Service: The Annuity Nobody NoticesWide moat

Intuitive Surgical (ISRG) — moat facet

$1.57 billion for keeping the fleet running, growing 20% a year, from an organisation the customer cannot replace.

Service revenue was $1,572.1 million in 2025, up 20% on $1,307.1 million, and Intuitive attributes the increase to "a larger installed base of systems producing service revenue and favorable product mix, particularly from da Vinci 5 surgical system placements"1.

Service revenue ($M)$1,307.1M2024$1,572.1M2025About $134,000 per installed system per year, from $132,000 in 2024.
Twenty percent growth from an organisation the customer is not permitted to replace. It is the least discussed line in the company.

Two things make this the quietest good business in the company. The first is that it is entirely a function of the installed base, which only grows: about 11,106 da Vinci systems at the end of 2025 and 11,710 by 30 June 20262. Systems stay in service for many years, so the base is a ratchet and the service line ratchets with it.

The second is that a newer, more capable system carries a higher service contract. Da Vinci 5 has more than 10,000 times the computing power of da Vinci Xi and integrates an electrosurgical unit, insufflation, force feedback and a set of digital products3; there is more to maintain, more software to keep current, and more value in keeping it current. So the replacement cycle raises service revenue per system without adding a single machine to the base.

Service is also where the relationship lives. Intuitive employs about 4,837 people in commercial and service operations4, and its clinical sales team "works on site at hospitals, interacting with surgeons or physicians, operating room staff, and hospital administrators"5. A rival selling a competing system is not just displacing hardware; it is displacing the people who are already in the building.

Track service revenue per system in the installed base: about $134,000 in 2025 against about $132,000 in 20246. Rising as da Vinci 5 penetrates is the mix effect working. Falling would mean discounting on renewal.

Moat trajectory: Widening

Service revenue was $1,572.1M against $1,308.0M, about 20% growth, faster than procedures. Every da Vinci 5 placement raises the contract value, and the fleet is still growing at double digits.

The number that tests this moat
Reported
Service revenue
$1,572.1M, up about 20% from $1,308.0M

Growing faster than procedures, because every da Vinci 5 raises the contract value without adding a system to the base. It is the least discussed and most predictable line in the company.

Source: Intuitive Surgical Form 10-K, fiscal year ended December 31, 2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
An Exclusive Service Monopoly Is a Regulatory Target
Hospitals paying one supplier to maintain equipment they own is precisely what right-to-repair rules address.
References
  1. ReportedService revenue was $1,572.1 million in 2025, up 20% on $1,307.1 million, and Intuitive attributes the increase to "a larger installed base of systems producing service revenue and favorable product mix, particularly from da Vinci 5...
    Intuitive Surgical Form 10-K, fiscal year ended December 31, 2025 - Item 7 MD&A, results of operations (instruments and accessories $6,018.9M, systems $2,473.7M, service $1,572.1M, recurring revenue $8,465.3M, gross margin 66.0%, operating income $2,945.5M, average selling price, lease revenue recognition, and the discussion of procedure categories) — FY2025 · publ. February 3, 2026 · source ↗
  2. ReportedThe first is that it is entirely a function of the installed base, which only grows: about 11,106 da Vinci systems at the end of 2025 and 11,710 by 30 June 2026.
    Intuitive Surgical Form 10-Q, quarter ended June 30, 2026 (installed base 11,710 da Vinci systems up 12%, 468 placements of which 246 were da Vinci 5, the operating-lease share, the distributor acquisitions in Italy, Spain and Portugal, cash and investments of $8.63 billion, and the factors expected to affect future placements) — Q2 2026 and the first six months · publ. July 21, 2026 · source ↗
  3. ReportedDa Vinci 5 has more than 10,000 times the computing power of da Vinci Xi and integrates an electrosurgical unit, insufflation, force feedback and a set of digital products; there is more to maintain, more software to keep current, and more...
    Intuitive Surgical Form 10-K, fiscal year ended December 31, 2025 - Item 1 Business (the da Vinci and Ion platforms, instruments with a use count enforced in the instrument itself, training pathways and SimNow, enabling technologies, manufacturing sites, employees by function, and the seasonality of benign procedures) — FY2025 · publ. February 3, 2026 · source ↗
  4. ReportedIntuitive employs about 4,837 people in commercial and service operations, and its clinical sales team "works on site at hospitals, interacting with surgeons or physicians, operating room staff, and hospital administrators".
    Intuitive Surgical Form 10-K, fiscal year ended December 31, 2025 - Item 1 Business (the da Vinci and Ion platforms, instruments with a use count enforced in the instrument itself, training pathways and SimNow, enabling technologies, manufacturing sites, employees by function, and the seasonality of benign procedures) — FY2025 · publ. February 3, 2026 · source ↗
  5. ReportedIntuitive employs about 4,837 people in commercial and service operations, and its clinical sales team "works on site at hospitals, interacting with surgeons or physicians, operating room staff, and hospital administrators".
    Intuitive Surgical Form 10-K, fiscal year ended December 31, 2025 - Item 1 Business (the da Vinci and Ion platforms, instruments with a use count enforced in the instrument itself, training pathways and SimNow, enabling technologies, manufacturing sites, employees by function, and the seasonality of benign procedures) — FY2025 · publ. February 3, 2026 · source ↗
  6. Moat Explorer calcTrack service revenue per system in the installed base: about $134,000 in 2025 against about $132,000 in 2024.
    Moat Explorer calculation - arithmetic on figures reported in Intuitive's Form 10-K and Form 10-Q: instruments and accessories of $6,018.9M over 3,153,000 da Vinci plus 144,100 Ion procedures ($1,825 a procedure), service revenue of $1,572.1M over the installed base (about $134,000 a system), variable lease revenue of $531M over 1,810 usage-based systems (about $293,000), procedures over the average installed base (about 300 a system), each revenue line as a share of the $10,064.7M total, and US general surgery as a share of US procedures — FY2025 · publ. September 2026 · source ↗
Sources
Generated September 23, 2026