Company expects to repurchase up to $275.0
million of its common stock beginning in Q4'24
- Q3'24 total revenues of $977.9 million, increased 1.8%
year-over-year, and Q3'24 diluted net income per share was $1.55,
or $2.35 on a non-GAAP diluted basis
- Q3'24 total revenues were unfavorably impacted by foreign
exchange by approximately $14.6 million year-over-year(1), and were
not significantly impacted sequentially
- Q3'24 operating income of $162.3 million and operating margin
of 16.6%, non-GAAP operating margin of 22.1%
- Q3'24 GAAP operating margin was unfavorably impacted by foreign
exchange by approximately 0.8 points year-over-year(1), and was not
significantly impacted sequentially
- Q3'24 Clear Aligner revenues of $786.8 million decreased 5.4%
sequentially, and decreased 1.0% year-over-year
- Q3'24 Clear Aligner volume of 617.2 thousand cases decreased
4.0% sequentially, and increased 2.5% year-over-year
- Q3'24 Clear Aligner volume for teens increased 6.7%
year-over-year and 9.1% sequentially to 236.3 thousand cases
- Q3'24 Imaging Systems and CAD/CAM Services revenues of $191.0
million, increased 15.6% year-over-year
- Cash and cash equivalents was $1.0 billion as of Q3'24 compared
to $761.4 million as of Q2'24
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 ("Q3'24"). Q3'24 total revenues were $977.9 million,
down 4.9% sequentially and up 1.8% year-over-year. Q3'24 total
revenues were not significantly impacted by foreign exchange
sequentially and unfavorably impacted by approximately $14.6
million or 1.5% year-over-year.(1) Q3'24 Clear Aligner revenues
were $786.8 million, down 5.4% sequentially and down 1.0%
year-over-year. Q3'24 Clear Aligner revenues were not significantly
impacted by foreign exchange sequentially, and unfavorably impacted
by approximately $11.7 million or 1.5% year-over-year.(1) Q3'24
Clear Aligner volume was down 4.0% sequentially and up 2.5%
year-over-year. Q3'24 Imaging Systems and CAD/CAM Services revenues
were $191.0 million, down 2.9% sequentially and up 15.6%
year-over-year. Q3'24 Imaging Systems and CAD/CAM Services revenues
were not significantly impacted by foreign exchange sequentially
and unfavorably impacted by approximately $2.9 million or 1.5%
year-over-year.(1)
Q3'24 operating income was $162.3 million resulting in an
operating margin of 16.6%, up 2.3 points sequentially, and down 0.7
points year-over-year. Q3'24 operating margin was not significantly
impacted by foreign exchange sequentially and was unfavorably
impacted by approximately 0.8 points year-over-year.(1) On a
non-GAAP basis, Q3'24 operating income was $215.9 million resulting
in an operating margin of 22.1%, down 0.2 points sequentially, and
up 0.3 points year-over-year. Q3'24 net income was $116.0 million,
or $1.55 per diluted share. On a non-GAAP basis, Q3'24 net income
was $175.6 million, or $2.35 per diluted share.
Commenting on Align's Q3'24 results, Align Technology President
and CEO Joe Hogan said, “Overall, Q3’24 results were mixed and
reflect strong Systems and Services year-over-year revenue growth,
as well as good Clear Aligner volume in the Asia Pacific, EMEA and
Latin America regions, partially offset by declines in the U.S. As
recently reported by many analysts and third-party research firms,
the underlying dental market in the U.S. remains sluggish and our
doctor customers cite similar trends. Q3’24 revenues of
approximately $978 million increased 1.8% year-over-year and Clear
Aligner volume of 617.2 thousand were up 2.5% year-over-year.
Despite strong growth from Systems and Services revenues, a record
87.4 thousand doctor submitters, a record 236 thousand teens
starting treatment—driven by a record teen case starts in China,
and a record 25K+ of DSP Invisalign® Touch-Up cases, total revenues
for Q3 were slightly below our Q3 revenue outlook in part due to
more pronounced seasonality for clear aligners than expected, as
well as continued weak consumer sentiment and a soft dental market
in the U.S. Q3’24 non-GAAP operating margin of 22.1% was better
than expected and increased year-over-year compared to 21.8% in
Q3’23.”
Financial Summary - Third Quarter
Fiscal 2024
Q3'24
Q2'24
Q3'23
Q/Q Change
Y/Y Change
Clear Aligner Shipments*
617,220
642,725
602,335
(4.0)%
+2.5%
GAAP
Net Revenues
$977.9M
$1,028.5M
$960.2M
(4.9)%
+1.8%
Clear Aligner
$786.8M
$831.7M
$794.9M
(5.4)%
(1.0)%
Imaging Systems and CAD/CAM Services
$191.0M
$196.8M
$165.3M
(2.9)%
+15.6%
Net Income
$116.0M
$96.6M
$121.4M
+20.1%
(4.5)%
Diluted EPS
$1.55
$1.28
$1.58
+$0.27
($0.03)
Non-GAAP
Net Income
$175.6M
$181.0M
$164.3M
(3.0)%
+6.9%
Diluted EPS
$2.35
$2.41
$2.14
($0.06)
+$0.21
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, 2024, we had over $1,041.9 million in cash
and cash equivalents, compared to over $761.4 million as of June
30, 2024. As of September 30, 2024, we had $300.0 million available
under a revolving line of credit.
Align also announced today a global organizational restructuring
plan that eliminates or transfers identified positions to other
locations. There are impacted employees in every region and they
will receive severance and other benefits based on applicable laws,
severance plans, or contracts governing their position and country
of employment. As part of the restructuring plan, Raj Pudipeddi’s
position as executive vice president and managing director of the
Americas region and chief marketing officer has been eliminated and
he will leave Align in the fourth quarter of 2024. As a result of
the restructuring plan, we anticipate incurring restructuring
charges in the fourth quarter related to severance of approximately
$30 million or 3% points impact on operating margin.
Commenting on Align’s restructuring actions today, Align
Technology CFO and EVP Global Finance, John Morici said, “We
continually evaluate and evolve our business to provide doctors
with the best tools and resources that they deserve, while managing
our operations responsibly. Today’s restructuring action was
designed to adjust our operations to more closely align with the
existing business environment. We expect the restructuring actions
we announced today to be margin accretive in 2025, even as we scale
our next generation direct 3D printing fabrication
manufacturing.”
Announcement Highlights
- On October 23, 2024, Align announced that Frank Quinn, formerly
Align vice president and general manager of the United States, will
rejoin the company as executive vice president and managing
director of the Americas region, reporting to Joe Hogan, Align
president and CEO.
- On August 22, 2024, Align announced the pilot of a new U.S.
Invisalign treatment promotional program for Costco members on
Costco.com. Costco members in the in the U.S. can purchase an
Invisalign treatment e-card and Invisalign™ Essentials Bundle+ on
Costco.com for $99.99 to receive a $400 discount off Invisalign
treatment with participating U.S. Invisalign providers.
Q4'24 Stock Repurchase
- As of September 30, 2024, $500.0 million remains available for
repurchases of our common stock under our stock repurchase program
approved in January 2023.
- Beginning in Q4'24 and continuing into the first quarter of
2025, we expect to repurchase up to $275.0 million of our common
stock through either, or 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, including foreign exchange, we provide the following
business outlook:
- For Q4'24, we expect worldwide revenues to be in the range of
$995M to $1,015M
- For Q4'24, we expect Clear Aligner volume and ASP to be
slightly up sequentially
- We also expect Systems and Services revenue to be up in Q4'24
sequentially consistent with typical Q4 seasonality
- We expect Q4’24 GAAP operating margin to be slightly lower than
14.0% primarily due to restructuring charges related to severance
as we adjust headcount for the existing business environment. We
estimate these restructuring charges to impact Q4’24 GAAP operating
margin by approximately 3 points
- We anticipate Q4’24 non-GAAP operating margin to be slightly up
sequentially
- For fiscal 2024, we expect investments in capital expenditures
to be above $100M. Capital expenditures primarily relate to
building construction and improvements as well as manufacturing
capacity in support of continued expansion
Align Webcast and Conference
Call
We will host a conference call today, October 23, 2024, at 4:30
p.m. ET, 1:30 p.m. PT, to review our Q3'24 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 at
https://edge.media-server.com/mmc/p/fyw8ag8t/. 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 ("GAAP") in the United States, we
use the following non-GAAP financial measures: constant currency
net revenues, constant currency gross profit, constant currency
gross margin, constant currency income from operations, constant
currency operating margin, non-GAAP gross profit, non-GAAP gross
margin, non-GAAP total operating expenses, non-GAAP income from
operations, non-GAAP operating margin, non-GAAP net income before
provision for income taxes, non-GAAP provision for income taxes,
non-GAAP effective tax rate, non-GAAP net income and non-GAAP
diluted net income per share.
These non-GAAP financial measures exclude certain items that may
not be indicative of our fundamental operating performance,
including foreign currency exchange rate impacts, the effects of
stock-based compensation, amortization of intangible assets related
to certain acquisitions, restructuring and other charges,
acquisition-related costs, associated tax impacts and discrete cash
and non-cash charges or gains that are included in the most
directly comparable GAAP financial measure.
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 material limitations to using non-GAAP financial
measures as they are not prepared in accordance with GAAP and may
be different from similarly titled non-GAAP financial measures used
by other companies. Non-GAAP financial measures exclude certain
items that may have a material impact upon our reported financial
results, which can limit their usefulness for comparison purposes.
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
both a GAAP and non-GAAP basis and by providing specific
information regarding the GAAP amounts excluded from these non-GAAP
financial 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, superior to, 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 and a
reconciliation of GAAP to non-GAAP 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 271 thousand doctor customers
and are key to accessing Align’s 600 million consumer market
opportunity worldwide. Over the past 27 years, Align has helped
doctors treat approximately 18.9 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, Align Digital Platform and
iTero Lumina 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 our stock repurchase programs, our
expectations for market opportunities, our expectations for the
restructuring actions and their impact, our expectations for Q4'24
worldwide revenues, Clear Aligner volume, Clear Aligner ASP,
Systems and Services revenues and GAAP and non-GAAP operating
margin, and 2024 capital expenditures. Forward-looking statements
contained in this press 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, higher 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 macroeconomic conditions, levels of employment, salaries
and wages, debt obligations, discretionary income, inflationary
pressure, declining consumer confidence, and the military conflicts
in the Middle East and Ukraine;
- variations in our geographic, channel and product mix, product
adoption, and selling prices regionally and globally, including
product mix shifts to lower priced products or to products with a
higher percentage of deferred revenue;
- 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 economic and geopolitical ramifications of the military
conflicts in the Middle East and Ukraine, including supply chain
and trade disruptions, tariffs, trade sanctions, customs inquiries
or restrictions, boycotts, retaliatory sanctions, nationalism, and
other consequences, any of which could adversely impact our
operations and assets;
- 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;
- 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;
- our 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;
- 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;
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 ("SEC"), including, but not limited to, our Annual
Report on Form 10-K for the year ended December 31, 2023, which was
filed with the SEC on February 28, 2024 and our latest Quarterly
Report on Form 10-Q for the quarter ended June 30, 2024, which was
filed with the SEC on August 2, 2024. 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,
2024
2023
2024
2023
Net revenues
$
977,872
$
960,214
$
3,003,793
$
2,905,534
Cost of net revenues
296,098
297,138
901,575
868,195
Gross profit
681,774
663,076
2,102,218
2,037,339
Operating expenses:
Selling, general and administrative
434,138
407,992
1,338,222
1,300,876
Research and development
85,272
88,738
269,324
264,670
Legal settlement loss
66
—
31,193
—
Total operating expenses
519,476
496,730
1,638,739
1,565,546
Income from operations
162,298
166,346
463,479
471,793
Interest income and other income
(expense), net:
Interest income
4,003
5,522
11,696
12,280
Other income (expense), net
(371
)
(9,757
)
(6,993
)
(15,749
)
Total interest income and other income
(expense), net
3,632
(4,235
)
4,703
(3,469
)
Net income before provision for income
taxes
165,930
162,111
468,182
468,324
Provision for income taxes
49,967
40,684
150,627
147,285
Net income
$
115,963
$
121,427
$
317,555
$
321,039
Net income per share:
Basic
$
1.55
$
1.59
$
4.23
$
4.19
Diluted
$
1.55
$
1.58
$
4.23
$
4.18
Shares used in computing net income per
share:
Basic
74,736
76,569
75,031
76,670
Diluted
74,757
76,826
75,149
76,849
ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
September 30,
2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
1,041,935
$
937,438
Marketable securities, short-term
—
35,304
Accounts receivable, net
1,010,601
903,424
Inventories
254,119
296,902
Prepaid expenses and other current
assets
290,732
273,550
Total current assets
2,597,387
2,446,618
Marketable securities, long-term
—
8,022
Property, plant and equipment, net
1,290,427
1,290,863
Operating lease right-of-use assets,
net
121,079
117,999
Goodwill
471,512
419,530
Intangible assets, net
115,905
82,118
Deferred tax assets
1,569,950
1,590,045
Other assets
199,714
128,682
Total assets
$
6,365,974
$
6,083,877
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
109,035
$
113,125
Accrued liabilities
574,556
525,780
Deferred revenues
1,380,022
1,427,706
Total current liabilities
2,063,613
2,066,611
Income tax payable
111,558
116,744
Operating lease liabilities
96,435
96,968
Other long-term liabilities
150,014
173,065
Total liabilities
2,421,620
2,453,388
Total stockholders’ equity
3,944,354
3,630,489
Total liabilities and stockholders’
equity
$
6,365,974
$
6,083,877
ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30,
2024
2023
CASH FLOWS FROM OPERATING
ACTIVITIES
Net cash provided by operating
activities
$
452,153
$
738,878
CASH FLOWS FROM INVESTING
ACTIVITIES
Net cash used in investing activities
(200,996
)
(182,619
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Net cash used in financing activities
(152,703
)
(248,059
)
Effect of foreign exchange rate changes on
cash, cash equivalents, and restricted cash
6,008
(11,205
)
Net increase in cash, cash equivalents,
and restricted cash
104,462
296,995
Cash, cash equivalents, and restricted
cash at beginning of the period
938,519
942,355
Cash, cash equivalents, and restricted
cash at end of the period
$
1,042,981
$
1,239,350
ALIGN TECHNOLOGY, INC.
INVISALIGN BUSINESS METRICS
Q1
Q2
Q3
Q4
Q1
Q2
Q3
2023
2023
2023
2023
2024
2024
2024
Number of Invisalign Trained Doctors
Cases Were Shipped To
82,730
83,440
85,195
83,700
83,510
86,135
87,380
Invisalign Trained Doctor Utilization
Rates*:
North America
9.5
9.8
9.6
9.1
9.5
9.9
9.7
North American Orthodontists
28.7
29.2
28.8
25.9
28.2
28.8
28.3
North American GP Dentists
4.9
5.2
4.9
5.0
4.9
5.3
5.0
International
6.2
6.6
6.1
6.5
6.3
6.7
6.2
Total Utilization Rates**
7.1
7.5
7.1
7.1
7.2
7.5
7.1
Clear Aligner Revenue Per Case
Shipment***:
$
1,335
$
1,335
$
1,320
$
1,320
$
1,350
$
1,295
$
1,275
* # 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
ALIGN TECHNOLOGY, INC.
STOCK-BASED COMPENSATION
(in thousands)
Q1
Q2
Q3
Q4
Fiscal
Q1
Q2
Q3
2023
2023
2023
2023
2023
2024
2024
2024
Stock-based Compensation (SBC):
SBC included in Gross Profit
$
1,807
$
1,901
$
1,974
$
1,780
$
7,462
$
2,064
$
2,582
$
3,070
SBC included in Operating Expenses
35,928
35,959
37,628
37,049
146,564
36,724
44,446
45,969
Total SBC
$
37,735
$
37,860
$
39,602
$
38,829
$
154,026
$
38,788
$
47,028
$
49,039
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,
2024
June 30, 2024
Impact % of Revenue
GAAP net revenues
$
977,872
$
1,028,490
Constant currency impact (1)
(125
)
0.0
%
Constant currency net revenues
(1)
$
977,747
GAAP Clear Aligner net revenues
$
786,844
$
831,738
Clear Aligner constant currency impact
(1)
(124
)
0.0
%
Clear Aligner constant currency net
revenues (1)
$
786,720
GAAP Imaging Systems and CAD/CAM
Services net revenues
$
191,028
$
196,752
Imaging Systems and CAD/CAM Services
constant currency impact (1)
(1
)
0.0
%
Imaging Systems and CAD/CAM Services
constant currency net revenues (1)
$
191,027
Year-over-year constant currency
analysis:
Three Months Ended
September 30,
2024
2023
Impact % of Revenue
GAAP net revenues
$
977,872
$
960,214
Constant currency impact (1)
14,649
1.5
%
Constant currency net revenues
(1)
$
992,521
GAAP Clear Aligner net revenues
$
786,844
$
794,939
Clear Aligner constant currency impact
(1)
11,700
1.5
%
Clear Aligner constant currency net
revenues (1)
$
798,544
GAAP Imaging Systems and CAD/CAM
Services net revenues
$
191,028
$
165,275
Imaging Systems and CAD/CAM Services
constant currency impact (1)
2,949
1.5
%
Imaging Systems and CAD/CAM Services
constant currency net revenues (1)
$
193,977
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).
(+)
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 GROSS PROFIT AND GROSS
MARGIN
(in thousands, except percentages)
Sequential constant currency analysis:
Three Months Ended
September 30,
2024
June 30, 2024
GAAP gross profit
$
681,774
$
722,628
Constant currency impact on net
revenues
(125
)
Constant currency gross profit
$
681,648
Three Months Ended
September 30,
2024
June 30, 2024
GAAP gross margin
69.7
%
70.3
%
Gross margin constant currency impact
(1)
0.0
Constant currency gross margin
(1)
69.7
%
Year-over-year constant currency
analysis:
Three Months Ended
September 30,
2024
2023
GAAP gross profit
$
681,774
$
663,076
Constant currency impact on net
revenues
14,649
Constant currency gross profit
$
696,422
Three Months Ended
September 30,
2024
2023
GAAP gross margin
69.7
%
69.1
%
Gross margin constant currency impact
(1)
0.4
Constant currency gross margin
(1)
70.2
%
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,
2024
June 30, 2024
GAAP income from operations
$
162,298
$
147,046
Income from operations constant currency
impact (1)
(1,374
)
Constant currency income from
operations (1)
$
160,924
Three Months Ended
September 30,
2024
June 30, 2024
GAAP operating margin
16.6
%
14.3
%
Operating margin constant currency impact
(2)
(0.1
)
Constant currency operating margin
(2)
16.5
%
Year-over-year constant currency
analysis:
Three Months Ended
September 30,
2024
2023
GAAP income from operations
$
162,298
$
166,346
Income from operations constant currency
impact (1)
9,973
Constant currency income from
operations (1)
$
172,271
Three Months Ended
September 30,
2024
2023
GAAP operating margin
16.6
%
17.3
%
Operating margin constant currency impact
(2)
0.8
Constant currency operating margin
(2)
17.4
%
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,
2024
2023
2024
2023
GAAP gross profit
$
681,774
$
663,076
$
2,102,218
$
2,037,339
Stock-based compensation
3,070
1,974
7,716
5,682
Amortization of intangibles (1)
3,702
2,825
11,104
8,409
Restructuring charges (2)
—
—
—
(8
)
Non-GAAP gross profit
$
688,546
$
667,875
$
2,121,038
$
2,051,422
GAAP gross margin
69.7
%
69.1
%
70.0
%
70.1
%
Non-GAAP gross margin
70.4
%
69.6
%
70.6
%
70.6
%
GAAP total operating expenses
$
519,476
$
496,730
$
1,638,739
$
1,565,546
Stock-based compensation
(45,969
)
(37,628
)
(127,139
)
(109,515
)
Amortization of intangibles (1)
(880
)
(885
)
(2,618
)
(2,631
)
Restructuring and other charges (2)
89
—
446
300
Legal settlement loss
(66
)
—
(31,193
)
—
Non-GAAP total operating
expenses
$
472,650
$
458,217
$
1,478,235
$
1,453,700
GAAP income from operations
$
162,298
$
166,346
$
463,479
$
471,793
Stock-based compensation
49,039
39,602
134,855
115,197
Amortization of intangibles (1)
4,582
3,710
13,722
11,040
Restructuring and other charges (2)
(89
)
—
(446
)
(308
)
Legal settlement loss
66
—
31,193
—
Non-GAAP income from operations
$
215,896
$
209,658
$
642,803
$
597,722
GAAP operating margin
16.6
%
17.3
%
15.4
%
16.2
%
Non-GAAP operating margin
22.1
%
21.8
%
21.4
%
20.6
%
GAAP net income before provision for
income taxes
$
165,930
$
162,111
$
468,182
$
468,324
Stock-based compensation
49,039
39,602
134,855
115,197
Amortization of intangibles (1)
4,582
3,710
13,722
11,040
Restructuring and other charges (2)
(89
)
—
(446
)
(308
)
Legal settlement loss
66
—
31,193
—
Non-GAAP net income before provision
for income taxes
$
219,528
$
205,423
$
647,506
$
594,253
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,
2024
2023
2024
2023
GAAP provision for income taxes
$
49,967
$
40,684
$
150,627
147,285
Tax impact on non-GAAP adjustments
(6,061
)
418
(21,156
)
(28,417
)
Non-GAAP provision for income
taxes
$
43,906
$
41,102
$
129,471
$
118,868
GAAP effective tax rate
30.1
%
25.1
%
32.2
%
31.4
%
Non-GAAP effective tax rate
20.0
%
20.0
%
20.0
%
20.0
%
GAAP net income
$
115,963
$
121,427
$
317,555
$
321,039
Stock-based compensation
49,039
39,602
134,855
115,197
Amortization of intangibles (1)
4,582
3,710
13,722
11,040
Restructuring and other charges (2)
(89
)
—
(446
)
(308
)
Legal settlement loss
66
—
31,193
—
Tax impact on non-GAAP adjustments
6,061
(418
)
21,156
28,417
Non-GAAP net income
$
175,622
$
164,321
$
518,035
$
475,385
GAAP diluted net income per
share
$
1.55
$
1.58
$
4.23
$
4.18
Non-GAAP diluted net income per
share
$
2.35
$
2.14
$
6.89
$
6.19
Shares used in computing diluted net
income per share
74,757
76,826
75,149
76,849
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 or revisions to initial severance cost
estimates.
(+)
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 2024 OUTLOOK - GAAP TO NON-GAAP
RECONCILIATION
GAAP operating margin
Slightly below 14.0%
Stock-based compensation
~5.0%
Amortization of intangibles (1)
~0.5%
Restructuring charges (2)
~3.0%
Non-GAAP operating margin
Slightly above 22.1%
(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/20241023467147/en/
Align Technology Madelyn Valente
(909) 833-5839 mvalente@aligntech.com
Zeno Group Sarah Johnson (828)
551-4201 sarah.johnson@zenogroup.com
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