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

Hi, everyone. Thank you for joining us. We really appreciate you taking the time to come all the way here to Las Vegas in conjunction with our Invisalign Summit for GPs. We've got a great lineup today for you, and I'm just going to cover off on a couple of housekeeping items. First of all, presentations today are being live streamed. So hello to everybody online. I appreciate, again, your time and attention. The material will be shared and posted on our website. The presentation slides, a soft copy will be posted on our website as well along with the meeting and the Q&A session after today's meeting. Our obligatory safe harbor, obviously, make sure you read it and you refer to our SEC filings for any disclosures and notices that are important to the content today as well as the presentation with respect to any forward-looking statements we might make. We also include some non-GAAP financial measures. And so again, we refer you to our SEC filings and to all of our financial metrics. One last thing I remind you of is we do have a very full agenda. So we appreciate you obviously helping us stay on time. So there is a break in between the first half and the second half of the presentation. We'll take roughly a 10-15 minutes break, and then we'll get started again. After the Q&A, we are going to have a reception with the management team. Unfortunately, that will not be on the webcast, but we do appreciate those of you here who've joined us in Las Vegas to stay around for some refreshments until 6:00. And with that, I'd like to turn the meeting over to Align Technology's President and CEO, Joe Hogan. Joe?

Thanks, Shirley, and thanks, everyone, for coming. Everybody looks all excited, which is great. We have some information today. We hope we've been really waiting to share with you and very excited about what we see what the future is. And that will come to pass and a few presentations here in a moment. So just in general, making Clear Aligner of treatment available for everyone with doctors. There's 2 big points I want to make here. One is, I think, everyone out there knows the opportunity that we talk about all the time, both on the orthodontic side with 22 million cases, I'll explain that in a second. And then also on the general dentistry side, with the 600 million patients that are out there. And it's in a lot of ways, digital is really free to orthodontics to do many more cases, many different cases, and there's not a limitation from a capacity standpoint overall. Our model is to do this through doctors. It's all along, obviously, SmileDirectClub, a lot of just direct-to-consumer companies have been out there. We know those business models we've seen over time don't work. We've always felt strongly about going through doctors. We feel strongly about moving teeth through bone. It's a very difficult thing to do. It's something it needs a doctor's attention, a lot of attention to, and these models have kind of ended up where we think, where we thought they would go. And I don't see that there's any credence in those kind of models going forward. And any geography we look at, where you see the direct to the consumer model. Overall, there's an enormous opportunity here. 22 million case starts now for many of you who follow us all the time, we talked about 21 million before with the advancement of IPE, Invisalign Palate Expander. We've increased that SIM to 22 million cases overall because now we can appear to that last 10% that we talked about particularly teen cases that we can use the palate expansion. And then we're looking at 600 million consumers out there. We talked about 500 million before. That's as we look at India in different parts of Southeast Asia and as we move into Africa, we see those kind of opportunities to is -- and again, this is in purchasing power parity in the sense of people that are out there that have a malocclusion just to seek Invisalign kind of treatment. So I think this might catch you because you look at those teeth, there and there's braces on those teeth. And there's a meaning there is that's our market. We're only 10% penetrated in that $22 million market that we're talking about. Our goal as a team is to stay focused on that. Now if you look at the next slide, you just don't see braces. Do you see how much happier those patients are? It's incredible, right? Part of what we're trying to do is bring joy to orthodontics too, and it's so much easier to work Invisalign than it is with wires and brackets. So look, the opportunity is used $22 million, obviously, and 600 million potential starts overall, a truly a global business. Right now, about 50% of our sales are outside of North America. And so over the years, we've really been able to spread this with a focus on international in a very big way. So the future is extremely bright. You look at it, 600 million potential patients, but then there's 2 million doctors out there. Now that's what we have to find, train, teach and how to move teeth. Because obviously this moves outside of orthodontics to a certain extent, and you have teeth straightening in a broader sense throughout the population. And think about an iTero scanner and I'll talk a second about when iTero came into the portfolio and why it's been so important and why it's even more important in the future. But we look at an iTero scanner in every doctor's office it's the front end of digital dentistry. It's the front end of when we do orthodontic procedures. It's a big part of what our strategy is and how we take doctors and move them into the digital area. Overall, and this -- I'll take some time on this chart here. It's fun to look at a business. I've been in enough businesses, to look at the businesses in sequences. It's how the business develop, what was its core technology? What did that core technology come with and how did it develop? And then how did the business grow over time? And there's 4 distinct phases here. If you look at '97 to 2006. So let's just say, roughly 9 years, 8 years of Invisalign. Those first 8 or 9 years were basically, can you move teeth with plastics. And can we scale that process? Remember, almost all of this was PVS impressions. There was no digital thread into it. We weren't sure. Sree will be up here in a minute, and many people that were part of this over the years. We didn't know if we could scale and do 1 million parts a day like we do today. Can you really use 3D printing with molds in order to make aligners and have those aligners operate in the way that the algorithms were designed to make those aligners work for. So it was a long time when you think of all those years, and we basically prove the viability of the product line and we prove the scalability. If you move into 2007 and 2012, the 4 system biomechanics that are listed here, that's when we really start to understand the 4 systems that are needed to move teeth. So we went from basically maybe being able to do 30% of the cases out there to start to look at maybe 50% of the cases because, we understood the mechanics better. Our G-series product, we understood retention better and what you needed, and that's where we came out with Vivera. We launched our first team product, just a general team product that we could work with. And then you see SmartForce features and again, and now is understanding the biomechanicals and the forces that you could put into an aligner in order to move teeth. And the last part of this, it's really important to see the iTero scanner came in. Because at that point in time, we understand having an analog entry into a digital kind of a process didn't make any sense at all. We want to digitize that front end, which is used to be PVS impressions on a CT scanner. And digitize that with an iOS and iTero scanner. And that's iTero. Obviously, that was a controversial acquisition at the time. It played out extremely well. I thank goodness for my predecessor, Tom actually getting that done because that's just the foundation of how we go to market in a really critical phase of our strategy. From 2013 to 2016, just 3 years, the material science came in, in a big way, and you hear more about material science today with 3D printing. And that meant you could put all these forces into the aligner if you want to, but you had to have a material and a structure that can convey those forces into moving teeth. And that's what SmartTrack was. They combined high tensile strength with an elongation kind of -- which is a ductal kind of material to really allow us to take our algorithms and express them in a big way. And that led to bite ramps and obviously all the way down to the mandibular that we had launched in 2016. 2017 to 2023, if you look again with the codes, remember, software is dark, new products are green. And then overall services or purple. A big expansion in the product line, but don't look at that as being like a messy diverse kind of an expansion. Those are very targeted things. One is -- we're working really hard on efficiency and efficacy with our software. So when you see us putting a lot of software out there and different products that we're launching. You'll hear about Smile Architect today, you out live update, IPP, all these things. or about how do you get more efficiency on the front end with your doctors and also efficiency with your patients. So we're getting better with that software over time and how to use it. It drives a whole lot of productivity in our system and also our doctor systems, too. Exocad was a critical acquisition for us back in 2019. It gave us a lot more credibility in what we call the restorative space, we now call comprehensive dentistry, where we see the merging of teeth straightening or comprehensive dentistry together with orthodontics in the future, and Zelko will explain that in detail as we go through this. The professional whitening subscriptions, e-commerce, these are natural things when you have a brand that we have and you have so many consumers that we service over time, and these are the kind of product that you want to have as you're going through Invisalign treatment and you're also going through Invisalign retention. And then lastly, we just announced last year, the enhanced precision wings. So we understood on mandibular advancement when you have small crowns and things you couldn't attach to have different design configurations. A lot of that isn't just in the design of the product line, it's in kind be manufactured. Emory Wright will talk about our manufacturing processes today is how do you really do something like curve wings, it's very difficult to vacuum form but you do that at scale in some way. So these are very distinct platforms, and I'll come back to these in a moment because we're moving on to a new platform, we want to announce today that's really exciting for the business. And I think hole is probably the most potential that we've had since really 1997 in the inception of the company. So we're in vendors. We create -- these are on the right-hand side, there are patents, the light blue, has to do with foreign patents, and the dark, the black is active U.S. patents. You can see about 1,700. About 65% of those have to do with iTero, have to do with software, where it has to do overall with material science overall. And we constantly do this and nobody in this business gets paid for having a patent. That's not what this is about. We file these patents because we feel that there are real opportunities for us to continue to grow the business overall and lengthen our opportunity from a strategy standpoint and an overall product standpoint to grow the marketplace. So we've more than doubled our patents in the last 5 years, and I'll make a point of it. It's not just for a patent's sake. These developments that we have in that we spend money on, we understand those returns, we understand the opportunity, and we do watch this very closely in the business. And we still see incredible opportunities in this business to differentiate ourselves, but also to increase the market size and increase the efficiency and efficacy of the product line. This is -- I thought this is a good recognition in the sense of top 100 innovators for 2 years in a row and some pretty good companies here when you look at [ Massimo ] and you look into Intuitive Surgical and where Align Technology is rated here. And so exceptionally high innovative strength and relevance. So when you see those kind of patents, it's also being recognized in the marketplace, the meaningfulness of those patents and that technology, too. Driving growth through R&D. And so this is your Y-axis, you can see is R&D as a percent of revenue and then R&D as a percent of OpEx. The point I want to make in this chart is Align Technology is a medical device company hanging out in dental. We look at our R&D spend, we look at what we do on brand, we look how we go to market with our own salesforce, it's very close to what a normal metal device company is. If you look at someone like Envista Dental Supply and as the diminishing of all. There are traditional dental companies with wide portfolios. And when they -- their R&D budgets are pretty much spread across a lot of areas. We stay focused on moving teeth, it's primarily we want to do. We spend a lot of R&D dollars to do that, and those are focused R&D in areas that we feel will get a strong return. If you take another look at it this way, if you -- we have a brand, it's an over $1 billion brand. We have probably anywhere between $200 million and $250 million a year, we go right to consumers. And that brand, when you include that brand, along with our R&D spend, you can see we move over towards [ Massimo ], Intuitive Surgical some other companies. It's what we have to do to advertise to get to consumers and have those consumers go into dentists -- and go into orthodontists, demanding the Invisalign brand. So it's aligned and you know this, you follow us, but it's a very unique company in that sense. And what we have to focus on and where we have to spend our money. And I think it stands out as we're differentiator when you look at the rest of the dental marketplace. We talk about the Align digital platform. And I get concerned with that because anybody that has any kind of tech today talks about a platform, and they talk about AI, and it starts to become generic to people like you, and I want just to come alive today with the presentations. This one is, this is a true platform. We connect, we scanned and that connect is that front end, I just talked about with patients from an advertising standpoint, setting in the dentists and orthodontists asking for the Invisalign brand. Then we scan, we diagnose, we plan, treat, monitor and retain. And obviously, our target audience are consumers, doctors in dental labs. No, that's -- as you all see these programs that we talk about today, they'll be lined up underneath each one of those areas because we pay a special attention on how to enhance those areas that make this from a comprehensive standpoint a much better way to move forward from a doctor standpoint and also from a patient standpoint and what their experience is. So I'm not going to walk you through these individually. What you see from a connect standpoint, how much we're spending right now from a consumer standpoint, the scanning part, Emory will talk about iTero today. It's just so critical. Remember, it's just not a PVS impression replacement in some way. There's so much power in that iTero scanner to do simulations and understanding and you can look at occlusal brands. You can look at so many things to help convince a patient and a doctor to move forward with treatment. Diagnose, more and more, you think when we scan, we can run a diagnosis from that. That can be a near, near infrared technology to pick up cavities or carries it can be, obviously, the diagnosis of amount inclusion and how that should change in some way. Sree also will talk about the diagnosis we have today with AI and what we use through X-rays and being able to identify that on file and understand overall. So diagnosis is a big part of this. But and then you have monitor and retain on the end, but the engine room in this business where we have to put so much focus and so much money and it's so important in this business to differentiate us and grow the marketplace, is on the plan and treat side. And if you look at what's presented up here today, you'll see that, that plan and treat that has to work. Everything else rotates around plan and treating this business. Those are enhancers. The real part of this business, we're really make a difference from a competitive standpoint and with our doctors and with our patients is right there on the plan and treat side. So I thought this was interesting. This is top dental industry trends. This was an article there was about start-ups, and they want to talk about what start-ups were in dentistry and what kind of technology they were using. If you look at these 10 areas, you can see that aligns every one of them. And I would say in most of these, we basically lead. So these are really hot areas, a lot of start-ups are thinking about how they can take advantage of that and move into the marketplace, not just with clear aligners with different things. We have in-depth technology in each one of those areas that we use in order to drive Invisalign. So stand back, think about 6 slides before this. When I went through the different phases of Invisalign over time, think of that as consolidated waves. So that first '97 to, let's say, 2006, this is about can you treat with plastic and malocclusions and can you scale it, right? Can you put this thing in manufacturing? Can you replicate those parts day in and day out and make that work? Do you have the kind of algorithms with different kinds of malocclusions? We proved that up to 2006. The second one, the aligner materials and then the G-series and the forces that Sree and his team came up with really led to the next phase of what we can do from a malocclusion standpoint. And really, increase the breadth of the product line and what we could go after and what orthodontists at that time and also it could go after. And then the Align digital platform that we introduced, I think, 3 or 4 years ago. And that was -- you saw the entire platform that would enhance, from a patient standpoint, also a doctor standpoint, that whole experience is it went and did a treatment and plan phase. The next platform we're going to hear about today, and we just made an announcement today of acquiring the company in Austria called Cubicure and I'll explain it. We've been talking about 3D printing aligners for a long time. And it's taken a lot of money and a lot of experience to know that the normal SLA process or 3D printing just doesn't have the material capabilities for aligners to work. So over a period of years, and Srini will touch on this, we've gotten to ourselves to a point where we feel strongly that we understand the polymer science, and we understand the process science. And Cubicure is the processor. It's a very special process from a 3D printing standpoint that they handle the kind of polymers that we know we need to have a kind of capability and strength in ductility that SmartTrack has. From a productivity, I've never seen an invention like this in any company I've been in that's so comprehensive. The one is, from a productivity standpoint, remember, today, we make 1 million molds a day, and we throw them away. We recycle and thermal recycling. We use those molds once. We vacuum over top of them and we move on. We don't 3D print a part, but we're the biggest 3D printers in the world. Because we use more thermo polymer to make those molds in any other company that's ever been around. So in 3D printing, we 3D print the aligner. Secondly is, automate design freedom because if you think about it, you're doing 30 mills on a sheet and you're vacuum forming that over top of a mold. And all you can do is draw that 30 mills down to maybe 10 mills on your incisors. It's hard to move molars and incisors and things like that with 10 mills a product. Ideally, what you want to do is put more material in the aligner, you need it, where what type of malocclusion it is, certain teeth are harder to move the other side of teeth, we never had that design freedom because we couldn't 3D print, we're only vacuum for me. The 3D printing will give that to us. So what's that mean, better efficacy and better efficiency in the sense of, hopefully, how fast those treatments can take place. And obviously, there's a lot of productivity opportunities as I mentioned before. And it's best-in-class compliance because it's more flexible. We say less IPR, interproximal reduction, which is means says enamel because you're not going to shave off enamel between teeth as you move teeth and different things. And fewer attachments you won't have to put the attachments right there. We'll be able to put material in those areas that will substitute for where the attachments before. This is the biggest invention that you can have when you're in this marketplace. This is when we're very confident that we know what to do. We're just going to explain it in detail. We've got to scale the polymer, we've got to scale the process, but we're right on the edge of this. So in the end, artificial intelligence, machine learning, we talk about machine learning, but it's just a subset of AI, in a sense you have good machine learning or modeling technology that allows you to boil up into AI and to use those algorithms. So in the end, you end up with this highly customized superior kind of outcomes. And these outcomes are great for doctors or great for patients, all fits together. So when you think about scale, and we talk about scale all the time because this is a business that truly relies on scale, whether it's software or hardware or manufacturing what we do. Technology innovation, $400 million a year we're spending on R&D. That's why we can deliver things like the 3D printing thing we're talking about today. It's not just making the product, it's just how do you educate your own teams, how do you educate doctors, how do you educate technicians to do this. We have 5,000 people out there that actually train and service. And it's really the tip of the spear for our business in a sense of what differentiates for competitors because we can take these sophisticated changes and move them into the marketplace in a way that people can understand them. Regulatory clearance and guidance, you don't see that on too many growth slides, but for us, it's critical because this is getting, we're a Class II medical device when you look at aligners. And it's getting more and more difficult all over the world with different regulations. So we have to make sure we stay on top of this. So in some way, we don't become untracked in the future with missing all on this. Last, if we have a $1 billion brand, you have to manage, it's understood. It's trusted out there with doctors and patients, and we'll continue to feed that and to support it. So transforming smiles and changing lives. We really believe in this business, we believe in the future. I'll hand it off to Raj and Raj will talk to more about marketing. Raj?

Good afternoon. So I get to pick off from where Joe was with the incredible opportunity we have with 600 million potential consumers. Look at $1,000 a treatment, that's $600 billion in market size, bigger than anything that I've ever worked in and bigger than most categories are. On a fund level, if you actually look at it from a retail standpoint, 600 million times 5,000, that's in the top 5 GDP countries of the world because that actually becomes [ 3 trillion ]. So all in all, just to say the market size is simply incredible here. And we have 4 proven strategies to realize this potential. International expansion, patient demand creation conversion, orthodontist utilization and GP adoption. We are relentlessly focused on executing these. And one of the things I tell you is every year I come by, I give you a quick update on how are we doing on these strategies. Let me start with demand creation. So in 2022, we delivered 22 billion impressions. That's more than 3 impressions for every living person on earth, okay? And we had almost 68 million potential patients visit our websites. Quarter 2, these numbers for quarter 2, we delivered 10 billion impressions, and you see this in our earnings. And we have almost 30 million people, potential patients visit our websites. Now remember, Joe talked about a $1 billion brand for a consumer to understand what Invisalign is so that he or she could ask it for himself herself, be kids they have to know what Invisalign is. And the only way they understand it is go to the website and understand. So this is an important metric. We now have influencers, more than 500 influencers globally, regionally in markets. So our reach is 300 million. I kind of joke with my marketing team, we can contest for elections anytime we want, 300 million reach with our influencers, as you can think about. Our app is available in more than 60 markets, 60 markets. We've got 3.6 million downloads. We've got 3,000 people actually using our app every month. And our website in hurdle into 2 markets, okay? Let me get going. In terms of how well we bring in new doctors, how do we train them, let's talk about new doctor onboarding, right? Look, we've trained upwards of 60,000 doctors, if you look at it over the last few years. One of the metrics we watch is how many cases does a doctor do in the first 90 days, right? Because it's a good indication of a doctor, it's comfort within this line. And if you look at that metric, we've been consistently growing that metric year after year from 2020 onwards. Growth programs. This is for doctors or already Invisalign users. We segment GP and orthos separately into 5 groups based on their comfort with using Invisalign based on their comfort with treating complex cases. So moving a doctor from an active segment on engaged segments, 4x the throughput, 4x. And from engage to expert gives us 3x. So if you move a doctor all the way from active to expert, that's a 12x increase in throughput and again, you can that we've been growing the number of doctors in the engage segment and the expert segment. And all of that is reflected on the right-hand side, you can see strong growth in utilization, which is number of cases per doctor per year. You can see that consistently grow over the last 3 years. Just an indication of the 4 strategies that I talked about, which is international expansion, demand, creation and conversion, orthodontic utilization, GP adoption are working. Now Emory is going to talk a lot about our global footprint. And so we've got 3 manufacturing facilities, 8 plus treatment planning facilities. So we've got a global footprint that we continue to expand. Even last year, we expanded into more markets, went direct in other markets, just so that we can make this footprint more robust. Now let me move forward to the Align Digital platform. We define our platform as a proprietary suite of technologies and services delivered as a seamless solution to customers so that they can transform smiles and change lives. And I think each of those words is an important choice. It's a proprietary suite so something that we have differentiation on. Technologies and services, we include both, delivered as a seamless solution for customers, right? This is not slapping 3 things together and calling it a platform. This is truly a solution that works end-to-end. And we'd also talked in 2020, we introduced this platform to you. 2021, we talked about the Align digital workflow, which is connect, scan, diagnose, plan, treat, monitor, retain. Last year, we used to have scan and diagnose, this year, we chose to separate it, reflecting our investment in diagnosis. And I'll talk a little bit more about that. Srini will cover that too in his section. I wanted to use the Align digital workflow as a framework to set the inventions, the innovations we've just recently launched, okay? I'll start with the $200 million of investment in marketing. Look, the fun thing about marketing is, I get to show videos. So rather than we talk about marketing, I want you to get a little bit of -- a little slice of what we are doing with consumers. Let's roll the video please. [Presentation]

We are the most recognized brand globally in orthodontics and dentistry, most trusted brand by both patients and doctors. They got an app, minus a line app. I shared that with you. It's used every month actively by 350,000 patients. Last year, we introduced Invisalign Practice App the objective is to bring all of the tasks that a doc does that staff do to their fingertips in the form of an app. That's what we call the Invisalign practice app. Right now, it's used by more than 80,000 doctors globally. Almost 20 million photographs have been uploaded. Think about the platform. I wanted to think about the scale and the breadth of the Align Digital platform. And what does it do from a competitive moat standpoint, right? Now let me move on to scan, Invisalign Outcome Simulator. We launched it, the pro version last year. One of the important data points, so what? So you launched an upgrade of your simulation so what. Look, when a patient walks in, he or she is not sure, gets scanned by iTero. If a doctor could show to him or her, how his or her smile would get transformed. In the context of his or her face, we know conversion improves. And now we know the doctors who use Invisalign Outcome Simulator Pro convert to 2x. 2x versus doctors who don't. So the adoption of this innovation has been exciting to watch globally for us. Using iTero and exocad completely seamlessly, being able to import, scan files into exocad so that labs and technicians could design better restorations. We've launched Connector 1.0, you will see us talk about Connector 2.0. Zelko will cover that in a section, 2. In terms of diagnosed, we always had the near infrared imaging technology helps doctors identifying proximal cavities. We'll talk a little bit more about what we're going to do in this one. Plan, like Joe said, plan is where the heart of our innovation has been, and we've transformed every aspect of the treatment planning process. Look, we started with -- we take all the complex preferences doctors have, bring it down to a template, so that when the doctor gets the treatment plan back, it's very close to what he or she wants. Then here, she can make the quick changes using live update and what took days or weeks of back and forth technicians, now it takes only minutes, right? We've got more than 50,000 doctors on some kind of template. Remember that template for custom template for doctors, high volume, we've got templates for DSOs. We've got templates for universities. We've got templates for different segments of doctor, just again focused on removing this friction, okay? All of you have heard about [ Alta ], right? Alta as a project, which was for treatment plan transformation. I got a video that we use as a seasonal reel for doctors which brings all the innovations together in a nice pace. I'm going to run that, so you can actually see that, okay? [Presentation]

Let's talk about [ SWOT ] from treatment plan transformation standpoint, right? We know that doctors, there are 50,000 plus doctors who use live update more than 900,000 cases done with live update. Almost 60,000 cases done with Cone Beam Computed Tomography. We know that these doctors have actually saved 20% from an efficiency standpoint from the amount of time they need to do treatment planning. Let's actually keep going, right? And I want to talk to you a little bit about Smile Architect. Remember, Smile Architect, I believe, is the biggest innovation we've launched from a software standpoint since the launch of Invisalign. Just like over the last 20 years, we've set Invisalign as the standard for care, for teeth movement for orthodontics. I'm believe Smile Architect and comprehensive dentistry will become the standard of care for restorative as well as orthodontist industry, okay? For the 2 million dentists that we need to win with so that we can actually get to the 600 million consumers, we have to become relevant. And what normal dentist does day-to-day is just restorations. And dentists want to do restorations because they want to deliver beautiful smiles. If we could and we are, if you could tell them that, you could deliver even better outcomes, more sustainable occlusion while delivering a much more beautiful smile. Why wouldn't they pick it? And that's exactly what Smile Architect does. It's a foray into ortho-restorative treatment planning, and we believe this will turbocharge our relevance to GPs. Let me show you a reel the talks about what's Smile Architect is. [Presentation]

Let me keep going. TREAT, right? With the scale we have of manufacturing almost 1 million aligners a day, delivering improved predictability year after year is a challenge. But we were able to do that over the last couple of years with G8 with helped improve predictability for deep bite cases. Now over the last year, we've introduced mandibular advancement with precision wings. We used to have a product, MA before. The wings didn't engage well if for children, especially if the grounds were small. We've now gotten great feedback from both patients and doctors because the curve brings engage better they're able to position the mandibular for. I'm also excited to share the portfolio additions, right? You know that we have comprehensive. We launched Comprehensive 3 in 3, which is 3 additional aligners, 3 years. You know that 92% of our cases can be done with 3 aligners or less globally on an average. So this product makes all the sense in the world. And this has been incredibly well accepted by doctors and patients globally. We've also launched essentials in a couple of markets in APAC, just so that we expand the offerings and access for patients and doctors and the whitening system globally. Let me talk about monitor. When a patient sends photographs, if a doc has to go through all the photographs every time, it's considerable time and investment. So we've now introduced virtual care AI, which takes photographs that the patient sends, is able to screen them based on a doctor's parameters. So the doctors or the staff can just look at patient off track. So it truly becomes a tool, a digital tool and a seamless tool that they could use to ensure the patients stay on track without a ton of investment of time, right? Last is retain. You will see us talk about this launching [ 1246 ] globally, and we'll talk a little bit more about DC when I talk about expanding innovations here. If you looked at everything that we launched and I said recent innovations, you would say, okay, isn't that enough? Well, let me tell you, we've got an equally impressive set of innovations coming up that we call upcoming innovations, right? And as part of Connect, what we have is we're introducing what we call the Doctor Estimate, enables doctors to share an estimate with potential patients. Remember, before a person comes and becomes a patient, he or she has a question, how much does it cost? How long would the treatment last? So that's an important friction that we're addressing with this one. On Scan, we are launching the line Oral Health Suite. Karim will talk about this one. But this is our first foray into enabling a structured dialogue between a dentist and his or her patient on oral health. This new suite helps dentists have a dialogue on tooth health, periodontal health, malocclusion as well as alignment, initial alignment with patients. And we think this is a great way to have a visual dialogue to educate patients on the condition of their oral health. iTero, exocad Connected 2.0, Zelko will talk about it. But we've made it truly seamless to be able to import restorative files from iTero into Exocad and come up with great restorations. Now let me actually talk about X-ray Insights, Sree will cover that in her section. What if you could have radiographs be automatically notated? And help doctors identify the issues that may be there in the caries or calculus or frankly, an occlusion. How about if we integrate all of this together in a seamless digital experience so that then they can have that conversation with patients. This is exactly what we are trying to launch. Now Plan, you saw a plan doctor, it puts even more controls in the hands of a doctor, but I want to kind of stress Smile Architect. Ortho-restorative treatment planning, facially driven, right? When you go -- when -- and I kind of give the example of a celebrity, when you go and talk about, hey, "I want to get a more beautiful smile." The dentist starts with, okay. Now let me measure, if your nose is exactly in the middle of your eyes, if that's actually intersecting your mouth right and then go from teeth alignment. So facially driven ortho-restorative treatment planning is absolutely critical. And we're going to launch that very, very soon. Importantly, we have 3 blockbusters that we are launching. Srini will talk about those 3. Palatal Expander that helps us expand the upper arch. It helps us expand the upper arch of growing patients. The way I look at it, is dentistry is full of medieval torture instruments. You've got braces, right, which I don't really understand why you would want to put a child, put a wire around the child's teeth and keep pulling it in one direction or the other until it gets aligned. And now to actually expand arches is the next level of medieval torture. There's a mechanical device in a child's mouth that you actually have to turn the screw. The parent has to turn this crew to be able to expand the arch. And we are launching IPA, which is a modern digital way to expand arches. Srini will talk about IPA as well as prefab attachments. Occlusive blocks, I talked about mandibular advancement with precision wings. There's a segment of doctors who believe in occlusal block, so we're going to kind of ensure that we deliver for them as well. In terms of monitor, we'll build on the capabilities of virtual care AI and on retainer. Simon will talk about DSP, talk about some of the new capabilities that we are launching here. Look, as we look forward, we want Invisalign to be among the top 10 brands for teens. I didn't say top 10 brands among dentistry. I said top 10 brands period among teens, okay? We want to be there like there along with Nike and Apple and Adidas. And I think we have every reason to be. We want real-time Invisalign. Think about it as I want to make treatment planning really, really simple, okay? Doctors can start anywhere, get a plan close to the preferences, make changes, visualize it to a patients so that he or she gets converted and get the treatment started in days. High-quality outcomes. As Joe said, all of the things that we do works only when the medical device works. So we've got to make sure that we deliver predictability. We've got to make sure we deliver new products that expand our market size and direct fabrication is the next big platform. We believe that direct printing hurdles an absolute low level of performance at an unprecedented level of efficiency and cost savings. You'll have Srini talk about that in great detail. Look, all of this has to come together in a seamless solution, right? So we envision patients and consumers interacting with My Invisalign app. We envision doctors interacting with practice app. We envision our entire Align team interacting with doctors and patients within [ site ] app. And then all of it put together in one integrated hub, okay? I'm going to come back to the point that I started with. A platform is a platform only if it delivers a seamless end-to-end solution. A platform makes sense when it delivers a competitive moat for the company. And a platform makes sense when there is innovation that any drives the core. We've got all of those. With that, let me actually invite Sree Kolli here, our Chief Digital Officer, to talk about AI.

Good afternoon, everyone. Thank you, Raj, and to all of you for joining us. I'm going to walk to some of the AI solutions that you have built and what's coming up in the future of innovation around software. Data is at the core of everything we do. We have a strong data conservative line. It's core to our business strategy. It enables us to drive growth and also look at new opportunities for value creation. Now the foundation for all this is high-quality data, which we have a lot of, and it's growing exponentially. And we're also continuously adding new modalities. We added photos with Virtual Care, X-rays with Insights. We're adding CBCT and so it's not just this volume of data that we have, but it's also the heterogeneous nature of data. The breadth and the depth of it makes it really possible for us to harness all of this and build very impactful AI applications. There is no other company that has all of this depth as well as the breadth of data, and we want to make sure that we are in the forefront of creating some really transformative solutions. While generative AI is sort of mainstream right now we have been building AI applications for the last 2 years. And we started off with something like a SmileView, whether patient uploads a photo or selfie, you are able to see the before and after. And if we think that, that was impressive, you should wait to see what Smart Video can do when a very realistic video of yourself, the before and after, really helps doctors convert patients. We've been using all kinds of AI technologies, machine learning, deep learning, neural networks, Emory is using computer vision for aligner quality inspection. When we make more than 1 million aligners a day, vision in his hands is what takes for us to scale. We're looking at natural language processing for chatbots and when Jen talks about delivering great experiences. So there are a ton of real technologies that we are using across the board. And I'm going to share with you a few of this and how powerful these are in the doctor's hands. We know visualization works with iOS and Pro to get very realistic in-face visualization. This is not some generic fake teeth that somebody paints on a scan. This is real time taking a scan, segmenting the teeth, running thousands of computations. And what you get as a result of it, is a very highly realistic and a very achievable plan. And Karim will share with you the impact of this is having in the doctor's office. X-ray Insights broadens the scope of [ ADP ]. And what we have done with AI-enhanced tools is it helps the doctors inform and educate their patients on oral health conditions. So powered by AI, we evaluate radiographs, you can look at caries, calculus, therapeutic radio frequencies, bone loss. All of these done chairside in minutes elevates the conversation with the patient and also increases treatment acceptance. And we are at the very, very start of this journey. And it's really exciting because the multi-modality comes into play here where today, we've been only using single modality like we use X-rays to determine caries or we use virtual care photos to look at treatment monitoring. And in the future, we'd be looking at multimodality screening like you would take a [ needy ] from an iTero scan and then have a reconfirmation with an X-ray. Or then you eventually look at multimodality diagnosis, where you will need multiple modes like you want to look at estimating the restorative volume, you'd be looking at a scan and x-ray and a photo together. So we're really, really excited about the potential of all of these data sources, which are very high quality that helps us build a good AI pipeline. And we're going to start building out a number of solutions in the Align Oral Health Suite going forward. Treatment planning. This is the engine like Joe talks about, there's a ton of AI and ML models that have gone into truly giving the doctor the kind of treatment they want. And with like infinite degrees of freedom, for the doctor to be able to codify the treatment plan, to be able to have 3D controls in their hands, to understand the best treatment for the patients. And all of this comes together because we have experience from the greater than millions of treatments that we have treated, the case experiences from those. And it's also the convergence of technology that has come together with cloud computing, high-performance computing that we are able to run thousands of computations real-time. And this is truly putting the power in the hands of the doctor, to be able to look at what the best treatment is for the patients. And it's a truly transformative solution for them that in business productivity, scalability, give them consistent quality ClinCheck every time. We enhanced it by adding real routes. And again, these are real routes and bone visualization. These are not simulations or somebody drawing this up in the back end. And what it does is if we thought that auto segmentation of an iTero scan, which is segmenting the teeth from a scan was a difficult problem by itself. Imagine trying to segment bones, teeth, roots, all of them from a CBCT file from a DICOM image and then trying to infuse the scans and all these edges into the ClinCheck platform to have a 3D version so that the doctor can look at the changes that they're trying to make, root contacts, root collisions, so that they can come up with the best quality ClinCheck plan that is available for their patients. Now this one is truly putting the power of AI to give them all the information that they need to get to a better quality treatment plan. Another great example of a tool, which is AI-enabled, is a tooth based analysis where you can see that if how do you preserve healthy tooth mass like if you see yellows or reds, that's the tooth that you have to remove which is not good. And if you want to get to truly minimally invasive treatments, you want to look at different options or how to preserve the teeth and the ClinCheck platform shows you in blue. What you can do to preserve. Now this solution along with many other AI-enabled solutions like very realistic facial rendering fusion of both 2D and 3D images are all part of the line of Smile Architect solution that allow us to enable ortho-restorative treatments and provides us an opportunity to be part of everyday comprehensive dentistry. Zelko is going to cover this in more detail. The next one we have is virtual care. Now we have AI-enabled guidance for the body for patients to take good quality pictures. And we know that good quality images are the basis for good AI. And we're also very excited about the opportunity of these photos to not just help us with tracking but also with diagnosis. And then we use these high-quality images. We can do AI-based tracking. And the really good part about this is the impact it has in the doctor's practice around scalability as well as for the doctor to offer really great experience to their patients. When Simon launched the Vivera subscription program and wanted to scale the program, wanted to go global and also include wires and brackets patients. We came up with an AI-enabled solution, one, to detect the brackets. And then to actually reconstruct the surface of the tooth. Now detection of the braces is relatively easy because we have a lot of data and we can identify the patterns and we can detect the braces and remove them. Reconstructing the braces or reconstructing the surface of the tooth on the other hand is very complex because much of the tooth anatomy is missing once you remove the brackets. So we have used some cutting-edge ML models to perform reconstruction as a single large step while we are simultaneously trying to account for all of the anatomy of the tooth. So this solution helps us open up in this line retention for wires and brackets patients and helps us scale as a results as well. This shift to AI is very profound. And it's happening now. This is not something that's out there in the future. I just showed you the benefits that we have had over the last few years where we've built AI-enabled solutions and high-quality data is helping us really create the next wave of personalized treatments like I showed you, whether it's in patient conversion. Good clinical outcomes, really great experiences that can provide to the customers, improve practice profitability. So it's creating value across the entire doctor patient journey. And it is helping us build truly transformative products. We are able to hire great data scientists and ML engineers and keeping up with the innovation brand. They truly believe in our purpose of transforming lives. We have great scalable compute and storage infrastructure to store all that data and what it also helps the ML engineers do is to iterate fast, really generate, improve the accuracy of the models. And what owning all the components of the AI, the full AI stack allows us to do is to really recognize patterns in the data that we have and with the best engineering talent tools, models, infrastructure, all these patterns of data can truly be turned into actionable knowledge for personalized medicine. Now while AI is very exciting for us, we are very clear on all the potential challenges. We are committed to deploying models responsibly with security, privacy and safety at the core of everything we build. We have barely scratched the realm of possibilities of what is out there when you have connected workflows, connected data and connected users all on a trusted platform. So we have continued to focus on innovation and for all our users using the AI first approach that we have taken over the last few years to make our products transformatively more helpful to our doctors, their practices and their patients. So with that, I am going to hand over to Srini to talk about the plans. Thank you.

Thanks, Sree. Hello, everybody. My name is Srini Kaza and I've been with Align for 24 years, 24 plus years. Really proud to be here, looking at all the innovations that are being presented today and how far we have come since I started this company when it was a startup with about 30 people. It was pretty clear for us when we started at the company that we were starting a revolution. It's not just an incremental improvement in how we do orthodontics. We started a revolution. We invented this field. So everything we've done from that point on is to really create the best Clear Aligner system in the world. And I believe I'm very confident in saying it is still by far the best Clear Aligner system in the world. And the reason for that is we have to learn a lot of things along the way over 24 years on what makes the best performing Align in the world. So a lot of things we talk about on a regular basis. The key part of this is that, just because you show it on the screen, I start in the end point and make an aligner from it does not mean your teeth are going to move like that. So you got to understand how to move teeth. So this key concept of what we call force-based system. So instead of just forming aligners from each stage and putting it on and hoping it works, we've created the system, which basically delivers the right force systems that gets you from stage to stage to stage, gives you the maximum probability of achieving our successful outcome. So as part of that, we have the 3 SmartForce, delivering the right amount of force in the right direction. Right force sectors basically smart stage, how you incrementally move from stage to stage and SmartTrack, the material that has to deliver all these innovations that you're putting in, in the patient's mouth. And along that, other speakers are going to talk about how we were able to scale, how we're able to use AI and so on to make the product more and more and more sophisticated over the years. So that's really what's driving a lot of these innovations that Joe talked about, so which I'm not going to go over again. But we continue to leverage that revolution that we created 24 years back to keep advancing the state of how we move teeth with aligners. And so today, I'm just going to talk about the next stage of that in terms of how we're leveraging everything that we've learned to create better solutions. So I'm going to talk a little bit about minimal attachment solution. So I think you guys are familiar if you talk to our doctors, placing attachments is one of the most labor-intensive processes that the doctor has to do or the staff has to do, depends on which region. So we're going to attack it from 2 different angles and I'm going to talk about the first angle first and we'll talk about the second one a little bit later on. So what we've created, so all this knowledge that we've gained on the previous slide that I showed, we have incorporated that into what we call a minimal attachment solution. So the goal here, we want to get rid of attachments. We understand it's a pain point, but we do not want to compromise on the performance. So it's not just a simple matter of saying, hey, my liner is more rigid. The material is more rigid. Therefore, I'm going to remove my attachments. I can cut longer, therefore, I remove my attachments. They will not work. I can tell you that. So what we're trying to do is not compromise on the performance and yet reduce the number of attachments. So I'm going to show you a couple of videos to see -- to show you how we're using the shape of the aligner itself, to create the right moments and forces. So we're replacing the attachments without giving up on performance of the device basically. So on the left, you see existing attachments. And basically, what we've done is taken advantage of the shape engineering, controlling the shape of the liner. So you contact the teeth at specific points. So you're delivering the right force systems in the right moment. Now obviously, because we've shifted some of this to the aligner itself, we expect the force system to be more consistent because we're manufacturing it internally using our amazing production system that Emory is going to talk about later. So one example is what you see on the left, where we completely eliminated the attachments by shape engineering the aligner, by activating the aligner. What you see on the left is we've minimized the number of attachments, again using the same concepts to get the right force systems out of it. So we're very excited about this innovation. We think it's -- we started doing some of this with G8 a little bit. This is the next step we're going to keep expanding this to address more and more cases going forward. But this is a platform that we're going to start developing more down the road. So I'll talk about the revolution and how we've leveraged that revolution over the years. We've already talked about a series of S curves that we've gone through. What I'm going to talk about next, I don't consider that to be the next curve, I consider that to be the next revolution. So in a lot of ways, I feel like I've come around a full circle. 24 years after I started Align, I feel like we're about to start a next revolution. So basically, what is it? It just combines everything that we've learned so far with some new technology. So AI, a lot of the AI tools that we have developed to understand how teeth move with our millions of cases in our database. And now we understand biomechanics. We understand how to move teeth, where to apply the forces, what are the right force factors, how to balance everything across the arch to get the right movements. So we take that knowledge, we combined -- use AI and everything that we learned with mechanics, do generative design, so what I would call generative design. So just like Generative AI, these are designs of your devices that can change based on what you're trying to accomplish and then you need a vehicle to deliver all that, which is direct 3D printing out devices. So with direct 3D printing, we'll be able to leverage a lot of these capabilities that we've built to deliver superior performing appliances. So I'm going to show you 2 examples of what we've done. So we've -- this is not just talk. We've already delivered a couple of -- or about to deliver a couple of these appliances. First one I'm going to talk about is Palatal Expander. Second, I think probably most of you are familiar with how traditional Palatal Expander look, these are metal with a screw in the middle that the parent is supposed to turn every day. I believe sort of the fundamental focus for the company since I've started, has always been using technology to make things very, very simple for our doctors and our consumers. So I think that's what we've done with this device. This is what the device looks like is basically Invisalign for Palatal expander. It's a series of devices that skeletally expand. This is not dental expansion. It's skeletal expansion to expand your palate during the growth phase. So you wear each one for roughly 24 to 48 hours, depends on what the doctor wants to do with it. And then you move on to the next one and so on. So it's a very similar concept to Invisalign but it's also very different in the sense that this is, again, skeletal expansion. So you need to apply a tremendous amount of force to be able to expand the structure skeletally. So it's not anything that aligners can deliver, whether you reinforce aligner or whatever it is, they will not be able to deliver this force. It's a tremendous amount of force that needs to be delivered. And yet they need to be removable. So they need to be usable, right? So you have too much force on your teeth, you cannot put them on and take it off. So that's the balance we've achieved through what I would call generative design. And the design changes for each case based on the anatomy of the patient and how much force we're trying to maintain. So we always try to maintain a specific amount of force and -- but also make it easy to use. So I'm just going to show you a couple of videos on the next slide, one showing how the traditional device looks, how it's placed and the other one showing how our device looks. So the one on the left, obviously, is the traditional one. If you're interested, I would encourage you to go on YouTube and take a look at rapid palatal expanders and take a look at the videos and how they're placed. This is roughly what it looks like. This is just showing how it's placed. You can also go look at how they're removed, what the side effects are and so on and so forth. Whereas on the right, it's a very simple device, right? So you just place it, make sure it goes over the attachments on the teeth by down and that's it. And the removal, start from the top, there's a small handle to create a leverage point to be able to remove the device, push on it, comes off and you remove it. So that's the innovation that we've created and we're very excited about it. One thing I would say is all those 4 pillars that I showed, if you use the right mechanics and if you use the right design and if you have the right material and you deliver it using the right process, which is direct 3D printing in this case, you should get really good results. That's the concept that we're working with, right? Use the right base, the right material, the right force systems, the right process, you should get great outcomes. And that's what we see. So we've already -- we've been testing this device for a while now. The outcomes that we see are amazing. The device does exactly what we program it to do. Pretty much exactly, 100% efficacy. And we see through CBCT scans that expansion is skeletal, it's not dental. Every doctor that we've worked with that have used the device are very excited about it, game changer and so on and so forth. So we're very excited about this device. So that's one example of 3D printing that is coming out soon to the market. And the second one is, remember, I talked about minimizing attacking attachments from 2 sides. One is minimizing attachments. This is the second approach that we're looking at. This is the traditional attachments work. So you feel a composite in a template, put it on cure it and you get your attachment. The only problem is it's a very subjective process. Now obviously, we've treated a lot of cases with it. So it works to a large extent, but it's a very subjective process. It depends on what materials the doctor use, what technique they use and so on and so forth. And, of course, it's labor-intensive for the doctors because it creates a lot of flash. So the material leaks out, creates a lot of flash on the teeth, creates a lot of pain points for our doctors to clean it up, whether it's during the placement or whether it's during the removal. So this is our solution. I'll let you take a look at it for a few seconds. So it's a 3D printed, again, taking advantage of 3D printing. So it's a directly 3D printed device with the attachments embedded in it. It self locates. So there's only one place where you can place it. So it's very simple to use. At the end, there's really no -- none of these side effects that I just talked about, no flash, nothing to clean up, extremely precise in terms of how it's located. And obviously, we expect it to be much simpler for the doctors to use. So it also helps address this share time and subjectivity as part of the process. So again, use the right process, the right materials, you should get great results, right? So we have been testing this concept as well. We have done over 100 cases already. And what we see is that this -- what -- the picture that you see is at week 40, after week 40, I believe. So there's quite a bit, 9-plus months after the attachments were placed. The shape and the integrity and the location of the attachments is extremely intact, as you can see here. So none of the loss of the shape and again, no flash, no side effects. So we expect that this is a one-step onetime process. So doctors don't have to keep placing attachments at additional aligner step and so on. One step, one time precise that lasts through the length of the treatment, easy-to-use, lower chair time and the other thing I would say is this is just the beginning. The attachments in the future will not look like this. We're going to leverage the power of 3D printing and the generative design to create more and more sophisticated attachments in the future. So try to minimize attachments to one side, try to make it as easy as possible to place the attachments on the other side. So that's how we're trying to approach this. Really quickly, I'm going to talk about aligners. Joe already mentioned this a little bit. So the challenge for directly 3D printing aligner is that just because it looks like an aligner doesn't mean it functions like an aligner. So our goal is not to compromise on performance. We do not want to compromise on performance. We want high-performing aligners. So we have to balance all these properties. It has to be elastic, but it has to be tough enough to be able to apply the force. It has to be safe. You cannot leach out or break down in the mouth. It has to be aesthetic, it has to be clear and so on. So this is a project that we're working on. We believe we've actually broken through. This is just a video showing how our -- this is still in the -- in our R&D labs, but this is how our aligner looks right now. And what I can tell you is from a material property standpoint, it is actually very, very close to SmartTrack. So this is not something that we've created to kind of look like an aligner and make a flash. This is something that we expect will perform at a very high efficacy. Again, remember the principles, right, use the right material, right process, right design, fuse that with AI, you should get great results. So we expect that we're going to get great results from this solution. We look forward to talking more about this in the future. So really, to create these high-performance devices, direct printed devices. It is not one thing. You have to reinvent basically end-to-end process. So this is why I feel like this is a revolution right where I started, you have to invent everything. So you need the right software, you need a printer -- you need the right printer. You need the -- first of all, you need the right material to be able to create these type of properties and those materials are not -- will not work in any of the existing printers out there in the world. There is no printer in the world that can print these type of materials that we're working on. And of course, you take advantage of the design once you figure out how to print things. So this is about Cubicure announcement. So this is the announcement that we just made that we're acquiring this company. Dave, this is a quick video showing how their process works on the side. So we've been working with them for many years. We've invested quite a bit of time and money to create these machines that can process these special materials really polymers. High-performance polymers, being able to print them directly but also at scale. That's really what we've been working on. You can go to the Cubicure website and see what they do, but these are high viscosity materials that there is no -- like I said, there's no printer in the world that can process these. They have a very unique technology to be able to make them. So we'll leverage that using the materials that we have developed to create these direct printed devices. In fact, the direct fab -- the direct printer attachments that I showed you, we are producing it on these machines and we'll keep expanding over a period of time. So again, I already talked about scaling. So we need to be able to scale these. This is something we're really good at. We will talk a little bit more about that. It's not just about making a couple of aligners. We need to be able to make millions of these and that's been our focus over the last many years is how do we not just invent this material but how can we produce it in a scalable manner. So that's what I believe we're at right now and we're at the beginning stages. It's going to be fun to discover where we go with this. So with that, I think we -- in my mind, with -- even with the existing technology, we continue to be the leader -- clear leader in my opinion, in terms of how we do Invisalign, how we develop our features. But with the advent of direct printed devices and everything that we've learned so far, we believe we're poised for the next-generation devices. I've shown you 2 examples of that and hope to show you more in the future. Thank you. With that, I'm going to pass it to Zelko.

Thank you, Srini. Really exciting. So comprehensive dentistry. My colleagues talked about comprehensive dentistry, ortho restorative. You've heard me talk about comprehensive dentistry probably for quite a number of years. I would say, you will hear about comprehensive dentistry more and more from us, from every other dental player because comprehensive dentistry is the future of the industry or interdisciplinary approach to treating patients. Patients should be treated the way they need it. It should be one discipline, you shouldn't get a different treatment if you go to a GP versus orthodontist. So if you look what happens in the dental practice and whatever they try to do, moving teeth, putting teeth in the right position is fundamental to getting best clinical outcomes. Whether its oral health, if you have a bad malocclusion and crooked teeth, it's very, very hard to clean them. If you look at function, it doesn't function, if your teeth are not aligned. If you look at aesthetics, I don't think crooked teeth are aesthetic. So whatever you do, moving teeth is critical. The problem is it's not being done today. And the reason it's not being done, it's not because nobody cares. It's because it's never been done, and it's very, very hard to do. So what we are going to do, we are going to make it possible for every doctor to take an interdisciplinary approach to treating their patients and deliver those best clinical outcomes. So there is no question in my mind, the future of dentistry is comprehensive. With the digital technology and a lot of technology we do, like Srini talked about, we can give tools into the hands of the doctors that they can deliver those comprehensive treatments, with clinical confidence, efficiency and speed. And that's why we build a platform because the platform is needed to bring it all together. I would say, removing healthy tooth mass, which is standard of care today. It's likely going to be malpractice in the future. And the only way to avoid reducing healthy tooth mass is by putting it to it in a better position. And we do that really, really well. It's not hard to do that. So how do we make tooth alignment, the standard of care in dentistry. I'm not talking about it every single dentist has to become orthodontist specialists. I'm talking about every single dentist not ignoring the position of their patient's teeth. They can move those teeth themselves without tools. Sometimes they just a couple of aligners. They can refer to a specialist but they should not ignore the need to move those teeth. And this is why we brought first capabilities in Invisalign in small architects with doctors can plan and visualize tooth movement in conjunction with restorative work. Almost all adults need more than just orthodontic treatment. And if you can design these restoratory work to finish it, to get great aesthetic outcomes, then you have the end goal in mind. And then you move teeth for those restorations in mind. And that's the beauty of digital treatment planning. You can define the angle and then you know where to move teeth to achieve that angle. We talked about the tooth mass and the tools to help doctors understand what needs to be done and also explain to their patients. So small architect is a great step toward comprehensive dentistry. Now exocad brings it to a completely next level. We acquired exocad 3 years ago. It is the best restorative platform in the world, used by doctors, by labs and has all the capabilities, whether you want to do a single visit dentistry for in practice or send work to lab, whether you want to do a small creator for a facially driven dentistry or print or mill your restorative parts. So how do we bring the power of exocad into a comprehensive digital dental platform we are building. So you're going to have to look at some teeth today. I like to show teeth but this is what we stand for, moving teeth and bringing beautiful smiles. So here is an example. It's example of our employee. So I can show his face. So this is Christian. He's got crooked teeth. And if he wanted to get a more beautiful smile, he also needs a better smile because he has got a deep bite and a lot of problems. He's going to have to come to a dentist most likely. So the dentist is going to take his photos. Internal scan, CBCT, everything else. And then we would also like dentists in the future to acquire a video and acquire a 3D facial scan. And this is why we are developing a solution that you can take a 3D facial scan just with a phone. It's going to be integrated in our phone app. It's about 30 seconds. You're watching it live. On the right-hand side, you see what's on the screen. So we're basically going around the face and about 30 seconds in very accurate 3D model of your face is created. No additional equipment, no additional space, no additional investment. And we can take this face into exocad, into ClinCheck and use the during treatment plan because everything is going to go through 3D. So now it all goes automatically. Exocad Connector is an example into exocad software and here is the example of a possible outcome for his more beautiful smile. This is smile creator in exocad, similar to small architect. So the problem with Christian is that he's got crooked teeth and the problem for a doctor is that they need to grind these teeth to get something that's close to aesthetically okay. You can see all the red areas start the healthy tooth mass that's going to be taken away. When you take away healthy tooth mass, you reduce the life of a tooth. The amount of stress increases by the amount of healthy tooth mass we remove. And Joe says, we want to die with our teeth in. If you grind them, that's not going to happen. You can also see in the bottom left corner this second to the center, the incisor is very, very thick. So to compensate for the tooth being in the wrong position, you have to put a lot of material. So it looks like okay, outside, but inside is really, really bad. So try to chew with that after losing a lot of tooth mass. So the simple solution is just put the teeth in a better place, 15 stages, 4 months. It's easier to do that than do a root canal. Look at this and we opened the bite, so much better, 15 stages. So now you can compare what you get without moving teeth and with moving teeth. This is the aesthetic outcome. Look at the restorative objects, how thin, how nicely place they are versus we had to do. Look at the size of these for even years. Look at the bite, the deep bite versus address deep bite after 15 stages of Invisalign. So why would Christian get what's on the left? Why wouldn't he get what's on the right. Why wouldn't Christian keep his healthy tooth mass? It only takes 15 stages. So we're going to give doctors tools to be able to understand, visual as explained, plan the lever. Here are some examples. Tooth mass. So you can see how much tooth mass you're losing. It's inside the yellow if you're not moving teeth versus moving. This is the tool. You can go in different planes. So every slice of the tooth you can see how much healthy tooth mass you're saving. If you were going for orthopedic surgery, would you let them cut half of your bone to fix it? There is no question in mind this is the future of the dentistry. So there are 2 million GPs out there who are not doing this today. We say that 75% of people would need or would benefit or wouldn't really need orthodontic treatment. Probably around half of all restorative procedures are this type of thing. Half -- close to half, 45%, I think we use that need tooth moving before restorations. And it's not being done, again, not because doctors don't care. They don't have the tools to do that. So we can give them the tools and make this the standard of care. I talked about facial capture. You can see here, digital articulator. See the difference in articulation and a function of your teeth with or without moving them. All these tools make it so easy, so straightforward to do the right thing. Actually, with these tools, you cannot do the wrong thing. There will be no option but to move teeth before you do the restoration. 2 million GPs, hundreds of millions of patients, every single year are not getting this, will be getting this in the future. And again, this is what Christian needs. Starting point, 15 stages, open up his bites, put it in the right place, and 4 restorations. Beautiful Smile that's going to last a lifetime. And of course, we can visualize it for Christian. This visualization actually pointed out is clinically accurate. This is not just some fake mock up teeth into his face. And then, of course, we talked about bringing it to videos. So that's why we want doctors to take a video. And I'm really happy to show you how it looks in the video. It's to work many, many years, extremely proud of it and happy to give it to our doctors very, very soon. iTero scan, ClinCheck plan in the video. This is what Christian is going to get. Ellie, she fell of the chair when she saw this. This is Nadia. It's only Invisalign treatment. She's got a good teeth. There is no need to do anything. Just align teeth, look at this. When these people saw their videos, we talk about outcome simulator, prove how much it improves our conversion. You take a look at the video. Utah, she is missing one tooth. So the teeth are moved, implant is placed. You get tears in your eyes when you look at this. So again, building on capabilities to bring more tools to the doctors to do comprehensive dentistry, to do the right thing for the patient and help patients understand the value they are getting from them. This is why you're going to be hearing about comprehensive dentistry more and more in the future. And this is why we are in the best position to deliver to our doctors. We have iTero, Invisalign exocad. We have all the building products, and we can achieve superior patient outcomes by giving those tools to our doctors. Thanks a lot. I'm going to now introduce Karim, my new buddy, a leader of our iTero business.

Thank you, Zelko. By the way, this is what I want for my teeth, all right? Good afternoon. I'm very pleased and excited to be here for my first Investor Day with Align. I joined the company about 6 months ago and I'd like to use just a couple of minutes to introduce myself because I haven't met with all of you before. Now I have been in the medtech industry over the last 25 years of my career, with GE and Philips, leading innovations and businesses in various clinical areas. And I have the privilege, the chance to see many transformation in the health care space. And I do believe that many of this transformation are relevant for what we see in the dental space today, and we'll talk about it. Now when Joe approach me about the Align opportunity. I have to say I was intrigued and I was excited. Well, besides having the opportunity to work with Joe again, which is always an enriching experience. Two things peaked my interest with Align. Number 1, is that I've always been very impressed looking at Align from outside, how they've been able to transform, to disrupt the orthodontists and dentists space over the last 20 years. Very impressive to see how they did that by delivering meaningful products that have had a profound impact on patients' lives. And when I look at it, it was like I want to be part of the next phase in this journey. You just heard Zelko talk about the comprehensive dentistry and what we need to do in order to transform and become -- and create this standard of care in dentistry. How can you not be part of that adventure. And the second reason is simply the potential. You've heard from my colleagues about the huge potential that we have around 2 million of dentists globally and a fraction of them only have adopted some source of digital workflow. So if we look at that as our opportunity, the sky is the limit. And I do believe, Joe will finish with this slide, I do believe that a line is the most well prepared in order to tackle this challenge. And indeed, by breaking the various assets that we have, the building blocks with iTero, Invisalign and exocad, we will be able to lead in this comprehensive dentistry that we talked about today. Now let's talk about the iTero business. Today, we have about 90,000 units in the field, which is roughly almost half of the IOS market out there globally. And we have a rich portfolio that covers all the way from value to premium, with a number of breakthrough technologies that we have introduced in the last few years that are allowing us to reposition iTero from being a scanner or a replacement for a PVS to being truly a comprehensive machine that delivers on this promise of oral health suite. If we look at the industry, this is really an interesting thing that really picked my interest when I looked at it when I joined Align, if you look on the left side, tells you the amount of systems globally across all the providers, the amount of systems that are in the field today, we have roughly doubled number of systems from 2018 to 2022, 2023, it's about doubled. And if you look at the projections that we see is going to double again in the next 3 to 4 years. What does that tell you? It says that the digital transformation is actually accelerating. And you see it on the right side, when you look at the maturity grid, you'll see that we have crossed the chasm. What does that mean is that we move from the early adopters to the early majority. And that's around -- that happens around 15% -- between 15% and 20%. This is just -- this is not just for dental. This is across any industry. When you cross the chasm, then the industry changes, there's a new dynamics that take place. One of them is that competition heightens. Up until now, we -- up until a couple of years ago, we did not see a lot of competition either in the clear aligner space or in the scanning space. But today, you see a lot of competition emerging. Why? Because they see the opportunity, the massive opportunity ahead of us in this transformation and a lot of people are coming in. With that, you will also see a big pressure on pricing. More competition, pricing is going to go down. And the only way to survive this game is through differentiation. And this is why we talk about comprehensive dentistry and how we go after this unique opportunity with the 2 million dentists out there. And then the third one, these type of customers that you have in the early majority and late majority, they have different needs. While the early adopters are happy to try new technologies. They want to be in the forefront. They want to be experiencing things. The early and late majority are different. They want products that have proven effectiveness. They want reliable solutions. They want a pristine customer experience. They want services and they want their system to be integrated into their ecosystem. And I do believe that Align can provide all of these needs, can satisfy all of these needs with everything that you have heard today. Another data point that I want to share is the -- this acceleration, we also see it on the uptake of Invisalign. With every iTero that we're placing out there, you see from 2020 to 2023, about 3 years, that we have a bit of 10% improvement on how the CCA uptake has taken place, which means that our strategy is working and will continue -- this adoption will continue to grow as we progress. Now Jeff, would talked a lot, Raj as well, talked a lot but the GP transformation, the practice transformation, and I do believe it starts with iTero. Why because the patient is going to see the progress of their oral health and the issue that they have, they will start to see it after they have done a scan. So if you provide all the tools at the chair side that the user, the doctor can use in order to show to their patient what is going on with their mouth. And then from there, go into this orthorestorative approach that Zelko talked about, then automatically, you will have this uptake with Invisalign and this is what we are going after. By having an iTero, we want to have an iTero every chair moving forward, where the doctors are going to use it to drive this adoption with their patients and then slowly moving the standard of care to enable this better clinical outcome, but making the tooth movement standard in dental procedures. I've been here only for 6 months and when I saw the videos and what Zelko talked about, I was shocked, right? You see that we still have customers that are doing it in the old way. And this is where we, as Align can come in and help them in transforming the practice in delivering better efficiency for them, but also a better clinical outcome for their patients. Now Raj introduced our Align digital workflow and if you think about iTero, I'm just going to click through it since Raj already talked about it extensively, you will see that iTero is going to be present in every one of the stages. iTero is central to what we do and we'll continue to be central in this journey that we are going after in this transformation. Now I would like to talk about a few innovations. One of them that Sri introduced is the Outcome Simulator Pro. And just looking at the data, after we've introduced this interesting feature, we see a 2x acceptance on the cases, i.e., the patient is twice as much likely to go with the treatment than with the normal 3D model. This is very impressive. But let's hear our customers talk about it because they are the ones who are experiencing this daily. [Presentation]

The second innovation I want to talk about is also one that was introduced earlier is the iTero Exocad Connector 2.0. And the way I look at it, this is really bringing the lab and the clinic much closer together by streamlining their workflow and the communication. So it will reduce the mistakes and it will accelerate the work that they need to do. And with that, both the lab and the clinic will have a productivity gain and we'll have less mistakes overall when they do their work. And again, this contributes to bring in exocad and iTero much closer together so that we can leverage each other in our portfolio in order to deliver these solutions that are unique to align. And then the third one was also introduced earlier is the oral health suite. And the way I look at this one is, there's 2 sides. There's one of them, which is on the doctor side, allowing doctors to have all the tools at the tip of their fingers and being able to -- once they have done a scan to see very quickly what is going on in the mouth of that patient. And on the patient side, it allows them to see right there at the chair with the scanner allows them to see what's going on in their mouth. So instead of the dentists trying to convince them that they have a problem by touching their gum or touching their teeth, the system is showing them that there's a problem. And then there can be a dialogue, the trusted dialogue where the 2 parties are talking about the best course of action in order to address whatever problem is there. But again, let's hear about our customers who are using this tool. [Presentation]

Well, you've heard about education. This is -- sometimes you hear also that, that's a struggle to really get their patient to do what they need to do in order to have a better or a health. With this tool that's going to really help them drive that adoption and education is going to be key in this journey. And then I'd like to close with our innovation strategy. There are 4 areas that we will continue to focus on when we look at the iTero specifically. The first one, obviously, is to continue to drive the Invisalign treatment adoption. This is our core and this is going to be present whether we are in pure orthodontic or in ortho-restorative, we will continue to drive this intimate workflow between the 2 systems. The second one is the scanner itself. And like I said, we are repositioning iTero from a scanner to a comprehensive oral system. But you still need a good scanner. It needs to be fast. It needs to be simple, it needs to have the right workflow. So we will continue to improve on our foundations. The third one is what Zelko talked about, how do we improve our restorative capabilities and make sure that our scanner can do all type of restorative work including moving teeth. And then the last one is leading with oral health, which we just looked at just a minute ago, is really starting -- and I think we're scratching the surface right now is we're looking at diagnostic and look at it as really people customers addressing the root cause of the problem instead of just fixing. I think dentists are trained to fix issues. Here, we have an opportunity to really look at the root causes behind any malfunction and then address it properly as was indicated in the previous discussions. With that, I'm not introducing the next presenter. I'm introducing the break. You earn the right to go on the break for a few minutes here. So -- and then we'll reconvene in Shirley, 15 minutes? All right. Thank you. [Break]

My name is Dr. Mitra Derakhshan. And what you heard most of this morning is everyone really talk about clinical outcomes and how doctors expect clinical outcomes. First and foremost, that's what we expect as doctors. And to really -- the initial barriers, as you know, to drive utilization and adoption of Clear Aligners really boil down on clinical confidence for doctors at the beginning. But it's not only about clinical confidence across adults, it's really about clinical confidence across the whole spectrum of malocclusion. Simple cases to complex cases including extractions, deep bite, all sorts of clinical conditions and as well as teenagers. Because those doctors were not going to compromise on clinical outcomes with teenage patients. But as we adopt and as doctors adopt and start to utilize clear aligners in their practices, what becomes most important then is practice efficiency and growth. And then barriers to adoption and growth, really boiled down to adopting digital workflows, moving from analog to digital and really getting that throughput so that you're more and more digital and that the profitability comes through. But at the same time, we know what patients want. Patients want that elevated experience. And they all want things done right away, instant visualization and communications so they can understand. Now Align is going to address and has the products to address all these needs for our customers, doctors and patients. But Align is in a unique position, is that we have clinical evidence across all these areas. Whether it's around exceptional quality clinical outcomes, there's multiple and multiple peer-reviewed articles that not only shows comparable outcomes to braces, but also, in many instances, superior outcomes to braces, such as where Clear Aligner, Invisalign becomes a treatment of choice in treating patients such as an open bite treatment. In addition, there's a lot of evidence now, plethora of evidence around teen treatment and the efficacies that we could gain with clear aligners and Invisalign specifically in teenage treatments and even more recently across the children area. But what we've also seen in the last few years is evidence and clinical evidence showing around practice efficiency and growth. So the idea of adopting digital practice is now being seen in very obvious things like less emergencies or fewer visits, but more meaningful evidence for doctors, such as 30% fewer visits or faster treatment times to braces. And this becomes quite meaningful for doctors as they adopt. In addition, we're seeing our patients benefit from all the rewards of clear aligner therapy with multiple evidence around less pain, better oral health, better gums, better periodontal health, more comfort but also evidence that supports better compliance in kids, advantages with Invisalign first that is comfort and aesthetics, fewer appointments and better oral hygiene, which are all important to moms. So this published evidence and these multiple published evidence is really meaningful for doctors. But what you'll also see is that, we have quite a bit of evidence across the whole spectrum of the Align Digital workflow and the Align Digital platform. You hear a lot about the Align Digital Workflow and Digital Platform, and you're going to hear about it from others as well. But Align is the company that is in position to actually have evidence across all these steps of the platform. And I'm just going to touch upon a few of them because there's probably too many to cover. But when we look at evidence again around how do we support elevated patient experiences or exceptional quality outcomes, the improvement in 66% more sensitivity using iTero NIRI technology as compared to X-rays. So think about an elevated patient experience in one scan, not only are you seeing what's going on, but you're also getting information about caries detection. So the one scan of [indiscernible] patient experience, no radiation and a lot more efficacy, 66% more sensitivity. In addition, this is where Align's clinical database and really the power of AI capabilities and data mining helps also generate evidence across the whole digital platform, which is unique and really differentiates us and our platform. Karim talked about the Invisalign Outcome Simulator Pro. So this is not based on 5 patients or 10 patients, based on hundreds of thousands of patient scans where we can see that the impact into conversion, but also the impact of what the digital platform is doing to our doctors and helping them with being more efficient in their practices. By going through the treatment planning process, 82% faster, getting ClinCheck conversions and therefore, they could deliver better outcomes quicker to their patients and the Aligner delivery. And we also heard a little bit about -- Sri talked a little bit about Vivera and the opportunity with Vivera. There's also evidence here to show that Vivera is really not only there to serve retention for Invisalign patient but also a broader indication with BRACEs patients, but also how the material helps withstand teeth clenching and grinding and great opportunity for doctors to be using the Vivera retainers pretty much in all patients. So I think Joe started off with this. And really we know as doctors moving teeth and roots through bone is a complex medical procedure. And most importantly, to achieve those clinical outcomes, we need an appliance to deliver those clinical outcomes. And again, Invisalign has that clinically proven evidence across the appliance and the Invisalign system to deliver that exceptional clinical outcome. And Srini talked a little bit about it and our appliance is phenomenal, and it's only going to get better as Srini talked about. But today, the evidence is there. SmartTrack material is the best material out there and there is clinical evidence to show that other materials out there don't have the same properties as SmartTrack material. And so therefore, others need to use other materials, a secondary material or compensate because they don't have all the properties in SmartTrack material to deliver those precise tooth movements that are needed. But another example around evidence in how we have the power of the database and all the data points that Sri talked about is smart stage technology or how we move teeth. We can go into the database and look at different patterns of how we move teeth. Is it better to move teeth sequentially? Or is it better move teeth all at one time. And by doing this, we can see what are the most effective patterns, but also the most efficient patterns. What are the patterns that are going to help give shorter treatment times to patients? What are the patterns that are going to help doctors with less AA rates or use aligners. And all of this feeds into treatment protocols, innovations, but also how we can use these through education and help develop templates for many of our doctors and make onboarding and easier the learning curve to get into Invisalign by using a lot of this information through the database and our treatment protocols. So really a plethora of evidence across whether it's delivering outcomes, whether it's the Align Digital platform and the Invisalign system. But as we all know, the teenagers and our growing patients and even the children in practices are the largest market opportunity for Clear Aligners. And what's most important when you think about teenagers and we talked about is not only moving teeth and roots. But in teenagers, you have to be able to move the jaws, you have to be able to move the bones. They're in the growing phase. So if you have a bite condition and imbalance in the jaws, that needs to be able to be solved. And so for products like Invisalign mandibular advancement, where you're moving teeth and the jaw forward at the same time. It's critical to treating teenagers, again, delivering that exceptional clinical outcome and not compromising on the quality of care. Srini talked about and introduced Palatal Expander. Palatal Expander, again, it's about moving the jaw, developing the jaws so that later on, the teeth can be aligned; or in an instance of a child when the teeth come in, they're going to come in with room. And again, the evidence is there not only around the efficacy. So the efficacy of mandibular advancement, Palatal Expander, Invisalign First, but also in comparison to traditional appliances. So in many instances, MA is moving at the same rate as the traditional appliances out there like Twin box or other jaw advancement appliances. Palatal Expander, we're getting the same results clinically that you would from a traditional appliance and actually even in many instances, better than traditional appliances. But on top of that, think about the elevated patient experience that you have: the comfort, the aesthetics, the less pain. So really, when we look at this, it's not any more about how to clear aligners compared to braces or traditional appliances. The really way to think about is how do the other appliances really compare to clear aligners or things like Palatal Expander. Because efficacy is there in the evidence, but the value add of the patient experience and the efficiencies the doctor can gain are far above anything we see. So it's great to have evidence for the sake of evidence. Evidence is important and it's critical for doctors but it's about how we take that evidence and we put into action to help drive utilization adoption for our customers and our doctors. So we drive this education through our programs. Growth programs, as Raj talked about, are onboarding, segmented programs where we talk about addressing different barriers at the different time points of the journey of our customers. Also, we bring this evidence through in our advertising. So Raj showed a couple of examples. We know what's important to moms, less pain, better oral health and faster treatment times than patients than braces. And that you could see some of those ads that were focused on faster than braces or less pain. And this helps moms choose the brands with -- that they want. And then not only have we learned over time by the evidence of not only efficacy, but the efficiency and the efficiencies we've seen, 30% fewer visits, 5 months faster treatment time than braces, better throughput for our customers. We have the know-how to help our doctors scale their digital practice and bring more throughput through their digital practice. So if you're seeing patients less frequently with different tools like virtual care, you're going to want to take the workflows in an office and adjust for them. And many doctors are starting to do this but now the Align teams also have this evidence to go out and help our doctors scale into the digital practice. So the investments really and also having clinical evidence continue to help drive and utilization and adoption. So just to summarize, Align is really differentiated through clinical evidence across the market opportunity, whether it's the largest market opportunity as we talked about and braces, specifically with growing patients, teenagers and children, but also across other aligners and scanners. And this is what's going to help continue to help drive adoption, utilization and what feeds into our innovation, our protocols, ability to continue to scale digital practices and also drive some of our go-to-market models. So with that, I'm going to introduce Simon Beard, our EVP of Americas and EMEA to talk about the market.

Thanks. Thank you, Mitra, and good afternoon to everyone. It's good to see you here, and thanks to everyone joining as well. So looking at the presentations that you heard before the break and Mitra's presentation is a privilege for me to be part of the team that really brings these new revolutionary approaches that Align has developed over the years to our customers. That job got a little bit bigger a few months ago. And I wanted to start by really positioning this new kind of Americas, EMEA region. One of the things I've learned because I've been fortunate enough to lead both the EMEA business and now the Americas and now the combined organization, is there are a lot of similarities in customers, in go-to-market and the approaches that we need to take to really best support our customers. So my objective and the team's objective is really to drive faster adoption of the technology that the team is developing, really bring some of the new business models that we've developed and then leverage a lot of best practice that exists across the combined region. And I'll talk to that a little bit as I go through this presentation. And then importantly, as we get larger and our customer base gets larger, we really want to ensure that at a local level, the teams can make decisions and move at the speed that our customers need us to move, so really pushing down empowerment within those teams and then leverage those commercial programs and approaches to really drive growth in the future. So as both Joe and Raj talked to, there's a huge opportunity. And clearly, up there, there is only really one picture that myself and the rest of the team think is acceptable as far as how many patients receive Clear Aligners today. But the immediate opportunity is impressive. Obviously, the biggest opportunity is teen. but the wider opportunity is really breathtaking. So if you look at the Americas and EMEA, you can see that our largest submitter base is across the Americas, the highest utilization there. And that's often a factor that we've been in that part of the world a lot longer. And hence, the growth -- the CAGR growth in EMEA is slightly higher than we're seeing. But the key number in there as well is the number of direct employees that we have today across the combined region that are really supporting our customers, both for Invisalign and iTero and it is a really key differentiator. We've got some incredible know-how and experience that really understands our digital platform, understands our products, but also understand how best to support customers, whether they're in sales, marketing, customer support and the large clinical groups that we have as well. So I'm going to cover 5 areas and touch on the approach that we're taking to really drive the adoption of our technology and to support our customers. So I'm going to start with auto engagement. Now the auto customer channel is still our largest channel by revenue and volume, and it's absolutely critical to us because this is where the largest immediate opportunity exists for Align. And when you look at the products that we've launched around MA, Invisalign First and now IPE, which customers are incredibly excited about, this is a really key focus for us. So you've heard about how we're raising awareness. We're trying to digitize that journey for the consumer and make sure that they can get in front of a confident user of Invisalign and iTero. And we're continually iterating to improve the efficiency of that process. I'm going to dig into a little bit more about how we're gaining traction with teams. And then I'll talk a little bit about our new subscription model. So we've been building our understanding and our approach within the teen market over a number of years, and we've introduced some additional things this year, and we'll continue to iterate as we try to penetrate this huge opportunity for Align. So we've taken a lot of best practice that we've learned from Europe around how we can make our customers clinically confident. That is a major barrier for them. They've been very used. They've been trained to use wires and brackets to treat growing adults. And so we're implementing kind of new programs, peer-to-peer approach to really support our customers through that learning curve. The second thing that we did and we started this in the U.S. and Canada, is you often hear about compliance or the perception of compliance being a barrier to either parents or the ortho and their teams to using Invisalign. So we introduced a 100-day guarantee that if the doctor needed to change the patient out of Invisalign back into wires and brackets, we credit that case 100%. So it didn't cost them anything, only the time of moving that patient. You won't be surprised to know that we've seen very, very little usage of that because as we know and the clinical data shows, teens are more compliant than adults. So that's been a great thing, improving our confidence in conversion and giving our customers that safety in it. The second thing is really supporting the staff. For many of you who are familiar with our business, most orthodontic practices are run by the staff. And so we have an extensive program of supporting treatment coordinators and orthodontic assistance so that they understand our technology and better utilize that technology in front of the patient. And then financing plans. We've been reasonably successful in Europe with teen packs. We've introduced extended terms and monthly payments to really help our customers get over that initial bump of the lab fee. So teen continues to be a really major focus for us as an organization. and adopting the new technologies that we are able to introduce. The second model really was introduced, and it came out of the depths of COVID, where we looked at an opportunity to really support our customers holistically from a product usage perspective. So we developed the subscription model. And in simple terms, what the doctor subscription model or DSP is, a doctor agrees to a certain number of aligners and they can choose various packs and aligners and they can use them either for retention cases or they can use them for what we call touch up, which is up to 10 stages. They decide what they use that pack for. We don't dictate that at all, and they can use from as little as 3 aligners all the way up to 10. And then if they need a few more, they can use their DSP allocation to do that. And then on the retention side, we saw that many customers are either outsourcing that to labs or they were actually starting to print those retailers in their office. And this is a way of really outsourcing it to align technology because most customers would admit that we make the best retainer. And the beauty of this is we have an amazing manufacturing facility that can deliver these things with speed, high quality, and it's all on the same platform. So it makes it very, very simple for the doctor and their staff to access this approach. And so we've seen a rapid adoption in the U.S. and Canada. It's probably one of the most popular programs we've introduced. And we're now rolling this opportunity out into Europe and to the rest of the world based on the success that we've seen in U.S. and Canada. The cool thing about this, and one of the objectives when we were trying to construct this approach is great for Align, but it's also of high value to our customers. It gives them new ways of treating patients with things like they can create patient subscription models as well because we all know that if you have orthodontic treatment, then you should wear a retainer for life, and this makes it really easy for them to do that. Moving on to the GP channel. This is an exciting opportunity. This is really the access point for us to really start to go after this kind of 400 million potential patients that exist. GPs principally treat adults, and those adults are often in their chair. So what we're trying to do is really unlock that potential with some of the new comprehensive technologies that the team have developed. I'll talk a little bit about iTero, then the importance of how we use peer-to-peer in education. So iTero is absolutely critical. And you would have seen data where we were able to sell iTero as a comprehensive scanner to general practices that they can use both for their restorative needs but also for the best Invisalign approach as well. It makes a huge difference to simplifying that workflow for most of the dental practices. And what we do there is, obviously, we've got a portfolio of scanners, so doctors can choose the level of scanner that they want to adopt. And then we also have a huge installed base across the region. And so we have a number of customers where we're looking to upgrade the -- what we'll call older iTero technology to the new scanners. We also have teams now that are really focused on accessing general dentists who actually don't use Invisalign at the moment. And actually, iTero is a great way of approaching them or they've either lapsed. They tried it and it didn't work for them. But the sole objective there of selling that scanner is to make sure that we turn that general dentist into an Invisalign doctor, where they're using Invisalign either for orthodontic but also, as Zelko talked about, this comprehensive approach to dentistry, where they're actually positioning and moving teeth to optimize the restorative outcome. And then we invested about 3.5 years ago around how we support labs. And I think many of you understand that dental labs are both influencers and also enablers for the choices the general dentists make when it comes to particularly scanning technology. So you heard last year, we have -- we're working with Desktop Metal as a lab who were trying to digitize general dentists and also a number of labs out there, and we're starting to see some great results. This is a great example of where we're using what we've learned in the U.S. to help how we drive the approach in Canada, in Europe, and also in Latin America. And last, if you think about our general dentist population, there's a large number of those doctors with low volume. They don't do many cases at the moment. But they're Align customers. And so we've got new programs where we're really looking to support them clinically, treatment planning support where we're rationalizing the portfolio to either Invisalign Go or 3 and 3, really to simplify the approach and open up the opportunities for them to use Invisalign across a myriad of opportunities. We have strong peer-to-peer education groups with Molise, David Galler, and also catalyst with Christina Blocker and [indiscernible] that are supporting GPs in that journey. And then obviously, a lot of our new certified doctors are actually general dentists. And we've made, as Raj showed, significant improvements in how we're activating those customers. Another area that we've really been focused on, and we really changed our approach about 4 years ago is the dental services or DSO or OSO if they're an orthodontic service organization. As many of you know, we've seen more consolidation, not just in the U.S. and Canada, but across the whole region. But if I talk specifically about the U.S., which is the most developed DSO market, we have about 20 large DSOs. And then a huge number of what we call mid-market or smaller DSOs that are growing quite rapidly. We see dentists who are newly graduated, many of them have the intention and end up working within DSOs initially. And we're seeing that consolidation continue. So we expect in the next few years that the number of dental clinics that will be part of the DSO will be close to 40%. So it's important for us strategically that we're -- within we have good relationships and that we're selling the value that the Align Digital platform can offer. So we focused on the kind of trend towards market consolidation. We have a dedicated team now. We changed this 4 years ago. So our larger DSOs -- we have a team of people both clinical marketing and sales that just think about their specific needs. And the key thing here is that the DSOs are committed to digitizing what they do within their dental offices. And where they see that vision and they really want to drive that, we can work with them and the scale that we have as a business to really support that. So digitization and scale are critical here. What we're going to be able to do over the next year or so is, once again, take what we've learned in the U.S., we've already implemented that in Canada, where we work with the largest DSOs there, but also into Europe, Middle East, Africa and Latin America. So last but not least, we've not really spoken much about this, but this is still a critical pillar of our growth, and that is how we expand into new markets, new channels as a business. We went direct in markets like Turkey, Middle East and Latin America, 4 to 5 years ago. And we've seen great progress in how we're engaging. We're still relatively small when it comes to the share of chair that we have, but for example, in Turkey, Turkey has gone from absolutely nowhere as a country to -- it's a top 15 market now for Align Technology, which is down to an amazing team there. If you think about the hyperinflation and foreign exchange challenges that country have, the growth has been dramatic. And in Latin America, where we introduced monthly rental around iTero and then a new program called Invisalign Pay, which breaks the acquisition of Invisalign down into monthly payments. everybody pays for things monthly in this part of the world, we really have to change our business model and innovate. We've seen really great response to that. Our newest area is Africa, and we've really only been direct for about 18 months in Africa. We focused on Ghana, Morocco and South Africa at the moment. but we see a great opportunity in Africa. Standard of health care there is high. And once again, there are consumers there who want in this line. So I'll just close by really saying that orthodontics really value innovation. We believe as a company, we can provide that innovation and that support. There's huge potential around comprehensive restorative dentistry and the role of Invisalign and tooth movement to that particular channel. I think we're extremely well positioned in DSO. I think we've got great relationships and a great reputation with both dental service organization and also orthodontic service organizations. And we are continuing to create these new business models that really ensure that our customers can transact with us in a way that better suits their business but also makes it easier for them to transact and grow their business, which is absolutely critical to us. So thanks for listening. And I'm now going to hand over to Raj Pudipeddi, whose second job is running Asia Pacific. So Raj, over to you.

See now you know the play. We're going to start with the opportunity. Simon talked about it, Joe talked about it. Look, we have an incredible opportunity to win with teams to win with adults with 200 million consumers in Asia Pacific. One of the things I want to reinforce is Asia Pacific is home to 3 of the top 5 GDP markets in the world. Asia Pacific is about 40% of the world's population. So the opportunity for us with just 35,000 active doctors and only 12 utilization is incredible, right? You just saw how we know to grow utilization from 12% to 25%. You saw that in developed markets like the U.S. Now we are bringing the same playbook to Asia Pacific. And one of the key things we need to do is to win the teens. Let's talk a little bit about the 4 strategies. These 4 strategies remain consistent for us, work for us. And let me talk a little bit about what we're doing in Asia. Look, first thing is China. Now all of you know China is a key market for us. But I got to tell you, China is an incredible white space. Just a few weeks ago, I was in this little town, Tier 2 city called Shenyang, and then I decided to go to this place called Foshan, which is a Tier 4 city. So I go to this Tier 4 city, I go to this clinic to meet a doctor, and she is incredibly excited first for 5D Plus. And then for all kinds of tips and suggestions on what she can do to digitize her workflow and grow Invisalign. Her whole focus was, look, how can I convert every team who comes to my clinic to Invisalign? What are the best in the world doing? What do I need to do? Two, in China, there is an additional travesty of adults being put into braces, right? So the second question was, how in the world do I actually convince adults, not to put on braces and use Invisalign. So I wanted to think about the white space we have in China with Tier 3, Tier 4 cities? Second thing that I'd like to talk to you about is Japan. Now, we all know Japan is a developed market. It's an important market for us. But one of the things that I'd reinforce to you is there are cities in Japan where we definitely can reinforce our brand presence and our sales presence, right? I had a dinner with key -- the top opinion leaders in Japan, and one of them came from one of the small towns. And her key push to me was Raj, you need to be more present in these towns for us to kind of understand the benefits of Invisalign. India Acceleration Plan, same story. So I was at a restaurant actually having dinner, the [indiscernible] comes in wearing braces. And I kind of said, why in the world would you do this to yourself? And so we are chatting for 10 minutes, right? And then I see 2 other people come over and say, okay, when are you going to launch Invisalign in this Tier 3 city? We don't have any presence in India beyond the top 6 cities. So you understand the level of white space we have from an expansion standpoint. Winning the DSOs, Simon did a great job of explaining the playbook we have in the U.S., in Europe. In terms of winning the DSOs, we were going to reapply the same playbook in Asia Pacific: have a dedicated team focused on workflows, focus on clinical efficacy, focus on absolute digital transformation of the practice. We touched almost 1,000 university graduates across Asia. We are now incorporated into most programs in schools in Asia and we want to continue to expand the presence. Because if Invisalign gets taught to orthodontic graduates in school, then when they come out, they are much more equipped for this new world with digital transformation. Ortho utilization, general interest adoption, there are 2 points that I'd reinforce to you, new doctors onboarding growth programs. Remember, there are only 2 ways to grow Invisalign. You get to the new folks or get existing folks to use more. And both of these are absolutely critical if you think about a developing market like Asia Pacific. All morning, we talked about innovation. You had Srini, you had Sree, you had Zelko, you had Mitra, outlining and detailing the incredible innovation we have. All of that is helpful if you can drive adoption. So one of the key focus areas we have in Asia is driving adoption of the innovation -- the incredible innovation and adoption of the platform that we have. In Asia Pacific, our brand is not as well known as in United States. So we are ensuring brand superiority, brand awareness, and making sure consumers know the difference between the Invisalign and all other alternatives. Last but not the least, iTero integration. Look, Asia Pacific in some ways is actually ahead of the world on digital integration, on digital adoption. So we have an opportunity to make sure we take iTero and hardwire to every one of the activities that we have from an Invisalign standpoint. We've done this in the past, but we are going to scale it up even more. So think about rentals, leasing, certified preowned, all of this integrated into a new doctor onboarding and growth programs, okay? Just a little snapshot on the efficacy of the programs. So we are training more doctors than ever before, and that's clearly resulting in growth. So if you look at doctors in a program, new doctor onboarding or growth programs. You can see that it's between 26% and 58% growth in terms of the number of cases that they do. China. I have to reinforce China. It continues to be an incredible opportunity for us. DSOs in China are actually really hungry. One of the recent meetings that I had with the top 6 DSO leaders reinforce the importance of bringing the playbook that we know how to do from a DSO standpoint, into China and then going ahead with it, okay? Smile Architect. In China, we have a lot more GPs and GP orthos, who do more restoration than orthodontics, more restoration than teeth movement. So we have an opportunity to use Smile Architect as an important catalyst to drive the conversion of the market from braces to comprehensive dentistry. You will see a consistency across the key markets. Look, Korea, India, Japan, Australia, the fundamentals stay the same, new doctor onboarding growth programs. Teen growth is absolutely critical in terms of our future here. We need to strengthen the brand, and we need to have the right portfolio. So I wanted to kind of share with you, we've launched Invisalign Adult and Invisalign Standard in China to expand the portfolio. We've also now piloted Invisalign Essential. So we call it Essentials by Invisalign in China, in India and Thailand. And the intent is to enable patients and doctors who have way more options so that a patient can consider Invisalign, come into the practice and then the doctor can prescribe the right thing, okay? Brand strengthened differentiation, the $1 billion brand that Joe talked about are absolutely critical for us. So here is a fun video on what we're doing. [Presentation]

So when you think about APAC, I wanted to think about the tremendous potential we have. We have the potential in existing markets, China, Japan. We have the potential in relatively new markets like India, where we just launched with GPs, and we have many other markets that we just operate through distributors: Indonesia, Philippines. So this is a region which has got growing patients maturing preferences from a consumer standpoint on the importance of a brand, acceptance of digital transformation and digital treatments. And of course, growing incomes. And all of this leads to a wonderful opportunity for us to commercialize our innovation and deliver strong growth for the company. With this, let me introduce Jen Olson to take us through leveraging CX with AI.

Hi, everyone. It's good to see you. Like Srini this is -- I'm a little bit of an old timer -- this is my 21st year with Align Technology. And as you've seen, so much has changed since I joined this organization. But to be honest, there's one thing that has stayed consistent for us. And I know we're going to talk about AI and kind of the future, but really customer has been the constant since the moment this company was formed and especially since I joined in 2002. And at the end of the day, we know that this is a relationship business. Customers have choices. They're very unique. We have a very diverse customer base. And so that relationship is something that we take seriously. They have very one-on-one relationships with their patients. And in turn, we try to have as personalized and curated one-on-one relationships with our doctors understanding their needs and preferences. And it's truly these customer experiences that drive our portfolios and our innovations and all of the things that you've seen today. So before I jump into the future, I thought I'd touch quickly on some of the things I've introduced to you in the past and give you an update on our journey with CX. The first one was the last time I was here, we had started a pilot on local hives and really what lives are -- hives are is their curated support networks for doctors. And at the time, we'd actually done this geographically. We had started in France. But what we learned was these were highly impactful when we targeted them towards subsets of customers. So for example, you heard about the new GP onboarding journey. Well, new GPs have really specific sets of needs, both clinical and customer support, which is very different from platinum elite providers. We also have curated hives for DSOs. And what this allows us to do is to support them in their journey with their unique needs. What we found is that doctors who are in these hives, their NPS is that much higher, 2x higher actually than those that are not. So we'll continue to leverage these in the appropriate manner. The second, I'm going to kind of combine and you cannot be a customer-obsessed organization if your entire organization doesn't understand your customer. So the last time I was here I introduced to you Care At Align. And Care At Align stands for connect, ask, respond and exit with empathy. It means truly understanding our customers and their feedback. When they give us feedback, we have to close the loop, and we have to understand the pains and challenges and opportunities that they see in their practices. Now we bring this to life through our organization. And 1 way we do this is through our dedicated week, 1 week every year called CX week. And if you're in an office, we have doctors come in, we have online content, and that's all about customers giving us feedback about what we do really well and what we can do even better. Now again, if you're a customer-facing employee, this becomes a little intuitive. But if you're deep in finance or legal, sometimes it's hard to connect what your day-to-day means to a customer. And so in order to get to customer obsession, it's critical for us that we all see how we connect into these customer experiences. Now the last journey we've been on is transforming the way we support customers. And this is sort of a digital journey of its own. 2 years ago, if you wanted to support from Align Technology, you probably had to call us and may be e-mail us. But we've completely changed that, and had started in the Americas. We introduced technology like live chat and chatbot, which not only provides efficiencies internally but also provided efficiencies for our doctors and their practices. And so how are we doing on that journey? Well, in under a year -- a little bit -- actually, excuse me, a little bit over a year, we've been able to offset over 1/3 of our incoming call volume leveraging these technologies. Now I think we've all had horrible experiences either with live chat or chatbot. And that's why we were very intentional about the way we went about this. We only automated the journeys that we felt would have the most impact and tested this with customers before we rolled it out, and you can see the results. Now our customers have also said, you know what, not only is this efficiency gain for you, but for us, this means efficiencies in our practices, because they're very busy people. And if any of you have spent a day in an orthodontist or a general dentist practice, you know that you are going to have to give up your lunch if you want to call and get answers because you're just that busy with your patients and patient care. And this has given them choices. So if doctors still want to call us, the patients -- or excuse me, if staff members don't want to call us, they have that option. But if they don't, what they've told us is with a 4.8% satisfaction rating, they like to have the option to use digital technology as well. Now this among a number of initiatives that we've had in the realm of customer experience has driven up our global. This is our company, NPS score, as given by our doctors over 20% since the last time I saw you at 58.4. Again, benchmarking this med tech, you're looking at 30 to 40 maybe on a good day. And so that's why we're tremendously not only proud of this number, but appreciative of the partnerships that we have with our customers that drive these results. So with all that said, what's next on this front? And this is where I get really excited. And Sree showed you a slide similar to this that talked about the power of data. And what's fun about our customer base is they are very involved and vocal and great about giving us feedback so much so that we actually on an annual basis get about 90% of our customer base giving us feedback at some point of their journey, either that's through customer support through their ClinCheck Promoter Score through the numerous surveys we send them. 90% of our customers globally give us feedback. So what does that enable? Well, then we can mine that data, and we can find out what do they really like from us, what do they not like? What do they want us to do more, where they want us to lean in and/or where do they want us to stop doing that. And so that enables us then to have personalized solutions. And the transformation I'm most excited about when it comes to support is going from reactive to proactive. And I'll talk about some pilots we're doing in just a moment. But the last is, this also allows us to prioritize customer requests. So whether it's the innovation road map with Raj and Sree and what they're doing or some of my engineering teams who run alongside them to do continued feature development on some things that are key customer asks. This enables us to remain agile and remains -- allows us to prioritize appropriately in the AMC and beyond based on what our customers are telling us that they want to see from us. So how does AI work in CX? Well, I thought I'd talk you through some things we've delivered and some things that are in pilot and are on the way. The first is an age-old question. We actually called it, where is my stuff initially because since I joined this company, when you would talk to doctors, one of the things from a productivity and efficiency standpoint that they struggled with was that a patient would leave their practice and there really wasn't that Amazon-like availability or visibility into where their case was in the process. And through machine learning, we've been able to provide that. So now they have a dashboard and they could track. What does this do? This means that a doctor can see when their ClinCheck is ready or their staff can alert them there's no delay in getting that reviewed or approved. And then from a staff standpoint what that enables is them on the scheduling side to be able to effectively manage their customer flow. And if you're doing a significant amount of Invisalign, this is critical because you have to be able to get your patients back in for that first aligner delivery, and this enables that. So we get a lot of positive feedback on this. The second is what I call surprise and delight. And this means that through AI, can I know something about you that you might need or want before you know it and then surprise you with that insight and deliver a great solution. So we are piloting a couple of things right now. I'll give you an example. What if I knew that because of the amount of iTero scanner sleeves that you ordered, but because of the number of iTero scans that you did, you might be running low and how might I then prompt you then to order before you realize that you're out? Or what if you're hovering over something on our website and we can see that you're kind of struggling with it or in ClinCheck? How might we deliver curated education to help you overcome that the next time. So again, our customers will tell us we're piloting things. We're getting feedback on these. And then based on their interpretation or their feedback to us on whether or not it matters, we'll continue to lean into this and to find even more items that we can surprise and delight them. But to me, this is the transition from going from reactive, I have a problem and I call you to proactive, I sensed you might have a problem and I'd love to delight you by anticipating and solving that for you. The last, you heard from Sree using natural language processing is with through our conversational AI and our chatbot, you saw the scores. One of the synergies that we get from Simon and the EMEA and Americas region is, it has immediately been scaling that support as we look to EMEA. We've already started in some APAC countries where appropriate as well. So what I want you to hear from me is as we get bigger, we're leveraging AI to maintain the fact that customer experiences should feel personal, should feel local, and that's not just driven by the sales team and the customer support teams but through our entire organization at Care At Align. And to talk a little bit about how that also translates into the manufacturing of aligners, I'll now hand things over to Emory Wright.

Thanks, Jen. I don't know about anybody else, but there's a lot going on. I'm an inside employee and sometimes it blows my mind to how much innovation and new programs and the massive market opportunity that you heard from my colleagues. It's just incredible. So I've -- it's been a couple of years since I've been on stage here, so it's good to be back in the line up. Good to see you all. Joe also earlier today, and I think actually a couple of people used this slide, did summarize kind of our journey over the past 26 years and a lot of the innovations that we've brought to the market and the incredible growth that we've seen over that time. I want to actually talk about what it takes to scale all of that innovation. And to do that at high volume on a global scale, to do it in a cost-effective manner and to do it while we're growing at 20-plus percent year-over-year. Now I guess, to use simple terms, it's not easy. I've been at it for about 23 years, and it's a complicated production process. Everything that we make is unique. No 2 aligners are the same. They're very small, lightweight. They're clear. They are organic shapes, which makes that very hard to automate and also makes it very hard from a manual standpoint for people to process those. We have -- we support hundreds of thousands of unique customers that all have different philosophies and different things that they want to see. And so the amount of support that's involved with that is very high to you, not just from -- in the markets with customer care and some of the things that Jen talked about, but also in our own internal treatment planning operations. There's a lot of support that goes into making sure that we can address the kind of global customer base. And I think the last thing that I would say is it's expensive to scale. It takes a lot of investment in engineering talent, in software development. You have to maintain a lot of know-how in your business in order to take this complicated process and scale it on a global level. We've been able to do that over the past 26 years. We've been able to take all of that engineering talent and capability that we have and especially the know-how and create an efficient and optimized global footprint that allows us to effectively support the global market. So this is -- we have direct treatment planning, local treatment planning support in our major markets. We have major aligner fabrication and treatment planning hubs in the regions. This allows us to help at a kind of near local or local level for that support I talked about. And it also allows us to kind of optimally have fast, quick turnaround times to support all the markets that we sell in with our high-quality mass customized medical device. Just a couple of statistics to kind of give you an understanding. So we support, I mentioned earlier, hundreds of thousands of different customers in hundreds of markets, and we support over 20 languages. We have the capacity today to produce close to 60,000 unique treatment plans and over 1 million unique aligners per day every day of the year. So that is definitely -- there's nobody else that can do what we do. It has the scale that we have and be able to reach across the globe like we do. So because of the know-how that we've accumulated and maintained over the years and our ability to invest in innovation and engineering resources, we've been able to disrupt our own technology multiple times over the years to create a better, cheaper and faster systems and technology that allow us to really kind of -- Srini mentioned this a little bit, revolutionize how we actually make aligners. We started off early on just automating some of the obvious easy labor-intensive processes. As we got better at that, we started to simplify that automation and miniaturize that automation, take up less of factory space. And we also started to really invest in and leverage our data, not only our patient data from the 50 million patients but our manufacturing data we have from making all those aligners and those treatment plans to kind of inform our technology and develop that further. So I want to give just a few examples of more recent advances. So in the throughput area, we've been able to increase our throughput by about 140,000 -- or sorry, 140%, which was 140,000, over the past few years by really maximizing the number of parts that we can produce at every cycle of our machines and minimize the unproductive time of that equipment. So here's just one of those examples of us making multiple parts at the same time on our automated lines. Innovations like this have really enabled us to drive scale. Another important advancement that we've done is really reduce the amount of material that we use to make aligners and that's good from a cost because it reduces cost, but it also reduces the amount of plastic that we utilize to make aligners and it keeps plastic out of the environment. And here, it's really just -- it's optimizing. You're using our knowledge of 3D printing and being able to minimize the amount of material that we need to use for every mold that we print by using a lot of engineering capability there. And then also developing a system that allows us to dynamically adjust how much material that we use per aligner. And that allows us to minimize our waste and -- which in total, has enabled us over the past few years to reduce our material consumption and our cost of material by 50%. So the throughput and the cost reduction, those are all key for scale, right? So that's helped us enable us to scale. But really, customers, what's key for them is quality, right? And so I mentioned earlier, it's clear, it's light, it's difficult to see. We've developed using some of our AI capability, vision systems that can detect very minor defects in the aligners that are difficult or impossible to see with human inspection. And so like -- these are a couple of examples of here's too many aligners in the package. That one should be obvious, but you have tears in the aligners, you have dents in the aligners or you have a cut line that wasn't done correctly on aligner. And this system leveraging our internal manufacturing gain allows us to actually see that and make sure that it doesn't escape the factory. And so those innovations like this have enabled us to take our defects in the field, down by 60% over the last few years. And that's from an already low defect rate. So we're very comfortable that we have unmatched quality out there. And in fact, it's easy for me to say that. But when we see doctors that go and try competitive brands and then they come back to Align's franchise, the thing that they tell us is that they come back because we have the best product. It works the best. We have the best quality, and those 2 are definitely linked. We also have the best support and service and that we deliver the fastest. And so that's our customers telling us that we've tried others and like no one can touch what you guys do. So if you take collectively all those improvements that we've done, that really enabled us to drive our overall cost per unit down, cost per aligner down by 50% over the past several years. And what that does, it allows us -- has allowed us to continue to invest in innovation, build capability which then drives further improvements and further savings. And we've kind of developed, what I would call a flywheel or kind of a sustainable innovation cycle in our manufacturing engineering talent and we're kind of able to rinse and repeat this over time. And so the other piece of that investment is enabling us to invest in more advanced technologies and more complex technologies on the manufacturing side. And we've heard a lot about AI today. There's many different disciplines in AI, and we've been investing over the past few years in many of these disciplines of AI so that we can kind of move to the next level. Doing automation is easier for some kind of binary processes. But there's many processes that we have that require interpretation from people or analysis for people before we can actually do something. And so with the new capability that we've developed, we're now able to automate those processes that were previously difficult to or we didn't believe were possible. This is using natural language processing. Machine learning is something that we've leveraged to -- kind of take us to the next level. So here's a couple of recent examples that are kind of easier to demonstrate that we've been working on. On the left is an automated vehicle essentially that will eliminate the need for having people move materials around the factories. We'll connect that with our capability for robotics to where we can then get rid of manual labor to load our automated machines and you kind of get closer to like a lights-out manufacturing operation. On the right-hand side is -- I think everyone here is familiar with additional aligners or refinement that customers occasionally have to go through. They send us data. And oftentimes, they want us to virtually remove things from the data and not remove other things. In the past, that required a technician to kind of understand what they wanted to do and then actually go and manually do it or do it with our software tools kind of in the semi-automated fashion. We've been able to utilize our own database of data and a lot of AI to be able to now selectively do this in a fully automated way that we don't have to touch it. So that's just another example. And these are things that we'll continue to extend going forward. So over -- so we've had the ability to continue to invest in technology innovation. We historically have maintained great know-how and engineering talent in many of these ones of engineering, including software engineering. And with this -- with the kind of the advancements that we're making in a lot of the artificial intelligence that will allow us to kind of get to that next level, allow us to get to that next S-curve in innovation. In that period in the future, we are going to fully optimize the automation of the treatment planning. Raj talked a little bit about this, I think, and several others to where it's truly chairside. There's -- it's more control in the customers' hands. It's a better experience for them, and it requires very little intervention from our side in that process. That's next level automation. We will, as I mentioned before, take our automation further into our value chain, and we'll get closer to a lights-out operation. And then lastly, we will essentially -- I didn't really realize this until Srini spoke today about being here for so long and kind of forget what you kind of went through to begin with. And now with this -- with direct fab, it's -- everything is totally brand-new. It's -- I mean, it's more advanced technology, but the whole scale is rinse and repeat there. So with our history of the ability to do that and our ability to continue to invest in innovation, we are well positioned to be able to take this to the next level and into the future. So it's exciting times to be able to do that again. So with that, I thank you for your time, and I'll turn it over to John Morici to close this out.

Hi, everybody. Good to see you. Who would have thought digital orthodontics could be so exciting? These are the topics that I want to talk about today. What I wanted to give you is maybe a backdrop a little bit to the technology and investments that we've made, what you're seeing here, what you've seen from a lot of my colleagues has really been the culmination of a lot of years of investments, investments that we've made. And a great example of that would be maybe going back to exocad. Exocad, you see in a lot of different presentations. You saw it a lot with [ Zelko ] talking about the ortho-restorative and how exocad is a key part of that. Back in the day when we were actually investing in that we closed that deal on April 1 of 2020, the heart of COVID. And I think to give you an example of what the company feels about that investment is, I remember calling Joe, like 3 days before it's going to close, I said we're going to use half our cash plus we're burning about $50 million a month in cash. And I don't know how, no one knows how long COVID's going to last. It's April 1, 2020. And I remember Joe saying at the time he's like on day 1, we're going to be thankful that we did this deal because of the technology and innovation and what it brings to the marketplace. So here we are over 1,000 days later, and you can see how it's integrated into our company and what it means to our company. But that's an example of the investments that we make, what we want to do as a company to be able to really grow in this industry. So what I'll talk about here is these topics here. And really, when you look at what makes Align unique, it's the huge market opportunity that we've talked about. The market opportunity, 600 million plus potential patients, the 22 million orthodontic case starts every year. And to have the innovation and technology and to be able to transform this industry with a company that can reliably execute and bring it all together, that's our unique position. That's what we can bring together as a company. So as you've seen, the 600 million patients, 2 million doctors, the 22 million orthodontic case starts, huge opportunity that we have in a marketplace. And now the technology and the innovation that we're bringing can really capture this. You've seen by my colleagues talking about the pillars of how we want to be able to grow our business. It starts with the international expansion. You talked about some of the places every region has it, whether you're in Latin America or you're in Southeast Asia or Eastern Europe, Africa, other places, there are still huge opportunities that we have on the international expansion standpoint. The patient demand, the marketing, being able to connect to potential patients is a key part of our business, and we want to continue that. And then really bringing it all together for the orthodontist and the general dentists to be able to drive conversion, be able to take those potential patients get them into their offices and give those doctors the best tools possible to be able to help drive that conversion. That's the key focus that we have as a business. So when we think about what it means from a competitive advantage standpoint, I just try to take some of the highlights of what a lot of my colleagues talked about when you think about whatever you were just talking about with the manufacturing excellence, being able to create and make over 1 million parts in a day, unique parts in a day to be able to help provide to our customers and ultimately their patients. To be able to be as geographic as we have now, treatment planning that's local, manufacturing that's now more local, being able to provide faster responses and so on to have this customer base where we're going to them directly with our sales force and extended sales force to be able to help them train and work with them on a day-by-day basis. Being able to look at it from a financial standpoint. I talked about using our cash to be able to buy a company, and what we just did today with Cubicure, sort of in a fortunate position to be in where we have a business model that generates great returns. We have a business model that generates great cash, and we can utilize that cash. And I'll talk more about what that means from that standpoint. What I hope you got from today is just a huge breadth of technology that's coming. And I've been here 7 years, I've never seen as much technology as we're bringing to market now that's really capturing and going after all the different opportunities that we have. And when you think about it from a company standpoint, we're the only company that can bring all these pieces together, there might be companies that are parts of this, but no company brings it all together. And I think that's what really gives us the competitive advantage that we enjoy. When you look at this, so you saw it from my colleagues a lot talking about this 23% going back to 2021. I separated it a little bit different. They were talking about technology and so on. Just look back at time and said, you talked about COVID and some of the impacts that happened. 23% on average a year over this time period, it doesn't mean every year is going to be at 23%. Some years have grown fast. And some years you've got recession or other things that impact, obviously, it impacts our numbers. But over the time, this is what gives us confidence in our long-term growth model. The technology plus that market opportunity over this time gives us this opportunity to grow, and we've been able to show this for the last 22 years. Another part that gives us confidence, it at least gives me a good understanding of where we're starting to see these revenue opportunities and how do we get these revenue opportunities to be that the sustainability of it. How do we get these to be day in and day out. Back in the past, we were really -- we sell aligners. And 2011, we bought iTero. And it was really kind of a product type company. You just had product, not much services, not much other types of revenue streams and so on, where we've developed today, we're about 30% of our products -- of our revenue that we have is much more of a continuing amount of revenue. You've got some things that reoccur. Simon talked about DSP and some of the subscription programs that we have. We talk about some of these other services that we're providing that give us this revenue on a regular basis. So when you think about it, when you start your quarter, you're starting your quarter with at least some of this revenue that's this recurring basis. And then you go into the sell-through part of it. What we'll see as we go forward, we want to be 40%, 50% of our revenue on a more recurring basis. So these are some of the things that we're talking about, where you look at treatment planning services, you look at diagnostics, you look at continuing to expand out in the subscription programs iTero leasing, different programs that we have that are going to get this recurring revenue while going after everything else is there in the core business. The technology that we have in the 3D printing, the new products that we have with the Invisalign Palatal Expander and so on, that's new revenue to us. We've never been in that space, and it's a huge opportunity for us. And it also not only gives us revenue there, but it also gives us opportunities to be able to now have that patient get older, get familiar with what you have in plastic in their mouth to treat them and now going into treatment, also gives the parent confidence that, that child is going to use it for Invisalign Palatal Expander, see the results. And they're also then going to be compliant when they do the next phase that they have. So there's a lot of benefits that we see that innovation is driving. One area that I do want to talk a little bit about, we'll give more details on this, and we'll start reporting it this way. I know we've talked about the DSP and what's included in our volume and what's not. Thought I'd show just a few quarters of this so you could see kind of the perspective of these are cases that are just low-stage cases, as Simon talks about, these touch-up cases that we just haven't included in our volume. They're in our revenue. They're showing up in other revenue. But this gives you a perspective of what we had. So the last quarter, second quarter, we talked about the fact that there's like 18,000, 19,000 cases that were touch up. We're not in our volume. If you were to show the volume for this, you could see that it adds 1.5 points of overall volume growth. You can see what it does from a utilization standpoint. We're going to go and make sure that you have the comparative this -- this way, but we're going to be talking about, including in our volume numbers, DSP. And it's just a reflective way to be able to show this. Back in the day when we started this in 2021, we didn't know how it was going to take off. We knew it would be incremental. We just didn't know how incremental. And we thought maybe it'd be skewed more to retention. And it is, but there's a lot of low-volume cases that are in here, and we want to be able to capture that and it's become a bigger part of our numbers, and we want to be able to include that. These cases are what we have. I mean, they're similar to the product portfolio that we have. Less than 10 stages. They can choose. The doctor can choose are anywhere from 3 stages to 10 stages. And these are touch-up cases that we have. As they commit to more, they get the benefit in terms of some of the volume benefit that they get in pricing. But from a gross margin standpoint, these are our highest gross margin products that we have at the company, 80-plus percent. So these are really, really good products for us to do as well as being incremental for doctors, and it's the way the doctors want to purchase. So it's a really, really good case and excited to see this launching in other regions as well. So when we talk about what we're doing from an innovation standpoint, how we go to market, we talked about for a while, we've been talking about as we expand out to Europe as an example, in Poland, you start your facility, you're going to get -- as you have higher utilization, you get more efficiency, you end up with more productivity. We see that just kind of taken us from last year, 71% from a gross margin standpoint. We'll get back into our long-term model of 73% to 78%. You can actually see it this year as you kind of go quarter-by-quarter. You start to see as you increase your utilization, your productivity the operations and sourcing teams do a great job of offsetting some of the inflation that we've seen, and it drives a lot of productivity as well as the product portfolio that we have. We've talked about this in the past where the 3 and 3 product that we have, where you can recognize maybe more revenue upfront because it's 3 years of fewer refinements and so on, that adds to our profitability that we have here shows up in revenue and helps us as well. So making good progress on this, more to come, but I feel really good about the activities that we have to get us into this from a long-term growth model standpoint. Same with operating margins. You can see some of the opportunities that we have in the businesses being able to leverage the investments that we have, where you have some of these products now coming to market, you can see that you spend a lot on R&D for some of the new technology. We spend a lot on a sales force going to a market. And now you start to see some of the leverage of those investments. On the R&D side, you don't have to may as much as these products come to market. You also get then the revenue benefits like Invisalign Palatal Expander and so on. That helps us from a leverage standpoint. And then you can -- other investments that you have, like I said, with sales and so on, they go into a territory, those sales people can leverage that. Operations is another way from a Poland standpoint as you leverage that facility more and more from a volume standpoint, we see our operations -- operating margin improve. And we've been able to see that almost on a quarter-by-quarter basis throughout this year. So when we look at how we think about the business and investments that we've made, if I look at kind of where 2023 is going to kind of play out, there's a certain amount of money that we've had to spend on CapEx. That's new facilities, equipment and so on. We expect that to come down a little bit as a percentage of our total because once you have the facility of the equipment and so on, you're just leveraging what you have already. Same way on the SG&A side, you've got investments that you make in sales teams and how you go to market and so on. Once you're in a country, you're now going to just leverage the investments that you make within the country to be able to help grow. Same way with R&D. I talked about some of the products and so on. You spend less mainly on R&D as the product now comes to market and you also get the revenue benefit and helps us in total. So then the rest of the cash that we have, the savings that we have from this as we generate more op profit and ultimately, cash is what we've been using for share repurchase. And when you look at what we've been able to do from a cash generation standpoint, going back way back in the day, where we're actually using cash to a point now in 2023 to generate it from a free cash flow over $700 million. So huge cash generation that we have. We can see what it does from a balance sheet standpoint and the cash that we have that we're able to generate through the operating model that we have, through the investments that we're making within the business. And then the rest, like we said, is we're going back to shareholders. You could see kind of over the time period here, the only time that we kind of took off was 2020. We had bought exocad, plus there was a lot of uncertainty in the world. So that's the one time. But you can see, as we've stepped this up, we have a $1 billion authorization now. And we'll continue to invest back into our shares, and it's been a good investment for us for utilizing the extra cash that we've had over time. You can see what it means from an invested capital standpoint fluctuations as you go through, but really not the significant fluctuations that we've had in the past, being a smaller business and be -- a great recession and other things that have gone on in the past. We've been able to work our way through from an investment standpoint. And the investments that we're making now, we expect that to be able to continue and improve as we go forward. So when we look at our financial model targets, I've touched on parts of this in terms of our growth and so on. But we think that with that market opportunity that we have, plus the investments that we're making and the technology that we're bringing that 20-plus percent revenue, like I said, showing 23% over the last 20 years. Gross margin commitment to be at that 73% to 78%. Working our way back into that. We made some good progress this year to be able to get to that op margin, 25% to 30%. Again, working our way back into that. You see the quarterly progression this year, and we feel good about the investments that we're making, we're able to get leverage. And you can see the results of our free cash flow. And the benefits that we have as a business to be able to come out and not have any debts, have good amount of cash on our books, but then be able to use the extra cash for share buybacks, and we've really stepped those up over the last several years. So when we look at it and what I want to convey to you is a result of all the hard work that the company is doing and what you see from a presentation standpoint here, there's so much market opportunity and so much technology and innovation that we're bringing. We feel that we're the only company that could bring this together and really drive the conversion to be able to grow and continue to grow in our company. And with that, we think that we can remain in that long-term growth model and feel very comfortable with the investments that we're making and the opportunities that we have in front of us. So with that, I say thank you. And we will come -- have everybody come up for Q&A.

Great. Thanks, everyone. We're going to get started with our Q&A session. We've got the entire Align Technology executive team on the stage right now, just getting situated here. We've -- we'll take questions. We've got 2 mics here. We can hand them to you, go back and forth, and I think we're ready to get started.

Before we take the first question, Jon, I'd just like to introduce Julie Colette and Stuart Hockridge. They didn't present today, not because they're not important. They're very big members of the team. We just have the timeframe. But Julie and Stuart, so don't be afraid to abuse them, too. Go ahead, Jon.

All right. I'm sorry about that. Jon Block with Stifel. I'll try to ask 2. I guess, versus the LRP, John, there might be a better line of sight to the margins with the direct fab. But I know I'm going to get a lot of questions on the top line. The 20% to 30%, is there a timeframe to recapture that? I'm guessing that's probably not a 2024. Is it a 2025? And maybe some meat on the bone on how you get there? And then this one might be for a whole host of people. But when we think about the direct fab, and it's been out there for so long and here you guys are putting a lot more detail behind it. Just some basic math, a $1,200 ASP for you guys, 75% GM and you get a COGS of around $300. How do we conceptualize what direct fab would mean for the COGS at $300? And then, Joe, you talked about the other advantage being, "Hey, look, it's not all about the COGS, it's about moving teeth more efficiently." Help us out. If we think about a typical case of 18 months treatment time, what does that move to under a direct fab environment?

Yes. I think as we talked about the long-term growth line, it's a long-term model, and it's over a long period of time. We're not ready to call like what we think next year's growth will be. But I think from the standpoint that we're positioned to be able to grow in the market. It's just what's that market going to look like. And then we'll have a better perspective as to what next year will mean. I think when you look past next year, I think you'd be -- you're more into that long-term growth model. But we just have to see what the market is going to be in terms of recession or not or mild or not to be able to make that call, and we'll update you on what that means for '24 in the future.

Jon, on your question, too. I think I'd kind of frame it as an efficacy question from a clear aligner standpoint, the vacuum form versus direct print. The only person here who's kind of capable of guessing that is Srini. And obviously, it's going to take us some time to kind of figure that out. But to think about today, we're 6 months faster than wires and brackets in general, right? So we start with that kind of just compared to an analog kind of process. Srini can put the material, where he wants to put them on a teeth. They're difficult once to move. You know there's an opportunity there. And Srini, you're going to have to take a guess.

Well, I would say the same principles are laid out, right? If we're able to control the shape and then put those things behind in terms of -- we have -- we already have some models that are ready to take advantage of that direct printing. So similar to IPE, we expect much higher efficacy, out of this device. But it's going to take time to find out because treatments last a year plus, I think, it's something like that. So it's going to take a while before we find out exactly what that number is, but I would expect much better performance just by the fact that we can control what we're putting into the mouth.

And from a cost standpoint, it really kind of comes down to what's the scale as you scale this, you can't be -- you've got to be producing a lot from an overall scale standpoint. But as this scales, it's cheaper for us to manufacture significantly cheaper for us to manufacture than our current technology. I mean most of the plastic that we have now is thrown away or recycled or so on. So the material costs that we have significantly higher now than the direct fab printing. So we'll get a benefit certainly in material, and we should get a labor benefit as we scale as well. So as you have that product capability and as you have all those other benefits in terms of going to market, we will get a cost benefit as this scales up.

Jon, I think the last thing to think about is design flexibility. So like curved wings and mandibular advancement and all the -- there's a lot of that gets tied up in manufacturing code. It's so hard to make those things. Making occlusal blocks 3D printing is lights out. I mean simple, right? You just print thickness section, is that a thinness section. So if you want to put a button on the front of a tooth to move it instead of having elastic piece that might be -- it's just the design flexibility is amazing. So it just gives a chance to work with it, work with from a clinical standpoint. But there's some -- here's something it will be, as John explained, less expensive and just no doubt more clinically capable than before. We just have to have a way to frame it. It might be different in an MA case versus a deep bite case different than an Invisalign first case. It's just that degree of flexibility we'll have give us a lot of options to see what works and what doesn't.

If I can say there is probably one element that will happen is you have more efficacy in the appliance, which I think drives not necessarily faster outcomes in terms of moving because you had [ by ], so you don't want to move too fast. But if you don't have as many refinements, right, you will finish the treatment sooner. You're going to have fewer aligners. So it's not just the cost per aligner, how many aligners you're going to use over a period of time.

It's a great point, John. Yes.

Jeff Johnson from Baird. Jon Block and I did not ham and egg this or set this up, but I'm going to come back to the LRP question as well with the top line just on the 20% to 30%. If I think back over the years, that 23% number today, you've got more competition. iTero went through some years of fantastic growth as you're going into Brazil and China in some of those markets, and now you're going CPO and leasing programs and all that. So I think we conceptually don't think iTero is going to grow at some of those huge rates we saw anyway. You're moving into some lower ASP markets. So any qualifiers you can put on that 20% to 30%? Should we think about if we get back there in 2025 or whenever it is, that we get back into that LRP, do we think near the lower end is kind of the starting point? And then what would it take to get to the midpoint or upper end of that? Or should you conceptually set us kind of a 20, low-20s would be really good to get back to? Anything above that is kind of icing on the cake, just qualitatively around that 20 to 30 range.

Well, I can take a start at that. I mean I think when you look at the market opportunity that we have, we're so underpenetrated from a market standpoint, you see some of this technology especially going after the teen opportunity that we have with the great products that we have plus the go-to-market competition or not. I mean, it's wires and brackets. And we have to be able to convince those doctors to not put wires and brackets on and use Invisalign. And we think that, especially on the more complicated case with now you have Rapid Palatal Expansion and Invisalign First and some of these others, no one has products like that. So I think to be able to have products that doctors feel comfortable working with, who give us that opportunity to be able to grow in those markets. I think the expansion that we're talking about in other regions and countries as well as going deeper in certain countries with DSP and some of the other go-to-market activities that we have, plus a decent economy. It can't be the super high inflation and recession, when people talk about that, oil prices, where they're at and so on. I think when you look at our growth that we've had in the past, they were either you had a recession in the past, we're impacted like other companies are impacted. Outside of recession, where it's a decent economy, we were growing 20-plus percent. And we think that, that opportunity is still there because the market opportunity is there. And we have even been a -- product portfolio to go after that market opportunity. Competition or not, we think we have that opportunity to grow into the long-term model. And that's why I'm super excited about the opportunity because we've never had a product portfolio as broad and as deep as the one we have now to be able to access that market.

And then maybe just a follow-up. Joe, for you or even Raj. Just it feels like, and correct me, if I'm wrong here, maybe a little reinvigoration on the APAC strategy here. Maybe you're leaning more heavily into it. And maybe it was a COVID volatility thing for the last few years that now it's just coming back from that, and this would have been your sense of the Asia Pac markets a few years ago, if not for COVID. But is there a hierarchy there that we should be thinking about? APAC now is clearly going to be maybe in a normalized economy, but APAC is clearly going to be your faster-growing market, getting back and tying it to the LRP. Is there a hierarchy of APAC? And then I don't know where EMEA versus the Americas would shake out in that. But it seems to me just more discussion today about China in a more positive light than I've heard, Asia Pac overall, some of the opportunities in some of those other countries, things like that. So just any updates there or thoughts.

Raj, I'll start off. It's a good question. I think you start from a lower base in Asia, too. So obviously, your ratios are going to be a little more generous in that sense. But when you look at what was going on in Asia and what Raj has been able to drive in the last 18 months or so, each 1 of these countries is different, each 1 offers even China, when you look about the massive underpenetration that Raj talked about, and even Japan has great opportunity. We see it in Korea. We see it in Taiwan or whatever. So -- but I don't know, Jeff, I want to just say that, that only exists in Asia because when you stand back and you look at not just the orthodontic piece around the world, but it's also the GP piece and what we talked about with comprehensive dentistry with [ Zelko ] went different today, how we can approach those marketplaces and drive them, too. So I mean that's so unusual about this business, is it just has such a breadth of opportunity because of the basis of the technology. Now obviously, there's a lot of thrust you have to put into this thing in a sense of salespeople and technology and all to realize that. But I think Asia has a benefit that it starts smaller and its diversity and we have. But the other parts of the world, too, there are just so much opportunity in that penetration piece. And that's how when we open with these slides today, too, that you drop it. And I know -- it's hard to think about that, and I'll bind it together with your question on competition, and I don't want to be demeaning at all from a competition standpoint. We play -- we pay close attention, but no one's offered anything, but price out there. That's it. I don't know who's making any money in this segment given the average selling prices that are flying around out there. And you guys are pretty generous with them because you record what their case volume is. But I never hear their response on what my CM is or what my OEM is or what it is. And we know how tough it is to scale this business and to do the things we said today, too. So we really feel like we set a stage above in the sense of where we're going, where we're taking new technology and what we can do. And with the underpenetrated market like this, you're going to have some success with competition, but our job is to move that market forward, grab that wires and brackets piece and move into the teeth moving that kind of comprehensive dentistry piece with the GP side. That's a long story on Asia, Raj, but go ahead.

I'll just build on what Joe said, really, Jeff. Look -- the way I look at it is, one, there is an incredible opportunity from a penetration standpoint. But two, there is also an opportunity to apply the playbooks that we know work, Jeff, right? Take DSOs, right? We know how to win the DSOs, how to partner with them. Simon and team has done a fabulous job. We've got to kind of bring it to Asia and we are doing that, right? Take new doctor onboarding growth programs. We know that it's important to execute on those. We have data, we have learnings on what to do and we're bringing that back to Asia. So what you're hearing from us from an Asia or a China standpoint is the market potential is there. We know that we have a huge opportunity to convert the 80% braces to aligners. And we will do that applying things we know in terms of where we go. But that actually connects to Jon's earlier question and answer on the growth potential, right? Exactly like Joe said, we have this potential across multiple markets. And our job is to kind of just make sure they execute with excellence. And nothing from a short-term challenge should take away from the attractiveness of the business long term.

Mike Ryskin, Bank of America. I want to first ask on -- go back to direct printing and Cubicure specifically. I was just wondering if you could clarify a little bit what is that Cubicure brings from externally because you also said you have been working with them in the past. Where does it fit in versus some of your internal efforts over the years? And then, obviously, the question of when can we get more updates on this? Because so far, it just seems like its future is that 1 month, 6 months, 6 years? I mean any color on that? And tied to that also, just how do you envision rolling this out? Is this just December 30, you're using the traditional math at January 1, it's all direct printing? Or is this gradual based on complexity? Just walk us through because if this is as revolutionary. As you say, you don't just sort of turn off the lights on and turn it on the next.

I mean there certainly will be a transition, but Srini here the best answer from a Cubicure standpoint, why it makes sense.

Yes. So the way to think about these direct printed appliances is you're trying to direct print polymers. They're not like the existing machines that are out there that are printing prototypes or things that can be used in a 2-step process like we do. Is directly printing highly functional polymers. So in order to do that, you have to invent everything from ground up, which is what we've been doing. So -- and 100% of the time, what people in the field will find out is that when you're trying to develop those type of materials, they will not fit into an existing 3D printer out there. So one characteristic for all these is high viscosity. So that they are extremely high viscosity materials, is that they are super thick. So if you put that material in an existing printer, it will destroy it, right? So that's what Cubicure brings. So this is what we kind of work with them over the years, since they're founding really. So they developed IP around how to handle these type of viscous materials. So that combination, basically, the materials that we've invented, we work with them to develop that process at a scale so you can print like hundreds of these -- that type of stuff. So we've been kind of developing that over the years. So that's what they bring. It's a completely new printing technology and a process that allows you to process these high-quality materials that turn into devices.

As far as how we roll those out, it's a good question. I think, it remains to be seen how fast we can scale and then bring them up. I mean, obviously, we can make designs, like I was mentioning to John, that are really different. So I mean, the idea that you'd start with some very different retainers that you could never make with vacuum forming, right? Would help you to do individual things and to start up over time. Obviously, the D Fab product that Srini talked about, it will be a different resin, but it will be on the same kinds of machines, too. And so after we see how fast we can scale, we understand the efficacy piece like John asked, and then I think we start making decisions from there how we go about it. But I think we'll be vacuum forming for a while, and I think that will be a competitive product in some way. And I'd like to drive differentiation. You want to with the direct printer product line and actually be rewarded for it, too, regardless of what the cost structure is, if that makes sense.

Yes, that's helpful. And if I could ask Second follow-up on DSPs. You had hinted at giving more and more visibility into that in the past. That's really appreciated. First, are you going to be providing a regular update on your quarterly earnings on DSP volumes, sort of the utilization metrics, just some of the stuff that you had up there today, John. And do you eventually see it replacing or in a sense, sort of absorbing all of your low complexity cases, where that's just every GP, every ortho that's a customer has some version of DSP running and that everything is so [ complex ] it can run through that? Or sort of how big could DSP get over time?

I would look at from a reporting standpoint, the numbers will include DSP going forward. So we see that in Q3. And we'll talk to it and break it out in the right way so that you can see it, but we definitely want to include that. I look at DSP and you could see Simon's rolling it out other. I think it's just a great way to be able to connect our scale and efficiency and opportunities that we could bring to doctors in a way that whenever we come up with new products like that, you want to make sure, at least from my standpoint, I wanted to make sure this is incremental. We started with certain doctors. Okay, the doctors, they were giving us a lot of high-volume cases or say, complicated cases, but were they giving us the low volume or retention. And those doctors weren't. With DSP, they started giving us all that. They stopped their own printing or they stopped doing things with labs and so on, and it came to us. And if that mindset could happen doctor by doctor, DSO by DSO, I'll take that all day because that's the definition of incremental. They're not going somewhere else or doing it themselves. And we have 80-plus percent gross margin on products like that. And we're really the only company who can provide at scale this type of response where they can almost get to same day starts or next day starts some of these products that we have and the fast response as well as retention.

Yes. I think, the way to think about it as well is it's really starting to open up retention after wires and brackets. So the speed the Emory and the team can deliver this to doctors. There used to be some nervousness around waiting, I don't know, a week or 2 weeks to actually get the patient into retention, whereas it's less than a week now that goes through a dedicated line in our manufacturing facilities. So it's very, very quick. So we don't hold them back. They go straight through. So that's 1 opportunity, those we're really excited about. We do have GPs already using DSP, but they're within DSOs. And when we look at the broader GP market, yes, I think there's definitely an opportunity for touch up when we talk about tooth movement, give some doctors that flexibility, but also retention and the claim that we too talked about around clinging and grinding with Vivera. Those patients are treated in a GP practice. And then I briefly mentioned during my presentation is we've now got doctors, who are developing their own subscription models for patients. And we're also introducing after they've had their first retainer, a direct-to-patient delivery as well. So all of these opportunities are starting to open themselves up purely by using our existing products with a different business model. And then I had even mentioned the geographic opportunity of going to Latin America, Europe, Middle East, Africa, Asia Pacific as well. So we're learning a lot. We've worked really closely with our customers because they see opportunities, where they can use either the retainer approach or the kind of the touch up product approach in different ways. And they love that because it just they have the freedom to do exactly what they want in the way that they want based on a regular monthly fee. And then they -- as they -- what we see is they start maybe 50 or 75 or 100 aligners a month, which is what they commit to and they grow their business and it cut and they see that kind of -- we see a compounding effect and then they see a compounding effect as well in that business. Very long winded, but there's so many possibilities that this has opened up for us.

Hi, Elizabeth Anderson from Evercore. Maybe just questions for Joe or for Simon. How do we think about -- can you flesh out some of the -- a little bit more about the details about gaining traction with teens and kids? What are the kind of sort of like uplift have you seen where you've introduced the financing plan or the team guarantee or something like that? Or sort of how do you also think about rolling that out? Is that everywhere now? Is it in certain markets, is that also part of the expansion? Because I guess I'm just trying to calibrate how that rolls through and helps to contribute to the overall growth.

So let me get the best perspective on.

I couldn't quite hear the question.

How you roll out the team program, financing, different things and...

What's the uplift? What's the geographic expansion?

We take a very, what we call a programmatic approach whether we did and we look at different segments of customers. And based on those segments are often based on complexity of cases that they do, the volume of cases that they are at, the adoption of our digital tools. And so we look within that where we've maybe got a -- let's take an orthodontist, for example, where they maybe use a lot of our clear aligners or Invisalign, but they usually mainly use it in adults. So these are people, who are familiar with the technology. So really taking those tools, understanding what the barriers they have to actually spreading their usage more into growing patients, yes. Sometimes we're seeing great success with Invisalign First. Really, doctors see these incredible results that they've never been able to get before with any other appliance, and they go, "Oh, okay." So I can really see the benefit here, and they would start then to maybe use it more in teen patients. And then when they may have that concern I talked about around compliance or they're studying for another parent, who had wires and brackets and things, little Johnny is not going to wear his Invisalign. And the doctor can confidently say, well, look, we'll put him in Invisalign. I think it's better for this -- for your son or your daughter to have this. But if he's not wearing it after 3 months, then we'll take them out of it at no cost to you and put him into wires and brackets. So we're just trying to give the doctors flexibility, confidence and also talk about the portfolio so that they've got options to do that.

Okay. And I guess just maybe to follow-up on that. Is that rolled out across the Americas and EMEA now? Or is that something that's sort of...

The team guarantee.

Well, all sort of the additional financing, the team guarantees, all these sort of different parts to accelerate team adoption? Or is that sort of something we should think about...

Well, part of the finance and there's also around PACs. That's not available in all European markets yet, but it's available in that number. We're just introducing the team guarantee now. That's been in the U.S. for about 3 months now. So it's like I said, as we bring the teams together and they're looking at best practice on what works, we're starting to share a lot of the ideas. We're taking a lot of the clinical programs and clinical approach that the European team have taken and bringing that into the U.S. So there's a lot that we've done, and there's a lot that we're doing, but there's more -- this is not -- well, we think we've got the perfect solution here. We're looking at different ways of really driving more share of chair and moving doctors away from wires and brackets.

Got it. And maybe John, just as a follow-up. When we think about the OpEx numbers that you just gave and sort of the increasing scale and an opportunity. Should we think about -- how do we think about the contribution factor from the R&D side versus more the sales and marketing side as those numbers scale over the next few years?

Probably more opportunity on the SG&A side just because the dollars are bigger, and you're at 9% or so of R&D. But look, as products go from R to D, you get some efficiencies and then they actually get a product that gets released, you get some of that revenue benefit as well. But I think majority of opportunities are probably on the SG&A side, just from a sure size of spend standpoint. But we're committed to being able to make the right investments at the point in time that are going to be for the benefit of the long term of the business. And you see different scaling opportunities that almost goes country by country, where we have those opportunities there and we'll make those trade-offs as we go forward.

Jason Bednar from Piper Sandler. Thanks for hosting the session. Always very informative. John, since we have in this forum, I'll ask a customary real-time annoying sell-side analyst question here. Just want to confirm you're still comfortable with how you've characterized third and fourth quarter guidance in spite of all the noise out there in the macro and uncertainties with China. But then on the direct printing topic, I'll add another 1 here. Are you able to talk about how much you've already invested in this effort? How much incremental spending is also necessary to get you to the point where you're ready for prime time? Are there milestones that you're looking towards on the materials process inside that we should have in mind?

Well, in terms of the quarter and year, as you know, kind of within quarter, especially this late in the quarter, we don't give an update to the quarter or for the year. We'll do all that I guess, October 25, and we'll update where things are at. But in terms of the milestones and where look, we're watching it closely. We've invested in the technology in printers and so on. We'll see how things scale. And I think we've learned through the technology that we have how to scale the business and do it at a -- at a point where we're in our long-term model from an investment standpoint to make sure that we can still do this on a profitable basis. But as Joe and the team have talked about, we start to see the applications. We have an understanding of how we want to scale this. Retention is -- makes a lot of sense, where we can really learn some of the IPE scaling capabilities will give us opportunities there, and we'll start to see that costs come down, and then we'll make those trade-offs between what's that right investment? Do you invest in our current technology? Or do you need to start investing in the new technology? But the nice thing also is we can utilize that manufacturing capability in our existing facilities, and there might be other opportunities that we have to even get closer to customers. So the biggest thing is it gives us a lot of flexibility, and we're going to learn from. But I like where the margins can go and what it could mean to us long term.

Okay. All right. Fair enough. And then I wanted to ask on IPE. Just if you can give us a sense, I don't think we saw anything out there on like a TAM for what IPE can be. I'm not sure if you're willing to provide anything there on what you expect potential volume opportunity could be pricing as you're looking to roll that out? And then how we should think about that rollout, not just here in the U.S. as you're getting ready to submit for 510(k) but also internationally as you look towards Europe and APAC and other markets.

A lot of that is regulatory on the IP side. I mean we feel we can move into Canada this year, as we stated, and we will, and we've already worked that market pretty hard in a sense of ramping that product up and understanding it. We could probably get through first -- the fourth quarter of this year, get through U.S. regulatory and some other ones, too. So kind of look at 2024 as being a scaler year for that. And reason -- obviously scaling manufacturing with the 3D printing process also. So I don't think we can give you a unit volume kind of a projection. But I can tell you, there's -- there's a huge amount of interest in the product out there because you could see how we demonstrated today what opportunity is versus the current devices. John, you've been reporting on it too because you run across that vein of doctors, who are excited about this too. So I think it will be a very successful product. We can't give you numbers right now. The hard work right now is scaling from a manufacturing standpoint, getting this thing through regulatory, so we get a good foundation as we go into next year or what it can do and what the demand pattern will look like.

But if you start with the 10%, we gave the 10% of -- upwards of 10% of teen cases need some type of skeletal expansion or could use that. Some used Invisalign First to kind of get that arch. But we'll need this 10%. You got 15 million, 16 million team starts every year. It's a big opportunity for us. I mean you're looking at 1.5 million potential from an opportunity standpoint. Yes, a lot of doctors need to try it and test it, see if it's going to work. Is it going to give them what they need and so on. But we're excited about the opportunity, and we're excited about the incremental revenue opportunity, not only in the product that it gives. But as I said, where you have pre-team using this, they're more likely to be able to use a Phase II, when their teeth need to -- or permanent teeth are in, they're going to need it for teeth straightening as well or Invisalign, the regular Invisalign product. So it gives us a lot of opportunity, not only for that initial opportunity, but there are other products as well.

Right. I think the TAM on IP, I think you should, to John's point, it's really important you think of it as a solution, right? It's not just the skeletal or the dental movement from an arch standpoint for growing patients. It's what happens once they finish that, then they'll move to first. And once they finish first, they'll move to -- they are going to retain it's after first and then Phase II. So think of it as an end-to-end solution for young kids all the way up to teens.

And then Europe, APAC regulatory submission plans. Just any -- is that a 2024 event, 2025? How do you think about that?

No, we say no, like regulatory approval. I mean, getting to the U.S., it's obviously, it's in Canada now. And we'll go through the process in other countries to be able to bring this to market. But we know the product works. We know it's safe. We know the outcomes that it provides. It's just a matter of going to combination of regulatory approval to be able to get that to market as well as to scale up.

I think once we get U.S. FDA approval, it will make our life easier in a lot of other countries. That's all.

I just want to do a quick time check. We're going to take 2 or 3 more questions and then we'll close and go to the reception.

Great. Nathan Rich from Goldman Sachs. I had 2 on the long-term plan. I guess, John, I think in the past, when you talked about the 20% to 30% revenue growth, you kind of characterized case growth as being kind of similar to that range. I just -- I guess with the focus on recurring revenue and the rollout of DSP, has your view of kind of case growth within that long-term revenue growth changed at all? And then the other question I wanted to ask was on the gross margin progression. I guess you kind of mentioned seeing gross margin leverage into the back half of this year as you start to leverage the ramp-up of the Poland facility. You're obviously investing in direct fab and the rollout of palatal expansion. When you think about gross margins over the next kind of 12 to 18 months, should we think about kind of continued progression kind of into your long-term range kind of based on how you see the business playing out?

I think I'll start with the gross margin. I mean it's a very important metric for us. We want to be able to, with our portfolio that we have, some of the products that we have that even though the ASP might be less like on a DSP product, so it's really high gross margins for us. So from a rate standpoint, it's a focus of us -- of ours when we want to go to market with the right products, when we want to have the efficiency scaling up operations and so on. So being in our long-term model is a big focus for us. And you've seen us make really from last year and now sequentially through this year, we've seen improvements in our gross margin, and we expect that to continue. I think from a volume standpoint in terms of what we show, I mean, the long-term model that we have is really a revenue and margin. It really isn't the volume piece of it. But look, we know we have to grow volume. We want to get this to be the adoption and so on. It's just that you see also with our revenue, there's other components that are in there as well. You have some of these things that now maybe with DSP in, you'll see that volume, but there's other parts of it that are services and others that aren't just related to that. You start to get into some of the diagnostics piece and some of the treatment planning services and other things. They're not necessarily showing up as Invisalign volume. We'll break that out and show it and give that visibility so you could see it. You'll see it in utilization, driving utilization is a key metric for us. You could see the benefits that, that gives and so on. So we'll help you make sure you have those pieces of it. But when we think of our long-term growth model, it's on a revenue basis that we've been able to grow. Obviously, volume is a big piece of it, but there are a lot of other components that go into them.

Great. And if I could just ask maybe for Raj a quick follow-up on China. You mentioned focusing on going into Tier 3 and Tier 4 cities. I guess, is there anything in particular that you have to do to target the GPs in those markets? And I guess, from a pricing standpoint, maybe what do you feel like kind of resonates the most for that type of market?

It's a great question. I'd say, first, when we go to Tier 3 and Tier 4, 1 of the things we are doing in addition to ramping up a new doctor on-boarding, is treatment planning. So if you're a GP and you're in Tier 3, Tier 4, you don't have the confidence necessary to use Invisalign to kind of treat complex cases. So what we've now started to do is offer treatment planning services so that the doctor can get comfortable, right, using Invisalign for a variety of cases before he or she kind of starts to do it independently. And we've now learned that this is a critical part of driving confidence among GPs and we've started to do that at scale now in China. Second thing that I wanted to kind of call out is on the portfolio piece, right? Look, China is a very unique market, right? When we launched Invisalign Adult, when we launched Invisalign Standard, right, we wanted to make sure, if you look at the United States, you've got a portfolio that says light, moderate, [ comp 3 & 3 ] and comprehensive. We were just trying to replicate that in the Chinese context of things. So we've seen that the portfolio resonates really, really well in China. Third thing I'd tell you is we've now learned that it's really, really important to stay with superiority and differentiation, right? It's easy to kind of start talking the price story in China, and that's a trap don't want to go into, right? You want to kind of stay with superiority, differentiation and the best brand and the best product available for the widest variety of cases. And we've chosen to focus on that...

Just wrap-up words. First of all, thank you so much for your time, and just flocking out here and taking the time with us. Look, I've been in a lot of businesses in my career, and I look at different situations, and I try to put myself in your shoes. I think this is a really difficult one to call. When you set up here, you know this is a very unique company. It has an incredible opportunity from a growth standpoint, because you have to think that moving teeth has never really been done on a wide sense. It hasn't been part of dentistry. The idea that you use wires and brackets contains itself into a small number of orthodontists, it been primarily for teens and not adults. And so I think to believe that this company, you first have to believe that the tooth movement is under a digital kind of a format is going to happen in the future. And is going to happen in the broad sense. And it's not just for big beautiful smiles. It's for dentition and saving your dentition over time. Saving in name or like Zelko talked about. I think why don't you get your heads around that and you believe it to any consequence because it's so huge, it's secondly, where does the line stand in that. And I think what we do, we showed you today, and we want to show you today is our commitment from a technology standpoint that there's so much more technology we can bring to this marketplace. It's both cost effective, increases the effectiveness of the product line and it allows us to be able to compete head on in no way any other company can in the marketplace. We couldn't be collectively more enthusiastic about the future, whether you're looking at iTero or exocad or Invisalign and how that works together from a teeth straightening standpoint. We know you have a lot of short sellers that say they have competition. You're going to see it. We understand all that. We see that and we deal with it. But the market opportunity here, the advantage we have from a technology standpoint, the platform that we have for growth I've never seen anything like it. And I couldn't be more excited about it. Hopefully, you leaving here, you feel the same way. So thanks again, and we look forward to some conversations outside.