Intuitive Surgical's operating margin moved -14.2 pp from 2026Q2 to 2026Q3. Revenue still set a record. For a beginner the lesson is simple: record sales and falling profit landed in the same report, and the cost lines tell you where to look.
Sales have never been higher
Intuitive Surgical sold more of its surgery robots and the supplies that go with them than in any quarter before. Revenue set a record in 2026Q3, the tallest bar on the chart. That was 21.7% more than the same quarter a year earlier. In 2026Q2 the same growth figure was 18.5%. Sales also rose 5.4% from that prior quarter, and over three years revenue compounded at 20.5% a year. The bars have climbed in most of the past three years, with a few dips along the way.
Data table
| period | revenue | yoy |
|---|---|---|
| 2023Q4 | $1.9bn | 16.5% |
| 2024Q1 | $1.9bn | 11.5% |
| 2024Q2 | $2.0bn | 14.5% |
| 2024Q3 | $2.0bn | 16.9% |
| 2024Q4 | $2.4bn | 25.2% |
| 2025Q1 | $2.3bn | 19.2% |
| 2025Q2 | $2.4bn | 21.4% |
| 2025Q3 | $2.5bn | 22.9% |
| 2025Q4 | $2.9bn | 18.8% |
| 2026Q1 | $2.8bn | 23.0% |
| 2026Q2 | $2.9bn | 18.5% |
| 2026Q3 | $3.0bn | 21.7% |
Profit went the other way
Now the odd part. Operating margin was 19.4% in 2026Q3. In 2026Q2 it was 33.6%. Gross margin actually improved to 68.4% in 2026Q3, which was 0.6 pp better than the quarter before. So the problem was not the cost of building the machines.
Data table
| order | category | amount | kind |
|---|---|---|---|
| 0 | 2026Q2 operating margin | 33.6% | total |
| 1 | Gross margin change | 0.6% | delta |
| 2 | Opex ratio change | -14.8% | delta |
| 3 | 2026Q3 operating margin | 19.4% | total |
The damage sat lower down. Operating expenses as a share of revenue jumped 14.8 pp. All in, operating margin The share of each sales dollar left after making the product and also paying salaries, marketing, research and legal bills. It is closer to the profit the business really earns. moved -14.2 pp over the quarter, and against the same quarter a year earlier the change was -10.9 pp. The company's own table labels one item inside those expenses 「Litigation charges」. My reading is that this legal item, which belongs to one quarter, explains most of the gap, rather than any change in how the robots are sold. One gap worth naming: a measured change in earnings per share The company's profit divided by the number of shares. It shows how much of the profit sits behind each single share., either against the prior quarter or against the same quarter a year earlier, is not available in this data, so the margin lines are what we can check. The figures here run through 2026Q3, the last quarter in the data.
Glossary
- gross margin
- The share of each sales dollar left after paying to make the product itself. Higher means the product is sold for much more than it costs to build.
- operating margin
- The share of each sales dollar left after making the product and also paying salaries, marketing, research and legal bills. It is closer to the profit the business really earns.
- operating expenses
- The running costs of the company below the factory: sales teams, research, administration and one-time legal costs.
- earnings per share
- The company's profit divided by the number of shares. It shows how much of the profit sits behind each single share.
The price tag is still the big one
What did the shares do? The data covers 3 trading days from the release, counting announcement day itself, so this is an early read. On announcement day itself the stock did slightly worse than its peer group, by -0.2%. Across those days Intuitive Surgical's cumulative abnormal return A share's move added up over several days, after taking out the move its peer group made in the same days. It tries to isolate what was specific to this company. was 2.5%, measured against a basket of 4 peers: Medtronic, Stryker, Boston Scientific and Abbott Laboratories. In the same window the stock moved a little better than that group once their shared move is stripped out. Before the release the same measure was -0.0%.
Glossary
- cumulative abnormal return
- A share's move added up over several days, after taking out the move its peer group made in the same days. It tries to isolate what was specific to this company.
- trailing earnings
- The profit the company actually reported over the past four quarters, not an estimate of profit still to come.
Valuation is where this company always stands out. The shares trade at 54.2x trailing earnings The profit the company actually reported over the past four quarters, not an estimate of profit still to come.. The median of its peers is 26.1x. That is a premium of 107.5% to the peer median, and the highest reading of the five names.
How many years of current profit do you think the share price equals?
Actual54.2x
It is 54.2x trailing earnings, against a peer median of 26.1x. My reading is that the market is paying for the growth record, not for this quarter's reported profit.
Show answer
54.2x It is 54.2x trailing earnings, against a peer median of 26.1x. My reading is that the market is paying for the growth record, not for this quarter's reported profit.
Zoom out and the year looks less flattering. From 2025-10-23 to 2026-10-23 the stock returned -18.0%, while the market returned 14.4%. The worst single day in that stretch was -14.1%, and at the lowest point the holding was -44.0% below its peak. Past performance does not predict future results.
Risks
- A one-off legal charge flatters or depresses a single quarter; the trend needs it stripped out.
- The peer basket is small and the companies differ, which limits the price comparison.
- Currency swings and accounting changes distort year-on-year comparisons.
Sources
- SEC EDGAR XBRL companyfacts, Intuitive Surgical, Inc. — data as of 2026-09-30; fetched 2026-10-24 16:57 UTC