Earnings call transcript Q4 2022

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Operator

Greetings, and welcome to SmileDirectClub's Fourth Quarter 2022 Earnings Call. A question-and-answer session will follow the formal presentation. [Operator Instructions].

I will now turn the conference over to Jonathan Fleetwood, Director of Investor Relations. Thank you.

begin. may You

Jonathan Fleetwood

Good operator. Thank morning. you,

Before we conference you this me includes let forward-looking remind call statements. that begin,

For additional information SEC on SmileDirectClub, please refer the factors filings to risk described therein. including the company's

as rely our not future should You forward-looking statements events. predictions on of

information, statements. on to presentation All call as on of for except of I a are as update our to forward-looking this refer forward-looking description beliefs we you applicable and We QX by based obligation law. that today. statements such undertake make no assumptions XXXX required certain earnings

is In website. a Regulation this for slides free financial adjusted also non-GAAP Exchange our conference which included cash call, call, obtained we this on measures respect of and G discussion measures, be in will have with the EBITDA by non-GAAP of such Act certain presentation required can the flow. Information to including financial

this refer non-GAAP the measures to you also of reconciliation We measures. certain to for financial GAAP presentation appropriate a

I'm and Executive joined on the Chairman, Financial Troy Chief David Chief Crawford. and Officer Officer, call today by Katzman;

the now me to David. call Let over turn

David Katzman

today. good and us for joining Thank you Jonathan, morning, everyone. Thanks,

Let our me as on strategic by begin the with as SDC the year in quarter's that updated last well XXXX results line key financial in initiatives call. on delivering full my team for provided entire outlook comments both congratulating we

better achieve with The growth. much efficient in operating line a our produce were to we even flow to more over disciplined decline built Our able deliver to profitability $XX in XXXX. And cost management is that model in free throughout saw a though that we leverage year us adjusted EBITDA top million have we XXXX comparable allowed full improvement revenue. cash modest a organization reflects positioned

by mission we convenient are loves democratize continues facing, and to it level Despite access our on to affordable execute the every for team a person to everyone. at making each and a high smile macroeconomic our challenges all

financial mission our to winning through discipline. our our are the by reach X throughout rigorous fulfill discussed strategic transformative year, we've innovation, with to As a pillars driven expand team

our fourth performing results me these context XXXX Let and we're pillars. how to quarter year along full this review in illustrate

First, base, our our consists to with approximately their our currently not solutions expand of on our customer new annual to includes with existing and for preferences only teeth entirely expansion $XX,XXX, start me based relates which incomes plans let households straightening reach. also with customer but to journey. serve unique needs pillar segments their of This

through straightening by foundation to our telehealth any serving platform business Our model. care leveraging without company's a access doctor-directed orthodontic providing those direct-to-consumer teeth began by

doctor locations, journey utilize model, planning begin by retail in reach our platform that leveraging our my a begin their proprietary I'll to new network, made own utilizing including pure to new customers visits we avenue, investments As SmileShop including and their technologies SDC. to discuss developed our later journey in channels comments, to expand years the rather our would They like technology segments. visiting telehealth we by for different customer have partner our have device than to with through treatment over our in-person SDC mobile their CarePlus AI

the to is a not to goal for demographics, along income solutions within base, customer our share provide with also Our but compelling only larger expand higher of market. current capturing team

base Our demographics higher for as needs to teams. second of our income as and innovations both pillar is unique segments creating growing the and expanded serve transformative well customer current

technology facility capital and X during robust our million have invested platform. state-of-the-art production to past We years over develop $XXX both expenditures in the

proprietary manufacturing and both utilizing FDA Our printers retainers wholly Tennessee Nashville, registered technologies. our XD X Gen in owned fleets manufacture clear uses one of North facility of largest America's aligners to

the same and Our approximately aligners X/X of members retainers the of count. team twice with Gen many head number with as twice X aligner as manufacturing produces many

These key been innovations roll that drivers our earnings have in on calls will transformative XXXX. discussing and fully growth our out 'XX over Our years the key developing began we include provides SmileMaker customers technology. their our an journey, doctor to in-person which platform, our mobile partner And leveraging locations. begin access featuring CarePlus channel for offering, SmileDirectClub XD network our scanning innovative expanding

develop images pleased that successfully customers images aligners This that our buying to or AI smile. offering I'm to great digital innovative or enhanced buy in own the while draft device customers our Australia their with SmileMaker automated launched cycle of experience. weeks treatment to to engine shortens SMP, mobile from plan digitally days late their minutes, that customers of a smile providing achieved with our technology technology submit their capture after an existing new even to Platform immediately November potential allows and and their seeing report allows in goal those mere our to a

improvements in As we platform are Maker its in metrics and outcomes platform. the Smile app our and enables innovative from anticipated launch would of Australian strong use, we be case our the this test conversion that seeing the

$XX potential adjusted Based deck, conversion can in to to second with to of XXXX. half investor our launch SMP, a from the XX. upcoming for EBITDA Australia in approximately we guidance on Slide be revenue in on has business have will increased beginning the add U.S. which viewed meaningful with to the million 'XX, our potential CarePlus, $XXX the in adjusted in million SMP increase in core the aligner deliver believe lead and incremental order When revenue combined and EBITDA

line line to this his factored later in or our touch note into contributions will any we Troy important remarks. that bottom XXXX from SMP not have it's guidance. But on current top

has lessons we the team to before and then experience plan in U.S. that a ensure in launch being performance. smile many from is optimal tweaked interactive for time an render a through custom QX. onboarding to our XD Everything customers successful scan your working complete so during the takes for new can enhancements it and make premium our hard launch, to first-in-class learned our been this We've test treatment

and of call This elevated CarePlus SDC offering. was 'XX allows our we market service Our aligners initiative began dentists practitioners second in the to underpenetrated the model specifically robust income professionals orthodontists convenience follow-up that and growth more parents desire to platform of our for want demands and teams meet and orthodontic discussing customers, of but that dental telehealth in-person households our also earnings care. telehealth utilize to general higher the added access traditional the

have expressed incremental no be training practices manufacturer. fees orthodontics Dental a paid product nature turnkey as minimal upfront which and requires the this the hybrid for and to enthusiasm for solution, equipment unique to of investment service

for price partner We San have launched this in Orlando, $X,XXX of our phase through certain Sacramento and doctors premium offering at Denver, our a participating Diego. pilot CarePlus network service of

all our pilot launch our locations any launch As SMP fast learnings roll more will Australia, follow with factor XXXX. throughout we broadly network in to from out to partner of this or in results in the share growth Early the will potential we offering calls. deeper these from pilot on launch X from markets across insights future and this positive, key been revenue have

winning entire We will drive We partners and transformative attract talent innovations third medical to team, a orthodontia, and top retain our these technology across with the seek but the industry. only pillar. not

career for for to 'XX, by team has Place supporting including Work growth leadership List. building Employers named for Best and from Forbes also third in parties recognized but both and best team, achievements Best our Diversity awards to comparably been Our

sales the as and industries other team top marketing, development, with industry well talent and as Our from across supplementing gained research engagements. has experience from product and valuable functions partnership within and insights both development

January rigorous Underlying reduce objective took our important so priorities can roughly We our advancements our one to pillars. is cash we of accomplish to strategic positive the most fourth in action by these of commitment million financial and costs $XXX free in flow QX. of discipline, our that

will growth cash flows. investments and continued is areas all of drive revenue Our profitable focus improve to across organization our prioritize that

we tough the that 'XX, in will details Troy manage discipline and to is continue cash our our controls outlook. the dedicated deployments environment Despite macroeconomic our through during business XXXX provide are cost we year. maintaining regarding to financial forecasted as

positive free rates. adjusted EBITDA However, it's exit flow highlight with that to cash we important quarterly to and run XXXX plan

discipline technology members We have financial the this solutions, and achieve platform to team target.

October sensitivity enhancements exciting our we aligner is our to in the as enhance for This online addition our customers, portfolio release the kit February. premium is CVS, evidenced over to convenience another and addition others. Walgreens available which and our countertop like of continue new customers Whitening to smile In store and by both for from recent offers launch solution the flosser, of XX,XXX Walmart, retail our in retail locations

of also I for with efforts to they've care come support their our team and to want service our brand. recognize relentless to from provide level expect the our customers customer

industry-leading our first service experience. discussed overcome a quarter was in quickly calls, get customer superior we've center and temporary back 'XX and of in delivering contact previous able to the challenges to As some team our

We have that licensing assets treatment built highlighted infrastructure and we leaders of the recognize planning we these including value industry discussions next-generation with call, utilizing opportunities, last On robust to continue manufacturing quarter's partnership strong on technologies. is orthodontia. on a innovative to have and the aligner technologies technology-driven and and white current to additive unlocking these opportunities partnerships We addition our of building breakthrough for our products. in production potential label the wholesale for our focus believe future

the along dental assets. capacity, look further months. credibility a to these monetize options growing more Combining business us additional great available in in coming on position our with and We innovative solutions market, our collection with places forward of our sharing production to opportunities the in

program, network be exclusive make X,XXX We We through the progress a will the with customers quarter to which expanding from locations, locations XXX quarter partner ended channel our increase which our is able meaningful footprint. continue great of receive third our our CarePlus offering. to in active

strong join market. to has reach pillar perfectly which to our generated from solution partner an CarePlus aligns addressable our across expanded Our with network, interest practitioners expand our

SDC to that markets have that the Key for for to the the our CarePlus of to and practice network proposition short allows any not of important customers to we value key in-person is want all of presence drive part drive our commute general partner ability do It's of marketing in in visit. we an scale, highlight a offices leverage network but have practice to a need firepower the foundational sales ensure offering. every customer our to for to doctor's that coverage

to overall pilot considering evaluate the they Some effectiveness their SDC their to leads traffic profile practice marketing once have new to and CarePlus their of already raising launch our time partners efforts eliminating market. own within are driven their of completely

lifetime provide practice. foot to eager and traffic turn some partners own life. see great their from received already patients the they dollar practice the from an a customers practice this will customer driven from marketing these We've value to opportunity a only that practice orthodontia the also feedback or with it for training leads without an that CarePlus convert with indicating CarePlus revenue spend direct additional their from to SDC opportunity incremental solution, untapped our Not CarePlus of provides any patient practice for into

Regarding from for playing offering incremental practitioner the out for the and share [indiscernible] our network an feedback of upfront benefiting All patients, solutions. our of of new innovations. market market affordable SDC greater customers a from also and key compared process as shown addressable costs, turnkey straightening X straining additional for teeth patients patients, leveraging consumers product or practice patient for DMAs CarePlus both launch the at the looking only well the synergies awareness pilot existing as existing competitive has existing the scale and partner benefits company's accessible, other capturing piece from option. points SDC's provides CarePlus practice optimization time, for an minimal to brand price these

come we model has X-year reflecting in anniversary evolved. how our on May, a our worth As it's company as upon

an started customers While smile enables now start healthy to to customers only unique whichever affordable to meets kits, begin through their we for business our with their their channel impression to one journey model preference. initially channel journey

network addition for start types SmileShop who to direct-to-consumer customers program. one factor traditional of doctor's and more short historical convenient Our some in that the We've their with locations. more our the soon than market model could A X% affordable is brought years treatment. of top to patients, later, so reach solution the the of partner enhanced journey in-person retail office created afford recognizing the as and was that to few our same these want

Our be partner service, greater network access for across has new channel customer provided premium will reach for solution. geographies, growth our but 'XX, CarePlus it not the only in

allowing we innovation the platform leveraged to in-house have our As we begin access care, their life, our their on handheld customers focus brought from journey to to bring Smile developments and own technology forward continued have fully to future to device. maker and small

access by Regardless our access these of to results to of a which provides dental towards care. supported and chooses begin smile, journey telehealth high channel a that customer professionals, a XX/X maintaining are platform all channels healthy to quality of ensuring

in aligner the business integrated market We value a of searching in of straitening all for areas growing vertically built consumers solutions. chain that participates teeth have clear the

we changing of quickly both for to the shareholders. our reach aligner the customer clear are returns landscape are full SDC We potential satisfaction and its industry, committed seeing with and financial

Troy our look stronger will early recent on at our results. expand over our sequentially outlook, in and aligner company financial including quarter orders the quarter first revenue fourth delivering

I'll over XXXX call turn Troy, will to our results year more and detail outlook. now QX our full the and financial Troy? who provide present full And year on

Troy Crawford

everything will to financial to Please our cover. website, investor quarter. the will our review details Thank provides for cover materials you, I posted be results I supplemental sure additional which on David. our

finalized within provided. results To start, released ranges preliminary previously on we the results XX, and we the are XXXX January

has costs to to in discipline across this organization, has in improvements efficiency year-over-year sales. quarterly us financial create cash the decline rigorous flow free despite allowed and on focus and operations continuous EBITDA and led support the streamline and Our

also core business of support positive $XXX of difficult structure for We between our EBITDA rate guidance and million year. and initiatives In XXXX flow that run we economy, adjusted end to cash size must that this of gave retain the cost to cost recognized the goal being right we million free the more our by sales environment. difficult included a $XXX savings

exciting does include Our being XXXX. not core initiatives business that in are deployed guidance the new

during in based in the and year, launch rest regional with learnings gotten and coming back David QX launched U.S. November. we As on the X of SDC from during markets the XXXX noted, in the Australia in are U.S. the app the CarePlus to in launching planning the test February SmileMaker initial expansion we've on

first, I by the of decrease of some of and difficult comments. customer. our and million, XX% plan related fourth in our a challenging $XX to cover driven on to by results was the Revenue a inflation QX has driven I these year-over-year potential which high which full initiatives But continued was for want particularly quarter basis. This is give XX% been color later the XXXX. conditions impact sequentially The for the for year core primarily macroeconomic to

initial aligners ASP sequentially We quarter, the an shipped down XX,XXX approximately in $XX.XX. of XX% at

promotional Our ASP increase driven activity. the quarter by over third $XX of lower was primarily

XXXX. seen the the in revenue what results we largely trend are of year-over-year Our of out reflective have play economy throughout

some other of items. overall Providing reserves. the well third as as gross drive by period, price revenue percentage XX% Implicit can aligner IPC deleveraging is the details concessions quarterly revenue XX% up rebalancing were from level quarter. the revenue, on recorded the in Fluctuations of in in of impacted which the

The based a and we revenue implicit cancellations, reserves information. As of maintained line on rebalance prior mentioned we current on we separate IPC and analyze were of calls, have gross and those reserves for as concessions XX%. full regularly price year percentage

despite QX current restructuring to results structure of we XXXX the our decline and flow. plan revenue in cash and meaningful our in macro free our customers, quarter, cost $XX EBITDA by improvements flow a fourth improved XXXX our and impacted in like fourth revenue from Much free $XX adjusted quarter affecting year-over-year drove implemented by million While QX saw compared million we of continued improved the in the cash quarter was headwinds by million. January $XX

discipline $X very illustrates full face EBITDA a despite flow year, the environment. in free XXXX difficult and rigor put adjusted place of we full $XXX the results macroeconomic only in in and Delivering financial beginning cash the revenue, the $XX For year-over-year million and of that cash a million adjusted EBITDA million. since year decreased reduction flow improved free have these

year-over-year associated lower receivable Reserves and approximately pressure revenue, $X with of the at in a interest at in which $X down $X revenue, Financing came approximately to million, in in XX% include our the of XX% and came is balance. QX tax to kit SmilePay and million program, adjustments, other which from aligner sales compared million which decrease refunds due gross revenue is accounts quarter. third

whitening at and came which products Other revenue of million total revenue. revenue XX% in fourth retainers, ancillary other to related includes quarter adjustments, or $XX net

to SmilePay. came above QX, program of approximately share our turning initial of through the in historical levels liner SmilePay In at is XX.X%, Now financed which purchases XX%.

base. an a with to program the important overall, basis to revenue current sales. to our compared percentage quarter as customer the continued delinquency Our a SmilePay to of on is our component lower And dollar affordability consistent rates QX, despite program prior drive in has due quarters well with perform relatively increase

confidence to monthly card gives a fact, on the that and low file payment, have well. continue credit SmilePay keep In us we will perform a

Turning the sales the from which was driven of higher side of margin volume the difference quarter cost half deleveraging down as fixed cost decline costs. by rate impression About of volume, in was to XX% which the holiday to shipping the lower and the for margins on margin sales quarter. attributable lower as to well higher business. retail cost kit on relative results was Gross a third with XX%, carries remaining the higher

Our to in we on will get the continues improvement leverage. through the growth line and that returns margins team added see focus programs efficiencies and operating from controls benefit as top to cost

as holiday in in of of a the revenue XXXX $XX XX% by expenses net primarily driven during sales in capture the Demand seasonal to percentage a the season result increases first New to fourth New in as Year, of increased expenses or quarter promotions in quarter. and of of million XX% selling drive to came the Marketing fourth in revenue and the and XXXX. at of net third quarter quarter, selling revenue the compared XX% quarter Marketing

mind digital assessment on process right With experimenting in analysis, our weeks always-on to our diversified having marketing with continuously are pulsing XXXX key the of find of is bottom and an is strategy to was channels to highly focus which that calibrate targeted optimizing achieve TV, our throughout spend us efficiency as high requires top in to sales. awareness marketing of platform discipline leads balance our optimize and leads, and that spend allows efficiency versus spend. reallocation. focus more It a spend very a advantage targeted period a base aided spend. with for been to funnel keep the to daily aligner in seeking such We've funnel fluid across high we A continuing and take important funnel dark quality

On we locations as held locations over permanent quarter a of XXX increase quarter the from XXX sites a SmileShops, pop-up net events for quarter. had of the with and end of course shop XX total the third of X location

As increasing pop-up of earnings indicated app the SmileMaker the the and we on network our call, both a number our in quarter. through to upcoming events the reduction our our access channel of of fourth solutions launch platform in partner customer drove scaling and

will our cannibalizing strategies We monitor supports expand existing reach incremental to continue sales our to that without from demand channels.

now David from practices are with and our over existing active focused footprint partner America locations training, CarePlus X,XXX The XXX pending network or increasing QX. our by preparing mentioned has productivity on been earlier, launch solution we optimizing North have As practices. network for that team partner

in offering, February to announcement of recent drive test Our launched to markets momentum interested join our which partner providers network. continues our in from positive CarePlus X

out but submission our premium markets scale will footprint network trajectory, service to we fully current serve channel U.S. our as XXXX. for both key operations our partner in CarePlus offering roll will all as a also Our

decrease by full in and amortization on expenses $XX lower quarter result third the as compensation results The in driven as quarter. based a million well from decreased incentive and third sequential depreciation costs as was year legal spending. were reduced expenses compared the and lower million administrative QX capital of to General $XX costs

the on place controls and lower over For continued the throughout were XXXX, general cost XXXX, of a focus year. full the taken administrative expenses down and stock prior primarily to January year year, expenses due $XX cost million compensation actions the in

costs million, $X.X we $X.X which in to expense to expenses related XXXX with April issued Other the related in debt and million issued XXXX. of associated include million is secured of convert the facility $X.X interest loan deferred is

international related associated related closure lease onetime and restructuring restructuring including related costs our Additionally, primarily and impairment as January costs to costs well million XXXX other of operations. with consisting abandonment, store was retention costs to to costs store facility as $X.X and actions, our

translation of currency due gains of $X.X foreign and million. our proceeds XXXX incurred insurance million April cyber-attack approximately unrealized to from We $X adjustments

fourth of All a of quarter adjusted above is the decrease $XX negative $XX fourth improvement of million the produced in in quarter, XXXX million EBITDA a which despite $XX the revenue. over million

adjusted down was year only year, full EBITDA $XXX revenue. a $X the decrease million For million in despite full

a million. loss $XX Our QX of loss $XX million compared fourth was XXXX to quarter net net

negative negative million Breaking Canada fourth and out $XX adjusted was the adjusted of EBITDA Rest EBITDA regionally in quarter, for million. the World $XX and U.S. came at

XXXX. cash while for the quarter and to as $XX cash is our for ended $XXX quarter on quarter balance was fourth from $XXX HPS. less $XX the quarter and fourth was spent sheet. Free million equivalents, in which cash was million. facility the operations negative We quarter, the drawn $XXX improvement for cash of over investing, operations $XXX a $XX $XX negative million Cash million with from Moving million fourth debt the the receivable fourth cash cash negative investing million, accounts from million in flow defined on net with million,

on also expected previously, realignment $XXX anticipated fiscal our reduce and costs based $XXX reduce actions million. David XXXX As line to These our to we impacting continued took in macro million January the meaningfully optimizes of This operations structure. year headwinds actions mentioned results. are cost between top our

where understand breakdown year, savings of While should during help components the could of the cost the the occur. change will the following savings you exact

between reductions of recent our selling leveraging improved marketing approximately a $XX and focus to million with expenses $XX efficiencies. marketing million trends anticipate to on We

administrative million $XX million. and between $XX cost reductions general expect We to

prioritization of have nearest profitability. capital drive and products expenditures will we capital the $XX million our ability other new be that to initiatives based projects, term on reducing million Lastly, technology by to on focusing $XX

sales adjusted are that cash by place positive we We positive put by path flow quarter. in cost EBITDA toward of our quarter very on XXXX environment, upside any difficult we putting level. a a will initiative results structure at efficiency changes our third EBITDA attain to recognize this business launches our high that free on to see we be and to us need and core to the realign cost fourth The in the profitability from additive

For EBITDA XXXX our which our we low business Gross driven expect between factor by in contributions year rollout represents costs or deliver macro program revenue CarePlus our margin core adjusted the third our $XX million million and $XXX onetime between does $XX in high top revenue full SmileMaker from U.S. and million platform by $XX $XX largely results XX%; with outlook $XXX and CapEx between our factors guidance, million being $X from action only, guidance. and to the our the end of between negative million. launch to XX% between the and positive key with any adjusted It's not and note line million quarter. the end million and 'XX differentiator this million, January that EBITDA of reorganization between negative achieved $XX market. important

we results. cash to our drive taken actions structure in realignment flow maintain continue line to bottom our on and focus by evidenced January, cost As stronger

CarePlus and our regarding for the contributions solution. guidance some business, to from In insights provide potential addition including the we SMP our growth to want initiatives, core

conversion This aligner revenue Collectively, potential the revenue the approximately U.S. and believe million to guidance. in balance business over increase million in U.S. growth locations to Australia on network the the solution Australia we rollout the to lead our orders by deliver rollout based on to second in and $XXX EBITDA launch with EBITDA core upcoming estimate our is based of SMP, add on increased has early second of of CarePlus continued initiatives in launch adjusted this partner last November have quarter contributions the a in adjusted of the year plans a $XX of end a Based potential more our the XXXX. incremental with and for SMP indications our of XXXX. half from to meaningful the in pilot

we updates data information. We market our investor see year capture the scale as and from the throughout additional deck full initiatives will more provide launches. these for Please

limited our CarePlus are live the new platform solution reality a both in and in our becoming geographies, and With now SmileMaker innovations investments market.

lead the the proprietary fronts. end-to-end industry on leveraging that we to are model many business built We have

participate our positioned at across one increasing are well SDC in retail an in to own journey own We to to technologies aligner they small locations number network of category of begin meet visit from customers from their the clear in-person channels the their wherever enabled an shop providers now one our partner device. to their wish home of and from mobile

for turn would closing I call David back that, With to remarks. the over like to some

David Katzman

results despite This reduction to bottom line and Thanks, were flow financial deliver a in Troy. Despite cost structure in revenue. our discipline. pillar the challenges faced the consumer, cash fourth goes we able of to to our manage improved

continue EBITDA significant flow We in achieving will quarterly with by 'XX and free positive cash QX. improvements in

by the initiatives, these expanded across of with the U.S. launch our along CarePlus upcoming regarding and the continue throughout innovations quarter our We'll U.S. key second to of offering XXXX. end market insights update milestones. to platform forward of of look and the We with our achievements rollout our markets any of additional other SmileMaker setting

operator with back the for everyone, you, Q&A. over joining that, to call Thank I'll turn the for today. And

Operator

[Operator Instructions].

is question from Jefferies. first with Our Brandon Couillard

Unidentified Analyst

that in funnel? tool Brandon. go a the the on Curious of the question patients legacy way is for that This Quick a platform is you on back legacy on the push can conversion think newer plan to if to the to Matt as SmileMaker rollout improved funnel Or there should we about just funnel. of drive for area the platform. to

of I think about X older. months were from cases XX% and historically, leads

a funnel? -- bit legacy you just this all to leads funnel. little could roll new Or and love about the So incremental that would we into coming out if think to should learn the perhaps

David Katzman

Yes, it's David. I can take that one.

went that's and on good So into has our are scan November. a platform but in introduced for was to Australia advertising that anybody customers, which in lead, funnel. at the really market that kit we new end of went seen kicked TV uptake in we in -- how potential flows, or deep both The SmileMaker CRM we and and exactly digital, the

So we shop. driving of kit to to when people to through engage less to advertising cost which will the app, try an than -- get launched that appointment have SmileMaker from U.S., booking will and smile back we we doing an a standpoint, lot leads work is impression millions go actually an or anything a that

So U.S. we anticipate the same thing will in happen the

Unidentified Analyst

appreciate $XX the I the split on about of incremental would million appreciated. half there think Any $XXX million more can revenue color the EBITDA each opportunity? any X? Okay. on potential contribution, color you of the be kind And there more Troy. color about we provide there the Should Is then representing and

Troy Crawford

Yes. then say the and app year. would it's SmileMaker the that to weighted be towards going back of I definitely, half

CarePlus likely get back the We like SmileMaker than launched and do that to Once it things it have able in a have impact, will in little app. that the more go leads markets be X should live we and to from like immediate the see but be rollout here things initiative recently, prior U.S., we slower a would what we'll that.

the the certainly opportunity in bigger again, of the of be back the SmileMaker with that majority would there's app. half And So year.

Operator

Jon is next question Stifel. from Our Block with

Thomas Stephan

you key far. numbers year Troy revenue. build impressive, to us maybe can is guys in of million for on primarily really parts for or it's especially the $XXX is Stephan sounds on It the the do But you like SmileMaker I'll through number really SmileMaker. at It's going big Jon. This SmileMaker, of David, than and contribution like you that it a if sounds with a stick well arrive those Tom gets Australia specifically? so walk less CarePlus. actual how

can leads, So maybe between on discuss that and that, making? assumptions you key metrics other just you're maybe conversion, assumptions

David Katzman

Yes, I take can one, that Tom.

as shop treatment the Same all seen all kit by to far a about falloff through the and up So aligner you deck and put our in we as strategy. before to we've XX go different -- showing that the and lead we steps to in back. we and have the an that photos your this innovation, what appointment, showed takes a the to upload XX launched funnel for kit, from with go-to-market impression, the impression impression talked legacy getting first get plan, thing investor good happens get hours sale your the way, even and

What had showed increase about in was investor deck the XX% a we in conversion.

remember, -- we showed we as you in If today I well. our and have deck it think

that same we're threw And that drop-off happens and and funnels steps the can minutes on shortening cycle could in those you the based life conversion. weeks, have seeing all just how -- hypothetical, improve process how scan to was kit out conversion. it We eliminate -- days by you in increase the we and shows that that when we it your and slide from wasn't what

through their XD many you to to conversion to seeing get people we're very how takes had render as enhancements, does lead to Plan. numbers can to similar it improvements the the enough, aligner prior Smile long scan, constantly take get for Ironically it long making conversion doing scan, put how Custom out launch. XD what Custom upload and we how Plan We're Smile

of doing days from scan X-minute these a much we have all lead that of a last Smile the better things about Custom their come call what customer is -- and the we've after lead Australia that been conversion Plan, with teeth XX their gets the over to phone. the So CSP on working in

be markets CarePlus like in translating SmileMaker to of versus that And we're is what and the is CarePlus going vast $XXX that we're market-by-market you into today. the said, because rollout X majority only which, million, a is

So conversion $XXX lift Australia. majority that based on is the we're that million in seeing the of vast

chose are to we It's nuances. Now market, but some one Australia. similar of very that reasons there tracks the the U.S.

The channels that marketing what different. is platform conversion, It TV months. different. are use but little different, a in the potential in seeing The on U.S. we anticipate the is get payment to in based that to we're we million is overall, $XXX only X back half. the

we if curves hit numbers the conversion we're hitting are those the that Australia. -- in that But right. You're

Thomas Stephan

That's around And then it. just my Got is second helpful. trends. maybe question

think can give to I typical given volume about or quarter-to-date guess, And of the that year then you rough the just may this willing year? But this the is share case color how you. to cadence are when particular on its have thinking guys in case early importance part gone, a seasonality volumes any you maybe just sense If us -- revenue of occur? how trends. benefits for about similarly, quarterly more Troy, a on for basis just curious

Troy Crawford

definitely Yes. lift I to some to QX. coming mean and say, would out seasonal related in We planned flow more attach QX, better sales, in we get normalized don't our I we're QX. that give we scans that and a quarterly kits QX. guidance is through We specifically, in in but expectation I that seeing saw would of QX of say would

we'd you historical, kind normal seasonal So lift as QX. what for a look of see at

this year. think can that I expect we

back the get of million, that maybe or as of the where again, any we on of economy. be And the as economy guidance half the end core half just our I end year, by little that say, what's the slightly overall higher back $XXX driven low going is economy these as worse gets in $XXX the doesn't really better to would well million range the going the better. to announced that combination When in guidance of considers of a guidance initiatives the

least at as would QX these go and normal QX's economic well will overall lift from initiatives how perspective, what about new the an as it out from on our seasonal say standpoint. in year see based then play think of But rest what we is the I

Operator

with Michael next America. Bank Our question Ryskin of from is

Unidentified Analyst

was annually X% is Peter you model Mike. a play year roughly that X% This had a to for Is pricing? net for in the average in Pricing on to long-term guys guys this that are How ASP updated thinking hikes on ago. about year? pointed you roughly

David Katzman

I mean, year, we would I in can I Yes, some that. take Yes, the say. place plan put in changes pricing to later

long-term think year that from customer about certainly The things price program. through I'd not numbers say SmilePay standard new we've that price think change did our we would we to out last was even I the model, can we standpoint increases. related didn't the given pay the though So a increase price

little kind overall basis, bit the consistent. a we're very on and of extend price terms keep So those payment monthly able a to

future. kind times we look the can economic timing these to easier it think increase on the the as tough make do sales depend of I price overall level throughout We've in from year. go we increases on of of the prices we we But enhancement what in So some released that not certainly. customer But would be.

Unidentified Analyst

larger expected if initiatives kind then at currently Or maximize what can you've further savings curious didn't And exploring on you other front right. cost point, this do still do range? just revenue any or that of support mostly you're All want... the think any to you

David Katzman

certainly. really the sure. one we of years, on. ours, we're that is It's about been financial And last those focus X pillars our a things talk we've working of focused Yes, over when discipline say, that I'd been towards,

on to will lot So we mean well. end we cuts We to in additional the by initiatives, XXXX fully, business costs that is of on a basis, profitability initiatives. to new then focused these get still add a additive. we launch here then And those of What core we announced obviously, some be expect with back sure new we're we've don't to XX related these can that as year. cuts came this executed more as make

a margin some of opportunities as expect of to our from we've you kind we standpoint much think efficient. to revenue we a cost will that. flow get initial what structure are But more I high overall that So drive related of there very inside information through at still given

we that that going guidance from think QX, focused certainly is on. to one EBITDA that the We're QX I an of things to make range sure perspective. get we're

control cost we of but certainly side. sales always can't You to control it, the piece have the the ability

to of throughout year. this focus continue will be it a ours So

Operator

Instructions]. [Operator

Marcus comes with Robbie next Our JPMorgan. question from

Robert Marcus

Great. to wanted the little visibility imply big quarter. would pretty normal I still does Maybe fourth start, than on there's a guidance. quarterly go economy step And an say, business to I up now. a average your base to from It less given basis been,

in economy, views interest step-up you where -- So from the are rates significant pretty confidence quarter how on quarter-to-quarter in fourth do we forward-looking that today. given the get

David Katzman

is certainly today, quarter really the we're I typically a first of just I what Yes, out we've mean little from bit that. macroeconomic of I for seeing we a gives lift say QX QX. forecasted confidence I'd to remainder focused. of can much year from a seasonal think take standpoint, because what see us the

at $XXX little a expect that to do be our the year the So We of back higher half million. end guidance out the range there we have of better.

also end And focus as know the -- is it's is a that new new in we this if got initiative the that likely what don't bottom Again, at impact I from business launched that on to we we've well. range. we're talking But obviously, in the general. come initiatives see standpoint then of about what core to going is as well.

So it's really focused. macro

seen I little flattening. a of think we've bit a

about we'll comparisons we previously that beginnings I on think we in really consumer. the first of see think year first talk we've about as see the the we felt as We I well. flattening, when strain the fill talked the think I market. economic last is that And what overall

effects. I opportunities these challenge have think is obviously, this first fill future in the the we say, is higher-income in teen and But a things they the going customer that environment, market this would $XX,XXX I we focus range, were it like core So to our as and into consumer. on again,

consistent the there. will play we So I very opportunities it think there's yes, what overall in But market. see out with

half. say I the how it economic not out just would So overall the certainly situation. the back see plays of woods we're to We'll in to out related have

Robert Marcus

assumed right? base in be Okay. guide, all But business additional clear, opportunities the to of not just those are

David Katzman

on That's The our of base are top business. consider to right. be all Yes. what initiatives we

Robert Marcus

quarter. free assume just be of plan further more. It Great. drawing we one your should year? the And fourth breakeven debt What quarters seems cash X the facility first to in and like then you you've in been for on flow draw

David Katzman

Yes.

opportunities Financial confident in ways we us get cuts on. to we're certainly, to positive one to I'd flat say what execute and did QX to there's flow in the we're discipline then our EBITDA focused the path and EBITDA by pretty QX. to resource that We positive lots different liquidity. plans standpoint is cost related certainly related liquidity. have So cash by free the significant -- of from things a of

as be on availability the what throughout HPS initiatives much well we'll part on deliver availability be be, the -- Obviously, facility the available to we facility on year. But be well. important left draws of And year. revenue some those our this able goes will as of have kind based ATM have will some how an left will as we on of what

Sales to I'd unpredictable, a different say cycle. have one I that thing the for say, we come unique years. that's would them a -- XX% X that of conversion kind of sales we about they but actual be conversion cycle those in, go bit can little cash us, receivable collect over

this focused and sales were old unique was that the a receivables. bit. what COVID aspect we despite fact X-year on So when We quite on came the of down those still hit, collecting

control, improves. marketing, we and focus short-term to it perspective like So on gives in until the long-term that's more a manage strategy, predictable like can cash down. it's flow your incoming those that us effective costs but cost economy not things things Obviously,

some in have what can to standpoint. related we certainly bring cash confidence we a from So

focus managing year. going control of cost on and side is throughout to be EBITDA and the free cash this flow Our the

Operator

that and have will reached today's session, question-and-answer We the our of end conclude conference.

participation. your disconnect this thank you at may lines your for and time, You

Jonathan Fleetwood	Director, IR
David Katzman	CEO & Chairman
Troy Crawford	CFO, CAO & Treasurer
Thomas Stephan	Stifel, Nicolaus & Company
Robert Marcus	JPMorgan Chase & Co.

SmileDirectClub (SDCCQ) 1 Mar 232022 Q4 Earnings call transcript