Intuitive Surgical: Robots, Revenue, and What’s Next
Dissecting Their Innovations, Earnings, and 2025 Outlook.
Intuitive Surgical ($ISRG) has played a massive role in developing the surgical industry and continues to do so. They are a healthcare tech company founded in 1995, launching their first da Vinci system in Europe in 1999, followed by the US launch in 2000. Since then, they have transformed doctor-assisted surgical robotics. Their systems are now used globally across a wide range of surgical specialities, helping surgeons perform complex procedures with greater precision and minimal invasiveness.
Intuitive Surgical isn’t just revolutionizing surgeries through its da Vinci systems; it’s also expanding into new territories with platforms like the Ion system. Designed for minimally invasive lung biopsies, Ion allows doctors to navigate deep into the lungs to collect tissue samples with precision, aiding in early lung cancer detection. While still a smaller contributor to overall revenue, Ion represents an exciting growth opportunity as Intuitive pushes into broader applications of robotic-assisted care.
With a focus on innovation and patient outcomes, Intuitive Surgical has cemented its position as a leader in the healthcare technology space. I’ll be looking into their latest earnings report alongside what to expect in 2025. But before doing so, let’s take a closer look at their core product, the da Vinci system, which is truly impressive.
da Vinci System
There are now 5 different versions of the da Vinci systems, with the latest version introduced in 2024. The da Vinci system combines advanced robotic technology with 3D visualization and precision instrumentation, allowing surgeons to perform complex surgeries with dexterity and control. The two main components of the systems are:
Surgeon Console: The surgeon operates the da Vinci system from a console that provides a 3D view of the surgical site. The console features hand controls that translate the surgeon's hand movements into precise movements of the robotic instruments inside the patient's body. Of course, surgeons are thoroughly trained before using this console as otherwise it would be similar to trying to win a teddy bear at an arcade!
Patient-side Cart: This cart is equipped with robotic arms featuring adjustable ends. At the tips of these arms, tools like scalpels and staplers can be interchanged depending on the procedure. The surgeon controls every move, turning these robotic arms into an extension of their own hands, making surgeries more precise and efficient than ever before.
I know what you may be thinking, are these systems safe and what happens if they malfunction during a surgery? It’s definitely a viable thought but Intuitive Surgical’s systems have been rigorously tested since their launch in 2000, with 9,902 systems deployed and over 12 million surgeries performed as of December 2024. It’s impressive to see how far the technology has come, and the da Vinci 5 takes it a step further with AI-driven features powered by 10,000 times more computational strength than its predecessor. Features like real-time tissue tracking, motion scaling, and predictive analytics bring meaningful advancements by enhancing safety and precision while reducing surgery times. Predictive analytics, in particular, provides valuable insights by tracking surgeons’ performance, helping them refine their techniques and complete procedures efficiently, freeing up additional space for new patients.
With such advanced technology at the heart of its offering, it’s no surprise that Intuitive Surgical’s innovations directly impact its financial performance.
Performance & Financials
Since the start of 2023, Intuitive Surgical’s share price has increased by ~125%. The largest weekly decline has been a mere 6% since the end of 2023. Talk about great risk to reward! Of course, hindsight is great but the execution of their business plan has been pretty much flawless.
ISRG’s business model is broken down into three parts:
System Sales: This segment represents the one-time revenue from selling DaVinci systems to hospitals and surgical centres. Each system is priced between $1.5 million and $2.5 million.
Instruments and Accessories: This is the backbone of Intuitive Surgical’s recurring revenue model. Instruments like scalpels, staplers, and other procedure-specific tools are essential for surgeries performed on DaVinci systems. These tools require periodic replacement, ensuring a steady revenue flow tied to the growing number of procedures, which increased by 17% in 2024 alone.
Services: Intuitive Surgical provides service contracts and software updates to maintain and enhance the performance of its systems. These services are essential to ensuring system reliability and integrating new features, creating another steady source of revenue.
Now, let’s dive into their latest earnings report, which covers the final quarter of 2024 as well as the full fiscal year.
Q4 2024 Earnings:
Let’s begin with one of the most important points. How much revenue did they make in the quarter and how does it compare to a year ago? In Q4, they reported a staggering $2.4 billion in revenue, marking a 25% increase from the $1.93 billion generated in Q4 2023 and beating analyst expectations by 7.32%. This is a really strong number which highlights the excellent performance of the company. EPS (earnings per share, which reflects profit per outstanding share) beat analyst estimates by 23.32%, coming in at $2.21 for the quarter.
Looking at how revenue was broken down for the full fiscal year, the revenue growth was largely powered by its Instruments and Accessories segment, which jumped 18.7% to $5.08 billion, thanks to increasing procedure volumes. Systems revenue grew by 17%, reaching $1.97 billion, driven by strong demand for the da Vinci 5. In Q4 alone, Intuitive placed 174 da Vinci 5 systems, contributing to the total of 493 systems placed for the year. Meanwhile, Services revenue rose 12% to $1.31 billion, reflecting ongoing demand for maintenance contracts and software updates across their growing installed base. This balanced growth across segments underscores the strength of Intuitive’s recurring revenue model and the continued expansion of robotic-assisted surgery worldwide.
On the cost side, non-GAAP gross margins improved to 69.5% in Q4 2024, up from 68% a year earlier, thanks to improved factory efficiency and reduced logistics costs. Intuitive ended the year with $8.83 billion in cash and investments, up by $521 million during the quarter, giving them a strong foundation to invest in further innovation, acquisitions, and operational scale. With 84% of total revenue now recurring, the company’s financial model is built for stability, even as it pursues long-term growth.
Intuitive Surgical’s operating expenses grew in 2024, largely due to increased R&D spending on innovations. While some companies might pull back on investments at this stage, it’s refreshing to see Intuitive doubling down on innovation to stay ahead in such a competitive market. This commitment to growth signals their confidence in both the expanding demand for robotic-assisted surgery and their ability to maintain a leading position in the industry.
A quick note before looking at net income, when companies report earnings, they share two types of numbers, GAAP (Generally Accepted Accounting Principles) and Non-GAAP. Non-GAAP figures are often seen as more useful because they leave out one-time costs or special adjustments, making it easier to understand how the business performs daily.
Net income in Q4 2024 on a non-GAAP basis came in at $805 million, a significant jump from $574 million in Q4 2023. Once again, impressive! This 40% year-over-year increase highlights Intuitive Surgical’s ability to balance growth and profitability, even as they ramp up investments in innovation like the da Vinci 5. It’s clear that their recurring revenue model, driven by instruments, accessories, and services, is paying off. What stands out most is their consistency in delivering strong earnings while continuing to expand their market share in robotic-assisted surgery. Few companies manage to execute this level of growth while keeping such strong margins intact.
In terms of valuations, ISRG is trading at a P/E multiple of 94.97x, which simply means that investors are paying nearly $95 for every $1 of earnings the company generates. Compared to its competitors, such as Stryker (48x P/E) and Medtronic (25x P/E), ISRG is trading at a premium. While this valuation may seem expensive, it reflects the market’s confidence in Intuitive Surgical’s superior growth potential, dominant market position, and robust recurring revenue model, which set it apart as a much stronger company in the space. However, it also indicates that the stock is priced for significant future growth, leaving little room for error if the company fails to meet expectations.
2025 Outlook
Looking ahead to 2025, Intuitive Surgical is poised for another year of growth, with procedure volumes projected to increase by 13–16%, building on the impressive 17% growth achieved in 2024. A key focus will be scaling the da Vinci 5 rollout globally, securing regional clearances, and introducing follow-on features to enhance its capabilities. In Europe, where over 2,000 systems are currently installed, tight healthcare budgets could create challenges, while competitive and regulatory pressures in China may impact system placements.
That said, Intuitive isn’t slowing down. The company is investing in new manufacturing facilities in California, Germany, and Bulgaria to meet growing demand, and it’s focusing on expanding platforms like Ion and SP, which saw procedure volumes skyrocket by 78% and 72% last year. Gross margins are expected to decline to 67–68%, driven by increased depreciation expenses, which represent the gradual allocation of costs for assets such as manufacturing equipment over its useful life. FX losses, and a higher revenue contribution from newer systems like da Vinci 5, Ion, and SP, which currently have lower profit margins, will also contribute to the decline. However, this reflects the company’s focus on innovation and ongoing investments in growth. With a strong revenue base, solid balance sheet, and an expanding portfolio, Intuitive Surgery is well-positioned to overcome challenges and maintain its leadership in the robotic-assisted surgery space.
Market Entry
The stock is trading well above its 200-day moving average (which tracks the average price over 200 days) and is pulling back from ATHs. There’s a level of previous resistance (think of this as the ceiling) which may act as support (think of this as the floor), at $555 which would be an appropriate place to enter in my opinion. The approach depends on the investor’s preference, using a dollar-cost averaging method renders entry levels somewhat irrelevant whereas if the investor wants to enter all in one go, picking your entry price is very important. More complex methods of entering such as using option contracts may also be viable but that is a topic for another day!
I hope this article on Intuitive Surgery has been helpful and as always, please feel free to reach out if you have any questions!
The information provided in this article is for informational purposes only and should not be considered financial or investment advice. Please conduct your own research or consult a licensed financial advisor before making any investment decisions. Past performance is not indicative of future results, and all investments carry risks.
I've been long this stock for years never seen anyone cover it
Yoooo this company is a beast! I’ve been following it since 2017 and its grown soo much. I’ve never seen anyone else do a report on this company so cudos to you !!