The Motley Fool·2025-11-20 08:57Core Insights - Intuitive Surgical's business model is primarily based on the sale of da Vinci surgical robots, but the real growth driver lies in its parts and services revenue stream [1][2][8] - The company has seen a significant increase in the number of da Vinci systems in use, with a 13% year-over-year growth in Q3 2025, leading to a nearly 33% increase in revenue from the "systems" segment [5][9] - The revenue breakdown shows that while "systems" sales account for about 25% of total revenue, the majority comes from instruments and accessories, which make up around 60% of overall sales [6][7] Revenue Breakdown - The income statement of Intuitive Surgical is divided into three main segments: systems (da Vinci robots), services, and instruments and accessories [4][7] - Services contribute approximately 15% to the top line, primarily from servicing da Vinci robots, while instruments and accessories are the largest revenue source [7] - The growth in surgeries performed using da Vinci systems (20% increase) outpaces the growth in the number of new systems sold, indicating a strong potential for parts and services revenue [8][12] Market Position - Intuitive Surgical is considered a growth stock, with a current market capitalization of $200 billion and a price-to-earnings (P/E) ratio of 72x, significantly higher than the S&P 500 average [9][11] - The company’s P/E ratio aligns with its five-year average, suggesting that while it is expensive relative to the market, it is consistent with its historical valuation [11] - Over the next decade, the revenue from parts and services is expected to increase, potentially making up as much as 80% of total revenue, indicating a shift towards more stable, annuity-like income [9][12]