Key Points
- Non-GAAP EPS rose 8.6% year over year to $2.41 per share.
- Total revenue was $1,028.5 million, an increase of 2.6%.
- Clear Aligner volume rose, but average selling prices lagged expectations.
Align Technology, Inc. (ALGN -1.89%), known for its Invisalign clear aligners, released its second-quarter earnings results on July 24, 2024, reporting mixed outcomes. The company posted a Non-GAAP diluted net income per share of $2.41. However, total revenue of $1,028.5 million was dampened by unfavorable foreign exchange impacts amounting to $11.6 million. Overall, the quarter showcased solid segment growth but was tempered by external economic factors and lower-than-expected average selling prices (ASP) for Clear Aligners.
| Metric | Q2 2024 | Q2 2023 | % Change Y/Y |
|---|---|---|---|
| Non-GAAP EPS | $2.41 | $2.22 | 8.6% |
| Total Revenue | $1,028.5M | $1,002.2M | 2.6% |
| Clear Aligner Revenue | $831.7M | $832.7M | -0.1% |
| Imaging Systems & CAD/CAM Services Revenue | $196.8M | $169.5M | 16.1% |
Source: 2024-24-24 earnings report.
Company Overview and Focus Areas
Align Technology, Inc. is a global medical device company known for its Invisalign system, which straightens teeth using clear mouthpieces. The company primarily focuses on the Clear Aligner market, consisting of products like Invisalign Comprehensive and Invisalign Express tailored to various malocclusion (misalignment) levels. Another key area is integrated digital solutions, such as the Align Digital Platform, iTero scanners, and ClinCheck treatment planning software, which complement its main products.
Recent efforts include expanding market penetration and improving product offerings. Strategic investments, like the $75-million stake in Heartland Dental, and innovative launches, such as the Invisalign Palatal Expander, highlight Align's commitment to growth and technology. Key success factors include maintaining technological leadership and increasing global market reach through digital and strategic initiatives.
Quarterly Highlights
During Q2 2024, Align Technology saw an increase in Clear Aligner volumes, particularly among teen patients, with a sequential rise of 6.2%. Despite a slight 0.1% year-over-year decline in Clear Aligner revenue to $831.7 million, the company launched new lower-priced products, like the Invisalign Palatal Expander, which played a role in this change. ASPs decreased, largely due to adverse foreign exchange impacts and product mix shifts away from higher-priced offerings.
Imaging Systems and CAD/CAM Services experienced substantial growth. Revenue in this segment rose 16.1% year-over-year to $196.8 million, driven by strong sales of the latest iTero scanners. Sequentially, this represented a 9.2% improvement.
Geographically, the Asia Pacific, EMEA (Eastern Europe, Middle East, and Africa), and Latin America regions fueled growth. Highly notable were the increased adult patient case starts. These rose by 5.0% sequentially and 1.0% year-over-year -- the highest in eight quarters. Align's equity investment in Heartland Dental showcases a strategic effort to penetrate key markets via partnerships.
However, operational margins faced pressure from foreign exchange impacts and legal settlement costs, resulting in a 2.9-point decline in year-over-year GAAP operating margins to 14.3%. Net income fell by 13.6%, landing at $96.6 million due to these higher expenses.
Looking Ahead
Align provided a cautious outlook for Q3 2024, anticipating revenues between $980 and $1,000 million, reflecting seasonal declines and continued foreign exchange challenges. The company expects a sequential drop in Clear Aligner volume and ASPs. GAAP operating margins are projected to be lower than the same period last year, with non-GAAP margins anticipated to be flat year-over-year.
For the full fiscal year 2024, Align projects overall revenue growth of 4% to 6%, with significant investments planned in capital expenditures, around $100 million.
