10-QPeriod: Q1 FY2010

INTUITIVE SURGICAL INC Quarterly Report for Q1 Ended Mar 31, 2010

Filed April 20, 2010For Securities:ISRG

Summary

Intuitive Surgical, Inc. (ISRG) reported robust financial performance for the first quarter of 2010, demonstrating significant growth across key metrics compared to the prior year period. Total revenue surged by 74.4% to $328.6 million, driven by a strong increase in both product and service revenues. This growth was propelled by the continued adoption of the da Vinci Surgical System, with system unit sales increasing by 57.6% to 104 units and the installed base expanding to 1,482 systems. The company's profitability saw a substantial improvement, with net income rising to $85.3 million, a nearly threefold increase from $28.1 million in the first quarter of 2009. Diluted earnings per share also saw a significant jump to $2.12 from $0.72. The company ended the quarter with a strong liquidity position, holding $1,395.5 million in cash and investments, and generated healthy operating cash flow, underscoring its financial stability and capacity for future investment.

Financial Highlights

46 data points
Beta

Revenue

$328.60M

73.2% Gross Margin

Net Income

$85.30M

26.0% Net Margin

EPS (Diluted)

$0.24

Total Assets

$2.02B

Cash & Equivalents

$313.60M

Free Cash Flow

$115.60M

Financial Statements
Beta
Revenue$328.60M
Cost of Revenue$88.10M
Gross Profit$240.50M
R&D Expenses$28.00M
SG&A Expenses$82.80M
Operating Expenses$110.80M
Operating Income$129.70M
Net Income$85.30M
EPS (Basic)$0.24
EPS (Diluted)$0.24
Shares Outstanding (Basic)349.20M
Shares Outstanding (Diluted)361.80M

Key Highlights

  • 1Total revenue increased significantly by 74.4% to $328.6 million in Q1 2010 compared to Q1 2009.
  • 2Net income more than doubled, rising to $85.3 million from $28.1 million in the prior year quarter.
  • 3Diluted earnings per share saw a substantial increase to $2.12 from $0.72.
  • 4Sales of da Vinci Surgical Systems increased by 57.6% to 104 units, with the da Vinci Si model comprising 77% of these sales.
  • 5The installed base of da Vinci Surgical Systems grew to 1,482 units as of March 31, 2010.
  • 6Recurring revenue (instruments, accessories, and service) showed strong growth, increasing to $173.3 million and constituting 53% of total revenue.
  • 7The company maintained a strong balance sheet with $1,395.5 million in cash and investments.

Frequently Asked Questions

The primary driver of revenue growth was the continued adoption of the da Vinci Surgical System, leading to increased sales of both the systems themselves and recurring revenue from instruments, accessories, and service contracts. The launch and positive market acceptance of the newer da Vinci Si Surgical System also contributed significantly.

Profitability has improved substantially. Net income more than doubled from $28.1 million in Q1 2009 to $85.3 million in Q1 2010. This improvement is reflected in both gross profit and operating income, driven by higher revenues and improved gross margins.

Recurring revenue, which includes revenue from instruments, accessories, and service contracts, is increasingly important. It grew to $173.3 million in Q1 2010 and represented 53% of total revenue. This trend indicates a growing installed base actively using the da Vinci systems and is expected to become a larger percentage of total revenue, providing a more stable and predictable revenue stream.

The company invests primarily in high-quality, fixed-income securities. As of March 31, 2010, Intuitive Surgical maintained a strong liquidity position with $1,395.5 million in cash and investments, an increase of $223.5 million during the quarter. The company generated $115.6 million in cash from operating activities, highlighting its robust financial health and ability to fund its operations and growth initiatives.