Welcome to the DexCom third quarter 2015 earnings release conference call. My name is Anna, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Kevin Sayer. Kevin, you may begin. Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: Thank you very much and welcome, everybody, to the third quarter 2015 DexCom earnings call. We'll start off by turning the time over to Steve Pacelli with our Safe Harbor statement. Steven Robert Pacelli - Executive VP-Strategy & Corporate Development: Thanks, Kevin. Some of the statements that we will make in today's call may constitute forward-looking statements. These statements reflect management's expectations about future events, operating plans, and performance, and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. A list of the factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is detailed under Risk Factors and elsewhere in our Annual Report on Form 10-K, our quarterly reports on Form 10-Q, and our other reports filed with the SEC. We undertake no obligation to update publicly or revise these forward-looking statements for any reason. Additionally, we will discuss certain financial information that has not been prepared in accordance with GAAP with respect to our cash-based operating results. This non-GAAP information is provided to enhance your overall understanding of our current financial performance. The presentation of this additional information should not be considered in isolation or as a substitute for results or superior to results prepared in accordance with GAAP. Kevin? Kevin Ronald Sayer - President,…

Thank you. And we have a question from Ben Andrew from William Blair. Please go ahead. Benjamin C. Andrew - William Blair & Co. LLC: Hi. Good afternoon, guys. Thank you for taking the questions. Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: You bet. Benjamin C. Andrew - William Blair & Co. LLC: First off, talk a little bit more, Steve, about the operating expense trajectory, or maybe just – you've been growing $10 million – $11 million sequentially each quarter this year. Does that pace look about right for several quarters, or should things taper as you've had the bolus because there's a whole bunch of moving pieces obviously on the development and the DTC side in the next several? Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: Ben, this is Kevin. I'll grab that one real quick. One of the big growth factors obviously has been our non-cash expenses, particularly the stock compensation because the stock has performed so well. Those numbers were much bigger than we had anticipated and certainly much bigger than we had had a year ago. As far as the increases in our quarter-to-quarter spending, again, there are moving pieces, and we continue to make investments. A perfect example is the investments we made in the DTC campaign this quarter, where we spent in excess of $2 million just getting geared up for the start. And there are other things that we've spent on the R&D side, the data opportunity, and things like that. I would tell you as you look forward next year, the best answer I can give you is we're going to be a little more transparent on expenses and a little more firm as we give our guidance at the start of the…

And our next question is from Mike Weinstein from JPMorgan. Please go ahead.

Hi, this is Robbie Marcus in for Mike. Congrats on the great quarter, guys. Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: Thank you, Robbie. Steven Robert Pacelli - Executive VP-Strategy & Corporate Development: Thank you, Robbie.

I was wondering, can you give us more color into third quarter trends? It came in well above where the Street was thinking, and this was almost entirely without the G5 impact. So can you give us a little more insight into what drove those trends? And then just transitioning into the G5 launch, this is the first time that pediatrics will have access to the AP algorithm. What are you seeing there so far in the early launch, and how do you expect that to play out over the coming timeframes? Thanks. Steven Robert Pacelli - Executive VP-Strategy & Corporate Development: So, Robbie, on the first part, what we've really seen frankly since the pediatric launch of G4 Platinum and then particularly this year with G4 Platinum with Share, when we launched the mobile Share platform with G4, what we really saw was a shift from – a push from the endocrinologist down to the patient till we really started to see this thing go, what I would characterize as more viral where patients, parents of patients, friends of patients have become by far our biggest advocates. And so I would tell you in the quarter, the impact there was probably our biggest driver because, as you mentioned, we really barely started shipping Gen 5 in the quarter. I think the Nick Jonas campaign, it's hard to measure but I think that had some impact as well. And then I guess the product is performing. And I think what we're seeking is just CGM is becoming much more rapidly more – I hate to call it the standard of care yet. We're not quite that penetrated into Type 1s yet. But it's quickly becoming the standard of care. And so I think when we look at getting big as quickly as we can, we talked about some of the spend we're going to do. Kevin mentioned some of the spend in Q3, which is literally spend just gearing up for the more aggressive DTC campaigns that we're anticipating here in Q4. As for pediatric utilization of the new algorithm with Gen 5, I'm not sure we can see any impact there. Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: I don't know, but we do know that the physicians are happy that it's available. Steven Robert Pacelli - Executive VP-Strategy & Corporate Development: The other – it hasn't been a material impact yet. But we did as of the beginning of the quarter start shipping much more of our business through the pharmacy channel, with United and Anthem going live at the beginning of Q3. That's starting to have an impact as well.

All right. And then it's been several months since the Google partnership was signed. Have you guys come up with how much incremental R&D spend we might see per quarter going forward from it? Thanks a lot. Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: You know what, Robbie, this is Kevin. We don't really have an incremental number to give you for Q4. We will give you very firm guidance on that the first of the year. We're just getting to know everybody, to be honest with you. And so while our projects are taking place and our project teams are getting together, there's still a lot of – we did sign this in the third quarter that we just reported on. It hasn't been that many months. We're really starting to get going now.

Our next question is from Bill Plovanic from Canaccord. Please go ahead.

Great, this is Kyle on for Bill. Congrats on a great quarter. I just wondered if we could start off on the PBM side. So third quarter is the first quarter moving with Anthem and UNH. I guess could you just talk to us about where are you in that transition over? How many – what's the percentage of patients now that are currently through that channel, and where do you see that going in nearer term, the next 12 to 18 months? Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: You know what? I pretty much said what we're going to say. We've hit our internal goal of covered lives and we have seen an increase in the number patients that have gone over, but we're not going to give a whole lot more color than that today. Our goal is over really a three-year period to move 70% of our business as pharmacy benefit as the primarily reimbursement source, and we're getting there. That's about it.

Okay, great. And then I know it's still early obviously with the G5 launch, but you highlighted looking to put a new receiver in the market in the second half of next year. I just wondered with the new system moving to the phone, how should we be modeling a new receiver launch? I'm just thinking about utilization from patients and adoption from that standpoint. And that's it, thank you. Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: The new receiver launch is strictly a function of coming up with something that is more modern than what we have, touch screen, a better experience for patients. It will be lower cost. The revenues aren't going to change we don't view drastically with respect to the receiver. But there are some patients, as we've learned, that would rather look at the data on their receiver than on their phone, so this will provide a much better experience for those guys and for that patient group, but it's not going to change much of anything.

Our next question is from James Francescone from Morgan Stanley. Please go ahead. James Francescone - Morgan Stanley & Co. LLC: Hey, thank you for taking the question. I just wanted to follow up on the manufacturing and inventory constraints that you alluded to in your prepared comments. What drives your confidence that that will not have an impact on the fourth quarter from a new patient start or revenue perspective? Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: We meet on this every day, and so I could give you very detailed specifics. We're catching up on the manufacturing side. This was to a large extent a component issue in getting our components in place at our contract manufacturer, who has done a yeoman's job building with what we have. The material is coming in. We're building at full capacity right now. We are pretty comfortable with our capacity and what we have. The only way we'd have a problem by the end of the quarter, barring something unforeseen today, would be if it was just a true mega-quarter beyond anything we could comprehend in our room here, so we feel pretty good about it. But we've got very good visibility into the capacity of our contract manufacturer. We have very strong visibility into the component schedules as they come in to get this done. This isn't a big yield problem. This isn't anything other than we launched the thing earlier than we had planned, and we took a month that we were supposed to be building up inventory and we shipped all the stuff. And so we put ourselves a little bit ahead of schedule. But we'll catch up. We're very comfortable with it. James Francescone - Morgan Stanley & Co. LLC: Okay. And just…

Our next question is from Brooks West from Piper Jaffray. Please go ahead. Brooks E. West - Piper Jaffray & Co (Broker): Hi, guys. Thanks for taking the questions. Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: You bet. Brooks E. West - Piper Jaffray & Co (Broker): Kevin, you talked a little bit about the pricing dynamics in the shift to the pharmacy, and that is a common question from investors. Can you just give us a little bit more on the mechanics of how that changes and how you might be actually realizing a higher price as you shift into that channel? Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: I can just give you the simple example. We have seen contract pricing between payers and our independent third-party distributors to the tune of – I don't know – $90 a sensor when we've set our ASP at $70 to $75. When you look at a contract like that and we look at that and go to a payer and say look, from a cost perspective we can get you this as a pharmacy benefit at a price much lower than $90, and I'm just using $90 as my test case here, it's pretty easy to show how that's better for the payer. On our side, we're selling the stuff to third-party distributor at a discount. When all is said and done, net to DexCom in some cases can be better. In some cases it will be lower. We know that. But we believe at the end we're trying to keep this as even as we possibly can, and we evaluate all the pricing opportunities very carefully. Brooks E. West - Piper Jaffray & Co (Broker): So should we be thinking about…

Our next question is from Jayson Bedford from Raymond James. Please go ahead. Michael R. Rich - Raymond James & Associates, Inc.: Hi, guys. This is Mike calling in for Jayson. Thanks for taking the questions. Not to beat a dead horse, but circling back to the investment comments, from a sales and marketing perspective, is it still fair to assume you're going to add maybe 20 or so reps in 2016? Could it be a more significant expansion, or do you think at this point you're getting more bang for your buck spending it on DTC or more of an R&D focus? Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: On the commercial side, they're going through their plans right now. I can tell you that our more recent investments have been made on the channel side with respect to the distribution channel, with respect to payers, with respect actually to programs to go out to pharmacies to prepare pharmacists to market and to sell this product. So we know there's going to be an investment there for next year. I haven't looked at next year's proposed territories yet. I can tell you we're getting tremendous bang for the buck out of our team. They're doing a fabulous job. You look at this revenue growth, and even though we added quite a few reps at the beginning of the year, these guys couldn't possibly be achieving these types of numbers without us getting a lot of bang for our buck. We are investing in a lot of new tools with respect to IT infrastructure and with respect to things we can do to make that process go faster with our online store. We know we could make the improvements there and we have, and things of…

Our next question is from Tao Levy from Wedbush Securities. Please go ahead.

Hi, good afternoon. Maybe I can start with a comment from you guys around utilization. I don't know if I missed that. Is there a difference that you've seen this quarter versus prior, on sensors? Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: This is Kevin. No, I think it continues to remain very strong. Everywhere I go I hear people get on this and stay. And fortunately as we migrate to G5, as these patients have their data go to the cloud, there will come a day when I ultimately have my big brother dream and I can have a TV in my office that shows me how many patients are on the system each and every day and get a much better idea of that. And from our cloud-based systems, we're going to be able to determine how often they change, what patterns really are. Anecdotally, we hear all sorts of things out there. We heard one patient say the data wasn't very good, and when we asked her how long she had worn the sensor, she was on week six. For a seven-day label product, week six is pretty good. And so we're going to learn a lot more and have a lot more understanding of those patterns. But, no, utilization is good.

Okay. And so my understanding is the way the transmitters for the G5 are shipped is you're shipping them two at a time, so patients are still ordering just twice a year, or getting scripts twice a year. Is that how it works, and is that how the insurance companies understand it? Because I guess what I'm getting at, is there a risk that the insurance companies lag in how quickly they update their system? So, all of a sudden, a patient is asking for four refills on their transmitters instead of just two, and insurance systems just aren't up to date with what you guys are doing. Steven Robert Pacelli - Executive VP-Strategy & Corporate Development: We're both chuckling because insurance systems are never really up to date, and we're always experiencing challenges. But no, the fact that we're sending two means that the patient is probably not going to have to come back for another six-plus months. And with G4 Platinum, the transition there was relatively seamless, moving from – remember, with SEVEN PLUS, it was a 12-month transmitter that lasted somewhere between 12 to 18 months. G4 Platinum, we were definitely selling more transmitters, and we were not having challenges at the insurance level. Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: Not globally, but sometimes that's the case. That just happens, yes. Steven Robert Pacelli - Executive VP-Strategy & Corporate Development: There are always insurance challenges.

Okay, great, thanks.

And our next question is from Doug Schenkel from Cowen & Company. Please go ahead. Ryan Blicker - Cowen & Co. LLC: Hi, this is Ryan Blicker on for Doug. Thanks for taking my questions. So let me just start with new revenue guidance. You said you now expect revenue to exceed the top end of your previous range. Steven Robert Pacelli - Executive VP-Strategy & Corporate Development: Yes. Ryan Blicker - Cowen & Co. LLC: But even at the top end, you think that could be exceeded with flat sequential revenue from Q4? You've targeted a long-term growth rate of 40%, but all of your commentary today as well as your results suggest your business is actually accelerating. Is there any reason you believe growth will decelerate below that 40% in Q4? Steven Robert Pacelli - Executive VP-Strategy & Corporate Development: No, we're sticking with our guidance, what we said. We updated our guidance last quarter to a top end of $375 million, which was north of our original stated guidance of 35% to 40%. And so we're not going to give any additional color as to where we think Q4 – we didn't say that we expect a sequential decline, we didn't say that we expect sequential flat. We said we are comfortable that we're going to exceed the top end of our $375 million, and we're going to leave it at that. Ryan Blicker - Cowen & Co. LLC: Okay, that's fair. And moving to the transmitters, can you give us a sense of how patients are responding to the shorter transmitter useful life than we thought? And maybe provide more color on the new transmitter you just talked about that will launch along with the sensor applicator in the second half of next year. You said smaller and lower cost. Should we also be looking for another shortened useful life? Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: No, the useful life will remain the same. And they really haven't had time to respond to a three-month life because we've only been shipping for a month and a half, so we haven't heard anything on that front yet. There's advantages and disadvantages to a three-month transmitter life. Obviously, the disadvantage is you do have to buy more of them. And as Steve mentioned earlier, hardware margins should come down a bit because of that. But the advantage is, when we get something new, that upgrade cycle is going to be really short because no matter when you bought your last transmitter, within 90 days you can move to the new one. So the upgrade programs, we have gone to great effort to offer our patients and will continue to do so if necessary. But the fact is we're not going to have to do that much of that because everybody's going to be ready to go in 90 days, so there are pluses and minuses to both.

Our next question is from Danielle Antalffy from Leerink Partners. Please go ahead.

Hey. Good afternoon, guys. Thanks so much for taking the question. Kevin, in the past you guys, you've talked about 40% for sustainable growth going forward, and obviously you've been growing much better than that this year and last year. I'm just wondering how we should be thinking about that longer time. You guys have a lot of tailwinds both nearer and medium term. So can you update us on what you're thinking about that longer-term growth target? Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: You know what, Danielle, we continue to plan for that sustainable 40% number. And having lived through these several quarters of 50%-plus growth, it's been great. But just by the law of increasing numbers, as you can see then in Q3, this year compared to Q3 last year with the blowout quarter, it's down from what used to be 60% into the 50s%. And so as our numbers increase, just because of percentages some of those percents have to come down. But there is still a whole bunch of market to go penetrate and go get in our Type 1 market. We still don't have the penetration that we need. There's a large international market for us to go capture. And we think as we've scheduled the pipeline and you've seen this growth, as Steve said, largely executed by great new technology and a commercial team that's executing on all cylinders combined with approvals and all those other things, those things are still in place for us. We've grown 40% on a number this year of – just last year, growing 40% on last year's number is certainly much tougher than growing 40% on the number from the year before. And so the law of big numbers eventually gets to you a little bit. But we're very optimistic about our business future, and we're not slowing down at all. But we'll give you a lot more color early in 2016 when we provide our 2016 guidance.

Okay, awesome. That's great, and then just following up on that, maybe a higher level question. As you think about the total addressable market here, what in your mind is a realistic penetration rate ultimately for Type 1 patients? Assuming you're successful in continuing to evolve the technology, no reason to assume you won't be because you guys have been so successful thus far. So ultimate penetration in Type 1s? And then how big do you think this can get in Type 2? And I'm asking at a very high level, five to 10 years from now. I'm obviously not asking you to provide guidance for the next few years. Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: I'll let Steve take his guess first, and then I'll give mine. Steven Robert Pacelli - Executive VP-Strategy & Corporate Development: Interesting. In Type 1, I would tell you in Type 1 in the U.S., if we're successful with the product iterations that we have, and I would tell you not even relying on a Google product, just some of the things that we have in the more nearer-term pipeline, there's no reason that as we replace finger sticks, and whether we ultimately if the FDA ever allows us to ultimately eliminate calibrations completely or whatever the safety check might look like down the road, there's no reason that every Type 1 in the U.S. who has some form of insurance, and I include Medicare and Medicaid in that over the next several years, there's no reason that everybody wouldn't use a CGM. Why would you prick your finger six, seven, eight times a day if you're a Type 1? If you have to monitor, wear a sensor. The Type 2 market is still very much evolving. You have…

And our last question is from Jeff Johnson from Robert Baird. Please go ahead. Jeffrey D. Johnson - Robert W. Baird & Co., Inc. (Broker): Thank you. Good evening, guys. Just two quick clarifying questions here. So, Kevin, I think I heard you say you're not giving an update on timing for a potential dosing claim. Last quarter I thought I remember you saying expecting that claim by next year. Is there any change there that I'm missing, or is there a change there? Can you clarify that? Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: I'm just being a little conservative for all intents and purposes. We are getting close to defining exactly what we have to do here, and yes, I'm just being cautious, that's all. Jeffrey D. Johnson - Robert W. Baird & Co., Inc. (Broker): All right, that's fair. And then I thought you also said from a pipeline standpoint that seeing a new inserter next year and a new receiver. I think in Q&A somebody asked about a new transmitter coming next year as well. Is it the new receiver that's coming next year, or is it a new transmitter as well? Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: With the new insertion system, there will be a new transmitter that has a much lower profile and a new receiver. So we'll have transmitter, receiver. It will be a big hardware year for us next year. Hardware and new apps and things of that nature will be our big product launches next year. Like I said, we'll give you more color on that first of the year when we provide our 2016 guidance.

We have no further questions at this time. I would now like to turn the call over to Mr. Sayer for closing remarks. Kevin Ronald Sayer - President, CEO, Chief Operating Officer & Director: Thank you very much. In conclusion, I want to thank all of you for your continued interest and support of DexCom. As we've stated throughout our comments all year and on this call, we're very proud of our accomplishments. We see an amazing future, and we will not rest until we achieve these goals. This quarter we added an amazing partner in Google that's going to help us ultimately develop the products and analytical tools to achieve the outcomes that years ago we would have only dreamed of. We're executing the plans we've described all year. Our revenues are growing robustly. We continue to add record numbers of new patients. Our cash-based operating results are improving at a much faster pace, but we are fully committed to making the investments necessary to get this company to more than $1 billion in revenues in a very short period of time much, much faster than I ever would have thought when I came here four years ago. As I said earlier also, I had an opportunity to spend quite a bit more time in the field over the past few weeks and visit with our great team and several healthcare professionals in their areas. I'm going to leave you with two other thoughts. First, when it comes to CGM, we're clearly the market leader here. One physician said to me, when it comes to CGM, I don't even think of anybody else. Another one said the effectiveness of an advance in diabetes technology is measured by one simple thing, reorders. Do the patients come back, and do they use it? Yours is the CGM that my patients continue to use. Second, I was visiting another office where the physician had very little experience with our system and very few patients using it. So we challenged him to wear a G5 and see what our patients experience. He doesn't have diabetes, but he's pretty excited, and really demanded that I want to wear it right now. Fortunately, we had a demonstration system, our rep did. And after a week our rep went back and informed me that he absolutely loves the visualization. He thinks the phone interface is fantastic. He's amazed at the information he's learned about his diet, his activity, and everything, and he really has no intention of giving the demo system back unless we do something to get it. Our long-term vision of CGM across the board is very real. It's going to take time, it's going to take money, it's going to take patience and innovation from all of us, but we're going to get there. Thanks again.