Align Technology, Inc. (ALGN) Earnings Call Transcript & Summary

Great. Good morning, everyone. My name is Nathan Rich, and I cover the dental space here at Goldman. We're very pleased to welcome the Align Technology to our conference today for this next session. I'm joined by the company's CFO, John Morici; as well as Shirley Stacy; and Madelyn Homick from Investor Relations. Before we get started, I'd just like to remind the audience that if anyone does have a question that they want ask during this presentation, you can either e-mail me directly or you can use the box in the webinar feature to submit your questions. So with that, why don't we get started. John, thanks so much for your time.

I guess maybe to start it off, you've highlighted the shift or the accelerated shift, I'd say, I guess to digital orthodontics. It seems like we've really seen that pickup over the past year or so kind of coinciding with COVID. I guess in your view what have been the biggest drivers of that? And do you see this being a more durable trend, shifting to aligners for orthodontic treatment coming out of the pandemic?

That's a good question, Nate. And really when you think about it, prior to the crisis that we were all in, it's an underpenetrated market. I mean, the vast majority of cases that are being done, orthodontic cases are being done with wires and brackets and not Invisalign. And as we've gone through this crisis, we continued -- as a company, we continued to make investments. Investments in what we do to go-to-market I mean, the sales people we've added, marketing that we spent to be able to drive that awareness, drive the training and work that we've done with our doctors, continue to invest in our products, best products, the ability to be able to really help digitize things, make things very visual for our doctors, allow them to be able to work through this recovery in a digitally safe and effective way. And continuing to add capacity, adding capacity where we want to be able to grow our business, international expansion and so on that we've done. So really in this vastly underpenetrated market, we continue to make investments. And we're very pleased with what we've seen from an outcome standpoint. We're continuing to drive this utilization, the digital utilization. We're on -- with our platform and the investments that we're making, we really want to be able to make digital orthodontics part of digital dentistry and really make this everyday as part of dentists and orthodontists. As they work through the recovery, we want to be what they turn to the platform that they turn to. So we continue to make investments. We want to drive that utilization. And I think the crisis and now recovery has really lend itself to that. So it's not one thing, Nate. I would say there's a multitude of things, just like we've seen in the past. But I think really, when you think about it from a trend standpoint, a lot of effort and changes have happened through this crisis, but the reality is the crisis being creates something new, in many ways, accelerated changes that were already happening. And we're at the forefront of that -- those digital changes and ultimately want to continue to make investments to drive that change.

You mentioned a lot of the investments on the doctor side. You've also been investing a lot on the consumer side as well in terms of marketing. This is a treatment option. I guess how do you -- are you thinking about the increase in the consumer demand that we've seen for orthodontic treatment? Obviously, consumers are in a good financial position. I think are more aware that this treatment is out there and is achievable. Do you think consumers are putting a greater priority on kind of oral health in general, and this is one of the components of that? And is that something that we could see continue longer term?

I think from -- as we think about the market, part of what we want is to be able to drive that awareness to those potential patients, those consumers that are out there. And as we recognized early on that we wanted to continue to be -- drive that awareness, keep people so that it would be top of mind. Invisalign would be top of mind for potential patients that are out there. So as they've gone through this crisis and now recovery, people are on calls like this or they're on social or online or watching TV or other ways that they're able to consume things and much more aware. And I think what the crisis and now recovery has helped people as well as doctors, they're just aware of flexibility. They're aware of alternatives. They're aware of opportunities to be able to have them move teeth in a safe, effective, predictable way and do things that maybe are a little bit more flexible. So I think with that underpenetrated market, huge opportunity, being able to reach these consumers to be able to drive that awareness and then ultimately have those consumers then take that next step to be able to come to our website, inquire about treatment, maybe go to specific doctors in their area, talk to maybe our concierge team to be able to talk about treatment. And is it right for them? Or other search mechanisms that they do, ultimately to be able to drive that awareness into a conversion into volume because that's ultimately how we measure that return on investment. We want to reach those consumers. We want to get them aware and understand of options and flexibility, be able to then have them take some action from that, be able to see their doctor. They go to our website, other places. So ultimately, we can drive that volume. And that's been the model that we've had and been successful, and that's how we go-to-market in many places.

And this year, that's kind of playing out in the revenue guidance that you gave, the $3.7 billion to $3.9 billion for the year, 25% growth in the back half of the year. I guess what drove your decision to give the full year revenue guidance? It's not something you've typically done historically. So could you kind of talk about just kind of what gave you the confidence to say that, hey, based on what we're seeing, we feel comfortable with putting this revenue range out there for the year?

Yes, Nate. It's a good question. And really, if you take a step back to a year ago, many companies including us stopped giving guidance because of the unknowns of COVID and some of things that we didn't know and couldn't control. And then we went through really our -- one of our worst quarters in the second quarter to all of our best quarter in the third quarter. So back to back, worst quarter to best quarter. And then subsequently, we saw a better quarter in the fourth quarter, and we saw a better quarter in the first quarter. And so really, what we wanted to do is just make sure that the investment community understood kind of how things were trending, what we saw. I know there's a lot of surveys and a lot of other work that's being done, but we wanted to be able to show kind of a reflection of what we've been able to achieve as we've gone through this recovery and be able to drive this into the market. So when we looked at that full year guidance, talked about kind of that revenue that we expect for this year, wanted to get to a full year so that you could get a perspective of what that meant after our first quarter. We wanted to talk about what it meant in the second half. So we talked about kind of that year-over-year, which is much more normalized in the second half than it is in the first half from COVID. So wanted to talk about the midpoint of our long-term model in the second half. And then also talk about investments that we continue to have to make. We're expanding globally, a lot of investments from sales and marketing, a lot of new products that we have invested in and try to really digitize our process that we have, which requires investments. And we so wanted to give an update in terms of the investments that we need and the returns that we expect on it. So it was really a combination of kind of what we're seeing in the marketplace, what we can do as a company now. And I think when you have more of the vaccines and other things rolled out, you just get more of an understanding of what opportunities we have, and that's really what that overall guidance was.

Makes sense. And is there anything different this year about the shape of the recovery or the cadence? You kind of talked about third quarter, fourth quarter built on third and first, built on fourth. And so just from a seasonality perspective or a cadence perspective, is there -- are you thinking about this year any differently than you would in a normal year?

Overall, no. You're going to get some adjustments, if you will, that maybe kind of move between months or quarters because overall, you're going to have seasonality that happens at times of the year teens will go into treatment in the summertime that's broadly across the board. You have some of EMEA and other places that are maybe a little bit slower in August due to holidays and vacations and so on. So you're going to have this seasonality, but I think what you saw last year, and will be mindful of this year, you have some teens, maybe they were stayed in school longer, didn't go to treatment right away or maybe there's some schools that might still be closed in certain countries and so on. And they might not have the urgency to go into treatment before schools kind of reopen. So we're watching things closely. But broadly, that seasonality is still there that we expect. You might see some local impacts on something maybe started a little bit earlier or continued a little bit longer. But it won't be -- it should be as extreme as it was last year.

Makes sense. I wanted to dig into some of the specific opportunities, maybe starting with the ortho channel. I think most of your orthodontic customers, at least in the Americas, I'd imagine this is true worldwide also. We're still doing less than 100 cases with Invisalign. They're probably doing up to 1,000 cases every year. So it shows you that sort of gap in penetration. The teens are obviously very important in this market. I guess from your point of view, what is the key to kind of increasing that penetration for the orthodontists? And you put programs in place like 360 and ADAPT, like how are those changing the way that orthodontist practice and incorporate Invisalign into what they do?

Well, as you said, Nate, and it's absolutely correct. The way to drive orthodontic utilization is around teens. And you're right, the majority of cases that they see orthodontists see are -- and the work that they do still is putting those teams into wires and brackets. In many countries, over 90% of the case is that that orthodontists see for teens is they put them in wires and brackets and smaller amount is and really the majority of what's left is Invisalign. But in many cases, where we've invested in products and in-process and really created that digital platform with really good products like Mandibular Advancement to be able to adjust the jaw alignment as well as straighten teeth. Invisalign first to be able to work with children that are 6, 7, 8 years old, with their doctor that has -- they have mixed dentition. They've got space concerns and so on. And this is kind of the first way to be able to kind of create that expansion and align things so that they're ready for that next treatment when their permanent teeth come in. There's a lot of investments that we made around that, where many doctors, they'll use 100% of our products for what they treat. But in a qualified doctor's hand, 80% to 90% of their cases should be able to be done with Invisalign. And yet we see market share that's less than 90 -- less than 10%. So the majority being done with wires and brackets. So it's -- when you have a product that can provide this type of treatment that can do so well, what do you do to really get that doctor and ultimately that patient to be able to go into treatment. So a lot of work is done around the advertising, where you're advertising to teens, you're advertising to parents, where you're getting them to understand the treatment benefits of Invisalign, how you can move teeth safely and effectively and the benefits that it brings to be able to have this type of digital orthodontics to be able to move their teeth, not have to go into treatment or back and forth to the office as much. Being able to play sports and play instruments and other things that are beneficial to that team to educating. So teens want this, making sure parents are very comfortable with that benefit of being able to move teeth predictably and reliably. And in many cases, a shorter period of time, that parent doesn't have to go back and forth to the dentist or the orthodontists to get things adjusted. Or if there's emergencies or other things that happen with wires and brackets, it's not happening with Invisalign. But then ultimately, that doctor, like you said, like see 1,000 different patients, how do we work with that doctor? Like I said, it's not about the product. Product works, doctors understand this. There's teens and parents that are aware of this. Ultimately, how do you drive that conversion with the doctor. So that's working with the orthodontist directly or the dentist directly with our sales team, education, training, making sure that they understand the capabilities of our products and through either direct training or peer-to-peer training and other things to be able to help drive that conversion or other things where you mentioned ADAPT where you can work with that doctor to really understand the analog to digital progression that's needed. And many times, these people -- ADAPT is an acronym for aligned digital and practice transformation. That's taking a doctor who, in your example, many times, maybe they do 20% of their cases with Invisalign, 80% of their cases with wires and brackets. They're dabbling in the digital side, but they're really not digital yet. The ADAPT really helps them understand where they're spending their time? How much time is spent in the chair? What's happening with emergency? Where -- how is their staff being affected and really understanding the productivity that can be driven by digitizing their practice, being more digital, less analog. And then you add to that, once you become more productive at that practice, then how do you use that productivity to drive profitability? You do that by generating more demand, more patients in -- directing patients in either that they see through advertising or the concierge team or others, to be able to come into those doctors who have now that capacity to be able to treat more patients. And you can turn that productivity into profitability right there in the doctor's office and turn them from 20% Invisalign to 80% Invisalign. And that office is much more efficient. It's the analog to digital progression that we see happening within this industry. And as I said COVID, COVID didn't start that, I think, in the end, COVID necessitated that flexibility and necessitated that change in the industry to go from analog to digital. So ADAPT is the way to do that. It shows up in our orthodontic utilization. And as you said, with teens, primarily, 75% of all orthodontic cases, the traditional orthodontic cases. So of the 15 million worldwide, 11 million or so of them are teens. It's a huge market. It's an underpenetrated market from an aligner standpoint and Invisalign standpoint, and it's part of the market that we want to continue to grow. But we have the products. We have the process. We have the capability. We've seen excellent teen growth prior to COVID and during COVID, and we want to continue to better grow in this space.

And tying that back to the increase in kind of orthodontic utilization that we've seen really over the past year. I mean, kind of taking all of what you said together, it seems like the higher utilizing docs are doing something kind of well north of that kind of 100,000 utilization per year that the kind of North America average is out of the Americas average is at. So it seems like there's still a lot of opportunity for that number to move higher, even though we have seen really nice growth over the past, call it, 18 months.

That's exactly it. I mean when you look at the broad growth that we've seen as we've gone through the recovery, and we've talked about at Investor Day and some of the earnings calls, we've seen broad growth. It's not just the high-volume doctors doing more volume, they are, and that's great. So they do -- they see more patients, and now they're putting more patients into Invisalign. We've seen some of the mid-tier doctors who they might have had a scanner, they might have done some through ADAPT and other programs, they're able to then digitize their practice, add another scanner, added more of a digital process be able to grow their practice. And through COVID, they've done well. And we've seen that. And you can really see that in our scanner growth. Our scanner growth that you've seen sequential improvement really from the third quarter last year all the way through the first quarter has improved, and we see more and more doctors digitizing their practice. And that, in some cases, our doctors that dabbled in it, and now they're doing more. And then you also see new doctors that are coming in. We talk a lot about some of the new doctor training and the benefits that we get from those doctors. These are doctors that, for whatever reason, weren't as physical impressions and they really weren't digitizing their practices now have come in. They've come in because either consumers or patients are kind of saying, this is the treatment that I want, if it's a teen or adult, and they want to be able to have that treatment or they go somewhere else. Or its doctors and practices saying, look, we need to be able to have a digital process because we don't want to go through what we just went through in the last year. We want to remain open. We want to be able to kind of control our own destiny. We want to make it -- it's a safe work environment for our staff and the doctors there. Or they just might not be able to see as many patients. They're still mask and other things that certain countries and certain regions have where you just can't see as many patients. So you've got to be as productive as possible as a result of that.

Great. Maybe wanted to move over to the international business. And starting with Europe, and I think I'm going to tie in the GP channel here. It seems like when you introduced iGo in Europe a few years ago, that really had helped to catalyze stronger growth in that region. I'm sure it's broader than just iGo. But could you maybe talk about how that's changed the workflow for GPs? What your experience has been in Europe? And then I think it's relatively newer in other markets like the U.S. What do you expect to see here? And would you expect to see the same type of uptake from that channel, given it's not a doctor that's historically made orthodontics a large part of their practice?

Yes, it's a good question. And it's -- to unpack that one, there are several aspects of this. One, when you think about the GP opportunity, when we talk about now moving outside of the traditional orthodontic case starts, which is on the orthodontic side, which is mostly teen, as I described, now you're starting to talk worldwide, EMEA as well as everywhere else, of the 500 million potential patients that are out there. Those are the people that have the means to afford treatment. They have the need for treatment. And the only way that they can be reached is through digital orthodontics. You can't just -- the logistics and the time and their view of what they want versus the treatment, it's got to be flexible. It's got to be able to provide that flexibility. Invisalign and clear aligner is the only way to be able to treat that. And so when you think about the opportunity that we started with, as you brought up in EMEA, when we go back a few years ago, we were a company that understood that there's differences between the way GP treats their patients versus orthodontist, orthodontist that's what they're doing. They're moving teeth. Somebody's coming to that orthodontist to move their teeth and move them, change their smile, teeth are rubbing or there's some collision there that they need to fix. Whereas a GP, the vast majority of what they do, 95 maybe plus percent of what they do is not straightening teeth. They're doing everything else. They're doing crowns and restorative work and fillings and cleanings and so on. And what we've learned is that those general dentists, the way to make them into kind of this digital world that we talk a lot about is when they are seeing patients, they scan their patients. They ideally have an iTero or they get an iTero or some of the new types of scanners that we have like a 5D to be able to see kind of inside the teeth and provide that diagnostic capability for that doctor. But anyway, scanning that patient, doing whatever work that they need to do at that time for that doctor and then at the end, that doctor comes in and says, look, this is how your teeth have changed over time. And this is how things look in your mouth and this is how treatment would look if we did 10 sets of aligners or 15 sets of aligners or 5 sets of aligner, whatever. And that's where kind of the iGo piece of it comes in. It's like looking at the scan, looking at the treatment. And then that general dentist saying, yes, it's a minor, more straightforward movement. I can do that. I can do that. Or he or she might say that's really a complicated case. I maybe don't do as many of those. I'm going to refer that one out and iGo really lends itself well to that. But the way that, that doctor then treats that patient where it's part of the routine, it's part of the exam, it's part of that end treatment, where as they're examining the mouth, they can -- that general dentist then can say to that patient, hey, for 10 sets of aligners, here's what it would cost to do. I can do it where you come back. For your next visit, you'll have your aligners. You go through that process. I'll see you at the end. It's very much part of that general dentist workflow. It's not an extra burden or significant cost for that patient. When that happens, it can happen right there. And we've got thousands of doctors that we sell to. So that is a huge benefit that we have as a result of that. We recognize that early that you need to separate your sales force. We did that within EMEA. EMEA is really the first place years ago that we had a separate sales force for GP versus orthodontists. We've now replicated that pretty much in many locations, including in the U.S., we did that at the beginning of last year, where we have a separate sales force for GP versus ortho. And it really lends itself to additional growth. And you do all this and everything that we've described here, coupled with increased and added awareness kind of at the front end of that funnel. So now you're reaching adults and others that are in this ecosystem, where they now know they have some awareness of your products. We're investing more in awareness of media and marketing and so on in the U.K., in France, Germany and other places where we can, where you drive that awareness, you then take that awareness through that patient into the doctor's office. When that doctor's office kind of has the process that I described, you have a really good chance for driving that conversion. And that's the way to get at those 500 million potential patients that are out there because they're in doctors' offices every day. And if you can drive that awareness, ultimately drive that conversion within those doctors' offices, it could be a great outcome for everybody.

And I wanted to ask on China as well. We've seen the growth rate kind of return back to the 20% to 30% in the back half of last year. I guess, how are you thinking about the growth in that market longer term? And could you maybe talk about what the strategy is to get at that next leg of growth? Obviously, you've invested a lot in that market, expanded geography has gotten into Tier 1, 2 and 3 cities. But kind of where do we stand today? And when you think about the future growth, what kind of what's the key to capitalizing on that?

Well, China, just like all places across the globe, they're underpenetrated market. And China is a great example of that. You've got the vast majority of cases being done with wires and brackets especially on the teen side. I mean, 90-plus percent of the cases are done with wires and brackets. So as you said, we've made investments in China manufacturing full plant there now. Treatment planning is being done in China, a lot of training centers and so on. So we recognize that even when you're in a Tier 1 or Tier 2 city, the coverage that you need on these massive cities you need more salespeople. You need more ways to be able to help drive that conversion. So it's continued investments in a very underpenetrated market. With the opportunities there, we want to continue to make investments. We know that it's a huge growth opportunity for us. And just like we look at all our markets and when we think about our growth driver initiatives, international expansion and growth is the #1 that we have. And China is an example of that and we'll continue to make investments where we see great return on those investments, and China is a great case for that.

Makes sense. And then maybe taking a step back and then following up on your comment on investments. You guys have never hesitated to reinvest in the business where you saw fit. You've typically gotten a pretty good ROI on those investments. I guess, as the business grows and the free cash flow grows, would you anticipate continuing to put the same percent of revenue or percent of free cash flow, however you look at it into the business? And so the dollars that you invest grow? I mean, do you see the kind of incremental opportunities that, hey, if we had more capital to spend or as we have more capital to spend, we will continue to put more money into capitalizing on this underpenetrated market?

Yes. I think when you look at our overall opportunity, as we talk about the vastly underpenetrated market and our go-to-market activities, R&D and other things, we're going to continue to invest in our business. So some of it is just to grow our OpEx and spending as it relates to growing those revenue opportunities, we're going to continue to make investments and be at the -- still with the 25-plus percent op margin targets that we have, but we know we need to continue to expand, as we've described. Some of it involves some of the CapEx that we have to spend. We announced talking about getting closer to our customers with some of the investments that we're making in EMEA to be closer to our customers. We're adding capacity all the time to meet our customers' needs. So you add that CapEx. Some of it becomes binary where you add a facility to like a plant for manufacturing, you might spend a little bit more upfront for that to get that facility. But then after that, you're spending maybe a little bit less as the percentage of revenue because you're just adding that capacity that's needed there, but you're not adding maybe that overall footprint. So I think that varies over time. But we remain committed to growing our business by investing in people and programs and so on to be able to grow, add capacity where we need to in some of the manufacturing locations, treatment planning and so on. Some of that's CapEx related to that. And then everything else really falls back to shareholders through buybacks and other things that we've talked about with the share buybacks and so on, where we want to continue to put cash back into our shareholders.

Makes sense. And so maybe just to tie together, we should think about operating margin staying in that 25% to 30% long-term range is sort of where we've seen in the past several quarters. As the business grows, obviously, that will give you kind of more opportunity to kind of go after some of these. But at the same time, kind of maintaining that margin with where you have it now?

Yes. I think when you look at our overall target, that makes sense. You're going to find quarters that are -- fluctuate a bit and even turn some types of years as you go through this from an investment standpoint. But overall, that's how we look at it. When we go-to-market and we think about some of the investment decisions we make, that long-range model is how we think about those investments.

Great. I wanted to maybe shift over to ASPs. And maybe if we could kind of unpack the comprehensive side from the noncomprehensive side because I think when you look at the total, you have mix dynamics that can kind of factor into that. I guess the ASP for noncomprehensive cases have been relatively stable. Comprehensive, I think, has come down a little bit over the past several years. I guess, could you maybe just talk to both of those types of cases? And how you're thinking about the factors that will really drive changes in ASP for both of those going forward?

Yes, you're right. So I mean, ASPs get headlines, no doubt. And what we've tried to be able to do is kind of explain some of the factors that go into the ASPs because as you rightly said, you've got comprehensive, higher ASPs, but maybe a lower gross margin. And then you have noncomprehensive that has a lower ASP but a higher gross margin rate. And really, the difference is it's really just the cost to serve. If you think about a noncomprehensive case where you might need 5 sets of aligners, 10 sets of aligners and there's no additional aligners. There's nothing else that is needed from us to sell that case. As I had described with maybe that general dentist, provide that case, it's a lower ASP because it's a less complicated product, but it is one where it's a great gross margin. And it's good from a rate standpoint. If you look at some of the comprehensive cases that are maybe take additional aligners and that child as their teeth change and so on, that doctor wants to make some adjustments and tweaks and so on. Look, we want to be able to help those doctors provide those complicated cases and be able to work those complicated cases. But from a cost to serve, sometimes those are -- they're higher ASP, but they're lower gross margin rate for us. So that's the balance that we have in this. What we're committed to is being able to grow and expand into this market, whether it's on the traditional orthodontic side or that general dentist side through these products. And depending on what suits that the needs for those doctors who'll provide those products, we'll do it at the best gross margin that we have. We would be able to see -- as things change, you get into certain markets, depending on that mix, it's less about the overall ASP and much more about the ASP for that group of products, noncomprehensive versus comprehensive. But what we've seen over the past several quarters is as we drive some of that leverage and benefits in our facilities and our manufacturing and so on, we can see some of the leverage benefits in our gross margin, and that's translated to our margin as well.

Makes sense. And I guess, as people think about ASPs going forward, I think that you've talked about there's kind of several ways to manage ASPs or there's promotions or the advantage program. I guess, how do you think about that? And running those kind of promotions or making changes to the loyalty program to kind of continue to deliver value to the dentists. Obviously, the larger space today, there's more players trying to go after the market opportunity. So can you maybe just talk through how you think about that dynamic when it comes to ASPs and competition?

I think we look at it, Nate, holistically. I mean, ASPs are a combination of you got list prices and then you have discounts and related advantage is kind of a piece of that whereas doctors do more cases, there are some benefits that they see. There's other promotions that we run to be able to drive kind of utilization, some of it based on the time of the year and so on. So we're looking at things holistically. In the end, we want to be able to drive volume, drive that utilization, but do it at the most profitable way. We will also look at it from a doctor's standpoint to say, look, there's a price equation to this, but there's also -- when we think of competition, we think of -- there's no company that's invested as much as we have over the years, over $2 billion of R&D into products for those doctors. We'll spend $250 million or more this year in R&D. And we'll also spend $250 million plus this year in driving awareness, driving potential patients to those practices. So you look at it, ASP wise, there's a list price and a discount component to that. But then when you look at it on a broader basis, that doctor is getting -- there's a price component that they have, but then there's also a benefit that they get for the entire practice, who's driving patients to them, who's advertising from? Who's using -- has the best products to be able to help them treat a wide range of cases that they might see. So that's the comprehensive view that we bring to it and doctors who understand this have done well with us.

Great. And maybe in just a few minutes that we have left. Going back to margins and just maybe a more specific question on 2021. I think the guidance is for 26.5% to 27.5% operating margins. Last 3 quarters, I think, have been north of 28%. So you talked about investments and that can be variable. Is that sort of what's impacting the step down in margins sequentially, I guess, over the balance of the next 3 quarters to get to the annual guidance for the year?

Right, Nate. And the numbers that you're recording were kind of the non-GAAP that we can have. But when we think of our overall margins, there's going to be trade-offs that you have where you have to continue to make investments to be able to drive your business. And it could vary somewhat by quarters and where you're investing, and you're able to see those returns as you go through this. But I think when you think of it overall and you think about our business, we're going to -- when we talked about our guidance for the year, we talked about the revenue growth total year and kind of second half. We also talk about the investments that it continues to take. There still is friction within the system where you're driving awareness, you have new products and product development that you have, you have conversion that you want to have within those doctors. And the OpEx and the money that we spend really starts to try to unlock that. And we talk a lot about a multi-variable equation. It really is. There's a multivariable equation here where you make investments ultimately to drive conversion. That's what we want at the most profitable way to do it. So we wanted to reflect that kind of in our guidance, that it's still needed. We're still at a point where we're very happy with the progress that we've made, but there's still a long way to go. And that's the beauty of this business. We have a huge opportunity in front of us in an underpenetrated market, and we have a lot of levers to pull to be able to grow into that market. And some of the numbers that we talk about for the rest of this year and as they are a part of our long-term growth model reflect that.

Great. We're almost at the time. So why don't we stop there? I'd like to thank John, Shirley and Madelyn for joining us today. Really appreciate your time. And everyone, thanks for tuning in. Best of luck with the rest of the conference.

Great. Thanks, Nate.

Thanks.

Thank you.

Have a good one.