Align Technology Q4 2025 Align Technology Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Align Technology Inc Earnings Call
Operator: Greetings. Welcome to the Align Fourth Quarter and Full Year 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Shirley Stacy, with Align Technology. You may begin.
Operator: Greetings. Welcome to the Align Fourth Quarter and Full Year 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Shirley Stacy, with Align Technology. You may begin.
Speaker #1: Greetings. Welcome to the ALIGN Q4 and full year 2025 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.
Speaker #1: Please note, this conference is being recorded. I will now turn the conference over to your host, Shirley Stacy with Align Technology. You may begin.
Speaker #2: Good afternoon, and thank you for joining us. I'm Shirley Stacy, Vice President of Corporate Communications and Investor Relations. Joining me for today's call are Joe Hogan, President and CEO, and John Morici, CFO.
Shirley Stacy: Good afternoon, and thank you for joining us. I'm Shirley Stacy, Vice President of Corporate Communications and Investor Relations. Joining me for today's call is Joe Hogan, President and CEO, and John Marici, CFO. We issued Q4 and full year 2025 financial results today via Business Wire, which is available on our website at investor.aligntech.com. Today's conference call is being audio webcast and will be archived on our website for approximately one month. As a reminder, the information provided and discussed today will include forward-looking statements, including statements about Align's future events and product outlook. These forward-looking statements are only predictions and involve risks and uncertainties that are described in more detail in our most recent periodic reports filed with the Securities and Exchange Commission, available on our website and at sec.gov. Actual results may vary significantly, and Align expressly assumes no obligation to update any forward-looking statement.
Shirley Stacy: Good afternoon, and thank you for joining us. I'm Shirley Stacy, Vice President of Corporate Communications and Investor Relations. Joining me for today's call is Joe Hogan, President and CEO, and John Marici, CFO. We issued Q4 and full year 2025 financial results today via Business Wire, which is available on our website at investor.aligntech.com. Today's conference call is being audio webcast and will be archived on our website for approximately one month. As a reminder, the information provided and discussed today will include forward-looking statements, including statements about Align's future events and product outlook. These forward-looking statements are only predictions and involve risks and uncertainties that are described in more detail in our most recent periodic reports filed with the Securities and Exchange Commission, available on our website and at sec.gov. Actual results may vary significantly, and Align expressly assumes no obligation to update any forward-looking statement.
Speaker #2: We issued Q4 and full year 2025 financial results today via Business Wire, which are available on our website at investor.aligntech.com. Today's conference call is being audio webcast and will be archived on our website for approximately one month.
Speaker #2: As a reminder, the information provided and discussed today will include forward-looking statements, including statements about ALIGN's future events and product outlook. These forward-looking statements are only predictions, and involve risks and uncertainties that are described in more detail in our most recent periodic reports filed with the Securities and Exchange Commission, available on our website and at sec.gov.
Speaker #2: Actual results may vary significantly, and Align expressly assumes no obligation to update any forward-looking statement. We have posted historical financial statements with corresponding reconciliations, including our GAAP to non-GAAP reconciliation, if applicable, and our Q4 and full year 2025 conference call slides on our website under Quarterly Results.
Shirley Stacy: We have posted historical financial statements with corresponding reconciliations, including our GAAP to non-GAAP reconciliation, if applicable, and our Q4 and full year 2025 conference call slides on our website under Quarterly Results. Please refer to these files for more detailed information. With that, I'd like to turn the call over to Align Technology's President and CEO, Joe Hogan. Joe?
Shirley Stacy: We have posted historical financial statements with corresponding reconciliations, including our GAAP to non-GAAP reconciliation, if applicable, and our Q4 and full year 2025 conference call slides on our website under Quarterly Results. Please refer to these files for more detailed information. With that, I'd like to turn the call over to Align Technology's President and CEO, Joe Hogan. Joe?
Speaker #2: Please refer to these files for more detailed information. With that, I'd like to turn the call over to ALIGN TECHNOLOGY's President and CEO, Joe Hogan.
Speaker #2: Joe?
Speaker #3: Thanks, Shirley. Good
Joe Hogan: Thanks, Shirley. Good afternoon, and thanks for joining us today. On our call today, I'll provide an overview of our fourth quarter and full year 2025 results and discuss performance of our two operating segments, systems, services, and clear aligners. John will provide more detail on our Q4 financial performance and comment on our views for 2026. Following that, I'll come back and summarize a few key points and open the call to questions. I'm pleased to report fourth quarter results with better-than-expected revenues and clear aligner volumes, as well as non-GAAP gross margin and non-GAAP operating margin, both above our outlook, and the highest non-GAAP operating margin since 2021. Q4 revenues were a record $1.048 billion, up 5.3% year-over-year and 5.2% sequentially.
Joe Hogan: Thanks, Shirley. Good afternoon, and thanks for joining us today. On our call today, I'll provide an overview of our fourth quarter and full year 2025 results and discuss performance of our two operating segments, systems, services, and clear aligners. John will provide more detail on our Q4 financial performance and comment on our views for 2026. Following that, I'll come back and summarize a few key points and open the call to questions. I'm pleased to report fourth quarter results with better-than-expected revenues and clear aligner volumes, as well as non-GAAP gross margin and non-GAAP operating margin, both above our outlook, and the highest non-GAAP operating margin since 2021. Q4 revenues were a record $1.048 billion, up 5.3% year-over-year and 5.2% sequentially.
Speaker #3: Good afternoon, and thanks for joining us today. On our Q4 and full year call today, I'll provide an overview of our 2025 results and discuss the performance of our two operating segments: System Services and Clear Aligners.
Speaker #3: John will provide more detail on our Q4 financial performance and comment on our views for 2026. Following that, I'll come back and summarize a few key points and open the call to questions.
Speaker #3: I'm pleased to report Q4 results, with better-than-expected revenues, and clear aligner volumes. As well as non-GAAP gross margin and non-GAAP operating margin, both above our outlook.
Speaker #3: Operating margin since, and the highest non-GAAP. 2021 Q4 revenues were a record $1,048 million, up 5.3% year-over-year and 5.2% sequentially. For the full year 2025, total revenues were a record $4 billion, up 1% year-over-year.
Joe Hogan: For the full year of 2025, total revenues were a record $4 billion, up 1% year-over-year. Systems and services revenues were $790 million, up 2.7% year-over-year. 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, which are 4.7% year-over-year. For the year, a record 936,000 teens and kids started treatment with Invisalign clear aligners, up 7.8% year-over-year for fiscal 2025. Total DSP touch-up cases shipped were over 136,000, up 36% compared to 2024. We also delivered fiscal 2025 non-GAAP operating margin of 22.7% above our 2025 outlook.
Joe Hogan: For the full year of 2025, total revenues were a record $4 billion, up 1% year-over-year. Systems and services revenues were $790 million, up 2.7% year-over-year. 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, which are 4.7% year-over-year. For the year, a record 936,000 teens and kids started treatment with Invisalign clear aligners, up 7.8% year-over-year for fiscal 2025. Total DSP touch-up cases shipped were over 136,000, up 36% compared to 2024. We also delivered fiscal 2025 non-GAAP operating margin of 22.7% above our 2025 outlook.
Speaker #3: Systems and services revenues were $790 million, up 2.7% year-over-year. Fiscal 2025 clear aligner revenues were $3.2 billion, up 0.5% year-over-year, on a record clear aligner volume of 2.6 million cases, which is up 4.7% year-over-year.
Speaker #3: For the year, a record $936,00 teens and kids started treatment with Invisalign clear aligners, up 7.8% year-over-year for fiscal 2025, total DSP touch-up cases shipped were over 136,000, up 36% compared to 2024.
Speaker #3: We also delivered fiscal 2025 non-GAAP operating margin of 22.7%, above our 2025 outlook. In terms of major milestones, as of December 31, 2025, over 296,000 active Invisalign-trained doctors have treated over 22 million people worldwide.
Joe Hogan: In terms of major milestones, as of 31 December 2025, over 296,000 active Invisalign-trained doctors have treated over 22 million people worldwide, including over 6.5 million teens and growing kids with Invisalign clear aligners and Invisalign palatal expanders. For clear aligners, Q4 revenues of $838 million were up 5.5% year over year and up 4% sequentially. Q4 clear aligner volume was also a record 677,000 cases, up 7.7% year over year and up 4.5% sequentially. On a year-over-year basis, Q4 aligner volume growth was driven by strength in EMEA, Latin America, and APAC, with stability in North America. Q4 clear aligner volume growth reflects strength from adults, teens, and growing kids patients, as well as growth in both the GP and ortho channels.
Joe Hogan: In terms of major milestones, as of 31 December 2025, over 296,000 active Invisalign-trained doctors have treated over 22 million people worldwide, including over 6.5 million teens and growing kids with Invisalign clear aligners and Invisalign palatal expanders. For clear aligners, Q4 revenues of $838 million were up 5.5% year over year and up 4% sequentially. Q4 clear aligner volume was also a record 677,000 cases, up 7.7% year over year and up 4.5% sequentially. On a year-over-year basis, Q4 aligner volume growth was driven by strength in EMEA, Latin America, and APAC, with stability in North America. Q4 clear aligner volume growth reflects strength from adults, teens, and growing kids patients, as well as growth in both the GP and ortho channels.
Speaker #3: Including over 6.5 million teens and growing kids, with Invisalign clear aligners and Invisalign palate expanders. For clear aligners, Q4 revenues of $838, were up 5.5% year-over-year and up 4% sequentially.
Speaker #3: Q4 clear aligner volume was also a record 677,000 cases, up 7.7% year-over-year and up 4.5% sequentially. On a year-over-year basis, Q4 aligner volume growth was driven by strength in EMEA, Latin America, and APAC, with stability in North America.
Speaker #3: Q4 clear aligner volume growth reflects strength from adults and teens and growing kids patients, as well as growth in both the GP and ortho channels.
Speaker #3: On a sequential basis, Q4 clear aligner volumes reflect strong growth from the EMEA region, driven primarily by adult patients as well as continued strength in Latin America, from teens, growing kids, and adult patients.
Joe Hogan: On a sequential basis, Q4 clear aligner volumes reflect strong growth from the EMEA region, driven primarily by adult patients, as well as continued strength in Latin America from teens, growing kids, and adult patients. For Q4, 88,000 doctors submitted Invisalign cases globally, a record high for a fourth quarter, driven primarily by a record number of orthodontist submitters. Dental service and orthodontic service organizations, DSOs or OSOs, remain one of Align's most important and scalable strategic growth channels and a major catalyst to making digital dentistry the global standard of care. As DSOs continue to outpace growth rates of traditional retail practices globally, they are becoming one of the most influential forces shaping digital dentistry.
Joe Hogan: On a sequential basis, Q4 clear aligner volumes reflect strong growth from the EMEA region, driven primarily by adult patients, as well as continued strength in Latin America from teens, growing kids, and adult patients. For Q4, 88,000 doctors submitted Invisalign cases globally, a record high for a fourth quarter, driven primarily by a record number of orthodontist submitters. Dental service and orthodontic service organizations, DSOs or OSOs, remain one of Align's most important and scalable strategic growth channels and a major catalyst to making digital dentistry the global standard of care. As DSOs continue to outpace growth rates of traditional retail practices globally, they are becoming one of the most influential forces shaping digital dentistry.
Speaker #3: For Q4, 88,000 doctors submitted Invisalign cases globally—a record high for Q4, driven primarily by a record number of orthodontist submitters. Dental service and orthodontic service organizations, DSOs or OSOs, remain one of Align's most important and scalable strategic growth channels.
Speaker #3: And a major catalyst to making digital dentistry the global standard of care. As DSOs continue to outpace growth rates of traditional retail practices globally, they are becoming one of the most influential forces shaping digital dentistry.
Speaker #3: In many respects, their scale, operational discipline, and need for consistent tech-enabled workflows make them ideal partners for accelerating adoption of the Invisalign system, iTero scanners, and fully digital workflows, across large networks of general dentists and orthodontists.
Joe Hogan: In many respects, their scale, operational discipline, and need for consistent tech-enabled workflows make them ideal partners for accelerating adoption of the Invisalign system, iTero scanners, and fully digital workflows across large networks of general dentists and orthodontists. This practice consolidation, a trend, strengthens brand preference and utilization as DSOs increasingly prioritize efficiency, clinical predictability, improved patient experience, and, importantly, scale. Align has proven its leadership as the world's most sophisticated treatment planning and 3D printing manufacturing operation, and our ability to scale and meet the patient needs, speed, and rigor of those rapidly growing DSOs is unmatched globally.... Over the past year, we continued to make strong progress with DSOs across all major regions. In the Americas, we deepened partnership with top DSOs, building on our successful Heartland and Smile Doctors relationships.
Joe Hogan: In many respects, their scale, operational discipline, and need for consistent tech-enabled workflows make them ideal partners for accelerating adoption of the Invisalign system, iTero scanners, and fully digital workflows across large networks of general dentists and orthodontists. This practice consolidation, a trend, strengthens brand preference and utilization as DSOs increasingly prioritize efficiency, clinical predictability, improved patient experience, and, importantly, scale. Align has proven its leadership as the world's most sophisticated treatment planning and 3D printing manufacturing operation, and our ability to scale and meet the patient needs, speed, and rigor of those rapidly growing DSOs is unmatched globally.... Over the past year, we continued to make strong progress with DSOs across all major regions. In the Americas, we deepened partnership with top DSOs, building on our successful Heartland and Smile Doctors relationships.
Speaker #3: This practice consolidation trend strengthens brand preference and utilization as DSOs increasingly prioritize efficiency, clinical predictability, improved patient experience, and importantly, scale. ALIGN has proven its leadership as the world's most sophisticated treatment planning and 3D printing manufacturing operation, and our ability to scale and meet the patient needs speed and rigor of those rapidly growing DSOs is unmatched globally.
Speaker #3: Over the past year, we continued to make strong progress with DSOs across all major regions. In the Americas, we deepened partnerships with top DSOs, building on our successful Heartland and Smile Doctors relationships.
Speaker #3: Our top 10 DSOs in the Americas grew double digits year-over-year, and retention was up double digits in the Americas. These gains helped offset broader orthodontic market softness in North America retail chain, where consumer sentiment and patient inflow remain pressured.
Joe Hogan: Our top 10 DSOs in the Americas grew double-digit year-over-year, and retention was up double digits in the Americas. These gains helped offset broader orthodontic market softness in North America retail chain, where consumer sentiment and patient inflow remained pressured. North America DSO performance remained very strong, delivering double-digit year-over-year growth, led by strength in the adult category. In EMEA, DSO performance was equally strong, with double-digit growth year-over-year and triple-digit growth among our top 10 DSOs in the region. DSOs continue to drive expansion in both Invisalign case volume and iTero scanner penetration. Across all regions, DSOs remain high growth, digitally forward partners that amplify Align's reach and impact. Their continued adoption of Invisalign and iTero reinforces the strength of our digital platform, as DSOs help move more of the industry toward a fully digital standard of care.
Joe Hogan: Our top 10 DSOs in the Americas grew double-digit year-over-year, and retention was up double digits in the Americas. These gains helped offset broader orthodontic market softness in North America retail chain, where consumer sentiment and patient inflow remained pressured. North America DSO performance remained very strong, delivering double-digit year-over-year growth, led by strength in the adult category. In EMEA, DSO performance was equally strong, with double-digit growth year-over-year and triple-digit growth among our top 10 DSOs in the region. DSOs continue to drive expansion in both Invisalign case volume and iTero scanner penetration. Across all regions, DSOs remain high growth, digitally forward partners that amplify Align's reach and impact. Their continued adoption of Invisalign and iTero reinforces the strength of our digital platform, as DSOs help move more of the industry toward a fully digital standard of care.
Speaker #3: North America DSO performance remained very strong, delivering double-digit year-over-year growth, led by strength in the adult category. In EMEA, DSO performance was equally strong, with double-digit growth year-over-year and triple-digit growth among our top 10 DSOs in the region.
Speaker #3: DSOs continue to drive expansion in both Invisalign case volume and iTero scanner penetration. Across all regions, DSOs remain high-growth, digitally forward partners that amplify Align's reach and impact.
Speaker #3: Their continued adoption of Invisalign and iTero reinforces the strength of our digital platform, as DSOs help move more of the industry toward a fully digital standard of care.
Speaker #3: In the Americas, clear aligner volumes were up year-over-year, representing one of the best growth rates since 2021. This was led by double-digit growth in Latin America, which delivered record-quarter shipments, driven by more submitters and higher utilization across both the orthodontist and GP channels.
Joe Hogan: In the Americas, clear aligner volumes were up year-over-year, representing one of the best growth rates since 2021. This was led by double-digit growth in Latin America, which delivered record quarter shipments, driven by more submitters and higher utilization across both the orthodontist and GP channels, with strength across adults, teens, and kids. We also reached a major Invisalign milestone in Q4 by surpassing 1 million patients treated with Invisalign in Latin America. In North America, we focused on driving adoption of Invisalign and saw encouraging results across our portfolio. Our year-over-year performance reflects higher utilization across all channels. We continue to see that practices taking an active approach to conversion, scanning every patient, using chair-side visualization tools, and offering patient financing, are performing better than those that don't.
Joe Hogan: In the Americas, clear aligner volumes were up year-over-year, representing one of the best growth rates since 2021. This was led by double-digit growth in Latin America, which delivered record quarter shipments, driven by more submitters and higher utilization across both the orthodontist and GP channels, with strength across adults, teens, and kids. We also reached a major Invisalign milestone in Q4 by surpassing 1 million patients treated with Invisalign in Latin America. In North America, we focused on driving adoption of Invisalign and saw encouraging results across our portfolio. Our year-over-year performance reflects higher utilization across all channels. We continue to see that practices taking an active approach to conversion, scanning every patient, using chair-side visualization tools, and offering patient financing, are performing better than those that don't.
Speaker #3: With strength across adults, teens, and kids, we also reached a major Invisalign milestone in Q4 by surpassing $1 million patients treated with Invisalign and Latin America.
Speaker #3: In North America, we focused on driving adoption of Invisalign and saw encouraging results across our portfolio. Our year-over-year performance reflects higher utilization across all channels.
Speaker #3: We continue to see that practices taking an active approach to conversion—scanning every patient, using chairside visualization tools, and offering patient financing—are performing better than those that don't.
Speaker #3: While DSOs are leading the way in North America, we're helping retail doctors adopt similar business methods through localized marketing, outside patient financing, and tools that help doctors attract and convert patients.
Joe Hogan: While DSOs are leading the way in North America, we're helping retail doctors adopt similar business methods through localized marketing, outside patient financing, and tools that help doctors attract and convert patients. Affordability also remains a priority. Our partnership with the healthcare financing platform, HFD, continues to grow, and doctors and DSOs enrolled in HFD are seen as incremental lift to Invisalign treatment, with meaningful room for expansion. By offering more portfolio flexibility, including streamlined configurations with no additional aligners, doctors have more options to meet patients' needs and drive adoption. In EMEA, clear aligner volumes grew double digits year over year, reaching record Q4 levels. We delivered double-digit growth year over year across almost all markets, with Iberia, the Nordics, and the UK all delivering double-digit growth. During the quarter, we surpassed key patient milestones, reaching over 1 million patients treated in both the UK and Iberia.
Joe Hogan: While DSOs are leading the way in North America, we're helping retail doctors adopt similar business methods through localized marketing, outside patient financing, and tools that help doctors attract and convert patients. Affordability also remains a priority. Our partnership with the healthcare financing platform, HFD, continues to grow, and doctors and DSOs enrolled in HFD are seen as incremental lift to Invisalign treatment, with meaningful room for expansion. By offering more portfolio flexibility, including streamlined configurations with no additional aligners, doctors have more options to meet patients' needs and drive adoption. In EMEA, clear aligner volumes grew double digits year over year, reaching record Q4 levels. We delivered double-digit growth year over year across almost all markets, with Iberia, the Nordics, and the UK all delivering double-digit growth. During the quarter, we surpassed key patient milestones, reaching over 1 million patients treated in both the UK and Iberia.
Speaker #3: Affordability also remains a priority. Our partnership with the healthcare financing platform HFD continues to grow, and doctors and DSOs enrolled in HFD are seen as incremental lifts to Invisalign treatment, with meaningful room for expansion.
Speaker #3: And by offering more portfolio flexibility, including streamlined configurations with no additional aligners, doctors have more options to meet patients' needs and drive adoption. In EMEA, clear aligner volumes grew double digits year-over-year, reaching record Q4 levels.
Speaker #3: We delivered double-digit growth year-over-year across almost all markets, with Iberia, the Nordics, and the UK all delivering double-digit growth. During the quarter, we surpassed key patient milestones, reaching over a million patients treated in both the UK and Iberia.
Speaker #3: In APAC, clear aligner volumes grew double digits year-over-year, achieving a record number of Q4 shipments by China, India, and Korea, with strength across teens and growing kids.
Joe Hogan: In APAC, clear aligner volumes grew double digits year-over-year, achieving a record number of Q4 shipments by China, India, and Korea, with strength across teens and growing kids. Growth reflected increases in both submitters and utilization in the GP channel, as well as an increase in ortho submitter utilization. Invisalign First continued to grow, as adoption of the Invisalign Palatal Expander System began in the region during the quarter. Retention performance remained strong year-over-year, supported by increased utilization across both channels. Regarding China's volume-based procurement process, or VBP, there continues to be implementation delays, and early phases are expected to begin within the public hospital system before expanding more broadly. As a reminder, over 85% of our business in China is in the private sector.
Joe Hogan: In APAC, clear aligner volumes grew double digits year-over-year, achieving a record number of Q4 shipments by China, India, and Korea, with strength across teens and growing kids. Growth reflected increases in both submitters and utilization in the GP channel, as well as an increase in ortho submitter utilization. Invisalign First continued to grow, as adoption of the Invisalign Palatal Expander System began in the region during the quarter. Retention performance remained strong year-over-year, supported by increased utilization across both channels. Regarding China's volume-based procurement process, or VBP, there continues to be implementation delays, and early phases are expected to begin within the public hospital system before expanding more broadly. As a reminder, over 85% of our business in China is in the private sector.
Speaker #3: Growth reflected increases in both submitters and utilization in the GP channel, as well as an increase in ortho submitter utilization. Invisalign first continued to grow adoption of the Invisalign palate expander system began in the region during the quarter.
Speaker #3: Retention performance remained strong year-over-year, supported by increased utilization across both channels. Regarding China's volume-based procurement process or VPP, there continues to be implementation delays, and early phases are expected to begin within the public hospital system before expanding more broadly.
Speaker #3: As a reminder, over 85% of our business in China is in the private sector, while timing and scope remain fluid. We believe we are well positioned to navigate the eventual pricing changes through our established local footprint, including local manufacturing, regulatory, and commercial infrastructure, and a product portfolio designed specifically for China's clinical and economic environment.
Joe Hogan: While timing and scope remain fluid, we believe we are well-positioned to navigate eventual pricing changes through our established local footprint, including local manufacturing, regulatory, and commercial infrastructure, and a product portfolio designed specifically for China's clinical and economic environment. In Q4, over 230,000 teens and growing kids started treatment with Invisalign clear aligners, an increase of 7% year-over-year. This growth was driven by strong performance in APAC, led by China, along with EMEA and Latin America, partially offset by continued softness in North America. Sequentially, case starts declined 9.8%, as expected, following an exceptionally strong 2-3 teen season. From a product standpoint, Invisalign First, the Invisalign palate expander, and MAOB, mandibular advancement with occlusal blocks, continued to fuel year-over-year growth across all regions.
Joe Hogan: While timing and scope remain fluid, we believe we are well-positioned to navigate eventual pricing changes through our established local footprint, including local manufacturing, regulatory, and commercial infrastructure, and a product portfolio designed specifically for China's clinical and economic environment. In Q4, over 230,000 teens and growing kids started treatment with Invisalign clear aligners, an increase of 7% year-over-year. This growth was driven by strong performance in APAC, led by China, along with EMEA and Latin America, partially offset by continued softness in North America. Sequentially, case starts declined 9.8%, as expected, following an exceptionally strong 2-3 teen season. From a product standpoint, Invisalign First, the Invisalign palate expander, and MAOB, mandibular advancement with occlusal blocks, continued to fuel year-over-year growth across all regions.
Speaker #3: In Q4, over 230,000 teens and growing kids started treatment with Invisalign clear aligners, an increase of 7% year-over-year. This growth was driven by strong performance in APAC, led by China, along with EMEA and Latin America, partially offset by continued softness in North America, sequentially case starts declined 9.8% as expected following an exceptionally strong Q3 teen season.
Speaker #3: From a product standpoint, Invisalign First, the Invisalign Palate Expander, and MAOB—mandibular advancement with occlusal blocks—continue to fuel year-over-year growth across all regions.
Speaker #3: Invisalign first is used for patients ages 6 to 10, addressing phase 1 needs such as crowding, spacing, narrow arches, and erupting teeth. Our palate expander system, the first direct-printed orthodontic appliance and the only FDA-cleared removable palate expander, remains a strong driver of early intervention adoption globally.
Joe Hogan: Invisalign First is used for patients ages 6 to 10, addressing phase one needs such as crowding, spacing, narrow arches, and erupting teeth. Our palate expander system, the first direct printed orthodontic appliance and the only FDA-cleared removable palate expander, remains a strong driver of early intervention adoption globally. Doctor engagement in the teen and early intervention category remains solid. In Q4, the number of doctors submitting cases for teens and growing kids increased 6% year-over-year, supported by continued strength in Invisalign First, palate expander, and MAOB. The Invisalign system continues to demonstrate broad clinical applicability across younger patients and adults, reinforced by our global scale and exceptional product portfolio with more than 22 million patients treated worldwide, including over 6.5 million teens.
Joe Hogan: Invisalign First is used for patients ages 6 to 10, addressing phase one needs such as crowding, spacing, narrow arches, and erupting teeth. Our palate expander system, the first direct printed orthodontic appliance and the only FDA-cleared removable palate expander, remains a strong driver of early intervention adoption globally. Doctor engagement in the teen and early intervention category remains solid. In Q4, the number of doctors submitting cases for teens and growing kids increased 6% year-over-year, supported by continued strength in Invisalign First, palate expander, and MAOB. The Invisalign system continues to demonstrate broad clinical applicability across younger patients and adults, reinforced by our global scale and exceptional product portfolio with more than 22 million patients treated worldwide, including over 6.5 million teens.
Speaker #3: Doctor engagement in the teen and early intervention category remains solid, and in Q4, the number of doctors submitting cases for teens and growing kids increased 6% year-over-year, supported by continued strength in Invisalign First, Palate Expander, and MAOB.
Speaker #3: The Invisalign system continues to demonstrate broad clinical applicability across younger patients and adults. Reinforced by our global scale and exceptional product portfolio—with more than 22 million patients treated worldwide, including over 6.5 million teens—our treatment planning platform is powered by a robust, evidence-based ClinCheck Live Plan, which can generate initial doctor-ready plans in about 15 minutes.
Joe Hogan: Our treatment planning platform is powered by a robust, evidence-based ClinCheck Live plan, which can generate initial doctor-ready plans in about 15 minutes and leverages AI-driven planning tools and integrated digital workflows to reduce cycle times, enhance chairside experience, and help doctors convert patients more efficiently. Our portfolio strategy, including products with lower upfront cost options, is expanding access for doctors while maintaining healthy margins. These configurations give providers more choices around refinements and pricing that continue to support adoption. We're also advancing direct fabrication, transitioning from thermoforming to 3D printing of clear aligners. Direct fabrication will unlock new design flexibility and, over time, reduce waste and lower cost, although early production has some dilutive margin impact until scale.
Joe Hogan: Our treatment planning platform is powered by a robust, evidence-based ClinCheck Live plan, which can generate initial doctor-ready plans in about 15 minutes and leverages AI-driven planning tools and integrated digital workflows to reduce cycle times, enhance chairside experience, and help doctors convert patients more efficiently. Our portfolio strategy, including products with lower upfront cost options, is expanding access for doctors while maintaining healthy margins. These configurations give providers more choices around refinements and pricing that continue to support adoption. We're also advancing direct fabrication, transitioning from thermoforming to 3D printing of clear aligners. Direct fabrication will unlock new design flexibility and, over time, reduce waste and lower cost, although early production has some dilutive margin impact until scale.
Speaker #3: Leverages AI-driven planning tools and integrated digital workflows to reduce cycle times and enhance chairside experience, helping doctors convert patients more efficiently. Our portfolio strategy, including products with lower upfront cost options, is expanding access for doctors while maintaining healthy margins.
Speaker #3: These configurations give providers more choices around refinement and pricing that continue to support adoption. We're also advancing direct fabrication, transitioning from thermoforming to 3D printing of clear aligner appliances.
Speaker #3: Direct fabrication will unlock new design flexibility and, over time, reduce waste and lower costs, although early production has some dilutive margin impact until scale.
Joe Hogan: We remain on track for limited market release of Invisalign First, direct 3D printed retainers, and Invisalign-specific 3D printed prefab attachments in 2026, with more complex products expected to follow in 2027. Invisalign-specific attachment system is a direct 3D-printed accessory indicated to bond attachments and engagement features. Over the past year, it has advanced through technical design assessment and has been used successfully to treat over 1,000 patients. Feedback from participating doctors has been consistently positive, demonstrating strong clinical adoption and market validation. For imaging systems and CAD/CAM services, which includes iTero solutions and exocad software, Q4 revenues were $209 million, up 4.2% year-over-year and up 10% sequentially, driven by higher volumes across all regions and continued adoption of iTero Lumina scanner.
Joe Hogan: We remain on track for limited market release of Invisalign First, direct 3D printed retainers, and Invisalign-specific 3D printed prefab attachments in 2026, with more complex products expected to follow in 2027. Invisalign-specific attachment system is a direct 3D-printed accessory indicated to bond attachments and engagement features. Over the past year, it has advanced through technical design assessment and has been used successfully to treat over 1,000 patients. Feedback from participating doctors has been consistently positive, demonstrating strong clinical adoption and market validation. For imaging systems and CAD/CAM services, which includes iTero solutions and exocad software, Q4 revenues were $209 million, up 4.2% year-over-year and up 10% sequentially, driven by higher volumes across all regions and continued adoption of iTero Lumina scanner.
Speaker #3: We remain on track for a limited market release of Invisalign First direct 3D-printed retainers and Invisalign-specific 3D-printed prefab attachments in 2026, with more complex products expected to follow in 2027.
Speaker #3: The Invisalign specific attachment system is a direct 3D printed accessory indicated to bond attachments and engagement features. Over the
Speaker #1: The past year , it has advanced through technical design , assessment and has been used successfully to treat over 1000 patients . Feedback from participating doctors has been feedback from participating doctors has been consistently positive , demonstrating strong clinical adoption and market validation for imaging systems and CAD .
Speaker #1: Cam services , which includes Itero solutions and Exocad software Q4 . revenues were $209 million , up 4.2% year over year and up 10% sequentially , driven by higher volumes across all regions and continued adoption of Itero scanner .
Joe Hogan: Lumina represented approximately 86% of full systems units in the quarter, and we continue to drive utilization through full systems installations. During Q4, exocad delivered sequential year-over-year revenue growth. We continued piloting exocad ART, stands for Advanced Restorative Treatment, in several European markets, with broader rollout plans for this year. ART extends a digital platform deeper into restorative and lab workflows, increasing software-driven recurring revenue and enhancing efficiency for doctors and labs. Exocad's strong footprint in dental labs provides a critical connection point between restorative dentistry and digital orthodontics, helping integrate restorative planning more tightly with iTero scanning and Invisalign treatment. As GPs and labs, we are developing across solutions that streamline restorative workflows, improve communications, and increase predictability, from single-tooth restorations to full-arch cases.
Joe Hogan: Lumina represented approximately 86% of full systems units in the quarter, and we continue to drive utilization through full systems installations. During Q4, exocad delivered sequential year-over-year revenue growth. We continued piloting exocad ART, stands for Advanced Restorative Treatment, in several European markets, with broader rollout plans for this year. ART extends a digital platform deeper into restorative and lab workflows, increasing software-driven recurring revenue and enhancing efficiency for doctors and labs. Exocad's strong footprint in dental labs provides a critical connection point between restorative dentistry and digital orthodontics, helping integrate restorative planning more tightly with iTero scanning and Invisalign treatment. As GPs and labs, we are developing across solutions that streamline restorative workflows, improve communications, and increase predictability, from single-tooth restorations to full-arch cases.
Speaker #1: Lumina represented approximately 86% of full systems units quarter , and we drive in the utilization through full systems . installations During Q4 . Exocad delivered sequential year over year revenue growth .
Speaker #1: We continued Exocad Art piloting stands for Advanced Restorative Treatment and several European markets with broader rollout planned for this year . Art extends a digital platform deeper into restorative and lab workflows , increasing software driven reoccurring revenue and enhancing efficiency for doctors and labs .
Speaker #1: Exocad strong footprint in dental labs provides a critical connection point between restorative dentistry and digital orthodontics , helping integrate restorative planning more tightly with itero scanning and Invisalign treatment .
Speaker #1: As GPS and labs , we are developing across that streamline solutions restorative workflows , improve communications , and increase predictability from single tooth restorations to full arch cases .
Joe Hogan: These advancements support broader digital adoption and create more opportunities to incorporate iTero scanning, and where clinically appropriate, Invisalign treatment as part of comprehensive care. Our growing suite of digital diagnostic tools, including Align Oral Health Suite and Align X-ray Insights, or AXI, helps doctors identify conditions earlier and deliver clearer, more informed treatment recommendations. When combined with the restorative capabilities of exocad and the visualization strength of iTero, these tools support better long-term oral health outcomes and naturally connect straightening, function, and restorative care with a unified digital platform. By strengthening our capabilities across diagnostic, restorative, and orthodontic workflows, we're increasing our relevance in everyday oral health care and positioning Align, iTero, and exocad as essential partners across the GP and lab ecosystem. With that, I'll now turn it over to John.
Joe Hogan: These advancements support broader digital adoption and create more opportunities to incorporate iTero scanning, and where clinically appropriate, Invisalign treatment as part of comprehensive care. Our growing suite of digital diagnostic tools, including Align Oral Health Suite and Align X-ray Insights, or AXI, helps doctors identify conditions earlier and deliver clearer, more informed treatment recommendations. When combined with the restorative capabilities of exocad and the visualization strength of iTero, these tools support better long-term oral health outcomes and naturally connect straightening, function, and restorative care with a unified digital platform. By strengthening our capabilities across diagnostic, restorative, and orthodontic workflows, we're increasing our relevance in everyday oral health care and positioning Align, iTero, and exocad as essential partners across the GP and lab ecosystem. With that, I'll now turn it over to John.
Speaker #1: These advancements support broader digital adoption and create more opportunities to incorporate iTero scanning, and, where clinically appropriate, Invisalign treatment as part of comprehensive care.
Speaker #1: Our growing suite of digital and diagnostic tools , including align Oral Health Suite and Align X-ray insights , or Axi , doctors identify conditions and earlier deliver clearer , more informed treatment recommendations .
Speaker #1: When combined with capabilities of Exocad and the visualization strength of Itero , these tools support better long term term oral health outcomes and naturally connect straightening function and restorative care with a unified digital platform .
Speaker #1: By strengthening our capabilities across diagnostic , restorative and orthodontic workflows , we're increasing our relevance in everyday oral health care and positioning a itero and exocad as a partners across the GP and lab ecosystem .
Speaker #1: With that , I'll now turn it over to John . Thanks , Joe . Now for our Q4 financial results . revenues fourth quarter for the were $1,000,000,047.6 million , up 5.2% from the prior quarter and up 5.3% from the corresponding quarter a year ago .
John Marici: Thanks, Joe. Now for our Q4 financial results. Total revenues for the fourth quarter were $1,047.6 million, up 5.2% from the prior quarter and up 5.3% from the corresponding quarter a year ago. On a constant currency basis, Q4 revenues were unfavorably impacted by approximately $3 million, or approximately 0.3% sequentially, and were favorably impacted by approximately $14.8 million year-over-year, or approximately 1.4%. Q4 clear aligner revenues were $838.1 million, up 4% sequentially, primarily due to higher volume and mix shift to higher priced countries and products, partially offset by higher discounts, higher net deferrals, and unfavorable foreign exchange.
John Morici: Thanks, Joe. Now for our Q4 financial results. Total revenues for the fourth quarter were $1,047.6 million, up 5.2% from the prior quarter and up 5.3% from the corresponding quarter a year ago. On a constant currency basis, Q4 revenues were unfavorably impacted by approximately $3 million, or approximately 0.3% sequentially, and were favorably impacted by approximately $14.8 million year-over-year, or approximately 1.4%. Q4 clear aligner revenues were $838.1 million, up 4% sequentially, primarily due to higher volume and mix shift to higher priced countries and products, partially offset by higher discounts, higher net deferrals, and unfavorable foreign exchange.
Speaker #1: On a constant currency basis , Q4 revenues were unfavorably impacted by approximately $3 million , or approximately 0.3% sequentially , and were favorably impacted by approximately $14.8 million year over year , or approximately 1.4% Q4 aligner revenues clear were $838.1 million , up 4% sequentially , primarily due to higher and mix shift to higher priced countries and products , partially offset by higher discounts .
Speaker #1: Higher net deferrals , and unfavorable foreign exchange , unfavorable foreign exchange impacted Q4 . Clear aligner revenues by $2.3 million , or approximately approximately 0.3% sequentially Q4 .
John Marici: Unfavorable foreign exchange impacted Q4 clear aligner revenues by approximately $2.3 million or approximately 0.3% sequentially. Q4 clear aligner average per-case shipment price was $1,240, a $5 decrease on a sequential basis, primarily due to higher discounts, higher net deferrals, and unfavorable foreign exchange, partially offset by a mix shift to higher price countries and products. On a year-over-year basis, Q4 clear aligner revenues were up 5.5%, primarily from higher volume, price increases, lower net deferrals, and favorable foreign exchange, partially offset by higher discount and mix shift to lower price countries and products. Favorable foreign exchange impacted Q4 clear aligner revenues by approximately $12.4 million or approximately 1.5% year-over-year.
John Morici: Unfavorable foreign exchange impacted Q4 clear aligner revenues by approximately $2.3 million or approximately 0.3% sequentially. Q4 clear aligner average per-case shipment price was $1,240, a $5 decrease on a sequential basis, primarily due to higher discounts, higher net deferrals, and unfavorable foreign exchange, partially offset by a mix shift to higher price countries and products. On a year-over-year basis, Q4 clear aligner revenues were up 5.5%, primarily from higher volume, price increases, lower net deferrals, and favorable foreign exchange, partially offset by higher discount and mix shift to lower price countries and products. Favorable foreign exchange impacted Q4 clear aligner revenues by approximately $12.4 million or approximately 1.5% year-over-year.
Speaker #1: Aligner Clear average shipment per price was $1,240 , a $5 decrease on a basis , primarily higher due to discounts , higher net deferrals , and unfavorable foreign exchange .
Speaker #1: Partially offset by a mix shift to higher priced products . On a year over year basis Q4 . Clear aligner were revenues up 5.5% , from higher primarily volume price increases .
Speaker #1: Lower net deferrals and favorable foreign exchange, partially offset by higher discounts and a mix shift to lower priced countries and products. Favorable foreign exchange impacted Q4 clear aligner revenues by approximately $12.4 million, or approximately 1.5% year over year.
John Marici: Q4 clear aligner average per-case shipment price was $1,240, down $25 on a year-over-year basis, primarily due to higher discounts, mix shift to lower price countries, and products, partially offset by price increases, favorable foreign exchange, and lower net deferrals. Clear aligner deferred revenues on the balance sheet as of December 31, 2025, decreased $33.9 million, or 2.9% sequentially, and decreased $61.4 million, or 5.1% year-over-year, and will be recognized as revenue as additional aligners are shipped. Q4 systems and services revenues of $209.4 million were up 10.3% sequentially, primarily due to higher scanner system sales, and non-system sales, partially offset by lower scanner wand sales, and unfavorable foreign exchange.
John Morici: Q4 clear aligner average per-case shipment price was $1,240, down $25 on a year-over-year basis, primarily due to higher discounts, mix shift to lower price countries, and products, partially offset by price increases, favorable foreign exchange, and lower net deferrals. Clear aligner deferred revenues on the balance sheet as of December 31, 2025, decreased $33.9 million, or 2.9% sequentially, and decreased $61.4 million, or 5.1% year-over-year, and will be recognized as revenue as additional aligners are shipped. Q4 systems and services revenues of $209.4 million were up 10.3% sequentially, primarily due to higher scanner system sales, and non-system sales, partially offset by lower scanner wand sales, and unfavorable foreign exchange.
Speaker #1: Q4 Clear Aligner per shipment price was $1,240 , down $25 on a year over year basis , primarily due to higher discounts . Mix to lower shift price countries and products offset by , partially price increases .
Speaker #1: Favorable foreign and lower net deferrals , clear aligner deferred revenues on the balance sheet as of exchange December 31st , 2025 , decreased $33.9 million , or 2.9% , sequentially , and decreased $61.4 million , or 5.1% year over and year , recognized as as revenue as additional aligners are shipped .
Speaker #1: systems Q4 and services revenues of $209.4 million were up 10.3% sequentially , primarily due to higher scanner system sales and Non-system sales . offset Partially lower by scanner wand sales and unfavorable foreign exchange .
John Marici: Q4 systems and services revenues were up 4.2% year over year, primarily due to higher non-system sales, favorable foreign exchange, and flat scanner system sales, partially offset by lower scanner wand sales. Foreign exchange unfavorably impacted Q4 systems and services revenues by approximately $0.7 million sequentially or approximately 0.3%. On a year-over-year basis, systems and services revenues were favorably impacted by foreign exchange of approximately $2.5 million, or approximately 1.2%. Systems and services deferred revenues was flat sequentially and decreased $24.6 million, or 11.2% year over year, due in part to the shorter duration of service contracts selected by customers on initial scanner system purchases. Moving on to gross margin.
John Morici: Q4 systems and services revenues were up 4.2% year over year, primarily due to higher non-system sales, favorable foreign exchange, and flat scanner system sales, partially offset by lower scanner wand sales. Foreign exchange unfavorably impacted Q4 systems and services revenues by approximately $0.7 million sequentially or approximately 0.3%. On a year-over-year basis, systems and services revenues were favorably impacted by foreign exchange of approximately $2.5 million, or approximately 1.2%. Systems and services deferred revenues was flat sequentially and decreased $24.6 million, or 11.2% year over year, due in part to the shorter duration of service contracts selected by customers on initial scanner system purchases. Moving on to gross margin.
Speaker #1: Q4 systems and services revenues were up 4.2% year over year , primarily due to higher non-system sales foreign , favorable and exchange , flat scanner system sales , partially offset by lower wand scanner sales , foreign exchange unfavorably impacted Q4 services systems and revenues by approximately sequentially or $0.7 million approximately 0.3% on a year over year basis .
Speaker #1: Systems and services . Revenues were favorably by impacted foreign exchange of approximately $2.5 million , or approximately 1.2% . Systems and services . Deferred revenues was flat sequentially and decreased $24.6 million , or 11.2% , year over year , due in part to the shorter duration of service contracts selected by customers on initial scanner system purchases .
John Marici: Fourth quarter overall gross margin was 65.3%, up 1.1 points sequentially, primarily due to operational efficiencies, impairment on assets held for sale in the third quarter, excess inventory write-off in the third quarter, and lower restructuring and other charges, partially offset by higher depreciation expense on assets disposed of other than by sale. Gross margin was down 4.8 points year-over-year, primarily due to higher depreciation expense on assets disposed of rather than by sale, partially offset by operational efficiencies, the lower restructuring, and lower restructuring and other charges. Overall, gross margin was unfavorably impacted by foreign exchange of 0.1 point sequentially, and favorably impacted by foreign exchange of 0.5 points on a year-over-year basis.
John Morici: Fourth quarter overall gross margin was 65.3%, up 1.1 points sequentially, primarily due to operational efficiencies, impairment on assets held for sale in the third quarter, excess inventory write-off in the third quarter, and lower restructuring and other charges, partially offset by higher depreciation expense on assets disposed of other than by sale. Gross margin was down 4.8 points year-over-year, primarily due to higher depreciation expense on assets disposed of rather than by sale, partially offset by operational efficiencies, the lower restructuring, and lower restructuring and other charges. Overall, gross margin was unfavorably impacted by foreign exchange of 0.1 point sequentially, and favorably impacted by foreign exchange of 0.5 points on a year-over-year basis.
Speaker #1: Moving on to gross margin , fourth quarter overall gross margin was 65.3% , up 1.1 points sequentially , primarily due to operational efficiencies , impairment on assets held for sale in the third quarter , inventory excess write off in the third and restructuring lower quarter , and other charges , partially offset by higher depreciation expense on assets disposed of .
Speaker #1: Other than by sale, gross margin was down 4.8 points year over year, primarily due to higher depreciation expense on assets disposed of rather than by partial sale.
Speaker #1: by operational efficiencies . The lower restructuring and lower restructuring and other charges . Overall gross margin was unfavorably impacted by foreign exchange of 0.1 points sequentially and favorably impacted foreign by exchange of 0.5 points on a year over year basis .
John Marici: On a non-GAAP basis, which excludes stock-based compensation, amortization of intangibles related to certain acquisitions, depreciation expense on assets disposed of other than by sale, restructuring, and other non-GAAP charges, gross margin for Q4 was 72%, up 1.6 points sequentially and up 1.2 points year-over-year. Clear aligner gross margin for Q4 was 64.2%, down 0.7 points sequentially, primarily due to depreciation expense on assets disposed of other than by sale, partially offset by operational efficiencies. Foreign exchange unfavorably impacted clear aligner gross margin by approximately 0.1 points sequentially. Clear aligner gross margin for Q4 was down 6 points year-over-year, primarily due to the depreciation expense of assets disposed of other than by sale and lower ASP, partially offset by operational efficiencies.
John Morici: On a non-GAAP basis, which excludes stock-based compensation, amortization of intangibles related to certain acquisitions, depreciation expense on assets disposed of other than by sale, restructuring, and other non-GAAP charges, gross margin for Q4 was 72%, up 1.6 points sequentially and up 1.2 points year-over-year. Clear aligner gross margin for Q4 was 64.2%, down 0.7 points sequentially, primarily due to depreciation expense on assets disposed of other than by sale, partially offset by operational efficiencies. Foreign exchange unfavorably impacted clear aligner gross margin by approximately 0.1 points sequentially. Clear aligner gross margin for Q4 was down 6 points year-over-year, primarily due to the depreciation expense of assets disposed of other than by sale and lower ASP, partially offset by operational efficiencies.
Speaker #1: an on On GAAP basis , which excludes stock based compensation , amortization of intangibles related to certain acquisitions , depreciation expense on assets disposed of other than by sale , restructuring and other non-GAAP charges .
Speaker #1: Gross fourth for the margin quarter 72% , was up 1.6 points sequentially and up 1.2 points year over year . Clear line gross margin the for fourth quarter was 64.2% , down 0.7 points primarily due to sequentially , depreciation expense on assets disposed of .
Speaker #1: than Other by sale , partially offset operational by efficiencies . Foreign unfavorably impacted Clear aligner margin by approximately 0.1 points sequentially . Clear aligner gross margin for the fourth quarter was down six points year over year , primarily due to the depreciation of expense assets disposed of other than by sale and lower ASP , partially offset by operational efficiencies .
John Marici: Foreign exchange favorably impacted clear aligner gross margin by approximately 0.5 points year-over-year. Systems and services gross margin for the fourth quarter was 69.6%, up 8.4 points sequentially, primarily due to excess inventory write-off in the third quarter, partially offset by lower ASP. Foreign exchange unfavorably impacted the systems and services gross margin by approximately 0.1 points sequentially. Systems and services gross margin for the fourth quarter was up 0.2 points year-over-year, primarily due to operational efficiencies, partially offset by lower ASP. Foreign exchange favorably impacted systems and services gross margin by approximately 0.4 points year-over-year. Q4 operating expenses were $528.3 million, down 2.7% sequentially and down 4.4% year-over-year.
John Morici: Foreign exchange favorably impacted clear aligner gross margin by approximately 0.5 points year-over-year. Systems and services gross margin for the fourth quarter was 69.6%, up 8.4 points sequentially, primarily due to excess inventory write-off in the third quarter, partially offset by lower ASP. Foreign exchange unfavorably impacted the systems and services gross margin by approximately 0.1 points sequentially. Systems and services gross margin for the fourth quarter was up 0.2 points year-over-year, primarily due to operational efficiencies, partially offset by lower ASP. Foreign exchange favorably impacted systems and services gross margin by approximately 0.4 points year-over-year. Q4 operating expenses were $528.3 million, down 2.7% sequentially and down 4.4% year-over-year.
Speaker #1: Foreign exchange favorably impacted clear aligner gross margin by approximately 0.5 points year over year . Systems and services . Gross margin for the fourth quarter was up 69.6% , primarily due sequentially , to 8.4 points excess inventory write off in the third quarter , partially offset by lower ASP foreign exchange unfavorably impacted the systems and services services gross margin by approximately 0.1 points sequentially .
Speaker #1: Systems and services . Gross margin for the fourth quarter was up 0.2 points year over year , primarily due to operational efficiencies , partially offset by lower ASP foreign exchange , favorably impacted systems and services .
Speaker #1: Gross margin by approximately 0.4 points year over year . Q4 operating expenses were $528.3 million , down 2.7% sequentially and down 4.4% year over year .
John Marici: On a sequential basis, operating expenses were $14.6 million lower, due primarily to lower restructuring costs, partially offset by slightly higher advertising and marketing and technology spend. Year-over-year, operating expenses decreased by $24.5 million, primarily due to lower restructuring costs. On a non-GAAP basis, excluding stock-based compensation, restructuring and other charges, and amortization of acquired intangibles related to certain acquisitions, depreciation expense on assets to be disposed of other than by sale, and other non-GAAP charges, operating expenses were $480.9 million, up 3.8% sequentially and up 1.3% year-over-year.
John Morici: On a sequential basis, operating expenses were $14.6 million lower, due primarily to lower restructuring costs, partially offset by slightly higher advertising and marketing and technology spend. Year-over-year, operating expenses decreased by $24.5 million, primarily due to lower restructuring costs. On a non-GAAP basis, excluding stock-based compensation, restructuring and other charges, and amortization of acquired intangibles related to certain acquisitions, depreciation expense on assets to be disposed of other than by sale, and other non-GAAP charges, operating expenses were $480.9 million, up 3.8% sequentially and up 1.3% year-over-year.
Speaker #1: On a sequential basis, operating expenses were $14.6 million lower, primarily due to lower restructuring, partially offset by slightly higher advertising and marketing, and technology year-over-year operating spend expenses decreased by $24.5 million, primarily due to lower restructuring costs.
Speaker #1: On a non-GAAP basis , excluding stock based compensation , restructuring and other charges and amortization of intangibles related acquired to certain acquisitions , depreciation expense on assets to be disposed of other than by sale to be , and other non-GAAP charges .
Speaker #1: Operating expenses were $480.9 million, up 3.8% sequentially and up 1.3% year over year. Our fourth quarter operating income of $155.3 million resulted in an operating margin of 14.8%, up approximately 5.2 points sequentially and up approximately 0.3 points year over year.
John Marici: Our fourth quarter operating income of $155.3 million resulted in an operating margin of 14.8%, up approximately 5.2 points sequentially and up approximately 0.3 points year-over-year. Operating margin was unfavorably impacted from foreign exchange by approximately 0.3 points sequentially, and favorably impacted by foreign exchange by approximately 0.2 points year-over-year. On a non-GAAP basis, which excludes stock-based compensation, restructuring and other charges, and amortization of intangibles related to certain acquisitions, depreciation expense on assets disposed of other than by sale, and other non-GAAP charges, operating margin for the fourth quarter was 26.1%, up 2.3 points sequentially and up 3 points year-over-year. Interest and other income and expense.
John Morici: Our fourth quarter operating income of $155.3 million resulted in an operating margin of 14.8%, up approximately 5.2 points sequentially and up approximately 0.3 points year-over-year. Operating margin was unfavorably impacted from foreign exchange by approximately 0.3 points sequentially, and favorably impacted by foreign exchange by approximately 0.2 points year-over-year. On a non-GAAP basis, which excludes stock-based compensation, restructuring and other charges, and amortization of intangibles related to certain acquisitions, depreciation expense on assets disposed of other than by sale, and other non-GAAP charges, operating margin for the fourth quarter was 26.1%, up 2.3 points sequentially and up 3 points year-over-year. Interest and other income and expense.
Speaker #1: Operating was unfavorable , unfavorably impacted from margin foreign by approximately 0.3 points and sequentially impacted foreign exchange by favorably by approximately over year 0.2 points year .
Speaker #1: On a non-GAAP which basis , excludes stock based compensation , restructuring , and other charges , and amortization of related intangibles certain to acquisitions .
Speaker #1: Depreciation expense on assets disposed of other than by sale , and other charges . Operating margin for the fourth quarter was up 2.3 points sequentially and up year over three points year .
John Marici: Net of the fourth quarter was an income of $21.3 million, compared to an expense of $1.6 million in Q3 of 2025, primarily due to gain on investments. On a year-over-year basis, Q4 interest and other income and expense was favorable compared to an expense of $3.4 million in Q4 of 2024, primarily by favorable foreign exchange movements and gain on investments. The GAAP effective tax rate in the fourth quarter was 23.1%, compared to 40.1% in the third quarter, and 26.3% in the fourth quarter of the prior year.
John Morici: Net of the fourth quarter was an income of $21.3 million, compared to an expense of $1.6 million in Q3 of 2025, primarily due to gain on investments. On a year-over-year basis, Q4 interest and other income and expense was favorable compared to an expense of $3.4 million in Q4 of 2024, primarily by favorable foreign exchange movements and gain on investments. The GAAP effective tax rate in the fourth quarter was 23.1%, compared to 40.1% in the third quarter, and 26.3% in the fourth quarter of the prior year.
Speaker #1: Interest and other income and expense , net of the fourth quarter , was an income of $21.3 million , compared to an expense of $1.6 million in Q3 of 2025 , primarily due to gain on investments on a year over year basis .
Speaker #1: Q4 . other Interest and income and expense was favorably was favorable compared to expense an of $3.4 million in Q4 of 24 , primarily by favorable foreign exchange and gain on investments movements , .
Speaker #1: The gap effective tax rate in the fourth quarter was 23.1% , compared to 40.1% in the third quarter and 26.3% in the fourth quarter of the year prior .
John Marici: The fourth quarter GAAP effective tax rate was lower than the third quarter effective tax rate, primarily due to the release of uncertain tax position reserves, partially offset by deferred tax adjustments from tax rate changes in certain foreign jurisdictions and additional taxes accrued on foreign earnings. The fourth quarter GAAP effective tax rate was lower than the fourth quarter effective tax rate of the prior year, primarily due to the release of uncertain tax position reserves and lower US taxes on foreign earnings, partially offset by deferred tax adjustments from tax rate changes in certain foreign jurisdictions, additional tax accrued on foreign earnings, and change in our jurisdictional mix of income. On a non-GAAP, our non-GAAP effective tax rate in the fourth quarter was 20%, which reflects our long-term projected tax rate.
John Morici: The fourth quarter GAAP effective tax rate was lower than the third quarter effective tax rate, primarily due to the release of uncertain tax position reserves, partially offset by deferred tax adjustments from tax rate changes in certain foreign jurisdictions and additional taxes accrued on foreign earnings. The fourth quarter GAAP effective tax rate was lower than the fourth quarter effective tax rate of the prior year, primarily due to the release of uncertain tax position reserves and lower US taxes on foreign earnings, partially offset by deferred tax adjustments from tax rate changes in certain foreign jurisdictions, additional tax accrued on foreign earnings, and change in our jurisdictional mix of income. On a non-GAAP, our non-GAAP effective tax rate in the fourth quarter was 20%, which reflects our long-term projected tax rate.
Speaker #1: GAAP The fourth quarter effective tax rate lower than the third quarter . Effective tax rate , primarily due to the release of uncertain reserves , position tax partially offset by deferred tax adjustments from tax rate changes in certain foreign jurisdictions and taxes additional accrued on foreign earnings .
Speaker #1: The fourth quarter GAAP effective tax rate was lower than the fourth quarter effective tax rate of the prior year, primarily due to the release of uncertain tax position reserves and lower U.S. taxes on foreign earnings.
Speaker #1: Partially tax deferred, offset by adjustments from tax rate changes in certain foreign jurisdictions. Additional tax accrued on foreign earnings and changes in our jurisdiction.
Speaker #1: income Jurisdictional mix of non-GAAP on . Our tax non-GAAP effective rate in the fourth quarter was reflects our long term tax rate projected Fourth quarter .
Speaker #1: income Jurisdictional mix of non-GAAP on . Our tax non-GAAP effective rate in the fourth quarter was reflects our long term 20% , which income per net diluted share was $1.89 , up $1 , $0.11 sequentially and up $0.50 compared to the prior year .
John Marici: Q4 net income per diluted share was $1.89, up $1.11 sequentially, and up $0.50 compared to the prior year. Our EPS was unfavorably impacted by approximately $0.05 on a sequential basis and favorably impacted by $0.03 on a year-over-year basis due to foreign exchange. On a non-GAAP basis, net income per diluted share was $3.29 for Q4, up $0.68 sequentially and $0.85 year-over-year due to higher revenue and lower operating expenses. Moving on to the balance sheet. As of 31 December 2025, cash and cash equivalents were $1,094.9 million, up sequentially $90.3 million, and up $51 million year-over-year.
John Morici: Q4 net income per diluted share was $1.89, up $1.11 sequentially, and up $0.50 compared to the prior year. Our EPS was unfavorably impacted by approximately $0.05 on a sequential basis and favorably impacted by $0.03 on a year-over-year basis due to foreign exchange. On a non-GAAP basis, net income per diluted share was $3.29 for Q4, up $0.68 sequentially and $0.85 year-over-year due to higher revenue and lower operating expenses. Moving on to the balance sheet. As of 31 December 2025, cash and cash equivalents were $1,094.9 million, up sequentially $90.3 million, and up $51 million year-over-year.
Speaker #1: Our EPs was unfavorably impacted by $0.05 on a sequential approximately basis , and favorably impacted by $0.03 on a year over year foreign basis due to exchange non-GAAP basis , .
Speaker #1: net On a income per diluted share was $3.29 for the fourth quarter , up $0.68 sequentially and $0.85 year over year due to higher and operating expenses .
Speaker #1: Moving on to the balance sheet as of December 31st, 2025, cash and cash equivalents were $1,000,094.9 million, up sequentially, and up year over year by $90.3 million, $51 million year over.
John Marici: Of the $1,094.9 million balance, $166.3 million was held in the US, and $928.6 million was held by our international business. During Q4 2025, we repurchased approximately 0.7 million shares of our common stock at an average share price of $142.87. These repurchases were made pursuant to the $200 million open market repurchase plan announced in August 2025 and were completed in January of 2026. During 2025, we repurchased 2.9 million shares of our common stock at an average per share price of $162.09, for a total of $465.9 million.
John Morici: Of the $1,094.9 million balance, $166.3 million was held in the US, and $928.6 million was held by our international business. During Q4 2025, we repurchased approximately 0.7 million shares of our common stock at an average share price of $142.87. These repurchases were made pursuant to the $200 million open market repurchase plan announced in August 2025 and were completed in January of 2026. During 2025, we repurchased 2.9 million shares of our common stock at an average per share price of $162.09, for a total of $465.9 million.
Speaker #1: Of the $1,000.1 million balance, $166.3 million was held in the US and $928.6 million was held by our international business. During Q4 2025, we repurchased approximately 0.7 million shares of our common stock at an average share price of $142.87.
Speaker #1: These repurchases were made pursuant to the market repurchase plan announced in August 2025 , were and in completed January of 2026 . During 2025 .
Speaker #1: We repurchased our common stock at an average share per price of $162.09 , for a of total $465.9 million . As of December 31st , 2025 .
John Marici: As of 31 December 2025, $831.2 million remains available for repurchases of our common stock under our $1 billion stock repurchase program announced in April 2025. Q4 accounts receivable balance was $1,101.8 million, up sequentially. Our overall day sales outstanding was 94 dollars, down approximately seven dollars sequentially and up approximately four days as compared to Q4 of 2024, and primarily reflect flexible payment terms that are part of our ongoing efforts to support Invisalign practices. Cash flow from operations for the fourth quarter was $223.2 million. Capital expenditures for the fourth quarter were $35.9 million, primarily related to investments in our manufacturing capacity and facilities.
John Morici: As of 31 December 2025, $831.2 million remains available for repurchases of our common stock under our $1 billion stock repurchase program announced in April 2025. Q4 accounts receivable balance was $1,101.8 million, up sequentially. Our overall day sales outstanding was 94 dollars, down approximately seven dollars sequentially and up approximately four days as compared to Q4 of 2024, and primarily reflect flexible payment terms that are part of our ongoing efforts to support Invisalign practices. Cash flow from operations for the fourth quarter was $223.2 million. Capital expenditures for the fourth quarter were $35.9 million, primarily related to investments in our manufacturing capacity and facilities.
Speaker #1: Dollars 831,000,000.2 million . remains repurchases of our common available for stock our $1 billion stock repurchase program April announced in of accounts receivable balance was 2025 , $1,000,000,101.8 million , up sequentially .
Speaker #1: overall de sales outstanding was $94 , down approximately $7 sequentially and up approximately four days as Q4 of 2020 . For and compared to primarily flexible payment reflect that are part terms of our ongoing efforts to support Invisalign practices .
Speaker #1: Cash flow from operations for the fourth quarter was $223.2 million. Capital expenditures for the fourth quarter were $35.9 million, primarily related to investments in our capacity and cash facilities.
John Marici: Free cash flow, defined as cash flow from operations minus capital expenditures, amounted to $187.3 million. Before I turn to our outlook, I'd like to provide the following remarks regarding US tariffs as of 31 December. Currently, we do not expect a material change to our results of operations as a consequence of the latest US tariff actions, and we refer you to our Q1 2025 press release and earnings materials, as well as our Q2 2025 webcast slides, which include specifics regarding potential impacts on US tariffs. Now, turning to our outlook.
John Morici: Free cash flow, defined as cash flow from operations minus capital expenditures, amounted to $187.3 million. Before I turn to our outlook, I'd like to provide the following remarks regarding US tariffs as of 31 December. Currently, we do not expect a material change to our results of operations as a consequence of the latest US tariff actions, and we refer you to our Q1 2025 press release and earnings materials, as well as our Q2 2025 webcast slides, which include specifics regarding potential impacts on US tariffs. Now, turning to our outlook.
Speaker #1: Free cash defined as flow from minus capital expenditures , amounted to flow , operations $187.3 million . Before I turn to our I'd like to outlook , the following remarks regarding provide .
Speaker #1: As of tariffs US December 31st . Currently , not expect a we do material change to our results of operations . As a consequence of the US tariff actions , and we refer you to our latest of release and Earnings materials 2025 press as our , as well Q2 2020 .
Speaker #1: Five webcast slides , which includes specifics regarding potential impacts on US tariffs . Now , turning to our outlook . Assuming no circumstances occur beyond our control , such foreign as exchange , macroeconomic conditions and our current duties , applicable including tariffs or other fees that could impact our business .
John Marici: Assuming no circumstances occur beyond our control, such as foreign exchange, macroeconomic conditions, and changes to our currently applicable duties, including tariffs or other fees that could impact our business, we expect Q1 2026 worldwide revenues to be in the range of $1.01 to 1.03 billion, up 3% to 5% year-over-year. We expect Q1 2026 clear aligner volume to be up mid-single digits year-over-year. We expect Q1 2026 clear aligner average selling price to be up sequentially from favorable geographic mix. We expect systems and services revenue to be down sequentially, consistent with our typical Q1 seasonality.
John Morici: Assuming no circumstances occur beyond our control, such as foreign exchange, macroeconomic conditions, and changes to our currently applicable duties, including tariffs or other fees that could impact our business, we expect Q1 2026 worldwide revenues to be in the range of $1.01 to 1.03 billion, up 3% to 5% year-over-year. We expect Q1 2026 clear aligner volume to be up mid-single digits year-over-year. We expect Q1 2026 clear aligner average selling price to be up sequentially from favorable geographic mix. We expect systems and services revenue to be down sequentially, consistent with our typical Q1 seasonality.
Speaker #1: We expect Q1 2026 worldwide revenues to range be in the of $1,000,000,010 million $1,000,000,030 million , to up 3 to 5% year over year .
Speaker #1: We expect Q1 volume to be up mid-single 26 clear aligner digits year over year . expect Q1 We aligner 2026 clear average price to be .
Speaker #1: sequentially from favorable geographic mix . We expect systems and services revenue to be down sequentially with our typical Q1 seasonality . We expect our Q1 2026 GAAP operating margin to be 12.4 to 12.8% , down sequentially , and Q1 2026 .
John Marici: We expect our Q1 2026 GAAP operating margin to be 12.4 to 12.8%, down sequentially, and Q1 2026 non-GAAP operating margin to be approximately 19.5%, consistent with Q1 seasonality. For fiscal 2026, we expect 2026 worldwide revenue growth to be up 3 to 4% year over year. We expect 2026 clear aligner volume growth to be up mid-single digits year over year. We expect the 2026 GAAP operating margin to be slightly below 18%, approximately 400 basis points improvement over 2025, and non-GAAP operating margin to be approximately 23.7%, 100 basis point improvement year over year, as communicated during our third quarter earnings call. We expect our investments in capital expenditures for fiscal 2026 to be $125 to 150 million.
John Morici: We expect our Q1 2026 GAAP operating margin to be 12.4 to 12.8%, down sequentially, and Q1 2026 non-GAAP operating margin to be approximately 19.5%, consistent with Q1 seasonality. For fiscal 2026, we expect 2026 worldwide revenue growth to be up 3 to 4% year over year. We expect 2026 clear aligner volume growth to be up mid-single digits year over year. We expect the 2026 GAAP operating margin to be slightly below 18%, approximately 400 basis points improvement over 2025, and non-GAAP operating margin to be approximately 23.7%, 100 basis point improvement year over year, as communicated during our third quarter earnings call. We expect our investments in capital expenditures for fiscal 2026 to be $125 to 150 million.
Speaker #1: non-GAAP operating margin to be approximately 19.5% , consistent with for fiscal 2026 . We seasonality expect 2026 worldwide revenue growth to 3 to 4% year over up year .
Speaker #1: We expect volume growth to be aligner up mid-single digits year over year . We the expect 2026 GAAP operating be slightly below 18% , approximately 400 basis improvement over points 2025 , and non-GAAP operating margin to be approximately 23.7% 100 basis point improvement year over year as communicated during our third quarter earnings call .
Speaker #1: We expect our investments in capital expenditures for fiscal 2026 to be 125 million to $150 million . Capital expenditures , primarily relate to technology , additional manufacturing capacity , as well as maintenance upgrades .
John Marici: Capital expenditures primarily relate to technology upgrades, additional manufacturing capacity, as well as maintenance. Q4 was a good finish to the year, with results that came in better than expected and reflect the continued strength of our business fundamentals. As we enter 2026, we are executing with focus and discipline, and we're encouraged by the progress we're seeing across the regions and key customer segments. Our confidence is grounded in the actions we're taking to actively manage the business and drive growth through our core strategic priorities: expanding international adoption, increasing orthodontic utilization, particularly among teens and kids, accelerating GP engagement, including restorative dentistry, and strengthening consumer demand conversion with greater emphasis on local last mile marketing. While the macro environment remains dynamic, we are cautiously optimistic.
John Morici: Capital expenditures primarily relate to technology upgrades, additional manufacturing capacity, as well as maintenance. Q4 was a good finish to the year, with results that came in better than expected and reflect the continued strength of our business fundamentals. As we enter 2026, we are executing with focus and discipline, and we're encouraged by the progress we're seeing across the regions and key customer segments. Our confidence is grounded in the actions we're taking to actively manage the business and drive growth through our core strategic priorities: expanding international adoption, increasing orthodontic utilization, particularly among teens and kids, accelerating GP engagement, including restorative dentistry, and strengthening consumer demand conversion with greater emphasis on local last mile marketing. While the macro environment remains dynamic, we are cautiously optimistic.
Speaker #1: Q4 finish to the year , was a good with results that came in better than expected and reflect the continued fundamentals strength of our business enter 2026 .
Speaker #1: We are executing with and focus discipline , and encouraged by we're progress the regions and key across we're seeing the customer segments . Our grounded in the taking to we're actions actively manage the growth and through our core strategic drive priorities .
Speaker #1: We are executing with and focus discipline , and encouraged by we're progress the regions and key across we're seeing the customer segments . Our grounded in the taking to we're actions actively manage the growth and through our core strategic drive priorities business Expanding international adoption , increasing utilization orthodontic , particularly confidence is teens and kids , accelerating GP engagement including restorative dentistry and strengthening consumer demand conversion with greater on local last emphasis mile marketing .
Speaker #1: While the macro environment remains dynamic , we cautiously , are optimistic with a strong innovation roadmap , cautiously disciplined operational and a global team committed to delivering for execution We patients .
John Marici: With a strong innovation roadmap, disciplined operational execution, and a global team committed to delivering for doctors and their patients, we believe we are well positioned to deliver growth and value in 2026 and beyond. With that, I'll turn it back over to Joe for final comments. Joe?
John Morici: With a strong innovation roadmap, disciplined operational execution, and a global team committed to delivering for doctors and their patients, we believe we are well positioned to deliver growth and value in 2026 and beyond. With that, I'll turn it back over to Joe for final comments. Joe?
Speaker #1: believe we are positioned to growth and well 2026 and in beyond . With I'll turn that , it back over to Joe for final comments .
Joe Hogan: Thanks, John. In summary, I'm pleased with the fourth quarter results and strong finish to 2025. We delivered sequential and year-over-year growth in clear aligners, saw improved stability in North America, and delivered solid performance in imaging systems and services. International markets and our DSO partners continue to show encouraging momentum, and we're tailoring region-regional specific strategies supported by local manufacturing and product offerings to unlock meaningful, still untapped demand. Across DSOs and GP dentists, we've strengthened clinical training, expanded AI-enabled tools, and broadened financial partnerships to support utilization and improve access to Invisalign treatment. Our localized data-driven marketing programs are beginning to improve retail conversion in targeted markets, and our evolving product portfolio, designed around affordability, flexibility, and predictability, is resonating with doctors. The teens and growing kids category remain a major long-term opportunity, supported by unique solutions like Invisalign First, Invisalign Palatal Expander System, and MAOB.
Joe Hogan: Thanks, John. In summary, I'm pleased with the fourth quarter results and strong finish to 2025. We delivered sequential and year-over-year growth in clear aligners, saw improved stability in North America, and delivered solid performance in imaging systems and services. International markets and our DSO partners continue to show encouraging momentum, and we're tailoring region-regional specific strategies supported by local manufacturing and product offerings to unlock meaningful, still untapped demand. Across DSOs and GP dentists, we've strengthened clinical training, expanded AI-enabled tools, and broadened financial partnerships to support utilization and improve access to Invisalign treatment. Our localized data-driven marketing programs are beginning to improve retail conversion in targeted markets, and our evolving product portfolio, designed around affordability, flexibility, and predictability, is resonating with doctors. The teens and growing kids category remain a major long-term opportunity, supported by unique solutions like Invisalign First, Invisalign Palatal Expander System, and MAOB.
Speaker #1: Joe . Thanks , John .
Speaker #1: Joe . Thanks , John . deliver
Speaker #2: In summary , pleased with the I'm fourth quarter and strong results to 2025 . We sequential and year growth in clear aligners improved stability in North America and , saw delivered solid performance imaging systems and in services .
Speaker #2: International markets and our DSO partners continue to show encouraging momentum. We're tailoring region-specific strategies with local manufacturing and product offerings to unlock meaningful, still untapped demand from DSOs and GP dentists.
Speaker #2: We strengthened across training clinical , expanded enabled and tools financial partnerships to support utilization and improve access to Invisalign treatment . Our AI driven marketing programs are improve retail conversion and targeted markets , and our evolving product portfolio beginning to designed affordability , flexibility and predictability , is resonating with doctors , the teens , and growing remain category term kids opportunity , supported unique solutions Invisalign first , Invisalign Palate like expander system and a .
Speaker #2: We strengthened across training clinical , expanded enabled and tools financial partnerships to support utilization and improve access to Invisalign treatment . Our AI driven marketing programs are improve retail conversion and targeted markets , and our evolving product portfolio beginning to designed affordability , flexibility and predictability , is resonating with doctors , the teens , and growing remain category term kids opportunity , supported unique solutions Invisalign first , Invisalign Palate like expander system and major long in across AI treatment planning innovation , integrated digital workflows , and direct fabrication Key capabilities .
Joe Hogan: We continue to invest in innovation across AI-driven treatment planning, integrated digital workflows, and direct fabrication capabilities. Key areas highlighted in Investor Day that improve predictability, increase speed, strengthen our cost structure, and enhance margins over time. These investments support our broader priorities, consistent execution, improved operating leverage, stronger conversion, and disciplined capital allocation. At the same time, we remain grounded in the realities of the current environment. Our opportunities are significant, but sustained momentum in 2026 will require disciplined execution across regions, channels, and product lines, particularly strengthening North America, improving conversion throughout the funnel, and scaling internationally. Looking ahead, we're cautiously optimistic. Our strategy is clear, our competitive advantages are strong, and our innovation roadmap is aligned to the needs of doctors, patients, and our partners globally. Realizing the full value of these assets will require continued focus and consistent performance.
Joe Hogan: We continue to invest in innovation across AI-driven treatment planning, integrated digital workflows, and direct fabrication capabilities. Key areas highlighted in Investor Day that improve predictability, increase speed, strengthen our cost structure, and enhance margins over time. These investments support our broader priorities, consistent execution, improved operating leverage, stronger conversion, and disciplined capital allocation. At the same time, we remain grounded in the realities of the current environment. Our opportunities are significant, but sustained momentum in 2026 will require disciplined execution across regions, channels, and product lines, particularly strengthening North America, improving conversion throughout the funnel, and scaling internationally. Looking ahead, we're cautiously optimistic. Our strategy is clear, our competitive advantages are strong, and our innovation roadmap is aligned to the needs of doctors, patients, and our partners globally. Realizing the full value of these assets will require continued focus and consistent performance.
Speaker #2: areas highlighted in Investor improved predictability , increased Day that speed , strengthen our cost by enhance time . These investments support our broader priorities .
Speaker #2: areas highlighted in Investor improved predictability , increased Day that speed , strengthen our cost by enhance time . These investments support our broader priorities structure , and execution , improved operating leverage conversion , and disciplined , stronger capital allocation .
Speaker #2: the same At time , we remain grounded in the margins over realities current Our opportunities are significant , but environment . momentum 2026 will require execution across disciplined in regions , channels and product lines , particularly strengthening North America , improving throughout the funnel , and scaling internationally Looking .
Speaker #2: the same At time , we remain grounded in the margins over realities current Our opportunities are significant , but environment . momentum 2026 will require execution across disciplined in regions , channels and product lines , particularly strengthening North America , improving throughout the funnel , and scaling internationally Looking . ahead , we're cautiously conversion optimistic .
Speaker #2: Our strategy is clear . Our competitive advantages are strong , and our innovation roadmap is aligned to of the needs doctors , and our patients globally full .
Speaker #2: value of these assets require Realizing the continued will performance . We remain focus and committed to expanding access to Invisalign , accelerating conversion , and treatment advancing the generation of digital next orthodontics .
Joe Hogan: We remain committed to expanding access to Invisalign treatment, accelerating conversion, and advancing the next generation of digital orthodontics, powered by the world's largest orthodontic data asset, real-time ClinCheck planning, and the only fully integrated digital ecosystem spanning Invisalign, iTero, and exocad. Together, these capabilities position us to broaden adoption, strengthen utilization, improve efficiency, and drive long-term value for customers, patients, and shareholders as we move into 2026. With that, thank you for the time. I'll turn the call over to the operator. Operator?
Joe Hogan: We remain committed to expanding access to Invisalign treatment, accelerating conversion, and advancing the next generation of digital orthodontics, powered by the world's largest orthodontic data asset, real-time ClinCheck planning, and the only fully integrated digital ecosystem spanning Invisalign, iTero, and exocad. Together, these capabilities position us to broaden adoption, strengthen utilization, improve efficiency, and drive long-term value for customers, patients, and shareholders as we move into 2026. With that, thank you for the time. I'll turn the call over to the operator. Operator?
Speaker #2: Powered world's orthodontic data largest real asset , time clincheck planning fully and the digital ecosystem spanning by the only Invisalign , Itero and Exocad .
Speaker #2: Together , these capabilities to position us broaden adoption , strengthen improve efficiency , and long term value for patients , and customers , shareholders utilization , 2026 with that , thank you for the time .
Speaker #2: Together , these capabilities to position us broaden adoption , strengthen improve efficiency , and long term value for patients , and customers , shareholders utilization , 2026 with that , .
Speaker #2: operator . Operator .
Operator: Thank you. At this time, we'll be conducting a question-and-answer session. If you would like to ask a question, please press star one one on your telephone keypad. You will then hear an automated message advising that your hand has been raised. You may press star one one again if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the keys. One moment, please. Our first question comes from the line of Elizabeth Anderson with Evercore ISI.
Operator: Thank you. At this time, we'll be conducting a question-and-answer session. If you would like to ask a question, please press star one one on your telephone keypad. You will then hear an automated message advising that your hand has been raised. You may press star one one again if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the keys. One moment, please. Our first question comes from the line of Elizabeth Anderson with Evercore ISI.
Speaker #3: Thank I'll turn the you this time , we'll be conducting question and answer session . If you would like to ask a question , press star one .
Speaker #3: One on your telephone
Speaker #3: keypad . You will then advising your automated hand has raised . You may been please press one again if star one message As you would like to remove your for question from the queue using the speaker it may be necessary to pick up your participants before pressing the handset please One moment .
Speaker #3: Our first question comes from the line of Elizabeth Anderson with Evercore ISI.
Elizabeth Anderson: Hey, guys. Good afternoon. Congrats on a nice quarter and outlook, and thanks for the question. I was wondering, Joe, if you could maybe parse apart and maybe conceptually, if you can't do it numerically, sort of how we think about this improved volume performance. Do you think it's sort of underlying market trends accelerating? I noticed you're also, there was a big emphasis, it seems like, on the sales force towards higher growth channels. So I'm just trying to understand how much of it you think is market driven and how much you think is perhaps a different, sales strategy or marketing strategy, that you guys are adopting. Thanks so much.
Elizabeth Anderson: Hey, guys. Good afternoon. Congrats on a nice quarter and outlook, and thanks for the question. I was wondering, Joe, if you could maybe parse apart and maybe conceptually, if you can't do it numerically, sort of how we think about this improved volume performance. Do you think it's sort of underlying market trends accelerating? I noticed you're also, there was a big emphasis, it seems like, on the sales force towards higher growth channels. So I'm just trying to understand how much of it you think is market driven and how much you think is perhaps a different, sales strategy or marketing strategy, that you guys are adopting. Thanks so much.
Speaker #4: Hey guys , afternoon . good Congrats on a nice quarter and outlook and thanks for the question was if you wondering could maybe parse apart conceptually , if you can do it numerically , and maybe how about this improved we think volume performance , do you think it's sort of underlying trends accelerating ?
Speaker #4: I noticed you also, I mean, I emphasize it seems like Salesforce growth channels. So I'm just trying to understand how much of that is towards higher market on the— and how much you think is driven, is perhaps a different sales and marketing strategy that you guys are— Thanks so much for adopting?
Joe Hogan: ... You know, I'd say stability when you look at the markets and what we've really worked through, Elizabeth, recently. I'd say on top of that stability, you see us executing well in the sense of, you know, we talked about the DSOs all around the world, and really, honestly, incredible growth they've been able to drive over the last really several quarters for the business. I think our portfolio, like we talked about with young patients, you know, again, you think about the palate expander, MAOB, those things, Invisalign First are great products. There's also a strong attachment rate we're seeing with when you have IPE along with Invisalign First. Those things, 40% of the time, will evolve into Invisalign First case.
Joe Hogan: ... You know, I'd say stability when you look at the markets and what we've really worked through, Elizabeth, recently. I'd say on top of that stability, you see us executing well in the sense of, you know, we talked about the DSOs all around the world, and really, honestly, incredible growth they've been able to drive over the last really several quarters for the business. I think our portfolio, like we talked about with young patients, you know, again, you think about the palate expander, MAOB, those things, Invisalign First are great products. There's also a strong attachment rate we're seeing with when you have IPE along with Invisalign First. Those things, 40% of the time, will evolve into Invisalign First case.
Speaker #4: .
Speaker #2: You I you know , I'd say stability when you look what we've markets and at the through , recently , I'd really worked on top of say that stability , you executing see us sense of , you in the talked about the all around the world Elizabeth really , honestly incredible growth .
Speaker #2: They've been able drive over to the last really several quarters for the think our portfolio , like we talked about with young patients , you know , again , you think palate expander , Maob , those , things those .
Speaker #2: Invisalign first are great products . There's also a strong attachment seeing rate . We're with when you have YP , along with Invisalign .
Speaker #2: First , those things 40% of the time will evolve into first case . So that's a Invisalign nice teens marketplace that to grow that .
Joe Hogan: So that's a nice part of that early teens marketplace, that we're helping to grow that marketplace overall.
Joe Hogan: So that's a nice part of that early teens marketplace, that we're helping to grow that marketplace overall.
Elizabeth Anderson: That's very helpful.
Elizabeth Anderson: That's very helpful.
Speaker #2: . That marketplace Early overall DSP then . And and touch all we're helping really a big are area for us to growth
Joe Hogan: And then DSP, and touch-up cases and all, are really a big growth area for us, too.
Joe Hogan: And then DSP, and touch-up cases and all, are really a big growth area for us, too.
Elizabeth Anderson: Got it. No, thank you for that additional color. And then maybe, John, one for you, as you talk about sort of the positive ASPs, perhaps in the first quarter. Anything you can do to help us put a little bit more of a parameter around what you would consider sort of that positive growth?
Elizabeth Anderson: Got it. No, thank you for that additional color. And then maybe, John, one for you, as you talk about sort of the positive ASPs, perhaps in the first quarter. Anything you can do to help us put a little bit more of a parameter around what you would consider sort of that positive growth?
Speaker #4: No , thank Got it . you for that
Speaker #4: color . And then maybe John one for you as you talk about sort of the positive ASPs , first quarter , help perhaps in the can do to us put a little bit more of a parameter around what consider sort of that positive growth you .
Speaker #4: color . And then maybe John one for you as you talk about sort of the positive ASPs , first quarter , help perhaps in the can do to us put a little bit more of a parameter around what consider sort of that positive growth you would
John Marici: Yeah, I think, when you look at the, the mix that we have as we grow in certain countries, and we've, we've talked about this, you know, certain countries give us more of a favorable ASP mix, and we expect that as, as we grow in some of these, these regions that have a higher list price, and that, that will help us. And then also balancing, the product portfolio, you know, where we have, you know, some of those products that, are more comprehensive, and, and we see some of that growth, coming through. So there's a, there's a multitude of, of, of things that we see from an ASP, standpoint, but manage it closely, understand what it means from an ASP all the way to gross margin, and, you know, we see a good combination there.
John Morici: Yeah, I think, when you look at the, the mix that we have as we grow in certain countries, and we've, we've talked about this, you know, certain countries give us more of a favorable ASP mix, and we expect that as, as we grow in some of these, these regions that have a higher list price, and that, that will help us. And then also balancing, the product portfolio, you know, where we have, you know, some of those products that, are more comprehensive, and, and we see some of that growth, coming through. So there's a, there's a multitude of, of, of things that we see from an ASP, standpoint, but manage it closely, understand what it means from an ASP all the way to gross margin, and, you know, we see a good combination there.
Speaker #2: Yeah .
Speaker #1: I some of these , these regions that have a higher list price and that that will countries and then you also balancing the think portfolio , where we have , you know , some of those that are more products comprehensive .
Speaker #1: look at the mix that we have we as grow in certain countries we've talked , and about this , know , certain up ASP mix , and we that expect as we grow in
Speaker #1: And some of growth we see that product through . there's a there's a multitude of of of things So that we see from an ASP standpoint .
Speaker #1: But manage it closely , what it means from an understand ASP all the way to gross margin . And , you know , we see a good combination there .
Elizabeth Anderson: Great. Thanks so much.
Elizabeth Anderson: Great. Thanks so much.
Speaker #4: Great . Thanks so .
Joe Hogan: Bye.
Joe Hogan: Bye.
Operator: Thank you. Our next question comes from the line of Brandon Vazquez with William Blair.
Operator: Thank you. Our next question comes from the line of Brandon Vazquez with William Blair.
Speaker #3: you Thank .
Speaker #3: next question comes line of much from the William with Blair .
Brandon Vazquez: Hey, everyone.
Brandon Vazquez: Hey, everyone.
Joe Hogan: Hi, Brandon.
Joe Hogan: Hi, Brandon.
Brandon Vazquez: Thanks. Hey, thanks for taking the questions. Maybe first, Joe, can we spend a minute? Another minute? You know, sounds like things are stable in end markets. Just talk to us a little bit about what that means. And in part, I'm asking because I think the next question then becomes like, what is the assumption as you think about the 2026 guidance? What are you guys kind of assuming, both on the international side and, or the Americas side for end markets?
Brandon Vazquez: Thanks. Hey, thanks for taking the questions. Maybe first, Joe, can we spend a minute? Another minute? You know, sounds like things are stable in end markets. Just talk to us a little bit about what that means. And in part, I'm asking because I think the next question then becomes like, what is the assumption as you think about the 2026 guidance? What are you guys kind of assuming, both on the international side and, or the Americas side for end markets?
Speaker #5: Hey everyone . Thanks . Hey , thanks for taking the questions . Maybe first . Joe , can we spend a minute ? You know , sounds like things are stable in end markets .
Speaker #5: Just talk to us a little bit . About means . And in part , I'm what that asking because I think the next question then becomes the assumption as , what is about the you think guidance ?
Speaker #5: What are you guys, kind of, seeing on the side and/or the front-end side markets internationally?
Speaker #5: What are you guys kind of the side and or the for end side markets international 2026
Speaker #5: What are you guys kind of the side and or the for end side markets international 2026 Americas , I
Joe Hogan: Brandon, it's Joe. I, you know, open up with this and let John jump in, is I'd say we're projecting, you know, what we experienced in the second half of the year, the execution we've had, obviously from a global standpoint, the good penetration and growth that we've seen there. Again, leveraging the early teens, like I talked about before with Elizabeth in those areas. And so we continue to run the plays we've been running from an execution standpoint and a product standpoint, not just globally, but in Americas and North America, too. John?
Joe Hogan: Brandon, it's Joe. I, you know, open up with this and let John jump in, is I'd say we're projecting, you know, what we experienced in the second half of the year, the execution we've had, obviously from a global standpoint, the good penetration and growth that we've seen there. Again, leveraging the early teens, like I talked about before with Elizabeth in those areas. And so we continue to run the plays we've been running from an execution standpoint and a product standpoint, not just globally, but in Americas and North America, too. John?
Speaker #2: , obviously , from a global second half of the standpoint , good seen penetration and growth there leveraging the that we've teens , like I talked about before .
Speaker #2: with Elizabeth in those And so run the early plays . We've been running from an continue to we standpoint and a product standpoint , not globally , but in America and North America too .
Speaker #2: just
John Marici: So just on that, Brandon, we're not expecting. Our forecast is saying, look, we expect the markets to behave like they are. No change in terms of what we've seen. It's about us driving that active conversion approach that we have. Some of it on the products and the portfolio that we have. Some of it is in terms of how we go to market, some of the last minute or last mile efforts that we have to be able to help those customers drive that conversion. So it's just taking that mindset and building that forward, but really not expecting the markets to be anything different, and that's what's included in the forecast.
John Morici: So just on that, Brandon, we're not expecting. Our forecast is saying, look, we expect the markets to behave like they are. No change in terms of what we've seen. It's about us driving that active conversion approach that we have. Some of it on the products and the portfolio that we have. Some of it is in terms of how we go to market, some of the last minute or last mile efforts that we have to be able to help those customers drive that conversion. So it's just taking that mindset and building that forward, but really not expecting the markets to be anything different, and that's what's included in the forecast.
Speaker #1: And so that , Brandon , we're
Speaker #1: on not is forecast expecting our saying , look , expect we we markets behave the to to like they are Again , change in terms of what we've seen .
Speaker #1: about It's that active conversion . approach that No , we have some of it us products and the driving portfolio that we have .
Speaker #1: Some of it is in terms of how we go to the market, some last minute or last mile efforts that be able—those, those we have to drive that conversion.
Speaker #1: So it's it's just customers taking that just building that and really But not expecting forward . the markets to be anything And that's what's included in the different .
Speaker #1: So it's it's just customers taking that just building that and really But not expecting forward . the markets to be anything And that's what's included in the just .
Brandon Vazquez: Got it. Then that's helpful. Joe, the comments you were making around DSOs are really interesting. I know this has been a strong point for you guys for a while, but I think this is the first time I've heard you say some of the DSOs grew triple digits. And I guess the question is, can you just talk to us a little bit like how early you are in this adoption curve in the DSOs? I'm trying to get a sense of how many of these can continue to grow in the double digit, or even some of them in the triple digits as you go through 2026. Thanks for the questions, guys.
Brandon Vazquez: Got it. Then that's helpful. Joe, the comments you were making around DSOs are really interesting. I know this has been a strong point for you guys for a while, but I think this is the first time I've heard you say some of the DSOs grew triple digits. And I guess the question is, can you just talk to us a little bit like how early you are in this adoption curve in the DSOs? I'm trying to get a sense of how many of these can continue to grow in the double digit, or even some of them in the triple digits as you go through 2026. Thanks for the questions, guys.
Speaker #5: Got it . And then that's . Joe . The comments you helpful were making around are Dsos really interesting . I know this has a strong point been for you guys for a while , but I think this is the first time I've heard you say some of the Dsos triple grew digits , and I guess the question is , can you just talk to us a little bit , like how are in this adoption curve in the dsos ?
Speaker #5: trying to I'm of how get a sense these can continue to grow digit , or in the some of them even many of double in the digits .
Speaker #5: As you go early, you.
Joe Hogan: Yeah, I think there's two parts to that, the answer to that question, Brandon. One is the continued DSO penetration as they move to a larger percentage of the markets that they participate in. And now behind that, we've, you know, recruited and, you know, been recruited by other DSOs to help to join that. So our penetration in DSOs around the world has increased, too. You know, as I said in my script, too, we are a natural partner because we use, we can scale on so many dimensions with them. And it's, it's, you know, some of these DSOs have worked with some competitive suppliers, and when they look at us, they understand that we can, we can scale treatment planning. We have local kind of distribution. There's just so many areas that we can help them with a broader product portfolio, all those things.
Joe Hogan: Yeah, I think there's two parts to that, the answer to that question, Brandon. One is the continued DSO penetration as they move to a larger percentage of the markets that they participate in. And now behind that, we've, you know, recruited and, you know, been recruited by other DSOs to help to join that. So our penetration in DSOs around the world has increased, too. You know, as I said in my script, too, we are a natural partner because we use, we can scale on so many dimensions with them. And it's, it's, you know, some of these DSOs have worked with some competitive suppliers, and when they look at us, they understand that we can, we can scale treatment planning. We have local kind of distribution. There's just so many areas that we can help them with a broader product portfolio, all those things.
Speaker #2: think there's Yeah , that . The
Speaker #2: question , one is the two parts to Brandon , continued DSO penetration answer to
Speaker #2: . And now behind that , recruited and , you been recruited by other Dsos to help that . So it penetration in dsos around the world has increased to you know , to join script to are a natural we partner because move we can scale we do many dimensions with them and it's , you of these had dsos know , some some competitive they look at us , they suppliers that we .
Speaker #2: can we can scale treatment planning . We have local kind understand There's just so many areas that we of can help them through broader product portfolio .
Joe Hogan: I would say, you know, we're still, you know, good growth parameters in that business. I'd say, also, you're going to see DSOs continue to expand around the globe, and we'll continue to take advantage of that, too.
Joe Hogan: I would say, you know, we're still, you know, good growth parameters in that business. I'd say, also, you're going to see DSOs continue to expand around the globe, and we'll continue to take advantage of that, too.
Speaker #2: All those things . So I would say , you know , we're still , you know , good growth parameters in that business .
Speaker #2: And I'd say also see you're going to Dsos continue to expand around , globe . And continue to we'll take advantage of that to .
Operator: Thank you.
Operator: Thank you.
Elizabeth Anderson: Thanks for having me.
Brandon Vazquez: Thanks for having me.
Speaker #3: Thank you .
Operator: Our next question comes from the line of Jeff Johnson with Baird.
Operator: Our next question comes from the line of Jeff Johnson with Baird.
Speaker #6: Thanks , Brandon .
Speaker #3: Our next question comes from the line of Jeff Johnson with Baird.
Jeff Johnson: Yeah, thanks. Good evening, guys. Hey, hey, Joe. Hey, wanted to start maybe on your adult business. That 8% number really stands out to me. You know, not only is it your best number since 2021, I think you said that on the call, but you guys haven't even sniffed a 5% number in the last 3 or 4 years, so that's, you know, materially higher and especially came against a generally tough comp of 4% last year in the Q4. So, you know, is that early traction with No AA? Is it some HFD tailwinds? Is it, you know, ClinCheck Live early traction? Just what's really driving that improvement on the adult side, especially given that macro doesn't seem like it's really supporting an improvement in, you know, adult spending on discretionary items?
Jeff Johnson: Yeah, thanks. Good evening, guys. Hey, hey, Joe. Hey, wanted to start maybe on your adult business. That 8% number really stands out to me. You know, not only is it your best number since 2021, I think you said that on the call, but you guys haven't even sniffed a 5% number in the last 3 or 4 years, so that's, you know, materially higher and especially came against a generally tough comp of 4% last year in the Q4. So, you know, is that early traction with No AA? Is it some HFD tailwinds? Is it, you know, ClinCheck Live early traction? Just what's really driving that improvement on the adult side, especially given that macro doesn't seem like it's really supporting an improvement in, you know, adult spending on discretionary items?
Speaker #7: Joe . Hey . I maybe Hey , business . on your That really stands out to wanted to start me . You know , not only 8% number is it your best number since 2021 , I think you said that on the call .
Speaker #7: But you guys haven't even sniffed a 5% number in the last 3 or 4 years . So that's , you know , materially higher came against a generally tough comp of 4% last year the fourth in quarter .
Speaker #7: So , you know , is early NOAA traction with ? Is it some HFD that it Is you know live early , Clincheck traction .
Speaker #7: Just what's really driving that improvement on the adult especially given that macro it's doesn't seem like really supporting an improvement in on spending discretionary items ?
Joe Hogan: I think you named three really good variables, Jeff, that's helping to drive that. You know, honestly, a lot of it comes from DSOs, too, which really helps, particularly on the GP side, we see. But the OSOs grow well in that area, too. So it's those variables you just talked about, you know, ending with financial credit, that really helps in these times, particularly in North America, where we know patients are challenged that way, too. So, you know, broad portfolio, scanning every patient that walks in the door. And we talk more and more about that's the key. If you want to go digital, you want to convert patients you normally wouldn't convert, is get this thing into a digital format and a pictorial format.
Joe Hogan: I think you named three really good variables, Jeff, that's helping to drive that. You know, honestly, a lot of it comes from DSOs, too, which really helps, particularly on the GP side, we see. But the OSOs grow well in that area, too. So it's those variables you just talked about, you know, ending with financial credit, that really helps in these times, particularly in North America, where we know patients are challenged that way, too. So, you know, broad portfolio, scanning every patient that walks in the door. And we talk more and more about that's the key. If you want to go digital, you want to convert patients you normally wouldn't convert, is get this thing into a digital format and a pictorial format.
Speaker #2: I think you need side , three really good variables , Jeff . helping to That's that . You know drive , honestly , a it comes through dsos , to which really you know , on the GP we see side , but you know , the the , oso's grow , particularly on , well in that area too .
Speaker #2: the , So those variables you helps just talked lot of times , particularly in North America where we know patients are challenged that way too .
Speaker #2: So , you know , broad portfolio scanning , every patient that walks in the door and we talk more and more about that's the key .
Speaker #2: If you want to go want to patients you convert normally wouldn't digital , you is get this thing into a convert digital format in a pictorial format .
Joe Hogan: You can show before and after results while that patient's in that chair. That's what the DSOs do so well, and the retail, you know, accounts we work with do that well, too. John, anything to add to that?
Joe Hogan: You can show before and after results while that patient's in that chair. That's what the DSOs do so well, and the retail, you know, accounts we work with do that well, too. John, anything to add to that?
Speaker #2: You can show before and results . While that patients in that chair , that's what the dsos do so well . And the retail you know accounts we work with do that well too .
Speaker #2: John anything you .
Jeff Johnson: Yeah, and-
Jeff Johnson: Yeah, and-
Joe Hogan: Sorry.
Joe Hogan: Sorry.
Jeff Johnson: Yeah, maybe one follow-up then. Yeah, yeah, Joe, just one follow-up, and it might be a similar topic or answer from you. But, you know, I think last quarter, when we kind of backed everything out, it looked like your North America retail business or your non-DSO business, I guess, is how we think about it, was probably down, you know, maybe pushing double digits, year-over-year. I know you guys told me that was a little aggressive, but somewhere in that ballpark. You mentioned, I think, at your very end comments there of the call of the prepared remarks, that the retail business got a little better.
Jeff Johnson: Yeah, maybe one follow-up then. Yeah, yeah, Joe, just one follow-up, and it might be a similar topic or answer from you. But, you know, I think last quarter, when we kind of backed everything out, it looked like your North America retail business or your non-DSO business, I guess, is how we think about it, was probably down, you know, maybe pushing double digits, year-over-year. I know you guys told me that was a little aggressive, but somewhere in that ballpark. You mentioned, I think, at your very end comments there of the call of the prepared remarks, that the retail business got a little better.
Speaker #7: Yeah . Maybe one follow up then . Yeah . just one follow up . It might be Joe , topic or you , but you know , I last quarter when we similar backed kind of everything out , it looked like your North American retail business or your non DSO business , I think guess how we is think about it probably maybe down pushing double over was year .
Speaker #7: I know you guys told me little aggressive , but somewhere in that ballpark you mentioned , I think at your very comments end there of the of the prepared remarks that the business got a little better any kind of commentary or any kind of color you can provide to flesh that you US retail business or North retail business out in the period .
Jeff Johnson: Just any kind of commentary or any kind of color you can provide to flesh that, you know, US retail business or North American retail business out in the period?
Jeff Johnson: Just any kind of commentary or any kind of color you can provide to flesh that, you know, US retail business or North American retail business out in the period?
Joe Hogan: Hey, Jeff, the word I'd use is more stability there. We're standing, I think, on a better platform in that sense. The team's been executing better around there. I wouldn't call the economic situation in the United States better in any way, in a sense of driving volume in that way. I'd just say the team's more focused. Our portfolio is a little broader, as we talked about. And obviously, the DSOs are helping a lot in that sense, too.
Joe Hogan: Hey, Jeff, the word I'd use is more stability there. We're standing, I think, on a better platform in that sense. The team's been executing better around there. I wouldn't call the economic situation in the United States better in any way, in a sense of driving volume in that way. I'd just say the team's more focused. Our portfolio is a little broader, as we talked about. And obviously, the DSOs are helping a lot in that sense, too.
Speaker #2: sense . The team's been executing better around there . I wouldn't call the economic in the United situation States better in any way , in the sense of driving volume in that I just say the team's way .
Speaker #2: more focused . Our portfolio is a little broader . As we talked about , and obviously the Dsos are lot in that sense ,
John Marici: In North America, we got better due to some of the retail wasn't as negative and the DSOs growth. That combination brought North America to be better on a year-over-year basis than it was in Q3. When we talked about it on the overall Americas, when you add in Latin America, grew at the fastest rate or one of the fastest rates since 2021. So we're encouraged by that, and it's all the things Joe talked about to help drive that conversion.
John Morici: In North America, we got better due to some of the retail wasn't as negative and the DSOs growth. That combination brought North America to be better on a year-over-year basis than it was in Q3. When we talked about it on the overall Americas, when you add in Latin America, grew at the fastest rate or one of the fastest rates since 2021. So we're encouraged by that, and it's all the things Joe talked about to help drive that conversion.
Speaker #1: In
Speaker #1: North too . America got better was we due to
Speaker #1: negative . And and the Dsos growth that combination brought North America to better on be year basis than it was a year over in Q3 .
Speaker #1: And talked about it on the when we overall helping a Americas , when you add in Latin America grew fastest at the rate , one of the fastest rate 2021 .
Speaker #1: we're So encouraged by that . And it's all the things about to help drive that .
Jeff Johnson: Thanks, Joe.
Jeff Johnson: Thanks, Joe. All right. Helpful. Thanks, guys.
Joe Hogan: All right. Helpful. Thanks, guys.
Speaker #7: Thanks . Joe talked guys .
John Marici: Thanks, Jeff.
John Morici: Thanks, Jeff.
Operator: Thank you. Our next question comes from the line of John Block with Stifel.
Operator: Thank you. Our next question comes from the line of John Block with Stifel.
Speaker #2: Jeff Thanks , .
Speaker #3: Thank you next from the
Speaker #3: Stifel .
John Block: Hey, John. Hey, hey, guys. Good afternoon. John, I, you know, I'm going to try to get pretty granular. I know you gave some color on 2026 clear aligner volumes and overall worldwide revenues for the year, but I just want to try to drill down on, you know, price or ASP. So should we think about Invisalign ASPs down, you know, call it 2% year-over-year? I'm thinking FX is probably a plus, and that full year is probably a plus, but maybe any detail you can give us there. And the follow-on would just be, you know, I think ASPs were supposed to be up a little bit, Q3 to Q4, they were down a little. Maybe just talk to that. Was it intra-quarter FX? Was that just geo mix? Any color there? Thanks.
Jon Block: Hey, John. Hey, hey, guys. Good afternoon. John, I, you know, I'm going to try to get pretty granular. I know you gave some color on 2026 clear aligner volumes and overall worldwide revenues for the year, but I just want to try to drill down on, you know, price or ASP. So should we think about Invisalign ASPs down, you know, call it 2% year-over-year? I'm thinking FX is probably a plus, and that full year is probably a plus, but maybe any detail you can give us there. And the follow-on would just be, you know, I think ASPs were supposed to be up a little bit, Q3 to Q4, they were down a little. Maybe just talk to that. Was it intra-quarter FX? Was that just geo mix? Any color there? Thanks.
Speaker #8: Thanks Hey , afternoon guys . Good . John . I you know , I'm going to try to get pretty granular . I know .
Speaker #8: Volumes, some overall 2026 clear aligner, and worldwide revenues for the year. But I just want to try to drill down on price or ASP.
Speaker #8: So should we think about Invisalign ASPs down ? You know , call it 2% year on I'm probably a thinking year . plus .
Speaker #8: So should we think about Invisalign ASPs down ? You know , call it 2% year on I'm probably a thinking year . FX is And that full year is probably since but a plus , maybe any detail you can give us there in the follow on would just you know , I think were ASPs supposed to be up a little bit .
Speaker #8: 3 to 4 . Q they were down a little , maybe just talk to that . Was that intra quarter FX was that just geo mix ?
John Marici: Yeah. No, two good questions. So overall, your first question, John, yeah, expect ASPs to work, you know, kind of model maybe 1 to 2% down overall. So it's kind of in that range that you talked about on a year-over-year basis for 2026. For all the things that we talked about, country mix as well as product mix, kind of the non-comprehensive versus, comprehensive. And when you look at it on a quarter-over-quarter basis, when you look at the-- our Q4, they would have been flat had we not had, you know, FX changed slightly. You know, we got a little bit worse, from a quarter over quarter in, in FX. And, but then you also add some of the country mix.
John Morici: Yeah. No, two good questions. So overall, your first question, John, yeah, expect ASPs to work, you know, kind of model maybe 1 to 2% down overall. So it's kind of in that range that you talked about on a year-over-year basis for 2026. For all the things that we talked about, country mix as well as product mix, kind of the non-comprehensive versus, comprehensive. And when you look at it on a quarter-over-quarter basis, when you look at the-- our Q4, they would have been flat had we not had, you know, FX changed slightly. You know, we got a little bit worse, from a quarter over quarter in, in FX. And, but then you also add some of the country mix.
Speaker #8: color there ? Thanks Any .
Speaker #1: Yeah . Two good questions . No . So overall your first question , John . Yeah expect ASPs . We're you know kind of model maybe 1 to 2% down overall .
Speaker #1: So it's kind of in that range that you talked about on a year over year basis for 2026 . For all the things that we talked about , country mix as well as product kind of the mix , non-comprehensive comprehensive .
Speaker #1: And at it on a when you look quarter over versus quarter basis , when you look at our fourth quarter , they would have been flat had we not had , you know , change slightly .
Speaker #1: You know , we got a FX little bit worse from a quarter over quarter in FX . And then you also had some of the country mix .
John Marici: We had really, really good growth in some of the countries, you know, that are in Latin America, Turkey, India, and so on, that have a lower, lower list price. So the combination of that country growth on a quarter-over-quarter basis plus, you know, slight impact on the FX side of things from a currency standpoint caused us to be down slightly.
John Morici: We had really, really good growth in some of the countries, you know, that are in Latin America, Turkey, India, and so on, that have a lower, lower list price. So the combination of that country growth on a quarter-over-quarter basis plus, you know, slight impact on the FX side of things from a currency standpoint caused us to be down slightly.
Speaker #1: We had really, really good growth in some of the countries that are in Latin America, and Turkey, and India, and so on.
Speaker #1: That have a lower , list price . So the combination of that country growth over on a quarter basis quarter plus , you know , slight impact on the FX side of things from a currency standpoint caused us to be down slightly .
John Block: Got it. Great color. And then just to follow up, Joe, I'm just curious, like, what you're hearing, if anything, regarding, you know, these tax receipts or stimulus. Did you build anything into Q1? Just how you think that may or may not play out. And then to tack on to that, admittedly, sort of different question is, we're sitting here in February, you know, is no AA officially out there? Are you going to sort of hit the go button all at once? I know it's been with the DSOs for a while, or is this going to be more drip, drip by geography? Just really how you refine the rollout of no AA and your thoughts there in 2026. Thank you.
Jon Block: Got it. Great color. And then just to follow up, Joe, I'm just curious, like, what you're hearing, if anything, regarding, you know, these tax receipts or stimulus. Did you build anything into Q1? Just how you think that may or may not play out. And then to tack on to that, admittedly, sort of different question is, we're sitting here in February, you know, is no AA officially out there? Are you going to sort of hit the go button all at once? I know it's been with the DSOs for a while, or is this going to be more drip, drip by geography? Just really how you refine the rollout of no AA and your thoughts there in 2026. Thank you.
Speaker #8: Got it . Great color . And then just the follow up , Joe , I'm just curious hearing , anything , you know , these tax if receipts or stimulus , build into one ?
Speaker #8: Q how you just think that anything did you may or may not play out ? And then the tack on of that admittedly sort of different question is we're sitting here in February , you know , is no AA officially out there ?
Speaker #8: Are you going to hit the sort of go button all at know it's once ? I been with the Dsos for a while , or going to be more drip , drip by geography ?
Speaker #8: Just really, how you've refined the rollout of no AA in your thoughts there in '26? Thank you, John.
Joe Hogan: Yeah, John, on the taxes, you know, again, I'll describe it as I did before. We just looked at North America as stable as we go into Q1. We understand some of the projections on taxes and what, you know, consumers... We look at that as possible upside, obviously, but we didn't plan necessarily around that. Just plan on, you know, how we have to execute and the way we did in Q4 and carry that over. As far as the No AA products, you know, they mix and match all over the world, John. It's kind of a different kind of a profile, what we have in the United States versus what we have in Europe and what we're doing in APAC in general.
Joe Hogan: Yeah, John, on the taxes, you know, again, I'll describe it as I did before. We just looked at North America as stable as we go into Q1. We understand some of the projections on taxes and what, you know, consumers... We look at that as possible upside, obviously, but we didn't plan necessarily around that. Just plan on, you know, how we have to execute and the way we did in Q4 and carry that over. As far as the No AA products, you know, they mix and match all over the world, John. It's kind of a different kind of a profile, what we have in the United States versus what we have in Europe and what we're doing in APAC in general.
Speaker #2: On on the taxes . You know , again , I'll describe it as I did before just looked at America North stable as we go into the first quarter .
Speaker #2: projections on the We . We taxes and what , you know , consumers that as . We look at possible . Upside , obviously , but we didn't plan necessarily around that .
Speaker #2: Just plan on , you know , how we have to execute . And the way we did in the fourth quarter . And over as far as the zero AA products , you know , they mix and over the world .
Speaker #2: Just plan on , you know , how we have to execute . And the way we did in the fourth quarter . And over as far as the zero AA products , you know , they mix and over the match all , it's John kind of a different kind profile .
Speaker #2: What we have in the of a United States versus what we Europe and what we're doing in APAC in general . But , you know , as John said in his comments , you know , the customers out there like this , options , especially ones that have a lot of confidence in our product line , how to use product , understand , you know , that the the the carry that before .
Joe Hogan: But you know, as John said in his comments, you know, the customers out there like this options, especially ones that have a lot of confidence in our product line, know how to use the product, understand, you know, that the perfection aspect of five by five that they think I worried about before. Over the years, I think they've gained more confidence in themselves through our product line and what it can do. So that it's not like it all starts right now. We have some of these things will roll out in APAC, some different variations will roll out in Europe. But I'd say, you know, by the end of Q1, into Q2 of this year, we'll have that pretty much lined out by geography.
Joe Hogan: But you know, as John said in his comments, you know, the customers out there like this options, especially ones that have a lot of confidence in our product line, know how to use the product, understand, you know, that the perfection aspect of five by five that they think I worried about before. Over the years, I think they've gained more confidence in themselves through our product line and what it can do. So that it's not like it all starts right now. We have some of these things will roll out in APAC, some different variations will roll out in Europe. But I'd say, you know, by the end of Q1, into Q2 of this year, we'll have that pretty much lined out by geography.
Speaker #2: Over the years, they've, I think, gained more confidence in themselves through our product line and what it can do. So it's not like it all starts right now.
Speaker #2: We have some of that will roll out these things in APAC , some different variations out and in the in Europe , but I'd say , you know , by the end of the first quarter second quarter into the of of this year , we'll have that pretty much lined out by geography .
Speaker #2: We have some of that will roll out these things in APAC , some different variations out and in the in Europe , but I'd say , you know , by the end of the first quarter second quarter into the of of this year , we'll have that pretty much lined out by geography
Speaker #2: We have some of that will roll out these things in APAC , some different variations out and in the in Europe , but I'd say , you know , by the end of the first quarter second quarter into the of of this year , we'll have that pretty much lined out by geography
John Block: Great. Thanks for the color, guys.
Jon Block: Great. Thanks for the color, guys.
Joe Hogan: Yeah, John. Thanks.
Joe Hogan: Yeah, John. Thanks.
Speaker #8: Thanks for the guys .
Speaker #2: Yeah . Thanks
Operator: Thank you. And our next question comes from the line of Michael Cherney with Leerink Partners.
Operator: Thank you. And our next question comes from the line of Michael Cherney with Leerink Partners.
Speaker #8: John .
Speaker #3: Thank you. Our next question comes from the line of Michael with Cherny, Leerink Partners.
Vik Chopra: ... Good evening. Yeah, hey, how's it going? Thanks for the question. Congrats on a nice quarter. Maybe just on the margin side, you know, great to see the talk about the 100 basis points of opportunity. As you think about where you were in Q3 versus the guidance now, any changes in terms of how you think about getting to that margin? Any positive surprises, anything relative to the revenue dropdown on the better case starts? Talk to me about the dynamics, especially the strategic nature of the dynamics, in terms of the potential for growth.
Michael Cherny: ... Good evening. Yeah, hey, how's it going? Thanks for the question. Congrats on a nice quarter. Maybe just on the margin side, you know, great to see the talk about the 100 basis points of opportunity. As you think about where you were in Q3 versus the guidance now, any changes in terms of how you think about getting to that margin? Any positive surprises, anything relative to the revenue dropdown on the better case starts? Talk to me about the dynamics, especially the strategic nature of the dynamics, in terms of the potential for growth.
Speaker #10: Good evening . Yeah . Hey how's it going ? Thanks for the question . on nice quarter . Maybe just on the margin know side , you great to see the talk about 100 basis points Congrats opportunity as you think about where you were in three Q versus the guidance .
Speaker #10: of any Now changes in terms of think about how you getting to that margin , any positive surprises , anything the revenue drop relative to on the better case starts to be thinking about the dynamics , especially the strategic nature of the in dynamics terms of the potential for growth .
John Marici: Yeah, Michael, this is John. So when you think about the product portfolio we have, you know, we have the mix shift that we've been talking about. It gets noted in ASP, but what that means is, when we don't have refinements and we have some of this lower stage product, it's more profitable. The margin rate is higher. And so you see some of that from a mix standpoint. It shows up in our gross margin. You're also seeing many of the effects of some of the productivity improvements that we have. We talked about some of the equipment that we had, and maybe upgrading some of the equipment and seeing some of this. We're starting to see early stages of that benefit as well.
John Morici: Yeah, Michael, this is John. So when you think about the product portfolio we have, you know, we have the mix shift that we've been talking about. It gets noted in ASP, but what that means is, when we don't have refinements and we have some of this lower stage product, it's more profitable. The margin rate is higher. And so you see some of that from a mix standpoint. It shows up in our gross margin. You're also seeing many of the effects of some of the productivity improvements that we have. We talked about some of the equipment that we had, and maybe upgrading some of the equipment and seeing some of this. We're starting to see early stages of that benefit as well.
Speaker #1: Yeah . this is Michael , John . So when you think about the product portfolio , we have , you know , we have the mix shift that we've been talking about .
Speaker #1: It gets noted in ASP . But what that means is when we don't have refinements and we have some product , stage of this lower it's it's more profitable .
Speaker #1: The margin rate is higher . And so you see some of that from a mix standpoint . It shows up in our in our gross margin .
Speaker #1: You're also seeing many of the effects of some of the productivity improvements that We talked we have . about some of the that we had equipment and maybe upgrading some of the equipment and seeing some of this .
Speaker #1: We're starting to see early stages of that benefit as well . So , you know , it's our it's products that our we and how have we're going to market with those .
John Marici: So, you know, it's our, it's our products that we have and, and how we're going to market with those, and then it's also just driving productivity. We want to be mindful of getting that adoption, growing our business, and that volume helps, DSP and others that don't have refinement, but then driving productivity. And we saw good results from a gross margin standpoint, like we saw in Q4, that we haven't seen, honestly, we haven't seen since close to 2021. So that's good to see, and we want to continue that as we go into 2026.
John Morici: So, you know, it's our, it's our products that we have and, and how we're going to market with those, and then it's also just driving productivity. We want to be mindful of getting that adoption, growing our business, and that volume helps, DSP and others that don't have refinement, but then driving productivity. And we saw good results from a gross margin standpoint, like we saw in Q4, that we haven't seen, honestly, we haven't seen since close to 2021. So that's good to see, and we want to continue that as we go into 2026.
Speaker #1: And also then it's just driving productivity . We want to be mindful of of getting that growing . Our adoption business . And that volume helps DSP and others that don't have refinements .
Speaker #1: And also then it's just driving productivity . We want to be mindful of of getting that growing . Our adoption business . And that volume helps DSP and others that don't have of driving productivity and we saw good results from a gross margin standpoint , like we saw in Q4 , that we haven't seen .
Speaker #1: Honestly , we haven't seen since close to 2021 . So that's good to see . And we want to continue that as we go into 2026 .
Vik Chopra: And just one follow-up, and I apologize if I missed the nuance relative to the DSO commentary. This is more tied back to the pull-through on Lumina. You're obviously now a year plus past the launch. How is it behaving, acting, in terms of your conversion opportunities relative to the placements and what that's doing in terms of some of the volume dynamics? Is it hitting the targets that you want? Is it outperforming? Anything more you can give us on the experience there would be great.
Michael Cherny: And just one follow-up, and I apologize if I missed the nuance relative to the DSO commentary. This is more tied back to the pull-through on Lumina. You're obviously now a year plus past the launch. How is it behaving, acting, in terms of your conversion opportunities relative to the placements and what that's doing in terms of some of the volume dynamics? Is it hitting the targets that you want? Is it outperforming? Anything more you can give us on the experience there would be great.
Speaker #10: And just one follow-up, and I apologize to the relative if I missed some nuance in the DSO commentary. This is tied back to the pull-through on Lumina.
Speaker #10: You're obviously now a year plus past the launch . How is it behaving , acting in terms of your conversion opportunities relative to the placements and what that's in terms doing of some of the volume dynamics ?
Speaker #10: Is it hitting the targets that you want? Is it outperforming anything more? You give us on the experience? They're great.
Joe Hogan: Yeah, we feel really good about that platform overall, Michael. It's been well accepted in the marketplace, both from a GP standpoint, who do a lot of restorative procedures, as well as the orthos, obviously, that are, you know, dedicated to orthodontics in that way. We know that, you know, having Lumina in those accounts, and the more Luminas you have in those accounts, the better off you do, and we continue to emphasize that at accounts, and the uptake seems to be good. I think to answer your question, you have to kind of go all over the world. But in general, I think the foundation of your question is, can you keep growing Lumina? Will you keep growing that platform? We feel good about that platform. It's a multi-structured light. We'll obviously have iterations on that platform as we go forward.
Joe Hogan: Yeah, we feel really good about that platform overall, Michael. It's been well accepted in the marketplace, both from a GP standpoint, who do a lot of restorative procedures, as well as the orthos, obviously, that are, you know, dedicated to orthodontics in that way. We know that, you know, having Lumina in those accounts, and the more Luminas you have in those accounts, the better off you do, and we continue to emphasize that at accounts, and the uptake seems to be good. I think to answer your question, you have to kind of go all over the world. But in general, I think the foundation of your question is, can you keep growing Lumina? Will you keep growing that platform? We feel good about that platform. It's a multi-structured light. We'll obviously have iterations on that platform as we go forward.
Speaker #2: We feel really good about that platform overall , Michael , it's been well accepted in the both marketplace , from a GP standpoint who do a lot of restorative procedures , as well as the authors obviously , that are , you know , dedicated to orthodontics in that way , we know that , you know , having Lumina at those accounts and the more luminous you have in those accounts , the better off you do .
Speaker #2: And we continue to emphasize that at accounts and the uptake seems to be good . I think the answer to your question , you have to kind of go all over the world .
Speaker #2: general , I think the foundation of But in your question is , can you keep growing ? Lumina ? Will you keep growing that platform ?
Speaker #2: We feel good about that platform. It's a multi-structured light. We'll obviously have iterations on that platform as we go forward.
Joe Hogan: So I feel really good about not just the market performance of Lumina over last year, but what we're positioned to do in the future with the technology, too.
Joe Hogan: So I feel really good about not just the market performance of Lumina over last year, but what we're positioned to do in the future with the technology, too.
Speaker #2: So I feel good, really, about not just the market performance of Lumen over last year, but what we're positioned to do in the future with the technology too.
John Marici: Thank you.
Michael Cherny: Thank you.
Jeff Johnson: Thanks, Michael. Next, next question.
Shirley Stacy: Thanks, Michael. Next, next question.
Speaker #3: Thank you . .
Operator: Our next question comes from the line of Vik Chopra with Wells Fargo.
Operator: Our next question comes from the line of Vik Chopra with Wells Fargo.
Speaker #11: Next question .
Speaker #3: Our next question comes from the line of Vik Chopra with Wells Fargo .
Vik Chopra: Hey, good afternoon, and congrats on a nice quarter.
Vik Chopra: Hey, good afternoon, and congrats on a nice quarter.
Speaker #12: Hey . Good afternoon and congrats on a nice quarter . Maybe a couple for me here . You know the , on guidance range .
John Marici: Thanks, Vik.
John Morici: Thanks, Vik.
Vik Chopra: Maybe a couple for me here. You know, on the guidance range, you know, you said 3% to 4% revenue growth for 2026. Maybe talk about some of the other variables behind that guidance range. And do you think that 3% to 4% range is conservative, or do you think you can deliver above that level of growth in 2026?
Vik Chopra: Maybe a couple for me here. You know, on the guidance range, you know, you said 3% to 4% revenue growth for 2026. Maybe talk about some of the other variables behind that guidance range. And do you think that 3% to 4% range is conservative, or do you think you can deliver above that level of growth in 2026?
Speaker #12: You know , you said 3 to 4% revenue growth for 2026 . Maybe talk about some of the other behind that variables guidance range .
Speaker #12: And do you think that 3 to 4% range is conservative, or do you think you can deliver above that level of growth in 2026?
John Marici: Yeah, Vik, this is John. So look, we guide as we always do. You know, we look at, you know, kind of how we see the numbers, the actions that we're taking to be able to help drive performance with new products and go-to-market activities and so on. So that's the range that we give at this point to be able to grow off of, you know, 2025 at 3% to 4%. You know, it goes back to things that I've talked about that are really strategic for us. We want to grow internationally. We're seeing good growth. We want to continue that. We want to continue to drive orthodontic, you know, utilization, so that's products, the NoAA product, the comprehensive helps there.
John Morici: Yeah, Vik, this is John. So look, we guide as we always do. You know, we look at, you know, kind of how we see the numbers, the actions that we're taking to be able to help drive performance with new products and go-to-market activities and so on. So that's the range that we give at this point to be able to grow off of, you know, 2025 at 3% to 4%. You know, it goes back to things that I've talked about that are really strategic for us. We want to grow internationally. We're seeing good growth. We want to continue that. We want to continue to drive orthodontic, you know, utilization, so that's products, the NoAA product, the comprehensive helps there.
Speaker #1: Yeah . Vic this is this is look John . So , we we guide as we always do . You know , we look at , know kind you of how how we see the numbers , the taking to be actions that able to help drive with new performance products and go to market activities and so on .
Speaker #1: So that's that's the range that we give at this point to be able to grow off of , you know , 2025 at the 3 to 4% , you know , it goes back to talked about things that I've that are really strategic for us .
Speaker #1: We want to grow internationally . We're seeing good growth . We want to continue that . We want to continue to drive orthodontic .
Speaker #1: You know , utilization . So that's products . The no product , the helps . There of the new . Some products that we have with with Invisalign first and Maob and others , those will help us grow that utilization for those doctors .
John Marici: Some of the new products that we have with Invisalign First, MAOB, and others, those will help us grow that utilization for those doctors. And we're really excited about how GPs fit into this. They're doing a lot more of scanning every patient, visualizing, really tying in financing and other things to get that sometimes reluctant patient to decide to go into treatment. And then, of course, we want to leverage our brand to be able to make sure everybody's aware of our product and how we can differentiate and so on. So it's really a continuation of our strategies around those major aspects that give us the confidence to be able to guide in the way we have. And, you know, as we go quarter by quarter, we'll update as needed.
John Morici: Some of the new products that we have with Invisalign First, MAOB, and others, those will help us grow that utilization for those doctors. And we're really excited about how GPs fit into this. They're doing a lot more of scanning every patient, visualizing, really tying in financing and other things to get that sometimes reluctant patient to decide to go into treatment. And then, of course, we want to leverage our brand to be able to make sure everybody's aware of our product and how we can differentiate and so on. So it's really a continuation of our strategies around those major aspects that give us the confidence to be able to guide in the way we have. And, you know, as we go quarter by quarter, we'll update as needed.
Speaker #1: And we're really excited about how GPS fit into this . They're doing a lot more of scanning every patient , visualizing , really tying in financing and other things to that get reluctant sometimes patient to to decide to go into treatment .
Speaker #1: And then , of course , we want to leverage our brand to be able to make aware everybody's sure our and how product we can and so on .
Speaker #1: So it's really a continuation of our strategies around those those major aspects that give us the confidence to be able to guide in the way we .
Speaker #1: And , you know , as we go quarter by quarter , we'll we'll update as needed have
Vik Chopra: Got it. And just a quick follow-up for me. You know, given the strong growth you called out among the DSOs, maybe just remind us what percent of your sales are coming from the DSO channel and how you plan to further expand these partnerships. Thank you.
Vik Chopra: Got it. And just a quick follow-up for me. You know, given the strong growth you called out among the DSOs, maybe just remind us what percent of your sales are coming from the DSO channel and how you plan to further expand these partnerships. Thank you.
Speaker #12: Just a bit. And quick.
Speaker #12: me . You . Got know , given the strong growth , you called out among the dsos , maybe just remind us what percent of your sales are coming from the DSO channel and how you plan to further expand these Thank partnerships .
John Marici: Yeah, DSOs for us, Vik, are about 25% of our business on a volume basis, and we want to continue to expand. They share many of these DSOs are becoming more of a digital orthodontic mindset. We share that digital orthodontic mindset with them, and they wanna, you know, they want the scanners, so they have Luminas. They're scanning every patient. They're providing a lot of visualization and growing, and we think that's a natural benefit. When a DSO is looking to scale, we can help provide that scale through our technology and our operations, sharing, you know, and leveraging the brand as well. So it's a great partnership. We want to continue on that, but also make sure that we're also helping our retail doctors grow as well.
John Morici: Yeah, DSOs for us, Vik, are about 25% of our business on a volume basis, and we want to continue to expand. They share many of these DSOs are becoming more of a digital orthodontic mindset. We share that digital orthodontic mindset with them, and they wanna, you know, they want the scanners, so they have Luminas. They're scanning every patient. They're providing a lot of visualization and growing, and we think that's a natural benefit. When a DSO is looking to scale, we can help provide that scale through our technology and our operations, sharing, you know, and leveraging the brand as well. So it's a great partnership. We want to continue on that, but also make sure that we're also helping our retail doctors grow as well.
Speaker #12: you .
Speaker #1: Dsos Yeah . for us . Vic , are about 25% of our of our business on a volume basis , and we want to continue to expand .
Speaker #1: share They many of these dsos are are becoming more of a digital orthodontic We share that mindset . digital orthodontic mindset with them and they want to , you know , they want the scanners .
Speaker #1: So they have luminas . They're scanning every patient . providing a lot of They're visualization and growing . And we think that's a that's a When benefit .
Speaker #1: DSO looking to scale, we can help provide that scale through our technology and our operations sharing, and leveraging the brand as well.
Speaker #1: So it's a great partnership . We want to continue on that . But also make sure that we're we're also helping our retail doctors grow as well .
John Marici: So we're not forgetting, 'cause there's a large amount of retail doctors as well, but we're very pleased to what we see in DSOs.
John Morici: So we're not forgetting, 'cause there's a large amount of retail doctors as well, but we're very pleased to what we see in DSOs.
Speaker #1: So we're not forgetting because there's a large amount of retail doctors as well . But we're very pleased with what we see in Dsos .
Jeff Johnson: Thanks, Vic.
Shirley Stacy: Thanks, Vic.
Speaker #6: Thanks , Nick .
Operator: Thank you. And our next question comes from the line of Jason Bednar with Piper Sandler.
Operator: Thank you. And our next question comes from the line of Jason Bednar with Piper Sandler.
Speaker #3: Thank you. And our next question comes from the line of Jason Bednar with Piper Sandler.
Joe Hogan: Hi, Jason.
Joe Hogan: Hi, Jason.
Jason Bednar: Hey, hey, guys. Good afternoon. Congrats on the results here today. I'm going to follow up on Mike Turney's operating margin question, tug on that thread to start. And the focus of the question is, are there things that need to happen or fall into place in order to hit that 100 basis point margin expansion target? You got a variety of scenarios that could obviously play out with product mix, geographic mix, channel mix. I get all that, but are there scenarios where you see that 100 basis points at risk, or is that piece of your guidance you feel fully within your control?
Jason Bednar: Hey, hey, guys. Good afternoon. Congrats on the results here today. I'm going to follow up on Mike Turney's operating margin question, tug on that thread to start. And the focus of the question is, are there things that need to happen or fall into place in order to hit that 100 basis point margin expansion target? You got a variety of scenarios that could obviously play out with product mix, geographic mix, channel mix. I get all that, but are there scenarios where you see that 100 basis points at risk, or is that piece of your guidance you feel fully within your control?
Speaker #2: Jason Hi ,
Speaker #2: .
Speaker #13: Hey . Hey , guys . Good afternoon . Congrats on the results here today . I'm going to follow up on Mike Czerny's operating margin question .
Speaker #13: Tug on that start thread to . And the focus of the question is , are there things that need to happen or fall into place in order to hit that 100 basis point margin expansion target ?
Speaker #13: You've got a variety of scenarios that could play out with product mix, geographic mix, and channel mix. I get all that, but are there scenarios you see where you have 100 basis points at risk, or is that piece of your guidance something you feel is fully within your control?
John Marici: Yeah, Jason, when we think about that, we look, we have to execute. We have to be able to help grow the business. So much of what we see, and especially on that, the productivity that we have is based on volume. We have to execute on our volume and get that to come through our manufacturing. We see volume benefits, volume leverage when we have that. But we've made a lot of changes, kind of exiting, kind of in the second half of last year, to improve some of the productivity, getting closer to our customers and so on. So we've made some of those structural changes to be able to help drive and improve that productivity. So we feel good about that from a guidance standpoint. Wanted to continue talking about the 100 basis points improvement.
John Morici: Yeah, Jason, when we think about that, we look, we have to execute. We have to be able to help grow the business. So much of what we see, and especially on that, the productivity that we have is based on volume. We have to execute on our volume and get that to come through our manufacturing. We see volume benefits, volume leverage when we have that. But we've made a lot of changes, kind of exiting, kind of in the second half of last year, to improve some of the productivity, getting closer to our customers and so on. So we've made some of those structural changes to be able to help drive and improve that productivity. So we feel good about that from a guidance standpoint. Wanted to continue talking about the 100 basis points improvement.
Speaker #1: Jason , Yeah , when we think about that , look , we have to execute . We have to be able to help grow the business .
Speaker #1: much of what So we see , especially on that , that productivity that we have is , is based on volume . We have to execute on our volume and get that to come through our manufacturing .
Speaker #1: We see volume benefits , volume leverage . When we have that . But we've made a lot of changes kind of kind of in the second half of last year to improve some of the productivity , getting closer to our so on .
Speaker #1: customers and made some of those structural changes to be able to help drive and improve that productivity . So we feel good about that .
Speaker #1: a guidance standpoint . Wanted From to continue talking about . improvement And the 100 basis point as we just like execute , our overall revenue guidance , we'll update as we go forward .
John Marici: As we execute, just like our overall revenue guidance, we'll update as we go forward.
John Morici: As we execute, just like our overall revenue guidance, we'll update as we go forward.
Jason Bednar: Okay, all right, fair enough. I want to move over to China VBP real quick, and I appreciate all the comments you made and your, your exposure more on the private side of the market. But I guess, can you help us a bit more with what you're seeing competitively in advance of that VBP rollout? Understanding it's, it's delayed, but what kind of pricing assumptions are you making in that down 1% to 2% guide for your global ASPs for the year? How much is China impacting that? And then are you similarly making assumptions around a volume uptick opposed to VBP implementation? Just any help there on those factors would be great.
Jason Bednar: Okay, all right, fair enough. I want to move over to China VBP real quick, and I appreciate all the comments you made and your, your exposure more on the private side of the market. But I guess, can you help us a bit more with what you're seeing competitively in advance of that VBP rollout? Understanding it's, it's delayed, but what kind of pricing assumptions are you making in that down 1% to 2% guide for your global ASPs for the year? How much is China impacting that? And then are you similarly making assumptions around a volume uptick opposed to VBP implementation? Just any help there on those factors would be great.
Speaker #13: Okay . All right . Fair enough . I want to move over to China real quick . And I appreciate all the comments you made in your exposure .
Speaker #13: More on the of the private side But I guess , can you help us a bit more with what you're seeing competitively in advance of DVP that ?
Speaker #13: understanding it's delayed , kind of pricing assumptions are you in that making down 1 to 2% guide for your global ASPs for the year ?
Speaker #13: How much is China that impacting are you ? And then similarly making assumptions around a volume uptick ? Post DVP implementation . Just any help there on those factors would be great .
Joe Hogan: Hey, Jason, it's Joe. You know, first of all, I'd say there's an uncertainty around that implementation next year. You know, secondly, you have to think three and four area hospitals are the biggest focus in that area. We don't really participate in that to any broad extent, and that's where it would be hit first, and it's kind of what I covered in my comments. You know, we're 85% private. We're primarily in one or two cities. Now, we know from the medical device industry and other parts of the orthodontic industry and the dental industry, that, you know, that might change in the sense of how VBP affects it. But we've pretty much taken a status quo look at our business in China as we go into the year.
Joe Hogan: Hey, Jason, it's Joe. You know, first of all, I'd say there's an uncertainty around that implementation next year. You know, secondly, you have to think three and four area hospitals are the biggest focus in that area. We don't really participate in that to any broad extent, and that's where it would be hit first, and it's kind of what I covered in my comments. You know, we're 85% private. We're primarily in one or two cities. Now, we know from the medical device industry and other parts of the orthodontic industry and the dental industry, that, you know, that might change in the sense of how VBP affects it. But we've pretty much taken a status quo look at our business in China as we go into the year.
Speaker #2: Hey Joel , I you know , first of all , I'd say there's an uncertainty around that implementation next year . Secondly , you have to think three and four area hospitals are the biggest focus in that area .
Speaker #2: We don't really participate in that to any any broad extent . And that's where it would be hit it's kind first . And of what I covered in my You comments .
Speaker #2: we're 85% private . We're primarily in 1 or 2 cities now . We know from the medical device industry and you know , and other parts of the orthodontic industry and dental industry that , you know , that might change in the sense of how vbp affects it .
Speaker #2: we've pretty much taken But a status quo look at our business in China as we go into as we go into the year , like I mentioned , I feel we're well positioned in a sense of the products that we would position there .
Joe Hogan: Like I mentioned, I feel we're well positioned in the sense of the products that we would position there, if that does go through. And so right now, we're not expecting any major disruption for China on year to year based on VBP.
Joe Hogan: Like I mentioned, I feel we're well positioned in the sense of the products that we would position there, if that does go through. And so right now, we're not expecting any major disruption for China on year to year based on VBP.
Speaker #2: If that does go through. And so right now, we're not expecting any major disruption for China year over year based on BPP.
John Marici: So our guidance, to be clear, Jason, does not include any VBP impact, whether it's on the volume side or ASP side, given how Joe positioned.
John Morici: So our guidance, to be clear, Jason, does not include any VBP impact, whether it's on the volume side or ASP side, given how Joe positioned.
Speaker #1: So our guidance to be clear , Jason , is does not include any BPP impact , whether it's on the volume side or ASP side , how given positioned .
Jeff Johnson: Thanks, Jason. Next question, please.
Shirley Stacy: Thanks, Jason. Next question, please.
Speaker #14: Thanks , Jason . Next question please .
Operator: Sure. Our next question comes from the line of Michael Sarcone with Jefferies.
Operator: Sure. Our next question comes from the line of Michael Sarcone with Jefferies.
Speaker #3: Sure . Our next question comes from the line of Michael Zarcone with Jefferies .
Joe Hogan: Hi, Michael.
Joe Hogan: Hi, Michael.
Michael Sarcone: Good afternoon, and thanks for taking the questions. Just first one on the system sales. I think you had talked about previously, you were going to end of life some of the older iTero systems. Maybe, you know, with that in mind, can you talk about how you're thinking about growth in 2026 between kind of replacement cycle versus de novo placements?
Michael Sarcone: Good afternoon, and thanks for taking the questions. Just first one on the system sales. I think you had talked about previously, you were going to end of life some of the older iTero systems. Maybe, you know, with that in mind, can you talk about how you're thinking about growth in 2026 between kind of replacement cycle versus de novo placements?
Speaker #8: Hi .
Speaker #8: Good Thanks for .
Speaker #8: Good Thanks for . afternoon Hey ,
Speaker #8: and .
Speaker #15: good afternoon and thanks for taking the questions . Just first one on system the sales . I think you had talked about previously , you were going to end of life .
Speaker #15: Some of the older iOS systems , maybe . With that in mind , can you talk about how you're thinking about growth in 26 between kind of replacement cycle versus de novo placements ?
Joe Hogan: Hey, Michael, I mean, we, there are some, you know, old iTero Element scanners that we have, you know, at a close on right now in the sense of what we'll service and what we won't service. And we're doing our best to work with doctors to get them, you know, over the line and into a new product like Lumina overall. I can't give you the specifics in the sense of, you know, how we look at our, our, you know, our overall services business next year, and, you know, and scanner business, and tell you specifically what that is, but I don't feel that transition's a major variable in the equation of our success next year.
Joe Hogan: Hey, Michael, I mean, we, there are some, you know, old iTero Element scanners that we have, you know, at a close on right now in the sense of what we'll service and what we won't service. And we're doing our best to work with doctors to get them, you know, over the line and into a new product like Lumina overall. I can't give you the specifics in the sense of, you know, how we look at our, our, you know, our overall services business next year, and, you know, and scanner business, and tell you specifically what that is, but I don't feel that transition's a major variable in the equation of our success next year.
Speaker #2: And Michael , I there are some mean we , you know , old element itero scanners that we have . You know in a clause on right now in the sense of what we'll service and what we weren't service and we're doing our best to work with doctors them over the line into a new product like to get Lumina .
Speaker #2: Overall , I can't give you the specifics in the sense of how we look at our our , you know , our overall services business next year .
Speaker #2: And, you know, in scanner business—and I'll tell you what that specifically is. But I don't feel that transition is a major variable in the equation of our success next year.
John Marici: We're always looking to have those scanners, especially the older ones, like we've seen iTero Element ones and twos, to position those out of the market, offer a trade-in allowance, and then get that doctor to the newest scanner, iTero Lumina. Once they see the difference, it usually you know kind of goes, and it's an easy transition. But it's more efficient for them to use iTero Lumina, and it's better for us. It captures more, the image is better, and so on. So we want that transition. So it's like everything else. We wanna work with them to make that happen.
John Morici: We're always looking to have those scanners, especially the older ones, like we've seen iTero Element ones and twos, to position those out of the market, offer a trade-in allowance, and then get that doctor to the newest scanner, iTero Lumina. Once they see the difference, it usually you know kind of goes, and it's an easy transition. But it's more efficient for them to use iTero Lumina, and it's better for us. It captures more, the image is better, and so on. So we want that transition. So it's like everything else. We wanna work with them to make that happen.
Speaker #1: We're always looking to to have those scanners , especially the older ones like we've seen element ones and twos to position those out of the market , offer a trade in allowance and then get that that doctor to the newest Lumina .
Speaker #1: scanner , And once they see the difference . It usually , you know , in . goes It's an easy transition . But it's more efficient for them to , to use Lumina .
Speaker #1: And it's it's better for us . It captures more images better and so on . So we want that transition . So it's like everything else we want to we work with them to happen make that .
Jeff Johnson: Thanks, Michael. Next question, please.
Shirley Stacy: Thanks, Michael. Next question, please.
Operator: Our next question comes from the line of Steven Valiquette with Mizuho Securities.
Operator: Our next question comes from the line of Steven Valiquette with Mizuho Securities.
Speaker #14: Thanks , Michael . Next question please .
Speaker #3: Our next question comes from the line of Steven Valiquette with Mizuho Securities.
Joe Hogan: Hi, Steve.
Joe Hogan: Hi, Steve.
Steven Valiquette: Great. Thanks. Yeah, good afternoon. Yeah, thanks for taking the question. Yeah, I guess just separate from the discussion on your own ASPs and your own pricing, just curious to maybe get a little more color on your thoughts on just overall clear aligner pricing trends across the broader global marketplace. There's seemingly some positive news in relation to price increases on, you know, a few key competitors. I'm wondering maybe just, you know, if, you know, tariffs or other factors are maybe just driving higher prices across the competitive landscape in a way that might, you know, help you. And, you know, is that material enough to... Where that was, like, a factor in your guidance, or do you think you would have guided for, like, your volume trends, kind of, regardless of what's going on in competitor pricing front? Thanks.
Steven Valiquette: Great. Thanks. Yeah, good afternoon. Yeah, thanks for taking the question. Yeah, I guess just separate from the discussion on your own ASPs and your own pricing, just curious to maybe get a little more color on your thoughts on just overall clear aligner pricing trends across the broader global marketplace. There's seemingly some positive news in relation to price increases on, you know, a few key competitors. I'm wondering maybe just, you know, if, you know, tariffs or other factors are maybe just driving higher prices across the competitive landscape in a way that might, you know, help you. And, you know, is that material enough to... Where that was, like, a factor in your guidance, or do you think you would have guided for, like, your volume trends, kind of, regardless of what's going on in competitor pricing front? Thanks.
Speaker #16: Hi , Steve . Thanks . Good afternoon . Yeah , thanks for taking the question . I guess just separate from the discussion on your own .
Speaker #16: ASPs and pricing . your own curious , maybe Just get a little more color on your thoughts on just overall clear line of pricing trends across the broader global marketplace .
Speaker #16: There seemingly some positive news in relation to price on increases a few key competitors , but I'm wondering tariffs or just maybe other factors or maybe if just driving prices the across competitive landscape in a way that might help you is ?
Speaker #16: And that material enough to where that was a factor in your guidance , or do you think you would have guided for like your volume trends ?
Speaker #16: Kind of regardless of what's going on on the competitor pricing front, thanks.
John Marici: ... Yeah, Steve, this is John. You know, I don't think that specific, what they're doing is factored into our guidance. You know, our guidance is based on what we can do to be able to help drive the business and drive adoption and take this active conversion approach. But it is noted. I mean, we watch things closely to see what competition does. We hear it in the field and so on. And you're right, many competitors, for various reasons, I think, you know, in terms of tariffs or maybe it's profitability or other reasons that they look at changing their pricing, and I think it stands to reason that some of the pricing that initially offered, they've had to increase, and it's probably a good thing in the long run to do.
John Morici: ... Yeah, Steve, this is John. You know, I don't think that specific, what they're doing is factored into our guidance. You know, our guidance is based on what we can do to be able to help drive the business and drive adoption and take this active conversion approach. But it is noted. I mean, we watch things closely to see what competition does. We hear it in the field and so on. And you're right, many competitors, for various reasons, I think, you know, in terms of tariffs or maybe it's profitability or other reasons that they look at changing their pricing, and I think it stands to reason that some of the pricing that initially offered, they've had to increase, and it's probably a good thing in the long run to do.
Speaker #1: Yeah , Steve , this is John . I you know , I don't think specific what they're doing is , is factored into our our guidance .
Speaker #1: You know, our guidance is based on what we can do to help drive the business and drive adoption, and take this active conversion approach.
Speaker #1: But it is noted . I mean , we watch things closely to see what competition does . We hear it in the field and so on .
Speaker #1: And and you're right , many competitors for various reasons . I think , you know , in terms of tariffs or maybe it's profitability or other reasons that they look at changing their pricing and I and , think it stands to reason that some of the pricing that initially offered , they've had to And probably a it's good thing in run to do it .
John Marici: It certainly helps us, I think, going forward, but it's not contemplated in our guidance, but I think it's the evolution of the business, as it goes forward.
John Morici: It certainly helps us, I think, going forward, but it's not contemplated in our guidance, but I think it's the evolution of the business, as it goes forward.
Speaker #1: helps Certainly us . the long I think , going forward . But it's not contemplated in our guidance . But I think it's the evolution of the business as it goes forward .
Shirley Stacy: Thanks, Michael. Next question, please.
Shirley Stacy: Thanks, Michael. Next question, please.
Speaker #14: Thanks , Michael . Next question please .
Operator: Our next question comes from the line of David Saxon with Needham and Company.
Operator: Our next question comes from the line of David Saxon with Needham and Company.
Speaker #3: Our next question comes from the line of David Saxon with Needham & Company.
David Saxon: Great. Thanks for taking my questions. Good afternoon. I'll just keep it at one. So just on the direct fab, you know, as you roll more products through direct fab, how should we think about the magnitude of that impact on gross margins and kind of the cadence of that of how that hits the P&L? Thanks so much.
David Saxon: Great. Thanks for taking my questions. Good afternoon. I'll just keep it at one. So just on the direct fab, you know, as you roll more products through direct fab, how should we think about the magnitude of that impact on gross margins and kind of the cadence of that of how that hits the P&L? Thanks so much.
Speaker #13: Great .
Speaker #17: Thanks for taking my questions . Good afternoon . I'll just keep it a one . So just on the direct fab , you know , as you roll more products through Direct fab , how how should we think about the magnitude that of impact on margins and kind of the cadence of gross that , of how that hits the PNL ?
Joe Hogan: Yeah, David, it's Joe. Let me – I think we've been pretty clear that, you know, that'll be somewhat margin dilutive in the sense as it begins to roll out in 2026. You know, we'll scale that. We have to scale to the millions, and so, you know, as we get into 2027, you'll see us really being able to scale out. And I think, you know, as you, as you enter the second half of 2027, you get into 2028, we expect we to move into margin accretion in the, in that period of time.
Joe Hogan: Yeah, David, it's Joe. Let me – I think we've been pretty clear that, you know, that'll be somewhat margin dilutive in the sense as it begins to roll out in 2026. You know, we'll scale that. We have to scale to the millions, and so, you know, as we get into 2027, you'll see us really being able to scale out. And I think, you know, as you, as you enter the second half of 2027, you get into 2028, we expect we to move into margin accretion in the, in that period of time.
Speaker #17: Thanks so much
Speaker #2: David , it's Joe .
Speaker #2: me think . We've been pretty clear that , you know , that will be somewhat margin dilutive in the sense as it begins to roll out in 2026 .
Speaker #2: You know , we'll scale that . We have to scale to the millions . . , you know , as Yeah , so we get into 2027 , you'll see us really being able to scale out .
Speaker #2: And you know , as you think , as you I enter the second half of you 2027 , get into 2028 . We expect we move into margin accretion in that period of time .
David Saxon: Okay. But for 2026, though, do you expect gross margin to be down, or I mean, to off that-
David Saxon: Okay. But for 2026, though, do you expect gross margin to be down, or I mean, to off that-
Speaker #17: Okay. For '26, do you expect gross margin to be down, or—I mean...
Joe Hogan: No, I mean, with the margins that we-- you know, we're pretty much projecting the margins that we have.
Joe Hogan: No, I mean, with the margins that we-- you know, we're pretty much projecting the margins that we have.
Speaker #2: The margins that we , you know , we're pretty much projecting the margins that we have .
John Marici: Yeah. So what we've got, you know, on the specific direct fab, direct fab, that, that is margin dilutive. But when we talk about the 100 basis point improvement, you know, on, on op margin, that includes, you know, whatever impact that we might have from the direct fab. So we're contemplating that in terms of our overall guidance, but on direct fab itself, like Joe said, you, you need to scale that resin and, and drive utilization on the actual manufacturing. And until you do so, it's, it's margin dilutive.
John Morici: Yeah. So what we've got, you know, on the specific direct fab, direct fab, that, that is margin dilutive. But when we talk about the 100 basis point improvement, you know, on, on op margin, that includes, you know, whatever impact that we might have from the direct fab. So we're contemplating that in terms of our overall guidance, but on direct fab itself, like Joe said, you, you need to scale that resin and, and drive utilization on the actual manufacturing. And until you do so, it's, it's margin dilutive.
Speaker #1: So we've got , you know , on the specific direct fab direct fab that that is margin dilutive . But when we talk about the 100 basis point improvement , you know , on on op margin , that includes , you know , whatever impact that we might have from the direct fab .
Speaker #1: So we're that in contemplating terms of our overall guidance . But on direct fab itself , like Joe said , you need to scale that resin and and drive utilization on the actual manufacturing .
Speaker #1: And until so , you do it's margin dilutive .
David Saxon: Okay, great. Thanks.
David Saxon: Okay, great. Thanks.
Speaker #17: Okay . Great . Thanks .
Operator: Thank you. Our next question comes from the line of Michael Ryskin with Bank of America.
Operator: Thank you. Our next question comes from the line of Michael Ryskin with Bank of America.
Speaker #3: Thank you . Our next question comes from the line Michael Ryskin with Bank of of America
Michael Ryskin: Great, thanks. I'll keep it to one as well. Just to follow up on the scanners and services segment for 2026. You know, you gave us a lot of moving pieces between the volumes, and you talked about ASPs earlier. It just sounds like you're guiding to scanners and services being roughly in line with total company revenue growth, give or take a couple points. I was just thinking that in 2025, you know, you guys had a really tough comp from prior year, 16%, so that was, you know, it did a little bit slower. But since you're still in the Lumina ramp, I'm just curious why you wouldn't see some upside there, and sort of what's holding you back from giving a more aggressive outlook on scanners? Thanks.
Michael Ryskin: Great, thanks. I'll keep it to one as well. Just to follow up on the scanners and services segment for 2026. You know, you gave us a lot of moving pieces between the volumes, and you talked about ASPs earlier. It just sounds like you're guiding to scanners and services being roughly in line with total company revenue growth, give or take a couple points. I was just thinking that in 2025, you know, you guys had a really tough comp from prior year, 16%, so that was, you know, it did a little bit slower. But since you're still in the Lumina ramp, I'm just curious why you wouldn't see some upside there, and sort of what's holding you back from giving a more aggressive outlook on scanners? Thanks.
Speaker #18: Thanks . Great . follow up the on scanners . And services segment for for 26 . You gave us a lot of moving pieces between volumes .
Speaker #18: I'll keep it to one as well . .
Speaker #18: Just a
Speaker #18: And you talked ASPs about earlier. It just sounds like you're guiding to scanners and services being roughly in line with company total revenue growth, give or take a couple of points.
Speaker #18: I was just thinking that in 25 , you guys had a really tough comp from prior year . Of 16% . So that was , you know , it did a little bit slower .
Speaker #18: But since you're still in the Lumina ramp , just curious why you wouldn't see some upside there . And sort of what's holding you back from giving a more aggressive outlook on scanners ?
John Marici: Yeah. Yeah, Michael, this is John. So, in total, you're right. Systems and services, when we think about kind of the company average in terms of, you know, the guidance that we gave, the 3 to 4%, systems and services kind of falls into that on a year-over-year basis. So a lot of new things that we still have to be able to grow with our systems and services business, some of the upgrades that we talk about, some of the trade-ins, other ways to be able to grow, but we think broadly it grows equal to, or about at what clear aligners grow.
John Morici: Yeah. Yeah, Michael, this is John. So, in total, you're right. Systems and services, when we think about kind of the company average in terms of, you know, the guidance that we gave, the 3 to 4%, systems and services kind of falls into that on a year-over-year basis. So a lot of new things that we still have to be able to grow with our systems and services business, some of the upgrades that we talk about, some of the trade-ins, other ways to be able to grow, but we think broadly it grows equal to, or about at what clear aligners grow.
Speaker #18: Thanks .
Speaker #1: Yeah , yeah . Michael , this is John . So in total you're right . Systems and services . When we think about kind of the company average in terms of , you know the guidance that we gave the 3 to 4% systems and kind of services into that on a year over year basis .
Speaker #1: a lot So of new things that we still be able to with our grow have to systems services and Some of the business .
Speaker #1: that we talk about , some of the trade ins , other ways to be able to grow , but we think broadly it grows equal to or about at what clear aligners grow .
Shirley Stacy: Thank you, Michael. Two more questions, please, Operator.
Shirley Stacy: Thank you, Michael. Two more questions, please, Operator.
Speaker #14: Thank you, Michael. Two more questions, please.
Operator: Our next question comes from the line of Kevin Caliendo with UBS.
Operator: Our next question comes from the line of Kevin Caliendo with UBS.
Speaker #3: Our next question comes from the line
Speaker #3: Kevin Caliendo with UBS .
Dylan Finley: Thank you. This is Dylan Finley on for Kevin. I'll keep it to one. Okay, going back to John's commentary on the question on the no AA and kind of where that stands today, you know, how is that contemplated into the, you know, 1 to 2% ASP decline that you're forecasting for the year? And I mean, is that product going to be rolled out in a meaningful way? And any additional aligners, whatever, would those be incremental to what you've guided for, or are there assumptions in place for what to get in additional aligners?
Dylan Finley: Thank you. This is Dylan Finley on for Kevin. I'll keep it to one. Okay, going back to John's commentary on the question on the no AA and kind of where that stands today, you know, how is that contemplated into the, you know, 1 to 2% ASP decline that you're forecasting for the year? And I mean, is that product going to be rolled out in a meaningful way? And any additional aligners, whatever, would those be incremental to what you've guided for, or are there assumptions in place for what to get in additional aligners?
Speaker #19: Thank you. This is Dylan Findlay on for Kevin. I'll keep it operator to one.
Speaker #1: Okay .
Speaker #19: Going back to John's commentary on the question on the no . AA kind of and stands where that today . How is that contemplated into the you know , 1 to 2% ASP decline that you're forecasting for the year ?
Speaker #19: I mean , is that product And going to be rolled out in a meaningful way ? And any additional aligners , whatever those be would incremental to what you've guided for ?
Speaker #19: Are there assumptions in place for what it takes to get additional aligners?
John Marici: Yeah, Dylan, I can take that. So, as we pilot things, we expect to roll things out from a no refinement type product, a no AA product. So we've seen good uptake on the comprehensive with no AAs. We're seeing this and have tested in various markets, and we're seeing success. So that continues to roll out in Q1. And like Joe said, it'd be mostly fully rolled out into Q2. Our guidance reflects that, so we have that. Don't think of an ASP impact with that type of product either, though, because remember, we don't have to defer revenue on a no refinement type of product, so we can recognize all the revenue upfront.
John Morici: Yeah, Dylan, I can take that. So, as we pilot things, we expect to roll things out from a no refinement type product, a no AA product. So we've seen good uptake on the comprehensive with no AAs. We're seeing this and have tested in various markets, and we're seeing success. So that continues to roll out in Q1. And like Joe said, it'd be mostly fully rolled out into Q2. Our guidance reflects that, so we have that. Don't think of an ASP impact with that type of product either, though, because remember, we don't have to defer revenue on a no refinement type of product, so we can recognize all the revenue upfront.
Speaker #1: Yeah , Dylan , I can take that . So expect we to in success as we things , we pilot expect to to roll things out from a no refinement type product that no AA product .
Speaker #1: So we're seeing good uptake on the comprehensive with no AAS . We're seeing this have in tested in in various markets , and we're seeing success .
Speaker #1: So that continues to roll out in in Q1 like Joe said , . And it'd be mostly fully rolled out into to Q into guidance reflects our that .
Speaker #1: So we have that . Don't think of an ASP impact with that type of product either , though , because remember , we don't have to defer revenue on a no refinement type of product .
Speaker #1: So we can recognize all the revenue up front. The refinements will come over time as doctors need to provide or need those refinements.
John Marici: The refinements will come over time, as doctors need those refinements, and we just get that over time. But it's not an initial ASP impact when we have that, and that's what's been contemplated in the volume that we gave, as well as the ASP.
John Morici: The refinements will come over time, as doctors need those refinements, and we just get that over time. But it's not an initial ASP impact when we have that, and that's what's been contemplated in the volume that we gave, as well as the ASP.
Speaker #1: And we just get that over time . And but it's not an initial ASP impact when we have that . And that's what's been contemplated in in the volume gave , as well as the ASP .
Shirley Stacy: Thanks, Dylan. Last question, Operator, please.
Shirley Stacy: Thanks, Dylan. Last question, Operator, please.
Operator: Final question comes from the line of Erin Wright with Morgan Stanley.
Operator: Final question comes from the line of Erin Wright with Morgan Stanley.
Speaker #3: The final question comes from the line of Erin Morgan Wright with Stanley.
David Saxon: Great. Thanks for squeezing me in. So in the ortho segment, how is broader clear aligner growth across the industry, particularly in the North American market, comparing to brackets and wires? And-
Erin Wright: Great. Thanks for squeezing me in. So in the ortho segment, how is broader clear aligner growth across the industry, particularly in the North American market, comparing to brackets and wires? And-
Speaker #20: Great . Thanks for squeezing me in . So in the ortho segment , how is broader , clear liner growth across the industry , particularly in the North American market , comparing to brackets and wires and just based on some of the gauge data that you track on that front .
Erin Wright: Just based on some of the gauge data that you track on that front. And then across kind of the teen segment, any metrics on conversion rates or anything like that from a Invisalign First or palatal expansion standpoint, and how that's tracking? Is that moving the needle? Thanks.
Erin Wright: Just based on some of the gauge data that you track on that front. And then across kind of the teen segment, any metrics on conversion rates or anything like that from a Invisalign First or palatal expansion standpoint, and how that's tracking? Is that moving the needle? Thanks.
Speaker #20: And then across kind of the teen segment , any metrics on conversion rates or anything like that from a Invisalign first or palate expansion standpoint and , and how that's tracking is that , is that moving the needle ?
Speaker #20: Thanks .
Joe Hogan: Erin, it's Joe. On the ortho segment, wires and brackets and liners, I would say there's between Q4 and what we saw the rest of the year, I don't think there's a big difference in the sense of the conversion we've seen on, you know, particularly teens with wires and brackets in our product line overall. Now, where we have seen a difference, obviously, in the younger patients, and that's not really a wires and brackets competition. Those are different devices that we're going about, and we saw, you know, great growth in that area. Conversion rates, again, I think conversion rates, if I hit this right on your question, Erin, it has a lot to do with how these doctors convert. Do they scan up front first?
Joe Hogan: Erin, it's Joe. On the ortho segment, wires and brackets and liners, I would say there's between Q4 and what we saw the rest of the year, I don't think there's a big difference in the sense of the conversion we've seen on, you know, particularly teens with wires and brackets in our product line overall. Now, where we have seen a difference, obviously, in the younger patients, and that's not really a wires and brackets competition. Those are different devices that we're going about, and we saw, you know, great growth in that area. Conversion rates, again, I think conversion rates, if I hit this right on your question, Erin, it has a lot to do with how these doctors convert. Do they scan up front first?
Speaker #2: Joe, on the ortho segment, wires and brackets and aligners, I would say there's between the fourth quarter and what we saw.
Speaker #2: The rest of the year . I don't think there's a big difference in the sense of the conversion we've seen on particularly teens with wires and brackets and , and our product line overall .
Speaker #2: Now, what we have seen is a difference, obviously, in the younger patients. And that's not really a wires and brackets competition.
Speaker #2: are Those different devices that we're going about . saw we great growth in that area . Conversion rates again I think conversion rates , if I hit this right on your question , Aaron , it has a lot to do with how these doctors convert .
Joe Hogan: Do they show, you know, visualization, you know, like, you know, our smile, you know, our smile products and different things like that. And so workflow becomes extremely important in the sense of what those conversion rates are. But I haven't. When you think holistically or generically in the industry, I don't think the conversion rates in the orthodontic community have changed dramatically at all during the year.
Joe Hogan: Do they show, you know, visualization, you know, like, you know, our smile, you know, our smile products and different things like that. And so workflow becomes extremely important in the sense of what those conversion rates are. But I haven't. When you think holistically or generically in the industry, I don't think the conversion rates in the orthodontic community have changed dramatically at all during the year.
Speaker #2: Do they scan first ? Do they up front show , you know , visualization , you know , like , you know , our smile .
Speaker #2: You our smile products and different things like that . And so workflow becomes extremely important in the sense of what those conversion rates are .
Speaker #2: But I when you haven't think holistically or generically in the industry , I don't think the conversion rates in the orthodontic community have changed dramatically at all during the year .
Erin Wright: Thanks, Erin.
Shirley Stacy: Thanks, Erin.
Operator: Thank you. And we have reached the end of our question-and-answer session. I will now turn the call back over to Shirley Stacy for closing remarks.
Operator: Thank you. And we have reached the end of our question-and-answer session. I will now turn the call back over to Shirley Stacy for closing remarks.
Speaker #6: Thanks , Erin .
Speaker #20: Hey ,
Speaker #20: thanks .
Speaker #3: Thank you. And we have reached the end of our question and answer session. I will now turn the call back over to Shirley Stacy for closing remarks.
Shirley Stacy: Thanks, everyone, for joining us today. We look forward to meeting you with you at upcoming investor conferences, at industry events, and, Chicago Midwinter in the next, couple weeks. If you have any follow-up questions, please contact investor relations, and have a great day.
Shirley Stacy: Thanks, everyone, for joining us today. We look forward to meeting you with you at upcoming investor conferences, at industry events, and, Chicago Midwinter in the next, couple weeks. If you have any follow-up questions, please contact investor relations, and have a great day.
Speaker #6: Hey , thanks .
Speaker #14: Everyone, thank you for joining us today. We look forward to meeting with you at upcoming investor conferences, at industry events, and at Chicago Mid-Winter in the next couple of weeks.
Speaker #14: If you have any follow-up questions, please contact Investor Relations, and have a great day.
Operator: Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Operator: Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
