ALGN Q3 Deep Dive: International Aligner Growth and New Technology Offset U.S. Dental Headwinds

Dental technology company Align Technology (NASDAQ:ALGN) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 1.8% year on year to $995.7 million. The company expects next quarter’s revenue to be around $1.04 billion, close to analysts’ estimates. Its non-GAAP profit of $2.61 per share was 8.4% above analysts’ consensus estimates.

Is now the time to buy ALGN? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Align Technology delivered third-quarter results that exceeded Wall Street’s expectations, with international demand for its Clear Aligner products and traction among teens and kids segments playing central roles. Management cited double-digit Clear Aligner volume growth in EMEA and APAC regions, and strong adoption of innovations like the Invisalign Palatal Expander, as key performance drivers. CEO Joe Hogan highlighted that “88,000 doctors globally submitted Invisalign cases, an all-time record,” indicating continued expansion of the global doctor base, even as North America’s retail channel remained sluggish.

Looking ahead, Align Technology’s guidance is shaped by ongoing investments in digital workflow solutions and product innovations designed to improve treatment efficiency and conversion rates. Management is focused on supporting doctors with AI-powered planning tools and expanding partnerships to enhance patient affordability. CFO John Morici noted that “HFD becomes more critical,” emphasizing patient financing as a lever for future growth. The company aims to maintain margin improvements through restructuring and cost controls, while remaining attentive to macroeconomic pressures in key markets.

Key Insights from Management’s Remarks

Management attributed quarterly outperformance to accelerating international demand for Clear Aligners, expanding adoption in the teens and kids segment, and new product launches that streamline doctor workflows.

• International aligner momentum: Double-digit volume growth in EMEA and APAC regions offset weaker North American retail demand, with China and Europe highlighted as significant contributors to overall growth.
• Teens and kids product expansion: Record-setting Invisalign case starts for younger patients, driven by the success of Invisalign First and Palatal Expander products, increased the proportion of cases from this demographic to 40% of total shipments.
• DSO channel strength: Dental Service Organizations (DSOs) delivered robust double-digit growth year-over-year, reflecting their ability to leverage digital workflows and patient financing options, and now account for roughly 25% of total business.
• AI-driven workflow improvements: Introduction of ClinCheck Live Plan, a new AI-powered treatment planning tool, enables doctors to generate and approve plans in 15 minutes, aiming to accelerate patient conversion and improve office productivity.
• Scanner and software ecosystem investments: Broader rollout of the iTero Lumina intraoral scanner and expanded exocad software functionality are intended to deepen digital engagement and support comprehensive treatment planning across geographies.

Drivers of Future Performance

Align’s outlook is driven by further adoption of digital and AI-powered technologies, international expansion, and ongoing efforts to address U.S. dental market challenges.

• Product innovation and automation: Continued investment in AI-powered treatment planning, such as ClinCheck Live Plan, and expansion of the iTero scanner ecosystem are expected to drive both doctor adoption and operational efficiency, supporting margin stability.
• International and DSO channel growth: Management expects sustained double-digit growth in EMEA and APAC Clear Aligner volumes and further penetration among DSOs, which benefit from scalable cost structures and access to patient financing like HFD partnerships.
• U.S. dental market headwinds: The company remains cautious on North American retail demand, attributing softness to macroeconomic factors. Management will focus on localized marketing, expanding financing options, and leveraging brand strength to support recovery, but recognizes this segment as a key risk to near-term growth.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will monitor (1) Clear Aligner volume trends in international markets to assess if double-digit growth persists, (2) the pace of U.S. retail recovery through patient financing adoption and targeted marketing, and (3) the impact of new AI-driven tools and digital workflows on doctor conversion rates and operational margins. Developments in the competitive landscape, especially in China, will also be closely tracked.

Align Technology currently trades at $153, up from $132.05 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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