Intuitive Surgical (ISRG) Financials

Intuitive Surgical’s latest financial statements show continued growth and strong operating leverage. In Q2 2026, revenue increased to $2.89 billion, up 18.8% from $2.44 billion in Q2 2025 and 65% from Q2 2023. Net income attributable to common shareholders rose 24.2% year over year to $818.1 million, while diluted EPS increased 26.5% to $2.29. This reflects both stronger earnings and a modest reduction in diluted shares outstanding.

Profitability also improved. Gross margin expanded to approximately 67.8% in Q2 2026 from 66.3% a year earlier, while operating margin increased to 33.6% from 30.5%. Operating expenses grew more slowly than revenue, particularly selling, general and administrative costs. Research and development spending continued to rise, reaching $370.6 million, which may support future product and procedure growth.

Cash generation remains a major strength. Q2 operating cash flow was $1.06 billion, up 48.3% from Q2 2025 and representing roughly 129% of net income. The company ended the quarter with $2.76 billion in cash and approximately $5.87 billion in short- and long-term investments. Intuitive Surgical also maintained a highly liquid balance sheet, with total liabilities of $2.58 billion compared with $18.30 billion of equity.

However, investors should monitor the effect of working-capital investment, taxes, buybacks and debt growth. Inventory increased 21.7% year over year, faster than revenue, while accounts receivable rose nearly 32%. Financing cash outflows included $320.3 million of share repurchases in Q2, and long-term debt has increased from $365.9 million in Q2 2024 to $656 million in Q2 2026.

• Strong revenue trajectory: Quarterly revenue increased from $1.56 billion in Q3 2022 to $2.89 billion in Q2 2026, with Q2 2026 revenue up 18.8% year over year.
• Improving profitability: Q2 2026 gross margin reached approximately 67.8% and operating margin reached 33.6%, both higher than in Q2 2025.
• Accelerating earnings growth: Net income attributable to common shareholders increased 24.2% year over year, while diluted EPS rose from $1.81 to $2.29.
• Excellent cash conversion: Operating cash flow climbed to $1.06 billion, substantially exceeding reported net income.
• Large liquidity reserve: Cash, short-term investments and long-term investments totaled approximately $8.63 billion at the end of Q2 2026.
• Share repurchases support per-share results: Intuitive Surgical repurchased $320.3 million of common stock in Q2 2026 and has reduced diluted average shares from 364.1 million in Q2 2025 to 357.3 million.
• Low balance-sheet leverage: Total liabilities were only about 12% of total assets, and the company reported no preferred stock or commitments and contingencies in the supplied data.
• Continued investment: Capital expenditures were $112.6 million in Q2 2026, while research and development spending reached $370.6 million. These investments could support long-term growth but may limit near-term free cash flow.
• Investment portfolio fluctuations: The company actively purchased and sold investments each quarter, producing volatile investing cash flows that may obscure underlying operating cash trends.
• Working-capital pressure remains: Changes in operating assets and liabilities reduced Q2 2026 operating cash flow by $194.4 million, while inventory and accounts receivable grew faster than revenue on a year-over-year basis.