Greetings and welcome to the Align Technology Second Quarter Earnings Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder this conference is being recorded. It is now my pleasure to introduce your host Shirley Stacy, Vice President of Corporate Investor Communication. Thank you may begin.

Thank you everyone and thank you for joining us. Joining me today is Joe Hogan, President, and CEO; and John Morici, CFO. We issued second quarter 2020 financial results today via GlobeNewswire, which is available on our website at investor.aligntech.com. On April 1st, 2020 we completed the acquisition of privately held exocad Global Holdings GMBH exocad. To reflect this addition acquisition of exocad into our operations as of Q2 2020, we have renamed the Scanner and Services segment to Imaging System and CAD/CAM Services or Systems and Services. Today's conference call is being audio webcast and will be archived on our website for approximately one month. A Telephone replay will be available today by approximately 5:30 P.M. Eastern Time through 5:30 P.M. Eastern Time on August 5th. To access the telephone replay, domestic callers should dial 877-660-6853 with conference number 13705887 followed by pound. International callers should dial 201-612-7415 with the same conference number. As a reminder, the information provided and discussed today will include forward-looking statements, including statements about Align's future events and product outlook. These forward-looking statements are only predictions and involve risks and uncertainties that are described in more detail in our most recent periodic reports filed with the Securities and Exchange Commission available on our website and at sec.gov. Actual results may vary significantly, and Align expressly assumes no obligation to update any forward-looking statement. We have posted historical financials including the corresponding reconciliations, including our GAAP to non-GAAP reconciliation as applicable. And our second quarter 2020 conference call slides are on our website under Quarterly Results. Please refer to these files for more detailed information. With that, I'd like to the call over to Align Technology's President and CEO, Joe Hogan. Joe?

Thanks Shirley. Good afternoon and thanks for joining us. I am pleased to report Q2 results and continued progress across all regions and customer channels that reflect our COVID-19 recovery efforts, and those of our customers. Practices across every region have reopened and are seeing patients and many of those practices are embracing digital treatment in new ways and more purposely than ever before. In particular Invisalign providers are using the virtual tools we expedited over the last few months to minimize in office appointments and deliver doctor-directed personalized treatment that meets the needs of the moment, trusted, safe, convenient, and reflecting the digital option. The initiatives we have prioritized globally over the last few months, including support for doctors to ensure treatment and business continuity a shift to online education, and training, ramping availability of virtual tools to keep doctors and patients connected throughout the treatment, and continued investment in consumer marketing, and concierge program, and personal protective equipment or PPE are helping doctors navigate this evolving environment and come back stronger as their practices have reopened. We have received consistently positive reactions and feedbacks from doctors in support of our efforts over the last few months. While it's too early to know for sure how extensive and sustainable the digital transition will be. Interest in digital solutions is building even among doctors who were not early adopters or advocates prior to the pandemic. The positive feedback and momentum is not just around Invisalign treatment. It includes digital workflow around iTero scanners and general dentistry. Doctors are telling us that iTero is central to their practice and to their practice workflows and its key to driving digital treatment. With that let me turn to results. For Q2, total revenues were $352 million down, 36% sequentially and down 41% year-over-year…

Thanks John, now for our Q2 financial results. Total revenue for the second quarter was $352.3 million, down 36.1% from the prior quarter and down 41.3% from the corresponding quarter a year ago. For clear aligners, Q2 revenues of $298.3 million was down 38.1% sequentially and down 39.9% year-over-year due to volume decreases across most regions. Driven by North America and EMEA and LATAM partially offset by APAC. Clear aligner revenue growth was impacted unfavorably from foreign exchange of approximately $6 million or approximately one point year-over-year. Q2 Invisalign ASPs were flat sequentially at $1,255 primarily due to promotional discounts and unfavorable foreign exchange mostly offset by increased revenue from countries with higher list prices and increased other case and revenue revenues. On a year over year basis Q2 Invisalign ASPs increased approximately $25 primarily reflecting price increases in all regions and additional line of revenue, partially offset by promotional discounts and unfavorable foreign exchange. One example of our crisis recovery program that we have implemented in Q2 was a switch program that enable doctors to switch wires and bracket patients into Invisalign clear aligners. Total Q2 Invisalign shipments of 221.9 thousand cases were down 38.3% sequentially and down 41.2% year-over-year. Our system and services revenues for the second quarter was $54 million down 22.2% sequentially and down 48.1% year-over-year due to volume decreases across most regions except APAC. Promotional discounts and a decrease in service revenue partially offset by exocad revenue. Moving on to gross margin. Second quarter overall gross margin was 63.7% down 7.9% sequentially and down 8.3 points year-over-year. On a non-GAAP basis, excluding stock-based compensation expense and amortization of intangibles related to exocad, overall gross margin was 64.4% for the second quarter down 7.4 points sequentially and down 7.8 points year-over-year. Q2 gross margin reflects Align’s…

Thanks John. In summary we're pleased with our progress last quarter and by the customer responses to the actions we’ve been taking to support their practices and patients. We have developed a careful recovery approach that accounts for the safety of our employees, our customers, and their teams, and their patients, and are committed to helping doctors navigate this evolving environment, and be successful. One of the biggest lessons we have learned over the last few months is about the critical importance of digital technology. Align has always been a proponent of digital treatment to think about all these things that digital platforms and virtual tools have enabled during the crisis. The people in the businesses, and the customers who stayed connected, the way we’re able to adapt to working from home, the rise of tele consults, the AI that modeled the virus patterns, and informed health experts, and so much more. Consider also the companies that have thrived, most of the companies that are digital with their core, Amazon, Apples, Zoom and Netflix just to name a few. The advantage of digital are much more magnified to practitioners and consumers. This became even clear in our industry when practices were shut down for months. Over and over we heard I‘ve been able to help my Invisalign patients progress in progress, but I had to just try to keep my patients in a holding pattern with wires and brackets. Treating orthodontic cases has amplified the clear benefits of digital technology in clear aligners. This is a method self serving. This pandemic has emphasized the benefits of digital technology across many facets of our lives and businesses. Our acquisition of exocad adds additional digital workflows that play in the GP space and lab space. We're all excited about the exocad team…

[Operator Instructions]. Our first question comes from the line of Nathan Rich with Goldman Sachs. Please proceed with your question.

Thanks. Good afternoon. Thanks for the question. Joe you highlighted the improvement that you saw in June. I understand sort of the rational for now providing guidance for 3Q kind of given kind of the situation, but can you maybe help us better understand kind of where the business kind of you and so just we have better sense of what the jumping out point is as we think about the back half of the year?

Yeah I mean we saw dramatic improvement between April and June. Obviously we were kind of in the jaws of COVID 19 with all the shutdowns in April. May was little better and then we’ve seen strong momentum as we’ve moved into June. So I think you can look at that as a significant improvement in our business overall.

Okay great and then you highlighted the 3000 customers that were new to Invisalign this quarter. Can you maybe just talk about how that compares to maybe what you see in a typical quarter and kind of what you’re doing was going to ensure that those doctors become kind of longer term customers of Invisalign?

Yeah I mean that’s. I mean when you think about COVID 19 and what the business has really faced in that. 3000 customers thus for us was terrific in that way. You don't actually look for new customers coming in on that. You’re looking for utilization rates on your current base. I mean we felt and I felt really great about the 3000. Obviously that got stronger as the quarter went on.

Thank you. Our next question comes from the line of Elizabeth Anderson with Evercore. Please proceed with your question.

Hi. Can you talk about. Do you think Asia is a good path to think about in terms of the recovery or do you see sort of significant differences in that geography that should prevent this from extrapolating?

Yeah I think Asia is so diverse in itself. It’s hard just to extrapolate Asia Elizabeth. .I mean obviously China was kind of first out of this thing, but China has had bumpy road also with the recent issues in Shanghai and different areas, so every one of these regions has its own unique footprint in its own unique model in a sense of how they’ve dealt with the virus, but obviously it in our transcript, but we’ve seen significant improvement in really every region around the world.

Okay and I think you commented also in terms of your cost structure, in terms of not furloughing in place. Is there any other major changes to the cost structure in the third quarter maybe just in the back of the year generally that we should think about as we’re updating our models?

Hi Elizabeth this is John. We continue to believe in our model. It’s a vastly underpenetrated market. We're going to make strategic investments to better grow in that market. Whether it’s R&D, sales, and marketing we’re going to continue to make those investments where we see a return.

Thank you. Our next question comes from the line of Steve Beuchaw with Wolfe Research. Please proceed with your question.

Hi good afternoon. Thanks for the time here. I wonder first Joe, could you give us any more color on the breadth of uptake of some of the new digital tools that you referred to and the extent to which practices are making these changes and converting over to something of a virtual experience. I mean is this. Is this 2% of your customer base? Is it a lot bigger than that? Any color is really very helpful there?

Steve when we talk about digital platform, you really start with iTero on the front end and even in a downturn like we saw with COVID in the capital equipment business. iTero showed up well and particularly with 5D in different areas, but that’s the front end of this whole piece that we talk about on digital platform, then you move through our obviously our treatment planning, and all, but what we added had when you think about the whole breadth of a global digital platform we added virtual care, that knew about and we came out so that. Doctors could talk to our patients remotely and be able to track treatment and actually we had several doctors actually close treatments cases remotely with our virtual treatment capability. And that really extended the effectiveness of the doctor's, and the effectiveness of the digital treatment in that sense too. There is a lot of imaging that we do now in our treatment planning and all too, so it’s not just tracking patients, it's also having images and different things that you can share with the patient is a sense of where they should be around treatment in those types of areas. So it's a broad kind of a digital platform we're talking about. I mean we had tens of thousands of people on our virtual care platform as we rolled that thing out in a matter of 30 days and all around the world. And we’ll continue to update that platform with AI. We’ll make it much more predictive so that doctors don't have to look at every patient. We have a strong roadmap in that sense too Steve so it’s just, it’s the breadth of the digital platform, and how it covers everything from starting with the consumer, turning them into a patient from iTero all the way to the back end up being able to monitor, and treat those patients.

Just one more from me. What I'm trying to get to here is some perspective on what the underlying trend is and I appreciate that you don't want to talk about the exit rate leaving 2Q and you're not going to give guidance for 3Q, but what if I said let's imagine a scenario where we don't have another wave of lockdowns where practices are operating, and what is admittedly a challenging environment, but we don't have any sort of government level, or professional society level. You’ve got to stop doing cases or stop engaging in practices. If that's the operating environment we’re in I mean can you grow in 3Q or the back half of the year? Can you speak at all to what the business would look like in that situation if we don't get more lockdowns? Thank you.

Steve I’d say we're incredibly optimistic in this scenario that you painted where we don't see another COVID shutdown on a major market that lasts a long period of time. Based on the recoveries that we’ve seen in the latter half of May and then the strong recovery in June, we feel really good about the future of this business in the third and fourth quarter and beyond. John anything to add?

That covers it.

Okay thanks a lot.

Thank you. Our next question comes from the line of Jon Block with Stifel. Please proceed with your question.

Hey guys. Good afternoon hey. Joe I hope you can hear me okay. A similar line of questioning, just sort of emendated with e mails about sorts of trends so let me try to frame it this way. I think with slide 8 you guys have increase in North America utilization for June. I think first part of the question is I just want to be clear. That was for both orthos and GPs up the slide. It was hard to tease that out and if that’s the case Joe was that pure. In other words I’m getting questions on practices reopened in May and obviously there is a lot of backlog, so you’re saying North America grew in June, but was it pure or? Was it a benefit of backlog and maybe you could comment if that growth continued into July would be very helpful for North America?

Hey John this is John. Some of that is, some of its backlog, and some of it is additional growth that they would have, so the utilization has improved as those doctors have come back to work and they’re seeing patients, and that’s true in North America and that’s true in all countries where we see those doctors’ offices opening up, so it's hard to tell how much is backlog versus how much is more run rate going forward, but we’re a combination of both.

And the second part of the questions is Joe I’ve got you. That increase or the year over year growth in North America does that continue to the month of July?

That momentum continued to be strong John.

Okay fantastic and the second part of the question, go from very near term next month to sort of 18 months out, 24 months out. John just as we think about the model longer term I think there Street has you guys from a 2021 perspective. Revenue is higher in 2021 to 2019. Let put away 2020 for a whole host of reasons, but let's look at 2010 versus 2019. Structurally if revs are higher by ex %, should the margin structure also be higher. I look back to 2019, you had someone timers and legal et cetera. You reset the base, but if that were the case I'm just trying to figure out do you think the margin profile would also follow when we look at the earnings power? Thanks guys.

Yeah, thanks John. So as we look at investing our believing in our long-term model, a long term growth model and that has up margin at the 25+% so that's how we look to keep investing. As you get some benefit through the expansion and other things you might get some leverage as you go but we believe in that long-term model and that's how we look forward on our investments.

Okay. Thanks guys a follow up, I appreciate it.

Thanks Jon.

Thank you our next question comes from the line of Ravi Misra with Berenberg Capital Markets. Please proceed with your question.

Hi thanks for taking the question, I hope everyone is well. So it is just first I wanted to ask you gave us some sort of inclination about what the COVID impact was in Q1, anything that you can provide color-wise on that for Q2?

Yeah I think Ravi was [indiscernible] you know obviously April was tough as you came out of March into April, you know we saw some stabilization in May and then good progress in June overall so it just a complete kind of beginning and end of the quarter overall and like we just mentioned by John is that’s what continued into July also.

Okay I guess and I guess it's going to be hard to get a dollar figure out of you guys. How about just on a ADAPT I'm curious about the business model here when you're talking about kind of increase in utilization, can you help us think about how you plan on monetizing that is there some sort of profit-sharing or revenue-sharing that comes to the increased caseload and when does that kind of start to kind of flow through the P&L should we expect this as a 2021 event or when is this a small program that shouldn't really ever material impact to revenue. Thanks.

Ravi this is John, so you talk about that ADAPT program that we spoke about?

Yeah.

Look, we believe the digital transformation and this is the way we see that in testing that we have done to be able to help practices be more efficient moving from analog to digital, we believe in the platform and believe in that process and these are initiatives that will take to help the fact. It will be a service for a fee and those doctors, those practices will see the benefit we have seen it time after time on those practices that they have seen improvement in their efficiency and profitability and we want to be at a provide that service.

What kind of a upfront payment?

Well I think you know the way we have built that will be probably different by region but it is not an easy transition for practitioners to go from analog to digital and we have known that’s been one of the fictional point for customers wanting to obviously go digital from a dentistry standpoint, orthodontic standpoint so we have learned a lot and we're using those learnings for customers to reach out and really want to make a commitment for digital transformation and we know we can help, we filed last year in every region and we rolled it out full force now.

Thank you. Our next question comes from the line of Steven Valiquette with Barclays. Please proceed with your question.

You guys mentioned the, that braces buyback program which had some success with 2500 patients which is I guess I was curious whether that program as something started turn into substantially larger numbers in the remainder of 2020 or that can maybe a smaller part of the overall picture, also did you do that just in North America or you planning to do that in most regions thanks?

We have been doing that program in different countries in Asia for a while so I mean how to implement it. We thought of the good time in North America obviously because some doctors being trapped with the large and brackets patients and their inability to be able to help them so, we'll continue that, we’ll continue through this quarter if we, whether we continue or not, it was really based on what consumer needs are and what doctors need are but will make that decision when time comes, we just trying to help in the moment and in the sense of doctors being able to control the practices and I help the patients.

Okay, finally my pre-teen daughter was wondering if you can say hi to Charlie D’Melio for when you get a chance.

Got it, got it surely better than what I will be important for us okay.

Thank you our next question comes from the line of Matt O'Brien with Piper Sandler. Please proceed with your question.

Good afternoon, thanks for taking that question. Just for a starters, just as we think about the recovery here in Q2, I look at the adult number on a worldwide basis as it was down 45, teen was down 32 per my math, but obviously in the US or North America that number was much lower so with the higher unemployment rates with more people kind of staying at home, how does the adult market in the US recovered during the back half of the year?

You know I think it's honestly hard to call them and obviously which are playing out our teams here, and this is a seasonal time for teens and we know we'll get a strong signal here in the third quarter. But we're a lot optimistic about adults, I think there is a lot of just talking to different people in marketplace and you noticed to this seems to be a lot of people with time on their hand, wanting to do elective procedures that they didn't have time to do before, we’re picking this stuff all around the country. So unlike 2008 where a lot of things folded up because people are worried about their personal wealth, people are sheltering in place, socially distancing and especially our demographic that we work through right now, seem to have more time on their hands to be able to pursue these kinds of things so we're also be optimistic on the adult segment going forward third and fourth quarter also.

Okay. Thanks and then a follow-up question. Joe just to your point about all this enthusiasm that you are seeing going forward in holding SG&A higher, gross margins and taking a hit right now because you are keeping folks in place, you got all this optimism. The doctoring number was down a little bit but obviously that’s COVID related, so can you just illuminate a little bit more where all this enthusiasm and optimism comes from as we start thinking beyond this year, we are touch points on the dockside in terms of virtual in person way higher, I guess what everybody's trying to get their hands on because of COVID, do you think this could accelerate the adoption of clear aligners versus traditional practices and wires given all the benefits of less office visits et cetera?

Matthew you asked the million-dollar question right or the billion dollar question all right. We think, obviously our story has always been, we’re way underpenetrating this marketplace based on what consumers want, based on what our technology can do from a clinical standpoint. The consumer experience that's going on, I think we all think that COVID is really shine the light on this of much less invasive treatment, much easier in this sense location standpoint, much better workflow for doctors to keep track of their patient. So, we think if anything this is a time if this could happen, we're not telling you that this is a tipping point in entire thing but we certainly see this isn't hurting our story and it certainly being supported out there not just in United States but broadly around the world.

Got it, thank you.

Thank you our next question comes from the line of John Kreger with William Blair. Please proceed with your question.

Hey John.

I just following up on Matt's question just if you could give us your sense of how you view the attitude of the consumer right now, they have the sort of forced deferral as practices shut down but now the practices are reopen, what is your sense about the willingness of the consumers sort of step up and make this purchase, does it fell like business is normal or still very much in a wait-and-see mode?

Well it feels like you know to it a teen season, we talked about this before John, we call this elective procedures but Teens have a certain clinical window that they fit into and it's always a timeframe with parents and we're very optimistic that that kind of Team focus and growth will continue in the third quarter, in China too, in United States and different places. But also this is a different, John this is different than 2008 from what we feel is consumers seem to have more optimism in the sense of economy you see it in the stock market right now we're see it there and they have more time on their hands with many people not working from offices. And so we're optimistic again that there is money out there and there is a willingness of patient to pursue this electric treatments and I think you also have to look at the static market from a surgical standpoint and see what’s going on there too. It seems it support that kind of an idea also. So it’s, this is different than what we have seen in past recessions for sure, I am not a registered economist, neither is John, we're good at visualizing in this business and that's where we can only just a reiterate to you the signals we are seeing in the marketplace. But right now as this comes back, we know that all dental offices are not completely up to speed but that is not necessary based on demand, that’s based on the way that they have to actually face this patients through their practices and make sure that they keep their staff safe and they keep patients safe too.

Great. Thank you and then one last one, you mentioned being still very much committed innovation, can you give us an update there, how is an mandibular advancement being adopted and any update on palate expansion?

Yeah it’s hard to take a second quarter on MA and give you a trend because it was a pretty hard hit overall, obviously bringing shock on my numbers. You know I would say overall mandibular advancement continues to go well, we pair with our team first product, Invisalign first product line which is doing extremely well also and so yeah what you really find around the world, John as you find some doctors just glued to amend that advancement, they would love it, they use it every day, other ones are trying it out, that they have had it on some patients and watching through it. On the first product line, they got to combine that together and so we see significant increase in what I call a clinical penetration because we can do those kinds of cases that we could really have done, you know every two years ago at all. So I would say, the way to look at that is our Teen first product, Invisalign first being the most uptake and a fastest uptake with mandibular advancement right behind it.

Great and any update on palate expansion?

We have all the protocols we know how to do it, we're trying to find manufacturing capabilities that can scale with what we have been in middle out there, that sounds trivial but in a business like this where you have credible amount of volume you have to put through, we still have some work to do in that skillet more.

Great thank you.

Thanks John.

Thank you our next question comes from the line of Jeff Johnson with Robert W. Baird. Please proceed with your question.

Hi Jeff.

So what the qualifying questions here if I could, when I saw that like John Black's question on the North American number, it depends on how you read the sentences in your slide deck, was North America up year-over-year in June and then if I take your April, May, June comments and May a little bit better than June a significant better. It seems like June on the kind of global revenue basis had to be down only 10% to 20% or so I don't know if you’ve talked to that at all but when I look at street down 20% in 3Q, it seems like you sitting pretty comfortable with the street kind of the $486 million revenue number where that right now, so just any help you can give us again we want to make sure we get kind of that 3Q at least ballpark accurate?

Yeah just a top year over year, not just total not from a June standpoint. Not just quarter-over-quarter but June year-over-year, so this is a pretty strong signal.

Is that year-over-year in June?

Yes.

Okay, and the [indiscernible] down 20% in the third quarter from a global revenue perspective, it sounds like your June kind of globally was probably down less than that 20% if I cannot see April, May, June comments. So just kind of your comfort at that $486 million number where the 3Q I know that you're not guiding but I would assume you don’t have too many concerns on that number?

We'll give you an A for trying. That’s a good one Jeff.

That’s was good one John. No, we are not guiding but trying to give you as much information on people doing surveys and other work as well you can up trying a little around it but just I want to give out for the things we talked about, don't want to give on future guidance. Jeff you're not being Q here, it’s hard to read signal, two noise right now and that's okay.

Totally understood, last question. Just on the virtual tools as some doctors come back we are talking to on the therapy and hey I have had patients that I haven't seen in three months are so progressing wow, there may be going to go to a Q3 month instead of every two months follow-up schedule with their clear aligner patients in that. I mean it seems like to me we're getting here if I’m down on even some of these really messed up teen cases o three hours, four hours for tools may be take that lower time, just talk of the efficiency and throughput advantage of that’s going to have braces even that's going to be the real driver even more sale than others digital and what have you it's just the efficiency improvements are getting so good here in clear aligners.

Yeah, I would say when we say all that digital, it’s just that what allows them to drive the efficiency you're talking about, just so when you have this kind of digital tools, allow you to monitor patients to communicate with patients one on one or you know any kind of AI they can tell patient if they're off-track or on track and we know that interaction also encourages patients with the most important variable Invisalign treatment is compliance, making sure that they have their aligners intact and if doctors are watching and we are keeping up, in that sense it helps also. And so what doctors find out overtime is that they can -- they will have to see these patients like every three weeks, like they do with wires and brackets, they don’t have to -- the obviously the PPE and everything else associated with their staff and all working through these patients. And, if the patient doesn't have to come in from a clear aligner standpoint, you either give them all their aligners upfront or you give them more aligners that allow them to continue to treatment, without having an actual doctor’s visit. So, it’s just tools, they are kind of tools that we use now and from a business standpoint that we have, but it is applied from a clinical standpoint to keep track of patients and to allow doctors to be more productive for sure.

Understood, thanks.

Yeah, thanks Jeff.

Thank you. Our final question comes from the line of Richard Newitter with SVB Leerink. Please proceed with your question.

Hi thanks for taking the question. I was just curious, the Switch program that you guys launched this quarter, has it been more effective in teens or adults and then I have a follow-up.

Yeah, Rich, this is John. It is a program as Joe said that we had in Japan and other places as well, it is something that our doctors and many of their patients who were stuck in treatment and teeth were moving wanted to make a switch to this. It is not necessarily a teen versus adult, it's just patients who want to progress with treatment and did not want the uncertainty of the current environment that they are in or future environment and went to their doctors and their doctors wanted to be able to switch them over and we made it so that they could do so.

I think Richard, what you are hearing from both of us is, in this case we're not quite sure exactly how many teens and adults were on Switch program, it is a good question, but you got to guess statistically the orthodontic market in the United States is 80% teens and 20% adults. So you can guess the majority of Switches were probably teens, but that is – let me get that data back to you.

And the bigger question there that I'm trying to get at with some of the things that you're talking about in a post COVID world and all of the benefits that now kind of pile on to aligners versus wires and brackets. I was trying to ask the question through the Switch program to see if it would -- to test [indiscernible] but it would seem that teen doing the conversion with adult - the conversation with adults and being able to get teens and the parents over the finish line, you have an added level of sell now. Is that what you're actually seeing in the marketplace and is it fair to say that maybe COVID has - has resulted in the much anticipated inflection point for teens, is that fair.

Well it's fair that it helped. I cannot tell you that the inflection point is here, but we certainly see a lot of uptake and interest and a digital workflow and our digital methodology in light of COVID-19, our experience has been when doctors can really convert most of their practice and that's why ADAPT, once you get over 50%, 60% digital, your practices change significantly and the consumers like it better, doctors tend to like it better, what we talked about you have higher margin and also a dramatic increase like 20% increase from a revenue standpoint. So, yeah, this is certainly - a COVID is certainly been a push for this. We are cautious, we don't want to talk about a crisis that’s just terrible for people, actually enhancing our business, but the fact is it does promote a workflow and a capability that's much more convenient at this point in time given the COVID threat.

Thank you.

Thank you. Our next question comes from the line of Michael Ryskin with Bank of America. Please proceed with your question.

Hi there, thanks for taking the question guys. I have a couple of quick ones. In your prepared remarks Joe and John, you obviously talked about third quarter, how that's typically the strongest part of the teen season, typically you see the nice little bolus, in the summer as everyone kind of stays home. I'm just curious with the strength that you saw in 2Q, do you think there could have been any sort of pull forward in teens in the quarter, just looking at for the last couple of months everyone’s been home anyway. So any expectations of maybe a little bit of a lull in 3Q or should we expect further pickup from current levels.

I think Michael when you ask a question like that and you need to think of our business and how broad it is and global it is today. There's a lot of mitigating factors, right, so we cannot tell you if there is a backlog of patients that have come in sooner or whatever. We just know it’s teen season in United States and its Canada and I mean, I'm sorry in China, Canada also and we're June was indicative of a good increase in the sense of teens looking for treatment and we think that will continue.

Great, thanks, and then another quick one. I realize you don't want to talk about the exit run rate or anything like that, but I think a lot of the assumptions is go forward are that there are no further lockdowns, there are no further sort of quarantine measures implemented, but I just want to ask in the recent weeks [indiscernible] in the Sunbelt, Texas, California, Florida, have you seen any fluctuation in volumes, any early indications there. I guess I am kind of asking of on the one hand you have a full recovery of the economy, on the other half you have full locking out, what if we were somewhat in the middle, are you seeing any indications there?

Mike, I think you look at – every area is different, we are seeing a different pace of recovery for the various regions and locations and practices, some practices they are open but then somebody within the practice develops COVID and it shuts down so it varies across. We're doing everything we can to make sure that those doctors have their PPE, they have promotion, they have things in place to be able to help drive volume, but it's very dependent on those specific areas not just in the U.S. but we're seeing this across the other regions as well.

Mike, right, it is back to Joe again too, I just want you to know we have great enthusiasm for teen and no matter where it is around the world but we can't tell you if there is a surge of teen patients based on a lot of teens not being in school, we cannot tell you if it's a backlog or whatever, but we can tell you we're enthusiastic about the season and that June was a good indication that it's heading in the right direction.

Great, thanks. Can I ask a quick clarification, okay just this has come up a dozen times in the past five minutes. Your response to Jeff's question on June, do you mean absolute case volume was up in North America in June or utilization is up in June.

Utilization.

Okay, thank you so much, thanks.

Thank you. Our final question comes from the line of Brandon Couillard with Jefferies. Please proceed with your question.

Joe or John, just a question on China, if you could speak to growth specifically in 2Q I know it is still down year over year, were there any other reasons kind of outside the three that you listed, Japan, South Korea, and Taiwan that were ahead of kind of your internal expectations?

No I cannot say that there was really, I mean we didn't talk a lot specifically about that but Japan, Taiwan, and Korea were exceptions because there were hardly a blip in a sense of what we saw and how they were affected with COVID but really every other country in APAC and most countries around the world we say except for the expansion markets in Asia and obviously COVID was a big impact on them.

Okay.

And then balance of the question John, I think so.

John, any chance you could share with us the exocad contribution in the second quarter or to results or should we just wait for the [Q4] for that.

Yeah, I think we talked about been in the scanner and services segment that we have and I think you can wait for the Q on that but it's - we acquired and it is part of our business and we will put more details into the Q.

I think that's the last question. So thank you everyone for joining us today. This concludes our conference call. If you have any follow-up questions, please follow up with Investor Relations. Have a great day.