Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2019	Oct. 25, 2019
Cover page.
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-32259
Entity Registrant Name	ALIGN TECHNOLOGY INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	94-3267295
Entity Address, Address Line One	2820 Orchard Parkway
Entity Address, City or Town	San Jose
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95134
City Area Code	408
Local Phone Number	470-1000
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	ALGN
Security Exchange Name	NASDAQ
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Shell Company	false
Entity Central Index Key	0001097149
Current Fiscal Year End Date	--12-31
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		78,812,958

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Statement [Abstract]
Net revenues	$ 607,341	$ 505,289	$ 1,757,009	$ 1,432,472
Cost of net revenues	169,787	133,508	485,070	367,701
Gross profit	437,554	371,781	1,271,939	1,064,771
Operating expenses:
Selling, general and administrative	277,514	213,873	792,572	625,585
Research and development	39,680	32,700	116,034	93,095
Impairments and other (gains) charges	(6,792)	0	22,990	0
Litigation settlement gain	0	0	(51,000)	0
Total operating expenses	310,402	246,573	880,596	718,680
Income from operations	127,152	125,208	391,343	346,091
Interest income	3,478	2,234	9,576	6,327
Other income (expense), net	(2,211)	(837)	5,935	(7,759)
Net income before provision for income taxes and equity in losses of investee	128,419	126,605	406,854	344,659
Provision for income taxes	25,895	24,601	77,812	35,206
Equity in losses of investee, net of tax	0	1,132	7,528	6,610
Net income	$ 102,524	$ 100,872	$ 321,514	$ 302,843
Net income per share:
Basic (in usd per share)	$ 1.29	$ 1.26	$ 4.03	$ 3.78
Diluted (in usd per share)	$ 1.28	$ 1.24	$ 4.00	$ 3.71
Shares used in computing net income per share:
Basic (in shares)	79,332	80,111	79,709	80,122
Diluted (in shares)	79,825	81,359	80,397	81,538

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 102,524	$ 100,872	$ 321,514	$ 302,843
Net change in foreign currency translation adjustment	(92)	(1,756)	530	(1,473)
Change in unrealized gains (losses) on investments, net of tax	41	117	317	174
Other comprehensive (loss) income	(51)	(1,639)	847	(1,299)
Comprehensive income	$ 102,473	$ 99,233	$ 322,361	$ 301,544

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 490,362	$ 636,899
Marketable securities, short-term	292,011	98,460
Accounts receivable, net of allowance for doubtful accounts of $5,572 and $2,378, respectively	531,816	439,009
Inventories	94,795	55,641
Prepaid expenses and other current assets	96,595	72,470
Total current assets	1,505,579	1,302,479
Marketable securities, long-term	0	9,112
Property, plant and equipment, net	606,581	521,329
Operating lease right-of-use assets, net	53,923	0
Equity method investments	0	45,913
Goodwill and intangible assets, net	77,012	81,949
Deferred tax assets	63,150	64,689
Other assets	44,135	26,987
Total assets	2,350,380	2,052,458
Current liabilities:
Accounts payable	63,300	64,256
Accrued liabilities	286,132	234,679
Deferred revenues	520,712	393,138
Total current liabilities	870,144	692,073
Income tax payable	101,914	78,008
Operating lease liabilities	43,365	0
Other long-term liabilities	29,408	29,486
Total liabilities	1,044,831	799,567
Commitments and contingencies (Notes 9 and 10)
Stockholders’ equity:
Preferred stock, $0.0001 par value (5,000 shares authorized; none issued)	0	0
Common stock, $0.0001 par value (200,000 shares authorized; 78,809 and 79,778 issued and outstanding, respectively)	8	8
Additional paid-in capital	892,309	877,514
Accumulated other comprehensive income (loss), net	(1,927)	(2,774)
Retained earnings	415,159	378,143
Total stockholders’ equity	1,305,549	1,252,891
Total liabilities and stockholders’ equity	$ 2,350,380	$ 2,052,458

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accounts receivable, allowance for doubtful accounts	$ 5,572	$ 2,378
Preferred stock, par value (in usd per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares issued	0	0
Common stock, par value (in usd per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000	200,000
Common stock, shares issued	78,809	79,778
Common stock, shares outstanding	78,809	79,778

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss), Net	Retained Earnings
Beginning Balance (in shares) at Dec. 31, 2017		80,040
Beginning Balance at Dec. 31, 2017	$ 1,154,288	$ 8	$ 886,435	$ 571	$ 267,274
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	302,843				302,843
Net change in unrealized gains (losses) from investments	174			174
Net change in foreign currency translation adjustment	(1,473)			(1,473)
Issuance of common stock relating to employee equity compensation plans (in shares)		765
Issuance of common stock relating to employee equity compensation plans	16,607		16,607
Tax withholdings related to net share settlements of restricted stock units	(81,756)		(81,756)
Common stock repurchased and retired (shares)		(822)
Common stock repurchased and retired	(250,002)		(7,933)		(242,069)
Stock-based compensation	51,918		51,918
Other	384				384
Ending Balance (in shares) at Sep. 30, 2018		79,983
Ending Balance at Sep. 30, 2018	1,192,983	$ 8	865,271	(728)	328,432
Beginning Balance (in shares) at Dec. 31, 2017		80,040
Beginning Balance at Dec. 31, 2017	1,154,288	$ 8	886,435	571	267,274
Ending Balance (in shares) at Dec. 31, 2018		79,778
Ending Balance at Dec. 31, 2018	1,252,891	$ 8	877,514	(2,774)	378,143
Beginning Balance (in shares) at Jun. 30, 2018		80,313
Beginning Balance at Jun. 30, 2018	1,218,959	$ 8	844,599	911	373,441
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	100,872				100,872
Net change in unrealized gains (losses) from investments	117			117
Net change in foreign currency translation adjustment	(1,756)			(1,756)
Issuance of common stock relating to employee equity compensation plans (in shares)		96
Issuance of common stock relating to employee equity compensation plans	8,021		8,021
Tax withholdings related to net share settlements of restricted stock units	(2,426)		(2,426)
Common stock repurchased and retired (shares)		(426)
Common stock repurchased and retired	(150,002)		(4,121)		(145,881)
Stock-based compensation	19,198		19,198
Ending Balance (in shares) at Sep. 30, 2018		79,983
Ending Balance at Sep. 30, 2018	1,192,983	$ 8	865,271	(728)	328,432
Beginning Balance (in shares) at Dec. 31, 2018		79,778
Beginning Balance at Dec. 31, 2018	1,252,891	$ 8	877,514	(2,774)	378,143
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	321,514				321,514
Net change in unrealized gains (losses) from investments	317			317
Net change in foreign currency translation adjustment	530			530
Issuance of common stock relating to employee equity compensation plans (in shares)		529
Issuance of common stock relating to employee equity compensation plans	17,907		17,907
Tax withholdings related to net share settlements of restricted stock units	(55,793)		(55,793)
Common stock repurchased and retired (shares)		(1,498)
Common stock repurchased and retired	(299,504)		(15,006)		(284,498)
Stock-based compensation	67,687		67,687
Ending Balance (in shares) at Sep. 30, 2019		78,809
Ending Balance at Sep. 30, 2019	1,305,549	$ 8	892,309	(1,927)	415,159
Beginning Balance (in shares) at Jun. 30, 2019		79,865
Beginning Balance at Jun. 30, 2019	1,373,682	$ 8	874,275	(1,876)	501,275
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	102,524				102,524
Net change in unrealized gains (losses) from investments	41			41
Net change in foreign currency translation adjustment	(92)			(92)
Issuance of common stock relating to employee equity compensation plans (in shares)		76
Issuance of common stock relating to employee equity compensation plans	8,293		8,293
Tax withholdings related to net share settlements of restricted stock units	$ (3,075)		(3,075)
Common stock repurchased and retired (shares)	(1,132)
Common stock repurchased and retired	$ (200,000)		(11,360)		(188,640)
Stock-based compensation	24,176		24,176
Ending Balance (in shares) at Sep. 30, 2019		78,809
Ending Balance at Sep. 30, 2019	$ 1,305,549	$ 8	$ 892,309	$ (1,927)	$ 415,159

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 321,514	$ 302,843
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes	1,470	2,047
Depreciation and amortization	57,194	38,185
Non-cash operating lease cost	13,600
Impairments on long-lived assets	28,498	0
Gain on lease terminations	(6,792)
Impairment on equity investment	3,975	0
Gain from sale of equity method investment	(15,769)	0
Stock-based compensation	67,687	51,918
Equity in losses of investee	7,528	6,610
Other non-cash operating activities	17,426	11,363
Changes in assets and liabilities:
Accounts receivable	(95,566)	(89,843)
Inventories	(40,775)	(17,192)
Prepaid expenses and other assets	(14,826)	(47,775)
Accounts payable	1,343	5,042
Accrued and other long-term liabilities	31,089	(25,436)
Long-term income tax payable	13,425	(18,435)
Deferred revenues	138,072	94,059
Net cash provided by operating activities	529,093	313,386
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment	(107,157)	(169,033)
Purchase of marketable securities	(588,805)	(150,022)
Proceeds from maturities of marketable securities	211,829	259,870
Proceeds from sales of marketable securities	194,677	9,560
Purchase of investments in privately held companies	0	(5,000)
Note repayment from privately held company	13,185	0
Loan repayment from equity investee	0	30,000
Other investing activities	(14,062)	604
Net cash used in investing activities	(290,333)	(24,021)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock	17,907	16,607
Common stock repurchases	(299,504)	(250,002)
Employees’ taxes paid upon the vesting of restricted stock units	(55,793)	(81,756)
Purchase of finance lease	(45,773)	0
Net cash used in financing activities	(383,163)	(315,151)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	(2,098)	(2,890)
Net decrease in cash, cash equivalents, and restricted cash	(146,501)	(28,676)
Cash, cash equivalents, and restricted cash at beginning of the period	637,566	450,125
Cash, cash equivalents, and restricted cash at end of the period	$ 491,065	$ 421,449

Summary of Significant Accounting Policies	9 Months Ended
Summary of Significant Accounting Policies	Sep. 30, 2019
Notes To Financial Statements [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by Align Technology, Inc. (“we”, “our”, or “Align”) in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and contains all adjustments, including normal recurring adjustments, necessary to state fairly our results of operations for the three and nine months ended September 30, 2019 and 2018, our comprehensive income for the three and nine months ended September 30, 2019 and 2018, our financial position as of September 30, 2019, our stockholders’ equity for the three and nine months ended September 30, 2019 and 2018, and our cash flows for the nine months ended September 30, 2019 and 2018. The Condensed Consolidated Balance Sheet as of December 31, 2018 was derived from the December 31, 2018 audited financial statements. It does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S.”). We adopted Accounting Standards Update (“ASU”) 2016-02, “Leases” (Topic 842) in the first quarter of fiscal year 2019 by electing the transition method issued in ASU 2018-11 and the package of practical expedients available in the standard. The standard had a material impact on our Condensed Consolidated Balance Sheet as we recognized assets and liabilities related to our leases. The adoption did not have an impact to prior periods. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or any other future period, and we make no representations related thereto. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and the Consolidated Financial Statements and notes thereto included in Items 7, 7A and 8, respectively, in our Annual Report on Form 10-K for the year ended December 31, 2018. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the U.S. requires our 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 the fair values of financial instruments, valuation of investments in privately held companies, useful lives of intangible assets and property and equipment, revenue recognition, stock-based compensation, long-lived assets and goodwill, income taxes and contingent liabilities, 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. Significant Accounting Policies Our significant accounting policies are described in Note 1 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K. Significant changes to the Lease policy is discussed below: Lease We lease office and retail spaces, vehicles and office equipment with original lease periods of up to 10 years. We determine if an arrangement is a lease at inception under ASC 842. Operating lease right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. If a lease arrangement does not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease which we include in our lease term when it is reasonably certain that we will exercise that option. We have lease agreements with lease and non-lease components which are accounted for as a single lease component. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Recent Accounting Pronouncements (i) New Accounting Updates Recently Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases” (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11, “Leases-Targeted Improvements,” which provides an additional transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. We adopted the guidance in the first quarter of fiscal year 2019 by electing the transition method issued in ASU 2018-11 and the package of practical expedients available in the standard. The standard had a material impact on our Condensed Consolidated Balance Sheet as we recognized assets and liabilities related to our leases. The adoption did not have an impact to prior periods. In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which gives entities the option to reclassify to retained earnings the tax effects resulting from the U.S. Tax Cuts and Jobs Act (the “TCJA”) related to items in accumulated other comprehensive income. The amendments are effective for fiscal years and interim periods within those years beginning after December 15, 2018 on a retrospective basis and early adoption is permitted. We adopted the standard in the first quarter of fiscal year 2019 which did not have a material impact on our consolidated financial statements and related disclosures. The TCJA did not affect our accumulated other comprehensive income (loss), net, and therefore we did not reclassify any income tax effects from accumulated other comprehensive income (loss), net to our retained earnings. (ii) Recent Accounting Updates Not Yet Effective In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses” (Topic 326) to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this update replace the existing guidance of incurred loss impairment methodology with an approach that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” which clarifies the scope of guidance in the ASU 2016-13. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures; however, we anticipate the adoption of the guidance will not have a material impact to our consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” to simplify the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. Under the amendments in this update, an entity will recognize an impairment charge for the amount by which the carrying value exceeds the fair value. The updated guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019 on a prospective basis and early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures; however, we anticipate the adoption of the guidance will not have a material impact to our consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement,” to modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The updated guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019 on a prospective basis and early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures; however, we anticipate the adoption of the guidance will not have a material impact to our consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” to clarify the guidance on the costs of implementing a cloud computing hosting arrangement that is a service contract. Under the amendments in this update, the entity is required to follow the guidance in Subtopic 350-40, Internal-Use Software, to determine which implementation costs under the service contract to be capitalized as an asset and which costs to expense. The updated guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019 either on a retrospective or prospective basis and early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

Investments and Fair Value Measurements

9 Months Ended

Sep. 30, 2019

Notes To Financial Statements [Abstract]

Investments and Fair Value Measurements

Marketable Securities

As of September 30, 2019 and December 31, 2018, the estimated fair value of our short-term and long-term marketable securities, classified as available for sale, are as follows (in thousands):

Short-term



September 30, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper	$	33,259	$	—	$	—		$	33,259
Corporate bonds	152,452		169		(10		)	152,611
U.S. government agency bonds	10,233		6		—			10,239
U.S. government treasury bonds	91,832		48		(5		)	91,875
Foreign bonds	4,004		4		—			4,008
Certificates of deposit	19		—		—			19
Total marketable securities, short-term	$	291,799	$	227	$	(15	)	$	292,011

As of September 30, 2019, we had no long-term marketable securities.

Short-term



December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper	$	17,793	$	—	$	—		$	17,793
Corporate bonds	45,100		—		(48		)	45,052
U.S. government agency bonds	19,981		—		(77		)	19,904
U.S. government treasury bonds	15,292		—		(1		)	15,291
Certificates of deposit	420		1		(1		)	420
Total marketable securities, short-term	$	98,586	$	1	$	(127	)	$	98,460

Long-term



December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate bonds	$	4,957	$	5	$	(2	)	$	4,960
U.S. government agency bonds	1,399		8		—			1,407
U.S. government treasury bonds	2,235		9		—			2,244
Certificates of deposit	500		1		—			501
Total marketable securities, long-term	$	9,091	$	23	$	(2	)	$	9,112

Cash equivalents are not included in the tables above as the gross unrealized gains and losses are not material. We have no short-term or long-term investments that have been in a continuous material unrealized loss position for greater than twelve months as of September 30, 2019 and December 31, 2018. Amounts reclassified to earnings from accumulated other comprehensive income (loss), net related to unrealized gains or losses were not material for the three and nine months ended September 30, 2019 and 2018. For the three and nine months ended September 30, 2019 and 2018, realized gains or losses were not material.

Our fixed-income securities investment portfolio consists of investments that can have a maximum effective maturity of up to 40 months on any individual security. 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. The unrealized losses are primarily due to changes in interest rates and credit spreads. We expect to realize the full value of all these investments upon maturity or sale. The weighted average remaining duration of these securities was approximately seven months and four months as of September 30, 2019 and December 31, 2018, respectively.

As the carrying value approximates the fair value for our short-term and long-term marketable securities shown in the tables above, the following table summarizes the fair value of our short-term and long-term marketable securities classified by contractual maturity as of September 30, 2019 and December 31, 2018 (in thousands):



	September 30, 2019		December 31, 2018
One year or less	$	292,011	$	98,460
Due in greater than one year	—		9,112
Total available for sale short-term and long-term marketable securities	$	292,011	$	107,572

Investments in Privately Held Companies

Our investments in privately held companies as of September 30, 2019 and December 31, 2018 are as follows (in thousands):



	September 30, 2019		December 31, 2018
Equity securities under the equity method investment ¹	$	—	$	45,913
Equity securities without readily determinable fair values ²	$	5,887	$	9,862


¹	Refer to Note 5 “Equity Method Investments” of the Notes to Condensed Consolidated Financial Statements for more information.


²	The equity securities are reported as a nonrecurring investment within other assets in our Condensed Consolidated Balance Sheet. During the nine months ended September 30, 2019, there was approximately $4.0 million of impairment resulting from an observable price change.

Fair Value Measurements

We measure the fair value of financial assets as the price 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.

The following tables summarize our financial assets measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018 (in thousands):



Description	Balance as of September 30, 2019		Level 1		Level 2
Cash equivalents:
Money market funds	$	181,401	$	181,401	$	—
Commercial paper	22,403		—		22,403
Corporate bonds	4,528		—		4,528
U.S. government treasury bonds	5,298		5,298		—
Short-term investments:
Commercial paper	33,259		—		33,259
Corporate bonds	152,611		—		152,611
U.S. government agency bonds	10,239		—		10,239
U.S. government treasury bonds	91,875		91,875		—
Foreign bonds	4,008		—		4,008
Certificates of deposit	19		—		19
Prepaid expenses and other current assets:
Israeli funds	3,103		—		3,103
	$	508,744	$	278,574	$	230,170



Description	Balance as of December 31, 2018		Level 1		Level 2
Cash equivalents:
Money market funds	$	431,081	$	431,081	$	—
Commercial paper	4,681		—		4,681
Corporate bonds	3,880		—		3,880
U.S. government treasury bonds	2,195		2,195		—
Short-term investments:
Commercial paper	17,793		—		17,793
Corporate bonds	45,052		—		45,052
U.S. government agency bonds	19,904		—		19,904
U.S. government treasury bonds	15,291		15,291		—
Certificates of deposit	420		—		420
Long-term investments:
Corporate bonds	4,960		—		4,960
U.S. government agency bonds	1,407		—		1,407
U.S. government treasury bonds	2,244		2,244		—
Certificates of deposit	501		—		501
Prepaid expenses and other current assets:
Israeli funds	3,047		—		3,047
	$	552,456	$	450,811	$	101,645

Derivative Financial Instruments

We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations on certain trade and intercompany receivables and payables. These forward contracts are classified within Level 2 of the fair value hierarchy. The net gain from the settlement of foreign currency forward contracts during the three months ended September 30, 2019 and September 30, 2018 was $10.1 million and $2.3 million, respectively, and the net gain from the settlement of foreign currency forward contracts during the nine months ended September 30, 2019 and September 30, 2018 was $10.5 million and $7.7 million, respectively. As of September 30, 2019 and December 31, 2018, the fair value of foreign exchange forward contracts outstanding was not material.

The following table presents the gross notional value of all our foreign exchange forward contracts outstanding as of September 30, 2019 and December 31, 2018 (in thousands):



	September 30, 2019
	Local Currency Amount	Notional Contract Amount (USD)
Euro	€89,000	$	97,206
Chinese Yuan	¥545,000	76,266
Canadian Dollar	C$44,000	33,250
Israeli Shekel	ILS111,000	32,043
British Pound	£21,000	25,843
Japanese Yen	¥2,700,000	25,021
Brazilian Real	R$89,000	21,318
Mexican Peso	M$140,000	7,078
Australian Dollar	A$3,000	2,030
		$	320,055



	December 31, 2018
	Local Currency Amount	Notional Contract Amount (USD)
Euro	€62,000	$	71,095
Chinese Yuan	¥375,000	54,515
Brazilian Real	R$81,000	20,858
Canadian Dollar	C$27,000	19,808
British Pound	£13,000	16,635
Japanese Yen	¥1,700,000	15,357
Australian Dollar	A$3,000	2,114
		$	200,382

Balance Sheet Components

9 Months Ended

Sep. 30, 2019

Notes To Financial Statements [Abstract]

Balance Sheet Components

Inventories

Inventories consist of the following (in thousands):



	September 30, 2019		December 31, 2018
Raw materials	$	43,808	$	26,119
Work in process	29,172		13,784
Finished goods	21,815		15,738
Total inventories	$	94,795	$	55,641

Prepaid Expenses and Other Current Assets

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



	September 30, 2019		December 31, 2018
Tax related receivables	$	35,424	$	36,794
Current promissory note and related interest receivable ¹	27,101		—
Other current receivables	2,283		6,511
Prepaid software and maintenance	10,735		5,938
Other prepaid expenses and current assets	21,052		23,227
Total prepaid expenses and other current assets	$	96,595	$	72,470


¹	Current portion of unsecured promissory note receivable and related interest receivable (Refer to Note 5“Equity Method Investments” of the Notes to Condensed Consolidated Financial Statements for more information).

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):



	September 30, 2019		December 31, 2018
Accrued payroll and benefits	$	131,337	$	127,109
Accrued expenses	61,858		39,323
Accrued professional fees	15,554		6,752
Current operating lease liabilities	13,706		—
Accrued warranty	10,802		8,551
Accrued property, plant and equipment	10,241		8,193
Accrued sales return reserve	9,390		6,534
Accrued customer credits and deposits	7,181		12,439
Accrued sales tax and value added tax	7,135		6,276
Accrued sales rebate	7,068		5,668
Accrued income taxes	5,885		5,752
Other accrued liabilities	5,975		8,082
Total accrued liabilities	$	286,132	$	234,679

Warranty

We regularly review the balance for accrued warranty and update based on historical warranty trends. Actual warranty costs incurred have not materially differed from those accrued; however, future actual warranty costs could differ from the estimated amounts.

Warranty accrual consists of the following activity (in thousands):



	Nine Months Ended September 30,
	2019			2018
Balance at beginning of period	$	8,551		$	5,929
Charged to cost of net revenues	9,429			10,874
Actual warranty expenditures	(7,178		)	(8,777		)
Balance at end of period	$	10,802		$	8,026

Deferred Revenues

Deferred revenues consist of the following (in thousands):



	September 30, 2019		December 31, 2018
Deferred revenues - current	$	520,712	$	393,138
Deferred revenues - long-term ¹	$	27,551	$	17,051

¹ Included in other long-term liabilities within our Condensed Consolidated Balance Sheet

During the three months ended September 30, 2019 and 2018, we recognized $607.3 million and $505.3 million of revenue, respectively, of which $70.1 million and $45.5 million was included in the deferred revenues balance at December 31, 2018 and 2017, respectively.

During the nine months ended September 30, 2019 and September 30, 2018, we recognized $1.8 billion and $1.4 billion of revenue, respectively, of which $207.0 million and $145.4 million was included in the deferred revenues balance at December 31, 2018 and 2017, respectively.

Our unfilled performance obligations, including deferred revenues and backlog, as of September 30, 2019 were $558.1 million. These performance obligations are expected to be recognized over the next one to five years.

Align has revised certain previously disclosed amounts within this footnote. These revisions did not impact current or prior period financial statements.

Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Lessee

We have operating leases for office and retail spaces, vehicles and office equipment.

The supplemental balance sheet information for our operating leases consist of following (in thousands):



Balance Sheet Location	September 30, 2019
Operating lease right-of-use assets, net	$	53,923

Accrued liabilities	$	13,706
Operating lease liabilities	43,365
Total operating lease liabilities	$	57,071

The components of lease expenses consist of following (in thousands):



Lease Cost	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost ¹	$	5,957	$	16,756
Variable lease cost	436		1,543
Total lease cost ²	$	6,393	$	18,299


¹	Includes short-term lease expense which are not material for the periods.


²	Included in operating expenses within our Condensed Consolidated Statement of Operations.

The following table provides a summary of our operating lease terms and discount rates:



Remaining Lease Term and Discount Rate	September 30, 2019

Weighted average remaining lease term (in years)	5.9
Weighted average discount rate	4.2	%

Maturities of operating lease liabilities as of September 30, 2019 are as follows (in thousands):



Fiscal Year Ending December 31,	Operating Leases
Remainder of 2019	$	3,957
2020	17,934
2021	15,990
2022	10,454
2023	7,014
Thereafter	7,076
Total lease payments	$	62,425
Less: Interest	(5,354		)
Total lease liabilities	$	57,071

As of September 30, 2019, we had additional operating leases that have not yet commenced of $9.6 million. These operating leases will commence between the remainder of fiscal year 2019 through 2021 with lease terms of 2 years to 4 years.

Minimum future lease payments previously disclosed under ASC 840 in our Annual Report on Form 10-K for the year ended December 31, 2018 are as follows (in thousands):



Fiscal Year Ending December 31,	Operating Leases
2019	$	21,429
2020	20,483
2021	18,897
2022	15,096
2023	12,400
Thereafter	18,371
Total minimum lease payments	$	106,676

Lessor

In April 2019, as part of the purchase of a building located in Morrisville, North Carolina, we assumed an existing lease with a third-party for a portion of the building which is classified as an operating lease.

Lease payments due to Align as of September 30, 2019 are as follows (in thousands):



Fiscal Year Ending December 31,	Operating Lease
Remainder of 2019	$	212
2020	859
2021	1,145
2022	1,199
2023	1,229
Thereafter	7,441
Total minimum lease payments	$	12,085

For the three and nine months ended September 30, 2019, operating lease income was not material.

Leases

Lessee

We have operating leases for office and retail spaces, vehicles and office equipment.

The supplemental balance sheet information for our operating leases consist of following (in thousands):



Balance Sheet Location	September 30, 2019
Operating lease right-of-use assets, net	$	53,923

Accrued liabilities	$	13,706
Operating lease liabilities	43,365
Total operating lease liabilities	$	57,071

The components of lease expenses consist of following (in thousands):



Lease Cost	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost ¹	$	5,957	$	16,756
Variable lease cost	436		1,543
Total lease cost ²	$	6,393	$	18,299


¹	Includes short-term lease expense which are not material for the periods.


²	Included in operating expenses within our Condensed Consolidated Statement of Operations.

The following table provides a summary of our operating lease terms and discount rates:



Remaining Lease Term and Discount Rate	September 30, 2019

Weighted average remaining lease term (in years)	5.9
Weighted average discount rate	4.2	%

Maturities of operating lease liabilities as of September 30, 2019 are as follows (in thousands):



Fiscal Year Ending December 31,	Operating Leases
Remainder of 2019	$	3,957
2020	17,934
2021	15,990
2022	10,454
2023	7,014
Thereafter	7,076
Total lease payments	$	62,425
Less: Interest	(5,354		)
Total lease liabilities	$	57,071

Minimum future lease payments previously disclosed under ASC 840 in our Annual Report on Form 10-K for the year ended December 31, 2018 are as follows (in thousands):



Fiscal Year Ending December 31,	Operating Leases
2019	$	21,429
2020	20,483
2021	18,897
2022	15,096
2023	12,400
Thereafter	18,371
Total minimum lease payments	$	106,676

Lessor

Lease payments due to Align as of September 30, 2019 are as follows (in thousands):



Fiscal Year Ending December 31,	Operating Lease
Remainder of 2019	$	212
2020	859
2021	1,145
2022	1,199
2023	1,229
Thereafter	7,441
Total minimum lease payments	$	12,085

For the three and nine months ended September 30, 2019, operating lease income was not material.

Equity Method Investments	9 Months Ended
Equity Method Investments	Sep. 30, 2019
Equity Method Investments and Joint Ventures [Abstract]
Equity Method Investments	Equity Method Investments On July 25, 2016, we acquired a 17% equity interest, on a fully diluted basis, in SmileDirectClub, LLC (“SDC”) for $46.7 million. On July 24, 2017, we purchased an additional 2% equity interest in SDC for $12.8 million. The investment was accounted for as an equity method investment and recorded in our Condensed Consolidated Balance Sheet. We recorded our proportional share of SDC’s losses within equity in losses of investee, net of tax, in our Condensed Consolidated Statement of Operations. As a result of the arbitrator’s decision regarding SDC announced on March 5, 2019, we were ordered to tender our SDC equity interest by April 3, 2019 for a purchase price equal to the “capital account” balance as of October 31, 2017 under the terms of the investment. In April 2019, based on the “capital account” value provided by SDC, we entered into an unsecured promissory note with SDC to receive $54.2 million through February 1, 2021 in exchange for the tender of our membership interests. As a result, we derecognized the equity method investments balance of $38.4 million in exchange for an unsecured promissory note of $54.2 million which we recorded in our Condensed Consolidated Balance Sheet. We recorded the difference of $15.8 million as a gain in the second quarter of 2019 as other income in our Condensed Consolidated Statement of Operation. Although we tendered our membership interests pursuant to the arbitrator’s decision, the parties did not agree on the amount of the “capital account” balance as of October 31, 2017 or the appropriate repurchase price for the membership units. On July 3, 2019, we filed a demand for arbitration regarding SDC’s calculation of the “capital account” balance. That arbitration proceeding remains pending and currently is scheduled to be heard in June 2020 (Refer to Note 9 “Legal Proceedings” of the Notes to Condensed Consolidated Financial Statements for SDC legal proceedings discussion). Concurrently with the investment on July 25, 2016, we also entered into a supply agreement with SDC to manufacture clear aligners for SDC’s program. The term of the supply agreement expires on December 31, 2019. The sale of aligners to SDC and the income from the supply agreement are reported in our Clear Aligner business segment.

Goodwill and Long-lived Assets

9 Months Ended

Sep. 30, 2019

Notes To Financial Statements [Abstract]

Goodwill and Intangible Assets

Goodwill

The change in the carrying value of goodwill for the nine months ended September 30, 2019, all attributable to our Clear Aligner reporting unit, is as follows (in thousands):



	Total
Balance as of December 31, 2018	$	64,029
Adjustments¹	(274		)
Balance as of September 30, 2019	$	63,755

¹The adjustments to goodwill during the period were a result of foreign currency translation.

During the fourth quarter of fiscal 2018, we performed the annual goodwill impairment testing and found no impairment as the fair value of our Clear Aligner reporting unit was significantly in excess of the carrying value.

Intangible Long-Lived Assets

Acquired intangible long-lived assets are being amortized as follows (in thousands):



	Weighted Average Amortization Period (in years)	Gross Carrying Amount as of September 30, 2019		Accumulated Amortization			Accumulated Impairment Loss			Net Carrying Value as of September 30, 2019
Trademarks	15	$	7,100	$	(2,011	)	$	(4,179	)	$	910
Existing technology	13	12,600		(5,690		)	(4,328		)	2,582
Customer relationships	11	33,500		(17,939		)	(10,751		)	4,810
Reacquired rights	3	7,500		(6,425		)	—			1,075
Patents	8	6,796		(2,954		)	—			3,842
Other	2	618		(580		)	—			38
Total intangible assets		$	68,114	$	(35,599	)	$	(19,258	)	$	13,257



	Weighted Average Amortization Period (in years)	Gross Carrying Amount as of December 31, 2018		Accumulated Amortization			Accumulated Impairment Loss			Net Carrying Value as of December 31, 2018
Trademarks	15	$	7,100	$	(1,907	)	$	(4,179	)	$	1,014
Existing technology	13	12,600		(5,268		)	(4,328		)	3,004
Customer relationships	11	33,500		(16,542		)	(10,751		)	6,207
Reacquired rights	3	7,500		(4,341		)	—			3,159
Patents	8	6,796		(2,334		)	—			4,462
Other	2	618		(544		)	—			74
Total intangible assets		$	68,114	$	(30,936	)	$	(19,258	)	$	17,920

The total estimated annual future amortization expense for these acquired intangible assets as of September 30, 2019 is as follows (in thousands):



Fiscal Year Ending December 31,	Amortization
Remainder of 2019	$	1,493
2020	3,825
2021	3,389
2022	2,116
2023	1,495
Thereafter	939
Total	$	13,257

Amortization expense for both the three months ended September 30, 2019 and 2018 was $1.5 million and amortization expense for both the nine months ended September 30, 2019 and 2018 was $4.5 million.

Legal Proceedings	9 Months Ended
Legal Proceedings	Sep. 30, 2019
Legal Proceedings [Abstract]
Legal Proceedings	Legal Proceedings Securities Class Action Lawsuit On November 5, 2018, a class action lawsuit against Align and three of our executive officers was filed in the U.S. District Court for the Northern District of California on behalf of a purported class of purchasers of our common stock between July 25, 2018 and October 24, 2018. The complaint generally alleges claims under the federal securities laws and seeks monetary damages in an unspecified amount and costs and expenses incurred in the litigation. On December 12, 2018, a similar lawsuit was filed in the same court on behalf of a purported class of purchasers of our common stock between April 25, 2018 and October 24, 2018 (together with the first lawsuit, the “Securities Actions”). On May 10, 2019, the lead plaintiff filed a consolidated complaint against Align and four of our executive officers alleging similar claims as the initial complaints on behalf of a purported class of purchasers of our common stock between April 25, 2018 and October 24, 2018. On June 24, 2019, defendants filed a motion to dismiss the consolidated complaint. On October 29, 2019, that motion to dismiss was granted with leave to amend. Align believes these claims are without merit and intends to vigorously defend itself. Align is currently unable to predict the outcome of these lawsuits and therefore cannot determine the likelihood of loss nor estimate a range of possible loss. Shareholder Derivative Lawsuit In January 2019, three derivative lawsuits were filed in the U.S. District Court for the Northern District of California, purportedly on behalf of Align, naming as defendants the members of our Board of Directors along with certain of our executive officers. The allegations in the complaints are similar to those presented in the Securities Actions, but the complaints assert various state law causes of action including for breaches of fiduciary duty, insider trading, and unjust enrichment, among others. The complaints seek unspecified monetary damages on behalf of Align, 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. On February 26, 2019, the three lawsuits were consolidated. On April 10, 2019, the court stayed the consolidated action pending final disposition of the Securities Actions. On April 12, 2019, a derivative lawsuit was also filed in California Superior Court for Santa Clara County, purportedly on behalf of Align, naming as defendants the members of our Board of Directors along with certain of our executive officers. The allegations in this complaint are similar to those in the derivative suits described above. On May 16, 2019, the court stayed this action pending final disposition of the Securities Actions. On February 22, 2019, a purported stockholder sent a letter to Align pursuant to 8 Del. C. § 220 demanding certain books and records for the stated purpose of investigating potential breaches of duty, corporate mismanagement, and alleged wrongdoing by fiduciaries of the Company. On April 16, 2019, Align responded and refused the demand on several legal grounds. On June 10, 2019, the purported stockholder petitioned the Superior Court of the State of California, County of Santa Clara, to issue a writ of mandate commanding Align to provide the books and records requested. On August 23, 2019, Align filed a demurrer seeking to dismiss the petition. A hearing on that demurrer was held on October 25, 2019. On October 28, 2019, the Court issued an order sustaining Align’s demurrer and dismissing the petition without an opportunity to amend. The Court further ordered Align to submit a proposed judgment of dismissal within 10 days. Align is currently unable to predict the outcome of this demand or of these lawsuits and therefore cannot determine the likelihood of loss nor estimate a range of possible loss. 3Shape Litigation On November 14, 2017, Align filed six patent infringement lawsuits asserting 26 patents against 3Shape, a Danish corporation, and a related U.S. corporate entity, asserting that 3Shape’s Trios intraoral scanning system and Dental System software infringe Align patents. Align filed two Section 337 complaints with the U.S. International Trade Commission (“ITC”) alleging that 3Shape violates U.S. trade laws by selling for importation and importing its infringing Trios intraoral scanning system and Dental System software. Align’s ITC complaints seek cease and desist orders and exclusion orders prohibiting the importation of 3Shape’s Trios scanning system and Dental System software products into the U.S. Align also filed four separate complaints in the U.S. District Court for the District of Delaware alleging patent infringement by 3Shape’s Trios intraoral scanning system and Dental System software. Two of those cases were stayed pending the ITC determinations, and the other two cases are currently active in discovery and pretrial proceedings. Trials have been scheduled to begin on April 20, 2020 in one case and to begin on June 8, 2020 in the other. Certain of Align’s asserted patents in the Delaware actions were found invalid by the District Court Judge. The ITC conducted hearings in the Section 337 investigations in September and November 2018. On March 1, 2019, the Administrative Law Judge issued an Initial Determination in one of the Section 337 investigations, finding no violation of Section 337 by 3Shape. On April 26, 2019, the Administrative Law Judge issued an Initial Determination in the second Section 337 investigations, finding no violation of Section 337 by 3Shape. Align and 3Shape each petitioned the Commission for review of the Initial Determinations. On July 18 and July 19, 2019, the Commission determined to review each Initial Determination and sought additional briefing by the parties with respect to one of the Section 337 investigations. On August 20, 2019, the Commission vacated one Initial Determination and terminated the investigation, and on October 15, 2019, the Court ordered that the stay be lifted on the corresponding Delaware case. The current target date for completion of the other investigation is November 22, 2019. On May 9, 2018, 3Shape filed a complaint in the U.S. District Court for the District of Delaware alleging patent infringement by Align’s iTero Element scanner of a single 3Shape patent; the court stayed the case. On June 14, 2018, 3Shape filed another complaint in the U.S. District Court for the District of Delaware alleging patent infringement by Align’s iTero Element scanner of a single 3Shape patent. On August 19, 2019, the Court consolidated the two actions, and 3Shape filed an amended complaint alleging infringement of an additional patent on August 30, 2019. The case is active and in the early discovery phase, with trial scheduled to begin on April 12, 2021. On August 28, 2018, 3Shape filed a complaint against Align in the U.S. District Court for the District of Delaware alleging antitrust violations and seeking monetary damages and injunctive relief relating to Align’s alleged market activities, including Align’s assertion of its patent portfolio, in alleged clear aligner and intraoral scanning markets, and the Court scheduled trial to begin on May 10, 2021. Align filed a motion to dismiss 3Shape’s complaint on October 17, 2018. Align also moved to stay the litigation pending the outcome of its motion to dismiss. The court granted Align’s motion to stay. On August 15, 2019, the Magistrate Judge recommended that Align’s motion to dismiss be granted, and, on September 26, 2019, the District Court Judge adopted the Magistrate Judge’s Report and Recommendation, granted Align’s motion to dismiss, and dismissed 3Shape’s complaint with leave to amend within thirty days of the order. On October 28, 2019, 3Shape filed an amended complaint. Align has until November 18, 2019 to respond. On December 10, 2018, Align filed three additional patent infringement lawsuits asserting 10 additional patents against 3Shape. Align filed one Section 337 complaint with the ITC alleging that 3Shape violates U.S. trade laws through unfair competition by selling for importation and importing the infringing TRIOS intraoral scanning system, Trios Lab Scanners and TRIOS software, TRIOS Module software, Dental System software, and Ortho System Software. On December 11, 2018, Align filed two separate complaints in the U.S. District Court for the District of Delaware alleging patent infringement by 3Shape's Trios intraoral scanning system, Lab Scanners and Dental and Ortho System Software. The ITC instituted the investigation, and one of the District Court cases was stayed pending the ITC determination. Certain claims of Align’s asserted patents in the Delaware action was found invalid by the District Court Judge. The remaining District Court case is in the very early stages of discovery and pretrial proceedings. The ITC evidentiary hearing was held at the end of October 2019. The deadline for the judge’s initial determination is March 6, 2020. 3Shape has sought to invalidate certain of Align’s patents through petitions for inter partes review proceedings. Align disputes 3Shape’s positions and intends to vigorously defend the validity of its patent rights. Each of the District Court patent infringement complaints seek monetary damages and injunctive relief against further infringement. We are currently unable to predict the outcome of this dispute and therefore cannot determine the likelihood of loss, if any, nor estimate a range of possible loss. Simon & Simon On March 14, 2019, a dental practice named Simon and Simon, PC d/b/a City Smiles brought an antitrust action on behalf of itself and a putative class of similarly situated practices seeking monetary damages and injunctive relief relating to Align’s alleged market activities in alleged clear aligner and intraoral scanning markets. Align filed a motion to dismiss the complaint on April 5, 2019, and the court held a hearing on Align’s motion. On October 15, 2019, the Magistrate Judge issued a Report and Recommendation on Align’s motion to dismiss which recommends that Align’s motion be granted and that the plaintiffs’ complaint be dismissed without prejudice. On October 29, 2019, Simon and Simon filed objections to the Magistrate Judge’s Report and Recommendation. Align has until November 12, 2019 to respond. Align believes the plaintiffs’ claims are without merit and intends to vigorously defend itself. SDC Dispute In February 2018, Align received a communication on behalf of SDC Financial LLC, SmileDirectClub LLC, and the Members of SDC Financial LLC other than the Company (collectively, the “SDC Entities”) alleging that the launch and operation of the Invisalign store pilot program constituted a breach of non-compete provisions applicable to the members of SDC Financial LLC, including Align. As a result of this alleged breach, SDC Financial LLC notified us that its members (other than Align) sought to exercise a right to repurchase all of Align's SDC Financial LLC membership interests for a purchase price equal to the current “capital account” balance of Align. The SDC Entities’ communication also alleged that Align breached confidentiality provisions applicable to the SDC Financial LLC members and demanded that Align cease all activities related to the Invisalign store pilot project, close existing Invisalign stores and cease using SDC’s confidential information. In April 2018, the SDC Entities instigated confidential arbitration proceedings and filed a complaint in the Chancery Court of Davidson County, State of Tennessee that sought, among other forms of relief, to preliminarily and permanently enjoin all activities related to the Invisalign store pilot project, require Align to close existing Invisalign stores, prohibit Align from opening any additional stores, and allow the SDC Entities to exercise a right to repurchase all of Align's SDC Financial LLC membership interests for a purchase price equal to Align's current “capital account” balance. On June 29, 2018, the Chancery Court of Davidson County, State of Tennessee denied the SDC Entities’ request for a temporary injunction to prevent Align from opening additional Invisalign stores. During December 2018, the parties participated in binding arbitration proceedings and presented closing arguments on January 23, 2019. The arbitrator issued his decision on March 4, 2019. The arbitrator found that Align breached the non-compete provision applicable to the members of SDC Financial LLC and that Align misused the SDC Entities’ confidential information and violated fiduciary duties to SDC Financial LLC. The arbitrator ordered Align to close its Invisalign stores by April 3, 2019, and enjoined Align from opening new Invisalign stores or providing certain services in physical retail establishments in connection with the marketing and sale of clear aligners, and enjoined Align from using the SDC Entities’ confidential information. The arbitrator extended the expiration date of specified aspects of the non-compete provision to August 18, 2022. The arbitrator also ordered Align to tender its SDC Financial LLC membership interests to the SDC Entities for a purchase price equal to the “capital account” balance as of October 31, 2017, to be determined in accordance with the applicable provisions of the SDC Operating Agreements. No financial damages were awarded to the SDC Entities. The SDC Entities filed a motion to confirm the Award, which Align did not oppose, in the Circuit Court for Cook County, Illinois. The motion to confirm the Award was granted on April 29, 2019. As required by the Award, on April 3, 2019, Align had closed its Invisalign stores, returned SDC’s alleged confidential information, and tendered its membership interests for a purchase price that SDC claims to be Align’s “capital account” balance as of October 31, 2017. Align disputes that the SDC Entities properly determined the value of Align’s “capital account” balance as of October 31, 2017 as required by the SDC Operating Agreements and the Award. Consequently, on July 3, 2019, Align filed a confidential demand for arbitration challenging the propriety of the SDC Entities’ determination of Align’s “capital account” balance as of October 31, 2017. That arbitration proceeding remains pending and currently is scheduled to be heard in June 2020. Relatedly, the SDC Entities filed a contempt petition with the Illinois court which confirmed the Award, asserting that Align had no right to contest the “capital account” determination as made by the SDC Entities. On September 4, 2019, the Illinois court denied in its entirety the contempt petition filed by the SDC Entities. On August 19, 2019, the SDC Entities filed a separate confidential arbitration proceeding alleging that Align has violated the non-compete provisions applicable to the members of the SDC Entities by virtue of Align’s alleged dealings with a third-party claimed to be a competitor of the SDC Entities. Align has denied the claim and intends to vigorously defend itself against the newly asserted allegations. The SDC Entities have yet to identify the range of damages they may seek to recover in the course of this arbitration and no hearing date has yet been set. Align is currently unable to predict the outcome of these lawsuits and therefore cannot determine the likelihood of loss nor estimate a range of possible loss. Straumann Group Litigation Settlement In March 2019, Align entered into an agreement with Straumann Group to settle all outstanding patent disputes in the U.S., the U.K., and Brazil, including those involving ClearCorrect, a subsidiary of Straumann Group. Under the terms of the settlement, Straumann Group paid Align $35.0 million on March 29, 2019. In addition, Align also signed a non-binding letter of intent with Straumann Group for a 5-year global development and distribution agreement whereby Straumann would distribute 5,000 iTero Element scanners which would be fully integrated into the Straumann/Dental Wings CARES®/DWOS® workflow. The agreement provided that if for any reason the companies chose not to enter into the development and distribution agreement by July 2, 2019 or by a mutually agreed extended date, Straumann Group would pay Align an additional $16.0 million in lieu of the development and distribution agreement. In June 2019, the parties terminated the discussions regarding a possible development and distribution agreement and as a result, Straumann paid us the additional $16.0 million in July 2019. During the nine months ended September 30, 2019, we recognized a litigation settlement gain of $51.0 million. In addition, in the course of Align’s operations, Align is 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 Align’s view of these matters may change in the future as litigation and events related thereto unfold; Align currently does not believe that these matters, individually or in the aggregate, will materially affect Align’s financial position, results of operations or cash flows.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Other Commitments On January 15, 2019, we entered into a Purchase Agreement to purchase five floors of a building under construction in Petach Tivka, Israel (the "Property") for a purchase price of approximately $27.0 million with an option to purchase additional three floors. The purchase price is payable in six installments according to construction milestones and the delivery of the Property will be throughout 2019 and 2020. On September 26, 2019, we entered into a Purchase and Sale Agreement to purchase a building located in San Jose, California for $21.3 million. On September 27, 2019, we paid a $0.3 million refundable deposit related to the Purchase and Sale Agreement and an additional $21.0 million will be paid on or before the closing date which is expected to occur in the first quarter of 2020. Subsequent to the end of third quarter of 2019, on October 3, 2019, we entered into a Promotional Rights Agreement (the “Agreement”) for $36.0 million with a third-party which includes certain advertising and media coverage. The expense related to the Agreement will be incurred over the period of April 1, 2020 through March 31, 2023. Off-Balance Sheet Arrangements As of September 30, 2019, we had no material off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources other than certain items disclosed in Note 9 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K. 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 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 September 30, 2019, we did not have any material indemnification claims that were probable or reasonably possible.

Stockholders' Equity

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Summary of Stock-Based Compensation Expense

As of September 30, 2019, the 2005 Incentive Plan (as amended) has a total reserve of 27,783,379 shares of which 5,372,152 shares are available for issuance.

Stock-based compensation is based on the estimated fair value of awards, net of estimated forfeitures, and recognized over the requisite service period. Estimated forfeitures are based on historical experience at the time of grant and may be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The stock-based compensation related to all of our stock-based awards and employee stock purchases for the three and nine months ended September 30, 2019 and 2018 is as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of net revenues	$	1,354	$	966	$	3,744	$	2,747
Selling, general and administrative	19,394		15,403		54,321		41,197
Research and development	3,428		2,829		9,622		7,974
Total stock-based compensation	$	24,176	$	19,198	$	67,687	$	51,918

Stock Options

We have not granted options since 2011 and all outstanding options were fully vested and associated stock-based compensation expenses was recognized as of December 31, 2015. During the nine months ended September 30, 2019, 8,187 stock options were exercised at a weighted average exercise price of $8.07 per share. As of September 30, 2019, there were no options outstanding and exercisable.

Restricted Stock Units (“RSUs”)

The fair value of RSUs is based on our closing stock price on the date of grant. A summary for the nine months ended September 30, 2019 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)
Nonvested as of December 31, 2018	931		$	129.39
Granted	276		256.33
Vested and released	(422	)	103.01
Forfeited	(61	)	181.57
Nonvested as of September 30, 2019	724		$	188.86	1.3	$	131,021

As of September 30, 2019, we expect to recognize $100.6 million of total unamortized compensation cost, net of estimated forfeitures, related to RSUs over a weighted average period of 2.2 years.

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

We grant MSUs to our executive officers. Each MSU represents the right to one share of Align’s 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, and certain MSU grants are also based on Align’s stock price at the end of the performance period. Generally, the vesting period of MSUs is three years. For MSUs granted during the nine months ended September 30, 2019, the maximum number of MSUs which will be eligible to vest are 250% of the MSUs initially granted.

A summary for the nine months ended September 30, 2019 is as follows:



	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)
Nonvested as of December 31, 2018	324		$	215.07
Granted	138		240.73
Vested and released	(191	)	77.17
Forfeited	(12	)	258.72
Nonvested as of September 30, 2019	259		$	326.15	1.4	$	46,776

As of September 30, 2019, we expect to recognize $43.7 million of total unamortized compensation cost, net of estimated forfeitures, related to MSUs over a weighted average period of 1.4 years.

Employee Stock Purchase Plan (“ESPP”)

In May 2010, our shareholders approved the 2010 Employee Stock Purchase Plan (the “2010 Purchase Plan”) which will continue until terminated by either the Board of Directors or its administrator. The maximum number of shares available for purchase under the 2010 Purchase Plan is 2,400,000 shares. As of September 30, 2019, we have 441,293 shares available for future issuance.

The fair value of the option component of the 2010 Purchase Plan shares was estimated at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Expected term (in years)	1.5			1.2			1.4			1.3
Expected volatility	52.0		%	35.7		%	50.1		%	35.2		%
Risk-free interest rate	1.8		%	2.5		%	2.2		%	2.2		%
Expected dividends	—			—			—			—
Weighted average fair value at grant date	$	80.42		$	109.58		$	86.02		$	94.71

As of September 30, 2019, there was $13.4 million of total unamortized compensation costs related to employee stock purchases which we expect to be recognized over a weighted average period of 1.2 year.

Common Stock Repurchase Programs	9 Months Ended
Common Stock Repurchase Programs	Sep. 30, 2019
Disclosure Common Stock Repurchase Program Additional Information [Abstract]
Common Stock Repurchase Programs	Common Stock Repurchase Programs April 2016 Repurchase Program In April 2016, we announced that our Board of Directors had authorized a plan to repurchase up to $300.0 million of our common stock (“April 2016 Repurchase Program”). In 2017, we entered into an accelerated share repurchase agreement ("2017 ASR") to repurchase $50.0 million of our common stock which was completed in August 2017. We received a total of approximately 0.4 million shares for an average share price of $146.48. During 2017, we repurchased on the open market approximately 0.2 million shares of our common stock at an average price of $243.40 per share, including commissions, for an aggregate purchase price of approximately $50.0 million. In 2018, we repurchased on the open market approximately 0.7 million shares of our common stock at an average price of $293.21 per share, including commissions, for an aggregate purchase price of approximately $200.0 million, completing the April 2016 Repurchase Program. May 2018 Repurchase Program In May 2018, we announced that our Board of Directors had authorized a plan to repurchase up to $600.0 million of our common stock (“May 2018 Repurchase Program”). In 2018, we repurchased on the open market approximately 0.1 million shares of our common stock at an average price of $356.54 per share, including commissions, for an aggregate purchase price of approximately $50.0 million. In 2018, we entered into an accelerated stock repurchase agreement (“2018 ASR”) to repurchase $50.0 million of our common stock which was completed in December 2018. We received a total of approximately 0.2 million shares for an average share price of $213.18. In February 2019, we repurchased on the open market approximately 0.2 million shares of our common stock at an average price of $243.42 per share, including commissions for an aggregate purchase price of $50.0 million. In May 2019, we repurchased on the open market approximately 0.2 million shares of our common stock at an average price of $307.48 per share, including commissions for an aggregate price of $49.5 million. In July 2019, we entered into an accelerated stock repurchase agreement (“2019 ASR”) to repurchase $200.0 million of our common stock which was completed in September 2019. We received a total of approximately 1.1 million shares for an average share price of $176.61. As of September 30, 2019, we have $200.5 million available for repurchase under the May 2018 Repurchase Program.

Accounting for Income Taxes	9 Months Ended
Accounting for Income Taxes	Sep. 30, 2019
Notes To Financial Statements [Abstract]
Accounting for Income Taxes	Accounting for Income Taxes Our provision for income taxes was $25.9 million and $24.6 million for the three months ended September 30, 2019 and 2018, respectively, representing effective tax rates of 20.2% and 19.4%, respectively. Our provision for income taxes was $77.8 million and $35.2 million for the nine months ended September 30, 2019 and 2018, respectively, representing effective tax rates of 19.1% and 10.2%, respectively. Our effective tax rate differs from the statutory federal income tax rate of 21% for the three and nine months ended September 30, 2019 mainly as a result of certain foreign earnings, primarily from the Netherlands and Costa Rica, being taxed at lower tax rates and the recognition of excess tax benefits related to stock-based compensation, partially offset by non-deductible officers’ compensation. Our effective tax rate differs from the statutory federal income tax rate of 21% for the three and nine months ended 2018 mainly as a result of the recognition of excess tax benefits related to stock-based compensation, tax benefits recognized related to a statute of limitations expiration, and certain foreign earnings, primarily from the Netherlands and Costa Rica, being taxed at lower tax rates, partially offset by unfavorable tax impact of the TCJA, including non-deductible officers’ compensation. The increase in our effective tax rate for the three and nine months ended September 30, 2019 compared to the same periods in 2018 is primarily attributable to reduced excess tax benefits from stock-based compensation mainly due to non-deductible officers’ compensation and tax benefits recorded last year as a result of expiration of statute limitations that did not recur in 2019. For the three and nine months ended September 30, 2019, we recognized excess tax benefits of $0.4 million and $13.5 million, respectively, in our provision for income taxes. We exercise significant judgment in regards to estimates of future market growth, forecasted earnings and projected taxable income in determining the provision for income taxes and for purposes of assessing our ability to utilize any future benefit from deferred tax assets. We file U.S. federal, U.S. state, and non-U.S. income tax returns. Our major tax jurisdictions include U.S. federal, the State of California and the Netherlands. For U.S. federal and state tax returns, we are no longer subject to tax examinations for years before 2015. We are currently under examination by the IRS for tax years 2015 and 2016. With few exceptions, we are no longer subject to examination by foreign tax authorities for years before 2012. Our total gross unrecognized tax benefits, excluding interest and penalties, was $46.0 million and $33.3 million as of September 30, 2019 and December 31, 2018, respectively, a material amount of which would impact our effective tax rate if recognized. Our total interest and penalties accrued as of September 30, 2019 was $1.6 million. We have elected to recognize interest and penalties related to unrecognized tax benefits as a component of income taxes. The timing and resolution of income tax examinations is uncertain, and the amounts ultimately paid, if any, upon resolution of issues raised by the taxing authorities may differ materially from the amounts accrued for each year. Although it is possible that our balance of gross unrecognized tax benefits could materially change in the next 12 months, given the uncertainty in the development of ongoing income tax examinations, we are unable to estimate the full range of possible adjustments to this balance. As of December 31, 2018, our undistributed earnings of our foreign subsidiaries totaled $533.5 million. As a result of the TCJA, during the year ended December 31, 2017, we provided for U.S. income taxes on undistributed foreign earnings through December 31, 2017, and we have reassessed our capital needs and investment strategy with regard to the indefinite reinvestment, determining that certain of those are no longer indefinitely reinvested. Of the total undistributed foreign earnings as of December 31, 2018, the amount that is not indefinitely reinvested is $239.2 million. The remaining amount of undistributed foreign earnings of approximately $294.3 million continues to be indefinitely reinvested in our international operations. Since U.S. income taxes have already been provided under the Global Intangible Low-Taxed Income (“GILTI”) provisions of the TCJA, the additional tax impact of the distribution of such foreign earnings to the U.S. parent company would be limited to withholding taxes and is not significant. In June 2017, the Costa Rica Ministry of Foreign Trade, an agency of the Government of Costa Rica, granted an extension of certain income tax incentives for an additional twelve year period. Under these incentives, all of the income in Costa Rica is subject to a reduced tax rate. In order to receive the benefit of these incentives, we must hire specified numbers of employees and maintain certain minimum levels of fixed asset investment in Costa Rica. If we do not fulfill these conditions for any reason, our incentive could lapse and our income in Costa Rica would be subject to taxation at higher rates which could have a negative impact on our operating results. The Costa Rica corporate income tax rate that would apply, absent the incentives, is 30% for 2019 and 2018. For the three and nine months ended September 30, 2019, the reduction in income taxes due to the reduced tax rate was minimal.

Segments and Geographical Information

9 Months Ended

Sep. 30, 2019

Notes To Financial Statements [Abstract]

Segments and Geographical Information

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer. We report segment information based on the management approach. The management approach designates the internal reporting used by CODM for decision making and performance assessment as the basis for determining our reportable segments. The performance measures of our reportable segments include net revenues, gross profit and income from operations. Income from operations for each segment includes all geographic revenues, related cost of net revenues and operating expenses directly attributable to the segment. Certain operating expenses are attributable to operating segments and each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. Costs not specifically allocated to segment income from operations include various corporate expenses such as stock-based compensation and costs related to IT, facilities, human resources, accounting and finance, legal and regulatory, and other separately managed general and administrative costs outside the operating segments.

We group our operations into two reportable segments: Clear Aligner segment and Scanner segment.


•	Our Clear Aligner segment consists of Comprehensive Products, Non-Comprehensive Products and Non-Case revenues as defined below:


•	Comprehensive Products include, but not limited to, our Invisalign Comprehensive (formerly known as Invisalign Full and Invisalign Teen), Invisalign Assist, Invisalign First and Invisalign Moderate.


•	Non-Comprehensive Products include, Invisalign Express 10, Invisalign Express 5, Express Package, Lite Package and Invisalign Go products in addition to revenues from the sale of aligners to SDC under our supply agreement.


•	Non-Case includes, but not limited to, Vivera retainers along with our training and ancillary products for treating malocclusion.


•	Our Scanner segment consists of intraoral scanning systems, additional services and ancillary products available with the intraoral scanners that provide digital alternatives to the traditional cast models. This segment includes our iTero scanner and OrthoCAD services.

These reportable operating segments are based on how our CODM views and evaluates our operations as well as allocation of resources. The following information relates to these segments (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
Net revenues	2019			2018			2019			2018
Clear Aligner	$	516,265		$	427,087		$	1,482,172		$	1,245,833
Scanner	91,076			78,202			274,837			186,639
Total net revenues	$	607,341		$	505,289		$	1,757,009		$	1,432,472
Gross profit
Clear Aligner	$	379,202		$	321,772		$	1,096,702		$	950,360
Scanner	58,352			50,009			175,237			114,411
Total gross profit	$	437,554		$	371,781		$	1,271,939		$	1,064,771
Income from operations
Clear Aligner	$	211,952		$	182,667		$	614,622		$	534,408
Scanner	32,760			31,498			100,286			65,250
Unallocated corporate expenses	(117,560		)	(88,957		)	(323,565		)	(253,567		)
Total income from operations	$	127,152		$	125,208		$	391,343		$	346,091
Depreciation and amortization
Clear Aligner	$	9,306		$	7,218		$	27,851		$	20,361
Scanner	1,987			1,237			5,349			3,510
Unallocated corporate depreciation and amortization	8,413			5,664			23,994			14,314
Total depreciation and amortization	$	19,706		$	14,119		$	57,194		$	38,185
Impairments and other (gains) charges
Clear Aligner	$	(6,792	)	$	—		$	22,990		$	—
Scanner	—			—			—			—
Unallocated corporate impairments and other charges	—			—			—			—
Total impairments and other charges	$	(6,792	)	$	—		$	22,990		$	—

The following table reconciles total segment income from operations in the table above to net income before provision for income taxes and equity losses of investee (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Total segment income from operations	$	244,712		$	214,165		$	714,908		$	599,658
Unallocated corporate expenses	(117,560		)	(88,957		)	(323,565		)	(253,567		)
Total income from operations	127,152			125,208			391,343			346,091
Interest income	3,478			2,234			9,576			6,327
Other income (expense), net	(2,211		)	(837		)	5,935			(7,759		)
Net income before provision for income taxes and equity in losses of investee	$	128,419		$	126,605		$	406,854		$	344,659

Geographical Information

Net revenues are presented below by geographic area (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net revenues¹:
United States	$	286,050	$	263,349	$	861,710	$	754,472
The Netherlands	173,926		141,405		540,858		437,364
China	63,636		52,874		151,075		116,891
Other International	83,729		47,661		203,366		123,745
Total net revenues	$	607,341	$	505,289	$	1,757,009	$	1,432,472

¹Net revenues are attributed to countries based on the location of where revenues are recognized by our legal entities.

Tangible long-lived assets are presented below by geographic area (in thousands):



	September 30, 2019		December 31, 2018
Long-lived assets²:
The Netherlands	$	231,746	$	206,679
United States	164,732		139,239
Costa Rica	81,574		80,218
China	62,359		36,249
Mexico	38,494		33,240
Other International	81,599		25,704
Total long-lived assets	$	660,504	$	521,329

²Long-lived assets are attributed to countries based on the location of our entity that owns or leases the assets.

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2019
Notes To Financial Statements [Abstract]
Basis of presentation	Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by Align Technology, Inc. (“we”, “our”, or “Align”) in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and contains all adjustments, including normal recurring adjustments, necessary to state fairly our results of operations for the three and nine months ended September 30, 2019 and 2018, our comprehensive income for the three and nine months ended September 30, 2019 and 2018, our financial position as of September 30, 2019, our stockholders’ equity for the three and nine months ended September 30, 2019 and 2018, and our cash flows for the nine months ended September 30, 2019 and 2018. The Condensed Consolidated Balance Sheet as of December 31, 2018 was derived from the December 31, 2018 audited financial statements. It does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S.”). We adopted Accounting Standards Update (“ASU”) 2016-02, “Leases” (Topic 842) in the first quarter of fiscal year 2019 by electing the transition method issued in ASU 2018-11 and the package of practical expedients available in the standard. The standard had a material impact on our Condensed Consolidated Balance Sheet as we recognized assets and liabilities related to our leases. The adoption did not have an impact to prior periods. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or any other future period, and we make no representations related thereto. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and the Consolidated Financial Statements and notes thereto included in Items 7, 7A and 8, respectively, in our Annual Report on Form 10-K for the year ended December 31, 2018.
Use of estimates	Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the U.S. requires our 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 the fair values of financial instruments, valuation of investments in privately held companies, useful lives of intangible assets and property and equipment, revenue recognition, stock-based compensation, long-lived assets and goodwill, income taxes and contingent liabilities, 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.
Lease	Lease We lease office and retail spaces, vehicles and office equipment with original lease periods of up to 10 years. We determine if an arrangement is a lease at inception under ASC 842. Operating lease right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. If a lease arrangement does not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease which we include in our lease term when it is reasonably certain that we will exercise that option. We have lease agreements with lease and non-lease components which are accounted for as a single lease component. Leases with an initial term of 12 months or less are not recorded on the balance sheet.
Recent Accounting Pronouncements	Recent Accounting Pronouncements (i) New Accounting Updates Recently Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases” (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11, “Leases-Targeted Improvements,” which provides an additional transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. We adopted the guidance in the first quarter of fiscal year 2019 by electing the transition method issued in ASU 2018-11 and the package of practical expedients available in the standard. The standard had a material impact on our Condensed Consolidated Balance Sheet as we recognized assets and liabilities related to our leases. The adoption did not have an impact to prior periods. In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which gives entities the option to reclassify to retained earnings the tax effects resulting from the U.S. Tax Cuts and Jobs Act (the “TCJA”) related to items in accumulated other comprehensive income. The amendments are effective for fiscal years and interim periods within those years beginning after December 15, 2018 on a retrospective basis and early adoption is permitted. We adopted the standard in the first quarter of fiscal year 2019 which did not have a material impact on our consolidated financial statements and related disclosures. The TCJA did not affect our accumulated other comprehensive income (loss), net, and therefore we did not reclassify any income tax effects from accumulated other comprehensive income (loss), net to our retained earnings. (ii) Recent Accounting Updates Not Yet Effective In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses” (Topic 326) to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this update replace the existing guidance of incurred loss impairment methodology with an approach that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” which clarifies the scope of guidance in the ASU 2016-13. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures; however, we anticipate the adoption of the guidance will not have a material impact to our consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” to simplify the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. Under the amendments in this update, an entity will recognize an impairment charge for the amount by which the carrying value exceeds the fair value. The updated guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019 on a prospective basis and early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures; however, we anticipate the adoption of the guidance will not have a material impact to our consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement,” to modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The updated guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019 on a prospective basis and early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures; however, we anticipate the adoption of the guidance will not have a material impact to our consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” to clarify the guidance on the costs of implementing a cloud computing hosting arrangement that is a service contract. Under the amendments in this update, the entity is required to follow the guidance in Subtopic 350-40, Internal-Use Software, to determine which implementation costs under the service contract to be capitalized as an asset and which costs to expense. The updated guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019 either on a retrospective or prospective basis and early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

Investments and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

Notes To Financial Statements [Abstract]

Short-Term And Long-Term Marketable Securities

As of September 30, 2019 and December 31, 2018, the estimated fair value of our short-term and long-term marketable securities, classified as available for sale, are as follows (in thousands):

Short-term



September 30, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper	$	33,259	$	—	$	—		$	33,259
Corporate bonds	152,452		169		(10		)	152,611
U.S. government agency bonds	10,233		6		—			10,239
U.S. government treasury bonds	91,832		48		(5		)	91,875
Foreign bonds	4,004		4		—			4,008
Certificates of deposit	19		—		—			19
Total marketable securities, short-term	$	291,799	$	227	$	(15	)	$	292,011

As of September 30, 2019, we had no long-term marketable securities.

Short-term



December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper	$	17,793	$	—	$	—		$	17,793
Corporate bonds	45,100		—		(48		)	45,052
U.S. government agency bonds	19,981		—		(77		)	19,904
U.S. government treasury bonds	15,292		—		(1		)	15,291
Certificates of deposit	420		1		(1		)	420
Total marketable securities, short-term	$	98,586	$	1	$	(127	)	$	98,460

Long-term



December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate bonds	$	4,957	$	5	$	(2	)	$	4,960
U.S. government agency bonds	1,399		8		—			1,407
U.S. government treasury bonds	2,235		9		—			2,244
Certificates of deposit	500		1		—			501
Total marketable securities, long-term	$	9,091	$	23	$	(2	)	$	9,112

Investments Classified by Contractual Maturity Date



	September 30, 2019		December 31, 2018
One year or less	$	292,011	$	98,460
Due in greater than one year	—		9,112
Total available for sale short-term and long-term marketable securities	$	292,011	$	107,572

Investments in privately held companies

Our investments in privately held companies as of September 30, 2019 and December 31, 2018 are as follows (in thousands):



	September 30, 2019		December 31, 2018
Equity securities under the equity method investment ¹	$	—	$	45,913
Equity securities without readily determinable fair values ²	$	5,887	$	9,862


¹	Refer to Note 5 “Equity Method Investments” of the Notes to Condensed Consolidated Financial Statements for more information.

The equity securities are reported as a nonrecurring investment within other assets in our Condensed Consolidated Balance Sheet. During the nine months ended September 30, 2019, there was approximately $4.0 million of impairment resulting from an observable price change.

Financial Assets Measured At Fair Value On Recurring Basis

The following tables summarize our financial assets measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018 (in thousands):



Description	Balance as of September 30, 2019		Level 1		Level 2
Cash equivalents:
Money market funds	$	181,401	$	181,401	$	—
Commercial paper	22,403		—		22,403
Corporate bonds	4,528		—		4,528
U.S. government treasury bonds	5,298		5,298		—
Short-term investments:
Commercial paper	33,259		—		33,259
Corporate bonds	152,611		—		152,611
U.S. government agency bonds	10,239		—		10,239
U.S. government treasury bonds	91,875		91,875		—
Foreign bonds	4,008		—		4,008
Certificates of deposit	19		—		19
Prepaid expenses and other current assets:
Israeli funds	3,103		—		3,103
	$	508,744	$	278,574	$	230,170



Description	Balance as of December 31, 2018		Level 1		Level 2
Cash equivalents:
Money market funds	$	431,081	$	431,081	$	—
Commercial paper	4,681		—		4,681
Corporate bonds	3,880		—		3,880
U.S. government treasury bonds	2,195		2,195		—
Short-term investments:
Commercial paper	17,793		—		17,793
Corporate bonds	45,052		—		45,052
U.S. government agency bonds	19,904		—		19,904
U.S. government treasury bonds	15,291		15,291		—
Certificates of deposit	420		—		420
Long-term investments:
Corporate bonds	4,960		—		4,960
U.S. government agency bonds	1,407		—		1,407
U.S. government treasury bonds	2,244		2,244		—
Certificates of deposit	501		—		501
Prepaid expenses and other current assets:
Israeli funds	3,047		—		3,047
	$	552,456	$	450,811	$	101,645

Notional value of derivative instruments

The following table presents the gross notional value of all our foreign exchange forward contracts outstanding as of September 30, 2019 and December 31, 2018 (in thousands):



	September 30, 2019
	Local Currency Amount	Notional Contract Amount (USD)
Euro	€89,000	$	97,206
Chinese Yuan	¥545,000	76,266
Canadian Dollar	C$44,000	33,250
Israeli Shekel	ILS111,000	32,043
British Pound	£21,000	25,843
Japanese Yen	¥2,700,000	25,021
Brazilian Real	R$89,000	21,318
Mexican Peso	M$140,000	7,078
Australian Dollar	A$3,000	2,030
		$	320,055



	December 31, 2018
	Local Currency Amount	Notional Contract Amount (USD)
Euro	€62,000	$	71,095
Chinese Yuan	¥375,000	54,515
Brazilian Real	R$81,000	20,858
Canadian Dollar	C$27,000	19,808
British Pound	£13,000	16,635
Japanese Yen	¥1,700,000	15,357
Australian Dollar	A$3,000	2,114
		$	200,382

Balance Sheet Components (Tables)

9 Months Ended

Sep. 30, 2019

Notes To Financial Statements [Abstract]

Schedule of Inventories

Inventories

Inventories consist of the following (in thousands):



	September 30, 2019		December 31, 2018
Raw materials	$	43,808	$	26,119
Work in process	29,172		13,784
Finished goods	21,815		15,738
Total inventories	$	94,795	$	55,641

Schedule of Prepaid Expense and Other Assets

Prepaid Expenses and Other Current Assets

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



	September 30, 2019		December 31, 2018
Tax related receivables	$	35,424	$	36,794
Current promissory note and related interest receivable ¹	27,101		—
Other current receivables	2,283		6,511
Prepaid software and maintenance	10,735		5,938
Other prepaid expenses and current assets	21,052		23,227
Total prepaid expenses and other current assets	$	96,595	$	72,470


¹	Current portion of unsecured promissory note receivable and related interest receivable (Refer to Note 5“Equity Method Investments” of the Notes to Condensed Consolidated Financial Statements for more information).

Schedule of Accrued Liabilities

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):



	September 30, 2019		December 31, 2018
Accrued payroll and benefits	$	131,337	$	127,109
Accrued expenses	61,858		39,323
Accrued professional fees	15,554		6,752
Current operating lease liabilities	13,706		—
Accrued warranty	10,802		8,551
Accrued property, plant and equipment	10,241		8,193
Accrued sales return reserve	9,390		6,534
Accrued customer credits and deposits	7,181		12,439
Accrued sales tax and value added tax	7,135		6,276
Accrued sales rebate	7,068		5,668
Accrued income taxes	5,885		5,752
Other accrued liabilities	5,975		8,082
Total accrued liabilities	$	286,132	$	234,679

Schedule of Warranty Accrual

Warranty

Warranty accrual consists of the following activity (in thousands):



	Nine Months Ended September 30,
	2019			2018
Balance at beginning of period	$	8,551		$	5,929
Charged to cost of net revenues	9,429			10,874
Actual warranty expenditures	(7,178		)	(8,777		)
Balance at end of period	$	10,802		$	8,026

Schedule of Deferred Revenues

Deferred Revenues

Deferred revenues consist of the following (in thousands):



	September 30, 2019		December 31, 2018
Deferred revenues - current	$	520,712	$	393,138
Deferred revenues - long-term ¹	$	27,551	$	17,051

¹ Included in other long-term liabilities within our Condensed Consolidated Balance Sheet

Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Assets And Liabilities, Lessee

The supplemental balance sheet information for our operating leases consist of following (in thousands):



Balance Sheet Location	September 30, 2019
Operating lease right-of-use assets, net	$	53,923

Accrued liabilities	$	13,706
Operating lease liabilities	43,365
Total operating lease liabilities	$	57,071

Lease, Cost

The components of lease expenses consist of following (in thousands):



Lease Cost	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost ¹	$	5,957	$	16,756
Variable lease cost	436		1,543
Total lease cost ²	$	6,393	$	18,299


¹	Includes short-term lease expense which are not material for the periods.

Included in operating expenses within our Condensed Consolidated Statement of Operations.

Lessee, Operating Lease, Disclosure

The following table provides a summary of our operating lease terms and discount rates:



Remaining Lease Term and Discount Rate	September 30, 2019

Weighted average remaining lease term (in years)	5.9
Weighted average discount rate	4.2	%

Lessee, Operating Lease, Liability, Maturity

Maturities of operating lease liabilities as of September 30, 2019 are as follows (in thousands):



Fiscal Year Ending December 31,	Operating Leases
Remainder of 2019	$	3,957
2020	17,934
2021	15,990
2022	10,454
2023	7,014
Thereafter	7,076
Total lease payments	$	62,425
Less: Interest	(5,354		)
Total lease liabilities	$	57,071

Schedule of Future Lease Payments

Minimum future lease payments previously disclosed under ASC 840 in our Annual Report on Form 10-K for the year ended December 31, 2018 are as follows (in thousands):



Fiscal Year Ending December 31,	Operating Leases
2019	$	21,429
2020	20,483
2021	18,897
2022	15,096
2023	12,400
Thereafter	18,371
Total minimum lease payments	$	106,676

Lessor, Operating Lease, Payments to be Received, Maturity

Lease payments due to Align as of September 30, 2019 are as follows (in thousands):



Fiscal Year Ending December 31,	Operating Lease
Remainder of 2019	$	212
2020	859
2021	1,145
2022	1,199
2023	1,229
Thereafter	7,441
Total minimum lease payments	$	12,085

Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2019

Notes To Financial Statements [Abstract]

Summary of Goodwill by Reportable Segment

The change in the carrying value of goodwill for the nine months ended September 30, 2019, all attributable to our Clear Aligner reporting unit, is as follows (in thousands):



	Total
Balance as of December 31, 2018	$	64,029
Adjustments¹	(274		)
Balance as of September 30, 2019	$	63,755

¹The adjustments to goodwill during the period were a result of foreign currency translation.

Schedule of Amortized Intangible Assets

Acquired intangible long-lived assets are being amortized as follows (in thousands):



	Weighted Average Amortization Period (in years)	Gross Carrying Amount as of September 30, 2019		Accumulated Amortization			Accumulated Impairment Loss			Net Carrying Value as of September 30, 2019
Trademarks	15	$	7,100	$	(2,011	)	$	(4,179	)	$	910
Existing technology	13	12,600		(5,690		)	(4,328		)	2,582
Customer relationships	11	33,500		(17,939		)	(10,751		)	4,810
Reacquired rights	3	7,500		(6,425		)	—			1,075
Patents	8	6,796		(2,954		)	—			3,842
Other	2	618		(580		)	—			38
Total intangible assets		$	68,114	$	(35,599	)	$	(19,258	)	$	13,257



	Weighted Average Amortization Period (in years)	Gross Carrying Amount as of December 31, 2018		Accumulated Amortization			Accumulated Impairment Loss			Net Carrying Value as of December 31, 2018
Trademarks	15	$	7,100	$	(1,907	)	$	(4,179	)	$	1,014
Existing technology	13	12,600		(5,268		)	(4,328		)	3,004
Customer relationships	11	33,500		(16,542		)	(10,751		)	6,207
Reacquired rights	3	7,500		(4,341		)	—			3,159
Patents	8	6,796		(2,334		)	—			4,462
Other	2	618		(544		)	—			74
Total intangible assets		$	68,114	$	(30,936	)	$	(19,258	)	$	17,920

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The total estimated annual future amortization expense for these acquired intangible assets as of September 30, 2019 is as follows (in thousands):



Fiscal Year Ending December 31,	Amortization
Remainder of 2019	$	1,493
2020	3,825
2021	3,389
2022	2,116
2023	1,495
Thereafter	939
Total	$	13,257

Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

Stock-based Compensation Expense

The stock-based compensation related to all of our stock-based awards and employee stock purchases for the three and nine months ended September 30, 2019 and 2018 is as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of net revenues	$	1,354	$	966	$	3,744	$	2,747
Selling, general and administrative	19,394		15,403		54,321		41,197
Research and development	3,428		2,829		9,622		7,974
Total stock-based compensation	$	24,176	$	19,198	$	67,687	$	51,918

Summary Of Restricted Stock Units

A summary for the nine months ended September 30, 2019 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)
Nonvested as of December 31, 2018	931		$	129.39
Granted	276		256.33
Vested and released	(422	)	103.01
Forfeited	(61	)	181.57
Nonvested as of September 30, 2019	724		$	188.86	1.3	$	131,021

Summary Of Market-performance Based Restricted Stock Units

A summary for the nine months ended September 30, 2019 is as follows:



	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)
Nonvested as of December 31, 2018	324		$	215.07
Granted	138		240.73
Vested and released	(191	)	77.17
Forfeited	(12	)	258.72
Nonvested as of September 30, 2019	259		$	326.15	1.4	$	46,776

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions

The fair value of the option component of the 2010 Purchase Plan shares was estimated at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Expected term (in years)	1.5			1.2			1.4			1.3
Expected volatility	52.0		%	35.7		%	50.1		%	35.2		%
Risk-free interest rate	1.8		%	2.5		%	2.2		%	2.2		%
Expected dividends	—			—			—			—
Weighted average fair value at grant date	$	80.42		$	109.58		$	86.02		$	94.71

Segments and Geographical Information (Tables)

9 Months Ended

Sep. 30, 2019

Notes To Financial Statements [Abstract]

Schedule of Segment Reporting Information, by Segment



	Three Months Ended September 30,						Nine Months Ended September 30,
Net revenues	2019			2018			2019			2018
Clear Aligner	$	516,265		$	427,087		$	1,482,172		$	1,245,833
Scanner	91,076			78,202			274,837			186,639
Total net revenues	$	607,341		$	505,289		$	1,757,009		$	1,432,472
Gross profit
Clear Aligner	$	379,202		$	321,772		$	1,096,702		$	950,360
Scanner	58,352			50,009			175,237			114,411
Total gross profit	$	437,554		$	371,781		$	1,271,939		$	1,064,771
Income from operations
Clear Aligner	$	211,952		$	182,667		$	614,622		$	534,408
Scanner	32,760			31,498			100,286			65,250
Unallocated corporate expenses	(117,560		)	(88,957		)	(323,565		)	(253,567		)
Total income from operations	$	127,152		$	125,208		$	391,343		$	346,091
Depreciation and amortization
Clear Aligner	$	9,306		$	7,218		$	27,851		$	20,361
Scanner	1,987			1,237			5,349			3,510
Unallocated corporate depreciation and amortization	8,413			5,664			23,994			14,314
Total depreciation and amortization	$	19,706		$	14,119		$	57,194		$	38,185
Impairments and other (gains) charges
Clear Aligner	$	(6,792	)	$	—		$	22,990		$	—
Scanner	—			—			—			—
Unallocated corporate impairments and other charges	—			—			—			—
Total impairments and other charges	$	(6,792	)	$	—		$	22,990		$	—

The following table reconciles total segment income from operations in the table above to net income before provision for income taxes and equity losses of investee (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Total segment income from operations	$	244,712		$	214,165		$	714,908		$	599,658
Unallocated corporate expenses	(117,560		)	(88,957		)	(323,565		)	(253,567		)
Total income from operations	127,152			125,208			391,343			346,091
Interest income	3,478			2,234			9,576			6,327
Other income (expense), net	(2,211		)	(837		)	5,935			(7,759		)
Net income before provision for income taxes and equity in losses of investee	$	128,419		$	126,605		$	406,854		$	344,659

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas

Net revenues are presented below by geographic area (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net revenues¹:
United States	$	286,050	$	263,349	$	861,710	$	754,472
The Netherlands	173,926		141,405		540,858		437,364
China	63,636		52,874		151,075		116,891
Other International	83,729		47,661		203,366		123,745
Total net revenues	$	607,341	$	505,289	$	1,757,009	$	1,432,472

¹Net revenues are attributed to countries based on the location of where revenues are recognized by our legal entities.

Tangible long-lived assets are presented below by geographic area (in thousands):



	September 30, 2019		December 31, 2018
Long-lived assets²:
The Netherlands	$	231,746	$	206,679
United States	164,732		139,239
Costa Rica	81,574		80,218
China	62,359		36,249
Mexico	38,494		33,240
Other International	81,599		25,704
Total long-lived assets	$	660,504	$	521,329

²Long-lived assets are attributed to countries based on the location of our entity that owns or leases the asset

Investments and Fair Value Measurements Short-Term and Long-Term Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Debt Securities, Available-for-sale [Line Items]
Total available for sale short-term and long-term marketable securities	$ 292,011	$ 107,572
Fair Value, Measurements, Recurring \| Short-term Investments
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	291,799	98,586
Gross Unrealized Gains	227	1
Gross Unrealized Losses	(15)	(127)
Total available for sale short-term and long-term marketable securities	292,011	98,460
Fair Value, Measurements, Recurring \| Short-term Investments \| Commercial paper
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	33,259	17,793
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Total available for sale short-term and long-term marketable securities	33,259	17,793
Fair Value, Measurements, Recurring \| Short-term Investments \| Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	152,452	45,100
Gross Unrealized Gains	169	0
Gross Unrealized Losses	(10)	(48)
Total available for sale short-term and long-term marketable securities	152,611	45,052
Fair Value, Measurements, Recurring \| Short-term Investments \| U.S. government agency bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	10,233	19,981
Gross Unrealized Gains	6	0
Gross Unrealized Losses	0	(77)
Total available for sale short-term and long-term marketable securities	10,239	19,904
Fair Value, Measurements, Recurring \| Short-term Investments \| U.S. government treasury bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	91,832	15,292
Gross Unrealized Gains	48	0
Gross Unrealized Losses	(5)	(1)
Total available for sale short-term and long-term marketable securities	91,875	15,291
Fair Value, Measurements, Recurring \| Short-term Investments \| Foreign bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	4,004
Gross Unrealized Gains	4
Gross Unrealized Losses	0
Total available for sale short-term and long-term marketable securities	4,008
Fair Value, Measurements, Recurring \| Short-term Investments \| Certificates of deposit
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	19	420
Gross Unrealized Gains	0	1
Gross Unrealized Losses	0	(1)
Total available for sale short-term and long-term marketable securities	$ 19	420
Fair Value, Measurements, Recurring \| Long-term Investments
Debt Securities, Available-for-sale [Line Items]
Amortized Cost		9,091
Gross Unrealized Gains		23
Gross Unrealized Losses		(2)
Total available for sale short-term and long-term marketable securities		9,112
Fair Value, Measurements, Recurring \| Long-term Investments \| Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost		4,957
Gross Unrealized Gains		5
Gross Unrealized Losses		(2)
Total available for sale short-term and long-term marketable securities		4,960
Fair Value, Measurements, Recurring \| Long-term Investments \| U.S. government agency bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost		1,399
Gross Unrealized Gains		8
Gross Unrealized Losses		0
Total available for sale short-term and long-term marketable securities		1,407
Fair Value, Measurements, Recurring \| Long-term Investments \| U.S. government treasury bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost		2,235
Gross Unrealized Gains		9
Gross Unrealized Losses		0
Total available for sale short-term and long-term marketable securities		2,244
Fair Value, Measurements, Recurring \| Long-term Investments \| Certificates of deposit
Debt Securities, Available-for-sale [Line Items]
Amortized Cost		500
Gross Unrealized Gains		1
Gross Unrealized Losses		0
Total available for sale short-term and long-term marketable securities		$ 501

Investments and Fair Value Measurements Available For Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Investments, Debt and Equity Securities [Abstract]
One year or less	$ 292,011	$ 98,460
Due in greater than one year	0	9,112
Total available for sale short-term and long-term marketable securities	$ 292,011	$ 107,572

Investments and Fair Value Measurements Derivative Notional Instruments (Details) - Level 2 - Other current assets - Foreign Exchange Forward € in Thousands, ₪ in Thousands, ¥ in Thousands, ¥ in Thousands, £ in Thousands, R$ in Thousands, $ in Thousands, $ in Thousands, $ in Thousands, $ in Thousands	Sep. 30, 2019 EUR (€)	Sep. 30, 2019 CNY (¥)	Sep. 30, 2019 USD ($)	Sep. 30, 2019 JPY (¥)	Sep. 30, 2019 AUD ($)	Sep. 30, 2019 BRL (R$)	Sep. 30, 2019 CAD ($)	Sep. 30, 2019 MXN ($)	Sep. 30, 2019 ILS (₪)	Sep. 30, 2019 GBP (£)	Dec. 31, 2018 EUR (€)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2018 USD ($)	Dec. 31, 2018 JPY (¥)	Dec. 31, 2018 AUD ($)	Dec. 31, 2018 BRL (R$)	Dec. 31, 2018 CAD ($)	Dec. 31, 2018 GBP (£)
Derivative [Line Items]
Notional amount			$ 320,055										$ 200,382
Euro
Derivative [Line Items]
Notional amount	€ 89,000		97,206								€ 62,000		71,095
Chinese Yuan
Derivative [Line Items]
Notional amount		¥ 545,000	76,266									¥ 375,000	54,515
Israeli Shekel
Derivative [Line Items]
Notional amount			32,043						₪ 111,000
British Pound
Derivative [Line Items]
Notional amount			25,843							£ 21,000			16,635					£ 13,000
Japanese Yen
Derivative [Line Items]
Notional amount			33,250				$ 44,000						19,808				$ 27,000
Brazilian Real
Derivative [Line Items]
Notional amount			21,318			R$ 89,000							20,858			R$ 81,000
Japanese Yen
Derivative [Line Items]
Notional amount			25,021	¥ 2,700,000									15,357	¥ 1,700,000
Mexican Peso
Derivative [Line Items]
Notional amount			7,078					$ 140,000
Australian Dollar
Derivative [Line Items]
Notional amount			$ 2,030		$ 3,000								$ 2,114		$ 3,000

Balance Sheet Components Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Notes To Financial Statements [Abstract]
Raw materials	$ 43,808	$ 26,119
Work in process	29,172	13,784
Finished goods	21,815	15,738
Total inventories	$ 94,795	$ 55,641

Balance Sheet Components Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Tax related receivables	$ 35,424	$ 36,794
Current promissory note and related interest receivable	27,101	0
Other current receivables	2,283	6,511
Prepaid software and maintenance	10,735	5,938
Other prepaid expenses and current assets	21,052	23,227
Total prepaid expenses and other current assets	$ 96,595	$ 72,470

Balance Sheet Components Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Notes To Financial Statements [Abstract]
Accrued payroll and benefits	$ 131,337	$ 127,109
Accrued expenses	61,858	39,323
Accrued professional fees	15,554	6,752
Current operating lease liabilities	13,706	0
Accrued warranty	10,802	8,551
Accrued property, plant and equipment	10,241	8,193
Accrued sales return reserve	9,390	6,534
Accrued customer credits and deposits	7,181	12,439
Accrued sales tax and value added tax	7,135	6,276
Accrued sales rebate	7,068	5,668
Accrued income taxes	5,885	5,752
Other accrued liabilities	5,975	8,082
Total accrued liabilities	$ 286,132	$ 234,679

Balance Sheet Components Narrative (Details) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended		9 Months Ended
	Mar. 29, 2019	Jul. 31, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Condensed Balance Sheet Statements, Captions [Line Items]
Net revenues			$ 607,341	$ 505,289	$ 1,757,009	$ 1,432,472
Revenue, remaining performance obligation			558,100		558,100
Deferred Revenue
Condensed Balance Sheet Statements, Captions [Line Items]
Contract with Customer, Liability			$ 70,100	$ 45,500	$ 207,000	$ 145,400
Minimum
Condensed Balance Sheet Statements, Captions [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period			1 year		1 year
Maximum
Condensed Balance Sheet Statements, Captions [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period			5 years		5 years
Straumann Group
Condensed Balance Sheet Statements, Captions [Line Items]
Proceeds from Legal Settlements	$ 35,000	$ 16,000

Leases - Schedule of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Leases [Abstract]
Operating Lease, Cost	$ 5,957	$ 16,756
Variable lease cost	436	1,543
Lease, Cost	$ 6,393	$ 18,299

Leases - Maturities of Operating Lease Liabilities (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Operating Leases
Remainder of 2019	$ 3,957
2020	17,934
2021	15,990
2022	10,454
2023	7,014
Thereafter	7,076
Total lease payments	62,425
Less: Interest	(5,354)
Total lease liabilities	$ 57,071

Leases - Minimum Future Lease Payments Previously Disclosed under ASC 840 (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 21,429
2020	20,483
2021	18,897
2022	15,096
2023	12,400
Thereafter	18,371
Total minimum lease payments	$ 106,676

Leases - Lessor (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Leases [Abstract]
Remainder of 2019	$ 212
2020	859
2021	1,145
2022	1,199
2023	1,229
Thereafter	7,441
Total minimum lease payments	$ 12,085

Equity Method Investments (Details) - USD ($) $ in Thousands			3 Months Ended	9 Months Ended
	Jul. 24, 2017	Jul. 25, 2016	Jun. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Apr. 30, 2019
Schedule of Equity Method Investments [Line Items]
Payments to acquire				$ 0	$ 5,000
Equity method investment, gain			$ 15,800	$ 15,769	$ 0
SDC
Schedule of Equity Method Investments [Line Items]
Ownership	2.00%	17.00%
Payments to acquire	$ 12,800	$ 46,700
SDC
Schedule of Equity Method Investments [Line Items]
Derecognized equity method investment						$ 38,400
Short-term notes receivable \| SDC
Schedule of Equity Method Investments [Line Items]
Promissory note receivable						$ 54,200

Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount, beginning balance	$ 68,114	$ 68,114
Accumulated Amortization	(35,599)	(30,936)
Accumulated Impairment Loss	(19,258)	(19,258)
Net Carrying Value, ending balance	$ 13,257	$ 17,920
Trademarks
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (in years)	15 years	15 years
Gross Carrying Amount, beginning balance	$ 7,100	$ 7,100
Accumulated Amortization	(2,011)	(1,907)
Accumulated Impairment Loss	(4,179)	(4,179)
Net Carrying Value, ending balance	$ 910	$ 1,014
Existing technology
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (in years)	13 years	13 years
Gross Carrying Amount, beginning balance	$ 12,600	$ 12,600
Accumulated Amortization	(5,690)	(5,268)
Accumulated Impairment Loss	(4,328)	(4,328)
Net Carrying Value, ending balance	$ 2,582	$ 3,004
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (in years)	11 years	11 years
Gross Carrying Amount, beginning balance	$ 33,500	$ 33,500
Accumulated Amortization	(17,939)	(16,542)
Accumulated Impairment Loss	(10,751)	(10,751)
Net Carrying Value, ending balance	$ 4,810	$ 6,207
Reacquired rights
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (in years)	3 years	3 years
Gross Carrying Amount, beginning balance	$ 7,500	$ 7,500
Accumulated Amortization	(6,425)	(4,341)
Accumulated Impairment Loss	0	0
Net Carrying Value, ending balance	$ 1,075	$ 3,159
Patents
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (in years)	8 years	8 years
Gross Carrying Amount, beginning balance	$ 6,796	$ 6,796
Accumulated Amortization	(2,954)	(2,334)
Accumulated Impairment Loss	0	0
Net Carrying Value, ending balance	$ 3,842	$ 4,462
Other
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (in years)	2 years	2 years
Gross Carrying Amount, beginning balance	$ 618	$ 618
Accumulated Amortization	(580)	(544)
Accumulated Impairment Loss	0	0
Net Carrying Value, ending balance	$ 38	$ 74

Goodwill and Intangible Assets - Total Estimated Annual Future Amortization Expense for Acquired Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Disclosure Total Estimated Annual Future Amortization Expense For Acquired Intangible Assets [Abstract]
Remainder of 2019	$ 1,493
2020	3,825
2021	3,389
2022	2,116
2023	1,495
Thereafter	939
Net Carrying Value, ending balance	$ 13,257	$ 17,920

Goodwill and Intangible Assets - Narrative (Details) - USD ($)	3 Months Ended			9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Impairments and other charges		$ 0
Amortization	$ 1,500,000		$ 1,500,000	$ 4,500,000	$ 4,500,000

Credit Facilities - Additional Information (Details) - USD ($)	Feb. 27, 2018	Sep. 30, 2019
Line of Credit Facility [Line Items]
Line of credit, available borrowings	$ 200,000,000.0
Current borrowing capacity	$ 50,000,000.0
Outstanding borrowings		$ 0
Base Rate
Line of Credit Facility [Line Items]
Basis Spread on Variable Rate	0.50%
London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Basis Spread on Variable Rate	1.00%
Minimum \| Base Rate
Line of Credit Facility [Line Items]
Basis Spread on Variable Rate	0.25%
Minimum \| London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Basis Spread on Variable Rate	1.25%
Maximum \| Base Rate
Line of Credit Facility [Line Items]
Basis Spread on Variable Rate	0.75%
Maximum \| London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Basis Spread on Variable Rate	1.75%

- Definition

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

Impairments and Other (Gains) Charges (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2019
Property, Plant and Equipment [Abstract]
Lease impairment		$ 14,200
Leasehold improvement impairment		14,300
Employee severance cost		$ 1,300
Gain on Lease Termination	$ 6,800		$ 6,792

Legal Proceedings - Narrative (Details) Unit in Thousands, $ in Thousands					1 Months Ended	3 Months Ended		9 Months Ended
	Mar. 29, 2019 USD ($)	Dec. 11, 2018 Lawsuit	Dec. 10, 2018 Lawsuit patent	Nov. 14, 2017 Lawsuit patent	Jul. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) Unit	Sep. 30, 2018 USD ($)
Loss Contingencies [Line Items]
Recognized gain on litigation settlement						$ 0	$ 0	$ 51,000	$ 0
Lawsuit Against 3Shape AS
Loss Contingencies [Line Items]
Number of lawsuits/complaints \| Lawsuit			3	6
Patents Allegedly Infringed upon \| patent			10	26
Violation Of Trade Laws 3Shape
Loss Contingencies [Line Items]
Number of lawsuits/complaints \| Lawsuit				2
Patent Infringement By 3Shape
Loss Contingencies [Line Items]
Number of lawsuits/complaints \| Lawsuit		2		4
Straumann Group
Loss Contingencies [Line Items]
Proceeds from Legal Settlements	$ 35,000				$ 16,000
Term of Global Development and Distribution agreement								5 years
Payment in lieu of Global Development and Distribution agreement						$ 16,000		$ 16,000
Recognized gain on litigation settlement								$ 51,000
iTero Element Scanners \| Straumann Group
Loss Contingencies [Line Items]
Number of scanners \| Unit								5

Commitments and Contingencies - Other Commitments (Details) $ in Thousands				9 Months Ended
	Sep. 27, 2019 USD ($)	Sep. 26, 2019 USD ($)	Jan. 15, 2019 USD ($) Payment floor	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Apr. 01, 2020 USD ($)	Mar. 31, 2020 USD ($)
Property, Plant and Equipment [Line Items]
Number of floors purchased \| floor			5
Purchase price of property			$ 27,000	$ 107,157	$ 169,033
Number of floors with the option to purchase \| floor			3
Number of installment payments \| Payment			6
Purchase price		$ 21,300
Refundable deposit	$ 300
Subsequent Event
Property, Plant and Equipment [Line Items]
Additional amount to be paid at closing							$ 21,000
Amount of total Promotional Rights Agreement						$ 36,000

Stockholders' Equity - Additional Information (Details) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares
Incentive Plan 2005
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for issuance	27,783,379
Number of shares available for issuance	5,372,152
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options exercised (in dollars per share)	8,187
Weighted average exercise price of stock options (in dollars per share) \| $ / shares	$ 8.07
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unamortized compensation cost \| $	$ 100.6
Weighted average period of total unamortized cost (in years)	2 years 2 months 12 days
Market Performance Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unamortized compensation cost \| $	$ 43.7
Weighted average period of total unamortized cost (in years)	1 year 4 months 24 days
Vesting period of granted market-performance based restricted stock units	3 years
Market Performance Based Restricted Stock Units \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of market-performance based restricted stock units eligible to vest over the vesting period	250.00%
Employee Stock Purchase Plan 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares available	2,400,000
Number of shares remaining	441,293
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unamortized compensation cost \| $	$ 13.4
Weighted average period of total unamortized cost (in years)	1 year 2 months 12 days

Stockholders' Equity - Stock-Based Compensation Expense Related to All Stock-Based Awards and Employee Stock Purchases (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 24,176	$ 19,198	$ 67,687	$ 51,918
Cost of net revenues
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	1,354	966	3,744	2,747
Selling, general and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	19,394	15,403	54,321	41,197
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 3,428	$ 2,829	$ 9,622	$ 7,974

Stockholders' Equity - Summary of Nonvested Shares (Details) - Restricted Stock Units (RSUs) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares
Number of Shares Underlying RSUs
Nonvested as of December 31, 2018 \| shares	931
Granted \| shares	276
Vested and released \| shares	(422)
Forfeited \| shares	(61)
Nonvested as of September 30, 2019 \| shares	724
Weighted Average Grant Date Fair Value
Nonvested as of December 31, 2018 \| $ / shares	$ 129.39
Granted \| $ / shares	256.33
Vested and released \| $ / shares	103.01
Forfeited \| $ / shares	181.57
Nonvested as of September 30, 2019 \| $ / shares	$ 188.86
Weighted Average Remaining Contractual Term (in years)
Nonvested as of September 30, 2019	1 year 3 months 18 days
Aggregate Intrinsic Value
Nonvested as of September 30, 2019 \| $	$ 131,021

Stockholders' Equity - Summary of MSU Performance (Details) - Market Performance Based Restricted Stock Units $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares
Number of Shares Underlying MSUs
Nonvested as of December 31, 2018 \| shares	324
Granted \| shares	138
Vested and released \| shares	(191)
Forfeited \| shares	(12)
Nonvested as of September 30, 2019 \| shares	259
Weighted Average Grant Date Fair Value
Nonvested as of December 31, 2018 \| $ / shares	$ 215.07
Granted \| $ / shares	240.73
Vested and released \| $ / shares	77.17
Forfeited \| $ / shares	258.72
Nonvested as of September 30, 2019 \| $ / shares	$ 326.15
Weighted Average Remaining Contractual Term (in years)
Nonvested as of September 30, 2019	1 year 4 months 24 days
Aggregate Intrinsic Value
Nonvested as of September 30, 2019 \| $	$ 46,776

Stockholders' Equity - Stock-based Compensation Employee Stock Purchase Plan (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Class of Stock [Line Items]
Expected term (in years)	1 year 6 months	1 year 2 months 12 days	1 year 4 months 24 days	1 year 3 months 18 days
Expected volatility	52.00%	35.70%	50.10%	35.20%
Risk-free interest rate	1.80%	2.50%	2.20%	2.20%
Expected dividends	0.00%	0.00%	0.00%	0.00%
Weighted average fair value at grant date (USD per Share)	$ 80.42	$ 109.58	$ 86.02	$ 94.71

Common Stock Repurchase Programs - Additional Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	1 Months Ended			3 Months Ended		9 Months Ended		12 Months Ended
	Jul. 31, 2019	May 31, 2019	Feb. 28, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Dec. 31, 2017	May 31, 2018	Apr. 30, 2016
Share Repurchases [Line Items]
Accelerated share repurchase (shares)				1,132
Repurchased				$ 200,000	$ 150,002	$ 299,504	$ 250,002
April 2016 Repurchase Program
Share Repurchases [Line Items]
Accelerated share repurchase (shares)								700	200
Share repurchase price (in dollars per share)								$ 293.21	$ 243.40
Repurchased								$ 200,000	$ 50,000
Value of repurchased common stock											$ 300,000
2017 ASR
Share Repurchases [Line Items]
Accelerated share repurchase (shares)									400
Price ($ per share)									$ 146.48
Repurchased									$ 50,000
May 2018 Repurchase Program
Share Repurchases [Line Items]
Accelerated share repurchase (shares)		200	200					100
Share repurchase price (in dollars per share)		$ 307.48	$ 243.42					$ 356.54
Repurchased		$ 49,500	$ 50,000					$ 50,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount				$ 200,500		$ 200,500
Value of repurchased common stock										$ 600,000
2018 ASR
Share Repurchases [Line Items]
Accelerated share repurchase (shares)								200
Share repurchase price (in dollars per share)								$ 213.18
Repurchased								$ 50,000
2019 ASR
Share Repurchases [Line Items]
Accelerated share repurchase (shares)						1,100
Share repurchase price (in dollars per share)						$ 176.61
Repurchased	$ 200,000

Accounting for Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2019	Dec. 31, 2018
Income Tax Contingency [Line Items]
Provision for income taxes	$ 25,895	$ 24,601	$ 77,812	$ 35,206
Effective income tax rate, continuing operations	20.20%	19.40%	19.10%	10.20%
Effective Income Tax Rate Reconciliation, Excess Tax Benefit Amount			$ 400	$ 13,500
Unrecognized tax benefits	$ 46,000		46,000			$ 33,300
Accrued penalties and interest	$ 1,600		$ 1,600
Undistributed earnings of foreign subsidiaries						533,500
Amount of no longer indefinitely reinvested foreign earnings						239,200
Amount of indefinitely reinvested foreign earnings						$ 294,300
National Corporate Tax Rate						30.00%
Scenario, Forecast \| Subsequent Event
Income Tax Contingency [Line Items]
National Corporate Tax Rate					30.00%

Computation of Basic and Diluted Net Income Per Share Attributable to Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net income	$ 102,524	$ 100,872	$ 321,514	$ 302,843
Weighted average common shares outstanding, basic	79,332	80,111	79,709	80,122
Dilutive effect of potential common stock	493	1,248	688	1,416
Total shares, diluted	79,825	81,359	80,397	81,538
Net income per share, basic	$ 1.29	$ 1.26	$ 4.03	$ 3.78
Net income per share, diluted	$ 1.28	$ 1.24	$ 4.00	$ 3.71
Retained Earnings
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net income	$ 102,524	$ 100,872	$ 321,514	$ 302,843

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(19))
-URI http://asc.fasb.org/extlink&oid=114873790&loc=SL114874131-224263

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109260490&loc=d3e1337-109256

Reference 3: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 55
-Paragraph 52
-URI http://asc.fasb.org/extlink&oid=109256448&loc=d3e4984-109258

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(21))
-URI http://asc.fasb.org/extlink&oid=115205541&loc=SL114868664-224227

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22694-107794

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6371337&loc=d3e3550-109257

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=109260490&loc=d3e1252-109256

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
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-Paragraph 1
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-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=109260490&loc=SL5780133-109256

+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Supplemental Cash Flow Information (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Non-cash investing and financing activities:
Fixed assets acquired with accounts payable or accrued liabilities	$ 14,331	$ 24,281
Conversion of convertible notes receivable into equity securities	0	4,862
Issuance of promissory note in exchange for sale of equity method investment	54,154	$ 0
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	21,186
Investing cash flows from finance leases	10,896
Financing cash flows from finance leases	45,773
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	26,395
Finance leases	$ 51,064

Segments and Geographical Information - Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Segment Reporting Information [Line Items]
Net revenues	$ 607,341	$ 505,289	$ 1,757,009	$ 1,432,472
Gross profit	437,554	371,781	1,271,939	1,064,771
Income from operations	127,152	125,208	391,343	346,091
Interest income	3,478	2,234	9,576	6,327
Impairments and other (gains) charges	(6,792)	0	22,990	0
Depreciation and amortization	19,706	14,119	57,194	38,185
Other income (expense), net	(2,211)	(837)	5,935	(7,759)
Net income before provision for income taxes and equity in losses of investee	128,419	126,605	406,854	344,659
Operating segments
Segment Reporting Information [Line Items]
Income from operations	244,712	214,165	714,908	599,658
Clear Aligner
Segment Reporting Information [Line Items]
Net revenues	516,265	427,087	1,482,172	1,245,833
Gross profit	379,202	321,772	1,096,702	950,360
Income from operations	211,952	182,667	614,622	534,408
Impairments and other (gains) charges	(6,792)	0	22,990	0
Depreciation and amortization	9,306	7,218	27,851	20,361
Scanner
Segment Reporting Information [Line Items]
Net revenues	91,076	78,202	274,837	186,639
Gross profit	58,352	50,009	175,237	114,411
Income from operations	32,760	31,498	100,286	65,250
Impairments and other (gains) charges	0	0	0	0
Depreciation and amortization	1,987	1,237	5,349	3,510
Unallocated corporate expenses
Segment Reporting Information [Line Items]
Income from operations	(117,560)	(88,957)	(323,565)	(253,567)
Impairments and other (gains) charges	0	0	0	0
Depreciation and amortization	$ 8,413	$ 5,664	$ 23,994	$ 14,314

Segments and Geographical Information - Net Revenues by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Segment Reporting Information [Line Items]
Net revenues	$ 607,341	$ 505,289	$ 1,757,009	$ 1,432,472
United States
Segment Reporting Information [Line Items]
Net revenues	286,050	263,349	861,710	754,472
The Netherlands
Segment Reporting Information [Line Items]
Net revenues	173,926	141,405	540,858	437,364
China
Segment Reporting Information [Line Items]
Net revenues	63,636	52,874	151,075	116,891
Other International
Segment Reporting Information [Line Items]
Net revenues	$ 83,729	$ 47,661	$ 203,366	$ 123,745

Investments and Fair Value Measurements Summary of Financial Assets Measured at Fair Value on Recurring Basis (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	$ 292,011,000	$ 107,572,000
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Assets, Fair Value Disclosure	508,744,000	552,456,000
Fair Value, Measurements, Recurring \| Israeli funds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Other assets	3,103,000	3,047,000
Fair Value, Measurements, Recurring \| Cash Equivalents \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents	181,401,000	431,081,000
Fair Value, Measurements, Recurring \| Cash Equivalents \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents	22,403,000	4,681,000
Fair Value, Measurements, Recurring \| Cash Equivalents \| Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents	4,528,000	3,880,000
Fair Value, Measurements, Recurring \| Cash Equivalents \| U.S. government treasury bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents	5,298,000	2,195,000
Fair Value, Measurements, Recurring \| Short-term Investments
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	292,011,000	98,460,000
Fair Value, Measurements, Recurring \| Short-term Investments \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	33,259,000	17,793,000
Fair Value, Measurements, Recurring \| Short-term Investments \| Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	152,611,000	45,052,000
Fair Value, Measurements, Recurring \| Short-term Investments \| U.S. government treasury bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	91,875,000	15,291,000
Fair Value, Measurements, Recurring \| Short-term Investments \| U.S. government agency bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	10,239,000	19,904,000
Fair Value, Measurements, Recurring \| Short-term Investments \| Foreign bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	4,008,000
Fair Value, Measurements, Recurring \| Short-term Investments \| Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	19,000	420,000
Fair Value, Measurements, Recurring \| Long-term Investments
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		9,112,000
Fair Value, Measurements, Recurring \| Long-term Investments \| Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		4,960,000
Fair Value, Measurements, Recurring \| Long-term Investments \| U.S. government treasury bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		2,244,000
Fair Value, Measurements, Recurring \| Long-term Investments \| U.S. government agency bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		1,407,000
Fair Value, Measurements, Recurring \| Long-term Investments \| Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		501,000
Fair Value, Measurements, Recurring \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Assets, Fair Value Disclosure	278,574,000	450,811,000
Fair Value, Measurements, Recurring \| Level 1 \| Israeli funds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Other assets	0	0
Fair Value, Measurements, Recurring \| Level 1 \| Cash Equivalents \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents	181,401,000	431,081,000
Fair Value, Measurements, Recurring \| Level 1 \| Cash Equivalents \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents	0	0
Fair Value, Measurements, Recurring \| Level 1 \| Cash Equivalents \| Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents	0	0
Fair Value, Measurements, Recurring \| Level 1 \| Cash Equivalents \| U.S. government treasury bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents	5,298,000	2,195,000
Fair Value, Measurements, Recurring \| Level 1 \| Short-term Investments \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	0	0
Fair Value, Measurements, Recurring \| Level 1 \| Short-term Investments \| Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	0	0
Fair Value, Measurements, Recurring \| Level 1 \| Short-term Investments \| U.S. government treasury bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	91,875,000	15,291,000
Fair Value, Measurements, Recurring \| Level 1 \| Short-term Investments \| U.S. government agency bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	0	0
Fair Value, Measurements, Recurring \| Level 1 \| Short-term Investments \| Foreign bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	0
Fair Value, Measurements, Recurring \| Level 1 \| Short-term Investments \| Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	0	0
Fair Value, Measurements, Recurring \| Level 1 \| Long-term Investments \| Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		0
Fair Value, Measurements, Recurring \| Level 1 \| Long-term Investments \| U.S. government treasury bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		2,244,000
Fair Value, Measurements, Recurring \| Level 1 \| Long-term Investments \| U.S. government agency bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		0
Fair Value, Measurements, Recurring \| Level 1 \| Long-term Investments \| Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		0
Fair Value, Measurements, Recurring \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Assets, Fair Value Disclosure	230,170,000	101,645,000
Fair Value, Measurements, Recurring \| Level 2 \| Israeli funds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Other assets	3,103,000	3,047,000
Fair Value, Measurements, Recurring \| Level 2 \| Cash Equivalents \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents	0	0
Fair Value, Measurements, Recurring \| Level 2 \| Cash Equivalents \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents	22,403,000	4,681,000
Fair Value, Measurements, Recurring \| Level 2 \| Cash Equivalents \| Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents	4,528,000	3,880,000
Fair Value, Measurements, Recurring \| Level 2 \| Cash Equivalents \| U.S. government treasury bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents	0	0
Fair Value, Measurements, Recurring \| Level 2 \| Short-term Investments \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	33,259,000	17,793,000
Fair Value, Measurements, Recurring \| Level 2 \| Short-term Investments \| Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	152,611,000	45,052,000
Fair Value, Measurements, Recurring \| Level 2 \| Short-term Investments \| U.S. government treasury bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	0	0
Fair Value, Measurements, Recurring \| Level 2 \| Short-term Investments \| U.S. government agency bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	10,239,000	19,904,000
Fair Value, Measurements, Recurring \| Level 2 \| Short-term Investments \| Foreign bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	4,008,000
Fair Value, Measurements, Recurring \| Level 2 \| Short-term Investments \| Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments	$ 19,000	420,000
Fair Value, Measurements, Recurring \| Level 2 \| Long-term Investments \| Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		4,960,000
Fair Value, Measurements, Recurring \| Level 2 \| Long-term Investments \| U.S. government treasury bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		0
Fair Value, Measurements, Recurring \| Level 2 \| Long-term Investments \| U.S. government agency bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		1,407,000
Fair Value, Measurements, Recurring \| Level 2 \| Long-term Investments \| Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Investments		$ 501,000

Leases (Details) $ in Millions	Sep. 30, 2019 USD ($)
Lessee, Lease, Description [Line Items]
Lease not yet commenced, amount	$ 9.6
Minimum
Lessee, Lease, Description [Line Items]
Term of contract	2 years
Maximum
Lessee, Lease, Description [Line Items]
Term of contract	4 years

Leases - Remaining Lease Term and Discount Rate (Details)	Sep. 30, 2019
Weighted average remaining lease term (in years)
Weighted average remaining lease term (in years)	5 years 10 months 24 days
Weighted average discount rate
Weighted average discount rate	4.20%

Credit Facilities	9 Months Ended
Credit Facilities	Sep. 30, 2019
Notes To Financial Statements [Abstract]
Credit Facilities	Credit Facilities On February 27, 2018, we entered into a credit facility for a $200.0 million revolving line of credit, with a $50.0 million letter of credit sublimit, and a maturity date of February 27, 2021. The credit facility requires us to comply with specific financial conditions and performance requirements. The loans bear interest, at our option, at either a rate based on the reserve adjusted LIBOR for the applicable interest period or a base rate, in each case plus a margin. The base rate is the highest of the credit facility’s publicly announced prime rate, the federal funds rate plus 0.50% and one month LIBOR plus 1.0%. The margin ranges from 1.25% to 1.75% for LIBOR loans and 0.25% to 0.75% for base rate loans. Interest on the loans is payable quarterly in arrears with respect to base rate loans and at the end of an interest period (and at three month intervals if the interest period exceeds three months) in the case of LIBOR loans. Principal, together with accrued and unpaid interest, is due on the maturity date. As of September 30, 2019, we had no outstanding borrowings under this credit facility and were in compliance with the conditions and performance requirements.

Impairments and Other (Gains) Charges	9 Months Ended
Impairments and Other (Gains) Charges	Sep. 30, 2019
Property, Plant and Equipment [Abstract]
Impairments and Other (Gains) Charges	Impairments and Other (Gains) Charges On March 5, 2019, we announced the outcome of the arbitration regarding SDC (Refer to Note 9 “Legal Proceedings” of the Notes to Condensed Consolidated Financial Statements for SDC legal proceedings discussion) which required Align to close its Invisalign stores and tender Align’s equity interest in SDC by April 3, 2019. Accordingly, Align evaluated the ongoing value of the Invisalign stores’ operating lease right-of-use assets and related leasehold improvements and other fixed assets in accordance with ASC 360, Property, Plant and Equipment. Based on the evaluation, Align determined that the carrying value of these assets were not recoverable. Align evaluated the fair value of these assets in accordance with ASC 820, Fair Value Measurement, and we considered the market participant’s ability to generate economic benefits by using these assets in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. As a result, in the first quarter of 2019, we recorded impairment losses of $14.2 million for operating lease right-of-use assets and $14.3 million of leasehold improvements and other fixed assets. In addition, we also recorded $1.3 million of employee severance costs and other charges. During the third quarter of 2019, we negotiated early termination of our Invisalign store leases and recorded lease termination gains of $6.8 million.

Balance Sheet Components Warranty Accrual Activity (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at beginning of period	$ 8,551	$ 5,929
Charged to cost of net revenues	9,429	10,874
Actual warranty expenditures	(7,178)	(8,777)
Balance at end of period	$ 10,802	$ 8,026

Balance Sheet Components Deferred Revenues (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Notes To Financial Statements [Abstract]
Deferred revenues - current	$ 520,712	$ 393,138
Deferred revenues - long-term	$ 27,551	$ 17,051

Leases - Lease Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Operating leases:
Operating lease right-of-use assets, net	$ 53,923	$ 0
Accrued liabilities	13,706	0
Operating lease liabilities	43,365	$ 0
Total operating lease liabilities	$ 57,071

Goodwill and Intangible Assets - Change in Carrying Value of Goodwill (Details) - Clear Aligner $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Goodwill [Roll Forward]
Balance as of December 31, 2018	$ 64,029
Adjustments	(274)
Balance as of September 30, 2019	$ 63,755

Segments and Geographical Information - Additional Information (Details)	9 Months Ended
	Sep. 30, 2019 segment
Disclosure Segments And Geographical Information Additional Information [Abstract]
Number of reportable segments	2

Segments and Geographical Information - Long-Lived Assets by Geographic Area (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Segment Reporting Information [Line Items]
Total long-lived assets	$ 660,504	$ 521,329
The Netherlands
Segment Reporting Information [Line Items]
Total long-lived assets	231,746	206,679
United States
Segment Reporting Information [Line Items]
Total long-lived assets	164,732	139,239
Costa Rica
Segment Reporting Information [Line Items]
Total long-lived assets	81,574	80,218
China
Segment Reporting Information [Line Items]
Total long-lived assets	62,359	36,249
Mexico
Segment Reporting Information [Line Items]
Total long-lived assets	38,494	33,240
Other International
Segment Reporting Information [Line Items]
Total long-lived assets	$ 81,599	$ 25,704