What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-08 compared with 2024-11-05 · 218 added, 299 removed, 513 unchanged (50% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net revenues $ 979,262 $ 997,431

5 unchanged sentences

Legal settlement loss 4,178 —

66 — 31,193 —

Total operating expenses 549,008 543,681

18 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net income $ 93,230 $ 105,028

8 unchanged sentences

(in thousands, except per share data)

September 30,

2025 December 31,

1 unchanged sentence

Cash and cash equivalents $ 873,012 $ 1,043,887

Marketable securities, short-term — 35,304

Accounts receivable, net of allowance for doubtful accounts of $ 22,469 and $ 19,131 , respectively

3 unchanged sentences

Total current assets 2,402,029 2,492,441

Marketable securities, long-term — 8,022

Property, plant and equipment, net 1,264,847 1,271,134

10 unchanged sentences

Deferred revenues

1,319,393 1,331,146

Total current liabilities 1,990,948 2,038,027

18 unchanged sentences

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 )

Common stock repurchased and retired — — — — — —

Equity forward contract related to accelerated stock repurchase — — — — — —

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

Three Months Ended March 31, 2025

Shares Amount

2 unchanged sentences

Net income — — — — 93,230 93,230

Net change in unrealized gains (losses) from investments — — — 605 — 605

Net change in foreign currency translation adjustment — — — 12,199 — 12,199

2 unchanged sentences

Common stock repurchased and retired ( 1,086 ) — ( 14,756 ) — ( 187,744 ) ( 202,500 )

Equity forward contract related to accelerated stock repurchase — — 49,527 — ( 49,527 ) —

Stock-based compensation — — 44,997 — — 44,997

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.

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss), Net Retained Earnings Total

Three Months Ended September 30, 2023

Shares Amount

Balance as of June 30, 2023

76,532 $ 8 $ 1,141,623 $ 11,343 $ 2,485,327 $ 3,638,301

Net income — — — — 121,427 121,427

Net change in unrealized gains (losses) from investments — — — 526 — 526

Net change in foreign currency translation adjustment — — — ( 9,822 ) — ( 9,822 )

Issuance of common stock relating to employee equity compensation plans 1

56 — 12,339 — — 12,339

Tax withholdings related to net share settlements of equity awards — — ( 507 ) — — ( 507 )

Stock-based compensation — — 39,602 — — 39,602

Balance as of September 30, 2023

Balance as of March 31, 2025

73,057 $ 7 $ 1,386,807 $ 18,177 $ 2,389,252 $ 3,794,243

1 Includes tax withholding shares related to net share settlements of equity awards.

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss), Net Retained Earnings Total

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Shares Amount

5 unchanged sentences

Issuance of common stock relating to employee equity compensation plans 328 — 14,339 — — 14,339

263 — 26,595 — — 26,595

Tax withholdings related to net share settlements of equity awards ( 86 ) — ( 26,055 ) — — ( 26,055 )

2 unchanged sentences

Stock-based compensation — — 38,788 — — 38,788

Balance as of September 30, 2023

Balance as of March 31, 2024

75,281 $ 7 $ 1,238,739 $ 18,439 $ 2,502,675 $ 3,759,860

1 Includes tax withholding shares related to net share settlements of equity awards.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Non-cash operating lease cost 9,457 9,612

Impairment of equity investment 115 3,329

Other non-cash operating activities 2,950 ( 2,359 )

12 unchanged sentences

Purchase of property, plant and equipment ( 25,289 ) ( 9,369 )

Purchase of marketable securities — ( 2,373 )

Proceeds from maturities of marketable securities — 6,035

Proceeds from sales of marketable securities — 831

Purchase of equity investments ( 75,390 ) ( 76,999 )

Other investing activities — ( 6 )

2 unchanged sentences

Proceeds from issuance of common stock 13,909 14,339

Common stock repurchases ( 150,012 ) ( 292,360 )

Activity for equity forward contracts related to accelerated stock repurchase agreements, net — 40,000

Common stock repurchases, net of excise tax

( 201,088 ) —

Payroll taxes paid upon the vesting of equity awards ( 19,577 ) ( 26,055 )

1 unchanged sentence

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 8,480 ( 9,004 )

Net increase in cash, cash equivalents, and restricted cash 104,462 296,995

Net decrease in cash, cash equivalents, and restricted cash

( 170,889 ) ( 71,640 )

Cash, cash equivalents and restricted cash at beginning of the period 1,044,963 938,519

8 unchanged sentences

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.

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, 2023 as filed with the SEC.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any other future period, and we make no representations related thereto.

The results of operations for the three months ended March 31, 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 the consolidated financial statements and accompanying notes.

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 and assumptions, including those that impact revenue recognition, long-lived and intangible assets, 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, as well as the reported amounts of revenues and expenses.

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.

Certain Risks and Uncertainties

We are subject to risks including, but not limited to, global and regional economic market conditions, inflation, fluctuations in foreign currency exchange rates, changes in consumer confidence and demand, increased competition, dependence on key personnel, protection and litigation of proprietary technology, shifts in taxable income between tax jurisdictions and compliance with regulations of the U.S.

Food and Drug Administration (“FDA”) and similar international agencies.

Our cash and investments are held primarily by five financial institutions.

Financial instruments which potentially expose us to concentrations of credit risk consist primarily of cash equivalents and marketable securities.

Historically, we have invested excess cash primarily in money market funds, corporate bonds, asset-backed securities, municipal and U.S.

government agency bonds and treasury bonds.

We periodically evaluate our investments for credit losses.

Such credit losses have not been material to our financial statements.

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 March 31, 2025, the Company has not experienced any material credit losses on such deposits.

We purchase certain inventory from sole suppliers.

2 unchanged sentences

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Effective

On November 27, 2023, the Financial Accounting Standards Board (“FASB ” ) issued Accounting Standards Update (“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 expenses.

(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 expenses and other segment expenses.

For public business entities, the provisions of ASU 2023-07 are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

Companies must apply the

guidance retrospectively to all prior periods presented in the financial statements.

The Company expects this pronouncement may result in changes to the nature of our reportable segment disclosures.

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 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.

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.

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.

The Company is evaluating the effect of this pronouncement on its annual consolidated financial statements.

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.

Financial Instruments

Cash, Cash Equivalents and Marketable Securities

The following tables summarize our cash and cash equivalents, and marketable securities on our Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 Amortized

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

March 31, 2025 Amortized

Losses Fair Value Cash and Cash Equivalents Marketable securities, short-term Marketable securities, long-term

1 unchanged sentence

Money market funds

100,608 — — 100,608 100,608 — —

Certificate of deposits

15,077 — — 15,077 15,077 — —

Total $ 873,012 $ — $ — $ 873,012 $ 873,012 $ — $ —

We have no short-term or long-term marketable securities as of September 30, 2024.

December 31, 2024 Amortized

2 unchanged sentences

Money market funds 291,464 — — 291,464 291,464 — —

Corporate bonds 31,943 5 ( 676 ) 31,272 — 28,704 2,568

government treasury bonds

4,855 — ( 99 ) 4,756 — — 4,756

Asset-backed securities 1,416 2 ( 1 ) 1,417 — 719 698

Municipal bonds 702 — ( 2 ) 700 — 700 —

government agency bonds 5,215 — ( 34 ) 5,181 — 5,181 —

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

The following table summarizes the fair value of our available-for-sale marketable securities classified by contractual maturity as of December 31, 2023 (in thousands):

December 31, 2023

Due in 1 year or less $ 34,617

Due in 1 year through 5 years 8,709

Total $ 43,326

The securities that we invest in are generally deemed to be low risk based on their credit ratings from the major rating agencies.

The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields.

As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss.

Our unrealized losses as of December 31, 2023 are primarily due to changes in interest rates and credit spreads.

The following table summarizes the fair value and gross unrealized losses as of December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

As of December 31, 2023

Less than 12 months 12 Months of Greater Total

December 31, 2023 Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

Corporate bonds $ — $ — $ 27,939 $ ( 676 ) $ 27,939 $ ( 676 )

government treasury bonds

2,044 ( 11 ) 2,712 ( 88 ) 4,756 ( 99 )

Asset-backed securities 1,018 ( 1 ) 83 — 1,101 ( 1 )

Municipal bonds — — 700 ( 2 ) 700 ( 2 )

government agency bonds 4,003 ( 11 ) 1,178 ( 23 ) 5,181 ( 34 )

Total $ 7,065 $ ( 23 ) $ 32,612 $ ( 789 ) $ 39,677 $ ( 812 )

We had no short-term or long-term marketable securities as of March 31, 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.

We use the 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.

3 unchanged sentences

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, 2024 and December 31, 2023 (in thousands):

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

Description Balance as of

September 30, 2024

March 31, 2025

Cash equivalents:

Money market funds $ 100,608 $ 100,608 $ —

Certificate of deposits

15,077 15,077 —

$ 115,685 $ 115,685 $ —

Description Balance as of December 31, 2024

2 unchanged sentences

Money market funds $ 291,464 $ 291,464 $ —

Short-term investments:

Corporate bonds 28,704 — 28,704

Municipal bonds 700 — 700

government agency bonds

$ 291,464 $ 291,464 $ —

Asset-backed securities 719 — 719

Long-term investments:

government treasury bonds

4,756 — 4,756

Corporate bonds 2,568 — 2,568

Asset-backed securities

$ 93,082 $ 49,756 $ 43,326

Accounts Receivable Factoring

2 unchanged sentences

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 was $ 8.2 million and $ 24.2 million during the three months ended September 30, 2024 and 2023, respectively, and $ 34.2 million and $ 40.4 million during the nine months ended September 30, 2024 and 2023, respectively.

Factoring fees on the sales of receivables were recorded in Other income (expense), net in our Condensed Consolidated Statement of Operations and were not material.

Total accounts receivable sold under factoring arrangements was $ 6.4 million and $ 14.6 million during the three months ended March 31, 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

2 unchanged sentences

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 to fair value for observable transactions for identical or similar investments of the same issuer.

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 through the purchase of Class A Common Stock for $ 150 million in total.

We are accounting for our investment in Heartland as an investment in equity securities.

Based on a review of the relevant facts and circumstances, primarily observable transactions for Heartland's Class A Common Stock, we determined that no adjustment to the carrying value of our investment was necessary for the three or nine months ended September 30, 2024.

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, we entered into a Subscription Agreement (the “Smile Doctors Subscription Agreement”) with New SD Holding Company, L.P.

(“SD Holding Company”).

Pursuant to the Smile Doctors Subscription Agreement we acquired less than a 3 % equity interest in SD Holding Company through the purchase of Class A Common Units for $ 30 million.

SD Holding Company owns a controlling interest, through intermediary entities, in Smile Doctors, LLC.

We account for our investments in Heartland and SD Holding Company as investments in equity securities, utilizing the measurement alternative.

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 months ended March 31, 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 on our Condensed Consolidated Balance Sheets as Other assets and any fair value adjustments or impairment, if any, are recorded in Other income (expense), net on our Condensed Consolidated Statement of Operations.

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

1 unchanged sentence

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 loss of $ 24.5 million and a net gain of $ 19.8 million, respectively, during the three months ended September 30, 2024 and 2023, and a net gain of $ 2.7 million and $ 14.4 million, respectively, during the nine months ended September 30, 2024 and 2023.

As a result of the settlement of foreign currency forward contracts, we recognized a net loss of $ 11.5 million and a net gain of $ 19.7 million, during the three months ended March 31, 2025 and 2024, respectively.

Recognized gains and losses from the settlement of foreign currency forward contracts are recorded to Other income (expense), net in our Condensed Consolidated Statements of Operations.

As of September 30, 2024 and December 31, 2023, the fair value of foreign exchange forward contracts outstanding were no t material.

The following tables present the gross notional value of all our foreign exchange forward contracts outstanding as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

As of March 31, 2025 and December 31, 2024, the fair value of outstanding foreign exchange forward contracts was no t material.

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

March 31, 2025

Local Currency Amount Notional Contract Amount (USD)

Euro € 166,020 $ 179,590

British Pound £ 105,720 141,511

Canadian Dollar $ 96,300 71,439

Canadian Dollar C$ 95,300 66,393

Polish Zloty PLN 199,200 51,328

British Pound £ 34,500 44,598

Chinese Yuan ¥ 260,000 35,862

3 unchanged sentences

Swiss Franc CHF 9,300 10,567

New Zealand Dollar NZ$ 7,700 4,898

Australian Dollar A$ 5,400 3,369

New Taiwan Dollar NT$ 98,000 3,110

Czech Koruna Kč 76,800 3,321

New Taiwan Dollar NT$ 66,000 1,991

New Zealand Dollar NZ$ 3,000 1,700

Korean Won ₩ 2,430,000 1,654

2 unchanged sentences

Euro € 176,080 $ 183,172

Canadian Dollar $ 108,900 82,166

Polish Zloty PLN 283,000 68,633

Canadian Dollar C$ 97,000 67,446

British Pound £ 37,600 47,090

Chinese Yuan ¥ 244,500 34,361

Swiss Franc CHF 28,600 34,132

Japanese Yen ¥ 3,577,000 25,347

Israeli Shekel ILS 90,055 24,740

Chinese Yuan ¥ 164,500 22,417

Brazilian Real R$ 83,100 13,327

Mexican Peso M$ 230,000 13,593

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

Czech Koruna Kč 60,200 2,687

Korean Won ₩ 2,000,000 1,361

1 unchanged sentence

Inventories consist of the following (in thousands):

September 30,

2025 December 31,

4 unchanged sentences

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

September 30,

2025 December 31,

4 unchanged sentences

Accrued liabilities consist of the following (in thousands):

September 30,

2025 December 31,

1 unchanged sentence

Accrued expenses 73,120 66,391

Accrued sales and marketing expenses 38,152 34,035

Accrued income taxes 47,838 48,808

Accrued sales and marketing expenses 43,086 37,617

Current operating lease liabilities 32,048 31,063

2 unchanged sentences

Total accrued liabilities $ 546,173 $ 598,188

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

Nine Months Ended

September 30,

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):

Three Months Ended

Balance at beginning of period $ 31,211 $ 22,426

3 unchanged sentences

Deferred revenues consist of the following (in thousands):

September 30,

2025 December 31,

3 unchanged sentences

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

During the three months ended September 30, 2024 and 2023, we recognized $ 977.9 million and $ 960.2 million of net revenues, respectively, of which $ 199.0 million and $ 178.8 million was included in the deferred revenues balance at December 31, 2023 and 2022, respectively.

During the nine months ended September 30, 2024 and 2023, we recognized $ 3,003.8 million and $ 2,905.5 million of net revenues, respectively, of which $ 658.2 million and $ 583.5 million was included in the deferred revenues balance at December 31, 2023 and 2022, respectively.

Our unfulfilled performance obligations, including deferred revenues and backlog, as of September 30, 2024 were $ 1,495.6 million.

These performance obligations are expected to be fulfilled over the next six months to five years .

During the three months ended March 31, 2025 and 2024, we recognized $ 979.3 million and $ 997.4 million of net revenues, respectively, of which $ 246.0 million and $ 236.8 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 March 31, 2025 were $ 1,418.6 million.

These performance obligations are expected to be fulfilled over a period up to five years .

Business Combination

13 unchanged sentences

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 Statement of Operations.

In 2021, we initiated Joint development (“JDA”) and Technology license agreements (“TLA”) to provide us with access to Cubicure’s technology.

2 unchanged sentences

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

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

Working capital $ 1,039

10 unchanged sentences

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, projected future cash flows associated with the technology, the asset's life cycle and the present value factor.

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.

3 unchanged sentences

Goodwill and Intangible Assets

The change in the carrying value of goodwill for the nine months ended September 30, 2024, categorized by reportable segment, is as follows (in thousands):

The change in the carrying value of goodwill for the three months ended March 31, 2025, categorized by reportable segment, is as follows (in thousands):

Clear Aligner Systems and Services Total

1 unchanged sentence

$ 152,645 $ 289,985 $ 442,630

Additions from acquisition 47,576 — 47,576

Foreign currency translation adjustments

3,534 11,447 14,981

Balance as of September 30, 2024

Balance as of March 31, 2025

$ 156,179 $ 301,432 $ 457,611

3 unchanged sentences

(in years) Gross Carrying Amount as of

September 30, 2024

March 31, 2025

Amortization Accumulated

Impairment Loss Net Carrying

September 30, 2024

March 31, 2025

Existing technology 11 $ 146,651 $ ( 56,004 ) $ — $ 90,647

1 unchanged sentence

Trademarks and tradenames 1

7 9,800 ( 7,000 ) — 2,800

Patents 12 480 ( 290 ) — 190

2 unchanged sentences

Total intangible assets, net $ 102,750

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

Weighted Average Amortization Period

10 unchanged sentences

Total intangible assets, net $ 103,488

Of the $ 146.7 million recorded as Existing technology intangible assets as of September 30, 2024, $ 47.0 million was acquired during the first quarter of 2024 as part of the Cubicure Acquisition.

The existing technology acquired in the Cubicure Acquisition had an estimated useful life of 13 years, which had the effect of increasing the weighted average amortization period from approximately 10 years as of December 31, 2023 to approximately 11 years as of September 30, 2024.

Refer to Note 4.

“ Business Combination ”.

The total estimated annual future amortization expense for these acquired intangible assets as of September 30, 2024, is as follows (in thousands):

The total estimated future amortization expense for these acquired finite-lived intangible assets as of March 31, 2025, is as follows (in thousands):

Fiscal Year Ending December 31, Amortization

2 unchanged sentences

Total $ 104,387

Amortization expense for the three months ended September 30, 2024 and 2023 was $ 4.6 million and $ 4.2 million, respectively, and amortization expense for the nine months ended September 30, 2024 and 2023 was $ 14.2 million and $ 12.4 million, respectively.

Amortization expense for the three months ended March 31, 2025 and 2024 was $ 4.6 million and $ 5.0 million, respectively.

Credit Facility

We have a credit facility that provides for a $ 300.0 million unsecured revolving line of credit, along with a $ 50.0 million letter of credit.

On December 23, 2022, we amended certain provisions in our credit facility which included extending the maturity date on the facility to December 23, 2027 and replacing the interest rate from the existing LIBOR with SOFR (“2022 Credit Facility”).

We have a credit facility, as amended in December 2022, that provides for a $ 300.0 million unsecured revolving line of credit, along with a $ 50.0 million letter of credit.

Our credit facility has a maturity date of December 23, 2027 and bears interest, at our option, at either a rate based on the SOFR for the applicable interest period or a base rate, in each case plus a margin.

The credit facility requires us to comply with specific financial conditions and performance requirements.

Loans under the 2022 Credit Facility bear interest, at our option, at either a rate based on the SOFR for the applicable interest period or a base rate, in each case plus a margin.

As of September 30, 2024, we had no outstanding borrowings under the 2022 Credit Facility and were in compliance with the conditions and performance requirements in all material respects.

As of March 31, 2025, we had no outstanding borrowings under the credit facility and were in compliance with the conditions and performance requirements in all material respects.

Legal Proceedings

2019 Shareholder Derivative Lawsuit

In January 2019, three derivative lawsuits were filed in the U.S.

District Court for the Northern District of California which were later consolidated, purportedly on our behalf, naming as defendants the then current members of our Board of

Directors along with certain of our executive officers.

The complaints assert various state law causes of action, including for breaches of fiduciary duty, insider trading, and unjust enrichment.

The complaints seek unspecified monetary damages on our behalf, which is named solely as a nominal defendant against whom no recovery is sought, as well as disgorgement and the costs and expenses associated with the litigation, including attorneys’ fees.

The consolidated action is currently stayed.

Defendants have not yet responded to the complaints.

On April 12, 2019, a derivative lawsuit was also filed in California Superior Court for Santa Clara County, purportedly on our behalf, naming as defendants the members of our Board of Directors along with certain of our executive officers.

The allegations in the complaint are similar to those in the derivative suits described above.

The matter is currently stayed.

Defendants have not yet responded to the complaint.

In the first quarter of 2024, the parties to these actions entered into a settlement agreement whereby, subject to court approval, plaintiffs will dismiss the lawsuits and release their claims.

In the settlement agreement, Align and the defendants deny any wrongdoing and are not making any monetary payments, other than a potential award of $ 575,000 in attorney’s fees to plaintiffs’ counsel, covered by insurance.

On August 2, 2024, the U.S.

District Court for the Northern District of California granted preliminary approval of the settlement.

Antitrust Class Actions

5 unchanged sentences

On February 21, 2024, the court granted Align’s motion for summary judgment on all claims brought by the plaintiffs.

The court entered judgment 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.

Plaintiff-Appellants' opening brief was filed July 15, 2024.

Align’s response brief was submitted October 21, 2024 and Plaintiff-Appellants' reply brief is due January 6, 2025.

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.

5 unchanged sentences

Plaintiffs have appealed the district court’s summary judgment ruling to the United States Court of Appeals for the Ninth Circuit.

Plaintiff-Appellants' opening brief was filed July 15, 2024.

Align’s response brief was submitted October 21, 2024 and Plaintiff-Appellants' reply brief is due January 6, 2025.

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.

In June 2024, Align and the Section 1 plaintiffs reached a settlement in principle that would resolve all remaining claims in the Section 1 lawsuit.

The settlement terms included a $ 27.5 million cash payment and an offer of a $ 300 coupon for class members who elected to purchase Invisalign treatment.

We agreed to settle the lawsuit to avoid the distraction and uncertainty of litigation.

On September 18, 2024, the U.S.

District Court for the Northern District of California denied plaintiffs’ motion for preliminary approval of the settlement without prejudice, allowing plaintiffs to file a renewed motion within 35 days.

Plaintiffs and Align filed a renewed motion for preliminary approval of the settlement on October 28, 2024.

In June 2024, Align and the Section 1 plaintiffs reached a settlement in principle 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 April 24, 2025 Plaintiffs filed a motion requesting the court approve the revised settlement.

hearing on the motion is scheduled for May 22, 2025.

We are unable to predict the timeline or outcome of the motion to approve the settlement.

We continue to believe that plaintiffs’ Section 1 claims are without merit and remain ready to vigorously defend ourselves against those claims.

During the nine months ended September 30, 2024 we accrued a loss of $ 31.1 million for legal settlements for multiple legal matters , but primarily related to the settlement of the Section 1 claims described above.

For the quarter ended March 31, 2025, Align accrued a total loss of $ 31.75 million, $ 27.5 million as of December 31, 2024 and an additional loss accrual of $ 4.25 million in the first quarter of 2025, for the settlement of the Section 1 claims described above.

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.

District Court for the Western District of Texas against ClearCorrect Operating, LLC, ClearCorrect Holdings., Inc.

and Institut Straumann AG (“Defendants”).

The complaint asserts claims of false advertising, unfair competition, civil conspiracy and infringement of Align patents related to aligner material, treatment planning, and intraoral scanner technologies.

Among other things, the complaint seeks relief enjoining the defendants’ infringement of multiple Align multilayer material patents through defendants’ manufacture, sale and offer for sale of aligners made with Zendura FLX/ClearQuartz materials.

On June 20, 2024, Defendants filed motions to dismiss the Complaint, which are pending.

On July 9, 2024, ClearCorrect Operating, LLC, ClearCorrect Holdings, Inc.

and Straumann USA LLC filed counterclaims against Align for alleged antitrust violations, false advertising, unfair competition, and breach of contract.

Among other things, the counterclaims seek relief enjoining Align’s accused business practices, invalidating Align’s asserted patents, and money damages.

Among other things, the complaint seeks relief enjoining Defendants’ infringement of multiple Align multilayer material patents through Defendants’ manufacture, sale and offer for sale of aligners made with Zendura FLX/ClearQuartz materials.

Defendants filed motions to dismiss the complaint, which are pending.

Defendants are also seeking to invalidate all of Align’s asserted patents at the district court and United States Patent and Trial Appeal Board.

On July 9, 2024, Defendants filed counterclaims against Align for alleged antitrust violations, false advertising, unfair competition and breach of contract.

Among other things, the counterclaims seek to stop Align’s accused business practices and money damages.

On September 13, 2024, we filed a motion to dismiss defendants’ counterclaims.

Align believes these claims are without merit and intends to vigorously defend itself.

Align is currently unable to predict the outcome of this lawsuit and cannot determine the likelihood of loss nor estimate a range of possible loss.

On February 7, 2025, the magistrate judge recommended denial of the motion to dismiss.

On February 21, 2025, we filed objections to the recommendation, which are pending before the district court judge.

A trial is scheduled for February 16, 2026.

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 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.

3 unchanged sentences

Commitments and Contingencies

Beginning in the third quarter of 2023 and continuing through the first quarter of 2024, the Company has 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 are required to pay these assessments prior to contesting or litigating in statutory appeal.

Beginning in the third quarter of 2023 and continuing through the first quarter of 2024, the Company 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.

The Company has historically asserted and continues to assert that doctor prescribed clear aligners sold by dentists for the orthodontic treatment of patient malocclusions are exempt from VAT, that the Company has reasonably relied upon statements and guidance by HMRC and that the Company’s 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, approximately $ 100 million, for the period of October 2019 through May 2023 and withdraw any potential assessments for the period from June 2023 through mid-October 2023.

Between October 21, 2024 and October 29, 2024, HMRC refunded to the Company all assessed amounts in full, approximately $ 100 million.

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 all assessed amounts, approximately $ 100 million.

The Company has remaining exposure in the amount of approximately $ 6.0 million for periods up to December 2023.

A statutory appeal (before the First-tier Tribunal - “Tax Tribunal”) is listed for January 27th through January 30th, 2025, at which time we anticipate the Tax Tribunal will determine whether clear aligners are exempt from VAT as a matter of law and whether the Company has any liability as a matter of principle.

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 Align’s favor indicating that clear aligners are “dental prostheses for the

purposes of VAT”, which is a key condition for the VAT exemption.

HMRC has until June 19, 2025 to appeal the Tax Tribunal decision.

HMRC may also attempt to challenge the applicability of VAT on a different basis.

It is not possible at this stage to accurately evaluate the likelihood of an unfavorable outcome from the Tax Tribunal statutory appeal.

Accordingly, the Company has determined that a potential loss related to VAT accounted for in the periods up to December 2023 is not probable.

The Company has determined that a potential loss related to VAT accounted for in the periods up to December 2023 is not probable.

Indemnification Provisions

6 unchanged sentences

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, 2024, we did not have any material indemnification claims that were probable or reasonably possible.

As of March 31, 2025, we did not have any material indemnification claims that were probable or reasonably possible.

Stockholders’ Equity

As of September 30, 2024, the Align Technology, Inc.

As of March 31, 2025, the Align Technology, Inc.

2005 Incentive Plan, as amended, has a total reserve of 32,168,895 shares, of which 1,877,934 shares are available for issuance.

Summary of Stock-Based Compensation Expense

The stock-based compensation related to our stock-based awards and employee stock purchase plan for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands):

The stock-based compensation related to our stock-based awards and employee stock purchase plan for the three months ended March 31, 2025 and 2024 is as follows (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Cost of net revenues $ 1,538 $ 2,064

5 unchanged sentences

RSUs granted generally vest over a period of four years .

A summary for the nine months ended September 30, 2024 is as follows:

A summary for the three months ended March 31, 2025 is as follows:

Number of Shares

6 unchanged sentences

Unvested as of December 31, 2024

1,019 $ 331.10

Vested and released ( 286 ) 362.30

Forfeited ( 32 ) 318.19

Unvested as of September 30, 2024

Unvested as of March 31, 2025

1,351 $ 260.72 2.0 $ 214,594

As of September 30, 2024, we expect to recognize $ 254.4 million of total unamortized compensation costs, net of estimated forfeitures, related to RSUs over a weighted average period of 2.7 years.

As of March 31, 2025, we expect to recognize $ 293.0 million of total unamortized compensation costs, net of estimated forfeitures, related to RSUs over a weighted average period of 3.1 years.

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

3 unchanged sentences

MSUs vest over a period of three years and the maximum number of shares eligible to vest in the future is 250 % of the MSUs initially granted.

The following table summarizes the MSU performance activity for the nine months ended September 30, 2024:

The following table summarizes the MSU performance activity for the three months ended March 31, 2025:

Number of Shares

10 unchanged sentences

Forfeited ( 10 ) 915.22

Unvested as of September 30, 2024

Unvested as of March 31, 2025

284 $ 506.66 2.1 $ 45,057

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

As of September 30, 2024, we expect to recognize $ 67.2 million of total unamortized compensation costs, net of estimated forfeitures, related to MSUs over a weighted average period of 1.6 years.

As of March 31, 2025, we expect to recognize $ 78.6 million of total unamortized compensation costs, net of estimated forfeitures, related to MSUs over a weighted average period of 2.1 years.

Restricted Stock Units with Performance Conditions (“PSUs”)

1 unchanged sentence

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, 2024:

The following table summarizes the PSU performance activity for the three months ended March 31, 2025:

Number of Shares

5 unchanged sentences

Unvested as of December 31, 2024

Granted 6 206.36

Vested and released ( 5 ) 201.63

Forfeited — —

Unvested as of September 30, 2024

Unvested as of March 31, 2025

6 $ 206.36 1.8 $ 1,001

As of September 30, 2024, we expect to recognize $ 1.2 million of total unamortized compensation costs, net of estimated forfeitures, related to PSUs over a weighted average period of 1.4 years.

As of March 31, 2025, we expect to recognize $ 0.9 million of total unamortized compensation costs, net of estimated forfeitures, related to PSUs over a weighted average period of 1.8 years.

Employee Stock Purchase Plan

As of September 30, 2024, we have 1,875,920 shares available for future issuance under the Align Technology, Inc.

As of March 31, 2025, we have 1,800,725 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,

Three Months Ended

Expected term (in years) 1.1 0.9

3 unchanged sentences

Weighted average fair value at grant date $ 70.62 $ 100.10

As of September 30, 2024, we expect to recognize $ 17.1 million of total unamortized compensation costs related to future employee stock purchases over a weighted average period of 0.9 years.

As of March 31, 2025, we expect to recognize $ 13.4 million of total unamortized compensation costs related to future employee stock purchases over a weighted average period of 0.9 years.

Common Stock Repurchase Programs

In May 2021, our Board of Directors authorized a plan to repurchase up to $ 1.0 billion of our common stock (“May 2021 Repurchase Program”), which was completed in March 2023.

In January 2023, our Board of Directors authorized a new plan to repurchase up to $ 1.0 billion of our common stock (“January 2023 Repurchase Program”).

In January 2023, our Board of Directors authorized a plan to repurchase up to $ 1.0 billion of our common stock (“January 2023 Repurchase Program”).

The January 2023 Repurchase Program does not have an expiration date.

Accelerated Share Repurchase Agreements (“ASRs”)

The following table summarizes the total repurchases of our common stock pursuant to an ASR entered into or completed during the three and nine months ended September 30, 2024 and 2023:

The following tables summarize the total repurchases of our common stock pursuant to Accelerated Share Repurchase (“ASR”) agreements and open market common stock repurchases under the January 2023 Repurchase Program:

Accelerated Share Repurchase Agreements

Date Repurchase

3 unchanged sentences

Received Average Price per Share

Q4 2022 May 2021 $ 200.0 Q1 2023 984,714 $ 203.10

Q1 2023 May 2021 $ 250.0 Q1 2023 805,908 $ 310.21

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

Open Market Common Stock Repurchases

On June 3, 2024, we initiated a plan to repurchase $ 150.0 million of our common stock through open market repurchases under the January 2023 Repurchase Program.

This plan was completed on June 26, 2024.

In total, we repurchased approximately 0.6 million shares of our common stock at an average price of $ 250.73 per share, including commissions and fees.

During the twelve months ended December 31, 2023, we repurchased $ 100.0 million of our common stock through open market repurchases under the January 2023 Repurchase Program, none of which occurred during the nine months ended September 30, 2023.

As of September 30, 2024, $ 500.0 million remains available for repurchases under the January 2023 Repurchase Program.

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 $ 129.0 N/A 1

753,993 $ 171.03

1 In May 2025, we completed the open market repurchase program initiated in Q1 2025.

In total we repurchased approximately 1.3 million shares of our common stock at an average price of $ 168 per share for an aggregate purchase price of approximately $ 225.0 million.

As of March 31, 2025 we had $ 96.0 million available for repurchase under the January 2023 Repurchase Program, which was used to repurchase shares through May 2, 2025.

These subsequent repurchases completed the January 2023 Repurchase Program.

In April 2025, our Board of Directors authorized a plan to repurchase up to $ 1.0 billion of our common stock (“April 2025 Repurchase Program”), none of which has been utilized.

Accounting for Income Taxes

Our provision for income taxes was $ 50.0 million and $ 40.7 million for the three months ended September 30, 2024 and 2023, respectively, representing effective tax rates of 30.1 % and 25.1 %, respectively.

Our provision for incomes taxes was $ 150.6 million and $ 147.3 million for the nine months ended September 30, 2024 and 2023, respectively, representing effective tax rates of 32.2 % and 31.4 %.

Our effective tax rate differs from the statutory federal income tax rate of 21% for the three and nine months ended September 30, 2024 and 2023 primarily due to the recognition of additional tax expense resulting from U.S.

Our provision for income taxes was $ 47.2 million and $ 53.4 million for the three months ended March 31, 2025 and 2024, respectively, representing effective tax rates of 33.6 % and 33.7 %, respectively.

Our effective tax rate differs from the statutory federal income tax rate of 21% for the three months ended March 31, 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 regards 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 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.

1 unchanged sentence

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 $ 156.2 million and $ 149.2 million as of September 30, 2024 and December 31, 2023, 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, 2024.

Our total gross unrecognized tax benefits, excluding interest and penalties, were $ 147.4 million and $ 145.5 million as of March 31, 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 months ended March 31, 2025.

Net Income per Share

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net income $ 93,230 $ 105,028

5 unchanged sentences

Anti-dilutive potential common shares 1

1,173 245 689 263

1 Represents 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.

For the three and nine months ended September 30, 2023 all anti-dilutive shares were RSUs.

1 Represents approximately 964 thousand RSU weighted average outstanding common stock equivalent shares for the three months ended March 31, 2025 and approximately 569 thousand RSU and 2 thousand ESPP weighted average outstanding common stock equivalent shares for the three months ended March 31, 2024 that are excluded from the calculation of diluted net income per share as the effect would have been anti-dilutive.

Supplemental Cash Flow Information

The supplemental cash flow information consists of the following (in thousands):

Nine Months Ended

September 30,

Three Months Ended

Non-cash investing and financing activities:

9 unchanged sentences

The management approach designates the internal reporting used by our Chief Operating Decision Maker (“CODM”), our Chief Executive Officer, for decision making and performance assessment as the basis for determining our reportable segments.

The performance measures of our reportable segments include net revenues, gross profit and income from operations.

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 IT, facilities, human resources, accounting and finance, legal and regulatory, other separately managed general and administrative costs outside the reportable segments and restructuring costs.

We group our operations into two reportable segments;

Clear Aligner segment and Imaging Systems and CAD/CAM Services (“Systems and Services”) segment.

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

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 segments performance, by reviewing each measure against internal forecasts and historical performance.

Our CODM may also benchmark each segments 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,

2024 2023 2024 2023

Clear Aligner $ 796,843 $ 817,251

1 unchanged sentence

Total net revenues $ 979,262 $ 997,431

Cost of net revenues 1

Clear Aligner

$ 234,754 $ 238,105

Systems and Services

64,400 61,510

Total cost of goods sold

$ 299,154 $ 299,615

Clear Aligner $ 562,089 $ 579,146

Systems and Services 118,019 118,670

Total gross profit $ 680,108 $ 697,816

Income from operations

Other Segment expenses

Clear Aligner

$ 301,865 $ 292,908

Systems and Services

59,556 68,977

Unallocated corporate expenses

187,587 181,796

Total operating expenses

$ 549,008 $ 543,681

Segment income from operations

Clear Aligner $ 260,224 $ 286,238

Systems and Services 58,463 49,693

Total segment income from operations

$ 318,687 $ 335,931

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.

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

Total segment income from operations $ 318,687 $ 335,931

Unallocated corporate expenses ( 187,587 ) ( 181,796 )

Total income from operations 131,100 154,135

Interest income 5,316 4,392

Other income (expense), net 4,026 ( 141 )

Net income before provision for income taxes $ 140,442 $ 158,386

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

Three Months Ended

Stock-based compensation

7 unchanged sentences

Systems and Services

8,099 7,827 23,007 23,716

Unallocated corporate expenses

1 unchanged sentence

Total depreciation and amortization $ 39,148 $ 32,946

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Total segment income from operations $ 345,063 $ 341,294 $ 1,051,410 $ 1,012,533

Unallocated corporate expenses ( 182,765 ) ( 174,948 ) ( 587,931 ) ( 540,740 )

Total income from operations 162,298 166,346 463,479 471,793

Interest income 4,003 5,522 11,696 12,280

Other income (expense), net ( 371 ) ( 9,757 ) ( 6,993 ) ( 15,749 )

Net income before provision for income taxes $ 165,930 $ 162,111 $ 468,182 $ 468,324

Our CODM does not regularly review total assets at the reportable segment level;

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net revenues 1 :

4 unchanged sentences

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

Tangible 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,

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):

2025 December 31,

6 unchanged sentences

Restructuring and Other Charges

During the fourth quarter of 2023, we initiated a restructuring plan to increase efficiencies across the organization and 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 September 30, 2024 , substantially all restructuring activities initiated in the fourth quarter of 2023 were complete.

Subsequent Event

Subsequent to our quarter end, on October 23, 2024, we announced a restructuring plan to reduce costs by adjusting headcount for the existing business environment.

The plan includes a reduction of our total headcount by approximately 700 employees.

The costs associated with this action primarily include severance and other one-time post-employment benefits and are currently estimated to be between approximately $ 25.0 million and $ 30.0 million.

We expect these activities to be substantially completed by the end of fiscal year 2024.

Additionally, on October 25, 2024, we announced a plan to repurchase $ 275.0 million of our common stock through open market repurchases beginning in the fourth quarter of 2024 and continuing through the first quarter of 2025.

The 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.

Upon completion of these open market repurchases the Company will have $ 225.0 million remaining available for repurchases under the January 2023 Repurchase Program.

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.

During the first quarter of 2024 , we reduced our December 31, 2023 restructuring liability by approximately $ 3.9 million, primarily due to cash payments.

2024 Restructuring

During the fourth quarter of 2024, we initiated a restructuring plan to increase efficiencies across the organization which is expected to be completed in the second half of 2025.

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.

During the first quarter of 2025, we reduced our December 31, 2024 restructuring liability by approximately $ 11.0 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 activities were primarily related to employee severance and other one-time post-employment benefits.

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

Three Months Ended

Balance at beginning of period 1

$ 13,001 $ 5,299

Restructuring charges

2,056 ( 152 )

Cash payments and adjustments

( 11,018 ) ( 3,752 )

Balance at end of period 1

$ 4,039 $ 1,395

1 Included in “Accrued liabilities” within our Condensed Consolidated Balance Sheets.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements