Intuitive(ISRG) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter revenue was $2.25 billion, a 19% increase year-over-year, with constant currency growth at 20% [45][46] - Pro forma gross margin for Q1 was 66.4%, down from 67.6% in the previous year, primarily due to higher facility costs and a greater mix of lower-margin products [54] - Pro forma net income for Q1 was $662 million, or $1.81 per share, compared to $541 million, or $1.50 per share, in the same quarter last year [58][59] Business Line Data and Key Metrics Changes - Da Vinci procedure growth was 17%, with a notable 36% growth in after-hours procedures in the U.S. [14][15] - Capital placements included 367 Da Vinci systems, a 17% increase from the previous year, with 147 Da Vinci 5 systems placed [42][45] - ION procedures grew 58% to approximately 31,000, while SP procedures saw a 94% increase [27][28] Market Data and Key Metrics Changes - U.S. procedures grew 13%, driven by benign general surgery, while OUS procedures grew 24%, with strong performance in India, Korea, and the UK [40][41] - Capital placements in the U.S. increased to 204 systems, up from 148 last year, while OUS placements decreased slightly from 165 to 163 [43][44] - The environment in China showed improvement, with procedure growth driven primarily by urologic procedures [41] Company Strategy and Development Direction - The company aims to focus on the full launch of Da Vinci 5 and increase adoption of focused procedures through training and market access efforts [29][30] - The strategy includes optimizing production costs and adjusting supply chain strategies in response to trade policy changes [10][11] - The company is committed to investing in R&D and innovation to drive long-term growth [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term opportunity for high-quality, minimally invasive care despite current trade policy uncertainties [11] - The company updated its full-year 2025 procedure growth forecast to a range of 15% to 17% [61] - Management acknowledged potential impacts from tariffs and government budget constraints on capital spending in key markets [62] Other Important Information - The company opened new manufacturing facilities in California, which will enhance its U.S. manufacturing and R&D capabilities [55] - The impact of tariffs is expected to increase each quarter, with an estimated additional cost of sales of approximately 1.7% of revenue for 2025 [36][37] Q&A Session Summary Question: Impact of tariffs on annualized basis - Management indicated that roughly half of the tariff impact is from U.S.-China trade, with the impact expected to increase each quarter [69] Question: Capital environment comparison to previous years - Management noted strong customer response to Da Vinci 5, with leasing arrangements providing flexibility for customers [72][73] Question: Inclusion of European reciprocal tariffs in estimates - Management confirmed that the 1.7% estimate includes the anticipated European tariffs [80] Question: Confidence in raising procedure volume forecast - Management cited strong Q1 performance and customer adoption as reasons for the early forecast increase [87][89] Question: Drivers of robust OUS growth - Management highlighted strong performance in early-stage markets like India and Taiwan, along with solid growth in the UK [108][110]