Align Technology (ALGN) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenues were $979.3 million, down 1.6% sequentially and 1.8% year-over-year, with Clear Aligner volumes up 6.2% year-over-year and 2.2% sequentially, driven by strength in teens and adults across all regions, especially APAC and EMEA.

• Q1 marked the highest year-over-year growth rate for both adult and teen patients since 2021, with record numbers of doctor submitters, utilization in the GP dentist channel, and the milestone of 20 million Invisalign patients treated globally.

• New product launches included the Invisalign Palatal Expander System, Invisalign System with Mandibular Advancement featuring Occlusal Blocks, and iTero Lumina Pro dental imaging system, expanding the portfolio for growing patients and GP dentists.

• DSOs continued to be a strong growth channel, outpacing retail doctors, with increased Clear Aligner volume and strong iTero scanner sales.

• Net income was $93.2 million (GAAP), with diluted EPS of $1.27; non-GAAP net income was $156.9 million, EPS $2.13.

Financial highlights

• Q1 total revenues were $979.3 million, down 1.6% sequentially and 1.8% year-over-year; constant currency impact was negative $21.4 million sequentially and $31.1 million year-over-year.

• Q1 Clear Aligner revenues were $796.8 million, up 0.3% sequentially but down 2.5% year-over-year, with average per case shipment price at $1,240, down $25 sequentially and $110 year-over-year due to FX, discounts, and product mix.

• Q1 Systems and Services/Imaging revenues were $182.4 million, down 9.2% sequentially but up 1.2% year-over-year, driven by iTero Lumina wand upgrades and new restorative software.

• Q1 overall gross margin was 69.5% (GAAP), down 0.6 points sequentially and 0.5 points year-over-year; Clear Aligner gross margin was 70.5%.

• Q1 operating income was $131.1 million (13.4% margin), down 1.1 points sequentially and 2.1 points year-over-year; non-GAAP operating margin was 19.1%.

• Cash and cash equivalents at quarter-end were $873 million; free cash flow was $27.4 million.

Outlook and guidance

• Q2 2025 revenues expected between $1.05 billion and $1.07 billion, with sequential growth in Clear Aligner volume and ASPs, and higher Systems and Services revenue.

• Q2 2025 gross margin and operating margin (GAAP and non-GAAP) expected to be up sequentially by about 3 points.

• Fiscal 2025 Clear Aligner volume growth projected at mid-single digits year-over-year; ASPs expected to decline due to product mix and emerging market growth.

• Fiscal 2025 revenue growth expected in the range of 3.5%-5.5%; GAAP operating margin to be about 2 points above 2024, non-GAAP margin around 22.5%.

• Capital expenditures for 2025 expected between $100 million and $150 million, focused on technology and manufacturing upgrades.