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ALGN Stock Up on Q3 Earnings and Revenue Beat, Margins Crash
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Key Takeaways
Align Technology's Q3 adjusted EPS rose 11.1% to $2.61, topping consensus by 10.1%.
ALGN's revenues grew 1.8% to $995.7M, driven by Clear Aligner sales and favorable currency impact.
ALGN's gross and operating margins contracted sharply as costs climbed despite higher earnings.
Align Technology, Inc. (ALGN - Free Report) delivered third-quarter 2025 adjusted earnings per share (EPS) of $2.61, up 11.1% from the year-ago level. The bottom line surpassed the Zacks Consensus Estimate by 10.1%.
GAAP EPS for the quarter was 78 cents, reflecting a fall of 49.7% from $1.55 in the comparable period of 2024.
ALGN’s Q3 Revenues
The top line increased 1.8% year over year to $995.7 million, and surpassed the Zacks Consensus Estimate by 2.5%.
Total revenues benefited from foreign exchange by approximately 1.6% year over year.
Following the earnings announcement, ALGN stock rose 15.1% in after-market trading yesterday.
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 were up 2.4% year over year to $805.8 million.
Revenues from Imaging Systems & CAD/CAM Services fell 0.6% to $189.9 million in the reported quarter. The segment, too, witnessed a favorable currency impact of 1.4% year over year.
ALGN’s Q3 Margins
Gross profit in the third quarter was $639.2 million, down 6.2% year over year. The gross margin contracted 552 basis points (bps) year over year to 64.2% due to an increase of 20.4% in the cost of net revenues.
SG&A expenses fell 3.8% to $417.8 million, while R&D expenses rose 9.4% to $93.3 million.
Operating income totaled $128.1 million, down 21.1% year over year. The operating margin contracted 374 bps to 12.9%.
Financial Details of ALGN
The company exited the third quarter with cash and cash equivalents of $1.00 billion compared with $901.2 million at the end of the second quarter.
Cumulative net cash provided by operating activities was $370 million compared with $452.1 million at the end of the third quarter of 2024.
Stock Repurchase
During the reported quarter, the company repurchased approximately 0.5 million shares of common stock at an average price of $136.77 per share. These repurchases were made following the $200.0 million open market repurchase plan announced on Aug. 5, 2025, expected to be completed in January 2026.
ALGN's Outlook
Align Technology provided its sales outlook for full-year 2025. It has also provided guidance for the fourth quarter of 2025.
For the full year, ALGN expects Clear Aligner revenue growth to be flat to slightly up from 2024, assuming foreign exchange at current spot rates. The Zacks Consensus Estimate for 2025 revenues is pegged at $4.01 billion, suggesting 0.2% growth year over year.
Align Technology, Inc. Price, Consensus and EPS Surprise
The GAAP operating margin is anticipated to range between 13.6% and 13.8% (earlier 13% and 14%).
To support continued expansion, the company expects to invest $100 (earlier $100-$125 million) in capital expenditures, primarily related to technology upgrades.
For the fourth quarter, ALGN anticipates worldwide revenues to be in the band of $1.03-$1.05 billion. The Zacks Consensus Estimate is pegged at $1.04 billion.
Our Take on ALGN
Align Technology exited the third quarter of 2025 with better-than-expected results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Also, revenues improved on a year-over-year basis due to a rise in the Clear Aligner segment’s sales.
Clear Aligner volume grew in APAC, EMEA and Latin American regions, driven by increased utilization across both orthodontists and general practitioners (GP) dentist channels, with strength in the teens and kids category. However, ALGN’s Imaging Systems & CAD/CAM Services business segment reported a year-over-year decline, primarily due to capital equipment seasonality.
However, 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).
Veracyte reported second-quarter 2025 adjusted EPS of 44 cents, which beat the Zacks Consensus Estimate by 41.9%. Revenues of $130.2 million topped the Zacks Consensus Estimate by 7.1%. VCYT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
VCYT has an estimated earnings growth rate of 19.3% for 2025 compared with the industry’s 12.9%. The company beat on earnings in each of the trailing four quarters, the average surprise being 242.77%.
Insulet, currently sporting a Zacks Rank #1, reported a second-quarter 2025 adjusted EPS of $1.17, which outperformed the Zacks Consensus Estimate by 25.81%. Revenues of $649.1 million exceeded the Zacks Consensus Estimate by 5.46%.
PODD has an estimated earnings growth rate of 42.3% for 2025 compared with the industry’s 12.7%. The company beat on earnings in each of the trailing four quarters, the average surprise being 19.54%.
Phibro Animal Health, currently carrying a Zacks Rank #2 (Buy), reported a fourth-quarter fiscal 2025 EPS of 57 cents, which beat the Zacks Consensus Estimate by 9.62%. Net sales of $378.7 million topped the consensus estimate by 4.86%.
Phibro has an estimated earnings growth rate of 21.1% for fiscal 2026 compared with the industry’s 12.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 27.88%.
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ALGN Stock Up on Q3 Earnings and Revenue Beat, Margins Crash
Key Takeaways
Align Technology, Inc. (ALGN - Free Report) delivered third-quarter 2025 adjusted earnings per share (EPS) of $2.61, up 11.1% from the year-ago level. The bottom line surpassed the Zacks Consensus Estimate by 10.1%.
GAAP EPS for the quarter was 78 cents, reflecting a fall of 49.7% from $1.55 in the comparable period of 2024.
ALGN’s Q3 Revenues
The top line increased 1.8% year over year to $995.7 million, and surpassed the Zacks Consensus Estimate by 2.5%.
Total revenues benefited from foreign exchange by approximately 1.6% year over year.
Following the earnings announcement, ALGN stock rose 15.1% in after-market trading yesterday.
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 were up 2.4% year over year to $805.8 million.
Clear Aligner revenues experienced a 1.6% year-over-year favorable foreign exchange impact.
Revenues from Imaging Systems & CAD/CAM Services fell 0.6% to $189.9 million in the reported quarter. The segment, too, witnessed a favorable currency impact of 1.4% year over year.
ALGN’s Q3 Margins
Gross profit in the third quarter was $639.2 million, down 6.2% year over year. The gross margin contracted 552 basis points (bps) year over year to 64.2% due to an increase of 20.4% in the cost of net revenues.
SG&A expenses fell 3.8% to $417.8 million, while R&D expenses rose 9.4% to $93.3 million.
Operating income totaled $128.1 million, down 21.1% year over year. The operating margin contracted 374 bps to 12.9%.
Financial Details of ALGN
The company exited the third quarter with cash and cash equivalents of $1.00 billion compared with $901.2 million at the end of the second quarter.
Cumulative net cash provided by operating activities was $370 million compared with $452.1 million at the end of the third quarter of 2024.
Stock Repurchase
During the reported quarter, the company repurchased approximately 0.5 million shares of common stock at an average price of $136.77 per share. These repurchases were made following the $200.0 million open market repurchase plan announced on Aug. 5, 2025, expected to be completed in January 2026.
ALGN's Outlook
Align Technology provided its sales outlook for full-year 2025. It has also provided guidance for the fourth quarter of 2025.
For the full year, ALGN expects Clear Aligner revenue growth to be flat to slightly up from 2024, assuming foreign exchange at current spot rates. The Zacks Consensus Estimate for 2025 revenues is pegged at $4.01 billion, suggesting 0.2% growth year over year.
Align Technology, Inc. Price, Consensus and EPS Surprise
Align Technology, Inc. price-consensus-eps-surprise-chart | Align Technology, Inc. Quote
The GAAP operating margin is anticipated to range between 13.6% and 13.8% (earlier 13% and 14%).
To support continued expansion, the company expects to invest $100 (earlier $100-$125 million) in capital expenditures, primarily related to technology upgrades.
For the fourth quarter, ALGN anticipates worldwide revenues to be in the band of $1.03-$1.05 billion. The Zacks Consensus Estimate is pegged at $1.04 billion.
Our Take on ALGN
Align Technology exited the third quarter of 2025 with better-than-expected results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Also, revenues improved on a year-over-year basis due to a rise in the Clear Aligner segment’s sales.
Clear Aligner volume grew in APAC, EMEA and Latin American regions, driven by increased utilization across both orthodontists and general practitioners (GP) dentist channels, with strength in the teens and kids category. However, ALGN’s Imaging Systems & CAD/CAM Services business segment reported a year-over-year decline, primarily due to capital equipment seasonality.
However, 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 Veracyte (VCYT - Free Report) , Insulet (PODD - Free Report) and Phibro Animal Health (PAHC - Free Report) .
Veracyte reported second-quarter 2025 adjusted EPS of 44 cents, which beat the Zacks Consensus Estimate by 41.9%. Revenues of $130.2 million topped the Zacks Consensus Estimate by 7.1%. VCYT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
VCYT has an estimated earnings growth rate of 19.3% for 2025 compared with the industry’s 12.9%. The company beat on earnings in each of the trailing four quarters, the average surprise being 242.77%.
Insulet, currently sporting a Zacks Rank #1, reported a second-quarter 2025 adjusted EPS of $1.17, which outperformed the Zacks Consensus Estimate by 25.81%. Revenues of $649.1 million exceeded the Zacks Consensus Estimate by 5.46%.
PODD has an estimated earnings growth rate of 42.3% for 2025 compared with the industry’s 12.7%. The company beat on earnings in each of the trailing four quarters, the average surprise being 19.54%.
Phibro Animal Health, currently carrying a Zacks Rank #2 (Buy), reported a fourth-quarter fiscal 2025 EPS of 57 cents, which beat the Zacks Consensus Estimate by 9.62%. Net sales of $378.7 million topped the consensus estimate by 4.86%.
Phibro has an estimated earnings growth rate of 21.1% for fiscal 2026 compared with the industry’s 12.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 27.88%.