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 June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net revenues $ 1,012,449 $ 1,028,490 $ 1,991,711 $ 2,025,921 Cost of net revenues 304,332 305,862 603,486 605,477 Gross profit 708,117 722,628 1,388,225 1,420,444 Operating expenses: Selling, general and administrative 448,686 452,262 896,315 904,084 Research and development 96,398 92,193 193,599 184,052 Legal settlement loss — 31,127 4,178 31,127 Total operating expenses 545,084 575,582 1,094,092 1,119,263 Income from operations 163,033 147,046 294,133 301,181 Interest income and other income (expense), net: Interest income 2,859 3,301 8,175 7,693 Other income (expense), net 7,624 ( 6,481 ) 11,650 ( 6,622 ) Total interest income and other income (expense), net 10,483 ( 3,180 ) 19,825 1,071 Net income before provision for income taxes 173,516 143,866 313,958 302,252 Provision for income taxes 48,908 47,302 96,120 100,660 Net income $ 124,608 $ 96,564 $ 217,838 $ 201,592 Net income per share: Basic $ 1.72 $ 1.28 $ 2.98 $ 2.68 Diluted $ 1.72 $ 1.28 $ 2.98 $ 2.68 Shares used in computing net income per share: Basic 72,565 75,184 73,061 75,180 Diluted 72,593 75,223 73,098 75,315 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 June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income $ 124,608 $ 96,564 $ 217,838 $ 201,592 Other comprehensive income (loss): Change in foreign currency translation adjustment, net of tax 43,010 6,359 55,209 3,427 Change in unrealized gains (losses) on investments, net of tax — 243 — 446 Other comprehensive income (loss) 43,010 6,602 55,209 3,873 Comprehensive income $ 167,618 $ 103,166 $ 273,047 $ 205,465 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) June 30, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 901,157 $ 1,043,887 Accounts receivable, net of allowance for doubtful accounts of $ 24,381 and $ 19,131 , respectively 1,116,210 995,685 Inventories 243,750 254,287 Prepaid expenses and other current assets 186,941 198,582 Total current assets 2,448,058 2,492,441 Property, plant and equipment, net 1,260,909 1,271,134 Operating lease right-of-use assets, net 116,674 113,376 Goodwill 491,072 442,630 Intangible assets, net 103,485 103,488 Deferred tax assets 1,548,229 1,557,372 Other assets 250,667 234,159 Total assets $ 6,219,094 $ 6,214,600 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 114,434 $ 108,693 Accrued liabilities 563,059 598,188 Deferred revenues 1,317,990 1,331,146 Total current liabilities 1,995,483 2,038,027 Income tax payable 103,558 96,466 Operating lease liabilities 90,474 88,214 Other long-term liabilities 116,800 139,908 Total liabilities 2,306,315 2,362,615 Commitments and contingencies (Note 7 and Note 8) Stockholders’ equity: Preferred stock, $ 0.0001 par value ( 5,000 shares authorized; none issued) — — Common stock, $ 0.0001 par value ( 200,000 shares authorized; 72,486 and 73,849 issued and outstanding, respectively) 7 7 Additional paid-in capital 1,426,541 1,362,234 Accumulated other comprehensive income (loss), net 61,187 5,978 Retained earnings 2,425,044 2,483,766 Total stockholders’ equity 3,912,779 3,851,985 Total liabilities and stockholders’ equity $ 6,219,094 $ 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 June 30, 2025 Shares Amount Balance as of March 31, 2025 73,057 $ 7 $ 1,386,807 $ 18,177 $ 2,389,252 $ 3,794,243 Net income — — — — 124,608 124,608 Net change in foreign currency translation adjustment — — — 43,010 — 43,010 Issuance of common stock relating to employee equity compensation plans 15 — — — — — Tax withholdings related to net share settlements of equity awards ( 1 ) — ( 253 ) — — ( 253 ) Common stock repurchased and retired ( 585 ) — ( 8,221 ) — ( 88,816 ) ( 97,037 ) Stock-based compensation — — 48,208 — — 48,208 Balance as of June 30, 2025 72,486 $ 7 $ 1,426,541 $ 61,187 $ 2,425,044 $ 3,912,779 Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss), Net Retained Earnings Total Six Months Ended June 30, 2025 Shares Amount Balance as of December 31, 2024 73,849 $ 7 $ 1,362,234 $ 5,978 $ 2,483,766 $ 3,851,985 Net income — — — — 217,838 217,838 Net change in foreign currency translation adjustment — — — 55,209 — 55,209 Issuance of common stock relating to employee equity compensation plans 408 — 13,909 — — 13,909 Tax withholdings related to net share settlements of equity awards ( 100 ) — ( 19,830 ) — — ( 19,830 ) Common stock repurchased and retired ( 1,671 ) — ( 22,977 ) — ( 276,560 ) ( 299,537 ) Stock-based compensation — — 93,205 — — 93,205 Balance as of June 30, 2025 72,486 $ 7 $ 1,426,541 $ 61,187 $ 2,425,044 $ 3,912,779 6 Table of Contents Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss), Net Retained Earnings Total Three Months Ended June 30, 2024 Shares Amount Balance as of March 31, 2024 75,281 $ 7 $ 1,238,739 $ 18,439 $ 2,502,675 $ 3,759,860 Net income — — — — 96,564 96,564 Net change in unrealized gains (losses) from investments — — — 243 — 243 Net change in foreign currency translation adjustment — — — 6,359 — 6,359 Issuance of common stock relating to employee equity compensation plans 17 — — — — — Tax withholdings related to net share settlements of equity awards ( 4 ) — ( 1,547 ) — — ( 1,547 ) Common stock repurchased and retired ( 598 ) — ( 7,922 ) — ( 142,677 ) ( 150,599 ) Stock-based compensation — — 47,028 — — 47,028 Balance as of June 30, 2024 74,696 $ 7 $ 1,276,298 $ 25,041 $ 2,456,562 $ 3,757,908 Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss), Net Retained Earnings Total Six Months Ended June 30, 2024 Shares Amount Balance as of December 31, 2023 75,075 $ 7 $ 1,162,140 $ 21,168 $ 2,447,174 $ 3,630,489 Net income — — — — 201,592 201,592 Net change in unrealized gains (losses) from investments — — — 446 — 446 Net change in foreign currency translation adjustment — — — 3,427 — 3,427 Issuance of common stock relating to employee equity compensation plans 345 — 14,339 — — 14,339 Tax withholdings related to net share settlements of equity awards ( 90 ) — ( 27,602 ) — — ( 27,602 ) Common stock repurchased and retired ( 634 ) — ( 7,922 ) — ( 142,677 ) ( 150,599 ) Equity forward contract related to accelerated stock repurchase — — 49,527 — ( 49,527 ) — Stock-based compensation — — 85,816 — — 85,816 Balance as of June 30, 2024 74,696 $ 7 $ 1,276,298 $ 25,041 $ 2,456,562 $ 3,757,908 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 Table of Contents ALIGN TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited ) Six Months Ended June 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 217,838 $ 201,592 Adjustments to reconcile net income to net cash provided by operating activities: Deferred taxes ( 759 ) 9,506 Depreciation and amortization 79,724 69,112 Stock-based compensation 93,205 85,816 Non-cash operating lease cost 19,457 19,040 Other non-cash operating activities 7,593 2,377 Changes in assets and liabilities, net of effects of acquisitions: Accounts receivable ( 121,406 ) ( 146,932 ) Inventories 9,044 31,396 Prepaid expenses and other assets ( 22,701 ) ( 80,904 ) Accounts payable ( 7,516 ) ( 6,398 ) Accrued and other long-term liabilities ( 35,503 ) 44,779 Long-term income tax payable 7,092 ( 12,961 ) Deferred revenues ( 64,742 ) ( 27,932 ) Net cash provided by operating activities 181,326 188,491 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions, net of cash acquired — ( 77,075 ) Purchase of property, plant and equipment ( 46,768 ) ( 62,819 ) Proceeds from maturities of marketable securities — 15,560 Proceeds from sales of marketable securities — 7,518 Purchase of equity investments ( 10,000 ) ( 75,390 ) Other investing activities — 129 Net cash used in investing activities ( 56,768 ) ( 192,077 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 13,909 14,339 Common stock repurchases, net of excise tax ( 297,134 ) ( 150,012 ) Payroll taxes paid upon the vesting of equity awards ( 19,830 ) ( 27,602 ) Net cash used in financing activities ( 303,055 ) ( 163,275 ) Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 35,876 ( 9,196 ) Net decrease in cash, cash equivalents, and restricted cash ( 142,621 ) ( 176,057 ) 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 $ 902,342 $ 762,462 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 8 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 and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or any other future period, and we make no representations related thereto. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition and deferred revenues, useful lives of intangible assets and property, plant and equipment, goodwill, income taxes, contingent liabilities, the fair values of financial instruments, stock-based compensation and the valuation of investments in privately held companies among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. 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 June 30, 2025, the Company has not experienced any material credit losses on such deposits. We purchase certain inventory from sole suppliers. Additionally, we rely on a limited number of hardware manufacturers. The inability of any supplier or manufacturer to fulfill our supply requirements could materially and adversely impact our future operating results. Recent Accounting Pronouncements (i) New Accounting Pronouncements Recently Adopted On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 (“ASU 2023-07”), “Improvements to Reportable Segment Disclosures. ” The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and other segment expenses. For public business entities, the provisions of ASU 2023-07 were effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. We adopted this standard in the fiscal year ended December 31, 2024 . See Note 14 “ Segments and Geographical Information.” (ii) Recent Accounting Pronouncements Not Yet Effective On 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 9 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 June 30, 2025 and Consolidated Balance Sheets as of December 31, 2024 (in thousands): Reported as: June 30, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable securities, short-term Marketable securities, long-term Cash $ 823,785 $ — $ — $ 823,785 $ 823,785 $ — $ — Money market funds 60,204 — — 60,204 60,204 — — Certificate of deposits 17,168 — — 17,168 17,168 — — Total $ 901,157 $ — $ — $ 901,157 $ 901,157 $ — $ — 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 June 30, 2025 or December 31, 2024. Fair Value Measurements Fair value is an exit price, representing the amount that would be received from selling an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. We use the U.S. GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value: Level 1 — Inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly. Level 3 — Inputs to the valuation techniques that are unobservable for the assets or liabilities. 10 Table of Contents The following tables summarize our financial assets measured at fair value as of June 30, 2025 and December 31, 2024 (in thousands): Description Balance as of June 30, 2025 Level 1 Cash equivalents: Money market funds $ 60,204 $ 60,204 Certificate of deposits 17,168 17,168 $ 77,372 $ 77,372 Description Balance as of December 31, 2024 Level 1 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 $ 18.3 million and $ 11.3 million during the three months ended June 30, 2025 and 2024, respectively, and $ 24.7 million and $ 25.9 million during the six months ended June 30, 2025 and 2024, respectively. Factoring fees on the sales of receivables were recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations and were not material. Investments in Privately Held Companies Our investments in privately held companies in which we cannot exercise significant influence and do not own a majority equity interest or otherwise control are accounted for as investments in equity securities. We have elected to account for all investments in equity securities in accordance with the measurement alternative. Under the measurement alternative, we record the value of our investments in equity securities at cost, minus impairment, if any. Additionally, we adjust the carrying value of our investments in equity securities for observable transactions for identical or similar investments of the same issuer. On April 24, 2023 and April 22, 2024, we entered into Subscription Agreements (the “Subscription Agreements”) with Heartland Dental Holding Corporation (“Heartland”). Pursuant to the Subscription Agreements we acquired less than a 5 % equity interest in Heartland through the purchase of Class A Common Stock for $ 150 million in total. In the fourth quarter of 2024, we recorded a $ 6 million increase to the carrying value of our investment, which increased the total carrying value of our investment in Heartland to $ 156 million. On December 19, 2024 and June 5, 2025, we entered into Subscription Agreements (the “Smile Doctors Subscription Agreements”) with New SD Holding Company, L.P. (“SD Holding Company”). Pursuant to the Smile Doctors Subscription Agreements we acquired less than a 3 % equity interest in SD Holding Company through the purchase of Class A Common Units for $ 40 million in total. SD Holding Company owns a controlling interest, through intermediary entities, in Smile Doctors, LLC. Based on a review of the relevant facts and circumstances, primarily observable transactions for identical investments, we determined that no adjustments to the carrying values of our investments were necessary for the three or six months ended June 30, 2025. Our investments in privately held companies in which we can exercise significant influence are accounted for as equity method investments. We have elected to account for our equity method investments under the fair value option. The carrying value of our investments in equity securities and equity method investments are reported in our Condensed Consolidated Balance Sheets as Other assets and any price adjustments or impairment, if any, are recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations. 11 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 $ 27.1 million and a net gain of $ 7.5 million, during the three months ended June 30, 2025 and 2024, respectively, and a net loss of $ 38.6 million and a net gain $ 27.2 million, respectively, during the six months ended June 30, 2025 and 2024. Recognized gains and losses from the settlement of foreign currency forward contracts are recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations. As of June 30, 2025 and December 31, 2024, the fair value of outstanding foreign exchange forward contracts was no t material. 12 Table of Contents The following tables present the gross notional value of all our foreign exchange forward contracts outstanding as of June 30, 2025 and December 31, 2024 (in thousands): June 30, 2025 Local Currency Amount Notional Contract Amount (USD) Euro € 176,860 $ 207,674 Canadian Dollar C$ 95,000 69,619 Polish Zloty PLN 188,000 51,876 British Pound £ 34,000 46,557 Chinese Yuan ¥ 251,400 35,183 Israeli Shekel ILS 92,300 27,396 Japanese Yen ¥ 3,700,000 25,707 Brazilian Real R$ 119,600 21,711 Swiss Franc CHF 7,500 9,436 New Taiwan Dollar NT$ 113,000 3,914 New Zealand Dollar NZ$ 5,900 3,579 Australian Dollar A$ 5,250 3,432 Czech Koruna Kč 70,000 3,329 Korean Won ₩ 4,500,000 3,327 Total notional contract amount $ 512,740 December 31, 2024 Local Currency Amount Notional Contract Amount (USD) Euro € 176,080 $ 183,172 Polish Zloty PLN 283,000 68,633 Canadian Dollar C$ 97,000 67,446 British Pound £ 37,600 47,090 Israeli Shekel ILS 90,055 24,740 Chinese Yuan ¥ 164,500 22,417 Brazilian Real R$ 83,100 13,327 Japanese Yen ¥ 2,000,000 12,778 Swiss Franc CHF 5,700 6,314 New Zealand Dollar NZ$ 7,000 3,924 Czech Koruna Kč 72,800 3,004 Australian Dollar A$ 3,800 2,355 New Taiwan Dollar NT$ 58,700 1,786 Korean Won ₩ 2,000,000 1,361 Total notional contract amount $ 458,347 13 Table of Contents Note 3. Balance Sheet Components Inventories consist of the following (in thousands): June 30, 2025 December 31, 2024 Raw materials $ 116,409 $ 124,377 Work in process 69,417 73,660 Finished goods 57,924 56,250 Total inventories $ 243,750 $ 254,287 Prepaid expenses and other current assets consist of the following (in thousands): June 30, 2025 December 31, 2024 Value added tax receivables $ 36,710 $ 34,028 Prepaid expenses 93,157 82,978 Other current assets 57,074 81,576 Total prepaid expenses and other current assets $ 186,941 $ 198,582 Accrued liabilities consist of the following (in thousands): June 30, 2025 December 31, 2024 Accrued payroll and benefits $ 224,346 $ 248,003 Accrued expenses 71,647 66,391 Accrued income taxes 30,191 48,808 Accrued sales and marketing expenses 36,051 37,617 Current operating lease liabilities 32,546 31,063 Accrued property, plant and equipment 8,232 13,462 Other accrued liabilities 160,046 152,844 Total accrued liabilities $ 563,059 $ 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): Six Months Ended June 30, 2025 2024 Balance at beginning of period $ 31,211 $ 22,426 Charged to cost of net revenues 12,688 10,959 Actual warranty expenditures ( 6,251 ) ( 6,523 ) Balance at end of period $ 37,648 $ 26,862 Deferred revenues consist of the following (in thousands): June 30, 2025 December 31, 2024 Deferred revenues - current $ 1,317,990 $ 1,331,146 Deferred revenues - long-term 1 $ 88,454 $ 102,164 1 Included in Other long-term liabilities within our Condensed Consolidated Balance Sheets. During the three months ended June 30, 2025 and 2024, we recognized $ 1,012.4 million and $ 1,028.5 million of net revenues, respectively, of which $ 229.4 million and $ 222.4 million was included in the deferred revenues balance at December 31, 2024 and 2023, respectively. 14 Table of Contents During the six months ended June 30, 2025 and 2024, we recognized $ 1,991.7 million and $ 2,025.9 million of net revenues, respectively, of which $ 475.4 million and $ 459.2 million was included in the deferred revenues balance at December 31, 2024 and 2023, respectively. Our unfulfilled performance obligations, including deferred revenues and backlog, as of June 30, 2025 were $ 1,411.5 million. These performance obligations are expected to be fulfilled over a period of 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 15 Table of Contents 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. Our condensed consolidated financial statements include the operating results of Cubicure from the Cubicure Acquisition Date. Separate post-acquisition operating results and pro forma results of operations for this acquisition have not been presented as the effect is not material to our consolidated financial results. Note 5 . Goodwill and Intangible Assets Goodwill The change in the carrying value of goodwill for the six months ended June 30, 2025, categorized by reportable segment, is as follows (in thousands): Clear Aligner Systems and Services Total Balance as of December 31, 2024 $ 152,645 $ 289,985 $ 442,630 Foreign currency translation adjustments 11,401 37,041 48,442 Balance as of June 30, 2025 $ 164,046 $ 327,026 $ 491,072 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 June 30, 2025 Accumulated Amortization Accumulated Impairment Loss Net Carrying Value as of June 30, 2025 Existing technology 11 $ 146,651 $ ( 59,715 ) $ — $ 86,936 Customer relationships 10 21,500 ( 11,287 ) — 10,213 Trademarks and tradenames 1 7 9,800 ( 7,350 ) — 2,450 Patents 12 480 ( 300 ) — 180 $ 178,431 $ ( 78,652 ) $ — 99,779 Foreign currency translation adjustments 3,706 Total intangible assets, net $ 103,485 1 The Weighted Average Amortization Period decreased from 10 years to 7 years due to an intangible asset with a useful life of 15 years becoming fully amortized during the first quarter of 2025. Weighted Average Amortization Period (in years) Gross Carrying Amount as of December 31, 2024 Accumulated Amortization Accumulated Impairment Loss Net Carrying Value as of December 31, 2024 Existing technology 11 $ 146,651 $ ( 52,238 ) $ — $ 94,413 Customer relationships 10 21,500 ( 10,079 ) — 11,421 Trademarks and tradenames 10 16,600 ( 9,255 ) ( 4,122 ) 3,223 Patents 12 480 ( 280 ) — 200 $ 185,231 $ ( 71,852 ) $ ( 4,122 ) 109,257 Foreign currency translation adjustments ( 5,769 ) Total intangible assets, net $ 103,488 16 Table of Contents The total estimated future amortization expense for these acquired finite-lived intangible assets as of June 30, 2025, is as follows (in thousands): Fiscal Year Ending December 31, Amortization Remainder of 2025 $ 9,219 2026 17,923 2027 15,607 2028 14,505 2029 14,505 2030 6,328 Thereafter 21,692 Total $ 99,779 Amortization expense for the three months ended June 30, 2025 and 2024 was $ 4.7 million, and amortization expense for the six months ended June 30, 2025 and 2024 was $ 9.3 million and $ 9.6 million, respectively. Note 6 . Credit Facility We maintain a credit facility, as amended in December 2022, that includes a $ 300.0 million unsecured revolving line of credit and a $ 50.0 million letter of credit sub-limit. The facility matures on December 23, 2027 and accrues interest, at our election, based on either the Secured Overnight Financing Rate (“SOFR”) for the applicable period or a base rate, in each case plus an applicable margin. The facility includes financial covenants and performance requirements. As of June 30, 2025, we had no outstanding borrowings under the facility and were in compliance with the terms and conditions of the facility in all material respects. Note 7. Legal Proceedings Antitrust Class Actions On June 5, 2020, a dental practice 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 us between January 1, 2019 and March 31, 2022. The court denied Plaintiffs’ motion to certify a class of purchasers of scanners. On February 21, 2024, the court granted our motion for summary judgment on all claims brought by the plaintiffs. Plaintiffs have appealed the district court’s summary judgment ruling to the United States Court of Appeals for the Ninth Circuit. Oral argument was held on April 10, 2025. On May 3, 2021, an individual named Misty Snow brought an antitrust action in the U.S. District Court for the Northern District of California on behalf of herself and a putative class of similarly situated individuals seeking treble monetary damages, interest, costs, attorneys’ fees and injunctive relief relating to our alleged market activities in alleged clear aligner and intraoral scanner markets based on Section 2 of the Sherman Act. Plaintiffs have since filed several amended complaints adding new plaintiffs, various state law claims and allegations based on Section 1 of the Sherman Act. On November 29, 2023, the court certified a class of indirect purchasers of Invisalign between July 1, 2018 and December 31, 2023 and a class of indirect purchasers of Invisalign seeking injunctive relief. On February 21, 2024, the court granted our motion for summary judgment on the claims related to Section 2 allegations. The court entered judgment for the Section 2 and related state law claims on March 22, 2024. Plaintiffs have appealed the district court’s summary judgment ruling to the United States Court of Appeals for the Ninth Circuit. Oral argument was held on April 10, 2025. We are currently unable to predict the outcome of these lawsuits and therefore we cannot determine the likelihood of loss, if any, nor estimate a range of possible loss. In June 2024, we reached a settlement in principle with the Section 1 plaintiffs to resolve all remaining claims in the Section 1 lawsuit. In March, 2025, Align and plaintiffs agreed to a revised settlement to resolve all Section 1 claims for a 17 Table of Contents $ 31.75 million cash payment. On May 28, 2025, the court granted preliminary approval of the proposed settlement. The Final Approval/Fairness hearing has been set for November 20, 2025. We are unable to predict the timeline or outcome of the court’s final approval decision. We continue to believe that plaintiffs’ Section 1 claims are without merit and remain ready to vigorously defend ourselves against those claims. For the quarter ended June 30, 2025, Align accrued a total loss of $ 31.75 million, consisting of $ 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. Subsequent to June 30, 2025, we issued a payment for the full settlement amount to an escrow agency in accordance with the court's preliminary approval. Straumann Litigation On April 11, 2024, we filed a lawsuit in the U.S. District Court for the Western District of Texas against ClearCorrect Operating, LLC, ClearCorrect Holdings., Inc. and Institut Straumann AG (collectively the “Defendants”). The complaint asserts claims of false advertising, unfair competition, civil conspiracy and infringement of our patents related to aligner material, treatment planning, and intraoral scanner technologies. Among other things, the complaint seeks relief enjoining Defendants’ infringement of multiple of our multilayer material patents through Defendants’ manufacture, sale and offer for sale of aligners made with Zendura FLX/ClearQuartz materials. Defendants filed motions to dismiss the complaint, which are pending. Defendants are also seeking to invalidate all of our asserted patents at the district court and United States Patent and Trial Appeal Board. On July 9, 2024, Defendants filed counterclaims against us alleging antitrust violations, false advertising, unfair competition and breach of contract. Among other things, the counterclaims seek to stop our alleged 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 May 11, 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, we received cumulative assessments of approximately $ 100 million from His Majesty’s Revenue and Customs (“HMRC”) for unpaid value added tax (“VAT”) related to certain clear aligner sales made during the period of October 2019 through May 2023. We were required to pay these assessments prior to contesting or litigating the matter in statutory appeal. We have historically asserted and continue to assert that doctor prescribed clear aligners sold by dentists for the orthodontic treatment of patient malocclusions are exempt from VAT, that we have reasonably relied upon statements and guidance by HMRC and that our interpretation of United Kingdom legislation is appropriate. In October 2024, the Company and HMRC reached a settlement agreement regarding the unpaid VAT related to certain aligner sales made during the period of October 2019 through mid-October 2023. As part of the settlement, HMRC agreed to vacate the judicial review (before the Administrative Court) originally scheduled for October 9th and October 10th, 2024, refund to the Company all assessments paid for the period of October 2019 through May 2023 and withdraw any potential assessments for the period from June 2023 through mid-October 2023. HMRC has refunded to the Company the assessed amounts, approximately $ 100 million. A statutory appeal (before the First-tier Tribunal - “Tax Tribunal”) was held on January 27th through January 30th, 2025. On April 24, 2025, the Tax Tribunal issued a ruling in our favor indicating that clear aligners are “dental prostheses for the 18 Table of Contents purposes of VAT”, which is a key condition for the VAT exemption. On June 13, 2025, HMRC applied for permission to appeal the Tax Tribunal decision, which was granted on July 15, 2025. On August 1, 2025, we were notified that HMRC had lodged their grounds for appeal to the Upper Tribunal. In August 2025 we stopped charging VAT to our United Kingdom customers. It is not possible at this stage to accurately evaluate the likelihood of an unfavorable outcome from the Upper Tribunal statutory appeal, nor estimate a range of possible loss. 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 June 30, 2025, we did not have any material indemnification claims that were probable or reasonably possible. Note 9. Stockholders’ Equity As of June 30, 2025, the Align Technology, Inc. 2005 Incentive Plan, as amended, has a total reserve of 32,168,895 shares, of which 1,893,259 shares are available for issuance. Summary of Stock-Based Compensation Expense Stock-based compensation related to our stock-based awards and employee stock purchase plan for the three and six months ended June 30, 2025 and 2024 is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Cost of net revenues $ 1,636 $ 2,582 $ 3,174 $ 4,646 Selling, general and administrative 33,485 34,274 64,351 62,768 Research and development 13,087 10,172 25,680 18,402 Total stock-based compensation $ 48,208 $ 47,028 $ 93,205 $ 85,816 Restricted Stock Units (“RSUs”) The fair value of RSUs is based on the closing price of our stock on the date of grant. Generally, RSUs vest over a period of four years . A summary for the six months ended June 30, 2025 is as follows: Number of Shares Underlying RSUs (in thousands) Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Unvested as of December 31, 2024 1,019 $ 331.10 Granted 670 197.17 Vested and released ( 301 ) 358.16 Forfeited ( 60 ) 292.10 Unvested as of June 30, 2025 1,328 $ 259.13 1.7 $ 251,343 19 Table of Contents As of June 30, 2025, we expect to recognize $ 261.8 million of total unamortized compensation costs, net of estimated forfeitures, related to RSUs over a weighted average period of 2.8 years. 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 our stock price relative to the performance of a stock market index over the vesting period. MSUs vest over a period of three years and the maximum number of shares eligible to vest is 250 % of the MSUs initially granted. The following table summarizes the MSU performance activity for the six months ended June 30, 2025: Number of Shares Underlying MSUs (in thousands) Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Unvested as of December 31, 2024 193 $ 679.14 Granted 127 362.98 Vested and released 1 ( 26 ) 915.22 Forfeited ( 10 ) 915.22 Unvested as of June 30, 2025 284 $ 506.66 1.8 $ 53,699 1 Includes MSUs vested during the period below 100 % of the original grant as actual shares released is based on our stock performance relative to a market index over the vesting period. As of June 30, 2025, we expect to recognize $ 67.3 million of total unamortized compensation costs, net of estimated forfeitures, related to MSUs over a weighted average period of 1.8 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 six months ended June 30, 2025: Number of Shares Underlying PSUs (in thousands) Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Unvested as of December 31, 2024 11 $ 204.33 Granted — — Vested and released ( 5 ) 201.63 Forfeited — — Unvested as of June 30, 2025 6 $ 206.36 1.5 $ 1,193 As of June 30, 2025, we expect to recognize $ 0.8 million of total unamortized compensation costs, net of estimated forfeitures, related to PSUs over a weighted average period of 1.5 years. Employee Stock Purchase Plan As of June 30, 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”). 20 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: Six Months Ended June 30, 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 June 30, 2025, we expect to recognize $ 9.7 million of total unamortized compensation costs related to future employee stock purchases over a weighted average period of 0.7 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 following tables summarize the total repurchases of our common stock pursuant to Accelerated Share Repurchase (“ASR”) agreements and open market common stock repurchases ("OMR") 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 $ 225.0 Q2 2025 1,339,124 $ 168.02 As of June 30, 2025 the January 2023 Repurchase Program was complete. In April 2025, our Board of Directors authorized a plan to repurchase up to $ 1.0 billion of our common stock (the “April 2025 Repurchase Program”). The April 2025 Repurchase Program is expected to be completed over a period of up to three years . On August 5, 2025 we announced a plan to repurchase $ 200 million of our common stock through open market repurchases beginning in the third quarter of 2025 and continuing into the first quarter of 2026. 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 $ 800.0 million remaining available for repurchases under the April 2025 Repurchase Program. Note 11. Accounting for Income Taxes Our provision for income taxes was $ 48.9 million and $ 47.3 million for the three months ended June 30, 2025 and 2024, respectively, representing effective tax rates of 28.2 % and 32.9 %, respectively. Our provision for income taxes was $ 96.1 million and $ 100.7 million for the six months ended June 30, 2025 and 2024, respectively, representing effective tax rates of 30.6 % and 33.3 %. Our effective tax rate differs from the statutory federal income tax rate of 21% for the three and six months 21 Table of Contents ended June 30, 2025 and 2024 primarily due to the recognition of additional tax expense resulting from U.S. taxes on foreign earnings, foreign income taxed at different rates, state income taxes and non-deductible expenses in the U.S. We exercise significant judgment in regard to estimates of future market growth, forecasted earnings and projected taxable income in determining the provision for income taxes and for purposes of assessing our ability to utilize any future benefit from deferred tax assets. We continue to assess the realizability of the deferred tax assets as we take into account new information. We may be required to adjust the valuation allowance for deferred tax assets if we determine, based on available evidence at the time of the determination, that it is more likely than not that some portion or all of the deferred tax assets will not be realized. Changes to the valuation allowance could have a material adverse effect on our results of operations. Our total gross unrecognized tax benefits, excluding interest and penalties, were $ 149.6 million and $ 145.5 million as of June 30, 2025 and December 31, 2024, respectively, a material amount of which would impact our effective tax rate if recognized. The increase in our unrecognized tax benefits relates primarily to positions taken on income tax return calculations finalized during the three and six months ended June 30, 2025. On July 4, 2025, the United States enacted tax reform legislation commonly referred to as the One Big Beautiful Bill Act. Included in this legislation are provisions that allow for the immediate expensing of certain domestic research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. We are currently evaluating the impact this legislation will have on our future results of operations, financial position and cash flows, if any. 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 June 30, Six Months Ended June 30, 2025 2024 2025 2024 Numerator: Net income $ 124,608 $ 96,564 $ 217,838 $ 201,592 Denominator: Weighted average common shares outstanding, basic 72,565 75,184 73,061 75,180 Dilutive effect of potential common stock 28 39 37 135 Total shares, diluted 72,593 75,223 73,098 75,315 Net income per share, basic $ 1.72 $ 1.28 $ 2.98 $ 2.68 Net income per share, diluted $ 1.72 $ 1.28 $ 2.98 $ 2.68 Anti-dilutive potential common shares 1 1,505 1,149 1,377 648 1 Represents approximately 1,501.7 thousand RSU and 3.3 thousand ESPP weighted average outstanding common stock equivalent shares for the three months ended June 30, 2025 and approximately 1,374.6 thousand RSU and 2.2 thousand ESPP weighted-average outstanding common stock equivalent shares for the six months ended June 30, 2025. Approximately 1,148.7 thousand RSU and 0.3 thousand ESPP weighted average outstanding common stock equivalent shares for the three months ended June 30, 2024 and approximately 647.8 thousand RSU and 0.1 thousand ESPP weighted-average outstanding common stock equivalent shares for the six months ended June 30, 2024 that are excluded from the calculation of diluted net income per share as the effect would have been anti-dilutive. 22 Table of Contents Note 13 . Supplemental Cash Flow Information The supplemental cash flow information consists of the following (in thousands): Six Months Ended June 30, 2025 2024 Non-cash investing and financing activities: Acquisition of property, plant and equipment in accounts payable and accrued liabilities $ 12,995 $ 16,657 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 $ 19,323 $ 19,643 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 12,259 $ 22,820 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. 23 Table of Contents Summarized financial information by reportable segment is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net revenues Clear Aligner $ 804,617 $ 831,738 $ 1,601,460 $ 1,648,989 Systems and Services 207,832 196,752 390,251 376,932 Total net revenues $ 1,012,449 $ 1,028,490 $ 1,991,711 $ 2,025,921 Cost of net revenues 1 Clear Aligner $ 240,811 $ 243,201 $ 475,565 $ 481,306 Systems and Services 63,521 62,661 127,921 124,171 Total cost of goods sold $ 304,332 $ 305,862 $ 603,486 $ 605,477 Gross profit Clear Aligner $ 563,806 $ 588,537 $ 1,125,895 $ 1,167,683 Systems and Services 144,311 134,091 262,330 252,761 Total gross profit $ 708,117 $ 722,628 $ 1,388,225 $ 1,420,444 Other Segment expenses Clear Aligner $ 296,795 $ 288,911 $ 598,660 $ 581,819 Systems and Services 58,574 63,301 118,130 132,278 Unallocated corporate expenses 189,715 223,370 377,302 405,166 Total operating expenses $ 545,084 $ 575,582 $ 1,094,092 $ 1,119,263 Segment income from operations Clear Aligner $ 267,011 $ 299,626 $ 527,235 $ 585,864 Systems and Services 85,737 70,790 144,200 120,483 Total segment income from operations $ 352,748 $ 370,416 $ 671,435 $ 706,347 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 June 30, Six Months Ended June 30, 2025 2024 2025 2024 Total segment income from operations $ 352,748 $ 370,416 $ 671,435 $ 706,347 Unallocated corporate expenses ( 189,715 ) ( 223,370 ) ( 377,302 ) ( 405,166 ) Total income from operations 163,033 147,046 294,133 301,181 Interest income 2,859 3,301 8,175 7,693 Other income (expense), net 7,624 ( 6,481 ) 11,650 ( 6,622 ) Net income before provision for income taxes $ 173,516 $ 143,866 $ 313,958 $ 302,252 The following table includes certain non-cash expenses for each reportable segment (in thousands): 24 Table of Contents Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Stock-based compensation Clear Aligner $ 6,065 $ 8,619 $ 11,883 $ 12,383 Systems and Services 403 421 806 780 Unallocated corporate expenses 41,740 37,988 80,516 72,653 Total stock-based compensation $ 48,208 $ 47,028 $ 93,205 $ 85,816 Depreciation and amortization Clear Aligner $ 19,495 $ 16,623 $ 38,399 $ 31,056 Systems and Services 9,302 8,070 17,771 14,908 Unallocated corporate expenses 11,779 11,473 23,554 23,148 Total depreciation and amortization $ 40,576 $ 36,166 $ 79,724 $ 69,112 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 June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net revenues 1 : U.S. $ 422,801 $ 438,533 $ 846,119 $ 870,634 Switzerland 235,247 270,946 459,379 522,704 Other International 354,401 319,011 686,213 632,583 Total net revenues $ 1,012,449 $ 1,028,490 $ 1,991,711 $ 2,025,921 1 Net revenues are attributed to countries based on the location of where revenues are recognized by our legal entities. Long-lived assets, which includes Property, plant and equipment, net and Operating lease right-of-use assets, net, are presented below by geographic area (in thousands): June 30, 2025 December 31, 2024 Long-lived assets 1 : Switzerland $ 562,566 $ 571,628 U.S. 204,559 207,689 Other International 610,458 605,193 Total long-lived assets $ 1,377,583 $ 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 half of 2024 , we reduced our December 31, 2023 restructuring liability by approximately $ 5.1 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 25 Table of Contents which $ 13.0 million remained unpaid and were included in Accrued liabilities as of December 31, 2024. During the first half of 2025, we reduced our December 31, 2024 restructuring liability by approximately $ 12.9 million primarily due to cash payments, offset by approximately $ 2.0 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): Six Months Ended June 30, 2025 2024 Balance at beginning of period 1 $ 13,001 $ 5,299 Restructuring charges 2,030 ( 509 ) Cash payments and adjustments ( 12,914 ) ( 4,573 ) Balance at end of period 1 $ 2,117 $ 217 1 Included in “Accrued liabilities” within our Condensed Consolidated Balance Sheets. 26 Table of Contents