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IS

INTUITIVE SURGICAL INC (ISRG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was strong: revenue rose 19% YoY to $2.2534B, GAAP diluted EPS was $1.92, and non‑GAAP EPS was $1.81; da Vinci procedures grew ~17%, system placements were 367 (147 DV5), and installed base reached 10,189 systems .
  • Intuitive raised 2025 procedure growth guidance to 15–17% but lowered non‑GAAP gross margin guidance to 65–66.5% (from 67–68%) on tariff impacts estimated at ~1.7% of revenue; opex growth guided to 10–14% .
  • Versus S&P Global consensus, Q1 revenue and EPS were both beats: revenue $2.2534B vs $2.1858B estimate and non‑GAAP EPS $1.81 vs $1.7335 estimate; 22 revenue and 24 EPS estimates contributed (Values retrieved from S&P Global)* .
  • Management highlighted DV5 adoption and digital features (Case Insights, Hub integration) as catalysts; tariff visibility and OUS capital constraints are the key stock debate given the gross margin guide-down .

What Went Well and What Went Wrong

What Went Well

  • Strong core metrics: procedures +17%, installed base +15%, DV5 adoption (147 DV5 systems, >32,000 DV5 procedures) drove healthy revenue growth (+19% YoY) .
  • U.S. capital demand solid with leasing/usage-based models enabling flexibility; ASP rose to ~$1.62M on higher DV5 mix; recurring revenue was 85% of total .
  • Digital/clinical momentum: Case Insights delivered on >22,000 procedures; early studies suggest force feedback may improve outcomes and training; SP stapler clearance broadens indications .
    “Core measures of our business were healthy this quarter, and we are pleased by continued customer adoption of our platforms, including da Vinci 5.” — CEO Gary Guthart .

What Went Wrong

  • Gross margin outlook cut to 65–66.5% for 2025 on tariffs (~1.7% of revenue); management expects tariff impact to step up through the year .
  • OUS capital constraints (Japan, Germany, U.K.) and China competition/price pressure; placements OUS fell slightly YoY (163 vs 165) while tariffs on China imports may impair tender wins .
  • Ion system placements down (49 vs 70) even as procedures rose 58%; SP still early in the U.S., commercialization of new indications measured .

Financial Results

Summary Financials (GAAP and non-GAAP EPS)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$2,038.1 $2,413.5 $2,253.4
GAAP Diluted EPS ($)$1.56 $1.88 $1.92
GAAP Net Income ($USD Millions)$565.1 $685.7 $698.4
Non‑GAAP Diluted EPS ($)$1.84 $2.21 $1.81
Gross Profit ($USD Millions)$1,373.9 $1,642.2 $1,457.7
Pro forma Gross Margin (%)69.1% 69.5% 66.4%

Notes:

  • Q1 2025 YoY revenue growth +19%; instruments & accessories +18%; systems +25% (driven by DV5 mix) .
  • Constant currency revenue growth +20% in Q1 .

Segment Revenue Breakdown

Segment ($USD Millions)Q3 2024Q4 2024Q1 2025
Instruments & Accessories$1,264.2 $1,411.5 $1,367.7
Systems$445.0 $654.6 $522.7
Services$328.9 $347.4 $363.0
Total Revenue$2,038.1 $2,413.5 $2,253.4

KPIs and Operating Metrics

KPIQ3 2024Q4 2024Q1 2025
Worldwide da Vinci procedure growth YoY~18% ~18% ~17%
System placements (da Vinci)379 493 367
DV5 placements110 174 147
Installed base (da Vinci systems)9,539 9,902 10,189
Leasing rate (% of placements)58% 45% 54%
Usage‑based operating leases (count)——107 (of 198 operating lease placements)
System ASP ($USD Millions)~$1.51 ~$1.59 ~$1.62
I&A revenue per procedure ($)~$1,800 ~$1,860 ~$1,780
Ion procedures (approx.)~25,000 ~28,000 ~31,000
SP procedure growth YoY70% 81% 94%

Results vs S&P Global Consensus (Q1 2025)

MetricActualConsensus# of Estimates
Revenue ($USD Millions)2,253.4 2,185.83*22*
EPS (Non‑GAAP, $)1.81 1.7335*24*

Values retrieved from S&P Global*.

Bold conclusion: both revenue and EPS were beats.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Worldwide da Vinci procedure growthFY 202513–16% 15–17% Raised
Non‑GAAP Gross MarginFY 202567–68% (excludes new tariffs) 65–66.5% (includes ~1.7% tariff impact) Lowered
Non‑GAAP Operating Expense GrowthFY 202510–15% 10–14% Lowered (narrowed)
Stock‑based CompensationFY 2025$760–$790M $770–$790M Slightly raised
Other Income (mostly interest)FY 2025$370–$400M $370–$400M Maintained
Capital ExpendituresFY 2025$650–$800M $650–$750M Lowered
Pro forma Tax RateFY 202522–23% 22–23% Maintained
Tariff impact (COGS)FY 2025Not included ~1.7% of revenue (±30 bps), ramps through year New headwind

Earnings Call Themes & Trends

TopicQ3 2024 MentionsQ4 2024 MentionsQ1 2025 CurrentTrend
Tariffs / MacroFlagged potential tariffs, FX exposure, and strong dollar risks 2025 gross margin guide excluded tariffs, with caveats Explicit tariff buckets, ~1.7% of revenue impact, margin guide cut; cadence increases through 2025 Headwinds intensifying
AI/Digital tools (Hub, Case Insights)Digital pillars, Hub in ~2,000 ORs; Case Insights early DV5 digital features at mid‑year broad launch; integration with Hub Case Insights on >22,000 procedures; real‑time video/3D model review features targeted for 510(k) later 2025 Expanding deployment
DV5 adoption110 placements; broad launch planned mid‑2025 174 placements; higher dual console mix; supply scaling 147 placements; >32,000 DV5 procedures; features ramp Strong, steady uptake
Regional dynamicsOUS procedures +24%; China below avg; Korea strike effects OUS +25%; Europe/Japan capital pressure; China placements ~20 OUS +24%; Europe/Japan constrained; China improved but competitive; tariffs affect China tenders Mixed; OUS constraints persist
Regulatory updatesKorea DV5 clearance; CE file submitted; Japan progressing Planning new facilities and global expansion SP SureForm 45 stapler FDA clearance; DV5 EU clearance expected near end of 2025; Japan ongoing Positive approvals
R&D & capacity buildNew GA facility; GCoE in India; depreciation to rise in 2025 Significant facilities coming in 2025; operating margin top‑tier long‑term Two new Sunnyvale facilities opened; Germany/Bulgaria endoscope manufacturing; Mexico expansion Execution on scale
Product performance (Ion, SP)Ion +73% procedures; SP +70% growth Ion +70% procedures; SP +81% growth; stapler pending Ion +58% procedures; SP +94% growth; stapler cleared Sustained growth

Management Commentary

  • “Core measures of our business were healthy this quarter... continued customer adoption of our platforms, including da Vinci 5.” — CEO Gary Guthart .
  • CFO tariff context: “We currently expect the impact to our income statement for 2025 to be additional cost of approximately 1.7% of revenue... impact increases each quarter; updated pro forma gross margin to 65–66.5%” .
  • President on DV5: over 32,000 procedures; integrated hardware rolling; real‑time video review and visual force feedback features targeted later this year; broad launch mid‑year 2025 .
  • On being part of the solution despite hospital budget stress: “For a well‑run program, total cost to treat per patient episode is outstanding... better outcomes and lowest total cost to treat” — CEO .

Q&A Highlights

  • Tariff breakdown and cadence: ~50% impact U.S.–China trade; ~40% imports to U.S. ex‑China (endoscopes from Europe and components); ~10% Mexico items not qualifying under USMCA; tariff impact rises through 2025 .
  • Capital environment: U.S. demand strong, leasing and usage‑based arrangements help; OUS constrained by government budgets and reprioritizations (e.g., military spending) .
  • DV5 supply and mix: DV5 share of placements healthy; normal seasonality; dual console availability improving with scale .
  • I&A per procedure dynamics: mix shifts (lower bariatric, higher cholecystectomy) offset by SP and DV5 accessory revenue (insufflation, force feedback) .
  • Medicaid policy uncertainties: exposure not dominant; too early to quantify impact on utilization .

Estimates Context

  • Q1 2025 delivered revenue $2,253.4M vs $2,185.83M consensus and non‑GAAP EPS $1.81 vs $1.7335 consensus; 22 revenue and 24 EPS estimates contributed (Values retrieved from S&P Global)* .
  • With DV5 adoption and recurring revenue mix, near‑term estimate revisions likely to reflect higher procedures and recurring revenue; margin expectations may be trimmed given explicit tariff headwinds, depreciation from new facilities, and product mix (DV5/Ion/SP below corporate margins) .

Key Takeaways for Investors

  • Strong top‑line momentum supported by procedures (+17%) and DV5 mix; recurring revenue remains ~85% of total, stabilizing the model .
  • Both revenue and EPS beat consensus; positive surprise ties to U.S. general surgery strength and DV5 adoption; watch leasing/usage‑based mix on revenue timing (purchase vs lease) .
  • 2025 gross margin guide‑down is the key debate; tariff impact (~1.7% of revenue) ramps across the year; margin pressure is a near‑term overhang .
  • DV5 broad launch mid‑year with integrated digital features (Hub, Case Insights) is a medium‑term catalyst; force feedback instruments supply constrained until late 2025 .
  • OUS capital constraints and China competition persist; strategy emphasizes utilization gains, economic tools, and leasing to mitigate capital bottlenecks .
  • Capacity expansion (Sunnyvale, Germany, Bulgaria, Mexico) positions Intuitive for scale and quality but lifts depreciation; expect operating margin below Q4 levels near‑term .
  • SP stapler clearance expands indications (thoracic, colorectal, urology), supporting SP growth trajectory, especially outside U.S. .

Appendix: Additional Q1 2025 Press Releases

  • U.S. FDA clearance of SP SureForm 45 stapler for thoracic, colorectal, and urologic procedures .
  • Research on expanding access to minimally invasive care and MIS deserts; RAS adoption increases MIS rates and access .