Intuitive Surgical ISRG · USD

SEGMENT INFORMATIONIntuitive is committed to advancing minimally invasive care through a comprehensive ecosystem of products and services. This connected ecosystem includes systems, instruments and accessories, learning, and services connected by a digital portfolio that enables actionable digital insights across the care continuum. The systems, as well as the instruments and accessories, are primarily developed and manufactured by the Company. During the years ended December 31, 2025, 2024, and 2023, domestic revenue accounted for 68%, 67% and 66%, respectively, of total revenue, while revenue from the Company’s OUS markets accounted for 32%, 33% and 34%, respectively, of total revenue. The Company manages the business activities on a consolidated basis and operates in one reportable segment.The Company’s Chief Executive Officer is the Chief Operating Decision Maker (“CODM”). The CODM utilizes the Company’s long-range plan, which includes product development roadmaps and long-range financial models, as a key input to resource allocation. The CODM makes decisions on resource allocation, assesses performance of the business, and monitors budget versus actual results using income from operations. Net income is also a measure that is considered in monitoring budget versus actual results.Significant expenses within income from operations, as well as within net income, include cost of revenue, research and development, and selling, general and administrative expenses, which are each separately presented on the Company’s Consolidated Statements of Income. Other segment items within net income include interest and other income, net, and income tax expense.The Company’s long-lived assets consist primarily of property, plant, and equipment, net. As of December 31, 2025 and 2024, 80% and 83%, respectively, of long-lived assets were in the U.S. As of December 31, 2025 and 2024, no individual country other than the U.S. accounted for 10% or more of these assets.

REVENUERevenue from external customers is attributed to individual countries based on customer location. The following table presents revenue disaggregated by geography and type (in millions):Year Ended December 31,U.S.202520242023Instruments and accessories$4,203.4 $3,626.4 $3,059.8 Systems1,581.8 1,122.6 865.5 Services1,030.6 840.4 763.3 Total U.S. revenue$6,815.8 $5,589.4 $4,688.6 OUSInstruments and accessories$1,815.5 $1,452.6 $1,216.8 Systems891.9 843.4 814.2 Services541.5 466.7 404.5 Total OUS revenue$3,248.9 $2,762.7 $2,435.5 TotalInstruments and accessories$6,018.9 $5,079.0 $4,276.6 Systems2,473.7 1,966.0 1,679.7 Services1,572.1 1,307.1 1,167.8 Total revenue$10,064.7 $8,352.1 $7,124.1 Remaining Performance ObligationsThe transaction price allocated to remaining performance obligations relates to amounts allocated to products and services for which revenue has not yet been recognized. A significant portion of these performance obligations relate to service obligations in the Company’s system sale and lease arrangements that will be satisfied and recognized as revenue in future periods. The transaction price allocated to the remaining performance obligations was $3.0 billion as of December 31, 2025. The remaining performance obligations are expected to be satisfied over the term of the system sale, lease, and service arrangements. Approximately half of the remaining performance obligations are expected to be recognized in the next 12 months with the remainder recognized thereafter over the term of the system sale, lease, and service arrangements, which are generally up to 5 years.Contract Assets and LiabilitiesThe following information summarizes the Company’s contract assets and liabilities (in millions):December 31,20252024Contract assets$15.3 $13.9 Deferred revenue$598.1 $522.9 Contract assets for the periods presented primarily represent the difference between the revenue that was recognized based on the relative standalone selling price of the related performance obligations satisfied and the contractual billing terms in the arrangements. The Company did not have significant impairment losses on its contract assets for any of the periods presented.The Company invoices its customers based on the billing schedules in its sales arrangements. Payments are generally due 30 to 60 days from the date of invoice.

COMMITMENTS AND CONTINGENCIESCommitmentsAs of December 31, 2025, the Company’s commitments include an estimated amount of approximately $2.53 billion relating to the Company’s open purchase orders and contractual obligations that occur in the ordinary course of business, including commitments with contract manufacturers and suppliers for which the Company has not received the goods or services, commitments for capital expenditures and construction-related activities for which the Company has not received the services, and acquisition and licensing of intellectual property. Although open purchase orders are considered enforceable and legally binding, the terms generally allow the Company the option to cancel, reschedule, and adjust its requirements based on its business needs prior to the delivery of goods or performance of services. Additionally, the Company has committed to making certain future milestone payments to third parties as part of licensing, collaboration, and development arrangements. Payments under these arrangements generally become due and payable only upon the achievement of certain specified developmental, regulatory, and/or commercial milestones. For instances in which the achievement of these milestones is neither probable nor reasonably estimable, such contingencies are not included in the estimated amount.ContingenciesFrom time to time, the Company is involved in a variety of claims, lawsuits, investigations, and proceedings relating to securities laws, product liability, intellectual property, commercial, insurance, contract disputes, employment, and other matters. Certain of these lawsuits and claims are described in further detail below. It is not possible to predict what the outcome of these matters will be, and the Company cannot guarantee that any resolution will be reached on commercially reasonable terms, if at all.A liability and related charge to earnings are recorded in the Consolidated Financial Statements for legal contingencies when the loss is considered probable and the amount can be reasonably estimated. The assessment is re-evaluated each accounting period and is based on all available information, including the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to each case.

INCOME TAXESIncome before provision for income taxes for the years ended December 31, 2025, 2024, and 2023, consisted of the following (in millions):Year Ended December 31,202520242023U.S.$2,283.8 $1,754.8 $1,251.1 Foreign1,027.6 919.0 707.8 Total income before provision for income taxes$3,311.4 $2,673.8 $1,958.9 The provision for income taxes for the years ended December 31, 2025, 2024, and 2023, consisted of the following (in millions):Year Ended December 31,202520242023CurrentFederal$235.6 $321.9 $315.2 State58.9 47.9 32.8 Foreign121.2 101.8 74.4 Total current income tax expense415.7 471.6 422.4 DeferredFederal(34.4)(157.7)(122.4)State(14.8)(23.9)(25.1)Foreign68.3 46.3 (133.3)Total deferred income tax expense (benefit)19.1 (135.3)(280.8)Total income tax expense$434.8 $336.3 $141.6 On July 4, 2025, OBBBA was enacted, introducing amendments to U.S. tax laws with various effective dates from 2025 to 2027. The changes introduced by OBBBA did not have a material impact on the Company’s effective tax rate for 2025.The Company’s provision for income taxes for 2023 reflected Swiss tax benefits of $92.3 million, net of a $67.3 million valuation allowance, related to certain tax assets recorded by our Swiss entity. In addition, a one-time net benefit of $67.1 million was recorded from the re-measurement of the Company’s Swiss deferred tax assets resulting from the Swiss cantonal tax rate increase enacted in December 2023 for years after 2024 as well as a Swiss cantonal tax rate increase from the discontinuation of the Company’s 2017 Swiss tax ruling, which was deemed effective as of January 1, 2023.A reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate for the year ended December 31, 2025, subsequent to the adoption of ASU 2023-09, including the amount and percentage of income before taxes, was as follows (dollars in millions):Year Ended December 31, 2025AmountPercentageU.S. federal tax at statutory rate$695.4 21.0 %State and local income tax, net of federal effect (1)35.0 1.1 %Foreign tax effectsSwitzerland – FederalStatutory tax rate difference between Switzerland and U.S.(57.0)(1.7)%Other6.2 0.2 %Switzerland – CantonalCantonal tax60.5 1.8 %Other foreign jurisdictions(35.0)(1.1)%Effect of cross-border tax laws27.8 0.8 %Tax creditsResearch and development tax credit(81.7)(2.5)%Non-taxable or non-deductible itemsExcess tax benefit(210.9)(6.4)%Share-based compensation not benefitted38.1 1.2 %Other(24.1)(0.

SHARE-BASED COMPENSATIONStock Plans2010 Incentive Award Plan. In April 2010, the Company’s stockholders approved the 2010 Incentive Award Plan (“2010 Plan”). Under this plan, the Company can issue RSUs, nonqualified stock options (“NSOs”), and PSUs to employees, non-employee directors, and consultants. Equity awards granted to employees and non-employee directors include a mix of RSUs, stock options, and, as applicable, PSUs. The 2010 Plan generally permits NSOs to be granted at no less than the fair market value of the common stock on the date of grant. Prior to 2022, NSOs were granted with terms of 10 years from the date of the grant. In January 2022, the Company changed the term of its new NSO grants to 7 years from the date of the grant. In May 2025, the Company’s shareholders approved an amended and restated 2010 Incentive Award Plan to provide for an increase in the number of shares of common stock reserved for issuance thereunder from 115,350,000 to 120,350,000. The 2010 Plan expires in 2035.As of December 31, 2025, approximately 22.1 million shares were reserved for future issuance under the 2010 Plan. A maximum of approximately 9.6 million of these shares can be awarded as RSUs.2009 Employment Commencement Incentive Plan. In October 2009, the Board adopted the 2009 Employment Commencement Incentive Plan (“New Hire Plan”). In April 2015, the Board of Directors amended and restated the New Hire Plan to provide for an increase in the number of shares of common stock authorized for issuance pursuant to awards granted under the New Hire Plan from 10,395,000 to 13,095,000. The New Hire Plan expired in October 2019 and, therefore, there are no shares reserved for future grants under the New Hire Plan. However, awards granted prior to the plan’s expiration continue to remain outstanding until their original expiration date.The New Hire Plan provided for the shares to be used exclusively for the grant of RSUs and NSOs to new employees (“New Hire Options”), who were not previously employees or non-employee directors of the Company. Prior to expiration of the plan, options were granted at an exercise price not less than the fair market value of the stock on the date of grant with a term not to exceed 10 years.Restricted Stock Units. The RSUs granted to employees vest in one-fourth increments annually over a four-year period.

LEASESLessor Information related to Intuitive System LeasingSales-type Leases. Lease receivables relating to sales-type lease arrangements are presented on the Consolidated Balance Sheets as follows (in millions):December 31,20252024Gross lease receivables$317.5 $393.4 Unearned income(14.7)(13.9)Subtotal302.8 379.5 Allowance for credit loss(2.6)(2.6)Net investment in sales-type leases$300.2 $376.9 Reported as:Prepaids and other current assets$100.9 $131.4 Intangible and other assets, net199.3 245.5 Net investment in sales-type leases$300.2 $376.9 Contractual maturities of gross lease receivables as of December 31, 2025, are as follows (in millions):Fiscal YearAmount2026$111.9 202790.6 202858.8 202938.9 203012.4 2031 and thereafter4.9 Total$317.5 Operating Leases. The Company’s fixed-payment or usage-based operating lease terms are generally less than seven years. Future lease payments (excluding non-lease elements and contingent payments related to usage-based arrangements) related to the non-cancellable portion of operating leases as of December 31, 2025, are as follows (in millions):Fiscal YearAmount2026$326.1 2027269.7 2028208.6 2029151.1 203083.5 2031 and thereafter61.9 Total$1,100.9 Lessee InformationThe Company enters into operating leases primarily for real estate, automobiles, and certain equipment. Operating lease expense was $40.9 million, $33.9 million, and $26.8 million for the years ended December 31, 2025, 2024, and 2023, respectively. For leases with terms of 12 months or less, the related expense was immaterial for each of the years ended December 31, 2025, 2024, and 2023.Supplemental cash flow information for the years ended December 31, 2025, 2024, and 2023 related to operating leases was as follows (in millions):Year Ended December 31,202520242023Cash paid for leases that were included within operating cash outflows$40.6 $33.2 $30.2 Right-of-use assets recognized related to new lease obligations$46.2 $88.6 $27.8 Supplemental balance sheet information related to operating leases, as of December 31, 2025, and 2024, was as follows (in millions, except lease term and discount rate):December 31,20252024Intangible and other assets, net (Right-of-use assets)$150.8 $136.4 Other accrued liabilities$39.0 $33.5 Other long-term liabilities131.9 112.5 Total lease liabilities$170.9 $146.0 Weighted-average remaining lease term6.0 years5.2 yearsWeighted-average discount rate4.6%4.

Our Board considers cybersecurity risk as part of its risk oversight function and has delegated oversight of cybersecurity and other information technology risks to the Audit Committee. The Audit Committee oversees management’s implementation of the cybersecurity risk management program.The Audit Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser potential impact. Our incident response procedures are coordinated with our disclosure controls and procedures to facilitate timely escalation to senior management and the Audit Committee for materiality assessment and, if required, current reporting.The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also receives briefings from management on our cybersecurity risk management program. Board members receive presentations on cybersecurity topics from our IT management team, internal security staff, or external experts as part of the Board’s continuing education. Six members of our Board have information security expertise, including Joseph C. Beery, Lewis Chew, Gary S. Guthart, Ph.D., Amal M. Johnson, Sreelakshmi Kolli, and Keith R. Leonard, Jr.Our management team, including our IT management team, is responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our management team is led by our Senior Director, IT Cybersecurity, who is within the organization of our Chief Information Officer (“CIO”). Our Senior Director, IT Cybersecurity has over 20 years of extensive information technology experience, including cybersecurity policies and standards, vulnerability management, data loss prevention, threat intelligence, incident response, risk management, and system, network, and web security. He holds a Certified Information Systems Security Professional (“CISSP”) certification. Our CIO holds a bachelor’s degree in Electronics Engineering from the University of Mumbai and has over 20 years of experience in CIO and other IT leadership positions at various public companies.

GOODWILL AND INTANGIBLE ASSETSAcquisitionsIn November 2025, Intuitive acquired a company that develops integrated robotics and artificial intelligence solutions to improve the accuracy, efficiency, and accessibility of tissue assessment during biopsy procedures at the point of care. The total purchase consideration for the acquisition was not material.There were no material acquisitions in 2024 or 2023.Pending AcquisitionsOn January 21, 2025, the Company announced that it has entered into a definitive agreement with the current Intuitive technology distributors ab medica, Abex, Excelencia Robotica, and their affiliates to acquire the da Vinci and Ion distribution businesses in Italy, Spain, Portugal, Malta, and San Marino, and associated territories. The transaction consists of an upfront cash payment of approximately €319 million, subject to certain closing adjustments. The Company expects to complete the transaction in the first half of 2026, subject to applicable regulatory approvals and customary closing conditions.GoodwillThe following table summarizes the changes in the carrying amount of goodwill (in millions):AmountBalance as of December 31, 2023$348.7 Acquisition activity— Translation and other(1.2)Balance as of December 31, 2024347.5 Acquisition activity22.3 Translation and other0.5 Balance as of December 31, 2025$370.3 The Company completed its annual goodwill impairment test and determined that no impairment existed. As of December 31, 2025, there has been no impairment of goodwill.Intangible AssetsThe following table summarizes the components of gross intangible asset, accumulated amortization, and net intangible asset balances as of December 31, 2025, and 2024 (in millions):December 31, 2025December 31, 2024Gross Carrying AmountAccumulated AmortizationNetCarryingAmountGross Carrying AmountAccumulated AmortizationNetCarryingAmountPatents and developed technology$192.8 $(182.8)$10.0 $203.3 $(185.4)$17.9 Customer relationships28.2 (27.1)1.1 27.3 (22.3)5.0 Distribution rights and others— — — 1.2 (1.1)0.1 Total definite-lived intangible assets$221.0 $(209.9)$11.1 $231.8 $(208.8)$23.0 In-process R&D6.0 — 6.0 — — — Total intangible assets$227.0 $(209.9)$17.1 $231.8 $(208.8)$23.0 Amortization expense related to intangible assets was $13.2 million, $16.7 million, and $20.2 million for the years ended December 31, 2025, 2024, and 2023, respectively.