Align Technology, Inc.

will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Shirley Stacey, VP Corporate Communications and Investor Relations.

Good afternoon and thank you for joining us. I'm Shirley Stacey, Vice President of Corporate Communications and Investor Relations. Joining me for today's call is Joe Hogan, President and CEO, and John Marucci, CFO. We issued second quarter 2021 financial results today via Globe Newswire, 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 by approximately 5.30 p.m. Eastern Time through 5.30 p.m. Eastern Time on August 11th. To access the telephone replay, domestic callers should dial 877-660-6853 with conference number 13720779 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 statements. We've posted historical financial statements, including the corresponding reconciliations, including our GAAP to non-GAAP reconciliation, if applicable, and our second quarter 2021 conference call slides on our website under quarterly results. Please refer to these files for more detailed information. With that, I'd like to turn the call over to Align Technologies President and CEO, Joe Hogan. Joe?

Thanks, Shirley. Good afternoon, and thanks for joining us. On our call today, I'll provide some highlights from the second quarter, then briefly discuss the performance of our two operating segments, system services and clear aligners. John will provide more detail on our financial results and discuss our outlook. Following that, I'll come back and summarize a few key points and open the call to questions. I'm pleased to report our first billion-dollar revenue quarter with record volumes reflecting continued momentum from both clear aligners, systems, and services. For Q2, systems and services revenues reflect strong growth across all regions and the strategic value of the iTero business with continued adoption of the iTero Element 5D Plus series of next-generation scanners and imaging systems, which launched in February. Increasingly, doctors are seeing the strategic impact and value of iTero scanners in their practices. In addition to its role in Invisalign case submissions, it's a true workhorse and digital enabler in every type of practice and across every type of orthodontic and restorative workflow. Q2 sequential clear aligner volumes were primarily driven by strength in both adult and teen market segments and across customer channels and regions, especially from the Americas and EMEA regions, reflecting the expanding opportunity for Invisalign treatment among adults globally, as well as the underlying orthodontic market, as we continue to build awareness of Invisalign brand and drive utilization among teens and younger patients. For Q221, Invisalign clear aligner volumes for teens were up 9.5% sequentially 156% year-over-year to 181,000 teens, representing one-third of total cases shipped with strong growth from North America and EMEA orthodontists. During the quarter, we hosted several teen-focused peer-to-peer events designed to build clinical confidence in teen treatment and highlighted teen digital treatment journey with Invisalign treatment. The recent APAC virtual symposium featured leading providers focusing on clinical excellence with teen treatment. And North America hosted the Invisalign Team Forum, virtual edition for Invisalign doctors bringing together clinical speakers, digital industry experts, and team patient panelists to share their insights. In May, Align focused on the Align Digital Platform at the 2021 AAO Annual Session, featuring a dynamic virtual lineup of Invisalign doctors describing how they have grown their practices through adoption of digital technology. Our Q2 results also reflect the positive impact of our investments in consumer marketing, generating billions of impressions and 33% year-over-year increase in leads for Invisalign doctors. During the quarter, we launched the next phase of our Mum Teen Multi-Touch campaign, as well as the new Invis is a Powerful Thing campaign, designed to engage teens and young adults. We also deepened our partnership with influencers like Charlie D'Amelio, with the first limited edition aligner case as part of our new e-commerce initiative featuring custom cases. Cleaning and oral care products as well as accessories like Invisalign stickables, all of which are available on Invisalign.com. These and other consumer initiatives are important in supporting doctors' practices, especially through the busy summer teen season and beyond. They also build out our investments in digital technology and innovation that are the foundation of the Align Digital platform, including integrated digital workflows and virtual tools, designed to improve clinical confidence, treatment, efficiency, and patient outcomes. A year ago, we released Invisalign Virtual Appointment and Invisalign Virtual Care Tools within our My Invisalign app in response to the global pandemic to enable Invisalign doctors to provide continuity of care for their patients. Today, Invisalign Virtual Care is available globally in 60 markets, and the My Invisalign app has been downloaded one million times with Invisalign patients worldwide. It was recently recognized as the best virtual care platform by the MedTech Breakthrough Awards Program and as a Digital Innovation of the Year by Healthcare Asia MedTech Awards. As part of the Invisalign virtual care, patients use my Invisalign app to stay engaged with their treatment and convey progress photos to their doctor, fostering two-way communications with the doctor through their Invisalign treatment journey. Now let's turn to the specifics around our second quarter results, starting with the Americas. For the Americas region, Q2 is another strong quarter, with Invisalign case volumes up 11% sequentially and 261% year-over-year, reflecting growth across the region, especially in the United States and Canada, from both comprehensive and non-comprehensive products, and increased Invisalign utilization from orthodontic and GP channels. DSO utilization continues to be a strong growth driver as well, led by Heartland and SmileDocs. For international business, Q2 Invisalign case volume was up sequentially, 12.7% on a year-over-year basis. International shipments were up 149%. For May, Q2 volumes were up sequentially, 17% and 265% year-over-year, with broad-based growth across all markets, led by Iberia, UK, and Italy, along with continued growth in our expansion markets. In Q2, growth from both channels was strong, with orthodontic channel growth reflecting increased Invisalign utilization and GP channel growth driven by increased Invisalign submitters. For Q2, EMEA growth also reflects adoption of the Invisalign First product, designed to treat a broad range of teeth straightening issues in growing children, from simple to complex, including crowding, spacing, and narrow dental arches. Aiding in treatment engagement for those younger patients, Invisalign Stickables are innovative accessories designed exclusively for use with a patented SmartTrac material in Invisalign Clear systems. Available in an array of designs, colors, shapes, and themes, Invisalign Stickables are a fun way for patients to show their personal style during Invisalign treatment. During the quarter, we also hosted a successful virtual edition of GP Growth Summit attended by over 1,200 doctors from the EMEA region. For APAC, Q2 volumes were up sequentially 4.8% and 50% on a year-over-year basis, reflecting growth across the region, led by Japan, China, and ANZ. despite new and extended COVID restrictions in several APAC markets. APAC performance reflects strength in GP channel with increased Invisalign submitters, especially in Japan, which continues to deliver strong growth. During the quarter, we hosted our China Forum, attended by over 1,500 doctors from private clinics, our APAC Virtual Symposium, attended by 1,400 doctors, as well as the China Public Hospital Forum in June. Our consumer marketing is focused on educating consumers about the Invisalign system, and driving that demand to Invisalign doctors' offices, ultimately capitalizing on the massive market opportunity to transform 500 million smiles. We have provided many of our key metrics that show increased activity and engagement with the Invisalign brand in our Q2 quarterly presentation slides available on aligntech.com. In Q2, we launched the Next Generation of Invis-Is multi-touch campaign, driving reach and awareness with adult, mom, and teen consumers yielding more than 200% growth in visitors globally to our websites and more than 82% increase in searches for an Invisalign-trained doctor. Leading with the Invis is not your parents' braces campaign, we connected with teens utilizing digital media such as YouTube, Twitch, and social media. We also continue with our Invisalign Changemakers program that celebrated and recognized teens driving change in their communities, which was covered by multiple media outlets such as Elite Daily, Refinery29, Yahoo, Unwind Hollywood Life, She Knows, J14, Yahoo Finance, Parents.com, Glamour, and New Beauty, and generated more than 600 million impressions. In the major region, our new marketing campaign to drive engagement and this is a powerful thing went live in the UK, Germany, and France during the quarter, resulting in more than 170% year-over-year increase in unique visitors, and 136% year-over-year increase in doctor locator searches. We will continue to roll out the campaign to additional markets in the region during the third quarter. We continue to expand our consumer advertising in the APAC region in Australia, Japan, and China, and saw more than an 800% increase in consumer engagement and 55% year-over-year increase in leads. Lastly, we continue to build strong relationship with global search and social media giants like Google, Snapchat, TikTok, in order to further leverage our best-in-class consumer demand programs more effectively globally. These partners recognize the power of the Invisalign brand and are helping us to amplify and gain efficiencies from our investments. For our systems and services business, G2 revenues were up 20% sequentially and up 214% year-over-year, reflecting strong scanner shipments and services. This represents the fourth consecutive quarter of sequential revenue growth. The ITERA Element 5D Plus imaging system continues to gain traction across all regions with strong adoption with new customers in the APAC and EMEA regions and with existing customers in the Americas region. In APAC, the ITERA Element 2 inter-world scanner did well during the quarter, helping to transform digital workflows and chair-side consults for doctors. During the quarter, we announced a new ITERA workflow 2.0 software and previewed auto-upload functionality in the ITERA Element 5D imaging system. The iTero Workflow 2.0 software advanced features include faster scanning, improved visualization, and enhanced patient communication tools. We'll roll it out regionally in all markets where the iTero Element Plus imaging systems are sold. The iTero Element 5D imaging system auto-upload feature will eliminate steps in streamlined and Invisalign case submissions with interaural color scan images that can be used in place of traditional interaural photos. The auto-upload functionality is scheduled for release during the third quarter of 2021. There's great symmetry between systems and services business with clear aligner business reflected in the positive correlation between the deployment of scanners and the increased utilization of Invisalign clear aligners. In terms of digital scans used for Invisalign case submissions, total digital scans in Q2 increased to 82.2% from 78.5% in Q2 last year. International scans increased to 76.2%, up from 72% in the same quarter last year. For the Americas, 86.6% of cases were submitted digitally, compared to 86% a year ago. Cumulatively, over 40.1 million orthodontic scans and 8.4 million restorative scans have been performed with iTero scanners. I'm also pleased to share that Align received regulatory approval for the iTero 5D Plus series in Japan on July 1st, with a formal launch event planned for August. Turning to ExoCAD. During the quarter, ExoCAD launched the Creator Center, the new ExoCAD one-stop shop for online and in-person educational events, with a database consisting of 35 educational webinars showcasing the highlights and add-on features of ExoCAD software solutions DentalCAD Galway 3.0, Exoplan 3.0 Galway. More than 2,500 users and distributors have been trained on the new software releases worldwide. ExoCAD has also expanded their market coverage with a new global OEM partner, Avoclar, Vivident, or we call IV, one of the largest manufacturers in the dental industry. This strategic collaboration will give ExoCAD access to thousands of new IV users worldwide. will also provide ExoCAD users with access to production processes with removable prosthetics in the future. Earlier this month, ExoCAD has released PartialCAD 3.0 Galway, its module for removable partial dental frameworks, which has new and advanced features for the design of high-quality partial dentures. This new release enhances digital CAD-CAM possibilities for ExoCAD users and dental technicians by providing simpler design solutions for complex cases. PartialCAD 3.0 GAUA provides both experts and new users with smooth, improved integration with DentalCAD, ExoCAD's leading software for dental laboratories. Bringing the iTero and ExoCAD businesses together makes us more viable within the GP segment and more relevant in day-to-day comprehensive dentistry for our customers. The combination of Invisalign clear aligners and iTero scanners have long provided a seamless workflow for orthodontic treatment. The integration of ExoCAD's expertise in restorative dentistry and implantology, guided surgery and smile design takes the aligned technical portfolio beyond our established footprint in orthodontics to ortho-restorative and restorative treatment and paves the way for new cross-disciplinary workflows that span from visualization and treatment planning to lab production to chair size. ExoCAD also broadens aligned platform reach in digital dentistry with over 200 partners and more than 40,000 licenses installed worldwide. With that, I'll now turn the call over to John.