Intuitive Surgical, Inc. (NASDAQ: ISRG) Q2 2025 Earnings | 07/23/2025

Intuitive Surgical, Inc. (Q2 2025) Earnings Call Summary

Intuitive Surgical reported strong financial results for Q2 2025, driven by solid procedure growth and capital placements, particularly for the new DaVinci 5 system. The company is navigating ongoing macro challenges in international markets and remains focused on advancing minimally invasive care through innovation and strategic expansion.

Key Financial Highlights (Q2 2025):

• Revenue: $2.44 billion, up 21% year-over-year (21% at constant currency).

• Pro Forma Operating Margin: 39%.

• Pro Forma Earnings Per Share: $2.19, up 23%.

• Pro Forma Net Income: $798 million, up from $641 million in Q2 2024.

• GAAP Net Income: $658 million ($1.81 per share).

• Cash and Investments: $9.5 billion, up from $9.1 billion last quarter.

• System Placements: 395 DaVinci systems placed (up 16% year-over-year), including 180 DaVinci 5 and 23 SP systems. 54 ION systems placed.

  • U.S. Placements: 216 systems (up from 149 last year).

  • OUS Placements: 179 systems (down from 192 last year), impacted by budget pressures in Japan, China, and Europe.

• Installed Base: DaVinci systems increased 14% to nearly 10,500 globally. ION systems expanded to 905 systems.

• Recurring Revenue: Grew 21%, accounting for 85% of total revenue.

• Pro Forma Gross Margin: 67.9% (down from 70% in Q2 2024) due to higher facilities costs, mix of lower margin ION and DaVinci 5 revenue, higher service costs, and a 60-basis point impact from tariffs.

  • Tariff Impact: Estimated at approximately 100 basis points (+/- 20 basis points) for the full year 2025, lower than previous estimates due to reduced U.S.-China bilateral tariff rates.

• Pro Forma Operating Expenses: Increased 9% year-over-year, driven by higher headcount (300 new employees) and facility costs.

Procedure Performance:

• DaVinci Procedures: Grew 17% globally.

  • U.S. Procedures: Grew 14%, led by benign general surgery (e.g., cholecystectomy and appendectomy), partly due to after-hours procedures.

  • OUS Procedures: Grew 23%, with strong contributions from India, Korea (partly due to a weaker comparison period from physician strikes last year), and distributor markets. Robust growth across colorectal, benign general surgery, thoracic, kidney, and HPV procedures outside the U.S.

• SP Procedures: Grew 88% year-over-year, with 112% growth in Korea and strong growth in Europe and Japan.

• ION Procedures: Grew 52% to approximately 35,000 in the quarter.

Strategic Initiatives & Product Highlights:

• DaVinci 5: In broad launch in the U.S. and received clearances in Europe and Japan, where measured launches will begin. Over 100,000 procedures performed to date in the U.S. measured launch. Average system utilization for DaVinci 5 surpassed Xi.

• Advanced Energy Instruments: Received 510(k) clearance for Vessel Sealer Curved, offering greater precision in narrow anatomical spaces.

• New Procedure Clearance: Received clearance for tracheobronchoplasty.

• Digital Ecosystem: Customers are collecting data on force feedback and other DaVinci 5 aspects through Case Insights. Developing telecollaboration tools (Intuitive Telepresence with Hub software) and demonstrated telesurgery on an advanced tissue model using DaVinci 5.

• SP & ION Expansion: Priorities include additional indications in the U.S., international market expansion, workflow enhancement, and cost improvement. First ION systems sold in Australia and Korea.

• Manufacturing Expansion: Opened a new 187,000 sq ft manufacturing facility in Bulgaria and plans to increase footprint in Germany and Mexico for additional capacity.

• Instrument Reprocessing: Acknowledged third-party reprocessing of instruments. Intuitive emphasizes safety, performance, quality, reliability, supply continuity, and value of its high-quality, new instruments. The company will continue to innovate and differentiate its portfolio.

Clinical Data Highlights:

• REAL Study (JAMA): Three-year results from a randomized trial showed robotic-assisted surgery for middle and low rectal cancer resulted in a 55% lower risk of local regional recurrence at three years compared to laparoscopy.

• DaVinci 5 Force Feedback & Case Insights: Early data from a single-surgeon experience indicated that higher forces during dissection were associated with increased length of stay, suggesting that force feedback and Case Insights can help identify factors predicting complications and optimize surgical techniques.

Updated Financial Outlook for 2025:

• DaVinci Procedure Growth: Updated to 15.5% - 17% (from 15%-17%).

• Pro Forma Gross Profit Margin: Updated to 66% - 67% (from 65%-66.5%).

• Pro Forma Operating Expense Growth: Remains 10% - 14%.

• Non-Cash Stock Compensation Expense: Remains $770 million - $790 million.

• Other Income (primarily interest income): Updated to $370 million - $390 million (from $340-$360 million).

• Capital Expenditures: Updated to $650 million - $725 million (from $600-$700 million), primarily for facility construction.

• Pro Forma Income Tax Rate: Remains 22% - 23%.