ALIGN TECHNOLOGY INC

Previous wording

UK VAT Update: On July 7, 2026, the Upper Tribunal (Tax and Chancery Chamber) of the United Kingdom issued a decision reversing the April 24, 2025 decision of the First-tier Tribunal and holding that clear aligners are not “dental prostheses” and are therefore subject to value added tax in the United Kingdom at the standard rate. We have recorded an estimated liability of approximately $37.5 million as of June 30, 2026, which reflects management’s best estimate of the obligation as of the reporting date. We intend to exhaust all available appeals and vigorously defend our position, but the ultimate resolution of this matter remains subject to significant uncertainty. For more information, see Note 7“Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements.

Current wording

UK VAT Update: On July 7, 2026, the Upper Tribunal (Tax and Chancery Chamber) of the United Kingdom issued a decision reversing the April 24, 2025 decision of the First-tier Tribunal and holding that clear aligners are not “dental prostheses” and are therefore subject to value added tax in the United Kingdom at the standard rate. We have recorded an estimated liability of approximately $43.1 million as of September 30, 2026, which reflects management’s best estimate of the obligation as of the reporting date. We intend to exhaust all available appeals and vigorously defend our position, but the ultimate resolution of this matter remains subject to significant uncertainty. Effective September 7, 2026, invoices due to UK customers for clear aligners and retainers include VAT at the applicable rate. For more information, see Note 8“Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements.

Previous wording

Many of these factors may contribute to, among other things, higher raw material prices, increased transportation and labor costs, and interruptions in supply and distribution operations, each of which can also impact the availability of certain raw materials, parts and components used in our products as well as our costs and those of our suppliers. For example, we believe that in the beginning of the second quarter of 2025, sales of our products were adversely impacted compared to the same period in prior years by certain macroeconomic conditions, including global tariff volatility, inflation, and higher interest rates, which we believe may continue to impede dental patient demand. Patient traffic growth has been uneven for many doctors, with orthodontic starts down for four consecutive years. We believe uncertainty not only impacts consumer purchasing decisions but also the decisions and recommendations that doctors make, especially doctors who offer both clear aligners and wires and brackets in their practices and have the additional time to treat patients with wires and brackets when orthodontic starts are slowing or diminishing. We believe this has resulted in an increase in orthodontic starts using wires and brackets in lieu of clear aligners that was more pronounced in the second quarter of 2025. We believe these trends are continuing and will impede future sales for so long as consumer economic uncertainty persists, particularly to the extent it impairs discretionary spending. Additionally, we believe that the ongoing military conflicts in the Middle East, including the hostilities involving Israel, Iran, and the United States that began or escalated in 2025 and 2026, together with elevated gasoline and energy costs and related market volatility, have and may continue to contribute to declines in widely reported measures of consumer confidence, and we anticipate these conditions will continue to add to market uncertainties and dampen consumer sentiment and demand.

Current wording

Many of these factors may contribute to, among other things, higher raw material prices, increased transportation and labor costs, and interruptions in supply and distribution operations, each of which can also impact the availability of certain raw materials, parts and components used in our products as well as our costs and those of our suppliers. For example, we believe that in the beginning of the second quarter of 2025, sales of our products were adversely impacted compared to the same period in prior years by certain macroeconomic conditions, including global tariff volatility, inflation, and higher interest rates, which we believe may continue to impede dental patient demand. Patient traffic growth has been uneven for many doctors, with orthodontic starts down for four consecutive years. We believe uncertainty not only impacts consumer purchasing decisions but also the decisions and recommendations that doctors make, especially doctors who offer both clear aligners and wires and brackets in their practices and have the additional time to treat patients with wires and brackets when orthodontic starts are slowing or diminishing. We believe this has resulted in an increase in orthodontic starts using wires and brackets in lieu of clear aligners that was more pronounced in the second quarter of 2025. We believe these trends are continuing and will impede future sales for so long as consumer economic uncertainty persists, particularly to the extent it impairs discretionary spending. Additionally, we believe that the ongoing military conflicts in the Middle East, including the hostilities involving Israel, Iran, and the United States that began in 2025 and escalated in 2026, together with elevated gasoline and energy costs and related market volatility, have and may continue to contribute to declines in widely reported measures of consumer confidence, and we anticipate these conditions will continue to add to market uncertainties and dampen consumer sentiment and demand.

Previous wording

Additionally, a material amount of our revenues are derived internationally and many of our international operations are denominated in currencies other than the U.S. dollar. In the second quarter of 2026, foreign currency movements favorably impacted our revenues compared to the prior-year period. Foreign exchange volatility and the subsequent strengthening or weakening of the U.S. dollar against other currencies remains uncertain and unpredictable.

Current wording

Additionally, a material amount of our revenues are derived internationally and many of our international operations are denominated in currencies other than the U.S. dollar. In the third quarter of 2026, foreign currency movements unfavorably impacted our revenues compared to the prior-year period. Foreign exchange volatility and the subsequent strengthening or weakening of the U.S. dollar against other currencies remains uncertain and unpredictable.

Previous wording

In the third quarter of 2025, we initiated a plan to realign certain business groups and reduce our global workforce as part of our continued effort to right size our labor force in response to the current macroeconomic environment. As of June 30, 2026, we incurred a total of approximately $40.2 million in restructuring charges under this plan, of which $2.5 million remained unpaid. These charges were primarily related to involuntary termination benefits, including employee severance and other post-employment benefits in connection with the 2025 restructuring plan, which has been completed. We do not expect to incur additional restructuring expenses in connection with the 2025 restructuring plan.

Current wording

During the third quarter of 2026, we initiated a plan to realign certain business groups and reduce our global workforce as part of our continued effort to right size our labor force in response to the current macroeconomic environment. We anticipate incurring between $35.0 million and $37.0 million in total restructuring expenses in connection with the 2026 restructuring plan, primarily related to involuntary termination benefits, including employee severance and other post-employment benefits. As of September 30, 2026, we incurred a total of $28.5 million in restructuring charges under this plan, of which $20.7 million remained unpaid.

Previous wording

•Clear Aligner revenues of $871 million, an increase of 8.2% year-over-year;

Current wording

•Clear Aligner revenues of $839 million, an increase of 4.2% year-over-year;

Previous wording

•Clear Aligner case volume increased 7.4% year-over-year and Clear Aligner case volume for teens and growing patients increased from 223.2 thousand shipments to 239.2 thousand or 7.2% year-over-year;

Current wording

•Clear Aligner case volume increased 6.6% year-over-year and Clear Aligner case volume for teens and growing patients increased from 256.0 thousand shipments to 274.6 thousand or 7.3% year-over-year;

Previous wording

•Imaging Systems and CAD/CAM services revenues of $185 million, a decrease of 10.8% year-over-year;

Current wording

•Imaging Systems and CAD/CAM services revenues of $175 million, a decrease of 7.6% year-over-year;

Previous wording

•Income from operations of $154 million and operating margin of 14.6%;

Current wording

•Income from operations of $169 million and operating margin of 16.7%;

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•Net income of $108 million with diluted net income per share of $1.51;

Current wording

•Net income of $135 million with diluted net income per share of $1.90;

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•Cash and cash equivalents of $1,103 million as of June 30, 2026;

Current wording

•Cash and cash equivalents of $1,145 million as of September 30, 2026;

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•Cash provided by operating activities of $193 million;

Current wording

•Cash provided by operating activities of $183 million;

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•Capital expenditures of $36 million, primarily related to investments in our manufacturing capacity and facilities; and

Current wording

•Capital expenditures of $45 million, primarily related to investments in our manufacturing capacity and facilities; and

Previous wording

•Number of employees was 20,435 as of June 30, 2026, a decrease of 4.9% year-over-year primarily due to workforce reduction associated with the 2025 restructuring plan.

Current wording

•Number of employees was 20,180 as of September 30, 2026, a decrease of 4.2% year-over-year primarily due to workforce reduction associated with the 2025 restructuring plan.

Previous wording

•As of June 30, 2026, approximately 23 million people worldwide have been treated with our Invisalign system.

Current wording

•As of September 30, 2026, approximately 24 million people worldwide have been treated with our Invisalign system.

Previous wording

•For the second quarter of 2026, the total number of Invisalign-trained doctors that submitted cases and received shipments (doctor submitters) was 89.2 thousand compared to 86.3 thousand in the second quarter of 2025, a 3.4% increase.

Current wording

•For the third quarter of 2026, the total number of Invisalign-trained doctors that submitted cases and received shipments (doctor submitters) was 90.9 thousand compared to 88.2 thousand in the third quarter of 2025, a 3.1% increase.

Previous wording

•The total utilization rate (case shipments divided by the number of doctor submitters) in the second quarter of 2026 increased to 7.8 cases per doctor compared to 7.5 cases per doctor in the second quarter of 2025.

Current wording

•The total utilization rate (case shipments divided by the number of doctor submitters) in the third quarter of 2026 increased to 7.6 cases per doctor compared to 7.3 cases per doctor in the third quarter of 2025.

Previous wording

•Clear aligner revenue per case shipment (clear aligner revenues divided by case shipments) increased from $1,250 in the second quarter of 2025 to $1,260 in the second quarter of 2026, a 0.8% increase.

Current wording

•Clear aligner revenue per case shipment (clear aligner revenues divided by case shipments) decreased from $1,245 in the third quarter of 2025 to $1,215 in the third quarter of 2026, a 2.4% decrease.

Previous wording

Net revenues for our Clear Aligner and Systems and Services segments for the three and six months ended June 30, 2026 and 2025 are as follows (in millions):

Current wording

Net revenues for our Clear Aligner and Systems and Services segments for the three and nine months ended September 30, 2026 and 2025 are as follows (in millions):

Previous wording

Case volume data which represents Clear Aligner case shipments for thethree and six months ended June 30, 2026 and 2025 is as follows (in thousands):

Current wording

Case volume data which represents Clear Aligner case shipments for thethree and nine months ended September 30, 2026 and 2025 is as follows (in thousands):

Previous wording

For the three and six months ended June 30, 2026, total net revenues increased by $44 million and $105 million compared to the same period in 2025, primarily due to an increase in Clear Aligner volume and increased ASPs.

Current wording

For the three and nine months ended September 30, 2026, total net revenues increased by $19 million and $124 million respectively, compared to the same period in 2025, primarily due to an increase in Clear Aligner volume and favorable deferred revenue.

Previous wording

For the three months ended June 30, 2026, Clear Aligner net revenues increased by $66 million compared to the same period in 2025, primarily due to an increase in volume, which increased net revenues by $53 million and an increase of $13 million from favorable foreign exchange rates and price increases.

Current wording

For the three months ended September 30, 2026, Clear Aligner net revenues increased by $33 million compared to the same period in 2025, primarily due to an increase in volume, which increased net revenues by $48 million, partially offset by $11 million from product mix shift to lower-priced countries and products and $4 million from unfavorable foreign exchange rates.

Previous wording

For the six months ended June 30, 2026, Clear Aligner net revenues increased by $125 million compared to the same period in 2025, primarily due to an increase in volume and favorable foreign exchange rates, which increased net revenues by $102 million and $49 million, respectively. These increases were partially offset by higher discounts and product mix shift to lower-priced countries and products resulting in a decrease in net revenues of $26 million.

Current wording

For the nine months ended September 30, 2026, Clear Aligner net revenues increased by $159 million compared to the same period in 2025, primarily due to an increase in volume and favorable foreign exchange rates, which increased net revenues by $150 million and $45 million, respectively. These increases were partially offset by higher discounts and product mix shift to lower-priced countries and products resulting in a decrease in net revenues of $36 million.

Previous wording

For the six months ended June 30, 2026, Systems and Services net revenues decreased by $21 million compared to the same period in 2025, primarily due to decrease of $46 million from mix shift to lower-priced products, and $28 million from lower scanner wand sales. These decreases were partially offset by higher system volume of $35 million and an increase of $18 million from higher non-systems sales and favorable foreign exchange.

Current wording

For the three months ended September 30, 2026, Systems and Services net revenues decreased by $14 million compared to the same period in 2025, primarily due to decrease of $19 million from mix shift to lower-priced products and unfavorable foreign exchange rates and $3 million from lower scanner wand sales. These decreases were partially offset by higher system volume of $3 million and an increase of $5 million from higher non-system sales.

Previous wording

For the three months ended June 30, 2026, Systems and Services net revenues decreased by $23 million compared to the same period in 2025, primarily due to decrease of $27 million from mix shift to lower-priced products and $15 million from lower scanner wand sales. These decreases were partially offset by higher system volume of $11 million and an increase of $8 million from higher non-system sales and favorable foreign exchange.

Current wording

For the nine months ended September 30, 2026, Systems and Services net revenues decreased by $35 million compared to the same period in 2025, primarily due to a decrease of $64 million from mix shift to lower-priced products, and $32 million from lower scanner wand sales. These decreases were partially offset by higher system volume of $38 million and an increase of $23 million from higher non-system sales and favorable foreign exchange.

Previous wording

For the three and six months ended June 30, 2026, our gross margin percentage increased as compared to the same periods in 2025 primarily due to tariff refunds, roll-off of accelerated depreciation and higher clear aligner ASPs.

Current wording

For the three months ended September 30, 2026, our gross margin percentage increased as compared to the same period in 2025 primarily due to operational efficiencies, tariff refunds, roll-off of accelerated depreciation partially offset by lower ASPs.

Previous wording

For the three and six months ended June 30, 2026, our gross margin increased compared to the same period in 2025, primarily due to higher ASPs, roll-off accelerated depreciation and operational efficiencies, partially offset by higher freight costs.

Current wording

For the nine months ended September 30, 2026, our gross margin increased compared to the same period in 2025, primarily due to operational efficiencies partially offset by accelerated depreciation and foreign exchange.

Previous wording

For the three and six months ended June 30, 2026, our gross margin increased compared to the same period in 2025, primarily due to lower Cost of net revenues from tariff refunds and operational efficiencies, partially offset by lower ASPs.

Current wording

For the three months ended September 30, 2026, our gross margin increased compared to the same period in 2025, primarily due to lower Cost of net revenues from restructuring expenses, operational efficiencies, tariff refunds, partially offset by lower ASPs and foreign exchange.

Previous wording

For the three months ended June 30, 2026, selling, general and administrative expense increased compared to the same period in 2025, primarily due to higher spend on outside services, higher employee costs, including salaries, fringe benefits and bonus, and higher equipment and maintenance costs, partially offset by lower advertising and marketing expense, and stock-based compensation.

Current wording

For the three months ended September 30, 2026, selling, general and administrative expense decreased compared to the same period in 2025, primarily due to lower advertising and marketing expense, lower stock-based compensation, and lower equipment and maintenance costs offset by higher spend on outside legal services and higher employee costs, including salaries, fringe benefits and bonus.

Previous wording

For the six months ended June 30, 2026, selling, general and administrative expense increased compared to the same period in 2025, primarily due to higher spend on outside services, litigation, higher employee costs, including salaries, fringe benefits and bonus, and higher equipment and software costs, partially offset by lower advertising and marketing expense, commissions, and stock-based compensation.

Current wording

For the nine months ended September 30, 2026, selling, general and administrative expense increased compared to the same period in 2025, primarily due to higher spend on employee costs, including salaries, fringe benefits and bonus, higher legal services spend and higher software costs offset by lower advertising and marketing expense, lower stock-based compensation, lower commissions, and lower equipment and maintenance costs.

Previous wording

For the three months ended June 30, 2026, research and development expense increased compared to the same period in 2025, primarily due to higher employee costs, including salaries, fringe benefits and bonus costs, outside services, and depreciation on capitalized labor costs related to internal-use software, partially offset by lower stock-based compensation.

Current wording

For the three months ended September 30, 2026, research and development expense increased marginally compared to the same period in 2025, primarily due to higher employee costs, including salaries, fringe benefits and bonus costs, other operating expenses, software and materials, and depreciation on capitalized labor costs related to internal-use software, partially offset by lower outside services and capitalization of labor costs related to internal use software.

Previous wording

For the six months ended June 30, 2026, research and development expense increased compared to the same period in 2025, primarily due to higher employee costs, including salaries, fringe benefits and bonus costs, depreciation on capitalized labor costs related to internal-use software, and cloud tool spending, partially offset by lower stock-based compensation, and reduced outside service provider spend.

Current wording

For the nine months ended September 30, 2026, research and development expense increased compared to the same period in 2025, primarily due to higher employee costs, including salaries, fringe benefits and bonus costs, depreciation on capitalized labor costs related to internal-use software, and cloud tool spending, other operating expense, software and materials partially offset by capitalization of labor costs related to internal use software, lower stock-based compensation, and reduced outside service provider spend.

Previous wording

For the three months ended June 30, 2026, we recorded $1.2 million and $37.5 million related to legal settlements and UK VAT contingency loss, respectively. Refer to Note 6 “Legal Proceedings” and Note 7 “Commitments and Contingencies”of the Notes to Condensed Consolidated Financial Statements for more information.

Current wording

For the three months ended September 30, 2026, we recorded $0.8 million and $5.6 million related to legal settlements and UK VAT contingency loss, respectively. Refer to Note 7 “Legal Proceedings” and Note 8 “Commitments and Contingencies”of the Notes to Condensed Consolidated Financial Statements for more information.

Previous wording

For the six months ended June 30, 2026, we recorded $31.8 million and $37.5 million related to legal settlements and UK VAT contingency loss, respectively. Refer to Note 6 “Legal Proceedings” and Note 7 “Commitments and Contingencies”of the Notes to Condensed Consolidated Financial Statements for more information.

Current wording

For the nine months ended September 30, 2026, we recorded $32.7 million and $43.1 million related to legal settlements and UK VAT contingency loss, respectively. Refer to Note 7 “Legal Proceedings” and Note 8 “Commitments and Contingencies”of the Notes to Condensed Consolidated Financial Statements for more information.

Previous wording

For the six months ended June 30, 2026, our operating margin increased compared to the same period in 2025, primarily due to higher gross margin and lower advertising and marketing expense, partially offset by an increase in employee costs and equipment.

Current wording

For the nine months ended September 30, 2026, our operating margin increased compared to the same period in 2025, primarily due to higher gross margin and lower advertising and marketing expense, lower credit card transaction fees and outside services, partially offset by an increase in employee costs and equipment.

Previous wording

For the three months ended June 30, 2026, our operating margin increased compared to the same period in 2025, primarily due to higher gross margin and a decrease in operating expenses related to lower advertising and marketing costs.

Current wording

For the three months ended September 30, 2026, our operating margin increased compared to the same period in 2025, primarily due to higher gross margin and a decrease in operating expenses related to lower employee costs.

Previous wording

For the six months ended June 30, 2026, our operating margin increased compared to the same period in 2025, primarily due to higher gross margin and a decrease in operating expenses related to lower employee costs, advertising and outside services partially offset by an increase in credit card transaction fees and equipment.

Current wording

For the nine months ended September 30, 2026, our operating margin increased compared to the same period in 2025, primarily due to higher gross margin and a decrease in operating expenses related to lower employee costs, advertising and outside services partially offset by an increase in credit card transaction fees and equipment.

Previous wording

For the three and six months ended June 30, 2026, interest income increased compared to the same period in 2025, primarily due to interest earned on cash and cash equivalent balances.

Current wording

For the three and nine months ended September 30, 2026, interest income increased compared to the same period in 2025, primarily due to interest earned on cash and cash equivalent balances.

Previous wording

For the six months ended June 30, 2026, other income (expense), net decreased compared to the same period in 2025, primarily due to an unfavorable impact from foreign exchange rates, partially offset by a gain recorded on our equity investment.

Current wording

For the nine months ended September 30, 2026, other income (expense), net decreased compared to the same period in 2025, primarily due to an unfavorable impact from foreign exchange rates, partially offset by a gain recorded on our equity investment and lower accounts receivable factoring fees.

Previous wording

Our effective tax rate differed from the U.S. statutory federal income tax rate of 21% for the three and six months period ended June 30, 2026 and 2025, primarily due to the recognition of additional tax expense resulting from U.S. taxes on foreign earnings, state income taxes, and non-deductible expense in the U.S., partially offset by the foreign income taxed at different rates.

Current wording

Our effective tax rate differs from the statutory federal income tax rate of 21% for the three months ended September 30, 2026, primarily due to foreign income taxed at different rates and U.S. tax on foreign earnings, partially offset by state income taxes and non-deductible expenses in the U.S. Our effective tax rate differs from the statutory federal income tax rate of 21% for the nine months ended September 30, 2026, primarily due to the recognition of additional tax expense resulting from U.S. taxes on foreign earnings, state income taxes, and non-deductible expenses in the U.S., partially offset by the foreign income taxed at different rates. Our effective tax rate differed from the U.S. statutory federal income tax rate of 21% for the three and nine months ended September 30, 2025, primarily due to the recognition of additional tax expense resulting from U.S. taxes on foreign earnings, state income taxes, and non-deductible expense in the U.S., partially offset by the foreign income taxed at different rates.

Previous wording

The decrease in our effective tax rate for the six months ended June 30, 2026 compared to the same period in 2025 is primarily attributable to the change in our jurisdictional mix of income, a decrease in the state income taxes and higher tax deduction from stock-based compensation.

Current wording

The decrease in our effective tax rate for the three months ended September 30, 2026 compared to the same period in 2025 is primarily attributable to a decrease in U.S. taxes on foreign earnings, partially offset by the change in our jurisdictional mix of income.