Behind Align Technology’s Key Growth Driver in 2017
ALGN’s 3Q17 performance in international markets
In 3Q17, Align Technology’s (ALGN) Invisalign case volumes shipped to doctors in international markets rose 47.4% on a YoY (year-over-year) basis and 6.8% sequentially, mainly on account of increased demand in Asia-Pacific. However, this growth was partly offset by the seasonal impact on demand in EMEA (Europe, the Middle East, and Africa) markets.
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In 3Q17, China emerged as the second-largest market for Align Technology, after the US. The company reported 57.4% YoY growth in Invisalign volumes shipped in Asia-Pacific markets in 3Q17, with major demand arising from China.
Around 1,500 doctors in these markets were trained on the Invisalign system in 3Q17, of which 1,000 doctors were from China. The direct correlation in the number of trained doctors and the subsequent rise in Invisalign demand are expected to benefit Align in future quarters. In 3Q17, Align almost tripled in its asset customer base in Asia-Pacific markets YoY.
In 3Q17, Align saw a 37.6% YoY rise in Invisalign volumes, mainly attributable to strong demand in core markets like France, the UK, and Spain. Slighter expansion in Africa, the Middle East, Russia, Nordic countries, Benelux (Belgium, the Netherlands, and Luxembourg), and Central and Eastern Europe also contributed substantially to rising demand for Invisalign in 3Q17.
Peer Dentsply Sirona (XRAY) reported revenues of ~$386.6 million from European markets in 3Q17, which represented YoY growth of ~8.2%.
Notably, Align Technology accounts for 0.38% of the Vanguard Mid-Cap Growth ETF’s (VOT) total portfolio holdings.
Future growth trends for Align Technology
Align Technology expects to increase its penetration in the China, India, Korea, Taiwan, and Australia in future quarters. In 4Q17, the company expects to witness a rise in demand in EMEA markets due to customers returning from summer holidays. Align projects a slight drop in Invisalign case demand in Asia-Pacific markets, however, as China will be observing its Golden Week holiday in 4Q17.
In the next part, we’ll take a closer look at demand for Invisalign in the teen segment, especially in North American markets.