Company: ALGN
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001097149-25-000012
Chunk: 4

Company: ALIGN TECHNOLOGY INC
Filing Date: 2025-02-28
Form: 10-K
Item: Item 8
Chunk 4
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. Management also considers usage rates, which is the number of times a customer is expected to order additional aligners. Management’s process for estimating usage rates requires significant judgment and evaluation of inputs, including historical usage data by region, country and channel.

The principal considerations for our determination that performing procedures relating to revenue recognition and the determination of standalone selling price of distinct performance obligations in Clear Aligner contracts is a critical audit matter are the significant judgment by management in determining the estimate of standalone selling price, which includes significant assumptions related to usage rates for each distinct performance obligation. This in turn led to significant auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s determination of the estimates of standalone selling price and usage rates for each distinct performance obligation.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to revenue recognition, including controls over the determination of standalone selling price for each distinct performance obligation in the Company’s Clear Aligner contracts. These procedures also included, among others, (i) testing management’s process for determining the estimate of standalone selling price, which included testing the completeness and accuracy of inputs used and evaluating the reasonableness of factors considered by management related to same or similar product historical sales and usage rates, and (ii) testing management’s process for estimating usage rates, which included evaluating the reasonableness of inputs evaluated by management related to historical usage data by region, country and channel.

/s/ PricewaterhouseCoopers LLP

San Jose, California

February 28, 2025 

We have served as the Company’s auditor since 1997.

57

ALIGN TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 Year Ended December 31, 202420232022Net revenues $3,999,012 $3,862,260 $3,734,635 Cost of net revenues1,199,853 1,155,397 1,100,860 Gross profit2,799,159 2,706,863 2,633,775 Operating expenses:Selling, general and administrative1,763,193 1,703,379 1,674,469 Research and development364,202 346,830 305,258 Restructuring and other charges33,168 13,316 11,453 Legal settlement