Align Technology's Q4 Revenue Hits Guidance Amid Persistent Margin Questions

What happened

Align Technology reported Q4 2025 revenues of $1,047.6 million, meeting the high end of its $1.025-1.045B guidance and showing modest 5.3% year-over-year growth. This follows a volatile 2025 marked by restructuring efforts and ASP erosion, as highlighted in the DeepValue report, which noted Q3 2025 stabilization with 4.9% volume growth and a 23.9% non-GAAP operating margin. The Q4 results suggest continued execution on cost-saving initiatives and volume growth, particularly in teen and international segments that have driven recent momentum. However, the press release omits margin details, raising critical questions about whether pricing pressures and competitive headwinds are undermining profitability. Investors must scrutinize the full financials to determine if the recovery is sustainable or if structural challenges persist.

Implication

Align's Q4 revenue meeting expectations helps restore management credibility after past misses, aligning with the base case scenario for steady growth and supporting the current stock price near $172.79. If upcoming reports show non-GAAP margins at or above the guided ~26%, it could strengthen confidence in the margin reset and push the stock toward the $205 base case value. However, margin shortfalls would validate bearish concerns about ASP erosion and competitive pressures, potentially dragging the stock toward the $135 bear case. Long-term, Align's ability to sustain >22% non-GAAP margins while leveraging teen and international growth is crucial for high-single-digit EPS expansion. Investors should await detailed margin data and 2026 guidance to assess if restructuring benefits are materializing as needed for the thesis to hold.

Thesis delta

The Q4 revenue performance is consistent with the base case assumption of mid-single-digit growth, so no major thesis shift is required. Any shift depends on margin outcomes; strong non-GAAP margins could bolster confidence in the bull case, while weak margins would reinforce downside risks and potentially trigger a re-evaluation towards the bear case.