Got Intuitive Surgical, got Brian King, Vice President, Treasurer, Head of Investor Relations. We've also got to have Brandon Lamm up here from Investor Relations as well. Thanks for joining us. Thank you for having us. Thanks for having us. I think you wanted to do an opening, forward-looking statement. Yeah, thanks. Just as a reminder, comments in today's meeting may be deemed to contain forward-looking statements. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our SEC filings, including our most recent 10-K and 10-Q. Investors are cautioned not to place undue reliance on such forward-looking statements. Thanks, Brandon. Great. Thanks a lot. So I wanted to start with, kind of Q1 procedure growth, just kind of start there, level set. It came in, I think, stronger than most people thought, 16% on a, a really tough comp. Just curious what, what happened, what kind of drove the upside in Q1, and how much of that is, you know, kind of sustainable strength here. Yeah. So, Q1 essentially had 16% procedure growth, versus a comparison of the prior year at 26%, right? We had really been emphasizing last year that we saw the benefit of patient backlog, which we assume is actually moderated through 2023. But what do we see in Q1 of 2024? You really saw strength in areas where, you know, you've continued to see strength in, let's say, globally, in areas like cholecystectomy, foregut procedures, colon resection, for example. And in the U.S. in particular, which was 14% procedure growth, you saw nice growth in general surgery, and then outside of the U.S., continued growth in countries like China, Germany, and the U.K. In hindsight, when you look back at the quarter, you do ask yourself, right, when you look at, I'd say, the long-term, compound annual growth rates for Q1, you know, we're essentially in that, say, mid-teen range or so historically. But what do we see in Q1? We were a bit higher than that globally. You could assume that a portion of that is some backlog that potentially was in the system, but it's really hard to know exactly what that is. Hence the reason why, in our when we're talking about our guidance in the low end or the high end of the range, what the impact of backlog could be. It seems like there's also some sort of a kind of acceleration in robotic procedures. I know there's kind of the penetration's moving a little bit faster than before. Some of the benign procedures coming through. Is there some of that going on as well? It's definitely a focus for us to, you know, drive adoption, penetration into a number of different procedure categories. But, I don't know if there's anything that's structurally different. I think, you know, we'd stick to our procedure guidance. 14%-17% is essentially what we said. And we're, you know, I think that's probably our most responsible, best estimate of what we think procedure growth will be, and further into penetration. Great. And then system placements were really strong. I think the installed base still grew, you know, 14%. That's kind of the highest growth that's been in a while, even with dV5 launch. So just, I don't know, our hospital checks also are pretty strong. People are out there buying a lot of XIs right now. Mm-hmm. Curious why, you know, what you're seeing in the field there from systems? Yeah, we had a good capital quarter, right, in Q1. I think 313 systems that were placed. You know, I think Jamie at the start of the year provided some a little bit of a cautionary commentary on the expectation is that capital placements could be lower in 2024. We started off the year strong. I think part of that is there was uncertainty around timing of when we would get regulatory approval for da Vinci 5. But yeah, I'd say nice strong capital placement growth. Really, what drives growth in capital is procedure growth, right? You have demand for procedures to be done. You have hospital systems that are getting utilization off their existing install base. If procedure demand exceeds utilization, you then have growth in your install base. And so with 16% procedure growth, you had utilization of 2%, essentially 14% growth in the install base. So that's kind of the dynamic that we ended up seeing. But to your point, I do think it was a nice capital quarter. At the end of the quarter is when we ended up getting da Vinci 5 clearance. So we'll see what happens for the remainder of the year. It seems like hospitals, though, are still kind of willing to kind of buy through a replacement cycle and buy kind of ahead of DB5 availability just because they need the capacity. Is that fair? Is that what we're seeing? Yeah. And, and so really emphasizing that point again of, as you have demand for procedures, or as hospital systems have demand for procedures, they're looking to add incremental capacity to be able to, you know, meet that procedure demand. And so that's important. And so you have Xi, which is an incredibly capable system, which can do a broad set of indications. And so they're looking to still, I'd say, expand their programs to be able to meet that procedure demand. So total, like, procedures kind of come at the higher end of the guide. The installed base kind of new system placements could maybe potentially grow year over year? Say that again. I think before you were talking about system placements, originally were going to be down. Mm-hmm. Potentially. Now it's kind of moved to choppy. If procedures come in strong, is there still kind of the potential for systems this year to kind of be up year-over-year? Let's see how that goes, right? Within our procedure guidance of 14%-17%, you can make an assumption on what you think install base growth will be. I think really what Jamie's been emphasizing and what we're seeing is you have a lot of customers who've now had exposure to da Vinci 5, right? They've, we're at Intuitive Connect, which is kind of like our macro world in a sense, where you bring in hospital administrators, surgeons to really, I would say, almost 2,000 or so that were doing test drives. You have SAGES, a lot of exposure there. And there's a, you know, maybe a behavior of individuals who will say, you know, "I'm really interested in da Vinci 5. I like it. I'm curious about it. Maybe I hold off on expanding our install base." Maybe they don't. I think that's where we're saying there potentially could be some choppiness, with capital placements for the year. So what's been some of the kind of the feedback from hospitals on DB5? And if it's more of a, "Hey, this is an incremental upgrade. I don't I can wait," or is it, "Hey, I this is a big step change. I want to upgrade the entire fleet?" And just kind of talk through some of the initial feedback there. So initial feedback, there's 8 systems that have been placed, right? So that's, it's probably too soon to really speculate on, on, on how aggressive or how interested customers are. I'd say the feedback has been very positive. We're encouraged by that. I think getting direct feedback from surgeons, there has been a lot of positive feedback, in particular in a number of different areas. And so, you have workflow efficiencies. You have ergonomic changes or differences. You have visualization that has actually improved. And so we get a lot of really nice feedback there. And then we believe force feedback is a differentiated technology. And so we're still getting feedback from surgeons there. But if you sort of double-click into it a bit, right, what is the feedback that we're getting on specific areas? Again, early on, we had surgeons that were supporting us through the clinical trial. You now have 8 systems that have been installed as of the end of Q1. The feedback has been, "I think I can do more procedures in the same amount of time. I think I can do the same procedures faster." And we saw that in early clinical data. I think over time, we'll have to see how that data plays out as surgeons are continuing to, you know, do more procedures, and we're evaluating that information with them. But specific product features, I'm just going to jump into a couple of those. Workflow efficiency has been, I'd say, somewhat surprising, I think, for surgeons. So there's over 150 or over 100 or so design changes. Some of the ones that we hear a lot about are the integrated insufflation with smoke evacuation, the surgeon being able to look through the UI that they have on their screen, right, and being able to adjust that on their own has been fantastic. The feedback has been good. The ability to swap between instrumentation, between arms. They can now do that digitally with the double-click of their fingers. And then also care teams who are, let's say, changing out instruments to put into a different arm. There's now a guided tool change, which allows those care teams to essentially know with very little risk on where they're going to, where they're going to insert that instrument to make sure there's nothing that they shouldn't be hitting. So it's stuff like that that, you know, you're getting this great feedback on, on product features. Then we'll have to see over time what happens with force feedback. How are you thinking about the kind of the limited launch versus the, the full launch and kind of the cadence? So 8 in Q1, how does that steps up and, and kind of the capacity to, to move into kind of all the demand that you might have, you know, into 2025? Yeah. So we will continue to stay in a phased launch, as we've been emphasizing, for at least the next several quarters. You know, we did place 8 systems at the end of March. It was actually quite remarkable. We're actually really proud of our teams who were able to make this happen. You ended up getting approval from the FDA in the beginning. We're actually sort of the middle of March. You're able to bring that system onto your APL, and then from there, being able to, you know, engage all the teams to be able to install those systems. So it's quite remarkable to get the 8 done. I can't really comment on Q2. I'd say there is a strong interest for procuring da Vinci 5, in particular incremental systems for those customers. We'll see how that goes. So I can't really probably be speculating at this point to say what that ramp would look like. We'll tell you more as time goes along. I would really emphasize, though, we are in a phased launch, and there are specific reasons why we're doing that. I kind of wanted to walk through how DB5 kind of impacts the model. You know, there's a lot of new revenue streams, higher ASP. I don't know if there's a way to think about kind of how the 30% higher ASP kind of flows through the leasing and kind of the trade-in credits, you know, start there. Yes. And so if I miss something, just let me know. Maybe actually, I want to go back on a point because it actually relates to what I'm going to tell you now. So during the phased launch, we've essentially said over, you know, over several quarters is where we'll have a phased launch. And so there are things that will be, essentially three areas we're really going to be focused on, you know, say, getting customer input from customers, feedback from them on features. There are, you know, supply chain work that we're doing to essentially optimize the supply chain. And then from there, there's this planned sort of upgrades and changes that we're making to the system. So all of that is why I'm saying that is that you'll have several quarters of just time where you have a limited, you're in limited launch. So early on, you're not going to have a significant impact to your financials, right? New products in particular, right, da Vinci 5 is not at the same, I'd say, margin levels as we are experiencing with, with Xi. We intend for those for da Vinci 5 to get back up to those levels, but there's a lot of work that needs to be done, right, to get there. But it's, it's what we're focused on. I'd say, accretive revenue from our other new platforms also, has an impact to that. Now, how it works, so if a customer, is interested in, in acquiring a da Vinci 5, essentially the ASP is 30% higher than the current cost for, an Xi. But when they take into consideration some of the items that are essentially integrated into da Vinci 5, really the value is about 15% higher versus Xi. So from a customer perspective, you know, they could essentially look at it and say it's about 15% higher when they take into consideration things like the integrated insufflation generator, you know, handheld camera, hub, simulation, a number of different factors, right, that go into that, a number of different features. So the customer at that point has an opportunity to either enter into a lease for a new system or to purchase. If they purchase, they essentially have the ability to, have a trade-in right for if they, they purchase an Xi today and they say, "Hey, I want a da Vinci 5 tomorrow," there's a trade-in credit that we recognize. We recognize Xi revenue. There's a trade-in credit that's essentially a contra-revenue amount that after a year or so starts to amortize back into revenue, right? So that's how the, the purchase transaction works. For the operating lease, they enter into an operating lease essentially two ways. They can either get into a straight rental or a pay-per-use arrangement. Essentially, they're getting access to that Xi. You have the lease transaction that goes over the term of the Xi lease, and there's a trade-in right, essentially, the ability to come in and negotiate with Intuitive. And I'll stop here in just a second to make sure I'm when we are able to get that system back and there's supply availability for that customer, we can then bring that Xi back and then install a da Vinci 5. And you'll see the value difference between the Xi and the DB5 essentially carried over the life of the lease. Very similar as well with the pay-per-use arrangement. If you think about the lease revenue, there's kind of two leases. One, you kind of do over five years, kind of pay as you go, and then there's another one kind of pay as you go. Right. Another pay-per-click. Is do we think about that as like 30% higher, like in terms of the kind of your lease payments or pay-per-click model being 30% higher with the new system? That's right. That value difference will essentially carry over time. The difference in the Xi and the da Vinci 5 value essentially will carry over those years. It is that ASP difference. When you think about some of the other ancillary revenue, how should we think about maybe the service line, you know, service per system changing and some of the stuff that could potentially go in, into that line? So with da Vinci 5, and even with Xi as part of the ecosystem, there are some digital products that actually are subscription-based. And those subscriptions will essentially run through our service revenue line. So one of those is Case Insights. And, you know, I did see a slide, like $70,000 per system, but for Case Insights. And so should we think about, like, all the systems that turn on at Case Insights kind of after the one-year free, like that's going to roll through per system and, and the service line kind of in addition to the, the service revenue that you had? The customer will want to, if, you know, if it's something that they agree to, they'll have to sign up for that subscription service. It doesn't automatically turn on and say, "Now you're, you know, automatically going to have Case Insights." They're going to want to subscribe to that service. So our hope is that customers find value with Case Insights, and they'll want to subscribe to that service. And it maybe it'd be helpful for everyone if, you know, maybe I should talk a little bit about what Case Insights is, just quickly. Our view with Case Insights is essentially how do you make surgeons better at what they do faster, right? So you're taking information from the robot, kinematic information, essentially economy of motion. So if you're looking at activity that the surgeon is doing with, say, camera insertion, moving around, instrumentation within the body, identifying Objective Performance Indicators or OPIs that correlate to better patient outcomes, right? So a surgeon can actually look at their information on Case Insights and say, "How do I compare to an expert surgeon? What are the things that I need to do either through instrument choreography or through how they perform a surgery to actually improve?" And so the idea and the benefit for Case Insights is really give them information on targeted training to actually help them get better faster. We think that that provides value for the hospital system. We think it provides value for the surgeon and also for the patient. What are we trying to accomplish? You really want to ensure that you're minimizing variability of outcomes for patients, right? And if you can do that through targeted training to make them better faster, there's value there. And so we think there's value for Case Insights for customers. And the kind of digital capabilities, is there kind of other things you can kind of turn on over time that's going to drive incremental revenue streams like Case Insights, or? There will be other areas too. I think these are things that we'll talk about over time. You know, an area that we've talked a little bit about is around 3D modeling, you know, being able to take a preoperative image and do a high, you know, create a highly colorized 3D model where you can over time, at some point in the future, overlay as surgery is being done, you know, during surgery to be able to get a, you know, let's say, augment the, vision for surgeons. You know, those are types of, let's say, revenue items that I think you would see coming through service over time. Now, yeah, things like that. A lot of opportunity there. There is opportunity there. I mean, we have a platform where we've added a lot of compute power, a lot of processing power, and it is in order to enable features like that over time. Then the I&A revenue line, you know, haptics impacts that. I think the smoke evacuation, insufflation impacts that. What else is kind of impacting the I&A revenue line? And is that enough to start to see that line start growing versus flat to down? No, I think we were really emphasizing force feedback. For example, if you had force feedback used across all procedures, you know, I think you'd see potentially a 9% increase in I&A revenue per procedure. Our view, though, with I&A revenue per procedure is that we would expect it to essentially trend down over time. A lot of that has to do with mix. A lot of it has to do with, you know, the types of procedures that are actually being performed. And then in particular, what we saw this past quarter was, you know, us working with our customers and our customers really kind of managing through some of their inventory to kind of be a bit more real-time. But I would say there are opportunities where we will make enhancements to instruments and accessories, which could increase value. I, you know, across 2 million-plus procedures, I think our view is that it will continue to decline modestly over time. Did I miss any other important kind of revenue line items before? well, no. Did you want to talk, yeah, anything that you wanted to talk about on kind of the trade-in credits and how that works? Sure. So, over time, so our expectation with da Vinci 5 is that you are essentially providing incremental capital for customers. It's not trying to take in a lot of trade-ins up front, right, to get in, and then swapping those out for da Vinci 5. But there will be trade-ins that'll come in over time. And especially as you're in broad launch, our hope would be is that customers will want to trade in their fleet and convert them over to da Vinci 5. But we'll see. Really, the focus is on incremental today. So what happens with that trade-in credit we talked about, you know, the upfront purchase in, in a customer that is interested in purchasing a da Vinci 5, but they take a Xi today. We recognize a, essentially a contra-revenue amount, trade-in value. But what ends up happening is, say, two years down the road, in that contract, that customer who has that specified trade-in right, they know how much value they're going to get for that system. And so they'll essentially trade in that system, we'll pay them for that, and it's an offset against the da Vinci 5 cost, if that makes sense. If you look at it, though, over the entire transaction for that customer, it's still higher, right, because they're essentially purchasing a da Vinci 5. But that's essentially how it works. The value of that trading credit will vary depending on the system, the age of that system, how new it is, if it was one that's a year old versus one that's seven or eight years old, right? There's going to be a value difference between that. As we get closer to where we start to see trade-ins, we'll let folks know what we think those trade-in credit amounts will be. Does it kind of follow a typical kind of seven-year depreciation cycle, or? I would say 5 years. I think it's, for us, essentially 5 years. Okay. That's helpful. The Xi's that are traded in, trying to talk about how hospitals and how you could potentially kind of redeploy those assets? Yeah. So XI is an incredibly capable system, right? We've been making a number of design changes to XI. It has a lot of procedure indications that we think, you know, customers really value. Our intent is, as we get XIs back from customers, we will refurbish those systems and being able to offer those systems to maybe more price-sensitive customers or in more price-sensitive economies where we can really, you know, make a difference by applying a, let's say, a multi-quadrant surgical device, XI, to be able to serve those local communities or those communities. We think it's powerful. We think XI is, again, incredibly capable, and we think customers will appreciate that. That's a potential way that procedures could potentially accelerate with da Vinci 5? Let's see, as we get closer and as those, those systems come back and as we're able to place those systems, I mean, our hope is, as part of as we talk about our TAM, is that we're moving into various economies over time, right, to move from the 7 million to the 21 million. Is it more into, like, ASCs, or is it more into, like, lower-priced community hospitals or geographic countries? I think it'll be a combination of all those. I think probably more into other geographies that are a bit more price-sensitive, but also being able to support those local community hospitals and others that want to adopt robotics that are not doing it today. And I kind of wanted to talk about margins as well. Both kind of shorter- term, when you were thinking through the launch of DV5, initially diluted it, kind of at what point does this become kind of break-even on the margin? Is that when you flip into full launch that you're break-even, or is it, you know, six months to a year after launch? Do you get into full launch? Yeah, it's too soon to say today. I think part of that is because of the work that we're doing on optimizing the supply chain. I think other and this is specific to DV5. Other work that we're doing, you know, on some of the product enhancements and as we're bringing up facilities for manufacturing, as you're adding scale, right, you're able to leverage off of those investments. I would say it's probably too soon to say. Our goal and the intent is to really get da Vinci 5 back up to Xi levels as fast as we can, but there's work that needs to be done as you're sort of ramping up that product. So it's too soon to say, though, Travis. Is the kind of gross margin hit that you saw with Xi's, is that a good corollary to look at, or is this DV5 going to be a lot different for some reason? I would say, you know, it's probably fair to look at that as, you know, directionally, right, what happened with margins when Xi was released. I think, again, just give us some time. You know, there are some pretty unique features that have some really critical subcomponents, and you want to make sure that you've optimized the supply chain to enhance your margins. But kind of longer- term, if you look at where your margins are today versus where they were kind of 2018, 2019, there's still a pretty big gap today. That's right. Can you think through kind of what that gap is, kind of what drove that gap even before the DV5 launch, between investments and inflation, and how that can kind of recover over the next couple of years? A lot of pressure on margins, gross margins in particular, were just lingering effects or just challenges you had during COVID, right? You have lingering effects of the supply chain, for example. And so we believe we have plans that we're executing on today that can improve margins. I think you've seen us do it previously. We believe we can still do it today. As you are driving additional volume on instruments and accessories on your product platforms, you know, you have an opportunity to work with your suppliers to be able to bring down costs. As you're considering how you're placing systems around the world, you have the opportunity to manage how you're shipping with freight. For example, in COVID, you had very limited opportunity, right, on where you were going to ship stuff. So you were shipping stuff air. Let's just use that as an example, where you can use other lower-cost methods of shipping. And so there's activities that were engaged in today to really improve margins, the gross margin side, that coupled with the activities that we have to improve margins on Ion, SP, and also with da Vinci 5 should help us get back to what we've committed to over time, over the next, say, three or five years, over the medium term, to really improve margins back up to that 70% level or 70%-plus level. How, how should we think about kind of the leverage on the SG&A and kind of the OpEx growth, R&D, kind of going forward? Is historically, you kind of grow that either in line or slightly below procedure growth, but kind of post-DV5 and some of those investments rolling off, we're going to kind of see that more a little bit more leverage on, on the OpEx? That's the intent. That is the intent. So, with operating margins, they are lower than they have been historically. It's not our or it's not a management objective to get back up to 40%. I would say our expectation is to be at the upper end of our peer set. We want to improve, or we will improve from where we're at today. Some of that is just flowing down from gross margin. The other area, as you alluded to, is really on getting leverage off of your enabling functions. You can see that we've made a lot of investments into our business over the past few years. There have been IT projects, there have been, headcount, infrastructure. I think over time, you know, we're looking to get leverage off of those investments. What about the margin and kind of the mix shift of the business over time and the impact on margins? Because I would think some of the kind of the service revenue coming in over time could be kind of margin accretive. Yeah, I think you know, margins for INA are accretive. They're, they're positive. Same on service. You know, capital is probably a little bit less than the others. I think as you're driving, you know, if you have nice capital placements and procedure growth is growing along with additional items that you're adding to service revenue, you know, those are going to help our margin profile. Great. I did want to kind of step back a little bit and go back to kind of the integration of the lap tower. So customers are getting a kind of full lap tower. There's the handheld cameras. Just kind of trying to think about kind of the Intuitive strategy, you know, from here by launching this kind of integration aspect and kind of your intent, you know, over time. The intent for us is to integrate items into the ecosystem that are going to provide workflow efficiencies for surgeons, right, and for care teams and for hospitals. That was really the idea behind some of those integration elements that we incorporated into da Vinci 5, integrated insufflation with smoke evacuation along with, say, handheld camera and other things. Basically, the idea is you do not need a separate lap tower for a da Vinci procedure. That is really the focus. If you're going to do a da Vinci procedure, it's up to you whether you, you know, a hospital system or a surgeon, if they want to use a different device, they can keep that tower there, or they can utilize our product, our tower, essentially to do that procedure. We're not, I'd say, necessarily targeting lap towers. It's just we want to make sure that they have an integrated experience that the surgeon is able to control those features as part of that stack. What about the kind of the imaging quality of kind of your, your tower kind of versus the competitors and where that's going to go over time and, and kind of the improvements that you're going to see there? It'll continue to get better. I think we've made a lot of improvements with da Vinci 5. I think the feedback has been very positive. But we've talked a bit about, you know, the areas where whether we're talking about 3D models and augmenting what a surgeon can see, and improving, I'd say, just, visualization broadly, whether you're looking at different modalities or whether you're looking at other methods of, let's say, imaging enhancements are all things that we're working through. Time will tell. Time will tell. So, so definitely some of the imaging molecules we could start to see. Scenario we've been working on for some time. Yeah. Is that something we can start to see over the shorter- term? We'll talk about it more when we get closer. All right. What are the kind of, like, some of the improvements that you're making on DV5? Are you going to make some of those kind of before the full launch, or are we going to see some of those probably kind of post the full launch? We'll see additional enhancements made both digital or software-oriented and also hardware-oriented. I think you'll see some elements, and we haven't been specific about what those are. You'll see some elements that get integrated into the existing platform, and then you'll all see some additional digital products that'll be also incorporated into the system over this sort of planned rollout of the system. Basically, the system that's out today is version one. It'll be different tomorrow, slightly. The hardware is the same. Kind of just changes on the margin on the software. That's right. And then kind of for the last minute, I did want to touch on Ion. I feel like it's a little bit underappreciated kind of opportunity. So just kind of a big picture Ion question. We're really excited about Ion. I think it has done quite well. You've seen, I think, success here in the U.S. with really being very focused in the lung biopsy market. We think we believe that our customers believe that it is differentiated technology, allowing them to get really far into the, let's say, the distal parts or the, the far, ends of the lung to get really small nodules, get biopsy really small nodules. You're seeing some expansion regionally. We're moving into Europe. We recently got approval to pursue China. And so, we're excited by it. We're definitely excited by it. Great. I think we're out of time. Thanks for coming. Thank you for having me. It's great.