Align Technology — Third Quarter 2026 Earnings Summary

Financial Performance:

• Q3 2026 total revenues were $1.015 billion, up 1.9% year-over-year and down 3.9% sequentially.
• Clear Aligner revenues were $839.3 million, up 4.2% year-over-year and down 3.6% sequentially; volume reached 690.6 thousand cases, up 6.6% year-over-year.
• Imaging Systems and CAD/CAM Services revenues were $175.5 million, down 7.6% year-over-year and down 5.3% sequentially.
• GAAP gross margin was 68.7%; non-GAAP gross margin was 70.4%, flat year-over-year (up ~0.7 points at constant currency).
• GAAP operating margin was 16.7%, compared to 9.7% in Q3 2025; non-GAAP operating margin was 24.4%, up 0.5 points year-over-year (up ~1.4 points at constant currency).
• GAAP diluted net income per share was $1.90, compared to $0.78 in Q3 2025; non-GAAP diluted net income per share was $2.80, compared to $2.61 in Q3 2025.
• GAAP net income was $135.0 million; non-GAAP net income was $198.9 million.
• Cash and cash equivalents were $1,144.9 million as of September 30, 2026, compared to $1,102.6 million as of June 30, 2026.
• $300.0 million was available under the revolving line of credit as of September 30, 2026.
• Deferred revenues were $1,162.1 million as of September 30, 2026, compared to $1,261.8 million as of December 31, 2025.

Guidance and Future Outlook:

• Q4 2026 worldwide revenue is expected to be $1,000 million to $1,020 million.
• Q4 2026 Clear Aligner volume is expected to be up low single-digits year-over-year; Clear Aligner ASP is expected to be down approximately 1% year-over-year.
• Q4 2026 Systems & Services revenue is expected to be $170 million to $180 million.
• Q4 2026 GAAP gross margin is expected to be approximately 71.0%; non-GAAP gross margin is expected to be approximately 72.0%.
• Q4 2026 GAAP operating margin is expected to be approximately 20.0%; non-GAAP operating margin is expected to be approximately 26.0%.
• Fiscal 2026 worldwide revenue is expected to be $4,110 million to $4,130 million.
• Fiscal 2026 Clear Aligner volume and revenue growth are expected to be up 5% to 6% year-over-year; Clear Aligner ASP is expected to be slightly down from 2025.
• Fiscal 2026 Systems & Services revenue is expected to be $715 million to $725 million.
• Fiscal 2026 GAAP operating margin is expected to be approximately 16.2% (up 2.7 points year-over-year); non-GAAP operating margin is expected to be approximately 23.7% (up 100 basis points year-over-year).
• Fiscal 2026 capital expenditures are expected to be $125 million to $150 million.
• Management assumes a 2027 operating environment broadly consistent with current conditions and does not require a consumer recovery for 2027 growth.

Business Segments and Product Lines:

• Clear Aligner volume growth was driven by record doctor submitters, record third-quarter shipments, improved utilization, and broad-based international growth.
• Orthodontist shipments in North America increased year-over-year for the first time in six quarters; DSO shipments were up double-digits across both orthodontist and GP customers.
• iTero scanner units placed (including leased, rented, and certified pre-owned) increased double-digits year-over-year to more than 157,000 systems globally.
• Doctor utilization increased 3.4% year-over-year in Q3 2026.
• NXT Technology, a next-gen direct fabrication 3D printing materials platform, is being introduced to enhance control, consistency, and precision.
• The Invisalign Specifix attachment system was launched to expand direct 3D-printing capabilities into attachment systems.
• A U.S. pilot for Invisalign Sports Guard, a custom direct 3D printed sports mouth guard made from an iTero scan, began in Q3 2026.

Market and Competitive Landscape:

• The market backdrop remains challenging with softer demand for discretionary healthcare spending and capital equipment investment.
• Sports mouth guards represent a large and growing market opportunity amid increasing awareness of concussion risks in contact sports.
• Management notes significant overlap between the sports mouth guard demographic and the kids and teens demographic for Invisalign treatment.

Risks and Challenges:

• Foreign exchange rates unfavorably impacted Q3 2026 total revenues by approximately $4.7 million sequentially and $5.0 million year-over-year.
• Gross margin was unfavorably impacted by higher fuel-related transportation costs, lower Clear Aligner ASPs, and geographic/product mix.
• Operating income was unfavorably impacted by a $5.6 million accrual related to UK VAT.
• Risks include macroeconomic conditions, geopolitical events, trade policies, changes in consumer purchasing behavior, competition from AI-powered technologies, and supply chain constraints.

Management Commentary and Tone:

• CEO Joe Hogan stated results were solid, with revenues and volumes in line with outlook and non-GAAP operating margin above prior guidance.
• Hogan highlighted continued growth in Clear Aligners, expansion of the digital platform, and improved profitability.
• CFO John Morici noted results were achieved against a challenging market backdrop but expressed confidence in delivering revenue growth and margin expansion in 2027.
• Management emphasized disciplined expense management and productivity improvements contributing to the non-GAAP operating margin of 24.4%.

Other Key Points:

• During Q3 2026, the company repurchased approximately 627.3 thousand shares at an average price of $164.73 per share.
• The $200.0 million open market repurchase plan announced in April 2026 was completed in Q3 2026.
• $630.0 million remains available for repurchases under the $1.0 billion stock repurchase program announced in April 2025.
• The company expects to repurchase up to $300.0 million of common stock in Q4 2026.
• Management expects to repurchase approximately $500 million of common stock in fiscal 2026.
• Legal settlements and contingencies included a $5.6 million accrual for UK VAT and approximately $1.0 million for legal settlements in Q3 2026.
• The company reported $17.2 million in restructuring and other charges for Q3 2026.