Analysis of Geographic Areas
Align Technology Inc. operates in 3 regions: U.S.; Switzerland; and Other International.
Area Asset Turnover
Align Technology Inc., asset turnover by geographic area
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| U.S. | 7.73 | 8.19 | 6.09 | 7.07 | 7.35 |
| Switzerland | 2.28 | 3.05 | 3.14 | — | — |
| Other International | 1.42 | 1.60 | 1.48 | 2.38 | 2.47 |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The analysis of geographic asset turnover reveals a significant disparity in asset utilization efficiency between the domestic U.S. market and international operations. The U.S. segment consistently outperforms all other regions, maintaining a substantially higher turnover ratio throughout the period observed.
- U.S. Asset Turnover
- The U.S. market demonstrates high operational efficiency, although it experienced volatility. The ratio declined from 7.35 in 2018 to a low of 6.09 in 2020. A sharp recovery followed in 2021, peaking at 8.19, before slightly moderating to 7.73 in 2022. Despite these fluctuations, the U.S. remains the most efficient region in converting assets into revenue.
- Switzerland Asset Turnover
- Data for the Swiss market indicates a consistent downward trend since 2020. The ratio decreased from 3.14 in 2020 to 3.05 in 2021, with a more pronounced decline to 2.28 in 2022. This trajectory suggests a reduction in the efficiency of asset employment within this specific geographic area.
- Other International Asset Turnover
- The Other International segment exhibits the lowest asset turnover of all reported regions. A notable contraction occurred between 2019 and 2020, where the ratio dropped from 2.38 to 1.48. While a slight recovery to 1.60 was noted in 2021, the ratio fell again to 1.42 by the end of 2022, reflecting persistent challenges in asset productivity across these markets.
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Area Asset Turnover: U.S.
Align Technology Inc.; U.S.; area asset turnover calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net revenues | 1,660,045) | 1,724,296) | 1,099,564) | 1,161,959) | 1,023,559) |
| Long-lived assets | 214,804) | 210,582) | 180,539) | 164,451) | 139,239) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 7.73 | 8.19 | 6.09 | 7.07 | 7.35 |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Area asset turnover = Net revenues ÷ Long-lived assets
= 1,660,045 ÷ 214,804 = 7.73
An analysis of U.S. operational efficiency from 2018 to 2022 reveals a period of consistent asset expansion coupled with fluctuating revenue performance, which directly impacted the area asset turnover ratio.
- Net Revenue Trends
- Net revenues experienced overall growth over the five-year period, rising from approximately 1.02 billion in 2018 to 1.66 billion in 2022. The trajectory was non-linear, characterized by a moderate increase in 2019, a contraction in 2020 to 1.10 billion, and a substantial surge in 2021 to a peak of 1.72 billion before a slight decline in the final year.
- Long-Lived Asset Growth
- Long-lived assets showed a steady and uninterrupted upward trend, increasing every year from 139.24 million in 2018 to 214.80 million in 2022. This indicates a consistent investment in the asset base regardless of short-term fluctuations in revenue.
- Area Asset Turnover Efficiency
- The asset turnover ratio reflected the interplay between revenue volatility and steady asset growth. Efficiency declined from 7.35 in 2018 to a period low of 6.09 in 2020, as revenue decreased while the asset base continued to expand. A significant recovery occurred in 2021, with the ratio peaking at 8.19, driven by the sharp increase in net revenues. By 2022, the ratio moderated to 7.73, indicating that while efficiency decreased slightly from the 2021 peak, it remained higher than the levels observed between 2018 and 2020.
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Area Asset Turnover: Switzerland
Align Technology Inc.; Switzerland; area asset turnover calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net revenues | 1,216,094) | 1,353,229) | 809,080) | —) | —) |
| Long-lived assets | 532,921) | 444,205) | 257,337) | —) | —) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 2.28 | 3.05 | 3.14 | — | — |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Area asset turnover = Net revenues ÷ Long-lived assets
= 1,216,094 ÷ 532,921 = 2.28
The financial performance in Switzerland between 2020 and 2022 is characterized by a significant expansion of the asset base coupled with fluctuating revenue streams, resulting in a progressive decline in asset utilization efficiency.
- Net Revenues
- Revenues experienced a period of strong growth between 2020 and 2021, rising from 809,080 thousand US$ to a peak of 1,353,229 thousand US$. However, this trend reversed in 2022, with revenues contracting to 1,216,094 thousand US$.
- Long-lived Assets
- A consistent and aggressive upward trajectory is observed in long-lived assets. The asset base more than doubled over the three-year period, increasing from 257,337 thousand US$ in 2020 to 532,921 thousand US$ by the end of 2022.
- Area Asset Turnover
- The asset turnover ratio shows a continuous downward trend, decreasing from 3.14 in 2020 to 3.05 in 2021, and further dropping to 2.28 in 2022. This decline indicates that the growth in the asset base has outpaced revenue generation. While the ratio remained relatively stable in 2021 due to strong revenue growth, the simultaneous occurrence of declining revenues and increasing assets in 2022 led to a more pronounced reduction in turnover efficiency.
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Area Asset Turnover: Other International
Align Technology Inc.; Other International; area asset turnover calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net revenues | 858,496) | 875,059) | 563,297) | 1,244,837) | 942,933) |
| Long-lived assets | 603,010) | 548,396) | 379,398) | 523,523) | 382,090) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 1.42 | 1.60 | 1.48 | 2.38 | 2.47 |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Area asset turnover = Net revenues ÷ Long-lived assets
= 858,496 ÷ 603,010 = 1.42
The analysis of the Other International geographic area indicates a general decline in asset utilization efficiency over the five-year period from 2018 to 2022. While the period began with high turnover rates, subsequent volatility in revenues combined with a long-term increase in the asset base has resulted in a lower overall efficiency ratio.
- Net Revenue Trends
- Revenues experienced growth between 2018 and 2019, peaking at 1,244,837 thousand US dollars. A significant contraction occurred in 2020, where revenues fell to 563,297 thousand US dollars, representing a decrease of approximately 54.7% from the previous year. A recovery followed in 2021, though revenue levels remained relatively stagnant into 2022, closing at 858,496 thousand US dollars.
- Long-lived Asset Dynamics
- The investment in long-lived assets showed a general upward trend, rising from 382,090 thousand US dollars in 2018 to 603,010 thousand US dollars in 2022. Despite a temporary reduction in 2020 to 379,398 thousand US dollars, assets expanded rapidly between 2020 and 2022, increasing by approximately 58.9% over those two years.
- Area Asset Turnover Interpretation
- The asset turnover ratio declined from 2.47 in 2018 to 1.42 in 2022. The most precipitous drop occurred in 2020, coinciding with the sharp decline in net revenues. Although a moderate recovery to 1.60 was achieved in 2021, the ratio retreated in 2022. This pattern suggests that the expansion of the asset base in the later years has outpaced the growth in revenue generation, leading to diminished operational efficiency in the region.
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Net revenues
Align Technology Inc., net revenues by geographic area
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| U.S. | 1,660,045) | 1,724,296) | 1,099,564) | 1,161,959) | 1,023,559) |
| Switzerland | 1,216,094) | 1,353,229) | 809,080) | —) | —) |
| Other International | 858,496) | 875,059) | 563,297) | 1,244,837) | 942,933) |
| Total | 3,734,635) | 3,952,584) | 2,471,941) | 2,406,796) | 1,966,492) |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
Total net revenues exhibited a general upward trajectory over the five-year period, increasing from approximately $1.97 billion in 2018 to $3.73 billion in 2022. A substantial growth spike occurred between 2020 and 2021, during which total revenues rose by approximately 60%. A moderate contraction was observed in 2022, suggesting a period of stabilization following the previous year's peak.
- U.S. Market Performance
- The United States remains the primary revenue contributor. Following a slight dip in 2020, U.S. revenues experienced a sharp increase to $1.72 billion in 2021, representing a significant expansion of the domestic market share. This was followed by a slight decrease to $1.66 billion in 2022.
- Switzerland Reporting and Growth
- Revenue reporting for Switzerland began in 2020 at $809 million. This segment showed rapid growth in 2021, peaking at $1.35 billion, before experiencing a decline to $1.22 billion in 2022. The emergence and growth of this segment contributed significantly to the overall increase in total net revenues from 2020 onward.
- Other International Volatility
- The Other International segment demonstrated the highest level of volatility. After peaking at $1.24 billion in 2019, revenues plummeted by more than 50% to $563 million in 2020. Although a partial recovery occurred in 2021 and 2022, revenues remained consistently below the 2019 levels, ending the period at $858 million.
- Geographic Revenue Concentration
- A strategic shift in revenue distribution is observable. In 2018, the U.S. and Other International segments were nearly equal in contribution. By 2022, the revenue mix became heavily concentrated in the U.S. and Switzerland, while the relative importance of the Other International segment diminished.
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Long-lived assets
Align Technology Inc., long-lived assets by geographic area
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| U.S. | 214,804) | 210,582) | 180,539) | 164,451) | 139,239) |
| Switzerland | 532,921) | 444,205) | 257,337) | —) | —) |
| Other International | 603,010) | 548,396) | 379,398) | 523,523) | 382,090) |
| Total | 1,350,735) | 1,203,183) | 817,274) | 687,974) | 521,329) |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
Total long-lived assets experienced significant growth between 2018 and 2022, increasing from 521.3 million USD to 1.35 billion USD. This overall upward trajectory indicates a substantial expansion of the physical and long-term capital base over the analyzed five-year period.
- United States Asset Growth
- Long-lived assets within the U.S. demonstrated a consistent year-over-year increase, rising from 139.2 million USD in 2018 to 214.8 million USD in 2022. This growth represents a steady, incremental investment in domestic infrastructure.
- Swiss Asset Emergence
- Switzerland became a significant contributor to the asset base starting in 2020, with an initial recorded value of 257.3 million USD. This figure grew rapidly to 532.9 million USD by 2022, marking the most aggressive growth rate among the identified geographic regions and indicating a strategic concentration of assets in this jurisdiction.
- Other International Asset Volatility
- Assets in other international regions grew from 382.1 million USD in 2018 to 603.0 million USD in 2022. However, a notable contraction occurred in 2020, where assets fell to 379.4 million USD from a 2019 peak of 523.5 million USD, before recovering and reaching their highest level by the end of 2022.
- Geographic Asset Distribution
- The distribution of long-lived assets shifted over time. In 2018, other international regions held the majority of the assets. By 2022, the asset base became more diversified, with Switzerland and other international regions collectively accounting for the vast majority of the total long-lived asset value, while the U.S. portion remained a smaller, stable component of the total.
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