ALIGN TECHNOLOGY INC

Previous wording

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the“Exchange Act”). These statements include, among other things, our expectations and intentions regarding our strategic objectives and the means to achieve them, our beliefs and expectations regarding macroeconomic conditions, including inflation, fluctuations in currency exchange rates, rising interest rates, market volatility, weakness in general economic conditions and recessions and the impact of efforts by central banks and federal, state and local governments to combat inflation and recession, our expectations and beliefs regarding customer and consumer purchasing behavior and changes in consumer spending habits, our expectations regarding product mix and product adoption, our expectations regarding competition and our ability to compete in our target markets, our expectations regarding the sales growth of our intraoral scanners, clear aligners and other products, our expectations regarding the impact of the military conflicts in the Middle East and Ukraine and our operations and assets in Israel and Russia, our marketing and efforts to build our brand awareness, our estimates regarding the size and opportunities of the markets we are targeting along with our expectations for growth in those markets, our beliefs regarding the impact of technological innovation in general, and in our solutions and products in particular, on target markets and patient care, our beliefs regarding digital dentistry and its potential to impact our business, our intentions regarding expanding our business, including its impact on our operational flexibility and responsiveness to customer demand, our beliefs regarding the importance of our manufacturing operations on our success, our beliefs regarding the need for and benefits of our technological development on Invisalign treatment, the areas of development in which we focus our efforts, and the advantages of our intellectual property portfolio, our beliefs regarding our business strategy and growth drivers, our expectations regarding the utilization rates for our products, including the impact of marketing on those rates and causes for periodic fluctuations of the rates, our expectations regarding the existence and impact of seasonality, our expectations regarding the productivity impact sales representatives will have on our sales and the impact of specialization of those representatives in sales channels, our expectations regarding the continued expansion of our international markets and their growth, our expectations regarding staying in compliance with laws and regulations currently applicable to, or which may become applicable to, our business both in the United States and internationally, our beliefs regarding our culture and commit…

Excerpt shortened here; the source contains the full paragraph.

Current wording

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the“Exchange Act”). These statements include, among other things, our expectations and intentions regarding our strategic objectives and the means to achieve them, our beliefs and expectations regarding macroeconomic conditions, including inflation, fluctuations in currency exchange rates, higher interest rates, market volatility, weakness in general economic conditions and recessions and the impact of efforts by central banks and federal, state and local governments to combat inflation and recession, our expectations and beliefs regarding customer and consumer purchasing behavior and changes in consumer spending habits, our expectations regarding product mix and product adoption, our expectations regarding competition and our ability to compete in our target markets, our expectations regarding the sales growth of our intraoral scanners, clear aligners and other products, our expectations regarding the impact of the military conflicts in the Middle East and Ukraine and our operations and assets in Israel and Russia, our marketing and efforts to build our brand awareness, our estimates regarding the size and opportunities of the markets we are targeting along with our expectations for growth in those markets, our beliefs regarding the impact of technological innovation in general, and in our solutions and products in particular, on target markets and patient care, our beliefs regarding digital dentistry and its potential to impact our business, our intentions regarding expanding our business, including its impact on our operational flexibility and responsiveness to customer demand, our expectations regarding our tax positions and the judgements we make related to our tax obligations, our beliefs regarding the importance of our manufacturing operations on our success, our beliefs regarding the need for and benefits of our technological development on Invisalign treatment, the areas of development in which we focus our efforts, and the advantages of our intellectual property portfolio, our beliefs regarding our business strategy and growth drivers, our expectations regarding the utilization rates for our products, including the impact of marketing on those rates and causes for periodic fluctuations of the rates, our expectations regarding the existence and impact of seasonality, our expectations regarding the productivity impact sales representatives will have on our sales and the impact of specialization of those representatives in sales channels, our expectations regarding the continued expansion of our international markets and their growth, our expectations regarding staying in compliance with laws and regulations currently applicable to, or which may become applicable to, …

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Our revenues are susceptible to fluctuations caused by macroeconomic conditions, inflation, changes to currency exchange rates, higher interest rates, actual and threatened wars and military actions, threats of or actual recessions, supply chain challenges, market volatility, and other factors, each of which impacts customer confidence, consumer sentiment and demand. Many of these same factors also impact our costs and those of our suppliers through higher raw material prices, transportation costs, labor costs, supply and distribution operations. During the first half of 2024, we believe sales of our products were impacted by macroeconomic conditions that adversely impacted disposable income and consumer demand and we believe this trend could continue in the second half of 2024. We also expect the military conflict between Russia and Ukraine to continue to create market uncertainties and dampen consumer sentiment and demand, particularly in Europe. The impact of declining demand may vary by time and region, making operational results uncertain and difficult to predict.

Current wording

Our revenues are susceptible to fluctuations caused by macroeconomic conditions, inflation, changes to currency exchange rates, higher interest rates, actual and threatened wars and military actions, threats of or actual recessions, supply chain challenges, market volatility, and other factors, each of which impacts customer confidence, consumer sentiment and demand. Many of these same factors also impact our costs and those of our suppliers through higher raw material prices, transportation costs, labor costs, supply and distribution operations. During 2024, we believe sales of our products have been impacted by macroeconomic conditions that adversely impacted disposable income and consumer demand and we believe this trend will continue for the remainder of 2024. We also expect the military conflict between Russia and Ukraine to continue to create market uncertainties and dampen consumer sentiment and demand, particularly in Europe. The impact of declining demand may vary by time and region, making operational results uncertain and difficult to predict.

Previous wording

Additionally, many of our international operations are denominated in currencies other than the U.S. dollar. In the second quarter of 2024, the U.S. dollar strengthened against major currencies, which negatively impacted our financial condition and results of operations for the quarter. On a year-over-year basis, the net impact from foreign exchange volatility was unfavorable to our financial condition and results of operations for the quarter. Foreign exchange volatility and the subsequent strengthening or weakening of the U.S dollar against other currencies remains uncertain and unpredictable.

Current wording

Additionally, many of our international operations are denominated in currencies other than the U.S. dollar. In the third quarter of 2024, on a sequential basis, there was no significant impact from foreign exchange on our financial condition. However, the U.S. dollar remained strong against major currencies on a year-over-year basis, which negatively impacted our financial condition and results of operations for the quarter. Foreign exchange volatility and the subsequent strengthening or weakening of the U.S dollar against other currencies remains uncertain and unpredictable.

Previous wording

The ongoing conflict in the Middle East may further exacerbate general and regional macroeconomic instability, particularly if fighting spreads to other locations, create shipping and logistical challenges or cost increases, or lead to sanctions or boycotts. Our iTero business is headquartered in Israel. In the second quarter of 2024, the timing and cost of shipping our products was not materially impacted and we have put measures in place to help reduce the risk of experiencing significant delays in the future. Additionally, we have employees and consultants in Israel that have been called for military service and they may be unavailable for an unknown period of time, but we are not currently being materially impacted. While, there have been export and import restrictions imposed against Israel, we are not currently being materially impacted by any trade sanctions. The conflict may continue to spread to other areas which may further impact our business. We continue to monitor the potential for violence and military actions that may directly or indirectly impact our personnel, manufacturing, supply chain, and sales.

Current wording

The ongoing conflict in the Middle East may further exacerbate general and regional macroeconomic instability, particularly if fighting continues to spread to other locations, create shipping and logistical challenges or cost increases, lead to sanctions or boycotts, or otherwise may materially impact our operations. For instance, our iTero business is headquartered in Israel. To date in 2024, the timing and cost of shipping our products has not been materially impacted and we have put measures in place to help reduce the risk of experiencing significant delays in the future. Additionally, although our operations have not thus far been materially impacted by employee absences, we have employees and consultants in Israel that have been called for military service and may be unavailable for an unknown period of time. Furthermore, while there have been export and import restrictions imposed against Israel, we have not been materially impacted by any trade sanctions yet. We continue to monitor the potential for violence and military actions that may directly or indirectly impact our personnel, manufacturing, supply chain, and sales.

Previous wording

Further discussion of the impact of these challenges on our business may be found in Part II, Item 1A of this Quarterly Report on Form 10-Q under the heading “Risk Factors.”

Current wording

Further discussion of the impact of these challenges on our business may be found in Part II, Item 1A “Risk Factors.”

Previous wording

◦Americas Clear Aligner revenues of $371.8 million, a decrease of 2.4% year-over-year;

Current wording

◦Americas Clear Aligner revenues of $349.2 million, a decrease of 4.7% year-over-year;

Previous wording

◦Clear Aligner case volume increased 3.2% year-over-year and Clear Aligner case volume for teenage patients increased 8.0% year-over-year;

Current wording

◦Clear Aligner case volume increased 2.5% year-over-year and Clear Aligner case volume for teenage patients increased 6.7% year-over-year;

Previous wording

•Imaging Systems and CAD/CAM Services revenues of $196.8 million, an increase of 16.1% year-over-year;

Current wording

•Imaging Systems and computer-aided design and computer-aided manufacturing (“CAD/CAM”) Services revenues of $191.0 million, an increase of 15.6% year-over-year;

Previous wording

•Income from operations of $147.0 million and operating margin of 14.3%;

Current wording

•Income from operations of $162.3 million and operating margin of 16.6%;

Previous wording

•Net income of $96.6 million with diluted net income per share of $1.28;

Current wording

•Net income of $116.0 million with diluted net income per share of $1.55;

Previous wording

•Cash provided by operating activities of $159.8 million;

Current wording

•Cash provided by operating activities of $263.7 million;

Previous wording

•Capital expenditures of $53.5 million, predominantly related to increases in our manufacturing capacity and facilities; and

Current wording

•Capital expenditures of $29.8 million, primarily related to investments in our manufacturing capacity and facilities; and

Previous wording

•Number of employees was 21,805 as of June 30, 2024, a decrease of 4.8% year-over-year.

Current wording

•Number of employees was 21,690 as of September 30, 2024, a decrease of 4.4% year-over-year.

Previous wording

•As of June 30, 2024, approximately 18.2 million people worldwide have been treated with our Invisalign system. Management measures these results by comparing to the millions of people who can benefit from straighter teeth and uses this data to target opportunities to expand the market for orthodontics by educating consumers about the benefits of straighter teeth using the Invisalign system.

Current wording

•As of September 30, 2024, approximately 18.9 million people worldwide have been treated with our Invisalign system. Management measures these results by comparing to the millions of people who can benefit from straighter teeth and uses this data to target opportunities to expand the market for orthodontics by educating consumers about the benefits of straighter teeth using the Invisalign system.

Previous wording

•For the second quarter of 2024, total Invisalign cases submitted with a digital scanner in the Americas increased to 95.9%, up from 94.2%* in the second quarter of 2023 and international scans increased to 89.8%, up from 87.9%* in the second quarter of 2023. For the second quarter of 2024, 98.2% of Invisalign cases submitted by North American orthodontists were submitted digitally.

Current wording

•For the third quarter of 2024, total Invisalign cases submitted with a digital scanner in the Americas increased to 96.1%, up from 94.6% in the third quarter of 2023 and international scans increased to 89.3%, up from 87.6% in the third quarter of 2023. For the third quarter of 2024, 98.2% of Invisalign cases submitted by North American orthodontists were submitted digitally.

Previous wording

•The total utilization rate in the second quarter of 2024 remained flat at 7.5 cases per doctor compared to the second quarter of 2023. Utilization rates in North America and our International locations were as follows:

Current wording

•The total utilization rate in the third quarter of 2024 remained flat at 7.1 cases per doctor compared to the third quarter of 2023. Utilization rates in North America and our International locations were as follows:

Previous wording

▪North America: The utilization rate among our North American orthodontist customers decreased to 28.8 cases per doctor in the second quarter of 2024 compared to 29.2* cases per doctor in the second quarter of 2023 and the utilization rate among our North American GP customers increased to 5.3 cases per doctor in the second quarter of 2024 compared to 5.2 cases per doctor in the second quarter of 2023.

Current wording

▪North America: The utilization rate among our North American orthodontist customers decreased to 28.3 cases per doctor in the third quarter of 2024 compared to 28.8 cases per doctor in the third quarter of 2023 and the utilization rate among our North American GP customers increased to 5.0 cases per doctor in the third quarter of 2024 compared to 4.9 cases per doctor in the third quarter of 2023.

Previous wording

▪International: International doctor utilization rate was 6.7 cases per doctor in the second quarter of 2024 compared to 6.6 cases per doctor in the second quarter of 2023.

Current wording

▪International: International doctor utilization rate was 6.2 cases per doctor in the third quarter of 2024 compared to 6.1 cases per doctor in the third quarter of 2023.

Previous wording

▪Non-Comprehensive Products include, but are not limited to, Invisalign Moderate, Lite and Express packages and Invisalign Go and Invisalign Go Plus and Invisalign Palatal Expander.

Current wording

▪Non-Comprehensive Products include, but are not limited to, Invisalign Moderate, Lite and Express packages, Invisalign Go and Invisalign Go Plus and Invisalign Palatal Expander.

Previous wording

Net revenues for our Clear Aligner and Systems and Services segments by region for the three and six months ended June 30, 2024 and 2023 are as follows (in millions):

Current wording

Net revenues for our Clear Aligner and Systems and Services segments by region for the three and nine months ended September 30, 2024 and 2023 are as follows (in millions):

Previous wording

Case volume data which represents Clear Aligner case shipments for thethree and six months ended June 30, 2024 and 2023 is as follows (in thousands):

Current wording

Case volume data which represents Clear Aligner case shipments for thethree and nine months ended September 30, 2024 and 2023 is as follows (in thousands):

Previous wording

For the three months ended June 30, 2024, total net revenues increased by $26.3 million as compared to the same period in 2023, primarily due to an increase in Systems and Services net revenue from higher scanner average selling price ("ASP") and non-system sales and Clear Aligner net revenues from an increase in volume partially offset by lower ASP.

Current wording

For the three months ended September 30, 2024, total net revenues increased by $18 million as compared to the same period in 2023, primarily due to an increase in Systems and Services net revenue from higher scanner average selling price ("ASP"), increase in non-system sales, and Clear Aligner net revenues from an increase in volume partially offset lower Clear Aligner ASP.

Previous wording

For the six months ended June 30, 2024, total net revenues increased by $80.6 million as compared to the same period in 2023, primarily due to an increase in Systems and Services net revenues from higher scanner ASP and non-system sales and Clear Aligner volume, partially offset by lower Clear Aligner ASP.

Current wording

For the nine months ended September 30, 2024, total net revenues increased by $98 million as compared to the same period in 2023, primarily due to an increase in Systems and Services net revenues from higher scanner ASP, increase in non-system sales and services revenue and Clear Aligner net revenues from an increase in volume, partially offset by lower Clear Aligner ASP.

Previous wording

For the six months ended June 30, 2024, Americas net revenues decreased by $3.5 million as compared to the same period in 2023, primarily due to a 0.5% decrease in ASP, resulting in a decrease of net revenues of $4.1 million. The decrease in ASP was primarily driven by a product mix shift to lower priced products which reduced net revenues by $47.7 million and higher promotional discounts which decreased net revenues by $34.3 million. These decreases were partially offset by lower net deferrals which increased net revenues by $65.4 million and price changes which increased net revenues by $11.1 million.

Current wording

For the three months ended September 30, 2024, Americas net revenues decreased by $17 million as compared to the same period in 2023, primarily due to a 3.9% decrease in ASP, resulting in a decrease of net revenues of $14 million. The decrease in ASP was driven by unfavorable foreign exchange rates that decreased net revenues by $6 million, a mix shift to lower priced products and countries which reduced net revenues by $23 million and higher promotional discounts which decreased net revenues by $14 million. These decreases were partially offset by lower net deferrals which increased net revenues by $23 million and price changes which increased net revenues by $6 million.

Previous wording

For the three months ended June 30, 2024, Americas net revenues decreased by $9.3 million as compared to the same period in 2023, primarily due to a 2.6% decrease in ASP, resulting in a decrease of net revenues of $10.0 million. The decrease in ASP was primarily driven by a product mix shift to lower priced products which reduced net revenues by $25.3 million and higher promotional discounts which decreased net revenues by $19.1 million. These decreases were partially offset by lower net deferrals which increased net revenues by $29.5 million and price changes which increased net revenues by $5.1 million.

Current wording

For the nine months ended September 30, 2024, Americas net revenues decreased by $21 million as compared to the same period in 2023, primarily due to a 1.6% decrease in ASP, resulting in a decrease of net revenues of $18 million. The decrease in ASP was primarily driven by a mix shift to lower priced products and countries which reduced net revenues by $71 million and higher promotional discounts which decreased net revenues by $49 million. These decreases were partially offset by lower net deferrals which increased net revenues by $86 million and price changes which increased net revenues by $16 million.

Previous wording

For the six months ended June 30, 2024, International net revenues increased by $21.1 million as compared to the same period in 2023, primarily due to a 6.0% increase in case volumes, resulting in increased net revenues by $44.3 million, partially offset by slightly lower ASP which decreased net revenues by $23.2 million. Lower ASP was largely due to higher promotional discounts which reduced net revenues by $51.2 million, a product mix shift to lower priced products reduced net revenues by $32.6 million, and unfavorable foreign exchange rates decreased net revenues by $20.4 million. The decreases in ASP were partially offset by lower net deferrals and price changes which increased net revenues by $53.7 million and $25.0 million, respectively.

Current wording

For the three months ended September 30, 2024, International net revenues increased by $6 million as compared to the same period in 2023, primarily due to a 6.3% increase in case volumes, resulting in increased net revenues by $22 million. This increase was partially offset by a decrease of 4.3% in ASP which decreased net revenues by $16 million. Lower ASP was due to unfavorable foreign exchange rates that decreased net revenues by $5 million and a price reduction we took in the United Kingdom (“UK”) to offset VAT on our sales into the UK, which decreased net revenues by $8 million. ASP was also negatively impacted by a mix shift to lower priced products and countries, which reduced net revenues by $15 million and higher promotional discounts which reduced net revenues by $31 million. The decreases in ASP were partially offset by lower net deferrals and price changes which increased net revenues by $26 million and $15 million, respectively.

Previous wording

For the three months ended June 30, 2024, International net revenues increased by $4.6 million as compared to the same period in 2023, primarily due to a 6.8% increase in case volumes, resulting in increased net revenues by $25.6 million, partially offset by slightly lower ASP which decreased net revenues by $20.9 million. Lower ASP was largely due to higher promotional discounts which reduced net revenues by $29.4 million, a product mix shift to lower priced products reduced net revenues by $15.1 million, and unfavorable foreign exchange rates decreased net revenues by $13.9 million. The decreases in ASP were partially offset by lower net deferrals and price changes which increased net revenues by $26.1 million and $11.8 million, respectively.

Current wording

For the nine months ended September 30, 2024, International net revenues increased by $27 million as compared to the same period in 2023, primarily due to a 6.1% increase in case volumes, resulting in increased net revenues by $67 million. This increase was partially offset by a decrease of 3.4% in ASP which decreased net revenues by $39 million. Lower ASP was due to unfavorable foreign exchange rates that decreased net revenues by $25 million, a price reduction we took in the UK to offset VAT on our sales into the UK, which decreased net revenues by $23 million, a mix shift to lower priced products and countries which reduced net revenues by $47 million and higher promotional discounts which reduced net revenues by $83 million. The decreases in ASP were partially offset by lower net deferrals and price changes which increased net revenues by $80 million and $55 million, respectively.

Previous wording

For the three and six months ended June 30, 2024, non-case net revenues increased by $3.7 million and $8.9 million, respectively as compared to the same period in 2023 mainly due to increased volume of Vivera retainers which includes retention aligners ordered through our Doctor Subscription Program.

Current wording

For the three and nine months ended September 30, 2024, non-case net revenues increased by $3 million and $12 million, respectively as compared to the same period in 2023 primarily due to increased volume of Vivera retainers which includes retention aligners ordered through our Doctor Subscription Program.

Previous wording

For the three months ended June 30, 2024, Systems and Services net revenues increased by $27.3 million as compared to the same period in 2023 primarily due to higher scanner ASP which increased net revenues by $11.7 million, an increase in sales of upgrade scanner systems which increased net revenues by $11.1 million, and higher services revenues which increased net revenues by $3.3 million.

Current wording

For the three months ended September 30, 2024, Systems and Services net revenues increased by $26 million as compared to the same period in 2023 primarily due to higher scanner ASP which increased net revenues by $20 million, an increase in sales of upgrade scanner systems which increased net revenues by $7 million, and higher services revenues which increased net revenues by $7 million. These increases were partially offset by lower volume and unfavorable foreign exchange rates which decreased net revenues by $10 million and $3 million, respectively.

Previous wording

For the six months ended June 30, 2024, Systems and Services net revenues increased by $54.1 million as compared to the same period in 2023 primarily due to an increase in sales of upgrade scanner systems which increased net revenues by $20.7 million, higher scanner ASP which increased net revenues by $13.8 million, higher services revenue which increased net revenues by $8.9 million and higher scanner volume which increased net revenues by $8.9 million. Additionally, CAD/CAM software revenues increased net revenues by $4.5 million. These increases were partially offset by lower sales of pre-owned scanner systems which decreased net revenues by $5.5 million.

Current wording

For the nine months ended September 30, 2024, Systems and Services net revenues increased by $80 million as compared to the same period in 2023 primarily due to higher scanner ASP which increased net revenues by $38 million, an increase in sales of upgrade scanner systems which increased net revenues by $30 million, and higher services revenue which increased net revenues by $18 million. Additionally, CAD/CAM software revenues increased net revenues by $6 million. These increases were partially offset by lower volume and unfavorable foreign exchange rates which decreased net revenues by $3 million and $7 million, respectively.

Previous wording

For the three months ended June 30, 2024, our gross margin percentage decreased as compared to the same period in 2023 primarily due to lower ASPs and increased manufacturing spend.

Current wording

For the three and nine months ended September 30, 2024, our gross margin percentage decreased as compared to the same periods in 2023 primarily due to lower ASPs.

Previous wording

For the three and six months ended June 30, 2024, our gross margin percentage increased as compared to the same periods in 2023 primarily due to higher ASPs, partially offset by higher manufacturing variances.

Current wording

For the three months ended September 30, 2024, our gross margin percentage increased as compared to the same period in 2023 primarily due to higher ASPs, partially offset by higher service and freight costs.

Previous wording

For the three months ended June 30, 2024, selling, general and administrative expense was flat compared to the same period in 2023 primarily due to lower outside services and marketing spend partially offset by higher employee costs, including higher stock-based compensation and bonus.

Current wording

For the three months ended September 30, 2024, selling, general and administrative expense increased compared to the same period in 2023 primarily due to higher employee costs, including higher salary, fringe benefits, stock-based compensation and bonus.

Previous wording

For the six months ended June 30, 2024, selling, general and administrative expense increased compared to the same period in 2023 primarily due to higher employee costs, including higher fringe benefits, stock-based compensation and bonus partially offset by lower outside services and marketing expense.

Current wording

For the nine months ended September 30, 2024, selling, general and administrative expense increased compared to the same period in 2023 primarily due to higher employee costs, including higher salary, fringe benefits, stock-based compensation and bonus partially offset by lower marketing expense.

Previous wording

For the six months ended June 30, 2024, research and development expense increased compared to the same period in 2023 primarily due to higher employee costs, including salaries, fringe benefits and stock-based compensation, net of capitalized labor costs related to internal use software, partially offset by lower outside services expense.

Current wording

For the three months ended September 30, 2024, research and development expense decreased compared to the same period in 2023 primarily due to capitalization of labor costs related to internal use software, partially offset by higher employee costs.

Previous wording

For the three months ended June 30, 2024, research and development expense increased compared to the same period in 2023 primarily due to higher employee costs, including salaries, fringe benefits and stock-based compensation, net of capitalized labor costs related to internal use software, partially offset by lower outside services expense.

Current wording

For the nine months ended September 30, 2024, research and development expense increased compared to the same period in 2023 primarily due to higher employee costs, including salaries, fringe benefits, stock-based compensation, net of capitalized labor costs related to internal use software, and bonus, partially offset by lower outside services expense.

Previous wording

For thethree and sixmonths ended June 30, 2024, we recorded a loss of $31.1 million due to legal settlements, primarily related to the Misty Snow Antitrust Class Action. Refer to Note 7 “Legal Proceedings” of the Notes to Condensed Consolidated Financial Statements for more information.

Current wording

For thethree and nine months ended September 30, 2024, we recorded losses of $0.1 million and $31 million, respectively, due to legal settlements. Refer to Note 7 “Legal Proceedings” of the Notes to Condensed Consolidated Financial Statements for more information.

Previous wording

For the three and six months ended June 30, 2024, our operating margin percentage decreased compared to the same periods in 2023 primarilydue to legal settlement losses. Refer to Note 7 “Legal Proceedings” of the Notes to Condensed Consolidated Financial Statements for more information.

Current wording

For the nine months ended September 30, 2024, our operating margin percentage decreased compared to the same periods in 2023 primarilydue to increased employee costs and legal settlement losses. Refer to Note 7 “Legal Proceedings” of the Notes to Condensed Consolidated Financial Statements for more information.

Previous wording

For the three and six months ended June 30, 2024, our operating margin percentage decreased compared to the same periods in 2023 primarilydue to a decrease in gross margin which was partially offset by operating leverage.

Current wording

For the three and nine months ended September 30, 2024, our operating margin percentage decreased compared to the same periods in 2023 primarilydue to a decrease in gross margin and increased employee costs.

Previous wording

For the three andsix months ended June 30, 2024, our operating margin percentage increased compared to the same periods in 2023 primarily due to higher gross margin.

Current wording

For the three andnine months ended September 30, 2024, our operating margin percentage increased compared to the same periods in 2023 primarily due to higher gross margin, partially offset by increased employee costs.