Based in Tempe, AZ, and founded in 1997, Align Technology, Inc. ( ALGN ) is a leading manufacturer of orthodontic treatments globally. They sell clear aligners under the Invisalign and Vivera brands as well as iTero scanners, alongsideI have been investing in the stock market since I was 17 years old, and over the 25+ years since I have learned the joy of compounding, the value of dividend reinvesting, and the principle that patient investing through good times and bad brings the greatest rewards. I believe ...

Financial Data and Key Metrics Changes - Q4 revenues reached a record $1.048 billion, up 5.3% year-over-year and 5.2% sequentially, while full year 2025 revenues were $4 billion, up 1% year-over-year [5][33] - Non-GAAP gross margin for Q4 was 72%, up 1.6 points sequentially and 1.2 points year-over-year, while GAAP gross margin was 65.3%, up 1.1 points sequentially but down 4.8 points year-over-year [40][42] - Q4 operating income was $155.3 million, resulting in an operating margin of 14.8%, up approximately 5.2 points sequentially and 0.3 points year-over-year [46] Business Line Data and Key Metrics Changes - Systems and services revenues were $790 million, up 2.7% year-over-year, while clear aligner revenues for fiscal 2025 were $3.2 billion, up 0.5% year-over-year with record clear aligner volumes of 2.6 million cases [6][7] - Q4 clear aligner revenues were $838 million, up 5.5% year-over-year and 4% sequentially, with a record volume of 677,000 cases, up 7.7% year-over-year [7][8] - Q4 systems and services revenues were $209.4 million, up 10.3% sequentially and 4.2% year-over-year, driven by higher scanner system sales [37][38] Market Data and Key Metrics Changes - Clear aligner volume growth in Q4 was driven by strength in EMEA, Latin America, and APAC, with stability in North America [8][15] - In EMEA, DSO performance showed double-digit growth year-over-year, while in Latin America, clear aligner volumes grew double digits, achieving record quarterly shipments [14][15] - In APAC, clear aligner volumes also grew double digits year-over-year, with significant contributions from China, India, and Korea [19] Company Strategy and Development Direction - The company aims to expand international adoption, increase orthodontic utilization, and strengthen consumer demand conversion through localized marketing [63][68] - The focus on DSOs as a strategic growth channel is emphasized, with partnerships driving digital dentistry adoption [10][12] - Investments in innovation, including AI-driven treatment planning and direct fabrication capabilities, are prioritized to enhance margins and operational efficiency [66][68] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macro environment, highlighting the importance of disciplined execution across regions and channels [67] - The company expects Q1 2026 worldwide revenues to be in the range of $1.01 billion to $1.03 billion, reflecting a year-over-year growth of 3%-5% [58] - For fiscal 2026, the company anticipates revenue growth of 3%-4% year-over-year, with clear aligner volume growth expected to be in the mid-single digits [60] Other Important Information - Cash and cash equivalents as of December 31, 2025, were $1.0949 billion, with $831.2 million remaining available for stock repurchases under the program [53][55] - The company repurchased approximately 0.7 million shares in Q4 2025 at an average price of $142.87 [54] Q&A Session Summary Question: Can you parse apart the improved volume performance? - Management noted stability in markets and effective execution, particularly with DSOs driving growth [72] Question: What are the assumptions for 2026 guidance regarding end markets? - Management expects markets to behave consistently with recent trends, focusing on active conversion strategies [83] Question: Can you discuss the growth of DSOs and their adoption curve? - Management indicated that DSOs are expanding and that there are still growth opportunities in this segment [86] Question: What is driving the improvement in the adult business? - Factors include DSO growth, financial credit availability, and effective patient conversion strategies [92] Question: How do you view ASPs for 2026? - Management expects ASPs to decline by 1%-2% year-over-year due to country and product mix [101]

Financial Data and Key Metrics Changes - Q4 revenues reached a record $1.048 billion, up 5.3% year-over-year and 5.2% sequentially [5] - For the full year 2025, total revenues were a record $4 billion, up 1% year-over-year [5] - Q4 overall gross margin was 65.3%, up 1.1 points sequentially but down 4.8 points year-over-year [40][41] - Q4 net income per diluted share was $1.89, up $1.11 sequentially and up $0.50 year-over-year [51] Business Line Data and Key Metrics Changes - Systems and services revenues were $790 million, up 2.7% year-over-year [6] - Clear aligner revenues for Q4 were $838 million, up 5.5% year-over-year and up 4% sequentially [7][34] - Fiscal 2025 clear aligner revenues were $3.2 billion, up 0.5% year-over-year on record clear aligner volumes of 2.6 million cases [6] Market Data and Key Metrics Changes - Q4 clear aligner volume was a record 677,000 cases, up 7.7% year-over-year [8] - In EMEA, clear aligner volumes grew double digits year-over-year, with significant growth in Iberia, the Nordics, and the UK [18] - In APAC, clear aligner volumes also grew double digits year-over-year, with record shipments from China, India, and Korea [19] Company Strategy and Development Direction - The company is focusing on expanding international adoption and increasing orthodontic utilization, particularly among teens and kids [62] - Strengthening consumer demand conversion through localized last-mile marketing is a key strategy [62] - The company aims to enhance its digital platform and maintain leadership in treatment planning and 3D printing manufacturing [12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the macro environment while highlighting strong fundamentals and execution [61][66] - The company expects Q1 2026 worldwide revenues to be in the range of $1.01 billion to $1.03 billion, up 3%-5% year-over-year [57] - For fiscal 2026, the company anticipates worldwide revenue growth of 3%-4% year-over-year [59] Other Important Information - The company repurchased approximately 0.7 million shares of common stock at an average price of $142.87 during Q4 [53] - Cash and cash equivalents as of December 31, 2025, were $1.0949 billion, up $90.3 million sequentially [52] Q&A Session Summary Question: Can you parse apart the improved volume performance? - Management noted stability in markets and effective execution, particularly with DSOs driving growth [71] Question: What are the assumptions for 2026 guidance regarding end markets? - Management expects markets to behave consistently with recent trends and emphasizes active conversion strategies [82] Question: Can you discuss the growth of DSOs and their adoption curve? - Management indicated that DSOs are expanding and that there are good growth parameters in this business [86] Question: What is driving the improvement in the adult business? - Factors include DSO growth, financial credit support, and effective patient conversion strategies [91] Question: How do you view the ASPs for 2026? - Management expects ASPs to be down 1%-2% year-over-year due to country and product mix [101]

Financial Data and Key Metrics Changes - Q4 2025 revenues reached a record $1.048 billion, up 5.3% year-over-year and 5.2% sequentially [3][19] - Full year 2025 total revenues were $4 billion, up 1% year-over-year [3] - Non-GAAP operating margin for Q4 was 22.7%, the highest since 2021 [4] - Q4 overall gross margin was 65.3%, up 1.1 points sequentially but down 4.8 points year-over-year [23][24] Business Line Data and Key Metrics Changes - Systems and services revenues were $790 million, up 2.7% year-over-year [4] - Clear aligner revenues for Q4 were $838 million, up 5.5% year-over-year and up 4% sequentially [4][20] - Fiscal 2025 clear aligner revenues were $3.2 billion, up 0.5% year-over-year with record volumes of 2.6 million cases [4] Market Data and Key Metrics Changes - Q4 clear aligner volume was a record 677,000 cases, up 7.7% year-over-year [5] - Strong growth in EMEA, Latin America, and APAC, with stability in North America [5] - In North America, clear aligner volumes were up year-over-year, with double-digit growth in Latin America [9] Company Strategy and Development Direction - Focus on expanding international adoption and increasing orthodontic utilization, particularly among teens and kids [36][38] - Strengthening partnerships with dental service organizations (DSOs) to drive digital dentistry adoption [6][9] - Continued investment in innovation, including AI-driven treatment planning and direct fabrication capabilities [38] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, emphasizing the importance of disciplined execution across regions and channels [36][39] - The macro environment remains dynamic, but the company is encouraged by progress in key customer segments [36] - Management highlighted the need for sustained momentum in North America and improving conversion rates [38] Other Important Information - Cash and cash equivalents as of December 31, 2025, were $1.0949 billion, up $90.3 million sequentially [30] - The company repurchased approximately 0.7 million shares at an average price of $142.87 during Q4 2025 [31] Q&A Session Summary Question: Improved volume performance and its drivers - Management noted stability in markets and effective execution, particularly with DSOs driving growth [42][43] Question: Guidance assumptions for 2026 - Management expects markets to behave similarly to the second half of 2025, focusing on active conversion strategies [51][52] Question: DSO adoption curve and growth potential - Management indicated continued DSO penetration and growth opportunities, with many DSOs expanding globally [53][55] Question: Adult business performance and drivers - Management attributed improved adult business performance to DSOs, financial credit options, and effective patient conversion strategies [60][61] Question: North American retail business stability - Management reported improved stability in the North American retail business, aided by DSOs and a broader product portfolio [63][64] Question: ASP expectations for 2026 - Management anticipates ASPs to decline by 1%-2% year-over-year due to product and country mix [67][70] Question: Tax receipts and stimulus impact - Management did not plan around potential tax receipts but acknowledged them as possible upside [72]