Company: ISRG
Filing Date: 2025-07-23
Form Type: 10-Q
Source: 0001035267-25-000192
Chunk: 73

Company: INTUITIVE SURGICAL INC
Filing Date: 2025-07-23
Form: 10-Q
Item: Item 1
Chunk 73
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2024. The lower product gross profit margin for the three months ended June 30, 2025, was primarily driven by higher costs associated with the phased launch of our da Vinci 5 surgical system, new tariffs, and incremental fixed overhead costs, including depreciation expense, associated with expanded manufacturing capacity.

Product gross profit for the six months ended June 30, 2025, increased by 19% to $2.58 billion, representing 65.6% of product revenue, compared to $2.18 billion, representing 66.5% of product revenue, for the six months ended June 30, 2024. The lower product gross profit margin for the six months ended June 30, 2025, was primarily driven by higher costs associated with the phased launch of our da Vinci 5 surgical system, incremental fixed overhead costs, including depreciation expense, associated with expanded manufacturing capacity, and new tariffs, partially offset by lower excess and obsolete inventory charges.

Product gross profit for the three and six months ended June 30, 2025, included share-based compensation expense of $30.3 million and $60.5 million, respectively, compared with $23.6 million and $46.3 million for the three and six months ended June 30, 2024, respectively. Product gross profit for the three and six months ended June 30, 2025, included intangible assets amortization expense of $2.3 million and $4.5 million, respectively, compared with $3.5 million and $7.1 million for the three and six months ended June 30, 2024, 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 June 30, 2025, increased by 16% to $255 million, representing 65.3% of service revenue, compared to $220 million, representing 69.2% of service revenue, for the three months ended June 30, 2024. The higher service gross profit for the three months ended June 30, 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