How ISRG (Intuitive Surgical) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a medical technology leader like Intuitive Surgical (ISRG) makes money is essential for investors and anyone interested in the business of robotic-assisted surgery. In this post, we break down Intuitive Surgical's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick Intuitive Surgical Overview

Intuitive Surgical operates at the forefront of robotic-assisted minimally invasive surgery, designing, manufacturing, and selling the da Vinci Surgical System and related instruments. Revenue comes primarily from the sale of surgical systems, instruments, accessories, and ongoing service contracts. The business is structured around two main segments: Product Revenue (systems, instruments, accessories) and Services Revenue (maintenance, training, and support).

Revenue Breakdown

• Total Revenue (Q3 2025): $2.51B (+22.9% YoY)
  • Product Revenue: $2.11B (84.2% of total)
  • Services Revenue: $395.9M (15.8% of total)
  • Growth is powered by increased adoption of da Vinci systems, higher procedure volumes, and expanding installed base.

Gross Profit and Margins

• Gross Profit: $1.66B (66.4% gross margin)
  • Cost of Revenue: $842.7M (+26.9% YoY)
  • Intuitive Surgical maintains robust margins due to its scalable technology platform and high-margin recurring revenue from instruments and services.
• Most costs come from manufacturing, supply chain, and service delivery.

Operating Income and Expenses

• Operating Income: $759.7M (+31.6% YoY, 30.3% margin)
• Operating Expenses: $902.7M (+13.3% YoY)
  • R&D: $329.4M (+15.2% YoY, 13.1% of revenue) — Focused on next-generation surgical platforms, digital solutions, and expanding clinical indications.
  • SG&A: $573.3M (+12.3% YoY, 22.9% of revenue) — Includes global sales, marketing, and administrative support for expanding operations.
  • Intuitive Surgical continues to prioritize innovation and invest in growth while maintaining operational efficiency.

Net Income

• Pre-Tax Income: $855.2M (+27.5% YoY, 34.1% margin)
• Income Tax: $146.0M (17.1% effective tax rate)
• Net Income: $704.4M (+24.7% YoY, 28.1% net margin)
• Intuitive Surgical converts a significant portion of sales into profit due to its scalable business model and pricing power.

What Drives Intuitive Surgical's Money Machine?

• Product Revenue: Over 84% of revenue comes from the sale of da Vinci systems, instruments, and accessories, driven by hospital adoption and procedure growth.
• Procedure Volume: The installed base of da Vinci systems and rising procedure counts are key metrics—each procedure generates recurring instrument and accessory revenue.
• R&D Investment: $329.4M in Q3 2025, fueling innovation in new platforms and digital surgery, ensuring long-term competitive advantage.
• Future Growth Areas: Expansion into new surgical specialties and international markets, though some investments are not yet profitable.

Visualizing Intuitive Surgical's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A and R&D) taking the largest chunk.
• Even after heavy investments in innovation and global expansion, 28.1% of revenue drops to the bottom line.

Key Takeaways

• Intuitive Surgical's money comes overwhelmingly from da Vinci system sales and recurring instrument revenue
• High gross and net margins illustrate the power of Intuitive Surgical's scalable, high-value technology business model
• Heavy investment in R&D, balanced by efficiency in operating costs
• Ongoing growth is driven by procedure volume, system adoption, and expanding clinical indications

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FAQ About Intuitive Surgical's Income Statement

1. What is the main source of Intuitive Surgical's revenue in 2025?

Intuitive Surgical generates over 84% of its revenue from product sales—including da Vinci surgical systems, instruments, and accessories. The remaining revenue comes from services such as maintenance and training.

2. How profitable is Intuitive Surgical in Q3 2025?

Intuitive Surgical reported net income of $704.4M in Q3 2025, with a net margin of approximately 28.1%, reflecting strong profitability driven by high-margin recurring revenue and operational leverage.

3. What are the largest expense categories for Intuitive Surgical?

The biggest expenses on Intuitive Surgical's income statement are operating expenses, particularly Research & Development (R&D) at $329.4M and Sales, General & Administrative (SG&A) at $573.3M in Q3 2025, as the company prioritizes innovation and global sales expansion.

4. Why does [segment/division] operate at a loss?

[If applicable: For example, a new digital surgery platform], despite generating $XXM in revenue, posted an operating loss of over $XXB in Q3 2025. This is because Intuitive Surgical aggressively invests in R&D and market expansion, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does Intuitive Surgical's effective tax rate compare to previous years?

Intuitive Surgical's effective tax rate in Q3 2025 was 17.1%, consistent with previous years. This moderate rate is primarily due to international structuring and tax benefits from share-based compensation.