Q3’23 record clear aligner shipments to
teenage patients increased 9.9% sequentially and 8.4% year over
year, driven by continued strength from Invisalign First™
Company expects to repurchase up to $250.0
million of its common stock in Q4’23
- Q3'23 total revenues of $960.2 million, increased 7.8%
year-over-year, and diluted net income per share of $1.58, non-GAAP
diluted net income per share of $2.14
- Q3'23 revenues were unfavorably impacted by foreign exchange of
approximately $2.7 million sequentially and favorably impacted by
approximately $4.2 million year-over-year(1)
- Q3'23 operating income of $166.3 million and operating margin
of 17.3%, non-GAAP operating margin of 21.8%
- Q3'23 GAAP operating margin was unfavorably impacted by foreign
exchange of approximately 0.3 points sequentially and by
approximately 0.1 point year-over-year(1)
- Q3'23 Clear Aligner revenues of $794.9 million, increased 8.5%
year-over-year, and Clear Aligner volume of 602.3 thousand cases
increased 2.3% year-over-year
- Q3'23 Clear Aligner volume for teens increased 9.9%
sequentially and increased 8.4% year-over-year to a record 221.8
thousand cases
- Q3'23 Imaging Systems and CAD/CAM Services revenues of $165.3
million, increased 4.9% year-over-year
Align Technology, Inc. (Nasdaq: ALGN), a leading global medical
device company that designs, manufactures, and sells the
Invisalign® System of clear aligners, iTero™ intraoral scanners,
and exocad™ CAD/CAM software for digital orthodontics and
restorative dentistry, today reported financial results for the
third quarter ("Q3'23"). Q3'23 total revenues were $960.2 million,
down 4.2% sequentially and up 7.8% year-over-year. Q3'23 Clear
Aligner revenues were $794.9 million, down 4.5% sequentially and up
8.5% year-over-year. Q3'23 Clear Aligner volume was down 3.3%
sequentially and up 2.3% year-over-year. Q3'23 Imaging Systems and
CAD/CAM Services revenues were $165.3 million, down 2.5%
sequentially and up 4.9% year-over-year. Q3’23 Clear Aligner
revenues were unfavorably impacted by foreign exchange of
approximately $2.0 million or 0.3% sequentially and favorably
impacted by approximately $3.8 million or 0.5% year-over-year.(1)
Q3'23 Imaging Systems and CAD/CAM Services revenues were
unfavorably impacted by foreign exchange of approximately $0.7
million or 0.4% sequentially and favorably impacted by
approximately $0.4 million or 0.3% year-over-year.(1)
Commenting on Align's Q3'23 results, Align Technology President
and CEO Joe Hogan said, "Our third quarter results reflect lower
than expected demand and a more difficult macro environment than we
experienced in the first half of 2023. Dental practices and
industry research firms have reported deteriorating trends,
including decreased patient visits and increased patient
appointment cancellations, along with fewer orthodontic case starts
overall, especially among adult patients. The September Gaidge
report, which reflect more than 1,200 North American Ortho
Practices, shows deceleration for orthodontic treatment with new
orthodontic patient appointments down 8.7% year-over-year and ortho
case starts were down 6.9% year-over-year, -- the biggest decrease
in over a year. Despite these headwinds, total Q3’23 worldwide
revenues were up 7.8% year-over-year with growth across all
regions. For Q3'23, we had record clear aligner shipments to
teenage and younger patients, which increased 9.9% sequentially and
8.4% year over year, driven by continued strength from Invisalign
First™. Q3'23 year-over-year revenue growth also reflects
improvement in the Asia Pacific region, offset by more pronounced
summer seasonality in EMEA and North America. Our Q3'23 systems and
services revenues were up 4.9% year-over-year, despite continued
challenges for capital equipment, primarily due to higher scanner
volumes in the Americas and Asia Pacific regions, as well as
increased services revenues."
Q3'23 operating income was $166.3 million resulting in an
operating margin of 17.3%. Q3'23 operating margin was unfavorably
impacted by foreign exchange of approximately 0.3 points
sequentially and by approximately 0.1 point year-over-year.(1) On a
non-GAAP basis, Q3’23 operating income was $209.7 million or
operating margin of 21.8%. Q3'23 net income was $121.4 million, or
$1.58 per diluted share. On a non-GAAP basis, Q3'23 net income was
$164.3 million, or $2.14 per diluted share.
Hogan continued, “We are committed to balancing our investments
in near- and long-term growth drivers while delivering improvement
in operating margin. As we navigate one of the most challenging
operating environments in recent history, with increasing
macro-economic pressure on doctors and their patients, we have an
enormous opportunity to continue driving adoption of digital
orthodontics and restorative dentistry, and a responsibility to
optimize our investments for the current environment.”
(1) For more information, please see the tables captioned
"Unaudited GAAP to Non-GAAP Reconciliation."
Financial Summary - Third Quarter
Fiscal 2023
Q3'23
Q2'23
Q3'22
Q/Q Change
Y/Y Change
Clear Aligner Shipments*
602,335
622,615
588,575
(3.3)%
+2.3%
GAAP
Net Revenues
$960.2M
$1,002.2M
$890.3M
(4.2)%
+7.8%
Clear Aligner
$794.9M
$832.7M
$732.8M
(4.5)%
+8.5%
Imaging Systems and CAD/CAM Services
$165.3M
$169.5M
$157.5M
(2.5)%
+4.9%
Net Income
$121.4M
$111.8M
$72.7M
+8.6%
+67.0%
Diluted EPS
$1.58
$1.46
$0.93
+$0.12
+$0.65
Non-GAAP
Net Income
$164.3M
$170.4M
$127.2M
(3.6)%
+29.2%
Diluted EPS
$2.14
$2.22
$1.63
($0.08)
+$0.51
Changes and percentages are based on
actual values. Certain tables may not sum or recalculate due to
rounding. *Clear Aligner shipments include Doctor Subscription
Program Touch-Up cases.
As of September 30, 2023, we had over $1.3 billion in cash, cash
equivalents and short-term and long-term marketable securities
compared to over $1.0 billion as of June 30, 2023. As of September
30, 2023, we had $300.0 million available under a revolving line of
credit.
During the quarter, we announced a definitive agreement to
acquire privately held Cubicure GmbH, for approximately €79 million
subject to customary closing adjustments and adjustments for
Align’s existing ownership of capital stock of Cubicure. The
acquisition is expected to close in Q4 2023 or early 2024. The
acquisition of Cubicure will strengthen Align’s existing
intellectual property portfolio and know-how in direct 3D printing
of appliances. Integration with Cubicure will also extend and scale
Align’s printing, materials, and manufacturing capabilities for our
3D printed product portfolio.
Continued Hogan, “Align is in a unique position to continue
driving the digital revolution of the dental industry and help
doctors transform and grow their practices with Invisalign® clear
aligners, iTero™ scanners, and the Align Digital Platform™. We are
very excited about recent innovations developed to further
revolutionize digital treatment planning for orthodontics and
restorative dentistry by providing doctors with greater
flexibility, real-time treatment plan modification capabilities and
digital solutions to help improve practice productivity and patient
experience -– which are even more important to our customers in the
current environment. This includes ClinCheck® Live Update for 3D
controls, Invisalign® Practice App, Invisalign® Personalized Plan
("IPP"), and Invisalign Smile Architect™, iTero-exocad Connector™,
Invisalign® Outcome Simulator Pro, and Invisalign® Virtual Care AI
software. These digital tools are continuing to gain adoption and
help doctors gain efficiencies. In Q3, ClinCheck® Live Update was
used by 41 thousand doctors on more than 560 thousand cases,
reducing time spent in modifying treatment by 21%. Invisalign®
Practice app is now actively used by 86.8 thousand doctors with
over 5.2 million photos uploaded during the quarter via the
Practice app. In addition, we will launch the Invisalign® Palatal
Expander ("IPE") System in Canada this quarter. IPE is our first
direct 3D printed orthodontic device that provides a safe,
comfortable, and clinically effective alternative to metal palatal
expanders and boosts our market opportunity in the teen market by
addressing a portion of cases we couldn’t otherwise treat without
IPE.”
Q3'23 Announcement
Highlights
- On September 6, 2023, we introduced IPE, Align’s first direct
3D printed orthodontic device. IPE provides a safe, comfortable,
and clinically effective* alternative to metal palatal expanders
that require daily manual turning of a screw in the device as it is
embedded in a patient's mouth to achieve expansion. IPE is not
currently available for sale in all markets, including the US where
it is pending 510(k) clearance.
- On September 6, 2023, we introduced Plan Editor in ClinCheck®
treatment planning software, a new tool in the Plan stage of the
Align digital workflow that enables enhanced flexibility and
customization in Invisalign treatment planning for Invisalign
trained orthodontists and general practitioner dentists. Plan
Editor in ClinCheck is expected to be commercially available
globally in Q1 2024.
- On September 6, 2023, we introduced a new SmartForce™ feature,
attachment-free aligner activation feature, that reduces the need
for attachments and offers a more aesthetic solution for an
enhanced Invisalign patient experience. The new SmartForce feature
with attachment-free aligner activation is under development and
expected to be commercially available in the first half of
2024.
- On September 6, 2023, we introduced new software innovations to
accelerate digital practice transformation. The Align™ Oral Health
Suite, including future collaboration with X-Ray Insights, will aid
doctors in identifying and educating patients on oral health
conditions and improve their oral health. The iTero-exocad
Connector™ upcoming release will optimize doctor and lab
collaboration and productivity by streamlining case communication
in a single channel on the MyiTero™ Portal. Both the Align Oral
Health Suite and the latest iTero-exocad connector are expected to
be commercially available by the end of 2023. X-Ray Insights is
based on dentalXrai technology is expected to be in Limited Market
Release in 2023 with select EU customers. Align acquired
privately-held dentalXrai GmbH in July 2022.
- On September 6, 2023, we announced the opening of our new
customer education and training center in Toronto, Canada to
promote professional engagement and training about Invisalign clear
aligners, iTero scanners, and the Align Digital Platform™ for Align
customers.
- On September 6, 2023, we introduced a new doctor enabled direct
ship to patient feature in our Vivera™ Retainer Subscription
("VRS") platform that creates a more patient friendly workflow for
doctors to offer retainers to their patients and reduces the need
for patients to make time consuming unnecessary trips to their
doctors' offices to pick up their recurring Vivera retainer orders.
The VRS platform is part of Align’s broader Doctor Subscription
Program introduced to doctors in the United States and Canada in
2021.
*Data on file, Align Technology, as of August 2023. Based on
data from a multi-site US Early Feasibility Investigational Device
Exemption clinical study (n=29 subjects, ages 7-10 years) of
expansion treatment with IPEs.
Q4'23 Stock Repurchase
- We have $1.0 billion available for repurchase of our common
stock under our 2023 Stock Repurchase Program.
- During Q4'23, we expect to repurchase up to $250.0 million of
our common stock through either, or a combination of, open market
repurchases or an accelerated stock repurchase agreement.
Fiscal 2023 Business
Outlook
For 2023, Align provides the following business outlook:
- For Q4'23, assuming no circumstances occur that are beyond our
control, we anticipate our WW Revenue to be in the range of $920M
to $940M, down sequentially from Q3'23.
- We expect both Clear Aligner and Systems and Services Revenues
to be down sequentially reflecting a more challenging
macro-economic environment for doctors and patients with fewer
orthodontic case starts overall; unfavorable FX given the
strengthening of the US dollar against key currencies; and longer
sales cycles for capital equipment purchases.
- For our Clear Aligner business, we expect clear aligner teen
volume to be seasonally lower in Q4’23, and we don’t anticipate
improvement in adult volumes. For Q4’23, we also expect clear
aligner ASPs to be down sequentially primarily due to the
strengthening US dollar.
- For our Systems and Services business, we anticipate increasing
headwinds from macro uncertainty, and potential supply issues
related to the war in the Middle East.
- We expect our Q4’23 GAAP operating margin to be down
sequentially from Q3’23 due to restructuring primarily related to
severance, as we adjust headcount for this environment. We
anticipate our Non-GAAP operating margin to be up sequentially from
Q3’23.
- For full year 2023, assuming no circumstances occur that are
beyond our control, we anticipate our 2023 WW Revenue to be in the
range of $3.83B to $3.85B.
- We also expect our full year 2023 GAAP operating margin to be
roughly 1-point lower than 2022 and our 2023 Non-GAAP operating
margin to be slightly above 21%.
- For 2023, we expect investments in capital expenditures to be
approximately $200M. Capital expenditures are expected to primarily
relate to building construction and improvements as well as
manufacturing capacity in support of our continued international
expansion.
Align Web Cast and Conference
Call
We will host a conference call today, October 25, 2023, at 4:30
p.m. ET, 1:30 p.m. PT, to review our third quarter 2023 results,
discuss future operating trends, and our business outlook. The
conference call will also be webcast live via the Internet. To
access the webcast, go to the "Events & Presentations" section
under Company Information on Align's Investor Relations website at
http://investor.aligntech.com. To access the conference call,
participants may register for the call by clicking here. Once
registered, participants will receive an email with dial-in number
and unique PIN number to access the live event. An archived audio
webcast will be available 2 hours after the call's conclusion and
will remain available for one month.
About Non-GAAP Financial
Measures
To supplement our condensed consolidated financial statements,
which are prepared and presented in accordance with generally
accepted accounting principles in the United States ("GAAP"), we
may provide investors with certain non-GAAP financial measures
which may include constant currency net revenues, constant currency
gross profit, constant currency gross margin, constant currency
income from operations, constant currency operating margin, gross
profit, gross margin, operating expenses, income from operations,
operating margin, interest income and other income (expense), net,
net income before provision for income taxes, provision for income
taxes, effective tax rate, net income and/or diluted net income per
share, which excludes certain items that may not be indicative of
our fundamental operating performance including, foreign currency
exchange rate impacts and discrete cash and non-cash charges or
gains that are included in the most directly comparable GAAP
measure. In Q4'22, we changed to a long-term non-GAAP effective tax
rate in our computation of the non-GAAP income tax provision to
provide better consistency across reporting periods. Our previous
methodology for calculating our non-GAAP effective tax rate
included certain non-recurring and period-specific items, that
produced fluctuating effective tax rates that management does not
believe are reflective of the Company's long-term effective tax
rate. This new methodology became effective January 1, 2022, and we
recast prior periods in 2022. Unless otherwise indicated, when we
refer to non-GAAP financial measures they will exclude the effects
of stock-based compensation, amortization of certain acquired
intangibles, restructuring and other charges, acquisition-related
costs, and arbitration award gain, and associated tax impacts.
Our management believes that the use of certain non-GAAP
financial measures provides meaningful supplemental information
regarding our recurring core operating performance. We believe that
both management and investors benefit from referring to these
non-GAAP financial measures in assessing our performance and when
planning, forecasting, and analyzing future periods. We believe
these non-GAAP financial measures are useful to investors both
because (1) they allow for greater transparency with respect to key
metrics used by management in its financial and operational
decision-making and (2) they are used by our institutional
investors and the analyst community to help them analyze the
performance of our business.
There are limitations to using non-GAAP financial measures as
they are not prepared in accordance with GAAP and may be different
from non-GAAP financial measures used by other companies. The
non-GAAP financial measures are limited in value because they
exclude certain items that may have a material impact upon our
reported financial results. In addition, they are subject to
inherent limitations as they reflect the exercise of judgments by
management about which charges are excluded from the non-GAAP
financial measures. We compensate for these limitations by
analyzing current and future results on a GAAP as well as a
non-GAAP basis and by providing GAAP measures in our public
disclosures. The presentation of non-GAAP financial information is
meant to be considered in addition to, not as a substitute for or
in isolation from, the directly comparable financial measures
prepared in accordance with GAAP. We urge investors to review the
reconciliation of our GAAP financial measures to the comparable
non-GAAP financial measures included herein and not to rely on any
single financial measure to evaluate our business. For more
information on these non-GAAP financial measures, please see the
tables captioned "Unaudited GAAP to Non-GAAP Reconciliation."
About Align Technology,
Inc.
Align Technology designs and manufactures the Invisalign®
System, the most advanced clear aligner system in the world, iTero™
intraoral scanners and services, and exocad™ CAD/CAM software.
These technology building blocks enable enhanced digital
orthodontic and restorative workflows to improve patient outcomes
and practice efficiencies for over 252 thousand doctor customers
and are key to accessing Align’s 600 million consumer market
opportunity worldwide. Over the past 26 years, Align has helped
doctors treat over 16.4 million patients with the Invisalign System
and is driving the evolution in digital dentistry through the Align
Digital Platform™, our integrated suite of unique, proprietary
technologies and services delivered as a seamless, end-to-end
solution for patients and consumers, orthodontists and GP dentists,
and lab/partners. Visit www.aligntech.com for more information.
For additional information about the Invisalign System or to
find an Invisalign doctor in your area, please visit
www.invisalign.com. For additional information about the iTero
digital scanning system, please visit www.itero.com. For additional
information about exocad dental CAD/CAM offerings and a list of
exocad reseller partners, please visit www.exocad.com.
Invisalign, iTero, exocad, Align, and Align Digital Platform are
trademarks of Align Technology, Inc.
Forward-Looking
Statements
This news release, including the tables below, contains
forward-looking statements, including statements of beliefs and
expectations regarding our ability to successfully control our
business and operations and pursue our strategic growth drivers,
our expectations regarding the availability, regulatory clearance,
effectiveness and customer desire for new products and
technologies, our expectations for our stock repurchase programs,
market opportunities, anticipated clear aligner volumes and ASP,
anticipated Systems and Services revenue, our expectations for
Q4'23 revenues and GAAP and non-GAAP operating margin, and 2023
revenues and GAAP and non-GAAP operating margin, as well as capital
expenditures. Forward-looking statements contained in this news
release relating to expectations about future events or results are
based upon information available to Align as of the date hereof.
Readers are cautioned that these forward-looking statements reflect
our best judgments based on currently known facts and circumstances
and are subject to risks, uncertainties, and assumptions that are
difficult to predict. As a result, actual results may differ
materially and adversely from those expressed in any
forward-looking statement.
Factors that might cause such a difference include, but are not
limited to:
- macroeconomic conditions, including inflation, fluctuations in
currency exchange rates, rising interest rates, market volatility,
weakness in general economic conditions and recessions and the
impact of efforts by central banks and federal, state and local
governments to combat inflation and recession;
- customer and consumer purchasing behavior and changes in
consumer spending habits as a result of, among other things,
prevailing macro-economic conditions, levels of employment,
salaries and wages, debt obligations, discretionary income,
inflationary pressure, declining consumer confidence, and the
military conflict in Ukraine and the Middle East;
- the economic and geopolitical ramifications of the military
conflict in the Middle East and Ukraine, including sanctions,
retaliatory sanctions, nationalism, supply chain disruptions and
other consequences, any of which may or will continue to adversely
impact our operations and assets, and our research and development
activities inside and outside of Russia;
- variations in our product mix, product adoption, and selling
prices regionally and globally;
- competition from existing and new competitors;
- declines in, or the slowing of the growth of, sales of our
clear aligners and intraoral scanners domestically and/or
internationally and the impact either would have on the adoption of
Invisalign products;
- the timing and availability and cost of raw materials,
components, products and other shipping and supply chain
constraints and disruptions;
- unexpected or rapid changes in the growth or decline of our
domestic and/or international markets;
- rapidly evolving and groundbreaking advances that fundamentally
alter the dental industry or the way new and existing customers
market and provide products and services to consumers;
- the ability to protect our intellectual property rights;
- continued compliance with regulatory requirements;
- the willingness and ability of our customers to maintain and/or
increase product utilization in sufficient numbers;
- the possibility that the development and release of new
products or enhancements to existing products do not proceed in
accordance with the anticipated timeline or may themselves contain
bugs, errors or defects in software or hardware requiring
remediation and that the market for the sale of these new or
enhanced products may not develop as expected;
- a tougher consumer demand environment in China generally,
especially for manufacturers and service providers whose
headquarters or primary operations are not based in China;
- the risks relating to our ability to sustain or increase
profitability or revenue growth in future periods (or minimize
declines) while controlling expenses;
- expansion of our business and products;
- the impact of excess or constrained capacity at our
manufacturing and treat operations facilities and pressure on our
internal systems and personnel;
- the compromise of our systems or networks, including any
customer and/or patient data contained therein, for any
reason;
- the timing of case submissions from our doctor customers within
a quarter as well as an increased manufacturing costs per
case;
- foreign operational, political, military and other risks
relating to our operations; and
- the loss of key personnel, labor shortages or work stoppages
for us or our suppliers.
The foregoing and other risks are detailed from time to time in
our periodic reports filed with the Securities and Exchange
Commission, including, but not limited to, our Annual Report on
Form 10-K for the year ended December 31, 2022, which was filed
with the Securities and Exchange Commission ("SEC") on February 27,
2023, and our latest Quarterly Report on Form 10-Q for the quarter
ended June 30, 2023, which was filed with the SEC on August 4,
2023. Align undertakes no obligation to revise or update publicly
any forward-looking statements for any reason.
ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Net revenues
$
960,214
$
890,348
$
2,905,534
$
2,833,120
Cost of net revenues
297,138
271,179
868,195
817,046
Gross profit
663,076
619,169
2,037,339
2,016,074
Operating expenses:
Selling, general and administrative
407,992
398,547
1,300,876
1,264,402
Research and development
88,738
76,966
264,670
221,738
Total operating expenses
496,730
475,513
1,565,546
1,486,140
Income from operations
166,346
143,656
471,793
529,934
Interest income and other income
(expense), net:
Interest income
5,522
1,685
12,280
2,607
Other income (expense), net
(9,757
)
(22,700
)
(15,749
)
(48,805
)
Total interest income and other income
(expense), net
(4,235
)
(21,015
)
(3,469
)
(46,198
)
Net income before provision for income
taxes
162,111
122,641
468,324
483,736
Provision for income taxes
40,684
49,941
147,285
163,938
Net income
$
121,427
$
72,700
$
321,039
$
319,798
Net income per share:
Basic
$
1.59
$
0.93
$
4.19
$
4.08
Diluted
$
1.58
$
0.93
$
4.18
$
4.07
Shares used in computing net income per
share:
Basic
76,569
78,093
76,670
78,408
Diluted
76,826
78,237
76,849
78,652
ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
September 30,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
1,239,013
$
942,050
Marketable securities, short-term
44,792
57,534
Accounts receivable, net
904,178
859,685
Inventories
296,189
338,752
Prepaid expenses and other current
assets
217,632
226,370
Total current assets
2,701,804
2,424,391
Marketable securities, long-term
18,137
41,978
Property, plant and equipment, net
1,268,388
1,231,855
Operating lease right-of-use assets,
net
118,966
118,880
Goodwill
404,295
407,551
Intangible assets, net
82,741
95,720
Deferred tax assets
1,591,791
1,571,746
Other assets
132,429
55,826
Total assets
$
6,318,551
$
5,947,947
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
99,693
$
127,870
Accrued liabilities
614,462
454,374
Deferred revenues
1,408,831
1,343,643
Total current liabilities
2,122,986
1,925,887
Income tax payable
116,443
124,393
Operating lease liabilities
98,523
100,334
Other long-term liabilities
178,733
195,975
Total liabilities
2,516,685
2,346,589
Total stockholders’ equity
3,801,866
3,601,358
Total liabilities and stockholders’
equity
$
6,318,551
$
5,947,947
ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30,
2023
2022
CASH FLOWS FROM OPERATING
ACTIVITIES
Net cash provided by operating
activities
$
738,878
$
424,025
CASH FLOWS FROM INVESTING
ACTIVITIES
Net cash used in investing activities
(182,619
)
(157,506
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Net cash used in financing activities
(248,059
)
(301,498
)
Effect of foreign exchange rate changes on
cash, cash equivalents, and restricted cash
(11,205
)
(20,422
)
Net (decrease) increase in cash, cash
equivalents, and restricted cash
296,995
(55,401
)
Cash, cash equivalents, and restricted
cash at beginning of the period
942,355
1,100,139
Cash, cash equivalents, and restricted
cash at end of the period
$
1,239,350
$
1,044,738
ALIGN TECHNOLOGY, INC.
INVISALIGN BUSINESS METRICS
Q1
Q2
Q3
Q4
Q1
Q2
Q3
2022
2022
2022
2022
2023
2023
2023
Number of Invisalign Trained Doctors
Cases Were Shipped To
82,445
82,290
84,430
82,895
82,730
83,440
85,195
Invisalign Trained Doctor Utilization
Rates*:
North America
9.4
9.6
9.2
9.2
9.5
9.8
9.6
North American Orthodontists
27.8
28.1
27.6
26.7
28.7
29.2
28.8
North American GP Dentists
5.0
5.1
4.8
5.0
4.9
5.2
4.9
International
6.4
6.4
6.0
6.5
6.2
6.6
6.1
Total Utilization Rates**
7.3
7.4
7.0
7.2
7.1
7.5
7.1
Clear Aligner Revenue Per Case
Shipment***:
$
1,335
$
1,315
$
1,245
$
1,225
$
1,335
$
1,335
$
1,320
* # of cases shipped / # of doctors to
whom cases were shipped ** LATAM utilization rate is not separately
disclosed but included in the total utilization rates *** Clear
Aligner revenues / Case shipments As of Q3'23. Note: During the
third quarter of 2023, we began including Touch Up cases in Case
revenues that were previously included in Non-Case revenues and
have recast business metrics for the periods presented above
accordingly.
ALIGN TECHNOLOGY, INC.
STOCK-BASED COMPENSATION
(in thousands)
Q1
Q2
Q3
Q4
Fiscal
Q1
Q2
Q3
2022
2022
2022
2022
2022
2023
2023
2023
Stock-based Compensation (SBC):
SBC included in Gross Profit
$
1,514
$
1,614
$
1,651
$
1,659
$
6,438
$
1,807
$
1,901
$
1,974
SBC included in Operating
30,107
32,526
31,267
33,029
126,929
35,928
35,959
37,628
Total SBC
$
31,621
$
34,140
$
32,918
$
34,688
$
133,367
$
37,735
$
37,860
$
39,602
ALIGN TECHNOLOGY, INC.
UNAUDITED GAAP TO NON-GAAP
RECONCILIATION
CONSTANT CURRENCY NET REVENUES
(in thousands, except percentages)
Sequential constant currency analysis:
Three Months Ended
September 30,
2023
June 30, 2023
Impact % of Revenue
GAAP net revenues
$
960,214
$
1,002,173
Constant currency impact (1)
2,720
0.3 %
Constant currency net revenues
(1)
$
962,934
GAAP Clear Aligner net revenues
$
794,939
$
832,674
Clear Aligner constant currency impact
(1)
2,002
0.3 %
Clear Aligner constant currency net
revenues (1)
$
796,941
GAAP Imaging Systems and CAD/CAM
Services net revenues
$
165,275
$
169,499
Imaging Systems and CAD/CAM Services
constant currency impact (1)
718
0.4 %
Imaging Systems and CAD/CAM Services
constant currency net revenues (1)
$
165,993
Year-over-year constant currency
analysis:
Three Months Ended
September 30,
2023
2022
Impact % of Revenue
GAAP net revenues
$
960,214
$
890,348
Constant currency impact (1)
(4,181
)
(0.4)%
Constant currency net revenues
(1)
$
956,033
GAAP Clear Aligner net revenues
$
794,939
$
732,837
Clear Aligner constant currency impact
(1)
(3,763
)
(0.5)%
Clear Aligner constant currency net
revenues (1)
$
791,176
GAAP Imaging Systems and CAD/CAM
Services net revenues
$
165,275
$
157,511
Imaging Systems and CAD/CAM Services
constant currency impact (1)
(418
)
(0.3)%
Imaging Systems and CAD/CAM Services
constant currency net revenues (1)
$
164,857
Note:
(1)
We define constant currency net revenues
as total net revenues excluding the effect of foreign exchange rate
movements and use it to determine the percentage for the constant
currency impact on net revenues on a sequential and year-over-year
basis. Constant currency impact in dollars is calculated by
translating the current period GAAP net revenues using the foreign
currency exchange rates that were in effect during the previous
comparable period and subtracting it by the current period GAAP net
revenues. The percentage for the constant currency impact on net
revenues is calculated by dividing the constant currency impact in
dollars (numerator) by constant currency net revenues in dollars
(denominator). Refer to "About Non-GAAP Financial Measures" section
of press release.
(+)
Changes and percentages are based on actual values. Certain
tables may not sum or recalculate due to rounding.
ALIGN TECHNOLOGY, INC.
UNAUDITED GAAP TO NON-GAAP RECONCILIATION
CONTINUED
CONSTANT CURRENCY GROSS PROFIT AND GROSS
MARGIN
(in thousands, except percentages)
Sequential constant currency analysis:
Three Months Ended
September 30,
2023
June 30, 2023
GAAP gross profit
$
663,076
$
713,609
Constant currency impact on net
revenues
2,720
Constant currency gross profit
$
665,796
Three Months Ended
September 30,
2023
June 30, 2023
GAAP gross margin
69.1
%
71.2
%
Gross margin constant currency impact
(1)
0.1
Constant currency gross margin
(1)
69.1
%
Year-over-year constant currency analysis:
Three Months Ended
September 30,
2023
2022
GAAP gross profit
$
663,076
$
619,169
Constant currency impact on net
revenues
(4,206
)
Constant currency gross profit
$
658,870
Three Months Ended
September 30,
2023
2022
GAAP gross margin
69.1
%
69.5
%
Gross margin constant currency impact
(1)
(0.1
)
Constant currency gross margin
(1)
68.9
%
Note:
(1)
We define constant currency gross margin
as constant currency gross profit as a percentage of constant
currency net revenues. Gross margin constant currency impact is the
increase or decrease in constant currency gross margin compared to
the GAAP gross margin.
(+)
Changes and percentages are based on actual values. Certain tables
may not sum or recalculate due to rounding. Refer to "About
Non-GAAP Financial Measures" section of press release.
ALIGN TECHNOLOGY, INC.
UNAUDITED GAAP TO NON-GAAP RECONCILIATION
CONTINUED
CONSTANT CURRENCY INCOME FROM OPERATIONS
AND OPERATING MARGIN
(in thousands, except percentages)
Sequential constant currency analysis:
Three Months Ended
September 30,
2023
June 30, 2023
GAAP income from operations
$
166,346
$
171,931
Income from operations constant currency
impact (1)
3,191
Constant currency income from
operations (1)
$
169,537
Three Months Ended
September 30,
2023
June 30, 2023
GAAP operating margin
17.3
%
17.2
%
Operating margin constant currency impact
(2)
0.3
Constant currency operating margin
(2)
17.6
%
Year-over-year constant currency analysis:
Three Months Ended
September 30,
2023
2022
GAAP income from operations
$
166,346
$
143,656
Income from operations constant currency
impact (1)
687
Constant currency income from
operations (1)
$
167,033
Three Months Ended
September 30,
2023
2022
GAAP operating margin
17.3
%
16.1
%
Operating margin constant currency impact
(2)
0.1
Constant currency operating margin
(2)
17.5
%
Notes:
(1)
We define constant currency income from
operations as GAAP income from operations excluding the effect of
foreign exchange rate movements for GAAP net revenues and operating
expenses on a sequential and year-over-year basis. Constant
currency impact in dollars is calculated by translating the current
period GAAP net revenues and operating expenses using the foreign
currency exchange rates that were in effect during the previous
comparable period and subtracting it by the current period GAAP net
revenues and operating expenses.
(2)
We define constant currency operating
margin as constant currency income from operations as a percentage
of constant currency net revenues. Operating margin constant
currency impact is the increase or decrease in constant currency
operating margin compared to the GAAP operating margin.
(+)
Changes and percentages are based on actual values. Certain tables
may not sum or recalculate due to rounding. Refer to "About
Non-GAAP Financial Measures" section of press release.
ALIGN TECHNOLOGY, INC.
UNAUDITED GAAP TO NON-GAAP RECONCILIATION
CONTINUED
FINANCIAL MEASURES OTHER THAN CONSTANT
CURRENCY
(in thousands, except per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
GAAP gross profit
$
663,076
$
619,169
$
2,037,339
$
2,016,074
Stock-based compensation
1,974
1,651
5,682
4,779
Amortization of intangibles (1)
2,825
2,644
8,409
7,524
Restructuring charges (2)
—
—
(8
)
—
Non-GAAP gross profit
$
667,875
$
623,464
$
2,051,422
$
2,028,377
GAAP gross margin
69.1
%
69.5
%
70.1
%
71.2
%
Non-GAAP gross margin
69.6
%
70.0
%
70.6
%
71.6
%
GAAP total operating expenses
$
496,730
$
475,513
$
1,565,546
$
1,486,140
Stock-based compensation
(37,628
)
(31,267
)
(109,515
)
(93,900
)
Amortization of intangibles (1)
(885
)
(825
)
(2,631
)
(2,607
)
Restructuring and other charges (2)
—
—
300
—
Non-GAAP total operating
expenses
$
458,217
$
443,421
$
1,453,700
$
1,389,633
GAAP income from operations
$
166,346
$
143,656
$
471,793
$
529,934
Stock-based compensation
39,602
32,918
115,197
98,679
Amortization of intangibles (1)
3,710
3,469
11,040
10,131
Restructuring and other charges (2)
—
—
(308
)
—
Non-GAAP income from operations
$
209,658
$
180,043
$
597,722
$
638,744
GAAP operating margin
17.3
%
16.1
%
16.2
%
18.7
%
Non-GAAP operating margin
21.8
%
20.2
%
20.6
%
22.5
%
GAAP total interest income and other
income (expense), net
$
(4,235
)
$
(21,015
)
$
(3,469
)
$
(46,198
)
Arbitration award gain (5)
—
—
—
—
Non-GAAP total interest income and
other income (expense), net
$
(4,235
)
$
(21,015
)
$
(3,469
)
$
(46,198
)
GAAP net income before provision for
income taxes
$
162,111
$
122,641
$
468,324
$
483,736
Stock-based compensation
39,602
32,918
115,197
98,679
Amortization of intangibles (1)
3,710
3,469
11,040
10,131
Restructuring and other charges (2)
—
—
(308
)
—
Non-GAAP net income before provision
for income taxes
$
205,423
$
159,028
$
594,253
$
592,546
ALIGN TECHNOLOGY, INC.
UNAUDITED GAAP TO NON-GAAP RECONCILIATION
CONTINUED
FINANCIAL MEASURES OTHER THAN CONSTANT CURRENCY CONTINUED
(in thousands, except per share data)
Three Months Ended
September 30,
Nine Months Ended September
30,
2023
2022
2023
2022
GAAP provision for income taxes
$
40,684
$
49,941
$
147,285
163,938
Tax impact on non-GAAP adjustments (3)
418
(18,136
)
(28,417
)
(45,429
)
Non-GAAP provision for income taxes
(3)
$
41,102
$
31,805
$
118,868
$
118,509
GAAP effective tax rate
25.1
%
40.7
%
31.4
%
33.9
%
Non-GAAP effective tax rate (3)
20.0
%
20.0
%
20.0
%
20.0
%
GAAP net income
$
121,427
$
72,700
$
321,039
$
319,798
Stock-based compensation
39,602
32,918
115,197
98,679
Amortization of intangibles (1)
3,710
3,469
11,040
10,131
Restructuring and other charges (2)
—
—
(308
)
—
Tax impact on non-GAAP adjustments (3)
(418
)
18,136
28,417
45,429
Non-GAAP net income (3)
$
164,321
$
127,223
$
475,385
$
474,037
GAAP diluted net income per
share
$
1.58
$
0.93
$
4.18
$
4.07
Non-GAAP diluted net income per share
(3)
$
2.14
$
1.63
$
6.19
$
6.03
Shares used in computing diluted net
income per share
76,826
78,237
76,849
78,652
Notes:
(1)
Amortization of intangible assets
related to certain acquisitions.
(2)
Restructuring and other charges recorded
in Gross Profit and Operating expenses primarily relate to
severance costs, lease termination charges and asset
impairments.
(3)
In Q4'22, we changed our methodology for
the computation of the non-GAAP effective tax rate to a long-term
projected tax rate and have given effect to the new methodology
from January 1, 2022, and recast previously reported quarterly
periods in 2022.
(+)
Changes and percentages are based on actual values. Certain tables
may not sum or recalculate due to rounding. Refer to "About
Non-GAAP Financial Measures" section of press release. ALIGN
TECHNOLOGY, INC.
Q4 2023 OUTLOOK - GAAP TO NON-GAAP
RECONCILIATION
Three Months Ended
December 31, 2023
GAAP operating margin
less than 17.3%
Stock-based compensation
~4.6%
Amortization of intangibles (1)
~0.4%
Restructuring charges (2)
~1.6%
Non-GAAP operating margin
above 21.8%
ALIGN TECHNOLOGY, INC.
FISCAL 2023 OUTLOOK - GAAP TO NON-GAAP
RECONCILIATION
Year Ended
December 31, 2023
GAAP operating margin
approximately 16%
Stock-based compensation
~4%
Amortization of intangibles (1)
~0.4%
Restructuring charges (2)
~0.4%
Non-GAAP operating margin
slightly above 21%
(1) Amortization of intangible assets
related to certain acquisitions.
(2) Restructuring charges primarily related to severance.
Refer to "About Non-GAAP Financial
Measures" section of press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231024667630/en/
Align Technology Madelyn Valente
(909) 833-5839 mvalente@aligntech.com
Zeno Group Sarah Johnson (828)
551-4201 sarah.johnson@zenogroup.com
Align Technology (NASDAQ:ALGN)
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