Da Vinci 5 Launch Timing
Q: When will da Vinci 5 be launched?
A: Management is aiming for a 2024 launch of da Vinci 5, pending FDA clearance. They are engaged in constructive conversations with the FDA but cannot guarantee the exact timing.

Da Vinci 5 Features and Impact
Q: What are the key differences in da Vinci 5?
A: While specifics are withheld until clearance, da Vinci 5 will have substantive improvements, including increased computational capability for future software enhancements. This will allow for greater penetration in existing procedures and opportunity for added functionality over time.

Financial Implications of da Vinci 5
Q: How will da Vinci 5 affect financials beyond 2024?
A: The financial dynamics of da Vinci 5's launch differ significantly from Xi's. Management is withholding detailed financial expectations until after clearance but noted that leasing arrangements may influence upgrades, potentially allowing customers to avoid capital budget barriers.

ASP Uplift and Manufacturing Capacity
Q: Will da Vinci 5 have higher ASPs and how is manufacturing capacity scaling?
A: They did not commit to specifics on ASP uplift but emphasized that pricing discussions will be detailed and customer-focused. Manufacturing will start with a phased launch; initial supply will be constrained intentionally, with scaling expected to take several quarters, possibly beyond a year.

Leasing Dynamics with da Vinci 5
Q: How will leasing be affected by da Vinci 5's launch?
A: An increase in operating leases is anticipated as customers may prefer leases with upgrade clauses to transition to da Vinci 5 when available. This shift means revenue will be spread over time rather than recognized upfront.

China Sales Impact
Q: How is the anticorruption campaign affecting China sales?
A: The anticorruption efforts in China are expected to delay tenders and impact system placements at least through the first half of 2024. Management lacks visibility beyond that period but hopes for normalization if the efforts conclude.

Procedure Growth Guidance
Q: Could you detail the 13%-16% procedure growth guidance?
A: Growth is driven by U.S. general surgery, which grew 25% in 2023, and international procedures beyond urology, which grew 35%. The guidance accounts for potential moderation in bariatric procedures, impact from China, and benefits from backlog, with tougher comps expected in the first half of the year.

Operating Margin and Expenses
Q: How will OpEx and CapEx affect margins?
A: Increased OpEx is anticipated due to R&D and SG&A investments for new product launches. Elevated CapEx is primarily for manufacturing facilities, with depreciation impacting cost of sales and SG&A in 2024. Operating margin expansion is expected over the medium term (3-5 years) as scaling and leverage opportunities are realized.

SP and Ion Updates
Q: What's new with SP and Ion systems?
A: SP had its strongest quarter ever and is expanding into Japan and Europe in 2024, with ongoing trials aiming to broaden indications. Ion faces supply constraints in catheters and vision probes, with resolution expected over several quarters, though no specific timeline was provided.

General Surgery Penetration
Q: How is penetration in general surgery progressing?
A: In the U.S., procedures like colorectal, bariatrics, cholecystectomy, and hernia are in the second quartile of adoption, indicating substantial growth opportunity. Internationally, general surgery is in the first quartile, representing early stages of adoption and significant potential.

Software Improvements in da Vinci 5
Q: Will da Vinci 5 focus on software enhancements?
A: Yes, da Vinci 5 includes increased computational capability, enabling future software updates and added functionality over time. This rebaselining allows for sequential software enhancements, much like previous systems, building upon its capabilities for years to come.