Intuitive Surgical updates 2025 da Vinci procedure growth guidance to 17%-17.5% while expanding da Vinci 5 placements internationally
Oct. 21, 2025 9:55 PM ET
AI-Generated Earnings Calls Insights
Earnings Call Insights: Intuitive Surgical (ISRG) Q3 2025
Management View- CEO David Rosa reported, "Q3 2025 was an excellent quarter for Intuitive, with strength in worldwide procedure growth and capital placements as well as increasing utilization across all platforms." He highlighted the broad adoption of da Vinci 5, including the first placements in Japan and Europe, and noted that, "da Vinci procedures increased by 19% and Ion procedures were higher by 52%, leading to total worldwide procedure growth of 20%." Rosa emphasized, "We placed 427 da Vinci systems, including 240 da Vinci 5 systems and 30 SP systems as well as 50 Ion systems," pointing to strong demand for system upgrades and dual consoles in the U.S. and initial placements internationally. He discussed the intent to offer refurbished Xi systems as part of the broader portfolio to expand access in cost-sensitive geographies. Rosa underscored ongoing software and hardware upgrades, including FDA 510(k) clearance for da Vinci 5 software enhancements enabling remote updates and advanced intraoperative features.
- CFO Jamie Samath stated, "In quarter 3, revenue grew 23% to $2.5 billion, pro forma operating margin was 39% and pro forma earnings per share increased 30%." Samath detailed the installed base increases for da Vinci and Ion systems, increased system utilization, and highlighted that, "As of Q3, aggregate average system utilization in OUS markets is approximately 20% below that of systems in the U.S." He also noted, "We saw 141 trade-in transactions in Q3, up from 38 a year ago, primarily driven by U.S. customers upgrading to da Vinci 5."
Outlook- Connally reported that the company is updating its 2025 da Vinci procedure growth guidance to a range of 17% and 17.5%, up from the prior 15.5%-17%. He also updated 2025 pro forma gross margin guidance to a range of 67% and 67.5% of revenue, citing greater leverage of fixed costs, cost reductions, and a lower expected tariff impact. Pro forma operating expense growth for 2025 is expected between 11% and 13%, with noncash stock compensation expense estimated at $785 million to $795 million. Other income is forecast between $350 million and $360 million, and capital expenditures between $625 million and $675 million. The 2025 pro forma income tax rate is now projected to be between 21% and 22%.
Financial Results- Samath reported total revenue for the quarter was $2.51 billion, representing 23% growth over the prior year. Recurring revenue accounted for 85% of total revenue. Pro forma net income was $867 million, with pro forma earnings per share at $2.40. GAAP net income was $704 million or $1.95 per share. Free cash flow was $736 million, and the company ended the quarter with $8.4 billion in cash and investments after repurchasing approximately 4 million shares for $1.9 billion. Pro forma gross margin for the quarter was 68%, down from 69.1% a year ago, with the decline attributed to tariffs, higher facility costs, and increased lower margin revenue from da Vinci 5 and Ion.
Q&A- Robert Marcus, JPMorgan: Asked about the drivers and sustainability of 20% procedure volume growth and the impact of da Vinci 5. Samath answered that Q3 U.S. da Vinci procedure growth was strong due to after-hours surgery and specific benign procedures, noting, "in Q1, it was 13%; Q2, 14%; and then in Q3, 16%." Rosa added that da Vinci 5's design intent is being validated by customer data. Samath revealed "about 67,000 da Vinci 5 procedures done in Q3."
- Marcus followed up on refurbished Xi systems. Rosa outlined the portfolio approach and potential for refurbished Xi to expand access, especially in cost-sensitive markets. Samath confirmed, "We've sold 20 refurbished Xis so far."
- Travis Steed, BofA: Asked about redeployment of Xi systems and utilization. Rosa described seamless integration for surgeons across platforms and flexibility for customers in building out fleets.
- Steed also inquired about new platforms and disease states, particularly in cardio. Rosa explained the unique capabilities of da Vinci 5 for cardiac surgery and outlined Intuitive's focus on leveraging core robotics and AI capabilities for unmet healthcare needs.
- Larry Biegelsen, Wells Fargo: Asked about U.S. utilization trends and net placements. Samath explained a customer-by-customer approach, prioritizing procedure growth and efficiency benefits of da Vinci 5, especially in large institutions.
- Biegelsen questioned gross margin outlook for 2026 and the impact of going direct in Italy, Spain, and Portugal. Samath deferred margin guidance to January but expects going direct to be slightly accretive to EPS.
- Frederick Wise, Stifel: Asked about ongoing softness in bariatrics and China. Connally said, "In Q3, domestic bariatric procedures continued to decline at high single digits...a little less than 3% of overall da Vinci procedures." Samath described the continued competitive and constrained environment in China.
- Wise followed up on the digital foundation and Hub features. Rosa highlighted the progressive rollout of digital tools and the foundational role of Hub in enabling future AI and analytics-driven insights.
- Patrick Wood, Morgan Stanley: Inquired about barriers to ASC adoption. Samath stated capital cost is the greater constraint, and reimbursement in ASCs is a fraction of HOPD, while sterilization has not been an impediment.
- David Roman, Goldman Sachs: Asked about haptics/Force Feedback and its impact on broader adoption. Rosa outlined the staged evidence-building process and explained Force Feedback's potential to improve outcomes procedure by procedure.
- Adam Maeder, Piper Sandler: Asked about the OUS da Vinci 5 launch. Samath reported early-stage, local approaches with a healthy pipeline and some incremental cost sensitivity versus the U.S.
Sentiment Analysis- Analysts' tone was positive, with questions focusing on sustainability of growth, further adoption of new technologies, and expansion into new markets. Curiosity and optimism were apparent around da Vinci 5 upgrades, refurbished Xi systems, and procedure growth drivers.
- Management maintained a confident and slightly cautious tone in their prepared remarks, with Rosa repeatedly emphasizing operational and financial positioning. During Q&A, responses were detailed and at times cautious, especially on issues such as gross margin outlook and OUS market dynamics, but confidence was signaled around technology adoption and pipeline strength. Phrases like "We are well positioned operationally and financially" and "We are committed to our 2025 priorities" expressed confidence.
- Compared to the previous quarter, the tone in both management and analysts has grown more positive, with less focus on macroeconomic risk and more on growth opportunities and product upgrades.
Quarter-over-Quarter Comparison- Guidance for 2025 da Vinci procedure growth was raised to 17%-17.5% from 15.5%-17%. Gross margin guidance was increased to 67%-67.5% from 66%-67%, reflecting improved cost control and lower tariff impact.
- Revenue growth accelerated from 21% in Q2 to 23% in Q3. Procedure growth rose from 18% to 20%. The number of da Vinci 5 systems placed jumped from 180 in Q2 to 240 in Q3. Trade-in transactions for system upgrades rose from 83 to 141 quarter-over-quarter.
- Management's tone showed increased confidence, especially regarding the adoption of da Vinci 5 and digital tools, while analysts shifted attention from capital risk and macro challenges to upside drivers and new platform opportunities.
- Key strategic focus evolved from measured da Vinci 5 launch in international markets in Q2 to broad international placements and increasing digital integration in Q3.
Risks and Concerns- Management cited ongoing government budget challenges in Japan and the U.K. and a competitive marketplace in China. Samath stated, "We continue to see government budget challenges in Japan and the U.K. and the constrained and competitive marketplace in China."
- Declining bariatric procedures continue to weigh on U.S. growth, with Connally noting, "In Q3, domestic bariatric procedures continued to decline at high single digits."
- Tariffs and facility costs are impacting gross margin, though mitigated by cost reductions and operational leverage. Samath highlighted ongoing evaluation of U.S. tax reform for potential future rate changes.
- Analysts expressed concern about capital costs and reimbursement constraints in ASCs, and the competitive landscape in China.
Final Takeaway
Intuitive Surgical's third quarter 2025 results showcased robust procedure and revenue growth, driven by strong adoption of da Vinci 5 systems and increasing system upgrades in both domestic and international markets. Management raised full-year procedure and margin guidance, reflecting confidence in operational execution and customer demand. The company continues to expand its product portfolio and digital capabilities, while actively managing risks in key global markets and maintaining a strong capital position to support future growth.
Read the full Earnings Call Transcript |
