Financial Data and Key Metrics Changes - In Q3 2025, revenue grew 23% to $2.5 billion, with pro forma operating margin at 39% and pro forma earnings per share increasing by 30% [15][23][25] - Total procedure growth was 20%, up from 18% in the first half of 2025 [15][19] - Pro forma net income for Q3 was $867 million, compared to $669 million last year, with pro forma earnings per share at $2.40 [25][26] Business Line Data and Key Metrics Changes - Da Vinci procedures increased by 19%, with the installed base of Da Vinci systems growing by 13% to almost 10,800 systems [15][16] - Ion procedures grew by 52%, with the installed base up by 30% to approximately 950 systems [16][19] - SP procedures saw a significant increase of 91%, driven by growth in Korea and early progress in other international markets [17][18] Market Data and Key Metrics Changes - In the U.S., total procedures for Da Vinci and Ion increased by 18%, with Da Vinci procedures growing by 16% and Ion procedures by 48% [16][17] - Outside the U.S., total procedures grew by 25%, with Da Vinci procedures increasing by 24% and Ion procedures quadrupling from a small base [16][17] - Average system utilization in OUS markets grew by 8% in Q3, reflecting strong multi-specialty procedure growth in various countries [18] Company Strategy and Development Direction - The company aims to focus on the full launch of Da Vinci 5, increasing adoption of focused procedures, and driving progress in product quality and manufacturing optimization [13][14] - Plans to offer refurbished Xi systems as part of a broader portfolio to expand access in certain geographies [7][14] - The company is committed to enhancing digital tools and integrating advanced imaging and AI capabilities into its platforms [56][75] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the adoption of Da Vinci 5, noting that it is designed to be easier to learn and use, supporting higher efficiencies [39][40] - The company updated its 2025 Da Vinci procedure growth guidance to a range of 17% to 17.5% [32] - Management acknowledged challenges in the bariatric market and competitive pressures in China, indicating ongoing monitoring of these areas [70][71] Other Important Information - The company received FDA 510(k) clearance for software updates for Da Vinci 5, enhancing surgeon awareness and decision-making [10][12] - The installed base of Da Vinci 5 systems reached 929, with strong demand for upgrades driving placements [19][20] - The company ended the quarter with $8.4 billion in cash and investments, down from $9.5 billion, primarily due to share repurchases [26] Q&A Session Summary Question: Trends driving procedure volume growth - Management noted strong growth in benign general surgery and acute care, with Da Vinci 5 adoption supporting utilization [36][38] Question: Refurbished Xi systems and market potential - Management highlighted the importance of refurbished Xi systems for cost-sensitive customers and noted early sales of 20 units [41][45] Question: Utilization of redeployed Xi systems - Management explained that consistent user interfaces allow surgeons to transition between Da Vinci 5 and Xi systems without retraining, enhancing flexibility [49][50] Question: Impact of Intuitive Hub on Da Vinci uptake - Management discussed the digital foundation of Da Vinci 5 and the role of Intuitive Hub in collecting and analyzing surgical data [72][75] Question: Constraints in ambulatory surgery centers - Management indicated that capital costs are a greater constraint than sterilization challenges, with a focus on lowering total treatment costs [78][81]

Financial Data and Key Metrics Changes - In Q3 2025, revenue grew 23% to $2.5 billion, with pro forma operating margin at 39% and pro forma earnings per share increasing by 30% [14][24][25] - Total procedure growth was 20%, with Da Vinci procedures increasing by 19% and Ion procedures by 52% [14][15][18] - Pro forma gross margin for the quarter was 68%, down from 69.1% in Q3 of the previous year [23][24] Business Line Data and Key Metrics Changes - Da Vinci system placements totaled 427, including 240 Da Vinci 5 systems, reflecting strong domestic demand for upgrades [5][14][19] - Ion platform procedures grew 52%, with the installed base increasing by 30% to approximately 950 systems [15][18] - Average system utilization for Da Vinci multiport platforms grew by 4%, while Ion utilization increased by 14% [5][15] Market Data and Key Metrics Changes - In the U.S., total procedures increased by 18%, with Da Vinci procedures growing by 16% and Ion procedures by 48% [15][16] - Internationally, total procedures grew by 25%, driven by strong results in India, Canada, Korea, Taiwan, and Brazil [16][17] - Da Vinci procedure growth in OUS markets included strong results in benign general surgery, colorectal, and hysterectomy procedures [17] Company Strategy and Development Direction - The company aims to focus on the full launch of Da Vinci 5, increasing adoption of focused procedures, and enhancing product quality and manufacturing optimization [12][31] - Plans to offer refurbished Xi systems to expand access in certain geographies and sites of care [6][40] - The company is committed to leveraging digital tools and AI to enhance surgical outcomes and operational efficiency [9][72] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth in procedure volumes and the positive impact of Da Vinci 5 on utilization rates [4][37] - The company is navigating challenges in markets like Japan and China, where government budget constraints and competition are significant [20][67] - Updated guidance for 2025 includes an increase in expected Da Vinci procedure growth to a range of 17% to 17.5% [31] Other Important Information - The company ended the quarter with $8.4 billion in cash and investments, down from $9.5 billion, primarily due to share repurchases [26] - The company received FDA clearance for significant software updates for Da Vinci 5, enhancing its capabilities [9][11] Q&A Session Summary Question: What trends are driving the 20% procedure volume growth? - Management noted strong growth in benign general surgery and elective procedures, with Da Vinci 5 adoption contributing significantly [34][35] Question: How is the refurbished Xi strategy progressing? - The company has sold 20 refurbished Xi systems and sees potential for growth in cost-sensitive markets [40][42] Question: What is the outlook for bariatric procedures and the China market? - Bariatric procedures continue to decline, and the company is navigating a competitive environment in China with price pressures [66][67] Question: How is the Intuitive Hub contributing to Da Vinci uptake? - The Intuitive Hub is integral to collecting data and enhancing surgical insights, which is expected to improve outcomes [68][72]

Core Viewpoint - Intuitive Surgical (ISRG) has experienced a significant decline in share price recently, following a period of substantial growth driven by strong demand for its robotic surgery systems, particularly the da Vinci platform, raising concerns about its valuation relative to the industry [1][2]. Financial Performance - ISRG reported fourth-quarter 2024 revenues of $2.41 billion, a 25.2% year-over-year increase, with full-year revenues reaching $8.4 billion, reflecting a 17% year-over-year growth [7]. - The company achieved earnings per share (EPS) growth of 2%, bringing the EPS to $2.21, and maintained a pro forma operating margin of 38% [7]. - Recurring revenues now account for 84% of total earnings, indicating a strong revenue generation model [7]. Market Trends and Growth - The volume of da Vinci procedures increased by 17% in 2024, with expectations for continued growth in 2025 [9]. - International markets, including India, the U.K., Italy, and Japan, experienced robust growth of 25% year-over-year, supported by recent investments and approvals [10]. - The Da Vinci SP and Ion platforms saw growth rates of 81% and 78% respectively, driven by strong demand in key international markets [12][13]. Strategic Initiatives - ISRG plans to invest EUR 290 million to directly market its da Vinci products in Italy, Spain, and Portugal, enhancing customer relationships [15]. - The company is expanding its manufacturing capabilities with new facilities in California, Germany, and Bulgaria to support production for the Da Vinci 5 and Ion systems [15]. Competitive Landscape - ISRG faces increasing competition in the robotic-assisted surgery market from major players like Johnson & Johnson and Medtronic, as well as from Chinese manufacturers offering competitive alternatives [19]. - Economic pressures in Europe and the rise of GLP-1 weight-loss drugs are impacting ISRG's procedure growth, particularly in the bariatric segment [20]. Future Outlook - ISRG projects procedural growth of 13-16% in 2025, while gross profit margins are expected to moderate to 67-68% due to increased depreciation expenses and a shift towards lower-margin products [26]. - The company is navigating macroeconomic challenges, including potential tariff risks and geopolitical tensions that could affect its global expansion and profitability [19][22].