Thank you. Good afternoon. 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 Morici, CFO. We issued fourth quarter and full year 2022 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 1 month. A telephone replay will be available by approximately 5:30 p.m. Eastern time through 5:30 p.m. Eastern time on February 15. To access the telephone replay, domestic callers should dial 866-813-9403 with access code 328900. International callers should dial 929-458-6194 using the same access code. 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 statements. We have posted historical financial statements, including the corresponding reconciliations, including our GAAP to non-GAAP reconciliation if applicable. And our fourth quarter and full year 2022 conference call slides on our website under Align 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?

Thanks, Shirley. Good afternoon, and thanks for joining us. On our call today, I'll provide an overview of our fourth quarter results and discuss a few highlights from our two operating segments, Systems and Services and Clear Aligners. John will provide more detail on our Q4 financial performance and comment on our views for 2023. Following that, I'll come back and summarize a few key points and open the call to questions. You'll note that we have shortened our formal remarks in order to leave more time for Q&A. Overall, I'm pleased to report fourth quarter results that reflect a more stable environment for doctors and their patients than the recent quarters, especially in the Americas and EMEA regions, as well as parts of APAC. For Q4, trends in consumer interest for orthodontic treatment, patient traffic in doctors' practices, and iTero scanner demos improved. However, the unfavorable effect of foreign exchange on our fourth quarter and full year 2022 results reduced our revenues and margins significantly. Despite the large impact of unfavorable foreign exchange, Q4 revenues of $901.5 million increased sequentially from Q3, reflecting growth in Systems and Services as well as a slight increase in Clear Aligner shipments. This is the first quarter in a year that our total revenues and Clear Aligner volumes increased sequentially. As we move through 2023, we are hopeful that we'll see continued stability in an improving operating environment, but we remind everyone that the macroeconomic situation remains fragile. Regardless, we are confident in our large untapped market opportunity for digital orthodontics and restorative dentistry. We anticipate 2023 will be an exciting year for new innovation at Align, and we'll begin to commercialize one of the largest new product and technology cycles in our 25-year history. The Q4 Systems and Services revenue of $169.9 million was up 7.8% sequentially and down 21.3% year-over-year. On a constant currency basis, Q4 Systems and Services revenues were impacted by unfavorable foreign exchange of approximately $2.7 million or 1.5% sequentially and approximately $11.2 million or 6.2% year-over-year. For Q4, Systems and Services revenues increased sequentially, driven by growth in the Americas and EMEA regions, reflecting continued sales of intraoral scanners, especially the iTero 5D. Q4 sequential growth also reflects continued growth of our scanner rental programs as well as initial deployment of a certified preowned scanner leasing rental program with Desktop Metal, that I'll describe in more detail shortly. We continue to develop new capital equipment opportunities to meet the digital transformation needs of our customers and DSO partners, which is a natural progression for our equipment business with a large and growing base of scanners sold. As our scanner portfolio expands and we introduce new products, we increase the opportunities for customers to upgrade and make trade-ins to provide refurbished scanners for emerging markets. We expect to continue rolling out programs such as leasing and rental offerings that help customers in the current macroeconomic environment by leveraging our balance sheet and selling the way our customers want to buy. On a year-over-year basis, Q4 services revenues increased primarily due to increased subscription revenue, resulting in a larger number of field scanners. We also had higher non-case systems revenues related to our scanner leasing rental programs previously mentioned. To help accelerate the adoption of digital orthodontics and restorative dentistry, in Q4, we announced a strategic collaboration with Desktop Metal to supply iTero Element Flex scanners to Desktop Labs, one of the largest lab networks in the U.S. serving general dentists. The iTero Element Flex is now the preferred restorative scanner for desktop labs and will connect dentists directly to a suite of offerings from desktop labs that simplify the digital design and manufacture restorations with both traditional and digital technologies. Our collaboration with Desktop Metal reflects our commitment to a relationship we expect will evolve and expand to being advanced restorative workflows to market. We see significant opportunities to enable dentists to use scan data directly to order restorative services or printed ready digital files from Desktop Labs that can be used for 3D printing in their offices. In addition to iTero scanners, we're also excited about extending the benefits of the Align Digital Platform, including the Invisalign System and Exocad software to Desktop Labs' customers as well. For Q4, total Clear Aligner revenues of $731.7 million were down slightly, 0.2% sequentially and down 10.3% year-over-year. On a constant currency basis, for Q4 Clear Aligner revenues were impacted by unfavorable foreign exchange of $13.4 million or 1.8% sequentially and $56.4 million or 7.2% year-over-year. Q4 total Clear Aligner volumes of $583,000 was up slightly sequentially, reflecting growth in the Americas and EMEA regions, offset by lower APAC volumes primarily in China. For the Americas, Q4 Clear Aligner volumes were down slightly sequentially, reflecting lower ortho cases, especially teen starts as compared to the typical higher teen season in Q3, offset primarily by an increase in adult patients from the GP dentist channel. For Q4, Clear Aligner volume from DSO customers continued to outpace non-DSO customers. For EMEA, Q4 Clear Aligner volume increased sequentially in all markets and across products, especially recently launched Invisalign Moderate, iGO Plus and iGO Express, which enabled GP dentists to treat a broader range of cases, mild-to-moderate types of malocclusions and can easily be integrated into a wide range of restorative treatments in a dental practice. EMEA had a strong sequential growth in the teen market segment with continued demand for Invisalign Teen case packs, which are available in France and Iberia, as well as Invisalign's first treatment for kids as young as 6 years old. APAC, Q4 Clear Aligner volumes were lower sequentially due primarily to China, which continues to be impacted by COVID. In Q4, ongoing COVID restrictions and lockdowns in China persisted throughout the quarter. Outside of China, APAC volumes increased sequentially led by Japan, Taiwan, India, and Southeast Asia markets. On a year-over-year basis, Q4 Clear Aligner case volumes reflected increased shipments led by Korea, India, Japan, Taiwan, and Vietnam. While the easing of COVID restrictions in China and the more recent downward trend in COVID infection rates are encouraging, many uncertainties remain, including the lingering impacts of COVID across the population and the time and effort needed to restore consumer confidence. For the other non-case revenues, which include retention products such as our Vivera Retainers, clinical training and education, accessories, e-commerce, and new subscription programs such as our DSP, fourth quarter revenues were down slightly sequentially and up double digits year-over-year. For retention and e-commerce products, Q4 revenues were relatively unchanged from Q3. We are pleased with our subscription-based programs like DSP, which increased sequentially and year-over-year and expect to continue expanding DSP offerings in other regions. For Q4, the total number of new Invisalign trained doctors decreased sequentially due primarily to the fourth quarter being a seasonally slower period for clinical education with holidays, et cetera, as well as fewer trainings in China and Brazil. This was offset by somewhat significantly higher numbers of new Invisalign doctors trained in EMEA. Teen orthodontic treatment is the largest segment of the orthodontic market worldwide and represents our largest opportunity for Clear Aligner sales to orthos. We continue to focus on gaining share from traditional metal braces through team specific sales and marketing programs and product features, including Invisalign First for kids as young as 6, which was up sequentially across all markets. For Q4, total Clear Aligner teen cases were down sequentially due primarily to the impact of COVID in China as well as seasonally fewer teen starts in North America as compared to Q3. According to the December gauge report, which tracks approximately 1,000 orthos in the United States and Canada, new patient exams for teens slowed in Q4, while new patient exams for adults improved slightly. A smaller pool of potential teen patients may put pressure on traditional orthos and cause them to shift between clear aligners and wires and brackets, especially those practices that have failed to understand the significant benefits of adopting more efficient digital workflows, believing metal braces are more profitable. In EMEA, Q4 was a record quarter for teen case starts. On a year-over-year basis, Q4 teen case starts were relatively unchanged. For Q4, Invisalign First increased year-over-year and was strong across all regions. Invisalign First Clear Aligner treatment is designed for predictive results and a positive experience while addressing the unique needs of growing children from as young as 6 to treat Phase I. For the full year, Invisalign Clear Aligner shipments for teens and young kids was approximately 733,000 cases; our teen case mix overall was a record 31% of Invisalign cases shipped for the year. Finally, in Q4, the total number of doctors shipped was 82,900 doctors, a slight decrease due primarily to the impact of COVID in China and off our Q3 '22 high point, which included a major DSO onboarding in North America. For the full year 2023, we also shipped to the highest cumulative number of Invisalign trained doctors over 124,000 doctors, reinforcing our commitment to doctor-directed care for Clear Aligner treatment to achieve the safest and best possible clinical treatment outcomes for patients. With that, I'll now turn the call over to John.

Thanks, Joe. Before I go through the details of our Q4 results, I want to comment on two items in our fourth quarter financial results. Restructuring and other charges, during Q4 2022, we incurred a total of $14.3 million of restructuring and other charges, of which $2.9 million was included in the cost of net revenues and $11.5 million included in operating expenses. Restructuring and other charges included $8.7 million of severance-related costs and $5.6 million of certain lease terminations and asset impairments, primarily related to rightsizing operations in Russia in light of business needs. Second, non-GAAP tax rate. In Q4 2022, we changed to a long-term projected tax rate for our non-GAAP provision for income taxes. Our previous methodology for calculating our non-GAAP effective tax rates included certain nonrecurring and period-specific items. That produced fluctuating effective tax rates that management does not believe are reflective of the company's long-term effective tax rate. We have recast non-GAAP results for our provision for income taxes, effective tax rate, net income and diluted net income per share for each reporting period in 2022 to reflect this change. We did not make any changes to the results reported for 2021 as reflecting the change in our methodology for the computation of the non-GAAP effective tax rate was immaterial to our 2021 results. Refer to the section in our Q4 press release titled Recast financial measures for prior periods in 2022 for a tax rate change under unaudited GAAP to non-GAAP reconciliation for further information. Now for our Q4 financial results. Total revenues for the fourth quarter were $901.5 million, up 1.3% from the prior quarter and down 12.6% from the corresponding quarter a year ago. On a constant currency basis, Q4 2022 revenues were impacted by unfavorable foreign exchange of approximately $16 million or approximately 1.7% sequentially and approximately $67.6 million year-over-year or approximately 7%. For Clear Aligners, Q4 revenues of $731.7 million were flat sequentially, primarily from lower ASPs, mostly offset by higher volumes. On a year-over-year basis, Q4 Clear Aligner revenues were down 10.3% and primarily due to lower volumes and lower ASPs, partially offset by higher non-case revenues. For Q4, Invisalign ASPs for comprehensive treatment were flat sequentially and decreased year-over-year. On a sequential basis, ASPs reflect the unfavorable impact from foreign exchange, partially offset by higher additional aligners and product mix shift. On a year-over-year basis, the decline in comprehensive ASPs reflect the significant impact of unfavorable foreign exchange, product mix shift and higher discounts partially offset by higher additional aligners and per order processing fees. For Q4, Invisalign ASPs for non-comprehensive treatment decreased sequentially and year-over-year. On a sequential basis, the decline in ASPs reflect product mix shift, unfavorable impact from foreign exchange and higher discounts, partially offset by higher additional aligners. On a year-over-year basis, the decline in ASPs reflect the significant impact of unfavorable foreign exchange, product mix shift and higher discounts, partially offset by higher additional aligners and per order processing fees. As we mentioned last quarter, as our revenues from subscriptions, retainers and other ancillary products continue to grow and expand globally, some of the historical metrics that focus only on case shipments do not account for our overall growth. In our earnings release and financial slides, you will see that we've added our total Clear Aligner revenue per case shipment, which is more indicative of our overall growth strategy. Clear Aligner's deferred revenues on the balance sheet increased by $56.4 million or 4.8% sequentially and $171.9 million or up 16.2% year-over-year and will be recognized as the additional aligners are shipped. Q4 2022 Systems and Services revenues of $169.9 million were up 7.8% sequentially, primarily due to higher scanner volume, services and Exocad revenues, partially offset by lower ASPs and were down 21.3% year-over-year primarily due to lower scanner volume and ASPs, partially offset by higher services revenue from our larger installed base of scanners and increased nonsystem revenues related to our certified preowned and leasing and rental programs. Q4 2022 Systems and Services revenue were unfavorably impacted by foreign exchange of approximately $2.7 million or approximately 1.5% sequentially. On a year-over-year basis, System and Services revenue were unfavorably impacted by foreign exchange of approximately $11.2 million or approximately 6.2%. The Systems and Services deferred revenues on the balance sheet were up $9 million or 3.4% sequentially and up $42.9 million or 18.7% year-over-year, primarily due to the increase in scanner sales and the deferral of service revenues included with the scanner purchase, which will be recognized ratably over the service period. Moving on to gross margin. Fourth quarter overall gross margin was 68.5%, down 1 point sequentially and down 3.7 points year-over-year. Overall, gross margin was unfavorably impacted by foreign exchange on our revenues by approximately 0.6 points sequentially and 2.2 points on a year-over-year basis. Clear Aligner gross margin for the fourth quarter was 70.8%, down 0.1 point sequentially due to lower ASPs and higher warranty and restructuring costs, partially offset by improved manufacturing absorption and lower training costs. Clear Aligner gross margin for the fourth quarter was down 3.4 points year-over-year, primarily due to lower ASPs, increased manufacturing spend as we continue to ramp up operations at our new manufacturing facility in Poland and a higher mix of additional aligner volume. Systems and Services gross margin for the fourth quarter was 58.8%, down 4.6 points sequentially due to lower ASPs and higher inventory costs and manufacturing inefficiencies, partially offset by higher services revenues and lower freight costs. Systems and Services gross margin for the fourth quarter was down 5.9 points year-over-year for the reasons stated previously. Q4 operating expenses were $505 million, up sequentially 6.2% and down 3.6% year-over-year. On a sequential basis, operating expenses were up $29.5 million, mainly due to restructuring and other charges and our continued investment in sales and R&D activities, along with higher consulting expenses. Year-over-year, operating expenses decreased by $18.6 million primarily due to controlled spending on advertising and marketing as part of our efforts to proactively manage costs as well as lower incentive compensation, partially offset by restructuring and other charges. On a non-GAAP basis, excluding stock-based compensation, restructuring and other charges and amortization of acquired intangibles related to certain acquisitions, operating expenses increased to $459.7 million, up 3.7% sequentially and down 7% year-over-year. Our fourth quarter operating income of $112.7 million resulted in an operating margin of 12.5%, down 3.6 points sequentially and down 8.9 points year-over-year. Operating margin was unfavorably impacted by 0.9 points sequentially, primarily due to foreign exchange and lower gross margin. The year-over-year decrease in operating margin is primarily attributed to lower gross margin, investments in our go-to-market teams and technology, as well as unfavorable impact from foreign exchange by approximately 4.2 points. On a non-GAAP basis, which excludes stock-based compensation, restructuring and other charges and amortization of intangibles related to certain acquisitions, operating margin for the fourth quarter was 18.3%, down 1.9 points sequentially and down 6.4 points year-over-year. Interest and other income expense net for the fourth quarter was income of $2.7 million compared to a loss of $21 million in the third quarter and a loss of $0.9 million in Q4 of 2021, primarily due to net foreign exchange gains from the strengthening of certain foreign currencies against the U.S. dollar. The GAAP effective tax rate in the fourth quarter was 63.8% compared to 40.7% in the third quarter and 13.2% in the fourth quarter of the prior year. The fourth quarter GAAP effective tax rate was higher than the third quarter effective tax rate primarily due to decreased earnings in low tax jurisdictions and an increase in the amount of U.S. minimum tax on foreign earnings. Our non-GAAP effective tax rate was 20% in the fourth quarter and reflects the change in our methodology that was discussed earlier. Our non-GAAP effective tax rate was 11.5% in the fourth quarter of the prior year in 2021, which does not reflect the change in our methodology. Fourth quarter net income per diluted share was $0.54, down sequentially $0.39 and down $1.86 compared to the prior year. Our earnings per share was unfavorably impacted by $0.04 on a sequential basis and $0.22 on a year-over-year basis due to foreign exchange. On a non-GAAP basis, net income per diluted share was $1.73 for the fourth quarter, up $0.10 sequentially and down $1.10 year-over-year. Note that the prior year 2021 non-GAAP net income per diluted share or prior year 2021 EPS does not reflect the Q4 2022 change in our methodology for the computation of the non-GAAP effective tax rate. Moving on to the balance sheet. As of December 31, 2022, cash and cash equivalents and short-term and long-term marketable securities were $1 billion, down sequentially $99.5 million and down $255.1 million year-over-year. Of our $1 billion balance, $387.9 million was held in the U.S. and $653.7 million was held by our international entities. In October 2022, we purchased approximately 848,000 shares of our common stock at an average price of $188.62 per share through a $200 million accelerated share repurchase under our May 2021, $1 billion stock repurchase program. We have $250 million remaining available for repurchase under this program, and we plan to repurchase this remaining amount starting in Q1 2023 through either a combination of open market repurchases or an accelerated stock repurchase agreement, completing the repurchases in Q2 of 2023. Q4 accounts receivable balance was $859.7 million, flat sequentially. Our overall days sales outstanding was 85 days, down 1 day sequentially and up approximately 7 days as compared to Q4 last year. Cash flow from operations for the fourth quarter was $144.7 million. Capital expenditures for the fourth quarter were $53.2 million, primarily related to our continued investment to increase aligner manufacturing capacity and facilities. Free cash flow, defined as cash flow from operations less capital expenditures, amounted to $91.5 million. We exited fiscal 2022 with a strong balance sheet, including $1 billion in cash and investments, a healthy cash flow position, and no long-term debt. As we announced with our earnings, Align's Board of Directors has authorized a new $1 billion stock repurchase program to succeed the current $1 billion program. This new $1 billion program reflects the strength of our balance sheet and our cash flow generation, as well as management and our board's continued confidence in our ability to capitalize on large market opportunities in our target markets and trajectory for growth while concurrently returning capital to our shareholders. Now turning to our outlook. As Joe mentioned earlier, we are pleased with our Q4 results and what appears to be a more stable environment in North America and EMEA. We are cautiously optimistic for continued stability and improving trends as we move through the year. However, the macroeconomic environment remains fragile. And given continued global challenges and uncertainty, we are not providing full year revenue guidance. We would like to see improvements in the operating environment and consumer demand signals, including stability in China before revisiting our approach. At the same time, we are confident in our large, untapped market opportunity for digital orthodontics and restorative dentistry and our ability to make progress towards our strategic initiatives. We intend to focus on the things we can control and influence, which includes strategic investments in sales, marketing, technology, and innovation. For full year 2023, assuming no additional material disruptions or circumstances beyond our control, we anticipate our 2023 non-GAAP operating margin to be slightly above 20%. With this backdrop for Q1 2023, we anticipate Clear Aligner volumes to be down sequentially, primarily due to weakness in China from COVID, partially offset by some stability from our Americas and EMEA regions. We anticipate Clear Aligner ASPs to be up from Q4 2022, primarily due to higher pricing and non-favorable and favorable foreign exchange rates. We anticipate iTero scanner and services revenue to be down sequentially as the business follows a more typical capital equipment cycle. Taken in total, we expect Q1 2023 revenues to be about flat to Q4 of 2022. We expect our Q1 2023 non-GAAP operating margin to be consistent with our Q4 2022 non-GAAP operating margin as we continue to make investments in R&D and other go-to-market activities. For 2023, we expect our investments in capital expenditures to exceed $200 million. Capital expenditures primarily relate to building construction and improvements as well as additional manufacturing capacity to support our international expansion. With that, I'll turn it back over to Joe for final comments.

Thanks, John. In closing, we're pleased with our fourth quarter results and the improved trends in sequential growth we saw in the Americas and EMEA regions and parts of APAC that reflect a more stable environment for doctors and their patients. While still very early and many uncertainties remain, we're hopeful that we'll see continued stability across the business and regions, especially in China. As we continue to work through these challenges, we're confident in our ability to focus on our customers and deliver key technology and innovation that furthers our leadership position in digital orthodontics and restorative dentistry. We are balancing investments to deliver shareholder value through transformative digital orthodontic solutions unique to Align. Align is a purpose-driven business, and we are committed to helping doctors transform smiles and change the lives of millions of people around the world. Over the last year, we have flooded our customer base with a lot of new technology that represents one of the largest new product cycles in our history. But there is still a great deal of room for innovation. In the next 1 to 3 years, you should expect to see new platforms from us that will continue to revolutionize doctors' practices and patients' expectations for doctor-led treatment. And scanning, making it simpler and faster. In software, saving both doctors and patients more time with improved clinical outcomes. In direct 3D printing, an evolution in both product and material science. These three platforms will give doctors tools only dreamt of before, with a singular focus to make the Invisalign system the standard of orthodontic and restorative care, and we couldn't be more excited about it. Thank you for your time today. We look forward to updating you on our next earnings call. Now I'll turn the call back over to the operator for questions.

The first call is from Jason Bednar with Piper Sandler.

Joe and John, congrats on seeing the stability return to the business. Maybe I'll start with that point. If you could talk about what's changed versus, say, 3 to 6 months ago, the adult part of the market still sounds maybe a little sluggish, but you also saw that sequential improvement. Teens are holding in. Could you maybe speak to the visibility you have today versus where you sat last summer or in the fall? What has led to the greater confidence in demand forecasting?

Jason, it's Joe. First of all, I think we have a more stable macroeconomic environment. I mean obviously, 2022 was pretty unprecedented when you think about the China situation, the Ukraine situation in Europe, and the rapid increase in federal reserve rates that really put the economy in a lot of ways. So I mean, we're working from a better platform in that sense. And I think, obviously, Powell's comments today and a 0.25 increase in all. I mean it shows a little bit of confidence on the Fed's partners and what they're seeing and what they're directing to. So I'd just say, Jason, from a broad standpoint, we feel really good about our portfolio. We feel good about the technology we talk about and all those things. We're just looking for a stable platform from an economic standpoint to operate from.

Okay. No, that's helpful. It definitely sounds more macro related than anything else. But that's helpful. And then maybe, Joe, I wanted to pick up on one point you mentioned regarding the bracket and wire piece. It sure seems like maybe a profit-motivated decision for doctors, maybe shortsighted, but still profit-motivated as they focus on the cost of brackets and wires versus that Clear Aligner lab fee. Maybe what do you think it's going to take to reverse that trend back to Clear Aligners picking up meaningful share, I guess, especially with teens? Do market volumes need to come back in a bigger way to convince doctors to free up more chair time with Clear Aligners? Or is there something you can do on your end to really stimulate that shift back towards Invisalign?

Jason, that's a great question. First of all, I mean, doctors are doing what they think are in their best financial interest and from a patient standpoint, too. A stronger economic environment will help in that sense because they'll have a higher patient traffic and the trade-off won't be as severe in that sense because of the patient throughput. But where we help us in technology and that's why we emphasize the technology developments and the investments that we're making that are really significant as we launch in this year. And like I talked about with just software alone to pick one in the sense of being able to move patients through faster being able to have doctors really do cases a lot faster before with our products like IPP in different areas. So those technology advancements are really important. And then how we put those together in business models like our digital subscription programs really help doctors get over that line, too. So I feel we have a good format to be able to address that going forward. But again, I'll emphasize, we need a market that we can stand on in the sense and predict.

Appreciate it. Next question, please.

Absolutely. The next question comes from Jeff Johnson with Baird.

Joe, I just want to ask a couple of questions here. I guess, one, just on the Clear Aligner volume guidance for 1Q. It sounds like it's because China, incrementally weaker stability in the Americas and the EMEA, you kind of had that in the press release. You got some hedging words in there about primarily due to weakness in China and some stability in the Americas and EMEA. I mean, should we be thinking at this point that your Americas and the EMEA are kind of a baseline here? And I know, obviously, macro can change from here, but assuming that macro change away, are we kind of at a baseline level now in absolute volumes for Americas and the EMEA? And do you think China, could it be a recovery play throughout this year? Are you seeing any early signs of some pickup in some of those big dental hospitals or the new adult standard product there or anything?

Jeff, first of all, on the front end with the Western economies is we just see stability. That's what we talked about. That's what we see versus before we saw the market falling away from us. So right now, we see it being stable. And feel better about that point. On China, I mean, the uncertainty in China is incredible when you think about a billion people being sick there right now or have been sick over the last couple of weeks. And Jeff, I refuse to give a forecast over a number of quarters now because a lot of it has to do with the uncertainty that we see in China and specifically, which is our second biggest market in the world. So I don't want to try to forecast China right now. I can tell you now it's a blur for us and very difficult, but just we feel good about where we stand with EMEA and the States from a stability standpoint. We try to reflect as much in our words, what we see for the first quarter for you too.

Understood. I'm sure there will be many questions about short-term matters. However, I don't want to focus on the Desktop Metal deal. Currently, is the collaboration primarily focused on using iTero for milling and/or 3D printing of restorations? Are there any initial efforts on 3D printing Clear Aligners? Also, could you provide an update on when we might see 3D printing of aligners in the office and the competitive advantages you believe Align can establish in that context?

Yes, Jeff, that's a good question. The Desktop Metals is primarily we think about a restorative play, how labs play a huge role and restore dentistry with general dentists. I mean, they're really strong partners in that sense. What Desktop Metal represents is you see a lot of 3D printing going on. There's some really great resin development around restorative types of things, dentures, different areas where Desktop Metal leads in and our iTero scanner can really help with that, too. Also, we have a vision of ortho restorative where you use our orthodontic procedures in order to reduce the amount of tooth loss mass that often comes with restorative procedures, too, that we'll work together with Desktop about. The idea of printing aligners and standard types of STL kind of processes from a 3D standpoint. I don't see that. And honestly, Jeff, I'm not one to think that doctors should turn their offices into production facilities. 3D printing is hard. The materials are difficult. There's a lot of doctors actually trying it, but I feel like doctors are much better being physicians and doctors in that sense than trying to run a manufacturing operation.

Even in that first case to try to seal the deal and really lock that patient in as a pain customer?

Jeff, I just think there are some things that kind of make sense from a productivity standpoint and some things that don't. Maybe the technology changes to the point, Jeff, that we'll have a different conversation. But as it stands today, I really don't believe that.

Our next question comes from Elizabeth Anderson with Evercore.

I was wondering if you could discuss how you view the operating expenses, particularly in sales and marketing, in this environment. Given the uncertain demand profile, are there adjustments you’re making in the fourth quarter and the first quarter to change that spending?

Yes, I think what we always look at, Elizabeth, this is John. We're always looking at trying to find the right return on investment. So as you see some of the markets stabilize and start to come back that we see, that's where we'll continue to make investments. And as we see volumes come back, we'll invest even more. Like we talked about some of the stability in Americas and EMEA. So we'll also look at trying to find the right return on investment. And as those markets stabilize and come back, you'll see us continue to invest in there. And as we said, last year, we kind of had to pare some of that back based on the conditions. And ideally, we could be in a better situation where we can make additional investments this year.

That makes sense. And maybe I was wondering if you could talk a little bit more about the GP demand profile because it was interesting how that was sort of holding up on a relative basis. I heard what you said, obviously, about the teen commentary. Is it something about that market or maybe the lower price point per case or anything like that that would sort of be impacting that? I'd be just curious to get more color on that.

Elizabeth, it's Joe. Could you restate that question? I didn't quite get the entire question.

In your prepared remarks, you mentioned the strength of GP dentists compared to ortho in the quarter. Could you elaborate on the reasons behind that observation?

Yes, that's a good question. When you think about it, we are an elective procedure. Someone goes to an orthodontist for a procedure like this to have their teeth straightened. In contrast, there is constant patient traffic at a general dentist's office for cleanings, restorations, and other services. Currently, since it's not just elective procedures, we believe general dentists are seeing more patients than orthodontists when comparing the two periods.

The following question comes from Jon Block with Stifel.

Maybe for the first one, John or Joe, can you just talk about the 5.5% price increase for 2023? The 1Q guidance is lower cases, lower scanner, and services but revenues flat. So clearly, ASP benefits. And I think you realized the 5.5%, the doc stays on comprehensive or goes to 3x3. But how do we think about what flows to realized ASP, John? Is that sort of a, I don't know, a plus 2% or 3% from the 4Q '22 levels when we think about 1Q '23 and into the balance of '23?

That's a good way to look at it, John, because you're going to have some cases that carry over where they order them and they get shipped a little bit later. And then you're right, you're going to have some mix shift between the 3x3, which is kind of the same price and then the full comprehensive. So 2% to 3% in that first quarter is about in that range.

I'm sorry, I know it was to clarify. That was just 2% to 3% sequential, John, correct from the 4Q to 1Q?

Yes, that's correct.

Okay. Sorry, for the second question regarding the operating margin, you mentioned 18% non-GAAP for the first quarter and more than 20% for the entire year. I'm going to ask a modeling question here. Should we expect sequential improvement for each quarter throughout 2023? And for you, Joe, can you discuss how you feel about that operating margin guidance, especially with the numerous uncertainties in the economy and the situation in China? You've described it as a fragile environment. How do you become confident in that guidance? Is there enough flexibility in operating expenses that you could adjust spending as needed?

Yes, I'll take the modeling question, John. Yes, you would expect that just like we have in maybe prior years and so on, as you start to get that volume leverage, you'll start to see some of that margin improvement as you go throughout the year. So it starts at that lower point and you would model it to see some improvement as you go through the year. And like we said, total year slightly above the 20%.

And John, on the OM guide and the confidence is related to what we see right now and what we think is some macro trends that are much more stable than what we've experienced before. So from that, we understand our costs, and we know what we have to give and take. And John and I watch it closely, and we obviously manage it as a percentage of the total revenues. So revenues have to adjust. We have to adjust too. But again, I think we know what the levers are in this business. And within the context of stability, we feel we can manage to the numbers that we've given.

Our next question comes from Nathan Rich with Goldman Sachs.

Joe, I just wanted to kind of follow up on your comments about starting to commercialize. Obviously, product and technology cycle that you seem very excited about in that sort of ortho and restorative vision. I guess could you maybe just kind of help crystallize that for us in terms of how that kind of come to market in 2023 and the kind of type of investment that the company needs to make to kind of go after that opportunity?

Nathan, overall, obviously, we do spend a significant amount on R&D in the business. And the foundation of that is the history of Align because basically we realize we're revolutionizing digital orthodontics overall. But what we see is it's not just invention for inventions' sake, we're always after, how can we do these cases faster? How do we do them more predictably? How do we make it simpler for doctors, a better treatment for patients overall and experience? And just to give you one statistic, right? So versus wires and brackets, which you talked about in the script. On average, we do patient cases 5 months faster and 35% fewer visits to a doctor. And you do that with technology, right? You do that through remote monitoring; you do that through the consistency of your algorithms in moving teeth and knowing when those seats are going to land as long as patients were. And so the technology I talked about in those three areas, first of all, whether it's scanning, we get better on scanning every year. AI is a real important part of that because through AI, you can anticipate a lot of things, move these scans through a lot faster. Inventions last year like IPP, Invisalign Personal Plan, those kinds of technologies really reduce the traffic and communications between a doctor and us in the sense of setting up treatment plans. And lastly, 3D printed devices, as I mentioned, has always been the holy grail because we're the biggest 3D printer in the world, but we don't really 3D print devices, we print molds, which you vacuum form over top of it. When you vacuum-form over top of a mold, you can't control wall thickness as you can in 3D printing. And all think this is really critical to move teeth. So all these inventions take a lot of time and money overall, but we just see a huge opportunity for us to be able to increase clinical efficacy and efficiency for doctors and patient experience, and that's why we're so excited about it.

Okay, great. I just need a quick clarification. On the adult side, cases increased by 7% sequentially, and it seems there was a slight improvement in North America. I believe the same was true for APAC. I didn’t hear a mention of the adult aspect when discussing EMEA. Was the adult trend more concentrated in North America, or did you observe similar dynamics in EMEA as well?

If I understood your question correctly, Nathan, EMEA performed very well, with positive results from both adults and teens. We were pleased with that. Typically, the third quarter can be challenging in Europe, but we saw a strong performance coming out of it into the fourth quarter. Therefore, we felt optimistic about the results for both the adult and teen segments in Europe.

Our next question comes from Kevin Caliendo with UBS.

I always struggle with this number that you really haven't grown the number of docs, and it's been a while. And I understand that when demand is down, you don't ship to docs every quarter. But even the ones that are registered Invisalign users haven't really grown. And I guess my question is, is there an issue with that? Like why hasn't that number really expanded over the last 4 to 5 quarters? And do you need it as part of your growth algorithm to keep expanding the number of doctors? Is it just a change in culture in the world right now? Or is it competitive pressures? Or is it just harder to find docs who are willing to do this? Because the penetration of Clear Aligners would suggest there's a lot of doctors out there that could be doing this.

Doctors in both the orthodontic and general practice fields are important. You're right about that, and we have expanded significantly on a global scale. Regarding your question about China, the situation there has declined. We have many doctors in China that we are unable to ship to at the moment. This explains the decrease. There isn’t a broader systemic issue preventing us from gaining more doctors; rather, we are currently affected by the challenges in China.

And your equation is right. It's new doctors, doctors that ship to as well as utilization. Those are two key metrics that help us grow our business.

Can I ask a quick follow-up? You mentioned the need to see improvements in consumer demand signals. How far ahead can you actually anticipate that? For instance, can you see demand increasing three months or six months down the line during your ordering and planning process? Or is it more immediate, indicating that you've reached an inflection point? What do you need to observe in consumer demand, and how far forward can you look before feeling confident that an inflection point has occurred?

Kevin, when we look at things, we're a real-time business, obviously, when you have 3D freebies like we do in 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.

Next question please.

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

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, we're just stable through the rest of the year rather than improving?

Yes, it's a good question. I mean we would expect as we start to see demand stabilize 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.

Next question please.

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

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?

I can start with the volume. We are closely monitoring various signals. We aimed to provide more insight regarding the first quarter, and the progression for the rest of the year will depend on how global circumstances evolve. Therefore, we will keep a close eye on the volume. As I mentioned, we anticipate some sequential improvement as we move through the year, but we are not getting into specifics regarding the total.

It's Joe, speaking about the DSP program, which was initially aimed at retainers or orthodontists since many orthodontists are producing their own retainers and handling wires and brackets. We have also included touch-up cases with ten fewer aligners, and that has been successful. What you're referring to is a subscription program for doctors, and we also have a subscription offering from doctors to patients that we are currently implementing. There is a lot of enthusiasm from our doctors regarding this initiative because it creates a recurring revenue stream that many of them haven't previously utilized. We are optimistic about this and will be collaborating closely with our doctors to implement it more fully this year.

Next question please.

Absolutely. The next question comes from Michael Ryskin with Bank of America.

Also, just a couple of quick points. First, regarding China, you mentioned the situation as unfavorable, which is understandable. Do you have any updated insights on BPP or anything else? Can you explain what's happening there amidst the ongoing COVID situation? Or is it just in limbo? Additionally, I wanted to ask about the non-GAAP tax rate; you mentioned 20% for Q4. Should we expect that to be the rate going forward?

So Michael, this is John. On tax rate for the non-GAAP tax rate assumed 20% going forward.

On China, BPP, I mean, obviously, that program over there, we talked about it several times, it's in Tier 3, Tier 4 cities. It's really not in the middle of our portfolio. It was picked up by some Chinese competitors. We're primarily private over there. We will sell the public hospitals. The program is not exclusive in that sense, too. So may we feel like we can manage in China right now around this fine.

Well, thank you, everyone. We appreciate your time today. This concludes our conference call. We look forward to speaking to you at upcoming financial conferences and industry meetings, including Chicago Midwinter, IDS, and AAO. If you have any follow-up questions, please contact our Investor Relations line. Have a great day.

This concludes today's conference. Thank you for your participation. You may now disconnect your lines.