SmileDirectClub Results Presentation Deck
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Gross margin.
Gross margin for the quarter was 54%, a 15%
decline sequentially. This is largely attributable to
the following areas:
A decrease in unique aligner orders shipped
quarter over quarter, while mid-course
correction (MCC) and refinement shipments
were equal to the average of the prior four
quarters.
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MCC/Refinement shipments are based
off demand from 4-6 months ago, when
volumes were higher, and have no
revenue associated with them.
This had an 800-basis point impact on
gross margin in Q2.
Impression kits represented a higher
percentage of the business compared to
previous quarters, which had a 700-basis
point impact on gross margin.
Lastly, retail represented a higher percentage
of the gross margin, given the lower initial
aligner shipments, which had a 200-basis
point impact on gross margin.
We continue to focus on streamlining our
manufacturing, and we remain on track for the
rollout of second-generation automation by Q4.
smile
DIRECT CLUB
73%
82%
Gross margin %
77%
73%
70%
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020
54%
Q2 2020
Initial Aligners vs. Total Aligners Shipped
Initial aligners were 61% of aligners shipped in
Q2, compared to an average of 77% in the
prior three quarters.
This is because there is a 4-6 month lag from
initial shipment to MCC/refinement shipments,
and we had higher volume in January and
February.
Our long-term gross margin target of 85% of
revenue remains intact.
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