Align Technology Leverages Global Surge to Offset U.S. Softening, Sets Sights on Margin Expansion in 2026

**Align Technology** (NASDAQ: ALGN) kicked off 2026 with $1.041 billion in revenue, a 6.2% year‑over‑year increase that the company attributes to “high Clear Aligner volumes and increased ASPs.” The growth was anchored by a record 686,000 cases shipped in the quarter – a 6.7% rise versus Q1 2025 – and a 7.4% jump in Clear Aligner revenue to $856 million.

“Clear Aligner volumes from both the GAAP and non‑GAAP operating margins exceeded our outlook,” said President and CEO Joe Hogan, underscoring the resilience of the digital orthodontics platform.

The **Clear Aligner** segment delivered the bulk of the upside. International markets outperformed, with double‑digit volume growth in EMEA, APAC and Latin America, while North America held steady but slipped modestly year‑over‑year. The company highlighted a 7.8% rise in adult case starts (449,000) and a 4.8% increase in teen and growing‑kid starts (237,000), led by China and Latin America.

New product levers – Invisalign First, the palate expander (IPE) and mandibular advancement blocks – helped expand the treatable patient pool, especially among pre‑teens. “The IPE was shown to effectively widen the upper jaw… delivering more controlled and predictable results,” Hogan added, citing a recent clinical study.

**Systems and Services**, which bundles iTero scanners, exocad software and X‑ray insights, grew only 0.9% to $184.1 million, reflecting the seasonal dip typical of the first quarter. The segment benefited from higher scanner sales, especially the lower‑priced PC‑based configurations that broaden affordability for new doctors. The installed base of active scanners now exceeds 125,000 globally, and more than 12 million iTero digital scans were performed during the quarter.

Margin dynamics were a key theme. GAAP gross margin rose to 70.8% (up 1.4 points YoY), while non‑GAAP gross margin reached 71.8% (up 1.6 points). The improvement stemmed from “operational efficiencies and higher Clear Aligner ASP,” Hogan said, noting a $10 per‑case price increase to $1,250. The company also highlighted lower refinement rates and the rollout of lower‑price configurations such as COMP 3in3 and the Doctor Subscription Program (DSP) Touch‑Up, which require fewer aligners and thus reduce manufacturing cost.

Operating expenses climbed 8.3% to $594.6 million, driven largely by legal settlement costs and higher employee compensation, but non‑GAAP operating expenses rose only 4.5% to $523.1 million. Consequently, GAAP operating margin ticked up to 13.6% (a 0.3‑point gain) and non‑GAAP operating margin surged to 21.5% (up 2.5 points).

Earnings per diluted share came in at $1.57 GAAP, a $0.31 YoY increase, and $2.58 on a non‑GAAP basis, a 21% rise. Cash and cash equivalents stood at $1.06 billion, up $187 million year‑over‑year, with $800 million still available under the $1 billion share‑repurchase program.

The company announced an additional $200 million buyback slated to begin in May, citing confidence that the stock “remains attractively valued.” Free cash flow for the quarter was $120.3 million after $30.8 million of capital expenditures.

Strategic initiatives took center stage. The DSP program, now in its second year, continues to drive double‑digit growth in touch‑up and retention cases across all regions. Patient‑financing solutions – Healthcare Financial Direct (HFD) in the U.S. and Invisalign Pay in Brazil – have been rolled out to more than 4,000 offices, with early data showing faster approvals and higher conversion rates.

The company also launched an Invisalign Advanced Restorative Treatment (ART) pilot in EMEA and a U.S. rollout, integrating exocad planning with restorative workflows. Finally, a limited market release of direct 3‑D‑printed aligner attachments was announced, signaling a longer‑term shift toward “direct fabrication” that could lower resin waste and improve cost structure.

Guidance for the second quarter was cautiously optimistic. Align expects worldwide revenue of $1.040‑$1.060 billion, a 3‑5% YoY increase, with Clear Aligner volume up sequentially and average selling price flat. Systems and Services revenue is also projected to rise sequentially.

GAAP operating margin is forecast at 16.4% and non‑GAAP at 21.5% for Q2. For the full year, the company reaffirmed its prior outlook of 3‑4% revenue growth, GAAP operating margin just under 18% (about 400 bps improvement YoY) and non‑GAAP margin of 23.7% (100 bps higher). Capital expenditures are expected to total $125‑$150 million for 2026.

The “prudent” tone in the outlook reflects the ongoing military action in the Middle East. Management said the conflict has a “single‑digit” impact on revenue and is “immaterial” to Q1 results, but they have built a modest cushion into Q2 guidance. “We continue to monitor developments closely… the overall effect on our EMEA results was immaterial in the first quarter,” CFO John Morici explained.

Analysts pressed management on several fronts. Citi’s Daniel Grosslight asked about the profitability cadence and the assumed Middle‑East impact. Morici replied that restructuring actions taken last year are now “taking hold” and that profitability should continue to improve as volume rises. Barclays’ Glen Santangelo sought clarity on the size of the Middle‑East exposure and the timing of the next share buyback. Morici confirmed the impact is “in the single digits” and noted that only about 20% of cash sits in the U.S., limiting the pace of repurchases. Evercore’s Elizabeth Anderson probed the $10 ASP increase and margin outlook.

Morici said the rise reflects a mix of favorable foreign‑exchange, country and product mix, and that “lower‑price products… have higher gross margin,” reinforcing the margin expansion narrative. Baird’s Jeff Johnson asked why North America lagged; Hogan attributed the gap to macro‑economic headwinds in the U.S. and emphasized that DSOs continue to drive double‑digit growth while retail channels remain “mixed.” Finally, Mizuho’s Steven Valiquette queried whether the conversion gap between scans and treatment starts had closed. Morici answered that the dislocation seen in Q2 2023 “has more or less returned to normal,” thanks in part to financing programs that improve patient conversion.

The market gave the news a modest lift. Align shares closed at $178.40, up 0.63% after the call, still down 9% for the week but up 14.25% year‑to‑date, trading 14.4% below the 52‑week high.

Overall, Align’s first‑quarter performance underscores a business that is increasingly global, leveraging digital workflows and financing tools to deepen market penetration, while carefully managing cost pressures and geopolitical risks. The firm’s ability to sustain margin expansion and deliver on its 2026 guidance will hinge on continued international demand, broader adoption of low‑refinement product configurations, and the effectiveness of its financing and DSO partnerships in the United States.