Last week, Align Technology (NASDAQ:ALGN) stock took a hit after a Wall Street analyst predicted that the company's growth will slow down. Of course, with the orthodontic-device maker's revenue soaring nearly 37% last year, a relatively slight slow-down would still mean that Align is growing sales faster than most companies.

After the market closed on Wednesday, Align announced its results from the first quarter. Was the Wall Street analyst's pessimistic projection on target? Not yet. Align again turned in a very strong performance. Here are the highlights. 

Dentist with patient pointing to her smile

Image source: Getty Images.

Align Technology results: The raw numbers

Metric 

Q1 2018 

Q1 2017 

Year-Over-Year Change

Sales

$436.9 million $310.3 million

40.8%

Net income from continuing operations

$95.9 million $69.4 million

38.1%

Diluted earnings per share (EPS)

$1.17 $0.85

37.6%

Data source: Align Technology.

What happened with Align Technology this quarter?

Align yet again set an all-time high for revenue in the first quarter. Shipments of the company's Invisalign clear aligners increased 30.8% year over year, with especially strong growth in international markets. The average selling price for Invisalign aligners also increased in the first quarter.

The company also posted great numbers for its scanner and services business. Sales soared 84% year over year to $51.4 million.

When Align announced its fourth-quarter and full-year 2017 results three months ago, the company projected that its first-quarter earnings per share would come in between $0.94 and $0.98. Align blew that guidance out of the water with its actual earnings in the first quarter. 

Align's big year-over-year EPS jump was actually even better than it appears at first glance. In the first quarter of 2017, the company received a tax benefit of $7.2 million, compared to a tax hit in the first quarter of this year of $2.9 million.

At the end of the first quarter, Align's cash, cash equivalents, and marketable securities totaled $673 million. That's less than the $761.5 million that Align had on hand at the end of 2017 due to the company repurchasing $100 million in stock during the first quarter.

Since the company's last quarterly update, Align has achieved several milestones, including:

  • Announced expansions to its Invisalign product portfolio that allow treatment of a broader range of patients
  • Introduced its new Invisalign Go Clear Aligner System that is integrated with the company's iTero scanner for mild to moderate cases of misalignment of teeth
  • Introduced two new iTero scanners with increased power and portability
  • Received Chinese approval for the iTero Element scanner

What management had to say

Align Technology CEO Joe Hogan said:

I'm pleased to report better-than-expected first-quarter results and a strong start to the year for Align, with revenues, volumes, and EPS above our guidance. Record Q1 revenues were up 41% year-over-year, reflecting continued strong Invisalign volume across all geographies and customer channels, as well as iTero scanner sales, which were up 84% year over year. Q1 Invisalign volume growth of 31% year over year was driven by increased utilization, including strong teen case growth globally and expansion of our customer base, which included over 4,200 new Invisalign-trained doctors worldwide.

Looking forward

Align projects second-quarter revenue between $460 million and $470 million. That reflects 30.5% year-over-year growth at the midpoint. Align also stated that it expects Invisalign case shipments in the second quarter of 296,000 to 301,000 -- an increase of 29% over the prior-year period at the midpoint of the range. The company projects diluted EPS between $1.02 and $1.06, a jump of 22.4% at the midpoint.

Those growth percentages are less than what Align has been achieving. Could the Wall Street analyst's prediction come true? Maybe, but remember that Align tends to underpromise and overdeliver with its guidance. That's exactly what happened in the first quarter.

One thing investors will want to watch is how the dispute between Align and its partner SmileDirectClub (SDC) progresses. A spokesperson from SDC stated that the company believes "that Align Technology is in direct violation of existing agreements" and is requesting that Align "immediately cease all activities related to their Invisalign store pilot project, as well as halt the use of SmileDirectClub's confidential and proprietary information." Align disputes those allegations and intends to "vigorously defend itself" in the ongoing litigation.