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    ALGN
    Earnings call· Mar 2026(Q1 FY26)

    ALIGN TECHNOLOGY Q1 FY26 earnings call ALGN

    Apr 29, 2026 Source

    Executive summary

    Align Q1 FY26 — Strong Clear Aligner Volumes and Margin Expansion

    Align Technology delivered better-than-expected Q1 FY26 results, driven by record Clear Aligner volumes and strong international growth across all patient segments and channels. The company demonstrated significant operating margin expansion due to efficiency initiatives, while navigating a mixed retail environment in North America and macroeconomic uncertainties, particularly related to the Middle East conflict. Management reaffirmed full-year guidance, maintaining a prudent stance despite the strong start to the year.

    Highlights

    5

    • Total revenues of $1.041 billion, up 6.2% year-over-year, exceeding expectations.

    • Clear Aligner shipments reached a record 686,000 cases, increasing 6.7% year-over-year, driven by international growth.

    • Non-GAAP operating margin expanded by 2.5 points year-over-year to 21.5%.

    • Non-GAAP diluted EPS increased 21% year-over-year to $2.58.

    • DSO Clear Aligner volumes grew double-digit across all regions, representing approximately 1/4 of total global volumes.

    Concerns

    4

    • Q1 Systems and Services revenue growth was modest at 0.9% year-over-year, reflecting expected capital equipment seasonality.

    • North America Clear Aligner volumes experienced a modest year-over-year decline, partially offsetting strong international growth.

    • The retail channel in the United States continued to be mixed, with doctors reporting less patient traffic during the quarter.

    • Uncertainty from ongoing military action in the Middle East is assumed to impact Q2 Clear Aligner and scanner demand.

    Guidance & targets

    14
    CategoryTargetConfidence
    Q2 2026 Worldwide Revenues
    $1.04 billion to $1.06 billion
    high materiality
    High
    Q2 2026 Clear Aligner Volume Growth
    up sequentially and year-over-year
    medium materiality
    High
    Q2 2026 Clear Aligner Average Selling Price (ASP)
    flat sequentially and year-over-year
    medium materiality
    High
    Q2 2026 Systems and Services Revenues
    up sequentially
    medium materiality
    High
    Q2 2026 GAAP Operating Margin
    approximately 16.4%
    high materiality
    High
    Q2 2026 Non-GAAP Operating Margin
    approximately 21.5%
    high materiality
    High
    FY 2026 Worldwide Revenue Growth
    up 3% to 4% year-over-year
    high materiality
    High
    FY 2026 Revenue Foreign Exchange Benefit
    approximately 100 basis points
    medium materiality
    High
    FY 2026 Clear Aligner Volume Growth
    up mid-single digits year-over-year
    high materiality
    High
    FY 2026 GAAP Operating Margin
    slightly below 18%
    high materiality
    High
    FY 2026 Non-GAAP Operating Margin
    approximately 23.7%
    high materiality
    High
    FY 2026 Capital Expenditures
    $125 million to $150 million
    medium materiality
    High
    Share Repurchase Program
    up to an additional $200 million
    medium materiality
    High
    FY 2026 Clear Aligner Average Selling Price (ASP) Change
    1% to 2% decrease year-over-year
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Clear Aligner
    Reflected double-digit volume growth in EMEA, APAC, and Latin America, with overall stability in North America. Growth driven by submitter expansion and higher utilization across Orthodontists and GP channels.
    Shipments: 686,000 casesShipments growth YoY: 6.7%Shipments growth sequentially: 1.3%Orthodontists shipments growth YoY: 7.4%GPs shipments growth YoY: 5.6%Adults treated: 449,000Adults treated growth YoY: 7.8%Teens and growing kids treated: 237,000Teens and growing kids treated growth YoY: 4.8%Doctors submitted cases: >88,000Doctors submitted cases growth YoY: 3%Doctor utilization growth YoY: 3.4%DSO volumes growth: double-digitDSO volumes % of total: ~1/4
    		$856 million7.4%2.1%71.6%
    Systems and Services
    Reflected expected first quarter capital equipment seasonality. Growth driven by iTero Lumina full systems, service revenues, and CPO sales, with a mix shift towards lower-priced scanner offerings.
    Total installed base of active scanners: >125,000iTero digital scans performed: >12 millionExocad revenue growth: double-digit YoY
    		$184.1 million0.9%declined sequentially67.2%

    Operational metrics

    16
    Non-GAAP Net Income Per Diluted Share
    $2.58up 21% year-over-year
    Q1 FY26

    Reported on a non-GAAP basis.

    Non-GAAP Operating Margin
    21.5%up 2.5 points year-over-year
    Q1 FY26

    Reported on a non-GAAP basis, reflecting improvements from restructuring and efficiency initiatives.

    Non-GAAP Gross Margin
    71.8%up 1.6 points year-over-year
    Q1 FY26

    Excludes stock-based compensation, amortization of intangibles, depreciation on disposed assets, gain on assets held for sale, and restructuring charges.

    Non-GAAP Operating Expenses
    $523.1 millionup 4.5% year-over-year
    Q1 FY26

    Excludes stock-based compensation, restructuring and other charges, amortization of acquired intangibles, and legal settlement costs.

    Non-GAAP Effective Tax Rate
    20%
    Q1 FY26

    Reflects the long-term projected tax rate.

    Cash and Cash Equivalents
    $1.0598 billionup $186.8 million year-over-year
    as of March 31, 2026

    Balance sheet item, with geographic split of holdings.

    Stock Repurchase Completed
    $200 million
    August 2025 to January 2026

    Completed under the previously authorized $1 billion stock repurchase program.

    Remaining Stock Repurchase Authorization
    $800 million
    as of March 31, 2026

    Amount remaining under the authorized stock repurchase program.

    Accounts Receivable Balance
    $1,125.1 million
    Q1 FY26

    Balance sheet item.

    Days Sales Outstanding (DSO)
    97 daysflat as compared to Q1 of 2025
    Q1 FY26

    Measure of collection efficiency.

    Total Revenues Constant Currency Impact
    $44.9 million4.5% year-over-year
    Q1 FY26

    Favorable impact from constant currency basis.

    Clear Aligner Revenues FX Impact
    $38.2 million4.7% year-over-year
    Q1 FY26

    Favorable impact from foreign exchange.

    Systems and Services Revenues FX Impact
    $6.7 million3.8% year-over-year
    Q1 FY26

    Favorable impact from foreign exchange.

    Clear Aligner Deferred Revenues
    $77.2 milliondecreased 6.4% year-over-year
    as of March 31, 2026

    Expected to decrease over time with Zero additional aligner configurations.

    Systems and Services Deferred Revenues
    $22.4 milliondecreased 10.8% year-over-year
    as of March 31, 2026

    Due in part to shorter duration of service contracts.

    Scrap Base (current vacuum forming)
    95%
    current

    Represents the scrap rate for the current vacuum forming manufacturing process, which direct fabrication aims to reduce.

    Industry KPIs

    10
    MetricValueDetails
    System utilization3.4%%
    Pricing realized price$1,250USD
    New product launch rampLimited market releases
    Procedure volume growth686,000cases
    FCF conversion leverage guidance$120.3 millionUSD
    Installed base system placements>125,000units
    Segment franchise organic growthDouble-digit growth%
    Consumables recurring revenue mixdouble-digit%
    Indicated addressable patient population22 millionannual case starts
    Pivotal trial clinical evidence milestonesEffective widening of upper jaw

    Product announcements

    1
    ProductTypeDetails
    Direct-3D Printed Attachments and Retainerslaunch

    Risks & headwinds

    3
    Middle East military actionQ2 2026 and beyond

    Immaterial effect on Q1 EMEA results; assumed some impact on Q2 Clear Aligner and scanner demand. Beyond Q2, increasingly difficult to predict.

    Mitigation: Prudent approach in Q2 outlook, monitoring developments closely.

    Macroeconomic uncertaintyFY 2026

    Macroeconomic environment remains uncertain, potential for higher fuel prices and inflation impacting consumer spending.

    Mitigation: Maintaining a prudent stance with respect to full-year guidance, disciplined execution, and active conversion efforts (financing, doctor support).

    Retail channel weakness in the United StatesQ1 FY26

    Retail channel continued to be mixed, with doctors reporting less patient traffic during the quarter.

    Mitigation: Expanding targeted initiatives focused on affordability, patient conversion, clinical confidence, and practice efficiency (DSP, HFD, Invisalign Pay, peer-to-peer mentoring, TPS).

    What to watch in Q2 FY26

    5

    Middle East Conflict Impact on Demand

    next quarter
    CurrentAssumed some impact on Q2 Clear Aligner and scanner demand
    TargetActual impact on Q2 Clear Aligner and scanner demand

    Why it matters

    The conflict's duration and escalation could significantly affect patient traffic, consumer demand, and shipping/freight, impacting overall revenue and profitability.

    Given the ongoing uncertainty, we have taken a prudent approach in our second quarter outlook by assuming some impact on both Clear Aligner and scanner demand.

    Q&A highlights

    5

    Asked about the expected ramp in profitability in H2 and the assumed impact of the Middle East conflict on Q2 guidance.

    Management stated that Q1 profitability reflected the success of prior restructuring and cost actions, expecting this trend to continue. They noted that profitability typically increases with volume throughout the year. The Middle East impact is minimal directly but affects macro factors like fuel prices and inflation, which are prudently factored into Q2 guidance.

    “We expect that profitability and the productivity to continue as we go through the year. And that's typically the cadence that we have as we go quarter-over-quarter, we see that profitability and especially as volume increases as well, we see that profitability come through as well.”

    asked by Daniel Grosslight · answered by John Morici

    2 min read6 chapters

    Detailed Narrative

    01

    Global Growth Drivers and Strategic Initiatives

    Align's Q1 performance was broad-based, with double-digit Clear Aligner volume growth in EMEA, APAC, and Latin America, alongside stability in North America. This growth was fueled by increased submitters and higher utilization across both orthodontist and GP channels, and strong demand from adult, teen, and growing kid patient categories. The company highlighted the success of its Doctor Subscription Program (DSP) and patient financing initiatives in driving adoption and utilization, with DSP touch-up cases growing double-digit year-over-year.

    02

    Digital Platform Expansion and Restorative Dentistry

    The iTero Lumina system continues to see adoption, with the total installed base exceeding 125,000 scanners globally and over 12 million digital scans performed in Q1. Exocad delivered double-digit revenue growth, reinforcing the strategy to integrate orthodontics and restorative dentistry. The Invisalign Advanced Restorative Treatment (ART) pilot, integrating with Exocad, aims to expand reach into the restorative market by enabling tooth alignment prior to restorative work, preserving natural dentition.

    03

    Enhanced Affordability and Clinical Confidence Programs

    Align is expanding targeted initiatives focused on affordability, patient conversion, clinical confidence, and practice efficiency. These include the Doctor Subscription Program (DSP), patient financing (Healthcare Finance Direct in the US, Invisalign Pay in Brazil), peer-to-peer mentoring, and Treatment Planning Services (TPS). TPS, in particular, has shown to materially increase utilization among users and contribute to low double-digit year-over-year growth in case starts in markets like Canada, addressing a key barrier for GP dentists.

    04

    Innovation for Growing Patients and Competitive Positioning

    The company continues to focus on the teen and growing kid segments, which represent the largest orthodontic patient opportunity. Products like Invisalign First, Invisalign Palate Expander (IPE), and mandibular advancement with occlusal blocks are driving adoption by treating a broader range of growing patients and competing effectively against traditional wires and brackets. A clinical study found IPE effectively widens the upper jaw, achieving bone and bite changes similar to traditional metal Hyrax expanders with more controlled and predictable results.

    05

    Advancements in Direct Fabrication Technology

    Align is advancing direct fabrication (direct 3D printing) deliberately and in phases, with initial limited market releases of direct-3D printed attachments and retainers in Q1. This technology is expected to unlock new design flexibility, strengthen the long-term cost structure, and improve operational efficiency by significantly reducing the 95% scrap base associated with current vacuum forming processes and isolating from petrochemical feed streams.

    06

    Financial Discipline and Capital Allocation

    Align maintains a disciplined capital return program, having completed a $200 million share repurchase between August 2025 and January 2026, and authorizing an additional $200 million. The company is focused on strengthening its cost structure through restructuring actions and efficiency initiatives, aiming for improved operating leverage and sustainable margin expansion, while managing input cost pressures and investing for long-term returns.

    AI-generated summary of the company’s earnings call. Not investment advice.