Align falls 23% as macro, forex headwinds hurt Q3 amid weak consumer sentiment
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Align Technology (NASDAQ:ALGN) dropped ~21% pre-market Thursday after the clear aligner maker failed to meet Street forecasts with its Q3 2022 results, attributing the underperformance to macro uncertainty, weaker consumer confidence, and forex impact. Alignâs (ALGN) rival in clear aligner market SmileDirectClub (SDC) also slipped in reaction.
Q3 revenue dropped ~12% YoY and ~8% from the preceding quarter to reach $890.3M, and adjusted for currency changes, the topline contracted only ~6% YoY and ~3% sequentially.
Clear Aligner revenues fell ~8% YoY and ~13% sequentially to stand at $732.8M, while Imaging Systems and CAD/CAM Services brought $157.5M to the topline with a drop of ~12% YoY and ~8% sequentially.
GAAP gross margin dropped to ~70% from ~74% in the prior year quarter and GAAP operating margin reached ~16% from ~26% in Q3 2021, driving down the net income by ~60% YoY to $72.7M.
During the earnings call, the Chief Financial Officer of Align (ALGN), John Morici, noted uncertainty over the outlook. âUnderlying market dynamics as well as the reactions to macroeconomic headwinds by central banks, governments and consumers remain uncertain,â he said.
While Align (ALGN) reiterated the long-term growth target of 20% to 30% for revenue, the company expects its fiscal 2022 GAAP operating margin to fall short of the targeted 20%, outlined during the Q1 2022 update.