ISRG · 10-Q · 2026Q2 · Full report

Gross Margin Drivers

INTUITIVE SURGICAL INC · 2026-07-21 · Importance 45 · Surprise 50 · No source text

Product gross margin increased to 67.9% in the second quarter of 2026 from 66.5% and to 67.3% for the first six months from 65.6%. Quarterly product-margin expansion reflected $27.5 million of IEEPA tariff refunds, lower logistics costs, and fixed-overhead leverage, partly offset by $17.7 million of additional quarterly intangible-asset amortization. Service gross margin increased to 67.2% quarterly from 65.3% because of tariff refunds and lower tariff expense, but declined to 65.2% year to date from 65.4% due to da Vinci 5 costs, incremental depreciation, excess and obsolete inventory charges, and higher amortization. Second-quarter service results included an additional $8.4 million IEEPA tariff refund, while amortization is expected to remain higher after the first-quarter 2026 acquisition.

Key facts

• Product gross profit was $1,642.9 million for Q2 2026, up 21% from $1,362.6 million in Q2 2025; product gross profit margin was 67.9% for Q2 2026 versus 66.5% for Q2 2025. source
• Service gross profit was $317.5 million for Q2 2026, up 24% from $255.3 million in Q2 2025; service gross profit margin was 67.2% for Q2 2026 versus 65.3% for Q2 2025. source
• Gross profit as a percentage of revenue was 67.8% for the three months ended June 30, 2026, compared to 66.3% for the three months ended June 30, 2025. source

Impact estimates