# ALIGN TECHNOLOGY INC (ALGN) Informational only - not investment advice. CIK: 0001097149 SIC: 3842 Orthopedic, Prosthetic & Surgical Appliances & Supplies SIC breadcrumb: [Manufacturing](/division/D/) > [SIC Major Group 38](/major-group/38/) > [SIC 3842 Orthopedic, Prosthetic & Surgical Appliances & Supplies](/industry/3842/) Latest 10-K filed: 2026-02-27 SEC page: https://www.sec.gov/edgar/browse/?CIK=1097149 Filing source: https://www.sec.gov/Archives/edgar/data/1097149/000109714926000014/algn-20251231.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 4034964000 | USD | 2025 | 2026-02-27 | | Net income | 410351000 | USD | 2025 | 2026-02-27 | | Assets | 6233693000 | USD | 2025 | 2026-02-27 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001097149.json. Derived margins are computed from the extracted annual SEC facts. | Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | 1,079,874,000 | 1,473,413,000 | 1,966,492,000 | 2,406,796,000 | 2,471,941,000 | 3,952,584,000 | 3,734,635,000 | 3,862,260,000 | 3,999,012,000 | 4,034,964,000 | | Net income | 189,682,000 | 231,418,000 | 400,235,000 | 442,776,000 | 1,775,888,000 | 772,020,000 | 361,573,000 | 445,053,000 | 421,362,000 | 410,351,000 | | Operating income | 248,921,000 | 353,611,000 | 466,564,000 | 542,493,000 | 387,171,000 | 976,400,000 | 642,595,000 | 643,338,000 | 607,628,000 | 545,755,000 | | Gross profit | 815,294,000 | 1,116,947,000 | 1,447,867,000 | 1,743,897,000 | 1,763,235,000 | 2,935,355,000 | 2,633,775,000 | 2,706,863,000 | 2,799,159,000 | 2,711,013,000 | | Diluted EPS | 2.33 | 2.83 | 4.92 | 5.53 | 22.41 | 9.69 | 4.61 | 5.81 | 5.62 | 5.65 | | Assets | 1,396,151,000 | 1,784,009,000 | 2,052,458,000 | 2,500,702,000 | 4,829,683,000 | 5,942,110,000 | 5,947,947,000 | 6,083,877,000 | 6,214,600,000 | 6,233,693,000 | | Liabilities | 400,762,000 | 629,721,000 | 799,567,000 | 1,154,533,000 | 1,595,818,000 | 2,319,396,000 | 2,346,589,000 | 2,453,388,000 | 2,362,615,000 | 2,184,546,000 | | Stockholders' equity | 999,307,000 | 1,154,288,000 | 1,252,891,000 | 1,346,169,000 | 3,233,865,000 | 3,622,714,000 | 3,601,358,000 | 3,630,489,000 | 3,851,985,000 | 4,049,147,000 | | Cash and cash equivalents | 389,275,000 | 449,511,000 | 636,899,000 | 550,425,000 | 960,843,000 | 1,099,370,000 | 942,050,000 | 937,438,000 | 1,043,887,000 | 1,094,908,000 | | Net margin | 17.57% | 15.71% | 20.35% | 18.40% | 71.84% | 19.53% | 9.68% | 11.52% | 10.54% | 10.17% | | Operating margin | 23.05% | 24.00% | 23.73% | 22.54% | 15.66% | 24.70% | 17.21% | 16.66% | 15.19% | 13.53% | ## Macro Cross-References - [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average - [UNRATE](/indicator/UNRATE/): Unemployment Rate - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit - [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy - [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food - [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy - [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter - [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index - [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate - [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm - [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate - [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio - [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed - [CE16OV](/indicator/CE16OV/): Employment Level - [ICSA](/indicator/ICSA/): Initial Claims - [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm - [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade - [PCE](/indicator/PCE/): Personal Consumption Expenditures - [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income - [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate - [M2SL](/indicator/M2SL/): M2 - [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance ## Latest 10-K MD&A Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. A discussion regarding our financial condition and results of operations for fiscal 2025 compared to fiscal 2024 is presented under Results of Operations of this Annual Report on Form 10-K. Discussions regarding our financial condition and results of operations for fiscal 2024 compared to 2023 have been omitted from this Annual Report on Form 10-K, but can be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 28, 2025, which is available without charge on the SEC’s website at www.sec.gov and on our investor relations website at investor.aligntech.com. Executive Overview of Results Our Strategic Growth Drivers We strive to help our doctor customers move their practices forward by connecting them with new patients, providing digital solutions to help increase practice efficiency and helping them deliver the best possible treatment outcomes and experiences to millions of people around the world. We strive to achieve this through our continued focus on, and execution of, our strategic growth drivers: International Expansion: Continually increasing the presence of our operations and commercial organization globally, expanding our products and service offerings and training and educating more doctors in more markets. General Practitioner dentists (“GP”) treatment: Making teeth straightening more relevant for GPs by enabling them to effectively scan, identify, treat, and monitor malocclusion. Patient Demand: Making the Invisalign® system the most recognized brand name in orthodontics by creating awareness and preference among consumers and motivating potential patients to start treatment. Orthodontist Utilization: Continually innovating in digital orthodontics to increase product applicability and predictability to address a range of malocclusion, especially for teens and growing patients, enabling doctors to confidently diagnose and treat more patients. Our growth strategy depends on our ability to facilitate the digital transformation of dentistry, our continuous focus on innovation, and expansion to meet and exceed evolving customer expectations as the array of products and services available to them increases. We strive to deliver on each of our strategic growth drivers through a variety of interrelated enterprise-wide efforts including: •Continuing penetration and adoption of Invisalign® clear aligners, iTero Element™ and Lumina™ intraoral scanners and exocad™ CAD/CAM solutions in international markets by investing in manufacturing operations, research and development, clinical treatment planning, sales and marketing and building our quality and regulatory capabilities in existing and emerging markets globally. Our fabrication facilities in our three key regions and treatment planning operations in targeted regional geographies brings our operations closer to our customers and enables us to serve them more quickly and respond to their needs more effectively. We have also diversified our research and development activities, which has created a longer term, more stable environment for consistent hiring, retention and innovation in a variety of high technology locations. •Targeting growth opportunities with international orthodontists and GP customers, particularly with adopters of digital dentistry platforms by tailoring our sales and marketing strategies, manufacturing operations and resources around the unique needs of each customer channel. As we continue growing, we intend to opportunistically expand our research, development, manufacturing, treatment planning, and sales and marketing operations to meet local and regional demand thoughtfully and deliberately. Over the longer-term, we expect international revenues to grow faster than Americas’ revenues as a result of growing international demand, our continued investment in international market expansion, the size of the market opportunities and our relatively low market penetration in these regions. 41 •Building confidence within the GP and orthodontic communities through training and education efforts to increase their adoption and utilization of digital dental practice transformation and clear aligner treatment. We continue to expand our clear aligner customer base by educating new doctors on the benefits of digital dentistry through the Invisalign System. We furthermore demonstrate to GPs and orthodontists how the iTero portfolio of intraoral scanners, products like Invisalign Go™ treatment, and exocad™ CAD/CAM restorative services and workflows can increase revenues and profitability for their dental practices by enhancing patient experiences and creating operational practice efficiencies. DSOs represent a large and growing opportunity to help drive adoption of digital technology across the dental industry. We have well established relationships with many DSOs globally that recognize the benefits of digital workflows enabled by our portfolio of products and services that make up the AlignTM Digital Platform, including increased practice efficiency and profitability, as well as delivering a better patient experience from shorter cycle times to customer proximity. We have and may continue to financially invest in or explore collaborations with key ecosystem partners, including DSOs, whose missions and visions align with our vision, strategy, business model and goals. •Investing in research and development that allows us to innovate, develop and bring to market products and solutions that deliver the ever-increasing clinical precision and predictability that doctors expect with the speed and convenience their patients require. For instance, in 2025, we announced several new enhancements to the AlignTM Digital Platform, including (i) restorative capabilities to our iTero Lumina™ intraoral scanner (without iTero NIRI technology) and the new iTero Lumina™ Pro dental imaging system (with iTero NIRI technology), and (ii) iTero Digital Solutions, a comprehensive ecosystem that includes intraoral scanners and integrated software tools, including enhancements to the Align™ Oral Health Suite, Invisalign® Outcome Simulator Pro with ClinCheck® Smile Video, and the iTero™ Design Suite. Additionally, we continue to invest in AI infrastructure, specialized talent, and strategic partnerships to further enhance the capabilities of the Align™ Digital Platform and differentiate our product portfolio from traditional and emerging competitors. We believe our commitment to AI can unlock new and adjacent market opportunities, and sharpen our operational focus and capital efficiency by driving automation, scalability, and productivity across our operations, while enabling doctors and their patients to benefit from more efficient and predictable treatment experiences. We maintain governance frameworks, internal controls, and oversight mechanisms designed to promote responsible AI development and deployment, mitigate associated risks, and ensure alignment with applicable laws. •Creating demand and enabling patient conversion with targeted investments in advertising and public relations through television, film, print, social media and alliances with professional sports teams, athletes, social media influencers and other strategic partners, to encourage treatment by Invisalign trained doctors. We believe that well-designed, targeted sales and marketing promotions that build on our strong brand awareness allow us to differentiate our products and solutions from traditional and emerging competitors. To increase awareness and educate young adults, parents and teens about the benefits of Invisalign treatment, in 2025, we continued to invest in and create campaigns across markets in media platforms such as TikTok, Instagram, YouTube, SnapChat, WeChat, and Douyin. We expect to make further investments to stimulate additional demand for Invisalign System treatment and drive more consumers to dental professionals for those treatments. •Pursuing new product lines that complement our doctor-prescribed principal products currently available in certain e-commerce and retail channels in the United States. Similarly, in 2025, we continued our focus on our doctor subscription plan and grew our underpenetrated share of the retainer business through strategic marketing campaigns focused on driving adoption and increasing market share. •Increasing global orthodontic utilization rates as doctors’ clinical confidence in the efficacy and predictability of the Invisalign System increases with advancements in products and technology and as patients and doctors demand treatments that emphasize convenience and safety through fewer visits and less invasive and quicker treatments. In addition, the teenage and younger market makes up approximately 70% of the estimated 22 million total annual global orthodontic case starts. We offer early interceptive treatment to this patient population with products designed to acclimate them to wearing removable devices. Included in these treatments are the Invisalign First Phase 1 Package, designed specifically for younger patients generally between the ages of six and ten. Also included are Invisalign Palatal Expanders, a series of removable devices that treat the most common skeletal and dental malocclusions in growing children, and the Invisalign System with mandibular advancement featuring occlusal blocks, which addresses Class II skeletal and dental correction for growing patients in the late mixed or early permanent dentition stages (ages 10-16). We furthermore continue to emphasize the benefits of the Invisalign System for teenage and younger patient treatments through education, training and sales and marketing programs. In 2025, a record number of teens and kids started treatment with Invisalign clear aligners. We expect utilization rates to continue to rise. However, our utilization rates will fluctuate from period to period due to a variety of factors, which may include seasonal trends in our business, consumer demand due to macroeconomic factors, and adoption rates for new products and features. 42 Trends and Uncertainties Below is a discussion of the significant trends and uncertainties that could impact our operations: Macroeconomic Challenges, Trade Impediments and Geopolitical Tensions Our revenues may fluctuate as a result of events and circumstances impacting customer confidence, consumer sentiment, discretionary spending and ultimately demand for dental services and our products. These events and circumstances include, but are not limited to, macroeconomic conditions, fluctuations in foreign currency exchange rates, tariffs or proposed tariffs, customs duties or fees, and any retaliatory tariffs or protectionist trade measures taken in response to such tariffs or as a result of trade and international disputes, inflation, elevated interest rates, actual or potential slowdowns or recessions, wages, employment levels and health insurance coverage, debt obligations, discretionary income, supply chain challenges, market volatility, and other factors. For more information on events and circumstances that could impact our revenues, refer to Part II, Item 1A “Risk Factors—Macroeconomic and External Risks.” Many of these factors may contribute to, among other things, higher raw material prices, increased transportation and labor costs, and interruptions in supply and distribution operations, each of which can also impact the availability of certain raw materials, parts and components used in our products as well as our costs and those of our suppliers. For example, we believe that in the beginning of the second quarter of 2025, sales of our products were adversely impacted compared to the same period in prior years by certain macroeconomic conditions, including global tariff volatility, inflation, and higher interest rates, which we believe may continue to impede dental patient demand. For example, patient traffic growth has been uneven for many doctors, with orthodontic starts down for four consecutive years. We believe uncertainty not only impacts consumer purchasing decisions but also the decisions and recommendations that doctors make, especially doctors who offer both clear aligners and wires and brackets in their practices and have the additional time to treat patients with wires and brackets when orthodontic starts are slowing or diminishing. We believe this has resulted in an increase in orthodontic starts using wires and brackets in lieu of clear aligners that was more pronounced in the second quarter of 2025. However, we believe these trends are continuing and will impede future sales for so long as consumer economic uncertainty persists, particularly to the extent it impairs discretionary spending. We also anticipate the geopolitical conflicts involving Ukraine, the Middle East, China and other regions will continue to add to market uncertainties and dampen consumer sentiment and demand. More directly, we believe government actions relating to actual or proposed tariffs and retaliatory actions in key strategic countries or regions, particularly in the United States, China, Europe, Brazil, Canada, Israel and Mexico may adversely impact our revenue and cost of goods sold. Additionally, the trade war and geopolitical tensions between the United States and China may result in the limitation or prohibition of the availability of certain raw materials, components and parts necessary for our products or the products of our suppliers. The degree of our exposure depends on, among other things, the type of goods subject to any tariffs or trade restrictions enacted, the tariff rates or limits imposed, the timing of the tariffs or restrictions and any other retaliatory measures enacted. The impact may vary by time and region, making operational results uncertain and difficult to predict. These events may also cause a shift in public opinion about companies based in the United States and this may have an adverse impact on our reputation and business. We continue to closely monitor the foregoing issues, assess their potential impact on our operations and financial results, and implement plans to seek to mitigate the impact of any adverse events. Additionally, a material amount of our revenues are derived internationally and many of our international operations are denominated in currencies other than the U.S. dollar. In 2025, the U.S. dollar remained weakened against major currencies, which positively impacted our financial condition and results of operations for the year. Foreign exchange volatility and the subsequent strengthening or weakening of the U.S. dollar against other currencies remains uncertain and unpredictable. We continue to monitor the potential for violence and military actions that may directly or indirectly impact our personnel, manufacturing, supply chain, and sales. For instance, the ongoing conflict in Ukraine and unstable environment in the Middle East, as well as increased geopolitical tensions involving Taiwan and the South China Sea may further exacerbate general and regional macroeconomic instability. This is particularly true if fighting erupts, intensifies, spreads to other locations, creates shipping and logistical challenges or cost increases, leads to sanctions or boycotts, or otherwise materially impacts our operations or consumer spending. Our iTero business is headquartered in Israel and, although the sales, delivery times and cost of shipping have not been materially impacted to date, the situation remains fluid. We have implemented contingency planning and business continuity measures to mitigate these risks, but it is uncertain whether further escalation could disrupt our operations. While there have been export and import restrictions imposed against products originating from and businesses operating in Israel, they have not materially impacted our sales or operations to date although we continue to monitor the risk. 2025 Restructuring 43 Beginning in the third quarter of 2025 and continuing into the fourth quarter, we initiated a series of restructuring actions to streamline our operations, realign parts of our organization, and optimize our global manufacturing footprint in response to the current macro environment. These actions included realigning certain business groups and reducing our global workforce, disposing of certain manufacturing assets prior to the end of their useful lives, and committing to the sale of a manufacturing facility and related assets. As part of these restructuring efforts, we incurred $41 million of expenses through December 31, 2025, primarily related to involuntary termination benefits, including employee severance and other post‑employment costs. We also recorded $76.9 million of accelerated depreciation associated with certain manufacturing assets we planned to dispose of other than by sale. In addition, we undertook actions to optimize our manufacturing footprint, including the planned sale of our manufacturing facility in Juarez, Mexico, consisting of land, building, and building improvements (the “disposal group”). During the third quarter of 2025, we determined that the disposal group met the criteria for classification as held for sale under ASC 360‑10. Accordingly, the disposal group was measured at its fair value less estimated costs to sell, resulting in an impairment charge of $23.1 million. As of December 31, 2025, we had $28.0 million of assets classified as held for sale. We may incur additional costs not currently contemplated due to events related to or resulting from these restructuring actions. Refer to Note 1 “Summary of Significant Accounting Policies,” Note 17 “Restructuring and Other Charges,” and Note 18 “Assets Held for Sale,” in the Notes to Consolidated Financial Statements for further discussion. Changing Product Preferences As the markets for clear aligners and digital processes and workflows used to transform the practice of dentistry continue to mature, we anticipate customer and patient expectations and demands will continue to evolve. We expect to meet customer demands with innovative treatment options that include more choices to address a wider scope of treatment goals and budgets based on our existing and new products. This may result in larger and unpredictable variations in geographic and product mix and selling prices, which could result in uncertain impacts on our financial statements and business operations. For example, we have and may continue to experience a shift from certain products with higher ASPs to those with lower ASPs. We strive to manage the challenges presented by the foregoing trends and uncertainties, including the macroeconomic conditions, tariffs and retaliatory measures, military conflicts and the evolution of our target markets, by focusing on improving our operations, further increasing flexibility and efficiencies in our processes, adjusting our business models to changing circumstances and offering products that meet market demand. Specifically, we are managing financial impacts by implementing strategic product innovations, introductions and pricing actions, implementing cost saving measures and evaluating hiring needs. Further discussion of the impact of these challenges on our business may be found in Part I, Item 1A of this Annual Report on Form 10-K under the heading “Risk Factors.” Key Financial and Operating Metrics We measure our performance against the foregoing strategic priorities by the achievement of key financial and operating metrics. For the year ended December 31, 2025, our business operations reflect the following: ◦Revenues of $4,035.0 million, an increase of 0.9% year-over-year; ◦Clear Aligner revenues of $3,245.4 million, an increase of 0.5% year-over-year; ◦Clear Aligner case volume increase of 4.7% year-over-year and Clear Aligner volume increase for teens and growing patients from 868.1 thousand shipments to 935.8 thousand or 7.8% year-over-year; ◦Imaging Systems and computer-aided design and computer-aided manufacturing (“CAD/CAM”) services revenues of $789.6 million, an increase of 2.7% year-over-year; ◦Income from operations of $545.8 million and operating margin of 13.5%; ◦Effective tax rate of 29.9%;      ◦Net income of $410.4 million with diluted net income per share of $5.65; ◦Cash and cash equivalents of $1,094.9 million as of December 31, 2025; ◦Cash provided by operating activities of $593.2 million; ◦Capital expenditures of $102.4 million, primarily related to investments in our manufacturing capacity and facilities; and ◦Number of employees was 20,290 as of December 31, 2025, a decrease of 3.1% year-over-year. 44 Other Statistical Data and Trends •As of December 31, 2025, over 22 million people worldwide have been treated with our Invisalign system. •For the year ended 2025, the total number of Invisalign-trained doctors cases were shipped to (doctor submitters) was 130.0 thousand compared to 130.4 thousand in 2024, a 0.3% decrease. GP and orthodontist doctor submitters decreased by approximately 2% and increased by approximately 2%, respectively, in 2025 compared to 2024. •The total utilization rate in 2025 was 20.1 cases per doctor compared to 19.1 in both 2024 and 2023. Our utilization rates have been impacted by the macroeconomic conditions and other factors as described in the “Trends and Uncertainties” section above. In general, we expect utilization rates to rise over time although they are likely to fluctuate from period to period. •Clear aligner revenue per case shipment (clear aligner revenues divided by case shipments) decreased by 3.9% from $1,295 in 2024 to $1,245 in 2025. Results of Operations Net Revenues by Reportable Segment We group our operations into two reportable segments: Clear Aligner segment and Systems and Services segment. •Our Clear Aligner segment consists of Comprehensive Products, Non-Comprehensive Products and Non-Case revenues as defined below: •Comprehensive Products include, but are not limited to, Invisalign Comprehensive, Invisalign First and Invisalign Comprehensive 3in3. •Non-Comprehensive Products include, but are not limited to, Invisalign Moderate, Lite and Express packages, Invisalign Go and Invisalign Go Plus and Invisalign Palatal Expander. •In the United States, Canada, and EMEA, we also offer a Doctor Subscription Program which is our monthly subscription-based clear aligner program. The program allows doctors the flexibility to order retainers and low-stage “touch-up” clear aligners within their subscribed tier and is designed for a segment of experienced Invisalign trained doctors who are currently not regularly using our retainers or low-stage aligners. The low-stage aligners, the Touch up product, are included as a Non-Comprehensive Product. •Non-Case revenues include, but are not limited to, retention products including retention aligners ordered through the Doctor Subscription Program, Invisalign training, adjusting tools used by dental professionals during the course of treatment and Invisalign Accessory Products that are complementary to our doctor-prescribed principal products such as aligner cases (clamshells), teeth whitening products, cleaning solutions (crystals, foam and other material) and other oral health products available in certain commerce channels in select markets. •Our Systems and Services segment consists of sales related to our iTero intraoral scanning systems, which includes a single hardware platform and restorative or orthodontic software options, scanner wand upgrades and non-system revenues from leases of scanner systems, sales of pre-owned scanner systems, subscription software, disposables, pay per scan services, as well as exocad’s CAD/CAM software solutions that integrate workflows to dental labs and dental practices. 45 Net revenues for our Clear Aligner and Systems and Services segments for the years ended December 31, 2025, 2024 and 2023 are as follows (in millions)1: Year Ended December 31, Year Ended December 31, Net Revenues 2025 2024 Change 2024 2023 Change Clear Aligner net revenues $ 3,245.4  $ 3,230.1  $ 15.3  0.5  % $ 3,230.1  $ 3,199.3  $ 30.8  1.0  % Systems and Services net revenues 789.6  768.9  20.7  2.7  % 768.9  662.9  106.0  16.0  % Total net revenues $ 4,035.0  $ 3,999.0  $ 36.0  0.9  % $ 3,999.0  $ 3,862.3  $ 136.8  3.5  % Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding. 1 Beginning with our quarterly report on Form 10-Q for the quarter ended March 31, 2025, we are no longer disclosing Clear Aligner net revenues for Americas, International and Non-case. Rather our disclosure will align with our Clear Aligner reportable segment in total. Clear Aligner Case Volume Case volume data which represents Clear Aligner case shipments for the years ended December 31, 2025, 2024 and 2023 is as follows (in thousands): Year Ended December 31, Year Ended December 31, 2025 2024 Change 2024 2023 Change Total case volume 2,611.3  2,493.7  117.5  4.7  % 2,493.7  2,408.5  85.2  3.5  % Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding. Total net revenues increased by $36 million in 2025 as compared to the same period in 2024, primarily due to an increase in Clear Aligner volume, partially offset by a decrease in ASP and an increase in Systems and Services net revenues driven by strong scanner wand sales. Clear Aligner Clear Aligner net revenues increased by $15 million in 2025 as compared to the same period in 2024, primarily due to higher Clear Aligner volume, resulting in an increase of net revenues of $138 million. Clear Aligner net revenues were further positively impacted by $4 million due to favorable foreign exchange rates. These increases were partially offset by a decrease in ASP, driven by product mix shift to lower priced products and higher discounts, resulting in a decrease of net revenue of $127 million. Systems and Services Systems and Services net revenues increased by $21 million in 2025 as compared to the same period in 2024 primarily due to an increase of $26 million in sales of scanner wands, driven by strong volume partially offset by lower scanner wand ASP, a $19 million increase from non-system sales and a $1 million positive impact from favorable foreign exchange rates. These increases were partially offset by lower scanner system sales of $25 million, driven by lower system volume and ASP. 46 Cost of net revenues and gross profit (in millions): Year Ended December 31, Year Ended December 31, 2025 2024 Change 2024 2023 Change Clear Aligner Cost of net revenues $ 1,058.9  $ 952.1  $ 106.8  $ 952.1  $ 911.3  $ 40.8  % of net segment revenues 32.6  % 29.5  % 29.5  % 28.5  % Gross profit $ 2,186.5  $ 2,278.0  $ (91.5) $ 2,278.0  $ 2,288.0  $ (10.1) Gross margin % 67.4  % 70.5  % 70.5  % 71.5  % Systems and Services Cost of net revenues $ 265.1  $ 247.7  $ 17.3  $ 247.7  $ 244.1  $ 3.6  % of net segment revenues 33.6  % 32.2  % 32.2  % 36.8  % Gross profit $ 524.5  $ 521.2  $ 3.3  $ 521.2  $ 418.8  $ 102.3  Gross margin % 66.4  % 67.8  % 67.8  % 63.2  % Total cost of net revenues $ 1,324.0  $ 1,199.9  $ 124.1  $ 1,199.9  $ 1,155.4  $ 44.5  % of net revenues 32.8  % 30.0  % 30.0  % 29.9  % Gross profit $ 2,711.0  $ 2,799.2  $ (88.1) $ 2,799.2  $ 2,706.9  $ 92.3  Gross margin % 67.2  % 70.0  % 70.0  % 70.1  % Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding. Cost of net revenues includes personnel-related costs including payroll and stock-based compensation for staff involved in the production process, the cost of materials, packaging, freight and shipping, depreciation on capital equipment and facilities used in the production process, amortization of acquired intangible assets and training costs. For the year ended 2025, our gross margin decreased as compared to the same period in 2024 primarily due to an increase in Clear Aligner Cost of net revenues driven by restructuring charges, impairment losses on Assets held for sale and depreciation on assets disposed of other than by sale. Our gross margin was further impacted negatively by an impairment loss on inventory recorded in our Systems and Services segment. We also experienced a decline in ASPs in both reportable segments. These decreases were partially offset by lower Cost of net revenues, excluding the items noted previously, from operational efficiencies. Clear Aligner The gross margin percentage decreased in 2025 as compared to the same period in 2024 primarily due to accelerated depreciation on assets disposed of other than by sale of $77 million and lower ASPs. These decreases were partially offset by operational efficiencies. Systems and Services The gross margin percentage decreased in 2025 as compared to the same period in 2024 primarily due to lower ASPs and an impairment loss on inventory of $15 million. These decreases were partially offset by lower Cost of net revenues, excluding the impairment loss, from operational efficiencies. Selling, general and administrative (in millions): Year Ended December 31, Year Ended December 31, 2025 2024 Change 2024 2023 Change Selling, general and administrative $ 1,755.8  $ 1,763.2  $ (7.4) $ 1,763.2  $ 1,703.4  $ 59.8  % of net revenues 43.5  % 44.1  % 44.1  % 44.1  % Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding. Selling, general and administrative expense generally includes personnel-related costs, including payroll, stock-based compensation and commissions for our sales force, marketing and advertising expenses including media, market research, marketing materials, clinical education, trade shows and industry events, legal and outside service costs, equipment, software and maintenance costs, depreciation and amortization expense and allocations of corporate overhead expenses including facilities and IT. 47 Selling, general and administrative expense decreased in 2025 compared to the same period in 2024 primarily due to lower employee costs, including salaries, fringe benefits, and bonus, and lower marketing and outside services expense. The decrease was partially offset by higher clinical education expense. Research and development (in millions): Year Ended December 31, Year Ended December 31, 2025 2024 Change 2024 2023 Change Research and development $ 369.9  $ 364.2  $ 5.7  $ 364.2  $ 346.8  $ 17.4  % of net revenues 9.2  % 9.1  % 9.1  % 9.0  % Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding. Research and development expense generally includes personnel-related costs, including payroll and stock-based compensation, outside service costs associated with the research and development of new products and enhancements to existing products, software, equipment, material and maintenance costs, depreciation and amortization expense and allocations of corporate overhead expenses including facilities and IT. Research and development expense increased in 2025 compared to the same period in 2024 primarily due to higher employee costs, including salaries, fringe benefits, stock-based compensation, offset by lower capitalized labor costs related to internal use software and lower bonus cost. Restructuring and other charges (in millions): Year Ended December 31, Year Ended December 31, 2025 2024 Change 2024 2023 Change Restructuring and other charges $ 35.4  $ 33.2  $ 2.2  $ 33.2  $ 13.3  $ 19.9  % of net revenues 0.9  % 0.8  % 0.8  % 0.3  % Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding. Restructuring and other charges increased in 2025 compared to the same period in 2024 due to higher severance and other one-time post-employment benefits, driven by a more significant restructuring plan initiated in 2025. Refer to Note 17 “Restructuring and Other Charges” of the Notes to Consolidated Financial Statements for more information. Legal settlement loss (in millions): Year Ended December 31, Year Ended December 31, 2025 2024 Change 2024 2023 Change Legal settlement loss $ 4.2  $ 31.0  $ (26.8) $ 31.0  $ —  $ 31.0  % of net revenues 0.1  % 0.8  % 0.8  % —  % Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding. Legal settlement losses were incurred in 2025 and 2024 due to litigation and other settlements. For the year ended 2025, we recorded losses of $4 million due to such legal settlements. Refer to Note 8 “Legal Proceedings” of the Notes to Consolidated Financial Statements for more information. 48 Income from operations (in millions): Year Ended December 31, Year Ended December 31, 2025 2024 Change 2024 2023 Change Clear Aligner Income from operations $ 1,034.8  $ 1,142.2  $ (107.4) $ 1,142.2  $ 1,182.3  $ (40.1) Operating margin % 31.9  % 35.4  % 35.4  % 37.0  % Systems and Services Income from operations $ 306.1  $ 269.2  $ 36.9  $ 269.2  $ 191.4  $ 77.9  Operating margin % 38.8  % 35.0  % 35.0  % 28.9  % Total Income from operations 1 $ 545.8  $ 607.6  $ (61.9) $ 607.6  $ 643.3  $ (35.7) Operating margin % 13.5  % 15.2  % 15.2  % 16.7  % Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding. 1    Refer to Note 16 “Segments and Geographical Information” of the Notes to Consolidated Financial Statements for details on unallocated corporate expenses and the reconciliation to consolidated Income from operations. Total operating margin percentage decreased in 2025 compared to the same period in 2024 primarily due to lower gross margin and higher restructuring and other charges, offset by lower legal settlement loss. Refer to Note 8 “Legal Proceedings” of the Notes to Consolidated Financial Statements for more information. Clear Aligner Operating margin percentage decreased in 2025 compared to the same period in 2024 primarily due to a decrease in gross margin and an increase in marketing and media expense and credit card transaction fees. Systems and Services Operating margin percentage increased in 2025 compared to the same period in 2024 primarily due to higher operating income driven by higher revenue and lower operating expenses related to a decrease in employee costs. Interest income (in millions): Year Ended December 31, Year Ended December 31, 2025 2024 Change 2024 2023 Change Interest income $ 16.0  $ 20.2  $ (4.2) $ 20.2  $ 17.3  $ 3.0  % of net revenues 0.4  % 0.5  % 0.5  % 0.4  % Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding. Interest income generally includes interest earned on cash, cash equivalents and investment balances. Interest income decreased in 2025 compared to the same period in 2024 primarily due to lower interest rates earned on cash and cash equivalent balances. Other income (expense), net (in millions): Year Ended December 31, Year Ended December 31, 2025 2024 Change 2024 2023 Change Other income (expense), net $ 23.5  $ (18.9) $ 42.4  $ (18.9) $ (19.4) $ 0.5  % of net revenues 0.6  % (0.5) % (0.5) % (0.5) % Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding. Other income (expense), net, generally includes foreign exchange gains and losses, gains and losses on foreign currency forward contracts, interest expense, gains and losses on equity investments and other miscellaneous charges. Other income (expense), net increased in 2025 compared to the same period in 2024 primarily due to gains recorded on our equity investments and changes in foreign exchange rates. 49 Provision for income taxes (in millions): Year Ended December 31, Year Ended December 31, 2025 2024 Change 2024 2023 Change Provision for (benefit from) income taxes $ 174.9  $ 187.6  $ (12.7) $ 187.6  $ 196.2  $ (8.6) Effective tax rates 29.9  % 30.8  % 30.8  % 30.6  % Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding. The decrease in our effective tax rate for the year ended December 31, 2025 compared to the same period in 2024 is primarily attributable to a decrease in U.S. taxes on foreign earnings, release of unrecognized tax benefits due to statute of limitation lapse, partially offset by the remeasurement of the deferred tax asset due to tax rate change and change in our jurisdictional mix of income. Liquidity and Capital Resources Liquidity and Trends As of December 31, 2025 and 2024, we had the following cash and cash equivalents (in thousands): December 31, 2025 2024 Cash and cash equivalents $ 1,094,908  $ 1,043,887  Our principal source of liquidity is cash provided by our operations. As of December 31, 2025 and 2024, we had cash and cash equivalents of $1,095 million and $1,044 million, respectively, of which approximately $929 million and $855 million, respectively, were held by our foreign subsidiaries. We continue to evaluate opportunities to repatriate our foreign earnings if or when needed. We do not expect to incur significant additional costs upon repatriation of these foreign earnings. We generate sufficient operating cash flow from our domestic operations and have access to $300 million under our revolving line of credit. We believe that our current cash balances and the borrowing capacity under our credit facility, if necessary, will be sufficient to fund our business for at least the next 12 months. Our material cash requirements as of December 31, 2025 and material trends and uncertainties for the fiscal year 2026 are as follows: •Our purchase commitments consist primarily of open purchase orders for goods and services, including manufacturing inventory, supplies and services, sales and marketing, research and development services and technological services, issued in the normal course of business. Our purchase commitments totaled $1,020 million. We anticipate a majority, an estimated $935 million, will be payable within the next 12 months. These purchase commitments exclude capital expenditures. •We expect our investments in capital expenditures to be between $125 million and $150 million for the next 12 months. Capital expenditures primarily relate to technology upgrades, additional manufacturing capacity as well as ongoing maintenance. •We committed to a plan to dispose of, other than by sale, specifically identified manufacturing assets prior to the end of their estimated useful lives during the third quarter of 2025. We have materially completed the disposition of these assets as of December 31, 2025. Accordingly, we have revised the estimated useful lives of these assets to reflect our use through the disposal date. For the year ended December 31, 2025, we recorded $77 million of accelerated depreciation expense related to these assets. The increase in depreciation expense negatively impacted Net income, net of tax, by $54 million or $0.74 per basic and diluted share. •We have future operating lease payments of $184 million, which includes $58 million for leases that have not yet commenced as of December 31, 2025. Refer to Note 4 “Leases” of the Notes to Consolidated Financial Statements for details on the lease payments. •We continually evaluate opportunities to repurchase shares of our common stock depending on various factors including our share price and current liquidity requirements. Our stock repurchase program is subject to periodic evaluations to determine when and if repurchases are in the best interests of our stockholders, taking into account 50 prevailing market conditions. In April 2025, our Board of Directors authorized a plan to repurchase up to $1.0 billion of our common stock, (the “April 2025 Repurchase Program”). The April 2025 Repurchase Program is expected to be completed over a period of up to three years. We repurchased $466 million during the year ended 2025, under both the April 2025 Repurchase Program and the January 2023 Repurchase Program (“January 2023 Repurchase Program”). The January 2023 Repurchase Program was completed in its entirely in the second quarter of 2025. We had approximately $831 million available as of year end, of which approximately $31 million was repurchased in January 2026, leaving $800 million available for future repurchase under the April 2025 Repurchase Program. Refer to Note 11 “Common Stock Repurchase Program” of the Notes to Consolidated Financial Statements for details on our stock repurchase programs. •In 2025, we settled certain legal matters and issued a payment for the full settlement amount of $32 million, Settlement payments were made in accordance with the terms and conditions as set forth in the settlement agreement. Refer to Note 8 “Legal Proceedings” of the Notes to Consolidated Financial Statements for more information. •In the third quarter of 2025, we initiated a restructuring plan to realign certain business groups and reduce our global workforce. This plan represents our continued effort to right size our labor force with the current macroeconomic environment. We incurred $41 million in total restructuring expenses, primarily related to involuntary termination benefits, including employee severance and other post-employment benefits. We may also incur additional costs not currently contemplated due to events related to or resulting from any such action. Refer to Note 17 “Restructuring and Other Charges” of the Notes to Consolidated Financial Statements for more information. •We may be required to adjust the valuation allowance for deferred tax assets if we determine, based on available evidence at the time of the determination, that it is more likely than not that some portion or all of the deferred tax assets will not be realized. This assessment includes deferred tax assets associated with our Switzerland tax deductible basis created from our 2020 intra-entity transfer of intellectual property, which have a finite utilization period and depend on our ability to generate sufficient taxable income in that jurisdiction. Any changes to the valuation allowance, particularly those related to our Switzerland deferred tax assets, could have a material adverse effect on our results of operations. Refer to Note 13 “Income Taxes” of the Notes to Consolidated Financial Statements for more information. •As of December 31, 2025, we had no material off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material impact on our liquidity or capital resources. Sources and Uses of Cash The following table summarizes our Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 Net cash provided by (used in): Operating activities $ 593,223  $ 738,231  $ 785,776  Investing activities (112,445) (254,912) (195,943) Financing activities (464,580) (355,722) (598,340) Effects of foreign exchange rate changes on cash, cash equivalents, and restricted cash 35,025  (21,153) 4,671  Net (decrease) increase in cash, cash equivalents, and restricted cash $ 51,223  $ 106,444  $ (3,836) Operating Activities For the year ended December 31, 2025, cash flows from operations of $593 million resulted primarily from our net income of approximately $410 million as well as the following: Significant adjustments to net income •Stock-based compensation of $186 million related to equity awards granted to employees and directors; and •Depreciation and amortization of $237 million related to our investments in property, plant and equipment and intangible assets. 51 Significant changes in working capital •Net outflow of $96 million from accrued and other long-term liabilities primarily due to timing of payments related to the payment of fiscal year 2024 bonuses in the first quarter of 2025; •Net outflow of $112 million from deferred revenues; and •Net outflow of $140 million from accounts receivable due to timing of collections and increased revenues. For the year ended December 31, 2024, cash flows from operations of $738 million resulted primarily from our net income of approximately $421 million as well as the following: Significant adjustments to net income •Stock-based compensation of $174 million related to equity awards granted to employees and directors; and •Depreciation and amortization of $145 million related to our investments in property, plant and equipment and intangible assets. Significant changes in working capital •Net inflow of $90 million from accrued and other long-term liabilities primarily due to timing of payments; •Net inflow of $68 million from prepaid expenses and other assets primarily due to settlement of tax matter. Refer to Note 8 “Legal Proceedings” of the Notes to Consolidated Financial Statements. •Net outflow of $80 million from deferred revenues; and •Net outflow of $153 million from accounts receivable due to timing of collections and increased revenues. Investing Activities Net cash used in investing activities was $112 million for the year ended December 31, 2025 which was primarily related to an outflow of $102 million for purchases of property, plant and equipment and a $10 million additional investment in SD Holding Company. Net cash used in investing activities was $255 million for the year ended December 31, 2024 which primarily consisted of $116 million for purchases of property, plant and equipment, $77 million for the Cubicure acquisition and $106 million for investments in privately held companies, partially offset by sales and maturities of marketable securities of $44 million. Financing Activities Net cash used in financing activities was $465 million for the year ended December 31, 2025 which consisted of payments to repurchase shares of our common stock of $466 million and payroll taxes paid for equity awards through share withholdings of $20 million, which were partially offset by proceeds from the issuance of common stock for $22 million. Net cash used in financing activities was $356 million for the year ended December 31, 2024 which consisted of payments to repurchase shares of our common stock of $353 million and payroll taxes paid for equity awards through share withholdings of $28 million, which were partially offset by proceeds from the issuance of common stock for $25 million. Critical Accounting Estimates Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and disclosures at the date of the financial statements. We evaluate our estimates on an on-going basis and use authoritative pronouncements, historical experience and other assumptions as the basis for making the estimates. Actual results could differ from those estimates. We believe the following critical accounting estimates affect our more significant judgments used in the preparation of our consolidated financial statements. For further information on all of our significant accounting policies, see Note 1 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements. 52 Revenue Recognition Our revenues are derived primarily from the sale of aligners, scanners, and services from our Clear Aligner and Systems and Services segments. We enter into sales contracts that may consist of multiple distinct performance obligations. Sales contracts with multiple performance obligations require management to exercise judgment in allocating the transaction price, based on standalone selling prices, to each performance obligation and determining the timing of revenue recognition which directly impacts our unfulfilled performance obligations at period end. Determining the standalone selling price (“SSP”) in order to allocate consideration from the contract to the individual performance obligations is the result of various factors, such as historical prices, changing trends and market conditions, costs, and gross margins. While changes in the allocation of the SSP between performance obligations will not affect the amount of total revenues recognized for a particular contract, any material changes could impact the timing of revenue recognition, which would have a material effect on our financial position and result of operations. This is because the contract consideration is allocated to each performance obligation, delivered or undelivered, at the inception of the contract based on the SSP of each distinct performance obligation. We allocate consideration for each clear aligner treatment plan based on each unit’s SSP. Management considers a variety of factors such as same or similar product historical sales, costs, and gross margin, which may vary over time depending upon the unique facts and circumstances related to each performance obligation in making these estimates. In addition to historical data, we take into consideration changing trends and market conditions. For treatment plans with multiple options, we also consider usage rates, which is the number of times a customer is expected to order more aligners after the initial shipment. Our process for estimating usage rates requires significant judgment and evaluation of inputs, including historical usage data by region, country and channel. We estimate the SSP of each element in a scanner system and services sale taking into consideration same or similar product historical prices as well as our discounting strategies. For CAD/CAM services, we estimate the SSP of each element, including the initial software license and maintenance and support, using data such as historical prices. Unfulfilled Performance Obligations for Clear Aligners and Scanners Our unfulfilled performance obligations, including deferred revenues and backlog, and the estimated revenues expected to be recognized in the future related to these performance obligations are $1,353 million and $1,445 million as of December 31, 2025 and 2024, respectively. This includes performance obligations from the Clear Aligner reportable segment, primarily the shipment of additional aligners, which are fulfilled over six months to five years. This also includes performance obligations from our Systems and Services reportable segment, primarily services and support, which are fulfilled over one to five years, and contracted deliveries of additional scanners. The estimate includes both product and service unfulfilled performance obligations and the time range reflects our best estimate of when we will transfer control to the customer and may change based on customer usage patterns, timing of shipments, readiness of customers' facilities for installation, and manufacturing availability. Impairment of Goodwill and Finite-Lived Intangible Assets Goodwill We evaluate goodwill for impairment at least annually on November 30th or more frequently if indicators of impairment are identified between annual testing dates. Goodwill is tested for impairment between annual testing dates when events or circumstances indicate that the fair value of a reporting unit has been reduced below its carrying value. When an indicator of impairment is identified we perform a quantitative impairment assessment in which we determine the fair value of a reporting unit and compare it to the carrying value of the respective reporting unit. We generally determine the fair value of a reporting unit via a discounted cash flow (“DCF”) analysis and allocate our net assets to each reporting unit to determine carrying value. The use of a DCF model requires management to exercise significant judgment related to operating assumptions and estimates including, revenue growth rates, terminal growth rates, operating margins and discount rates, among others. Additionally, management exercises judgment when determining the methodology used to allocate net assets to each reporting unit. We will record an impairment charge when our quantitative impairment analysis indicates that the carrying value of a reporting unit exceeds its fair value. Finite-Lived Intangible Assets Finite-lived intangible assets are reviewed for impairment when events or circumstances indicate that the carrying value of an asset (asset group) may not be recoverable. When an impairment indicator is identified, we perform a recoverability test, in 53 which the estimated, undiscounted future cash flows expected to result from the use and eventual disposition of the asset (asset group) are compared to the carrying value of the asset (asset group). When our recoverability test results in undiscounted cash flows that are greater than carrying value, no impairment is recorded. However, when our recoverability test results in undiscounted cash flows that are less than carrying value, we determine the fair value of the asset (asset group) and reduce the carrying amount of the asset (asset group), through an impairment charge, to its fair value. The process of identifying impairment indicators, preparing an undiscounted cash flow and determining the fair value of the asset (asset group) require management to exercise significant judgment related to various assumptions and estimates. If we were to have impairments to goodwill or finite-lived intangible assets, it could adversely affect our operating results. During the years ended 2025 and 2024, we did not have any impairment charges related to our goodwill or finite-lived intangible assets. Accounting for Income Taxes We are subject to income taxes in the United States and numerous foreign jurisdictions. The evaluation of our uncertain tax positions involves significant judgment in the interpretation and application of U.S. GAAP and complex domestic and international tax laws related to the allocation of international taxation rights between countries. We are also required to evaluate the realizability of our deferred tax assets on an ongoing basis in accordance with U.S. GAAP. Realization of our deferred tax assets is dependent on our ability to generate future taxable income which is determined based on assumptions such as estimated growth rates in revenues, gross margins, future cash flows and discount rates in the jurisdictions in which we operate. The accuracy of these estimates could be affected by unforeseen events or actual results, and the sustainability of our future tax benefits is dependent upon the acceptance of these valuation estimates and assumptions by the taxing authorities, particularly with respect to our Switzerland operation, where our deferred tax assets have a finite utilization period. While we currently believe that it is more likely than not that these deferred tax assets will be realized and that a valuation allowance is not required, this conclusion remains sensitive to changes in our operational performance, taxable income forecasts, and other relevant factors. We may, in the future, be required to increase the valuation allowance to take into account deferred tax assets that we may be unable to realize, which would result in a material increase to our income tax provision in the period the determination is made. Accounting for Legal Proceedings Estimates of probable losses resulting from litigation are inherently difficult to make, particularly when the matters are in early procedural stages with incomplete facts and information. The final outcome of legal proceedings is dependent on many variables that are difficult to predict and, therefore, the ultimate cost to resolve such matters may be materially different than our current estimates. Consequently, new information or changes in judgments and estimates could have a material adverse effect on our business, financial condition, and results of operations or cash flows. Recent Accounting Pronouncements See Note 1 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for a discussion of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on results of operations and financial condition, which is incorporated herein.