ALIGN TECHNOLOGY INC 10-Q

Item 1. Financial Statements. ALIGN TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended March 31, 2025 2024 Net revenues $ 979,262 $ 997,431 Cost of net revenues 299,154 299,615 Gross profit 680,108 697,816 Operating expenses: Selling, general and administrative 447,629 451,822 Research and development 97,201 91,859 Legal settlement loss 4,178 — Total operating expenses 549,008 543,681 Income from operations 131,100 154,135 Interest income and other income (expense), net: Interest income 5,316 4,392 Other income (expense), net 4,026 ( 141 ) Total interest income and other income (expense), net 9,342 4,251 Net income before provision for income taxes 140,442 158,386 Provision for income taxes 47,212 53,358 Net income $ 93,230 $ 105,028 Net income per share: Basic $ 1.27 $ 1.40 Diluted $ 1.27 $ 1.39 Shares used in computing net income per share: Basic 73,562 75,175 Diluted 73,615 75,322 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents ALIGN TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) (unaudited) Three Months Ended March 31, 2025 2024 Net income $ 93,230 $ 105,028 Other comprehensive income (loss): Change in foreign currency translation adjustment, net of tax 12,199 ( 2,932 ) Change in unrealized gains (losses) on investments, net of tax — 203 Other comprehensive income (loss) 12,199 ( 2,729 ) Comprehensive income $ 105,429 $ 102,299 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents ALIGN TECHNOLOGY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) (unaudited) March 31, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 873,012 $ 1,043,887 Accounts receivable, net of allowance for doubtful accounts of $ 22,469 and $ 19,131 , respectively 1,061,976 995,685 Inventories 246,567 254,287 Prepaid expenses and other current assets 220,474 198,582 Total current assets 2,402,029 2,492,441 Property, plant and equipment, net 1,264,847 1,271,134 Operating lease right-of-use assets, net 113,179 113,376 Goodwill 457,611 442,630 Intangible assets, net 102,750 103,488 Deferred tax assets 1,523,479 1,557,372 Other assets 238,925 234,159 Total assets $ 6,102,820 $ 6,214,600 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 125,382 $ 108,693 Accrued liabilities 546,173 598,188 Deferred revenues 1,319,393 1,331,146 Total current liabilities 1,990,948 2,038,027 Income tax payable 99,781 96,466 Operating lease liabilities 86,487 88,214 Other long-term liabilities 131,361 139,908 Total liabilities 2,308,577 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; 73,057 and 73,849 issued and outstanding, respectively) 7 7 Additional paid-in capital 1,386,807 1,362,234 Accumulated other comprehensive income (loss), net 18,177 5,978 Retained earnings 2,389,252 2,483,766 Total stockholders’ equity 3,794,243 3,851,985 Total liabilities and stockholders’ equity $ 6,102,820 $ 6,214,600 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents 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 March 31, 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 — — — — 93,230 93,230 Net change in foreign currency translation adjustment — — — 12,199 — 12,199 Issuance of common stock relating to employee equity compensation plans 393 — 13,909 — — 13,909 Tax withholdings related to net share settlements of equity awards ( 99 ) — ( 19,577 ) — — ( 19,577 ) Common stock repurchased and retired ( 1,086 ) — ( 14,756 ) — ( 187,744 ) ( 202,500 ) Stock-based compensation — — 44,997 — — 44,997 Balance as of March 31, 2025 73,057 $ 7 $ 1,386,807 $ 18,177 $ 2,389,252 $ 3,794,243 Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss), Net Retained Earnings Total Three Months Ended March 31, 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 — — — — 105,028 105,028 Net change in unrealized gains (losses) from investments — — — 203 — 203 Net change in foreign currency translation adjustment — — — ( 2,932 ) — ( 2,932 ) Issuance of common stock relating to employee equity compensation plans 328 — 14,339 — — 14,339 Tax withholdings related to net share settlements of equity awards ( 86 ) — ( 26,055 ) — — ( 26,055 ) Common stock repurchased and retired ( 36 ) — — — — — Equity forward contract related to accelerated stock repurchase — — 49,527 — ( 49,527 ) — Stock-based compensation — — 38,788 — — 38,788 Balance as of March 31, 2024 75,281 $ 7 $ 1,238,739 $ 18,439 $ 2,502,675 $ 3,759,860 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 Table of Contents ALIGN TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited ) Three Months Ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 93,230 $ 105,028 Adjustments to reconcile net income to net cash provided by operating activities: Deferred taxes 33,683 18,047 Depreciation and amortization 39,148 32,946 Stock-based compensation 44,997 38,788 Non-cash operating lease cost 9,457 9,612 Other non-cash operating activities 2,950 ( 2,359 ) Changes in assets and liabilities, net of effects of acquisitions: Accounts receivable ( 65,302 ) ( 69,589 ) Inventories 7,396 15,573 Prepaid expenses and other assets ( 21,970 ) ( 79,160 ) Accounts payable 8,575 4,100 Accrued and other long-term liabilities ( 67,877 ) ( 34,473 ) Long-term income tax payable 3,316 4,570 Deferred revenues ( 34,927 ) ( 14,419 ) Net cash provided by operating activities 52,676 28,664 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions, net of cash acquired — ( 77,075 ) Purchase of property, plant and equipment ( 25,289 ) ( 9,369 ) Proceeds from maturities of marketable securities — 6,035 Proceeds from sales of marketable securities — 831 Other investing activities — ( 6 ) Net cash used in investing activities ( 25,289 ) ( 79,584 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 13,909 14,339 Common stock repurchases, net of excise tax ( 201,088 ) — Payroll taxes paid upon the vesting of equity awards ( 19,577 ) ( 26,055 ) Net cash used in financing activities ( 206,756 ) ( 11,716 ) Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 8,480 ( 9,004 ) 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 Cash, cash equivalents and restricted cash at end of the period $ 874,074 $ 866,879 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 Table of Contents 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 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 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. 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 March 31, 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 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. 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 8 Table of Contents 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. 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. 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 March 31, 2025 and Consolidated Balance Sheets as of December 31, 2024 (in thousands): Reported as: March 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable securities, short-term Marketable securities, long-term Cash $ 757,327 $ — $ — $ 757,327 $ 757,327 $ — $ — 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 $ — $ — Reported as: December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable securities, short-term Marketable securities, long-term 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 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 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. 9 Table of Contents 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 March 31, 2025 Level 1 Level 2 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 Level 1 Level 2 Cash equivalents: Money market funds $ 291,464 $ 291,464 $ — $ 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 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 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, 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 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. 10 Table of Contents 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 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 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 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 Japanese Yen ¥ 3,300,000 22,105 Israeli Shekel ILS 80,600 21,646 Brazilian Real R$ 101,800 17,605 Swiss Franc CHF 9,300 10,567 Australian Dollar A$ 5,400 3,369 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 $ 461,729 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 $ 458,347 11 Table of Contents Note 3. Balance Sheet Components Inventories consist of the following (in thousands): March 31, 2025 December 31, 2024 Raw materials $ 118,333 $ 124,377 Work in process 69,432 73,660 Finished goods 58,802 56,250 Total inventories $ 246,567 $ 254,287 Prepaid expenses and other current assets consist of the following (in thousands): March 31, 2025 December 31, 2024 Value added tax receivables $ 33,168 $ 34,028 Prepaid expenses 104,081 82,978 Other current assets 83,225 81,576 Total prepaid expenses and other current assets $ 220,474 $ 198,582 Accrued liabilities consist of the following (in thousands): March 31, 2025 December 31, 2024 Accrued payroll and benefits $ 192,101 $ 248,003 Accrued expenses 73,120 66,391 Accrued income taxes 47,838 48,808 Accrued sales and marketing expenses 43,086 37,617 Current operating lease liabilities 32,048 31,063 Accrued property, plant and equipment 10,023 13,462 Other accrued liabilities 147,957 152,844 Total accrued liabilities $ 546,173 $ 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): Three Months Ended March 31, 2025 2024 Balance at beginning of period $ 31,211 $ 22,426 Charged to cost of net revenues 4,719 5,449 Actual warranty expenditures ( 3,332 ) ( 3,312 ) Balance at end of period $ 32,598 $ 24,563 Deferred revenues consist of the following (in thousands): March 31, 2025 December 31, 2024 Deferred revenues - current $ 1,319,393 $ 1,331,146 Deferred revenues - long-term 1 $ 93,317 $ 102,164 1 Included in Other long-term liabilities within our Condensed Consolidated Balance Sheets. 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. 12 Table of Contents 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 . 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. 13 Table of Contents Our 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 three months ended March 31, 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 3,534 11,447 14,981 Balance as of March 31, 2025 $ 156,179 $ 301,432 $ 457,611 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 March 31, 2025 Accumulated Amortization Accumulated Impairment Loss Net Carrying Value as of March 31, 2025 Existing technology 11 $ 146,651 $ ( 56,004 ) $ — $ 90,647 Customer relationships 10 21,500 ( 10,750 ) — 10,750 Trademarks and tradenames 1 7 9,800 ( 7,000 ) — 2,800 Patents 12 480 ( 290 ) — 190 $ 178,431 $ ( 74,044 ) $ — 104,387 Foreign currency translation adjustments ( 1,637 ) 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 (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 14 Table of Contents 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 Remainder of 2025 $ 13,827 2026 17,923 2027 15,607 2028 14,505 2029 14,505 2030 6,328 Thereafter 21,692 Total $ 104,387 Amortization expense for the three months ended March 31, 2025 and 2024 was $ 4.6 million and $ 5.0 million, respectively. Note 6 . 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. 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. Note 7. Legal Proceedings Antitrust Class Actions On June 5, 2020, a dental practice named 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 Align 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 Align’s 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 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 Align’s 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. 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. A 15 Table of Contents 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. 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 (“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 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. 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. 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, 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 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”) 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 16 Table of Contents 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. 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 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 March 31, 2025, we did not have any material indemnification claims that were probable or reasonably possible. Note 9. Stockholders’ Equity 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 months ended March 31, 2025 and 2024 is as follows (in thousands): Three Months Ended March 31, 2025 2024 Cost of net revenues $ 1,538 $ 2,064 Selling, general and administrative 30,866 28,494 Research and development 12,593 8,230 Total stock-based compensation $ 44,997 $ 38,788 Restricted Stock Units (“RSUs”) The fair value of RSUs is based on our closing stock price on the date of grant. RSUs granted generally vest over a period of four years . A summary for the three months ended March 31, 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 650 197.93 Vested and released ( 286 ) 362.30 Forfeited ( 32 ) 318.19 Unvested as of March 31, 2025 1,351 $ 260.72 2.0 $ 214,594 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. 17 Table of Contents Market-Performance Based Restricted Stock Units (“MSUs”) 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 Align’s 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 in the future is 250 % of the MSUs initially granted. The following table summarizes the MSU performance activity for the three months ended March 31, 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 ( 26 ) 915.22 Forfeited ( 10 ) 915.22 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 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”) 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 three months ended March 31, 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 March 31, 2025 6 $ 206.36 1.8 $ 1,001 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 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”). 18 Table of Contents 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: Three Months Ended March 31, 2025 2024 Expected term (in years) 1.1 0.9 Expected volatility 40.9 % 56.0 % Risk-free interest rate 4.2 % 4.8 % Expected dividends — — Weighted average fair value at grant date $ 70.62 $ 100.10 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. 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 (“January 2023 Repurchase Program”). The January 2023 Repurchase Program does not have an expiration date. 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 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 Common Stock 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 $ 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. Note 11. Accounting for Income Taxes 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. 19 Table of Contents 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 $ 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. 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 March 31, 2025 2024 Numerator: Net income $ 93,230 $ 105,028 Denominator: Weighted average common shares outstanding, basic 73,562 75,175 Dilutive effect of potential common stock 53 147 Total shares, diluted 73,615 75,322 Net income per share, basic $ 1.27 $ 1.40 Net income per share, diluted $ 1.27 $ 1.39 Anti-dilutive potential common shares 1 964 571 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. Note 13 . Supplemental Cash Flow Information The supplemental cash flow information consists of the following (in thousands): Three Months Ended March 31, 2025 2024 Non-cash investing and financing activities: Acquisition of property, plant and equipment in accounts payable and accrued liabilities $ 13,851 $ 21,284 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 $ 9,592 $ 9,998 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 5,024 $ 10,568 20 Table of Contents 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 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 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 March 31, 2025 2024 Net revenues Clear Aligner $ 796,843 $ 817,251 Systems and Services 182,419 180,180 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 Gross profit Clear Aligner $ 562,089 $ 579,146 Systems and Services 118,019 118,670 Total gross profit $ 680,108 $ 697,816 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. 21 Table of Contents 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 March 31, 2025 2024 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 March 31, 2025 2024 Stock-based compensation Clear Aligner $ 5,818 $ 3,764 Systems and Services 403 359 Unallocated corporate expenses 38,776 34,665 Total stock-based compensation $ 44,997 $ 38,788 Depreciation and amortization Clear Aligner $ 18,904 $ 14,433 Systems and Services 8,469 6,838 Unallocated corporate expenses 11,775 11,675 Total depreciation and amortization $ 39,148 $ 32,946 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 March 31, 2025 2024 Net revenues 1 : U.S. $ 423,318 $ 432,101 Switzerland 224,132 251,758 Other International 331,812 313,572 Total net revenues $ 979,262 $ 997,431 1 Net revenues are attributed to countries based on the location of where revenues are recognized by our legal entities. 22 Table of Contents 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): March 31, 2025 December 31, 2024 Long-lived assets 1 : Switzerland $ 568,693 $ 571,628 U.S. 203,140 207,689 Other International 606,193 605,193 Total long-lived assets $ 1,378,026 $ 1,384,510 1 Long-lived assets are attributed to countries based on the location of our entity that owns or leases the assets. 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. 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 March 31, 2025 2024 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. 23 Table of Contents