Company: ISRG
Filing Date: 2025-04-23
Form Type: 10-Q
Source: 0001035267-25-000109
Chunk: 102

Company: INTUITIVE SURGICAL INC
Filing Date: 2025-04-23
Form: 10-Q
Item: Item 2
Chunk 102
---
 March 31, 2025, was primarily driven by higher costs associated with our da Vinci 5 surgical system, incremental fixed overhead costs, including depreciation expense, associated with expanded manufacturing capacity, and higher scrap, partially offset by lower excess and obsolete inventory charges. The impact of tariffs for the three months ended March 31, 2025, was immaterial.

Product gross profit for the three months ended March 31, 2025, and 2024, included share-based compensation expense of $30.2 million and $22.7 million, respectively, and intangible assets amortization expense of $2.2 million and $3.6 million, respectively.

Our capital expenditures increased during 2024, as we continued to build the infrastructure needed to scale our business. As a result, in 2025, depreciation expense has increased and will continue to increase as additional projects are placed in service, which may impact our future gross profit margin.

Service

Service gross profit for the three months ended March 31, 2025, increased by 7% to $238.0 million, representing 65.6% of service revenue, compared to $222.7 million, representing 71.0% of service revenue, for the three months ended March 31, 2024. The higher service gross profit for the three months ended March 31, 2025, was primarily driven by higher service revenue, reflecting a larger installed base of da Vinci surgical systems, partially offset by a lower service gross profit margin. The lower service gross profit margin for the three months ended March 31, 2025, was primarily driven by an unfavorable repair mix, higher costs associated with our da Vinci 5 surgical system, and incremental fixed costs, including depreciation expense, partially offset by lower logistics costs and lower excess and obsolete inventory charges.

Service gross profit for the three months ended March 31, 2025, and 2024, included share-based compensation expense of $8.2 million and $7.0 million, respectively, and intangible assets amortization expense of $0.2 million and $0.2 million, respectively.

39

Selling, General and Administrative Expenses

Selling, general and administrative expenses include costs for sales, marketing, and administrative personnel, sales and marketing activities, trade show expenses, legal expenses, regulatory fees, and general corporate expenses.

Selling, general and administrative expenses for the three months ended March 31, 2025, increased by 15% to