Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Align Technology Inc., income tax expense (benefit), continuing operations

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Federal	188,050)	157,383)	55,291)	76,528)	35,788)
State	34,621)	28,365)	8,862)	9,169)	9,568)
Foreign	56,537)	42,681)	29,399)	28,364)	22,753)
Current	279,208)	228,429)	93,552)	114,061)	68,109)
Federal	(55,579)	(25,598)	(11,749)	1,235)	(5,989)
State	(12,265)	(5,860)	(2,121)	209)	(3,274)
Foreign	26,120)	43,432)	(1,476,621)	(3,158)	(1,123)
Deferred	(41,724)	11,974)	(1,490,491)	(1,714)	(10,386)
Provision for (benefit from) income taxes	237,484)	240,403)	(1,396,939)	112,347)	57,723)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Current	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Align Technology Inc. current increased from 2020 to 2021 and from 2021 to 2022.
Deferred	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Align Technology Inc. deferred increased from 2020 to 2021 but then slightly decreased from 2021 to 2022.
Provision for (benefit from) income taxes	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Align Technology Inc. provision for (benefit from) income taxes increased from 2020 to 2021 but then slightly decreased from 2021 to 2022.

Align Technology Inc., effective income tax rate (EITR) reconciliation

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
U.S. federal statutory income tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
State income taxes, net of federal tax benefit	3.70%	2.20%	1.80%	1.70%	1.30%
U.S. tax on foreign earnings	5.60%	2.70%	0.00%	1.90%	4.10%
Impact of differences in foreign tax rates	3.30%	-2.00%	5.60%	-5.10%	-6.70%
Stock-based compensation	2.10%	-0.30%	1.10%	-0.30%	-3.40%
Impact of intra-entity intellectual property rights transfer	0.00%	0.00%	-395.60%	0.00%	0.00%
Settlement on audits	1.90%	0.00%	-1.40%	0.00%	0.00%
Change in valuation allowance	1.70%	1.10%	0.10%	0.00%	0.00%
Other items not individually material	0.30%	-1.00%	-1.20%	0.80%	-3.90%
Effective tax rate	39.60%	23.70%	-368.60%	20.00%	12.40%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Effective tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Align Technology Inc. effective tax rate increased from 2020 to 2021 and from 2021 to 2022.

Align Technology Inc., components of deferred tax assets and liabilities

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net operating loss and capital loss carryforwards	15,380)	11,069)	20,728)	18,182)	25,410)
Reserves and accruals	32,759)	47,641)	34,469)	39,264)	24,769)
Stock-based compensation	19,469)	13,576)	10,842)	8,416)	8,571)
Deferred revenue	117,039)	83,514)	32,562)	20,909)	14,285)
Capitalized research & development	54,293)	—)	—)	—)	—)
Amortizable tax basis in intangibles	1,350,434)	1,392,471)	1,468,159)	—)	—)
Other	16,645)	15,645)	3,844)	3,390)	1,273)
Deferred tax assets before valuation allowance	1,606,019)	1,563,916)	1,570,604)	90,161)	74,308)
Valuation allowance	(23,286)	(12,938)	(1,325)	(1,086)	(251)
Deferred tax assets	1,582,733)	1,550,978)	1,569,279)	89,075)	74,057)
Depreciation and amortization	(11,407)	(11,915)	(14,730)	(23,817)	(8,320)
Acquisition-related intangibles	(26,008)	(28,989)	(35,689)	—)	—)
Unremitted foreign earnings	—)	—)	—)	—)	(612)
Other	(3,438)	(6,931)	(1,720)	(1,341)	(902)
Deferred tax liabilities	(40,853)	(47,835)	(52,139)	(25,158)	(9,834)
Net deferred tax assets (liabilities)	1,541,880)	1,503,143)	1,517,140)	63,917)	64,223)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Deferred tax assets before valuation allowance	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Align Technology Inc. deferred tax assets before valuation allowance decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.
Deferred tax assets	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Align Technology Inc. deferred tax assets decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.
Net deferred tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Align Technology Inc. net deferred tax assets (liabilities) decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.

Align Technology Inc., deferred tax assets and liabilities, classification

US$ in thousands

		Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
	Deferred tax assets	1,571,746)	1,533,767)	1,552,831)	64,007)	64,689)
	Deferred tax liabilities	29,866)	30,624)	35,691)	90)	466)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Deferred tax assets	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	Align Technology Inc. deferred tax assets decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.
Deferred tax liabilities	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Align Technology Inc. deferred tax liabilities decreased from 2020 to 2021 and from 2021 to 2022.

Align Technology Inc., adjustments to financial statements

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Adjustment to Total Assets
Total assets (as reported)	5,947,947)	5,942,110)	4,829,683)	2,500,702)	2,052,458)
Less: Noncurrent deferred tax assets, net	1,571,746)	1,533,767)	1,552,831)	64,007)	64,689)
Total assets (adjusted)	4,376,201)	4,408,343)	3,276,852)	2,436,695)	1,987,769)
Adjustment to Total Liabilities
Total liabilities (as reported)	2,346,589)	2,319,396)	1,595,818)	1,154,533)	799,567)
Less: Noncurrent deferred tax liabilities, net	29,866)	30,624)	35,691)	90)	466)
Total liabilities (adjusted)	2,316,723)	2,288,772)	1,560,127)	1,154,443)	799,101)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	3,601,358)	3,622,714)	3,233,865)	1,346,169)	1,252,891)
Less: Net deferred tax assets (liabilities)	1,541,880)	1,503,143)	1,517,140)	63,917)	64,223)
Stockholders’ equity (adjusted)	2,059,478)	2,119,571)	1,716,725)	1,282,252)	1,188,668)
Adjustment to Net Income
Net income (as reported)	361,573)	772,020)	1,775,888)	442,776)	400,235)
Add: Deferred income tax expense (benefit)	(41,724)	11,974)	(1,490,491)	(1,714)	(10,386)
Net income (adjusted)	319,849)	783,994)	285,397)	441,062)	389,849)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Align Technology Inc., Financial Data: Reported vs. Adjusted

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Align Technology Inc., adjusted financial ratios

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net Profit Margin
Reported net profit margin	9.68%	19.53%	71.84%	18.40%	20.35%
Adjusted net profit margin	8.56%	19.83%	11.55%	18.33%	19.82%
Total Asset Turnover
Reported total asset turnover	0.63	0.67	0.51	0.96	0.96
Adjusted total asset turnover	0.85	0.90	0.75	0.99	0.99
Financial Leverage
Reported financial leverage	1.65	1.64	1.49	1.86	1.64
Adjusted financial leverage	2.12	2.08	1.91	1.90	1.67
Return on Equity (ROE)
Reported ROE	10.04%	21.31%	54.92%	32.89%	31.94%
Adjusted ROE	15.53%	36.99%	16.62%	34.40%	32.80%
Return on Assets (ROA)
Reported ROA	6.08%	12.99%	36.77%	17.71%	19.50%
Adjusted ROA	7.31%	17.78%	8.71%	18.10%	19.61%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Align Technology Inc. adjusted net profit margin ratio improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Align Technology Inc. adjusted total asset turnover ratio improved from 2020 to 2021 but then slightly deteriorated from 2021 to 2022.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Align Technology Inc. adjusted financial leverage ratio increased from 2020 to 2021 and from 2021 to 2022.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Align Technology Inc. adjusted ROE improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Align Technology Inc. adjusted ROA improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

Align Technology Inc., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income	361,573)	772,020)	1,775,888)	442,776)	400,235)
Net revenues	3,734,635)	3,952,584)	2,471,941)	2,406,796)	1,966,492)
Profitability Ratio
Net profit margin¹	9.68%	19.53%	71.84%	18.40%	20.35%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	319,849)	783,994)	285,397)	441,062)	389,849)
Net revenues	3,734,635)	3,952,584)	2,471,941)	2,406,796)	1,966,492)
Profitability Ratio
Adjusted net profit margin²	8.56%	19.83%	11.55%	18.33%	19.82%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Net profit margin = 100 × Net income ÷ Net revenues
= 100 × 361,573 ÷ 3,734,635 = 9.68%

² Adjusted net profit margin = 100 × Adjusted net income ÷ Net revenues
= 100 × 319,849 ÷ 3,734,635 = 8.56%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Align Technology Inc. adjusted net profit margin ratio improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net revenues	3,734,635)	3,952,584)	2,471,941)	2,406,796)	1,966,492)
Total assets	5,947,947)	5,942,110)	4,829,683)	2,500,702)	2,052,458)
Activity Ratio
Total asset turnover¹	0.63	0.67	0.51	0.96	0.96
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Net revenues	3,734,635)	3,952,584)	2,471,941)	2,406,796)	1,966,492)
Adjusted total assets	4,376,201)	4,408,343)	3,276,852)	2,436,695)	1,987,769)
Activity Ratio
Adjusted total asset turnover²	0.85	0.90	0.75	0.99	0.99

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Total asset turnover = Net revenues ÷ Total assets
= 3,734,635 ÷ 5,947,947 = 0.63

² Adjusted total asset turnover = Net revenues ÷ Adjusted total assets
= 3,734,635 ÷ 4,376,201 = 0.85

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Align Technology Inc. adjusted total asset turnover ratio improved from 2020 to 2021 but then slightly deteriorated from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Total assets	5,947,947)	5,942,110)	4,829,683)	2,500,702)	2,052,458)
Stockholders’ equity	3,601,358)	3,622,714)	3,233,865)	1,346,169)	1,252,891)
Solvency Ratio
Financial leverage¹	1.65	1.64	1.49	1.86	1.64
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets	4,376,201)	4,408,343)	3,276,852)	2,436,695)	1,987,769)
Adjusted stockholders’ equity	2,059,478)	2,119,571)	1,716,725)	1,282,252)	1,188,668)
Solvency Ratio
Adjusted financial leverage²	2.12	2.08	1.91	1.90	1.67

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 5,947,947 ÷ 3,601,358 = 1.65

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 4,376,201 ÷ 2,059,478 = 2.12

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Align Technology Inc. adjusted financial leverage ratio increased from 2020 to 2021 and from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income	361,573)	772,020)	1,775,888)	442,776)	400,235)
Stockholders’ equity	3,601,358)	3,622,714)	3,233,865)	1,346,169)	1,252,891)
Profitability Ratio
ROE¹	10.04%	21.31%	54.92%	32.89%	31.94%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	319,849)	783,994)	285,397)	441,062)	389,849)
Adjusted stockholders’ equity	2,059,478)	2,119,571)	1,716,725)	1,282,252)	1,188,668)
Profitability Ratio
Adjusted ROE²	15.53%	36.99%	16.62%	34.40%	32.80%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 361,573 ÷ 3,601,358 = 10.04%

² Adjusted ROE = 100 × Adjusted net income ÷ Adjusted stockholders’ equity
= 100 × 319,849 ÷ 2,059,478 = 15.53%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Align Technology Inc. adjusted ROE improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income	361,573)	772,020)	1,775,888)	442,776)	400,235)
Total assets	5,947,947)	5,942,110)	4,829,683)	2,500,702)	2,052,458)
Profitability Ratio
ROA¹	6.08%	12.99%	36.77%	17.71%	19.50%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	319,849)	783,994)	285,397)	441,062)	389,849)
Adjusted total assets	4,376,201)	4,408,343)	3,276,852)	2,436,695)	1,987,769)
Profitability Ratio
Adjusted ROA²	7.31%	17.78%	8.71%	18.10%	19.61%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 361,573 ÷ 5,947,947 = 6.08%

² Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 319,849 ÷ 4,376,201 = 7.31%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Align Technology Inc. adjusted ROA improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

Align Technology Inc. (NASDAQ:ALGN)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

Align Technology Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Align Technology Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)