Align Technology’s second quarter was marked by lower-than-expected revenue and profit, which led to a substantial negative market reaction. Management pointed to weaker-than-normal patient case conversion in late June, especially in North America and parts of Europe, as a key driver. CEO Joe Hogan acknowledged that “June just didn’t materialize the way we thought it would,” citing reduced patient traffic and heightened consumer reluctance to spend on elective dental procedures. Hogan also highlighted a continued shift by some orthodontists to traditional braces amid economic uncertainty, further impacting demand for clear aligners.
Is now the time to buy ALGN? Find out in our full research report (it’s free).
Align Technology (ALGN) Q2 CY2025 Highlights:
- Revenue: $1.01 billion vs analyst estimates of $1.06 billion (1.6% year-on-year decline, 4.8% miss)
- Adjusted EPS: $2.49 vs analyst expectations of $2.57 (3.3% miss)
- Adjusted EBITDA: $256.5 million vs analyst estimates of $267.7 million (25.3% margin, 4.2% miss)
- Revenue Guidance for Q3 CY2025 is $975 million at the midpoint, below analyst estimates of $1.04 billion
- Operating Margin: 16.1%, up from 14.3% in the same quarter last year
- Sales Volumes were flat year on year (3.2% in the same quarter last year)
- Market Capitalization: $10.18 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Align Technology’s Q2 Earnings Call
- Elizabeth Anderson (Evercore ISI) asked about the drivers behind weak case conversion and the shift to traditional braces. CEO Joseph Hogan explained that June’s conversion rates fell short mainly in North America and select European countries due to patient reluctance and some orthodontists prioritizing existing inventory.
- Jon Block (Stifel) pressed on the sequential revenue growth assumptions for later in the year, questioning the feasibility of a strong Q4 rebound. CFO John Morici responded that expected improvements are driven by new scanner launches and marketing efforts aimed at boosting conversion in key segments.
- Jeffrey Johnson (RW Baird) probed whether doctors or consumers were more responsible for the slowdown. Hogan emphasized that consumer reluctance was the primary factor, but acknowledged that some individual practices opted for traditional methods based on profitability.
- Russell Yuen (William Blair) asked about the impact of weakened consumer sentiment on the iTero Lumina scanner. Hogan admitted full system sales lagged due to low capital investment appetite, with most growth coming from wand upgrades.
- Vik Chopra (Wells Fargo) questioned the sufficiency of restructuring actions. Morici expressed confidence that streamlining operations and getting closer to customers would enhance productivity and long-term profitability.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will closely watch (1) trends in patient conversion rates and consumer willingness to spend on elective dental procedures, (2) the effectiveness and pace of Align’s operational restructuring and cost savings, and (3) the adoption rate of new products such as the iTero Lumina scanner and recent clear aligner offerings. Continued monitoring of tariff impacts and international pricing adjustments will also be important indicators of progress.
Align Technology currently trades at $140.49, down from $204.41 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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