4e2341970ef886794576c2cc5ed395d201331c44d2617f6f3b970b7e67173166

| Metric / Quarter | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Ion System Installed Base (units) | **321**  **[ISRG_3141193_4]**  | **376**  **[0001035267-23-000092_isrg-20230331.htm:54]**  | **435**  **[0001035267-23-000159_isrg-20230630.htm:62]**  | **490**  **[0001035267-23-000196_isrg-20230930.htm:62]**  | **534**  **[ISRG_3370595_4]**  | **604**  **[0001035267-24-000137_isrg-20240331.htm:54]**  | **678**  **[0001035267-24-000207_isrg-20240630.htm:54]**  | **736**  **[0001035267-24-000247_isrg-20240930.htm:60]**  |
| Da Vinci Procedure Volume (procedures) | **540,000**  **[0001035267-23-000092_isrg-20230331.htm:50]**  | **567,000**  **[0001035267-23-000159_isrg-20230630.htm:56]**  | **567,000**  **[0001035267-23-000196_isrg-20230930.htm:56]**  | **627,000**  **[0001035267-24-000137_isrg-20240331.htm:50]**  | **661,000**  **[0001035267-24-000207_isrg-20240630.htm:54]** **[0001035267-24-000203_q224ex-991earningsrelease.htm:1]**  | **670,000**  **[0001035267-24-000247_isrg-20240930.htm:54]** **[0001035267-24-000244_q324ex-991earningsrelease.htm:1]**  |
| Ion Procedure Volume (procedures) | **7,900**  **[ISRG_3141193_4]**  | **10,200**  **[0001035267-23-000092_isrg-20230331.htm:50]**  | **12,700**  **[0001035267-23-000159_isrg-20230630.htm:56]**  | **14,500**  **[0001035267-23-000196_isrg-20230930.htm:56]**  | **16,500**  **[ISRG_3370595_4]**  | **19,500**  **[ISRG_3380010_4]** **[0001035267-24-000137_isrg-20240331.htm:50]**  | **23,200**  **[0001035267-24-000207_isrg-20240630.htm:54]**  | **25,000**  **[0001035267-24-000247_isrg-20240930.htm:54]**  |
| Da Vinci Surgical System Installed Base (units) | **7,544**  **[0001035267-23-000006_q422ex-991earningsrelease.htm:0]** **[0001035267-23-000019_isrg-20221231.htm:140]** **[0001035267-23-000019_isrg-20221231.htm:136]**  | **7,779**  **[0001035267-23-000092_isrg-20230331.htm:50]** **[0001035267-23-000087_q123ex-991earningsrelease.htm:0]**  | **8,042**  **[0001035267-23-000159_isrg-20230630.htm:56]**  | **8,285**  **[0001035267-23-000196_isrg-20230930.htm:56]**  | **8,606**  **[0001035267-24-000009_q423ex-991earningsrelease.htm:0]**  | **8,887**  **[0001035267-24-000133_q124ex-991earningsrelease.htm:0]** **[0001035267-24-000137_isrg-20240331.htm:50]** **[0001035267-24-000137_isrg-20240331.htm:53]**  | **9,203**  **[0001035267-24-000207_isrg-20240630.htm:54]** **[0001035267-24-000203_q224ex-991earningsrelease.htm:0]**  | **9,539**  **[0001035267-24-000247_isrg-20240930.htm:54]** **[0001035267-24-000244_q324ex-991earningsrelease.htm:0]**  |
| Da Vinci System Installed Base under Operating Leasing Arrangements (units) | **1,683**  **[0001035267-23-000019_isrg-20221231.htm:121]**  | **1,780**  **[0001035267-23-000092_isrg-20230331.htm:54]**  | **1,925**  **[0001035267-23-000159_isrg-20230630.htm:62]**  | **2,064**  **[0001035267-23-000196_isrg-20230930.htm:61]**  | **2,227**  **[0001035267-24-000021_isrg-20231231.htm:128]**  | **2,335**  **[0001035267-24-000137_isrg-20240331.htm:54]**  | **2,469**  **[0001035267-24-000207_isrg-20240630.htm:60]**  | **2,641**  **[0001035267-24-000247_isrg-20240930.htm:60]**  |
| Ion System Installed Base under Operating Leasing Arrangements (units) | **132**  **[ISRG_3141193_4]**  | **155**  **[0001035267-23-000092_isrg-20230331.htm:54]**  | **175**  **[0001035267-23-000159_isrg-20230630.htm:62]**  | **194**  **[0001035267-23-000196_isrg-20230930.htm:62]**  | **214**  **[0001035267-24-000021_isrg-20231231.htm:147]**  | **244**  **[0001035267-24-000137_isrg-20240331.htm:54]**  | **275**  **[0001035267-24-000207_isrg-20240630.htm:60]**  | **296**  **[0001035267-24-000247_isrg-20240930.htm:61]**  |
| Da Vinci System Placements Under Leasing Arrangements (units) | **154**  **[0001035267-23-000003_q422ex-991q4prexreleaseq4o.htm:1]** **[0001035267-23-000006_q422ex-991earningsrelease.htm:1]**  | **131**  **[0001035267-23-000092_isrg-20230331.htm:54]**  | **170**  **[0001035267-23-000159_isrg-20230630.htm:62]**  | **174**  **[0001035267-23-000196_isrg-20230930.htm:61]**  | **201**  **[0001035267-24-000006_q423ex-991q4prexreleaseq4o.htm:1]**  | **165**  **[0001035267-24-000137_isrg-20240331.htm:54]**  | **201**  **[0001035267-24-000207_isrg-20240630.htm:60]**  | **233**  **[0001035267-24-000247_isrg-20240930.htm:60]**  |
| Ion System Placements Under Leasing Arrangements (units) | **34**  **[0001035267-23-000003_q422ex-992q4prereleaseq4on.htm:0]**  | **34**  **[0001035267-23-000092_isrg-20230331.htm:54]**  | **32**  **[0001035267-23-000159_isrg-20230630.htm:62]**  | **27**  **[0001035267-23-000196_isrg-20230930.htm:62]**  | **39**  **[0001035267-24-000137_isrg-20240331.htm:54]**  | **40**  **[0001035267-24-000207_isrg-20240630.htm:60]**  | **38**  **[0001035267-24-000247_isrg-20240930.htm:61]**  |
| Da Vinci Surgical Systems Placed (units) | **369**  **[0001035267-23-000003_q422ex-991q4prexreleaseq4o.htm:1]** **[0001035267-23-000003_q422ex-991q4prexreleaseq4o.htm:0]** **[0001035267-23-000006_q422ex-991earningsrelease.htm:0]**  | **312**  **[0001035267-23-000092_isrg-20230331.htm:48]** **[0001035267-23-000092_isrg-20230331.htm:50]** **[0001035267-23-000087_q123ex-991earningsrelease.htm:0]** **[0001035267-23-000092_isrg-20230331.htm:53]** **[ISRG_3246756_3]** **[ISRG_3246756_0]** **[ISRG_3246756_2]**  | **331**  **[0001035267-23-000159_isrg-20230630.htm:56]** **[0001035267-23-000155_q223ex-991earningsrelease.htm:0]** **[ISRG_3255030_0]**  | **312**  **[0001035267-23-000196_isrg-20230930.htm:56]** **[0001035267-23-000196_isrg-20230930.htm:61]** **[0001035267-23-000192_q323ex-991earningsrelease.htm:1]**  | **415**  **[0001035267-24-000006_q423ex-991q4prexreleaseq4o.htm:1]**  | **313**  **[0001035267-24-000137_isrg-20240331.htm:48]**  | **341**  **[0001035267-24-000207_isrg-20240630.htm:54]** **[0001035267-24-000207_isrg-20240630.htm:59]** **[0001035267-24-000203_q224ex-991earningsrelease.htm:0]**  | **379**  **[0001035267-24-000247_isrg-20240930.htm:52]**  |
| Installed Base of Da Vinci SP Surgical Systems (units) | **121**  **[0001035267-23-000019_isrg-20221231.htm:113]**  | **130**  **[0001035267-23-000092_isrg-20230331.htm:30]**  | **142**  **[ISRG_3383074_1]**  | **158**  **[ISRG_3337763_1]**  | **177**  **[0001035267-24-000021_isrg-20231231.htm:120]**  | **201**  **[0001035267-24-000137_isrg-20240331.htm:31]** **[0001035267-24-000137_isrg-20240331.htm:50]**  | **222**  **[0001035267-24-000207_isrg-20240630.htm:36]**  | **243**  **[ISRG_3402972_1]**  |

02d63b43dcf2bbc04924fd8f26fd2cf7d6c870b80efe733ef5ee85d47ba1cc76

Intuitive Surgical, Inc. develops, manufactures, and markets advanced surgical systems designed to enable minimally invasive care **[0001035267-24-000021_isrg-20231231.htm:172]** **[0001035267-24-000247_isrg-20240930.htm:3]**. The company offers the da Vinci® surgical systems and the Ion® endoluminal system, generating revenue from their sale and lease, as well as from recurring sales of instruments, accessories, and services **[0001035267-24-000021_isrg-20231231.htm:125]** **[0001035267-24-000137_isrg-20240331.htm:35]** **[0001035267-24-000207_isrg-20240630.htm:39]** **[0001035267-24-000247_isrg-20240930.htm:39]**. Intuitive Surgical also provides a portfolio of learning offerings and digital solutions, although these do not currently generate material revenue **[0001035267-24-000021_isrg-20231231.htm:125]** **[0001035267-24-000137_isrg-20240331.htm:35]** **[0001035267-24-000207_isrg-20240630.htm:39]** **[0001035267-24-000247_isrg-20240930.htm:39]**.

1. **da Vinci® Surgical Systems** - Comprises a surgeon console, a patient-side cart, and a high-performance vision system, facilitating minimally invasive surgeries.
2. **Ion® Endoluminal System** - Includes a system cart, a controller, a catheter, and a vision probe, designed for minimally invasive endoluminal procedures.
3. **Instruments and Accessories** - Offers a range of instruments and accessories with limited lives that require regular replacement, contributing to recurring revenue.
4. **Service Contracts** - Provides service contracts typically entered into at the time of system sale or lease, ensuring ongoing support and maintenance.
5. **Learning Offerings and Digital Solutions** - Delivers a portfolio of educational and digital solutions, although these currently do not generate significant revenue.

fe2114ca5ef6cb6faea232b5e4a8d662d90160395269e46ae695302817db7361

| Metric [USD Millions] | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|-----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| U.S. Revenue          | N/A     | **1,109.9**  **[0001035267-23-000092_isrg-20230331.htm:52]**  | **1,142.5**  **[0001035267-23-000159_isrg-20230630.htm:12]**  | **1,180.2**  **[0001035267-23-000196_isrg-20230930.htm:14]**  | N/A     | **1,238.5**  **[0001035267-24-000137_isrg-20240331.htm:12]**  | **1,320.0**  **[0001035267-24-000207_isrg-20240630.htm:12]**  | **1,379.4**  **[0001035267-24-000247_isrg-20240930.htm:13]**  |
| OUS Revenue           | N/A     | **586.3**  **[0001035267-23-000092_isrg-20230331.htm:52]**    | **613.4**  **[0001035267-23-000159_isrg-20230630.htm:12]**    | **563.5**  **[0001035267-23-000196_isrg-20230930.htm:14]**    | N/A     | **652.1**  **[0001035267-24-000137_isrg-20240331.htm:12]**    | **690.7**  **[0001035267-24-000207_isrg-20240630.htm:12]**    | **658.7**  **[0001035267-24-000247_isrg-20240930.htm:13]**    |

e294c29fffd6573dcdba82ff1bb1057f9a70093b853b3753344c3ba506a34a03

| Metric [USD Billion] | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Instruments and Accessories | **0.941**  **[0001035267-23-000006_q422ex-991earningsrelease.htm:1]**  | **0.986**  **[0001035267-23-000087_q123ex-991earningsrelease.htm:1]**  | **1.08**  **[0001035267-23-000159_isrg-20230630.htm:56]**  | **1.071**  **[0001035267-23-000192_q323ex-991earningsrelease.htm:1]**  | **1.14**  **[0001035267-24-000009_q423ex-991earningsrelease.htm:1]**  | **1.16**  **[0001035267-24-000133_q124ex-991earningsrelease.htm:1]**  | **1.24**  **[0001035267-24-000203_q224ex-991earningsrelease.htm:1]**  | **1.26**  **[0001035267-24-000244_q324ex-991earningsrelease.htm:1]**  |
| Systems              | **0.451**  **[0001035267-23-000006_q422ex-991earningsrelease.htm:1]** **[0001035267-23-000003_q422ex-992q4prereleaseq4on.htm:0]**  | **0.427**  **[0001035267-23-000092_isrg-20230331.htm:50]**  | **0.393**  **[0001035267-23-000155_q223ex-991earningsrelease.htm:0]**  | **0.379**  **[0001035267-23-000196_isrg-20230930.htm:56]**  | **0.480**  **[0001035267-24-000006_q423ex-991q4prexreleaseq4o.htm:0]**  | **0.418**  **[0001035267-24-000137_isrg-20240331.htm:50]**  | **0.448**  **[0001035267-24-000207_isrg-20240630.htm:54]**  | **0.445**  **[0001035267-24-000247_isrg-20240930.htm:54]**  |
| Services             | **0.263**  **[0001035267-23-000006_q422ex-991earningsrelease.htm:1]** **[0001035267-23-000003_q422ex-992q4prereleaseq4on.htm:0]**  | **0.283**  **[0001035267-23-000087_q123ex-991earningsrelease.htm:0]**  | **0.287**  **[0001035267-23-000159_isrg-20230630.htm:61]**  | **0.293**  **[0001035267-23-000192_q323ex-991earningsrelease.htm:1]** **[0001035267-23-000196_isrg-20230930.htm:56]** **[0001035267-23-000196_isrg-20230930.htm:59]**  | **0.304**  **[0001035267-24-000009_q423ex-991earningsrelease.htm:1]** **[0001035267-24-000006_q423ex-991q4prexreleaseq4o.htm:0]** **[0001035267-24-000006_q423ex-992q4prereleaseq4on.htm:0]**  | **0.313**  **[0001035267-24-000133_q124ex-991earningsrelease.htm:1]** **[0001035267-24-000137_isrg-20240331.htm:50]** **[0001035267-24-000137_isrg-20240331.htm:53]** **[0001035267-24-000137_isrg-20240331.htm:52]** **[0001035267-24-000133_q124ex-991earningsrelease.htm:8]**  | **0.317**  **[0001035267-24-000203_q224ex-991earningsrelease.htm:0]**  | **0.329**  **[0001035267-24-000244_q324ex-991earningsrelease.htm:1]** **[0001035267-24-000247_isrg-20240930.htm:54]** **[0001035267-24-000247_isrg-20240930.htm:59]** **[0001035267-24-000247_isrg-20240930.htm:56]** **[0001035267-24-000247_isrg-20240930.htm:2]**  |
| **Total Revenue**    | **1.66**  **[0001035267-23-000006_q422ex-991earningsrelease.htm:1]** **[0001035267-23-000003_q422ex-992q4prereleaseq4on.htm:0]**   | **1.70**  **[0001035267-23-000092_isrg-20230331.htm:53]**   | **1.76**  **[0001035267-23-000155_q223ex-991earningsrelease.htm:1]**   | **1.744**  **[0001035267-23-000192_q323ex-991earningsrelease.htm:1]** **[0001035267-23-000196_isrg-20230930.htm:56]** **[0001035267-23-000196_isrg-20230930.htm:59]**  | **1.93**  **[0001035267-24-000009_q423ex-991earningsrelease.htm:1]** **[0001035267-24-000006_q423ex-991q4prexreleaseq4o.htm:0]** **[0001035267-24-000006_q423ex-992q4prereleaseq4on.htm:0]**   | **1.89**  **[0001035267-24-000137_isrg-20240331.htm:53]**   | **2.01**  **[0001035267-24-000207_isrg-20240630.htm:59]**   | **2.04**  **[0001035267-24-000247_isrg-20240930.htm:59]**   |

f34367803826139101b9dda530850c8a16583c1448554178c668013fcf5d4424

1. Given your expectation for gross margins to be lower next year due to significant incremental depreciation from new facilities, how do you plan to mitigate margin pressures while continuing to invest in R&D and maintain top-tier profitability?
2. With the da Vinci 5 rollout prioritizing single-system placements and dual console availability delayed, are you concerned that adoption among larger academic centers will be slower, potentially impacting procedure growth in this segment?
3. The percentage of systems placed under usage-based arrangements has increased from 12% to 15%, introducing variability in procedure volumes; how does this shift impact your revenue predictability and what measures are you taking to manage the risk of underutilization?
4. In international markets, regulatory approvals are staggered with Korea approved but delays in Japan and Europe not expected until the end of next year; how does this affect your global growth strategy and what plans do you have to accelerate market entry in these key regions?
5. As innovation shifts toward software with potentially shorter development cycles, how do you plan to continue differentiating your platform given the ease of replication in software, and what role will hardware innovation play in maintaining your competitive advantage?

267af8d77b151ab1820177801f5edb2829b93f3bb0e07d6fc38a7314ad2ea1a3

Adjustments for Non-Cash Items (USD, millions)

Stock-Based Compensation (USD, millions)

Changes in Working Capital (USD, millions)

Capital Expenditures (CapEx) (USD, millions)

Proceeds from / Repayments of Debt (USD, millions)

Share Repurchases (USD, millions)

Dividend Payments (USD, millions)

Net Change in Cash (USD, millions)

881b26934748cfac9aa1ff005109c0abd9e51d57ac7214b7bc374663157268f0

0d85bd709d115e0564815994e3dd3a452d83873a65b110ecd1cabe574406d13f

- **The introduction of new digital features and upgrades in the da Vinci 5 system is expected to enhance capabilities, making it easier for care teams to achieve great outcomes, build confidence, and potentially open opportunities to reach more patients.**  **[ISRG_3413152_15]**
- **The full launch of da Vinci 5 and anticipated upgrade cycle starting mid-year are expected to increase the proportion of da Vinci 5 placements, boosting capital sales and leading to higher recurring revenue from instruments and accessories.**  **[ISRG_3413152_11]**
- **As the installed base grows, especially in regions, Intuitive Surgical gains efficiencies in selling and servicing, resulting in improved margins due to geographic density and increased utilization of higher-margin instruments and accessories.**  **[ISRG_3413152_14]**

e0f3f53e75c88ada20e4cd065e2a17945206b72ab736b2be1efe04ba63d126b6

- **Competitive pressures in China are impacting sales, creating a challenging environment.** Jamie Samath stated that "the environment in China continues to be dynamic and challenging as we've said, impacted by both domestic competition and a set of activities implemented by the government there".  **[ISRG_3413152_16]**  This could hinder future growth in a significant market.
- **Gross margins are expected to decline in 2025 due to increased depreciation expenses, unfavorable product mix, and foreign exchange impacts.** Jamie highlighted that "there's really three drivers... the largest of which is the impact of depreciation expense and associated fixed costs... The other two dynamics... are product mix with dV5, Ion and SP being a greater proportion of the revenue... they all carry currently margins below the corporate average... And then... the impact of FX".  **[ISRG_3413152_9]**
- **Slowing growth rates in the Ion platform as it reaches maturity in the U.S. may impact future revenue growth.** Jamie noted that "you just naturally... start to see procedure growth rates come down. And you've seen that if you look at the last 3 or 4 quarters... customers will tend to more focus on improvements in utilization".  **[ISRG_3413152_15]**  This suggests that as adoption peaks, growth could decelerate.

40d7e59d2002b2d94e563bd4d22854fed0c57fae55c77c06ca96f1a10058ddd6

1. **Gross Margin Outlook**  
   **Q:** Why is gross margin guidance of 67%-68% lower, and what's the path back to 70%?  
   **A:** Gross margin is expected to decline from **69.1% in 2024 to 67%-68% in 2025** due to three main factors: increased depreciation expense and associated fixed costs (about one percentage point impact with roughly **$25 million** more in expenses); a dilutive effect from the product mix shift towards **da Vinci 5, Ion, and SP**, which currently have margins below the corporate average; and impacts from foreign exchange rates. Over the midterm, management believes they can get back beyond **70% gross margin** by leveraging growth past incremental depreciation and improving product margins in Ion and SP.  **[ISRG_3413152_9]** 

2. **Competition Impact, Especially China**  
   **Q:** How is increased competition affecting sales, particularly in China?  
   **A:** In China, increased competition from domestic competitors and government actions have made the environment **dynamic and challenging**, resulting in consistent but difficult conditions. They placed **20 systems in China in Q4**, which they don't characterize as strong. Internationally, while competition hasn't significantly impacted selling cycles yet, there is potential for selling cycles to **lengthen** as more competitors gain clearances in various markets, including the U.S.  **[ISRG_3413152_11]** **[ISRG_3413152_16]** 

3. **da Vinci 5 Upgrade Cycle**  
   **Q:** How will the mix between da Vinci 5 and Xi systems evolve, and when will upgrades occur?  
   **A:** Over time, the proportion of **da Vinci 5 (dV5)** placements should **increase** as they move to broad launch and receive additional geographical clearances. Trade-ins from Xi to dV5 are expected to pick up starting midyear during broad launch. The upgrade cycle depends on how compelling the new features are, such as software updates and integrated technologies. While difficult to predict the speed, the trading cycle is expected to be **progressive**, with dV5 gradually replacing Xi in placements.  **[ISRG_3413152_10]** 

4. **Ion and SP Margin Drag**  
   **Q:** When will Ion and SP stop being a margin drag, and what drives their growth?  
   **A:** Ion performed **28,000 procedures in Q4**, indicating a run rate of over **100,000 procedures**, primarily in the U.S. As adoption matures, procedure growth rates may naturally slow. The next growth phase involves international launches in **Europe, Korea, and China**, and exploring new indications in the lung and potentially other areas. Reducing product costs is a midterm goal aligned with gross margin objectives. For SP, international launches and new indications like thoracic and colorectal are driving growth. Margin improvement for SP will occur over the midterm but requires less effort compared to Ion.  **[ISRG_3413152_15]** 

5. **Tariff Risks**  
   **Q:** How might tariffs impact the company, and what are the mitigation plans?  
   **A:** Potential tariffs, especially on products manufactured in **Mexico**, could have a **material impact**. A significant portion of their instruments are produced there. Management is closely monitoring developments and evaluating responses, including potential **pricing adjustments**, but no decisions have been made yet. They aim to balance customer needs with business requirements.  **[ISRG_3413152_13]** 

6. **R&D Investments and Growth Areas**  
   **Q:** How will the R&D investment opportunity evolve, and what new areas are being targeted?  
   **A:** The company is investing over **$1 billion** annually in R&D, focusing on innovations that extend existing platforms, develop new platforms in the future, and expand indications geographically and through new instruments and imaging capabilities. They also invest to meet the needs of **latecomers to robotics**, addressing different learning or economic needs. Opportunities span multiple horizons and specialties, aiming for a balanced approach without overexposure to any single area.  **[ISRG_3413152_12]** 

7. **Instruments and Accessories Opportunities**  
   **Q:** What future opportunities exist in instruments and accessories, and how will this affect margins?  
   **A:** Management seeks to add value by integrating or developing products that enhance clinical or economic outcomes. Examples include **force feedback instruments** and **insufflation systems** on da Vinci 5. Force feedback instruments, with a higher ASP, won't be in broad supply until the **end of 2025**, limiting their immediate impact on instruments and accessories per procedure. Over the next few years, I&A per procedure is expected to **drift down slowly** due to a higher proportion of growth coming from benign procedures, which typically use fewer or less expensive instruments.  **[ISRG_3413152_17]** 

8. **Efficiencies from Installed Base Density**  
   **Q:** Does increased installed base density lead to margin improvements?  
   **A:** Higher geographic density of the installed base provides **cost advantages** in supporting accounts, including efficiencies in service, depots, sales support, and training. This **scale** can lead to margin improvements due to reduced costs in servicing densely populated markets.  **[ISRG_3413152_18]** 

9. **Capital Equipment Environment**  
   **Q:** What is the outlook for capital equipment sales globally?  
   **A:** In the **U.S.**, the capital environment has been **strong**, driven partly by interest in da Vinci 5 as a new product, with less sensitivity to capital budgets. Challenges exist in the **U.K. and Germany**, and in **Japan**, there were delays due to profitability issues at certain customers in Q4. The outlook for **2025** remains uncertain, with mixed dynamics expected in international markets.  **[ISRG_3413152_8]** **[ISRG_3413152_11]** 

10. **New Digital Features for da Vinci 5**  
    **Q:** How will new digital features enhance da Vinci 5?  
    **A:** New hardware and software digital features aim to make it easier to achieve great outcomes by providing **real-time tools** in the operating room, building confidence among care teams, and **accelerating learning**. These features may include imaging and **augmented reality** enhancements that inspire surgeons and open new opportunities, potentially increasing access to more patients rather than entirely new procedure categories.  **[ISRG_3413152_14]** 

62be374c73ad1437dca6d1f2a166be61796b009bd168be1a6aeead12e2a46676

71533929e5a6b47cfac4498987a763fd7e444ca29bb1f5a3975b4681e5ccd240

ce3e742332fcb2748bf618beb31c382aab9a955fd1cf36e3810b06eb9824b132

Instruments and Accessories

Systems

Services

Operating Lease Revenue

Variable Lease Revenue

Lease Buyouts

Total Revenue

dcda9eefdba79d1dd5b5e8e7fc1367faf00922696513af15f74411f2cf8c52b7

cb87a665e713ee210d4c719277d72780d54bdf038ec4caff48c808453a9936e4

- Asensus Surgical, Inc.  **[0001035267-24-000021_isrg-20231231.htm:53]** **[0001035267-24-000021_isrg-20231231.htm:27]** 
- Beijing Surgerii Robotics Company Limited  **[0001035267-24-000021_isrg-20231231.htm:53]** **[0001035267-24-000021_isrg-20231231.htm:27]** 
- CMR Surgical Ltd.  **[0001035267-24-000021_isrg-20231231.htm:53]** **[0001035267-24-000021_isrg-20231231.htm:27]** 
- Johnson & Johnson  **[0001035267-24-000021_isrg-20231231.htm:53]** **[0001035267-24-000021_isrg-20231231.htm:27]** 
- Medicaroid Corporation  **[0001035267-24-000021_isrg-20231231.htm:53]** **[0001035267-24-000021_isrg-20231231.htm:27]** 
- Medtronic plc  **[0001035267-24-000021_isrg-20231231.htm:53]** **[0001035267-24-000021_isrg-20231231.htm:27]** 
- meerecompany Inc.  **[0001035267-24-000021_isrg-20231231.htm:53]** **[0001035267-24-000021_isrg-20231231.htm:27]** 
- Noah Medical  **[0001035267-24-000021_isrg-20231231.htm:53]** **[0001035267-24-000021_isrg-20231231.htm:27]** 
- Shandong Weigao Group Medical Polymer Company Ltd.  **[0001035267-24-000021_isrg-20231231.htm:53]** **[0001035267-24-000021_isrg-20231231.htm:27]** 
- Shanghai Microport Medbot (Group) Co., Ltd.  **[0001035267-24-000021_isrg-20231231.htm:53]** **[0001035267-24-000021_isrg-20231231.htm:27]** 
- Shenzhen Edge Medical Co., Ltd.  **[0001035267-24-000021_isrg-20231231.htm:53]** **[0001035267-24-000021_isrg-20231231.htm:27]** 

853ce177ca5c7267308517f6296655d2dcfe3e14b63b1162cf33f7395cdca23f

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Procedure Growth**: 16% to 17%
  2. **Pro Forma Gross Profit Margin**: 68.5% to 69%
  3. **Pro Forma Operating Expense Growth**: 10% to 12%
  4. **Noncash Stock Compensation Expense**: $670 million to $690 million
  5. **Other Income**: $325 million to $345 million
  6. **Capital Expenditures**: $1 billion to $1.2 billion
  7. **Pro Forma Income Tax Rate**: 22% to 23%  **[ISRG_3402972_9]** 

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Procedure Growth**: 15.5% to 17%
  2. **Gross Profit Margin**: 68.5% to 69%
  3. **Operating Expenses**: 10% to 13%
  4. **Noncash Stock Compensation Expense**: $680 million to $700 million
  5. **Other Income**: $300 million to $320 million
  6. **Capital Expenditures**: $1 billion to $1.2 billion
  7. **Income Tax Rate**: 22% to 24%  **[ISRG_3393436_8]** 

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Procedure Growth**: 14% to 17%
  2. **Gross Profit Margin**: 67% to 68%
  3. **Operating Expenses**: 11% to 15%
  4. **Noncash Stock Compensation Expense**: $680 million to $710 million
  5. **Other Income**: $290 million to $320 million
  6. **Capital Expenditures**: $1 billion to $1.2 billion
  7. **Income Tax Rate**: 22% to 24%  **[ISRG_3380010_7]** 

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Procedure Growth**: 13% to 16%
  2. **Gross Profit Margin**: 67% to 68%
  3. **Operating Expenses**: 11% to 15%
  4. **Non-Cash Stock Compensation Expense**: $680 million to $710 million
  5. **Other Income**: $290 million to $320 million
  6. **Capital Expenditures**: $1 billion to $1.2 billion
  7. **Pro Forma Income Tax Rate**: 22% to 24%  **[ISRG_3370595_8]** **[ISRG_3370595_9]** **[ISRG_3370595_0]** 

98576c2699a8682bb604a88490090b36e27848a5c0c8f6d29088cac96d9a2628

Ion System Installed Base (units)

Da Vinci Procedure Volume (procedures)

Ion Procedure Volume (procedures)

Da Vinci Surgical System Installed Base (units)

Da Vinci System Installed Base under Operating Leasing Arrangements (units)

Ion System Installed Base under Operating Leasing Arrangements (units)

Da Vinci System Placements Under Leasing Arrangements (units)

Ion System Placements Under Leasing Arrangements (units)

Da Vinci Surgical Systems Placed (units)

Installed Base of Da Vinci SP Surgical Systems (units)

24d0acc16fbb075e5b5f183d2b6c912fbbdfeba74ba36b16408807ead364fe64

U.S.

7d41e1f4c70b1af7b1a35f56eb106b59f96b8577457b2f5f4a3e0997f249946b

| Name                  | Position                                                   | Start Date       | Short Bio                                                                                                                                                                                                                                                                                                                                                       |
|-----------------------|------------------------------------------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Gary S. Guthart, Ph.D.| Chief Executive Officer and Board Member                   | April 1996       | Gary S. Guthart, Ph.D., joined Intuitive Surgical, Inc. in **April 1996**. He was promoted to President in **July 2007** and appointed as Chief Executive Officer in **January 2010**. Dr. Guthart has been a member of the Board of Directors since **2009**. Before joining Intuitive, he was part of the core team developing foundation technology for computer-enhanced surgery at SRI International  **[0001035267-24-000116_isrg-20240308.htm:19]** **[0001035267-23-000083_isrg-20230310.htm:16]** . |
| David J. Rosa         | President and Board Member                                 | March 1996       | David J. Rosa joined Intuitive Surgical in **March 1996** and has held various leadership positions in engineering, clinical development, marketing, and product development. He was promoted to Senior Vice President, Emerging Procedures & Technology, in April 2011, and later transitioned to Senior Vice President, Scientific Affairs. In May 2023, Mr. Rosa was promoted to the role of President  **[0001035267-24-000116_isrg-20240308.htm:41]** **[0001035267-23-000083_isrg-20230310.htm:42]** . |
| Mark P. Brosius       | Senior Vice President and Chief Manufacturing and Supply Chain Officer | December 2012    | Mark P. Brosius joined Intuitive Surgical in **December 2012** as Director of Equipment Engineering. He was promoted to Senior Director of Production Instrument Engineering in August 2014, and then to Senior Director of New Product Introduction in June 2015. In May 2023, Mr. Brosius was promoted to Chief Manufacturing and Supply Chain Officer  **[0001035267-24-000116_isrg-20240308.htm:41]** .                                                   |
| Henry L. Charlton     | Senior Vice President and Chief Commercial and Marketing Officer | November 2003    | Henry L. Charlton joined Intuitive in **November 2003** and has held various commercial leadership positions in the U.S. and Europe. In May 2023, he became the Senior Vice President and Chief Commercial and Marketing Officer  **[0001035267-24-000116_isrg-20240308.htm:41]** **[0001035267-23-000083_isrg-20230310.htm:42]** .                                                                                                                                                               |
| Myriam J. Curet, M.D., F.A.C.S. | Executive Vice President and Chief Medical Officer | December 2005    | Myriam J. Curet, M.D., F.A.C.S., joined Intuitive in **December 2005** as Chief Medical Advisor. She was promoted to Senior Vice President and Chief Medical Officer in February 2014 and further promoted to Executive Vice President and Chief Medical Officer in November 2017  **[0001035267-24-000116_isrg-20240308.htm:41]** **[0001035267-23-000083_isrg-20230310.htm:42]** .                                                                                                               |
| Bob DeSantis          | Executive Vice President and Chief Strategy and Corporate Operations Officer | January 2013     | Bob DeSantis joined Intuitive Surgical in **January 2013** as Vice President, Instruments & Accessories, New Product Introduction. In May 2023, Mr. DeSantis was promoted to Executive Vice President and Chief Strategy and Corporate Operations Officer  **[0001035267-24-000116_isrg-20240308.htm:41]** .                                                                                                                                         |
| Gary H. Loeb          | Senior Vice President, General Counsel and Chief Compliance Officer | September 2022   | Gary H. Loeb joined Intuitive Surgical in **September 2022** as Senior Vice President, General Counsel, and Chief Compliance Officer. Prior to joining Intuitive, Mr. Loeb served as general counsel for several public and private medical diagnostic and therapeutic firms  **[0001035267-24-000116_isrg-20240308.htm:41]** **[0001035267-23-000083_isrg-20230310.htm:42]** .                                                                                                                   |
| Brian E. Miller, Ph.D.| Executive Vice President and Chief Digital Officer         | April 2003       | Brian E. Miller, Ph.D., joined Intuitive in **April 2003** when Computer Motion merged with Intuitive. He became Senior Vice President and Chief Digital Officer in January **2021** and was promoted to Executive Vice President and Chief Digital Officer in February **2023**  **[0001035267-24-000116_isrg-20240308.htm:41]** .                                                                                                                   |
| Marshall L. Mohr      | Executive Vice President, Global Business Services         | March 2006       | Marshall L. Mohr joined Intuitive Surgical, Inc. in **March 2006** as Senior Vice President and Chief Financial Officer. In **January 2022**, Mr. Mohr assumed the role of Executive Vice President, Global Business Services  **[0001035267-24-000116_isrg-20240308.htm:42]** **[0001035267-23-000083_isrg-20230310.htm:42]** .                                                                                                                                                                   |
| Jamie E. Samath       | Senior Vice President and Chief Financial Officer          | April 2013       | Jamie E. Samath joined Intuitive Surgical, Inc. in **April 2013** as Vice President and Corporate Controller. In **January 2022**, he was promoted to the position of Chief Financial Officer  **[0001035267-24-000116_isrg-20240308.htm:42]** **[0001035267-23-000083_isrg-20230310.htm:42]** .                                                                                                                                                                                                 |

470e850fe75db853b6901c0843647084fa07c9b59cb095445d6af01f8c155a22

**Annual guidance for FY 2024:**
- **Procedure Growth**: 16% to 17%  **[ISRG_3402972_9]**  (no change from 16% to 17%   )  
- **Pro Forma Gross Profit Margin**: 68.5% to 69%  **[ISRG_3402972_9]**  (no change from 68.5% to 69%   )  
- **Pro Forma Operating Expense Growth**: 10% to 12%  **[ISRG_3402972_9]**  (no change from 10% to 12%   )  
- **Non-Cash Stock Compensation Expense**: $670 million to $690 million  **[ISRG_3402972_9]**  (no change from $670 million to $690 million   )  
- **Other Income (Primarily Interest Income)**: $325 million to $345 million  **[ISRG_3402972_9]**  (no change from $325 million to $345 million   )  
- **Capital Expenditures**: $1 billion to $1.2 billion  **[ISRG_3402972_9]**  (no change from $1 billion to $1.2 billion   )  
- **Income Tax Rate**: 22% to 23%  **[ISRG_3402972_9]**  (no change from 22% to 23%   )  

6f4374273c34d43d3727e0e17c3d25001a276ae7c4b4680046696d0eb0293baa

| Program Details          | Program 1     |
|--------------------------|---------------|
| Approval Date            | March 2009  **[0001035267-24-000247_isrg-20240930.htm:78]**  |
| End Date/Duration        | No expiration date  **[0001035267-24-000247_isrg-20240930.htm:78]**  |
| Total additional amount  | $3.5 billion (July 2022)  **[0001035267-24-000247_isrg-20240930.htm:23]**  |
| Remaining authorization amount | $1.1 billion (as of September 30, 2024)  **[0001035267-24-000247_isrg-20240930.htm:23]** **[0001035267-24-000247_isrg-20240930.htm:78]**  |
| Details                  | Most recent authorization in July 2022  **[0001035267-24-000247_isrg-20240930.htm:23]**  |

f7d096ea7c75412775dc2190f30cf84a4cf23749ef21057ff72c24889545db90

ISRG reports Q4 Ion procedures at 28k, fueling a 100k+ annual run rate. The da Vinci 5 launch mid-year should drive capital sales, yet gross margin is projected to drop from 69.1% in 2024 to 67–68% in 2025 due to higher depreciation, product mix shifts, and FX headwinds.

e224b213e258831e6d608cadc56a1d2f48aaf84473aab8b27432efed4f3fcb87

| Name                     | Start Date       | End Date       | Reason for Change                                                                 |
|--------------------------|------------------|----------------|----------------------------------------------------------------------------------|
| PricewaterhouseCoopers LLP | N/A              | Present        | Current auditor.                                                                 |
| Ernst & Young LLP        | N/A              | February 11, 2014  **[0001035267-14-000017_isrg-20140218x8kdeclinetos.htm:1]**  | Declined to respond to the company's request for proposal and chose not to stand for re-election.  **[0001035267-14-000017_isrg-20140218x8kdeclinetos.htm:1]**  |

721aeea89e2b2bc1c6ab0caccad3e3dfa04d6bbd9f111602084ec2b0e103164e

- **Total Revenue**: $2,413.5 million (**+25%** YoY)  **[0001035267-24-000021_isrg-20231231.htm:145]** **[0001035267-24-000021_isrg-20231231.htm:143]** **[0001035267-25-000008_q424ex-991earningsrelease.htm:10]**   
- Systems: $654.6 million (**+36%** YoY)  **[0001035267-24-000021_isrg-20231231.htm:145]** **[0001035267-24-000021_isrg-20231231.htm:143]** **[0001035267-25-000008_q424ex-991earningsrelease.htm:10]**   
- Instruments & Accessories: $1,411.5 million (+23% YoY)  **[0001035267-24-000021_isrg-20231231.htm:145]** **[0001035267-24-000021_isrg-20231231.htm:143]** **[0001035267-25-000008_q424ex-991earningsrelease.htm:10]**   
- Services: $347.4 million (+14% YoY)  **[0001035267-24-000021_isrg-20231231.htm:145]** **[0001035267-24-000021_isrg-20231231.htm:143]** **[0001035267-25-000008_q424ex-991earningsrelease.htm:10]**   

018aecee6a3772a8319d28d56f8e6f7d1e19136b0ae76f7e0c740aff056daab6

4414b83948f55608c1978e5590c7efc9aea62fb34accef543c634c9708b72f93

- **ISRG anticipates lower gross margins in 2025 due to significant incremental depreciation expenses as new facilities come online, potentially pressuring overall profitability.**  **[ISRG_3402972_13]**
- **The company faces persistent capital spending pressures in Europe and China, with government budget constraints in Europe and healthcare market stress and increased domestic competition in China, which may impact future system placements and revenue growth in these regions.**  **[ISRG_3402972_19]**
- **In the U.S. market, some procedure categories are maturing, which may lead to slower growth rates as ISRG reaches the back half of adoption curves for certain procedures, necessitating reliance on smaller niche markets for future growth.**  **[ISRG_3402972_21]**

dfc0e1620c67d317ef191acfa5efb34604c57c181e45841028f33c6dc83381f8

54ed100e9472b551d6ea535c9accd5019a50e475867f91fb9690f2ad8a0a181e

- **Delays and uncertainties in the launch of da Vinci 5 may impact revenue growth:** Intuitive Surgical has not yet received FDA clearance for da Vinci 5 and cannot provide specificity on launch timing and pricing. The company expects a phased rollout over several quarters once cleared, and as a result, expects total system placements for 2024 to be lower than 2023. Trading volumes are expected to be lower in 2024 due to the end of the SI trading cycle and the phased rollout of da Vinci 5. **This may negatively impact revenue growth in 2024.**  **[ISRG_3370595_6]** ,  **[ISRG_3370595_13]**
- **Gross margins and operating margins are under pressure due to new product launches and increased costs:** The anticipated launch of da Vinci 5, increased depreciation expense, and an adverse mix impact from the growth in new platforms are expected to put pressure on operating margins in 2024. The company expects its pro forma gross profit margin to be within **67% and 68% of net revenue**, down from 68% in 2023. **Operating margins are expected to be under pressure in 2024.**  **[ISRG_3370595_6]** ,  **[ISRG_3370595_8]**
- **Supply chain challenges and competition may hinder growth in key markets:** Intuitive Surgical experienced supply challenges for its Ion catheter and vision probe, limiting Ion system placements during the quarter and contributing to backlog growth. The company is not ready to specify when these supply chain issues will be resolved. Additionally, system placements in China are expected to be at lower levels due to ongoing anticorruption efforts and increasing competition, which may impact procedure growth in 2024.  **[ISRG_3370595_4]** ,  **[ISRG_3370595_8]** ,  **[ISRG_3370595_16]**

b1614a77bc28e2e7b22cc69f62a5a98bb0206829cacd1566dab71e580fe490e6

1. **da Vinci 5 Ramp-up**  
   **Q:** How will da Vinci 5 placements ramp in H2?  
   **A:** Management expects **da Vinci 5 placements in the U.S. to increase modestly quarter-to-quarter** in the second half of 2024.  **[ISRG_3393436_9]**  This reflects ongoing hardware and software updates being integrated carefully into production.  **[ISRG_3393436_9]** **[ISRG_3393436_21]**  The company is focusing on maturing the supply chain, manufacturing capacity, and responding to customer feedback before a broad launch.  **[ISRG_3393436_11]** **[ISRG_3393436_21]** 

2. **Gross Margin Outlook**  
   **Q:** Why were gross margins strong this quarter?  
   **A:** Gross margins improved due to **lower inventory reserves** and early realization of **component and logistics cost reductions**.  **[ISRG_3393436_12]**  Teams shifted focus from supply constraints to cost reductions, which came in earlier than expected.  **[ISRG_3393436_12]** **[ISRG_3393436_24]**  However, the company anticipates **increased depreciation** and a higher proportion of revenue from new products like da Vinci 5, Ion, and SP in the second half.  **[ISRG_3393436_12]** **[ISRG_3393436_24]**  The aspiration for a **70% gross margin** remains a medium-term goal.  **[ISRG_3393436_24]** 

3. **China Sales and Outlook**  
   **Q:** How is the China market performing amid challenges?  
   **A:** The new stimulus in China is **not expected to materially impact system placements or quotas**.  **[ISRG_3393436_10]**  The operating environment remains challenging due to anticorruption initiatives and economic re-basing in med tech.  **[ISRG_3393436_10]**  Despite these challenges, the company is seeing **double-digit procedure growth** in China.  **[ISRG_3393436_10]** **[ISRG_3393436_17]** 

4. **Procedure Growth Outlook**  
   **Q:** What is the outlook considering GLP-1 impact and Asia pressures?  
   **A:** Procedure guidance for the year is **15.5% to 17% growth**.  **[ISRG_3393436_17]**  At the low end, assumptions include continued softness in bariatric procedures due to GLP-1s and pressures in Asia.  **[ISRG_3393436_17]**  The impact of GLP-1s on bariatric surgery **has not bottomed yet**, and it's uncertain when it will stabilize.  **[ISRG_3393436_17]**  China and Korea pressures are expected **not to worsen** at the high end of the range.  **[ISRG_3393436_17]** 

5. **da Vinci Xi Demand**  
   **Q:** What is the demand for da Vinci Xi amid dV5 rollout?  
   **A:** In the U.S., there is still demand for **da Vinci Xi**.  **[ISRG_3393436_19]**  Some customers need incremental capacity and are taking Xi now with an upgrade right to dV5 when available.  **[ISRG_3393436_19]**  Others are waiting to see the value of dV5, considering their strategy, procedure mix, and budget.  **[ISRG_3393436_19]**  There is a segment of customers that **really like Xi**.  **[ISRG_3393436_19]** 

6. **Operating Expenses and Depreciation**  
   **Q:** What underpins OpEx growth for the rest of the year?  
   **A:** Operating expenses are expected to accelerate in the second half, growing **11% to 16%** compared to **9%** in the first half.  **[ISRG_3393436_16]**  This is primarily driven by **increased depreciation**.  **[ISRG_3393436_16]**  Some expenses have shifted into 2025 due to timing and focus.  **[ISRG_3393436_16]** 

7. **Ion Adoption and Impact**  
   **Q:** How is Ion adoption affecting diagnostics and surgeries?  
   **A:** Ion is proving effective in diagnosing **smaller lesions** with high diagnostic yields, approaching **TTNA or CT-guided biopsy levels**.  **[ISRG_3393436_15]**  This allows for earlier cancer detection with improved safety profiles.  **[ISRG_3393436_15]**  Patients diagnosed via Ion may proceed to **da Vinci surgeries**, though it's decided case by case.  **[ISRG_3393436_15]** 

8. **SP System Indications**  
   **Q:** How will new SP indications impact adoption?  
   **A:** The thoracic indication for SP expands opportunities but requires a **stapler** for optimal procedures, which is under development.  **[ISRG_3393436_22]** **[ISRG_3393436_23]**  The colorectal indication is progressing, and while details are limited, it will also require the SP stapler.  **[ISRG_3393436_23]**  These indications can **supplement SP procedure growth** in the U.S..  **[ISRG_3393436_22]** **[ISRG_3393436_23]** 

9. **da Vinci 5 Updates**  
   **Q:** What hardware/software changes are planned for dV5?  
   **A:** Near-term additions include integration of **Intuitive Hub** capabilities, allowing surgeons to access and manipulate **3D models** and **intraoperative video** from the console.  **[ISRG_3393436_21]**  Software upgrades will address customer feedback during the measured launch.  **[ISRG_3393436_21]**  Future developments involve **AI and machine learning** for advanced features.  **[ISRG_3393436_21]** 

10. **Global Expansion of da Vinci 5**  
    **Q:** Any updates on bringing dV5 to global markets?  
    **A:** Plans are consistent with prior communications. Discussions with **Korea and Japan** are ongoing, and a **European launch is not expected before the end of next year**.  **[ISRG_3393436_20]**  Further details will be shared as plans become more focused.  **[ISRG_3393436_20]** 

11. **da Vinci 5 Unlocking New TAM**  
    **Q:** Will dV5 unlock new procedures or TAM?  
    **A:** Management believes da Vinci 5 can help grow long term by deepening penetration in existing procedures and helping care teams adopt robotics.  **[ISRG_3393436_18]**  Additional indications for dV5 may be pursued in the future.  **[ISRG_3393436_18]** 

12. **Force Feedback and Adoption**  
    **Q:** Can Force Feedback aid surgeon adoption?  
    **A:** **Force Feedback** can impact learning curves, improving time to proficiency for new surgeons.  **[ISRG_3393436_14]**  It may also contribute to better surgical outcomes by reducing force on tissues.  **[ISRG_3393436_14]**  Development of data and research will take time.  **[ISRG_3393436_14]** 

59943ed4fc2e132d24f1b2b06bacec4a24f0f6973fd8ab6316e2dfc03845cc53

- **ISRG sees substantial growth opportunities both in deepening penetration of existing procedures and in expanding into new indications with products like Ion and SP, providing diversified sources of growth.**  **[ISRG_3402972_21]**
- **The da Vinci 5 system is experiencing broad adoption across multiple specialties, with customers expressing a preference for the system, indicating strong future demand and revenue potential.**  **[ISRG_3402972_20]**
- **Ion is progressing well in the U.S., having crossed the chasm with double-digit prevalence in biopsy usage, and early international expansion suggests significant future growth opportunities.**  **[ISRG_3402972_15]**

161fc227902f2086959a0a09f17cd4fef59644d666ba0bd33edf1a67fd347897

1. **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.  **[ISRG_3370595_12]** **[ISRG_3370595_13]** 

2. **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.  **[ISRG_3370595_12]** **[ISRG_3370595_14]** 

3. **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.  **[ISRG_3370595_10]** **[ISRG_3370595_11]** 

4. **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.  **[ISRG_3370595_13]** 

5. **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.  **[ISRG_3370595_10]** **[ISRG_3370595_17]** 

6. **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.  **[ISRG_3370595_18]** 

7. **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.  **[ISRG_3370595_19]** 

8. **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.  **[ISRG_3370595_15]** 

9. **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.  **[ISRG_3370595_16]** 

10. **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.  **[ISRG_3370595_20]** 

11. **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.  **[ISRG_3370595_14]** 

3adcf63de1c332ee0ce5b18db9ecf4387189d1ff800ad309de295825029aed77

1. **Margin Outlook**  
   **Q:** How much more room is there for margin improvement?  
   **A:** Management aims for margins that are top-tier among med-tech peers but does not expect operating margins to exceed **40%**. They reported **37%** operating margin this quarter and **36%** year-to-date. For **2025**, they anticipate gross margins to be slightly lower due to significant incremental depreciation from new facilities. Their mid-term aspiration is to reach **70%** gross margins, balancing investment with profitability.  **[ISRG_3402972_13]** 

2. **Capital Environment and Global Pressures**  
   **Q:** How is the capital environment affecting sales in Europe and China?  
   **A:** In Europe, particularly the **UK and Germany**, there is pressure on capital spending due to government budget constraints, similar to the last quarter. In China, the healthcare market faces stress from value-based pricing and price caps, along with competition from domestic companies receiving provincial preferences. These pressures are expected to persist for several quarters.  **[ISRG_3402972_19]** 

3. **da Vinci 5 Ramp and Efficiency Gains**  
   **Q:** What's the outlook for the da Vinci 5 ramp-up and efficiency gains?  
   **A:** The company will continue scheduled software updates for da Vinci 5, with additional hardware and software features expected at broad launch in mid-**2025**. Supply of da Vinci 5 is anticipated to increase modestly quarter-over-quarter into next year. Early feedback from surgeons indicates efficiency gains and improved console time, potentially leading to higher throughput and contribution margin benefits for hospitals.  **[ISRG_3402972_10]** 

4. **Dual Console Availability Impact**  
   **Q:** Is dual console availability affecting da Vinci 5 sales?  
   **A:** Dual console production is being prioritized alongside single system deals as supply ramps up. As capacity increases, they will produce additional consoles for dual system placements. Management does not anticipate significant changes in their forecast due to dual console availability and expects to serve all customers at broad launch without materially impacting procedure growth rates.  **[ISRG_3402972_17]** 

5. **Ion Launch Progress**  
   **Q:** Where is the Ion launch and adoption curve now?  
   **A:** In the U.S., Ion is progressing well in its first indication for biopsy of suspicious lung nodules, achieving double-digit prevalence in total biopsy use. The focus is on high utilization, customer satisfaction, and pursuing additional lung indications. Internationally, they are in early stages, with initial momentum in Europe starting in the **UK** and **Germany**, and early steps in **China**.  **[ISRG_3402972_15]** 

6. **Usage Agreements Growth**  
   **Q:** How do usage agreements impact the placement model and P&L?  
   **A:** Usage-based agreements, where customers pay per use, have grown from **12%** to **15%** of system placements. These arrangements are popular as they allow access to additional capacity without capital budgets and lower customer risk. Operating leases, including usage agreements, are slightly accretive compared to purchases due to embedded interest rates. Growth in the U.S. is expected to moderate due to high penetration, while international markets are at an earlier stage.  **[ISRG_3402972_16]** 

7. **Refurbished Systems Opportunity**  
   **Q:** What's the plan for refurbishing and reselling traded-in systems?  
   **A:** As the trade-in cycle for da Vinci 5 unfolds over multiple years, they will refurbish returned Xi systems. This enables market segmentation, offering cost-sensitive options in the U.S. and international markets. Specific plans are being developed but will follow this general approach.  **[ISRG_3402972_14]** 

8. **New Procedures Adoption**  
   **Q:** How are new procedures like appendectomy contributing to growth?  
   **A:** Procedures such as foregut and hepatobiliary are growing nicely, with rates accretive to the U.S. average, though they remain relatively small. Appendectomy is at an earlier stage but also shows accretive growth. As surgeons expand their use of Xi, these procedures extend into emergent care settings, increasing routine utilization. They have FDA indication for appendectomy in the U.S., but it remains a small, emergent-focused procedure.  **[ISRG_3402972_12]** 

9. **Growth Drivers Ahead**  
   **Q:** Will growth come from deeper penetration or new segments?  
   **A:** Management sees a balanced approach. While they are reaching maturity in some procedures, there is still significant opportunity for deeper penetration. Simultaneously, they are pursuing new opportunities and indications with platforms like Ion and SP, as well as multiport systems. These new areas may be niche markets rather than large segments, and more details will be shared as they mature.  **[ISRG_3402972_21]** 

10. **Hub Experience and Implications**  
    **Q:** What is the early experience with Hub, and its impact?  
    **A:** Hub, including Gen 4 compatibility and integration with da Vinci 5, serves as a robust data recorder and media management device. Over **2,000** operating rooms have installations, primarily on-premise. Customers value the ability to track data and assess post-op performance. Moving towards cloud implementations will enhance capabilities. Management views this as the beginning of Hub's journey in terms of penetration and content.  **[ISRG_3402972_18]** 

11. **International Approvals and Supply**  
    **Q:** Do you have supply to support Korean launch and updates on Japan and Europe?  
    **A:** They have sufficient supply to meet demand in **Korea** following the earlier-than-expected approval. Timing for **Japan** remains unspecified as discussions continue. For **Europe**, they expect to obtain CE Mark near the end of **2025**, consistent with prior expectations.  **[ISRG_3402972_11]** 

12. **da Vinci 5 Insights and Innovation Cycle**  
    **Q:** Any insights on da Vinci 5 usage and software innovation?  
    **A:** da Vinci 5 is used across a broad range of procedures, but it's too early to compare utilization metrics with Xi due to limited data. For innovation, non-medical device software can have rapid update cycles, while software governed by regulatory processes follows a longer cadence, though still quicker than major hardware changes. Management emphasizes that hardware development will continue alongside software innovation, with da Vinci 5 offering opportunities in both areas.  **[ISRG_3402972_20]** 

b4542d134d39553133fa7216fa8b845ded573cee9ed437e32ca7a7fb7caf043f

- **70 da Vinci 5 systems were placed in Q2**, indicating a strong start for the new system. The company expects da Vinci 5 placements to increase modestly quarter-over-quarter in the second half of 2024, with a measured rollout continuing through the first half of 2025.  **[ISRG_3393436_9]**
- **Global procedure growth of 17% in Q2**, with U.S. procedures growing 14% and outside the U.S. growing 22%, despite challenges in markets like China and Korea. This demonstrates robust demand for the company's surgical systems and procedures.  **[ISRG_3393436_2]** **[ISRG_3393436_10]**
- Progress in expanding indications for their platforms, including **FDA clearance for thoracic procedures** on the da Vinci SP platform  **[ISRG_3393436_3]** **[ISRG_3393436_23]** , and ongoing IDE studies for colorectal indications, which could unlock additional market opportunities.  **[ISRG_3393436_23]**

ba752b199d9802477a81bea1b29682c5527454bec6289ef06eb9f8347671ea0e

- **Delays in the global rollout of da Vinci 5 may slow international revenue growth.** The company does not expect to launch da Vinci 5 in Europe before the end of next year, and the measured rollout will continue through the first half of 2025. This extended timeline could delay expansion into key markets.  **[ISRG_3393436_20]**
- **Challenges in China, including a difficult operating environment and competition from domestic robotic systems, may impact growth.** The company stated that the operating environment remains **challenging**, with **delayed tenders** and emerging domestic robotic systems affecting capital placements and procedure growth. Additionally, recent stimulus measures are not expected to materially impact placements or quotas.  **[ISRG_3393436_10]**
- **Margins may be under pressure due to increased depreciation and costs associated with new products.** While gross margins were strong this quarter, the company expects **increased depreciation in the second half** and a **significant increase starting in Q1 2025** due to capital investments. The goal of achieving a **70% gross margin** is a medium-term aspiration and not expected in the short term.  **[ISRG_3393436_24]** ,  **[ISRG_3393436_12]**

791cb80cbe2a87245dcff255b08de9a34d3c8368c63c74897dc022a140dbe82d

- **Supply constraints for the new da Vinci 5 system may last through 2024 and into early 2025**, potentially limiting sales growth and capital placements.  **[ISRG_3380010_10]**
- **Increased competition in China from domestic robotic companies is leading to lower pricing and capital placements**, which could impact revenue growth in that market.  **[ISRG_3380010_18]**
- **Growth in bariatric procedures has flattened, with continued deceleration and uncertainty about future trends**, potentially affecting procedure volumes and revenue.  **[ISRG_3380010_14]**

637bdb383846ed3d8c45562a557141df8bcd55b4f595abbd37a602f06b526663

- **Strong Procedure Growth:** The company reported **16% global procedure growth** in Q1 2024, with particular strength in the **U.S. and the U.K.**, indicating robust demand for their surgical systems.  **[ISRG_3380010_8]**
- **Successful Launch of New Products:** Intuitive Surgical launched its next-generation multiport platform, **da Vinci 5**, receiving positive feedback from customers on **improved precision, imaging, and ergonomics**, and placed **8 da Vinci 5 systems** in the quarter.  **[ISRG_3380010_2]**
- **Raised Financial Guidance:** The company increased its full-year 2024 procedure growth forecast from **13%-16%** to **14%-17%**, reflecting confidence in sustained demand and strong performance.  **[ISRG_3380010_7]**

b1e2f231bcf7fcb7af9389e7c827bdab661cd00c54a8d11e0629f970868a7527

1. **Bariatric Procedure Trends**  
   **Q:** Is bariatric procedure growth weakening, and how does it affect guidance?  
   **A:** Bariatric procedures have decelerated to be flat year-over-year, and it's uncertain whether the trend will worsen or improve.  **[ISRG_3380010_14]**  The low end of our guidance assumes further weakness in bariatric procedures, while the high end assumes flat to slightly positive growth.  **[ISRG_3380010_14]** 

2. **da Vinci 5 Supply Constraints**  
   **Q:** When will supply constraints for da Vinci 5 be resolved and trigger full launch?  
   **A:** We are optimizing the supply chain and ensuring quality, which will continue through all of 2024 and into early 2025.  **[ISRG_3380010_10]**  Incorporating customer feedback and adding feature enhancements are also part of our plan.  **[ISRG_3380010_10]**  We don't expect significant changes to this timeline.  **[ISRG_3380010_10]** 

3. **China Pricing Pressure**  
   **Q:** Is lower pricing in China temporary or permanent, and what's the competitive situation?  
   **A:** Lower pricing in China is primarily due to competition from domestic robotic players.  **[ISRG_3380010_18]**  We have introduced a domestically manufactured Xi system, allowing us to participate in tenders requiring local production and to segment on price.  **[ISRG_3380010_18]**  Pricing pressure is expected to continue due to the competitive environment.  **[ISRG_3380010_18]** 

4. **System Placement Outlook**  
   **Q:** Could system placements be higher in 2024 despite previous expectations?  
   **A:** We expect trade-in volumes to decline in 2024 due to limited supply of da Vinci 5 and a smaller remaining installed base of third-generation Si systems.  **[ISRG_3380010_12]**  Overall system placements may be choppy as customers might choose to wait for da Vinci 5.  **[ISRG_3380010_12]**  We generally do not provide specific guidance on system placements.  **[ISRG_3380010_12]** 

5. **Procedure Volume Growth**  
   **Q:** What's driving the strong procedure volume, and is it sustainable?  
   **A:** We saw particular strength in the U.S. and U.K., with continued growth in procedures beyond urology, including cancer procedures like colorectal, thoracic, and hysterectomy.  **[ISRG_3380010_8]**  Early-stage growth in benign procedures in international markets also contributed.  **[ISRG_3380010_8]**  While we raised guidance slightly, we're monitoring sustainability carefully.  **[ISRG_3380010_8]** 

6. **da Vinci 5 Features and New Indications**  
   **Q:** How might da Vinci 5's features allow for new procedures?  
   **A:** da Vinci 5 offers better imaging, precision, and high performance, enabling subtle and fine surgical motions.  **[ISRG_3380010_11]**  While current indications largely mirror those of Xi and X systems, we're evaluating additional clinical indications that may require FDA discussions.  **[ISRG_3380010_11]** 

7. **Ion Growth and Supply Issues**  
   **Q:** Is Ion's growth sustainable despite supply challenges?  
   **A:** We experienced a partial recovery this quarter but haven't fully resolved catheter and vision probe supply issues.  **[ISRG_3380010_20]**  There's a backlog pending supply stabilization.  **[ISRG_3380010_20]**  Growth is driven by placements in both existing and new accounts, including greenfield opportunities.  **[ISRG_3380010_20]** 

8. **Force Feedback Instruments Impact**  
   **Q:** Feedback on force feedback instruments and plans to expand the portfolio?  
   **A:** Clinicians are exploring the benefits of force feedback instruments, which have sensitive sensors reporting tissue contact forces.  **[ISRG_3380010_16]**  Using force reflection, surgeons can reduce the force applied to tissue, potentially improving patient outcomes.  **[ISRG_3380010_16]**  We aim to make these instruments robust at scale before expanding the portfolio.  **[ISRG_3380010_16]** 

9. **SP Platform in Europe and U.S. Implications**  
   **Q:** How does SP's indication expansion in Europe affect the U.S. market approach?  
   **A:** Early uptake and excitement in Europe are encouraging.  **[ISRG_3380010_17]**  Success in markets like Korea and Japan is informing our approach.  **[ISRG_3380010_17]**  We have submitted for additional indications in the U.S. and are conducting IDE trials, which may accelerate U.S. indications over time.  **[ISRG_3380010_17]** 

94e16a25d190f8d92e880f8339c3f3b2fcb09b3c676f6f3caff0f57f5debe12d

- The adoption of da Vinci systems in general surgery procedures like colorectal, bariatrics, cholecystectomy, and hernia is still in the **second quartile** of the adoption curve in the U.S., providing significant room for growth. Internationally, adoption is even earlier, in the **first quartile**, indicating a considerable runway for expansion.  **[ISRG_3370595_20]**
- The anticipated launch of the next-generation **da Vinci 5** system, possessing **10,000x** the processing power of previous generations, is expected to enhance performance and usability, offering hospitals more options and potentially driving further adoption and penetration.  **[ISRG_3370595_2]** ,  **[ISRG_3370595_20]** ,  **[ISRG_3370595_14]**
- The **SP platform** is exhibiting robust growth, with fourth-quarter placements increasing to **19 systems**, and is expected to expand into Europe in 2024, opening new markets and contributing to revenue growth. Additionally, despite current supply challenges, there is strong customer demand for the **Ion system**, and resolving these issues could unlock significant growth potential.  **[ISRG_3370595_16]**

46082c16ac71496def6889305fdac2276f379c01d7c2550b014a4d75218410b4

Intuitive Surgical Inc (ISRG)

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