Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, good afternoon. Thank you for standing by, and welcome to the Intuitive Quarter Four 2022 Earnings Release. At this time, all lines are in a listen-only mode. Later, there will be an opportunity for your questions. [Operator Instructions] And as a reminder, today's conference is being recorded.

like of the Investor I'd our over time, Head host, Relations, this to conference turn to At Mr. Brian King. Please, go ahead.

Brian King

welcome today, Guthart, Good call. Samath, and to quarter fourth afternoon, earnings our With CFO. me CEO; we our Gary have and Jamie Intuitive's conference

call risks These I our Actual Commission including XX-K today's results uncertainties. risks or materially those be on we are may mentioned begin, in XXXX. you implied comments contain expressed result like differ our would XXXX, Before deemed uncertainties Form October and in detail X, of filed and as inform Securities described recent to to Form that February and filings, on may XX-Q filed statements. XX, and Exchange certain a on most forward-looking from

found SEC our to not statements. undue can Our at Investors website. the are website be forward-looking through such cautioned filings SEC's reliance on place or

that website have Today's audio and will to this Relations page. financial be press Please on call website. under our Investor posted for section tables data intuitive.com Events at supplementary available conference our note our been release on replay the

finally, procedure And Jamie will XXXX. highlights clinical and earlier and discuss will results, described you our financial format outlook results, provide and consist quarter of press question-and-answer question-and-answer as will for session. highlights. Gary by followed operational Today's updated our the will I release fourth provide highlights with quarter's business a a providing our of host announced review and our session. financial a today, of present in will we

it turn will Gary. that, And with to I over

Gary Guthart

increase healthy for The full of for base existing year today. pre-pandemic the year was levels. customers joining were systems. XXXX. for you fundamentals and of concurrently growth and us the solid, our growth approached utilization Installed full Procedure QX Thank in business

in robotics and products through investments instruments, indication expansions. our flexible multi-port, and ecosystems development single-port accessories, product extended Our new digital

mitigated the partners supply operations year. our persisted through and the chain work fine the that teams Finally, challenges largely supply of

and as the general the and bariatric XX% Turning procedures. such saw to included Areas first United year. We benign in full for quarter States, procedures particularly surgery, cholecystectomy of the repair. hernia strength procedure growth surgery

Colon rectal data this outside US beyond of access. to products to our the market our the We accretive was Strong continued. performance. urology also growth global and procedure organization, diversification strategic in our ecosystems and trials, clinical growth attribute value investments and

Procedure declining through Regionally, the Japan, United and wave growth China the the November India States, hampered the in was starting of out year. in quarter end XXXX. progressively stood procedures with Europe in COVID by and in QX,

strength, period, SP Ion gynecology Korea. in Global XXXX. with the XXXX in moved compound both recovery compared procedures over showed three-year continued core with of annual growth XXX% with the XX% grew urology same growth its coming and of year, toward exceeding growth the areas majority their in and from procedure procedures XXXX, rates

capital placed XXX QX the we XXX front, in compared QX On with XXXX. systems in

X,XXX For systems with the in year, we XXXX. placed full X,XXX compared

and for was for in SP Our growth XX% for base rate XXXX. Ion XXX% installed multiport, XX%

additional for our programs we sustained strong for demand variable in placement now and capacity Ion in with our capital as capacity multiple Ion to and their hospitals indications. in demand expanding Overall, operating trends continue systems SP showed pursue interest for multiport several additional

organization and predictor SP flat for XX% incorporated X% System in by the in roughly year, measured QX and increased utilization for utilization learnings. for utilization multiport as important grew was demand X% our Ion. year-over-year is over future Utilization an however, of year the

third-generation the trade-in multiport grew on XXXX. finances, dollar population decline the the Touching impacted in the the by was of our X% systems. strength Revenue and in revenue of year of

manufacturing platforms and and higher continued commercial investments growth of our R&D reflecting of that capital global our by of guidance products, the footprint. support at the and end expansion landed capabilities, spend amortization our driven expenses expansion Our of our digital

capital have several care we to procedures supply systems the to have become using continue in standard scale. our we the company as been globe the an build own expenditures This several as increasing of investment is our countries. important Structurally, at industrial

have key robust capital-intensive technologies, instrument than allow of dependability, robust accessory customers. us a chain, market important supply in increased our pipelines, to our support business our vertically and make and serve digital investments bring technologies industrial These attractive a products chain years costs. supply lower We products and that more software The been develop past, ownership to and of product integrating imaging to and points. include at price more strategic investments more

through take to the enable also procedures, example, of efforts mind. to starts our I'd in our in Intuitive investments. the quadruple like our general a pursuit specific walk for in Coordinating aim moment with customers' those platform surgery. end to

systems for time. We over new functionality design addition all of our to allow the

Vinci our products. For new accessories, clearances, a our the da multiport model and X, instruments philosophy new enabled new adding generation platform, fourth da Xi strengthen and by imaging capabilities, software us new Vinci design has to this regulatory new with continuously

of a enabler discussed products which million in XXXX revenue $XXX our of surgery as These year in in the revenue ago. XX% with lot as are a minute of approximately stapling instruments well contributed growth our include the and growth key instruments, advanced general energy

fourth-generation clinical indications representative launch. to States in since United our platform its We added multiport procedure the XX

States spans for surgical now indications categories platforms United indications the multiport multiport and total over Our today. procedure in six XX

and Intuitive app. integrating launch training and Intuitive roughly significant smaller the since upgrades. have Xi of Hub My We systems next-generation routinely operating releases platform products, our XX OS We been reality Endoscope launched digital virtual our with fourth-generation software and including dozens improve visualization, Plus,

capabilities. and launch invest software expect in platform operating Concurrently, system generations enhanced our year. additional significantly and bring we Gen multiport this compatible We to X products new new of that

system For programs, multi-port we follows. as our development prioritize

focusing highest on product improved while patient of sensing dependability robot targeting quality. surgical precision, outcomes, Our is imaging innovation core often in the and improvement and priority capability instrument and through

analytic for the products for digital power, acquisition personalized to operating improve Next, learning we services team's room, analysis efficiency and care designed teams usability, including care for surgical skill and and programs.

treat can finally, flexibility that we post add and the systems per launch. platforms design to the to And to cost lower total ecosystems future with designed capability episode. we their patient Next,

time moment, any In more investment and substantial global current required environment, and technology we're typically and to the are require core making progress. architecture good we're at These often Given the market. architectures one given multiyear that cycles, developing new the design clinical system than human review. validate trials beyond in regulatory changes

do in start we we launch not As currently year, a XXXX. multi-port system this new expect

unmet based cost support ability We're clinical US. and has the on growth lung manufacturability, Ion. Adoption its healthy in on of improving iron rapid its Turning biopsy. products to been robustness focused need meet the to an in to

for in Europe, dossier green in a We have submitted also channel. Korea China's a review and regulatory

pandemic clearance at expect in clearance given this XXXX. time time in Ion health in adjustments We for the on the in We don't Chinese care China Europe ongoing a have firm related forecast system.

opportunities development applications. clinical the Ion conducting a into and extend Ion to lung. for advanced future clinical platform is research also strong other We're with indications in

our completing the focus pulmonologists body an thoracic While for outside we opportunity provide on what the value in to surgeons. and robotics started is lung, our offers Ion flexible

PMDA with has SP, obtained supported platform, da in Japan. recently indications single-port broad and Vinci strong in clearance Our has Korea adoption

first months. expect in Japan of We in SP installs the coming

in dossier our notified da Europe midyear to submit Vinci our Next, we on XXXX. to body plan SP

clinical indications indications additional regulatory been currently SP utility We're with So of indications surgery. the on some in requirements pursuing surgery share trials, United far, for XXXX we'll in two, feedback customer in established. and our for has on and we're for SP colorectal strong these thoracic information pathway prospective trials the IDE beyond these them required for are use Korea. as conducting SP more the clinical healthy In multi-specialty States, have and

new R&D, categories We're to ones. leadership portfolio in invest we development have continuing where expansion under to significant and existing resources support in the positioned into

chain Our reduction will product cost support capital increase investments supply industrial scale. to global and robustness,

front, growth a the we'll rate hard relative enabling pursue turn Recognizing in are economic targeting foundational to conditions forecast, XXXX. XXXX On and leverage making we're XXXX deceleration SG&A to of for in to functions. are fixed cost we some investments,

improve We forma pro in the and margins operating fluctuate the next then over quarters expect several to mid-term.

product increased platforms; and supply, excellent follows; in of by from expanded quality training, provision new that services indications as and access scale. through adoption and XXXX from country productivity outstanding pandemic of the pursuit of we as emerge for launches our and second, procedures In market execution; increased are priorities functions pursuit defined closing, benefit continuity for third, and commercial first, performance and finally, focused our our stresses;

Jamie, through take turn will in time finances who now I'll greater over our the detail. to you

Jamie Samath

remarks. on will GAAP A pro also and highlights of our performance performance GAAP our I in a between my later is prepared will basis. posted the pro afternoon. forma our non-GAAP website. our results summarize I forma Good describe reconciliation or on

release XXXX XXXX, I and XX% greater are press or QX three-year revenue procedures QX before compared in full annual detail. review of preliminary on and January to basis. XX% growth line our as grew a XX. our XXXX compound will by XXXX in describing performance year results briefly procedures with rate

over total grew due trading we placed to of the systems X% Recurring represented use which the the in to down correlated XXX ongoing year-over-year, the year. revenue population driven prior During our a decline by of field. of declining year, SIs systems of revenue, products volumes in XX% X,XXX and XX% at is customers,

adversely year-over-year X% grew approximately of point. by Pro increased challenges on reflected was approximately Total revenue forma impact supply FX, the revenue $X.X XX% inflation operating and chain together constant basis. and margin pro currency headwinds, X margin of of percentage XX% forma billion a operating and XXXX impacted several

During repurchased XX.X have shares, authorization billion. shares stock we to $X.X million remaining $X.X of or our our repurchase the billion approximately year, and a we of

XXX With Japan performance, in in by last primarily X% to higher the were trends XX respect XXX transactions year. and the fourth systems in compared than QX. placed trading XXX quarter, the last lower placed Turning transactions we There to capital than of driven customers trading OUS customers, we XXX were Brazil. as year. XXX recent quarter the with to systems, of

of US. which in of XXX base, As in were SIs end installed of are approximately the the XXX remaining QX, there the

continuing the to of generation we systems decline expect older trading in volumes field, the Given significantly XXXX. in decline

QX a fourth basis, approximately $X.XX last revenue of year. increase revenue constant currency from an On XX%. was quarter X% grew billion,

US rates a non-USD dollar For and weakened basis XXXX. basis, is the full total average XXX The has stronger on recently, revenue. of as represented approximately the denominated than result, a US revenue rates, in using in current year points realized revenue-weighted dollar XXXX, XX% currencies

reflecting statistics Additional the a in with placed revenue in last spending environment XXX decline we fourth and associated as follows: systems given the capital and than systems year, trade-in the macroeconomic XXX the systems quarter, of US by we transactions. placed cautious trends are lower customers, XX

an XX reaching XX with Current we high. X%, China Average by XX into systems XXX in last into Outside systems the XXX all-time XX included QX US XX into into into the placements compared and the system with system of Japan, compared XX utilization in quarter Japan, Europe, into and in fourth US increased placed Europe, XXXX. year. China quarter

XXXX, in remaining were end four there local that under XX are There and the of active of registered the systems now China current China. the in tenders As existing are quota. quota under they're in competitors

Leasing in the placements prefer last Delays last to by further the procedure of capacity customers acquired in in of a lease placements an under arrangements. QX driven will to primarily growth. constrain lease XX% quota and part with higher granting year. usage-based compared who reflected installed our the represented base in mix in The the mix and grow and of China was limit ability new for US quarter XX% increase

we the leases to expect fluctuate will last year. over million will to that selling quarter-to-quarter, time. continue $X.XX operating proportion of leasing under prices as compared While were QX placements system increase million average $X.XX from

mix mix of System by recognized of in higher fourth in XXXX. FX, offset Xi We placements. last of million lease quarter regional quarter partially and a were QX jewel ASPs favorable $XX the million revenue buyout impacted $XX compared by with million negatively a and $XX

levels. $XX On quarter procedure ordering and reduced compared as and instrument last per per last approximately Vinci approximately particularly year. procedure inventory patterns $X,XXX accessory approximately and impacted a procedure revenue negatively $X,XXX I&A year-over-year US approximately their customers, with China, basis, and negative impact FX in per $XX had da was a the by $X,XXX of customer

are placed Turning base In to and just placements XXXX, tripled systems is XXX arrangements. QX, lease as to XX,XXX in over of our we installed systems XXXX. XX now to system compared XXX to double operating QX we procedures of as systems, platform. which Ion to under Ion XXX Ion XXXX. In of XX The compared

compared during as providing the XXX% made app for quarter, usage Ion increased in and we X,XXX approximately Intuitive ecosystem, launch them of investments Ion we last of statistics. to the procedures year. their Ion quarter access Fourth My commenced da previous insights have our Leveraging real-time to Vinci users,

P&L, of XXXX quarter. Moving XX.X% margin on the of to compared gross the for XX.X% rest fourth with pro fourth of quarter quarter the XXXX for and forma the last XX.X% was

reminder, last matters. conclusion gross points tax of a included approximately As one-time a the of basis favorable relating to quarter's benefit margin certain indirect XX

was margin future of growth. Pro lower last manufacturing Higher revenue increased relative primarily to not The stronger fixed forma than related quarter. costs did was a and given to environment and supply QX last year, in indicators improve to inefficiencies the health costs US component inventory challenging and of supply due compared combination for dollar the as to investments reflect relative higher gross revenue, chain environment and fixed pricing.

quarter increased higher higher travel customer training increased last increased operating expenses XX% forma driven related project headcount, Fourth and activities compared with pro costs, by costs. year, R&D

expenses quarter couple to contribution in and not of a Fourth $XX years XXXX XXXX. the repeat did Intuitive for can operating their Foundation, the next efforts included support million which

are we our factory in employees half procedure of were employees additions to last quarter. headcount QX to added quarter the compared about the which Mexico moderate at instrument to a than with More continued increasing XXX increase employees QX we in pace in net in net of XXX in production staff support growth. of approximately The

to relatively this a SP our in in pace expenses we will planning to In operating in trials. in Ion, and investments in related are given leverage our clinical we operating we are expenses provide growth stage capabilities call. XXXX significant earlier XXXX, Brian slowing advance While robotics next-generation our our opportunity the outlook our of balanced functions, and and later digital. in for for the enabling hiring expect increase pursuing expenses

expenditures forward $XXX million the $XXX facilities for significant capital $X manufacturing we were make expect to two-thirds be growth million, to expenditures and several expenditures. of a will plans for our we of As years, which in capacity. expand we over Capital look to planning range next are capital XXXX to approximately our XXXX billion,

in platform production proprietary for capacity of plans China. investment are low-cost and California in manufacturing building Germany, da Georgia. advanced our manufacturing new Bulgaria capacity and endoscope domestic Vinci Our and products development include in facilities Xi a facility in Internationally, Ion for we new systems increasing manufacturing the production product in establishing

will of across be expanding footprint low-cost in to We our our high-volume, also of site all Mexico the growth instrument support platforms. procedure

consolidate in we hubs, manufacturing surgeon campus as our hub result, allow capacity. expense in our and Coast East multiyear and to investments as Atlanta, outside headquarter are technology while XXXX. centralized significantly will These more manufacturing of And and training, into our increase development to a California such just co-locate we expect investments. Sunnyvale, depreciation us increase These larger in XXXX

primarily exchange interest losses the due higher remeasurement $X.X prior income. quarter, of income the and forma for Pro lower in to from other QX, $XX.X than sheet higher balance was million million foreign

year. associated with effective million, $X.XX geographical than primarily result the a $X Fourth XXXX quarter per as quarter forma $XXX the $X.XX pro tax share lower more mix fourth discrete matter. and forma of a prior fourth share was of the tax pro earnings net rate or foreign compared million of a for benefit quarters, million XX.X%, favorable quarter last per Our for $XXX was with income or tax

was fourth $X.XX I of XXXX GAAP quarter quarter million share for million results. net XXXX. of of our net or for compared GAAP with income $X.XX will $XXX per the per share the or summarize now GAAP income $XXX fourth

outlined pro with tax GAAP on gains and and and excess website associated our stock and amortization and net benefits investments. strategic include income charges quantified are stock-based adjustments compensation, employee employee litigation The awards, on of forma between intangibles, losses

reflected $X cash expenditures, ended and share operating partially and cash and cash offset $X.X $X.X the with billion in the activities. sequential billion investments QX. investments by compared of at capital of reduction We The from with end repurchases year billion of

highlights would XXXX. that, outlook over our it provide will like discuss to to with Brian, who clinical and And I for turn

Brian King

Thank XX% annual you, procedure three-year year US the procedure and Jamie. growth a in growth on was growth increased XX% of outside compound the growth XX% and full Overall comprised of the XX% for was XXXX basis. growth Overall US.

quarter to US basis, a fourth year a three-year XX% the rate procedures was of the growth of year. quarter US, to impact last XX% year-over-year, US compound grew On XX%. a last the in XXXX given for ago, compared December In fourth quarter. the comparison XXXX The annual and favorable growth growth procedure reflected Omicron variant XX% the quarter of procedure

quarter US, XX%. to fourth Outside year-over-year, quarter. XX% of XXXX for was approximately of growth procedure three-year fourth On basis, a the compound growth last compared volume grew quarter XX% XX% annual procedure the and

quarter growth Turning the and Procedure in outside regions Germany categories. was surgery to urology growth Europe. noted, led strong and in strong by the in of UK, gynecology procedure was general Italy. growth In

in UK, colorectal hysterectomy. Specifically surgery strong early-stage strong in experienced continued and growth we growth in the

Asia. Turning in continue and India in to growth experience Growth notable of to was be strong and strength China procedure solid, to growth early-stage continued and with growth. capital Japan. Taiwan in outside healthy Korea Procedure

was resection newly as stage growth Japan, the the reimbursed led with Japan general were most noted in quarter. XX in with a also by procedure in nephrectomy Jamie hysterectomy and Overall single surgery, systems for in placed growth strong country, and earlier, in the In colon quarter early procedures. urology

in the we fourth the quarter, observed midway China, procedures. through decline In

decline a were once procedure Towards hospitals was increase Zero-COVID volume cases COVID the end of the in as the saw quarter, dealing in with we removed. significant policy

year-over-year modest a decline result, QX. a procedures in experienced As China

calls, recently published studies that our quarter Now clinical side turning to we be on of we to certain deem notable. these Each highlight business. the

we the of more stakeholders the a have to all understanding published gain evidence, encourage over the extensive scientific of of years. to studies that body thoroughly detail complete review been However,

adoption Surgery US, one surgery for still general XXXX, surgery has Society of of severity and for released or guidelines been XX, or absence Health from in While in bariatric the regardless robotic-assisted the Bariatric major the for metabolic Metabolic to that XX of of Federation for early the stages procedures the and Intuitive. Obesity bariatric International In in and the and Institute recommended Metabolic American National the Surgery fastest-growing October XXXX MBS, to lowering presence, surgery, comorbidities. BMI Disorders the of updates of

minimally These robotic'. guidelines 'MBS evidence-based is 'MBS all for preferably laparoscopical now most And surgical that is the that, invasive performed approaches, note across effective obesity classes.' treatment using BMI

In Barley another analysis Wayne Luke's in between XXXX identifying US Bethlehem, procedures from the the from the bariatric St. Hospital XXXX. recently analysis, database University NBA published a SIP MBS Dr. and proportion of Pennsylvania, performed in descriptive

care and robotic a Using up our to proportion in advanced of found approach surgeon robotic-assisted instruments minimally to an new the of forward We guidelines. year. threefold or continuing even per care a they in We the training of greater for invasive difference population robotic-assisted surgery the provide as bariatrics. surgeons support high-quality in to and to are portion MBS under believe various laparoscopic cases look drive adoption helping teams robotic and investments their

surgeons included XXX rectal cases in behalf the multicenter low Fang from Shanghai Lancet. impaired rectal cancer across study short-term Dr. approach. performed by and and each and by A robotic-assisted in on XX in the for from Group, RealStudy a study hospitals with of published in recent trial controlled China, approaches middle experienced laparoscopic approximately cancer This randomized University Fudan outcomes

a macroscopic positive robotic-assisted With rate in well with the a was as the margin respect of very rate X.X% as lower complete to X.X% resection. of operative group higher patients outcomes, circumferential

laparoscopic conversion reported patient of intraoperative open. A a the Furthermore, to was arm of higher experienced higher group. rate in X.X% laparoscopic complications also rate X.X%

with patients the X.X% the lower or performed had X Postoperatively, X% robotic-assisted gastrointestinal Notably, perineal a in one-day abdominal of shorter as an stay were rate higher. resections robotic in arm the also well Clavien-Dindo postoperatively of as of approximately a length postoperative faster less complications group. recovery

trauma than middle In summary, that for surgery better that with and Robotic low surgery conventional resection less surgical laparoscopic outcomes surgeons and the better rectal postoperative experienced authors quality short-term resulted by suggests recovery. concluded in cancer,

now with to for turn financial our will Starting XXXX. I outlook procedures.

anticipate assumes we choppiness throughout The a hospitalizations year. the the within growth with XXXX, range at hospitals low For staffing year of of full procedure and continued globally end to range pressure XX%. XX% COVID

diversified and staffing, At with timing In or the of addition, assume challenges range, high of the to does general hospital we capital in supply disruptions in at COVID significant assumes urology no China capacity and what the material, with significant range end quota. uncertainty the new reflect similar beyond surgery US chain not significant impact of continued XXXX, constraints growth assume US. it of ongoing start in outside new pandemic. the The the we from experienced the COVID growth the and throughout

being COVID China, with XXXX we weakest in uncertainty experienced have deductibles of with the first patient quarter timing the seasonally seasonal are as pandemic, before the reset. expect we the Beyond in procedures quarter similar as

have factors. system to and establish previously, based product procedure reimbursement can capital from robotic competitive to revenue, economic including substantially expand hospital cycles, and many we period government policies, spending ultimately vary or are respect sales driven sales mentioned hospitals factors, health demand, quotas, care Capital capital catalyzing With capacity. cycles, as cycles national period upon by to

gross Turning profit. to

mix profit gross to be expect XX% of lower was new pro chain our within gross greater platform. products, forma full infrastructure we impact in the margin higher and net revenue. XXXX of higher pro forma pro reflects The of XX% our XXXX In XXXX, XX.X%. costs, profit Our of profit from in a forma estimate margin and margin year supply gross investment particular, costs, Ion

rates currency depending profit of procedure the gross vary fluctuations on in competitive largely and quarter-to-quarter Our trade-in pricing. and margin will product, impact regional potential and mix volumes, mix, foreign actual

US operating reflects support markets regulatory digital between operating along platform growth continued operating In grew forma and capabilities, the XX%. pro clearances growth and products, into X% be our clinical operating expense In XX%. to trials. our forma spending expansion to we and expect outside expenses to of XXXX, pro expense expenses. with to Turning investments XXXX, The advance

to million expect to non-cash million between range compensation stock our We XXXX. $XXX in expense $XXX

comprised income expect million We $XXX of income, other total million between which is XXXX. interest to in mostly $XXX and

income tax, forma in With income rate XXXX, was our tax regard to XX.X%. pro

we income. forward, and between XX% be of pro forma tax estimate our we XX% rate look As XXXX to pre-tax

our concludes prepared That comments.

We now call the questions. will open to your

Operator

first Robbie comes JPMorgan. ahead. from Please go today Marcus, question Our representing Instructions] [Operator

Robbie Marcus

Appreciate Thanks Great. for to than taking market the in it. OpEx Maybe taking start, that it and through to questions. cycles the the better but longer robot. expected, bring lot a to get regulatory with balance came guide with a new

exactly So maybe about talk you could what longer? is taking

trials come Are global be specific done are had this in to maybe being now of required? longer a the is are time, are markets lengthening past taking robot? there certain that to And new that that with or regulatory there

Gary Guthart

right. Robbie. All Thanks,

I been over sharing with think, now. quarters we've you several

technologies indications, all way many been not but core many markets, of playing of probably has every ago, of them, years we've seen new one, and four In the changed single in through. data terms but requirements. new the additional That

six that implications much come changed that. clinical work. environment like some so you our has and period, ago SP, trials, in requiring see not the things would or it's five And that So prospective of market just human have the they're to years over differently SP that

really technologies SP. indications what That's and It be. has not are to the unique what with do to new underlying might

of relative true. prior systems is that playing to iterations and think That's through I features. So

Europe in it Certainly of country there. the with seen United varies the European requirements we've and over kind regulatory data then increased from in the by States, changes years,

question ask for follow-up one. I'll OpEx, of Jamie terms let on you In a perhaps that

Robbie Marcus

good to up rate in OpEx, here, CapEx Yes. I'll OpEx the seeing spending where Thanks. on maybe is the there versus from? And a the follow SG&A growth Jamie, where and And you're decrease tie to year-over-year lower investment R&D? future. is because coming there the in Maybe talk for

Jamie Samath

Robbie, and we're within functions It's Yes. that the of across fair, the investing areas the company. differentially investment

and being obviously, to for clinical execute additional gaining in opportunities technology. of by We're And we're focus, growth there. expenses markets to clearances. looking indications to we respect operating to our XXXX want priorities focused to some Our areas with the expand geographical and advance drive

pursue of what us Gary referenced SG&A, in that's of us way headcount some as two, from motivated subsets year or over, growth there Within described, perspective, as described. G&A previously the that, the see which some has has say, the headcount are leverage the partly that by to we've opportunity we've expanded is headcount. functions you let's last R&D to generally, And and as and gives an sequencing, moderated were and investments in our looking that absorb

there's and look So differential similar and R&D next R&D. of investment grow to rates SG&A kind year. at relatively I SG&A at aggregate, likely within they're in If

Robbie Marcus

Great. the questions. I you appreciate taking

Operator

Biegelsen Fargo. the ahead. to go with we'll line Then of Wells Larry go Please,

Larry Biegelsen

at Good afternoon. your one Thanks today Gary, you question. for taking the scale JPMorgan. comments and your system -- that new made industrial comments One, on the on

system talked and you requiring technology core So in about often changes the launch a multi-port clinical trials that you XXXX. won't

trial new market? start a clinical and outside is the the system you XXXX; question even in my developing publicly A, a will US, would you trial, disclose start say, in clinical if you and B, Gary, a if did trial were So that a

Gary Guthart

we of publicly SPI or our so Across disclosed there otherwise. whether where places -- it's in are systems, normal rules. all some are of for is those answer all And trials the have sorts we reasons, sorts per doing places

reasons, we try For don't detail competitive to position the much, going forward. too and take we'll them that's

Larry Biegelsen

term scale recently. implications enough. that Intuitive industrial -- financially? And a talked you. for Fair What the are the exactly? And you you a mean Good. what lot Thank used lot Gary, does about

Gary Guthart

on I'll side. finance on mean help detailing to me ask does take I'll and it Jamie the what

going One things the integrated that's into in becoming we is countries. of well that are on many several surgical practices

a responsibility. opportunity us great for I and serious that's think a

robustness As want sure last supply and supply to chain that in things, we regard we've stability years that chain with have integrating seen vertically -- where the making of we can. couple other we

we've We lower can doing higher us it that We of that. robustness. plan that gives us to done. think been for lot work imaging have the robustness. that It allows gives and We both quality. pipeline us A to the cost customer

those think core imaging, but instruments only in good and we not true And are some That's and technologies in long-term investments. accessories.

So, been really positive. that's

another I and the I business is product support on that, single-port the and that those things for place -- multiple digital architecture. what think our is supply that's world. and is can going the multiport, but one mean, Ion, It our products, by tools And chain multiple architecture, There's seamless can also our of and I platforms. by digital around is not in just that can powerful mean digital our integrate products countries architecture where company that platforms support

capability, us lower a for take gives some for a can and the Those be technology. our and customers it serve our some customers. in advantage, to that allows investment us So, cost planning core and great total things quality leverage gives it cost forward and the us to

For help can in example, our build countries. multiple we in base, But care that It's manufacturing so in opportunity. global digital, a products. opportunity facilities, support standard can to it's be in it of the

I over and help the takes for customer are play time. give? clear. robustness think long-term any clear some durability that the are Jamie, But out advantages cost that I quite the and you'll think quite advantages company

Jamie Samath

billion I the that we've is million just say the of to linked $XXX industrial XXXX. would scale to capital described, $X industrial operating investment in -- plans expenditure

automated And on straightforward. and for highly relatively that's we calculations both are run customers. I'd large, advantage the investments those our there ROI advantages just add scale and that having for real in think us an financial are factories at

we incremental drive can margin calculations essentially from growth. return they're dollars and gross relatively So, the straightforward are the

Larry Biegelsen

very right. All Thank much. you

Gary Guthart

Thanks Larry.

Operator

Steed go to America. Please of Bank of ahead. with go Travis we'll Next line

Travis Steed

for thanks the question. taking Hi,

around multi-port Gary, about see platform more customer could or XXXX, hardware, that's something I you on mean, just upgrades to upgrades that with bring material curious, software you down? but but the no upgrades in things you're if or capability Just we curious how new Gen the thinking imaging X, mentioned mentioned, mostly procedure

Gary Guthart

Yeah.

We continue into to X. add Gen capabilities

We expect well. so to year do as this

Some of it instrumentation. will be in advanced

We developing are we're that of -- some and we and think X. on work going both capability systems imaging energy improvements doing in side time on Gen nice capability our core in be the some side, over there's the hardware software some around the to

we progress. make So to continue

Travis Steed

you, And any just that on on funnel to while early Okay. But to if not the XXXX. have comments then saying capital in anything or XXXX come I not front?

evaluating of, time think frame are February when I kind year, customers is budget. last January,

sure things want So capital I the with funnel? just to seem fairly stable make

Jamie Samath

are On the cautious. macro given is, say inputs relatively I'd capital from sense is that are customers funnel the side, our still what they

bit still And quite shortages rates vacancy for bit in have pre-pandemic they're a hospitals. costs, still improved, levels there's I macro. a for staffing uncertainty quite of think labor terms the than example, in of while, worse

So a cautious careful they're uncertainty. they and perspective given are financial being macroeconomic from

I'd stays of of But where relatively our nice the half terms are in high seeing growth capital wouldn't has beyond in their anything da I robotics Vinci in a that think the specific programs. in of experiences I there's their second highlight terms budgets. they're as priority say customers XXXX been XXXX fact cautious, outlook.

Travis Steed

right, you. Thank All great.

Operator

Stifel. line from Rick will next of question our And the Please Wise come ahead. with go

Rick Wise

for to at or a mean, about not getting Hi, XXXX. in talk it. not? know new history, and with us you always thoughts clear -- afternoon. -- entire Gary. thinking Good next ready of I you're thinking level, your why -- you've off so i.e., a maybe your being about new you for But the obviously, high for the system, always Starting the about company thank could you're about system, about why timing what's your I

how yet, to competitive technology capital you the But isn't more or it wanted ahead is makes go have on about this is this are year. ready positioning external environment you the that difficult or you -- hesitant to

about might what that understand Just and trying future? to it your about the thinking say

Gary Guthart

products terms is and us you to that Thank experience for and of of we set research, help basis, in deliver That's do we primary in thing. the of And technology things that services can the for that That we can outcomes And how training can usability of would effort, thing design think the all studies, about you and for that what is that patient center. front care outcomes. do mostly the make happen. terms We and they what the of terms changes teams in Yeah. the do progress. surgery the expect question.

advance to reasonably as And as we given environment in. then that we that can, quickly try we're the

too doing imagine is capital somebody that you going We -- be. we think hospital to timing don't We about environment of not much can motivation. that, what don't highest my do the is perfection

and market, perfectly environment the sophisticated by. enough to to time are with is I complex we're not to these regard macroeconomic enough bring things think it to that really what trying driven

regulatory things think technologists things closely closely with and then We that closely with a down spectacular. we find really course, key And very those work that our We are what think, work do work we I the once pathway, to understand who are. the work requirements we with are, the we world bodies matter. matter, around to needs their and pathway. understand we And of customers whether

impacted as items other that capability, disruptions that happened ripples production say new have but of prototypes to well, product that not procure forms only and puts last for into what development people the have I because and of in waves supply three years focus. have impact kind can chain

little in bit that too. there, a there's So of

Rick Wise

on could just want China just you. a the as your thoughts expectations. your expand And And or as I to new very make flow as just tender related we're year Thank Thank much. or understanding you, about carefully to thoughts you follow-up, further recovery particularly understanding all if unfolds? procedure sure quota your embedded I'm comments,

Jamie Samath

Yes.

we November. in December, saw we're think impacted in January, be QX more China to continued in therefore, perhaps got procedures what and is, China That far least I part in procedures in early at has saying expect, severe we so of beyond. the and impacted

given in And for it's to is relative us unique to predict, China difficult the I policy they had. the Zero-COVID have relatively think that situation

and might how laid as reflected that guidance specific in provided. predictions not procedure we recover. how when we're any Brian that's out So to that the making

quota the kind quota more. a in year. year particular have quota, third third have in we're Separately, don't the been any again might historical on the two come. nothing We a as period, reference, insight use of of the quotas new as when to issued last new We that only

Rick Wise

Thank you, Jamie.

Operator

will Please, ahead. Taylor go Jefferies. be question with from Matt the of line next our And

Matt Taylor

the taking China. for Thanks Hi. question. I wanted to on one ask

the little local for a about talked quota any about talk flesh I some you refreshing wondered out the insight new You are kind bit uncertainty much could be? and then competitors tenders. the then, that and local for and if that And how could could for when have of competing in will the flavor think quota compete to how a you give China you the and competitive competitors beyond? us be with tenders into you

Jamie Samath

I so take is care far strong. robotic feature use of that and surgeons And has and products would that, set capability our say demand view, the technology about just China, if a long-term mid- in experience been quite for underlying the they that you there.

received Again, it to any last to saw that quota. the we particular have ability the we timing one, but than previous of be respect insight quota have larger again. don't was We predict with higher we and size will no

to So love able you second But Matt? clarity give that. part what's the be we'd to of your greater than question,

Gary Guthart

take Why that local don't little competition a things what I about kinds we're seeing. That and was bit one? of

I natural competitors First, think expected. be and in of the entry China should is

people this market probably how about for net also. more advocating over quota. people in in a value therefore, the probably a for think That's net it's positive market, ways, development think it's I of terms the in of some the time, positive

this capacity seen very world And the near-term, early different systems around things value-based than the to the tend a lot of or The that of and the to on. sense, not be middle with new some is we're early than going markets, see In entry feature-based entering. everywhere setting of a lot are, around a trials, early there early, that in things late. some early clinical competition, is the indicative around different of we've placements, of lot up

your of wave down, core to competitive the systems look after dynamics you a that then goes it see more out, and then what clinical putting trial And starts through like. settle little bit

really China competitors. innings in we're and we're be expect I seeing in the what assertive. to with really, them So, early active

Matt Taylor

Okay, you the clear. color. for Thank

Operator

Next we'll Mizuho line representing the Please Group. go of Anthony to ahead. Petrone, go

Anthony Petrone

overall on One, in as the just a pricing to here specifically multiport just trying follow-up US. the relates On system it on volumes, pricing, the update then and understand on Thanks. dynamics to the here. procedure

as to a there's relates there's cycle. costs heavy inflation, R&D, CapEx have higher We input it and

higher the hand, robot. So, Intuitive we one hospitals NextGen constrained on you through can have, model. obviously, push that sort and for on licensing somewhat other of, pricing has a the the But now here side,

seems BMI deal. a influence So, XX% like guidance? think elongated the next-gen contemplated on the then big when strategy to lower quickly just regulatory XX procedure about XX% And to pricing we does guideline, the robot? the new it Is how the Thanks. cycle, in threshold, an procedures, that on that XX,

Jamie Samath

products that our with in our portfolio, seeing you costs to pay prices our wage sticky. What Just comment only is we suppliers, gone have current staff. we're on pay They costs I'll the the the core respect as up, described. production chain, pricing, looks we in and supply

the continue respect decisions We we've would process. on something monitoring but any There's process that ongoing routine made through with we to point it's specific have carefully highlight pricing, existing a we're relative We'll pricing at to use we that basis. that processes monitor to this we that have. an nothing that

determine the might have early for on effect, guidelines, terms anything, of really and that BMI in to surgical With I your to it's bariatrics change in think term what question bariatrics. total respect if the

provided, XX% to wouldn't in I XX% we there's And it guidance quickly. and that the to move nothing so reflected that therefore, expect

And through for to even undertake -- there by go become to there kind guidelines. with this of change way, they in have they set bariatrics, that are eligible of the real are before a respect with patients in protocols surgery, activities

Gary Guthart

I'd Maybe and a tiny bit pricing margin. add on

On all that's and our customers the pricing cost sure make across of to value. for matched side, way the the total we look ownership

routinely, do global then bring is and by we look. as what country. Jamie pricing that, a It's the it that. we value said, and We that the do does what's So

on it's we're some whether to in those. understand design point, We think And from sticky. confused the With of are or about of regard I inflationary in we're of some or have, they're those opportunities. other pursuit scale Jamie's margin, to or here. where or we that have go whether pressures the what don't levers production you,

Some little of a them while. take

control better So us the factory cost those are some we're the of over the automation of about making, some give things about, that some we of automation investments talking we’re that of time. talked

we're or guard changes off caught cost don't of some I really confused the so of And think by the influence.

Anthony Petrone

you. Thank

Operator

a Please RBC. ahead. question with the go have from of And we Singh Shagun line

Shagun Singh

Great. Thank the taking you for question.

one clarification then Just and a Ion. on

could be helpful. on XXXX, at size you but On a something XXXX and clinical the Just looking the the of line? color time to we a expect if XXXX, new any et or depending trial would cetera, not in we system, are you beyond preliminary have fed launch said initiate

expansion then what provided in And well look the to what, lowering in the call to into that of any the kinds system? on achieve cost talk different advancements did you could treat, of, you new you as allow kind as beyond about on color total or the Any what procedures.

I that And just wondering full for progress little if was bit of also you're a PRECIsE expansion impact the results. talk set then Ion, you and the of the taking indication on on questions. technology? about you And two-year any Thank the could making expected the ablation

Gary Guthart

where as in period, we're markets as opportunities to SP what new have to to multi-port see on to our create expansions platforms for detail and With We'll open talked Okay. it about beyond indication unfolds doing for to opportunity discussed XXXX us, We'll what we opportunities we've a Nothing our I bit across further regard detail little to you already. already. -- we SP about. for procedure in we're which more that set. excited

front, that about the asked they in anything outside the a that. reflected has I tier supplying the that the on that hoped Ion that been of study finding outcome On data. on it's that we're don't delivering usable that Feedback seeing Folks you it's are field adoption. we it more promise. and detail had to the is have specific PRECIsE the bit little from have

that. with pleased we're So

excited quarter, We're innings of regard to we're the engaging last it. we at customers and just looking we ablation, said the trial early With data. by as Europe in -- are at

time. indications get that we several as experience long the time. are there more in think we'll those detail more pursue I more over We'll and

but There be those are started. we clear. the think outside current We they're are the not finish of We focus. really I too, interesting, opportunities to think want areas long job

thoracic with engagement pulmonologists surgeons. great have and We

go. structure we have move And We other to it our more make the easier, indications that, move after then opportunity then the we'll focus and robust from have ever And we'll products to to the earned step. next continue do margin We're opportunity that. them going want lung. where support on to our to to to to in

Gary Guthart

continue thank interventions. there opportunity improve question. closing, So for acute That last believe the questions fundamentally you is a In and to substantial there. we was our and surgery durable to

outcomes; physicians more teams care and with for of experiences customers for teams Our care to hospitals, total continue pursuit what predictable and, teams; quadruple better, ultimately, cost better aim: work their a patients; the patient closely experiences have in of our termed care. better lower

get better, profoundly you to diseases and less surgery back identified months. care again is We believe acute their that a in teams, care we care Intuitive, and their of We At invasive human. your and this talking three value to Thank on and so needs and with envision can quickly, future for patients in matters creation foundationally look where forward is environment. you most. understanding patients and flows what support treated of It extraordinary are journey. earlier for respect from

Operator

and you conclude the thank today. gentlemen, does our Services. participation Event AT&T ladies your We for that using And conference for and

may You disconnect. now

Intuitive Surgical (ISRG) 24 Jan 232022 Q4 Earnings call transcript