Align Technology (ALGN) risk factors, FY2024 10-K

Macroeconomic and External Risks

1. 01rates have and could in the future reduce consumers’ disposable income, which could cause a decrease in discretionary spending for our products
2. 02Our business, financial condition and results of operations could be impacted by geopolitical events, tariffs, trade and international disputes, wars, military actions and terrorism, or major public health crises

Business and Industry Risks

1. 03Demand for our products and services may not increase or may decrease for many reasons, including resistance to the innovative and business-model-disruptive nature of some of our products and services, which could have a material impact on our business, financial condition and results of operations
2. 04Our net revenues are primarily dependent on sales of the Invisalign System and iTero intraoral scanners. Of the two, we expect the Invisalign System to continue to represent the majority of our net revenues, making sales of it critical to our success
3. 05Our success depends on our ability to successfully develop, introduce, achieve market acceptance of, and manage new or improved products and services
4. 06We may invest in or acquire other businesses, products, technologies or other assets which may require significant management attention, disrupt our business, dilute stockholder value or adversely affect our business, financial condition and results of operations

Operational Risks

1. 07Our operating results have and will continue to fluctuate in the future, which makes predicting the timing and amount of customer demand and our revenues, costs, and expenditures difficult
2. 08We are subject to operating risks, including excess or constrained capacity and operational inefficiencies, which could adversely affect our results of operations
3. 09Our IT systems are critical to our business. Issues with IT system and software integration, implementation, updates, and upgrades, or third-party software have previously and could again in the future disrupt our operations and have a material impact on our business, our reputation, and operating results
4. 10Products in our Systems and Services segment, such as our iTero intraoral scanners, are subject to software and hardware risks that, if improperly managed, could have a material adverse impact on our business and financial results
5. 11We are highly dependent on third-party suppliers, some of whom are sole source suppliers, for certain key machines, components and materials, and our business, financial condition and results of operations could be materially adversely affected if supply is restricted or ends or the price materially increases
6. 12We use distributors for a portion of the importation, marketing and sales of our products and services, which exposes us to risks to our sales, operations and reputation, including the risk these distributors do not comply with applicable laws or our internal procedures
7. 13A disruption in the operations of a primary freight carrier, higher shipping costs or shipping delays could disrupt our supply chain and impact our operating and financial results
8. 14Our success depends on our personnel. If we cannot attract, motivate, train or retain personnel, it will be difficult to achieve our strategic priorities, which could materially adversely affect our business, financial condition and results of operations
9. 15We depend on our marketing activities to deepen our market penetration and raise awareness of our brands, products, and services, which may prove unsuccessful or may become less effective or more costly to maintain in the long term

Legal, Regulatory and Compliance Risks

1. 16We are subject to antitrust and competition regulations, litigation and enforcement that may result in fines, penalties, restrictions on our business practices, and product, services or operational changes which could materially impact our business, financial condition and results of operations
2. 17Failure to obtain or maintain approvals or comply with regulations regarding our products or services or those of our suppliers could materially harm our sales, result in substantial penalties and fines, interrupt our supply chain and cause harm to our reputation
3. 18criminal prosecution. Delays or failures to obtain or maintain regulatory approvals, clearances or to comply with regulatory requirements may materially adversely affect our domestic or international operations, and adversely impact our business
4. 19We have been incorporating and continue to work to further incorporate AI technologies into our products, services and IT systems. Implementation of AI and machine learning technologies may result in legal and regulatory risks, reputational harm or have other adverse consequences to our business
5. 20Our success depends in part on our ability to maintain existing IP rights and obtain, maintain and enforce further IP protections for our products. Our inability to do so could harm our competitive position
6. 21Litigation regarding our IP rights, rights claimed by third parties or IP litigation by any vendors on whose products or services we rely for our products and services may impact our ability to grow our business and adversely impact our reputation and results of operations

Financial, Tax and Accounting Risks

1. 22If our goodwill, intangible or long-lived assets become impaired, we may be required to record material charges to income
2. 23Changes in, or interpretations of, accounting rules and regulations, could result in unfavorable accounting charges
3. 24We are required to annually assess our internal control over financial reporting and any adverse results from such assessment may result in a loss of investor confidence in our financial reports and adversely affect our stock price
4. 25Our effective tax rate may vary significantly from period to period, which could result in volatility of our operating results and adversely affect our financial results
5. 26New tax laws and practices, changes to existing tax laws and practices, or disputes regarding the positions we take regarding tax laws, could negatively affect our provision for income taxes as well as our ongoing operations
6. 27Historically, the market price for our common stock has been volatile
7. 28We cannot guarantee that we will continue to repurchase our common stock in the future, and any repurchases we may make may not achieve our desired objectives
8. 29Future sales of significant amounts of our common stock may depress our stock price