Align Technology-ALGN Q4 Earnings Top Estimates, Revenues Miss, Stock Falls

Core Insights - Align Technology, Inc. (ALGN) reported fourth-quarter 2024 adjusted earnings per share (EPS) of $2.44, a 0.8% increase year-over-year, surpassing the Zacks Consensus Estimate by 0.4% [1][2] - The company's GAAP EPS for the quarter was$ 1.39, reflecting a 15.2% decline from $1.64 in the same period of 2023 [2] - Full-year adjusted EPS reached$ 9.33, an 8.4% increase from 2023, also exceeding the Zacks Consensus Estimate by 0.1% [2] Revenue Performance - Q4 revenues increased by 4% year-over-year to $995.2 million, but fell short of the Zacks Consensus Estimate by 0.2% [3] - Full-year revenues totaled$ 4.00 billion, marking a 3.5% increase from 2023, aligning with the Zacks Consensus Estimate [3] Segment Analysis - Clear Aligner segment revenues rose 1.6% year-over-year to $794.3 million, with a minor unfavorable foreign exchange impact of 0.1% [4] - Imaging Systems & CAD/CAM Services revenues surged 14.9% to$ 200.9 million, also experiencing a 0.1% unfavorable currency impact [4] Margin and Expense Overview - Gross profit for the quarter was $696.9 million, up 4.1% year-over-year, with a gross margin of 70%, expanding by 5 basis points [5] - SG&A expenses increased by 5.6% to$ 425 million, while R&D expenses rose 15.5% to $94.9 million [5] - Operating income totaled$ 177.1 million, down 4.2% year-over-year, with an operating margin contraction of 153 basis points to 17.8% [5] Financial Position - At the end of Q4, cash and cash equivalents stood at $1.04 billion, up from$ 937.4 million at the end of Q4 2023 [6] - Cumulative net cash provided by operating activities was $738.2 million, down from$ 785.8 million at the end of 2023 [6] Stock Repurchase Program - ALGN has $225 million available for repurchases under its$ 1.0 billion Stock Repurchase Program, authorized in January 2023 [7] Future Guidance - For full-year 2025, ALGN expects low single-digit revenue growth, indicating approximately 2% unfavorable foreign exchange impact [8] - The Zacks Consensus Estimate for 2025 revenues is $4.19 billion, suggesting a 4.8% year-over-year growth [8] - The anticipated GAAP operating margin for 2025 is expected to be slightly above the 2024 level, with a non-GAAP operating margin forecasted at approximately 22.5% [9] Q1 2025 Expectations - For Q1 2025, ALGN projects worldwide revenues between$ 965 million and $985 million, while the Zacks Consensus Estimate is$ 1.02 billion [10] Overall Assessment - Align Technology's Q4 results were mixed, with earnings exceeding estimates but revenues falling short [11] - Revenue growth was driven by increased volumes in Clear Aligner and Imaging Systems & CAD/CAM Services [11] - Clear Aligner volume growth was supported by higher shipments across all operational regions, particularly in the EMEA region [12] - The Imaging Systems & CAD/CAM Services segment saw strong growth due to higher average selling prices and improved service revenues [13] - The company achieved significant milestones, including 271.6 thousand active Invisalign-trained practitioners and over 2 billion clear aligners manufactured [14]