Q2 2024 Align Technology Inc Earnings Call

Welcome to the Align Technology second quarter 2024 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I would now like to turn the conference over to your host, Shirley Stacy with Align Technologies. You may begin.

Operator: At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I would now like to turn the conference over to your host, Shirley Stacy with Align Technologies. You may begin.

Operator: At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

Shirley Stacy: I would now like to turn the conference over to your hosts, Shirley Stacy with Align Technologies. You may begin. Good afternoon, and thank you for joining us.

Shirley Stacy: Good afternoon, and thank you for joining us. I'm Shirley Stacy, Vice President of Corporate Communications and Investor Relations. Joining me for today's call is Joe Hogan, President and CEO, and John Morici, CFO. We issued our second quarter 2024 financial results today via Business Wire, which is available on our website at investor.aligntech.com. Today's conference call is being webcast and will be archived on our website for approximately one month. As a reminder, the information provided and discussed today will include forward-looking statements, including statements about Align's future events and product outlook. These forward-looking statements are only predictions and involve risks and uncertainties that are described in more detail in our most recent periodic reports filed with the Securities and Exchange Commission, available on our website and at sec.gov.

Shirley Stacy: I'm Shirley Stacy, Vice President of Corporate Communications and Investor Relations. Joining me for today's call is Jo Hogan, President and CEO, and John Marie G, CFO. We issued second quarter, 2024 financial results today. Today, we have BusinessWire, which is available on our website at investor.aligntech.com. Today's conference call is being audio webcast and will be archived on our website for approximately one month. As a reminder, the information provided and discussed today will include forward-looking statements, including statements about aligns, future events, and product outlook. These forward-looking statements are only predictions and involve risks and uncertainties that are described in more detail.

Good afternoon and thank you for joining us. I'm Shirley Stacy, Vice President of Corporate Communications and Investor Relations.

Speaker Change: Joining me for today's call is Joe Hogan, President and CEO , and John Morici, CFO .

Speaker Change: We issued second quarter 2024 financial results today via Business Wire, which is available on our website at investor.aligntech.com.

Today's conference call is being audio webcast and will be archived on our website for approximately one month.

Speaker Change: As a reminder, the information provided and discussed today will include forward-looking statements, including statements about Align's future events and product outlook.

Speaker Change: These forward-looking statements are only predictions and involve risks and uncertainties that are described in more detail in our most recent periodic reports filed with the Securities and Exchange Commission available on our website and at SEC.gov.

Shirley Stacy: In our most recent periodic reports filed with the Securities and Exchange Commission, available on our website and at SEC.gov. Actual results may vary significantly, and Align expressly assumes no obligation to update any forward-looking statement. We have posted historical financial statements with corresponding reconciliation, including our GAAP to non-GAAP reconciliation, if applicable, and our second quarter 2024 conference call slides on our website under quarterly results. Please refer to these files for more detailed information.

Speaker Change: Actual results may vary significantly, and Align expressly assumes no obligation to update any forward-looking statement.

Speaker Change: We have posted historical financial statements with corresponding reconciliations, including our GAAP to non-GAAP reconciliation, if applicable, and our second quarter 2024 conference call slides.

Joseph M. Hogan: on our website under quarterly results. Please refer to these files for more detailed information. With that, I'd like to turn the call over to Align Technology's President and CEO , Joe Hogan. Joe?

Joseph Hogan: With that, I'd like to turn the call over to Align Technologies, President and CEO Jo Hogan. Thanks, you're really good. Afternoon, and thanks for joining us. On our call today, I'll provide an overview of our second quarter results and discuss a few highlights from our two operating segments: systems and services, and clear liners. John will provide more detail on our Q2 financial performance and comment on our views for our third quarter and for 2024 in total.

Shirley Stacy: Actual results may vary significantly, and Align expressly assumes no obligation to update any forward-looking statement. We have posted historical financial statements with corresponding reconciliations, including our gap to non-gap reconciliation, if applicable, and our second quarter 2024 conference call slides on our website under quarterly results. Please refer to these files for more detailed information. With that, I'd like to turn the call over to Align Technology's President and CEO, Joe Ho

Joseph M. Hogan: Thanks, Shirley. Good afternoon, and thanks for joining us on our call today. I'll provide an overview of our second quarter results and discuss a few highlights from our two operating segments, systems and services, and clear aligners. John will provide more detail on our Q2 financial performance and comment on our views for our third quarter and for 2024 in total. Following that, I'll come back and summarize a few key points and open the call to questions.

Joseph M. Hogan: Thanks Shirley, good afternoon, and thanks for joining us.

Joseph M. Hogan: On our call today, I'll provide an overview of our second quarter results and discuss a few highlights from our two operating segments, systems and services, and clear aligners.

Joseph M. Hogan: John will provide more detail on our Q2 financial performance and comment on our views for our third quarter and for 2024 in total. Following that, I'll come back and summarize a few key points and open the call to questions.

Joseph Hogan: Following that, I'll come back and summarize a few key points and open the call to questions. Overall, I'm pleased to report solid second quarter results. Total Q2 24 revenues of 1 billion, 28.5 million, were up 3.1 percent sequentially and 2.6 percent year over year, reflecting growth in both clear liner volumes and imaging systems and CAD CAM services revenues. Q2 24 total revenues were unfavorably impacted by foreign exchange of approximately 11.6 million, or 1.1 percent sequentially, and unfavorably impacted by approximately 18.1 million, or 1.7 percent year over year. For clear liners, Q2 24 volumes increased 6.2 percent sequentially and 3.2 percent year over year, driven by growth from adult patients and strong teen case starts across the regions, led by strength in Asia Pacific.

Joseph M. Hogan: Overall, I'm pleased to report solid second quarter results. Total Q2-24 revenues of $1,028,500,000 were up 3.1% sequentially and 2.6% year-over-year, reflecting growth in both clear aligner volumes and imaging systems and CAD-CAM services revenues. Q224 total revenues were unfavorably impacted by foreign exchange of approximately 11.6 million, or 1.1% sequentially, and unfavorably impacted by approximately 18.1 million, or 1.7% year over year. For clear liners, Q224 volumes increased 6.2% sequentially and 3.2% year over year, driven by growth from adult patients and strong teen case starts across the regions, led by Our Q2 results also reflect a record number of doctors submitting cases and record numbers of doctors shipped to for the quarter.

Joseph M. Hogan: Overall, I'm pleased to report solid second quarter results.

John F. Morici: Total Q2-24 revenues of $1,028,500,000 were up 3.1% sequentially and 2.6% year-over-year, reflecting growth in both clear aligner volumes and imaging systems and CAD CAM services revenues.

Joseph M. Hogan: Q224 total revenues were unfavorably impacted by foreign exchange.

John F. Morici: of approximately 11.6 million, or 1.1% sequentially, and unfavorably impacted by approximately 18.1 million, or 1.7% year-over-year. For clear liners, Q2-24 volumes increased 6.2% sequentially.

John F. Morici: and 3.2% year-over-year driven by growth from adult patients and strong teen case starts across the regions led by strength in Asia-Pacific, EEMA, and Latin America.

Joseph Hogan: Our Q2 results also reflect a record number of doctors submitting cases and record doctors shipped to for the quarter. Q2 24 clear liner ASPs were down sequentially and lower than anticipated in our second quarter outlook, due in part to greater impact of unfavorably foreign exchange across multiple currencies, especially the Japanese yen, Euro, and Brazilian Rial, as well as discounts and products mixed shift to lower ASP products. As a result, total Q2 revenues were slightly below the expected range for Q2 quarterly revenues. Notwithstanding these factors, non-GAAP operating margin for the second quarter was 22.3 percent, up 2.5 points sequentially and up 1 point year over year.

John F. Morici: Our Q2 results also reflect a record number of doctors submitting cases and record doctors shipped to for the quarter. Q2-24 clear aligner ASPs were down sequentially and lower than anticipated in our second quarter outlook, due in part to greater impact of unfavorable foreign exchange across multiple currencies.

Joseph M. Hogan: Q2-24 clear aligner ASPs were down sequentially and lower than anticipated in our second quarter outlook due in part to the greater impact of unfavorable foreign exchange across multiple currencies, especially the Japanese Yen, Euro, and Brazilian Rial, as well as discounts and product mix shifts to lower ASP products. As a result, total Q2 revenues were slightly below the expected range for our Q2 quarterly revenues. Notwithstanding these factors, the non-GAAP operating margin for the second quarter was 22.3%, up 2.5 points sequentially and up 1 point year over year, for Imaging Systems and CAD-CAM Services.

John F. Morici: Especially the Japanese Yen, Euro, and Brazilian Real.

John F. Morici: as well as discounts and products mix shifts to lower ASP products.

John F. Morici: As a result, total Q2 revenues were slightly below the expected range for our Q2 quarterly revenues. Notwithstanding these factors, non-GAAP operating margin for the second quarter was 22.3%, up 2.5 points sequentially, and up 1 point year-over-year.

Joseph Hogan: For imaging systems and CADCAM services, Q224 revenues increased 9.2% sequentially and 16.1% year-over-year, reflecting continued adoption of our next-generation Iterra Illumina Scanner, which made up the majority of our equipment sales. Iterra Illumina and Wand upgrades, Iterra Element, scanner tradins, as well as increased Iterra's scanner leases. For Q224, the belt patient case starts to rub 5% sequentially in 1% year-over-year, reflecting our highest number of adult shipments in eight quarters, driven by strains in the GP channel led by North America and APAC dentist. In the teen and growing kid segment, over 216,000 teens and younger patients started treatment with Invisalign clear aligners during the second quarter, an increase of 8.8% sequentially and up 8% year-over-year, reflecting growth across regions, especially from Invisalign First and the MA and APAC regions.

Joseph M. Hogan: Q224 revenues increased 9.2% sequentially and 16.1% year-over-year, reflecting continued adoption of our next-generation ITERA Illumina scanner, which made up the majority of our equipment sales. ITERA Illumina and wand upgrades, ITERA Element scanner trade-ins, as well as increased ITERA scanner leases.

John F. Morici: for Imaging Systems and CAD CAM Services.

John F. Morici: Q224 revenues increased 9.2% sequentially and 16.1% year-over-year, reflecting continued adoption.

John F. Morici: of our next generation ITERO Illumina scanner, which made up the majority of our equipment sales. ITERO Illumina and wand upgrades, ITERO Element scanner trade-ins, as well as increased ITERO scanner leases.

Joseph M. Hogan: For Q224, adult patient case starts were up 5% sequentially and 1% year-over-year, reflecting our highest number of adult shipments in eight quarters. Driven by Strength in a GP Channel led by North America and APAC Dental In the teen and growing kids segment, over 216,000 teens and younger patients started treatment with Invisalign Clear Aligners during the second quarter, an increase of 8.8% sequentially and up 8% year-over-year, reflecting growth across regions, especially from Invisalign First and the EMEA and APAC regions.

John F. Morici: For Q224, adult patient case starts were up 5% sequentially and 1% year-over-year, reflecting our highest number of adult shipments in eight quarters.

John F. Morici: Driven by strength in a GP channel led by North America, an APAC dentist.

John F. Morici: In teen and growing kids segment, over 216,000 teens and younger patients started treatment with Invisalign Clear Aligners during the second quarter, an increase of 8.8% sequentially and up 8% year-over-year, reflecting growth across regions, especially from Invisalign First and the EMEA and APAC regions.

Joseph Hogan: In Q22, the number of doctors submitting teen or younger patients' can case starts was up 8% year-over-year, led by continued strain from doctors treating young kids, also known as growing patients. The response from doctors and their patients to the Invisalign palliative standard system continues to be positive. We believe that Invisalign palliative standard system is a better option for expanding a growing patient's narrow palette compared to traditional appliances used today. The Invisalign palliative standard system is currently available in the US, Canada, Australia, and New Zealand. We expect it to be available in other markets, spending future applicable regulatory proofs.

Joseph M. Hogan: In Q2, the number of doctors submitting teen or younger patient case starts was up 8% year-over-year, led by continued strength from doctors treating young kids, also known as growing patients. The response from doctors and their patients to the Invisalign Palette Expander System continues to be positive. We believe that the Invisalign Palette Expander System is a better option for expanding a growing patient's narrow palette compared to traditional appliances used today. The Invisalign Palette Expander System is currently available in the U.S., Canada, Australia, and New Zealand.

John F. Morici: In Q2, the number of doctors submitting teen or younger patient case starts was up 8% year over year, led by continued strength from doctors treating young kids, also known as growing patients.

John F. Morici: The response from doctors and their patients to the Invisalign Palette Expander System continues to be positive.

John F. Morici: We believe that Invisalign Palette Expander System is a better option for expanding a growing patient's narrow palette compared to traditional appliances used today. The Invisalign Palette Expander System is currently available in the U.S., Canada, Australia, and New Zealand. We expect it to be available in other markets pending future applicable regulatory approval.

Joseph M. Hogan: We expect it to be available in other markets pending future applicable regulatory approval. Non-case revenues include our Vivera retainers, which include retention aligners ordered through our doctor's subscription program or DSP, as well as clinical training and education accessories in e-commerce. Q2 non-case revenues were up 3.5% sequentially and up 5.1% year-over-year, primarily due to continued growth in retainers and DSP. For Q2, total clear aligner shipments included approximately 25,000 Invisalign DSP touch-up cases, a record high quarter of 37% year-over-year.

Joseph Hogan: Non-case revenues include our Rivera retainers, which include retention aligners, ordered through our doctor subscription program or DSP, as well as clinical training and education accessories in e-commerce. Q22 non-case revenues were up 3.5% sequentially and up 5.1% year-over-year, primarily due to continued growth in retainers and DSP. For Q2, total clear aligners shipments include approximately 25,000 Invisalign DSP touch-up cases, a record-high quarter of 37% year-over-year. DSP continues to drive growth and is currently available in North America in certain countries. During the quarter, we extended DSP into more countries in Europe, and we anticipate expanding into additional markets going forward.

John F. Morici: Non-case revenues include our Vivera retainers, which include retention aligners ordered through our doctor subscription program or DSP, as well as clinical training and education accessories in e-commerce.

Speaker Change: Q2 non-case revenues were up 3.5% sequentially and up 5.1% year-over-year, primarily due to continued growth in retainers and DSP.

Speaker Change: For Q2, total clear aligner shipments include approximately 25,000 Invisalign DSP touch-up cases, a record high quarter of 37% year-over-year.

Joseph M. Hogan: DSP continues to drive growth and is currently available in North America and certain EMEA countries. During the quarter, we extended DSP into more countries in Europe, and we anticipate expanding into additional markets going forward. DSP is also now available in 14-stage touch-up, a liner offering across all markets where it's available. As a result, touch-up cases increased significantly in Europe.

Speaker Change: DSP continues to drive growth and is currently available in North America and certain EMEA countries.

Speaker Change: During the quarter, we extended DSP into more countries in Europe , and we anticipate expanding into additional markets going forward. DSP is also now available in 14-stage touch-up, a liner offering across all markets where it's available. As a result, touch-up cases increased significantly in Q2.

Joseph Hogan: DSP is also now available in 14-stage touch-up, aligner offering across all markets where it's available. As a result, touch-up cases increase significantly in Q2. Q22 24 clear aligner volume and DSO customers increase sequentially year-over-year, reflecting growth across all regions. DSOs represent a large and growing opportunity to help drive adoption of digital technology across the dental industry. We have well-established relationships in many DSOs globally that recognize the benefits of digital workflows enabled by our portfolio of products and services that make up the digital platform, including increased practice efficiency and profitability, as well as delivering a better patient experience from shorter cycle times and customer proximity.

Joseph M. Hogan: 2224 Clear liner volume and DSO customers increased sequentially year over year, reflecting growth across all regions. DSOs represent a large and growing opportunity to help drive the adoption of digital technology across the dental industry. We have well-established relationships and many DSOs globally that recognize the benefits of digital workflows enabled by our portfolio of products and services that make up the digital platform, including increased practice efficiency and profitability as well as delivering a better patient experience from shorter cycle times and customer proximity. Smile Docs and Heartland Dental are two of our largest DSO partners.

Speaker Change: 2224 Clearliner volume and DSO customers increased sequentially year over year reflecting growth across all regions.

Speaker Change: DSOs represent a large and growing opportunity to help drive adoption of digital technology across the dental industry.

Speaker Change: We have well-established relationships and many DSOs globally that recognize the benefits of digital workflows enabled by our portfolio of products and services that make up the digital platform.

Speaker Change: Including increased practice efficiency and profitability, as well as delivering a better patient experience from shorter cycle times and customer proximity.

Joseph Hogan: Smow docs in Hartland, Dental, or two of our DSO partners, we are continuously exploring collaboration with a DSOs that can further the adoption of digital dentistry. Each DSO has a different strategy and business model, and our focus is working and encouraging DSOs, along with our vision strategy and business model goal.

Speaker Change: Smile Docs and Heartland Dental are two of our largest DSO partners.

Joseph M. Hogan: We are continuously exploring collaboration with the DSOs that can further the adoption of digital dentistry. Each DSO has a different strategy and business model, and our focus is working with and encouraging DSOs to align with our vision, strategy, and business model goals. Today, Invisalign is the most recognized orthodontic brand globally, and Invisalign Clear Aligner treatment is faster and more effective than traditional metal braces, yet the underlying market opportunity remains huge and un

Speaker Change: We are continuously exploring cooperation.

Speaker Change: with the DSOs that can further the adoption of digital dentistry. Each DSO has a different strategy and business model and our focus is working and encouraging DSOs align with our vision, strategy, and business model goals.

Joseph Hogan: Today, Invisalign is the most recognized orthodontic gland globally, and Invisalign clear line of treatment is faster and more effective than traditional mental braces; yet the underlying market opportunity remains huge and untapped. We continue to invest in consumer marketing and demand creation initiatives that raise awareness and drive potential patients to Invisalign practices globally. In Q2, we had more than 17 billion impressions and 50 million visitors to our websites globally.

Speaker Change: Today Invisalign is the most recognized orthodontic brand globally and Invisalign Clear Aligner treatment is faster and more effective than traditional metal braces, yet the underlying market opportunity remains huge and untapped.

Joseph M. Hogan: We continue to invest in consumer marketing and demand creation initiatives that raise awareness and drive potential patients to Invisalign Practices Globally. In Q2, we had more than 17 billion impressions and 50 million visitors to our website worldwide. Below are additional highlights from Q2, and more information is available in our Q2-24 earnings webcast slides. To increase awareness and educate young adults, parents, and teens about the benefits of the Invisalign brand, we continue to invest in and create campaigns and social media platforms such as TikTok, Instagram, YouTube, Snapchat, WeChat, and beyond across the market.

Speaker Change: We continue to invest in consumer marketing and demand creation initiatives that raise awareness and drive potential patients.

Speaker Change: to Invisalign Practices Globally. In Q2, we had more than 17 billion impressions and 50 million visitors to our websites globally. Below are additional highlights from Q2 and more information is available in our Q2-24 earnings webcast slides.

Joseph Hogan: Below are additional highlights from Q2, and more information is available in our Q2 24 earnings webcast slides. To increase awareness and educate young adults, parents, and teens about the benefits of Invisalign brand, we continue to invest and create campaigns and social media platforms such as TikTok, Instagram, YouTube, Snapchat, WeChat, and Dion across the markets. Reaching young adults as well as teens and their parents also requires the right engagement to Invisalign influencers and creator-centric campaigns. In America's social media campaigns featured Olympic athletes such as Rebecca Andraj from Brazil, Andre de Grasse from Canada, Jordan Chiles from the United States, and Paralympic athlete Lizzie Smith from the United States.

Speaker Change: To increase awareness and educate young adults, parents and teens about the benefits of Invisalign Brand, we continue to invest and create campaigns and social media platforms such as TikTok, Instagram, YouTube, Snapchat, WeChat, and beyond across the markets.

Joseph M. Hogan: Reaching young adults as well as teens and their parents also requires the right engagement with Invisalign influencers and creator-centric campaigns. In the Americas, our influence in social media campaigns featured Olympic athletes such as Rebecca Andrade from Brazil, Andre DeGrasse from Canada, Jordan Childs from the United States, and Paralympic athlete Lizzie Smith from the United States.

Speaker Change: Reaching young adults as well as teens and their parents also requires the right engagement to Invisalign influencers and creator-centric campaigns.

Speaker Change: In the Americas, our influence in social media campaigns featured Olympic athletes such as Rebecca Andrade from Brazil, Andre DeGrasse from Canada, Jordan Childs from the United States, and Paralympic athlete Lizzie Smith from the United States.

Joseph Hogan: To bolster tea demand, team demand, we launched new activations with teen high school sports social media platform over time, including several programs focused on showcasing elite high school athletes across boys' football, girls' basketball, girls' soccer. We highlighted why they chose to transform their smile within Invisalign aligners and showcase their results. In the mayor region, we partnered with influencers to reach consumers across social media platforms, including TikTok and Meta, and launched our global consumer campaigns for teens and parents. In A-PACT, we continue to invest in consumer advertising across the region and expanded our region, Japan and India, via Meta and YouTube and partner with key social media influencers.

Joseph M. Hogan: To bolster team demand, we launched new activations with Teen High School Sports social media platform, Overtime, including several programs focused on showcasing elite high school athletes across boys' and girls' football, girls' basketball, and girls' soccer. We highlighted why they chose to transform their smile with Invisalign aligners and showcased their results. In the Maya region, we partnered with influencers to reach consumers across social media platforms, including TikTok and Meta, and launched our global consumer campaigns for teens and parents.

Speaker Change: To bolster team demand, we launched new activations with

Speaker Change: Teen High School Sports Social Media Platform, Overtime

Speaker Change: Including several programs focused on showcasing elite high school athletes across boys, footballs, girls basketball, girls soccer. We highlighted why they chose to transform their smile with Invisalign Aligners and showcase their results.

Speaker Change: In the Maya region, we partnered with influencers to reach consumers across social media platforms, including TikTok and Meta, and launched our global consumer campaigns for teens and parents.

Joseph M. Hogan: In APAC, we continue to invest in consumer advertising across the region and expanded our reach in Japan and India via Meta and YouTube and partner with key social media influencers. Finally, adoption of the myInvisalign Consumer Patient App continued to increase with over 4 million downloads to date and over 384,000 monthly active users and an 8% year-over-year increase. Usage of our other digital tools also continued to increase. ClinCheck Live was used by almost 50,000 doctors on more than 692,000 cases, reducing time spent on modifying treatment plans by an average of 16.3%. The Invisalign Practice App is increasing its adoption with 85,000 doctors who actively are using the app, and 5.9 million photographs were uploaded in Q2 via the Invisalign Practice App.

Speaker Change: In APAC, we continue to invest in consumer advertising across the region and expanded our reach in Japan and India via Meta and YouTube and partner with key social media influencers.

Joseph Hogan: Finally, adoption of my Invisalign consumer patient app continued to increase, with over 4 million downloads to date and over 384,000 monthly active users and an 8% year-over-year increase. Uses of our other digital tools also continued to increase. ClinCheck Live update was used by almost 50,000 doctors, more than 692,000 cases, reducing time spent and modifying treatment plans by an average of 16.3%. Invisalign practice app is increasing in adoption with 85,000 doctors who actively are using the app, and 5.9 million photographs were uploaded in Q2 via the Invisalign practice app. Year-over-year growth in Q2 systems and services revenue were up 16.1% reflect higher scanner ASPs and non-system revenues driven by a terrible luminal-wond upgrades, increased service revenues, and a larger base of scanner sold.

Speaker Change: Finally, adoption of myInvisalign consumer patient app continued to increase with over 4 million downloads to date and over 384,000 monthly active users and 80% year-over-year increase.

Speaker Change: Usage of our other digital tools also continued to increase. ClinCheck Live Update was used by almost 50,000 doctors on more than 692,000 cases, reducing time spent in modifying treatment plans by an average of 16.3%.

Speaker Change: The Invisalign Practice App is increasing its adoption with 85,000 doctors who actively are using the app, and 5.9 million photographs were uploaded in Q2 via the Invisalign Practice App.

Joseph M. Hogan: Year over year growth in Q2 system and services revenue was up 16.1%, reflecting higher scanner AS and Non-System revenues driven by a tear aluminum wand upgrade, increased service revenues, and a larger base of scanner soles. On a sequential basis, Q2 systems and services revenues were up 9.2%, reflecting higher scanner volumes, higher scanner ASPs, and higher non-systems revenues driven by ITERA aluminum wand upgrades. Gatera Lumina's new multi-direct capture technology replaces the confocal imaging technology in earlier models and has a 3x wider field of capture and a 50% smaller and 45% lighter wand, delivering faster scanning speed, higher accuracy, superior visualization, and a more comfortable scanning experience. Lumen is currently available for orthodontic workflows as a new standalone scanner or as a wand upgrade from ITERA Element 5D Plus

Speaker Change: Year-over-year growth in Q2 system and services revenue were up 16.1%, reflect higher scanner ASPs and non-system revenues driven by Atera alumina wand upgrades, increased service revenues, and a larger base of scanners sold.

Joseph Hogan: On a sequential basis, Q2 systems and services revenues were up 9.2%, reflecting higher scanner volumes, higher scanner ASPs, and higher non-systems revenues driven by a terrible luminal-wond upgrades. The Aterra Lumen is new multi-direct capture technology replaces the confocal imaging technology in earlier models and has a 3x wider field of capture and a 50% smaller and 45% lighter one, delivering faster scanning speed, higher accuracy, superior visualization, and a more comfortable scanning experience. Lumen is currently available with orthodontic workflows as a new standalone scanner or as a one-duck grade for my Tarot Element 5D Plus scanner. During the second quarter, we had a record number of competitive trade-ins demonstrating the continued success of the Iterra Lumen A scanner in the marketplace.

Speaker Change: On a sequential basis, Q2 systems and services revenues were up 9.2%, reflecting higher scanner volumes, higher scanner ASPs, and higher non-systems revenues driven by ITER Illumina wand upgrades.

Speaker Change: The Atera Lumina's new multi-direct capture technology replaces the confocal imaging technology in earlier models and has a 3x wider field of capture.

Speaker Change: and a 50% smaller and 45% lighter wand, delivering faster scanning speed, higher accuracy, superior visualization, and a more comfortable scanning experience.

Speaker Change: Lumen is currently available with orthodontic workflows as a new stand-alone scanner or as a wand upgrade for my TeraElement 5D Plus scanner.

Joseph M. Hogan: During the second quarter, we had a record number of competitive trade-ins, demonstrating the continued success of the iTerra Lumina scanner in the market. We're also seeing a halo effect with Invisalign scans. We're pleased to see more doctors coming into the digital ecosystem with an increase in first-time Invisalign case submitters, as well as the return of lapse submitters. Overall, in Q2, we're very pleased with the continued uptake of the iTero Lumina scanner with ortho workflow and response from customers.

Speaker Change: During the second quarter, we had a record number of competitive trade-ins demonstrating the continued success of the iTerra Lumina scanner in the marketplace.

Joseph Hogan: We're also seeing a halo effect with Invisalign scans. We're pleased to see more doctors coming into the digital ecosystem, with an increase in first-time Invisalign case submitters as well as return of lapse submitters. Overall, Q2, we're very pleased with the continued uptake of Iterra Lumen, a scanner with ortho workflow and response from customers.

Speaker Change: We're also seeing a halo effect with Invisalign scans. We're pleased to see more doctors coming into the digital ecosystem with an increase in first-time Invisalign case submitters, as well as return of lapse submitters.

Speaker Change: Overall, Q2, we're very pleased with the continued uptake of iTero Lumina scanner with ortho workflow and response from customers. We're looking forward to a limited market release for the restorative software on Lumina in Q4, followed by full commercialization in Q125.

Joseph Hogan: We're looking forward to a limited market release for the restorative software aluminum in Q4, followed by full commercialization in Q125. Today we introduced the Iterra design suite offering doctors an intuitive way to facilitate designs with 3D printing of models, bytesplints, and restorations and practice. This software innovation is designed to help doctors increase their practice efficiencies and elevate patient experiences by shortening the time to treatment through an intuitive way to design for in-practice 3D printing. The Align digital platform provides an innovative portfolio of customer-focused technologies that enable seamless end-to-end workflows for dental professionals. Iterra Design Suite is now available to an early access program.

Joseph M. Hogan: We're looking forward to a limited market release for the restorative software on Lumina in Q4, followed by full commercialization in Q125. Today we introduce the iTero Design Suite, offering doctors an intuitive way to facilitate designs for 3D printing of models, bite splints, and restorations in practice.

Speaker Change: Today we introduced

Speaker Change: The ITERO Design Suite, offering doctors an intuitive way to facilitate designs for 3D printing of models, bite splints, and restorations in practice.

Joseph M. Hogan: This software innovation is designed to help doctors increase their practice efficiencies and elevate patient experiences by shortening the time to treatment through an intuitive way to design for in-practice 3D printing. The Align digital platform provides an innovative portfolio of customer-focused technologies that enable seamless end-to-end workflows for dental professionals. ITERO Design Suite is now available through an early access program. Doctors using an iTero scanner can submit their interest via their scanner or My iTero portal.

Speaker Change: This software innovation is designed to help doctors increase their practice efficiencies and elevate patient experiences by shortening the time to treatment through an intuitive way to design for in-practice 3D printing.

Speaker Change: The Align digital platform provides an innovative portfolio of customer-focused technologies that enable seamless end-to-end workflows for dental professionals. ITERO Design Suite is now available through an early access program.

Joseph Hogan: Doctors using an Iterra scanner can submit their interest via their scanner or My Iterra portal software is expected to be available later this year in selected markets.

Speaker Change: Doctors using an iTero scanner can submit their interest via their scanner or my iTero portal. Software is expected to be available later this year in selected markets. With that, I'll turn it over to John .

John F. Morici: The software is expected to be available later this year in selected markets. With that, I'll turn it over to John. Thanks, Joe.

John Morici: With that, I'll turn it over to John. Thanks, Joe.

John F. Morici: Now for our Q2 financial results. Total revenues for the second quarter were $1,028,000,000.5, up 3.1% from the prior quarter and up 2.6% from the corresponding quarter a year ago. On a constant currency basis, Q2'24 revenues were impacted by unfavorable foreign exchange of approximately $11.6 million, or approximately 1.1% sequentially, and were unfavorably impacted by approximately $18.1 million year-over-year, or approximately 1.7%. For clear aligners, Q-tube revenues of $831.7 million were up 1.8% sequentially, primarily from higher volumes, partially offset by lower ASA.

John Morici: Now for our Q2 financial results. Total revenues for the second quarter were $1 billion, $28 million, 3.1% from the prior quarter and up 2.6% from the corresponding quarter a year ago. On a constant currency basis, Q2 24 revenues were impacted by unfavorable foreign exchange of approximately $11.6 million, or approximately 1.1% sequentially. And we're unfavorably impacted by approximately $18.1 million year-over-year, or approximately 1.7%. For Clearer Liners, Q2 revenues of $831.7 million were up 1.8% sequentially, primarily from higher volumes, partially offset by lower ASPs. On a year-over-year basis, Q2 clear liner revenues were flat primarily due to higher discounts, a product mixed shift to lower ASP products, and the unfavorable impact from foreign exchange, offset by lower net revenue deferrals, higher volumes, and price increases.

John F. Morici: Thanks Joe. Now for our Q2 financial results. Total revenues for the second quarter were $1,028,000,000.5.

John F. Morici: dollars up 3.1% from the prior quarter and up 2.6% from the corresponding quarter a year ago. On a constant currency basis, Q2'24 revenues were impacted by unfavorable foreign exchange of approximately $11.6 million or approximately 1.1% sequentially.

John F. Morici: and were unfavorably impacted by approximately $18.1 million year-over-year or approximately 1.7%.

John F. Morici: For clear aligners, Q-tube revenues of $831.7 million were up 1.8% sequentially, primarily from higher volumes, partially offset by lower ASPs.

John F. Morici: On a year-over-year basis, Q2 Clearliner revenues were flat primarily due to higher discounts, a product makeshift to lower ASP products, and the unfavorable impact from foreign exchange, offset by lower net revenue deferrals, higher volumes, and price increases.

John F. Morici: On a year-over-year basis, Q2 clear aligner revenues were flat primarily due to higher discounts, a product mix shift to lower ASP products, and the unfavorable impact from foreign exchange, offset by lower net revenue deferrals, higher volumes, and price increases.

John Morici: Q2 24 clearer liner revenues were unfavorably impacted by foreign exchange of approximately $9.5 million, or approximately 1.1% sequentially. On a year-over-year basis, clear liner revenues were unfavorably impacted by foreign exchange of approximately $14.7 million, or approximately 1.7%. For Q2, in Visalign ASPs, for comprehensive treatment, were down sequentially and year-over-year. On a sequential basis, the decline in ASP primarily reflects higher discounts, a product mixed shift to lower ASP products, and the unfavorable impact of foreign exchange. On a year-over-year basis, the decline in comprehensive ASPs primarily reflects higher discounts, a product mixed shift to lower ASP products, and the unfavorable impact from foreign exchange, mostly offset by lower net revenue deferrals and price.

John F. Morici: Q224 Clearliner revenues were unfavorably impacted by foreign exchange of approximately $9.5 million, or approximately 1.1% sequentially. On a year-over-year basis, clear aligner revenues were unfavorably impacted by foreign exchange of approximately $14.7 million, or approximately 1.7%. For Q2, Invisalign ASPs for comprehensive treatment were down sequentially and year-over-year.

John F. Morici: Q224 Clearliner Revenues were unfavorably impacted by foreign exchange.

John F. Morici: of approximately $9.5 million or approximately 1.1% sequentially.

John F. Morici: On a year-over-year basis, Clearliner revenues were unfavorably impacted by foreign exchange of approximately $14.7 million, or approximately 1.7%.

John F. Morici: For Q2, Invisalign ASPs for Comprehensive Treatment were down sequentially and year-over-year. On a sequential basis, the decline in ASP primarily reflects higher discounts, a product mix shift to lower ASP products, and the unfavorable impact of foreign exchange.

John F. Morici: On a sequential basis, the decline in ASP primarily reflects higher discounts, a product makeshift to lower ASP products, and the unfavorable impact of foreign exchange. On a year-over-year basis, the decline in comprehensive ASPs primarily reflects higher discounts, a product makeshift to lower ASP products, and the unfavorable impact from foreign exchange, mostly offset by lower net revenue deferrals and price. For Q2, Invisalign ASPs for non-comprehensive treatment were down sequentially and year over year.

John F. Morici: On a year-over-year basis, the decline in comprehensive ASPs primarily reflects higher discounts, a product makeshift to lower ASP products, and the unfavorable impact from foreign exchange, mostly offset by lower net revenue deferrals and price increases.

John Morici: Increases. For Q2, in visualized ASPs for non-copary answer treatment, we're down sequentially and year-over-year. On a sequential basis, the decline in ASPs reflects the unfavorable impact from foreign exchange, higher net revenue deferrals, and a product makeshift to lower ASP products, partially offset by price increases. On a year-rear basis, the decrease in non-copary answer ASPs reflects higher discounts, a product makeshift to lower ASP products, the unfavorable impact of foreign exchange, and the unfavorable impact of a price adjustment in the UK to make the recently mandatory application of VAT to our lioners cost neutral to customers.

John F. Morici: For Q2, Invisalign ASPs for non-comprehensive treatment were down sequentially.

John F. Morici: On a sequential basis, the decline in ASPs reflects the unfavorable impact of foreign exchange, higher net revenue deferrals, and a product makeshift to lower ASP products, partially offset by price. On a year-over-year basis, the decrease in non-comprehensive AS... Reflects higher discounts, a product makeshift to lower ASP products, the unfavorable impact of foreign exchange, and the unfavorable impact of a price adjustment in the UK to make the recently mandatory application of VAT to our liners cost neutral to customers. Our Invisalign Comprehensive 3-in-3 product is available in North America, EMEA, and in certain markets across APEC.

John F. Morici: and year over year on a sequential basis.

John F. Morici: The decline in ASPs...

John F. Morici: Reflects the unfavorable impact from foreign exchange, higher net revenue deferrals, and a product makeshift to lower ASB products, partially offset by price increases.

John F. Morici: On a year-over-year basis, the decrease in non-comprehensive ASPs reflects higher discounts, a product makeshift to lower ASP products,

John F. Morici: The Unfavorable Impact of Foreign Exchange and the Unfavorable Impact of a Price Adjustment in the U.K.

John F. Morici: to make the recently mandatory application of VAT to our liners cost-neutral to customers.

John Morici: Our invisible and comprehensive three-and-three product is available in North America, AMEA, and in certain markets across APEC. We are pleased with the continued adoption of the invisible and comprehensive three-and-three product and anticipate an adoption will continue to increase. Comprehensive three-and-three provides doctors the flexibility they want while allowing us to recognize more revenue up front, with deferred revenue being recognized over a shorter period compared to our traditional invisible and comprehensive product and benefiting us with a more favorable growth margin. Clear aligner deferred revenues on the balance sheet decreased $7.8 million, or 0.6% sequentially, and decreased $5.2 million, or 0.4% year-over-year. AMEA will be recognized as additional aligners are shipped.

John F. Morici: Our Invisalign Comprehensive 3-in-3 product is available in North America, EMEA, and in certain markets across APEC.

John F. Morici: We are pleased with the continued adoption of the Invisalign Comprehensive 3-in-3 product and anticipate adoption will continue to increase. The 3-in-3 provides doctors with the flexibility they want while allowing us to recognize more revenue up front, with deferred revenue being recognized over a shorter period compared to our traditional Invisalign Comprehensive product and benefiting us with a more favorable gross margin. Clear a Line of Deferred Revenues on the Balance Sheet decreased $7.8 million, or 0.6% sequentially, and decreased $5.2 million, or 0.4% year-over-year, and will be recognized as the additional aligners are shipped.

John F. Morici: We are pleased with the continued adoption of the Invisalign Comprehensive 3in3 product and anticipate adoption will continue to increase.

John F. Morici: Comprehensive 3-in-3 provides doctors the flexibility they want while allowing us to recognize more revenue up front, with deferred revenue being recognized over a shorter period compared to our traditional Invisalign comprehensive product and benefiting us with a more favorable gross margin.

John F. Morici: Clear a line of deferred revenues on the balance sheet.

John F. Morici: decreased $7.8 million or 0.6% sequentially and decreased $5.2 million or 0.4% year-over-year and will be recognized as the additional aligners are shipped.

John F. Morici: Q224 systems and services revenues of $196.8 million were up 9.2% sequentially, primarily due to higher volumes, higher ASPs, and non-systems revenues mostly related to upgrades. Q2 24 systems and services revenues were up 16.1% year over year, primarily due to higher ASPs.

John Morici: Q224 systems and services revenues of $196.8 million were up 9.2% sequentially, primarily due to higher volumes, higher ASPs, and non-systems revenues mostly related to upgrades. Q224 systems and services revenues were up 16.1% year-over-year, primarily due to higher ASPs, increased non-system revenues mostly related to upgrades in our leasing rental programs, and higher service revenues. We are pleased to be able to leverage our operational and financial capabilities to provide different types of go-to-market models for our customers, such as leasing and rental options. In the end, we are focused on selling the where customers want to buy. Q224 systems and services revenues were unfavorably impacted by foreign exchange of approximately $2.1 million, or approximately 1% sequentially.

John F. Morici: Q224 systems and services revenues of $196.8 million were up 9.2% sequentially, primarily due to higher volumes, higher ASPs, and non-systems revenues mostly related to upgrades.

John F. Morici: Q2-24 systems and services revenues were up 16.1% year-over-year, primarily due to higher ASPs.

John F. Morici: Increased non-system revenues, mostly related to upgrades in our leasing and rental programs and higher service revenue. We are pleased to be able to leverage our operational and financial capabilities to provide different types of go-to-market models for our customers, such as leasing and rental options. In the end, we are focused on selling the way our customers want to buy. Q2-24 systems and services revenues were unfavorably impacted by foreign exchange of approximately $2.1 million, or approximately 1% sequentially.

John F. Morici: Increased non-system revenues mostly related to upgrades in our leasing rental programs and higher service revenues.

Speaker Change: We are pleased to be able to leverage our operational and financial capabilities to provide different types of go-to-market models for our customers, such as leasing and rental options. In the end, we are focused on selling the way our customers want to buy.

Speaker Change: Q2 24 systems and services revenues were unfavorably impacted by foreign exchange of approximately 2.1 million dollars

John Morici: On a year-over-year basis, system and services revenues were unfavorably impacted by foreign exchange of approximately $3.4 million, or approximately 1.7%. Systems and services deferred revenues on the balance sheet was down $20.4 million or 8.3% sequentially and down $43.4 million or 16.2% year-over-year, primarily due to the recognition of services revenues, which are recognized radically over the service period. The decline in deferred revenues both sequentially and year-over-year primarily reflects the shorter duration of service contracts applicable to initial scanner purchases. As our scanner portfolio expands and we introduce new products, we are increasing the opportunities for customers to upgrade and make trade-ins in addition to our scanning leasing and rental programs. Developing new capital equipment opportunities to meet the digital transformation needs of our customers and our DSO partners is a natural progression for our equipment business with a large and growing base of scanners sold.

John F. Morici: On a year-over-year basis, systems and services revenues were unfavorably impacted by foreign exchange of approximately $3.4 million, or approximately 1.7%. Systems and Services Deferred Revenues on the balance sheet were down $20.4 million or 8.3% sequentially and down $43.4 million or 16.2% year-over-year, primarily due to the recognition of services revenues, which are recognized readily over the service period. The decline in deferred revenues, both sequentially and year-over-year, primarily reflects the shorter duration of service contracts applicable to initial scanner purchases. As our scanner portfolio expands and we introduce new products, we are increasing the opportunities for customers to upgrade and make trade-ins, in addition to our scanning, leasing, and rental programs. Developing New Capital

Speaker Change: or approximately...

Speaker Change: 1% sequentially.

Speaker Change: On a year-over-year basis, systems and services revenues were unfavorably impacted by foreign exchange of approximately $3.4 million, or approximately 1.7%.

Speaker Change: Systems & Services Deferred Revenues on the Balance Sheet was down $20.4 million, or 8.3% sequentially, and down $43.4 million, or 16.2% year-over-year, primarily due to the recognition of services revenues

Speaker Change: which are recognized readily over the service period. The decline in deferred revenues both sequentially and year-over-year primarily reflects the shorter duration of service contracts applicable to initial scanner purchases.

Speaker Change: As our scanner portfolio expands and we introduce new products, we are increasing the opportunities for customers to upgrade and make trade-ins, in addition to our scanning, leasing, and rental programs.

John F. Morici: Opportunities to meet the digital transformation needs of our customers and our DSO partners is a natural progression for our equipment business, with a large and growing base of scanners sold. The structural programs we have implemented across both of our operating segments benefit our customers by providing them with more options to choose what they need, in some cases at a reduced price. That may impact our ASPs, but the cost of service for us is lower, and the benefit is then reflected in our gross margin.

Speaker Change: Developing new capital equipment opportunities to meet the digital transformation needs of our customers and our DSO partners is a natural progression for our equipment business with a large and growing base of scanners sold.

John Morici: The structural programs we have implemented across both of our operating segment benefit are customers by providing them with more options to choose what they need. that may impact our ASPs, but the cost of service for us is lower, and the benefit is then reflected in our gross margins.

Speaker Change: The structural programs we have implemented across both of our operating segment benefit our customers by providing them with more options to choose what they need.

Speaker Change: In some cases, at a reduced price.

Speaker Change: That may impact our ASPs, but the cost of service for us is lower, and the benefit is then reflected in our gross margins.

John Morici: Moving to gross margin, second quarter overall gross margin was 70.3% of 0.3% sequentially and down 0.9% year-over-year. Overall gross margin was unfavorably impacted by foreign exchange by approximately 0.3% sequentially and unfavorably impacted by approximately 0.5% on a year-over-year basis. Clear aligner gross margin for the second quarter was 70.8%, down 0.1% sequentially, due primarily to lower ASPs, partially offset by lower additional aligners and leveraged manufacturing spend. Clear aligner gross margin for the second quarter was down 1.7% year-over-year due primarily to lower ASPs and higher manufacturing spend. As we continue to ramp up poll and manufacturing facility and the impact of unfavorable foreign exchange systems and services gross margin for the second quarter was a record 68.2%, up 2.3% sequentially primarily due to higher ASPs and manufacturing efficiencies. Systems and services gross margin for the second quarter was up 3 points year-over-year for the reason stated above.

John F. Morici: Moving to gross margin, second quarter overall gross margin was 70.3%, up 0.3 points sequentially and down 0.9 points year over year. Overall gross margin was unfavorably impacted by foreign exchange by approximately 0.3 points sequentially and unfavorably impacted by approximately 0.5 points on a year over year basis. Clear a line at gross margin for the second quarter was 70.8%, down 0.1 points sequentially due primarily to lower ASPs, partially offset by lower additional aligners and leveraged manufacturing spend. Clearliner gross margin for the second quarter was down 1.7 points year-over-year due primarily to lower ASPs and higher manufacturing spend as we continue to ramp up our Poland manufacturing facility and the impact of unfavorable foreign exchanges.

Speaker Change: Moving to gross margin, second quarter overall gross margin was 70.3%, up 0.3 points sequentially and down 0.9 points year over year.

Speaker Change: Overall, gross margin was unfavorably impacted by foreign exchange.

Speaker Change: by approximately 0.3 points sequentially and unfavorably impacted by approximately 0.5 points on a year-over-year basis.

Speaker Change: Clear align our gross margin for the second quarter.

Speaker Change: was 70.8% down 0.1 points sequentially due primarily to lower ASPs partially offset by lower additional aligners and leveraged manufacturing spend.

Speaker Change: Clearliner gross margin for the second quarter

Speaker Change: to lower ASPs and higher manufacturing spend as we continue to ramp up Poland manufacturing facility and the impact of unfavorable foreign exchange.

John F. Morici: Systems and Services gross margin for the second quarter was a record 68.2%, up 2.3 points sequentially, primarily due to higher ASBs and manufacturing efficiency. Systems and Services gross margin for the second quarter was up three points year over year for the reasons stated above. Q2 operating expenses were $575.6 million, up 5.9% sequentially and 6.3% year-over-year. On a sequential basis, operating expenses were up by $31.9 million, due primarily to about $31 million in legal settlements. Year-over-year operating expenses increased by $33.9 million, primarily due to legal settlements and higher employee compensation, partially offset by lower outside services, advertising, and marketing expenses.

Speaker Change: Systems and Services gross margin for the second quarter was a record 68.2%, up 2.3 points sequentially, primarily due to higher ASPs and manufacturing efficiencies.

Speaker Change: Systems and Services gross margin for the second quarter was up three points year over year for the reasons stated above.

John Morici: Q2 operating expenses were $575.6 million, up 5.9% sequentially and 6.3% year-over-year. On a sequential basis, operating expenses were up by $31.9 million due primarily to about $31 million in legal settlements. Year-over-year operating expenses increased by $33.9 million primarily due to legal settlements and higher employee compensation, partially offset by lower outside services, advertising, and marketing expenses. On an on-gap basis, excluding stock-based compensation, amortization of acquired and tangible related to certain acquisitions, restructuring legal settlements, and other charges, operating expenses were $499.5 million, down 1.3% sequentially and down 1.1% year-over-year. Our second quarter operating income of $147 million resulted in an operating margin of 14.3%, down 1.2% sequentially and down 2.9% year-over-year.

Speaker Change: Q2 operating expenses were $575.6 million, up 5.9% sequentially, and 6.3% year-over-year. On a sequential basis, operating expenses...

Speaker Change: We're up by $31.9 million, due primarily to about $31 million in legal settlements. Year-over-year operating expenses increased by $33.9 million, primarily due to legal settlements

Speaker Change: and higher employee compensation, partially offset by lower outside services, advertising and marketing expenses.

Speaker Change: On an ONGAP basis, excluding stock-based compensation, amortization of acquired intangibles related to certain acquisitions,

John F. Morici: On an on-gap basis, excluding stock-based compensation, amortization of acquired intangibles related to certain acquisitions, restructuring, legal settlements, and other charges, operating expenses were $499.5 million, down 1.3% sequentially, and down 1.1% year over year. Our second quarter operating income of $147 million resulted in an operating margin of 14.3%, down 1.2 points sequentially, and down 2.9% year over year. Operating margin was unfavorably impacted by foreign exchange of approximately 0.6 points sequentially and unfavorably impacted by 1.2 points year over year.

Speaker Change: Restructuring, legal settlements, and other charges, operating expenses were $499.5 million dollars, down 1.3% sequentially, and down 1.1% year-over-year.

Speaker Change: Our second quarter operating income of $147 million resulted in an operating margin of 14.3%.

John Morici: Operating margin was unfavorably impacted from foreign exchange of approximately 0.6 points sequentially and unfavorably impacted by 1.2 points year-over-year. On an on-gap basis, which excludes stock-based compensation, amortization of a tangible related to certain acquisitions, restructuring legal settlements, and other charges, operating margin for the second quarter was 22.3%, up 2.5 points sequentially and up 1.1 year-over-year.

Speaker Change: Down 1.2 points sequentially and down 2.9% year-over-year. Operating margin was unfavorably impacted from foreign exchange of approximately 0.6 points sequentially and unfavorably impacted by 1.2 points year-over-year.

Speaker Change: On a non-GAAP basis, which excludes stock-based compensation, amortization of intangibles related to certain acquisitions, restructuring, legal settlements, and other charges, operating margin for the second quarter was 22.3%, up 2.5 points sequentially, and up 1 point year-over-year.

John F. Morici: On a non-GAAP basis, which excludes stock-based compensation, amortization of intangibles related to certain acquisitions, restructuring, legal settlements, and other charges, operating margin for the second quarter was 22.3%, up 2.5 points sequentially, and up 1 point year-over-year.

John Morici: Interest in other income expense net for the second quarter was an expense of $3.2 million, primarily due to unfavorable foreign exchange, compared to an income of $4.3 million in Q1 of 24 and an expense of $1.3 million in Q2 of 23. Recall that Q124 included a non-recurring gain on our equity investments. The gap effective tax rate in the second quarter was 32.9 percent compared to 33.7 percent in the first quarter and 34.8 percent in the second quarter of the prior year. The second quarter gap effective tax rate was lower than the first quarter effective tax rate primarily due to discrete tax expenses recognized in Q1 of 24 that did not re-occur in Q2 of 24, and that benefit was partially offset by an increase in non-detectable expenses.

John F. Morici: Interest and other income expense net for the second quarter was an expense of $3.2 million, primarily due to unfavorable foreign exchange rates, compared to an income of $4.3 million in Q1 of 2024 and an expense of... $1.3 million in Q2 of 23. Recall that Q1 of 24 included a non-recurring gain on our equity investment. The GAAP effective tax rate in the second quarter was 32.9%, compared to 33.7% in the first quarter and 34.8% in the second quarter of the prior year.

Speaker Change: Interest and other income expense, net for the second quarter, was an expense of $3.2 million, primarily due to unfavorable foreign exchange, compared to an income of $4.3 million in Q1 of 24, and an expense of...

Speaker Change: $1.3 million in Q2 of 23. Recall that Q1 of 24 included a non-recurring gain on our equity investments.

Speaker Change: The gap effective tax rate in the second quarter was 32.9% compared to 33.7% in the first quarter and 34.8% in the second quarter of the prior year.

John F. Morici: The second quarter GAAP effective tax rate was lower than the first quarter effective tax rate, primarily due to discrete tax expenses recognized in Q1 of 24 that did not reoccur in Q2 of 24, and that benefit was partially offset by an increase in non-detectable expenses. Our non-GAAP effective tax rate in the second quarter was 20%, which reflects our long-term projected tax rate. Second quarter net income per diluted share was $1.28, down sequentially by $0.11 and down $0.18 compared to the prior year.

Speaker Change: The second quarter GAAP effective tax rate was lower than the first quarter effective tax rate, primarily due to discrete tax expenses recognized in Q1 of 24 that did not reoccur

Speaker Change: In Q2 of 24 and that benefit was partially offset by an increase in non-detectable expenses.

John Morici: Our non-GAAP effective tax rate in the second quarter was 20 percent, which reflects our long-term projected tax rate. The second quarter net income diluted share was $1.28, down sequentially $0.11 and down 18 cents compared to the prior year. Our EPS was unfavorably impacted by 11 cents on a sequential basis and 17 cents on a year-rear basis due to foreign exchange. On a non-gap basis, net income per diluted share was $2.41 for the second quarter, up 27 cents sequentially and up 19 cents year-rear.

Speaker Change: Our non-GAAP effective tax rate in the second quarter was 20%, which reflects our long-term projected tax rate.

Speaker Change: Second quarter net income per diluted share was $1.28, down sequentially $0.11, and down $0.18 compared to the prior year.

John F. Morici: Our EPS was unfavorably impacted by $0.11 on a sequential basis and $0.17 on a year-over-year basis due to foreign exchange. On a non-GAAP basis, net income per diluted share was $2.41 for the second quarter, up $0.27 sequentially and up $0.19 year-over-year.

Speaker Change: Our EPS was unfavorably impacted by $0.11 on a sequential basis and $0.17 on a year-over-year basis due to foreign exchange.

Speaker Change: On a non-GAAP basis, net income per diluted share was $2.41 for the second quarter, up $0.27 sequentially and up $0.19 year over year.

John Morici: Moving on to the balance sheet. As of June 30, 2024, cash, cash equivalents, and short and long-term marketable securities were $782.1 million, down sequentially $120.4 million and down $251.7 million year-rear. Of our $782.1 million balance, $140 million was held in the US, and $642.1 million was held by our international entities. During Q224, we repurchase approximately 0.6 million shares of our common stock at an average price of $250.73 through $150 million of open-market repurchases. As of June 30, 2024, $500 million remains available for repurchases of our common stock under the January 2023 repurchase program.

John F. Morici: Moving on to the balance sheet. As of June 30, 2024, cash, cash equivalents, and short and long term marketable securities were $782.1 million, down sequentially by $120.4 million, and down $251.7 million year-over-year. Of our $782.1 million balance, $140 million was held in the U.S., and $642.1 million was held by our international entities.

Speaker Change: Moving on to the balance sheet, as of June 30, 2024, cash, cash equivalents, and short and long-term marketable securities

Speaker Change: were $782.1 million, down sequentially $120.4 million, and down $251.7 million year-over-year. Of our $782.1 million balance, $140 million was held in the U.S.

Speaker Change: and $642.1 million was held by our international entities.

John F. Morici: During Q2-24, we repurchased approximately 0.6 million shares of our common stock at an average price of $250.73 through $150 million of Open Market Repurchases. As of June 30, 2024, $500 million remains available for repurchases of our CometStock under the January 2023 repurchase program. During the quarter, we completed a $75 million equity investment in Heartland Dental, a multidisciplinary DSO with GP and ortho practices across the United States. Our Q2 accounts receivable balance was $1 billion.

Speaker Change: During Q2-24, we repurchased approximately

Speaker Change: 0.6 million shares of our common stock at an average price of $250.73 through $150 million

Speaker Change: As of June 30, 2024, $500 million remains available for repurchases of our CometSock under the January 2023 repurchase program.

John Morici: During the quarter, we completed a $75 million equity investment in Heartland, Dento, a multidisciplinary DSO with GP and orthopractices across the United States. Q2 accounts receivable balance was $1,020.0 million, up sequentially. Our overall day sales outstanding was 89 days, up approximately 3 days sequentially and up approximately 8 days as compared to Q2 last year. Cashville from operations for the second quarter was $159.8 million. Capital expenditures for the second quarter were $53.5 million, primarily related to our continued investments to increase aligner manufacturing capacity and facilities. Free cash flow defined as cash flow from operations less capital expenditures amounted to $106.4 million.

Speaker Change: During the quarter, we completed a $75 million equity investment in Heartland Dental, a multidisciplinary DSO with GP and ortho practices across the United States.

Speaker Change: Q2 accounts receivable balance was $1 billion.

John F. Morici: 20 million point one up sequentially. Our overall day sales outstanding was 89 days, up approximately three days sequentially and up approximately eight days as compared to Q2 last year. Cashflow from operations for the second quarter was $159.8 million.

Speaker Change: $20,000,000.1 up sequentially. Our overall day sales outstanding was 89 days, up approximately 3 days sequentially, and up approximately 8 days as compared to Q2 last year.

Speaker Change: Cash flow from operations for the second quarter was $159.8 million.

John F. Morici: Capital expenditures for the second quarter were $53.5 million, primarily related to our continued investments to increase aligner manufacturing capacity and facilities. Pre-cashflow, defined as cashflow from operations, less capital expenditures, amounted to $106.4 million. Now turning to our outlook, assuming no circumstances occur beyond our control, we provide the following business outlook for Q3 and fiscal 2024. For fiscal 2024, we expect our Q3 worldwide revenues to be in a range of $980 million to $1 billion.

Speaker Change: Capital expenditures for the second quarter were $53.5 million, primarily related to our continued investments.

Speaker Change: to increase aligner manufacturing capacity and facilities. Free cash flow, defined as cash flow from operations, less capital expenditures, amounted to $106.4 million.

John Morici: Now turning to our outlook, assuming no circumstances occur beyond our control, we provide the following business outlook for Q3 and fiscal 2024. for Q3 2024. We expect our Q3 worldwide revenues to be in a range of $980 million to $1 billion. We expect clear-liner volume to be down sequentially as a result of Q3 seasonality, and clear-liner ASPs to be down sequentially, primarily due to foreign exchange and product mix. We also expect systems and services revenues to be down sequentially because of Q3 seasonality. We expect our Q3 2024 gap operating margin to be below Q3 2023 gap operating margin and Q3 2024 non-gap operating margin to be flat to Q3 2023 non-gap operating margin.

Speaker Change: Now turning to our outlook, assuming no circumstances occur beyond our control, we provide the following business outlook for Q3 and fiscal 2024.

Speaker Change: For Q3 2024, we expect our Q3 worldwide revenues to be in the range of $980 million to $1 billion.

John F. Morici: We expect clear aligner volume to be down sequentially as a result of Q3 seasonality and clear aligner ASPs to be down sequentially, primarily due to foreign exchange and product. We also expect systems and services revenues to be down sequentially because of Q3 seasonality.

Speaker Change: We expect clear aligner volume to be down sequentially as a result of Q3 seasonality and clear aligner ASBs to be down sequentially, primarily due to foreign exchange and product mix.

Speaker Change: We also expect systems and services revenues to be down sequentially because of Q3 seasonality.

John F. Morici: We expect our Q3 2024 gap operating margin to be below Q3 2023 gap operating margin and Q3 2024 non-gap operating margin to be flat to Q3 2023 non-gap operating margin for fiscal 2024. We expect fiscal 2024 total revenue growth to be up 4% to 6% year-over-year, due in part to lower clear aligner ASPs year-over-year from continued unfavorable foreign exchange and In addition, our revised revenue outlook reflects our anticipated commercial launch of Itero Lumina with restorative capabilities to occur in Q1 of 2025 instead of 2024, as previously anticipated.

Speaker Change: We expect our Q3 2024 gap operating margin to be below Q3 2023 gap operating margin and Q3 2024 non-gap operating margin to be flat to Q3 2023 non-gap operating margin.

John Morici: For fiscal 2024, we expect fiscal 2024 total revenue growth to be up 4% to 6% year-over-year, due in part to lower clear-liner ASPs year-over-year from continued unfavorable foreign exchange and product mix. In addition, our revised revenue outlook reflects our anticipated commercial launch of a Tarot Lumen-up with restored capabilities to occur in Q1 of 2025 instead of 2024 as previously anticipated. We expect fiscal 2024 gap operating margin to be slightly below 2023 gap operating margin, and 2024 non-gap operating margin to be above 2023 non-gap operating margin.

Speaker Change: For Fiscal 2024, we expect Fiscal 2024 total revenue growth to be $3.5 million.

Speaker Change: to be up four to six percent year over year.

Speaker Change: do in part to lower clear aligner ASPs year over year from continued unfavorable foreign exchange and product mix.

Speaker Change: In addition, our revised Revenue Outlook reflects our anticipated commercial launch of Itero Lumina with restorative capabilities to occur in Q1 of 2025 instead of 2024, as previously anticipated.

John F. Morici: We expect fiscal 2024's gap operating margin to be slightly below 2023's gap operating margin, and 2024's non-gap operating margin to be above 2023's non-gap operating margin. We expect investments in capital expenditures for fiscal 2024 to be approximately $100 million.

Speaker Change: We expect fiscal 2024 gap operating margin to be slightly below 2023 gap operating margin and 2024 non-gap operating margin to be above 2023 non-gap operating margin.

John Morici: We expect investments in capital expenditures for fiscal 2024 to be approximately $100 million. Capital expenditures primarily relate to building construction and improvements, as well as manufacturing capacity in support of continued expansion.

Speaker Change: We expect investments in capital expenditures for fiscal 2024 to be approximately $100 million. Capital expenditures primarily relate to building construction and improvements, as well as manufacturing capacity in support of continued expansion.

Joseph M. Hogan: Capital expenditures primarily relate to building construction and improvements as well as manufacturing capacity in support of continued expansion. With that, I'll turn it back over to Joe for final comments. Thanks, John. In summary, I'm pleased with our overall performance for Q2 and the growth we delivered across the business in clear liner volumes, as well as strong revenues from scanners and services. Notwithstanding the impact of unfavorable foreign exchange on our revenues, we believe the end markets are stable overall.

Joseph Hogan: With that, I'll turn it back over to Joe for final comments.

Joseph Hogan: Joe. Thanks, John. In summary, I'm pleased with our overall performance for Q2 and the growth we delivered across the business for clear-liner volumes as well as strong revenues from scanners and services. Notwithstanding the impact of unfavorable foreign exchange on our revenues, we believe the end markets are stable overall, and we're committed to supporting our doctor customers and the future of visual innovation. Our purpose is to transform smiles and change lives with the goal of being the standard of care in orthodontics with Invisalign clear-liner treatment. Technically, we believe that we can treat the vast majority of orthodontic cases today, from the simplest to the most complex.

Speaker Change: With that, I'll turn it back over to Joe for final comments. Joe?

Joseph M. Hogan: Thanks, John . In summary, I'm pleased with our overall performance for Q2 and the growth we delivered across the business for clear ladder volumes, as well as strong revenues from scanners and services.

Speaker Change: Notwithstanding the impact of unfavorable foreign exchange on our revenues, we believe the end markets are stable overall and we are committed to supporting our doctorate customers and the future of digital innovation.

Joseph M. Hogan: We're committed to supporting our doctor customers and the future of digital innovation. Our purpose is to transform smiles and change lives with the goal of being the standard of care in orthodontics with Invisalign® Clear Aligner® treatment. Clinically, we believe that we can treat the vast majority of orthodontic cases today, from the simplest to the most complex. Clinical efficacy is no longer a question.

Speaker Change: Our purpose is to transform smiles and change lives with the goal of being the standard of care in orthodontics with Invisalign Clear Aligner Treatment.

Speaker Change: Clinically, we believe that we can treat the vast majority of orthodontic cases today, from the simplest to the most complex. Clinical efficacy is no longer a question. We now focus on the treatment experience for patients and on efficiency and growth for our doctor customers. The orthodontic case start market is vastly underpenetrated.

Joseph Hogan: Clinical efficacy is no longer a question. We now focus on the treatment experience for patients and on efficiency and growth for our doctor customers. The orthodontic case start market is vastly under-penetrated, and there are millions of consumers who had benefit from digital orthodontics. We continue to evolve to better meet the needs of doctors and potential patients who increasingly seek convenient, elevated digital experiences. Our digital platform of integrated technology software and services has helped improve orthodontic treatment for millions by delivering seamless workflows and dental practices on mobile devices and through remote monitoring and are designed to help doctors and patients realize the benefits of a truly seamless end-to-end digital workflows and patient experiences.

Joseph M. Hogan: We now focus on the treatment experience for patients and on efficiency and growth for our doctor-customers. The orthodontic case start market is vastly underpenetrated. And there are millions of consumers who would benefit from digital orthodontics. We continue to evolve to better meet the needs of doctors and potential patients who increasingly seek convenient, elevated digital experiences. Our digital platform of integrated technologies, software, and services has helped improve orthodontic treatment for millions by delivering seamless workflows and dental practices on mobile devices and through remote monitoring, and is designed to help doctors and patients realize the benefits of a truly seamless end-to-end digital workflow and patient experience. But the journey from analog to digital has proven difficult for practices.

Speaker Change: and there are millions of consumers who would benefit from digital orthodontics. We continue to evolve to better meet the needs of doctors, potential patients, who increasingly seek convenient, elevated digital experiences.

Speaker Change: Our digital platform of integrated technology, software, and services.

Speaker Change: has helped improve orthodontic treatment for millions by delivering seamless workflows and dental practices on mobile devices and through remote monitoring and are designed to help doctors and patients realize the benefits of a truly seamless end-to-end digital workflows and patient experiences.

Joseph Hogan: But the journey from analog to digital has proven difficult for practices. The orthodontic practice of the future requires full digital transformation to truly realize the promise of digital, and there is no other MedTech company in the world that can help practices meet this challenge.

Speaker Change: But the journey from analog to digital has proven difficult for practices.

Joseph M. Hogan: The orthodontic practice of the future requires full digital transformation to truly realize the promise of digital. And there is no other medtech company in the world that can help practices meet this challenge. With that, I thank you for your time today. We look forward to sharing our continued progress as we move the industry forward through digital orthodontics. Now, I'll turn the call over to the operator for your question. Operator.

Speaker Change: The orthodontic practice of the future requires full digital transformation to truly realize the promise of digital.

Joseph Hogan: With that, I thank you for your time today. We look forward to sharing our continued progress as we move the industry forward to digital orthodontics.

Speaker Change: And there is no other medtech company in the world that can help practices meet this challenge. With that, I thank you for your time today. We look forward to sharing our continued progress as we move the industry forward through digital orthodontics. Now I'll turn the call over to the operator for your questions.

Operator: Now I'll turn the call over to the operator for your questions. Operator, thank you. At this time, I would like to conduct a question and answer session. If you'd like to ask a question, please press star 11 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 11 again to remove yourself from the queue if your question has been answered. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star 11 keys. One moment for our first question.

Operator: Thank you. At this time, we would like to conduct a question and answer session. If you'd like to ask a question, please press star one one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star one one again to remove yourself from the queue.

Speaker Change: Operator.

Speaker Change: Thank you. At this time, we would like to conduct a question and answer session. If you'd like to ask a question, please press star 11 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 11 again to remove yourself from the queue if your question has been answered.

Operator: If your question has been answered for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star one one. One moment for our first question. Our first question comes from the line of Michael Cherny from Lee Rink Partners. Your question, please. Good afternoon.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star 1-1 keys. One moment for our first question.

Michael Cherny: Our first question comes from the line of Michael Cherny from Lee Rink Partners.

Michael Cherny: Your question, please. Good afternoon. Thank you for taking all the questions. Maybe if I just dive in a little bit on the guidance change and some of the moving pieces, in particular, I want to get a sense from you of what you've used within your control versus outside. Obviously, FX is something that management can control, but you think about the guidance in particular on the ASB side. How using about the flow through what isn't within your control on mix? Is there something to do in promotion? Is there anything else that can come from a pricing competition that we should be worried about?

Speaker Change: Our first question comes from the line of Michael Cherny from Lee Rink Partners. Your question, please.

Michael Aaron Cherny: Thank you for taking all the questions. Maybe I can just dive in a little bit on the guidance change and some of the moving pieces. In particular, I want to get a sense from you of what you view as within your control versus outside. Obviously, FX is something that management can't control.

Michael Tierney: Good afternoon, thank you for taking all the questions. Maybe if I can just dive in a little bit on the guidance change and some of the moving pieces. In particular, I want to get a sense

Speaker Change: from you of what you view as within your control versus outside. Obviously...

John F. Morici: But if you think about the guidance, in particular on the AFP side, how do you think about the flow through of what is within your control on mix? Is this something you do in promotion? Is there anything else that can come from a pricing competition that we should be worried about? I just want to drill down a little bit more into that number, given that it seems to be the biggest fulcrum point relative to the guidance. Yeah, it's a good question, Michael. This is John.

Speaker Change: SX is something that management can't control, but if you think about the guidance...

Speaker Change: In particular, on the ASB side, how do you think about the flow-through of what is within your control on mix? Is this something you can do on promotion?

Speaker Change: Is there anything else that can come from a pricing competition that we should be worried about? Just want to dive a little bit more into that number given that it seems to be the biggest fulcrum point relative to the guidance change.

Michael Cherny: Just want to dive a little bit more into that number, given that it seems to be the biggest focus point relative to the guidance change.

John Morici: Yeah, it's a good question, Michael. This is John. Look, when we looked at the total year and based on what we're seeing now, we see the unfavorable foreign exchange impact. We saw it in Q2, and we continue to see and project that that will continue for the rest of this year. So that's in our Outlook. Just over a point of our reduction in our total year is related to foreign exchange. The mix effect that you talked about, that's really the way our customers want to buy. In some cases, they're buying lower price products. It's part of our portfolio.

John F. Morici: Look, when we looked at the total year, and based on what we're seeing now, we see the unfavorable foreign exchange impact. We saw it in Q2, and we continue to see and project that that will continue for the rest of this year. So in our outlook, just over a point of our reduction in our total year is related to foreign exchange. The mixed effect that you talked about; that's really the way our customers want to buy.

John F. Morici: Yeah, it's a good question, Michael. This is John . Look, when we looked at the total year, and based on what we're seeing now, we see the unfavorable foreign exchange impact. We saw it in Q2, and we continue to see and project that that will continue for the rest of this year. So that's in our outlook.

John F. Morici: Just over a point of our reduction in our total year is related to foreign exchange.

Speaker Change: The mix effect that you talked about, that's really the way our customers want to buy. In some cases, they're buying.

John F. Morici: In some cases, they're buying lower-priced products as part of our portfolio. We see that as incremental in cases like doctor subscription programs. They're just at a lower ASP. But what we end up seeing then is a better gross margin. Our cost to serve, in many cases, is lower than that.

John Morici: We see that as incremental in cases like Doctor Subscription Program. They're just at a lower ASB, but what we end up seeing then is a better growth margin. Our cost to serve, in many cases, is lower than that, but it really is a reflection of what doctors want to do with the cases that they buy.

John F. Morici: Lower priced products is part of our portfolio. We see that as incremental in cases like Dr. Subscription Program. They're just at a lower ASP.

John F. Morici: But what we end up seeing then is a better gross margin. Our cost to serve in many cases is lower than that, but it really is a reflection of what doctors want to do with the cases that they buy.

John F. Morici: It really is a reflection of what doctors want to do with the cases that they buy. Okay, thank you. Thanks, folks. Thank you. And our next question comes from the line of Elizabeth Anderson from Evercore ISI, which accelerated off a tougher comp. It would be helpful to also get some more additional perspective there. Thanks. Hi Elizabeth.

Michael Cherny: Okay, thank you.

Elizabeth Anderson: Thank you. And our next question comes from the line of Elizabeth Anderson from Evercore ISR. Hi, guys. Thanks so much for the question. I was wondering if you had just regarding the guidance. If you had any insights that you could share on.

Speaker Change: Okay, thank you.

Speaker Change: Thanks, bud. Thank you.

Speaker Change: And our next question comes from the line of Elizabeth Anderson from Evercore ISI.

Speaker Change: Great question. Thanks.

Elizabeth Hammell Anderson: Hi guys, thanks so much for the question. I was wondering if you had, just regarding the guidance, if you had any insights that you could share on whether any of the ITERO restorative scan revenue was originally contemplated in the 2024 guidance and now with the pushout on the launch, if that was sort of an impact on that on the guidance as well. And then as a follow-up, if you could talk a little bit more about the acceleration in the teen revenue, sorry, in the teen cases which accelerated off a tougher comp, that would be helpful to also get some more additional perspective there. Thanks.

Elizabeth Anderson: Whether any of the ITERO restorative scan revenue was originally contemplated in the 2024 guidance and now, with the push out on the launch, if that was sort of an impact on the guidance as well.

Elizabeth Anderson: And then as a follow-up, if you could talk a little bit more about the acceleration and the teen revenue or, sorry, in the team cases, which accelerated off a tougher comp, that would be helpful to also get some more additional perspective there. Thanks. Hi, Elizabeth. Yes, you're right. The, the Lumen over restorative that we expected to launch in the fourth quarter, now the full launch into next year. That revenue was expected for this year.

Elizabeth Hammell Anderson: Yes, you're right. The Lumina restorative that we expected to launch in the fourth quarter, now the full launch into next year, the revenue was expected for this year. So that's part of the reasoning for taking down our overall guidance, in addition to the FX, as I said in the previous question. Great. And any chance you want to quantify that ITERO restorative contribution change or, or no? Yeah, yeah, we're not good.

Elizabeth Hammell Anderson: Yeah, hi Elizabeth. Yes, you're right.

Speaker Change: The Lumina Restorative that we expected to launch in the fourth quarter, now the full launch into next year.

John Morici: So that's part of the reason for taking down our overall guidance, in addition to the effects, as I said on the previous question. And then you question on teen look, we're pleased with our teen growth. We saw good over 8% growth on a quarter-over-quarter basis, 8% growth on a year-over-year basis. We saw good adoption in many places around the world, and it's a further reflection of the various products that we have, the adoption that that doctors have. A lot of new doctors coming into the ecosystem to get trained and then actually become customers of ours.

Speaker Change: That revenue was expected for this year. So that's part of the.

Speaker Change: Reasoning for taking down our overall guidance, in addition to the effects, as I said on the previous question.

Speaker Change: And then your question on teen, look, we're pleased with our teen growth. We saw good, over 8% growth on a quarter-over-quarter basis, 8% growth on a year-over-year basis.

Speaker Change: We saw good adoption in many places around the world and it's a further reflection of the various products that we have, the adoption that doctors have.

Speaker Change: A lot of new doctors coming into the ecosystem to get trained and then actually become customers of ours. So we're pleased with the progress that we're seeing within TEEN.

John Morici: So we're pleased with the progress that we're seeing.

Elizabeth Anderson: with Intine. Great.

John Morici: And any chance you want to quantify that itara restorative contribution change or no? Yeah, we're not giving it directly, but it's less than a percent, slightly less than a percentage of the total. That's helpful. Thank you.

Speaker Change: Great. And any chance you want to quantify that ITARO restorative contribution change or no? Yeah, we're not giving it directly, but it's less than a percent, slightly less than a percentage of the total. That's helpful. Thank you.

John F. Morici: Not given directly, but it's, you know, it's less than a percent, slightly less than a percentage of the total. That's helpful. Thank you. That's good. And our next question comes from the line of John Block from Stiefel. Your question, please. Hey, Joe. Good afternoon.

John Morici: Good. Thank you.

Speaker Change: Thank you.

John Block: And our next question comes from a line of John Block, from Steve Fuller. Your question, please. Hey, Joe, good afternoon. Yeah, where to start? You know, everyone was nervous about cases, and then you come in and you beat cases handling. Obviously, the focus is going to be on the ASP. So John, maybe let me know if I have these numbers right, but it looks like the aligner ASP was down roughly 4% Q over Q. The effects hit was about a percent. So can you talk in details as much as possible? The other 3% decline in the ASP Q over Q.

Speaker Change: And our next question comes from the line of John Block from Stiefel. Your question, please.

Jonathan David Block: Yeah, where to start? You know, everyone was nervous about cases, and then you come in, and you beat cases handily, and obviously, the focus is going to be on the ASP. So, John, maybe let me know if I have these numbers right, but it looks like the Aligner ASP was down roughly 4% Q over Q. The FX hit was about a percent. So can you talk in detail as much as possible? The other 3% decline in the ASP Q over Q, if I've got that right, seems like a big deviation from where your head was at three months ago. How much of that was mixed?

John F. Morici: Hey Joe, good afternoon. Yeah, where to start? You know, everyone was nervous about cases and then you come in and you beat cases handily and obviously the focus is going to be on the ASP so

Joseph M. Hogan: John , maybe let me know if I have these numbers right, but it looks like the aligner ASP was down roughly 4% Q over Q. The FX hit was about a percent. So can you talk in detail as much as possible?

John Block: I've got that right. And it seems like a big deviation from where your head was at 3 months ago. How much of it was mixed versus discounts? And if it was a lot of mix, why did mix become so pronounced over the past 3 months?

Speaker Change: The other 3% decline in the ASP, Q over Q, if I've got that right, it seems like a big deviation from where your head was at three months ago. How much of it was mixed?

Speaker Change: versus discounts. And if it was a lot of mix, why did mix become so pronounced over the past three months? And maybe we can start there, please.

John Morici: And maybe we can start there, please. Yeah, John, I'm when you look at mix that we have, we see doctors, you know, utilizing DSP more and more as a record amount of DSP that we had in the quarter that's at a lower ASP. We saw a lot of GP growth. We talked about adult cases being up and the best volumes that we've seen in several quarters. And many times that's lower stage products that we end up seeing come through. And so when we see the ASP, it's just a reflection of the different products that are being sold.

John F. Morici: versus discounts, and if there was a lot of mix, why did it become so pronounced over the past three months? And maybe we can start there. Yeah, John, when you look at the mix that we have, we see doctors, you know, utilizing DSP more and more. As a record amount of DSP that we had in a quarter that's at a lower ASP, we saw a lot of GP growth, which we talked about adult cases being up, and the best volumes that we've seen in several quarters.

Speaker Change: Yeah, John , when you look at mix that we have, we see doctors, you know, utilizing DSP more and more as a record amount of DSP that we had in a quarter that's at a lower ASP. We saw a lot of GP growth. We talked about adult cases being up.

Speaker Change: and the best volumes that we've seen in several quarters. And many times that's lower stage products that we end up seeing.

Speaker Change: And so when we see the ASP, it's just a reflection of the different products that are being sold and those doctors are taking those up at that. But you also know, and we've talked about, where margins...

John Morici: And those doctors are taking those up at that. But you also know, and we've talked about where margins, margins in many cases are better at those lower stage products. And we end up seeing this as a benefit to be able to see you show up in gross margins and also out margins.

John F. Morici: And many times, that's lower stage products that we end up seeing come through. And so when we see the ASP, it's a Margins are, in many cases, better at those lower stage products, and we end up seeing this as a benefit to be able to show up in gross margins and also operating margins. Okay, so I guess just as a follow-up to that, are you saying that discounts weren't more aggressive, call it, in 2Q24 than maybe what we've seen historically? And just to tack on to that question, you know, you brought down the midpoint of the rev guide from about 7% to 5%. You said FX was a percent.

Speaker Change: Margins, in many cases, are better at those lower-stage products, and we end up seeing this as a benefit to be able to show up in gross margins and also op margins.

John Block: Okay, so I guess to maybe just as a follow-up to that, are you saying that discounts weren't more aggressive, call it in 2Q24 than maybe what we've seen historically? And just to tack on to that follow-up? You know, you brought down the midpoint of the red guide from about seven percent to five percent. You said FX was a percent. You said the GP restorative push aluminum was slightly less than one percent. I mean, you sort of implying that Clearliner revenue by and large for 2024 is somewhat unchanged or maybe down a smidge, and then I'll ask my quick or follow-up.

Speaker Change: Okay, so I guess to maybe just as a follow-up to that...

Speaker Change: Are you saying that discounts weren't more aggressive, call it, in 2Q24 than maybe what we've seen historical? And just to tack on to that follow-up, you know, you brought down the midpoint of the Rev Guide from about 7% to 5%. You said FX was a percent. You said the GP restorative push on Lumino was...

John F. Morici: You said the GP restorative push on Lumina was slightly less than 1%. I mean, are you sort of implying that the clear line of revenue by and large for 2024 is somewhat unchanged or maybe down a smidge? And then I'll ask my quicker follow-up. Thanks.

Speaker Change: Slightly less than 1%. I mean, he's sort of implying that Clearliner revenue by and large for 2024 is somewhat unchanged or maybe down a smidge. And then I'll ask my quicker follow up. Thanks.

John Block: Thanks. Yeah, Clearliner revenue down a little bit for the total year because of the ASPs that we spoke about, you know, not necessarily due to the volume changes. Like you said, we're pleased with the Q2 volume that we have, but that's how we would look at the change. Mostly the FX for the total year as we describe, and then some mix, but then the rest of it due to ITERRAL changes from this year to next year.

John F. Morici: Yeah, clear a line of revenue down, down a little bit for the total year because of the ASBs that we spoke about, you know, not necessarily due to the volume changes. Like you said, we are pleased with the Q2 volume that we have. But that's how we look at the change, you know, mostly, mostly the effects for the total year as we've described, and then some mix, but then the rest of it due to ITERL changes from this year to next, Okay, and last question for me, I guess, online, just trying to, if I've got this right, it looks like the revenue comes down a little bit, you know, the midpoint, but I believe the non-GAAP EBIT margins came up slightly, I think, before it was like flat to slightly up, and now you're saying slightly up, so maybe just talk through the dynamics where you're able to arguably increase the non-GAAP EBIT margin assumption for 24, even off the more modest revenue base, and thanks for the time guys.

Speaker Change: Yeah, clear a line of revenue down a little bit for the total year because of the ASPs that we spoke about. You know, not necessarily due to any volume changes. Like you said, we are pleased with the Q2 volume that we have.

Speaker Change: That's how we would look at the change, mostly the effects for the total year, as we described, and then some mix, but then the rest of it due to ITERL changes from this year to next year.

John Morici: Okay, and last question for me, I guess online, to show you if I've got this right, it looks like the revenue comes down a little bit, you know, the midpoint, but I believe the non-GAAP EBIT margins came up slightly. I think before it was like flat to slightly up, and now you're saying slightly up. So maybe just talk through the dynamics where you're able to arguably increase the non-GAAP even margin assumption for 24 even off the more modest revenue base. And thanks for the time, guys. Yeah, no, it's a good question. And so, as we looked at, and as we talk about some of the, you know, I know ESP gets a focus, but really when you look at the margin that we get on all of these products, as it goes to some of the lower stage products, we end up with a better margin, our cost of service lower, which shows up in gross margin and flows its way to up margin.

Speaker Change: Okay, and last question for me, I guess online, just trying to, if I've got this right, it looks like the revenue comes down a little bit, you know, the midpoint.

John: But I believe the non-gap EBIT margins came up slightly. I think before it was like flat to slightly up and now you're saying slightly up. So maybe just talk through the dynamics where you're able to arguably increase the non-gap EBIT margin assumption for 24 even off the more modest revenue base. And thanks for the time guys.

Speaker Change: Yeah, no, it's a good question. And so as we looked at, and as we talked about some of the, you know, I know ESP gets a gets a focus. But really, when you look at the the margin that we get on all of these products, is as they go to some of the lower stage products, we end up with a better margin, our cost of service lower, which shows up in gross margin, and flows its way to up margin. And I think the rest of it is, as you saw, with this quarter, from an OPEC standpoint, and how we think about the levers that we could pull or not pull, we're very mindful of that in this environment. And want to be able to deliver as much volume and as much top line as we can, but be very mindful of the operating profit that we need to deliver.

John F. Morici: And I think the rest of it, as you saw with this quarter, from an OPEC standpoint, and how we think about the levers that we could pull or not pull, we're very mindful of that in this environment and want to be able to deliver as much volume and as much top line as we can but be very mindful of the operating profit that we need to deliver. Thank you.

John Morici: And I think the rest of it, as you saw with this quarter from anopic standpoint and how we think about the levers that we could pull or not pull, we're very mindful of that in this environment and want to be able to deliver as much volume and as much top line as we can, but be very mindful of the operating profit that we need to deliver.

Jeff Johnson: Thank you. And our next question comes from the line of Jeff Johnson with Beard. Your question, please. Hey, Jeff. Hey, Joe, good afternoon, guys. I wanted to start maybe on your doctor's shift to number in the quarter. You shift to a little over 86,000 docs this quarter. I think for three straight years, you've kind of been in that 82 to 85,000 range. So maybe not a big breakout, but at least, you know, some of these underlying numbers on utilization, these doctor's shift to and that are starting to perk up a little bit. So I guess what I'm trying to understand on that doctor's shift to number.

John F. Morici: And our next question comes from the line of Jeff Johnson with Baird. Your question, please. Hey, Jeff. Hey, Joe.

Speaker Change: Thank you.

Speaker Change: And our next question comes from the line of Jeff Johnson with Baird. Your question please.

Jeffrey D. Johnson: Good afternoon, guys. I wanted to start maybe on your Dr. SHIP-2 number for the quarter. You shipped to a little over 86,000 docs this quarter. I think for three straight years, you've kind of been in that 82 to 85,000 range.

Jeffrey D. Johnson: Hey Jeff.

Jeffrey D. Johnson: Hey Joe, good afternoon guys. I wanted to start maybe on your doctor ship two number in the quarter. You shipped to a little over 86,000 docs this quarter. I think for three straight years you've kind of been in that 82 to 85,000.

Speaker Change: So, maybe not a big breakout, but at least, you know, some of these underlying numbers on utilization, these Dr. SHIP-2 and that are starting to perk up a little bit. So, I guess what I'm trying to understand on that Dr. SHIP-2 number, are you starting to see some benefits of some of the investments John's been talking about the last couple quarters on getting that doctor prescribing base to expand? Is it expanding that base? Is it slowing the outflow of that base? As we know, you've had some competitive losses here over the last couple years. Just maybe help us understand the inflow and the outflow rates and what's moving between those two pieces.

Jeff Johnson: Are you starting to see some benefits of some of the investments? John's been talking about the last couple quarters on getting that doctor prescribing base to expand. Is it is it expanding that base? Is it slowing the outflow of that base? As we know, you've had some competitive losses here over the last couple of years. Just maybe help us understand the inflow and the outflow rates and what's moving between those two pieces. Thanks.

Jeffrey D. Johnson: So maybe not a big breakout, but at least some of these underlying numbers on utilization, these Dr. SHIP-2 numbers, are starting to pick up a little bit. So I guess what I'm trying to understand on that Dr. SHIP-2 number, are you starting to see some benefits of some of the investments John's been talking about the last couple quarters on getting that doctor prescribing base to expand? Is it expanding that base? Or is it slowing the outflow of that base?

Jeff Johnson: Hey, Jeff, Joe. You know, first of all, it's, you know, we're pleased with that. It's good to see utilization go up. It's also great to see the doctor's go up to, and obviously there's a strong conservative effort. We talk about that, you know, underserved marketplace out there, and we know there's still a lot of doctors to train, and there's still, you know, doctors do a lot more cases. So it's a big focus for the business. You know, when you, when you ask that question, you know, we're loosening through or gaining through, there's always a mix and a change in those kinds of things, Jeff, but, you know, overall you can see here that we're gaining.

Joseph M. Hogan: As we know, you've had some competitive losses here over the last couple years. Just maybe help us understand the inflow and the outflow rates and what's moving between those two pieces. Thanks. Hey Jeff, Joe.

Speaker Change: Hey Jeff, Joe, you know, first of all, you know, we're pleased with that. It's good to see utilization go up. It's also great to see the doctors go up too and obviously there's a, you know, strong conservative effort. We talk about that, you know,

Speaker Change: underserved marketplace out there and we know there's still a lot of doctors to train and there's still you know doctors do a lot more cases so it's a big focus for the business.

Speaker Change: You know, when you ask that question, you know, are we losing few or gaining few, there's always a mix and a change in those kinds of things, Jeff, but, you know, overall you can see here that we're gaining.

Joseph Hogan: It's not saying that we don't lose some thoughts sometimes, but you know, we often bring them back to, you know, the whole story with what we've been through as competitors and enter the marketplaces. You know, sometimes we'll lose some doctors. They often come back and, you know, one of the things about, you know, our business to sometimes it takes, you know, 18 months for doctors to figure out if those competitive cases are actually going to work. And, you know, and obviously I think we're, we're making good progress in the sense of convincing doctors to move ahead with us.

Joseph M. Hogan: You know, first of all, we're pleased with that. It's good to see utilization go up. It's also great to see the number of doctors go up too. And obviously, there's a strong conservative effort.

Joseph M. Hogan: We talk about that, you know, underserved marketplace out there, and we know there's still a lot of doctors to train. And there's still, you know, doctors who do a lot more cases.

Speaker Change: What we've been through as competitors have entered the marketplace is, you know, sometimes we'll lose some doctors, they often come back. And, you know, one of the things about, you know, our business too, sometimes it takes, you know, 18 months for doctors to figure out if those competitive cases are actually going to work. And, you know, and obviously, I think we're making good progress in the sense of convincing doctors to move ahead with us. And this growth in doctors in utilization occurred, you know, across the globe.

Joseph Hogan: And this growth in doctors in utilization occurred, you know, across the globe, which is great. It wasn't like it just came out of one region. Yeah, understood. All right.

Speaker Change: Which is great, it wasn't like it just came out of one region.

Jeff Johnson: And then maybe just to follow up on the manufacturing side, you know, we saw the news. Maybe a couple of months ago of Emery's new role leading direct fab. He's going to stay in that role. It sounds like through 2026 when he's going to write off into the sunset.

Speaker Change: Yeah, understood. All right. Then maybe just to follow up on the manufacturing side, you know, we saw the news maybe a couple months ago of Emory's new role leading DirectFab. He's going to stay in that role it sounds like through 2026 when he's going to ride off into the sunset. So does that tell us anything about timelines on DirectFab? I mean, Emory just doesn't seem like the kind of guy that would want to walk away in the middle of something. So is that kind of drawing a line in the sand that by 2026 you should be up and running fairly well, fairly, you know, maybe not efficiently, but fairly completely and getting that DirectFab plans all put together and rolling out some of that 3D printed stuff in a bigger way?

Jeff Johnson: So does that tell us anything about timelines on direct fab? I mean, Emery just doesn't seem like the kind of guy that would want to walk away in the middle of something. So is that kind of drawing a line in the sand that by 2026 you should be up and running fairly well, fairly, you know, maybe not efficiently, but fairly completely and getting that direct fab plans. I'll put together and rolling out some of that 3D printed stuff in a bigger way.

Joseph M. Hogan: So it's a big focus for the business. You know, when you ask that question, "We're losing a few or gaining a few," there's always a mix and a change in those kinds of things, Jeff. But, you know, overall, you can see here that we're gaining. It's not saying that we don't lose some docs sometimes.

Joseph Hogan: Jeff's good question. You know, we have a lot of faith in Emery. He's been here for so long, and he's the only guy that's ever scaled, you know, aligners to the point, you know, they jazz. And so it's really fun to have him in this role because he gives us great feedback in the sense of where we are. It's just the best I can say. What we've talked about with analysts is we're looking at two to three years on this scale. And don't think of it as a linear line. This is one where you have to do a lot of equipment work at first to get the efficiencies that have this equipment work 24 by seven.

Joseph M. Hogan: But you know, we often bring them back to the whole story of what we've been through as competitors enter the marketplace is, you know, sometimes we'll lose some doctors, but they often come back. And, you know, one of the things about our business, too, sometimes it takes 18 months for doctors to figure out if those competitive cases are actually going to work. And, you know, and obviously, I think we're making good progress in the sense of convincing doctors to move ahead with us. And, and this growth in doctors' utilization has occurred, you know, across the globe, which is great. It wasn't like it just came out of one.

Jeffrey D. Johnson: Hey Jeff, it's a good question. You know, we have a lot of faith in Emory. He's been here for so long and he's the only guy that's ever scaled, you know, aligners to the point, you know, that he has and so...

Speaker Change: It's really fun to have him in this role because he gives us great feedback in the sense of where we are. Jeff, the best I can say, what we've talked about with the analysts is

Jeffrey D. Johnson: We're looking at two to three years on this scale, and don't think of it as a linear line.

Jeffrey D. Johnson: This is one where you have to do a lot of equipment work at first to get the efficiencies to have this equipment work 24 by 7.

Jeff Johnson: And then secondly, this is a brand new resident who has never been sourced before. And so finding the source of the resident, making sure you have the reactor capacity, all those things take time. So I look at over the next year, we do a lot of that groundwork, and then you start to see products and different things that will roll from that. So, but it's best to fix in your mind that it's a two to three-year carnival.

Jeffrey D. Johnson: And then secondly, this is a brand new resin. It's never been sourced before. And so finding the source of the resin, making sure you have the reactor capacity, all those things take time. So I look at over the next year, we do a lot of that groundwork, and then you'll start to see products and different things that will roll from that. But it's best to fix in your mind that it's a two to three year kind of a roll-up.

Jeff Johnson: Hello. Understood.

Joseph M. Hogan: Yeah, I understand. All right. And then maybe just to follow up on the manufacturing side, you know, we saw the news maybe a couple months ago of Emory's new role leading DirectFab. He's going to stay in that role, it sounds like, through 2026, when he's going to ride off into the sunset. So does that tell us anything about the timelines on DirectFab? I mean, Emory just doesn't seem like the kind of guy that would want to walk away in the middle of something.

Operator: Thank you. Okay. Thank you.

Joseph M. Hogan: So is that kind of drawing a line in the sand that by 2026, you should be up and running fairly well, fairly, you know, maybe not efficiently, but fairly, completely, in getting that DirectFab plans all put together and rolling out some of that 3D printed stuff in a bigger way? Yeah, Jeff. It's a good question. You know, we have a lot of faith in Emory. He's been here for so long. And he's the only guy that's ever scaled, you know, the aligners to the point that he has.

Joseph M. Hogan: And so it's really fun to have him in this role because he gives us great feedback on a sense of where we are. Jeff, the best I can say about what we've talked about with the analysts is we're looking at two to three years on this scale. And don't think of it as a linear line.

Speaker Change: Understood. Thank you. Okay.

Brandon Vazquez: One moment for our next question. And our next question comes from the line of Brandon Vazquez from William Blair. Your question, please. Everyone, thanks for taking the question.

Speaker Change: Thank you. One moment for our next question.

Joseph M. Hogan: This is one where you have to do a lot of equipment work at first to get the efficiency of this equipment to work 24 by seven. And then, secondly, this is a brand new resin that's never been sourced before. And so finding the source of the resin, making sure you have the reactor capacity, all those things take time. So I look at the next year, we do a lot of that groundwork, and then you'll start to see products and different things that will roll out from that. So, but it's best to fix in your mind that it's a two to three year kind of role. Understandable. Thank you. Thank you.

Speaker Change: And our next question.

Joseph M. Hogan: One moment for our next question. And our next question comes from the line of Brandon Vazquez from William Blair. Your question, please. Everyone, thanks for taking the questions. I'll ask two up front because it's kind of guidance related.

Speaker Change: Comes from the line of Brandon Vazquez from William Blair. Your question please.

Brandon Vazquez: I'll ask two upfront because it's kind of guidance related. One, a little near term, which is basically, I think if you do the sequentials and the implied numbers on the guidance that you've given us, there's maybe like a high single digits revenue increase going into Q4. I think, correct me if I'm wrong, but that's kind of like pre-COVID levels of seasonality back when the business was a little more normal. So the question near term being given the uncertainty in the market, what kind of gives you the confidence that you guys can kind of return normal seasonality with them this year.

Brandon Vazquez: One, a little near term, which is basically I think if you do the sequentials and the implied numbers on the guidance that you've given us, there's maybe like a high single-digit revenue increase going into Q4. I think, correct me if I'm wrong, but that's kind of like pre-COVID levels of seasonality back when the business was a little more normal. So the question near term, given the uncertainty in the market, what kind of gives you the confidence that you guys can kind of return to normal seasonality within this year?

Brandon Vazquez: Hi everyone, thanks for taking the question. I'll ask two up front because it's kind of guidance related, one a little near term, which is basically, I think if you do the sequentials and the implied numbers on the guidance that you've given us,

Speaker Change: There's maybe like a high single digits revenue increase going into Q4, I think, correct me if I'm wrong, but that's kind of like pre-COVID levels of seasonality, back when the business was a little more normal. So the question near term being, given the uncertainty in the market, what kind of gives you the confidence that you guys can...

Brandon Vazquez: And then the follow-up to that on kind of a long-term guidance question is, like, if we look, let's call it three years out. What are the growth expectations of this business or the growth algorithm? Any color you can give us around that?

Brandon Vazquez: And then the follow-up to that on kind of a long-term guidance question is like if we look, let's call it three years out, what's kind of the growth expectations of this business or the growth algorithm? Any color you can give us around that, assuming that it seems like we're stuck in somewhat of an uncertain and market stable, but not exactly where you want it. So we talk about the opportunity to accelerate, if even possible, in an end market like this over the couple of three plus years.

Speaker Change: Kind of return to normal seasonality within this year.

Speaker Change: And then the follow-up to that on kind of a long-term guidance question is like,

Speaker Change: Thank you for your time. Thank you.

Speaker Change: Let's call it three years out.

Speaker Change: What's kind of the growth expectations of this business or the growth algorithm, any color you can give us around that, assuming that, you know, it seems like we're stuck in somewhat of a...

John F. Morici: Assuming that, you know, it seems like we're stuck in somewhat of an uncertain and market stable situation, but not exactly where you want it. So, you know, talk about the opportunity to accelerate, if even possible, in an end market like this over the next three plus years. Thank you.

Speaker Change: an uncertain end market, stable, but not exactly where you want it. So talk about the opportunity to accelerate, if even possible, in an end market like this over the three-plus years. Thank you.

John Morici: Thank you. Yeah, Brandon, this is John. I could take the question kind of on the remaining part of this year and so on. So we've guided to what we can see based on how the quarter played out. We actually saw in the second quarter. I mean, I'm not saying it's a return to normal seasonality, but it's much more seasonal in the second quarter in terms of how our volume progressed and how it changed quarter of a quarter to more normal seasonality. So our reflection of what we tried to do for the rest of this year based on what we see in terms of volume, take out effects, and some of that noise that gets caught into Q2.

John F. Morici: Yeah, Brandon, this is John. I could take the question kind of on the remaining part of this year and so on. So we've guided to what we can see, based on how the quarter played out. We actually saw in the second quarter, I mean, I'm not saying it's a return to normal seasonality, but it was much more seasonal in the second quarter in terms of how our volume progressed and how it changed quarter over quarter to more, more normal seasonality.

Speaker Change: Yeah, Brandon, this is John . I could take the question kind of on the remaining part of this year and so on. So we've guided to what we what we can see based on

Speaker Change: how the quarter played out. We actually saw in the second quarter, I mean,

Speaker Change: I'm not saying it's a return to normal seasonality, but it's much more seasonal in the second quarter in terms of how our volume...

Speaker Change: progressed and how it changed quarter over quarter to more more normal seasonality. You know and so our reflection of what we tried to do for the rest of this year based on what we see in terms of volume takeout FX and some of that noise that gets caught into into Q2 but from a underlying volume standpoint we saw

John F. Morici: You know, and so our reflection of what we tried to do for the rest of this year, based on what we see in terms of volume, take out FX and some of that noise that gets caught up in Q2. But from a underlying volume standpoint, we saw more normal seasonality. And as we play out the rest of this year, we expect that to continue with the teen season that comes in, that we're in now that China in the third quarter is a strong quarter for them because of the team season. Europe, not so much.

John Morici: But from an underlying volume standpoint, we saw more normal seasonality. And as we play out the rest of this year, we expect that to continue with teen season that comes in that we're in now. The China and the third quarter is a strong quarter for them because of teen season. Europe not so much. We expect that to now play out more normally as it moves from Q3 to Q4.

Speaker Change: more normal seasonality. And as we play out the rest of this year, we expect that to to continue with, you know, teen season that comes in that we're in now that, you know, China in the third quarter is

Speaker Change: is a strong quarter for them because of team season. Europe not so much. We expect that to play out more normally as it moves from Q3 to Q4.

John F. Morici: We expect that to play out more normally as it moves from Q3 to Q4. When we think of the total and look out into three years, and so on, we're in an under-penetrated market, and we've talked a lot about that. We think we have the products and the go-to-market capabilities to really move this market forward. And it's up to us to be able to help drive this market forward. And when we look out, and we look out in our long-term model, we believe in the opportunity for revenue growth of 20 plus percent and up margin of 25 plus percent.

John Morici: When we think of the total and looking out into three years and so on, look, we're in an under-penetrated market. And we've talked a lot about that. We think we have the products and the go-to-market capabilities to really move this market forward. And it's up to us to be able to help drive this market forward. And when we look out and we look out in our long-term model, we believe in the opportunity: revenue growth is 20 plus percent and up margin 25 plus percent. And that's how we are positioning things for growth, for whether it's direct fab and the growth opportunities that we have there and the efficiencies that we can drive, as well as the standard production that we have now.

Speaker Change: when we think of the total and looking out into three years and so look we're in an under penetrated market and and we've talked about a lot about that we think we have the products and the go-to-market capabilities to really move this market forward and it's up to us to be able to help drive this market forward and when we look out and we look out in our long-term model

Speaker Change: We believe in the opportunity revenue growth is 20 plus percent and up margin 25 plus percent.

John F. Morici: And that's how we are positioning things for growth, whether it's direct fab and the growth opportunities that we have there and the efficiencies that we can drive, as well as the standard production that we have now.

Speaker Change: And that's how we are positioning things for growth, for whether it's DirectFab and the growth opportunities that we have there and the efficiencies that we can drive, as well as the standard production that we have now. That's how we're building from an investment standpoint. We're mindful of changes that can happen short-term in the economy and so on, and that's why we give you kind of the guidance that we have at least now in short-term. But in longer-term, we believe in our model, and that's how we're investing in the future.

John F. Morici: That's how we're building from an investment standpoint. We're mindful of changes that can happen in the short term, in the economy, and so on. And that's why we give you kind of the guidance that we have at least now in the short term. But in the longer term, we believe in our model, and that's how we're investing in the future. And as a reminder, if you do have a question at this time, please press star one one. Our next question comes from the line of Jason Bednar from Piper Sandler. Your question, please. Afternoon, everyone. Hey there,

John Morici: That's how we're building from an investment standpoint. We're mindful of changes that can happen short-term in the economy and so on. And that's why we give you kind of the guidance that we have at least now in short-term. But in the longer term, we believe in our model and that's how we're investing in the future.

John Morici: Thank you. And, as a reminder, if you do have a question at this time, please press star one one. Our next question comes from the line of Jason Bednar from Piper Sam. They're your question, please. Afternoon everyone. I just wanted to touch on either one of such a one-year term item with third quarter guidance. You know, some of us been discussed already, but clearly a little bit lower than where you probably model things out internally three to six months ago. And I guess I'm just reminded of maybe where we were a year ago, and third quarter, you had higher expectations and where you ended up finishing.

Speaker Change: Thank you. And as a reminder, if you do have a question at this time, please press star 11. Our next question comes from the line of Jason Bednar from Piper Sandler. Your question, please.

Jason M. Bednar: Good afternoon, everyone.

Jason M. Bednar: I wanted to touch on one near-term item with third-quarter guidance. You know, some of it's been discussed already, but clearly a little bit lower than where you probably modeled things out internally three to six months ago. And I guess I'm just reminded of maybe where we were a year ago in the third quarter. You had higher expectations than where you ended up finishing.

Jason M. Bednar: Hey there. I wanted to touch on one near-term item with third quarter guidance.

Jason M. Bednar: You know, some of it's been discussed already, but you're clearly a little bit lower than where you probably modeled things out internally three to six months ago. And I guess I'm just reminded of maybe where we were a year ago in the third quarter, you had higher expectations than where you ended up finishing. So I guess I'm curious.

Jason Bednar: So I guess I'm curious maybe how much of that experience from last year informed your view on volumes and product mix versus pay the trends and macro data points that you've seen developed the last few months. And then maybe include here if you could just how you're seeing that team season develops since we are in the thick of that right now.

John F. Morici: So I guess I'm curious, maybe how much of that experience from last year informed your view on volumes and product mix versus, say, the trends and macro data points that you've seen develop in the last few months? And then maybe include here, if you could, just how you're seeing that team season develop, since we are in the thick of that right now. Yeah, Jason, I could take that on Q3. Some of those specifics, certainly, we look at last year, we look at, you know, 2022, you know, you get into those COVID years, they're tough to call. And then, you know, then you have to jump before COVID.

Speaker Change: Maybe how much of that experience from last year informed your view on volumes and product mix versus, say, the trends and macro data points that you've seen develop the last few months. And then maybe include here, if you could, just how you're seeing that team season develop since we are in the thick of that right now.

Jason Bednar: Yeah, Jason, I could take that on the Q3, some of those specifics. Certainly, we look at last year; we look at the 2022. You know, you get into those COVID years; they're tough to call, and then, you know, then you have to jump before COVID. So now you're talking almost five years ago. So, you know, you look at what you see at the time, knowing that, you know, most recently you have. You know, we know we have Europe has a summer kind of shutdown, comes back into September. We want to be able to see in September that they do come back, you know, US is in team season trying to get into team season as well.

John F. Morici: So now you're talking about almost five years ago. So, you know, you look at what you see at the time, knowing that, you know, most recently, you have, you know, Europe has a summer kind of shutdown that comes back into September; we want to be able to see in September that they do come back. The US is in teen season, and China gets into teen season as well.

Speaker Change: Yeah, Jason, I could take that on the Q3, some of those specifics. Certainly, we look at last year, we look at the, you know, 2022. You know, you get into those COVID years, they're tough to call. And then, you know, then you have to jump before COVID. So now you're talking about almost...

Speaker Change: five years ago. So, you know, you look at what what you see at the time knowing that, you know, most recently you have

Speaker Change: You know, we know we have Europe has a summer kind of shutdown, comes back into September . We want to be able to see in September that they do come back. You know, U.S. is in teen season, China gets into teen season as well, and we want to see how that plays out. So we call based on what we expect, both from a volume standpoint, and we are really trying to give the foreign exchange that started the quarter in July , where that FX is, and not make an assumption as to whether things are going to get better or worse. We want to put that out there and really try to give you.

John F. Morici: And we want to see how that plays out. So we call it based on what we expect, both from a volume standpoint, and we are really trying to give the foreign exchange that we see that started the quarter in July, where that FX is, and not make an assumption as to whether things are going to get better or worse. We want to put that out there and really try to give you more of the underlying performance for the Yeah, on the team side, you know, Jason, as I said in my script, and we were pleased with the team growth, which was over 8%, which is, you know, great to see. A lot of that was supported by Asia and also Europe when you really got into team numbers.

Jason Bednar: And we want to see how that plays out. So we call based on what we expect both from a volume standpoint. And we are really trying to give the foreign exchange that we see that started the quarter in July, where that affects is, and not make an assumption as to whether things are getting better or worse. We want to put that out there and really try to give you more of the underlying performance for the business. Yeah, on a team side, you know, Jason, I said in my script and we were pleased with the team growth. You know, it was over 8%, which is, you know, great to see. A lot of that was supported by Asia and also Europe.

Speaker Change: More of the underlying performance for the business.

Joseph M. Hogan: Again, IPE is part of that, you know, we look at that as, you know, obviously, pre-season, and we're watching the ramp-up of that and the acceptance in the marketplace. So I hope I'm answering your question. But overall, we feel good about the team. Now, you know, there's a big team season in China in the third quarter.

Speaker Change: Joe, you want to talk about too?

Joseph M. Hogan: Yeah, on a team side, you know, Jason, as I said in my script, I mean, we were pleased with the team growth. You know, it was over 8%, which is, you know, great to see. A lot of that was supported by Asia and also Europe , and you really got to get into team numbers.

John Morici: And you really got to get in a team numbers. Again, IP is part of that. You know, it's we look at that as, you know, obviously preteen, and we're watching the ramp up of that and the acceptance in the marketplace. So hope I'm answering your question, but overall we feel good about the team. Now, you know, is a big teen season in China in the third quarter. You know, we're watching it closely. We expect you to know, be able to perform in that side too. So I'm optimistic as it stands. Okay, great.

Speaker Change: Again, IPE is part of that, you know, it's, we look at that as, you know, obviously pre-teen.

Speaker Change: And we're watching the ramp up of that and the acceptance in the marketplace. So hope I'm answering your question, but overall, we feel good about the team. Now, there's a big team season in China in the third quarter, we're watching it closely. We expect to be able to perform in that side too, so I'm optimistic as it stands.

Joseph M. Hogan: You know, we're watching it closely. We expect you to be able to perform on that side, too. So I'm up to Mr.

Joseph M. Hogan: Okay, great. And then, just for my follow up, I'm going to pack a few in here. You know, maybe the bigger picture, if we step back and look at some of the recent developments, you know, there are a lot of initiatives, different initiatives, marketing programs, menu expansion, customer incentives, so on and so forth. Those all help contribute to, you know, expanding that utilization line and improving doctor productivity. You've got the Costco relationship that's been discussed. You know, we uncovered what looks to be one of the larger changes to your Advantage program in at least a few years.

Jason Bednar: And then from my follow up, I'm going to pack you in here.

Speaker Change: Okay, great.

Jason Bednar: You know, maybe bigger picture if we step back and look at some of the recent developments. You know, there's a lot of initiatives, different initiatives, marketing programs, menu expansion, customer incentives, so on and so forth. Those all help contribute to, you know, expanding that utilization line, improving doctor productivity. You've got the Costco relationship that's been discussed. You know, we uncover, but looks to be one of the larger changes to your advantage program in at least a few years. So I'm curious how you have us think about these in the broader context of your commercial efforts.

Speaker Change: For my follow-up, I'm going to pack a few in here. You know, maybe a bigger picture if we step back and look at some of the recent developments. I know there's a lot of initiatives, different initiatives, marketing programs, menu expansion, customer incentives, so on and so forth. Those all help contribute to, you know,

Speaker Change: expanding that utilization line, improving doctor productivity. You've got the Costco relationship that's been discussed. You know, we uncovered what looks to be one of the larger changes to your Advantage program in at least a few years.

Joseph M. Hogan: So, I'm curious how you want us to think about these in the broader context of your commercial efforts. Would you consider things like the Costco and Advantage changes, you know, either or both more impactful than what you typically do? Have you seen any change maybe in doctor behavior, just in response to these Advantage changes? And then what's the right way to think about each of these affecting that AFP line that's now, you know, coming to focus more significantly with today's results? Thank you.

Speaker Change: So I'm curious how you have us think about these in the broader context of your commercial efforts.

Jason Bednar: Would you consider things like the Costco and Advantage changes, you know, either are both more impactful than what you typically do? Have you seen any change, maybe in that behavior? Just in response to these advantage changes. And then what's the right way to think about each of these influencing that AFP line that's now coming to focus more significantly with today's results? Thank you.

Speaker Change: Would you consider things like the Costco and Advantage changes, you know, either or both more impactful than what you typically do? Have you seen any change maybe in doc behavior, just in response to these Advantage changes?

Speaker Change: And then what's the right way to think about each of these influencing that AFP line that's now coming to focus more significantly with today's results?

Joseph Hogan: Yeah, that's a good, great question, Jason. I look at this to answer a couple different ways because I think one is one is like on the advantage you brought up. That's really a reflection of trying to put some structure, a little added structure, to our advantage program where many of our promotions were trying to get to. And in the end, an advantage program is trying to get new doctors in, give them a progression of how they can get discounts as they do more and more cases, tribunalization. So that's good for new doctors; that's good for existing doctors.

Speaker Change: Thank you. Yeah, that's a good great question Jason. I look at this answer in a couple different ways because I think one is

Speaker Change: One is like on the advantage you brought up That's really a reflection of trying to put some structure a little added structure to our Advantage program where many of our Promotions we're trying to get to and in the end for an Advantage program is trying to get new doctors in give them a progression of how they can get discounts as they do more and more cases drive utilization

John F. Morici: And in the end, an Advantage program is trying to get new doctors in, give them a progression of how they can get discounts as they do more and more cases, drive utilization. So, that's good for new doctors, that's good for existing doctors. So, the Advantage changes really are trying to put more structure into that, into the second half and beyond, because they really hadn't been refreshed like what we've done now.

Joseph Hogan: So the advantage changes really were trying to put more structure into that into the second half and carrying forward because they really hadn't been refreshed like what we've done now. But it's all about tribunalization, getting doctors to do more and more. cases.

Speaker Change: So that's good for new doctors, that's good for existing doctors. So the advantage change is really we're trying to put more structure into that, into the second half and carrying forward. Because they really hadn't been refreshed like what we've done now. But it's all about drive and utilization, getting doctors to do more and more cases.

John F. Morici: But it's all about driving utilization, getting doctors to do more and more cases. Programs like we're testing or piloting with Costco are really just trying to drive more conversion. Find ways where those consumers or those potential patients are out there. They're shopping around. They're looking.

Joseph Hogan: Programs like we're testing or piloting with a Costco is really just trying to drive, you know, more conversion. Find ways where those consumers or those potential patients are out there; they're shopping around, they're looking at you. See the economy, see inflation, you see other things. We know those potential patients are out there. We just have to find ways to be able to connect them with a great product that we have with our customers, with our doctors, and Costco's an example of that that we'll test and we'll see, but it's really that specifically is designed around conversion, drive as much conversion as we can.

Speaker Change: Programs like we're testing or piloting with Costco is really just trying to drive, you know, more conversion. Find ways where those consumers or those potential patients are out there, they're shopping around, they're looking, you see the economy, see inflation, you see other things. We know those.

John F. Morici: You see the economy. You see inflation. You see other things.

John F. Morici: We know those potential patients are out there. We just have to find ways to be able to connect them with a great product that we have with our customers, with our doctors, and Costco's an example of that that we'll test and we'll see, but it's really that specifically is designed around conversion, driving as much conversion as we can. Thank you. And our next question: come to my wine.

Speaker Change: Potential patients are out there, we just have to find ways to be able to connect them with a great product that we have, with our customers, with our doctors, and Costco is an example of that, that we'll test, and we'll see, but it's really, that specifically is designed around conversion, drive as much conversion as we can.

Michael Ryskin: Thank you. Thank you, and our next question comes from the line of Michael Ryskin from Bank of America. Your question, please. Hey, thanks for taking the question, guys. Joe, John, I want to follow up on a point that you've touched on a couple of times already in terms of the ASTs. You know, you talked about part of it is the mixed shift and a lot of it is, you know, how your customers want to buy, whether that's, you know, different products within portfolio, whether or DSP, things like that. But what I want to get at is, you know, are you concerned by that trend itself at all? Is that that customers want the lower products.

Speaker Change: Thank you. Thank you.

Michael Leonidovich Ryskin: Michael Ryskin from Bank of America. Your question, please. Hey, thanks for taking the question, guys. Joe, John, I want to follow up on a point that you touched on a couple of times already: in terms of the ASPs you talked about, part of it is the mix shift.

Speaker Change: And our next question.

Speaker Change: It comes from the line of Michael Ryskin from Bank of America. Your question, please.

Michael Leonidovich Ryskin: And a lot of it is, you know, how your customers want to buy, whether that's, you know, different products within the portfolio or DSP, things like that. But what I want to get at is, Are you concerned by that trend itself at all? I understand that customers want lower products; I get that, you know, gives you the option to still meet them in the air, and that still drives volume.

Michael Leonidovich Ryskin: Hey, thanks for taking the question guys. Joe, John , I want to follow up on a point that you touched on a couple times already, in terms of the ASPs. You know, you talked about

Michael Leonidovich Ryskin: Part of it is the mixed shift, and a lot of it is how your customers want to buy, whether that's different products within the portfolio, or DSP, things like that. But what I want to get at is...

Speaker Change: You know, are you...

Speaker Change: Are you concerned by that trend itself at all, that customers want the lower products? I get that, you know, it gives you the option to still meet them in the air, and that still drives the volume, but...

Michael Ryskin: I get that, you know, it gives you the option to still meet them in the air, and that still drives the volume. But, you know, is that, is that something that you expected this shift down? You know, as you say, the market's still very unkind of traded. It's a big on tap market. So you think that you wouldn't be seeing the demand, the elasticity type of price that you are.

Joseph M. Hogan: But, you know, is that something that you expected this shift down? You know, as you say, the market's still very unpenetrated. It's a big untapped market.

Speaker Change: Is that something that you expected, this shift down? As you say, the market's still very unpenetrated, it's a big untapped market, so you'd think that you wouldn't be seeing the demand elasticity tied to price that you are.

Joseph M. Hogan: So you think that you wouldn't be seeing the demand elasticity tied to price that you are. So is this, is this temporary because of the current macro environment and consumer sensitivity, or does this say something deeper that, you know, the rest of the market that's out there really doesn't exist at that, you know, 1300 plus ASP, maybe it's lower and lower and lower. Hey, Michael, it's Joe.

Joseph Hogan: So is this, is this temporary because of the current macro environment and consumer sensitivity, or just the same deeper that, you know, the rest of the market that's out there, really doesn't exist at that, you know, 1300 plus ASP, maybe it's lower and lower and lower. And Michael, let's show, look, I think the ASP DCTRAD explain as much as we can is, you know, we're always staring at the margin side and make sure that our margins are good. We find out that all over the world, I mean, if you're in India, they ask for a different product than they ask in the United States and different areas. And, you know, some people want to buy it by a five, someone want three by three, all these things are different products for different kinds of applications and GPs and worth, those are different to times too.

Speaker Change: Is this temporary because of the current macro environment and consumer sensitivity, or does it say something deeper that, you know, the rest of the market that's out there really doesn't exist at that, you know, 1300 plus ASP, maybe it's lower and lower and lower?

Joseph M. Hogan: Look, I think the ASP piece to try to explain as much as we can is, you know, we're always staring at the margin side and making sure that our margins are good. We found out that all over the world, I mean, if you're in India, they ask for a different product than they ask for in the United States in different areas. You know, some people want a 5x5, and someone else wants a 3x3. All these things are different products for different kinds of applications, and GPs and orthotics are different at times too.

Speaker Change: Hey, Michael, it's Joe. Look, I think the ASP piece to try to explain as much as we can is, you know, we're always staring at the margin side and make sure that our margins are good. We find out that all over the world, I mean, over here in India, they ask for a different product, and they ask the United States in different areas. And

Speaker Change: You know, some people want a 5x5, someone wants a 3x3, all these things are different products for different kinds of applications, and GPs and orthos are different at times too.

Joseph M. Hogan: So, what we're seeing, and there are varying ASPs on it, but we always have high, you see our margins have actually moved up on that. So, you're not necessarily seeing the market just driving prices down. You're just seeing us have a variety of options that customers or doctors want around the world and making sure that we supply those well. You know, one, we talked about 25,000 cases came through DSP. Remember, those are cases that doctors used to mold these things in their offices in order to address them, right?

Joseph Hogan: So what we're seeing, and there's varying ASPs on it, but we always have high; you see our margins have actually moved up on that. So you're seeing, not necessarily the market is driving price down. You're just seeing us having a variation of options that customers or doctors want around the world and making sure that we supply those well. You know, one, you know, we talk about 25,000 cases came through DSP. Remember, those are cases that, you know, that doctors used to mold these things in their offices in order to address those, right? And now they're buying three or four of ours.

Speaker Change: What we're seeing, and there's varying ASPs on it, but we always have high, you see our margins have actually moved up on that.

Speaker Change: You're seeing, not necessarily the market just driving price down, you're just seeing us...

Speaker Change: Having a variation of options.

Speaker Change: The customers are Doctors 1 around the world.

Speaker Change: and making sure that we supply those well.

Speaker Change: You know, one, you know, we talked about 25,000 cases came through DSP.

Speaker Change: Remember, those are cases that, you know, that doctors used to mold these things in their offices in order to address those, right?

Joseph M. Hogan: And now, they're buying three or four of ours. Now, yeah, we're getting great margin on that product line, but overall, it's a lower ASP in that sense as part of the DSP program. So, what you're seeing is just us responding to a market that's a good market out there with varying degrees of price and value, and you'll see us continue to do that in order to grow the market. Okay, and then a much quicker follow-up, hopefully.

Joseph Hogan: Now, yeah, we're getting great margin on that product line, but overall it's a lower ASP in that sense as part of the DSP program. So what you're seeing is just us responding to a market. It's a good market out there with varying degrees of price and value, and you'll see us continue to do that in order to grow the marketplace.

Speaker Change: And now they're buying three or four of ours. Now, yeah, we're getting great margins on that product line, but overall, it's a lower ASP in that sense as part of the DSP program. So, what you're seeing is just us responding to a market. It's a good market out there with varying degrees of price and value.

Speaker Change: And you'll see us continue to do that in order to grow the marketplace.

Michael Ryskin: Okay, and then much quicker follow up, hopefully.

Joseph M. Hogan: Sorry if I missed it. But did you call up why the Illumina restorative was pushed out to 1-225? Was this a commercial decision or something on the development side? Yeah, you know, Michael. There are like five areas of restorative that you have to be, you know, very good at as you go through this.

Joseph Hogan: Sorry if I missed it, but did you call up why the women of restorative was pushed out to 1, 2, 25? Was this commercial decision or something on the development side? Yeah, you know, Michael brothers, like there's like five areas of restorative that you have to be, you know, very good at as you go through this. And two to reviews, we've made it extremely good progress on most of them. But we just want to take a little extra time to make sure we get this right. And we want to make sure that we run it through our doctors who are actually going to use it, you know, the luminaries out there that helped to promote the product and make sure that they're comfortable with it too.

Speaker Change: Okay, and then much quicker follow-up, hopefully. Sorry if I missed it, but did you call up why the Lumina restorative was pushed out to 1Q25? Was this a commercial decision or something on the development side?

Joseph M. Hogan: And in the reviews, we've made extremely good progress on most of them. But we just want to take a little extra time to make sure we get this right. And we want to make sure that we run it through our doctors who are actually going to use it, you know, the luminaries out there that help to promote the product, and make sure that they're comfortable with it too.

Speaker Change: Yeah, you know, Michael, there's like, there's like five areas of restorative.

Speaker Change: that you have to be, you know, very good at as you go through this.

Speaker Change: And through the reviews, we made extremely good progress on most of them.

Speaker Change: But we just, we wanted to take a little extra time to make sure that we get this right.

Speaker Change: And we want to make sure that we run it through our doctors who are actually going to use it. You know, the luminaries out there that help to promote the product and make sure that they're comfortable with it too. So we just feel it's diligent and responsible to make sure that we take a few more months here, launch it in the first quarter so that we have the world's best product.

Michael Ryskin: So we just feel it's diligent and responsible to make sure that we take a few more months here at launch in the first quarter. So we have the world's best product. Okay.

Joseph M. Hogan: So we just feel it's diligent and responsible to make sure that we take a few more months here, and launch it in the first quarter so that we have the world's best product. Okay, thanks. Next time.

Erin Wright: Thanks. Next time.

Erin Wright: Thank you. And one moment for our next question. And our next question comes from the line of Erin Wright from Morgan Stanley. Your question, please. Thanks for taking my question. So, did you see any recent changes, for instance, in the adult case volume dynamics throughout the quarter and just what are you seeing to find that third quarter in terms of adult cases? I just has anything changed in terms of your view on the macro environment and for the remainder of the year. And I hate to belabor this, but also for the Americas too. But on the macro question, what are you generally expecting stability in your guidance?

Joseph M. Hogan: Thank you. And one moment for our next question. And our next question comes from the line of Erin Wright from Morgan Stanley. Your question, please. So did you see any recent changes, for instance, in the adult case volume dynamics throughout the quarter? And just what are you seeing so far in the third quarter in terms of adult cases?

Speaker Change: Okay, thanks. Thanks, guys.

Speaker Change: Thank you. And one moment for our next question.

Speaker Change: And our next question comes from the line of Erin Wright from Morgan Stanley . Your question, please.

Erin Elizabeth Wilson Wright: Thanks for taking my questions.

Erin Elizabeth Wilson Wright: Did you see any recent changes, for instance, in the adult case volume dynamics throughout the quarter and just what are you seeing so far in the third quarter in terms of adult cases?

Erin Elizabeth Wilson Wright: Has anything changed in terms of your view on the macro environment for the remainder of the year? And I hate to belabor this, but also for the Americas, too, but on the macro question, but are you generally expecting stability in your guidance? Or are you anticipating a range of outcomes from a consumer and macro environment standpoint for the remainder of the year? Aaron, we have had that in our script. And you know, we talk about it all the time, as you know, we're, we're expecting stability. I mean, obviously, not stability in exchange rates, right? We can't, we're not that smart; we'd be working somewhere else if we knew exchange that well.

Speaker Change: Has anything changed in terms of your view on the macro environment for the remainder of the year? And I hate to belabor this, but also for the Americas too.

Speaker Change: But on the macro question, but are you generally expecting stability in your guidance or are you anticipating a range of outcomes from a consumer and macro environment standpoint for the remainder of the year?

Joseph Hogan: Are you anticipating a range of outcomes from a consumer and macro environment standpoint for the remainder of the year? Erin, we had that in our script, and you know, we talk about it as, you know, we're expecting stability. I mean, obviously not stability and exchange rates, right? We're not that smart. We've been working somewhere else if we knew exchange that well. But as far as the market overall and how we want to go about it, we still feel we're dealing in a stable environment. The last thing I'll say about this: you know, this is a very global business.

Speaker Change: Erin, we had that in our script and we talk about it as we're expecting stability.

Erin Elizabeth Wilson Wright: I mean, obviously not stability and exchange rates, right? We can't. We're not that smart. We'd be working somewhere else if we knew exchange that well, but

John F. Morici: But as far as the market overall and how we want to go about it, we still feel we're dealing in a stable environment. The last thing I'll say about this is that this is a very global business. You see that, you know, the Japanese yen, the Brazilian real, the business has grown substantially that way.

Erin Elizabeth Wilson Wright: As far as the market overall and how we want to go about it, we still feel we're dealing in a stable environment. The last thing I'll say about this, you know, this is a very global business.

John Morici: You saw that, you know, the Japanese yen, Brazilian real; the business is growing substantial that way. And there's a certain amount of stability that we have that plays across geographies too. And that adult piece, you know, we sell; we sell growth. We sell highest quarter in many quarters. So we're pleased with it. I think it's a reflection of our GP business growing, GP's growing with DSOs and so on, being able to get some of that volume through. Like Joe said, it's more of a stability that we're seeing, but we're pleased with that adult growth. And some of that contributes to some of that lower ASB product.

Erin Elizabeth Wilson Wright: You saw that, you know, Japanese Yen, Brazilian Real, the business has grown substantially that way. And there's a certain amount of stability that we have that plays across geographies too.

Joseph M. Hogan: And there's a certain amount of stability that we have that plays across geographies. And that adult piece, you know, we saw growth; we saw the highest quarter in many quarters. So we're pleased with it. I think it's a reflection of our GP business, growing GPs, growing with DSOs, and so on, being able to get some of that volume through. Like Joe said, it's more of a stability that we're seeing, but we're pleased with that adult growth. And some of that contributes to some of that lower ASB product.

John F. Morici: It's great. If that's how doctors want to buy to be able to treat those adults, we're happy to sell it to them. And as Joe said, it's a better margin. And you mentioned China too in the teen market there, but just generally speaking, can you give us an update on China, the underlying demand trends and market dynamics there?

Erin Elizabeth Wilson Wright: And that adult piece, you know, we saw growth, we saw...

Erin Elizabeth Wilson Wright: highest quarter in many quarters. So we're pleased with it. I think it's a reflection of our GP business, growing GPs, growing with DSOs and so on, being able to

Erin Elizabeth Wilson Wright: to get some of that volume through.

Erin Elizabeth Wilson Wright: Like Joe said it's it's more of a stability that we're seeing but we're pleased with that adult growth and and some of that contributes to some of that lower ASB product. It's great if that's how doctors want to buy to be able to treat those adults we're happy to sell it to them and as Joe said it's a better margin for us.

Joseph Hogan: It's great. If that's how doctors want to buy to be able to treat those adults, we're happy to sell it to them. And as Joe said, it's a better margin for us.

Joseph Hogan: You mentioned China too in the team market there, but just generally speaking, can you give us an update on kind of China, the underlying demand trends and market dynamics there? It's it's it's Joe again here. China performed the way we want China to perform, just as we predicted. You know, overall, I mean, you know, the market is China. I think that tier three and four cities are actually challenged more than, you know, the private and one and two. But, you know, overall, there's no surprise; you have a good team there. Junho is a great leader for us there.

Speaker Change: And you mentioned China too in the tea market there, but just generally speaking, can you give us an update on kind of China, the underlying demand trends and market dynamics there?

Joseph M. Hogan: It's Joe again, Erin. China performed the way we wanted them to perform, just as we predicted. I think the tier 3 and 4 cities are actually challenged more than the private, 1 and 2s, but overall, there's no surprise, we have a good team there, Juneau is a great leader for us there, and we like the results, and we're looking forward to a good quarter there, which is, you know, the third quarter is always the biggest quarter.

Speaker Change: It's Joe again, Erin. China performed the way we wanted China to perform, just as we predicted.

Speaker Change: You know, overall, I mean, you know, the market is challenging to tier three and four cities are actually challenged more than, you know, the private and one and twos, but

Speaker Change: You know, overall, there's no surprise. We have a good team there. Juneau is a great leader for us there, and we like the results, and we're looking forward to a good team quarter there, which is, you know, third quarter is always the biggest quarter for China.

Joseph Hogan: And we'd like to result. And we're looking forward to a good team quarter there, which is, you know, third quarter is always the biggest quarter for China. Okay. Thank you.

Joseph M. Hogan: Okay, thank you. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Shirley Stacy for any closing comments. Thank you, Operator. And thank you, everyone, for joining us on the call today. We look forward to speaking to you at upcoming financial conferences and industry events. If you have any questions, please contact our Investor Relations team. Have a great day. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day. I hope you have a nice day.

Operator: This does conclude the question and answer session of today's program.

Speaker Change: Okay, thank you. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Shirley Stacy for any closing comments.

Shirley Stacy: I'd like to hand the program back to Shirley Stacy for any closing comments. Thank you, operator. And thank you, everyone, for joining us on the call today. We look forward to speaking to you at upcoming financial conferences and industry events. If you have any questions, please follow up with our Investor Relations team. Have a great day.

Shirley Stacy: Thank you, operator. And thank you everyone for joining us on the call today. We look forward to speaking to you at upcoming financial conferences and industry events. If you have any questions, please follow up with our investor relations team. Have a great day.

Operator: Thank you, ladies and gentlemen, for your participation at today's conference.

Operator: This does conclude the program.

Speaker Change: Thank you ladies and gentlemen for your participation at today's conference. This does conclude the program. You may now disconnect. Good day.

Operator: You may now disconnect.

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Speaker Change: ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪

Speaker Change: Thank you for watching!