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    ISRG
    Earnings call· Sep 2025(Q3 FY25)

    INTUITIVE SURGICAL INC ISRG

    Oct 21, 2025 Source

    Executive summary

    Intuitive Surgical Q3 FY25 — Strong Procedure Growth and da Vinci 5 Adoption

    Intuitive Surgical delivered a robust Q3 FY25, marked by significant procedure growth across its da Vinci and Ion platforms, fueled by strong adoption of the da Vinci 5 system both domestically and in initial international markets. The company is strategically leveraging da Vinci 5 upgrades to drive utilization and capacity expansion, while also planning to introduce refurbished Xi systems to broaden market access. Despite ongoing headwinds in bariatrics and certain international capital markets, the focus remains on innovation, clinical evidence, and expanding the installed base to improve patient outcomes and operational efficiency.

    Highlights

    5

    • Total worldwide procedure growth of 20%, driven by da Vinci procedures up 19% and Ion procedures up 52%.

    • Revenue grew 23% to $2.51 billion, with pro forma EPS up 30%.

    • Placed 427 da Vinci systems, including 240 da Vinci 5 systems, driving strong domestic demand.

    • da Vinci 5 utilization already outpacing Xi, with 67,000 procedures performed in Q3.

    • SP procedures increased 91%, with strong growth in Korea and early international progress.

    Concerns

    3

    • Domestic bariatric procedures continued to decline at high single digits for the sixth consecutive quarter.

    • OUS placements in Japan, China, and the U.K. were lower year-over-year due to government budget challenges and competitive market conditions.

    • Pro forma gross margin declined to 68% from 69.1% YoY, impacted by tariffs (90 bps), higher facility costs, and mix shift.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2025 da Vinci procedure growth
    17% and 17.5%
    high materiality
    High
    Full-year 2025 pro forma gross profit margin
    67% and 67.5%
    high materiality
    High
    Full-year 2025 tariff impact on gross margin
    70 basis points, plus or minus 10 basis points
    medium materiality
    High
    Full-year 2025 pro forma operating expense growth
    11% and 13%
    medium materiality
    High
    Full-year 2025 noncash stock compensation expense
    $785 million and $795 million
    low materiality
    High
    Full-year 2025 other income
    $350 million and $360 million
    low materiality
    High
    Full-year 2025 capital expenditures
    $625 million and $675 million
    medium materiality
    High
    Full-year 2025 pro forma income tax rate
    21% and 22%
    medium materiality
    High
    Impact of going direct in Italy, Spain, Portugal
    slightly accretive to pro forma EPS
    medium materiality
    High

    Segment performance

    15
    SegmentRevenueYoYQoQMargin
    Worldwide (Total)
    Revenue growth was also 23% on a constant currency basis.
    Total procedure growth: 20%Recurring revenue: 85% of total revenue
    		$2.51 billion23%——
    U.S. (Total)
    Total procedures (da Vinci and Ion) growth: 18%
    		————
    Outside U.S. (Total)
    Total procedures (da Vinci and Ion) growth: 25%Aggregate average system utilization: approximately 20% below U.S.
    		————
    da Vinci (Worldwide)
    I&A revenue consistent with overall procedure growth. Average selling price driven by higher mix of da Vinci 5 and dual console systems, partially offset by higher trade-ins.
    Procedures growth: 19%Installed base: almost 10,800 systemsAverage system utilization: 4%I&A revenue: $1.5 billionI&A revenue growth: 20%I&A revenue per procedure: $1,800 (flat YoY)Systems placed: 427Leasing represented: 54% of placementsLeasing revenue growth: 33%Installed base under operating lease expansion: 18%Lease revenue per system increase: 10%Average selling price for purchased systems: $1.6 million
    		————
    da Vinci (U.S.)
    Utilization increase reflected strong Q3 procedure growth and higher mix of da Vinci 5 in the installed base.
    Procedures growth: 16%Utilization growth: 2% (vs flat H1 2025)Systems placed: 263
    		————
    da Vinci (OUS)
    Procedure growth driven by strong results in India, Canada, Korea, Taiwan, Brazil, and solid growth in China, U.K., Italy, and France. Japan procedure growth was lower than expectations due to lower capital placements. Distributor market performance was strong, driven by Brazil and the Middle East.
    Procedures growth: 24% (approx. 1 percentage point benefit from holiday timing)Utilization growth: 8% (vs 6% H1 2025)Systems placed: 164Systems placed in Europe: 63Systems placed in Japan: 16Systems placed in China: 13Systems placed in distributor markets: 64
    		————
    da Vinci 5
    Demand for da Vinci 5 upgrades drove strong domestic placements. Installed base includes at least 1 da Vinci 5 system in 18 of the largest 20 IDNs. 21 hospitals with 3+ multiport systems have fully standardized to da Vinci 5.
    Systems placed: 240Installed base: 929 systemsProcedures performed in Q3: 67,000Procedures performed in Q2: 50,000Utilization: outpacing XiIntegrated insufflation technology usage: almost 90% of procedures
    		————
    SP (Worldwide)
    Growth led by ongoing growth in Korea, continued early progress in other international markets, and initial domestic use of the SP stapler in colorectal and thoracic procedures.
    Procedures growth: 91%Systems placed: 30
    		————
    Ion (Worldwide)
    Lower Ion placements in the U.S. primarily reflects a joint focus with customers on increasing utilization.
    Procedures growth: 52%Installed base: approximately 950 systemsAverage system utilization: 14%I&A revenue per procedure: $2,200 (consistent with prior periods)Systems placed: 50
    		————
    Ion (U.S.)
    Procedures growth: 48%
    		————
    Ion (OUS)
    Procedures growth: quadrupling from a small baseSystems placed: 9
    		————
    Benign General Surgery (OUS)
    Accretive da Vinci procedure growth.
    		—39%——
    Colorectal (OUS)
    Accretive da Vinci procedure growth.
    		—28%——
    Hysterectomy (OUS)
    Accretive da Vinci procedure growth.
    		—27%——
    Thoracic (OUS)
    Accretive da Vinci procedure growth.
    		—26%——

    Operational metrics

    20
    Pro forma operating margin
    39%
    Q3 FY25

    Reflected broad launch of da Vinci 5 and expanded adoption of Ion and SP.

    Pro forma earnings per share
    $2.40increased 30%
    Q3 FY25

    Excluding the benefit of tax expense in Q3 from U.S. tax reform and the release of tax reserve.

    Pro forma gross margin
    68%down from 69.1% in Q3 FY24
    Q3 FY25
    Pro forma operating expenses growth
    11%year-over-year
    Q3 FY25

    Driven by higher headcount, increased facility costs, and higher R&D prototype expenses, partially offset by lower legal spending.

    Employees added
    340
    Q3 FY25

    Primarily in core commercial, engineering, and manufacturing functions.

    Pro forma other income
    $93 millionflat to prior quarter
    Q3 FY25

    Reflecting lower interest income, offset by lower FX impact from remeasurement of the balance sheet.

    Pro forma effective tax rate
    18.3%lower than expectations
    Q3 FY25
    GAAP net income
    $704 millioncompared to $565 million in Q3 FY24
    Q3 FY25
    GAAP earnings per share
    $1.95compared to $1.56 per share in Q3 FY24
    Q3 FY25
    Cash and investments balance
    $8.4 billiondown from $9.5 billion last quarter
    Q3 FY25

    Reflects stock repurchases, partially offset by strong free cash flow.

    Stock repurchases
    $1.9 billion
    Q3 FY25
    Refurbished Xi systems sold
    20
    Q3 FY25

    Part of portfolio strategy to offer segmentation for cost-sensitive customers.

    Domestic bariatric procedures growth
    high single digits decline6 quarters of down mid-single digits to high single digits
    Q3 FY25

    Represents less than 3% of overall da Vinci procedures. Surgeons cannot predict when declines will end due to GLP-1 impact.

    OUS da Vinci procedure growth benefit
    1
    Q3 FY25

    Due to timing of certain local holidays in Asia markets.

    da Vinci leasing percentage of placements
    54%up from 49% last quarter, down from 58% last year
    Q3 FY25

    Driven primarily by customer mix. Expect rates to increase over time, primarily driven by OUS markets.

    Lease buyout revenue
    $22 millioncompared to $30 million last quarter and $24 million last year
    Q3 FY25
    Service revenue growth
    20%
    Q3 FY25

    Reflecting increase of da Vinci installed base of 13% and Ion installed base of 30%.

    Service revenue per da Vinci system growth
    5%year-over-year
    Q3 FY25

    Primarily reflecting a higher mix of da Vinci 5 systems.

    Trade-in transactions
    141up from 38 a year ago
    Q3 FY25

    Primarily driven by U.S. customers upgrading to da Vinci 5.

    Employees to be transferred for direct market entry
    approximately 250
    H1 FY26

    For going direct in Italy, Spain, and Portugal.

    Industry KPIs

    11
    MetricValueDetails
    Tariff impact90bps
    System utilization4%%
    Pricing realized price$1,800USD
    New product launch ramp929systems
    Procedure volume growth20%%
    FCF conversion leverage guidance$736 millionUSD
    Installed base system placements427systems
    Segment franchise organic growth19%%
    Consumables recurring revenue mix85%%
    Sales force commercial capacity build340employees
    Pivotal trial clinical evidence milestones84.6%%

    Product announcements

    3
    ProductTypeDetails
    da Vinci 5 Softwareupdate
    SP Staplerupdate
    Ion Softwareupdate

    Risks & headwinds

    4
    Domestic Bariatric Procedure DeclineOngoing

    High single digits decline in Q3, marking ~6 quarters of mid-to-high single-digit declines. Represents <3% of overall da Vinci procedures.

    Mitigation: Surgeons cannot yet predict when declines will end, as new GLP-1 patients offset those coming off drugs. Intuitive is monitoring the situation.

    OUS Capital Placements ChallengesQ3 FY25, ongoing

    OUS placements included 63 systems in Europe (vs 65 last year), 16 in Japan (vs 39 last year), and 13 in China (vs 14 last year).

    Mitigation: Attributed to government budget challenges in Japan and the U.K., and a constrained/competitive marketplace in China. Strong performance in distributor markets (Brazil, Middle East) partially offset this.

    Gross Margin PressureQ3 FY25

    68% in Q3 FY25, down from 69.1% in Q3 FY24. Impacted by 90 basis points from tariffs.

    Mitigation: Also due to higher facility costs, greater mix of lower margin da Vinci 5 and Ion revenue, and higher service costs, partially offset by cost reductions. Full-year tariff impact now expected to be 70 bps +/- 10 bps.

    Reimbursement in ASCsOngoing

    Reimbursement in an ASC is a fraction of the reimbursement in a HOPD.

    Mitigation: Creates a barrier, particularly for ASCs owned by IDNs. Intuitive is focused on addressing capital costs (e.g., with refurbished Xi) and strategically interested in lowering total cost to treat.

    What to watch in Q4 FY25

    5

    da Vinci 5 OUS Placements

    Next quarter and into 2026
    Current12 systems placed in Q3 (Japan & Europe)
    TargetContinued acceleration of placements in Europe and Japan

    Why it matters

    Indicates the success of international expansion for the new flagship system and its contribution to overall growth.

    You see the larger institutions and those institutions want to be early adopters and want to get hold of the latest technology to be those that are most interested. There is a little bit more of a segmentation discussion in terms of some incremental cost sensitivity to the da Vinci 5 pricing relative to, say, the U.S. market. I think we have a healthy pipeline in both markets, but there's work to be done to have customers work through the evaluation process.

    Q&A highlights

    7

    What trends are driving the 20% procedure growth, how sustainable is it, and how much is attributable to da Vinci 5?

    Jamie Samath noted strong U.S. da Vinci growth (16% in Q3 vs 13-14% earlier in year) driven by after-hours surgery, acute care, and benign general surgery. He mentioned anecdotal reports of elective procedure acceleration in July/August due to Medicare/ACA noise, but no third-party data confirmation. OUS growth had a 1 percentage point benefit from holiday timing. Dave Rosa highlighted da Vinci 5's design for ease of use and efficiency, supporting utilization. Jamie added that 67,000 da Vinci 5 procedures were done in Q3, up from 50,000 in Q2.

    “So if you look at U.S. da Vinci procedure growth, maybe just to frame it, in Q1, it was 13%; Q2, 14%; and then in Q3, 16%. So obviously, that Q3 U.S. da Vinci procedure growth number was strong relative to recent trends.”

    asked by Robert Marcus · answered by Jamie Samath

    2 min read5 chapters

    Detailed Narrative

    01

    da Vinci 5 Adoption and Impact

    The broad launch of da Vinci 5 has been a significant catalyst, with 240 systems placed in Q3, bringing the installed base to 929. The system's design intent for ease of learning, use, and efficiency is being validated, with da Vinci 5 utilization already outpacing Xi. This is driving strong domestic demand for upgrades and dual consoles, and initial placements in Japan and Europe have received positive early feedback.

    02

    Procedure Growth Drivers

    Total worldwide procedure growth reached 20%, with da Vinci procedures up 19% and Ion procedures up 52%. Key drivers for da Vinci include strength in benign general surgery in the U.S. and accretive growth in general surgery and gynecology internationally. SP procedures saw a 91% increase, led by Korea and early international expansion, with initial domestic use of the SP stapler in colorectal and thoracic procedures.

    03

    Digital and AI Integration

    Intuitive is enhancing its platforms with advanced software and hardware. A recent FDA 510(k) clearance for da Vinci 5 software enables remote updates and introduces features like Force Gauge and Focus Mode, improving surgeon awareness and decision-making. The company is leveraging its 'Hub' hardware and increased compute power for data collection (video, kinematic, force) and AI/machine learning analysis to provide real-time insights and augmented dexterity.

    04

    Clinical Evidence and Force Feedback

    New clinical data supports the Ion system's impact on early lung cancer diagnosis, showing an 84.6% diagnostic yield with integrated cone-beam CT. For da Vinci 5, a study on Force Feedback in thoracic surgery demonstrated a 20% reduction in peak force application, suggesting objectively gentler surgery. The next step is to link these force reductions to improved patient outcomes (e.g., pain, functional recovery) across various procedures.

    05

    Strategic Capital Allocation and Market Expansion

    The company is strategically managing its installed base, with refurbished Xi systems being offered to expand access in cost-sensitive markets and alternative sites of care, including ASCs. While domestic bariatric procedures continue to decline, Intuitive is exploring new growth avenues, including cardiac surgery with da Vinci 5's precision capabilities and ongoing R&D in unmet medical needs where its core robotic expertise can be applied.

    AI-generated summary of the company’s earnings call. Not investment advice.