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Segments and Geographical Information | 9 Months Ended
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Sep. 30, 2022
Segment Reporting [Abstract] |
Segments and Geographical Information | Segments and Geographical Information Segment Information We report segment information based on the management approach. The management approach designates the internal reporting used by our Chief Operating Decision Maker for decision making and performance assessment as the basis for determining our reportable segments. The performance measures of our reportable segments include net revenues, gross profit and income from operations. Income from operations for each segment includes all geographic revenues, related cost of net revenues and operating expenses directly attributable to the segment. Certain operating expenses are attributable to operating segments and each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. Costs not specifically allocated to segment income from operations include various corporate expenses such as stock-based compensation and costs related to IT, facilities, human resources, accounting and finance, legal and regulatory, and other separately managed general and administrative costs outside the operating segments. We group our operations into two reportable segments: Clear Aligner segment and Imaging Systems and CAD/CAM services (“Systems and Services”) segment. Summarized financial information by segment is as follows (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2022 |  | 2021 |  | 2022 |  | 2021
Net revenues |  |  |  |  |  |  |  |
Clear Aligner |  | $ | 732,837 |  |  | $ | 837,593 |  |  | $ | 2,340,931 |  |  | $ | 2,431,821 |
Systems and Services |  | 157,511 |  |  | 178,313 |  |  | 492,189 |  |  | 489,664 |
Total net revenues |  | $ | 890,348 |  |  | $ | 1,015,906 |  |  | $ | 2,833,120 |  |  | $ | 2,921,485 |
Gross profit |  |  |  |  |  |  |  |
Clear Aligner |  | $ | 519,387 |  |  | $ | 638,169 |  |  | $ | 1,710,328 |  |  | $ | 1,869,368 |
Systems and Services |  | 99,782 |  |  | 116,987 |  |  | 305,746 |  |  | 321,424 |
Total gross profit |  | $ | 619,169 |  |  | $ | 755,156 |  |  | $ | 2,016,074 |  |  | $ | 2,190,792 |
Income from operations |  |  |  |  |  |  |  |
Clear Aligner |  | $ | 259,434 |  |  | $ | 346,957 |  |  | $ | 879,362 |  |  | $ | 1,022,048 |
Systems and Services |  | 44,436 |  |  | 65,791 |  |  | 140,834 |  |  | 177,694 |
Unallocated corporate expenses |  | (160,214) |  |  | (151,588) |  |  | (490,262) |  |  | (444,234) |
Total income from operations |  | $ | 143,656 |  |  | $ | 261,160 |  |  | $ | 529,934 |  |  | $ | 755,508 |
Stock-based compensation |  |  |  |  |  |  |  |
Clear Aligner |  | $ | 4,377 |  |  | $ | 2,824 |  |  | $ | 10,232 |  |  | $ | 7,750 |
Systems and Services |  | 240 |  |  | 169 |  |  | 690 |  |  | 514 |
Unallocated corporate expenses |  | 28,301 |  |  | 25,409 |  |  | 87,757 |  |  | 76,234 |
Total stock-based compensation |  | $ | 32,918 |  |  | $ | 28,402 |  |  | $ | 98,679 |  |  | $ | 84,498 |
Depreciation and amortization |  |  |  |  |  |  |  |
Clear Aligner |  | $ | 14,678 |  |  | $ | 13,191 |  |  | $ | 42,474 |  |  | $ | 36,481 |
Systems and Services |  | 7,181 |  |  | 5,827 |  |  | 20,879 |  |  | 14,994 |
Unallocated corporate expenses |  | 10,330 |  |  | 8,596 |  |  | 28,743 |  |  | 27,666 |
Total depreciation and amortization |  | $ | 32,189 |  |  | $ | 27,614 |  |  | $ | 92,096 |  |  | $ | 79,141 |
The following table reconciles total segment income from operations in the table above to net income before provision for income taxes (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2022 |  | 2021 |  | 2022 |  | 2021
Total segment income from operations |  | $ | 303,870 |  |  | $ | 412,748 |  |  | $ | 1,020,196 |  |  | $ | 1,199,742 |
Unallocated corporate expenses |  | (160,214) |  |  | (151,588) |  |  | (490,262) |  |  | (444,234) |
Total income from operations |  | 143,656 |  |  | 261,160 |  |  | 529,934 |  |  | 755,508 |
Interest income |  | 1,685 |  |  | 401 |  |  | 2,607 |  |  | 2,427 |
Other income (expense), net |  | (22,700) |  |  | 427 |  |  | (48,805) |  |  | 34,476 |
Net income before provision for income taxes |  | $ | 122,641 |  |  | $ | 261,988 |  |  | $ | 483,736 |  |  | $ | 792,411 |
Geographical Information Net revenues are presented below by geographic area (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2022 |  | 2021 |  | 2022 |  | 2021
Net revenues 1: |  |  |  |  |  |  |  |
U.S. |  | $ | 400,045 |  |  | $ | 448,858 |  |  | $ | 1,251,018 |  |  | $ | 1,266,258 |
Switzerland |  | 257,845 |  |  | 323,036 |  |  | 919,935 |  |  | 1,004,820 |
Other International |  | 232,458 |  |  | 244,012 |  |  | 662,167 |  |  | 650,407 |
Total net revenues |  | $ | 890,348 |  |  | $ | 1,015,906 |  |  | $ | 2,833,120 |  |  | $ | 2,921,485 |
1 Net revenues are attributed to countries based on the location of where revenues are recognized by our legal entities. Tangible long-lived assets, which includes Property, plant and equipment, net, and Operating lease right-of-use assets, net, are presented below by geographic area (in thousands):
|  | September 30, 2022 |  | December 31, 2021
Long-lived assets 1: |  |  |  |
Switzerland |  | $ | 519,202 |  |  | $ | 444,205 |
U.S. |  | 214,975 |  |  | 210,582 |
China |  | 112,715 |  |  | 125,346 |
Other International |  | 469,019 |  |  | 423,050 |
Total long-lived assets |  | $ | 1,315,911 |  |  | $ | 1,203,183 |
1 Long-lived assets are attributed to countries based on the location of our entity that owns or leases the assets.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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