“When a hospital trades in an Xi for a DV5, the same program slot gives 11% more procedures a quarter.”

The quarter: P&L, balance sheet, valuation

Recurring revenue is $2.47b, 85% of the total. ii Product revenue (I&A and systems) is 84% of the total and grew 18.1% in the quarter; services are 16% and grew 20.8%. H

Growth by line and geography

59.2% of the business, systems and services (about 40%) plus I&A outside the US (19.2%), is growing at about 20% year on year, while I&A in the US is growing at about 16%. H

Net income attributable to the China joint venture (noncontrolling interest): $5.1m in Q2’26, $4.5m in Q1’26 and $20.6m in FY’25, after $14.9m in ’24 and $19.3m in ’23. i

Placements, platforms, installed base

Q2 placements: 468. That is 246 DV5, 38 SP, 64 Xi R, 58 X and 62 Xi; 114 of them with a dual console, which generates a moat: training capacity. ii US placements went from 216 in Q2’25 to 267 in Q2’26: 27 greenfield systems at ambulatory surgery centers (ASCs); otherwise, almost entirely upgrades to DV5.

• Higher utilization of DV5 than of Xi. ii
• System utilization is the metric in the US: it grew 3% in Q2, a “healthy level”. ii
• Management: “distributor markets have responded well”. That is, Intuitive acquired its European distributor, apparently to take the distributor’s share, as those businesses had been responding well. ii

The replacement cycle and trade-ins

From Si to Xi took seven years, with peak trade-ins in 2024. From Xi to DV5, 2024 to around 2031: a growth avenue for five more years.

DV5 placements: 352 in ’24, 870 in ’25, 230 in Q1’26 and 246 in Q2’26. That is 1.7K of an 11.7K fleet (14.5%); with 445 SP, DV5 and SP together are 18.3%. The rest, 11.7K less DV5 and SP, is about 9,565 fourth-generation and older systems; ASCs and hospital outpatient departments may stay on the fourth generation. H

Trade-in velocity is accelerating, for three reasons: the DV5 ASP credit; Xi R, refurbishing traded-in systems for resale to ASCs; and the utilization uplift.

Xi R started a year ago: 130 sold, 50 in the US, 20 at ASCs, in 11 to 12 countries. ii A fourth-generation ecosystem, affordable, gives access to customers not yet in robotics, and then, perhaps, upside.

When a hospital trades in an Xi for a DV5, the same program slot gives 11% more procedures a quarter: growth even with the base stalled.

Why? Management says it is because of what the systems are. I want to check whether it is also where they sit, and whether the +11% holds once the flagship accounts have already upgraded.

The capex cycle

The investor concern: bad debt might build at hospitals as people fall off ACA and Medicaid coverage. The response: US system placements were healthy in Q2, up 24% year on year, and about 70% were acquired under leasing arrangements, which gives hospitals more flexibility under capital constraints. ii

Hospitals typically buy systems ahead of rising demand. That is not the case now: they are not expanding the installed base.

Leasing mix and revenue quality

Operating leases as a share of all placements: 48% in 2023, 51% in 2024, 49% in 2025 and 54% in Q2’26, a very recent uptick. Of these, 57% are usage-based leases, paid as procedures are performed: less predictability, but more skin in the game and more upside as more indications are cleared. Not just an annuity. ii

Usage-based is not the fastest-growing lease type: fixed-payment operating leases grew 55% in H1 year on year, against 7.8% for usage-based. Sales-type leases: 23 in H1’26, against 16 in H1’25. i

Since 2025, property, plant and equipment includes the systems leased to customers, to support the leasing business: previously in operating activities, now in investing activities. i

Pricing: the EUP thread

To watch in the coming quarters, in 2027: whether EUP, the Extended Use Program, starts to push I&A revenue per procedure down.

If, through EUP, Intuitive gets incremental volume in lower-acuity procedures, spending there the pricing gains from premium procedures such as force feedback (FFB), DV5 and SP, the strategy can work if volume elasticity really shows up. So we may see a scenario where I&A revenue per case is stable or falling while benign procedures accelerate in H2’27. Here Intuitive is cutting prices where entrants such as Hugo and Ottava are going to attack, and where remanufacturers are trying to enter with their refurbished instruments.

The EUP challenge: forgone replacement revenue, recovered through volume elasticity, retention and laparoscopic share gains. The test: revenue per procedure against benign-procedure growth.

I&A revenue per procedure: $2,200 for Ion (Q3 and Q4 ’25 calls), $1,830 for da Vinci (Q2’26). ii Management lists Ion and DV5 growth as offsets to product cost reduction.

Benign procedures, seasonality, outside the US

Procedures outside the US are 38% of the total (37.9%): 340K of 900K globally. Benign procedures are 25% of those (Q2 call), about 85K, so 75% is complex oncology. Benign procedures outside the US are 9.5% of global volume, and they grew 37% in Q2’26 (Q2 call). ii

System placements are seasonal: up in Q4, down in Q1. More than 50% of da Vinci procedures are benign, and benign procedures are more seasonal than cancer or other life-threatening ones: up in Q4, down in Q1.

Competition, antitrust, remanufacturing

• Antitrust: no antitrust injunction can override FDA clearance for third parties.
• Restore Robotics: on March 31, ’26, clearance to remanufacture two more Xi instruments, after a March ’25 clearance for Restore scissors. Restore’s clearances cover 4 I&A out of more than 100 EndoWrist SKUs (made obsolete by the platform transition), all on Xi, while Intuitive’s growth comes from DV5 and SP. iii
• The clearance process costs $100K–$250K and takes 6 to 7 months per SKU. iii
• Intuitive still hasn’t followed the printer pathway (managed print services) or the aviation one (parts manufacturer approval), which bundle service and asset into one toll. Intuitive’s is only a system lease, with I&A apart.
• None of the competitors has force feedback. FFB clearances are expanding, with cardiac FFB instruments to follow: multi-year differentiation.
• Bariatric procedures were 4–5% of da Vinci procedures (Q3’23 call) and are below 3% (Q3’25 call): GLP-1 is not a threat. ii

Tariff exposure