Greetings, and welcome to Align Technology’s Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A 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, Corporate and Investor Communications. Thank you. You may begin.

Thank you. Thank you for joining us everyone. Joining me on today’s call is Joe Hogan, President and CEO; and John Morici, CFO. We issued third quarter 2020 financial results today via GlobeNewswire, which is available on our website at investor.aligntech.com. Today's conference call is being audio webcast and will be archived on our website for approximately one month. A telephone replay will be available today by approximately 5:30 PM Eastern Time through 5:30 PM Eastern Time on November 4. To access the telephone replay, domestic callers should dial 877-660-6853, with conference number 13710706, 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 financial statements, including the corresponding reconciliations, including our GAAP and non-GAAP reconciliation, if applicable. And our third quarter 2020 conference call slides are on our website under Quarterly Results. Please refer to these files for more detailed information. With that, I’ll turn the call over to Align Technology's President and CEO, Joe Hogan. Joe?

Thanks, Shirley. Good afternoon, and thanks for joining us. I'm pleased to report stronger than expected results with record third quarter revenues up 21% year-over-year, reflecting strong momentum across all regions and customer channels for both Invisalign clear aligners and iTero scanners and services. During the quarter, we continued to support doctor recovery efforts with products, programs and virtual tools and training that helped more docs transition their practices to digital technologies and drove record utilization across the Invisalign portfolio. Capping off a record quarter is an achievement of our 9th million Invisalign patient milestone. We also saw a strong response to our new teen and mom-focused consumer campaign with a 118% year-over-year increase in total leads, garnered 3.3 billion impressions, an uptick in consumer engagement from new social media influencers like Charli D’Amelio and Marsai Martin, a 26% increase year-over-year in teenagers using Invisalign clear aligners. Our overall revenue momentum has continued into October and we are encouraged by positive feedback from Invisalign practices regarding the benefits of digital orthodontics starting with an iTero scanner for Invisalign treatment, especially in this COVID environment. For Q3, total revenues were $733 million, up 108% sequentially and up 21% year-over-year, reflecting a sharp rebound in sales for both Invisalign clear aligners and iTero imaging systems as practices around the world reopened and got back to work treating existing and new patients. Q3 revenues for clear aligners were $621 million, up 20% year-over-year, and imaging systems and CAD/CAM Services were $113.4 million, up 24.5% year-over-year. Q3 Invisalign shipments were a record of 496,000 cases, up 28.7% versus prior year and up 124% versus prior quarter, reflecting strong recovery across all regions. During the quarter, we saw increased demand for new cases as restrictions eased and doctors ramped up their practices. This is in…

Thanks Joe, now for our Q3 financial results. Total revenues for the third quarter were $734.1 million, up 108.4% from the prior quarter and up 20.9% from the corresponding quarter a year-ago. For clear aligners, Q3 revenues of $620.8 million were up 108.1% sequentially and up 20.2% year-over-year due to Invisalign volume growth in all regions, driven by North America, EMEA, APAC and LATAM, partially offset by lower ASPs. Historically we have raised prices by approximately $50 per case in the third quarter. Given our continued commitment to helping our customers in their recovery efforts, we did not implement a price increase this year. Q3 Invisalign ASPs were down sequentially $75 primarily due to higher mix of new cases versus additional aligner shipments as Joe mentioned earlier. Recall Q2 ASPs benefited from more additional aligner shipments as doctors were focused on maintaining treatment progress for existing Invisalign patients. This trend reversed itself after practices reopened in Q3 and demand for new cases ramped up significantly. As a result, our deferred revenue balances increased $93 million from Q2, of which, the majority of this increase is related to clear aligner, and will be recognized with future additional aligner shipments. On a year-over-year basis, Q3 Invisalign ASPs decreased approximately $80 primarily reflecting higher promotional discounts and increased deferrals related to additional aligners. In addition, we provided doctors with incentives designed to specifically aid them in the recovery during the pandemic. Q3 total Invisalign shipments of 496.1 million cases were up 123.6% sequentially and up 28.7% year-over-year. Our System and Services revenues for the third quarter was $113.4 million up 110.1% sequentially due to an increase in scanner sales and increased services revenues from higher installed base. Year-over-year System and Services revenue was up 24.5% due to higher scanner sales, services revenue, and…

In summary, we are certainly pleased with our progress in the third quarter. We have taken a very thoughtful approach to recovery and we have persevered in large part by living the values that are important to us as an organization; agility, customer and accountability. In a time of great uncertainty, when swift actions have been required, we have responded like no other company in our industry. Most importantly, we have followed our guiding principles and supported our employees and customers, protecting employee jobs and salaries and working to support the needs of our teams globally, and supporting our customers with PPE, extended payment terms, postponed subscription fees for iTero, and numerous programs to help them through this crisis. We also applied our manufacturing experience and resources to making testing swabs for hospitals and PPE for our own teams and also customers. Instead of going quiet or holding on planned spend, we accelerated our investments in marketing to drive consumer demand to our doctors’ offices and stay top of mind with consumers. We accelerated new digital technology to market so that we could provide virtual tools to our doctors that enabled them to stay connected with their patient and keep their treatment moving forward. We supported doctors and their teams with online education and digital forums that went beyond product and clinical education to help navigate PPE shortages and recovery planning; and we continued to grow the business, not just protecting jobs but adding headcount, continuing our investments in R&D and product innovation as you saw in our Invisalign G8 announcement today and developing our plans for manufacturing expansion. Our actions are a result of the conviction that we have in our business model, supported by the strength of our balance sheet, to drive results that exhibit our accountability to…

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Nathan Rich with Goldman Sachs. Please proceed with your question.

Thanks, and good afternoon. Joe and John, obviously, great to see the volumes come back so nicely. It sounds like the momentum continued in October. Could you maybe just kind of help us understand kind of the cadence of growth that you saw over the quarter? And any comments on how October has fared so far, maybe relative to the type of case growth that you saw in 3Q?

Yes, yes, Nathan, thanks for the question. Look, we just built through the quarter. Every month we saw actually continue to enhance momentum. And the short answer to your question is, we’ve seen that build in October also.

That’s great. And Joe, obviously, you kind of talked through in detail about what has kind of driven the stronger utilization that you’ve seen and the value of digital treatment. When you kind of take a step back and kind of think longer-term, how has that kind of changed your outlook or influence your kind of multi-year outlook for kind of what you could see from this business over the next several years going forward?

Nathan, you’ve known John and me and Shirley long enough. I mean, we’re incredibly enthusiastic about this business and bullish about this business. And you can see we’re even more so as obviously we deliver the kind of results we have in 3Q. I think you always have to keep in mind two things here. One is, we’re in a very volatile environment. We understand that and we’ve done some things. We feel that’s really helped our doctors through this and made the company stronger coming out at the other end. But always remember, we’re completely underpenetrated in this marketplace, right? We’re still less than 10% penetrated from an orthodontic procedure standpoint, let alone those 300 million patients we talk about there that should receive orthodontic treatment that aren’t receiving orthodontic treatment. So we remain incredibly bullish with a digital format to be able to go after those patients and be able to continue to drive the growth of this business.

Thanks, Rich. Next question…

Okay. Thanks.

Yes.

Next question, please.

Our next question comes from the line of Erin Wright with Credit Suisse. Please proceed with your question.

Great, thanks. So, can you speak to some of the contributions from the recovery efforts in switching brackets and wires patients? Or are you continuing to see those contributions and efforts into the fourth quarter? And do you think that will drive the Board’s longer-term shift here? Do you have any indication based on the responses? I guess you’ve seen from practitioners how sticky that is? Thanks.

Well, it’s – overall – hey, it’s Joe. I mean, overall, it’s pretty sticky when we buy their wires and brackets inventory back. And then we introduced in the programs like ADAPT and different things that really allow them to begin a digital transformation within their practices. So I feel that part is very sticky. I can’t sit here and naively say that everyone who starts to move digital in this crisis is going to stay digital. But I can tell you that we have the tools, being able to drive consumer demand and consumer awareness and all those things, helps us to maintain that stickiness. And I think over time, we’ll just have to see how sticky it is as we come out of this COVID crisis.

Okay, great. And then on ASPs in the quarter, I guess, is that the run rate we should be thinking about? I know you didn’t take the price hikes, but any other mix dynamics as we think about the next quarter and beyond?

Hey, Erin, this is John. Yes, the mix that we saw – we talked about some of the dynamics of all those new cases coming in and we saw that. We also talked about not having a price increase given the conditions that we’re in. We’ll evaluate going forward as to any changes we might make in pricing and so on. But I think from a run rate standpoint, this is a good starting point for going forward.

Okay, great. Thanks.

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

Hi, Steve.

Hi, good afternoon, and thanks for the time here. I wonder if you could expound a little bit on some of the numbers that you’ve given here at this quarter, and I believe you did in the prior quarter as well around not just the training numbers, but some of the data that you gave on people who are not just getting trained, but who are new to Invisalign. I’m sorry, I don’t know, maybe some do. But what were those numbers a year ago? And do you have visibility into what those training numbers look like out into 4Q or even beyond?

Yes, Steve, this is John. I think when you look at being able to train like we can now doing much more virtual being able to have that remote training as well as where you can in person gives us a lot of flexibility going forward to be able to expand out our training. So there’s a lot of new capabilities, a lot of new tools that we’ve introduced this quarter to be able to help our customers and train new customers as well as our sales team be able to reach those. So it’s a key part as you know to our growth and we’re going to continue to find ways to be able to connect with new doctors to be able to get them to understand the benefits of Invisalign and ultimately have them use it more and more to grow.

Okay. Thanks, John. And then, Joe, one for you. So I’ll let you carry the burden of being the CEO of the first big dental company here in the U.S. to report. Just give a little bit of perspective on how you imagine policy evolves. As you talk to folks around the CDC, AAO, the ADA, any of their counterpart organizations in Europe, do you see any sign that there might be a move toward practice closures? Or are we really past that now that we’ve got PPE in place? I ask because I think they’re just a lot of folks who are looking at the growth, not just at Align, but at some other companies and it’s really attractive growth, but people are just worried about the possibility that we see lockdowns again. So any perspective you could offer there would be really helpful? Thank you.

Yes, Steve. Steve, I’d tell you, talking to obviously doctors all around the world or whatever. I don’t see that there’s any imminent, a lot of closures in the industry. I mean, there’s frustration with the closures and obviously a lot of disagreement in the sense of when they’re told to close. Fortunately, what we’ve seen with the COVID coming back here in the fall, we haven’t seen the institution of going back and closing these doctors’ offices, which help. I can tell you, Steve, since I’ve been here five years, there’s always a certain segment of the dental industry that is looking to sell or looking to change and get out, but not close down. So I honestly think that there’s still optimism out there. I’ve seen the doctors do a great job in a sense of being able to protect their employees, make sure that they protect their patients and do the things that are needed. I know by reading your material and other materials that we’ve all picked up that most of the doctors are running at 70%, 75% kind of a capacity, but they’re finding a way to make it work. So I’m not looking at any imminent demise in the business in the sense of close downs or anything like that. And I think the offices are getting better and better being able to drive volume through their offices. And again, you know that this is a digital format that we feel that sets a foundation for them to have a much better patient flow through or a much fewer touches in this COVID world, which we hope hopefully will carry over as we move out of this next year.

Really appreciate that. Thanks for all the time here.

Thanks, Steve.

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

Great. Thanks, guys.

Hi, Jon.

Hey, Joe, actually, first one for you. Sort of qualitatively, can you give us a beat or a signal on teen share of chair? And do you see a broadening out within your ortho customer base? I think that’s the key sort of the broadening out. In other words, are you seeing the one from orthos that we’re always, I don’t know, call it less than 5% Invisalign shared chair. Are they stepping up to the plate because of clear aligner workflow advantages? And if so, how do you sort of ensure that you capitalize on that longer term?

Yes. Well, I think it’s a couple things, Jon. Obviously, COVID has been an added incentive to move people out of analog into digital because of fewer touches and being able to maintain continuity of treatment, even if things are shutdown. So there’s no question, we saw our share of chair increased in that sense. I think also when you see new products like Invisalign First and those things we’ve introduced in the last few years, that’s – as you know well, that’s extended our reach from a HDM point within that specific demographic. That’s helped us also. And I think there’s a combination here of further and further realization of how digital processes and orthodontics really can help, can help be more efficient, but also realization from consumers that it is an offering here that is better than wires and brackets, and more efficient, certainly in this COVID kind of environment. So how do we – how are we certain that we maintain that? Jon, when you look at programs like ADAPT and things, those – that switch over – let’s back up for a second. Jon, five years ago, we were fighting for clinical, I’d say relevancy in this industry. That’s not a question anymore. All the docs – most of the docs out there understand very clearly we can do 80%, 90% of the cases out there. It becomes a business formula. Can we really make money with a digital kind of a system? And those are the programs that we’ve been putting together with doctors with outside experts that can really train doctors as to how digital can work, how can expand their practices and how actually can be more profitable in a digital process. And I’m confident with what we’re building up in that area, we’ll be able to extend that going forward.

Got it. Fair enough. I’ll shift over to GP side for the other question. The utilization over four, I think I’ve been waiting 10 or so years for that and I get it. Some of it’s probably pent-up demand. You talked to that a little bit on the call, but what about the other components? Is it some scanner digitizing the front end, the bifurcating of the sales force? I mean, essentially Joe, have you given the tools that you needed to the GP to finally sort of step function that utilization rate higher that was always sort of stuck right around that mid threes for a number of years? Thanks guys.

Yes. Jon, I feel the answer to your question is yes, we have. I mean everything from iTero and really the inside of iTero and the software programs at all in conjunction with iGo that make it much simpler for doctors that haven’t been associated with digital orthodontics before. Our segmented sales force, for sure. I mean, we’ve piloted this in Europe first and somewhat in APAC. So we knew what to expect. We were just fortunate enough to launch it ahead of this issue, ahead of the COVID issue, and they have the salespeople ready to have that touch with customers to make it work. What I’m excited about this, Jon, we have so much more that we can do to make that work also. And I think with a confidence that GPs are having in this kind of a system, it’s a light touch system, it’s a high revenue kind of a product and it’s gaining more attention in that channel. So, yes, I’m really – we’re all thrilled here to see the utilization rates, but it is on the back of those kinds of innovations in distribution and also product that we think we’ve been able to drive it.

Okay. And if I can just quickly slip in one more, just for a clarification, I think it was all the way back to Nathan’s first question, just to be clear when you say momentum building, I mean, do we take that your October year-over-year growth rate was north of your worldwide 3Q growth rate that you posted? Thanks, guys.

Jon, you’re right. We see momentum building and that continues – it continues that growth from a revenue and a volume standpoint into October.

Thanks, Jon. Next question, please.

Thanks, Jon.

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

Hi, Elizabeth.

Hi, guys. Thanks so much for the question. As we think about the outlook for 4Q and as we come out of COVID more broadly, are there any – I know you guys obviously didn’t cut costs, kept the sales force, because you maybe foresaw some of this growth coming back. Is there anything in terms of investments of the ramp back that we should be considering?

Well, I think there’s just continuity of investments is the way I’d answer your question. They’re not new investments. We’ll continue to invest in the consumer side, pretty dramatically. You’ll see that we’re doing that all around the world. It’s not just in the United States or Canada. We’re also – you’ll see investments in Europe and also Asia to a degree that we haven’t made before. We have a series of new products that we’re investing in. We kept that momentum in the third quarter and where we hired engineers to keep that moving. And then these specific programs for doctors like ADAPT that we’re talking about, and AIF and different things, they’re really an important part of this because you have to make sure that these workflow changes, and the way ClinCheck works, like ClinCheck Pro and whatever, they have to be introduced to docs and we got to have the high touch kind of a system to give them the confidence in those programs. So it’s a long answer to your question, but I’d say we maintain and enhance what we have been doing is what you’ll see in the fourth quarter and as we go into the first quarter too.

The added piece, Elizabeth, from an investment standpoint is investing in operations to stay ahead of the volume. And making those investments we did so in Q3, we’ll continue to make those investments in Q4.

Okay. But it doesn’t sound like there’s anything totally different that this sort of – because we could consider catch up or something on that front. Okay. I guess – yes.

You go ahead, Elizabeth.

No, I was just wondering, you talked about some of your continued spend on social channels in terms of marketing and that seemed also a continuation plus obviously the buyback program in the quarter. Is there anything else that you guys see changing in terms of your marketing spend going forward? Would you say it’s sort of like a continuation of the types of programs that you were doing in the third quarter?

Well, I think, obviously, Raj and our marketing team are very innovative and it’s not that we’ll just keep with the same themes. We obviously we run – we run trials, we do different things, we’ll change them up or whatever based on what we’re experiencing in the marketplace. So our investments will continue to be very aggressive. We’ll continue to be innovative in the sense of how we do these things, but we certainly won’t let off the gas in the sense of the focus that we’ve had over the last few quarters.

Thanks, Elizabeth. Next question, please.

Our next question comes from the line of Steve Valiquette with Barclays. Please proceed with your question.

Hi, this is Jonathan Young on for Steve.

Hi, Steve. Hi, there.

Hey, it’s Jonathan. Hi. So you just from relation to the backlog, you were talking about on the pent-up demand, I guess from your perspective, how much backlog do you think is kind of still out there with the docs before it normalizes out as we kind of move forward?

Steve, you asked a big question. I mean, from a backlog standpoint, we really don’t know. When you talk from an empirical standpoint, when you talk to many of our docs, they’ll say they cleared out their backlog in July and August. But this is a global business it’s hard to talk about all over the world where it stands, but – when things came out of lockdown and when they didn’t. So we struggled to be able to quantify a number for you in that sense.

Okay. And just going back to the comment about the utilization of docs being at about 70%, 75% capacity, I guess, from – that’s from the capacity standpoint, but from your customer base, are they all largely open at this point or is there still 10%, 20% that still remains close due to random shutdowns globally or locally in certain areas? Thanks.

No, they’re largely open.

Great. Thank you.

Yes. You're welcome Jon.

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

Hey guys.

Hey John.

Hey. Can you just talk a little bit more about again the uncertainties that prompted you to not guide to Q4 after a very, very good third quarter? And one thing I was thinking about given the rebound in cases in Europe are you seeing any signs of maybe just patient traffic slowing down even if practices aren't closing per se?

Yes, jump in.

Yes. I think, when you think about what we've seen in terms of the momentum we see we tried to lay that out, obviously there are still unknowns in the world. I would say COVID in the global economy and so on. But for the things that we can control and what we tried to lay out around the R&D investments, in manufacturing, and marketing and sales we feel really good about our momentum and what we can drive in the future. We just have unknowns that are outside of our control and so that's the reason from a guidance standpoint that we didn't give specific guidance. But we wanted to highlight that we've – because our continued momentum as we went through the quarter both for revenue and volume, and that continued past the quarter end.

Great. Thank you. Joe, a question for you about sort of the strategy to get the attention more of GPs. Can you just talk about how exocad is going and what else your – what other levers you're pulling to sort of become more of that sort of daily thought process for the typical general dentist?

Yes, John that’s a good question. Look, I feel great about exocad and obviously when I talked about in the highlights that we just went over is, I mean its digital dentistry on the GP side. You have to go around the world and understand how exocad is, exocad is very embedded in Europe also in various parts of the far-east and in some parts of the United States, but the key is just a digital workflow and it's between iTero France is, it's in a obviously a GPs office and that CAD/CAM piece is either extended in office or primarily it goes to labs. I think it's given us the initial boost that we wanted to in the sense of our relevancy in the GPs office in the sense of an iTero scanner can do these kinds of restorative scans and this kind of restorative workflow. What's really exciting is, when you look at how you can integrate what exocad does in a seamless workflow way with iTero and also Invisalign, it just gives us a lot of degrees of freedom to really change that kind of restorative dentistry. I'm really excited about the progress even in the short amount of time.

Great. Thank you.

Thanks, John.

Our next question comes from the line of Brandon Couillard with Jefferies. Please proceed with your question.

Hi, thanks. Good afternoon. John, I think you said leads were up something like 120% year-over-year. How do we think about the relevancy of that metric as a leading indicator of revenue growth, it's not a metric I can recall you really discussing before?

Well, that's a good question. I mean, we do – I don't know how we've communicated that before, but it certainly is a term we use internally here at Align all the time. A lead is just what you would guess it is Brandon and it's a strong lead in the sense of a customer wanting to turn into a patient. And we have several ways of touching that customer they can come through our Invisalign app. They could be contacted by a concierge service. Concierge service can take the information and move it onto a doctor's office, but it's a lead and it's a great leading indicator of the interest of patients out there. And it's, again, one of the major attributes of Align of what we bring to the marketplace is to be able to excite consumers and move them into our doctor partner groups.

Okay. And then John, any chance you could specifically speak to China growth in the third quarter? And then secondly the financial impact of opening the new permanent manufacturing facility as opposed to the temporary site you have been operating be in terms of revenue growth or profitability or expenses you think you can share there?

In China, we saw a good sequential growth, continues to grow. I mean, obviously they were the first ones kind of in the pandemic to starting Q1 we saw some growth in Q2 and significantly more growth in Q3. The manufacturing like you said, is gone live it's now greenfield facility where everything's up and running. We're adding more capacity there to meet our demands. But it was a very smooth transition. We learned a lot from having that temporary facility and learning kind of the manufacturing, the scale up that we needed and that transitioned very well into the new facility.

Great. Thank you.

Our next question comes from the line of Jeff Johnson with Baird. Please proceed with your question.

Thank you. Good evening guys.

Hey Jeff.

Hello. Joe, wanted to the start with you again, it's the same thing, Jon Block's trying to feel out here, but was there anything different in your North American ortho customer mix? Did the Diamond and Double Diamond guys come back much faster than the lower-end guys, anything at all like that? And I guess what I'm trying to get at and same thing, like I said, John is sustainability of that 24% North American ortho utilization number, a fantastic number, is that our evidence, is that our proof point there of this move from analog to digital, as you keep talking about it, is that the number to focus in on there and then obviously the GP number as well?

Yes, I think, Jeff if your real question is about utilization being the key metric, I mean, it certainly is, but who has led that, our Diamond and Diamond Plus docs are already having a big digital aspect of what they were doing. We're able to function extremely well in this environment. Remember our virtual care tool that we bought out really six months before we wanted to do it, it wasn't the best tool in the world, but we've made it better over time. Really gave them that digital interface with their patient base that allowed them to be able to track their patients without having come back to the office that was for a certain period of time. So but to say that it was only those practices would be wrong. We saw no matter what tier they were in our advantage program, we saw them reaching for training, wanting to work from a digital standpoint. The orthodontist recognized the advantages of digital during this whole sequence and again, that's why the program and the things that we've had in place, the investments we made or whatever, they were very timely to help to support that interest.

Yes. Understood. And then maybe just a follow-up for John. So John, you seem to imply that maybe ASP is here at this level are good way to think about the next few quarters. Does that mean some of the incentives kind of sustain here? Do you leave them in place? And I just want to understand the accounting. Does the bracket buybacks, does that go against ASPs in any way or is that a cost buried somewhere else in the P&L? Thanks.

No, that is a cost against as a promotion, so it goes against revenue for the bracket buyback in. And we'll evaluate as we do on a normal basis with promotions, what promotions are working, what's driving that right level of utilization and engagement, whether a new doctor to a doctor that does a lot of volume. We did mention that we didn't increase price and that was something that's just a reflection of what's happening in the marketplace. And look we are very pleased with, when you look at Invisalign ASPs that it's 74.7%. We haven't seen that in several quarters. So, we're very aware of the dynamics around promotions and what that drives, but ultimately its driving profitability and we saw great gross margin growth.

Yes. Understood. Thanks.

Thanks, Jeff.

Our next question comes from the line of Glen Santangelo with Guggenheim. Please proceed with your question.

Hey, Glen.

Hey Glen, you there? We maybe not hearing your line clearly.

Hello. Can you hear me now?

Yes, we can.

Hey Joe, how are you? Thanks so much. Joe. I just want to take a step back. I mean a lot of the questions were already asked, but I wanted one of the follow-up to response you said to the earlier question. What's your sense going on with your organic growth rate of this business? I mean, are you seeing that the organic growth rate of just the ortho business in general accelerate through the pandemic, and then as you think about sort of the penetration of clear aligners versus total cases, you sort of cited that you still think we're less than 10% penetrated. Could you maybe talk about the penetration in North America and international, maybe how you see those sort of penetration rates evolving over the next couple of years?

Well, I mean, obviously we measure ourselves from a penetration rate standpoint overall and we split the market up obviously in teens and adults, ortho versus the general segment with GPs. But if I'm answering your question right, Glen, I mean we have increasing penetration in the utilization we call on different parts of the marketplace. The digital platforms and things that we've put in place are really enhancement to doctors to get on these digital platforms and use the tools and things that we have. So Glen, I think again as I mentioned in the other question on like this is – remember we're still underpenetrated, it really as digital orthodontics has such a long runway, but it is a different workflow for doctors and it's a different expectation from a patient base, understanding you really can use in digital platform in order to move teeth as efficiently or better than wires and brackets and so. It's so important that we have a strong digital platform that unites the workflow between us and doctors, and doctors and patients that you have a breadth of product, everything from Invisalign First, all the way to express and comprehensive products, and retainers and things in between. Sales forces are incredibly important for that penetration, the sense of how you talked – how you touch docs and how you move things forward. So I would say Glen, to answer your question here, there's no magic on this penetration piece. It's a lot of work. It's a lot of work and a lot of friction you have to overcome, there's no escaping it, but it's inevitable. Digital is better than analog in a COVID environment or not in a COVID environment. That's our position and that's what we'll continue to drive.

And Joe, it seems like you may be expanded your sort of technology lead again with sort of this latest development on the G8 side. Could you maybe just give us a quick update on the competitive landscape? Are you seeing anything else in the market that is starting to get any traction or is it still kind of really just an execution issue for you?

This is all about execution with us. It's a – from – I have nothing from an update from a competitive standpoint, really to report. Remember our competition is about expanding the marketplace that is what it's all about. This is not a scrum of a bunch of people making plastic aligners. This is a scrum about what can you do to reduce the friction of getting dentists and orthodontists to move forward in a digital process. It's the growth of this marketplace that is really the material difference here. It's not individual competition in the trenches that we're focused on or concerned about how do we expand the marketplace Glen.

Okay. Thanks for the comments.

Yes. Thank you.

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

Hi, thanks for taking the question.

Hi, Rich.

Hi, how are you doing, Joe.

Good.

Wanted to just start-off, just thinking back over the 20 year journey that you had or longer than that now, you're not specifically, but just in aligners and what you've seen in your tenure and what you know before, can you – there'll probably be an inflection point moments and I'm just curious where and how kind of this COVID opportunity, which is clearly on some level creating an inflection point on some level, where that stacks up? And a year or two years from now, do you think we're going to be saying this was probably the one of the defining periods for you guys to capitalize on converting the gene segment and getting that accelerated kind of digital boost that you needed to really kind of move this market conversion opportunity in a step function fashion. I'm just trying to put it in perspective, are we kind of at the demarcation here, where this is kind of defining period for the company?

Well, you know Richard this is always really – it's hard to always call it, you're asking about the tipping point. And John has a great saying you never know the tipping point until it tips, right. So, but I would tell you that, obviously in the current environment that we have right now, where infection is a concern, digital becomes predominant in that sense of doctors looking at it. But I think another good signal that you can say that this can become more permanent, what's really unusual here is take a look at iTero growing 25%, right. You see capital of goods in a situation like this are going to lag, because doctors aren't going to make that kind of a capital outlay when their businesses are under pressure. And what we saw in this case is iTero grew phenomenally and then what we know, and you see that 93% of the cases in the United States right now for ortho is coming through digitally, when you get an iTero scanner into an office whether it's a GP or ortho they become really committed on the digital piece of want to learn. So I think that kind of demand for iTero scanner, what I call a hurricane right now from a doctor’s cash flow standpoint really shows that they're interested in the sense of this digital transformation and want to stick with it.

That's helpful. And maybe just want to follow up on the competitive comments and questions from the prior. I'm just curious, your ability to train virtually and remotely and your customer base and the advantage you have there. Are your competitors able to kind of get into the channel even as effectively as they might have otherwise been or you basically kind of converting on your own right now, I'm just curious if there's just an inherent structural advantage that you have there during this period and if competitor sales reps are allowed to say engage as actively as you are?

Yes. Forgive me if I don't answer your question properly, but what I can drive from that is the importance of a sales force versus competition, and then the importance of training. And there's no company in the world that can provide digital training, whether it's virtual or if it's allowed in the future, which it will be obviously face-to-face across a number of platforms that Align can provide. ADAPT is another kind of training, ADAPT is Align Digital and Practice Transformation program that kind of experts that we put in place that understand doctors office workflow and economics, and how we can work through them. Our sales force is, since I've been in this business five years now and I've run sales forces in businesses pretty much my entire adult life. I have never seen such a high touch sales force in my life. The importance of touch with a sales team with those doctors is incredibly important because of how different digital is from a workflow standpoint, a clinical standpoint than what an analog procedure is. So there's no way around that. And then the last part is, maybe we're taking advantage of our competitors or something. And I don't say there in any arrogance or whatever, the competitions, I actually welcome it to a certain extent because it helps to legitimize a digital space. Our job broadly is how do we go and get dentists and orthodontists to move from analog to digital, not so much what the next competitor's product is out there and we're fighting for that extra ounce of share, that's not where we are right now. This is about an expensive marketplace.

Thank you.

Yes. Thank you.

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

Hi team. How's it going? Hope everyone's well.

Hi, Ravi.

Thank you so much.

To take a pivot to G8 for a second, and remembering correctly prior versions of the systems have been seen as the step function advancements that have opened the door to more cases and more comfort with doing the system. With G8, just curious in terms of number one, how do you see it kind of increasing the addressable market for the number of cases you can treat? I mean, is this opening up doors that couldn't be done before by the sort of average dentist. And number two, do we have any sort of IP protection around this. I mean, looking at the press release, it seems like a pretty powerful set of innovations in the way you're staging it or this kind of a function or development on top of existing technologies in that sense from an IP perspective?

Yes. Hey Ravi, good question. First of all, when you think of how we got the G8 is, we've done 9 million patients, right. And probably deep bite cases are 30% of those cases and G8’s around deep bite. And when you do deep bite, there's a lot of extrusion in deep bite, now I don’t want to get to clinically into this thing but extrusion means you're pulling the tooth down or pushing a tooth up. And those are the most difficult movements that we make. They're the hardest movements to do. When we talk about IP, it has to be with the specific kind of attachment, it's where you place that attachment. It's that interface of that attachment with the aligner and how the aligner – actually that's what we call it the activated part of this thing. And I'd say do we have IP around that? Sure, we do. Do we have IP around doing a deep bite case? No, but our products are specifically geared to be able to do that. And so we use a lot of AI and machine learning to mine that database to figure out where these deep bite cases weren't finishing as fast as they could be at times. And the new G8 supposed to make this better it's been tried in different areas. And in the end, what it does it gives doctors more confidence to be able to get into those cases and though they can finish them the way they want to finish them and that's the purpose of the product.

Great. And then maybe if I can build on that.

Thanks, Ravi.

Yes, go ahead.

Sure. So one more. So pre-pandemic, you guys were on a kind of case growth basis somewhere in the 30’s, high 20’s range. I appreciate that it's very difficult to look past what's going on in the world right now, but say we do kind of normalize at some point in the future post-pandemic. With these innovations and the sales force touch points that you mentioned, is that 20% to 30% case growth, given where we are on the adoption curve still a kind of reasonable proxy for where this market can go. Thanks.

Hey Ravi, this is John. Good question. When we think about the investments that we make in the – as we've described, the vastly underpenetrated market that we're in, we look at our investments to say, look, we can grow revenue in the 20% to 30% and that's how we think of things. And that's what we think that we can control the investments that we're making to be able to grow in this market to that. We didn't guide to that because there's unknowns outside of what we can control and we've kept it at that. But certainly when we look at investments in this market and the opportunities that we have, we look at those investments with the long-term growth model from a revenue standpoint of 20% to 30%.

Thanks, Ravi.

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

Hey, guys. Thanks for fitting me in. Yes, it's late, so I'll just keep it to one. Obviously, seeing the really strong utilization numbers in the Americas for the orthos and GPs. But obviously that's only half of the equation, because you also got the number of docs actually receiving those. So I was just wondering if you could provide any additional color on the split between ortho and GP, which really drove the volume in the quarter in the Americas. What I'm getting at is, with the rebound you commented on and some of that pent-up demand was there one part of your customer base that really accelerated better than the others or was it pretty broad based?

Yes. I can take that, Michael. This is John. Really when we look at the utilization and the growth that we saw was very broad, it was across GP and ortho. It was across multiple-tiers. We just saw a good adoption of our technology as these practices opened. Patients ask for it by name, doctors used our product. There were many doctors that were higher up on the tiers accelerated their cases. And then even new doctors or doctors that are at lower tiers were able to increase the utilization. So, we're very happy with the results that we saw from newer doctors to more experienced doctors and felt really good about how they were in that recovery mode. As we said, it's tough to understand and break out the piece of how much is pent-up demand versus run rate. But as we went through the quarter, as we said, we got stronger and stronger. So we feel good about the situation that we left Q3 with.

Great. Thanks.

Thanks, Michael. We've got time for one more question, operator.

Our next question comes from the line of Jason Bednar with Piper Sandler. Please proceed with your question.

Hey, Jason.

Great. Thanks for squeezing me in here. Hi, there. Congrats on a nice quarter, everyone. Have a clarification question just real quick and then another I'll ask upfront here. Just that enhanced momentum building comment that you made for October, Joe, can you just confirm that holds for all major reporting channels you have with GPs and orthodontists? And then, I know it's early days for iGo Plus, but curious if you could just talk about initial feedback on the system in the first markets you entered in Europe, any learnings you can draw on the early days of that launch before you look to take that system and do additional markets? Thanks.

Yes, Jason. First of all, I can confirm that it's across all channels, all markets. There's nothing really like in sight, it's not with that momentum that we – on iPro Plus, iPro Plus is about just enhancing the ability of doctors that are on iPro to be able to do more enhanced cases. And the feedback is great. We started in Europe, because that's where iPro really started from in a big way. And those are the first doctors that really asked for that. And then as and we've rolled that out in general. And it's really on the back of like the ClinCheck 6.0, the cloud-type-based product that we've done. That's one of the great things about digital platforms because you can expand them to be able to fit specifically in different markets at different times. And that's what iPro Plus really represents. So, I hope that helps, Jason.

Yes. Thanks, Joe.

Yes. Take care.

There are no other questions in the queue. I'd like to hand it back to management.

Thanks, everyone. We appreciate your time today. If you have any follow-up questions, please contact Investor Relations and we look forward to speaking to you at our Investor Day, November 23rd. Have a great night.

Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.