Slide 1: Q1 2023 Financial Results
Q1 2023 Financial Results Align Technology, Inc. April 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: 15.1M total Invisalign patients treated to date
15.1M total Invisalign® patients treated to date, including 4.1M 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® Virt
Slide 7: Align Digital Platform
Align Digital Platform™ An integrated suite of proprietary technologies and services delivered as a seamless end-to-end solution to customers, to transform smiles and change lives. © 2023 Align Technology, Inc. All rights reserved. 7
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 better than expected first quarter revenues and earnings. Our first quarter revenues of $943.1 million, a sequential increase, reflect stability across all regions for our Clear Aligner business and favorable average selling price for the Clear Ali
Slide 15: Quarterly Highlights
Quarterly Highlights © 2023 Align Technology, Inc. All rights reserved. 15
Slide 16: Q1 2023 Revenues and Operating Margin
Q1 2023 Revenues and Operating Margin TOTAL REVENUES TOTAL SYSTEMS AND SERVICES REVENUES TOTAL CLEAR ALIGNER REVENUES GAAP OP PROFIT MARGIN Q1’23 Q1’23 Q1’23 Q1’23 $943.1M $153.3M $789.8M $133.5M | 14.2% Q/Q +4.6% Y/Y (3.1)% Q/Q (9.7)% Y/Y (6.2)% Q/Q +7.9% Y/Y (2.5)% Q/Q +1.7% pts Y/Y (6.2)% pts Q1’
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 (5.3)% Y/Y (2.3)% Y/Y +0.6% Q/Q (3.7)% Q/Q Q1'22 Q4'22 Q1'23 Q1'21 Q4'22 Q1'23 North Americas Utilization* International Utilization* NA Ort
Slide 19: Q1 2023 Non-Case Revenues
Q1 2023 Non-Case Revenues Non-Case Clear Aligner Metrics Non-Case Clear Aligner Revenues +19.2% Y/Y +10.5% Q/Q • Q1 Non-Case Revenues were up Q/Q and Y/Y, reflecting continued growth from DSP, Vivera™ Retainers and Commerce sales which include everything from aligner cases, to whitening and cleaning
Slide 20: 4.1M Teen and Kids treated with the Invisalign System
4.1M 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: Clear Aligner volume from DSO customers continued to outpace non-DSO
For Q1, Clear Aligner volume from Dental Service Organization (“DSO”) customers continued to outpace non-DSO customers • For Q1, clear aligner volume from Dental Service Org (DSO) customers continued to outpace non-DSO customers. Q1 clear aligner volume from DSO customers increased sequentially, ref
Slide 22: Power of consumer brand
Power of consumer brand Focusing on educating consumers about the Invisalign® System and driving demand to Invisalign doctors’ offices • Our consumer marketing focuses on creating awareness with consumers about the Invisalign System and driving that demand to Invisalign doctors’ offices, ultimately
Slide 23: Developing the future of digital dentistry and digital orthodontics
Developing the future of digital dentistry and digital orthodontics • Align avidly supports the orthodontic profession through education, grants and continued innovation. Our educational pathway was created to support recent graduates and early career doctors at critical career transition points. As
Slide 24: 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 Q1 2023 Invisalign® Brand Consumer Concierge Q1 2023 Invisalign® Brand Consumer Marketing Americas • The Invisalign® Brand Consumer Concierge service teams hav
Slide 25: Systems and Services segment
Systems and Services segment Imaging Systems and CAD/CAM Services Systems and Services Revenues (6.2)% Y/Y ($M) (9.7)% Q/Q Intraoral digital scans for Invisalign® case submission $163.5 $169.9 $153.3 93.1% 90.6% 87.0% 85.5% 82.8% 80.5% 75.1% 68.7% Q1'22 Q4'22 Q1'23* Q1'20 Q1'21 Q1'22 Q1'23 Services
Slide 26: exocad Q1 2023 Highlights
exocad Q1 2023 Highlights exoplan 3.1 Rijeka launched Future of smile design preview at IDS 2023 Prosthetic-driven implant planning and surgical guide design New AI-enhanced visualization for increased patient acceptance Release Highlights: 3D Face scan App: • Rapid pre-planning helps patients • 3D
Slide 27: Q1 2023 Financial Review
Q1 2023 Financial Review © 2023 Align Technology, Inc. All rights reserved. 27
Slide 28: Revenues Trend
Revenues Trend Q1’23 highlights • Total revenues of $943.1M, +4.6% Q/Q and (3.1)% Y/Y (3.1)% Y/Y • Q/Q, revenues were favorably impacted by FX of ~$25.8M* • Y/Y, revenues were unfavorably impacted by FX of ~$34.9M* • Clear Aligners revenues of $789.8M, +7.9% Q/Q and (2.5)% Y/Y +4.6% Q/Q $M • Q/Q inc
Slide 29: Clear Aligner Shipments Trend
Clear Aligner Shipments Trend Q1’23 highlights (3.9)% Y/Y • In Q1, Clear Aligner case volume was (1.4)% Q/Q, and (3.9)% (1.4)% Q/Q (#K) Y/Y • Q1 total Clear Aligner volumes of 575.4K were down slightly Q/Q, reflecting stability across regions and improvements in consumer confidence, as well as the e
Slide 30: GAAP Gross Margin Trends
GAAP Gross Margin Trends Q1’23 highlights (2.9)% pts +1.5% pts • Overall gross margin was 70.0%, +1.5 pts Q/Q and (2.9) pts Y/Y • Overall gross margin was favorably impacted by FX by ~0.8 pts Q/Q and unfavorably impacted by ~1.1 pts Y/Y 72.9% 70.9% 70.0% • Clear Aligner gross margin was 71.7% 69.5%
Slide 31: GAAP Operating Expense Trends
GAAP Operating Expense Trends Q1’23 highlights +3.1% Y/Y +4.4% Q/Q $M • Operating expenses were $527.1M, +4.4% Q/Q and +3.1% Y/Y $511.3 $527.1 $499.4 $505.0 • Q/Q, operating expenses +$22.1M, primarily from higher incentive $475.5 compensation and consumer marketing spend, partially offset by restru
Slide 32: GAAP Operating Margin and Earnings Per Share Trends
GAAP Operating Margin and Earnings Per Share Trends Q1’23 highlights (6.2)% pts • Operating income of $133.5M resulted in an operating margin of 14.2%,+1.7 pts Q/Q and (6.2) pts Y/Y +1.7% pts • Operating margin was favorably impacted by ~1.5 pts Q/Q primarily due to FX* and higher gross margin • Y/Y
Slide 33: Trended financials
Trended financials GAAP Gross Margin % Operating Expense ($M) Operating Margin % & EPS 72.9% $511.3 $499.4 $527.1 70.9% 70.0% $475.5 $505.0 69.5% 68.5% 20.4% 19.4% 16.1% 12.5% 14.2% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Diluted Earnings Per Share $
Slide 34: Clear Aligner Revenue Per Case Shipment
Clear Aligner Revenue Per Case Shipment Clear Aligner Revenue Per Case Shipment $1,400 $1,300 $1,200 $1,100 $1,000 $900 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Worldwide ASP $1,265 $1,265 $1,280 $1,290 $1,350 $1,335 $1,270 $1,255 $1,375 • Average Selling Price (“ASP”): Clear aligner re
Slide 35: Balance Sheet, Cash Flow, & Stock
Balance Sheet, Cash Flow, & Stock • Of our $921.4 million balance, $310.5M was held in the U.S. and Q1’22 Q4’22 Q1’23 ($ in millions except for DSO) $610.9M was held by our international entities • During Q1'23, we purchased approximately 942K shares of our Accounts Receivables, net $950.9 $859.7 $8
Slide 36: Closing Comments
Closing Comments © 2023 Align Technology, Inc. All rights reserved. 36
Slide 37: Business trends commentary
Business trends commentary We are pleased with our Q1 results and what continues to be a more stable operating environment across all regions. We remain cautiously optimistic for continued stability as we move through the year. However, the macroeconomic environment remains uncertain and given conti
Slide 38: Closing commentary
Closing commentary In closing, we’re pleased with our first quarter results that reflected an environment of continued stability for our doctor customers; however, degrees of uncertainty remain from market to market. We are confident in our durable competitive advantage as we continue to transform t
Slide 39: © 2023 Align Technology, Inc. All rights reserved.
© 2023 Align Technology, Inc. All rights reserved. 39
Slide 40: Appendix
Appendix © 2023 Align Technology, Inc. All rights reserved. 40
Slide 41: 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 42: 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 43: 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 44: 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 45: 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.