ALIGN TECHNOLOGY INC

Previous wording

A discussion regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 is presented under Results of Operations of this Form 10-K. Discussions regarding our financial condition and results of operations for fiscal 2023 compared to 2022 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, 2023, filed with the SEC on February 28, 2024, which is available without charge on the SEC’s website atwww.sec.gov and on our investor relations website atinvestor.aligntech.com.

Current wording

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 atwww.sec.gov and on our investor relations website atinvestor.aligntech.com.

Previous wording

Our strategic priorities focus on four principal pillars for growth: (i) international expansion; (ii) general dental practitioners (“GP”) treatment; (iii) patient demand; and (iv) orthodontic utilization. Our growth strategy depends on our ability to facilitate the digital transformation of dentistry happening around the world, 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.

Current wording

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.

Previous wording

•Continuing penetration and adoption of Invisalign clear aligners, intraoral scanners and 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. For instance, we have fabrication facilities in three key regions as a part of our strategy to bring operational facilities closer to customers to serve them more quickly and respond to their needs more effectively as well as new treatment planning operations in targeted regional geographies. 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.

Current wording

•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.

Previous wording

•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 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 Align TM Digital Platform, including increased practice efficiency and profitability, as well as delivering a better patient experience from shorter cycle times and 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 own vision, strategy, business model and goals.

Current wording

•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 Align TM 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.

Previous wording

•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.

Current wording

•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 Align TM 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.

Previous wording

•Creating demand and enabling patient conversion with targeted investments in advertising and public relations through social media, influencers and other forms of digital communications 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 2024, 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 create additional demand for Invisalign System treatment driving more consumers to dental professionals for those treatments.

Current wording

•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.

Previous wording

•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 about 70% of the approximately 22 million total annual global orthodontic case starts. We continue to emphasize the benefits of the Invisalign System for teenage and younger patient treatments through education, training and sales and marketing programs. In 2024, we had record shipments to teenage and younger patients. 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.

Current wording

•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.

Previous wording

Additionally, government actions in various countries relating to implemented or proposed tariffs, particularly the United States, China, Mexico, and Europe are expected to adversely impact our revenue and cost of goods sold if implemented. The degree of our exposure is dependent on, among other things, the type of goods subject to any tariffs enacted, the tariff rates imposed, the timing of the tariffs and any retaliatory measures enacted. The impact of declining demand may vary by time and region, making operational results uncertain and difficult to predict. We continue to closely monitor the foregoing issues, assess their potential impact on our operations and financial results, and implement plans to mitigate the impact of any adverse events.

Current wording

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.

Previous wording

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 2024, the U.S. dollar remained strong against major currencies, which negatively 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.

Current wording

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.

Previous wording

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, ongoing conflicts in the Middle East may further exacerbate general and regional macroeconomic instability, particularly if fighting intensifies, spreads to other locations, creates shipping and logistical challenges or cost increases, leads to sanctions or boycotts, or otherwise may materially impact our operations. For instance, our iTero business is headquartered in Israel and, although the sales, delivery times and cost of shipping our products have not been materially impacted and we have put measures in place to help reduce the future risks, it remains uncertain if there will be impacts on our sales, delivery times or cost of shipping our products. 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.

Current wording

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.

Previous wording

As the markets for clear aligners and digital processes and workflows used to transform the practice of dentistry continue to mature, we continue to 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 with uncertain implications on our financial statements and business operations.

Current wording

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.

Previous wording

We strive to manage the challenges from the 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 through strategic product innovations, introductions and pricing actions, implementing cost saving measures and evaluating hiring needs.

Current wording

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.

Previous wording

We measure our performance against these strategic priorities by the achievement of key financial and operating metrics. For the year ended December 31, 2024, our business operations reflect the following:

Current wording

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:

Previous wording

◦Clear Aligner revenues of $3,230.1 million, an increase of 1.0% year-over-year;

Current wording

◦Clear Aligner revenues of $3,245.4 million, an increase of 0.5% year-over-year;

Previous wording

▪Clear Aligner volume increase of 3.5% year-over-year and Clear Aligner volume increase for kids and teens of 7.7% year-over-year;

Current wording

◦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;

Previous wording

◦Imaging Systems and computer-aided design and computer-aided manufacturing (“CAD/CAM”) Services revenues of $768.9 million, an increase of 16.0% year-over-year;

Current wording

◦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;

Previous wording

◦Income from operations of $607.6 million and operating margin of 15.2%;

Current wording

◦Income from operations of $545.8 million and operating margin of 13.5%;

Previous wording

◦Net income of $421.4 million with diluted net income per share of $5.62;

Current wording

◦Net income of $410.4 million with diluted net income per share of $5.65;

Previous wording

◦Cash provided by operating activities of $738.2 million;

Current wording

◦Cash provided by operating activities of $593.2 million;

Previous wording

◦Capital expenditures of $115.6 million, primarily related to investments in our manufacturing capacity and facilities; and

Current wording

◦Capital expenditures of $102.4 million, primarily related to investments in our manufacturing capacity and facilities; and

Previous wording

◦Number of employees of 20,945 as of December 31, 2024, a decrease of 3.1% year-over-year.

Current wording

◦Number of employees was 20,290 as of December 31, 2025, a decrease of 3.1% year-over-year.

Previous wording

•As of December 31, 2024, over 19 million people worldwide have been treated with our Invisalign System. Management measures these results by comparing to the millions of people who can benefit from straighter teeth and uses this data to target opportunities to expand the market for orthodontics by educating consumers about the benefits of straighter teeth using the Invisalign System.

Current wording

•As of December 31, 2025, over 22 million people worldwide have been treated with our Invisalign system.

Previous wording

•The total number of Invisalign trained doctors cases were shipped to (doctor submitters) in 2024 was 130.4 thousand compared to 125.8 thousand in 2023, a 3.6% increase. GP and orthodontist doctor submitters increased by approximately 3% and 4%, respectively, in 2024 compared to 2023.

Current wording

•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.

Previous wording

•Our total utilization rate in 2024 of 19.1 cases per doctor was flat compared to 2023 and slightly down from 19.3 cases per doctor in 2022. 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.

Current wording

•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.

Previous wording

•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, upgrades and 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.

Current wording

•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.

Previous wording

Net revenues for our Clear Aligner and Systems and Services segments by region for the year ended December 31, 2024, 2023 and 2022 are as follows (in millions):

Current wording

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:

Previous wording

Case volume data which represents Clear Aligner case shipments for the year ended December 31, 2024, 2023 and 2022 is as follows (in thousands):

Current wording

Case volume data which represents Clear Aligner case shipments for the years ended December 31, 2025, 2024 and 2023 is as follows (in thousands):

Previous wording

Total net revenues increased by $137 million in 2024 as compared to 2023, primarily due to an increase in Systems and Services net revenues from higher scanner ASP, increase in non-system sales and services revenue. Clear Aligner net revenues increased primarily from an increase in volume, partially offset by lower Clear Aligner ASP.

Current wording

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.

Previous wording

The gross margin percentage increased in 2024 as compared to 2023 primarily due to higher ASPs and lower cost of net revenues leverage, partially offset by lower service revenue mix.

Current wording

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.

Previous wording

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 Information Technology (“IT”).

Current wording

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.

Previous wording

Selling, general and administrative expense increased in 2024 compared to 2023 primarily due to higher employee costs, including salaries, fringe benefits, stock-based compensation and bonus partially offset by lower outside services expense.

Current wording

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.

Previous wording

Research and development expense increased in 2024 compared to 2023 primarily due to higher employee costs, including salaries, fringe benefits, stock-based compensation, net of capitalized labor costs related to internal use software, and bonus, partially offset by lower outside services expense.

Current wording

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.

Previous wording

Restructuring and other charges increased in 2024 compared to 2023 due to higher severance and other one-time post-employment benefits, driven by a more significant restructuring plan initiated in 2024. Refer to Note 17 “Restructuring and Other Charges” of the Notes to Consolidated Financial Statements for more information.

Current wording

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.

Previous wording

Legal settlement loss incurred during 2024 was due to litigation and other settlements. Refer to Note 8 “Legal Proceedings” of the Notes to Consolidated Financial Statements for more information.

Current wording

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.

Previous wording

Total operating margin percentage decreased in 2024 compared to 2023 primarilydue to increased legal settlement losses, restructuring and other charges and employee costs. Refer to Note 8 “Legal Proceedings” of the Notes to Consolidated Financial Statements.

Current wording

Total operating margin percentage decreased in 2025 compared to the same period in 2024 primarilydue 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.

Previous wording

Operating margin percentage decreased in 2024 compared to 2023 primarilydue to a decrease in gross margin and an increase in employee costs.

Current wording

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.

Previous wording

Other income (expense), net increased in 2024 compared to 2023 primarily due to gains recorded on our equity investments, offset by the unfavorable impact of foreign exchange rates.

Current wording

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.

Previous wording

The increase in our effective tax rate for the year ended December 31, 2024 compared to the same period in 2023 isprimarily attributable to an increase in U.S. taxes on foreign earnings, partially offset by a change in our jurisdictional mix of income and release of unrecognized tax benefits due to a lapse of the statute of limitation.

Current wording

The decrease in our effective tax rate for the year ended December 31, 2025 compared to the same period in 2024 isprimarily 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.

Previous wording

As of December 31, 2024 and 2023, we had the following cash and cash equivalents and short-term and long-term marketable securities (in thousands):

Current wording

As of December 31, 2025 and 2024, we had the following cash and cash equivalents (in thousands):

Previous wording

As of December 31, 2024 and 2023, approximately $855 million and $785 million, respectively, of cash, cash equivalents and marketable securities 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 domestic operating cash flow 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.

Current wording

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.