Align Technology (ALGN) Stifel Jaws & Paws Conference 2026 summary

Key innovation and product initiatives

• Transitioning from standalone products to integrated solutions, such as enhanced palatal expanders and mandibular advancement devices addressing skeletal issues.

• Direct fabrication technology is being piloted, aiming to simplify multi-issue treatments and improve scalability, with broader rollout expected as pilots transition to general release.

• Financing initiatives and partnerships with external providers are being expanded to improve patient affordability and conversion rates, with momentum expected to build into next year.

• Ortho-restorative initiatives involving labs are in pilot stages, with gradual rollout planned as adoption grows.

• Direct fabrication products are currently dilutive to gross margins but expected to be neutral by next year and accretive by 2028 as scale increases.

Financial performance and guidance

• Q2 2026 guidance reflects prudent assumptions, with revenue expected to rise about 1% at the midpoint, below the typical 3-4% sequential increase, due to geopolitical and macroeconomic uncertainties.

• Margin expansion of 100 basis points is anticipated this year, driven by restructuring, product mix improvements, and ongoing productivity initiatives.

• R&D as a percentage of revenue is expected to normalize as new products move from development to commercialization and revenue grows.

• ASPs are expected to be flat to down 1% for 2026, aided by FX and VAT benefits, with mix effects from growth in lower ASP markets and products.

Regional and market dynamics

• North America faces challenges in retail, but DSOs are achieving double-digit growth through active conversion strategies and financing options.

• International markets (APAC, EMEA, LATAM) are experiencing broad-based double-digit growth, especially in under-penetrated countries like Turkey, India, and Southeast Asia.

• DSOs account for about 35% of North American volume and 25% globally, providing a positive mix shift and operational leverage.