Financial Data and Key Metrics Changes - Revenue grew 21% year-over-year to $10.1 billion, with operating margins at 37% reflecting investments in R&D and manufacturing scale [10][19] - Pro forma EPS increased 22%, marking the third consecutive year of growth above 20% [19] - Free cash flow rose to $2.5 billion, up from $1.3 billion in 2024 [19] Business Line Data and Key Metrics Changes - Total procedures grew 19%, with da Vinci procedures increasing approximately 18% and Ion procedures growing 51% [7][18] - In Q4, da Vinci procedures grew 17%, with the installed base increasing by 12% to over 11,100 systems [20] - Ion platform procedures increased 44%, with the installed base up by 24% to just under 1,000 systems [20] Market Data and Key Metrics Changes - In the U.S., da Vinci procedures increased 15% to over 2 million, while international procedures grew by 23% to over 1.1 million [7] - Growth rates were 21% in Europe, 24% in Asia, and 27% in the rest of the world [7] - Total procedures outside the U.S. accounted for roughly 35% of global procedures [7] Company Strategy and Development Direction - The company focuses on four strategic priorities: launching da Vinci 5, increasing adoption of focused procedures, building industrial scale and product quality, and enhancing digital tools [5][16] - The company aims to expand its platforms and digital features while increasing adoption of focused procedures through training and market access efforts [16] Management's Comments on Operating Environment and Future Outlook - Management believes the company is in the early stages of advancing minimally invasive care, with significant long-term opportunities ahead [4] - For 2026, the company anticipates da Vinci procedure growth in the range of 13%-15%, driven by general surgery in the U.S. and international procedures [41][42] - The company expects pro forma gross profit margin to be between 67% and 68% of net revenue in 2026 [42] Other Important Information - The company placed 1,721 da Vinci systems in 2025, including 870 da Vinci 5 systems [8] - The installed base of da Vinci systems increased by 12% to just over 11,100 systems, with average system utilization increasing by 4% [20] - The company received FDA clearance for several cardiac procedures on da Vinci 5, indicating a focus on expanding into new disease states [11][52] Q&A Session Summary Question: FDA approvals for cardiac non-force feedback instruments - Management discussed the foundational aspects of supporting cardiac surgery and the importance of training pathways for minimally invasive approaches [48][50] Question: Incorporating advanced imaging features into the robotic ecosystem - Management explained that advanced imaging capabilities are being developed to improve surgical outcomes and will have associated revenue streams [54][55] Question: Expanding footprint in ASCs - Management highlighted the importance of high-quality clinical outcomes and the economic structure needed for ASCs, with a focus on lower acuity procedures [61][62] Question: Utilization and system ASPs in 2026 - Management indicated that while overall da Vinci utilization grew 4%, they are not ready to predict future utilization rates [66] Question: Gross margin and OpEx assumptions - Management outlined various dynamics affecting gross margin, including higher trade-ins and a mix of da Vinci 5 systems [72] Question: Competition in China - Management acknowledged increased competition in China but expressed confidence in their ability to compete effectively [75][76]

Core Thesis - Intuitive Surgical, Inc. (ISRG) is recognized as a global leader in robotic-assisted surgery, with a strong market position and a robust business model that supports high-margin, predictable revenue streams [2][3]. Company Overview - The da Vinci system by Intuitive Surgical has been utilized in over 17 million operations across 74 countries, establishing a significant presence in the surgical ecosystem [2]. - The company holds an estimated 60–70% market share in soft-tissue robotics, supported by a comprehensive approach that includes hospital workflows, surgeon training, and recurring revenue from instruments and services [2][3]. Financial Performance - Intuitive Surgical has achieved a 15% compound annual growth rate (CAGR) in revenues over the last decade, with nearly $10 billion in annual revenue, of which 85% is recurring [3][4]. - The company maintains gross margins near 70%, generates over $1 billion in free cash flow annually, and operates with virtually no debt [4]. - Recent performance indicates strong system placements and a 21% growth in recurring revenue, alongside stable margins despite some cost pressures [4]. Growth Drivers - Growth is driven by the expansion of the installed base, increasing procedure volumes, global reach, and ongoing product innovation, including the da Vinci 5 system and new platforms like Ion [3][4]. - Long-term trends favoring minimally invasive surgery and the expansion of procedures into new specialties are expected to support low double-digit to mid-teens growth in the future [4]. Valuation Insights - The current valuation of Intuitive Surgical is considered rich, with shares trading around 50 times earnings, suggesting limited upside from current levels [5]. - The stock is viewed as attractive primarily at lower entry points, with an accumulation target set near $380 per share to optimize risk and reward [5]. Competitive Landscape - Despite increasing competition from companies like Medtronic, CMR Surgical, and Johnson & Johnson, Intuitive Surgical's established ecosystem and regulatory approvals create a durable competitive advantage [3].