Intuitive Surgical Inc. (ISRG)

Intuitive Surgical Inc. Q1 2025 Financial Report

Report Date: 2025-04-25
Period Covered: Q1 2025 (Quarter ended March 31, 2025)
Form Type: 10-Q

1. Executive Summary

• Total Revenue: $2,253.4 million (up 19.2% YoY)
• Gross Profit: $1,457.7 million (64.7% margin)
• Net Income: $703.7 million (31.2% margin); Net Income Attributable to Intuitive: $698.4 million
• Operating Cash Flow: $581.6 million

2. Profit & Loss Analysis

• Revenue growth driven by a 16.6% increase in da Vinci procedure volume (732K vs. 627K) and 57.6% growth in Ion procedures (30.7K vs. 19.5K).
• Product revenue rose 19.9% to $1,890.4 million; service revenue grew 15.8% to $363.0 million.
• Gross margin contracted slightly (from 65.9% to 64.7%) due to higher depreciation on capacity expansions and modest scrap costs.
• SG&A rose 14.6% to $563.4 million and R&D increased 11.2% to $316.2 million, reflecting investment in next-generation systems and digital services.

3. Debt & Liquidity

• No interest-bearing debt; balance sheet remains debt-free.
• Cash, cash equivalents and investments totaled $9.10 billion at quarter-end, up from $8.83 billion in Dec 2024.
• Free cash flow remains robust, funding capital projects and share-based compensation.

4. Key Drivers

• Installed Base Expansion: da Vinci installed base grew to 10,189 systems (+14.7% YoY), Ion to 853 (+41.2%).
• Procedure Adoption: Continued penetration in general surgery (notably cholecystectomy, hernia repair) and urology.
• New Offerings: Launch of the da Vinci Xi with force-feedback, e200 generator and redesigned SureForm staplers boosting ASPs.

5. Pros & Cons

Pros:

• Market leadership in robotic surgery with expanding ecosystem (devices, instruments, digital services).
• Strong cash generation supports R&D, global expansion and potential M&A.
• No financial leverage; high balance-sheet flexibility.

Cons:

• Emerging competition in China and other regions could pressure ASPs.
• Tariff increases and supply-chain volatility may inflate costs.
• Regulatory and litigation risks (patent suits, product-liability cases) could weigh on financials.

Revenue Breakdown (Q1 2025):

• By Business Line: – Instruments: $1,367.7 million (60.7%) – Accessories & Systems: $522.7 million (23.2%) – Services: $363.0 million (16.1%)

• By Geography: – Domestic (U.S.): $1,538.2 million (68.2%) – Outside U.S. (OUS): $715.2 million (31.8%)

• Cost of Revenue: – Product: $670.7 million – Service: $125.0 million

• Operating Expenses: – SG&A: $563.4 million – R&D: $316.2 million

Intuitive Surgical’s financial trajectory remains robust, driven by expanding procedure volumes and strong uptake of new technologies. The company’s debt-free balance sheet and cash reserves support accelerated R&D and geographic rollout, particularly for the Ion endoluminal system. Key health indicators include stable gross margins above 64%, high operating cash flow conversion (>25% of revenue), and double-digit installed base growth.

Future opportunities lie in deeper penetration of general, urologic and gynecologic procedures, broader Ion applications and digital services monetization. However, macro-risks such as global tariffs, supply-chain disruption, rising competition in China, evolving reimbursement landscapes and potential litigation remain headwinds. Maintaining leadership will require continued innovation, cost discipline and proactive risk management to sustain margin profile and free-cash-flow generation.