Core Viewpoint - Align Technology (ALGN.US) experienced a significant drop of over 33%, reaching a five-year low of $134.83, following disappointing financial results for the second quarter [1] Financial Performance - The company reported adjusted diluted earnings per share of $2.49 for the second quarter, an increase from $2.41 in the same period last year, but below the FactSet analyst estimate of $2.57 [1] - Quarterly revenue was $1.01 billion, down from $1.03 billion year-over-year, and also below the FactSet analyst expectation of $1.06 billion [1] - For the third quarter, Align expects revenue to be between $965 million and $985 million, which is lower than the FactSet analyst forecast of $1.04 billion [1] Operational Changes - Align plans to implement a series of actions to streamline operations, including global workforce reductions [1] - The company anticipates that these actions will incur one-time costs of $150 million to $170 million in the second half of the year [1]

Core Insights - Align Technology, Inc. (ALGN) reported second-quarter 2025 adjusted earnings per share (EPS) of $2.49, a 3.3% increase year-over-year, but missed the Zacks Consensus Estimate by 3.1% [1] - The company's revenues for the quarter were $1.01 billion, down 1.6% year-over-year, and also fell short of the Zacks Consensus Estimate by 4.6% [2] - Following the earnings announcement, ALGN's stock experienced a significant decline of 34.2% in after-market trading [1] Revenue Breakdown - ALGN operates in two reportable segments: Clear Aligner and Imaging Systems & CAD/CAM Services [3] - Revenues from the Clear Aligner segment decreased by 3.3% year-over-year to $804.6 million, despite a favorable foreign exchange impact of 0.6% [3] - Imaging Systems & CAD/CAM Services revenues increased by 5.6% to $207.8 million, also benefiting from a 0.5% favorable currency impact [3] Margin Analysis - Gross profit for the second quarter was $708.1 million, a decline of 2% year-over-year, with a gross margin of 69.9%, down 32 basis points [4] - Selling, General and Administrative (SG&A) expenses decreased by 0.8% to $448.7 million, while Research and Development (R&D) expenses rose by 4.6% to $96.4 million [4] - Operating income was $163 million, down 8.5% year-over-year, leading to an operating margin contraction of 122 basis points to 16.1% [4] Financial Position - At the end of the second quarter, ALGN had cash and cash equivalents of $901.2 million, up from $873 million at the end of the first quarter [5] - Net cash provided by operating activities was $181.3 million, compared to $188.5 million at the end of the second quarter of 2024 [5] Stock Repurchase Program - During the quarter, ALGN repurchased approximately 585.1 thousand shares at an average price of $164.14 per share, completing a $225 million open market repurchase initiated in the first quarter of 2025 [6] - This marked the completion of the entire $1 billion stock repurchase program approved in January 2023 [6] Future Outlook - For the full year 2025, ALGN expects Clear Aligner revenue growth to be flat to slightly up from 2024, with Systems and Services revenues anticipated to grow faster [9] - The Zacks Consensus Estimate for 2025 revenues is $4.16 billion, indicating a 3.9% year-over-year growth [9] - For the third quarter, ALGN projects worldwide revenues between $965 million and $985 million, while the Zacks Consensus Estimate is $1.04 billion [11] Additional Insights - ALGN achieved a record number of teen cases, treating over 6 million teens and kids with the Invisalign system globally [14] - Despite the challenges, Clear Aligner volume grew in APAC and EMEA regions, driven by increased utilization among orthodontists and general practitioners [13]

View all Key Company Metrics for Align Technology here>>> Shares of Align Technology have returned +5.9% over the past month versus the Zacks S&P 500 composite's +3.4% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term. Clear Aligner Shipments: 644 versus 672 estimated by two analysts on average. Net revenues- Imaging Systems and CAD/CAM Services: $207.83 million versus the three-analyst average estimate of $205.92 million. The repo ...

Company Performance - Align Technology reported quarterly earnings of $2.49 per share, missing the Zacks Consensus Estimate of $2.57 per share, but showing an increase from $2.41 per share a year ago [1] - The company posted revenues of $1.01 billion for the quarter, missing the Zacks Consensus Estimate by 4.61%, and down from $1.03 billion year-over-year [3] - The earnings surprise for the quarter was -3.11%, while the previous quarter saw a positive surprise of +7.58% [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.73 on revenues of $1.04 billion, and for the current fiscal year, it is $10.33 on revenues of $4.16 billion [8] - The estimate revisions trend for Align Technology was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [7] Industry Context - Align Technology operates within the Medical - Dental Supplies industry, which is currently ranked in the top 12% of over 250 Zacks industries, suggesting a favorable industry outlook [9] - The performance of Align Technology's stock may be influenced by the overall industry outlook and trends in earnings estimate revisions [6][9]

Financial Data and Key Metrics Changes - Total Q2 revenues were $1,012,400,000, reflecting a 3.4% sequential increase but a 1.6% year-over-year decrease [6][16][24] - Clear aligner revenues for Q2 were $804,600,000, up 1% sequentially but down 3.3% year-over-year [16][17] - Overall gross margin for Q2 was 69.9%, up 0.5 points sequentially but down 0.3 points year-over-year [19][20] - Q2 operating income was $163,000,000, resulting in an operating margin of 16.1%, up 2.7 points sequentially and 1.7 points year-over-year [22][24] Business Line Data and Key Metrics Changes - Systems and services segment revenues for Q2 were $207,800,000, up 13.9% sequentially and 5.6% year-over-year, driven by higher scanner system revenue [9][18] - Clear aligner volumes increased slightly year-over-year in APAC and EMEA regions, but were offset by lower volumes in The Americas [10][12] - The average per case shipment price for clear aligners was $12.50, down $45 year-over-year due to discounts and a product mix shift [17][20] Market Data and Key Metrics Changes - In North America, clear aligner volumes were down slightly year-over-year, reflecting solid growth in the Latin America teen segment [11][12] - EMEA region saw year-over-year growth in clear aligner volume driven by increased utilization across both orthodontists and GP dentist channels [12] - APAC region experienced year-over-year growth in clear aligner volume, particularly in China [12][13] Company Strategy and Development Direction - The company plans to streamline operations and reallocate resources to align with long-term growth and profitability objectives, including reducing the global workforce and optimizing manufacturing [28][30] - The focus will be on innovation, efficiency, and execution, with investments in next-generation technology and treatment platforms [38][39] - The company aims to enhance customer engagement and improve case conversion through integrated consumer marketing programs [40][41] Management's Comments on Operating Environment and Future Outlook - Management noted that economic uncertainty, including US tariff turmoil and less affordable financing options, impacted demand for clear aligners and new iTero scanning systems [8][9] - Despite challenges, consumer interest in Invisalign treatment remains strong, and the company is focused on driving engagement and effectiveness of commercial marketing programs [9][38] - The outlook for Q3 anticipates continued economic uncertainty, with expected revenues in the range of $965,000,000 to $985,000,000 [33][34] Other Important Information - The company repurchased approximately 585,100 shares at an average price of $164.14 per share, completing a $1,000,000,000 stock repurchase program [26][27] - Cash and cash equivalents as of June 30, 2025, were $901,200,000, up $28,100,000 sequentially [25][27] Q&A Session Summary Question: Can you talk about case conversion trends across the quarter? - Management noted that case conversion was uneven, particularly in June, which did not materialize as expected, primarily affecting North America and parts of Europe [44][46] Question: What are the levers being pulled regarding orthodontists using more brackets and wires? - Management indicated that orthodontists who have not fully committed to digital solutions may revert to using wires and brackets due to economic pressures and inventory considerations [46][48] Question: How does the company view its market position relative to competitors? - Management stated that competitive dynamics have not changed significantly, and while there are pressures from competitors, the company remains confident in its market position [77][78] Question: Can you provide insights on the restructuring and its impact on manufacturing? - Management explained that the restructuring aims to optimize manufacturing and reduce costs, with a focus on transitioning to more efficient technologies [68][69]

Financial Data and Key Metrics Changes - Total Q2 revenues were $1,012,400,000, reflecting a 3.4% sequential increase but a 1.6% year-over-year decrease [5][14] - Clear aligner revenues for Q2 were $804,600,000, up 1% sequentially but down 3.3% year-over-year, primarily due to lower average selling prices (ASPs) and discounts [14][15] - Overall gross margin for Q2 was 69.9%, up 0.5 points sequentially but down 0.3 points year-over-year [18][19] - Net income per diluted share for Q2 was $1.72, up $0.45 sequentially and up $0.43 year-over-year [24] Business Line Data and Key Metrics Changes - Systems and services segment revenues for Q2 were $207,800,000, up 13.9% sequentially and 5.6% year-over-year, driven by higher scanner system revenue [8][17] - Clear aligner volumes increased slightly year-over-year in the APAC and EMEA regions, but were offset by lower volumes in The Americas [9][10] - The iTero Lumina scanner sales were strong, but full system sales were lower than expected, impacting overall revenue [5][14] Market Data and Key Metrics Changes - In North America, clear aligner volumes were down slightly year-over-year, while Latin America saw solid growth in the teen segment [10][11] - EMEA region clear aligner volume grew year-over-year, driven by increased utilization across both orthodontists and GP dentist channels [11] - APAC region clear aligner volume also grew year-over-year, led by increased submitters in China [11] Company Strategy and Development Direction - The company plans to streamline operations and reallocate resources to align with long-term growth and profitability objectives, including reducing workforce and optimizing manufacturing [28][29] - Focus on innovation and new product cycles to drive engagement and effectiveness in commercial marketing programs [7][38] - The company is committed to enhancing customer trust and providing value-based innovation to remain competitive [37][40] Management's Comments on Operating Environment and Future Outlook - Management noted that economic uncertainty, including US tariff turmoil and less affordable financing options, impacted demand for clear aligners and new iTero scanning systems [6][7] - Despite challenges, consumer interest in Invisalign treatment remains strong, and the company is focused on driving engagement and improving case conversion [36][39] - The outlook for Q3 anticipates continued economic uncertainty, with expected revenues in the range of $965,000,000 to $985,000,000 [32] Other Important Information - The company repurchased approximately 585,100 shares of common stock at an average price of $164.14 per share, completing a $1,000,000,000 stock repurchase program [26] - Clear aligner deferred revenues decreased year-over-year, indicating potential future revenue recognition challenges [17] Q&A Session Summary Question: Can you talk about case conversion trends across the quarter? - Management noted that case conversion was weaker than expected, particularly in June, which did not materialize as anticipated [44][45] Question: What levers can be pulled regarding the shift back to brackets and wires? - Management indicated that orthodontists not fully committed to digital solutions may revert to traditional methods due to economic pressures [46][47] Question: How does the company view its market share in the clear aligner market? - Management believes that competitive dynamics have not significantly changed, and they are not losing market share despite economic challenges [78] Question: What actions are being taken to stimulate demand? - The company is focusing on closer collaboration with doctors and enhancing marketing efforts to drive patient conversion [97]

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]