Greetings and welcome to the Align 4Q and Fiscal Year Earnings 2020 Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Shirley Stacy.
Thank you, Shirley. You may begin.
Good afternoon. Thank you for joining us. I'm Shirley Stacy, Vice President of Corporate Communications and Investor Relations. Joining me for today's call is Joe Hogan, President and CEO and John Maricci, CFO. We issued 4th quarter and full year 2020 financial results today via GlobeNewswire, which is available on our website at investor.
.Alliantech.com. Today's conference call is being audio webcast and will be archived on our website for approximately 1 month. A telephone replay will be available today by approximately 5:30 p. M. Eastern Time through 5:30 p.
M. Eastern Time on February 17. To access the telephone replay, domestic callers should dial 877-660-6853 with conference number 1371 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 atsec.gov.
Actual results may vary significantly, and Align expressly assumes no obligation to update any forward looking statements. We have posted historical financial statements, including the corresponding reconciliations, including our GAAP to non GAAP reconciliation, if applicable, and our Q4 and full year 2020 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 Technology's President and CEO, Joe Hoggett. Joe?
Thanks, Shirley. Good afternoon and thanks for joining us. On our call today, I'll provide some highlights from the Q4 and full year, then briefly discuss the performance of our 2 operating segments, Clear aligners in systems and services. John will provide more detail on our financial results and share additional color on business trends. Following that, I'll come back and summarize a few key points and open the call to questions.
Our 4th quarter was a strong finish to the year with record revenues and volumes from both Invisalign aligners and Itero scanners, as well as increased gross margins, operating margins, EPS And cash flow. Our 4th quarter performance was driven by strong year over year growth across customer channels and regions and continued momentum sequentially. During the quarter, we achieved a major milestone in EMEA with a shipment to our 2 millionth Invisalign patient that will be amplified with the EMEA wide campaign that will launch next month. This milestone for EMEA reflects strong acceleration in Invisalign adoption and growth. For Q4, total revenues were $834,500,000 up 13.7% sequentially and up 28.4 percent year over year.
Q4 2020 Clear Aligner revenues of $700,700,000 We're up 12.9% sequentially and increased 28.9% year over year. In Q4, we shipped a record 568,000 Invisalign cases, an increase of 14.5% sequentially and 37.3% year over year. Q4 reflects increased Invisalign adoption from both adults and teenagers, which are up 36.7% and 38.7 Year over year, respectively. Our teen and mom focused consumer campaign generated 77% year over year increase in unique visitors to our website and 76% increase in leads generation. In addition, Invisalign social media influencers Like Charlie, D'Amelio, Marce Martin, Christina Milana, Tisha Campbell Martin, Rachel Zoe, Tiffany Ma and Taz Maury continue to deliver exciting new content and increased engagement for the Invisalign brand with consumers And among their millions of followers.
Our digital platform continues to gain traction as doctors' usage of Itero scanners increase. Our consumer and patient app was rolled out to more than 50 markets, resulting in more than a 2.5x increase And apps download and monthly active users in 2020 versus a year ago. Our patient feature usage continues to increase. For example, Invisalign Virtual Appointment was used 68,000 times. Our insurance verification feature was used 26,000 times And more than 30,000 patients enrolled in Invisalign Virtual Care in 2020.
Our new consumer website was rolled out to more than 40 markets around the world And is driving increased effectiveness in lead generation. We also launched an improved new doctor recruitment website in the U. S. And Canada to support our digital conversion journey. This will be expanded to other markets in the next few months.
From a product perspective, growth was strong across the Invisalign portfolio, especially for non comprehensive cases including Invisalign Go and Invisalign Modern. There are also more doctors engaging with us through the Align Digital and Practice Transformation or ADAPT program as more practices are moving towards digital practice optimization. As you'll recall, Adapt was piloted over 2 years ago and is being commercialized as a standalone service providing the relevant workforce, clinical And marketing support to enable doctors to digitally transform their practices. In Q4, we shipped a record 77,000 Invisalign doctors worldwide, of which a record 7,300 were first time customers. We also trained over 6,400 new docs in Q4, including over 3,900 international doctors.
Q4 2020 system and services revenues of $133,800,000 were up 18% sequentially driven by momentum in the Americas and EMEA And up 26% year over year reflecting strong growth in EMEA and Asia Pacific. Our results reflect continued strong uptake Of the iTero Element 5D, the only intraoral scanner with caries detection, which is scaling rapidly across each region And represented approximately a third of Itero volumes in Q4. Innovation remains a cornerstone of our business. Today, we announced the availability of the Itero Element Plus series, which expands our portfolio of Itero Element scanners and imaging systems to include new solutions that serve a broader range of the dental marketplace. The new iTero Element Plus series of scanners and imaging systems Builds on the success of the award winning iTero Element family and offers all the existing orthodontic and restorative digital capabilities doctors have come to rely on, Plus faster processing time and advanced visualization capabilities for seamless scanning experience in a new sleek ergonomically designed package.
We announced the launch of our next gen ClinCheck Pro 6.0 proprietary treatment planning software with in face visualization And our Invisalign G8 improved predictability in our last earnings call we announced. Their availability is being expanded across all regions. Further, we launched several enhancements to our treatment planning, including improved final teeth position and auto segmentation. We also added several new features to our virtual care tool. For the full year of 2020, Total revenues were a record $2,500,000,000 up 2.7% year over year.
Clear aligner revenues Of $2,100,000,000 were up 3.7 percent, reflecting a record 1,600,000 Invisalign shipments and growth of 7.9%. During the year, 30.3 percent of total Invisalign cases or nearly 1 500,000 teens or younger started Invisalign treatment. This is up 11.5% from 2019. System and services revenues were down slightly compared to 2019. 2020 was a year unlike any other we've experienced.
The COVID-nineteen pandemic and its impact have been life changing, Marked by loss and separation, recovery and renewal, record highs and lows and significant milestones and accomplishments, Even in a time of huge disruption, we all had to adapt, evaluate priorities and develop new ways of doing things, both personally and professionally. Through it all, Alliant's priority has been the health and well-being of our employees and their families and our doctor customers and their staff, and that remains a constant. Despite the swift onset of the pandemic and the uncertainty through 2020, we didn't hold our plans or change our strategy for continued growth. We completed the acquisition of exocad, accelerated our investments in marketing to create Invisalign brand awareness and drive consumer demand for our doctors' offices, Accelerated new technology to market with virtual tools that enabled our doctors to stay connected with their patients, provided PPE to those in need and supported doctors and their teams with online education and digital forms that went beyond products to help them navigate the uncertainties of the pandemic. As a result of our continued strategic focus and investments, we exited the year stronger than we started And 2021 is off to a great start.
Now let's turn to the specifics around our Q4 starting with the Americas. For the Americas region, Q4 Invisalign case volume was up 12.7% sequentially and up 34.1% year over year, reflecting increased utilization of Invisalign treatment for both orthodontic and GP channels. Our continued investments in digital marketing and sales programs and focus on market segmentation are helping drive strong growth of Invisalign clear aligners and iTero products. During the quarter, we continued offering sales Initiatives to our doctor partners to help drive adoption of Invisalign and Itero products. The bracket buyback Switch program, which we launched in North America in Q2 2020, continues to drive conversions from wires and brackets to Invisalign clear aligners.
During Q4, this program resulted in about 10,000 new cases similar to Q3. We believe this is also causing a halo effect with patients switching from wires and brackets to Invisalign clear aligners with increased awareness of the benefits of Invisalign treatment And how it is less disruptive to their lives with the outcome of a beautiful smile through an Invisalign trained doctor. The teen awesomeness centers programs Direct patients to Invisalign doctors who are experts at treating teens and are seen as the go to docs for treatment. We continue to see growth of Invisalign First for treatment in younger kids driving increased comprehensive treatments within North America Ortho Channel. Latin American volume was also up year over year, led by strong growth in Brazil and Mexico.
We believe the market for orthodontic treatment is huge in Latin America as we continue to grow our presence across the region. We saw increased utilization in the GP channel with Invisalign Go and the continued adoption of moderate. The GP Accelerator program designed exclusively for general practitioner dentists provides an all encompassing support plan based on practice needs that is centered around maximizing iTero integration, clinical support needs and implementing new marketing strategies. We also see increased utilization with GP Dentists that have enrolled in the EyePro program as well as with doctors that have installed the Itero scanner. DSO utilization also increased and continues to be a strong growth driver led by Heartland and SmileDox.
For the full year, American Invisalign volume was up 3.6%. For our international business, Q4 Invisalign case volume was up sequentially 6.7% led by strong growth in EMEA as doctors returned from summer holiday season offset somewhat by seasonally slower period in China. On a year over year basis, international shipments were up 41.1%, reflecting increases throughout both EMEA and APAC. For the full year, international Invisalign volume was up 13.3%. For EMEA, Q4 volumes were up sequentially 47.9% 48.3% on a year over year basis across all markets, with strong performance across both ortho and GP channels.
Within the GP channel specifically, we saw acceleration in both utilization and shipments with Invisalign Go. We also saw acceleration in both core and expansion markets with growth in our core markets led by Iberia, UK and France, Along with continued growth in our expansion markets led by Central and Eastern Europe and the Benelux. We introduced the Ortho Recovery 360 program in EMEA last quarter to support our orthodontists as they started reopening their businesses. As of Q4, 3,200 orthodontists have enrolled in the program. During the quarter, we launched a Recovery 2 program with a refreshed website featuring all digital tools, growth programs and education events for EMEA doctors to support their relief efforts during COVID-nineteen.
We also held our digital innovation forum at the beginning of December, where approximately 900 doctors, both ortho and GP, Attended the 2 day forum event with keynotes on the digitization of dental practices. We also continued our digital excellence series of webinars launched by the Itero team. Throughout the quarter, the following digital innovations were also launched across EMEA, Invisalign G8, ClinCheck Pro 6.0 and Invisalign Go Plus to help drive Invisalign clear aligner utilization. To support our GP doctors, we launched our GP Recovery 360 program last quarter with over 2,700 GPs enrolled so far. We continue to offer online and on demand education events, which reached over 15,000 GPs cumulatively.
For the full year, the main Invisalign volume was up 12.6%. For APAC, Q4 volumes were down sequentially 14.7%, Notwithstanding typical Q4 seasonality in China following a strong Q3, we had strong growth in Japan and ANZ and Southeast Asia. On a year over year basis, APAC was up 30% compared to the prior year, reflecting continued strong growth across the region. We were pleased to see the growth in the adult segment with non comprehensive cases with the Invisalign moderate product in the GP channel. In the teen segment, we also saw an increase in utilization amongst Invisalign doctors and we saw continued acceleration from Japan and ANZ.
For the full year, APAC Invisalign volume was up 14.3%. Last year, we launched a new and improved digital learning for our doctors offering a comprehensive learning platform with role specific content for orthos, GPs and their teens. The improved functionality enables more online learning opportunities with spotlight features for what's trending now, Recommended learning path based on doctors' experiences and expanded categories, including digital treatment planning, comprehensive dentistry and team education. For the year, over 127,000 doctors have accessed recorded lectures, Completed self paced learning modules and watched how to videos with new certified doctors viewing more than 1,400,000 pages of content. Among the ortho channel, over 47,000 unique users have engaged with a digital learning site with an additional 80,000 unique users from the GP channel.
As we've mentioned, we are seeing good adoption of the Adapt program, which is an expert and independent fee based business consulting service Opera by Align to optimize clinic's operational workflow and processes to enhance the patient's experience and customers and staff satisfaction, which will in turn translate into higher growth and greater efficiencies for orthodontic practices. As a result, the Adapt service Participating process in Q4 improved profitability significantly after implementation. Our consumer marketing is focused on capitalizing on the massive market to transform 500,000,000 smiles, educating consumers about the Invisalign system and driving that demand to our Invisalign doctor offices. In Q4, we saw strong digital engagement globally with more than a 77% increase in unique visitors, 108% increase in doc locator searches and 76% increase in leads created, driven by our global adult and mom focused campaigns And teen focused influencer content. Our U.
S. Mom teen multi touch multimillion dollar multimillion dollar campaign with influencer led YouTube videos, Among Focus TV spot, a custom Twitch activation and mega teen sensation Charli D'Amelio continued to perform very well And garnered $2,700,000,000 impressions in Q4. The statistics I shared previously speak to the successful reach of this marketing campaign is having to not only drive demand with consumers, but also in educating them on the benefits of Invisalign treatment through a doctor's office. In Q4, we also launched MediaTEST in the EMEA region, in the UK, Germany and France and in the APAC region in Australia and Japan. These have worked very well and resulted in more than a 6x increase in leads in EMEA and a 3x increase in leads in APAC.
Several key metrics that show increased activity and engagement with the Invisalign brand are included in our Q4 quarterly presentation slides available on our website. Align is always looking for new opportunities to reach consumers and be relevant to potential patients wherever they work, live and play, Which is why we announced the Invisalign brand is the official clear aligner sponsor of the National Football League, the NFL, and 11 NFL teams including the Tampa Bay Buccaneers and Kansas City Chiefs. The NFL League partnership designed to expand our reach with consumers Generated over $150,000,000 impressions in 2020, helping to drive awareness of Invisalign clear aligner treatment at a national level, while the team agreements are designed to help us engage within key markets and connect consumers with doctors in those markets. For our systems and services business, Q4 revenues were up 18% sequentially due to higher shipments and services revenue. We continue to see momentum with the iTero Element 5 d imaging system gaining traction in all regions with significant ElementFlex sales in EMEA.
On a year over year basis, Systems and services revenues were up 26% due to higher shipments and services. For the year, our system and services total revenues We're down 2.8% year over year, cumulatively over 3.31,400,000 orthodontic scans And 6,700,000 restorative scans have been performed with iTero scanners. For Q4, total Invisalign cases submitted with a digital up 64.7% in the same quarter last year. We're pleased to see that within the Americas, 94.8 We're also proud to share that Itero Element intraoral scanners are the winners of the 2020 Dentaltown Townie Choice Award for digital and pressing category. Also during the quarter, the National Association of Dental Laboratories Judging panel selected the Itero Element 5D as the winner of the 2020 Journal of Dental Technology Wow Award.
The award represents a recognition of our commitment to enhancing patient engagement and communications that support efficient laboratory production. For exocad during the quarter, we launched 2 of the largest software releases in history, DentalCAD and exoplan. DentalCAD 3.0 Galloway includes over 90 new features and over 80 enhanced functionalities with significant improvements to reduce design time such as instant and atomic morphing. Exoplan 3.0 Galloway includes over 40 new features and over 60 enhanced functionalities that support planning of indentulist cases, including the design of surgical guides. During the quarter, exocad also added 2 new large implant manufacturers as OEMs for exoplan in Brazil.
With that, I'll now turn it over to John.
Thanks, Joe. Now for our Q4 financial results. Total revenues for the Q4 were $834,500,000 up 13.7% from the prior quarter and up 28.4% from the corresponding quarter a year ago. For clear aligners, Q4 revenues of $700,700,000 were up 12.9% sequentially and up 28.9 percent year over year, reflecting Invisalign volume growth in all regions, partially offset by lower ASPs. Clear aligner revenues growth was favorably impacted by foreign exchange of approximately $5,000,000 or approximately 0.8 points sequentially And on a year over year basis by approximately $10,300,000 or approximately 1.9 points.
Q4 Invisalign ASPs were down sequentially $15 primarily due to increased revenue deferrals related to a higher mix of new cases versus additional liners, partially offset by favorable foreign exchange and lower promotional discounts. As we mentioned last quarter, We did not implement a price increase in 2020, given our continued commitment to helping our customers in the recovery efforts during the pandemic. On a year over year basis, Q4 Invisalign ASP decreased approximately $75 primarily due to our decision not to raise Prices last summer, increased revenue deferrals for new cases versus additional liners and higher promotional discounts, partially offset by favorable foreign exchange. As a result, clear aligner deferred revenue on the balance sheet increased $83,000,000 sequentially And $195,000,000 year over year and will be recognized as the additional aligners are shipped. Total Q4 clear aligner shipments of 568,000 cases were up 14.5% sequentially and up 37.3 percent year over year.
Our system and services revenues for the 4th quarter was $133,800,000 up 18 percent sequentially due to an increase in scanner sales and increased services revenues from our larger installed base and higher ASPs. Year over year systems and services revenue was up 26% due to higher scanner sales, services revenue and the inclusion of exoCAD's CADCAM services, partially offset by lower scanner ASPs. Imaging Systems and CADCAM Services deferred revenue was up 30% sequentially and up 69% year over year, primarily due to the increase in scanner sales and the deferral of service revenues, which will be recognized ratably over the service period. Moving on to gross margin. 4th quarter overall gross margin was 73.2%, up 0.4 points sequentially and up 0.5 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 73.6 percent for the 4th quarter, up 0.3 points sequentially and up 0.7 points year over year. Clear aligner gross margin for the 4th quarter was 74.9%, up 0.1 points sequentially due to lower additional aligner volume, partially offset by higher warranty, Other manufacturing costs and lower ASPs. Clear aligner gross margin was up 0.7 points year over year, primarily due to favorable product mix from increased iTero scanner absorption as a result of increased manufacturing Volumes partially offset by lower ASPs, higher warranty costs and other manufacturing costs. Systems and services gross margin for the Q4 was 64.2%, up 2.2 points sequentially, primarily due to higher ASPs and increased manufacturing efficiencies from higher production volumes. Systems and services gross margin was down 0.7 points year over year due to lower ASPs, higher freight and other manufacturing costs, partially offset by higher services revenue.
Q4 operating expenses were $397,300,000 up sequentially 11.3% and up 23.8% year over year. The sequential increase in operating expenses is due to increased marketing and media spend and spending commensurate with business growth. Year over year, Operating expenses increased by $76,500,000 reflecting our continued investment in sales and marketing, R and D activities and manufacturing operations. On a non GAAP basis, operating expenses were $372,300,000 up sequentially 12.1% and up 23.4% year over year due to the reasons as described earlier. Our 4th quarter operating income of $213,200,000 resulted in an operating margin Up 25.5 percent, up 1.4 points sequentially and up 2.3 points year over year.
The sequential and year over year increases in operating income and the operating margin are primarily attributed to higher gross margin and operating leverage. On a non GAAP basis, which excludes stock based compensation, amortization of intangibles Related to exocad and acquisition related costs, operating margin for the 4th quarter was 28.9%, up 0.9 points sequentially and up 2.5 points year over year. Interest and other income expense, Net for the Q4 was a benefit of $1,400,000 primarily driven by favorable foreign exchange. With regards to the 4th quarter tax provision, our GAAP tax rate was 25.9%, which includes tax benefits of approximately $11,000,000 related to adjustments in prior year's unrecognized tax positions. The 4th quarter tax rate on a non GAAP basis was 14.5% compared to 16.6% in prior quarter and 20.9% in the same quarter a year ago.
The 4th quarter non GAAP tax rate was lower than the 3rd quarter's rate primarily due to the reasons previously stated. 4th quarter net income per diluted share was $2 up $0.24 sequentially and up $0.47 compared to the prior year. On a non GAAP basis, net income Per diluted share was $2.61 for the 4th quarter, up $0.37 sequentially and up $0.85 year over year. Moving on to the balance sheet. As of December 31, 2020, cash and cash equivalents were $960,800,000 an increase of approximately $345,300,000 from the prior quarter, which is primarily due to higher cash flow from operations.
Of our $960,800,000 of cash In cash equivalents, $548,300,000 was held in the U. S. And $412,500,000 was held by Our international entities. Q4 accounts receivable balance was $657,700,000 Up approximately 5% sequentially. Our overall days sales outstanding was 71 days, down approximately 6 days sequentially and down approximately 5 days as compared to Q4 last year due to strong cash collections.
Cash flow from operations for the Q4 was $381,400,000 Capital expenditures for the 4th quarter were $53,200,000 primarily related to our continued investment in increasing aligner capacity and facilities. Free cash flow, defined as cash flow from operations less capital expenditures, amounted to $328,300,000 Under our May 2018 repurchase program, we have $100,000,000 still available for repurchase of our common stock. Before we move to the outlook, I would like to make a few comments on the full year 2020 results. In 2020, we shipped a record 1,600,000 Invisalign cases, up 7.9% year over year. This reflects 13.3% volume growth from our international doctors and 3.6% volume growth from our Americas doctors.
Systems and services volumes were down 12% compared to 2019, reflecting the impact of COVID-nineteen pandemic on equipment sales. Total revenue was a record $2,500,000,000 up 2.7% year over year with clear aligner revenues, a record $2,100,000,000 up 3.7% year over year. 2020 systems and services revenue were $370,500,000 including exoPAD revenues from April 1, 2020 forward compared to $381,000,000 in 20 19. Full year 2020 operating income of $387,200,000 down 28.6% versus 2019 and operating margin at 15.7% versus 22.5% in 2019. 2019 operating income included a litigation benefit of $51,000,000 And Invisalign store closures of $23,000,000 for a net benefit on operating margin of 1.1%.
With regards to full year tax provision, our GAAP tax rate was negative 368.6 percent, which includes a one time tax benefit of approximately $1,500,000,000 net of current year amortization Associated with the recognition of a deferred tax asset related to an intranetty sale of certain intellectual property rights resulting from our corporate structure reorganization completed in the Q1 of 2020. Excluding the tax Benefit related to our corporate structure reorganization and the related tax effects of stock based compensation and other non GAAP adjustments, the full year tax Rate on a non GAAP basis was 17.6% compared to 22% for 2019. 2020 diluted EPS was $22.41 On a non GAAP basis, 2020 diluted EPS was $5.25 Free cash flow was $507,300,000 for 2020, down $90,300,000 versus 2019. Now let me turn to our outlook. Overall, we are very pleased with our Q4 performance and the strong momentum in our business, which has continued through January for both clear aligners and systems And services.
As we discussed at our Investor Day in November, we are committed to making significant investments to drive growth, And we are seeing good return on these investments across all regions and customer channels. These strong returns give us confidence to continue investing in sales, marketing, innovation and manufacturing capacity to accelerate adoption in a huge underpenetrated market. These investments, coupled with typical typically higher seasonal operating expenses as a percentage of revenue, are expected to result in sequentially lower operating margin percent in Q1 as we have historically seen. While the global operating environment surrounding the pandemic remains uncertain, we will continue to focus on what we can control, And we are confident in our ability to continue to execute. Our responsibility is to continue driving innovation and delivering on the needs of our customer doctors and their patients.
Over the past 24 years, Align has invested billions In technology, innovation, consumer marketing and demand creation to connect millions of consumers with our doctor customers. We will continue to invest in this business to drive demand and drive adoption of the Align Digital platform, including manufacturing and operational expansion. We will always be responsible. Just like we've done in the past, we make investments to drive growth and maximize ROI. We remain committed to our long term target model of 20% to 30% revenue growth for clear aligners and systems and services And operating margin of 25% to 30%.
With that, I'll turn it back over to Joe for final comments. Joe?
Thanks, John. The choices we made in 2020 to protect employees, support customers and press forward on our strategy for growth were possible because of the strength of our balance sheet and the confidence we have in our business model. Our actions reflect our conviction And the enormous opportunity we have to transform Smiles and change lives. With 15,000,000 orthodontic cases Starts annually and more than 500,000,000 consumers who can benefit from a better smile, the market for digital orthodontics and restorative dentistry is massive and has been unleashed by the need for digital. In a macro sense, COVID-nineteen has accentuated the benefits and pervasiveness of the digital economy.
From an Align standpoint, practices across every region are embracing digital treatment in new ways and more purposely than ever before. Invisalign providers are using our virtual tools to minimize in office appointments and deliver doctor directed personalized treatment that meets the needs of the moment And that will reshape the future of treatment. Digital acceleration is not just around Invisalign treatment. It includes digital workflows around Itero scanners and general dentistry. Doctors tell us that the Itero scanner is central to their practice and their practice workflows And it's key to driving digital treatment.
We've also known this, Itero and now exocad are core components of the Align Digital platform. Our integrated suite of unique proprietary technologies and services delivered as a seamless end to end solution for patients and consumers, Orthodontists and GP Dentists and Lab Partners. And particularly, we now have all the building blocks to create digital workflows, Leveraging the combined power Invisalign treatment, iTero scanners and exocad software become more relevant to the GP market, which is critical to accessing the $500,000,000 consumer opportunity. Align is a growth business with huge opportunities, but the environment remains uncertain due to COVID-nineteen. Our plan is still to counter uncertainty by staying focused on our long term strategy, Living our values, supporting our employees and customers and keeping in mind the demand drivers we've identified over the past year, The redirection of disposable income for many consumers, channel focus that allows us to reach and support a wider range of customers within each channel.
And most importantly, the digital mindset that's taking hold with more and more of our customers and that we are supporting through innovative products and programs that can help support their digital transformation. We are not ignoring the reality of COVID-nineteen and how long it may be part of our lives, But we're also not going to stop driving the business forward for the good of the customers and their patients, our employees and our stakeholders. In closing, I want to leave you with a few thoughts as we begin the New Year. While there is considerable amount of turmoil in the world, our focus is on what we can control as a company. We have strong momentum.
We'll stay focused on our strategic priorities, international expansion, patient demand and conversion, Orthodontist utilization and GP Dentist treatment. In summary, we're very pleased with the Q4 and the full year results of 2020 during a remarkable year with events beyond our control as a result of COVID-nineteen. It is during times such as this when having a solid strategy Combined with focused execution can lead to outcomes that support growth, not only for Align's business, but also practice growth for Align's customers, which also leads to more and more Invisalign smiles. With that, turn it over to the operator and we'll take calls.
Thank you. We will now be conducting a question and answer session. Thank you. Our first question comes from Ravi Misra with Berenberg Capital Markets. Please proceed with your question.
Hi, thanks for taking the question. Hi, how are you? Happy to hear all that. So I just wanted to maybe start one, I'll let the others maybe Talk about the quarterly trends, but one of the things that kind of stood out to me was you're driving extremely strong volume growth amidst what's kind of a Stable to slightly declining pricing environment. Just curious first, when do
you think you'll be able
to go back to the kind of prior model where you're able Pricing, is that still in the cards? And then secondly, I think the teen market is an area that we've kind of always been Looking at it the next leg of growth, the kind of huge market that's out there. And you're talking about some of the conversion and the lead generation. Can you help us understand some of the conversion rates around the leads that you generate in terms of timing and how long this takes to get the ROI that is put into the advertisements that you're putting out there?
Hey, Robbie. First of all, I guess your first question is on average selling prices. We try to communicate this as strongly as we can is to keep your eyes on gross margin because We have huge mix, whether it's international mix or it's product mix, you see a lot of progress in iGO and products like moderate and Invisalign First and those products, They carry actually lower average selling prices, but higher margins. And so you could often mix up on those things. So I'd say, as we keep emphasizing is Don't be overly concerned about ASPs or focused on ASPs.
Like John said, we didn't increase ASPs this year because we're interested in supporting our customers and making sure that This is difficult really difficult transition for many practices right now and instituting a price increase just wouldn't have been responsible in that sense. But at the same time, We drove incredible productivity across the business and we're able to show those kind of gross margins. So I hope you and the rest of the analyst community out there can actually see that. We've been talking about this for a few years, but actually taking place. On the teen side and the conversion spot from an advertising standpoint, I mean, we come at this from a lot of different ways and a lot of different areas.
And we if we're going to start teen season, you really have to start in February in the United States and you to really work through a lot of different aspects of social media. You advertise differently for moms and you do teams and different things like that. So I can't give you a correlation coefficient in the sense of here we invest and how much we get back, but we understand as well as a business, we've been doing it for years. We understand the timing of it and more and more become more specific on the social advertising pieces and how to implement that properly. And John, do you have anything to add?
No, that's just I mean, there's others that are in the equation. You have to reach the team, as Joe described, and we talked about social influencers and so on. You have to reach the parents, And we tried that and then also have the right formula with the doctor. So getting those 3 to think about Going into treatment is really the key.
Okay. And maybe one last one, if I can ask one more. Just on the reopening How are you guys kind of thinking about the consumer spending environment as the options that The patient is going to have start increasing. I mean is that going to require more investment here in
the near term? Or do
you think kind of where we're at a baseline where you've kind of Gotten the ramp where things are starting to really click here with the advertising that you're doing as is? Thank you.
Yes, Rob, it's a good question. I mean, look, we're always looking to maximize our return on investment. We talk about that to grow in this vastly underpenetrated market. In some Countries like in the U. S, it's just a matter of refining how we spend.
We talk about the influencers, talk about NFL and other things. And in other countries, we've really started spending some of that consumer advertising and we see a great response and we see a strong return. And those are areas that as we see that response, we see it turn into volume. Those are areas that will continue. So We're always looking at return on investment and we'll find ways to be able to grow our volume that way.
Thanks, Robbie.
Thank you. Our next question comes from Jon Block with Stifel. Please proceed with your question.
Hey, Jon.
Hey, Joe. Good afternoon. Joe, you mentioned 2021 is off to a great start from 2015 to 2019. So I'm sort of isolating pre COVID management guidance for 1Q cases, the guidance for 1Q cases were up pretty consistently just low single digits off What you did in the Q4 and I guess where I'm going with this is at a high level what's the expectation for case growth Sequentially? And I'm just trying to level set as the back part of 2020 likely benefited from some pent up demand.
So Just how we should think about the trend line, if you would, into the early part of 2021?
Hey, John, Yes, I'll let John have the specifics of it. Just tell you that January was a really strong orders quarter, so that momentum really continues.
And look, John, I think as we've said, and we're controlling what we can control, making investments that help drive this business. We look at As Joe said, we felt really good about how we exited Q4. We saw that in January as well. And we don't want to guide. We specifically have it because there's things that are outside of our control.
And We'll leave that as it is. What we're trying to give you is kind of the latest information without projecting forward.
Okay, fair enough. And I'll ask a quick 2 parter for the second one. EMEA was just gangbusters. I mean, I think it was up 48% off a 32% comp. Shout out to Marcus, but anything to call out there?
I mean, the number was huge. And then the second part is, teeing up almost 40%, Joe, what do you think the underlying ortho Where I'm going with this is just your conviction of sort of maybe a type of inflection point, if you would, with teen share of share? Thanks, guys.
Hey, John, I appreciate you bringing up EMEA. I mean, that was just an amazing performance when you see that. I've been doing business in Europe since I was 30 years and See growth like that by countries, it's amazing. And I think that's to me, that was really a story on the Q4 too was the breadth of that growth. It wasn't just North America.
It wasn't just Asia. It was deep. It was cross segments, cross GPs, across orthos. So John, I'm not ready to talk about an inflection point. All I can say is when you think about we had 77,000 doctors that ordered that I talked about in my script And then 7,200,000 to 7,300 more doctors, what's 10% more doctors?
That's a record for us too. So We see Invisalign as digital treatment really catching on in a big way and it's meaningful. Look, we're gearing up for it. We're obviously advertising to drive that demand and We'll stay focused on just executing, John, right now.
Thanks, guys.
Thanks, John. Next question?
Thank you. Our next question comes from Steve Beuchaw with Wolfe Research. Please proceed with your question.
Hi, Steve. Hi, thanks for
the time here guys. I wanted to try to understand a little bit better The relationship between some of the things that you flagged, John, in your prepared remarks as it relates to deferrals And ASP, I certainly agree with the view that gross margins are really the critical metric, but I'm sure we're going to get a lot of Questions about ASP tonight and over the next couple of days. So I wonder if you could help us understand a little bit more deeply, 1, why would we be seeing more deferred revenue here both on aligners and on scanners? What's the relationship to ASP and do we see that reverse?
Yes. Steve, the basic way to think about this is As we look at our revenue, we've got revenue on a new case that we ship out and there's a certain amount that you recognize on that shipment Based on our rev rec. And then there's a certain amount for future aligners or future that are needed, that will be deferred revenue. And then you also get into your revenue, so those deferrals that you've made for maybe Previous quarters or even previous year that as they that doctor needs to use that additional liners, you're going to get revenue for that. When you have a mix like we have where there's much more, there's just demand for future volume for new cases, You get a mix where we just have a lot more as a percentage of new cases and that's what impacts ASPs.
When we look at that from a margin standpoint, it's margin accretive. We're getting that as new cases. Many of the cases that we get back from a deferred revenue standpoint where there's refinements, we just don't make as much margin on that. You get the deferred revenue, but you don't get as much Of the margin. So there's those dynamics that we have.
We saw just when you have a significant volume increase like we saw in our 3rd Q4.
Okay. Thank you, John. And then I wanted to follow-up about the GP channel. GP has been just gangbusters here lately. I wonder if I could try to understand that a little bit more deeply.
One is, do you think it continues to grow at this sort of clip relative to the ortho channel? Maybe 2, do you think ex OCAD has been a driver of incremental growth in that channel at this point? And then lastly, should we think about the shift to DSOs being a variable one way or another? And I apologize for my kids screaming in the background.
That's the life we live now, Steve. We understand. It happens on a life every call. From a GP channel standpoint, I mean, 3 years ago when we first started Segmenting in Europe and now we had to do it in the States and we do it all over the world. And then we introduced products like iGo that were specific to it.
And just a sales force that can communicate with GPs because it's a different conversation than with orthos. I can't tell you where it's going, but when we talk about that 5 100,000,000 patients like I did in my script, that's where they are and that's where you touch them. And it's a different it's not a big teen market. It's a lot of adults. But it has to have a workflow that's specific to a GP and that's why we've derived our products, why Itero is so important from a front end standpoint.
Your question on exocad is, we think that's going to be a big GP driver for us. It's a big legitimate piece for us, but I don't think it's adding to volume right now. We're just rolling out these new products. We're just starting to integrate that kind of software code into Itero and into our programs and that certainly will drive increased penetration in the future.
Thank you. Our next question comes from Jeff Johnson with Robert W. Baird and Co. Please proceed with your question.
Thank you. Good evening, guys. Hey, Joe. I wanted to start with, I know it's Tough and maybe there's not even a way to do it, but any way to think about especially over the last two quarters, how much of this patient volume has been backlog versus the zoom effect versus True kind of accelerating penetration of clear aligners versus brackets and wires. Just is there any way to bucket or what are any metrics You're looking at that tells you this is truly kind of that secular uptick we've all been waiting for versus backlog and some of the Zoom effect?
I think as we get further and further from the Q2, obviously the backlog question becomes less and less As part of the noise of the structure, right? I feel a lot of analysts, Jeff, they wonder, hey, we had a great Q3, obviously, and it was well, how much of that was really the Q2 that was rolled into the 3rd? We really don't know what that was. We don't. And our doctors don't know it either as we talk to them.
The 4th obviously had less of that. And We really felt good about our orders in January too. So I think we're really moving away from that question here soon. The number of docs like I just Quoted with over 7,000 new docs ordering from us, 77,000 in total shows you the breadth of what's going on. And What's really struck me in this entire thing too, Jeff, is really the this is not just United States, this is all over the world.
It's Latin America, it's APAC, it's Tremendous growth in Japan and ANZ and traditional markets, in China, in Europe. So there's breadth of this and in the segments we talked about both GPs So, look, there have to have been backlog in the 3rd quarter. There has to be some backlog in the 4th quarter, whatever, but we don't think that's the overriding story here.
Yes, that's fair. And then one other kind of maybe more conceptual question. Just as I think about I think about it through your advantages program, but Are you seeing doctors that are the high volume guys, the platinum guys moving up to diamond and double diamond? Is it the lower Bronze and or gold guys moving up to platinum, does it matter to you which it is? But more importantly, conceptually, is it getting those low volume guys to really go all in here or the high volume guys to convert completely to Invisalign?
And I'm sure you're going to tell me it's a mix of both that, but just kind of what you're seeing would be helpful there on your own customer base.
Yes. You helped answer that question, Jeff. It is a mix. But it is really broad. I mean, we see it in the bronze accounts and golds and all the way to diamond and diamond plus and we see growth in all those segments.
And I think it's kind of logical, right? The people that know how to do digital are going to expand on it because digital really allows them to function in this COVID environment in a way that Allows them fewer customer touches and they can actually carry on their practices in a normal way. Other doctors We see the advantages of that. They have patients asking for it and they start to move toward a digital kind of a platform. So overall, again, it's a breadth discussion.
It's not just one area. It's not
just one country. It's And it's not just one area, it's not just one country, it's not one segment of the Advantage program. We've just been seeing adoption across the board. And John, anything to
add on?
No, I'd echo this, the breadth. I mean, you have new doctors, like Joe said, 7,000 new doctors It's really start to accelerate. And then at the top of the pyramid, you have people that are doing a lot of cases and they do even more cases. So That's part of when we talk about the breadth of this growth and what makes us excited. And it's like Joe said, not just the U.
S. Phenomena, it's pretty much everywhere.
And Jeff, Jeff, the last thing you said is do you care, which I thought was kind of interesting is like we really don't care. We just want to serve the doctors who want to work with us. We see this market we talk about how large this market is and how under penetrated it is. And we just want to see wherever that growth is, that's great. It's on the low end that's terrific, it's on the high end that's terrific.
We set this company up to be able to service either side and to work well with them.
Thank you. Appreciate the comments.
Thank
you. Our next question comes from Elizabeth Anderson with Evercore.
One of the many nice parts of the quarter was the scanner and CADCAM revenue. Can you talk a little bit about what you sort of As sort of market growth there, like where are you taking share? Is it in the GP, more in the ortho channel? Is it Orthodontists adding their 3rd scanner, is it people finally saying, yes, I'll go digital? Obviously, the total number of cases As you know, submitted digitally was very high.
Any other color you could provide there would be really helpful.
Elizabeth, it's you could work for us, okay? You kind of described exactly how that demand is. It's coming from all these different places. And a lot of it, when Say where you're taking share, a lot of it is just analog share. There's so much of dentistry still just completely analog.
They're still doing impressions and different pieces. And so it's the growth has been tremendous in that sense. Your question about orthodontists that start to move up into a significant part of their practice Being Invisalign, you'll see a scanner at every chair and they use these things Constantly, it's part of what they do. And what we see on the GP segment is the communication tool ends up being the scanner in the front of the scanner because In the past, they'd hold up a mirror and say, can you see that second molar back there? And you'd say, yes, but you really couldn't.
Right now, you throw it on a screen, it's live, you can See exactly what's going on. It becomes an incredible patient communication tool in a sense of where's your dentition, what needs to be done and It helps to convince patients of what the doctor wants to do and the validity of that kind of treatment. So that this is where dentistry is going. And when you look at iTero, It is arguably the highest performing scanner in the world. The speed of it, the exactness of it, color rendering And also with NHERI technology be able to see caries or cavities is a real benefit.
Even the orthodontists who want to make sure that before you start the treatment that that dentition is in good enough shape to be the accept that kind of movement. So This is the time for digitization inside of dentistry and Itero plays a big role in that and it front ends our digital platform.
Especially in a COVID environment, Given the fact that you don't want to have as much time for impressions and so on and you want to be able to have something that's fast and really be part of that digital workflow, This Itero lends itself well.
Okay. That's super helpful. And just sort of like just follow-up more housekeeping question. One, obviously, you announced the new products today and I imagine that that's something you'll be talking about as sort of the virtual Chicago midwinter and what you would have discussed a lot of it IDS. Is there anything we should keep in mind in terms of the ramp of sort of new products or impact from IDS moving to the back half of the year?
And then on the other side, obviously, we saw your announcement about the move to Arizona. Sounds exciting. I just didn't know if that had any Act in terms of something we should model in on taxes or anything else just to touch on that as well?
Yes. I think, I can answer the tax piece of it. Really not a tax impact. It really came down When we look at the campus that we have in San Jose and the expansion that we have from a technology center, we become space constrained. And so we want to keep that technology center, that innovation center in San Jose and expand that out and add more to help with that innovation And then moving to here in Tempe for kind of that head office just made sense to us.
Yes. And Elizabeth on the new product pieces, keep in mind, we talked about we spend $500,000,000 a year on advertising and also new product development. You'll see a lot of We don't pace ourselves on those introductions based on IDS. And that's why we obviously announced the new Itero scanner. We talked about the new 6.0 software that we have, a lot of changes to 5 pause, which is our final positioning aspect of dentition.
We had the Plus product from Igo, the in face visualization. This is a digital business and it requires constant iterations and products. And obviously, midwinter and those things were great places to highlight it. But our innovation, we looked at it as agile, not waterfall anymore. In a sense, waterfall used to be Invent during the year, release 1 period of the year.
More and more you'll see us just monthly just rolling out new products As we adapt to a more kind of an agile philosophy of development than a waterfall type of, if that's what you're asking, Elizabeth.
Makes total sense. Thank you so much.
Yes. You're welcome.
Thank you. Our next question comes from Richard Newitter with SVB Leerink. Please proceed with your question.
Hi, Richard. Hi, Richard.
Hi, Richard. Hi, Richard. Hi, Richard. Hi, Richard. Hi, Richard.
Hi, Richard.
Just maybe to start off, the Switch program, which has fairly been extremely successful for you. I'm curious to know how much more runway there is Associated program, and maybe if you could just comment on kind of how you're at least thinking about that from your internal modeling?
Yes. Look, I think it has a huge amount of breadth to it. I mean, it's not just U. S. We started this in Japan actually years ago, introduced to the United States.
And you think about It's just a great winner, detaching those wires and brackets from people's teeth, using Invisalign, understanding like we said in our script, just how much more simple it is And better for people and comfortable for people to go with our product line. So we think it's we have a lot of room to grow and we're going to keep supporting
Yes. And Rich, this is John. I mean, we are always looking at those types of promotions for an ROI. And In these cases, many cases looking at it from an incremental standpoint, nothing could be more incremental than it was glued on to someone's teeth and now they come off and they go to Invisalign. So we like those dynamics there.
It sends a great message. And those people who had wires and brackets on their teeth Ken, talk about their experience with Invisalign. So there's a lot of positives to it. And as Joe said, it started in Japan and we've seen great Success in the U. S.
And we look to other places as well.
Got it. Helpful. And Joe, you said a few times how How encouraging the trends have been in January. I'm just curious, understanding it's only 1 month, but all else equal, If the trends that you're seeing now were to hold kind of the for a good portion of the year, where in your long term Kind of long range plan of 20% to 30%, do you think you'd be falling towards the mid to upper end? I'm just trying to get a sense for What you think in there?
Thanks, Tyre. Look, we were very committed to our long term growth model 20%, 30%. That's really all I can say right now. Rich, we're in a really uncertain environment. We're happy about January.
This is why we're not giving guidance. We're all living with volatility right now. We'll just continue to execute and keep our heads down. But we're committed to that 20% to 30% growth model that we've been talking about for several years.
Thanks, Richard. Okay.
Thanks. Thank you.
Questions?
Thank you. Our next question comes from John Kreger with William Blair. Please proceed with your question.
In the Q4, how do you feel about your ability to deliver on that if the order flow were sustained in terms of fabrication and fulfillment? How are those metrics holding up at this point?
Our supply chains, we try to keep ahead in that sense. So I feel We have adequate plans and capacity right now to be handled with surgeon demand.
Great. Okay. And then John, I think you've talked about in the past A reasonable assumption is kind of a flattish ASP and realize there's a lot of puts and takes. But is that still a reasonable kind of planning thing for us? Or Are you guys thinking less on the pricing front, and therefore maybe more of a downward trend over the coming year?
It's tough because it really becomes kind of the end result, because if you have more primary cases, as I spoke, compared to secondaries, You can get some of these impacts in ASPs. I think in general, there's not a significant change that we would expect in some of the mix Or some of that pricing. So that being said, you wouldn't expect too much fluctuations in ASPs. But like I said, It depends on that demand that comes forward from our doctors.
Got it. Okay. And then one more. Joe, in a typical year, we'd Kind of teens would be big in Q3 and adults would be bigger in Q4. Is that same sort of seasonal pattern likely do you think in 21 given what we know now or would you expect kind of teen order flow to be more kind of spread evenly throughout the year?
Yes, John, we don't know, but I'll tell you, it became muted this year. Obviously, we saw as much stronger 4th quarter in United States in teens Then we saw it's just you normally see from a season standpoint, it get continued. So I think all of us are expecting summer and fall months as COVID to start to retreat a little bit that might take us back to the patterns that we had before, but I don't think it's going to be binary. I really don't. I think This could have changed the pattern.
We're just going to have to we're going to have to just ride the curve here and see how it goes. But We'll continue to advertise through this. We'll execute on the plays that we talked about in our scripts and we really feel confident we can continue to drive significant team demand.
Great. Thank you.
Thanks, John.
Operator, we'll take 1 or 2 more questions, please.
Okay. Our next question comes from Jason Bednar with Piper Sandler. Please proceed with your question.
Hey, good afternoon, everyone. Thanks for taking the questions here. Congrats on another really strong quarter. I appreciate all the details you discussed. Maybe building off some of the real time commentary you shared at the end of your prepared remarks there, Joe.
Just curious if you can expand on what you're seeing in January from maybe a utilization perspective, Maybe in the context of where we were October through December, any notable callouts in January, from like a geographic perspective or teens or adults?
I think the call out, Jason, really is just a breadth of it, really. There wasn't any geography in particular that dominated or It was just in segment 2 GP and ortho continue to be strong. So when you exit a year and you enter a new year, you're obviously glued to that month See, especially in a business like this, what the momentum is and we just see a continuation of the strong momentum that we had in the Q4. That's John, anything to add on your?
I think the breadth of it is my note on this, that we have Across geographies between GP and orthos. And what we described is a lot of doctors that are higher up in the tier. They're continuing to do a lot of volume And then a lot of new doctors that come in with cases in hand and we can get them to start the Invisalign system into our digital ecosystem. So That continued from Q4 into Q1. Okay.
That's helpful guys. And then just focusing on China here just for a quick moment. There wasn't a great deal of discussion, probably less than this call than maybe any other call in recent memory in China in particular. But I appreciate the seasonality that happens here in the Q4, but maybe just wondering if you can expand on what you're seeing with your business in the Clear aligner market in China specifically and maybe That against some of your other APAC markets?
We felt good about our growth in China, 26% for the quarter overall. China is, we see shutdowns periodically, issues in Shanghai or different places. The Chinese Our pretty draconian, I'd use to move is when they see COVID, they move pretty quickly. The public hospitals have been throttled to a certain extent on elective procedures. So Well, we feel good about the quarter and we feel honestly our investments in China, we really feel good about those.
The manufacturing piece helps to legitimize us. Our IT systems from a data protection standpoint have to be geared toward China. We're in good shape with that. We're assembling Itero there now. We feel great about our training centers, great about our treatment planning capabilities.
So overall, we remain bullish on China and we think that China will start to with the rest of the world will start to recover in the second half of next year too and we expect to be a big part of that.
All right.
Very helpful. Thanks guys.
Thanks, Sue. Operator, we'll take one more question please. I know we run over.
Okay. Our last question comes from Nathan Rich with Goldman Sachs. Please proceed with your question.
Hi, Nathan.
Hey, Joe. Good afternoon. Thanks for squeezing me in. Obviously, results over the past couple of quarters have been really strong. I guess, when we look out 2021, it's tough to know what happens with COVID, but hopefully we'll start to get back to normal life Later this year or 2022.
I think as we look at where consensus is modeled, I think kind of high teens revenue growth, it seems like you still feel comfortable With the 20% to 30% target, so do you feel like we should be expecting that type of growth in line with the long term range Off of this like this new higher level of volumes that you're starting to see in the back half of this year?
Nathan, we try to emphasize as much as we can. We feel very confident about those 20% to 30% ranges of growth And continuing to target 25% to 30% operating profit too in order to do that. So you'll see us in investment rates that John talked about, we're putting in place To drive that demand. So we make we remain committed to that model of growth.
It starts with the best vendor penetrated market and the investment opportunity we talked about. We try to give you a kind of the breadth of all the We talked about we tried to give you a kind of the breadth of all the different levers that we have to pull to be able to drive that return. And we continue to make that changes over time in terms of how we invest and where and so on, but that belief is still there. And when we make those forward investments, we're investing into that underpenetrated market that we think we can grow 20% to 30% in And do it at a 25 plus percent off margin rate. Yes.
Great. Well, congratulations on a strong quarter.
Thanks a lot, Nathan.
Appreciate it.
Thanks, Nate.
Thanks, Nate. Well, thank you everyone for joining us today. This concludes our earnings call. If you have any follow-up questions, please contact our Investor Relations department. We look forward to following up with you in upcoming conferences and virtual events.
Have a great day.
This concludes today's conference. You may disconnect your lines at this time.