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Intuitive Surgical's Margin Soars Despite Slowdown
23 Aug
Summary
- US procedure growth for da Vinci systems slowed to 12% in June quarter.
- Operating margin widened for three consecutive years, reaching 31.3%.
- Recurring revenue constituted 85% of total revenue in the recent quarter.
Intuitive Surgical's operating margin has demonstrated consistent growth, widening for three straight years to reach 31.3% as of the last twelve months on $11.0 billion in revenue. This trend persists even as the pace of US da Vinci procedure growth has slowed.
In the June quarter, US procedure growth was 12%, down from 14% in the prior quarter. Management attributes this moderation to patients deferring procedures and the law of large numbers, though analysts have questioned this explanation. US bariatric cases saw a high single-digit decline, potentially due to increased use of GLP-1 medications.
Despite slower procedure growth, operating expenses rose 13% against a 19% revenue increase in the June quarter on a non-GAAP basis. R&D spending intentionally outpaced SG&A. Recurring revenue, comprising 85% of the quarter's total, highlights the company's strong installed base, which saw 468 da Vinci systems placed, up 18% year-over-year.
