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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________  
FORM  10-Q
____________________________  
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to
Commission File Number: 000-32259
____________________________
ALIGN TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
____________________________ 
Delaware 94-3267295
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

410 North Scottsdale Road, Suite 1300
Tempe , Arizona 85288
(Address of principal executive offices) (Zip Code)
( 602 ) 742-2000
(Registrant’s telephone number, including area code)
 ____________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.0001 par value ALGN The NASDAQ Stock Market LLC
(NASDAQ Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes    ☒     No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes    ☒     No   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

I ndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐     No  ☒
As of October 29, 2025, the number of shares outstanding of the registrant’s Common Stock, $0.0001 par value, was 71,749,995 .

1

Table of Contents

ALIGN TECHNOLOGY, INC.
TABLE OF CONTENTS
 

PART I F INANCIAL INFORMATION
3

Item 1. F inancial S tatements (U naudited ):
3

Condensed Consolidated Statements of Operations
3

C ondensed C onsolidated S tatements of C omprehensive Income
4

Condensed Consolidated Balance Sheets
5

Condensed Consolidated Statements of Stockholders’ Equity
6

Condensed Consolidated Statements of Cash Flows
8

Notes to Condensed Consolidated Financial Statements
9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
28

Item 3. Quantitative and Qualitative Disclosures About Market Risk
39

Item 4. Controls and Procedures
40

PART II O THER INFORMATION
40

Item 1. Legal Proceedings
40

Item 1A. Risk Factors
40

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
55

Item 3. Defaults Upon Senior Securities
55

Item 4. Mine Safety Disclosures
55

Item 5. Other Information
55

Item 6. Exhibits
57

Signatures
58

Invisalign, Align, the Invisalign logo, ClinCheck, Invisalign Assist, Invisalign First, Invisalign Go, the Invisalign sonic logo, Vivera, SmartForce, SmartTrack, SmartStage, SmileView, iTero, iTero Element, iTero Lumina, Orthocad, exocad, Align Digital Platform, Align Oral Health Suite, Invisalign Smile Architect, iTero exocad Connector, exocad Dental CAD, and Cubicure, among others, are trademarks and/or service marks of Align Technology, Inc. or one of its subsidiaries or affiliated companies and may be registered in the United States and/or other countries.

2

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1.          Financial Statements.

ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 2025 2024
Net revenues $ 995,692   $ 977,872   $ 2,987,403   $ 3,003,793  
Cost of net revenues 356,491   296,098   959,977   901,575  
Gross profit 639,201   681,774   2,027,426   2,102,218  
Operating expenses:
Selling, general and administrative 417,800   434,138   1,314,115   1,338,222  
Research and development 93,276   85,272   286,875   269,324  
Restructuring and other charges 31,827   —   31,827   —  
Legal settlement loss —   66   4,178   31,193  
Total operating expenses 542,903   519,476   1,636,995   1,638,739  
Income from operations 96,298   162,298   390,431   463,479  
Interest income and other income (expense), net:
Interest income 3,249   4,003   11,424   11,696  
Other income (expense), net ( 4,813 ) ( 371 ) 6,837   ( 6,993 )
      Total interest income and other income (expense), net ( 1,564 ) 3,632   18,261   4,703  
Net income before provision for income taxes 94,734   165,930   408,692   468,182  
Provision for income taxes 37,981   49,967   134,101   150,627  
Net income $ 56,753   $ 115,963   $ 274,591   $ 317,555  

Net income per share:
Basic
$ 0.78   $ 1.55   $ 3.77   $ 4.23  
Diluted
$ 0.78   $ 1.55   $ 3.77   $ 4.23  
Shares used in computing net income per share:
Basic
72,377   74,736   72,831   75,031  
Diluted
72,419   74,757   72,880   75,149  

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
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ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 
Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 2025 2024
Net income $ 56,753   $ 115,963   $ 274,591   $ 317,555  
Other comprehensive income:

Change in foreign currency translation adjustment, net of tax 4,185   10,713   59,394   14,140  
Change in unrealized gains (losses) on investments, net of tax —   159   —   605  

Other comprehensive income
4,185   10,872   59,394   14,745  
Comprehensive income $ 60,938   $ 126,835   $ 333,985   $ 332,300  

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
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ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)

September 30,
2025 December 31,
2024
ASSETS
Current assets:
Cash and cash equivalents $ 1,004,589   $ 1,043,887  

Accounts receivable, net of allowance for doubtful accounts of $ 28,250 and $ 19,131 , respectively
1,099,372   995,685  
Inventories 228,161   254,287  
Prepaid expenses and other current assets 174,114   198,582  
Assets held for sale
27,858   —  
Total current assets 2,534,094   2,492,441  

Property, plant and equipment, net 1,184,554   1,271,134  
Operating lease right-of-use assets, net 115,038   113,376  
Goodwill 491,516   442,630  
Intangible assets, net 98,716   103,488  
Deferred tax assets 1,555,580   1,557,372  
Other assets 254,054   234,159  
Total assets $ 6,233,552   $ 6,214,600  

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 125,550   $ 108,693  
Accrued liabilities 546,293   598,188  
Deferred revenues
1,294,623   1,331,146  
Total current liabilities 1,966,466   2,038,027  
Income tax payable 110,595   96,466  
Operating lease liabilities 87,278   88,214  
Other long-term liabilities 111,755   139,908  
Total liabilities 2,276,094   2,362,615  
Commitments and contingencies (Note 7 and Note 8)

Stockholders’ equity:
Preferred stock, $ 0.0001 par value ( 5,000 shares authorized; none issued)
—   —  
Common stock, $ 0.0001 par value ( 200,000 shares authorized; 72,040 and 73,849 issued and outstanding, respectively)
7   7  
Additional paid-in capital 1,475,146   1,362,234  
Accumulated other comprehensive income (loss), net 65,372   5,978  
Retained earnings 2,416,933   2,483,766  
Total stockholders’ equity 3,957,458   3,851,985  
Total liabilities and stockholders’ equity $ 6,233,552   $ 6,214,600  

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
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ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss), Net Retained Earnings Total
Three Months Ended September 30, 2025
Shares Amount
Balance as of June 30, 2025
72,486   $ 7   $ 1,426,541   $ 61,187   $ 2,425,044   $ 3,912,779  
Net income —  —  —  —  56,753   56,753  

Net change in foreign currency translation adjustment —  —  —  4,185   —  4,185  
Issuance of common stock relating to employee equity compensation plans 80   —  7,839   —  —  7,839  
Tax withholdings related to net share settlements of equity awards ( 3 ) —  ( 402 ) —  —  ( 402 )
Common stock repurchased and retired ( 523 ) —  ( 7,209 ) —  ( 64,864 ) ( 72,073 )

Stock-based compensation —  —  48,377   —  —  48,377  
Balance as of September 30, 2025
72,040   $ 7   $ 1,475,146   $ 65,372   $ 2,416,933   $ 3,957,458  

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss), Net Retained Earnings Total
Nine Months Ended September 30, 2025
Shares Amount
Balance as of December 31, 2024
73,849   $ 7   $ 1,362,234   $ 5,978   $ 2,483,766   $ 3,851,985  
Net income —  —  —  —  274,591   274,591  

Net change in foreign currency translation adjustment —  —  —  59,394   —  59,394  
Issuance of common stock relating to employee equity compensation plans 488   —  21,748   —  —  21,748  
Tax withholdings related to net share settlements of equity awards ( 103 ) —  ( 20,232 ) —  —  ( 20,232 )
Common stock repurchased and retired ( 2,194 ) —  ( 30,186 ) —  ( 341,424 ) ( 371,610 )

Stock-based compensation —  —  141,582   —  —  141,582  
Balance as of September 30, 2025
72,040   $ 7   $ 1,475,146   $ 65,372   $ 2,416,933   $ 3,957,458  

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Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss), Net Retained Earnings Total
Three Months Ended September 30, 2024
Shares Amount
Balance as of June 30, 2024
74,696   $ 7   $ 1,276,298   $ 25,041   $ 2,456,562   $ 3,757,908  
Net income —  —  —  —  115,963   115,963  
Net change in unrealized gains (losses) from investments —  —  —  159   —  159  
Net change in foreign currency translation adjustment —  —  —  10,713   —  10,713  
Issuance of common stock relating to employee equity compensation plans 63   —  10,942   —  —  10,942  
Tax withholdings related to net share settlements of equity awards ( 2 ) —  ( 370 ) —  —  ( 370 )

Stock-based compensation —  —  49,039   —  —  49,039  
Balance as of September 30, 2024
74,757   $ 7   $ 1,335,909   $ 35,913   $ 2,572,525   $ 3,944,354  

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss), Net Retained Earnings Total
Nine Months Ended September 30, 2024
Shares Amount
Balance as of December 31, 2023
75,075   $ 7   $ 1,162,140   $ 21,168   $ 2,447,174   $ 3,630,489  
Net income —  —  —  —  317,555   317,555  
Net change in unrealized gains (losses) from investments —  —  —  605   —  605  
Net change in foreign currency translation adjustment —  —  —  14,140   —  14,140  
Issuance of common stock relating to employee equity compensation plans 408   —  25,281   —  —  25,281  
Tax withholdings related to net share settlements of equity awards ( 92 ) —  ( 27,972 ) —  —  ( 27,972 )
Common stock repurchased and retired ( 634 ) —  ( 7,922 ) —  ( 142,677 ) ( 150,599 )
Equity forward contract related to accelerated stock repurchase —  —  49,527   —  ( 49,527 ) —  
Stock-based compensation —  —  134,855   —  —  134,855  
Balance as of September 30, 2024
74,757   $ 7   $ 1,335,909   $ 35,913   $ 2,572,525   $ 3,944,354  

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited )

  Nine Months Ended
September 30,
  2025 2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 274,591   $ 317,555  
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes ( 9,409 ) 17,465  
Depreciation and amortization 135,441   106,905  
Stock-based compensation 141,582   134,855  
Non-cash operating lease cost 29,504   28,603  
Impairment loss on Assets held for sale
23,142   —  
Impairment of equity investment 85   115  

Other non-cash operating activities 29,349   6,931  
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable ( 117,709 ) ( 135,239 )
Inventories 3,055   32,304  
Prepaid expenses and other assets ( 4,053 ) ( 26,283 )
Accounts payable 6,729   ( 13,283 )
Accrued and other long-term liabilities ( 67,730 ) 47,618  
Long-term income tax payable 14,130   ( 5,186 )
Deferred revenues ( 88,661 ) ( 60,207 )
Net cash provided by operating activities
370,046   452,153  
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired —   ( 77,075 )
Purchase of property, plant and equipment ( 66,529 ) ( 92,619 )

Proceeds from maturities of marketable securities —   25,660  
Proceeds from sales of marketable securities —   18,193  
Purchase of equity investments ( 10,000 ) ( 75,390 )

Other investing activities —   235  
Net cash used in investing activities ( 76,529 ) ( 200,996 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 21,749   25,281  
Common stock repurchases, net of excise tax
( 368,691 ) ( 150,012 )

Payroll taxes paid upon the vesting of equity awards ( 20,232 ) ( 27,972 )
Net cash used in financing activities ( 367,174 ) ( 152,703 )
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 34,502   6,008  
Net (decrease) increase in cash, cash equivalents, and restricted cash
( 39,155 ) 104,462  
Cash, cash equivalents and restricted cash at beginning of the period 1,044,963   938,519  
Cash, cash equivalents and restricted cash at end of the period $ 1,005,808   $ 1,042,981  

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
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ALIGN TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation and Preparation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by Align Technology, Inc. (“we”, “our”, the “Company” or “Align”) on a consistent basis with the audited Consolidated Financial Statements for the year ended December 31, 2024, and contain all adjustments, including normal recurring adjustments, necessary to fairly state the information set forth herein. These unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and, therefore, omit certain information and footnote disclosures necessary to present the unaudited Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and notes thereto included in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or any other future period, and we make no representations related thereto.  

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition and deferred revenues, useful lives of intangible assets and property, plant and equipment, goodwill, income taxes, contingent liabilities, the fair values of financial instruments, stock-based compensation and the valuation of investments in privately held companies among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

In the third quarter of 2025, we committed to a plan to dispose of, other than by sale, specifically identified manufacturing assets prior to the end of their estimated useful lives. We anticipate completing the disposition of these assets by December 31, 2025. Accordingly, we have revised the estimated useful lives of these assets to reflect our use through the disposal date. In the three and nine months ended September 30, 2025, we recorded $ 13.7 million of depreciation expense related to these assets. The increase in depreciation expense negatively impacted Net income, net of tax, by $ 8.2 million or $ 0.11 per basic and diluted share and $ 9.2  million or $ 0.13 per basic and diluted share for the three and nine months ended September 30, 2025, respectively.

Certain Risks and Uncertainties

Financial instruments which potentially expose the Company to concentration of credit risk, consist principally of cash and cash equivalents. These instruments have minimal credit risk exposures. Management regularly monitors their compositions and maturities. The Company maintains its cash and cash equivalents in bank accounts that exceed federally insured FDIC limits. Through September 30, 2025, the Company has not experienced any material credit losses on such deposits.

We purchase certain inventory from sole suppliers. Additionally, we rely on a limited number of hardware manufacturers. The inability of any supplier or manufacturer to fulfill our supply requirements could materially and adversely impact our future operating results.

Recent Accounting Pronouncements

(i) New Accounting Pronouncements Recently Adopted

On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 (“ASU 2023-07”), “Improvements to Reportable Segment Disclosures. ” The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment
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expenses and other segment expenses. For public business entities, the provisions of ASU 2023-07 were effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. We adopted this standard in the fiscal year ended December 31, 2024 . See Note 14 “ Segments and Geographical Information.”

(ii) Recent Accounting Pronouncements Not Yet Effective

On September 18, 2025, the FASB issued ASU 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software.” The amendments in this ASU simplify the accounting for internal-use software by eliminating the existing project development stages and introducing new guidance for evaluating the probable-to-complete threshold for capitalization. The amendments in this ASU also require the application of ASC 360-10 disclosure requirements for all capitalized internal-use software costs, regardless of how those costs are presented in the financial statements. The provisions of ASU 2025-06 are effective for all entities for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the effect of this pronouncement on its annual consolidated financial statements.

On December 14, 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures. ” The amendments in this ASU require a public entity to disclose in tabular format, using both percentages and reporting currency amounts, specific categories in the rate reconciliation and to provide additional information for reconciling items that meet a quantitative threshold. The amendments in this ASU also require taxes paid (net of refunds received) to be disaggregated by federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold. For public business entities, the provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. ASU 2023-09 will impact our accounting for income tax financial statement disclosure beginning with our annual report on Form 10-K for the year ending December 31, 2025, but will not impact our consolidated balance sheets, statements of operations or statements of cash flows. We plan to adopt ASU 2023-09 on a prospective basis.

On November 4, 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures. ” The amendments in this ASU require a public entity to disclose, in the notes to the financial statements, specified information about certain costs and expenses, including the amounts of inventory purchases, employee compensation, depreciation and intangible asset amortization. For public business entities, the provisions of ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. There will be no impact to our consolidated balance sheets or statements of operations; however, the Company is evaluating the effect of this pronouncement on our consolidated financial statement disclosures.
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Note 2.  Financial Instruments

Cash, Cash Equivalents and Marketable Securities

The following tables summarize our cash, cash equivalents and marketable securities balances in our Condensed Consolidated Balance Sheets as of September 30, 2025 and Consolidated Balance Sheets as of December 31, 2024 (in thousands):

Reported as:
September 30, 2025 Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value Cash and Cash Equivalents
Cash $ 797,412   $ —  $ —  $ 797,412   $ 797,412  
Money market funds
190,785   —  —  190,785   190,785  
Certificate of deposits
16,392   —  —  16,392   16,392  

Total $ 1,004,589   $ —  $ —  $ 1,004,589   $ 1,004,589  

Reported as:
December 31, 2024 Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value Cash and Cash Equivalents
Cash $ 752,423   $ —  $ —  $ 752,423   $ 752,423  
Money market funds 291,464   —  —  291,464   291,464  

Total $ 1,043,887   $ —  $ —  $ 1,043,887   $ 1,043,887  

We had no short-term or long-term marketable securities as of September 30, 2025 or December 31, 2024.

Fair Value Measurements

Fair value is an exit price, representing the amount that would be received from selling an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. We use the U.S. GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value:

Level 1 — Inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly.

Level 3 — Inputs to the valuation techniques that are unobservable for the assets or liabilities.

The following tables summarize our financial assets measured at fair value as of September 30, 2025 and December 31, 2024 (in thousands):

Description Balance as of
September 30, 2025
Level 1
Cash equivalents:
Money market funds $ 190,785   $ 190,785  
Certificate of deposits
16,392   16,392  

Total
$ 207,177   $ 207,177  

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Description Balance as of
December 31, 2024
Level 1
Cash equivalents:
Money market funds $ 291,464   $ 291,464  

Total
$ 291,464   $ 291,464  

Accounts Receivable Factoring

We enter into factoring transactions on a non-recourse basis with financial institutions to sell certain of our non-U.S. accounts receivable. We account for these transactions as sales of financial assets and include the cash proceeds as a part of our cash flows from operations in the Condensed Consolidated Statements of Cash Flows. Total accounts receivable sold under factoring arrangements were $ 10.0 million and $ 8.2 million during the three months ended September 30, 2025 and 2024, respectively, and $ 34.6 million and $ 34.2 million during the nine months ended September 30, 2025 and 2024, respectively. Factoring fees on the sales of receivables were recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations and were not material.

Investments in Privately Held Companies

Our investments in privately held companies in which we cannot exercise significant influence and do not own a majority equity interest or otherwise control are accounted for as investments in equity securities. We have elected to account for all investments in equity securities in accordance with the measurement alternative. Under the measurement alternative, we record the value of our investments in equity securities at cost, minus impairment, if any. Additionally, we adjust the carrying value of our investments in equity securities for observable transactions for identical or similar investments of the same issuer.

On April 24, 2023 and April 22, 2024, we entered into Subscription Agreements (the “Subscription Agreements”) with Heartland Dental Holding Corporation (“Heartland”). Pursuant to the Subscription Agreements we acquired less than a 5 % equity interest in Heartland through the purchase of Class A Common Stock for $ 150 million in total. In the fourth quarter of 2024, we recorded a $ 6 million increase to the carrying value of our investment, which increased the total carrying value of our investment in Heartland to $ 156 million.

On December 19, 2024 and June 5, 2025, we entered into Subscription Agreements (the “Smile Doctors Subscription Agreements”) with New SD Holding Company, L.P. (“SD Holding Company”). Pursuant to the Smile Doctors Subscription Agreements we acquired less than a 3 % equity interest in SD Holding Company through the purchase of Class A Common Units for $ 40 million in total. SD Holding Company owns a controlling interest, through intermediary entities, in Smile Doctors, LLC.

Based on a review of the relevant facts and circumstances, primarily observable transactions for identical investments, we determined that no adjustments to the carrying values of our investments were necessary for the three or nine months ended September 30, 2025.

Our investments in privately held companies in which we can exercise significant influence are accounted for as equity method investments. We have elected to account for our equity method investments under the fair value option.

The carrying value of our investments in equity securities and equity method investments are reported in our Condensed Consolidated Balance Sheets as Other assets and any price adjustments or impairment, if any, are recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations.

Derivatives Not Designated as Hedging Instruments

We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations on certain assets and liabilities. These forward contracts are classified within Level 2 of the fair value hierarchy. As a result of the settlement of foreign currency forward contracts, we recognized a net gain of $ 3.3 million and a net loss of $ 24.5 million during the three months ended September 30, 2025 and 2024, respectively, and a net loss of $ 35.3 million and a net gain $ 2.7 million, respectively, during the nine months ended September 30, 2025 and 2024. Recognized gains and losses from the settlement of foreign currency forward contracts are recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations. As of September 30, 2025 and December 31, 2024, the fair value of outstanding foreign exchange forward contracts was no t material.

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The following tables present the gross notional value of all our foreign exchange forward contracts outstanding as of September 30, 2025 and December 31, 2024 (in thousands):

September 30, 2025
Local Currency Amount Notional Contract Amount (USD)
Euro € 159,000 $ 186,840  
Canadian Dollar C$ 82,500 59,356  
British Pound £ 39,700 53,324  
Polish Zloty PLN 175,000 48,036  
Israeli Shekel ILS 94,100 28,452  
Japanese Yen ¥ 3,300,000 22,374  
Brazilian Real R$ 92,300 17,189  
Swiss Franc CHF 5,600 7,048  
New Taiwan Dollar NT$ 106,300 3,482  
Australian Dollar A$ 4,800 3,177  
New Zealand Dollar NZ$ 4,300 2,495  
Korean Won ₩ 3,200,000 2,283  
Chinese Yuan ¥ 15,000 2,108  

Total notional contract amount $ 436,164  

December 31, 2024
Local Currency Amount Notional Contract Amount (USD)
Euro € 176,080 $ 183,172  
Polish Zloty PLN 283,000 68,633  
Canadian Dollar C$ 97,000 67,446  
British Pound £ 37,600 47,090  
Israeli Shekel ILS 90,055 24,740  
Chinese Yuan ¥ 164,500 22,417  
Brazilian Real R$ 83,100 13,327  
Japanese Yen ¥ 2,000,000 12,778  
Swiss Franc CHF 5,700 6,314  
New Zealand Dollar NZ$ 7,000 3,924  
Czech Koruna Kč 72,800 3,004  
Australian Dollar A$ 3,800 2,355  
New Taiwan Dollar NT$ 58,700 1,786  
Korean Won ₩ 2,000,000 1,361  

Total notional contract amount $ 458,347  

Note 3. Balance Sheet Components

Inventories consist of the following (in thousands):

September 30,
2025 December 31,
2024
Raw materials $ 97,264   $ 124,377  
Work in process 63,097   73,660  
Finished goods 67,800   56,250  
Total inventories $ 228,161   $ 254,287  

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During the three months ended September 30, 2025, we recognized an impairment loss on inventory of $ 14.9  million to adjust our inventory balance to its net realizable value. This loss was recorded in Cost of net revenues in our Condensed Consolidated Statements of Operations.

Prepaid expenses and other current assets consist of the following (in thousands):

September 30,
2025 December 31,
2024
Value added tax receivables $ 41,190   $ 34,028  
Prepaid expenses 75,884   82,978  
Other current assets 57,040   81,576  
Total prepaid expenses and other current assets $ 174,114   $ 198,582  

Accrued liabilities consist of the following (in thousands):  

September 30,
2025 December 31,
2024
Accrued payroll and benefits $ 210,499   $ 248,003  
Accrued expenses 62,177   66,391  
Accrued income taxes 39,522   48,808  
Accrued sales and marketing expenses 34,247   37,617  
Current operating lease liabilities 33,993   31,063  
Accrued property, plant and equipment 8,411   13,462  

Other accrued liabilities 157,444   152,844  
Total accrued liabilities $ 546,293   $ 598,188  

Accrued warranty, which is included in the “Other accrued liabilities” category of the Total accrued liabilities table above, consists of the following activity (in thousands):

Nine Months Ended
September 30,
  2025 2024
Balance at beginning of period $ 31,211   $ 22,426  
Charged to cost of net revenues 12,596   14,658  
Actual warranty expenditures ( 9,108 ) ( 9,889 )
Balance at end of period $ 34,699   $ 27,195  

Deferred revenues consist of the following (in thousands):

September 30,
2025 December 31,
2024
Deferred revenues - current $ 1,294,623   $ 1,331,146  
Deferred revenues - long-term 1
84,424   102,164  
Total deferred revenues
$ 1,379,047   $ 1,433,310  

1 Included in Other long-term liabilities within our Condensed Consolidated Balance Sheets.

During the three months ended September 30, 2025 and 2024, we recognized $ 995.7 million and $ 977.9 million of net revenues, respectively, of which $ 200.0 million and $ 199.0 million was included in the deferred revenues balance at December 31, 2024 and 2023, respectively.

During the nine months ended September 30, 2025 and 2024, we recognized $ 2,987.4 million and $ 3,003.8 million of net revenues, respectively, of which $ 675.3 million and $ 658.2 million was included in the deferred revenues balance at December 31, 2024 and 2023, respectively.

Our unfulfilled performance obligations, including deferred revenues and backlog, as of September 30, 2025 were $ 1,383.3 million. These performance obligations are expected to be fulfilled over a period of up to five years .

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Note 4 .  Business Combination

On January 2, 2024 (the “Cubicure Acquisition Date”), we completed the acquisition of privately held Cubicure GmbH (“Cubicure”) (the “Cubicure Acquisition”) . Cubicure is an Austrian company and specializes in direct 3D printing solutions for polymer additive manufacturing that develops, produces and distributes innovative materials, equipment and processes for 3D printing solutions. The Cubicure Acquisition is intended to support and scale our strategic innovation roadmap and strengthen the Align Digital Platform. In fiscal year 2021, we acquired a 9.04 % equity interest in Cubicure. Subsequently, on the Cubicure Acquisition Date, we acquired the remaining equity of Cubicure. Prior to the acquisition, we also had technology license and joint development agreements with Cubicure.

The fair value of consideration transferred in the acquisition is shown in the table below (in thousands):

Cash paid to Cubicure stockholders $ 80,142  
Fair value of pre-existing equity interest ownership 7,968  
Settlement of pre-existing relationship - accounts payable ( 2,316 )
Total purchase consideration paid $ 85,794  

The Cubicure Acquisition was accounted for as a business combination under ASC Topic 805, Business Combinations ( “ASC 805”) that was achieved in stages. As a result of the Cubicure Acquisition, we remeasured our pre-existing equity interest in Cubicure at fair value prior to the Cubicure Acquisition. Based on the fair value of this equity interest, derived from the purchase price, we estimated the fair value of our 9.04 % pre-existing investment in Cubicure to be approximately $ 8.0 million. The remeasurement resulted in the recognition of a pre-tax gain of $ 4.1 million, which was reflected as a component of Other income (expense), net within our Condensed Consolidated Statements of Operations.

In 2021, we initiated Joint development (“JDA”) and Technology license agreements (“TLA”) to provide us with access to Cubicure’s technology. The settlement of the JDA and TLA were concluded to be at market terms on the Cubicure Acquisition Date; therefore, no gain or loss was recorded related to the settlement of these contracts. We also had accounts payable from the pre-existing arrangements with Cubicure of $ 2.3 million, which were effectively settled and reduced from the purchase consideration of the Cubicure Acquisition.

The allocation of purchase price to assets acquired and liabilities assumed is as follows (in thousands):

Working capital $ 1,039  
Property & equipment 975  
Developed technology 47,000  
Other non-current asset 1,483  
Other liabilities ( 12,279 )
Goodwill 47,576  
Total $ 85,794  

Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and identifiable intangible assets, and represents the value associated with future technology, future customer relationships and the knowledge and experience of the workforce in place. None of this goodwill is deductible for tax purposes. We allocated all goodwill to our Clear Aligner reporting unit.

As part of the Cubicure Acquisition, we acquired a developed technology intangible asset. The acquired developed technology had an estimated fair value of $ 47.0  million as of the Cubicure Acquisition Date and will be amortized over a useful life of thirteen years .

The fair value of developed technology was estimated under the Multi-Period Excess Earnings Method and the fair value estimates for developed technology include significant assumptions in the prospective financial information which include, but are not limited to, the projected future cash flows associated with the technology, the asset's life cycle and a present value factor.

Acquisition related costs are recognized separately from the business combination and are expensed as incurred. Acquisition related costs were not material.

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Our Condensed Consolidated Financial Statements include the operating results of Cubicure from the Cubicure Acquisition Date. Separate post-acquisition operating results and pro forma results of operations for this acquisition have not been presented as the effect is not material to our consolidated financial results.

Note 5 .  Goodwill and Intangible Assets

Goodwill

The change in the carrying value of goodwill for the nine months ended September 30, 2025, categorized by reportable segment, is as follows (in thousands):

Clear Aligner Systems and Services Total
Balance as of December 31, 2024
$ 152,645   $ 289,985   $ 442,630  

Foreign currency translation adjustments
11,547   37,339   48,886  
Balance as of September 30, 2025
$ 164,192   $ 327,324   $ 491,516  

Finite-Lived Intangible Assets

Acquired finite-lived intangible assets, excluding intangibles that were fully amortized, are as follows (in thousands): 

Weighted Average Amortization Period
(in years) Gross Carrying Amount as of
September 30, 2025
Accumulated
Amortization Accumulated
Impairment Loss Net Carrying
Value as of
September 30, 2025

Existing technology 11 $ 146,651   $ ( 63,426 ) $ —   $ 83,225  
Customer relationships 10 21,500   ( 11,825 ) —   9,675  
Trademarks and tradenames 1
7 9,800   ( 7,700 ) —   2,100  
Patents 12 480   ( 310 ) —   170  
$ 178,431   $ ( 83,261 ) $ —   95,170  
Foreign currency translation adjustments 3,546  
Total intangible assets, net $ 98,716  

1 The Weighted Average Amortization Period decreased from 10 years to 7 years due to an intangible asset with a useful life of 15 years becoming fully amortized during the first quarter of 2025.

Weighted Average Amortization Period
(in years) Gross Carrying
Amount as of December 31, 2024
Accumulated
Amortization
Accumulated Impairment Loss Net Carrying
Value as of
December 31, 2024

Existing technology 11 $ 146,651   $ ( 52,238 ) $ —   $ 94,413  
Customer relationships 10 21,500   ( 10,079 ) —   11,421  
Trademarks and tradenames 10 16,600   ( 9,255 ) ( 4,122 ) 3,223  
Patents 12 480   ( 280 ) —   200  
$ 185,231   $ ( 71,852 ) $ ( 4,122 ) 109,257  
Foreign currency translation adjustments ( 5,769 )
Total intangible assets, net $ 103,488  

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The total estimated future amortization expense for these acquired finite-lived intangible assets as of September 30, 2025 is as follows (in thousands):

Fiscal Year Ending December 31, Amortization
Remainder of 2025
$ 4,610  
2026 17,923  
2027 15,607  
2028 14,505  
2029 14,505  
2030 6,328  
Thereafter 21,692  
Total $ 95,170  

Amortization expense for the three months ended September 30, 2025 and 2024 was $ 4.8 million and $ 4.6 million, and amortization expense for the nine months ended September 30, 2025 and 2024 was $ 14.0 million and $ 14.2 million, respectively.

Note 6 .  Credit Facility

We maintain a credit facility, as amended in December 2022, that includes a $ 300.0 million unsecured revolving line of credit and a $ 50.0 million letter of credit sub-limit. The facility matures on December 23, 2027 and accrues interest, at our election, based on either the Secured Overnight Financing Rate (“SOFR”) for the applicable period or a base rate, in each case plus an applicable margin.

The facility includes financial covenants and performance requirements. As of September 30, 2025, we had no outstanding borrowings under the facility and were in compliance with the terms and conditions of the facility in all material respects.

Note 7. Legal Proceedings

Antitrust Class Actions

On June 5, 2020, a dental practice, Simon and Simon, PC (doing business as City Smiles), brought an antitrust action in the U.S. District Court for the Northern District of California on behalf of itself and a putative class of similarly situated practices seeking treble monetary damages, interest, costs, attorneys’ fees and injunctive relief relating to our alleged market activities in alleged clear aligner and intraoral scanner markets. Plaintiff filed an amended complaint and added VIP Dental Spas as a plaintiff on August 14, 2020. On December 18, 2023, the court certified a class of persons or entities that purchased Invisalign directly from us between January 1, 2019 and March 31, 2022. The court denied Plaintiffs’ motion to certify a class of purchasers of scanners. On February 21, 2024, the court granted our motion for summary judgment on all claims brought by the plaintiffs. Plaintiffs have appealed the district court’s summary judgment ruling to the United States Court of Appeals for the Ninth Circuit. Oral argument was held on April 10, 2025.

On May 3, 2021, an individual named Misty Snow brought an antitrust action in the U.S. District Court for the Northern District of California on behalf of herself and a putative class of similarly situated individuals seeking treble monetary damages, interest, costs, attorneys’ fees and injunctive relief relating to our alleged market activities in alleged clear aligner and intraoral scanner markets based on Section 2 of the Sherman Act. Plaintiffs have since filed several amended complaints adding new plaintiffs, various state law claims and allegations based on Section 1 of the Sherman Act. On November 29, 2023, the court certified a class of indirect purchasers of Invisalign between July 1, 2018 and December 31, 2023 and a class of indirect purchasers of Invisalign seeking injunctive relief. On February 21, 2024, the court granted our motion for summary judgment on the claims related to Section 2 allegations. The court entered judgment for the Section 2 and related state law claims on March 22, 2024. Plaintiffs have appealed the district court’s summary judgment ruling to the United States Court of Appeals for the Ninth Circuit. Oral argument was held on April 10, 2025.

We are currently unable to predict the outcome of these lawsuits and therefore we cannot determine the likelihood of loss, if any, nor estimate a range of possible loss.

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In June 2024, we reached a settlement in principle with the Section 1 plaintiffs to resolve all remaining claims in the Section 1 lawsuit. In March 2025, Align and plaintiffs agreed to a revised settlement to resolve all Section 1 claims for a $ 31.75  million cash payment. On May 28, 2025, the court granted preliminary approval of the proposed settlement. The Final Approval/Fairness hearing has been set for November 20, 2025. We are unable to predict the timeline or outcome of the court’s final approval decision. We continue to believe that plaintiffs’ Section 1 claims are without merit and remain ready to vigorously defend ourselves against those claims.

During the quarter ended September 30, 2025, Align issued a payment for the full settlement amount, $ 31.75 million, consisting of $ 27.5  million accrued as of December 31, 2024 and an additional loss accrual of $ 4.25  million in the first quarter of 2025, to an escrow agency in accordance with the court's preliminary approval.

Straumann Litigation

On April 11, 2024, we filed a lawsuit in the U.S. District Court for the Western District of Texas against ClearCorrect Operating, LLC, ClearCorrect Holdings., Inc. and Institut Straumann AG (collectively the “Defendants”). The complaint asserted claims of false advertising, unfair competition, civil conspiracy and infringement of our patents related to aligner material, treatment planning, and intraoral scanner technologies. Among other things, the complaint seeks relief enjoining Defendants’ infringement of multiple of our multilayer material patents through Defendants’ manufacture, sale and offer for sale of aligners made with Zendura FLX/ClearQuartz materials. On August 29, 2025 Align filed an amended complaint for damages and injunctive relief. On September 12, 2025, Defendants filed a motion to dismiss the amended complaint. That motion to dismiss remains pending. Defendants are also seeking to invalidate all of our asserted patents at the district court and United States Patent and Trial Appeal Board.

On July 9, 2024, Defendants filed counterclaims against us alleging antitrust violations, false advertising, unfair competition and breach of contract. Among other things, the counterclaims seek injunctive relief and money damages. On August 29, 2025, Defendants filed amended counterclaims, which additionally allege that Align procured certain materials patents by fraud. On September 26, 2025, Align filed a motion to dismiss the amended counterclaims. That motion remains pending.

On April 10, 12 and 14, 2025, the Defendants filed eight inter partes review (“IPR”) petitions with the United States Patent Trial and Appeal Board (“PTAB”), alleging that eight of the patents asserted by Align against the Defendants are unpatentable. On October 23, 2025, the PTAB issued decisions denying institution of two of Defendants eight IPRs. On October 23, 2025, the PTAB issued a decision instituting proceedings on one of the IPRs. Decisions on the remaining five IPRs are expected on or before November 8, 2025. We believe the petitions are without merit and intend to defend ourselves vigorously.

We believe Defendants’ counterclaims are without merit and intend to vigorously defend ourselves. We are currently unable to predict the outcome of this lawsuit and cannot determine the likelihood of loss, if any, nor estimate a range of possible loss.

Angelalign Technology, Inc.

On August 15, 2025, we initiated two actions in the European Union Patent Court against Angelalign Technology, Inc.; Angelalign France Technology SASU; Europe Angelalign Technology B.V.; Angelalign Technology (Germany) GmbH; Italy Angelalign Technology S.R.L.; Shanghai EA Medical Instruments Co., Ltd. (collectively the “Defendants”) for infringing certain patens related to use interface and attachments. The Defendants responded in one action on October 23, 2025, and have yet to respond to the other.

On August 18, 2025, we filed a lawsuit in the U.S. District Court for the Eastern District of Texas against Angelalign Technology Inc., Wuxi EA Medical Instruments Technologies Ltd., Wuxi EA Bio-Tech Co., Ltd., and Shanghai EA Medical Instruments Co., Ltd (collectively the “Defendants”). The complaint alleges that the Defendants infringed our patents related to multilayer materials, bite ramps, and power ridges. Defendants have not yet responded to the complaint.

On August 18, 2025, we initiated two actions in the China Intermediate People’s Court against Shanghai Angelalign Medical Devices Co., Ltd., Wuxi Angelalign Medical Device Technology Co., Ltd., and Wuxi Angelalign Biotechnology Co., Ltd (collectively the “Chinese Defendants”) for infringing patents related to attachments and force-based treatment planning.
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On September 10, 2025, we filed another action against the Chinese Defendants alleging infringement of our patent related to extraction site closure. The Chinese Defendants have yet to respond to the complaints.

On September 23, 2025, we filed a complaint at the U.S. International Trade Commission (“ITC”) against Angelalign Technology Inc., Wuxi EA Medical Instruments Technologies Ltd., Wuxi EA Bio-Tech Co., Ltd., Shanghai EA Medical Instruments Co., Ltd., and USA Angelalign Technology Corp. (collectively, “Respondents”). The complaint alleges that Respondents are violating 19 U.S.C. § 1337 (“Section 337”) through unlawful and unauthorized importation and sale of clear aligners that infringe claims of our patents related to multilayer materials, bite ramps, and power ridges. The complaint seeks an exclusion order blocking Respondents’ importation of the infringing clear aligners into the U.S., and a cease-and-desist order prohibiting Respondent from selling, marketing, and transferring the infringing clear aligners within the U.S. The ITC has yet to institute this investigation and has ceased regular operations during the government shutdown. Respondents have yet to appear.

On August 22, 2025, Shanghai Angelalign Medical Devices Co., Ltd. and Wuxi Angelalign Medical Devices Technology Co., Ltd. filed a legal action against us in the Beijing Intellectual Property Court. The complaint alleges that we violate an Angelalign patent claim relating to undercut detection for mold manufacturing and seeks money damages and injunctive relief. We believe the case is without merit and intend to defend ourselves vigorously.

We are currently unable to predict the outcome of these lawsuits or any future litigation, and therefore we cannot determine the likelihood of loss, if any, nor estimate a range of possible loss.

In addition to the above, in the ordinary course of our operations, we are involved in a variety of claims, suits, investigations and proceedings, including actions with respect to intellectual property claims, patent infringement claims, government investigations, labor and employment claims, breach of contract claims, tax and other matters. Regardless of the outcome, these proceedings can have an adverse impact on us because of defense costs, diversion of management resources and other factors. Although the results of complex legal proceedings are difficult to predict and our view of these matters may change in the future as litigation and events related thereto unfold; we currently do not believe that these matters, individually or in the aggregate, will materially affect our financial position, results of operations or cash flows.

Note 8 .  Commitments and Contingencies

Tax Matter

Beginning in the third quarter of 2023 and continuing through the first quarter of 2024, we received cumulative assessments of approximately $ 100  million from His Majesty’s Revenue and Customs (“HMRC”) for unpaid value added tax (“VAT”) related to certain clear aligner sales made during the period of October 2019 through May 2023. We were required to pay these assessments prior to contesting or litigating the matter in statutory appeal. We have historically asserted and continue to assert that doctor prescribed clear aligners sold by dentists for the orthodontic treatment of patient malocclusions are exempt from VAT, that we have reasonably relied upon statements and guidance by HMRC and that our interpretation of United Kingdom legislation is appropriate.

In October 2024, the Company and HMRC reached a settlement agreement regarding the unpaid VAT related to certain aligner sales made during the period of October 2019 through mid-October 2023. As part of the settlement, HMRC agreed to vacate the judicial review (before the Administrative Court) originally scheduled for October 9th and October 10th, 2024, refund to the Company all assessments paid for the period of October 2019 through May 2023 and withdraw any potential assessments for the period from June 2023 through mid-October 2023. HMRC has refunded to the Company the assessed amounts, approximately $ 100  million.

A statutory appeal (before the First-tier Tribunal - “Tax Tribunal”) was held on January 27th through January 30th, 2025. On April 24, 2025, the Tax Tribunal issued a ruling in our favor indicating that clear aligners are “dental prostheses for the purposes of VAT”, which is a key condition for the VAT exemption. On June 13, 2025, HMRC applied for permission to appeal the Tax Tribunal decision, which was granted on July 15, 2025. On August 1, 2025, HMRC lodged their grounds for appeal to the Upper Tribunal. A hearing in front of the Upper Tribunal has been scheduled for May 2026.

In August 2025, we stopped charging VAT to our United Kingdom customers. It is not possible at this stage to accurately evaluate the likelihood of an unfavorable outcome from the Upper Tribunal statutory appeal, nor estimate a range of possible loss.
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Indemnification Provisions

In the normal course of business, to facilitate transactions in our services and products, we indemnify certain parties: customers, vendors, lessors and other parties with respect to certain matters, including, but not limited to, services to be provided by us and intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with our directors and our executive officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. Several of these agreements limit the time within which an indemnification claim can be made and the amount of the claim.

It is not possible to make a reasonable estimate of the maximum potential amount of future payments, if any, under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement. Additionally, we have a limited history of prior indemnification claims and the payments we have made under such agreements have not had a material adverse effect on our results of operations, cash flows or financial position. However, to the extent that valid indemnification claims arise in the future, future payments by us could be significant and could have a material adverse effect on our results of operations or cash flows in a particular period. As of September 30, 2025, we did not have any material indemnification claims that were probable or reasonably possible.

Note 9.  Stockholders’ Equity

As of September 30, 2025, the Align Technology, Inc. 2005 Incentive Plan, as amended, has a total reserve of 34,668,895 shares, of which 4,542,079 shares are available for issuance.

Summary of Stock-Based Compensation Expense

Stock-based compensation related to our stock-based awards and employee stock purchase plan for the three and nine months ended September 30, 2025 and 2024 is as follows (in thousands):

  Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 2025 2024
Cost of net revenues $ 1,540   $ 3,070   $ 4,714   $ 7,716  
Selling, general and administrative 35,226   34,937   99,577   97,705  
Research and development 11,611   11,032   37,291   29,434  
Total stock-based compensation $ 48,377   $ 49,039   $ 141,582   $ 134,855  

Restricted Stock Units (“RSUs”)

The fair value of RSUs is based on the closing price of our stock on the date of grant. Generally, RSUs vest over a period of four years .

A summary for the nine months ended September 30, 2025 is as follows:

Number of Shares
Underlying RSUs
(in thousands)
Weighted Average Grant Date Fair Value Weighted Average Remaining
Contractual Term (in years) Aggregate
Intrinsic Value
(in thousands)
Unvested as of December 31, 2024
1,019   $ 331.10  
Granted
677   196.72  
Vested and released ( 307 ) 356.81  
Forfeited ( 99 ) 280.42  
Unvested as of September 30, 2025
1,290   $ 258.36   1.5 $ 161,601  

As of September 30, 2025, we expect to recognize $ 226.3 million of total unamortized compensation costs, net of estimated forfeitures, related to RSUs over a weighted average period of 2.6 years.

Market-Performance Based Restricted Stock Units (“MSUs”)

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We grant MSUs to members of senior management. Each MSU represents the right to one share of our common stock. The actual number of MSUs which will be eligible to vest will be based on the performance of our stock price relative to the performance of a stock market index over the vesting period. MSUs vest over a period of three years and the maximum number of shares eligible to vest is 250 % of the MSUs initially granted.

The following table summarizes the MSU performance activity for the nine months ended September 30, 2025:  

Number of Shares
Underlying MSUs
(in thousands)
Weighted Average Grant Date Fair Value Weighted Average
Remaining
Contractual Term (in years)
Aggregate
Intrinsic Value
(in thousands)
Unvested as of December 31, 2024
193   $ 679.14  
Granted 127   362.98  
Vested and released 1
( 30 ) 878.35  
Forfeited ( 27 ) 638.92  
Unvested as of September 30, 2025
263   $ 507.88   1.6 $ 32,997  

1 Includes MSUs vested during the period below 100 % of the original grant as actual shares released is based on our stock performance relative to a market index over the vesting period.

As of September 30, 2025, we expect to recognize $ 52.1 million of total unamortized compensation costs, net of estimated forfeitures, related to MSUs over a weighted average period of 1.6 years.

Restricted Stock Units with Performance Conditions (“PSUs”)

Our PSUs typically include a service and performance condition. We recognize share-based compensation expense for PSUs if it is probable that the performance condition will be achieved.

The following table summarizes the PSU performance activity for the nine months ended September 30, 2025:

Number of Shares
Underlying PSUs
(in thousands) Weighted Average Grant Date Fair Value Weighted Average
Remaining
Contractual Term (in years)
Aggregate
Intrinsic Value
(in thousands)
Unvested as of December 31, 2024
11   $ 204.33  
Granted —   —  
Vested and released ( 5 ) 201.63  
Forfeited —   —  
Unvested as of September 30, 2025
6   $ 206.36   1.3 $ 789  

As of September 30, 2025, we expect to recognize $ 0.6 million of total unamortized compensation costs, net of estimated forfeitures, related to PSUs over a weighted average period of 1.3 years.

Employee Stock Purchase Plan

As of September 30, 2025, we have 1,728,664 shares available for future issuance under the Align Technology, Inc. 2010 Employee Stock Purchase Plan (as amended and restated, the “2010 Purchase Plan”).

The fair value of the option component of the 2010 Purchase Plan shares was estimated at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:

  Nine Months Ended
September 30,
  2025 2024
Expected term (in years) 1.2 1.3
Expected volatility 56.2   % 49.2   %
Risk-free interest rate 4.0   % 4.6   %
Expected dividends —   —  
Weighted average fair value at grant date $ 64.94   $ 94.70  

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As of September 30, 2025, we expect to recognize $ 16.1 million of total unamortized compensation costs related to future employee stock purchases over a weighted average period of 0.9 years.

Note 10.  Common Stock Repurchase Programs

In January 2023, our Board of Directors authorized a plan to repurchase up to $ 1.0  billion of our common stock (the “January 2023 Repurchase Program”). The January 2023 Repurchase Program was completed in its entirely in the second quarter of 2025.

In April 2025, our Board of Directors authorized a plan to repurchase up to $ 1.0  billion of our common stock (the “April 2025 Repurchase Program”). The April 2025 Repurchase Program is expected to be completed over a period of up to three years . As of September 30, 2025, we have $ 928.4 million remaining available for repurchase under the April 2025 Repurchase Program.

The following tables summarize the total repurchases of our common stock pursuant to Accelerated Share Repurchase (“ASR”) agreements and Open Market Repurchase (“OMR”) programs under the January 2023 and April 2025 Repurchase Programs:

Accelerated Share Repurchase Agreements

Agreement
 Date Repurchase
 Program Amount Paid
(in millions) Completion
Date Total Shares
Received Average Price per Share

Q4 2023 January 2023 $ 250.0   Q1 2024 1,086,334   $ 230.13  

Open Market Repurchases

Agreement
 Date Repurchase
 Program Amount Paid
(in millions) Completion
Date Total Shares
Received Average Price per Share
Q4 2023 January 2023 $ 100.0   Q4 2023 465,518   $ 214.81  
Q2 2024 January 2023 $ 150.0   Q2 2024 598,302   $ 250.73  
Q4 2024 January 2023 $ 275.0   Q1 2025 1,241,509   $ 221.50  
Q1 2025 January 2023 $ 225.0   Q2 2025 1,339,124   $ 168.02  
Q3 2025
April 2025 $ 71.6   N/A 1
523,203   $ 136.77  

1 On August 5, 2025, we initiated a $ 200  million open market repurchase program which is expected to be completed in January 2026. The total number of shares to be repurchased and the average price per share are not determinable as of the filing of this Quarterly Report on Form 10-Q. The amount paid, total shares received and average price per share per the table above are determined as of September 30, 2025.

Note 11. Accounting for Income Taxes

Our provision for income taxes was $ 38.0 million and $ 50.0 million for the three months ended September 30, 2025 and 2024, respectively, representing effective tax rates of 40.1 % and 30.1 %, respectively. Our provision for income taxes was $ 134.1 million and $ 150.6 million for the nine months ended September 30, 2025 and 2024, respectively, representing effective tax rates of 32.8 % and 32.2 %. Our effective tax rate differs from the statutory federal income tax rate of 21% for the three and nine months ended September 30, 2025 and 2024 primarily due to the recognition of additional tax expense resulting from U.S. taxes on foreign earnings, foreign income taxed at different rates, state income taxes and non-deductible expenses in the U.S.

We exercise significant judgment in regard to estimates of future market growth, forecasted earnings and projected taxable income in determining the provision for income taxes and for purposes of assessing our ability to utilize any future benefit from deferred tax assets. We continue to assess the realizability of the deferred tax assets as we take into account new information. We may be required to adjust the valuation allowance for deferred tax assets if we determine, based on available evidence at the time of the determination, that it is more likely than not that some portion or all of the deferred tax assets will not be realized. Changes to the valuation allowance could have a material adverse effect on our results of operations.

Our total gross unrecognized tax benefits, excluding interest and penalties, were $ 150.9 million and $ 145.5 million as of September 30, 2025 and December 31, 2024, respectively, a material amount of which would impact our effective tax rate if recognized. The increase in our unrecognized tax benefits relates primarily to positions taken on income tax return calculations finalized during the three and nine months ended September 30, 2025.
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On July 4, 2025, the United States enacted tax reform legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). Included in this legislation are provisions that allow for the immediate expensing of certain domestic research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. In the third quarter of 2025, the period of enactment, we included the impact of the OBBBA tax legislation in our results of operations and financial position, which were not material.

Note 12 . Net Income per Share

  The following table sets forth the computation of basic and diluted net income per share attributable to common stock (in thousands, except per share amounts):

  Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 2025 2024
Numerator:
Net income $ 56,753   $ 115,963   $ 274,591   $ 317,555  
Denominator:
Weighted average common shares outstanding, basic 72,377   74,736   72,831   75,031  
Dilutive effect of potential common stock 42   21   49   118  
Total shares, diluted 72,419   74,757   72,880   75,149  

Net income per share, basic $ 0.78   $ 1.55   $ 3.77   $ 4.23  
Net income per share, diluted $ 0.78   $ 1.55   $ 3.77   $ 4.23  

Anti-dilutive potential common shares 1
1,321   1,173   1,273   689  

1 Represents approximately 1,320.9  thousand RSU for the three months ended September 30, 2025 and approximately 1,273.3 thousand RSU and 0.1 thousand ESPP weighted-average outstanding common stock equivalent shares for the nine months ended September 30, 2025. Approximately 1,169.7  thousand RSU and 3.1  thousand ESPP weighted average outstanding common stock equivalent shares for the three months ended September 30, 2024 and approximately 687.7  thousand RSU and 0.8  thousand ESPP weighted-average outstanding common stock equivalent shares for the nine months ended September 30, 2024 that are excluded from the calculation of diluted net income per share as the effect would have been anti-dilutive.

Note 13 . Supplemental Cash Flow Information

The supplemental cash flow information consists of the following (in thousands):
  Nine Months Ended
September 30,
  2025 2024
Non-cash investing and financing activities:
Acquisition of property, plant and equipment in accounts payable and accrued liabilities $ 11,997   $ 17,631  
Final settlement of prior year stock repurchase forward contract $ —   $ 50,000  
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 29,503   $ 29,854  
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 19,996   $ 25,422  

Note 14 .  Segments and Geographical Information

Segment Information

We report segment information based on the management approach. The management approach designates the internal reporting used by our Chief Operating Decision Maker (“CODM”), our Chief Executive Officer, for decision making and
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performance assessment as the basis for determining our reportable segments. We group our operations into two reportable segments; Clear Aligner segment and Imaging Systems and CAD/CAM services (“Systems and Services”) segment, which are based on our predominant product lines.

Our CODM uses gross profit and income from operations to assess each reportable segment's performance, by reviewing each measure against internal forecasts and historical performance. Our CODM may also benchmark each segment's performance against our competitors and external expectations.

Summarized financial information by reportable segment is as follows (in thousands):

  Three Months Ended
September 30, Nine Months Ended
September 30,
2025 2024 2025 2024
Net revenues
Clear Aligner $ 805,799   $ 786,844   $ 2,407,259   $ 2,435,833  
Systems and Services 189,893   191,028   580,144   567,960  
Total net revenues $ 995,692   $ 977,872   $ 2,987,403   $ 3,003,793  
Cost of net revenues 1

Clear Aligner
$ 282,941   $ 234,003   $ 758,506   $ 715,309  
Systems and Services
73,550   62,095   201,471   186,266  
Total cost of goods sold
$ 356,491   $ 296,098   $ 959,977   $ 901,575  
Gross profit
Clear Aligner $ 522,858   $ 552,841   $ 1,648,753   $ 1,720,524  
Systems and Services 116,343   128,933   378,673   381,694  
Total gross profit $ 639,201   $ 681,774   $ 2,027,426   $ 2,102,218  
Other Segment expenses

Clear Aligner
$ 272,150   $ 276,522   $ 870,810   $ 858,341  
Systems and Services
56,502   60,189   174,632   192,467  
Unallocated corporate expenses
214,251   182,765   591,553   587,931  
Total operating expenses
$ 542,903   $ 519,476   $ 1,636,995   $ 1,638,739  
Segment income from operations

Clear Aligner $ 250,708   $ 276,319   $ 777,943   $ 862,183  
Systems and Services 59,841   68,744   204,041   189,227  
Total segment income from operations
$ 310,549   $ 345,063   $ 981,984   $ 1,051,410  

1      Management has identified Cost of net revenues as a significant expense for our Clear Aligner and Systems and Services reportable segments.

Other segment expenses typically include employee related costs, marketing and advertising costs and depreciation and amortization expense incurred by various functions including selling, marketing, general and administrative and research and development. Our CODM does not regularly receive these operating expenses at the reportable segment level.

Income from operations for each segment includes all geographic revenues, related cost of net revenues and operating expenses directly attributable to the reportable segment. Certain operating expenses are not directly attributable to a reportable segment and must be allocated. Each allocation is measured differently based on the nature of the cost being allocated. Certain other operating expense are not specifically allocated to segment income from operations and generally include various corporate expenses such as stock-based compensation and costs related to information technology (“IT”), facilities, human resources, accounting and finance, legal and regulatory, other separately managed general and administrative costs outside the reportable segments and restructuring costs.

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The following table reconciles total segment income from operations in the table above to net income before provision for (benefit from) income taxes (in thousands):

  Three Months Ended
September 30, Nine Months Ended
September 30,
2025 2024 2025 2024
Total segment income from operations $ 310,549   $ 345,063   $ 981,984   $ 1,051,410  
Unallocated corporate expenses ( 214,251 ) ( 182,765 ) ( 591,553 ) ( 587,931 )

Total income from operations 96,298   162,298   390,431   463,479  
Interest income 3,249   4,003   11,424   11,696  
Other income (expense), net ( 4,813 ) ( 371 ) 6,837   ( 6,993 )

Net income before provision for income taxes $ 94,734   $ 165,930   $ 408,692   $ 468,182  

The following table includes certain non-cash expenses for each reportable segment (in thousands):

  Three Months Ended
September 30, Nine Months Ended
September 30,
2025 2024 2025 2024
Stock-based compensation
Clear Aligner $ 6,069   $ 7,648   $ 17,952   $ 20,031  
Systems and Services 419   427   1,225   1,207  
Unallocated corporate expenses 41,889   40,964   122,405   113,617  
Total stock-based compensation $ 48,377   $ 49,039   $ 141,582   $ 134,855  
Depreciation and amortization
Clear Aligner
$ 32,976   $ 17,971   $ 71,375   $ 49,027  
Systems and Services
11,160   8,099   28,931   23,007  
Unallocated corporate expenses
11,581   11,723   35,135   34,871  
Total depreciation and amortization $ 55,717   $ 37,793   $ 135,441   $ 106,905  

Our CODM does not regularly review total assets at the reportable segment level; however, we have provided geographical information related to our long-lived assets below.

Geographical Information

Net revenues are presented below by geographic area (in thousands):

  Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 2025 2024
Net revenues 1 :

U.S. $ 410,560   $ 421,204   $ 1,256,679   $ 1,291,838  
Switzerland 210,844   216,638   670,223   739,342  
Other International 374,288   340,030   1,060,501   972,613  
Total net revenues $ 995,692   $ 977,872   $ 2,987,403   $ 3,003,793  

1 Net revenues are attributed to countries based on the location of where revenues are recognized by our legal entities.

Long-lived assets, which includes Property, plant and equipment, net and Operating lease right-of-use assets, net, are presented below by geographic area (in thousands):

  September 30,
2025 December 31,
2024
Long-lived assets 1 :

Switzerland $ 543,669   $ 571,628  
U.S. 200,478   207,689  

Other International 555,445   605,193  
Total long-lived assets $ 1,299,592   $ 1,384,510  

1 Long-lived assets are attributed to countries based on the location of our entity that owns or leases the assets.
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Note 15.  Restructuring and Other Charges

2023 Restructuring

During the fourth quarter of 2023, we incurred approximately $ 14.0 million in restructuring expenses, of which $ 5.3 million remained unpaid and were included in Accrued liabilities as of December 31, 2023. As of December 31, 2024, we had no remaining restructuring liability related to the 2023 Restructuring.

2024 Restructuring

During the fourth quarter of 2024, we incurred approximately $ 37.0 million in restructuring expenses, of which $ 13.0 million remained unpaid and were included in Accrued liabilities as of December 31, 2024. For the nine months ended September 30, 2025, we reduced our December 31, 2024 restructuring liability by approximately $ 14.6 million primarily due to cash payments, offset by approximately $ 2.1 million of additional restructuring expense recorded in Cost of net revenues.

The 2023 and 2024 restructuring charges were primarily related to involuntary termination benefits, including employee severance and other post-employment benefits.

2025 Restructuring

During the third quarter of 2025, we initiated a plan to realign certain business groups and reduce our global workforce. This plan represents our continued effort to right size our labor force with the current macroeconomic environment. We anticipate incurring between $ 40.0 million and $ 50.0 million in total restructuring expenses, primarily related to involuntary termination benefits, including employee severance and other post-employment benefits. We recorded $ 4.8 million in Cost of net revenues and $ 31.8 million in Restructuring and other charges in our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025. All charges recorded to Cost of net revenues were allocated to our Clear Aligner reportable segment and all charges recorded to Restructuring and other charges were unallocated corporate expenses. As of September 30, 2025, $ 32.0 million remained unpaid and was included in Accrued liabilities in our Condensed Consolidated Balance Sheets.

Activity related to the restructuring liabilities associated with our restructuring initiatives consists of the following (in thousands):

For the twelve months ended December 31, 2024

2023 Restructuring 2024 Restructuring Total
Balance at beginning of period 1
$ 5,299   $ —   $ 5,299  
Restructuring and other charges
( 598 ) 36,991   36,393  
Cash payments and adjustments
( 4,701 ) ( 23,990 ) ( 28,691 )
Balance at end of period 1
$ —   $ 13,001   $ 13,001  

For the nine months ended September 30, 2025

2024 Restructuring 2025 Restructuring 2
Total
Balance at beginning of period 1
$ 13,001   $ —   $ 13,001  
Restructuring and other charges
2,056   36,619   38,675  
Cash payments and adjustments
( 14,569 ) ( 4,659 ) ( 19,228 )
Balance at end of period 1
$ 488   $ 31,960   $ 32,448  

1 Included in “Accrued liabilities” within our Condensed Consolidated Balance Sheets.
2 2025 restructuring activities include an immaterial amount of charges for non post-employment benefit related restructuring expense.

Note 16 . Assets Held for Sale

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In connection with the 2025 Restructuring activities, refer to Note 15 “Restructuring and Other Charges” , we have undertaken additional actions to optimize our manufacturing footprint. These actions include disposing, either by sale or other than by sale, of certain capital assets, including various manufacturing assets and facilities. For discussion of assets disposed of other than by sale refer to Note 1 “Summary of Significant Accounting Policies."

ASC Topic 360-10, Property, Plant and Equipment - Overall, requires a long-lived asset to be classified as “held for sale” in the period in which certain criteria are met. The Company classifies real estate assets as held for sale after the following conditions have been satisfied: (1) management, having the appropriate authority, commits to a plan to sell the asset, (2) the asset is available for immediate sale in its present condition, (3) the Company has initiated an active program to sell the asset, (4) it is probable the sale of the asset will be completed within one year, (5) the asset is being actively marketed for a reasonable price, and (6) it is unlikely the plan to sell the asset will significantly change. At the time the Company classifies a property as held for sale, the Company ceases recording depreciation. An asset classified as held for sale is measured and reported at the lower of its carrying amount or its estimated fair value less cost to sell.

During the third quarter of 2025, the Company committed to a plan to sell a manufacturing facility, including land, building and building improvements (collectively the “disposal group”), located in Juarez, Mexico and determined the disposal group met the criteria for classification as held for sale as of September 30, 2025. As of September 30, 2025, the Company classified the disposal group as “Assets held for sale” in our Condensed Consolidated Balance Sheets, for $ 27.9 million, which represents the disposal group’s fair value less estimated costs to sell. Fair value of the disposal group was determined utilizing two equally weighted valuation techniques, the Direct Capitalization and Direct Comparison methods. The Direct Capitalization method utilizes various inputs, including estimated market rents, vacancy rates and operating expenses, to determine an estimated net operating income, and a capitalization rate. The Direct Comparison method utilizes sales of comparable properties, adjusted for property differences such as location, physical characteristics and market conditions.

We recognized an impairment loss on assets held for sale of $ 23.1 million, recorded to Cost of net revenues in our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025. The entire impairment loss was attributable to our Clear Aligner reportable segment.

The sale of the disposal group is expected to be completed within the next 12 months.

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Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements include, among other things, our expectations and intentions regarding our strategic objectives, business strategy and growth drivers, and the means to achieve them; our beliefs and expectations regarding macroeconomic conditions, including fluctuations in currency exchange rates, higher interest rates, market volatility, threats or actual imposition of tariffs, customs duties and fees by nations and retaliatory actions, inflation, threats of or actual economic slowdowns or recessions, or trade wars and geopolitical tensions; our expectations and beliefs regarding customer and consumer confidence, purchasing behavior and demand for dental services and changes in consumer spending habits; our expectations regarding implemented or proposed tariffs and retaliatory actions or other trade restrictions or measures taken by the United States and other countries that have or could impact our products and product sales; our expectations regarding product mix, product launches, product pilots and product adoption; our expectations regarding competition and our ability to compete in our target markets; our expectations regarding the sales growth of our clear aligners, intraoral scanners and other products; our expectations regarding the impact of the military conflicts in Ukraine and the Middle East, including military actions in Israel and increased geopolitical tensions involving Taiwan and the South China Sea, on our employees, operations and assets, particularly in Israel and Russia; our ability to implement and realize the anticipated benefits currently expected from our restructuring plan initiated in the third quarter of 2025, as well as the anticipated expenses we will incur pursuant to the plan; our marketing and efforts to build our brand awareness; our estimates regarding the size and opportunities of our target markets along with our expectations for growth in those markets and potential collaboration opportunities; our beliefs regarding the general impact of technological innovation and on our particular solutions and products; our beliefs regarding digital dentistry and its potential to impact our business and transform dentistry; our intentions regarding expansion of our business and any impacts on our operational flexibility and responsiveness to customer demand; our expectations regarding our tax positions and the judgments we make related to our tax obligations; our beliefs regarding the importance of our manufacturing operations on our success; our beliefs regarding the need for and benefits of our technological development on Invisalign treatment, the areas of development in which we focus our efforts, and the advantages of our intellectual property portfolio; our expectations regarding the utilization rates for our products, including the impact of marketing on those rates and causes for periodic fluctuations of the rates; our expectations regarding the existence and impact of seasonality; our expectations regarding the continued expansion of our international markets and their growth; our expectations regarding impacts or staying in compliance with laws and regulations currently applicable to, or which may become applicable to, our business both in the United States and internationally; our beliefs regarding our culture and commitment and its impact on our financial and operational performance and its importance to our future success; our expectations for future investments in and benefits from sales and marketing activities; our preparedness and our customers’ preparedness to react to changing circumstances and demand; our expectations for our expenses and capital obligations and expenditures in particular; our intentions to control spending and for investments, our intentions regarding the investment of and ability to repatriate foreign earnings; our belief regarding the sufficiency of our cash and investment balances and borrowing capacity; our judgments regarding the estimates used in our revenue recognition and assessment of goodwill and intangible assets; our predicted level of operating expenses and gross margins and other factors beyond our control, as well as other statements regarding our future operations, financial condition and prospects and business strategies.

These statements may contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” or other words indicating future results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in particular, the risks discussed below in Part II, Item 1A “Risk Factors.” We undertake no obligation to revise or update these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

The following discussion and analysis of our financial condition and results of operations should be read together with our Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2025.

Executive Overview of Results

Trends and Uncertainties

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Our strategic priorities focus on four principal pillars for growth: (i) international expansion; (ii) general dental practitioners (“GP”) treatment; (iii) patient demand; and (iv) orthodontic utilization. Our growth strategy depends on our ability to facilitate the digital transformation of dentistry, our continuous focus on innovation, and expansion to meet and exceed evolving customer expectations as the array of products and services available to them increases. Below is a discussion of the significant trends and uncertainties that could impact our operations:

Macroeconomic Challenges, Trade Impediments and Geopolitical Tensions

Our revenues and other results of operations are susceptible to fluctuations resulting from various events and circumstances, including macroeconomic conditions, threats or actual or proposed tariffs, inflation, higher interest rates, customs duties and fees by nations and retaliatory actions, threats of or actual slowdowns or recessions, wages, debt obligations, discretionary income, fluctuations in foreign currency exchange rates, supply chain challenges, market volatility, employment levels, health insurance coverage, and other factors, each of which impacts customer confidence, consumer sentiment, discretionary spending and ultimately demand for dental services and our products. Moreover, we rely on the operations of the U.S. federal government to obtain and maintain necessary clearances or approvals for the offer, sale and delivery of our products, including from the Patent and Trademark Office, Food and Drug Administration, Customs and Border Protection, and similar agencies. A prolonged government shutdown or reductions in government personnel may impede our ability to sell or deliver our products which could have a material adverse effect on our business, financial condition and results of operations.

Many of these factors also impact the availability of certain raw materials, parts and components used in our products as well as our costs and those of our suppliers through higher raw material prices, transportation costs, labor costs, supply and distribution operations. We believe that since the second quarter of 2025, sales of our products have been adversely impacted by certain macroeconomic conditions, including global tariff volatility, inflation, and higher interest rates, which we believe have and may continue to impede dental patient demand. For example, patient traffic growth has been uneven for many doctors, with orthodontic starts down for four consecutive years. We believe uncertainty not only impacts consumer purchasing decisions but also the decisions and recommendations that doctors make, especially doctors who offer both clear aligners and wires and brackets in their practices and have the additional time to treat patients with wires and brackets when orthodontic starts are slowing or diminishing. We believe this has resulted in an increase in orthodontic starts using wires and brackets in lieu of clear aligners that was more pronounced in the second quarter of 2025. However, we believe these trends are continuing and will impede future sales for so long as consumer economic uncertainty persists, particularly to the extent it impairs discretionary spending. We also anticipate the geopolitical conflicts involving Ukraine, the Middle East, China and other regions will continue to add to market uncertainties and dampen consumer sentiment and demand.

More directly, we believe government actions relating to actual or proposed tariffs and retaliatory actions in key strategic countries or regions, particularly in the United States, China, Europe, Brazil, Canada, Israel and Mexico may adversely impact our revenue and cost of goods sold. Additionally, the trade war and geopolitical tensions between the United States and China may result in the limitation or prohibition of the availability of certain raw materials, components and parts necessary for our products or the products of our suppliers. The degree of our exposure depends on, among other things, the type of goods subject to any tariffs or trade restrictions enacted, the tariff rates or limits imposed, the timing of the tariffs or restrictions and any other retaliatory measures enacted. The impact may vary by time and region, making operational results uncertain and difficult to predict. These events may also cause a shift in public opinion about companies based in the United States and this may have an adverse impact on our reputation and business. We continue to closely monitor the foregoing issues, assess their potential impact on our operations and financial results, and implement plans to seek to mitigate the impact of any adverse events.

Additionally, a material amount of our revenues are derived internationally and many of our international operations are denominated in currencies other than the U.S. dollar. In the third quarter of 2025, the U.S. dollar weakened against major currencies, which positively impacted our financial condition and results of operations for the quarter. Foreign exchange volatility and the subsequent strengthening or weakening of the U.S. dollar against other currencies remains uncertain and unpredictable.

We continue to monitor the potential for violence and military actions that may directly or indirectly impact our personnel, manufacturing, supply chain, and sales. For instance, the ongoing conflict in Ukraine and unstable environment in the Middle East, as well as increased geopolitical tensions involving Taiwan and the South China Sea may further exacerbate general and regional macroeconomic instability. This is particularly true if fighting erupts, intensifies, spreads to other locations, creates shipping and logistical challenges or cost increases, leads to sanctions or boycotts, or otherwise materially impacts our operations or consumer spending. Our iTero business is headquartered in Israel and, although the sales, delivery times and cost of shipping have not been materially impacted to date, the situation remains fluid. We have implemented contingency planning and business continuity measures to mitigate these risks, but it is uncertain whether further escalation could disrupt our operations. While there have been export and import restrictions imposed against products originating from and businesses operating in Israel, they have not materially impacted our sales or operations to date although we continue to monitor the risk.
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2025 Restructuring

Beginning in in the third quarter of 2025 and continuing into the fourth quarter, we initiated a plan to realign certain business groups and reduce our global workforce in response to the current macroeconomic environment. We anticipate incurring between $40.0 million and $50.0 million in total restructuring expenses, primarily related to involuntary termination benefits, including employee severance and other post-employment benefits. The foregoing estimates that we anticipate incurring in connection with these actions are contingent upon various assumptions and actual results may differ. We may also incur additional costs not currently contemplated due to events related to or resulting from any such action. Our management or board of directors may determine not to pursue certain portions of any of these actions and any actions ultimately pursued may not achieve the benefits currently anticipated. For more information, see Note 15.  “ Restructuring and Other Charges ” of the Notes to Condensed Consolidated Financial Statements

Changing Product Preferences

As the markets for clear aligners and digital processes and workflows used to transform the practice of dentistry continue to mature, we anticipate customer and patient expectations and demands will continue to evolve. We expect to meet customer demands with innovative treatment options that include more choices to address a wider scope of treatment goals and budgets based on our existing and new products. This may result in larger and unpredictable variations in geographic and product mix and selling prices with uncertain implications on our financial statements and business operations. For example, we have and may continue to experience a shift from certain products with higher average selling prices (“ASP”) to those with lower ASPs.

We strive to manage the challenges presented by the foregoing trends and uncertainties, including the macroeconomic conditions, tariffs and retaliatory measures, military conflicts and the evolution of our target markets, by focusing on improving our operations, further increasing flexibility and efficiencies in our processes, adjusting our business models to changing circumstances and offering products that meet market demand. Specifically, we are managing financial impacts by implementing strategic product innovations, introductions and pricing actions, implementing cost saving measures, and evaluating hiring needs.

Further discussion of the impact of these challenges on our business may be found in Part II, Item 1A “Risk Factors.”

Key Financial and Operating Metrics

We measure our performance against the foregoing strategic priorities by the achievement of key financial and operating metrics. For the three months ended September 30, 2025, our business operations reflect the following:

• Revenues of $996 million, an increase of 1.8% year-over-year;
• Clear Aligner revenues of $806 million, an increase of 2.4% year-over-year;
• Clear Aligner case volume increased 4.9% year-over-year and Clear Aligner case volume for teens and growing patients increased from 236.3 thousand shipments to 256.0 thousand or 8.3% year-over-year;
• Imaging Systems and CAD/CAM services revenues of $190 million, a decrease of 0.6% year-over-year;
• Income from operations of $96 million and operating margin of 9.7%;
• Effective tax rate of 40.1%;
• Net income of $57 million with diluted net income per share of $0.78;
• Cash and cash equivalents of $1,005 million as of September 30, 2025;
• Cash provided by operating activities of $189 million;
• Capital expenditures of $20 million, primarily related to investments in our manufacturing capacity and facilities; and
• Number of employees was 21,065 as of September 30, 2025, a decrease of 2.9% year-over-year.

Other Statistical Data and Trends

• As of September 30, 2025, approximately 21 million people worldwide have been treated with our Invisalign system.

• For the third quarter of 2025, the total number of Invisalign trained doctors cases were shipped to (doctor submitters) was 88.2 thousand compared to 87.4 thousand in the third quarter of 2024, a 0.9% increase.
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• The total utilization rate in the third quarter of 2025 increased to 7.3 cases per doctor compared to 7.1 cases per doctor in the third quarter of 2024.

• Clear aligner revenue per case shipment (clear aligner revenues divided by case shipments) decreased from $1,275 in the third quarter of 2024 to $1,245 in the third quarter of 2025, a 2.4% decrease.

Results of Operations

Net Revenues by Reportable Segment     

We group our operations into two reportable segments: Clear Aligner segment and Systems and Services segment.

• Our Clear Aligner segment consists of Comprehensive Products, Non-Comprehensive Products and Non-Case revenues as defined below:

▪ Comprehensive Products include, but are not limited to, Invisalign Comprehensive, Invisalign First and Invisalign Comprehensive 3in3.

▪ Non-Comprehensive Products include, but are not limited to, Invisalign Moderate, Lite and Express packages, Invisalign Go and Invisalign Go Plus and Invisalign Palatal Expander.

▪ In the United States, Canada and EMEA, we also offer a Doctor Subscription Program which is our monthly subscription-based clear aligner program. The program allows doctors the flexibility to order retainers and low-stage “touch-up” clear aligners within their subscribed tier and is designed for a segment of experienced Invisalign trained doctors who are currently not regularly using our retainers or low-stage aligners. The low-stage aligners, the Touch up product, are included as a Non-Comprehensive Product.

▪ Non-Case revenues include, but are not limited to, retention products including retention aligners ordered through the Doctor Subscription Program, Invisalign training, adjusting tools used by dental professionals during the course of treatment and Invisalign Accessory Products that are complementary to our doctor-prescribed principal products such as aligner cases (clamshells), teeth whitening products, cleaning solutions (crystals, foam and other material) and other oral health products available in certain commerce channels in select markets.

▪ Our Systems and Services segment consists of sales related to our iTero intraoral scanning systems, which includes a single hardware platform and restorative or orthodontic software options, scanner wand upgrades, and non-system revenues from leases of scanner systems, sales of pre-owned scanner systems, subscription software, disposables, pay per scan services, as well as exocad ’ s CAD/CAM software solutions that integrate workflows to dental labs and dental practices.

Net revenues for our Clear Aligner and Systems and Services segments for the three and nine months ended September 30, 2025 and 2024 are as follows (in millions) 1 :

  Three Months Ended
September 30, Nine Months Ended
September 30,
Net Revenues 2025 2024 Change 2025 2024 Change

Clear Aligner net revenues
$ 805.8  $ 786.8  $ 19.0  2.4  % $ 2,407.3  $ 2,435.8  $ (28.6) (1.2) %
Systems and Services net revenues 189.9  191.0  (1.1) (0.6) % 580.1  568.0  12.2  2.1  %
Total net revenues $ 995.7  $ 977.9  $ 17.8  1.8  % $ 2,987.4  $ 3,003.8  $ (16.4) (0.5) %

Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.

1 Beginning with our quarterly report on Form 10-Q for the quarter ended March 31, 2025, we are no longer disclosing Clear Aligner net revenues for Americas, International and Non-case. Rather our disclosure will align with our Clear Aligner reportable segment in total.

Clear Aligner Case Volume

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Case volume data which represents Clear Aligner case shipments for the three and nine months ended September 30, 2025 and 2024 is as follows (in thousands):

  Three Months Ended
September 30, Nine Months Ended
September 30,
2025 2024 Change 2025 2024 Change

Total case volume 647.8  617.2  30.5  4.9  % 1,934.4  1,865.0  69.4  3.7  %

Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.

For the three months ended September 30, 2025, total net revenues increased by $18 million as compared to the same period in 2024, primarily due to an increase in Clear Aligner volume.

For the nine months ended September 30, 2025, total net revenues decreased by $16 million as compared to the same period in 2024, primarily driven by a decrease in Clear Aligner ASP, partially offset by an increase in Systems and Services net revenues primarily driven by strong scanner wand sales.

Clear Aligner

For the three months ended September 30, 2025, Clear Aligner net revenues increased by $19 million as compared to the same period in 2024, primarily due to an increase in volume and favorable foreign exchange rates, which increased net revenues by $35 million and $13 million, respectively. These increases were partially offset by a decrease in ASP, driven by a product mix shift to lower priced countries and products and higher discounts, resulting in a decrease of net revenues of $29 million.

For the nine months ended September 30, 2025, Clear Aligner net revenues decreased by $29 million as compared to the same period in 2024, primarily due to a decrease in ASP, driven by a product mix shift to lower priced products and higher discounts, resulting in a decrease of net revenues of $103 million. Clear Aligner net revenues were further negatively impacted by $8 million due to unfavorable foreign exchange rates. These decreases were partially offset by an increase in volume which increased net revenues by $82 million.

Systems and Services

For the three months ended September 30, 2025, Systems and Services net revenues decreased by $1 million as compared to the same period in 2024, due to lower scanner system sales of $10 million, primarily driven by lower scanner system volume. This decrease was partially offset by an increase of $3 million from sales of scanner wands, driven by strong volume, a $3 million increase from non-system sales and a $3 million favorable impact from foreign exchange rates.

For the nine months ended September 30, 2025, Systems and Services net revenues increased by $12 million as compared to the same period in 2024, primarily due to an increase of $27 million in sales of scanner wands, driven by strong volume partially offset by lower scanner wand ASP, and a $13 million increase from non-system sales. These increases were partially offset by lower scanner system sales of $25 million, driven by lower volume and ASP, and a $2 million negative impact from unfavorable foreign exchange rates.

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Cost of net revenues and gross profit (in millions):
  Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 Change 2025 2024 Change
Clear Aligner
Cost of net revenues $ 282.9  $ 234.0  $ 48.9  $ 758.5  $ 715.3  $ 43.2 
% of net segment revenues 35.1  % 29.7  % 31.5  % 29.4  %
Gross profit $ 522.9  $ 552.8  $ (30.0) $ 1,648.8  $ 1,720.5  $ (71.8)
Gross margin % 64.9  % 70.3  % 68.5  % 70.6  %
Systems and Services
Cost of net revenues $ 73.6  $ 62.1  $ 11.5  $ 201.5  $ 186.3  $ 15.2 
% of net segment revenues 38.7  % 32.5  % 34.7  % 32.8  %
Gross profit $ 116.3  $ 128.9  $ (12.6) $ 378.7  $ 381.7  $ (3.0)
Gross margin % 61.3  % 67.5  % 65.3  % 67.2  %
Total cost of net revenues $ 356.5  $ 296.1  $ 60.4  $ 960.0  $ 901.6  $ 58.4 
% of net revenues 35.8  % 30.3  % 32.1  % 30.0  %
Gross profit $ 639.2  $ 681.8  $ (42.6) $ 2,027.4  $ 2,102.2  $ (74.8)
Gross margin % 64.2  % 69.7  % 67.9  % 70.0  %

Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.

Cost of net revenues includes personnel-related costs including payroll and stock-based compensation for staff involved in the production process, the cost of materials, packaging, freight and shipping, depreciation on capital equipment and facilities used in the production process, amortization of acquired intangible assets and training costs.

For the three and nine months ended September 30, 2025, our gross margin decreased as compared to the same periods in 2024 primarily due to an increase in Clear Aligner Cost of net revenues driven by restructuring charges, impairment losses on Assets held for sale and depreciation on assets disposed of other than by sale. Our gross margin was further impacted negatively by an impairment loss on inventory recorded in our Systems and Services segment. We also experienced a decline in ASP ’ s in both reportable segments. These decreases were partially offset by lower Cost of net revenues, excluding the items noted previously, from operational efficiencies.

Clear Aligner

For the three and nine months ended September 30, 2025, our gross margin decreased as compared to the same period in 2024 primarily due to restructuring charges of $5 million, impairment losses on Assets held for sale of $23 million and depreciation on assets disposed of other than by sale of $14 million. Clear Aligner gross margin was also negatively impacted by lower ASP ’ s. These decreases were partially offset by lower Cost of net revenues, excluding the items noted previously, from operational efficiencies.

Systems and Services

For the three and nine months ended September 30, 2025, our gross margin decreased as compared to the same periods in 2024 primarily due to lower ASP's and an impairment loss on inventory of $15 million. These decreases were partially offset by lower Cost of net revenues, excluding the impairment loss, from operational efficiencies.

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Selling, general and administrative (in millions):
  Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 Change 2025 2024 Change
Selling, general and administrative $ 417.8  $ 434.1  $ (16.3) $ 1,314.1  $ 1,338.2  $ (24.1)
% of net revenues 42.0  % 44.4  % 44.0  % 44.6  %

Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.

Selling, general and administrative expense generally includes personnel-related costs, including payroll, stock-based compensation and commissions for our sales force, marketing and advertising expenses including media, market research, marketing materials, clinical education, trade shows and industry events, legal and outside service costs, equipment, software and maintenance costs, depreciation and amortization expense and allocations of corporate overhead expenses including facilities and IT.

For the three months ended September 30, 2025, selling, general and administrative expense decreased compared to the same period in 2024 primarily due to lower employee costs, including salaries, fringe benefits and bonus and lower marketing expense.

For the nine months ended September 30, 2025, selling, general and administrative expense decreased compared to the same period in 2024 primarily due to lower employee costs, including salaries, fringe benefits, and bonus and lower outside services, partially offset by higher clinical education expense.

Research and development (in millions):
  Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 Change 2025 2024 Change
Research and development $ 93.3  $ 85.3  $ 8.0  $ 286.9  $ 269.3  $ 17.6 
% of net revenues 9.4  % 8.7  % 9.6  % 9.0  %

Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.

Research and development expense generally includes personnel-related costs, including payroll and stock-based compensation, outside service costs associated with the research and development of new products and enhancements to existing products, software, equipment, material and maintenance costs, depreciation and amortization expense and allocations of corporate overhead expenses including facilities and IT.

For the three and nine months ended September 30, 2025, research and development expense increased compared to the same periods in 2024 primarily due to higher employee costs, including salaries, fringe benefits and stock-based compensation, partially offset by lower bonus cost.

Restructuring and other charges (in millions):

  Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 Change 2025 2024 Change

Restructuring and other charges $ 31.8  $ —  $ 31.8  $ 31.8  $ —  $ 31.8 
% of net revenues 3.2  % —  % 1.1  % —  %

Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.

For the three and nine months ended September 30, 2025, restructuring and other charges increased compared to the same period in 2024. Refer to Note 15 "Restructuring and other charges" of the Notes to the Condensed Consolidated Financial Statements for more information .

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Legal settlement loss (in millions):
  Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 Change 2025 2024 Change
Legal settlement loss
$ —  $ 0.1  $ (0.1) $ 4.2  $ 31.2  $ (27.0)
% of net revenues —  % —  % 0.1  % 1.0  %

Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.

For the nine months ended September 30, 2025, we recorded losses of $4 million due to legal settlements. Refer to Note 7 “ Legal Proceedings ” of the Notes to Condensed Consolidated Financial Statements for more information.

Income from operations (in millions):
  Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 Change 2025 2024 Change
Clear Aligner
Income from operations $ 250.7  $ 276.3  $ (25.6) $ 777.9  $ 862.2  $ (84.2)
Operating margin % 31.1  % 35.1  % 32.3  % 35.4  %
Systems and Services
Income from operations $ 59.8  $ 68.7  $ (8.9) $ 204.0  $ 189.2  $ 14.8 
Operating margin % 31.5  % 36.0  % 35.2  % 33.3  %
Total income from operations 1
$ 96.3  $ 162.3  $ (66.0) $ 390.4  $ 463.5  $ (73.0)
Operating margin % 9.7  % 16.6  % 13.1  % 15.4  %

Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.

1 Refer to Note 14 “Segments and Geographical Information” of the Notes to Condensed Consolidated Financial Statements for details on unallocated corporate expenses and the reconciliation to Income from Operations.

For the three and nine months ended September 30, 2025, our operating margin decreased compared to the same periods in 2024 primarily due to lower gross margin and higher restructuring and other charges.

Clear Aligner

For the three and nine months ended September 30, 2025, our operating margin decreased compared to the same periods in 2024 primarily due to a decrease in gross margin.

Systems and Services

For the three months ended September 30, 2025, our operating margin decreased compared to the same period in 2024 primarily due to a decrease in gross margin.

For the nine months ended September 30, 2025, our operating margin increased compared to the same period in 2024 primarily due to improved operating leverage primarily from lower employee spend, partially offset by a decrease in gross margin.

Interest income (in millions):
  Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 Change 2025 2024 Change
Interest income $ 3.2  $ 4.0  $ (0.8) $ 11.4  $ 11.7  $ (0.3)
% of net revenues 0.3  % 0.4  % 0.4  % 0.4  %

Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.

Interest income generally includes interest earned on cash, cash equivalents and investment balances.
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For the three and nine months ended September 30, 2025, interest income decreased slightly compared to the same period in 2024 primarily due to lower interest rates earned on cash and cash equivalent balances.

Other income (expense), net (in millions):
  Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 Change 2025 2024 Change
Other income (expense), net $ (4.8) $ (0.4) $ (4.4) $ 6.8  $ (7.0) $ 13.8 
% of net revenues (0.5) % —  % 0.2  % (0.2) %

Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.

Other income (expense), net, generally includes foreign exchange gains and losses, gains and losses on foreign currency forward contracts, interest expense, gains and losses on equity investments and other miscellaneous charges.

For the three months ended September 30, 2025, other income (expense), net decreased compared to the same period in 2024 primarily due to changes in foreign exchange rates.

For the nine months ended September 30, 2025, other income (expense), net increased compared to the same period in 2024 primarily due to changes in foreign exchange rates partially offset by a gain recorded on our equity investments in the first quarter of 2024.

Provision for income taxes (in millions):
  Three Months Ended
September 30, Nine Months Ended
September 30,
  2025 2024 Change 2025 2024 Change
Provision for income taxes $ 38.0  $ 50.0  $ (12.0) $ 134.1  $ 150.6  $ (16.5)
Effective tax rates 40.1  % 30.1  % 32.8  % 32.2  %

Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.

Our effective tax rate differs from the U.S. statutory federal income tax rate of 21% for the three and nine month periods ended September 30, 2025 and 2024 primarily due to the recognition of additional tax expense resulting from U.S. taxes on foreign earnings, foreign income taxed at different rates, state income taxes and non-deductible expense in the U.S.

The increase in our effective tax rate for the three months ended September 30, 2025 compared to the same period in 2024 is primarily attributable to the change in our jurisdictional mix of income, partially offset by the decrease in U.S. taxes on foreign earnings.

The increase in our effective tax rate for the nine months ended September 30, 2025 compared to the same period in 2024 is primarily attributable to the change in our jurisdictional mix of income, lower tax deduction from stock-based compensation, partially offset by the decrease in U.S. taxes on foreign earnings.

Liquidity and Capital Resources

Liquidity and Trends

As of September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $1,005 million and $1,044 million, respectively, of which approximately $814 million and $855 million, respectively, were held by our foreign subsidiaries. We continue to evaluate opportunities to repatriate our foreign earnings if or when needed. We do not expect to incur significant additional costs upon repatriation of these foreign earnings. We generate sufficient operating cash flow from our domestic operations and have access to $300 million under our revolving line of credit. We believe that our current cash balances and the borrowing capacity under our credit facility, if necessary, will be sufficient to fund our business for at least the next 12 months.

Our material cash requirements as of September 30, 2025 are as follows:

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• Our purchase commitments consist primarily of open purchase orders for goods and services, including manufacturing inventory, supplies and services, sales and marketing, research and development services and technological services, issued in the normal course of business. There have been no material changes to our purchase commitments for goods and services during the nine months ended September 30, 2025 as compared to the year ended December 31, 2024.

• There have been no material changes to our future operating lease payments during the nine months ended September 30, 2025 as compared to the year ended December 31, 2024.

• We anticipate our investments in capital expenditures for fiscal year 2025 to be approximately $100 million. Capital expenditures primarily relate to technology upgrades and investments in manufacturing and treatment planning to meet actual and anticipated demand.

• In April 2025, our Board of Directors authorized a plan to repurchase up to $1.0 billion of our common stock. The April 2025 Repurchase Program is expected to be completed over a period of up to three years. We continually evaluate opportunities to repurchase shares of our common stock depending on various factors including our share price and current liquidity requirements. We expect to repurchase $128.4 million during the fourth quarter of 2025 and through January 2026 pursuant to the open market repurchase program announced in August 2025. Refer to Note 10 “Common Stock Repurchase Program” of the Notes to Condensed Consolidated Financial Statements for details on our stock repurchase programs.

• As of September 30, 2025, we had no material off-balance sheet arrangements that have or are reasonably likely to have a current or future material impact on our liquidity or capital resources.

• In the third quarter of 2025, we initiated a restructuring plan which will continue through the fourth quarter of 2025. We anticipate incurring between approximately $40.0 million and $50.0 million in total restructuring expenses, primarily related to involuntary termination benefits, including employee severance and other post-employment benefits.

Sources and Uses of Cash

The following table summarizes our Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (in thousands):

  Nine Months Ended
September 30,
  2025 2024
Net cash provided by (used in):

Operating activities $ 370,046  $ 452,153 
Investing activities (76,529) (200,996)
Financing activities (367,174) (152,703)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
34,502  6,008 
Net (decrease) increase in cash, cash equivalents and restricted cash
$ (39,155) $ 104,462 

Operating Activities

For the nine months ended September 30, 2025, cash flows from operations of $370 million resulted primarily from our net income of approximately $275 million as well as the following:

Significant adjustments to reconcile net income to net cash provided by operating activities

• Depreciation and amortization of $135 million related to our investments in property, plant and equipment and intangible assets;
• Stock-based compensation of $142 million related to equity awards granted to employees and directors;
• Non-cash operating lease costs of $30 million;
• Other non-cash operating activities of $29 million primarily related to an impairment loss on inventory and an increase in our bad debt allowance; and
• Impairment loss on Assets held for sale of $23 million.

Significant changes in working capital
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• Net outflow of $118 million in accounts receivable due to timing of collections;
• Net outflow of $68 million in accrued and other long-term liabilities primarily due to the payment of fiscal year 2024 bonuses in the first quarter of 2025; and
• Net outflow of $89 million in deferred revenue.

Investing Activities

Net cash used in investing activities was $77 million for the nine months ended September 30, 2025 which was primarily related to an outflow of $67 million for purchases of property, plant and equipment and $10 million for our additional investment in SD Holding Company.

Financing Activities

Net cash used in financing activities was $367 million for the nine months ended September 30, 2025 which was primarily related to outflows of $369 million for share repurchases and $20 million for payroll taxes paid for vested equity awards, partially offset by $22 million of proceeds from the issuance of common stock under our employee stock purchase plan.

Critical Accounting Estimates

Management’s discussion and analysis of our financial condition and results of operations is based on our Condensed Consolidated Financial Statements which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and disclosures at the date of the financial statements. We evaluate our estimates on an ongoing basis, including those related to revenue recognition, goodwill and finite-lived intangible assets, income taxes and legal proceedings and litigation. We use authoritative pronouncements, historical experience and other assumptions as the basis for making estimates. Actual results could differ from those estimates.

Revenue Recognition

Our revenues are derived primarily from the sale of aligners, scanners and services from our Clear Aligner and Systems and Services segments. We enter into sales contracts that may consist of multiple distinct performance obligations where certain performance obligations of the sales contract are not delivered in one reporting period. We measure and allocate revenues according to ASC 606-10, “Revenues from Contracts with Customers.”

Determining the standalone selling price (“SSP”) in order to allocate consideration from the contract to the individual performance obligations is the result of various factors, such as historical prices, changing trends and market conditions, costs and gross margins. While changes in the allocation of the SSP between performance obligations will not affect the amount of total revenues recognized for a particular contract, any material changes could impact the timing of revenue recognition, which would have a material effect on our financial position and result of operations. This is because the contract consideration is allocated to each performance obligation, delivered or undelivered, at the inception of the contract based on the SSP of each distinct performance obligation.

We allocate consideration for each clear aligner treatment plan based on each unit’s SSP. Management considers a variety of factors such as same or similar product historical sales, costs and gross margin, which may vary over time depending upon the unique facts and circumstances related to each performance obligation in making these estimates. In addition to historical data, we take into consideration changing trends and market conditions. For treatment plans with multiple options, we also consider usage rates, which is the number of times a customer is expected to order more aligners after the initial shipment. Our process for estimating usage rates requires significant judgment and evaluation of inputs, including historical usage data by region, country and channel.

We estimate the SSP of each element in a scanner system and services sale taking into consideration same or similar product historical prices as well as our discounting strategies. For CAD/CAM services, we estimate the SSP of each element, including the initial software license and maintenance and support, using data such as historical prices.

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Recent Accounting Pronouncements

See Note 1 “ Summary of Significant Accounting Policies ” of the Notes to Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements.

Item 3.        Quantitative and Qualitative Disclosures About Market Risk.

In the normal course of business, we are exposed to interest rate, foreign currency exchange and inflation risks that could impact our financial position and results of operations. In addition, we are subject to the broad market risk that is created by the global market disruptions and uncertainties resulting from macroeconomic challenges, geopolitical events, trade and other international disputes, including various military conflicts and consumer confidence. Further discussion on these risks may be found in Part II, Item 1A “Risk Factors.”

Interest Rate Risk

Changes in interest rates could impact our anticipated interest income earned on our cash and cash equivalents balance. As of September 30, 2025, we are not exposed to interest rate risk on our unsecured revolving line of credit. An immediate 10% change in interest rates would not have a material adverse impact on our future operating results and cash flows. As of September 30, 2025, we had no short term or long-term marketable securities.

We have not historically used derivative financial instruments to manage our exposure to changes in interest rates.

Foreign Currency Exchange Rate Risk

As a result of our international operations, our financial performance has been affected by fluctuations in foreign currency exchange rates and economic conditions in global markets. There is no assurance that exchange rate fluctuations will not adversely impact our results of operations or financial position in the future; however, generally we conduct sales in the local currencies of the countries in which we operate, which provides a degree of natural hedging as most subsidiaries’ also incur their operating expenses in those same currencies.

To further reduce the short-term impact of foreign exchange rate fluctuations on certain assets and liabilities, we enter into foreign currency forward contracts in markets where we have meaningful exposure, primarily involving the Euro, British Pound, Chinese Yuan, Polish Zloty and Canadian Dollar. These contracts, which are not designated as hedging instruments, typically have original maturities of one month and are marked to market through earnings each reporting period. The gains and losses from these forward contracts are intended to offset the gains and losses in the underlying foreign currency denominated monetary assets and liabilities. We do not enter into foreign currency forward contracts for trading or speculative purposes.

As our international footprint expands, we continuously reassess our strategy for managing foreign exchange risk. Although we continue to monitor our exposure to currency fluctuations, and, where appropriate, mitigate our exposure through the use of forward contracts, a hypothetical 10% aggregate change in foreign currency exchange rates relative to the U.S. dollar could have a material impact on our results of operations and financial position.

Inflation Risk

The economy has been impacted by certain macroeconomic challenges which have contributed to high inflation that has impacted both our revenues and costs globally. While inflation has been declining recently, it is uncertain that it will continue to decline in the future. If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. There is no assurance that our results of operations and financial condition will not be adversely impacted by inflation in the future.

Investment Risk

We hold equity securities in privately held companies, which are subject to equity price risks and exposures from the evolving macroeconomic environment, including uncertainty and volatility in financial markets and other changes in economic conditions, such as an increase in trade tensions and related tariffs, that could have a material impact on the carrying value of our investments.

Our investments in privately held companies primarily consist of equity securities without readily determinable fair values. We elected to account for our investments in privately held companies using the measurement alternative, which is cost, less any impairment, adjusted for changes in fair value resulting from observable transactions for identical or similar
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investments of the same issuer. We perform a qualitative assessment at each reporting date to determine whether there are triggering events for impairment. The qualitative assessment considers factors such as but not limited to, the investee’s financial performance and business prospects; industry performance; economic environment; and other relevant events and factors affecting the investee. Valuations of our equity investments are complex due to the lack of readily available market data and observable transactions. The carrying value of our investments in privately held companies was $198.2 million at September 30, 2025 and $188.2 million at December 31, 2024.

Item 4.        Controls and Procedures.

Evaluation of disclosure controls and procedures.

Our management, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of September 30, 2025, to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.

Changes in internal control over financial reporting.

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION
 

Item 1.        Legal Proceedings.

The information required by this item is incorporated herein by reference to the information set forth in Note 7 “ Legal Proceedings ” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q .

Item 1A. Risk Factors.

The following discusses some of the risks and uncertainties that may affect our business, reputation, results of operations, financial condition, cash flows, and the price of our common stock. You should carefully review this section, as well as our Condensed Consolidated Financial Statements and notes thereto and other information appearing in this Quarterly Report on Form 10-Q, for important information regarding these and other risks that may affect us. The order we have chosen to list the risks below or the sections in which we have identified them should not be interpreted to mean we deem any risks to be more or less important or likely to occur or, if any do occur, that their impact may be any less significant than any others. These risk factors should be considered in connection with the forward-looking statements contained in this Quarterly Report on Form 10-Q because they could cause our actual results of operations and financial condition to differ materially from those statements. Before you invest in our common stock, know that investing involves risks, including those described below, which are not the only risks we face. If any of the risks actually occur, our business, financial condition and results of operations could be negatively affected, the trading price of our common stock could decline, and you may lose all or part of your investment.

Macroeconomic and External Risks

Our business, financial condition and results of operations depend on global and regional economic conditions. Inflation, fluctuations in foreign currency exchange rates, changes in consumer confidence and demand, general economic weakness and actual or potential slowdowns or recessions have and could in the future materially affect our business, financial condition and results of operations.

Macroeconomic conditions impact consumer confidence and discretionary spending, which can adversely affect demand for dental services and our products. Consumer spending habits are affected by, among other things, fluctuations in foreign currency exchange rates, changes in consumer confidence and demand, inflation, general economic weakness, actual or potential slowdowns or recessions, pandemics, wars and military actions, employment levels, health insurance coverage, wages, debt obligations, discretionary income, interest rates, market volatility and perceptions of current and future economic conditions. Macroeconomic conditions can, among other things, reduce or shift spending away from elective procedures, drive patients to pursue less costly orthodontic treatments, decrease the number of orthodontic case starts, reduce patient traffic in
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dental offices, or reduce demand for dental services generally. For instance, decreased demand for dental services have and may in the future cause doctors and labs to use wires and brackets more frequently for orthodontic treatment instead of clear aligners and postpone investments in capital equipment, such as intraoral scanners and CAD/CAM equipment and software. Uncertain economic outlooks for, or declines in the economic outlooks of, the United States, Chinese, European and other economies have and could in the future materially adversely affect consumer demand and dental practice spending. Increases in the cost of fuel and energy, food, and other essential or discretionary items as well as higher interest rates have and could in the future reduce consumers’ disposable income, which could cause a decrease in discretionary spending for our products.

Inflation has and may continue to adversely impact spending and trade activities and may unpredictably impact global and regional economies. Efforts by central banks and federal, state and local governments to combat inflation could result in an economic recession or slowdown or adversely impact consumer spending for a prolonged period of time. Higher inflation has and may continue to increase domestic and international shipping costs, raw material prices and labor rates, which could adversely impact the costs of producing, procuring and shipping our products. We may not be able to fully mitigate the impact of the increased costs or pass price increases on to our customers, which could result in downward pressure on our operating results. Attempts to offset cost increases with price increases may reduce sales, increase customer dissatisfaction or otherwise harm our reputation. Any of these events could materially affect our business, financial condition or results of operations.

We have significant international operations and sales and are therefore exposed to fluctuations in foreign currencies that have and may continue to adversely impact our business, financial condition or results of operations. Although the U.S. dollar is our reporting currency, a large portion of our net revenues and expenses are generated in foreign currencies. While we forecast our balance sheet exposures to foreign currency fluctuations and utilize foreign currency forward contracts to moderate the impact of currency fluctuations on certain assets and liabilities, these contracts may not eliminate our exposure. Currency exchange rate fluctuations have and may continue to materially adversely affect our results of operations and cash flows.

Our business, financial condition and results of operations could be impacted by geopolitical events, new, proposed or retaliatory tariffs, trade and international disputes, wars, military actions and terrorism, or major public health crises .

Geopolitical events, threats or actual imposition of tariffs, customs duties and fees by nations and retaliatory actions, trade and international disputes, wars, military actions and terrorism, or major public health crises have and could in the future harm or disrupt international commerce and the global economy and could materially adversely affect our business with our customers and consumers, suppliers, contract manufacturers, commercial intermediaries and other business partners. Such events have and could result in, among other things, supply chain and trade disruptions, changes in diplomatic and trade relationships, new and retaliatory tariffs, trade protection measures, quotas, embargoes, trade sanctions and countersanctions, customs investigations or restrictions, boycotts, reduced consumer spending, government shutdowns, cyberattacks, energy shortages or power outages, energy rationing that adversely impacts our manufacturing facilities, rising fuel or rising costs of producing, procuring, and shipping our products, constraints, volatility or disruption in the financial markets, employee deaths or injuries, restrictions and shortages of food, water, shelter and medical supplies, data or information exchange, disruptions, interruptions or limitations in telecommunication services, critical systems or applications reliant on a stable and uninterrupted communications infrastructure, and protests that may impact delivery of our products to customers or destruction of property. Such events may also cause a shift in public opinion about companies based in the United States or in the regions where we operate or plan to operate, which could adversely impact our reputation and business.

Tariffs or proposed tariffs, customs duties or fees, and any retaliatory tariffs or protectionist trade measures taken in response to such tariffs may increase the cost of our products, components or the raw materials used to make them, reduce demand for our products, limit our ability to sell to certain customers, limit or prohibit the availability of certain raw materials, components and parts necessary for our products or the products of our suppliers, or impede or slow the movement of our goods across borders. For example, the U.S. Department of Commerce has initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, to determine the effects on the national security of imports of personal protective equipment (PPE), medical consumables, and medical equipment including devices. A significant portion of the products we sell, and the components and raw materials used in our products are originally manufactured or sourced outside the United States. For example, we manufacture clear aligners in our facility in Mexico and ship them to the United States, primarily for our United States customers, with the remainder eventually shipped to other international locations. Tariffs have and could in the future result in additional costs for our products, which may reduce demand for our products and adversely impact our gross margin and results of operations, and we may not be able to fully or substantially mitigate the impact of any new or increased tariffs or pass price increases on to our customers. The extent and duration of any tariffs and the resulting impact on general economic conditions and on our business, financial condition and results of operations are uncertain.

Foreign countries have and may continue to adopt or rescind other measures, such as controls on the import or export of goods, technology or data, including personal data, which could adversely impact our operations and supply chains or limit our ability to offer certain products or services. We may take various actions in response to these measures, including changing suppliers, where we manufacture our products, or restructuring business relationships. Such actions may be expensive, time-consuming, disruptive to our logistics and operations, irreversible, and more costly for us and our customers. Trade restrictions may be announced with little or no advance notice and we may be unable to effectively mitigate any adverse impacts in a timely manner or at all.

Military conflicts have and may in the future materially adversely impact the economies in which we operate. Our iTero operations, headquartered in Israel, are close to areas that have been affected by the ongoing conflict between Israel and Hamas since October 7, 2023. A ceasefire was agreed upon between both sides in early October 2025. It is uncertain whether the ceasefire will be sustained and lead to a lasting resolution of the conflict. If the ceasefire is not sustained, we may be at a continued risk of damage to our properties, personnel and resources, which may impact our employees and our iTero business and operations. Some employees in Israel have been called for military service in the conflict and they may be absent for certain periods of time. Furthermore, if the conflict resumes, our facilities may be damaged or our manufacturing capability or delivery
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schedules impacted as a result of the conflict. Our supply chains and demand for our products could be impaired as a result of hostilities, export and import restrictions, sanctions or boycotts. These events could disrupt ongoing operations and may materially impact the logistics, timing and cost of shipping of our products and materials or our ability to operate out of impacted areas, and our ongoing contingency planning and business continuity measures to mitigate these risks may not be sufficient. Additionally, China’s territorial conflicts with other neighboring countries may impact our operations and sales in China. We cannot predict the progress or outcome of these events or the reactions by governments, businesses or consumers and each event could, individually or in the aggregate, materially adversely affect our business, financial condition and results of operations.

Our operations may be impacted by natural disasters, which may become more frequent or severe as a result of climate change, and may adversely impact our business, financial condition and results of operations, as well as those of our customers and consumers, suppliers, contract manufacturers, commercial intermediaries and other business partners.

Natural disasters such as earthquakes, tsunamis, floods, droughts, hurricanes, wildfires, urban fires, volcanic eruptions and other extreme weather conditions can cause deaths, injuries and major public health crises, power outages, property damage, restrictions and shortages of food, water, shelter and medical supplies, telecommunications failures, materials scarcity, price volatility and other adverse consequences. If a natural disaster occurs in a region where one of our facilities or those of our customers or suppliers are located, our or their employees or facilities could be impacted, valuable research could be lost, and our ability to create treatment plans, respond to customer inquiries or manufacture and ship our products could be compromised, causing significant delays and reputational harm. Climate change could increase the frequency and severity of natural disasters and could change the supply, demand or availability of sources of energy or resources material to manufacturing our products and operations. It could also affect the availability or cost of materials, goods, and services on which we and our suppliers, contract manufacturers, commercial intermediaries and other business partners rely, which could materially adversely impact our business, financial condition and results of operations.

Business and Industry Risks

Demand 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.

Our products and services require our customers and consumers to forego traditional treatment methods. For example, Invisalign treatment is a significant departure from traditional orthodontic wires and brackets, and our customers and consumers may not find it cost-effective or preferable. A number of dental professionals believe Invisalign treatment is only appropriate for a limited percentage of patients. Additionally, our clear aligners and iTero products utilize digital technology and some dental professionals have and may continue to resist moving to a digital platform. Increased acceptance of our products and services depends in part on the recommendations of dental professionals, professional associations, societies and organizations, as well as other factors, including efficacy, safety, ease of use, reliability, aesthetics, third-party reimbursement, price compared to traditional treatment methods and competing products, and perceptions regarding single-use or non-recyclable plastics. Additionally, negative experiences with clear aligner products manufactured or distributed by competitors may adversely affect our reputation and demand for the Invisalign System if consumers or dental professionals attribute these negative experiences to clear aligner therapy generally, even if our products differ significantly in design, quality, and clinical effectiveness. If demand for our products or services fails to increase, or decreases, our business, financial condition and results of operations may be materially adversely affected.

Our net revenues depend primarily on sales of the Invisalign System and iTero intraoral scanners and declines in volume or ASP may adversely affect net revenues, gross profit, operating profit and net income.

Our net revenues are primarily dependent on sales of the Invisalign System an d iTero intraoral scanners. Of the two, we expect the Invisalign System to continue to represent the majority of our net revenues and remain critical to our success. The ASPs of our products, particularly the Invisalign System, are influenced by numerous factors, including the mix of product treatment packages, geographical mix, channel mix and timing of products sold (particularly the timing and quantity of orders for additional clear aligners for certain Invisalign products), promotions and discounts and foreign currency exchange rates. In addition, we sell our products at different prices and with varying shipping and handling charges or processing fees that may differ by country. Our ASPs for the Invisalign System and iTero intraoral scanners have been and could in the future be adversely affected if:
• we offer promotions or general or volume-based discount programs, product or services bundles, large account sales or consumer rebate programs;
• participation in promotions or programs unexpectedly increases, decreases or changes demand in material ways;
• our geographic, channel or product mix shifts to lower-priced products or to products with a higher percentage of deferred revenue;
• we decrease prices or are unable to increase prices on one or more products or services in response to increasing competitive pricing pressures;
• we introduce new or change existing products or services, or modify how we market or sell any of our new or existing products or services;
• we modify our pricing strategies for certain products or adjust pricing for certain items based on cancellation fees, shipping and handling charges or processing fees;
• we participate in government tenders, such as volume-based procurement in China; or
• our critical accounting estimates materially differ from actual results.

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To stimulate product and services demand, we have a history of offering volume discounts, price reductions and other promotions to targeted customers and consumers and releasing lower-priced products. These promotional campaigns and lower-priced products have had, and may in the future have, unexpected and unintended consequences, including reduced net revenues, gross profit, operating profit and net income.

Competition in the markets for our products and services is increasing and we expect aggressive competition from existing competitors and emerging companies that introduce new technologies, products or services, and customers who alone or with others create orthodontic appliances and solutions or other products or services that compete with us.

The dental industry is experiencing immense and rapid digital transformation, and we face competition from a variety of competitors including companies that specialize in products or systems and services that provide solutions similar to those that we offer. While solutions such as the Invisalign System, iTero intraoral scanners, CAD/CAM software and our digital platform facilitate this transition, we face competition from companies that seek to introduce new technologies and products and companies that remain dedicated to traditional products and services, such as wires and brackets, which doctors have historically been able to purchase at a lower price point. As we continue to expand globally, we may continue to encounter competition in different geographic regions. We have experienced price-focused competition in various markets and we anticipate this will continue. We may be unable to compete with these competitors, increased competition may result in commoditization of our products or services, or competitors may render our technology or products obsolete or economically unattractive, particularly as competitors incorporate artificial intelligence (“AI”) and machine learning into new or existing services and technologies that facilitate changes in doctor-patient interactions, expectations and treatment workflows. We may be unable to devote adequate financial resources to develop or acquire new AI technologies and systems in the future and sufficiently meet evolving industry trends and consumer demands.

The number and types of competitors we face are diverse and growing rapidly. The Invisalign System competes primarily against traditional wires and brackets and increasingly with clear aligners manufactured and distributed by new market entrants and existing competitors, including traditional medical device companies, laboratories, startups and, in some cases, doctors and dental service organizations (“DSOs”). Our competitors also include direct-to-consumer companies that provide clear aligners using a business model requiring little to no in-office care from trained and licensed doctors, and doctors and DSOs who manufacture custom aligners or procure products from third-party white-label providers. Large consumer product companies may also start supplying orthodontic products. Orthodontists, GPs and DSOs have and may continue to sample competitive and alternative products, take advantage of competitive promotions and sale opportunities, or engage in “bait and switch,” “margin steering” or similar practices that take advantage of the significant brand recognition of Invisalign to offer alternative products.

Our iTero intraoral scanners are also facing increased competition from new and existing competitors. Our scanners compete with polyvinyl siloxane impressions and numerous new and existing intraoral scanners and traditional impression methods, as well as traditional bite wing 2D dental X-rays and dental imaging systems that leverage near infrared imaging technology and AI for detecting interproximal caries. We have and may continue to experience competition with respect to our scanners and software solutions from competitors who introduce products at lower prices or with enhanced features or functionalities that better meets customer demand, including expansion of their portfolios in the digital ecosystem. If we are unable to compete effectively with existing products, existing competitors, new market entrants, or respond effectively to new technologies, our business, financial condition and results of operations could be materially adversely impacted.

Our success depends on our ability to successfully develop, introduce, achieve market acceptance of, and manage new or improved products and services.

Our success depends on our ability to quickly and profitably develop, manufacture, market, and obtain and maintain regulatory approvals or clearances of new, improved or refurbished products and services. The extent and rate at which our products or services achieve market acceptance and penetration depends on many factors, including our ability to:
• successfully predict, timely innovate, develop, and launch new or improved technologies, applications, features, products and services to meet market demand and keep pace with changes in technology, customers’ demands and industry standards;
• successfully and timely obtain regulatory approvals or clearances of new or improved products or services from government agencies such as the U.S. Food and Drug Administration (“FDA”) and analogous agencies in other countries;
• cost-effectively and efficiently develop, manufacture, quality test, market, dispose of and sell new or improved products and services, including localized versions for international markets;
• properly forecast the amount and timing of new or improved product and services demand;
• allocate our research and development funding to products and services with higher growth prospects;
• ensure the compatibility of our technology, services and systems with those of our customers;
• anticipate and rapidly innovate in response to new competitive offerings and technologies;
• differentiate our products and services from those of our competitors as well as other products and services in our own portfolio and successfully articulate the benefits to potential customers;
• design and manufacture products that achieve the clinical and practice outcomes necessary for market acceptance;
• manage the impact of nationalism or initiatives encouraging consumer purchases from domestic vendors;
• qualify for third-party reimbursement for procedures involving our products or services;
• offer attractive and competitive products, services and subscription plans;
• encourage customers to adopt new or improved technologies and provide the needed technical, sales and marketing support to make new or improved product and services launches successful;
• manage government procurement program restrictions; and
• source and receive quality raw materials or parts from our suppliers.

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If we fail to accurately predict the needs and preferences of customers and their patients, or fail to offer viable products or services, we may invest heavily in research and development that does not lead to significant revenues. Even if we successfully innovate and develop new or improved products and services, we may incur substantial costs doing so and our profitability may suffer. Introduction and acceptance of any products and services may take significant time and effort, particularly if they require doctor education and training to understand their benefits or doctors choose to withhold judgment on a product or service until patients complete their treatments.

In addition, we periodically introduce new business and sales initiatives to meet customers’ needs and demands. In general, our internal resources support these initiatives without clear indications they will prove successful or be without short-term execution challenges. Should these initiatives fail, our business, financial condition and results of operations could be materially adversely impacted.

We 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.

We have and may in the future acquire, or make investments in, companies, businesses, products, technologies or other assets. Alternatively, we may be unable to find suitable investment or acquisition opportunities or be unable to complete investments or acquisitions on favorable terms. If we make such investments or complete acquisitions, we may not ultimately strengthen our competitive position or achieve desired synergies and integration. Moreover, the companies in which we do invest may fail or we may ultimately own less than a majority of the outstanding shares of the company and be unable to control or have significant influence over critical issues that could harm the value of our investment.

We are subject to various risks when making a strategic investment or acquisition and integrating the operations and cultures of acquired businesses within our own, which could materially impact our business, financial condition or results of operations, including that we may:
• fail to perform proper due diligence and inherit unexpected material issues or assets, including intellectual property (“IP”) or other litigation or ongoing investigations, accounting irregularities or compliance liabilities;
• fail to comply with regulations, governmental actions, orders or decrees;
• experience information technology (“IT”) security and privacy compliance issues;
• invest in companies that generate net losses or are slow or fail to develop;
• not realize a positive return on our investment or determine that investments have declined in value, which could require recording impairments;
• need to pay cash, incur debt or issue equity securities to pay for an acquisition, adversely affecting our liquidity, financial condition or the trading price of our common stock;
• find it difficult to implement and harmonize company-wide financial reporting, forecasting and budgeting, accounting, billing, IT and other systems due to inconsistencies in standards, internal controls, procedures and policies;
• require significant time and resources to effectuate the integration;
• fail to retain key personnel or harm our existing culture or the culture of an acquired entity;
• not realize material portions of the expected synergies and benefits of the investment or acquisition; or
• unsuccessfully evaluate or utilize the acquired technology or acquired company’s know-how or fail to successfully integrate the technologies acquired.

Operational Risks

Our results of operations have and will continue to fluctuate in the future, which makes it difficult to predict the timing and amount of customer demand and our revenues, costs, and expenditures.

Our quarterly and annual operating results have and will continue to fluctuate for a variety of reasons. Some of the factors that have and could in the future cause our operating results to fluctuate include:
• changes in consumer, customer and industry demand;
• changes in manufacturing, packaging, delivery and inventory costs;
• the creditworthiness, liquidity and solvency of our customers and their ability to timely make payments when due;
• our ability to collect payments;
• our acceptance of longer customer payment cycles;
• changes in the timing of revenue recognition and our ASPs;
• seasonal fluctuations;
• geographic, channel or product mix shifts to lower priced products or to products with a higher percentage of deferred revenue;
• improvements to or changes in our products, capabilities or technologies that replace or shorten the life cycles of legacy products or cause customers to defer or stop purchasing legacy products until new products become available;
• changes in costs and expenditures, including in connection with new treatment planning and fabrication facilities and the hiring and deployment of personnel;
• the timing of clear aligner treatment order submissions, acceptance, processing and fulfillment, which can cause fluctuations in our backlog;
• new, proposed or retaliatory tariffs; and
• timing and fluctuation of spending around marketing and brand awareness campaigns and industry trade shows.

If we fail to accurately predict product demand, our manufacturing capacity or that of one or more of our suppliers, may be inadequate. Specifically, our manufacturing process relies on sophisticated computer software and requires new technicians to
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undergo a long training process, often 120 days or longer. Additionally, production levels for our iTero intraoral scanners are generally based on forecasts and historic demand and we often place orders with suppliers for materials, components, sub-assemblies and finished products weeks or more in advance of projected orders. If we do not hire and train the appropriate number of technicians in anticipation of demand, our costs and expenditures may not align with our revenues or revenue growth. Additionally, to secure supplies for production of products, we periodically enter into non-cancelable minimum purchase commitments with vendors, which could impact our ability to adjust inventory for declining demand. In addition, we may be required to purchase or lease additional or larger facilities and equipment to manage demand. If we fail to timely manufacture and deliver products to meet demand, this could damage our relationships with existing customers or harm our ability to attract new customers and adversely affect our business, financial condition and results of operations.

We may make business decisions that adversely affect our operating results such as modifications to our pricing policies and payment terms, promotions, development efforts, product releases, business structure or operations. The majority of our expenses, such as employee compensation and lease obligations, are relatively fixed in the short term. Moreover, our expense levels are based, in part, on expectations for future revenues. As a result, if our net revenues for a particular period are below expectations, we may be unable to timely or effectively reduce spending to offset any shortfalls. This variability and unpredictability could also result in our failing to meet the expectations of industry, financial analysts or investors.

We are subject to operating risks, including excess or constrained capacity, operational inefficiencies and pressure on our internal systems, personnel and suppliers, including as a result of our past and any future restructuring efforts, which could adversely affect our results of operations.