Align Technology Q2 2025 slides: Mixed results as operating margins improve

Align Technology (NASDAQ:ALGN) presented its second quarter 2025 financial results on July 30, revealing a mixed performance with stronger Systems and Services growth offsetting weaker Clear Aligner revenues. The company reported total revenues of $1,012.4 million, down 1.6% year-over-year but up 3.4% sequentially, while operating margins showed improvement.

Introduction & Market Context

Align Technology’s Q2 2025 results come amid what the company described as "uneven patient case conversion, tariff turmoil, and less affordable financing" in its presentation. The orthodontic market continues to face headwinds, with the company noting that orthodontic starts are down for the fourth consecutive year.

Despite these challenges, Align maintains a positive long-term outlook based on the substantial global opportunity, which the company quantifies as more than 600 million potential patients worldwide. The presentation highlighted that 75% of the global population suffers from malocclusion (misalignment of teeth), underscoring the market potential.

As shown in the following slide depicting the global opportunity:

Quarterly Performance Highlights

For Q2 2025, Align Technology reported total revenues of $1,012.4 million, representing a 1.6% decrease year-over-year but a 3.4% increase quarter-over-quarter. The company’s performance was bolstered by favorable foreign exchange impacts of approximately $26.4 million quarter-over-quarter and $5.6 million year-over-year.

The company’s Systems and Services segment showed strong growth, with revenues of $207.8 million, up 5.6% year-over-year and 13.9% quarter-over-quarter. This growth partially offset the decline in Clear Aligner revenues, which fell 3.3% year-over-year to $804.6 million but increased 1.0% sequentially.

The following slide details the Q2 2025 revenue and operating margin performance:

Despite the revenue challenges, Align improved its profitability metrics. GAAP operating profit reached $163.0 million, representing an operating margin of 16.1%, which was up 1.8 percentage points year-over-year and 2.7 percentage points quarter-over-quarter.

Detailed Financial Analysis

Align’s Q2 2025 results fell short of the guidance provided during the Q1 earnings call, which projected Q2 revenues between $1,050 million and $1,070 million. The actual revenue of $1,012.4 million represents a shortfall of approximately 4% from the midpoint of that guidance.

The company’s stock showed minimal movement in after-hours trading, with the price at $205.82, suggesting that investors had already priced in the challenges or that the results were in line with revised market expectations.

The divergence in performance between segments highlights Align’s evolving business mix. While the core Clear Aligner business faces headwinds, the Systems and Services segment—which includes the iTero scanner business—continues to show strength. This diversification helps buffer overall performance during periods of uneven growth.

The company’s digital scanner opportunity remains substantial, with Align noting that there are 2 million doctors worldwide and over 100,000 iTero scanners already deployed. The company’s strategy emphasizes placing an iTero scanner "at every chair."

The following slide illustrates the digital scanner opportunity:

Strategic Initiatives

Align Technology continues to emphasize its comprehensive digital platform, which integrates various aspects of the dental treatment workflow. The platform connects consumers, patients, doctors, and dental labs through a circular process that includes scanning, diagnosis, treatment planning, monitoring, and retention.

This integrated approach represents Align’s strategy to maintain its competitive position in the clear aligner market while expanding its digital ecosystem. The company’s digital platform is visualized in the following slide:

The company’s global market distribution strategy targets three major regions: Americas (8 million orthodontic starts annually), EMEA (6 million), and APAC (8 million), for a total of 22 million annual orthodontic starts worldwide. This global approach helps Align diversify its revenue streams across different economic environments.

The following slide shows the global distribution of aligners:

Forward-Looking Statements

Looking ahead, Align Technology acknowledged continued economic uncertainty but noted strong consumer interest in Invisalign treatment. The company is actively pushing to drive engagement with younger clients, a demographic that represents a significant growth opportunity.

The prevalence of malocclusion worldwide (75%) continues to provide a substantial addressable market for Align’s products, as illustrated in the following slide:

While the company faces near-term challenges including tariff impacts and financing constraints for patients, its long-term strategy remains focused on expanding its digital ecosystem and making tooth movement the standard of care globally.

Management’s commentary suggests a cautious outlook for the remainder of 2025, with economic headwinds likely to continue affecting patient conversion rates. However, the improvement in operating margins demonstrates the company’s ability to manage costs effectively despite revenue pressures.

Investors will be watching closely to see if Align can return to growth in its Clear Aligner business while maintaining the momentum in its Systems and Services segment in the coming quarters.

Full presentation:

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