Align Technology, Inc. (ALGN Quick QuoteALGN - Free Report) delivered first-quarter 2025 adjusted earnings per share (EPS) of $2.13, up 0.5% from the year-ago level. The reported figure topped the Zacks Consensus Estimate by 7.6%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

GAAP EPS for the quarter was $1.27, reflecting a decline of 8.6% from $1.39 in the comparable period of 2024. 

Following the earnings announcement, ALGN stock edged 9.6% in after-market trading yesterday.

ALGN’s Q1 Revenues

The top line decreased 1.8% year over year to $979.3 million, but surpassed the Zacks Consensus Estimate by 0.7%. Revenues were adversely impacted by foreign exchange of approximately 3.1%.

ALGN’s Segments in Detail

The company has two reportable segments — Clear Aligner, and Imaging Systems and CAD/CAM Services (Systems and Services).

Revenues in the Clear Aligner segment fell 2.5% year over year to $796.8 million. 

Clear Aligner revenues had a 3.1% unfavorable foreign exchange impact.

Revenues from Imaging Systems & CAD/CAM Services rose 1.2% to $182.4 million in the reported quarter. The segment, too, witnessed an unfavorable currency impact of 2.8%.

Margins

Gross profit in the first quarter was $680.1 million, down 2.5% year over year. The gross margin contracted 51 basis points (bps) year over year to 70% despite a decrease of 0.1% in the cost of net revenues.

SG&A expenses fell 0.9% to $447.6 million, while R&D expenses rose 5.8% to $97.2 million.

Operating income totaled $135.3 million, down 12.2% year over year. The operating margin contracted 164 bps to 13.8%.

Financial Details of ALGN 

The company exited the first quarter of 2025 with cash and cash equivalents of $873 million compared with $1.04 billion at the end of the fourth quarter of 2024.  

The net cash provided by operating activities was $52.7 million compared with $28.7 million at the end of the first quarter of 2024. 

Stock Repurchase

During the reported quarter, the company initiated a new plan to repurchase the remaining $225.0 million of common stock under the January 2023 approved Stock Repurchase Program of $1.0 billion through open market repurchases. 

ALGN's Guidance

Align Technology provided its sales outlook for full-year 2025. It has also provided a guidance for the second quarter of 2025.

For the full year, ALGN expects revenue growth to be in the range of 3.5% to 5.5%, at current spot rates. The Zacks Consensus Estimate for 2025 revenues is pegged at $4.09 billion, suggesting 2.2% growth year over year.

The 2025 GAAP operating margin for the full year is anticipated to be approximately 2 basis points above the 2024 level. The non-GAAP operating margin is expected to be approximately 22.5%.

Align Technology, Inc. Price, Consensus and EPS Surprise

Align Technology, Inc. price-consensus-eps-surprise-chart | Align Technology, Inc. Quote

To support continued expansion, the company expects to invest $100-$150 million in capital expenditures, primarily related to technology upgrades and manufacturing capacity.

For the second quarter, ALGN anticipates worldwide revenues to be in the band of $1.05-$1.07 billion. The Zacks Consensus Estimate is pegged at $1.05 billion.

Our Take

Align Technology exited the first quarter of 2025 with better-than-expected results, wherein both earnings and revenues beat the Zacks Consensus Estimate. However, revenues deteriorated on a year-over-year basis due to a decline in Clear Aligner segment’s sales. 

On a positive note, Clear Aligner volume growth was driven by strength in both the teens and adult patient arms across the EMEA, Asia-Pacific and North America regions. 

Additionally, ALGN’s Imaging Systems & CAD/CAM Services business segment reported strong growth on a year-over-year basis, primarily due to improved scanner and wand revenues driven by upgrades in the leasing rental programs.

During the quarter, Align Technology achieved several milestones, including 280 thousand active Invisalign-trained practitioners and 20 million Invisalign patients treated worldwide.

Further, contraction of both the gross and operating margins is a matter of concern. 

ALGN’s Zacks Rank and Key Picks

Align Technology currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are AngioDynamics (ANGO Quick QuoteANGO - Free Report) , Veeva Systems (VEEV Quick QuoteVEEV - Free Report) and Masimo (MASI Quick QuoteMASI - Free Report) . 

AngioDynamics, currently sporting a Zacks Rank #1 (Strong Buy), reported third-quarter fiscal 2025 adjusted EPS of 3 cents, which beat the Zacks Consensus Estimate of a loss of 13 cents.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Revenues of $72 million beat the Zacks Consensus Estimate by 2%. ANGO has an estimated fiscal 2026 earnings growth rate of 27.8% compared with the S&P 500 composite’s 10.5%. The company beat on earnings in each of the trailing four quarters, the average surprise being 70.9%.

Veeva Systems, carrying a Zacks Rank #2 (Buy) at present, posted fourth-quarter fiscal 2025 adjusted EPS of $1.75, which exceeded the Zacks Consensus Estimate by 10.1%. Revenues of $720.9 million surpassed the Zacks Consensus Estimate by 3.2%.

VEEV has an estimated long-term earnings growth rate of 26.6% compared with the industry’s 20.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.9%.

Masimo, currently carrying a Zacks Rank #2, reported a fourth-quarter 2024 adjusted EPS of $1.80, which surpassed the Zacks Consensus Estimate by 20.8%. Revenues of $600.7 million topped the Zacks Consensus Estimate by 0.8%.

MASI has an estimated earnings yield of 3.5% for fiscal 2025 compared with the industry’s 3.6%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.4%.