Q2 2025 Financial Results Align Technology, Inc. July 30, 2025 ©2025 Align Technology Inc. All rights reserved. ©2025, Align Technology Inc. All rights reserved. Safe Harbor and Forward-Looking Statements This presentation, including the tables below, contains forward-looking statements, including statements of beliefs and expectations regarding our ability to successfully manage our business and operations, reduce costs, manage investments and pursue our strategic growth drivers, our expectations regarding ...

Executive Summary & Q2'25 Financial Highlights Align Technology's Q2'25 saw mixed financial results, with sequential revenue growth but a slight year-over-year decline, alongside strategic operational updates [Q2'25 Financial Overview](index=1&type=section&id=Q2%2725%20Financial%20Overview) Align Technology reported mixed Q2'25 financial results, with sequential growth but a slight year-over-year decrease, and favorable foreign exchange impact | Metric | Q2'25 Value | Sequential Change | Year-over-Year Change | | :-------------------------------- | :---------------- | :---------------- | :-------------------- | | Total Revenues | $1,012.4M | +3.4% | -1.6% | | Clear Aligner Revenues | $804.6M | +1.0% | -3.3% | | Clear Aligner Volume | 644.4 thousand cases | +0.3% | +0.3% | | Imaging Systems & CAD/CAM Services Revenues | $207.8M | +13.9% | +5.6% | | Operating Income | $163.0M | N/A | N/A | | Operating Margin (GAAP) | 16.1% | N/A | N/A | | Operating Margin (Non-GAAP) | 21.3% | N/A | N/A | | Diluted Net Income Per Share (GAAP) | $1.72 | N/A | N/A | | Diluted Net Income Per Share (Non-GAAP) | $2.49 | N/A | N/A | | Cash and Cash Equivalents | $901.2M | N/A | N/A | - Foreign exchange favorably impacted Q2'25 total revenues by approximately **$26.4 million** (**2.7%** sequentially) and **$5.6 million** (**0.6%** year-over-year)[3](index=3&type=chunk)[4](index=4&type=chunk) [CEO Commentary and Market Conditions](index=2&type=section&id=CEO%20Commentary%20and%20Market%20Conditions) CEO commentary cited mixed Q2'25 results, with strong scanner upgrades offset by lower sales and decreased Clear Aligner volumes, impacting outlook - Q2'25 results were mixed, with total revenues of **$1,012.4 million** reflecting solid year-over-year growth for Systems and Services (driven by iTero Lumina scanner wand upgrades) but a slight year-over-year decrease in Clear Aligner revenues due to lower-than-expected volumes in Europe and North America[5](index=5&type=chunk) - Worldwide revenues and operating margins were below Q2 outlook, impacted by uneven patient case conversion, U.S. tariff turmoil, and less affordable financing options for orthodontic treatment and capital equipment purchases[5](index=5&type=chunk) - Dental industry surveys suggest less overall patient traffic, fewer orthodontic case starts, and patient hesitation toward elective procedures, marking the **fourth consecutive year** orthodontic starts are down[5](index=5&type=chunk) - The company is evaluating actions to reduce costs and manage investments while driving commercial and marketing programs, especially for teens and kids, in anticipation of continued economic uncertainty[5](index=5&type=chunk) Detailed Financial Results This section details Align Technology's Q2'25 GAAP and non-GAAP financial performance, cash position, and key business metrics [Q2'25 GAAP and Non-GAAP Financial Summary](index=3&type=section&id=Q2%2725%20GAAP%20and%20Non-GAAP%20Financial%20Summary) This summary compares key GAAP and Non-GAAP metrics for Q2'25 against prior quarters, detailing changes in revenues, net income, and diluted EPS | Metric | Q2'25 | Q1'25 | Q2'24 | Q/Q Change | Y/Y Change | | :-------------------------------- | :------ | :------ | :------ | :--------- | :--------- | | Clear Aligner Shipments | 644,370 | 642,305 | 642,725 | +0.3% | +0.3% | | **GAAP** | | | | | | | Net Revenues | $1,012.4M | $979.3M | $1,028.5M | +3.4% | (1.6)% | | Clear Aligner Revenues | $804.6M | $796.8M | $831.7M | +1.0% | (3.3)% | | Imaging Systems and CAD/CAM Services Revenues | $207.8M | $182.4M | $196.8M | +13.9% | +5.6% | | Net Income | $124.6M | $93.2M | $96.6M | +33.7% | +29.0% | | Diluted EPS | $1.72 | $1.27 | $1.28 | +$0.45 | +$0.43 | | **Non-GAAP** | | | | | | | Net Income | $181.1M | $156.9M | $181.0M | +15.5% | +0.1% | | Diluted EPS | $2.49 | $2.13 | $2.41 | +$0.36 | +$0.09 | [Cash and Liquidity](index=3&type=section&id=Cash%20and%20Liquidity) As of June 30, 2025, Align Technology maintained a strong cash position with over $900 million in cash and cash equivalents and an available revolving line of credit - Cash and cash equivalents were approximately **$901.2 million** as of June 30, 2025, up from **$873.0 million** as of March 31, 2025[9](index=9&type=chunk) - The company had **$300.0 million** available under its revolving line of credit as of June 30, 2025[9](index=9&type=chunk) [Invisalign Business Metrics](index=14&type=section&id=Invisalign%20Business%20Metrics) Invisalign business metrics for Q2'25 show a slight increase in the number of trained doctors and stable utilization rates, while clear aligner revenue per case shipment experienced a minor sequential increase but a year-over-year decrease | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------------------------- | :------ | :------ | :------ | | Number of Invisalign Trained Doctors Cases Were Shipped To | 86,250 | 85,275 | 86,135 | | Invisalign Trained Doctor Utilization Rates* | 7.5 | 7.5 | 7.5 | | Clear Aligner Revenue Per Case Shipment** | $1,250 | $1,240 | $1,295 | [Stock-Based Compensation](index=14&type=section&id=Stock-Based%20Compensation) Total stock-based compensation for Q2'25 increased sequentially and year-over-year, with the majority allocated to operating expenses | Stock-based Compensation (SBC) | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------------------- | :------ | :------ | :------ | | SBC included in Gross Profit | $1,636 | $1,538 | $2,582 | | SBC included in Operating Expenses | $46,572 | $43,459 | $44,446 | | Total SBC | $48,208 | $44,997 | $47,028 | Strategic Initiatives & Corporate Updates This section outlines Align Technology's operational streamlining, product and market expansions, corporate governance, share repurchase program, and regulatory updates [Operational Streamlining and Resource Reallocation](index=3&type=section&id=Operational%20Streamlining%20and%20Resource%20Reallocation) Align Technology announced plans for operational streamlining in the second half of fiscal 2025, including workforce reduction and manufacturing optimization, to enhance profitability and align with long-term growth - Align expects to streamline operations, reallocate resources, realign business groups, and reduce its global workforce in H2 2025[10](index=10&type=chunk) - Plans include optimizing manufacturing footprint, disposing of certain capital assets, and transitioning to next-generation manufacturing technologies[10](index=10&type=chunk) - Expected one-time charges of approximately **$150 million to $170 million** in H2 2025, primarily non-cash, with about **$40 million** in cash charges[10](index=10&type=chunk) - These actions are projected to achieve a GAAP operating margin of **13.0%–14.0%** and a non-GAAP operating margin slightly above **22.5%** in FY 2025, and improve GAAP and non-GAAP operating margins by at least **100 basis points** year-over-year in FY 2026[10](index=10&type=chunk) [Product and Market Announcements](index=4&type=section&id=Product%20and%20Market%20Announcements) Align Technology made several announcements in Q2'25 and early Q3'25, focusing on expanding the commercial availability of its Invisalign System with mandibular advancement and Palatal Expander System in new markets, alongside new marketing initiatives and collaborations - Commercial availability of the Invisalign System with mandibular advancement expanded to Malaysia (July 22, 2025), India (July 14, 2025), U.S. and Canada (April 24, 2025), and Australia and New Zealand (April 1, 2025)[13](index=13&type=chunk) - The Invisalign Palatal Expander System became commercially available in Malaysia (July 22, 2025) and India (July 14, 2025), and was approved in China (May 15, 2025)[13](index=13&type=chunk) - Align announced a collaboration with Disney's 'Freakier Friday' movie sequel (July 16, 2025) and launched an integrated consumer and professional brand campaign focused on Invisalign treatment for kids and teens (June 17, 2025)[13](index=13&type=chunk) [Corporate Governance and Research](index=4&type=section&id=Corporate%20Governance%20and%20Research) Align Technology strengthened its Board of Directors with a new appointment and continued its commitment to research through its annual award program - Britt Vitalone, EVP and CFO of McK

Core Viewpoint - Align Technology, Inc. (ALGN) is expected to report its second-quarter 2025 results on July 30, with adjusted earnings per share (EPS) anticipated at $2.57, reflecting a 6.6% increase year-over-year, and revenues projected at $1.06 billion, indicating a 3.2% rise from the previous year [1][2][7]. Group 1: Earnings and Revenue Estimates - The Zacks Consensus Estimate for revenues is set at $1.06 billion, suggesting a 3.2% increase from the year-ago figure [2]. - The Zacks Consensus Estimate for earnings is pinned at $2.57 per share, implying a 6.6% rise from the year-ago recorded actuals [2]. - Estimates for second-quarter earnings have remained unchanged at $2.57 per share over the past 30 days [3]. Group 2: Business Performance Factors - The Clear Aligner business is expected to show strength in volumes for both teens and adult patients, particularly in the APAC and EMEA regions, driven by orthodontic and GP dentist channels [4]. - In the first quarter, Clear Aligner volume from DSO customers increased year-over-year, with significant growth in the U.S. DSO business, benefiting from partnerships with SmileDoctors and Heartland Dental [5]. - The approval of the Invisalign Palatal Expander System in China and the introduction of the Invisalign System with mandibular advancement are anticipated to contribute positively to second-quarter revenues [6]. Group 3: Systems & Services Business - The Systems & Services business is projected to experience growth due to increased scanner volumes and non-system revenues from iTero Lumina wand upgrades [7]. - The launch of next-generation iTero Lumina solutions and Align X-ray Insights is expected to have a positive impact on the company's second-quarter top line [9]. - The positive customer response to the iTero Lumina Scanner with ortho workflow is likely to have boosted revenues [8].

Group 1 - Align Technology (ALGN) has reached a significant support level and is considered a good investment pick from a technical perspective, having recently broken through the 200-day moving average, indicating a long-term bullish trend [1] - ALGN shares have increased by 9.1% over the past four weeks, and the company holds a Zacks Rank 2 (Buy), suggesting potential for continued price appreciation [2] - Positive earnings estimate revisions support the bullish outlook for ALGN, with no estimates decreasing in the past two months and two estimates increasing, alongside a rising consensus estimate [3]

Technical Analysis - Align Technology (ALGN) has recently reached a key level of support and has overtaken the 20-day moving average, indicating a short-term bullish trend [1] - The 20-day simple moving average is a popular trading tool that smooths out price fluctuations and provides trend reversal signals, beneficial for short-term traders [1][2] Stock Performance - ALGN shares have increased by 9.1% over the past four weeks, suggesting a positive trend [2] - The company currently holds a Zacks Rank 2 (Buy), indicating potential for continued price appreciation [2] Earnings Estimates - There have been two upward revisions for ALGN's earnings estimates for the current fiscal year, with no downward revisions, leading to an increased consensus estimate [3] - The combination of positive earnings estimate revisions and technical indicators suggests that ALGN may experience further gains in the near future [3]

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Core Viewpoint - Investors in the Medical - Dental Supplies sector should consider Align Technology (ALGN) and Straumann Holding AG (SAUHY) as potential value opportunities, with ALGN currently presenting a superior value option based on various valuation metrics [1][7]. Valuation Metrics - Both ALGN and SAUHY hold a Zacks Rank of 2 (Buy), indicating a positive earnings outlook due to favorable analyst estimate revisions [3]. - ALGN has a forward P/E ratio of 18.33, while SAUHY has a higher forward P/E of 30.67, suggesting that ALGN may be undervalued compared to SAUHY [5]. - The PEG ratio for ALGN is 1.63, indicating a more favorable valuation relative to its expected earnings growth compared to SAUHY's PEG ratio of 2.14 [5]. - ALGN's P/B ratio is 3.65, significantly lower than SAUHY's P/B ratio of 8.9, further supporting ALGN's position as a better value stock [6]. - Based on these valuation figures, ALGN earns a Value grade of B, while SAUHY receives a Value grade of D, highlighting the relative undervaluation of ALGN [6].

Core Insights - Align Technology's (ALGN) efforts to expand the Invisalign business are expected to drive significant growth in the coming quarters, alongside advancements in iTero intraoral scanning technology [1][9] - The company has a strong financial position with zero debt and substantial cash flow, although foreign exchange challenges pose risks to its operations [9][10] Financial Performance - Over the past year, ALGN shares have decreased by 22.2%, while the industry saw a decline of 1.6%, and the S&P 500 composite increased by 11.3% [2] - The company's market capitalization stands at $11.66 billion, with a long-term estimated earnings growth rate of 11.2%, surpassing the industry's 9.9% [2] - ALGN has consistently exceeded earnings estimates in the last four quarters, with an average surprise of 3.4% [2] Business Developments - The Invisalign portfolio is expanding, with recent approvals for the Invisalign Palatal Expander in Turkey and the introduction of the Mandibular Advancement system in multiple countries [4][5] - ALGN has strengthened partnerships with global dental service organizations to enhance digital adoption in dentistry [6] - The iTero intraoral scanners are gaining traction globally, with new restorative capabilities and software upgrades announced in the first quarter [7][9] Solvency and Cash Flow - Align Technology maintains a strong liquidity position with no debt, reporting cash and cash equivalents of $873 million in the first quarter [10] - The cumulative net cash from operating activities increased to $52.2 million compared to $28 million in the previous year [10] Market Challenges - Foreign exchange fluctuations are a significant concern, impacting revenues as a large portion is generated outside the U.S. [11] - Both business segments experienced adverse effects from unfavorable foreign exchange rates in the first quarter [11] Earnings Estimates - The Zacks Consensus Estimate for 2025 earnings per share (EPS) remains at $10.33, with revenues projected at $4.15 billion, indicating a 3.9% increase from the previous year [12]

Company Overview - Align Technology (NASDAQ: ALGN) is recognized as a market leader in the digital dentistry platform sector, yet it is still valued by the market similarly to traditional orthodontic device companies [1] Market Opportunity - There exists a significant opportunity for Align Technology in underpenetrated scanner bases and the development of emerging recurring revenue streams [1] Market Sentiment - The current market sentiment remains pessimistic regarding Align Technology, despite the potential for growth and innovation within the company [1]

Align Technology (ALGN) 2025 Conference Summary Company Overview - **Company**: Align Technology (ALGN) - **Event**: Jefferies 2025 New York Healthcare Conference - **Date**: June 04, 2025 - **Speakers**: Simon Beard (EVP, EMEA), Shirley Stacy (VP Finance), Evelyn Valenti Key Industry Insights Innovation and Technology - Align Technology is entering a phase of significant innovation, focusing on game-changing technologies such as: - **ClinCheck Software**: Transitioning from a manual process to a touchless phase using algorithms and AI, leading to productivity gains for clinicians and the company [3][4] - **Direct Printing**: Eliminating the vacuum forming process in manufacturing Invisalign products, enhancing efficiency [4] - **New Scanning Technology**: Introduction of multidirectional capture technology, opening new development avenues [5] Market Dynamics - The company has seen strong growth in the Asia Pacific and EMEA regions, indicating a balanced global business model [6] - EMEA presents a significant opportunity for expansion, with many markets still underpenetrated despite long-term presence [11][12] Regional Differences - The EMEA market has similarities to North America in terms of digitizing doctor practices, but also faces unique challenges: - Different regulatory environments and advertising laws across European countries [15][16] - Structural differences in how orthodontists and general dentists operate in various markets [17] Growth Projections - Align Technology anticipates a volume growth of 5% to 15% during the ORP period, with acceleration beyond 15% thereafter [26] Strategic Initiatives Peer-to-Peer Program - The company has implemented a peer-to-peer mentorship program to support inexperienced orthodontists, resulting in significant growth in their practices: - Mentees can experience a 5-6x increase in growth, with even higher rates in the kids and teen segment [36] Product Launches - Recent product launches include: - **Palatal Expander**: First new device in over 50 years, showing promising adoption and positive feedback from doctors [41][44] - **Mandibular Advancement Device**: Early feedback indicates effective results, though longer-term outcomes are still being assessed [45] - **Lumina Restorative**: Positive market response noted for its efficiency and photorealism [47] Addressing General Practitioner (GP) Opportunities - The company is focusing on training general dentists with iTero scanners to optimize workflows and improve patient consultations [63][65] - A strategy is in place to support existing general dentists who perform few cases, enhancing their confidence and efficiency through treatment planning services [69] Conclusion - Align Technology is positioned for growth through innovation, strategic regional expansion, and targeted support for practitioners. The company is committed to leveraging its technological advancements to enhance productivity and market penetration in the EMEA region and beyond.