• Total Revenue: $995.2 million for Q4, up 1.8% sequentially and 4% year-over-year.
• Clear Aligner Revenue: $794.3 million for Q4, up 0.9% sequentially and 1.6% year-over-year.
• Systems and Services Revenue: $200.9 million for Q4, up 5.2% sequentially and 14.9% year-over-year.
• Clear Aligner Volume Growth: 6.1% year-over-year for Q4.
• Non-GAAP Operating Margin: 23.2% for Q4, up 1.1 points sequentially.
• Net Income per Diluted Share: $1.39 for Q4, down $0.16 sequentially.
• Cash and Cash Equivalents: $1,043.9 million as of December 31, 2024.
• Free Cash Flow: $263 million for Q4.
• Operating Expenses: $552.8 million for Q4, up 6.4% sequentially.
• Gross Margin: 70% for Q4, up 0.3 points sequentially.
• Capital Expenditures: $23 million for Q4.

• Warning! GuruFocus has detected 4 Warning Signs with ALGN.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Align Technology Inc (NASDAQ:ALGN) reported Q4 total revenues of $995 million, a 4% increase year-over-year, driven by strong growth in Systems and Services revenues.
• Clear Aligner volumes grew 6.1% year-over-year, with notable strength in the EMEA, APAC, and LatAm regions.
• The company achieved several milestones, including 272,000 active Invisalign trained practitioners and 19.5 million Invisalign patients treated.
• Align Technology Inc (NASDAQ:ALGN) saw a record number of doctor submitters worldwide, reflecting increased utilization and growth in both adult and teen segments.
• The iTero Lumina scanner launch was successful, with positive feedback from doctors, and plans to expand its capabilities to include restorative workflows.

Negative Points

• Q4 Clear Aligner ASPs were lower than expected due to unfavorable foreign exchange impacts from a stronger U.S. dollar.
• Operating expenses increased by 11% year-over-year, primarily due to restructuring, advertising, and marketing expenses.
• The orthodontic market in North America has been flat for the last three years, impacting growth in that region.
• Align Technology Inc (NASDAQ:ALGN) faces potential challenges from new tariffs on shipments from Mexico to the U.S., which could impact costs.
• The company anticipates a decline in Q1 2025 revenues due to foreign exchange impacts and lower capital equipment sales.

Q & A Highlights

Q: Can you provide more details on the guidance for Clear Aligner volumes and pricing, considering the impact of foreign exchange and market dynamics? A: John F. Morici, CFO, explained that they expect Clear Aligner volumes to grow mid-single digits in 2025. The growth will vary across regions and times of the year. The ASPs are expected to be impacted by foreign exchange, with a 2-point headwind year-over-year due to the strengthening of the US dollar.

Q: How do you view the competitive dynamics in the market, and are there opportunities for market share gains? A: Joseph M. Hogan, CEO, stated that they do not see significant changes in competitive dynamics from 2024 to 2025. Align's innovations, such as mini ClinCheck, are expected to enhance productivity and maintain a competitive edge globally, including in China.

Q: What are your expectations for the iTero Lumina scanner launch, and how do you see the growth dynamics in North America, particularly with DSO versus non-DSO customers? A: Joseph M. Hogan, CEO, noted that the iTero Lumina scanner has been well-received, especially for its image quality and usability. The launch will complete the system for GPs, allowing them to perform restorative work. John F. Morici, CFO, added that they offer various purchasing options, including leasing, to accommodate different customer needs.

Q: How do you perceive the overall orthodontic industry, and do you think Align is gaining market share? A: Joseph M. Hogan, CEO, mentioned that the orthodontic market in North America has been flat for the past three years. Align has made progress with new products, particularly in the GP channel, and is focusing on new technologies to differentiate in the orthodontic community.

Q: Can you elaborate on the impact of foreign exchange on ASPs and operating margins for 2025? A: John F. Morici, CFO, indicated that foreign exchange is expected to have a 2-point headwind on ASPs and over 1 point on operating margins year-over-year. The impact is more pronounced in Q1 due to the stronger US dollar.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.