Slide 1: Q4 and Fiscal 2023 Financial Results
Q4 and Fiscal 2023 Financial Results Align Technology, Inc. January 31, 2024 ©2024 Align Technology Inc. All rights reserved. 1
Slide 2: Q4 and Full Year 2023 Conference Call Details
Q4 and Full Year 2023 Conference Call Details Conference call Speakers: Joe Hogan, President and CEO John Morici, CFO Shirley Stacy, VP, Finance, Investor Relations and Corporate Communications Webcast Archive: Audio webcast archive will be available at http://investor.aligntech.com for one month Co
Slide 3: Safe Harbor and Forward-Looking Statements
Safe Harbor and Forward-Looking Statements This presentation, including the tables below, contains forward-looking statements, including statements of beliefs and expectations regarding anticipated capital expenditures, clear aligner volumes, clear aligner ASPs, iTero scanner and services revenue, t
Slide 4: About Non-GAAP Financial Measures
About Non-GAAP Financial Measures • To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States ("GAAP"), we may provide investors with certain non-GAAP financial measures which may i
Slide 5: 2023 Milestones
2023 Milestones • 17M Invisalign® patients treated—including 4.7M teens • 4M Vivera™ retainer cases • +100K iTero™ scanners sold • Full year fiscal 2023, total revenues exceeded our prior outlook, and we delivered fiscal 2023 non-GAAP operating margin above 21%* ©2024 *See table: Align Unaudited Tec
Slide 6: Making clear aligner treatment available for everyone through doctors
Making clear aligner treatment available for EVERYONE through DOCTORS
Slide 7: 600M potential patients, 2M doctors, iTero at every chair
600M POTENTIAL PATIENTS through +2M DOCTORS with an iTero™ scanner at EVERY CHAIR
Slide 8: From appliance to platform
2024 From appliance to platform iTero Lumina™ intraoral scanner iTero Multi-Direct Capture™ technology 2017 – 2023 ClinCheck® Smile Video Revenue Y/Y% 2001–2023 Invisalign First™ LTM 20% - 30% +22.5% My Invisalign™ app iTero Element™ 5D imaging system NIRI ClinCheck® Pro 6 2013 – 2016 exocad™ lab so
Slide 9: iTero Lumina intraoral scanner
iTero Lumina™ intraoral scanner A practice digital transformation solution • The iTero Lumina™ intraoral scanner is a breakthrough technology - with 3X wider field of capture1 in a 50% smaller wand2, that delivers faster scanning, higher accuracy3, and superior visualization4 for greater practice ef
Slide 10: Invisalign Palatal Expander system receives U.S. FDA 510(k) clearance
Invisalign® Palatal Expander system receives U.S. FDA 510(k) clearance PALATAL EXPANSION: Invisalign® Palatal Expander system (“IPE”) PALATAL EXPANSION: Current solutions Micro-Implant Assisted Rapid Palatal Expander (MARPE) Hyrax Appliance (banded) • During Q4, we announced that the U.S. Food and D
Slide 11: ClinCheck Smile Video
ClinCheck® Smile Video The next generation in-face visualization tool that is expected to be available to all doctors that use Invisalign® Practice app and ClinCheck treatment software • We are also launching ClinCheck® Smile Video, the next generation of in-face visualization with AI-assisted video
Slide 12: Align Technology Among Top Organizations Granted U.S. Patents in 2023
Align Technology Among Top 300 WW Organizations Granted U.S. Patents in 2023 Our patient-focused research and development programs have led to innovations designed to deliver world-class products that doctors and their patients trust to create a better smile The patents granted by the United States
Slide 13: ©2024 Align Technology Inc. All rights reserved.
©2024 Align Technology Inc. All rights reserved.
Slide 14: Enormous Opportunity
ENORMOUS OPPORTUNITY 600M Consumer Opportunity 15M teens 22M Annual ortho starts 7M adults ©2024, Align Technology Inc. All rights reserved.
Slide 15: Focused Execution: Strategic Growth Drivers
INTERNATIONAL PATIENT ORTHODONTIST GP DENTIST EXPANSION DEMAND UTILIZATION TREATMENT Focused Execution STRATEGIC GROWTH DRIVERS
Slide 16: Align's unique position and multivariable equation difficult to replicate
Align's unique position and multivariable equation that is very difficult to replicate RELIABLE FINANCIAL RESULTS MANUFACTURING EXCELLENCE • • Excellent Top-line & profit growth • > 1M unique clear aligner parts / day • Strong Balance Sheet • > 59K treatment plans / day Proven & Scalable Technology
Slide 17: Q4 and Full Year 2023 CEO Opening Comments
Q4 and Full Year 2023 CEO Opening Comments • We are pleased to report fourth quarter results with better-than-expected revenues and earnings. As of the end of Q4 we achieved several major milestones including 17 million Invisalign® patients treated—including 4.7 million teens – plus 4 million Vivera
Slide 18: Q4 2023 Highlights
Q4 2023 Highlights ©2024 Align Technology Inc. All rights reserved. 18
Slide 19: FY2023 Revenues and Operating Margin
FY2023 Revenues and Operating Margin TOTAL REVENUES TOTAL SYSTEMS AND SERVICES REVENUES TOTAL CLEAR ALIGNER REVENUES GAAP OP PROFIT MARGIN 2023 2023 2023 2023 $3,862.3M $662.9M $3,199.3M $643.3M | 16.7% Y/Y +3.4% Y/Y +0.1% Y/Y +4.1% Y/Y (0.5)% pts 2022 2022 2022 2022 $3,734.6M $662.1M $3,072.6M $642
Slide 20: Q4 2023 Revenues and Operating Margin
Q4 2023 Revenues and Operating Margin TOTAL REVENUES TOTAL SYSTEMS AND SERVICES REVENUES TOTAL CLEAR ALIGNER REVENUES GAAP OP PROFIT MARGIN Q4'23 Q4'23 Q4'23 Q4'23 $956.7M $174.8M $781.9M $171.5M | 17.9% Q/Q (0.4)% Y/Y +6.1% Q/Q +5.8% Y/Y +2.9% Q/Q (1.6)% Y/Y +6.9% Q/Q +0.6% pt Y/Y +5.4% pts Q4’22 Q
Slide 21: FY2023 Clear Aligner segment
FY2023 Clear Aligner segment Americas International Non-Case Clear Aligner Metrics Clear Aligner Metrics Clear Aligner Metrics Americas Clear Aligner Shipments International Clear Aligner Shipments Non-Case Clear Aligner Revenues (2.1)% Y/Y +3.5% Y/Y +14.0% Y/Y ($M) $286.9 $251.7 $199.6 2021* 2022*
Slide 22: Q4 2023 Clear Aligner segment
Q4 2023 Clear Aligner segment Americas International Non-Case Clear Aligner Metrics Clear Aligner Metrics Clear Aligner Metrics Americas Clear Aligner Shipments International Clear Aligner Shipments Non-Case Clear Aligner Revenues (4.5)% Y/Y +3.9% Y/Y +13.3% Y/Y (5.7)% Q/Q +3.0% Q/Q ($M) (1.9)% Q/Q
Slide 23: Q4 2023 Invisalign Doctor Subscription Program Touch-Up Cases
Q4 2023 Invisalign® Doctor Subscription Program (“DSP”) Touch-Up Cases 623 605 608 604 599 599 602 596 593 589 591 584 583 577 575 573 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Clear Aligner Shipments w/o Touch-up (K) Clear Aligner Shipments (K) Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23
Slide 24: 4.7M Teens and Kids treated with the Invisalign System
4.7M Teens and Kids treated with the Invisalign® System, to date • In the teen segment, for Q4, 197 thousand teens and younger patients started treatment with Invisalign clear aligners up 6% year over year and were a record number of teen cases shipped compared to prior fourth quarters. Q4 Teen star
Slide 25: FY 2023 Connecting consumers with Invisalign doctors
FY 2023 Connecting consumers with Invisalign® doctors Delivering a best-in-class experience to achieve a happy and healthy smile through doctors The Invisalign® Brand Consumer Concierge service teams have connected tens of thousands of potential consumers with Invisalign doctors and reached millions
Slide 26: Invisalign is the Most Trusted Brand in Orthodontics
Invisalign® is the Most Trusted Brand in Orthodontics Q4 2023 Consumer Demand Creation and Digital Tools • Our consumer marketing focuses on creating awareness with consumers about the Invisalign system and driving that demand to Invisalign doctors’ offices, ultimately capitalizing on the massive ma
Slide 27: Invisalign Influencers
Invisalign® Influencers Q4 2023 Consumer Demand Creation and Digital Tools • Reaching young adults as well as teens and their parents also requires the right engagement through Invisalign influencers and creator-centric campaigns. In the US, we partnered with creators such as Symonne Harrison, Avery
Slide 28: iTero intraoral scanners
iTero™ intraoral scanners Accelerating digital practice transformation The iTero scanner is at the front end of digital dentistry. Today, we have over 100K iTero scanners sold or roughly half of the intraoral scanning market globally. We have a scanner portfolio that consists of value to premium pro
Slide 29: Q4 2023 Systems and Services segment
Q4 2023 Systems and Services segment Imaging Systems and CAD/CAM Services Systems and Services Revenues +2.9% Y/Y +0.1% Y/Y ($M) +5.8% Q/Q Intraoral digital scans for Invisalign® case $174.8 $705.5 $169.9 $165.3 $662.0 $662.9 submission 95.1% 92.7% 89.2% 86.8% 88.1% 84.0% 80.8% 73.7% Q4'22 Q3'23 Q4'
Slide 30: Q4 2023 exocad Highlights
Q4 2023 exocad Highlights exocad introduces DentalCAD 3.2 Elefsina software with more than 60 new features for more automation and speed The software release offers new and improved workflows - from treatment planning to design and manufacturing The new preparation margin repair tool enables users t
Slide 31: Q4 2023 Financial Review
Q4 2023 Financial Review ©2024 Align Technology Inc. All rights reserved. 31
Slide 32: Trended Revenues and Volumes
Trended Revenues and Volumes Q4’23 highlights +6.1% Y/Y Q4’23 Clear Aligner Case Volume (0.4)% Q/Q (0.6)% Y/Y $M $1,002.2 (1.6)% Q/Q $943.1 $960.2 $956.7 $901.5 (#K) $169.5 $153.3 $165.3 $174.8 $169.9 596.2 590.9 622.6 602.3 592.6 $789.8 $832.7 $794.9 $781.9 $731.7 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q4'2
Slide 33: Q4 2023 Financial Summary Commentary
Q4 2023 Financial Summary Commentary • Q4'23 Total revenues of $956.7M, (0.4)% Q/Q and +6.1% Y/Y • Q/Q, Q4'23 revenues were unfavorably impacted by FX of ~$12.8M* • Y/Y, Q4’23 revenues were favorably impacted by FX of ~$13.8M* • Q4'23 Clear Aligners revenues of $781.9M, (1.6)% Q/Q and +6.9% Y/Y • Q/
Slide 34: Trended GAAP Gross Margins
Trended GAAP Gross Margins Q4’23 highlights +1.5% pts +0.9% pts • Overall Q4'23 gross margin was 70.0%, +0.9 pts Q/Q and +1.5 pts Y/Y Q/Q, overall gross margin was unfavorably impacted by FX of ~0.4 pt Y/Y, overall gross margin was favorably impacted by FX of ~0.4 pt • Q4’23 Non-GAAP gross margin wa
Slide 35: Trended GAAP Operating Expense
Trended GAAP Operating Expense Q4’23 highlights (1.4)% Y/Y +0.3% Q/Q • During Q4’23, we incurred a total of $14.0M of restructuring and other charges, primarily related to post-employment benefits $M $527.1 $541.7 $505.0 $498.0 • Q4'23 Operating expenses were $498.0M, +0.3% Q/Q and (1.4)% Y/Y $496.7
Slide 36: GAAP Operating Margin and Earnings Per Share Trends
GAAP Operating Margin and Earnings Per Share Trends Q4’23 highlights +5.4% pts • Q4'23 Operating income of $171.5M resulted in an Q4'23 operating margin of 17.9%,+0.6 pts Q/Q and +0.6% pts +5.4 pts Y/Y Q4'23 Q/Q impacted by unfavorable FX of ~0.6 pts* Q4'23 Y/Y increase in operating margin is primar
Slide 37: Trended Quarterly Financials
Trended Quarterly Financials GAAP Gross Margin % Operating Expense ($M) Operating Margin % & EPS $541.7 71.2% $505.0 $527.1 $496.7 $498.0 68.5% 70.0% 69.1% 70.0% 17.2% 17.3% 17.9% 12.5% 14.2% Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Diluted Earnings $
Slide 38: Q4 2023 Clear Aligner Revenue Per Case Shipment
Q4 2023 Clear Aligner Revenue Per Case Shipment Clear Aligner Revenue Per Case Shipment $1,400 $1,300 $1,200 $1,100 $1,000 $900 Q4'21 Q1'22 Q2'22* Q3'22* Q4'22* Q1'23* Q2'23* Q3'23 Q4'23 Worldwide ASP $1,280 $1,335 $1,315 $1,245 $1,225 $1,335 $1,335 $1,320 $1,320 • Average Selling Price (“ASP”): Cle
Slide 39: Balance Sheet, Cash Flow, & Stock
Balance Sheet, Cash Flow, & Stock • Of our $980.8 million balance, $196.1M was held in the U.S. and $748.7M was held by our international entities Q4’22 Q3’23 Q4’23 ($ in millions except for DSO) • In October 2023, we purchased approximately 1.0 million shares of our common stock at an average price
Slide 40: 2023 Financial Review
2023 Financial Review ©2024 Align Technology Inc. All rights reserved. 40
Slide 41: 2023 Financial Highlights
2023 Financial Highlights • We are pleased with our fourth quarter and fiscal 2023 results, and we are GAAP 2023 YoY especially proud of our continued focused execution of our product roadmap and innovation pipeline. We are committed to delivering on our Total Net Revenues $3,862.3M +3.4% strategic
Slide 42: 2023 Trended financials
2023 Trended financials GAAP Gross Margin % Operating Expense ($M) Operating Margin % & EPS $2,063.5 74.3% $1,959.0 $1,991.2 24.7% 70.5% 70.1% 17.2% 16.7% 2021 2022 2023 2021 2022 2023 2021 2022 2023 Diluted Earnings $9.69 $4.61 $5.81 Per Share Non-GAAP Gross Margin % Operating Expense ($M) Operatin
Slide 43: 2023 Balance Sheet and Cash Flow Highlights
2023 Balance Sheet and Cash Flow Highlights 2022 2023 ($ in millions except for DSO) Accounts Receivables, net $859.7 $903.4 DSO 85 days 85 days Cash, Cash Equivalents, and Short-Term and Long-Term Marketable Securities $1,041.6 $980.8 Cash Flow from Operations $568.7 $785.8 Capital Expenditures $(2
Slide 44: Closing Comments
Closing Comments ©2024 Align Technology Inc. All rights reserved. 44
Slide 45: Fiscal 2024 business outlook
Fiscal 2024 business outlook Now, turning to our outlook -- assuming no circumstances occur beyond our control we provide the following framework for Q1 and fiscal 2024: First quarter 2024 outlook: •For Q1’24, we expect our worldwide revenues to be in the range of $960M to $980M, up slightly from Q4
Slide 46: Q4 and Full Year 2023 Earnings Call CEO Closing commentary
Q4 and Full Year 2023 Earnings Call CEO Closing commentary • In closing, while we are pleased with our better than expected fourth quarter results and start to the year, we are even more excited about Align Innovation in 2024 and our next wave of growth drivers. When we spoke to you a year ago, we s
Slide 47: Addressing DTC clear aligners and our industry
We want to address an important matter regarding DTC clear aligners and our industry Align has always believed that a doctor centered model for orthodontic treatment is the safest for patients, and we are always looking for new and better ways to support doctors as they work to create better smiles
Slide 48: ©2024 Align Technology Inc. All rights reserved.
©2024 Align Technology Inc. All rights reserved. 48
Slide 49: Appendix
Appendix ©2024 Align Technology Inc. All rights reserved. 49
Slide 50: Unaudited GAAP to Non-GAAP Reconciliation Constant Currency Net Revenues
ALIGN TECHNOLOGY, INC. ALIGN TECHNOLOGY, INC. Unaudited GAAP to Non- UNAUDITED GAAP TO NON-GAAP RECONCILIATION+ CONSTANT CURRENCY NET REVENUES (in thousands, except percentages) UNAUDITED GAAP TO NON-GAAP RECONCILIATION CONTINUED+ CONSTANT CURRENCY NET REVENUES CONTINUED (in thousands, except percen
Slide 51: Unaudited GAAP to Non-GAAP Reconciliation Constant Currency Gross Profit
Unaudited GAAP to Non- GAAP Reconciliation Constant Currency Gross Profit and Gross Margin 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 const
Slide 52: Unaudited GAAP to Non-GAAP Reconciliation Constant Currency Operating Income
Unaudited GAAP to Non- ALIGN TECHNOLOGY, INC. UNAUDITED GAAP TO NON-GAAP RECONCILIATION CONTINUED+ CONSTANT CURRENCY INCOME FROM OPERATIONS AND OPERATING MARGIN ALIGN TECHNOLOGY, INC. UNAUDITED GAAP TO NON-GAAP RECONCILIATION CONTINUED+ CONSTANT CURRENCY INCOME FROM OPERATIONS AND OPERATING MARGIN C
Slide 53: Unaudited GAAP to Non-GAAP Reconciliation Financial Measures
Unaudited GAAP to Non- GAAP Reconciliation Financial Measures Other Than Constant Currency Notes: 1) Amortization of intangible assets related to certain acquisitions 2) During the fourth quarters of 2022 and 2023, we initiated restructuring plans to increase efficiencies across the organization and
Slide 54: Q1 2024 and Fiscal 2024 Outlook GAAP to Non-GAAP Reconciliation
Q1 2024 and Fiscal 2024 Outlook – GAAP to Non-GAAP Reconciliation Notes: 1) Amortization of intangible assets related to certain acquisitions ©2024 Align Technology Inc. All rights reserved.