Align Technology, Inc. (NASDAQ:ALGN) Q4 2022 Earnings Call Transcript

Kevin Caliendo: Can I ask a quick follow-up? You talk about the need to see consumer demand signals improving. And how far ahead can you actually see that? Meaning — is it — is there something in ordering and planning? Like can you see 3 months ahead or 6 months ahead in terms of you’re starting to see demand increase? Or is it really real time, like we’ve made — we’re starting to see an inflection point? I guess it gets to the point of like what do you need to see in terms of consumer demand? How far forward can you look before you can really feel comfortable that there’s been an inflection plan?

Joseph Hogan: Kevin, when we look at things, we’re a real-time business, obviously, when you have 3D freebies like we do what we make. And there’s no leading indicator that would say it hasn’t or squared of overnight, 90%. But what we watch closely are the consumer confidence indices in the States and Europe where we can get good wins. Now they’re more confirming than they are predictive in what we’re seeing but they reflect the, I think, best from a demand standpoint of what we can expect in the consumer confidence indices that we see both in Europe and the States have flattened out or turned slightly positive in the last month or so.

Shirley Stacy: Next question please.

Operator: Absolutely. Our next one comes from Brandon Vazquez with William Blair.

Brandon Vazquez: I wanted to ask one to kind of go back to a couple of us, who are trying to get at. You guided to a full year op margin above 20%, and you’re a little bit below that now, of course, probably transient. The question being, do you need sequential improvements in sales to then drive the sequential improvements in op margins through the year? Like how should we be thinking about that? Or are you prepared to kind of deliver that 20% even if let’s say, were just stable through the rest of the year rather than improving?

John Morici: Yes, it’s a good question. I mean we would expect as we start to see demand as it stabilized as things change in the world and give us a better operating environment, we would expect to see some sequential improvement in revenue as you go through the year. And that would help us get some of the leverage that we need from an op margin standpoint.

Shirley Stacy: Next question please.

Operator: Absolutely. The next question comes from Erin Wright with Morgan Stanley.

Erin Wright: Great. Just a follow-up to that last question, just to clarify, I understand you’re not giving the full year guidance from a volume perspective. But if you do continue to see the environment is what you’re saying sustained where it is today or get slightly better? You are in a position to grow volume year-over-year in 2023. And then just a separate question on subscription offerings, particularly in retainers. And I’m curious how that’s resonating with customers today as another revenue driver for the practice. And when do you think that, that will be material in terms of contribution?

John Morici: I can start on the volume. I mean we would expect — we’re watching a lot of the signals closely. We tried to give more color around Q1 and the rest of the year will play out as things as things in the world change to the situation. So we’ll watch volume closely. But like I said, we would expect some sequential improvement as you go forward through the year. But — we’re not getting into the specifics of what it is for total.