Slide 1: Q3 2023 Financial Results
Q3 2023 Financial Results Align Technology, Inc. October 25, 2023 © 2023 Align Technology, Inc. All rights reserved. 1
Slide 2: Q3 2023 Conference Call Details
Q3 2003 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 Cont
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 our ability to successfully control our business and operations and pursue our strategic growth drivers, our expec
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: 16.4M cumulative Invisalign patients treated
16.4M cumulative Invisalign® patients treated, including 4.5M teens/kids. © 2023 Align Technology, Inc. All rights reserved. 5
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
600M POTENTIAL PATIENTS through +2M DOCTORS with an iTero™ scanner at EVERY CHAIR
Slide 8: Align digital platform
ee align digital platform: Come a ; s 3{é invisalign’ | iTero: | exocad: | viverar NN
Slide 9: Align Digital Workflow
Align Digital Workflow Dedicated tools and capabilities for each stage of the treatment journey Connect Scan Diagnose Plan Treat Monitor Retain • $200M annual • iTero™ scanners with • Align™ Oral Health Suite • ClinCheck® Live Update for • Invisalign® System • Invisalign® Virtual Care • Vivera™ reta
Slide 10: Enormous Opportunity
ENORMOUS OPPORTUNITY 600M Consumer Opportunity 15M teens 22M Annual ortho starts 7M adults ©2023, Align Technology Inc. All rights reserved.
Slide 11: Focused Execution: Strategic Growth Drivers
INTERNATIONAL PATIENT ORTHODONTIST GP DENTIST EXPANSION DEMAND UTILIZATION TREATMENT Focused Execution STRATEGIC GROWTH DRIVERS
Slide 12: 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 13: Q3 2023 CEO Opening Comments
Q3 2023 CEO Opening Comments Our third quarter results reflect lower than expected demand and a more difficult macro environment than we experienced in the first half of 2023. Dental practices and industry research firms have reported deteriorating trends including decreased patient visits and incre
Slide 14: Q3 2023 Highlights
Q3 2023 Highlights © 2023 Align Technology, Inc. All rights reserved. 14
Slide 15: Q3 2023 Revenues and Operating Margin
Q3 2023 Revenues and Operating Margin TOTAL REVENUES TOTAL SYSTEMS AND SERVICES REVENUES TOTAL CLEAR ALIGNER REVENUES GAAP OP PROFIT MARGIN Q3'23 Q3'23 Q3'23 Q3'23 $960.2M $165.3M $794.9M $166.3M | 17.3% Q/Q (4.2)% Y/Y +7.8% Q/Q (2.5)% Y/Y +4.9% Q/Q (4.5)% Y/Y +8.5% Q/Q +0.1% pt Y/Y +1.2% pts Q3’22
Slide 16: Q3 2023 Clear Aligner segment
Q3 2023 Clear Aligner segment Americas International Non-Case Clear Aligner Metrics Clear Aligner Metrics Clear Aligner Metrics Americas Clear Aligner Shipments International Clear Aligner Shipments Non-Case Clear Aligner Revenues (0.3)% Y/Y 5.5% Y/Y +13.5% Y/Y (3.8)% Q/Q (2.6)% Q/Q ($M) (0.2)% Q/Q
Slide 17: Q3 2023 Invisalign Doctor Subscription Program Touch-Up Cases
Q3 2023 Invisalign Doctor Subscription Program (DSP) Touch-Up Cases Invisalign DSP Touch-Up* compared to Invisalign® Express Products • For Q3, we shipped over 19K Invisalign Doctor Subscription Program (“DSP”) cases, primarily in North America, an increase of more than 70% year over year from Q3’22
Slide 18: Q3 2023 Financial Review
4.5M Teens and Kids treated with the Invisalign® System, to date • For Q3, we had record clear aligner shipments to teenage and younger patients, which increased 10% sequentially and 8.4% year over year to a record 222 thousand cases, driven by continued strength from Invisalign First™. Q3 2023 Fina
Slide 19: Invisalign is the Most Trusted Brand in Orthodontics
Invisalign® is the Most Trusted Brand in Orthodontics Q3 2023 Consumer Demand Creation • It is important we continue to create demand for Invisalign clear aligners, especially given macro- economic pressures on doctors and their patients. • To increase awareness and educate young adults, parents and
Slide 20: Invisalign Influencers
Invisalign® Influencers Q3 2023 Consumer Demand Creation • Reaching young adults as well as teens and their parents also requires the right engagement through Invisalign influencers and creator-centric campaigns, which delivered 5.8B impressions in the Americas in Q3. Creators such as Michael Cimino
Slide 21: Connecting consumers with Invisalign doctors
Q3 2023 Connecting consumers with Invisalign® doctors Delivering a best-in-class experience to achieve a happy and healthy smile through doctors Q3 2023 Invisalign® Brand Consumer Concierge Q3 2023 Invisalign® Brand Consumer Marketing Americas • The Invisalign® Brand Consumer Concierge service teams
Slide 22: Q3 2023 Systems and Services segment
Q3 2023 Systems and Services segment Imaging Systems and CAD/CAM Services Systems and Services Revenues +4.9% Y/Y ($M) (2.5)% Q/Q Intraoral digital scans for Invisalign® case submission $157.5 $169.5 $165.3 94.6% 92.3% 87.9% 87.6% 83.2% 84.3% 79.3% 72.1% Q3'22 Q2'23 Q3'23 Q3'20 Q3'21 Q3'22 Q3'23 Ame
Slide 23: Q3 2023 exocad Highlights
Q3 2023 exocad Highlights exocad releases PartialCAD 3.1 Rijeka with improved ChairsideCAD software receives "CELLERANT usability and functionality BEST OF CLASS TECHNOLOGY AWARD" • The new release enhances digital CAD/CAM capabilities • ChairsideCAD, exocad‘s easy-to-use CAD for partial denture des
Slide 24: Q3 2023 Financial Review
Q3 2023 Financial Review © 2023 Align Technology, Inc. All rights reserved. 24
Slide 25: Trended Revenues and Volumes
Trended Revenues and Volumes Q3’23 highlights +7.8% Y/Y Q3’23 Clear Aligner Case Volume (4.2)% Q/Q +2.3% Y/Y $M $1,002.2 (3.3)% Q/Q $943.1 $960.2 (#K) $890.3 $901.5 $169.5 $153.3 $165.3 $157.5 $169.9 596.2 590.9 622.6 602.3 588.6 $789.8 $832.7 $794.9 $732.8 $731.7 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q3'22
Slide 26: Q3 2023 Financial Summary Commentary
Q3 2023 Financial Summary Commentary • Q3'23 Total revenues of $960.2M, (4.2)% Q/Q and +7.8% Y/Y • Q/Q, Q3'23 revenues were unfavorably impacted by FX of ~$2.7M* • Y/Y, Q3'23 revenues were favorably impacted by FX of ~$4.2M* • Q3'23 Clear Aligners revenues of $794.9M, (4.5)% Q/Q and +8.5% Y/Y • Q/Q,
Slide 27: Trended GAAP Gross Margins
Trended GAAP Gross Margins Q3’23 highlights (0.4)% pts (2.1)% pts • Overall Q3'23 gross margin was 69.1%, (2.1) pts Q/Q and (0.5) pts Y/Y • Q/Q, overall gross margin was unfavorably impacted by FX of ~0.1 pt • Y/Y, overall gross margin was favorably impacted by FX of ~0.1 pt 71.2% • Q3'23 Clear Alig
Slide 28: Trended GAAP Operating Expense
Trended GAAP Operating Expense Q3’23 highlights +4.5% Y/Y (8.3)% Q/Q • Q3'23 Operating expenses were $496.7M, (8.3)% Q/Q and +4.5% Y/Y • Q/Q, Q3'23 operating expenses ($44.9)M, primarily from lower consumer $M marketing spend and lower incentive compensation $541.7 • Y/Y, Q3'23 operating expenses +2
Slide 29: GAAP Operating Margin and Earnings Per Share Trends
GAAP Operating Margin and Earnings Per Share Trends Q3’23 highlights +1.2% pts • Q3'23 Operating income of $166.3M resulted in an Q3'23 operating margin of 17.3%,+0.1 pts Q/Q and +1.2 pts Y/Y. +0.1% pts • Q3'23 Q/Q decrease primarily attributable to unfavorable impact from FX by ~0.3 pts*. • Q3'23 Y
Slide 30: Trended Quarterly Financials
Trended Quarterly Financials GAAP Gross Margin % Operating Expense ($M) Operating Margin % & EPS $527.1 $541.7 $496.7 70.0% 71.2% $475.5 $505.0 69.5% 68.5% 69.1% 16.1% 17.2% 17.3% 12.5% 14.2% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Diluted Earnings $
Slide 31: Q3 2023 Clear Aligner Revenue Per Case Shipment
Q3 2023 Clear Aligner Revenue Per Case Shipment Clear Aligner Revenue Per Case Shipment $1,400 $1,300 $1,200 $1,100 $1,000 $900 Q3'21* Q4'21* Q1'22* Q2'22* Q3'22* Q4'22* Q1'23* Q2'23* Q3'23 Worldwide ASP $1,270 $1,280 $1,335 $1,315 $1,245 $1,225 $1,335 $1,335 $1,320 • Average Selling Price (“ASP”):
Slide 32: Balance Sheet, Cash Flow, & Stock
Balance Sheet, Cash Flow, & Stock • Of our $1.3 billion balance, $381.3M was held in the U.S. and $920.6M was Q3’22 Q2’23 Q3’23 held by our international entities ($ in millions except for DSO) • During Q1’23, we announced that our Board of Directors authorized a new Accounts Receivables, net $859.6
Slide 33: Closing Comments
Closing Comments © 2023 Align Technology, Inc. All rights reserved. 33
Slide 34: Q4 and Fiscal 2023 Outlook
Q4 and Fiscal 2023 Outlook Q4'23 Clear Aligner and Scanner & Services • For Q4'23, assuming no circumstances occur that are beyond our control, we anticipate our WW Revenue to be in the range of $920M to $940M, down sequentially from Q3'23. • We expect both Clear Aligner and Systems and Services Rev
Slide 35: Q3 2023 Earnings Call CEO Closing commentary
Q3 2023 Earnings Call CEO Closing commentary • While our third quarter results and fourth quarter outlook reflect weaker consumer sentiment and increased headwinds, including foreign exchange, Align is in a unique position to continue driving the digital revolution in the dental industry and help do
Slide 36: From appliance to platform
From appliance to platform 2017 – 2023 Invisalign First™ 2001–2023 My Invisalign™ app Revenue Y/Y% LTM 20% - 30% +23% iTero Element™ 5D imaging system NIRI ClinCheck® Pro 6 exocad™ lab software 2013 – 2016 Invisalign® Virtual Care SmartTrack™ material Professional Whitening Biteramps Subscription In
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: 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. 2) Restructuring charges primarily related to severance. © 2023 Align Technology, Inc. All rights reserved.