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IS

INTUITIVE SURGICAL INC (ISRG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue rose 25% to $2.41B on strong procedure growth and systems ASP uplift; non-GAAP EPS was $2.21 while GAAP EPS was $1.88 .
  • 493 da Vinci systems placed (vs. 415 LY), including 174 da Vinci 5; installed base reached 9,902 (+15% YoY); worldwide da Vinci procedures grew ~18% YoY .
  • Mix tailwinds: higher purchase mix, more dual consoles, and higher ASPs (Q4 system ASP ~$1.59M) drove systems revenue (+36% YoY), but management flagged rising depreciation and leasing mix as headwinds into 2025 .
  • 2025 outlook: procedure growth 13–16%, non-GAAP gross margin 67–68% (down from 69.1% in 2024), non-GAAP OpEx +10–15%, tax rate 22–23%; potential tariff impact not included and could be material .
  • Consensus estimates from S&P Global were unavailable due to API rate limits at the time of analysis; beat/miss vs. Street could not be quantified (values would be from S&P Global if available).

What Went Well and What Went Wrong

What Went Well

  • Systems strength and pricing: Q4 revenue up 25% with systems revenue $655M (+36% YoY) on higher purchase mix, more dual consoles, and higher ASPs; pro forma operating margin reached 38% in Q4 (ahead of expectations) .
  • Platform adoption: 493 placements in Q4 (174 dV5), installed base to 9,902; dV5 momentum (362 in 2024; >32,000 procedures), with broad specialty use and digital feature roadmap .
  • Adjacent platforms accelerating: Ion Q4 procedures ~28,000 (+70% YoY) and installed base +51% to 805; SP Q4 procedure growth +81%, with placements across Korea, Europe, Japan, and U.S. .

Specific quote: “Our financial performance was ahead of our expectations… resulting in pro forma operating margin of 38%.” — CFO Jamie Samath .
Specific quote: “We placed 362 da Vinci 5s in the year… over 32,000 procedures on da Vinci 5 in 2024.” — CEO Gary Guthart .

What Went Wrong

  • 2025 margin compression: Non-GAAP gross margin guided to 67–68% vs. 69.1% in 2024, on higher depreciation, mix dilutive to margin (dV5, Ion, SP), and FX; management expects lower operating margins vs. Q4 run-rate .
  • Procedure headwinds in select categories/regions: U.S. bariatric declines amid GLP‑1 adoption; European capital budgets constrained (U.K., Germany); Korea physician strikes; China remains challenging with domestic competition and policy dynamics .
  • Mid-’25 trade-in cycle may weigh on system ASPs as credits rise with broader dV5 launch; potential new tariffs (e.g., Mexico) could be a material headwind (not in guidance) .

Data point: Q4 OpEx included a $45M contribution to the Intuitive Foundation (also $40M in Q4’23), weighing on EPS .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total Revenue ($B)$1.93 $2.01 $2.04 $2.41
GAAP Diluted EPS$1.69 $1.46 $1.56 $1.88
Non-GAAP Diluted EPS$1.60 $1.78 $1.84 $2.21
GAAP Income from Operations ($M)$450.2 $567.3 $577.3 $734.9
Non-GAAP Income from Operations ($M)$621.0 $754.1 $754.9 $927.7
GAAP Net Income Attrib. ISRG ($M)$606.2 $526.9 $565.1 $685.7
Non-GAAP Net Income Attrib. ISRG ($M)$573.6 $641.0 $669.1 $804.7
Non-GAAP Gross Margin %68.0% (Q4) vs. 69.5% in Q4’24 70.0% (Q2) 69.1% (Q3) 69.5% (Q4)

Segment revenue mix (in $M):

SegmentQ4 2023Q2 2024Q3 2024Q4 2024
Instruments & Accessories$1,143.7 $1,244.4 $1,264.2 $1,411.5
Systems$480.2 $448.2 $445.0 $654.6
Services$304.4 $317.3 $328.9 $347.4
Total$1,928.3 $2,009.9 $2,038.1 $2,413.5

Key KPIs:

KPIQ2 2024Q3 2024Q4 2024
Worldwide da Vinci procedure growth (YoY)~17% ~18% ~18%
System placements (units)341 379 493
dV5 placements (units)70 110 174
Installed base (systems)9,203 9,539 9,902
System ASP (approx.)$1.44M $1.51M $1.59M
I&A revenue per procedure (approx.)~$1,800 ~$1,800 ~$1,860
Leasing mix (% of placements)51% 58% 45%
Ion quarterly procedures (approx.)~23,200 ~25,000 ~28,000
Ion installed base (period end)678 736 805
SP placements (quarter)21 21 30
SP procedure growth (YoY)+74% +70% +81%

Note: No estimate comparison is shown as S&P Global consensus data was unavailable at query time due to API limits.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Worldwide da Vinci procedures growthFY 2025n/a~13%–16%New FY guide
Non-GAAP gross marginFY 2025n/a67%–68% (vs 69.1% in 2024)Cautious (lower vs 2024)
Non-GAAP OpEx growthFY 2025n/a10%–15% (vs 10% in 2024)Higher range vs 2024
Pro forma tax rateFY 20252024: 21.4% 22%–23%Up modestly
Other incomeFY 20252024 guide: $325–$345M $370–$400MUp vs 2024 guide
Capital expendituresFY 20252024 guide: $1.0–$1.2B $650–$800MLower capex plan
Stock-based compensationFY 20252024 guide: $670–$690M $760–$790MHigher SBC

Note: Guidance excludes potential new tariffs; impact could be material and is not embedded .

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
Digital/AI features (Hub, Case Insights, Force Feedback)Launch of Case Insights; early efficiency gains; focus on data infra Case Insights adds force/kinematics/video; EU submissions; broad launch mid-2025 features dV5 digital upgrades in 2025; force feedback broad supply late-2025; value analysis focus Steady build; evidence generation phase
Supply chain & manufacturing expansionIon/SP supply improvements; Q2 GM 70% aided by cost downs New GA and India facilities; note big depreciation in 2025 New facilities coming (CA, DE, BG); higher 2025 depreciation; elevated inventory; lower 2025–26 capex Scaling at “industrial” level; near-term margin pressure
Tariffs/macroTariff risks monitored; mix of lease usage rising Ongoing Europe budget pressure; China stress; FX noted Tariffs could be material; FX part of gross margin headwind Macro headwinds persist
Product performance (dV5)70 dV5 in Q2; constrained rollout into 1H’25 110 dV5 in Q3; Korea clearance; mid-’25 broad launch; early efficiency 174 dV5 in Q4; higher ASPs; trade-in credits to rise with broad launch Ramp accelerating; ASP and credits to fluctuate
Regional dynamicsEurope capex constrained; China headwinds; Korea strikes Similar themes; OUS growth led by UK/India; China below average U.K./Germany capex constrained; China “dynamic and challenging” Mixed; U.S. strong, Europe/China cautious
R&D & innovationContinued investment; SP thoracic clearance; stapler in dev Pro forma OpEx leverage; still prioritize R&D ~11% of rev 2025 OpEx +10–15% with higher legal/depr.; R&D remains priority Consistent commitment

Management Commentary

  • “Q4 performance was ahead of our expectations… driven by revenue growth of 25%… resulting in pro forma operating margin of 38%.” — CFO Jamie Samath .
  • “We placed 362 da Vinci 5s in the year… over 32,000 procedures on da Vinci 5 in 2024… customers will receive hardware and software upgrades going forward starting this year.” — CEO Gary Guthart .
  • “We expect our pro forma gross profit margin to be within a range of 67% and 68%… lower… reflects significant incremental depreciation… growth in newer products… and the impact of the stronger U.S. dollar.” — Brandon Lamm (Outlook) .
  • “Bariatric procedures fell modestly for the full year 2024, given the rise in GLP‑1 medications.” — CEO Gary Guthart .
  • “Placements in the U.K. and Germany continue to be impacted by ongoing government budget pressures affecting health care capital spending.” — CFO Jamie Samath .

Q&A Highlights

  • Gross margin bridge 2024→2025: ~1 point impact from higher depreciation; remainder from mix (dV5/Ion/SP) and FX; path back to 70% over multi-year as scale and cost-downs accrue .
  • Competitive landscape: Outside China relatively stable thus far, but as competitors seek clearances, selling cycles could lengthen; clearly evident in China already .
  • dV5 upgrade cycle: Broad launch mid-2025 expected to increase trade-in activity; credits to be higher, pressuring ASPs near-term; refurbished Xi can serve price-sensitive segments .
  • Tariffs: Significant exposure to instrument manufacturing in Mexico; any new tariffs could be material; pricing responses under evaluation, no decisions yet .
  • Leasing/usage-based shift: Leasing expected to grow over time; usage-based contracts popular, with target economics akin to fixed leases but utilization variability managed closely .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 were unavailable at query time due to provider rate limits; we therefore cannot quantify revenue/EPS beats or misses vs. Street. Where estimates would normally be shown, we have noted the unavailability and anchored analysis to company-reported actuals and management commentary [GetEstimates error noted]. Values would be retrieved from S&P Global if available.

Key Takeaways for Investors

  • dV5 momentum is tangible (174 Q4 placements; higher ASPs; early efficiency data) and should remain a 2025 narrative driver as supply scales and software features broaden mid-year .
  • 2025 margin compression is the primary near-term risk: depreciation ramp, mix dilutive platforms, and FX push non-GAAP gross margin to 67–68% despite healthy demand .
  • Mix dynamics matter: lower leasing mix aided Q4 systems revenue and margins, but management expects leasing rates to rise over time, smoothing revenue recognition but pressuring in-quarter P&L .
  • Non-core platforms are scaling: Ion and SP growth remain robust and strategically important, but continue to dilute product margins near-term; cost-down and scale programs are in flight .
  • Watch macro sensitivities: European capex constraints, China’s competitive/policy environment, and potential Mexico tariffs are key external variables not fully in the outlook .
  • Capital intensity abates: Capex is set to decline to $650–$800M in 2025 as major facilities come online, though depreciation and inventory will be elevated near term .
  • Trade set-up: Positive narrative on top-line growth and dV5 adoption vs. near-term margin guide down and mid-’25 ASP pressure from trade-ins; stock reaction likely hinges on confidence in scaling/efficiency offsets and tariff outcomes .

Appendix: Additional Details

Selected Q4 drivers and disclosures:

  • Instruments & accessories revenue +23% YoY to $1.41B, driven by ~18% da Vinci procedure growth, ~70% Ion procedure growth, and customer buying patterns .
  • Systems revenue $655M vs. $480M LY; lower leased mix vs. prior periods and higher average selling prices vs. Q4’23 helped; 222 systems under operating leases (140 usage-based) in Q4’24 .
  • Cash, cash equivalents and investments at quarter-end: $8.83B (+$521M QoQ), driven by operating cash flow, partly offset by capex .
  • Q4 expenses included $45M contribution to Intuitive Foundation (vs. $40M in Q4’23) .
  • FY24 non-GAAP gross margin 69.1%; FY24 pro forma operating margin 37% .

Press releases of note (Q4 window):

  • Q4 earnings press release (Jan 23, 2025) –.
  • 8-K filing with earnings and outlook; and separate press release: plan to establish direct presence in Italy/Spain/Portugal/Malta/San Marino via distributor acquisition (upfront ~€290M + up to €31M earn-out; expected close 1H26) .
  • Foundation donation press release (Jan 27, 2025) confirming $45M gift referenced in Q4 results .