Align Technology ((ALGN)) has held its Q1 earnings call. Read on for the main highlights of the call.
Align Technology’s recent earnings call revealed a mixed sentiment, highlighting robust growth in Clear Aligner volumes and successful product launches, yet tempered by challenges such as a sequential decline in Systems and Services revenue, adverse foreign exchange impacts, and reduced operating margins.
Record Growth in Clear Aligner Volumes
Q1 2025 saw a remarkable 6.2% year-over-year growth in Clear Aligner volumes, driven by strong performance across EMEA, APAC regions, and North America. This represents the highest year-over-year growth rate for both adult and teen patients since 2021, underscoring Align Technology’s successful market penetration and product acceptance.
Expansion in Teen and Kids Segment
Align Technology reported a significant increase in the teen and kids segment, with approximately 226,000 new Invisalign Clear Aligner treatments started in Q1 2025. This reflects a 4.5% sequential growth and a 13.3% increase year-over-year, indicating strong demand and acceptance among younger demographics.
iTero Lumina Scanner Launch
The successful launch of the iTero Lumina scanner, equipped with restorative software, contributed positively to the year-over-year growth in Systems and Services revenues. This innovation highlights Align’s commitment to enhancing its product offerings and maintaining its competitive edge.
Global Reach with New Products
Align Technology expanded its global footprint with the introduction of the Invisalign Palate Expander system in new markets such as Turkey and China. Additionally, the Invisalign system with Mandibular Advancement featuring Occlusal Blocks was launched in the U.S., Canada, Australia, and New Zealand, broadening its product accessibility.
Sequential Decline in Systems and Services Revenue
Despite the positive developments, Q1 2025 saw a 9.2% sequential decline in Systems and Services revenues. This was attributed to lower scanner systems revenue and unfavorable foreign exchange rates, presenting a challenge for the company’s financial performance.
Impact of Foreign Exchange
Foreign exchange fluctuations negatively impacted Q1 2025 revenues by approximately $31.1 million year-over-year. This adverse effect was felt across both Clear Aligner and Systems and Services revenues, highlighting the challenges of operating in a global market.
Decrease in Operating Margin
Align Technology’s operating margin for Q1 2025 was 13.4%, marking a decrease of 1.1 points sequentially and 2.1 points year-over-year. This decline was influenced by unfavorable foreign exchange and shifts in product mix, affecting overall profitability.
Lower Clear Aligner ASPs
The average selling price per case for Clear Aligners decreased by $110 year-over-year in Q1 2025. This decline was due to increased discounts, a shift towards lower-priced products, and adverse foreign exchange impacts, which collectively pressured revenue.
Forward-Looking Guidance
Align Technology provided an optimistic outlook for the upcoming quarters. The company anticipates Q2 2025 revenues to range between $1.05 billion and $1.07 billion, with expectations of sequential growth in Clear Aligner volumes and ASPs. For the full fiscal year 2025, Align forecasts mid-single-digit growth in Clear Aligner volume, with Systems and Services revenues projected to grow at a faster pace. The company expects fiscal year revenue growth between 3.5% and 5.5%, with improvements in GAAP and non-GAAP operating margins.
In summary, Align Technology’s earnings call reflected a balanced view of current achievements and challenges. While the company celebrated significant growth in Clear Aligner volumes and product expansions, it also faced hurdles such as revenue declines in Systems and Services and foreign exchange impacts. Looking ahead, Align remains optimistic about its growth trajectory, projecting increased revenues and improved margins for the fiscal year 2025.