Good morning, everyone. I want to welcome the President and CEO of Tandem Diabetes and Susan Morrison, Senior Vice President, Executive Vice President, excuse me, and Chief Administrative Officer. We'll obviously open this up to questions if people have them. Feel free to just wave at me, and we'll get a mic over to you so those participating in the webcast can hear that feedback as well. I thought maybe we'd spend a little bit of time just talking about recent performance, go into the pipeline a little bit, and then kind of wrap up with how to sort of contextualize performance. You had a sort of set of 2027 goals out there, but obviously markets have evolved, et cetera. Maybe we'll just sort of start with kind of the Q4 to Q1 dynamic.
I think Q4 had some factors that didn't come in as expected, which all seemed to reverse in Q1, with Q1 coming in quite a bit ahead of your expectations as well as external expectations. Maybe just help us think about the evolution of the business over the past six months. Is the right way to think about taking the two quarters together? Is that a better representation of kind of underlying trends? How should we think about how you started the year versus how you ended the year?
First of all, I think that we had a great year in 2024. We basically guided at the beginning of the year to 10% growth. We ended with 18%. Even though Q4, we had a little bit of a seasonality flip, I would say, it was still an exceptional quarter for us. It was, I think, the highest fourth quarter we've ever had. We just saw a sort of softening of the demand in the very end of the quarter. We have never seen that before. That was certainly unfortunate. I think that we've got a lot of very exciting things that are going on with the business today. I think the first quarter is representative of what we can expect as we go forward. We're changing the way we do business in many different ways.
I think one of the things that happened in 2024 is we introduced Tandem Mobi, which is a smaller device. It's much more discreet, and it still uses the sort of game-changing Control-IQ technology. What Mobi has done for us is we've seen a substantial increase in the amount of MDI starts that we've been getting since Mobi came to market. We have, since it's been on the market for four quarters now, and we've seen four quarters of double-digit growth in MDI starts. Prior to that, we were definitely feeling additional pressure. That's an exciting part of it. The other thing about Mobi that's exciting as well is it is less expensive to build. We do expect to see substantial marketing benefits of that. The substantial opportunity as we go into 2025 and beyond.
We just got the Type II approval, which is very exciting as well. We expect to see meaningful growth for that over the next couple of years. The pharmacy channel is something that there was a point in time where I would have said we were not sure we could take advantage of it. Now we are absolutely certain we can, and we are going to do everything we can to fully get into the pharmacy channel and take advantage of the benefits for the people who use our product as well as for the business because our IASPs will see it. There are a lot of things that we have changed in the business over the last couple of years. I think we are starting to finally see the benefits of those, and we expect to continue to see them happen this year and next.
Okay. Maybe we could unpack a few of those different pieces. If you give a look at the first quarter, you grew over 20%, really strong start to the year. How should we think about some of the drivers that contributed to that? Because Type II, you got kind of midway through the quarter. I would not think that that had a big impact. Maybe just give us a little bit of flavor of what contributed to that performance.
We have seen steady improvement in supply sales over the last couple of years. I think it's indicative of the fact that once people start to use our product, there's very little attrition. They continue to use it. I think the supply sale growth certainly does that. We also saw, again, MDI growth driven by Mobi. I think that the two of those, I think, are probably the core of the growth that we expected.
As we think about Mobi specifically, I know you've been out four quarters now, but what is a good framework to use to think about when the product hits its strike? You obviously have some early adopters, but when you launch a new product, it takes time to educate the market, get your customers excited, train people, et cetera. Where are we in sort of the ramp to inflection?
I think we're still in the early innings. I say that because we still have Android. It's not iOS only today. Android's coming later this year. We have now received CE Mark, OUS. We will begin to get it into the OUS countries. We've got the FreeStyle Libre 3 integration coming as well, which we think is going to be meaningful. Finally, we have the tubeless version of Mobi, which we think really is a game changer. I think when the tubeless Mobi is on the marketplace, we expect that we will begin to take competitive share from other patch-oriented companies.
What about some of the timing of tubeless Mobi?
We haven't said specifically. It's not too far out in the future. Right now, I'd say you want to, the design is completed. We're doing validation testing, all of the work that you have to do to prepare the dossier for the FDA. We're building out the manufacturing capacity. When you think about Mobi, it's the exact same pump that's on the market today. All Mobi is, or excuse me, Tubeless Mobi. Tubeless Mobi is, it's a supply change. Instead of an infusion set, you have a tubeless infusion site and a cartridge that's modified to fit into it. With Mobi, you can use a tubeless or a tubed option. I think that gives people maximum versatility. When you combine that with the algorithm that we have, we think it's going to be a winning product.
Maybe just talk to us a little bit about the Type IIs. You've had the approval now for five-ish, four and a half months, I think. Maybe just what are you seeing in terms of uptake? I know you had some data also at ATTD. What's been the response to that, and how is that progressing?
I'd say it's only been a few months. Actually, I think it was in the February-March time frame when we got it. It is relatively early. The team is actually, we've decided to move forward with Type II using a pilot. The pilot is fully deployed. What we're looking at as we do this is we're looking to look at market access. What is the best way to get market access? How do we drive, find what preferences that people have? We're also looking at just training physicians, making people aware of the benefits of the technology. We are in this pilot phase right now. I think that as we get more and more confidence that we're doing these, that these decisions we're making are the correct ones, we'll begin to expand it.
I would think by the end of the year, have broad sales coverage for the product.
Maybe sort of I know it's very early since the announcement of one of your competitors to separate their diabetes business. How should we think about the competitive dynamic unfolding as that transaction materializes?
I think that they're a very capable company. The group that works in diabetes has done a nice job over the last couple of years. They've got a more competitive product on the market today. I think what's happening is they're retaining their own renewals more effectively than in the past. I think anytime you have to separate an entity, you've got to spend quite a bit of work to figure out what exactly is what's being separated, what are the organizational elements, how do things continue to go, how can you resource everything that you've been doing before. There's likely to be disruption here in the short term is what I would anticipate. I think once they're in the market, they've got a separate team. They're likely to be a more effective competitor. That's how I would characterize it.
I think the good news, though, is when you look at our pipeline, when you look at the initiatives that we have underway, I feel that we will have the benefit of all of that by the time they're on the market kind of up and running.
Okay. I want to come back to the pipeline in a second. If I just sort of reflect a little bit on what you've shared so far about the drivers for Q1, you look at the rest of the year, and it's like, what's going on? I think your guidance implies about 7% growth for the balance of the year compared to the 22% in Q1. Maybe just give us a sense of what are some of the factors you considered when preparing the outlook for the rest of the year, and where are the puts and takes?
Susie, you want to take that?
Sure. When you look at our guidance expectations for the remainder of the year, it's important to break out what we expect in the U.S. from internationally. In the U.S., it's actually about 13% growth expectations. Outside the United States, we're preparing to go direct internationally in select countries. With that, there's an expectation that there may be either a slowdown in sales as we move towards that direct operation, or that there may be inventory that we need to buy back. In the third and fourth quarter, we expect somewhere between $15 million-$20 million of headwind. That's what's really impacting when you look at it from an overall guide growth perspective.
On that transition internationally, do you have the sales force in place? Are you ready to make that transition so it is a quick, any disruption would be, that is almost an accounting disruption, right, buying back inventory or some of these stocking, that is not an underlying business trend dynamic?
We're in the process of doing that right now. We've got a leadership team that's essentially in place for the countries that we will be going direct in. We're building on just all of the operational resources necessary to support an entity that's independent. That's all going on. We're establishing all of the IT infrastructure to support OUS. I think that the plan is that as soon as January 1st hits, we're going to be ready to go. That's what we're up to. I think that this is a natural transition that occurs in companies of our size. I mean, we've been in the market now for five years. We have great partnerships with our distributors.
I think it makes sense from a margin benefit point of view for the business, as well as I think that our own sales force can do a better job servicing the customers and just doing a better job of introducing all of the new technology that we plan to bring to the OUS markets here in the next year or two.
I think even if you adjust for that potential headwind, you're still reflecting a slowdown in the balance of the year. What are the factors that would contribute to that beyond the adjustment on either inventory or other kind of one-off matters?
Absolutely. We are really looking at overall opportunities and risk. I would say overall in our guidance philosophy, what you see is us putting a greater weighting towards the risk side as we see things prove out.
I think we've historically been conservative. I think it's the right way. We are not going to put assumptions into the guidance that we have unless we have high confidence that we can achieve them, that we've already seen them in the market, we've seen the performance. That's just typically we have a number of things that are exciting that are happening this year that aren't in the guidance. I think that that's essentially what happened last year as well, where we started off at 10% and ended up at 18%.
Okay. One of the questions I've gotten on the Type II population is, how do investors break out early enthusiasm for having the indication for you and one of your competitors? We just see sort of like a flash in the pan, kind of bolus of growth, for lack of a better way to put it, and then kind of petering out after that. How are you thinking about the build in Type II?
When you look at the market in the U.S., there's 2.3 million people that have insulin-intensive Type II, which means they have to basically bolus for meals, and they need basal insulin every few minutes. It is very much like the Type I community. It is getting larger over time. Today, roughly 100,000 people of the 2.3 million use pumps. It is incredibly underpenetrated. When you compare that to the Type I, there's maybe 1.9 million people with Type I. About 40% of them use pumps today. We have seen steady progress over the last couple of years as AID technologies have become more and more popular. I do not think there is going to be a bolus. I think it is going to be a steady increase as the companies continue to develop new technology that is easy, that is discreet, and that provides great therapy.
We have looked real carefully at the community, the Type II community. What we have found is that as awareness of the benefits of these AID systems is just more and more available, they're more willing to consider it. We would have said a couple of years ago that it's 5% penetration. Today, maybe it can get to 15%. I would say we think it's been 20%-25%-30%, even more. I think the more people that are out there selling to the market only helps improve the market awareness. I think this is a long-term substantial, it basically doubles the size of the US market force, and it's even larger OUS. I think it's a meaningful benefit for the company.
How about the go-to-market strategy? I mean, I think if you look at the evolution of Type I, Type II MDIs to now the broader Type II population, you're going from kind of a market where you're serving endos more so. Now you're kind of toggling over to serving PCPs, potentially some in the pharmacy versus the DME channel. How does that influence your go-to-market strategy? Have you made the sales force investments in a PCP channel, et cetera?
I think when you look at Type II, there are a number of people who are managed by PCPs. There is a substantial number that once they start to use insulin, move from PCPs to endos. I think that we have a pilot underway right now to answer many of the questions that you just brought up. That is, what is the right size of the sales force? Who are the people we'll be contacting? What market access approaches do we use? All of that is underway today. I think that it's a, again, it's a large market that's out there. We're evaluating it. I think as we have more confidence with the levers that we can use that are going to be more effective, we will do that and we'll expand it. We typically look at sales force expansions at the end of the year.
I think we just expanded in the first quarter primarily for Type I to increase our share of voice in this market. I think that it's definitely something we'll be looking at. When you look at today, the people we call on, we call on endos and high prescribing, high insulin prescribing PCPs. We already have PCPs that are out there who have a substantial number of Type IIs in their practice. I think there's a who we cover today, there's a big opportunity out there as of today.
Excellent. Maybe we could talk about the pipeline. I think sometimes we look at the pipeline, we think it's Mobi, Tobi, and Sigi. I think when you go actually beneath there, there's a lot of subcomponents to that integration with CGMs, integration with Android and iOS. I mean, there's sort of a lot of other pieces to some of these products. Maybe you could sort of talk us through Mobi. It sounds like that's sort of progressing as expected. Kind of give us a lay of the land across the rest of the portfolio.
Sure. It's a large market, of course, but it's highly segmented. Because of that, I mean, people want to wear, interact with, control their devices differently. It's very subtle. When you talk to people, there are small things about these devices that people love, and it's why they choose it. We think having a single device in this very diverse market is not the effective strategy. We are planning to have a portfolio approach. We have t:slim, which has been on the market for a while, for 10 years now. It's doing very well. We expect it'll continue to have a long life. We're bringing Mobi to market right now. Mobi is a device that has incredible versatility in terms of how you wear it, where you wear it. It gives people a lot of flexibility.
We do believe there's a meaningful number of people out there who would not come to pump therapy unless there's a patch device in the market. We see having all three. As you've mentioned, when you look at there's different sensor technologies, we want all of these devices to be able to use the best sensor technology that's available. Our algorithm, fortunately, it's an interoperable algorithm, so it can be deployed on all three of these devices. I think the portfolio approach is what we're taking. We think that's going to be more meaningful in terms of just addressing the various needs of the market.
You had an announcement this morning on partnership with Abbott to measure ketones. Maybe just talk through that a little bit, the announcement this morning.
Sure. We have been working with Abbott for years now. We're just about ready. In fact, we're on the verge in the next couple of days of deploying the FreeStyle Libre 3 into the US market, which we think is a big deal for us. You'll see it at the ADA. We have a phased launch where we kind of go slow at first and gradually pick up momentum as we hit more and more KPIs for the launch. Abbott recently has indicated that they're developing a sensor that has the ability to measure insulin or glucose and ketones. The benefit of that is that when you look at the performance of all the algorithms on the market today, the newer algorithms really have done a good job of eliminating lows, eliminating hypoglycemia. Most of the time and range problem is highs.
Highs, they're indicative of ketone presence. If there's a way for us to actually see and measure ketones earlier, we could potentially respond. First of all, just let the patient know that there's ketones. You may want to consider doing a bolus. There's something as simple as that. There's also consideration for incorporating the information into the algorithm. It does it for you. I think that the time and range improvement by reducing that high hyperglycemia is meaningful. I think it's a very exciting development, and certainly we want to deploy it.
I know you've pulled back from giving specific timelines or target approval dates across different products in the pipeline. Maybe you talked a little bit about where you are with Tubeless. It sounds like you're at design freeze and getting ready to prepare a filing. What's the next update we're going to get on Siggi?
Yeah, I think that Siggi is a device that is in the design phase at this point in time. We've transitioned all of the work on Siggi's pump from Switzerland back to our facility in San Diego. We have a team of people that just finished developing Mobi. They're available, and they're now jumping on Siggi as an opportunity. I think that it's an important part of the development. We're very pleased with where we are today. One of the things that we've done over the last two years is substantially reduce the risk of the design. Now that we've done that, we can move more aggressively into the implementation and finalization of the design. I think risk reduction is what we've been doing this past couple of years, and we're very satisfied with the performance.
When you say risk reduction, this is on product performance or manufacturability?
On both.
On both.
The whole thing. I'd say that you want to make sure it's a safe, efficacious device, highly reliable, and that it's going to meet your performance requirements over a four-year period.
If you think about kind of trying to put a guess on timelines, if you complete the design, have you gone through V&V or is that?
We haven't gone through V&V yet. We're still in the design process.
Okay. And these are 510(k)?
It's 510(k).
Okay. It sounds like you wouldn't be in a position to file for another 18 months?
Are you trying to put words in my mouth?
I am trying to.
I do not think we are going to talk about it. I think that every single time we talk about our dates, we basically are telling our competitors what is going on. I would just prefer to stop. We have decided not to do that.
Understood. Okay. Maybe we can talk about ADA coming up here.
One thing I would like to talk about, though, that I think is really important. I think that the growth that Tandem saw over the last, from, let's say, the 2018 through 2023 timeframe, was really driven by the performance of the algorithm and the fact that the algorithm really differentiated itself from anything else that was on the marketplace. We licensed the algorithm for Control-IQ from a company called TypeZero, which was a spinoff out of UVA. We did that back then because we did not have algorithm developers. It was also the algorithm that had the most clinical data on it in terms of research studies and something that the FDA was very familiar with.
We just recently entered into another agreement with UVA, and they have another algorithm called AdaNet, which has the most clinical data of any fully closed-loop system that's on the marketplace. As a company, this is the North Star, we think. We think we have to have the most exciting and interesting pumps on the market, the best performance, most discretion, most innovative. You've also got to have the best algorithm. The team is really working hard to get this to market as quickly as possible. We successfully partnered with UVA in the past, and we anticipate that that's going to happen again. I think it's a really important part of the business, and I think that's something important to keep in mind.
That's a good segue, I think, to talk about ADA a little bit. I know one of your competitors is going to have this unveiling of sorts to the investor community about on their patch pump. There's always a series of different data that come out during that meeting. What are some of the things that you want to highlight to folks ahead of ADA that you want them paying attention to for Tandem?
Yeah. First of all, we're going to show the Type II data again in the U.S. It's only been presented in Amsterdam. I think it's an opportunity for us to show a broader community here in the U.S. the benefits of the Type II performance. That's exciting. We've also got a pregnancy study that we've collaborated with the University of Montreal in Canada to look at the effects of Control-IQ in managing diabetes in pregnant women. That's a big deal for us, which we think is going to be a meaningful market opportunity as time goes forward. There are a lot of studies that are out there as well about Control-IQ, benefits of Control-IQ on children, et cetera. I think that the other big thing I believe will be just the FreeStyle Libre 3 integration. I think there's a lot going on.
We're excited about it. I would say that when it comes to people demonstrating patch pumps, it's like we acquired AMF Medical two years ago. And two years ago, their patch pump pumped. It pumped saline. It pumped insulin. Pumping is not a big deal. It's not hard. What's hard is to make sure it's reliable and safe. I think that takes time. It's not something that you can do overnight. I think that, and I'm sure it'll be exciting. I think you have to understand it's easy to show that performance, but not necessarily meaningful at this point in time.
Understood. On your point on the algorithm, we've heard the same thing in our kind of checks on the market. What are some of the either data you're working on or studies you're working on that can further drive that point home?
I'm remiss in saying, because we just talked about the ADA, UVA will be presenting a number of papers there that show the performance of the AdaNet algorithm. Basically, the system is set up basically to set it and forget it. I mean, you do not have to bolus for meals if you do not want to. The algorithm has been tested in situations where people are at home, they are eating a lot of carbs, and they are not bolusing. The performance, it is real-world data. It is a substantial improvement in simplicity, experience, and a reduction of the cognitive burden. The way we are looking at this, though, is that there are devices on the market today that talk about simplicity, and you cannot change anything.
That is very frustrating for the people using it, because at times their diabetes is not being managed well, and they want to have the ability to make changes so that the physicians. With the system that we are looking at, you can go into a fully closed-loop mode and operate that way. If you feel like you need to make iterative or small improvements, you can do that at the same time. We think that is the best of both worlds, and it is really what we are pursuing right now. We think it is going to be the next step in diabetes therapy.
Okay. There will be those data at ADA also.
Yeah. I mean, as I said, UVA has presented it. They're at the ATTD. They'll be presenting it here. There's been quite a bit of studies. They're kind of prolific when it comes to generating data. I think that's really important to us, because when you generate data, these clinical studies, you have to do it with knowledge of the FDA. The FDA has now been taken along through all of these different studies, and they're aware of it. That just helps improve or reduce the time to market.
Okay. I want to cover a few P&L items before we go there. We're going to talk about just the channel. There's a lot of focus on this shift to pharmacy and implications. How important is that? You made a reference to that earlier on just channel and patient access. How important is that to you, and where are we in that developing that opportunity?
We've been looking at this now for a couple of years. The real turning point for us was approval of Mobi last year. Mobi allowed us to actually work with payer organizations to get contracts in place for pharmacy channels. We have about 30% of covered lives under contract today. That's in a relatively short period of time. We really didn't start actively selling through the pharmacy channel until the first quarter. I think that we view it, from a patient point of view, as less out of pocket. From a patient and an ACP point of view, it's easier access. That's really the reason we're going after it. From a company point of view, the real benefit is that the ASPs of both the supplies and the pump are higher.
Selling the same number of products, we will now see a benefit to the top line of the business. It is something that you might imagine that we are moving as aggressively as we can. We are excited about it. There was a question, I think, maybe a year or two ago as to whether or not the pharmacy channel would even accept a durable product. That has certainly been answered. Now they want us in it, and they want us in it aggressively. We have brought on a number of team members that have done this before in many companies. We are moving as quickly as we can. Again, it is ease of access for the patient and reduction in the payment point or the out-of-pocket. There are a lot of benefits. We expect this to drive meaningful growth in the business.
What are some of the barriers that you have to knock down to broaden access to the pharmacy for you? Are there any implications to consider as relationships with the DMEs and how that transition might impact the core business?
Yeah. I think that there are operational requirements that you've got to get in place, which we're, of course, working on now. There's also additional covered lives. We have 30%. We need to get that number up. So there's new agreements that we're working to get in place, and we think we will. There's definitely, and there's also a learning curve. I mean, it's new to us. I mean, we have all these experienced people in doing it. It's still new to us. We want to move aggressively, but we want to move cautiously at the same time. Interestingly enough, about the DME suppliers, many of the distributors that are in DME today are also creating hybrid business models where they do both. I think that they see the writing on the wall to a certain extent.
I think it makes sense for them to do that. Then as we adjudicate the sale, we can decide which channel is better for the patient. With the distributors that have the hybrid model, we can choose either sort of a DME or a pharmacy, whatever's best for them.
Got it. Is there any risk of an air pocket in growth as this transition happens? I appreciate that. I'm sure you maintain the same guidance philosophy. You would contemplate that. Is there any dynamic that we have to that might come into play as it relates to just inventory dynamics or anything else that might disrupt the transition?
I don't think so. I think that the, I mean, we have our managed care team manages both the pharmacy and the DME relationships. I think maintaining open dialogue, transparency, et cetera, with your partners is really important. I think that's something that the team's done a good job on. Relative to the, again, we're in the implementation phase at a certain level on the operational side. There's different packaging, different labeling, and things like that that have to be done. We've done that. We're continuing to expand in that area. I think that it's really cover lives. Let's get more contracts. Let's increase the cover lives. As you start to actually sell into the pharmacy channel, there's things you just learn. It doesn't go as perfectly as you expect. You've got to knock down these barriers and keep moving.
That's kind of where we are today. I think it's a big opportunity for us this year and beyond.
Okay. Excellent. Maybe we could go over to the P&L, Susan, and talk a little bit about, let's start with gross margins. The Q1 revenue came in much better, I think, than what people had expected than where you had kind of targeted. Gross margins was roughly in line at the 51- ish percent from what you had kind of laid out earlier in the year. There's this ramp from 51%- 54% for the full year. So presumably that implies a number above that in Q4. Maybe just sort of talk us through the moving parts here on the gross margin line.
Sure. I think that's one of the things that's exciting about 2025 is you're actually starting to see the benefit and evidence of initiatives that we started putting in place 12 months - 18 months ago. A big piece of that is Mobi and Mobi becoming a larger mix of our business. John talked through some of the benefits there. On the pump side, the cartridges are actually about 20% less cost of manufacturing. On the pump, it's 10-15% less. As you see that become a greater portion of our business, you're going to see that in the gross margin. Also, we're seeing even greater benefit in the operating margin as we drive greater leverage within our business, particularly within SG&A.
I would highlight that some of the benefit of that we are able to actually achieve while we are doing things like Salesforce expansion and while we are investing and going direct internationally. A lot of these is just time as you are starting to see that evidence of pull-through from these prior initiatives.
Is the gross margin as straightforward as, I mean, obviously revenue scale matters. Mobi becomes a bigger percentage of total. Mobi has significantly higher gross margins, so the total corporate margin goes up. What are the other factors?
Yeah. That's the big piece, but also pharmacy, when you have the pricing benefit. And also, we've seen great pricing benefit even within DME, 2-3% increase. As we're able to demonstrate the value of our products, we're able to see that nice increase in pricing. We previously had put out a longer-term target of a 65% gross margin. And I think there's been question of how and when do you get there. And now, as a nice milestone, we've been able to share that we expect to hit a 60% gross margin as early as one of the quarters in 2026. And how that impacts the full year, of course, depends on which quarter we achieve that. But you can see that you see the benefit of this pretty meaningfully, pretty quick.
What are sort of the operational factors that need to play out to get to, even this year, you've got to be in like a high 50s gross margin in Q4 just to average out to get there. What are some of the just operating dynamics that need to unfold to get to that number?
I think it's just primarily scale. I mean, right now, we've had Mobi on the market for roughly a year. I think that today, the pump is accretive to the t:slim pump. We've seen the benefit of that. I think this year, it's really the supply side. It's just really overhead absorption. I mean, as you start a new product, you have a lot of overhead in place that's not being fully utilized. You've got to ramp up volume to do that. I think we're at that point now where we have the volume we anticipate for the capacity we have on the pump. We're doing the same thing this year for the supplies. I think that you're exactly right, though.
This year, in order for us to hit 54, we have to exceed and end the year at a pretty high margin. I think that we feel confident in doing that. All of the new products that we are bringing to market are designed in a way that they are less expensive to build than the previous ones. As Susan mentioned, I think the pharmacy channel is another big opportunity for us to really, I would say we have high confidence in getting the 65% gross margin. We also have high confidence and commitment to getting the operating margins that we have committed to as well.
As we think about the gross and adjusted EBITDA margin, is it pretty linear that gross margin goes up, adjusted EBITDA margin should go up at a pretty similar pace?
I would say that it's, I mean, there's certainly going to be that relationship. The other thing that we've been doing internally, we've been doing a lot of business process redevelopment. We're looking at using new technologies to reduce the sort of the human involvement in customer interactions. We expect that that's going to drive additional leverage on the bottom line. I think that we could see more benefit to the bottom line based on some of these other problems that we've got going on that aren't necessarily tied to gross margin.
Is there a revenue level that you could sort of lay out for people that gets you to double-digit margins? Is that $1.2 billion, $1.5 billion?
We really haven't said revenue. We've said number of customers, install customer base. When we set the goals for the company a couple of years ago, we set a million customers. I think the thing we're happy to report today is it's less than that now for us to get to those double-digit improvements that we've talked about. I think we have a great deal of focus on this in the company, something we take very seriously. I think you're going to start to see steady progress in that area.
Excellent. I think with that, we are just at time. John and Susan, thank you for making the trip today.
Good to see you. Thank you.
Thank you, everybody.
Thanks, everybody.
Thank you.