Align Technology, Inc.
CEO : Mr. Joseph M. Hogan
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 3.4% YoY | -8.6% | 1.4% | 2023-07-26 |
John Morici says,
Revenue and Growth
- Total revenues for Q2 2023 were $1.002 billion, up 6.3% from the previous quarter and 3.4% from the same quarter a year ago.
- Clear aligner revenues in Q2 were $832.7 million, up 5.4% sequentially and 4.3% year-over-year.
- Invisalign ASPs for comprehensive treatment were down sequentially but up year-over-year.
- Invisalign ASPs for non-comprehensive treatment were up sequentially and year-over-year.
- Revenues from subscriptions, retainers, and ancillary products are expected to account for a larger percentage of overall growth.
Deferred Revenues
- Clear aligner deferred revenues on the balance sheet increased $13 million sequentially and $138.6 million year-over-year.
- Systems and Services deferred revenues on the balance sheet were down $2.3 million sequentially but up $8.6 million year-over-year.
Gross Margin
- Overall gross margin for Q2 was 71.2%, up 1.2 points sequentially and 0.3 points year-over-year.
- Clear aligner gross margin for Q2 was 72.4%, up 0.7 points sequentially but down 0.9 points year-over-year.
- Systems and Services gross margin for Q2 was 65.1%, up 3.5 points sequentially and 5.3 points year-over-year.
Operating Expenses
- Operating expenses for Q2 were $541.7 million, up 2.8% sequentially and 8.5% year-over-year.
- On a non-GAAP basis, operating expenses were $505 million, up 2.9% sequentially and 8.4% year-over-year.
Operating Margin
- Operating margin for Q2 was 17.2%, up 3 points sequentially but down 2.2 points year-over-year.
- On a non-GAAP basis, operating margin for Q2 was 21.3%, up 2.8 points sequentially but down 2 points year-over-year.
Outlook
- For Q3 2023, worldwide revenue is expected to be in the range of $990 million to $1.01 billion, up approximately 12% year-over-year at the midpoint.
- For full-year 2023, worldwide revenue is expected to be in the range of $3.97 billion to $3.99 billion, up approximately 7% year-over-year at the midpoint.
- Full-year 2023 GAAP operating margin is expected to be slightly above 17% and non-GAAP operating margin is expected to be slightly above 21%.
Joseph Hogan says,
Q2 Financial Performance
- Revenues and operating margins exceeded guidance
- Improving trends across regions
- Strength in teen and younger patient volumes
- Momentum in submitters and utilization
- Growth from Invisalign First
Systems & Services Segment
- Q2 revenues of $169.5 million, up 10.5% sequentially
- Increased scanner volumes and higher services and non-system revenues
- Higher subscription revenues from iTero scanners
- Higher non-system scanner revenues from certified pre-owned and leasing programs
Clear Aligner Segment
- Q2 revenues of $832.7 million, up 5.4% sequentially
- Growth across all regions
- Increase in non-case revenues from Vivera retainers and DSP
- Success of Invisalign Doctor Subscription Program (DSP)
- Expanded DSP to Spain and Nordic countries
Regional Performance
- Americas: Growth in both ortho and GP dentist channels
- EMEA: Growth in Invisalign Moderate and Comprehensive products
- APAC: Improving trends in China, Japan, Taiwan, Korea, and India
Teen Segment
- 195,000 teens and kids started treatment with Invisalign in Q2
- 7% sequential growth and 10% year-over-year growth
- Increased adoption of Invisalign First and Teen Case Packs
Consumer Marketing
- Investment in top media platforms and social media influencers
- Brand interest remained strong with millions of website visits
- Increased adoption of My Invisalign consumer and patient apps
- Use of digital tools like ClinCheck live update and Invisalign practice app
Q & A sessions,
1. Innovations in the Digital Platform
- Aligned digital platform offers a seamless end-to-end digital experience for doctors and patients
- ClinCheck live update for 3D controls allows real-time modification of Invisalign patient treatment plans
- Invisalign Personal Plan (IPP) streamlines treatment planning process for more consistent and efficient results
- Invisalign Smile Architect integrates clear aligner therapy into comprehensive treatment plans
- Invisalign Virtual Care equips doctors with a next-generation remote monitoring solution
- Cowen computed tomography (CVCT) enables visualization of patient’s roots
- Invisalign Outcome Simulator Pro adds personalized visualization of new smile using photo and 3D simulation
- Itero-exocad Connector integrates iTero intraoral camera and NIRI images with exocad DentalCAD 3.1 software for visualizing teeth structure
2. Targeted Focus on Teen Market
- Teen market represents a significant opportunity for growth, with majority of case starts being teen patients
- Invisalign First product line shows strong growth globally
- Teen packs and different business models are tailored to target the teen market
- Goal to increase penetration in the teen market by improving clinical outcomes and gaining orthodontists’ confidence
3. Expansion in EMEA and APAC Regions
- Good performance in EMEA, with strong growth in Iberia, UK, and Nordic countries
- Improving consumer sentiment and solidifying economies contribute to positive numbers in EMEA
- China, Japan, and Korea show strong growth in APAC region
- Overall improvement in both regions, particularly in the teen segment
4. Challenges in Orthodontic Workflows
- Orthodontists’ workflow preferences and economic challenges make it difficult to fully transition to clear aligner treatments
- Invisalign First shows promise in treating Phase I patients
- In the future, clear aligners are expected to offer advantages in terms of clinical outcomes and patient experience
- Main issues are now focused on workflow and confidence in orthodontic practice
5. Competitive Landscape and Value Proposition
- Competitive environment exists in the dental scanner market, with sensitivity to capital expenditures
- Aligned offers a superior product line and value stream with integration with Invisalign
- Ongoing success and strong numbers reflect the company’s value proposition
- CPOs (certified preowned) help to compete in the lower end of the market
- Confidence in Aligned’s capability and value proposition remains high
No bad stock 