INTUITIVE SURGICAL INC Q1 FY2025 earnings call

• Business performed well in Q1 with strong procedure growth in core general surgery in the US and outside the US. New system placements were solid, especially in the US. - Platforms performed well with continued adoption of dV5, solid results in Ion and acceleration in SP procedures. - Principles for navigating trade policy: first priority to ensure global supply, second to optimize production costs and rebalance product flows, third to adjust supply chain strategy and pricing when trade environment stabilizes. - da Vinci 5 rollout progressed with 147 systems placed and over 32,000 procedures performed. Force Feedback features are being studied with early positive results. - Ion procedures grew 58%, with clearance in Australia and first provincial charge code in China. - SP procedures grew 94%, with US 510(k) clearance for da Vinci SP SureForm 45 stapler.

Da Vinci procedure growth in the quarter was 17%. The installed base of da Vinci Systems grew 15% and average system utilization grew 2%. Ion procedures grew 58% to approximately 31,000. SP procedures grew 94%. First quarter revenue was $2.25 billion, a 19% increase over the previous year. Systems revenue grew 25% year-over-year, driven by a 17% increase in da Vinci system placements and higher system ASP. Recurring revenue grew 19% in Q1, representing 85% of total revenue.

• Full year 2025 procedure growth outlook increased to 15% - 17% from the previous range of 13% - 16%. - Pro forma gross margin expected to be within 65% - 66.5% of revenue due to tariff impacts. - Pro forma operating expense growth expected to be between 10% and 14%. - Non-cash stock compensation expense expected to range between $770 million and $790 million in 2025. - Other income (mostly interest income) expected to total between $370 million and $400 million. - Capital expenditures estimated to range from $650 million to $750 million. - Pro forma income tax rate expected to be between 22% and 23% of pre-tax income.

• Dynamic trade policy changes affecting costs and customers' costs. - Tariffs impacting cost of sales, with an expected additional cost of sales impact of approximately 1.7% of revenue. - Financial pressures and healthcare spending constraints in key OUS markets like Japan, Germany and the UK. - Potential reprioritization of capital budgets by customers globally.

Q: Travis Steed from Bank of America Securities asked about tariffs breakdown and cadence.

A: Jamie Samath said roughly half of the impact is U.S.-China trade, about 40% is imports into the US ex-China, etc., and impact increases each quarter.

Q: Larry Biegelsen from Wells Fargo asked about da Vinci 5 placements in US.

A: Jamie Samath said it's normal seasonality.

Q: Robbie Marcus from JPMorgan asked about procedure growth confidence and tariff mitigations.

A: Jamie Samath and David Rosa discussed procedure growth confidence and potential mitigations like dual sourcing, strategic reserves, etc.

Q: Rick Wise from Stifel asked about OUS growth drivers.

A: Jamie Samath talked about OUS growth drivers like India, Taiwan, Europe, etc.

Q: Adam Maeder from Piper Sandler asked about force feedback technology.

A: Jamie Samath and Gary Guthart discussed force feedback instrument usage and clinical strategy.

Q: Ryan Zimmerman from BTIG asked about Medicaid cuts impact.

A: Jamie Samath and Gary Guthart said it's too early to comment.

Q: David Roman from Goldman Sachs asked about Intuitive being part of the solution.

A: Gary Guthart discussed Intuitive being part of the solution for hospitals.