ALIGN TECHNOLOGY INC Q4 FY2024 earnings call

• Joe Hogan highlighted Q4 and full-year results, noting Clear Aligner volume growth, record submitters, and momentum in Systems and Services. Key milestones included 272,000 active Invisalign trained practitioners, 19.5 million Invisalign patients, and over 2 billion clear aligners manufactured. - John Morici discussed financial results, FX impact on ASPs, VAT settlement with UK tax authorities, gross margin details, operating expenses, and balance sheet items. He also provided context on pricing and potential new tariffs. - Operational highlights included continued adoption of iTero Lumina scanner, progress with Invisalign Palatal Expander regulatory approvals, and growth in DSO customers.

Clear Aligners: Q4 2024 revenues were $794.3 million, up 0.9% sequentially, driven by higher volumes and lower net revenue deferrals, partially offset by product mix shift and discounts. Full year 2024 total revenues were $4 billion, with Clear Aligner volumes at 2.5 million cases, both up 3.5% year-over-year. System Services: Q4 2024 revenues were $200.9 million, up 5.2% sequentially, primarily due to higher scanner volumes and non-systems revenue, with year-over-year growth of 14.9%.

• Q1 2025 worldwide revenues expected to be in the range of $965 million to $985 million, down sequentially due to FX and lower capital equipment sales. - Fiscal 2025 outlook: low single-digit revenue growth, mid-single-digit Clear Aligner volume growth, ASPs down y-o-y, Systems and Services growth faster, GAAP operating margin ~2 points above 2024, non-GAAP operating margin ~22.5%, and capital expenditures between $100M and $150M.

• Foreign exchange fluctuations impacting ASPs and financial results. - Potential new tariffs on Mexico shipments, with uncertainty around implementation and impact on transfer prices. - Remaining VAT dispute in the UK with uncertainty around ruling and potential 20% VAT application to Clear Aligner sales.

Q: Michael Cherny asked about Clear Aligner volume and competitive dynamics.

A: John Morici said Clear Aligner volume expected mid-single digits y-o-y, Joe Hogan noted new innovations like Minute ClinCheck drive competitive edge.

Q: Elizabeth Anderson inquired about Lumina scanner and DSO growth.

A: Joe Hogan discussed positive uptake of Lumina scanner in ortho and restorative, John Morici talked about portfolio options and leasing/rental opportunities for customers.

Q: Glen Santangelo asked about ASP and DSO growth.

A: John Morici explained ~2 point FX headwind on ASP for 2025, Joe Hogan discussed DSO as force multiplier and GP market potential.

Q: Jeff Johnson asked about FX impact on margins.

A: John Morici said FX has over 1 point impact on op margin, with margin accretion from volume and new products.

Q: Brandon Vazquez asked about IPE adoption and international performance.

A: Joe Hogan discussed IPE adoption progress and international outperformance due to better economies and product penetration.

Q: Jason Bednar asked about teen channel friction and processing fees.

A: Joe Hogan and John Morici talked about teen channel economics and removing processing fees to neutralize impact on ASP.

Q: Steven Valiquette asked about US market competition from Chinese suppliers.

A: Joe Hogan emphasized customer service, technology, and relationships as key to winning in US market.

Q: Unidentified Analyst asked about direct fabrication commercialization.

A: Joe Hogan discussed Invisalign First retainer commercialization timeline and benefits of new 3D printing technology.

Q: Michael Ryskin asked about tariff impact on COGS.

A: John Morici provided perspective on tariff impact on transfer prices and COGS.

Q: Erin Wright asked about tariffs and China market.

A: John Morici said no embedded tariffs in guidance, Joe Hogan noted China market stable.