How ISRG (Intuitive Surgical) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a medical robotics leader like Intuitive Surgical 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 (Q4 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 as a pioneer in robotic-assisted minimally invasive surgery, primarily through its da Vinci surgical systems. Revenue comes from product sales (instruments and systems) and services (maintenance and support). The company dominates the surgical robotics market with recurring revenue from procedures and system upkeep.

Revenue Breakdown

• Total Revenue (Q4 2025): $2.87B (+18.8% YoY)
  • Product Revenue: $2.44B (85.3% of total)
  • Services Revenue: $0.42B (14.7% of total)
  • Growth is powered by increased procedure volumes, system placements, and expanding global adoption of da Vinci systems.

Gross Profit and Margins

• Gross Profit: $1.91B (66.6% gross margin)
  • Cost of Revenue: $0.96B (+24.3% YoY)
  • Intuitive Surgical maintains robust margins due to high-margin recurring instrument sales, scalable system utilization, and pricing power in specialized robotics.
• Most costs come from manufacturing of instruments and systems, supply chain for components, and service support infrastructure.

Operating Income and Expenses

• Operating Income: $0.86B (+17.6% YoY, 30.2% margin)
• Operating Expenses: $1.05B (+15.7% YoY)
  • R&D: $0.35B (+19.7% YoY, 12.3% of revenue) — focused on next-generation da Vinci systems, AI enhancements, and new procedure indications
  • SG&A: $0.69B (+12.2% YoY, 24.0% of revenue) — driven by sales force expansion, marketing for global penetration, and administrative scaling
  • Intuitive Surgical continues to prioritize innovation while maintaining efficiency in operations amid rapid growth.

Net Income

• Pre-Tax Income: $0.96B (+18.0% YoY, 33.3% margin)
• Income Tax: $0.16B (16.3% effective tax rate)
• Net Income: $0.79B (+15.9% YoY, 27.7% net margin)
• Intuitive Surgical converts a high portion of sales into profit due to scalability of its razor-blade model (systems as razors, instruments as blades), efficiency, and pricing power.

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What Drives Intuitive Surgical's Money Machine?

• Product Revenue: 85.3%+ of revenue / Primarily instruments and accessories used in da Vinci procedures, with systems driving initial placements
• Procedure Growth: Over 18% YoY revenue growth tied to rising surgical volumes globally, fueled by clinical evidence and training programs
• R&D Investment: Heavy focus on system upgrades and new technologies to sustain leadership in robotics
• International Expansion: Emerging markets as future growth areas, though not yet profitable at scale due to localization investments

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.[1][4]

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant R&D investments, 27.7% of revenue drops to the bottom line.

Key Takeaways

• Intuitive Surgical's money comes overwhelmingly from product revenue (instruments and systems)
• High gross and net margins illustrate the power of Intuitive Surgical's recurring razor-blade business model
• Heavy investment in R&D, balanced by efficiency in operating costs
• Ongoing growth is driven by procedure volume increases and system adoption

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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 85% of its revenue from Product Revenue (instruments and systems). Services Revenue contributes the remaining 14.7% through maintenance and support.

2. How profitable is Intuitive Surgical in Q4 2025?

Intuitive Surgical reported net income of $0.79B in Q4 2025, with a net margin of approximately 27.7%, reflecting strong profitability driven by high-margin recurring revenues 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) and Sales, General & Administrative (SG&A) costs. R&D investment reached $0.35B in Q4 2025, as Intuitive Surgical prioritizes next-gen systems and AI integrations.

4. Why does Services Revenue operate with high efficiency?

Services, generating $0.42B in revenue, supports high overall profitability despite scaling costs. This is because Intuitive Surgical leverages recurring contracts with minimal incremental costs, driving long-term growth—even as investments expand the installed base.

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

Intuitive Surgical's effective tax rate in Q4 2025 was 16.3%, consistent with previous years. This low rate is primarily due to tax benefits from international operations and share-based compensation.