Align Technology announces first quarter 2024 financial results

Align Technology, Inc. reported financial results for the first quarter (“Q1’24”). Q1’24 total revenues were $997.4 million, up 4.3% sequentially and up 5.8% year-over-year. Q1’24 Clear Aligner revenues were $817.3 million, up 4.5% sequentially and up 3.5% year-over-year. Q1’24 Clear Aligner volume was up 2.1% sequentially and up 2.4% year-over-year. Q1’24 Imaging Systems and CAD/CAM Services revenues were $180.2 million, up 3.1% sequentially and up 17.5% year-over-year. Q1’24 Clear Aligner revenues were favorably impacted by foreign exchange of approximately $8.4 million or 1.0% sequentially and unfavorably impacted by approximately $3.9 million or 0.5% year-over-year. Q1’24 Imaging Systems and CAD/CAM Services revenues were favorably impacted by foreign exchange of approximately $1.5 million or 0.9% sequentially and unfavorably impacted by approximately $0.9 million or 0.5% year-over-year.

Q1’24 operating income was $154.1 million resulting in an operating margin of 15.5%. Q1’24 operating margin was favorably impacted by foreign exchange of approximately 0.1 points sequentially and unfavorably impacted by approximately 0.7 points year-over-year. On a non-GAAP basis, Q1’24 operating income was $197.5 million or operating margin of 19.8%. Q1’24 net income was $105.0 million, or $1.39 per diluted share. On a non-GAAP basis, Q1’24 net income was $161.4 million, or $2.14 per diluted share.

Commenting on Align’s Q1’24 results, Align Technology President and CEO Joe Hogan said, “I’m pleased to report better than expected revenue and earnings for the first quarter and a solid start to the year. For Q1, total worldwide revenues were up 5.8% year-over-year, reflecting 3.5% year-over-year growth from our Clear Aligner segment and 17.5% year-over-year growth from Systems and Services. On a year-over-year basis, Q1 revenue growth was up across all regions and was driven by strong Clear Aligner volumes primarily in the Asia Pacific region. Year-over-year growth also reflects strength in the orthodontic channel, with total Invisalign® case starts from teens and younger patients up 5.8% year-over-year — driven by continued momentum across all regions from Invisalign First™, as well as Invisalign DSP Touch-Up cases. On a sequential basis, Q1 total revenues were up 4.3%, reflecting a sequential increase in Clear Aligner revenues, especially from North America orthodontists, as well as strong Systems and Services revenues primarily driven by iTero Lumina™ wand upgrades in North America.”

Continued Hogan, “During the quarter, we achieved several significant milestones: We completed the acquisition of Cubicure GmbH, a leader in direct 3D printing solutions which is the foundation for our next generation aligner manufacturing; we successfully launched the iTero Lumina™ intraoral scanner – our next generation of digital scanning technology; we launched the Invisalign® Palatal Expander system in the U.S. and Canada, and we received regulatory approval for the Invisalign Palatal Expander in Australia and New Zealand. The Invisalign® Palatal Expander System is Align’s first 3D-printed orthodontic device to address widening the upper arch in growing patients. It is a revolutionary, clinically effective approach to expansion that avoids the challenges of traditional palatal expander appliances.”

Financial summary – First quarter fiscal 2024

As of March 31, 2024, we had over $902.5 million in cash, cash equivalents and short-term and long-term marketable securities compared to over $980.8 million as of December 31, 2023. As of March 31, 2024, we had $300.0 million available under a revolving line of credit.

Q1’24 stock repurchase
In January 2024, we received approximately 37 thousand shares of our common stock upon final settlement of our Q4’23 $250.0 million Accelerated Share Repurchase (“ASR”) contract. In total, we repurchased approximately 1.1 million shares at an average price per share of $230.13 under the Q4’23 ASR contract.

There remains $650.0 million available for repurchase of our common stock under our January 2023 Repurchase Program.

During Q2’24, we expect to repurchase up to $150.0 million of our common stock through either a combination of open market repurchases or an accelerated stock repurchase agreement.

Fiscal 2024 business outlook

Turning to our outlook, assuming no circumstances occur beyond our control, we provide the following framework for Q2 and fiscal 2024:

Second quarter 2024 outlook:

For Q2’24, we provide the following business outlook:

• We expect worldwide revenues to be in the range of $1,030M to $1,050M
• We expect Clear Aligner volume to be up sequentially and Clear Aligner ASP to be down slightly sequentially, primarily as a result of unfavorable foreign exchange
• We expect Systems and Services revenue to be up sequentially as we continue to ramp iTero Lumina™ in Q2’24
• We expect our Q2’24 GAAP operating margin and Non-GAAP operating margin to be slightly above Q1’24 GAAP and Non-GAAP operating margins respectively

Full year 2024 outlook:

• We expect fiscal 2024 total revenue growth to be up +6% to +8% year-over-year, which is higher than our prior outlook of “up mid-single digit growth compared to 2023”. The increase in our 2024 revenue outlook reflects our Q1 results, our Q2 outlook, and continued execution of our growth strategies. We anticipate that the incremental revenue reflected in our 2024 outlook will be roughly split equally between our 2 operating segments
• We expect fiscal 2024 Clear Aligner ASP to be slightly up year-over-year
• We expect fiscal 2024 GAAP operating margin and non-GAAP operating margin to be slightly above the 2023 GAAP operating margin and non-GAAP operating margin, respectively
• We expect our investments in capital expenditures for fiscal 2024 to be approximately $100M. Capital expenditures primarily relate to building construction and improvements as well as manufacturing capacity in support of our continued expansion

MB Bureau