Slide 1: Q2 2023 Financial Results
Q2 2023 Financial Results Align Technology, Inc. July 26, 2023 © 2023 Align Technology, Inc. All rights reserved. 1
Slide 2: Conference Details
Conference Details Conference call Contacts • Speakers: • Website: http://investor.aligntech.com/ • Joe Hogan, President and CEO • Email: investorinfo@aligntech.com • John Morici, CFO • Tel: (602) 742-2000 • Shirley Stacy, VP, Finance, Investor Relations and Corporate • Corporate and Investor Commun
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 market opportunities, our ability to deliver products and technologies, anticipated clear aligner volumes and ASP,
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: 15.7M total Invisalign patients treated to date
15.7M total Invisalign® patients treated to date, including 4.3M teens. © 2023 Align Technology, Inc. All rights reserved. 5
Slide 6: 25 years – From appliance to platform
25 years – From appliance to platform 2017 – 2022 G-Series Revenue Y/Y% 2001 – 2022 ClinCheck® Pro 6.0 +23% iTero Element™ 5D imaging system NIRI Invisalign First™ 2013 – 2016 My Invisalign™ app G-Series Invisalign Smile Architect™ SmartTechnology Invisalign® Virtual Care SmartTrack™ Invisalign® Vir
Slide 7: © 2023 Align Technology, Inc. All rights reserved.
© 2023 Align Technology, Inc. All rights reserved.
Slide 8: Align Digital Workflow
Align® Digital Workflow A seamless end-to-end treatment experience that guides doctor customers from first consultation through to final smile, delivering to them and their patients’ superior clinical outcomes, treatment efficiency, and an elevated patient experience. $300M annual investment in iTer
Slide 9: Unprecedented Opportunity
Unprecedented Opportunity © 2023 Align Technology, Inc. All rights reserved. 9
Slide 10: Potential patients through 2M doctors
7M EMEA 7M Ortho 7M AMERICAS APAC Ortho Ortho 500M Potential patients through 2M doctors © 2023 Align Technology, Inc. All rights reserved. © 2023 Align Technology, Inc. All rights reserved.
Slide 11: Orthodontic starts: teens and adults
14M Teens Orthodontic starts Adults 21M © 2023Align Technology, Inc. All rights reserved. 7M
Slide 12: Relentless focus and execution on our strategic priorities
International expansion Relentless focus Patient demand & conversion and execution on our Orthodontist utilization strategic priorities GP dentist treatment
Slide 13: Our unique position and sustainable competitive advantage
Our unique position and sustainable competitive advantage Multivariable equation that is very difficult to replicate Manufacturing Excellence Financial Reliable Financial Results ✓ 1M unique clear aligner parts / day Discipline ✓ Excellent Top-line & profit growth ✓ > 55K treatment plans / day ✓ Str
Slide 14: Opening Commentary
Opening Commentary Overall, we’re pleased to report another better than expected quarter with Q2 revenues and operating margins that exceeded our guidance. Q2 results reflect improving trends across regions and strength in teen and younger patient volumes, driven by momentum in both submitters and u
Slide 15: Quarterly Highlights
Quarterly Highlights © 2023 Align Technology, Inc. All rights reserved. 15
Slide 16: Q2 2023 Revenues and Operating Margin
Q2 2023 Revenues and Operating Margin TOTAL REVENUES TOTAL SYSTEMS AND SERVICES REVENUES TOTAL CLEAR ALIGNER REVENUES GAAP OP PROFIT MARGIN Q2’23 Q2’23 Q2’23 Q2’23 $1,002.2M $169.5M $832.7M $171.9M | 17.2% Q/Q +6.3% Y/Y +3.4% Q/Q +10.5% Y/Y (1.0)% Q/Q +5.4% Y/Y +4.3% Q/Q +3.0% pts Y/Y (2.2)% pts Q2’
Slide 17: Business and Regional Review
Business and Regional Review © 2023 Align Technology, Inc. All rights reserved. 17
Slide 18: Clear Aligner segment
Clear Aligner segment Americas International Clear Aligner Metrics Clear Aligner Metrics Americas Clear Aligner Shipments International Clear Aligner Shipments (4.0)% Y/Y +6.7% Y/Y +2.9% Q/Q +7.3% Q/Q Q2'22 Q1'23 Q2'23 Q2'22 Q1'23 Q2'23 North Americas Utilization* International Utilization* NA Ortho
Slide 19: Q2 2023 Non-Case Revenues
Q2 2023 Non-Case Revenues • Q2 Non-Case revenues of $79.0M was up 6.2% Q/Q and 17.9% Y/Y, reflecting continued growth from Non-Case Vivera™ retainers, the Invisalign Doctor Subscription Program (DSP) our monthly subscription-based clear Clear Aligner Metrics aligners program, and Commerce sales for
Slide 20: 4.3M Teen and Kids treated with the Invisalign System
4.3M Teen and Kids treated with the Invisalign® System, to date • Teen orthodontic treatment is the largest segment of the orthodontic market worldwide and represents our largest opportunity for clear aligners sales to Orthos. We continue to focus on gaining share from traditional metal braces throu
Slide 21: Power of consumer brand
Power of consumer brand Focusing on educating consumers about the Invisalign® System and driving demand to Invisalign doctors’ offices • The Invisalign® System is one of the most trusted brands in the Orthodontic industry globally among both doctors and patients. On the consumer marketing front, we
Slide 22: Connecting consumers with top Invisalign doctors
Connecting consumers with top Invisalign® doctors Delivering a best-in-class experience to achieve a happy and healthy smile through doctors Q2 2023 Invisalign® Brand Consumer Concierge Q2 2023 Invisalign® Brand Consumer Marketing Americas • The Invisalign® Brand Consumer Concierge service teams hav
Slide 23: Systems and Services segment
Systems and Services segment Imaging Systems and CAD/CAM Services Systems and Services Revenues (1.0)% Y/Y ($M) +10.5% Q/Q Intraoral digital scans for Invisalign® case $171.2 $169.5 submission $153.3 94.0% 91.4% 86.6% 88.0% 85.7% 83.7% 76.2% 72.0% Q2'22 Q1'23 Q2'23 Q2'20 Q2'21 Q2'22 Q2'23 Americas I
Slide 24: exocad Q2 2023 Highlights
exocad Q2 2023 Highlights exocad’s global CAD/CAM conference “Insights 2024” returns to Palma de Mallorca exocad releases ChairsideCAD 3.1 Rijeka with many new features for • Insights 2024, the fourth global gathering for dental labs and clinics, will be held on May 9–10, 2024, under the motto “Netw
Slide 25: Q2 2023 Financial Review
Q2 2023 Financial Review © 2023 Align Technology, Inc. All rights reserved. 25
Slide 26: Revenues Trend
Revenues Trend Q2’23 highlights • Total revenues of $1,002.2M, +6.3% Q/Q and +3.4% Y/Y +3.4% Y/Y • Q/Q, revenues were favorably impacted by FX of ~$1.3M* • Y/Y, revenues were unfavorably impacted by FX of ~$19.4M* • Clear Aligners revenues of $832.7M, +5.4% Q/Q and +4.3% Y/Y +6.3% Q/Q • Q/Q, increas
Slide 27: Clear Aligner Shipments Trend
Clear Aligner Shipments Trend Q2’23 highlights +0.9% Y/Y • In Q2, Clear Aligner case volume was +5.0% Q/Q, and +0.9% +5.0% Q/Q (#K) Y/Y 599.0 577.2 583.7 575.4 604.4 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q/Q and Y/Y percentages are based on actual values. Rounding may affect totals © 2023 Align Technology,
Slide 28: GAAP Gross Margin Trends
GAAP Gross Margin Trends Q2’23 highlights +0.3% pts +1.2% pts • Overall gross margin was 71.2%, +1.2 pts Q/Q and +0.3 pts Y/Y • Y/Y, overall gross margin was unfavorably impacted by FX of ~0.5 pts • Clear Aligner gross margin was 72.4% 70.9% 71.2% • +0.7 pts Q/Q primarily due to lower mix of additio
Slide 29: GAAP Operating Expense Trends
GAAP Operating Expense Trends Q2’23 highlights +8.5% Y/Y +2.8% Q/Q • Operating expenses were $541.7M, +2.8% Q/Q and +8.5% Y/Y • Q/Q, operating expenses +$14.5M, primarily from higher consumer $M marketing spend and higher incentive compensation $541.7 • Y/Y, operating expenses +42.3M, primarily due
Slide 30: GAAP Operating Margin and Earnings Per Share Trends
GAAP Operating Margin and Earnings Per Share Trends Q2’23 highlights (2.2)% pts • Operating income of $171.9M resulted in an operating margin of 17.2%,+3.0 pts Q/Q and (2.2) pts Y/Y +3.0% pts • Q/Q increase primarily attributable to higher gross margin • Y/Y decrease primarily attributable to invest
Slide 31: Trended financials
Trended financials GAAP Gross Margin % Operating Expense ($M) Operating Margin % & EPS $541.7 70.9% 71.2% $499.4 $475.5 $505.0 $527.1 69.5% 68.5% 70.0% 19.4% 16.1% 17.2% 12.5% 14.2% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Diluted Earnings $1.44 $0.93
Slide 32: Clear Aligner Revenue Per Case Shipment
Clear Aligner Revenue Per Case Shipment Clear Aligner Revenue Per Case Shipment $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Worldwide ASP $1,265 $1,280 $1,290 $1,350 $1,335 $1,270 $1,255 $1,375 $1,380 • Average Selling Price (“ASP”): Clear ali
Slide 33: Balance Sheet, Cash Flow, & Stock
Balance Sheet, Cash Flow, & Stock • Of our $1.0 billion balance, $314.3M was held in the U.S. and Q2’22 Q1’23 Q2’23 ($ in millions except for DSO) $719.5M was held by our international entities • In Q2, we completed a $75M equity investment in Heartland Dental, Accounts Receivables, net $931.9 $884.
Slide 34: Closing Comments
Closing Comments © 2023 Align Technology, Inc. All rights reserved. 34
Slide 35: Business trends commentary
Business trends commentary We are pleased with our Q2 results. While the macroeconomic environment still remains uncertain, we have seen improvements in the operating environment and consumer demand signals that influence our outlook. • For Q3'23, we anticipate our WW Revenue to be in the range of $
Slide 36: Closing commentary
Closing commentary Overall, we’re pleased with our second quarter results and feel good about our continued growth despite an economic slowdown and uncertain environment. Q2 results demonstrate our resilience and adaptability. While we cannot predict future economic conditions, we are confident in o
Slide 37: © 2023 Align Technology, Inc. All rights reserved.
© 2023 Align Technology, Inc. All rights reserved. 37
Slide 38: Appendix
Appendix © 2023 Align Technology, Inc. All rights reserved. 38
Slide 39: GAAP to Non-GAAP Reconciliation Constant Currency Net Revenues
Unaudited GAAP to Non- GAAP Reconciliation Constant Currency Net Revenues 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 seque
Slide 40: GAAP to Non-GAAP Reconciliation Constant Currency Gross Profit and Gross Margin
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 41: GAAP to Non-GAAP Reconciliation Constant Currency Income from Operations
Unaudited GAAP to Non- GAAP Reconciliation Constant Currency Income from Operations and Operating Margin 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
Slide 42: GAAP to Non-GAAP Reconciliation Financial Measures Other Than Constant Currency
Unaudited GAAP to Non- GAAP Reconciliation Financial Measures Other Than Constant Currency 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, lease termin
Slide 43: Fiscal 2023 Outlook GAAP to Non-GAAP Reconciliation
Fiscal 2023 Outlook – GAAP to Non- GAAP Reconciliation Note: 1) Amortization of intangible assets related to certain acquisitions. © 2023 Align Technology, Inc. All rights reserved.