Align Technology (ticker: ALGN), a leading manufacturer of the clear Invisalign System used for teeth straightening, has reported impressive second-quarter results that exceeded Wall Street expectations. The company's earnings stood at $2.22 per share, with revenue reaching a staggering $1 billion. This performance surpasses analysts' predictions of earnings at $2.03 per share on revenue amounting to $991.3 million.
Compared to the previous year's figures of $1.82 per share and revenue of $943.1 million, Align has demonstrated a continued upward trajectory.
Align Technology's clear teeth aligners provide patients with a discreet and comfortable alternative to traditional metal braces. During the earnings call, the company highlighted its successful utilization of social media platforms like TikTok, YouTube, Instagram, and Snapchat to collaborate with influential individuals in order to expand its reach among younger demographics. By tapping into these channels, Align aims to effectively market its clear teeth aligners as a solution that does not interfere with the aesthetics of school photos.
In the second quarter, Align Technology reported operating expenses of $541.7 million, indicating an 8.5% increase from the previous year. This growth is primarily attributed to higher consumer marketing expenditures. However, the company's gross margins remained strong at 71.2%, a slight improvement from the preceding year's margin of 70%.
Align Technology's outstanding performance in Q2 reflects the increasing demand for clear teeth aligners, particularly among younger individuals seeking aesthetic dental solutions. With its strategic focus on leveraging social media platforms and its commitment to innovation, Align is well-positioned to maintain its leadership in this market segment.
Reaccelerating Growth Linked to Adult and Teen Demand, says Analyst
An analyst at William Blair, Brandon Vazquez, suggests that the key to reaccelerating growth for the company lies in adults' willingness to spend on clear aligners and orthodontists' willingness to digitize and convert more teen cases to clear aligners. Vazquez rates the stock at Outperform without a specific price target.
Despite concerns over high inflation and rising interest rates, the company has been experiencing strong consumer demand, primarily from teens and younger patients.
Chief Financial Officer, John Morici, acknowledged the uncertain macroeconomic environment but pointed out improvements in the operating landscape and positive consumer demand signals that influence their outlook.
Align, the company in focus, anticipates generating revenue between $3.97 billion and $3.99 billion in 2023. FactSet analysts projected slightly lower revenue of $3.95 billion for the same year.
Following this positive news, the stock of Align saw a significant surge of 18% to reach $400. If it remains at these levels, this will be the highest closing value since April 2022, and the stock's best performance in both the S&P 500 and the Nasdaq 100 this year.
