Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Align Technology's second quarter of fiscal 2026 reflected resilient demand for its Clear Aligner products, as case shipments grew 7.4% and average selling prices edged higher, driving an 8.2% revenue increase in the segment. However, the period was marred by a $38.7 million legal and VAT contingency charge, which, together with higher operating expenses, caused net income to decline 13.1%. Systems and Services revenue fell 10.8% due to a mix shift toward lower-priced products, partially offsetting Clear Aligner gains. Gross margin improved 1.8 percentage points, benefiting from tariff refunds and operational efficiencies, but the one-time charge weighed heavily on profitability.
Revenue
$1.06B
+4.32% YoY
EPS (Diluted)
$1.51
-12.21% YoY
Gross Margin
71.7%
+1.8 pts YoY
Operating Income
$154.01M
-5.53% YoY
Source: SEC XBRL
Align Technology (ALGN) reported Q2 FY2026 revenue of $1.06B, up 4.3% year over year. Operating margin was 14.6%, down 1.5 points from 16.1% a year earlier. ALGN's fiscal Q2 FY2026 corresponds to calendar Q2 2026.
Last 4 quarters: 3 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Jun 2026This filing | 2.64 | 2.66 | Miss -0.9% |
| Mar 2026 | 2.58 | 2.33 | Beat +11.0% |
| Dec 2025 | 3.29 | 3.03 | Beat +8.5% |
| Sep 2025 | 2.61 | 2.45 | Beat +6.5% |
Adjusted (non-GAAP) EPS of $2.64 versus the $2.66 analyst consensus — a -0.9% miss for Jun 2026. Analyst consensus is quoted on the adjusted (non-GAAP) basis the street uses. GAAP diluted EPS for this quarter was $1.51.
2 reported segments · SEC XBRL
Segment revenue totals $1.06B, which is the $1.06B of consolidated revenue on the income statement.
Profit above is reported as operating income, the measure ALGN itself discloses in this filing. Each company chooses its own measure here, so these margins are not comparable with another company's.
Compiled by AI from 10-Q Item 2 of this filing
Recorded a $37.5 million estimated liability for a UK VAT ruling that clear aligners are subject to standard VAT, plus $1.2 million in legal settlements, totaling $38.7 million in charges for the quarter.
Source: 10-Q Item 2 MD&A
Announced plans to build a ~$200 million manufacturing facility in Hyderabad, India, with operations expected to start in 2027 to support demand and diversify the supply chain.
Source: 10-Q Item 2 MD&A
Clear Aligner case volume increased 7.4% year-over-year, with teen cases up 7.2%; average selling price per case rose 0.8% to $1,260, contributing to an 8.2% segment revenue increase.
Source: 10-Q Item 2 MD&A
Systems and Services revenue decreased 10.8% primarily due to a mix shift to lower-priced products and a $15 million decline in scanner wand sales, partially offset by higher system volume.
Source: 10-Q Item 2 MD&A
Overall gross margin expanded 1.8 percentage points to 71.7%, driven by tariff refunds, roll-off of accelerated depreciation, and higher Clear Aligner ASPs, partially offset by increased freight costs.
Source: 10-Q Item 2 MD&A
Compiled by AI from 10-Q Item 1A of this filing · 3 high, 2 medium, 0 low
Demand for elective orthodontic procedures is highly sensitive to macroeconomic conditions; high inflation, interest rates, and economic uncertainty have reduced patient traffic and orthodontic case starts, with some doctors shifting patients to lower-cost wires and brackets.
Source: 10-Q Item 1A Risk Factors
The majority of net revenues come from sales of the Invisalign System; any decline in volume or average selling price, whether from competition, product mix shifts, or pricing pressures, could materially adverse the company's financial results.
Source: 10-Q Item 1A Risk Factors
The clear aligner market faces growing competition from traditional braces, new market entrants including DTC companies, and large dental service organizations that may steer patients to alternative products, increasing commoditization risk.
Source: 10-Q Item 1A Risk Factors
A significant portion of products are manufactured in Mexico and shipped globally; ongoing tariff disputes, including new Section 301 duties, could increase costs, reduce demand, and disrupt supply chains.
Source: 10-Q Item 1A Risk Factors
Shifts toward lower-priced Clear Aligner configurations and increased discounting, combined with geographic mix changes, could erode average selling prices and margins over time.
Source: 10-Q Item 1A Risk Factors
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 1.06 $B | 1.01 $B | +4.32% |
Cost of Revenue $M | 298.76 $M | 304.33 $M | -1.83% |
Gross Profit $M | 757.43 $M | 708.12 $M | +6.96% |
Operating Income $M | 154.01 $M | 163.03 $M | -5.53% |
Net Income $M | 108.29 $M | 124.61 $M | -13.09% |
EPS (Basic) $ | 1.51 $ | 1.72 $ | -12.21% |
EPS (Diluted) $ | 1.51 $ | 1.72 $ | -12.21% |
R&D Expense $M | 102.03 $M | 96.40 $M | +5.84% |
SG&A Expense $M | 462.67 $M | 448.69 $M | +3.12% |
Answers draw on this SEC filing and the data on this page
Expected release date, analyst estimates & what to watch
Align Technology delivered solid Q1 FY2026 results with revenue of $1.04B (+6.2% YoY), net income surging 21.0% to $112.8M, and operating cash flow nearly tripling to $151.0M, reflecting improved profitability and a strengthened balance sheet.
Align Technology (ALGN) posted modest FY2025 revenue growth of +0.9% to $4.03B, but profitability deteriorated across the board as cost of revenue surged 10.3%, compressing gross margin by ~280 bps to 67.2% and driving operating income down 10.2% to $546M.
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