You are here

Align Technology Announces Third Quarter 2018 Financial Results

  • Q3 revenues up 31.2% year-over-year to a record $505.3 million, and diluted EPS of $1.24
  • Q3 operating income up 26.8% year-over-year to $125.2 million, operating margin of 24.8%
  • Q3 total Invisalign case shipments up 35.3% year-over-year to 319.3 thousand
  • Q3 Invisalign cases for teenage patients up 41.1% year-over-year to 98.5 thousand
  • Q3 iTero scanner and services revenues up 79.1% year-over-year to $78.2 million            

SAN JOSE, Calif., Oct. 24, 2018 (GLOBE NEWSWIRE) -- Align Technology, Inc. (Nasdaq: ALGN) today reported financial results for the third quarter ended September 30, 2018. Invisalign case shipments in the third quarter of 2018 (Q3’18) were 319.3 thousand, up 35.3% year-over-year. Americas and International region case shipments were up year-over-year 29.1% and 45.6%, respectively. Q3’18 Invisalign cases for teenage patients were 98.5 thousand, up 41.1% year-over-year. Q3’18 revenues were $505.3 million, up 31.2% year-over-year and Q3’18 operating income was $125.2 million, up 26.8% year-over-year resulting in an operating margin of 24.8%. Net profit was $100.9 million, or $1.24 per diluted share, up $0.23 year-over-year.
Commenting on Align’s Q3 2018 results, Align Technology President and CEO Joe Hogan said, “I’m pleased to report third quarter results with revenue and earnings above our outlook driven by higher than expected Invisalign volume -- offset somewhat by lower ASPs and foreign exchange. We also had another record quarter for the iTero scanner business with revenues up 79.1% year-over-year. Q3 Invisalign volume increased 5.5% sequentially and up 35.3% year-over-year reflecting strength across regions and customer channels, as well as strong growth from both teen and adult patients. From a product perspective, we saw strength across the Invisalign portfolio with growth from both comprehensive and non-comprehensive products, reflecting an acceleration in the non-comprehensive category related to expansion of our product portfolio, as well as new sales programs and promotions intended to increase adoption and utilization. We also saw continued strength from international regions, especially Asia Pacific, which was our 2nd largest region after the Americas in Q3.”

GAAP Summary Financial Comparisons
Third Quarter Fiscal 2018

 Q3’18Q2’18Q3’17 Q/Q Change Y/Y Change
Invisalign Case Shipments1319,345302,685236,065+5.5%+35.3%
Net Revenues$505.3M$490.3M$385.3M+3.1%+31.2%
  Clear Aligner2$427.1M$433.2M$341.6M(1.4)%+25.0%
  Scanner & Services$78.2M$57.0M$43.7M+37.2%+79.1%
Net Profit$100.9M$106.1M$82.6M(4.9)%+22.2%
Diluted EPS$1.24$1.30$1.01$(0.06)+$0.23

Note: Changes and percentages are based on actual values and may affect totals due to rounding
1 Invisalign shipment figures do not include SmileDirectClub aligners
2 Clear aligner revenue includes revenues from Invisalign clear aligners and SmileDirectClub aligners

As of September 30, 2018, Align had $613.2 million in cash, cash equivalents and marketable securities compared to $720.7 million as of June 30, 2018. During Q3’18, we repurchased $150.0 million of our stock against our stock buy-back authorizations and have $550.0 million still available for repurchase under the  May 2018 Repurchase Program.   

Announcements and Highlights

During the third quarter Align announced the following:

  • Expanded the interactive brand experience program that was piloted in late 2017, and will add eight new locations in major U.S. cities in the fourth quarter of 2018. The program expansion is designed to address the rapidly-evolving consumer market for clear aligners and connects consumers interested in Invisalign treatment with Invisalign doctors in their communities.

  • The first four Invisalign Experience locations in California, Pennsylvania and Maryland have shown great progress since opening and have contributed to a significant influx of consumer interest in the orthodontic marketplace surrounding each location. Key performance metrics to date suggest that the addition of an Invisalign Experience location can have a significant positive impact or “halo effect” on overall Invisalign patient growth in the surrounding area, even among doctors that are not directly participating in the Invisalign Experience pilot program.

  • Announced the Invisalign Experience Branded Practice Pilot (doctor owned pilot). In Q4, Align will also partner with a few Invisalign doctors in select U.S. cities who will pilot Invisalign Experience branded practices to test new ways to reach consumers and connect them directly with doctors to start Invisalign treatment. This pilot is intended to help doctors integrate consumer-friendly design and consultation workflow into their practices and test new Invisalign Experience branding and a consumer-focused approach to consultations and Invisalign treatment starts. It includes an initial digital scan and smile visualization with a scanner, and immediate appointments for walk-ins.

  • Launched the new digital treatment planning facility and education center in Madrid, Spain. The new launch reflects the dynamic growth of Spain and Portugal (jointly known as Iberia) in the Europe, Middle East and Africa (EMEA) region and beyond. The second of its kind in Europe and the fourth worldwide, the treatment planning facility in Madrid aims to increase our commitment to Invisalign trained doctors in Spain and Portugal, and will play a key role in Align trained doctors in Spain and Portugal, and will play a key role in Align Technology`s strategy to be closer to its customers and support them in digital treatment planning. The new facility, which also acts as an education center for doctors, brings together current commercial teams representing Iberia and the new treatment planning team to provide Spanish and Portuguese doctors with first-hand support from the local staff.

  • Announced that on August 22, 2018, the United States Court of Appeals for the Federal Circuit (“Federal Circuit”) vacated the Patent Trial and Appeal Board’s (“PTAB”) decision invalidating certain claims of Align’s patent no. 6,699,037, entitled “Method and System for Incrementally Moving Teeth” (the ‘037 Patent). Although Align is not currently asserting this patent in any litigation against ClearCorrect, ClearCorrect challenged the validity of the patent in an inter partes review procedure and the resulting PTAB decision had invalidated four of the patent’s claims as obvious. The Federal Circuit disagreed and set aside the obviousness determination because “[n]either the Board’s decision nor ClearCorrect’s brief on appeal reveals substantial evidence in support of those findings.” The Federal Circuit remanded the matter to the PTAB for further proceedings consistent with its opinion.

  • Shared the results of a new study by RealSelf, recognizing Invisalign clear aligners as the most popular non-surgical cosmetic treatment brides and grooms are choosing and reviewing on its website before their big day. The study analyzed reviews on the RealSelf website over the past year that mention wedding-related keywords and rank the treatments based on percentage of total reviews.

  • Launched its Orthodontic Aligner Fellowship Certificate Program, in collaboration with DentalXP, a global dental education provider on August 6, 2018. The training program will provide general practitioner dentists with professional education to help integrate Invisalign clear aligner therapy and iTero intraoral scanning more seamlessly into their comprehensive patient care.

  • Expanded operations in Costa Rica with new facilities to support continued long-term growth.  The grand opening of our newest facilities in Costa Rica on July 20 was attended by Carlos Alvarado Quesada, President of Costa Rica, as well as local government officials. Align invested approximately $50.0 million in two new multi-story office buildings, located at San Antonio Business Center (Belén, Heredia), with plans to open another multimillion dollar facility located in La Lima (Cartago) later this year. The new facilities will eventually house all of Align’s Costa Rica employees and provide space to accommodate our long-term growth.

Q4 2018 Business Outlook

For the fourth quarter of 2018 (Q4’18), Align provides the following guidance:

  • Net revenues in the range of $505 million to $515 million, up approximately 20% to 22% over the same period a year ago
  • Invisalign case shipments in the range of 330 thousand to 335 thousand, up approximately 29% to 31% over the same period a year ago
  • Operating margin in the range of 23.2% to 23.9%
  • Diluted EPS in the range of $1.10 to $1.15

Align Web Cast and Conference Call
Align will host a conference call today, October 24, 2018 at 4:30 p.m. ET, 1:30 p.m. PT, to review its third quarter 2018 results, discuss future operating trends and the business outlook. The conference call will also be web cast live via the Internet. To access the webcast, go to the “Events & Presentations” section under Company Information on Align’s Investor Relations web site at To access the conference call, please dial 201-689-8261. An archived audio web cast will be available beginning approximately one hour after the call's conclusion and will remain available for approximately 12 months. Additionally, a telephonic replay of the call can be accessed by dialing 877-660-6853 with conference number 13683414 followed by #. For international callers, please dial 201-612-7415 and use the same conference number referenced above. The telephonic replay will be available through 5:30 p.m. ET on November 7, 2018.

About Align Technology, Inc.
Align Technology designs and manufactures the Invisalign® system, the most advanced clear aligner system in the world, and iTero® intraoral scanners and services. Align’s products help dental professionals achieve the clinical results they expect and deliver effective, cutting-edge dental options to their patients. Visit for more information.

For additional information about the Invisalign system or to find an Invisalign doctor in your area, please visit For additional information about iTero digital scanning system, please visit

Forward-Looking Statement
This news release, including the tables below, contains forward-looking statements, including statements regarding certain business metrics for the fourth quarter of 2018, including, but not limited to, anticipated net revenues, gross margin, operating expenses, operating profit, diluted earnings per share, tax rate including the financial impact of recent U.S. Tax Cuts and Jobs Act and case shipments. Forward-looking statements contained in this news release and the tables below relating to expectations about future events or results are based upon information available to Align as of the date hereof. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. As a result, actual results may differ materially and adversely from those expressed in any forward-looking statement. Factors that might cause such a difference include, but are not limited to, difficulties predicting customer and consumer purchasing behavior, Align's ability to protect its intellectual property rights, continued compliance with regulatory requirements, competition from existing and new competitors, the willingness and ability of our customers to maintain and/or increase product utilization in sufficient numbers, the possibility that the development and release of new products does not proceed in accordance with the anticipated timeline, the possibility that the market for the sale of these new products may not develop as expected, or that the expected benefits of new or existing business relationships will not be achieved as anticipated, risks relating to international sales, which are increasingly a larger portion of our total revenues, the risks relating to Align's ability to sustain or increase profitability or revenue growth in future periods while controlling expenses, growth related risks, including capacity constraints and pressure on our internal systems and personnel, the security of customer and/or patient data is compromised for any reason, continued customer demand for our existing and new products, changes in consumer spending habits as a result of, among other things, prevailing economic conditions, levels of employment, salaries and wages and consumer confidence, the timing of case submissions from our doctors within a quarter, acceptance of our products by consumers and dental professionals, changes to our interpretation of the U.S. Tax Cuts and Jobs Act which may change as we receive additional clarification and implementation guidance, possibly materially, foreign operational, political and other risks relating to Align's international manufacturing operations, litigation risks, uncertainties involved in any contract dispute resolution and the possibility of Align choosing to settle the litigation for business or other reasons. Align's ability to develop and successfully introduce new products and product enhancements and the loss of key personnel. These and other risks are detailed from time to time in Align's periodic reports filed with the Securities and Exchange Commission, including, but not limited to, its Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the Securities and Exchange Commission (SEC) on February 28, 2018. Align undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

(in thousands, except per share data)      
  Three Months Ended
September 30,
 Nine Months Ended
September 30,
   2018   2017  2018   2017
Net revenues $  505,289  $  385,267 $  1,432,472  $  1,052,090
Cost of net revenues     133,508     92,779    367,701     253,060
Gross profit    371,781     292,488    1,064,771     799,030
Operating expenses:        
Selling, general and administrative    213,873     169,524    625,585     483,636
Research and development    32,700     24,201    93,095     71,389
  Total operating expenses    246,573     193,725    718,680     555,025
Income from operations    125,208     98,763    346,091     244,005
Interest income    2,234     1,826    6,327     4,462
Other income (expense), net    (837)    1,924    (7,759)    4,145
Net income before provision for income taxes and equity in losses of investee    126,605     102,513    344,659     252,612
Provision for income taxes    24,601     18,344    35,206     26,508
Equity in losses of investee, net of tax    1,132     1,614    6,610     4,950
Net income $  100,872  $  82,555 $  302,843  $  221,154
Net income per share:        
Basic $  1.26  $  1.03 $  3.78  $  2.76
Diluted $  1.24  $  1.01 $  3.71  $  2.71
Shares used in computing net income per share:        
Basic    80,111     80,163    80,122     80,086
Diluted    81,359     81,789    81,538     81,757
* During Q1'18, we adopted the ASC 606, "Revenues from Contracts with Customers" using the full retrospective method. The adoption of ASC 606 did not have a material impact on our Condensed Consolidated Statements of Operations presented herein.


(in thousands)     
  September 30,
 December 31,
Current assets:     
Cash and cash equivalents $420,860 $449,511 
Marketable securities, short-term  184,297  272,031 
Accounts receivable, net  420,276  324,189 
Inventories  48,858  31,688 
Prepaid expenses and other current assets  149,891  80,948 
Total current assets  1,224,182  1,158,367 
Marketable securities, long-term  8,091  39,948 
Property, plant and equipment, net  491,630  348,793 
Equity method investments  47,996  54,606 
Goodwill and intangible assets, net  83,607  89,068 
Deferred tax assets  47,435  49,334 
Other assets  25,464  43,893 
Total assets $1,928,405 $1,784,009 
Current liabilities:     
Accounts payable $43,065 $36,776 
Accrued liabilities  219,035  195,562 
Deferred revenues  356,109  267,713 
Total current liabilities  618,209  500,051 
Income tax payable  95,655  114,091 
Other long-term liabilities  21,558  15,579 
Total liabilities  735,422  629,721 
Total stockholders' equity  1,192,983  1,154,288 
Total liabilities and stockholders' equity $1,928,405 $1,784,009 
* During Q1'18, we adopted the ASC 606, "Revenues from Contracts with Customers" using the full retrospective method. Condensed Consolidated Balance Sheet as of December 31,2017 has been recasted to comply with the adoption.


(in thousands)
  Nine Months Ended
September 30,
   2018   2017 
Net income $302,843  $221,154 
Net cash provided by operating activities  313,386   276,213 
Net cash used in investing activities  (24,021)  (231,784)
Net cash used in financing activities  (315,151)  (79,036)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash  (2,890)  4,806 
Net decrease in cash, cash equivalents, and restricted cash  (28,676)  (29,801)
Cash, cash equivalents, and restricted cash at beginning of the period  450,125   393,019 
Cash, cash equivalents, and restricted cash at end of the period $421,449  $363,218 
*During Q1'18, we adopted ASU 2016-18, "Statement of Cash Flows - Restricted Cash" on a retrospective basis. Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2017 has been recasted to comply with the adoption.


ALIGN TECHNOLOGY, INC.                  
    Q1 Q2 Q3 Q4 Fiscal Q1 Q2 Q3 
     2017   2017  2017  2017  2017  2018  2018  2018 
Invisalign Average Selling Price (ASP):                  
 Worldwide ASP   $  1,270  $  1,285  $  1,310  $  1,305  $  1,295  $  1,310  $  1,315  $  1,230  
 International ASP  $  1,345  $  1,340  $  1,395  $  1,400  $  1,375  $  1,435  $  1,425  $  1,340  
Invisalign Cases Shipped by Geography:                  
 Americas   134,450   148,470   147,660   155,625   586,205   166,665   181,425   190,615  
 International   73,610   83,420   88,405   99,405   344,840   105,570   121,260   128,730  
   Total Cases Shipped   208,060   231,890   236,065   255,030   931,045   272,235   302,685   319,345  
  YoY % growth   27.1%   31.0%   32.8%   34.2%   31.4%   30.8%   30.5%   35.3%  
  QoQ % growth   9.5%   11.5%   1.8%   8.0%     6.7%   11.2%   5.5%  
Number of Invisalign Doctors Cases Were Shipped To:                 
 Americas   24,595   25,570   25,865   26,480   38,230   27,105   28,280   28,890  
 International   14,270   15,695   16,740   18,505   26,175   19,700   21,805   23,270  
   Total Doctors Cases Shipped To   38,865   41,265   42,605   44,985   64,405   46,805   50,085   52,160  
Invisalign Doctor Utilization Rates**:                  
 North America    5.6   5.9   5.8   6.0   15.8   6.3   6.6   6.9  
   North American Orthodontists    12.6   13.6   13.8   14.0   46.6   15.3   16.4   17.4  
   North American GP Dentists    3.1   3.3   3.1   3.3   8.2   3.4   3.6   3.5  
 International   5.2   5.3   5.3   5.4   13.2   5.4   5.6   5.5  
   Total Utilization Rates   5.4   5.6   5.5   5.7     14.5   5.8   6.0   6.1  
Number of Invisalign Doctors Trained***:                  
 Americas   1,050     1,825   1,980     1,760   6,615   1,630   1,880     2,085  
 International     2,220     3,055   2,540   2,400   10,215     2,645     3,300     2,845  
   Total Doctors Trained Worldwide   3,270   4,880   4,520   4,160   16,830   4,275   5,180   4,930  
   Total to Date Worldwide   118,740   123,620   128,140   132,300   132,300   136,575   141,755   146,685  
Note: Historical public data may differ due to rounding. Additionally, rounding may effect totals. Effective Q1'18, Americas region includes North America and LATAM. International region includes EMEA and APAC. We have recasted historical data to reflect the change.  
* Invisalign business metrics exclude SmileDirectClub aligners.                 
** # of cases shipped / # of doctors to whom cases were shipped. LATAM utilization rate is not separately disclosed, but included in the total utilization rates.   
***2018 and 2017 adjusted to reflect Americas doctors trained for Invisalign iGo  
ALIGN TECHNOLOGY, INC.                  
(in thousands)                  
    Q1 Q2 Q3 Q4 Fiscal Q1 Q2 Q3 
     2017  2017  2017  2017  2017  2018  2018  2018 
Stock-based Compensation (SBC)                  
 SBC included in Gross Profit  $  925  $  768  $  833  $  804  $  3,330  $  881  $  900  $  966  
 SBC included in Operating Expenses   13,887   13,477   14,134   14,026   55,524   14,949   15,990   18,232  
   Total SBC Expense  $  14,812  $  14,245  $  14,967  $  14,830  $  58,854  $  15,830  $  16,890  $  19,198  


The outlook figures provided below and elsewhere in this press release are approximate in nature since Align’s business outlook is difficult to predict.  Align’s future performance involves numerous risks and uncertainties and the company’s results could differ materially from the outlook provided.  Some of the factors that could affect Align’s future financial performance and business outlook are set forth under “Forward Looking Information” above in this press release. 
Financial Outlook         
(in millions, except per share amounts and percentages)       
  Q4'18 Guidance       
Net Revenues $505.0 - $515.0       
Gross Margin 72.3% - 73.0%       
Operating Expenses $248.0 - $253.0       
Operating Margin 23.2% - 23.9%       
Net Income per Diluted Share $1.10 - $1.15(1,2)       
Business Metrics: Q4'18       
Case Shipments 330.0K - 335.0K       
Capital Expenditure $50M - $55M       
Depreciation & Amortization $15M - $16M       
Diluted Shares Outstanding 81.3M(2)       
Stock Based Compensation Expense $19.1M       
Effective Tax Rate ~22.5%(1)       
(1) Includes excess tax benefits related to share-based compensation expense pursuant to ASU 2016-09
(2) Excludes any stock repurchases during the quarter       

Align Technology                                                                    
Madelyn Homick                                                           
(408) 470-1180                                                                                                  

Ethos Communication    
Shannon Mangum Henderson
(678) 261-7803

Wednesday, October 24, 2018 - 16:07