INTUITIVE SURGICAL INC Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 was a strong year for Intuitive with 17% procedure growth, $8.4 billion in revenue (17% growth over 2023), and 84% recurring revenue.
• Da Vinci 5 had a successful launch with 362 systems placed, and over 2,500 surgeons performed over 32,000 procedures on it in 2024.
• Procedures: Full-year growth was 17%, with strong performance in US general surgery, UK, Japan, and Germany. Ion had 78% growth, and SP had 72% growth.
• Capital placements: Multi-port systems placed were 1430 in 2024, Ion 271, and SP 96. Utilization: multi-port grew 3%, SP 12%, and Ion 13%.
• 2025 priorities: Focus on full launch of da Vinci 5, increased adoption through training and commercial activities, building industrial scale and manufacturing optimization, and excellence in digital tools.

Segment Performance

• Da Vinci: In 2024, 362 da Vinci 5 systems were placed, and full-year procedures grew 17%. Revenue for the year was $8.4 billion, with 84% being recurring. In Q4 2024, revenue was $2.41 billion, systems placements were 493, and system average selling price was $1.59 million.
• Ion: Full-year 2024 growth was 78%, with approximately 28,000 Ion procedures in Q4 2024. 69 Ion systems were placed in Q4 2024, and the installed base increased 51% to 805 systems.
• SP: Full-year 2024 growth was 72%, with SP procedure growth accelerating to 81% in Q4 2024. 30 SP systems were placed in Q4 2024, and 96 for the full year.

Guidance

• Procedures: 2025 expected full-year procedure growth within 13%-16%.
• Gross Margin: 2025 pro forma gross profit margin expected to be within 67%-68% of net revenue.
• Operating Expenses: 2025 pro forma operating expense growth expected within 10%-15%.
• Other Income: 2025 expected to be between $370 million and $400 million.
• Capital Expenditures: 2025 expected to be between $650 million and $800 million.
• Tax Rate: 2025 pro forma income tax rate expected within 22%-23% of pretax income.

Risks

• Competition: Increasing competition could lengthen selling cycles.
• Tariffs: Potential impact on manufacturing costs, especially if tariffs are implemented on Mexican manufacturing.
• Regulatory: Delays or issues with regulatory clearances in some markets.
• Economic Factors: Government budget pressures affecting capital spending in regions like the UK, Germany, and Japan.

Q: Larry Biegelsen from Wells Fargo asks about US system placements and utilization leading to procedures.

A: Gary Guthart responds about different program expectations, new capital opportunities, and utilization settling for multiport but growth for SP and Ion.

Q: Robbie Marcus from JPMorgan asks about da Vinci 5 mix vs Xi.

A: Gary Guthart talks about broad launch, supply chains, software updates, and Jamie Samath on modeling implications.

Q: Travis Steed from Bank of America Securities asks about R&D investment.

A: Gary Guthart talks about mix of extensions, new platforms, geographic expansion.

Q: Rick Wise from Stifel asks about da Vinci 5 digital features and Ion/SP margin.

A: Gary Guthart on digital features in DV5, Jamie Samath on Ion/SP growth and margin work.

Q: David Roman from Goldman Sachs asks about competition and selling cycles.

A: Jamie Samath talks about China competition and impact on other markets.

Q: Patrick Wood from Morgan Stanley asks about install-based efficiencies.

A: Jamie Samath on I&A revenue margins and scale advantages.