>>ISRG – bridgeofsighs was correct when he said in #msg-34952515 that the sequential growth numbers were unimpressive. In accounting parlance, sequential refers to quarter-over-quarter (rather than year-over-year) results, and ISRG’s QoQ results in 4Q08 were not great.
Relative to 3Q08, 4Q08 saw a decline in the number of da Vinci systems sold (from 91 to 88), a decline in the average revenue per installed system (from $1.37M to $1.32M), and a decline in total revenue (from $236M to $232M).<<
Dew,
As I'm sure you know, year over year comparisons correct for seasonal issues and are generally more reliable. But if you insist on a literal reply to bridge's post, I shall oblige.
>>I would keep an eye on sequential instrumentation growth numbers which are not impressive.<< (bridgeofsighs)
Instrument & accessories revenue (these are not broken out separately, and this is almost all instruments revenue anyway) increased from $75.941M in 3Q08 to $81.575M in 4Q08, an incease of 7.4% over a single quarter. And it should not be lost on anyone that 4Q08 was not the best quarter for many companies to compare to.
So I repeat that bridge's post was absolutely wrong. Sequential instrumentation growth was quite impressive.
>>Relative to 3Q08, 4Q08 saw a decline in the number of da Vinci systems sold (from 91 to 88), a decline in the average revenue per installed system (from $1.37M to $1.32M), and a decline in total revenue (from $236M to $232M).<<
Now you are broadening the discussion, which is fine. Correcting for trade-ins, systems sold actually went from 91 in Q3 to 85 in Q4. Obviously that is due to the capital spending hit that many companies have seen. And it will continue in 2009; I am modelling a ~10% dip in systems sold in 2009 compared to 2008. But - and this is a crucially important point that a lot of people following Intuitive miss - adoption of the technology and therefore long-term growth of the company is NOT measured by systems sold. It is measured by procedures carried out, and that was up a whopping 15% from Q3 to Q4.
The tiny decrease in system ASP that you refer to (which is actually not the revenue per installed system) is a meaningless quarterly fluctuation. It has to do with product mix - how many systems were sold through distributors in the quarter, how many trade-ins there were in the quarter, how many were purchased with HD vision, etc. It fluctuates from quarter to quarter and has *nothing* to do with the growth of the company.
The small sequential decline in total revenue was due to the above factors, but has nothing to do with the long-term growth of the company - which (*again*) is driven by procedures.
Procedures increased by 15% sequentially and 60% year over year. And the company, which has a history of being very conservative in its guidance, is guiding to 35-40% growth in 2009.
That's how fast the company is growing from a long-term perspective. 60% last year. Probably about 40% next year.
I should mention that system revenues dipped below 50% of total revenues for the first time in Q4 and that percentage will continue to decrease over time as the systems are more and more heavily used, generating more and more instruments & accessories revenue per system.
>>By the way, I know for a fact that bridgeofsighs has an unimpeachable contact in the medical-device arena. If I were you, I would not be so quick to dismiss what he says.<<
Well that's great. I know several of the engineers that designed built the da Vinci and some of the surgeons who use it. I have attended surgical conferences and workshops and viewed many dozens of robotic surgery lectures and demonstrations. I have spent thousands of hours following and modelling the company for close to a decade.
The simple fact is that Bridgeofsighs posted some nonsense about Intuitive and I called it out. I don't think you would have reacted any differently if someone posted nonsense about one of the companies you've been following meticulously for years.
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