Executive Summary

Q1’25 revenue of $979.3M and non-GAAP EPS of $2.13 came in slightly above Wall Street consensus on revenue ($975.8M*) and above on EPS ($1.99*); GAAP operating margin was 13.4% (FX headwind ~1.1 pts q/q and ~1.4 pts y/y) and non-GAAP operating margin was 19.1% .
Clear Aligner volume rose 6.2% y/y to 642.3k cases with teens/growing patients up 13.3% y/y; Systems & Services grew 1.2% y/y despite seasonal q/q decline, supported by iTero Lumina adoption .
FY’25 outlook raised to 3.5%–5.5% revenue growth (from “low single digits” in Feb); Q2’25 revenue guide $1.05B–$1.07B with sequential margin expansion (~+3 pts GAAP and non-GAAP) and gross margin up on higher ASPs/volume .
Catalysts/overhangs: favorable U.K. VAT tribunal ruling (potential ASP/discount relief if sustained) and tariff mitigation plans; FX remains a swing factor, and mix shift to non-comprehensive products continues to pressure ASPs .
Strategic innovation drumbeat (MA with occlusal blocks; Align X‑ray Insights AI; restorative software for iTero Lumina) underpins medium‑term growth narrative and DSO channel momentum .

Note: Consensus estimates marked with * are from S&P Global; see Estimates Context for details.

What Went Well and What Went Wrong

What Went Well
- Broad-based volume growth: Clear Aligner cases +6.2% y/y to 642.3k; teens/growing patients +13.3% y/y with record first‑quarter submitters and higher GP utilization; CEO: “highest y/y growth rate for both adult and teen patients since 2021” .
- Innovation tailwinds: iTero Lumina restorative software launched late March; management cited positive feedback and record scanner systems/wands in a quarter, supporting Systems & Services +1.2% y/y despite seasonality .
- FY’25 growth outlook raised; Q2 guide implies sequential revenue and margin expansion; UK VAT ruling favorable and considered a potential lever on U.K. pricing/discounts if sustained .
What Went Wrong
- FX headwinds weighed on revenue (~$31.1M y/y) and margins (operating margin −1.4 pts y/y impact); non-GAAP operating margin fell 0.7 pts y/y to 19.1% .
- ASP pressure from mix/discounts persisted; Clear Aligner revenue per case dropped to $1,240 (from $1,295 in Q4’24 and $1,350 in Q1’24); management highlighted product mix shift to lower-priced, non‑comprehensive products .
- Working capital: Days sales outstanding increased to 97 days (+7 q/q, +11 y/y) given extended terms to support practices; deferred revenues declined y/y for both Clear Aligners and Systems & Services .

Financial Results

Headline results vs prior periods and estimates

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$977.9	$995.2	$979.3
GAAP Diluted EPS ($)	$1.55	$1.39	$1.27
Non-GAAP Diluted EPS ($)	$2.35	$2.44	$2.13
Gross Margin (%)	69.7%	70.0%	69.5%
GAAP Operating Margin (%)	16.6%	14.5%	13.4%
Non-GAAP Operating Margin (%)	22.1%	23.2%	19.1%
Q1 2025 Consensus Revenue ($M)			975.8*
Q1 2025 Consensus EPS ($)			1.99*

FX impact: revenue −$31.1M y/y; operating margin −1.4 pts y/y; EPS impact −$0.12 y/y (management commentary) .
Non‑GAAP adjustments in Q1’25 included SBC ($45.0M), amortization ($4.39M), restructuring/other ($2.06M), legal settlement loss ($4.18M) .

Asterisk denotes S&P Global consensus values retrieved via GetEstimates.

Segment breakdown

Metric	Q3 2024	Q4 2024	Q1 2025
Clear Aligner Revenue ($M)	$786.8	$794.3	$796.8
Imaging Systems & CAD/CAM Revenue ($M)	$191.0	$200.9	$182.4
Clear Aligner Shipments (Cases)	617,220	628,730	642,305

KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
Invisalign Trained Doctor Submitters (#)	87,380	85,685	85,275
Total Utilization (cases/doctor)	7.1	7.3	7.5
Clear Aligner Revenue per Case ($)	$1,275	$1,295	$1,240
Teens & Growing Patients (Cases)	236.3k (teens, Q3)	—	225.8k; +13.3% y/y

Guidance Changes

Metric	Period	Previous Guidance (Feb 5, 2025)	Current Guidance (Apr 30, 2025)	Change
Revenue growth (y/y)	FY 2025	“Low single digits”	3.5%–5.5%	Raised
Revenue ($)	Q1 2025	$965M–$985M	Actual $979.3M	In line with range
Revenue ($)	Q2 2025	—	$1,050M–$1,070M	New
GAAP Operating Margin	Q2 2025	—	~+3 pts q/q	New
Non-GAAP Operating Margin	Q2 2025	—	~+3 pts q/q	New
Non-GAAP Operating Margin	FY 2025	~22.5%	~22.5%	Maintained
GAAP Operating Margin vs 2024	FY 2025	~+2 pts vs 2024	~+2 pts vs 2024	Maintained
Clear Aligner Volume	FY 2025	Mid-single digit growth	Mid-single digit growth	Maintained
Clear Aligner ASPs	FY 2025	Down y/y (FX/mix)	Down y/y (mix; emerging markets)	Maintained
Systems & Services	FY 2025	Grow faster than Aligners	Grow faster than Aligners	Maintained
Gross Margin	Q2 2025	—	Up q/q (higher ASPs/volume)	New
Capex	FY 2025	$100M–$150M	$100M–$150M	Maintained
Effective Tax Rate (Non-GAAP)	Ongoing	~20% (long-term)	~20% (long-term)	Maintained
Dividends	—	None disclosed	None disclosed	N/A

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24 and Q4’24)	Current Period (Q1’25)	Trend
Product innovation (iTero Lumina)	iTero Lumina launched; Systems & Services strong y/y growth	Restorative software launched late March; positive customer feedback; record scanner systems/wands	Improving adoption
Teens/growing patients	Record teen starts in China; solid teen mix	Teens/growing +13.3% y/y; IPE momentum; MA with occlusal blocks launched	Accelerating
AI/diagnostics	—	Align X‑ray Insights AI CADe launched in EU/UK	Emerging
ASPs/mix	Pressure from mix and FX in Q4	Continued mix shift to non‑comprehensive; FX turns slight tailwind at spots; UK VAT could ease discounts if upheld	Stabilizing (FX), mix pressure persists
Tariffs/supply chain	Restructuring and commentary, monitoring tariffs	USMCA exemption for Mexico-made goods per EO; China-for-China; Israel 10% tariff ~$1M/month impact baked into guidance	Managed risk
Regional trends	U.S. sluggish in Q3; EMEA/APAC strength	Strength across APAC/EMEA; NA growth resumed; LATAM softer	Improving breadth
DSOs channel	—	DSO volume up q/q and y/y for Aligners and scanners	Strengthening
Regulatory/legal	—	UK VAT tribunal favorable; HMRC appeal window through June 19	Positive (pending finality)

Management Commentary

“Fiscal 2025 is off to a good start with Q1 Clear Aligner volumes up both sequentially and year-over-year… highest year-over-year growth rate for both adult and teen patients since 2021.” — Joe Hogan, CEO .
“We delivered more scanner systems and wands in a quarter than ever before… feedback regarding our Lumina portfolio has been positive.” — Joe Hogan .
“We expect our Q2’25 GAAP and non-GAAP operating margin to be up sequentially by approximately 3 points… [and] 2025 non-GAAP operating margin to be approximately 22.5%.” — John Morici, CFO .
On tariffs: “We think we’ll be able to mitigate [impacts]… we positioned ourselves as a truly global business,” with Mexico-for-U.S., China-for-China, and Poland for Europe .
On UK VAT: favorable tribunal ruling that Clear Aligners are dental prostheses (VAT-exempt condition); potential to adjust discounts if ruling stands .

Q&A Highlights

ASP dynamics: Management affirmed FY narrative of ASPs down y/y on mix, with FX turning slight tailwind at current spots; MA with occlusal blocks carries a slightly higher price and could aid ASP mix at the margin .
Tariff mitigation: USMCA-compliant Mexico manufacturing for U.S.; China-for-China with supply chain adjustments for raw materials; ~$1M/month impact at baseline 10% Israel tariff incorporated in guidance .
Margin drivers: Expansion rooted in manufacturing efficiencies, materials/logistics savings, and product mix (e.g., MAOB) despite tariff considerations; aiming for +70 bps op margin y/y in 2025 .
Demand/backdrop: Breadth across geographies and both teen/adult segments; sequential improvement expected into Q2; no evidence of China backlash to date .
Working capital/financing: DSO terms and patient financing partners (e.g., HFD) supporting demand; DSO channel outpacing retail doctors .

Estimates Context

Q1 2025: Actual revenue $979.3M vs consensus $975.8M* (beat); non-GAAP EPS $2.13 vs consensus $1.99* (beat) .
Q4 2024 (context): Revenue $995.2M vs $999.2M* (slight miss); non-GAAP EPS $2.44 vs $2.45* (in line) .
Q2 2025 (guide vs street): Company revenue guidance $1.05B–$1.07B vs consensus $1.061B*; guide brackets consensus and implies sequential margin expansion .

Asterisk denotes S&P Global consensus values retrieved via GetEstimates.

Key Takeaways for Investors

Execution beat: Modest top‑line and EPS beats, with broad-based volume strength (teens/adults, APAC/EMEA, improving NA) underpinning raised FY’25 revenue growth to 3.5%–5.5% .
Mix headwinds vs innovation tailwinds: Non‑comprehensive product mix and discounting weigh on ASPs, but MA with occlusal blocks and restorative iTero software can support pricing/margins over time .
Margin trajectory intact: Despite FX/tariff volatility, Align targets ~22.5% non‑GAAP op margin for FY’25; Q2 margin guided up ~3 pts sequentially on higher ASPs/volume .
Risk management: UK VAT ruling reduces an overhang (pending appeal); tariff exposure is mitigated by regionalized manufacturing and supply adjustments; FX remains a variable .
KPIs healthy: Utilization improved to 7.5; shipments +6.2% y/y; DSO channel expanding faster than retail; watch DSO (days sales outstanding) at 97 days as a working capital consideration .
Trading setup: Near-term catalysts include Q2 delivery vs bracketed consensus and Investor Day follow-ups on product pipeline; sustained teen momentum (IPE/MAOB) and Lumina uptake can drive estimate revisions if ASP/mix stabilizes .

Supporting Data

Q1’25 vs Q1’24 (y/y)

Metric	Q1 2024	Q1 2025	y/y
Revenue ($M)	$997.4	$979.3	−1.8%
GAAP Diluted EPS ($)	$1.39	$1.27	−$0.12
Non-GAAP Diluted EPS ($)	$2.14	$2.13	−$0.01
Gross Margin (%)	70.0%	69.5%	−0.5 pts
GAAP Op Margin (%)	15.5%	13.4%	−2.1 pts
Non-GAAP Op Margin (%)	19.8%	19.1%	−0.7 pts
Clear Aligner Shipments (k)	605.1	642.3	+6.2%

Non-GAAP reconciliation highlights (Q1’25)

Item	Q1 2025
SBC add-back	$44.997M
Amortization add-back	$4.390M
Restructuring/other add-back	$2.056M
Legal settlement loss add-back	$4.178M
Non-GAAP operating margin	19.1%

Selected balance sheet/cash flow

Cash & equivalents: $873.0M (3/31/25) vs $1,043.9M (12/31/24) .
Operating cash flow: $52.7M in Q1’25; Capex $25.3M; FCF $27.4M .
Share repurchase: $72.1M completed from prior plan; $129.0M repurchased under $225M remaining authorization in Q1’25 .

Other relevant Q1’25 press releases

Align X‑ray Insights AI CADe launched in EU/UK; positioned to enhance diagnostics and treatment acceptance .
Invisalign System with mandibular advancement featuring occlusal blocks: commercial availability (U.S./Canada; later EMEA) for Class II correction, a premium comprehensive adjunct .

Footnote on estimates: Values marked with * were retrieved from S&P Global (Capital IQ) consensus via GetEstimates.

ALIGN TECHNOLOGY INC (ALGN)·Q1 2025 Earnings Summary