Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Analyst for John Kreger with William Blair.
Analyst for John Kreger – William Blair
My first question was just around the revenue guidance. The guidance implies the fourth quarter revenues will decline from the third quarter. Is this just a function of seasonal pattern for you of a summer slowdown or is there anything else behind that expectation?
Jost Fischer
Talking about the fourth quarter, I just want to highlight that we had a very good result year to date, a bit ahead of what we thought we would be at this time of the year. Our guidance implies that revenues will be roughly flat compared to prior year, but down on a constant currency basis. Last year, we were growing 31%, especially CAD/CAM was up 68%, a performance that we cannot do again. We had that strong growth in the US that was even higher than 68%, due to the well-received Patterson upgrade program. Our international markets year to date have very good performance. We expect that to continue. The CAD/CAM I was touching in the US and therefore I think the fourth quarter will be something that is not indicative of our future opportunities.
Analyst for John Kreger – William Blair
And then, what are your thoughts about how the second half of the calendar year might play out around the traditional heavy season for equipment buying? Do you think it is likely to be a pretty typical season, or could it be better because of the tax incentive we are expecting in the fourth quarter calendar?
Jost Fischer
Well, we’re looking at section 129. We haven’t seen a real impact at this point in time. We expect that to be more at the back end of the year, which will then be our new fiscal year. Usually doctors tend to make their decision as late as possible after reviewing that with their tax advisors, so we expect positive impact from the tax breaks, but we will see the majority of that in the November-December timeframe.
Analyst for John Kreger – William Blair
And then, just wondering about your thoughts on if you’ve seen any impact in the CAD/CAM or imaging space from your competitor?
Jost Fischer
First of all, I would like to underscore that CAD/CAM is the future of dentistry that not only we see. We are pleased that two thirds of dental reps now are talking positive about CAD/CAM, so we believe this will have a positive effect on the overall market. Let me remind you that we have about a 20-year head-start on this one, and we have lots of clinical reference that we can show, and this is what our competitors still have to work through. I think overall this is going to be positive for CEREC as well.
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