ALIGN TECHNOLOGY INC [ALGN] Filings

10-Q 1 algn-20240630.htm 10-Q algn-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-Q

____________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-32259

____________________________

ALIGN TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

____________________________


Delaware			94-3267295
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

410 North Scottsdale Road, Suite 1300

Tempe, Arizona 85288

(Address of principal executive offices, including zip code)

(602) 742-2000

(Registrant’s telephone number, including area code)

____________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	ALGN	The NASDAQ Stock Market LLC
		(NASDAQ Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s Common Stock, $0.0001 par value, as of July 26, 2024 was 74,697,065.

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ALIGN TECHNOLOGY, INC.

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PART I	F INANCIAL INFORMATION	3
Item 1.	F inancial S tatements (U naudited ):	3
	Condensed Consolidated Statements of Operations	3
	C ondensed C onsolidated S tatements of C omprehensive Income	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39
PART II	O THER INFORMATION	39
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	56
Signatures		57

Invisalign, Align, the Invisalign logo, ClinCheck, Invisalign Assist, Invisalign Teen, Invisalign First, Invisalign Go, the Invisalign sonic logo, Vivera, SmartForce, SmartTrack, SmartStage, SmileView, iTero, iTero Element, iTero Lumina, Orthocad, exocad, Align Digital Platform, Invisalign Smile Architect, iTero exocad Connector and exocad Dental CAD, among others, are trademarks and/or service marks of Align Technology, Inc. or one of its subsidiaries or affiliated companies and may be registered in the United States and/or other countries.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ALIGN TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net revenues	$	1,028,490	$	1,002,173	$	2,025,921	$	1,945,320
Cost of net revenues	305,862		288,564		605,477		571,057
Gross profit	722,628		713,609		1,420,444		1,374,263
Operating expenses:
Selling, general and administrative	452,262		453,193		904,084		892,884
Research and development	92,193		88,485		184,052		175,932
Legal settlement loss	31,127		—		31,127		—

Total operating expenses	575,582		541,678		1,119,263		1,068,816
Income from operations	147,046		171,931		301,181		305,447
Interest income and other income (expense), net:
Interest income	3,301		4,421		7,693		6,758
Other income (expense), net	(6,481)		(4,763)		(6,622)		(5,992)
Total interest income and other income (expense), net	(3,180)		(342)		1,071		766
Net income before provision for income taxes	143,866		171,589		302,252		306,213
Provision for income taxes	47,302		59,775		100,660		106,601
Net income	$	96,564	$	111,814	$	201,592	$	199,612

Net income per share:
Basic	$	1.28	$	1.46	$	2.68	$	2.60
Diluted	$	1.28	$	1.46	$	2.68	$	2.60
Shares used in computing net income per share:
Basic	75,184		76,524		75,180		76,722
Diluted	75,223		76,689		75,315		76,897

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ALIGN TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	96,564	$	111,814	$	201,592	$	199,612
Other comprehensive income:
Change in foreign currency translation adjustment, net of tax	6,359		9,158		3,427		19,632
Change in unrealized gains (losses) on investments, net of tax	243		350		446		1,995

Other comprehensive income	6,602		9,508		3,873		21,627
Comprehensive income	$	103,166	$	121,322	$	205,465	$	221,239

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ALIGN TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)


	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	761,429	$	937,438
Marketable securities, short-term	20,682		35,304
Accounts receivable, net of allowance for doubtful accounts of $17,355 and $14,893, respectively	1,020,135		903,424
Inventories	259,492		296,902
Prepaid expenses and other current assets	350,634		273,550
Total current assets	2,412,372		2,446,618
Marketable securities, long-term	—		8,022
Property, plant and equipment, net	1,277,826		1,290,863
Operating lease right-of-use assets, net	122,174		117,999
Goodwill	454,493		419,530
Intangible assets, net	115,705		82,118
Deferred tax assets	1,577,856		1,590,045
Other assets	197,898		128,682
Total assets	$	6,158,324	$	6,083,877

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	105,792	$	113,125
Accrued liabilities	555,458		525,780
Deferred revenues	1,378,867		1,427,706
Total current liabilities	2,040,117		2,066,611
Income tax payable	103,783		116,744
Operating lease liabilities	98,301		96,968
Other long-term liabilities	158,215		173,065
Total liabilities	2,400,416		2,453,388
Commitments and contingencies (Note 7 and Note 8)
Stockholders’ equity:
Preferred stock, $0.0001 par value (5,000 shares authorized; none issued)	—		—
Common stock, $0.0001 par value (200,000 shares authorized; 74,696 and 75,075 issued and outstanding, respectively)	7		7
Additional paid-in capital	1,276,298		1,162,140
Accumulated other comprehensive income (loss), net	25,041		21,168
Retained earnings	2,456,562		2,447,174
Total stockholders’ equity	3,757,908		3,630,489
Total liabilities and stockholders’ equity	$	6,158,324	$	6,083,877

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ALIGN TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss), Net		Retained Earnings		Total
Three Months Ended June 30, 2024	Shares	Amount
Balance as of March 31, 2024	75,281	$	7	$	1,238,739	$	18,439	$	2,502,675	$	3,759,860
Net income	—	—		—		—		96,564		96,564
Net change in unrealized gains (losses) from investments	—	—		—		243		—		243
Net change in foreign currency translation adjustment	—	—		—		6,359		—		6,359
Issuance of common stock relating to employee equity compensation plans	17	—		—		—		—		—
Tax withholdings related to net share settlements of equity awards	(4)	—		(1,547)		—		—		(1,547)
Common stock repurchased and retired	(598)	—		(7,922)		—		(142,677)		(150,599)
Equity forward contract related to accelerated stock repurchase		—		—		—		—		—
Stock-based compensation	—	—		47,028				—		47,028
Balance as of June 30, 2024	74,696	$	7	$	1,276,298	$	25,041	$	2,456,562	$	3,757,908


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss), Net		Retained Earnings		Total
Six Months Ended June 30, 2024	Shares	Amount
Balance as of December 31, 2023	75,075	$	7	$	1,162,140	$	21,168	$	2,447,174	$	3,630,489
Net income	—	—		—		—		201,592		201,592
Net change in unrealized gains (losses) from investments	—	—		—		446		—		446
Net change in foreign currency translation adjustment	—	—		—		3,427		—		3,427
Issuance of common stock relating to employee equity compensation plans	345	—		14,339		—		—		14,339
Tax withholdings related to net share settlements of equity awards	(90)	—		(27,602)		—		—		(27,602)
Common stock repurchased and retired	(634)	—		(7,922)		—		(142,677)		(150,599)
Equity forward contract related to accelerated stock repurchase	—	—		49,527		—		(49,527)		—
Stock-based compensation	—	—		85,816		—		—		85,816
Balance as of June 30, 2024	74,696	$	7	$	1,276,298	$	25,041	$	2,456,562	$	3,757,908

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss), Net		Retained Earnings		Total
Three Months Ended June 30, 2023	Shares	Amount
Balance as of March 31, 2023	76,516	$	8	$	1,104,693	$	1,835	$	2,373,513	$	3,480,049
Net income	—	—		—		—		111,814		111,814
Net change in unrealized gains (losses) from investments	—	—		—		350		—		350
Net change in foreign currency translation adjustment	—	—		—		9,158		—		9,158
Issuance of common stock relating to employee equity compensation plans1	16	—		—		—		—		—
Tax withholdings related to net share settlements of equity awards	—	—		(930)		—		—		(930)


Stock-based compensation	—	—		37,860				—		37,860
Balance as of June 30, 2023	76,532	$	8	$	1,141,623	$	11,343	$	2,485,327	$	3,638,301
1 Includes tax withholding shares related to net share settlements of equity awards.


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss), Net		Retained Earnings		Total
Six Months Ended June 30, 2023	Shares	Amount
Balance as of December 31, 2022	77,267	$	8	$	1,044,946	$	(10,284)	$	2,566,688	$	3,601,358
Net income	—	—		—		—		199,612		199,612
Net change in unrealized gains (losses) from investments	—	—		—		1,995		—		1,995
Net change in foreign currency translation adjustment	—	—		—		19,632		—		19,632
Issuance of common stock relating to employee equity compensation plans1	207	—		14,256		—		—		14,256
Tax withholdings related to net share settlements of equity awards	—	—		(21,787)		—		—		(21,787)
Common stock repurchased and retired	(942)	—		(11,387)		—		(280,973)		(292,360)
Equity forward contract related to accelerated stock repurchase	—	—		40,000		—		—		40,000
Stock-based compensation	—	—		75,595		—		—		75,595
Balance as of June 30, 2023	76,532	$	8	$	1,141,623	$	11,343	$	2,485,327	$	3,638,301
1 Includes tax withholding shares related to net share settlements of equity awards.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ALIGN TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	201,592	$	199,612
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes	9,506		(36,688)
Depreciation and amortization	69,112		71,639
Stock-based compensation	85,816		75,595
Non-cash operating lease cost	19,040		15,531


Other non-cash operating activities	2,377		21,860
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable	(146,932)		(73,680)
Inventories	31,396		19,064
Prepaid expenses and other assets	(80,904)		(16,799)
Accounts payable	(6,398)		(10,351)
Accrued and other long-term liabilities	44,779		140,284
Long-term income tax payable	(12,961)		(11,113)
Deferred revenues	(27,932)		56,718
Net cash provided by operating activities	188,491		451,672
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired	(77,075)		—
Purchase of property, plant and equipment	(62,819)		(122,664)
Purchase of marketable securities	—		(2,373)
Proceeds from maturities of marketable securities	15,560		17,601
Proceeds from sales of marketable securities	7,518		4,048
Purchase of equity investments	(75,390)		(75,000)


Other investing activities	129		74
Net cash used in investing activities	(192,077)		(178,314)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock	14,339		14,256
Common stock repurchases	(150,012)		(292,360)
Activity for equity forward contracts related to accelerated stock repurchase agreements, net	—		40,000
Payroll taxes paid upon the vesting of equity awards	(27,602)		(21,788)
Net cash used in financing activities	(163,275)		(259,892)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	(9,196)		(3,523)
Net (decrease) increase in cash, cash equivalents, and restricted cash	(176,057)		9,943
Cash, cash equivalents, and restricted cash at beginning of the period	938,519		942,355
Cash, cash equivalents, and restricted cash at end of the period	$	762,462	$	952,298

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ALIGN TECHNOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation and Preparation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by Align Technology, Inc. (“we”, “our”, the "Company", or “Align”) on a consistent basis with the audited Consolidated Financial Statements for the year ended December 31, 2023, and contain all adjustments, including normal recurring adjustments, necessary to fairly state the information set forth herein. These unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and, therefore, omit certain information and footnote disclosures necessary to present the unaudited Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“U.S.”).

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and notes thereto included in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any other future period, and we make no representations related thereto.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, useful lives of intangible assets and property and equipment, long-lived assets and goodwill, income taxes, contingent liabilities, the fair values of financial instruments, stock-based compensation and the valuation of investments in privately held companies, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Certain Risks and Uncertainties

We are subject to risks including, but not limited to, global and regional economic market conditions, inflation, fluctuations in foreign currency exchange rates, changes in consumer confidence and demand, increased competition, dependence on key personnel, protection and litigation of proprietary technology, shifts in taxable income between tax jurisdictions and compliance with regulations of the U.S. Food and Drug Administration (“FDA”) and similar international agencies.

Our cash and investments are held primarily by five financial institutions. Financial instruments which potentially expose us to concentrations of credit risk consist primarily of cash equivalents and marketable securities. We invest excess cash primarily in money market funds, corporate bonds, asset-backed securities, municipal and U.S. government agency bonds and treasury bonds. We periodically evaluate our investments for credit losses. Such credit losses have not been material to our financial statements.

We purchase certain inventory from sole suppliers. Additionally, we rely on a limited number of hardware manufacturers. The inability of any supplier or manufacturer to fulfill our supply requirements could materially and adversely impact our future operating results.

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Effective

On November 27, 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, “Improvements to Reportable Segment Disclosures.” The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. For public business entities, the provisions of ASU 2023-07 are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Companies must apply the

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guidance retrospectively to all prior periods presented in the financial statements. The Company expects this pronouncement may result in changes to the nature of our reportable segment disclosures.

On December 14, 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures.” The amendments in this ASU require a public entity to disclose in tabular format, using both percentages and reporting currency amounts, specific categories in the rate reconciliation and to provide additional information for reconciling items that meet a quantitative threshold. The amendments in this ASU also require taxes paid (net of refunds received) to be disaggregated by federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold. For public business entities, the provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is evaluating the effect of this pronouncement on its annual consolidated financial statements.

Note 2. Financial Instruments

Cash, Cash Equivalents and Marketable Securities

The following tables summarize our cash and cash equivalents, and marketable securities on our Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (in thousands):


									Reported as:
June 30, 2024	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable securities, short-term		Marketable securities, long-term
Cash	$	759,803	$	—	$	—	$	759,803	$	759,803	$	—	$	—
Money market funds	1,626		—		—		1,626		1,626		—		—
Corporate bonds	19,560		—		(208)		19,352		—		19,352		—

Asset-backed securities	324		—		—		324		—		324

U.S. government agency bonds	1,009		—		(3)		1,006		—		1,006		—

Total	$	782,322	$	—	$	(211)	$	782,111	$	761,429	$	20,682	$	—


									Reported as:
December 31, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable securities, short-term		Marketable securities, long-term
Cash	$	887,682	$	—	$	—	$	887,682	$	887,682	$	—	$	—
Money market funds	49,756		—		—		49,756		49,756		—		—
Corporate bonds	31,943		5		(676)		31,272		—		28,704		2,568
U.S. government treasury bonds	4,855		—		(99)		4,756		—		—		4,756
Asset-backed securities	1,416		2		(1)		1,417		—		719		698
Municipal bonds	702		—		(2)		700		—		700		—
U.S. government agency bonds	5,215		—		(34)		5,181		—		5,181		—

Total	$	981,569	$	7	$	(812)	$	980,764	$	937,438	$	35,304	$	8,022

The following table summarizes the fair value of our available-for-sale marketable securities classified by contractual maturity as of June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024		December 31, 2023
Due in 1 year or less	$	20,358	$	34,617
Due in 1 year through 5 years	324		8,709
Total	$	20,682	$	43,326

The securities that we invest in are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss. Our unrealized losses as of June 30, 2024 and December 31, 2023 are primarily due to changes in interest rates and credit spreads.

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The following tables summarize the fair value and gross unrealized losses as of June 30, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):


	As of June 30, 2024
	Less than 12 months				12 Months of Greater				Total
June 30, 2024	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Corporate bonds	$	2,013	$	—	$	17,339	$	(208)		$	19,352	$	(208)

Asset-backed securities	—		—		324		—			324		—

U.S. government agency bonds	—		—		1,006		(3)			1,006		(3)

Total	$	2,013	$	—	$	18,669	$	(211)		$	20,682	$	(211)


	As of December 31, 2023
	Less than 12 months				12 Months of Greater				Total
December 31, 2023	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Corporate bonds	$	—	$	—	$	27,939	$	(676)		$	27,939	$	(676)
U.S. government treasury bonds	2,044		(11)		2,712		(88)			4,756		(99)
Asset-backed securities	1,018		(1)		83		—			1,101		(1)
Municipal bonds	—		—		700		(2)			700		(2)
U.S. government agency bonds	4,003		(11)		1,178		(23)			5,181		(34)

Total	$	7,065	$	(23)	$	32,612	$	(789)		$	39,677	$	(812)

Fair Value Measurements

Fair value is an exit price, representing the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. We obtain fair values for our Level 2 investments. Our custody bank and asset managers independently use professional pricing services to gather pricing data which may include quoted market prices for identical or comparable financial instruments, or inputs other than quoted prices that are observable either directly or indirectly, and we are ultimately responsible for these underlying estimates.

Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

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The following tables summarize our financial assets measured at fair value as of June 30, 2024 and December 31, 2023 (in thousands):


Description	Balance as of June 30, 2024		Level 1		Level 2
Cash equivalents:
Money market funds	$	1,626	$	1,626	$	—





Short-term investments:

U.S. government agency bonds	1,006		—		1,006

Corporate bonds	19,352		—		19,352

Asset-backed securities	324		—		324










	$	22,308	$	1,626	$	20,682


Description	Balance as of December 31, 2023		Level 1		Level 2
Cash equivalents:
Money market funds	$	49,756	$	49,756	$	—




Short-term investments:
Corporate bonds	28,704		—		28,704
Municipal bonds	700		—		700
U.S. government agency bonds	5,181		—		5,181
Asset-backed securities	719		—		719



Long-term investments:
U.S. government treasury bonds	4,756		—		4,756
Corporate bonds	2,568		—		2,568


Asset-backed securities	698		—		698






	$	93,082	$	49,756	$	43,326

Accounts Receivable Factoring

We enter into factoring transactions on a non-recourse basis with financial institutions to sell certain of our non-U.S. accounts receivable. We account for these transactions as sales of financial assets and include the cash proceeds as a part of our cash flows from operations in the Condensed Consolidated Statements of Cash Flows. Total accounts receivable sold under the factoring arrangements was $11.3 million and $8.2 million during the three months ended June 30, 2024 and 2023, respectively, and $25.9 million and $16.2 million during the six months ended June 30, 2024 and 2023, respectively. Factoring fees on the sales of receivables were recorded in other income (expense), net in our Condensed Consolidated Statement of Operations and were not material.

Investments in Privately Held Companies

Our investments in privately held companies in which we cannot exercise significant influence and do not own a majority equity interest or otherwise control are accounted for as an investment in equity securities. We have elected to account for all investments in equity securities in accordance with the measurement alternative. Under the measurement alternative, we record the value of our investments in equity securities at cost, minus impairment, if any. Additionally, we adjust the carrying value of our investments in equity securities to fair value for observable transactions for identical or similar investments of the same issuer.

On April 24, 2023 and April 22, 2024, we entered into Subscription Agreements (the “Subscription Agreements”) with Heartland Dental Holding Corporation (“Heartland”). Pursuant to the Subscription Agreements we acquired less than a 5% equity interest through the purchase of Class A Common Stock for $150 million in total. We are accounting for our investment in Heartland as an investment in equity securities. Based on a review of the relevant facts and circumstances, primarily observable transactions for Heartland's Class A Common Stock, we determined that no adjustment to the carrying value of our investment was necessary for the three or six months ended June 30, 2024.

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Our investments in privately held companies in which we can exercise significant influence are accounted for as equity method investments. We have elected to account for our equity method investments under the fair value option.

The carrying value of our investments in equity securities and equity method investments are reported on our Condensed Consolidated Balance Sheets as Other assets and any fair value adjustments or impairment, if any, are recorded in other income (expense), net on our Condensed Consolidated Statement of Operations.

Derivatives Not Designated as Hedging Instruments

We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations on certain assets and liabilities. These forward contracts are classified within Level 2 of the fair value hierarchy. As a result of the settlement of foreign currency forward contracts, we recognized a net gain of $7.5 million and $1.1 million, respectively, during the three months ended June 30, 2024 and 2023, and a net gain of $27.2 million and a net loss of $5.3 million, respectively, during the six months ended June 30, 2024 and 2023. Recognized gains and losses from the settlement of foreign currency forward contracts are recorded to Other income (expense), net in our Condensed Consolidated Statements of Operations. As of June 30, 2024 and December 31, 2023, the fair value of foreign exchange forward contracts outstanding were not material.

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The following tables present the gross notional value of all our foreign exchange forward contracts outstanding as of June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024
	Local Currency Amount	Notional Contract Amount (USD)
Euro	€224,400	$	240,601
British Pound	£114,500	144,867
Canadian Dollar	$102,400	74,790
Polish Zloty	PLN291,700	72,401
Chinese Yuan	¥336,300	46,207
Japanese Yen	¥4,700,000	29,419
Israeli Shekel	ILS69,600	18,554
Brazilian Real	R$91,600	16,390
Mexican Peso	M$288,500	15,750
Swiss Franc	CHF4,700	5,246
Australian Dollar	A$6,200	4,137
New Taiwan Dollar	NT$111,000	3,418
New Zealand Dollar	NZ$5,200	3,168
Korean Won	₩3,100,000	2,244
Czech Koruna	Kč28,000	1,197
		$	678,389


	December 31, 2023
	Local Currency Amount	Notional Contract Amount (USD)
Euro	€337,780	$	373,705
Canadian Dollar	$108,900	82,166
Polish Zloty	PLN276,900	70,393
British Pound	£45,590	58,005
Chinese Yuan	¥244,500.00	34,361
Swiss Franc	CHF28,600	34,132
Japanese Yen	¥3,577,000	25,347
Israeli Shekel	ILS78,700	21,800
Brazilian Real	R$80,500	16,563
Mexican Peso	M$230,000	13,593
New Zealand Dollar	NZ$6,600	4,161
Australian Dollar	A$4,300	2,921
New Taiwan Dollar	NT$89,000	2,919
Czech Koruna	Kč60,200	2,687
Korean Won	₩2,200,000	1,709
		$	744,462

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Note 3. Balance Sheet Components

Inventories consist of the following (in thousands):


	June 30, 2024		December 31, 2023
Raw materials	$	125,034	$	145,492
Work in process	87,034		91,259
Finished goods	47,424		60,151
Total inventories	$	259,492	$	296,902

Prepaid expenses and other current assets consist of the following (in thousands):


	June 30, 2024		December 31, 2023
Value added tax receivables	$	188,847	$	143,728
Prepaid expenses	91,262		52,487
Other current assets	70,525		77,335
Total prepaid expenses and other current assets	$	350,634	$	273,550

Accrued liabilities consist of the following (in thousands):


	June 30, 2024		December 31, 2023
Accrued payroll and benefits	$	232,052	$	220,862
Accrued expenses	64,476		71,109
Accrued sales and marketing expenses	48,287		34,035
Accrued income taxes	36,082		38,103
Current operating lease liabilities	30,790		29,651
Accrued property, plant and equipment	10,985		23,618

Other accrued liabilities	132,786		108,402
Total accrued liabilities	$	555,458	$	525,780

Accrued warranty, which is included in the "Other accrued liabilities" category of the accrued liabilities table above, consists of the following activity (in thousands):


	Six Months Ended June 30,
	2024		2023
Balance at beginning of period	$	22,426	$	17,873
Charged to cost of net revenues	10,959		9,421
Actual warranty expenditures	(6,523)		(6,797)
Balance at end of period	$	26,862	$	20,497

Deferred revenues consist of the following (in thousands):


	June 30, 2024		December 31, 2023
Deferred revenues - current	$	1,378,867	$	1,427,706
Deferred revenues - long-term 1	$	117,582	$	138,000

1 Included in Other long-term liabilities within our Condensed Consolidated Balance Sheets.

During the three months ended June 30, 2024 and 2023, we recognized $1,028.5 million and $1,002.2 million of net revenues, respectively, of which $222.4 million and $199.0 million was included in the deferred revenues balance at December 31, 2023 and 2022, respectively.

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During the six months ended June 30, 2024 and 2023, we recognized $2,025.9 million and $1,945.3 million of net revenues, respectively, of which $459.2 million and $404.7 million was included in the deferred revenues balance at December 31, 2023 and 2022, respectively.

Our unfulfilled performance obligations, including deferred revenues and backlog, as of June 30, 2024 were $1,505.0 million. These performance obligations are expected to be fulfilled over the next six months to five years.

Note 4. Business Combination

On January 2, 2024 (the “Cubicure Acquisition Date”), we completed the acquisition of privately-held Cubicure GmbH (“Cubicure”) (the "Cubicure Acquisition"). Cubicure is an Austrian company and specializes in direct 3D printing solutions for polymer additive manufacturing that develops, produces, and distributes innovative materials, equipment, and processes for 3D printing solutions. The Cubicure Acquisition is intended to support and scale our strategic innovation roadmap and strengthen the Align Digital Platform. In fiscal year 2021, we acquired an 9.04% equity interest in Cubicure. Subsequently, on the Cubicure Acquisition Date, we acquired the remaining equity of Cubicure. Prior to the acquisition, we also had technology license and joint development agreements with Cubicure.

The fair value of consideration transferred in the acquisition is shown in the table below (in thousands):


Cash paid to Cubicure stockholders	$	80,142
Fair value of pre-existing equity interest ownership	7,968
Settlement of pre-existing relationship - accounts payable	(2,316)
Total purchase consideration paid	$	85,794

The Cubicure Acquisition was accounted for as a business combination under ASC Topic 805, Business Combinations (“ASC 805”) that was achieved in stages. As a result of the Cubicure Acquisition, we remeasured our pre-existing equity interest in Cubicure at fair value prior to the Cubicure Acquisition. Based on the fair value of this equity interest, derived from the purchase price, we estimated the fair value of our 9.04% pre-existing investment in Cubicure to be approximately $8.0 million. The remeasurement resulted in the recognition of a pre-tax gain of $4.1 million, which was reflected as a component of Other income (expense), net within our Condensed Consolidated Statement of Operations.

In 2021, we initiated Joint development (“JDA”) and Technology license agreements (“TLA”) to provide us with access to Cubicure's technology. The settlement of the JDA and TLA were concluded to be at market terms on the Cubicure Acquisition Date; therefore, no gain or loss was recorded related to the settlement of these contracts. We also had accounts payable from the pre-existing arrangements with Cubicure of $2.3 million, which were effectively settled and reduced from the purchase consideration of the Cubicure Acquisition.

The preliminary allocation of purchase price to assets acquired and liabilities assumed which is subject to change within the measurement period is as follows (in thousands):


Working capital	$	1,039
Property & equipment	975
Developed technology	47,000
Other non-current asset	1,386
Other liabilities	(12,279)
Goodwill	47,673
Total	$	85,794

Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and identifiable intangible assets, and represents the value associated future technology, future customer relationships, and the knowledge and experience of the workforce in place. None of this goodwill is deductible for tax purposes. We allocated all goodwill to our Clear Aligner reporting unit.

As part of the Cubicure Acquisition we acquired a developed technology intangible asset. The acquired developed technology had an estimated fair value of $47.0 million as of the Cubicure Acquisition Date and will be amortized over a useful life of thirteen years.

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The fair value of developed technology was estimated under the Multi-Period Excess Earnings Method and the fair value estimates for developed technology include significant assumptions in the prospective financial information which include, but are not limited, to the projected future cash flows associated with the technology, asset's life cycle and the present value factor.

Acquisition related costs are recognized separately from the business combination and are expensed as incurred. Acquisition related costs were not material.

Our consolidated financial statements include the operating results of Cubicure from the Cubicure Acquisition Date. Separate post-acquisition operating results and pro forma results of operations for this acquisition have not been presented as the effect is not material to our consolidated financial results.

Note 5. Goodwill and Intangible Assets

Goodwill

The change in the carrying value of goodwill for the six months ended June 30, 2024, categorized by reportable segments, is as follows (in thousands):


	Clear Aligner		Systems and Services		Total
Balance as of December 31, 2023	$	111,086	$	308,444	$	419,530
Additions from acquisition	47,673		—		47,673
Foreign currency translation adjustments	(3,091)		(9,619)		(12,710)
Balance as of June 30, 2024	$	155,668	$	298,825	$	454,493

Finite-Lived Intangible Assets

Acquired finite-lived intangible assets were as follows, excluding intangibles that were fully amortized, is as follows (in thousands):


	Weighted Average Amortization Period (in years)	Gross Carrying Amount as of June 30, 2024		Accumulated Amortization		Accumulated Impairment Loss		Net Carrying Value as of June 30, 2024
Existing technology	11	$	146,651	$	(44,869)	$	—	$	101,782
Customer relationships	10	21,500		(9,138)		—		12,362
Trademarks and tradenames	10	16,600		(8,374)		(4,122)		4,104
Patents	12	480		(260)		—		220
		$	185,231	$	(62,641)	$	(4,122)	118,468
Foreign currency translation adjustments								(2,763)
Total intangible assets, net 1								$	115,705

1 Includes $46.7 million of fully amortized intangible assets.

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	Weighted Average Amortization Period (in years)	Gross Carrying Amount as of December 31, 2023		Accumulated Amortization		Accumulated Impairment Loss		Net Carrying Value as of December 31, 2023
Existing technology	10	$	112,051	$	(45,331)	$	(4,328)	$	62,392
Customer relationships	10	21,500		(8,063)		—		13,437
Trademarks and tradenames	10	16,600		(7,605)		(4,122)		4,873
Patents	8	6,511		(6,082)		—		429
		$	156,662	$	(67,081)	$	(8,450)	81,131
Foreign currency translation adjustments								987
Total intangible assets, net 1								$	82,118

1 Includes $34.3 million of fully amortized intangible assets.

Of the $146.7 million recorded as existing technology intangible assets as of June 30, 2024, $47.0 million was acquired during the first quarter of 2024 as part of the Cubicure Acquisition. The existing technology acquired in the Cubicure Acquisition had an estimated useful life of 13 years, which had the effect of increasing the weighted average amortization period from approximately 10 years as of December 31, 2023 to approximately 11 years as of June 30, 2024. Refer to Note 4. Business Combination.

The total estimated annual future amortization expense for these acquired intangible assets as of June 30, 2024, is as follows (in thousands):


Fiscal Year Ending December 31,	Amortization
Remainder of 2024	$	9,287
2025	18,574
2026	17,969
2027	15,607
2028	14,505
Thereafter	42,526
Total	$	118,468

Amortization expense for the three months ended June 30, 2024 and 2023 was $4.7 million and $4.1 million, respectively, and amortization expense for the six months ended June 30, 2024 and 2023 was $9.6 million and $8.2 million, respectively.

Note 6. Credit Facility

We have a credit facility that provides for a $300.0 million unsecured revolving line of credit, along with a $50.0 million letter of credit. On December 23, 2022, we amended certain provisions in our credit facility which included extending the maturity date on the facility to December 23, 2027 and replacing the interest rate from the existing LIBOR with SOFR (“2022 Credit Facility”). The 2022 Credit Facility requires us to comply with specific financial conditions and performance requirements. Loans under the 2022 Credit Facility bear interest, at our option, at either a rate based on the SOFR for the applicable interest period or a base rate, in each case plus a margin. As of June 30, 2024, we had no outstanding borrowings under the 2022 Credit Facility and were in compliance with the conditions and performance requirements in all material respects.

Note 7. Legal Proceedings

2019 Shareholder Derivative Lawsuit

In January 2019, three derivative lawsuits were filed in the U.S. District Court for the Northern District of California which were later consolidated, purportedly on our behalf, naming as defendants the then current members of our Board of Directors along with certain of our executive officers. The complaints assert various state law causes of action, including for breaches of fiduciary duty, insider trading, and unjust enrichment. The complaints seek unspecified monetary damages on our

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behalf, which is named solely as a nominal defendant against whom no recovery is sought, as well as disgorgement and the costs and expenses associated with the litigation, including attorneys’ fees. The consolidated action is currently stayed. Defendants have not yet responded to the complaints.

On April 12, 2019, a derivative lawsuit was also filed in California Superior Court for Santa Clara County, purportedly on our behalf, naming as defendants the members of our Board of Directors along with certain of our executive officers. The allegations in the complaint are similar to those in the derivative suits described above. The matter is currently stayed. Defendants have not yet responded to the complaint.

In the first quarter of 2024, the parties to these actions entered into a settlement agreement whereby, subject to court approval, plaintiffs will dismiss the lawsuits and release their claims. In the settlement agreement, Align and the defendants deny any wrongdoing and are not making any monetary payments, other than a potential award of $575,000 in attorney’s fees to plaintiffs’ counsel, covered by insurance. On July 3, 2024, the U.S. District Court for the Northern District of California denied preliminary approval of the settlement without prejudice. The court held a case management conference on August 1, 2024 and indicated a revised order would issue in the near future.

Antitrust Class Actions

On June 5, 2020, a dental practice named Simon and Simon, PC doing business as City Smiles brought an antitrust action in the U.S. District Court for the Northern District of California on behalf of itself and a putative class of similarly situated practices seeking treble monetary damages, interest, costs, attorneys’ fees, and injunctive relief relating to our alleged market activities in alleged clear aligner and intraoral scanner markets. Plaintiff filed an amended complaint and added VIP Dental Spas as a plaintiff on August 14, 2020. On December 18, 2023, the court certified a class of persons or entities that purchased Invisalign directly from Align between January 1, 2019 and March 31, 2022. The court denied Plaintiffs’ motion to certify a class of purchasers of scanners. On February 21, 2024, the court granted Align’s motion for summary judgment on all claims brought by the plaintiffs. The court entered judgment on March 22, 2024. Plaintiffs have appealed the district court’s summary judgment ruling to the United States Court of Appeals for the Ninth Circuit. Plaintiff-Appellants' opening brief was filed July 15, 2024. Align’s response brief is due September 27, 2024 and Plaintiff-Appellants' reply brief is due October 18, 2024.

On May 3, 2021, an individual named Misty Snow brought an antitrust action in the U.S. District Court for the Northern District of California on behalf of herself and a putative class of similarly situated individuals seeking treble monetary damages, interest, costs, attorneys’ fees, and injunctive relief relating to our alleged market activities in alleged clear aligner and intraoral scanner markets based on Section 2 of the Sherman Act. Plaintiffs have filed several amended complaints adding new plaintiffs, various state law claims, and allegations based on Section 1 of the Sherman Act. On November 29, 2023, the court certified a class of indirect purchasers of Invisalign between July 1, 2018 and December 31, 2023 and a class of indirect purchasers of Invisalign seeking injunctive relief. On February 21, 2024, the court granted Align’s motion for summary judgment on the claims related to Section 2 allegations. The court entered judgment for the Section 2 and related state law claims on March 22, 2024. Plaintiffs have appealed the district court’s summary judgment ruling to the United States Court of Appeals for the Ninth Circuit. Plaintiff-Appellants' opening brief was filed July 15, 2024. Align’s response brief is due September 27, 2024 and Plaintiff-Appellants' reply brief is due October 18, 2024.

We are currently unable to predict the outcome of these lawsuits and therefore we cannot determine the likelihood of loss, if any, nor estimate a range of possible loss.

In June 2024, Align and the Section 1 plaintiffs reached a settlement in principle that would resolve all remaining claims in the Section 1 lawsuit. The settlement terms remain confidential and subject to court approval. While we continue to believe that plaintiffs’ Section 1 claims are without merit and despite vigorously defending ourselves against those claims, we decided to settle the lawsuit to avoid the distraction and uncertainty of litigation.

During the three months ended June 30, 2024 we accrued a loss of $31.1 million for legal settlements for multiple legal matters, but primarily related to the settlement of the Section 1 claims described above.

Straumann Litigation

On April 11, 2024, we filed a lawsuit in the U.S. District Court for the Western District of Texas against ClearCorrect Operating, LLC, ClearCorrect Holdings, Inc., and Institut Straumann AG. The complaint asserts claims of false advertising, unfair competition, civil conspiracy, and infringement of Align patents related to aligner material, treatment planning, and intraoral scanner technologies. Among other things, the complaint seeks relief enjoining the defendants’ infringement of multiple Align multilayer material patents through defendants’ manufacture, sale and offer for sale of aligners made with Zendura FLX/ClearQuartz materials. On June 20, 2024, Defendants filed motions to dismiss the Complaint, which are pending. On July 9, 2024, ClearCorrect Operating, LLC, ClearCorrect Holdings, Inc. and Straumann USA LLC filed counterclaims

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against Align for alleged antitrust violations, false advertising, unfair competition, and breach of contract. Among other things, the counterclaims seek relief enjoining Align’s accused business practices, invalidating Align’s asserted patents, and money damages. Align believes these claims are without merit and intends to vigorously defend itself. Align is currently unable to predict the outcome of this lawsuit and cannot determine the likelihood of loss nor estimate a range of possible loss.

In addition to the above, in the ordinary course of our operations, we are involved in a variety of claims, suits, investigations, and proceedings, including actions with respect to intellectual property claims, patent infringement claims, government investigations, labor and employment claims, breach of contract claims, tax, and other matters. Regardless of the outcome, these proceedings can have an adverse impact on us because of defense costs, diversion of management resources, and other factors. Although the results of complex legal proceedings are difficult to predict and our view of these matters may change in the future as litigation and events related thereto unfold; we currently do not believe that these matters, individually or in the aggregate, will materially affect our financial position, results of operations or cash flows.

Note 8. Commitments and Contingencies

Tax Matter

Beginning in the third quarter of 2023 and continuing through the first quarter of 2024, the Company has received cumulative assessments of approximately $95 million from His Majesty’s Revenue and Customs (“HMRC”) for unpaid value added tax (“VAT”) related to certain clear aligner sales made during the period of October 2019 through May 2023. We are required to pay these assessments prior to contesting or litigating in statutory appeal. The Company has historically asserted and continues to assert that doctor prescribed clear aligners sold by dentists for the orthodontic treatment of patient malocclusions are exempt from VAT, that the Company has reasonably relied upon statements and guidance by HMRC and that the Company’s interpretation of United Kingdom legislation is appropriate. A hearing has been scheduled for October 9 through October 10, 2024 regarding the unpaid VAT related to certain aligner sales made during the period of October 2019 through May 2023. It is not possible at this stage to accurately evaluate the likelihood of an unfavorable outcome of any legal challenges brought by the Company against HMRC disputing this initial assessment and any assessments for other past periods. Accordingly, the Company has determined that a potential loss related to unpaid VAT is not probable. As such, we have not recorded a contingent loss for these assessments in our Condensed Consolidated Statements of Operations for the six months ended June 30, 2024. The Company acknowledges that this matter poses risks of litigation and the ultimate resolution of this matter could result in an unfavorable ruling, which consequently could lead to a significant loss to the Company. As of June 30, 2024, if an unfavorable ruling is issued, we estimate a potential exposure of approximately $115 million, depending on fluctuations of foreign currency exchange rates, excluding interest and penalties.

Indemnification Provisions

In the normal course of business to facilitate transactions in our services and products, we indemnify certain parties: customers, vendors, lessors, and other parties with respect to certain matters, including, but not limited to, services to be provided by us and intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with our directors and our executive officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. Several of these agreements limit the time within which an indemnification claim can be made and the amount of the claim.

It is not possible to make a reasonable estimate of the maximum potential amount of future payments, if any, under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement. Additionally, we have a limited history of prior indemnification claims and the payments we have made under such agreements have not had a material adverse effect on our results of operations, cash flows or financial position. However, to the extent that valid indemnification claims arise in the future, future payments by us could be significant and could have a material adverse effect on our results of operations or cash flows in a particular period. As of June 30, 2024, we did not have any material indemnification claims that were probable or reasonably possible.

Note 9. Stockholders’ Equity

As of June 30, 2024, the Align Technology, Inc. 2005 Incentive Plan, as amended, has a total reserve of 32,168,895 shares, of which 3,381,447 shares are available for issuance.

Summary of Stock-Based Compensation Expense

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The stock-based compensation related to our stock-based awards and employee stock purchase plan for the three and six months ended June 30, 2024 and 2023 is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of net revenues	$	2,582	$	1,901	$	4,646	$	3,708
Selling, general and administrative	34,274		29,002		62,768		57,693

Research and development	10,172		6,957		18,402		14,194
Total stock-based compensation	$	47,028	$	37,860	$	85,816	$	75,595

Restricted Stock Units (“RSUs”)

The fair value of RSUs is based on our closing stock price on the date of grant. RSUs granted generally vest over a period of four years. A summary for the six months ended June 30, 2024 is as follows:


	Number of Shares Underlying RSUs (in thousands)	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Unvested as of December 31, 2023	736	$	367.63
Granted	631	310.21
Vested and released	(249)	370.60
Forfeited	(34)	360.58
Unvested as of June 30, 2024	1,084	$	333.79	1.8	$	261,797

As of June 30, 2024, we expect to recognize $285.6 million of total unamortized compensation costs, net of estimated forfeitures, related to RSUs over a weighted average period of 2.9 years.

Market-Performance Based Restricted Stock Units (“MSUs”)

We grant MSUs to members of senior management. Each MSU represents the right to one share of our common stock. The actual number of MSUs which will be eligible to vest will be based on the performance of Align’s stock price relative to the performance of a stock market index over the vesting period. MSUs vest over a period of three years and the maximum number of shares eligible to vest in the future is 250% of the MSUs initially granted.

The following table summarizes the MSU performance activity for the six months ended June 30, 2024:


	Number of Shares Underlying MSUs (in thousands)	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Unvested as of December 31, 2023	158	$	811.06
Granted	83