Dental technology company Align Technology (NASDAQ: ALGN) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 4.3% year on year to $1.06 billion. On the other hand, next quarter’s revenue guidance of $1.01 billion was less impressive, coming in 1.3% below analysts’ estimates. Its non-GAAP profit of $2.64 per share was 1.7% above analysts’ consensus estimates.
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Align Technology (ALGN) Q2 CY2026 Highlights:
- Revenue: $1.06 billion vs analyst estimates of $1.05 billion (4.3% year-on-year growth, in line)
- Adjusted EPS: $2.64 vs analyst estimates of $2.60 (1.7% beat)
- Adjusted Operating Income: $241.7 million vs analyst estimates of $230.6 million (22.9% margin, 4.8% beat)
- Revenue Guidance for Q3 CY2026 is $1.01 billion at the midpoint, below analyst estimates of $1.02 billion
- Operating Margin: 14.6%, down from 16.1% in the same quarter last year
- Sales Volumes were up 7.4% year on year
- Market Capitalization: $12.58 billion
Company Overview
Pioneering an alternative to traditional metal braces with nearly invisible plastic aligners, Align Technology (NASDAQ: ALGN) designs and manufactures Invisalign clear aligners, iTero intraoral scanners, and dental CAD/CAM software for orthodontic and restorative treatments.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Align Technology grew its sales at a tepid 3.6% compounded annual growth rate. This fell short of our benchmark for the healthcare sector and is a tough starting point for our analysis.
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Align Technology’s recent performance shows its demand has slowed as its annualized revenue growth of 2.5% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
This quarter, Align Technology grew its revenue by 4.3% year on year, and its $1.06 billion of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 1.4% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 3% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its newer products and services will not lead to better top-line performance yet.
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Adjusted Operating Margin
Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to paint a better picture of normalized profits.
Align Technology has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average adjusted operating margin of 22.4%.
Looking at the trend in its profitability, Align Technology’s adjusted operating margin decreased by 1.6 percentage points over the last five years, but it rose by 1.7 percentage points on a two-year basis. Still, shareholders will want to see Align Technology become more profitable in the future.
In Q2, Align Technology generated an adjusted operating margin profit margin of 22.9%, up 1.6 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Align Technology’s EPS grew at an unimpressive 1.4% compounded annual growth rate over the last five years, lower than its 3.6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.
We can take a deeper look into Align Technology’s earnings to better understand the drivers of its performance. As we mentioned earlier, Align Technology’s adjusted operating margin expanded this quarter but declined by 1.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
In Q2, Align Technology reported adjusted EPS of $2.64, up from $2.49 in the same quarter last year. This print beat analysts’ estimates by 1.7%. Over the next 12 months, Wall Street expects Align Technology’s full-year EPS to grow 6% from $11.12 to $11.79.
Key Takeaways from Align Technology’s Q2 Results
We struggled to find many positives in these results. Overall, this was a weaker quarter. The stock traded down 2.4% to $173.00 immediately after reporting.
Big picture, is Align Technology a buy here and now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
