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

Company: INTUITIVE SURGICAL INC
Filing Date: 2025-04-23
Form: 10-Q
Item: Item 1
Chunk 25
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 in the 2022, 2023, and 2024 PSU awards is considered a market condition, and the expense is determined at the grant date. The procedure growth and relative adjusted operating margin metrics are considered performance conditions, and the expense is recorded based on the forecasted performance, which is reassessed each reporting period based on the probability of achieving the performance conditions. The number of shares earned at the end of the three-year period will vary, based on actual performance, from 0% to 125% of the target number of PSUs granted. PSUs are subject to forfeiture if employment terminates prior to the vesting date. PSUs are not considered issued or outstanding shares of the Company.The Company calculates the fair value for each component of the PSUs individually. The fair value for the component with the TSR metric was determined using Monte Carlo simulation. The fair value per share for the components with the procedure growth metrics is equal to the closing stock price on the grant date.PSU activity for the three months ended March 31, 2025, was as follows (in millions, except per share amounts): SharesWeighted-AverageGrant Date Fair Value Per ShareUnvested balance as of December 31, 20240.3 $306.94 Granted0.1 $580.93 Vested(0.1)$299.32 Performance change— $267.23 Forfeited— $— Unvested balance as of March 31, 20250.3 $367.92 Employee Stock Purchase PlanUnder the Employee Stock Purchase Plan (“ESPP”), employees purchased approximately 0.2 million shares for $75.5 million and approximately 0.3 million shares for $68.4 million during the three months ended March 31, 2025, and 2024, respectively.

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Share-Based Compensation ExpenseThe following table summarizes share-based compensation expense (in millions): Three Months Ended March 31, 20252024Cost of revenue – product (before capitalization)$30.9 $22.8 Amounts capitalized into inventory(28.5)(21.4)Amounts recognized in income for amounts previously capitalized in inventory27.8 21.3 Cost of revenue – product$30.2 $22.7 Cost of revenue – service8.2 7.0 Total cost of revenue38.4 29.7 Selling, general and administrative82.3