Intuitive Surgical Inc. (NASDAQ:ISRG)

Inventory Turnover

The inventory turnover ratio exhibits a declining trend over the observed periods, decreasing from 2.64 in early 2021 to approximately 1.81 by the third quarter of 2025. This indicates that inventory is being sold and replaced less frequently, suggesting a possible buildup of inventory or slower sales turnover.

Receivables Turnover

Receivables turnover fluctuates moderately but generally remains stable around a ratio of 6.5 to 7.6. There is no clear upward or downward trend, indicating consistent efficiency in collecting receivables over the years.

Payables Turnover

The payables turnover ratio shows variability without a definitive trend, ranging roughly between 10.4 and 14.8. Notably, the ratio declines somewhat after 2021 before bouncing back in mid-2024, reflecting changes in the speed of payments to suppliers that vary throughout the periods.

Working Capital Turnover

Working capital turnover initially rises from 0.88 in the first quarter of 2021 to a peak of 1.56 in late 2024, indicating increased efficiency in using working capital to generate sales. However, this efficiency slightly decreases afterward, settling near 1.3 to 1.4 in 2025.

Average Inventory Processing Period

The average inventory processing period lengthens steadily, increasing from 138 days in early 2021 to over 200 days by 2025. This aligns inversely with the declining inventory turnover, suggesting longer holding periods of inventory on hand which could reflect slower sales or inventory management challenges.

Average Receivable Collection Period

There is some variation in the average receivable collection period, generally ranging between 46 and 58 days across the timeframe. A slight increase is observed around 2023 and early 2024, followed by a moderate decline toward 2025, implying some fluctuations in the speed of collecting receivables but overall relative stability.

Operating Cycle

The operating cycle lengthens from about 172 days in late 2021 to approximately 250 days in 2024 and 2025. This indicates that the overall time taken to convert inventory and receivables into cash is increasing, corresponding with the rising inventory processing period and relatively stable receivable collection period.

Average Payables Payment Period

The average payables payment period varies between 25 and 35 days with some fluctuations over the timeframe. There is a slight upward trend after 2021, indicating the company is taking longer to pay its suppliers on average in recent periods.

Cash Conversion Cycle

The cash conversion cycle shows an increasing trend from about 146 days in late 2021 to around 230 days by 2024, followed by a slight decrease and stabilization around 215-220 days in 2025. This indicates a lengthening interval between cash outflows for inventory and payables and the inflow from receivables, reflecting a decrease in liquidity efficiency.

Cost of Revenue

The cost of revenue shows a consistent upward trend over the reported periods. Starting at approximately $389.5 million in the first quarter of 2021, the figure steadily increased each quarter, reaching a peak of around $842.7 million by the third quarter of 2025. There is notable acceleration in growth towards the later quarters, especially from 2023 onwards, indicating rising production or service delivery costs associated with the company’s operations.

Inventory

Inventory levels have also risen significantly through the periods analyzed. Beginning at about $576.8 million in early 2021, inventory progressively increased, reaching approximately $1.78 billion by the third quarter of 2025. This steady build-up of inventory highlights increased stockpiling, possibly in response to anticipated demand growth or supply chain strategies. Notably, the pace of inventory accumulation appears to accelerate after mid-2022.

Inventory Turnover Ratio

The inventory turnover ratio has displayed a general declining trend across the timeline. Starting from 2.64 in the first quarter of 2021, it decreased gradually to about 1.81 by the third quarter of 2025. This decline suggests that the company is turning over its inventory less frequently over time, which may reflect slower sales velocity relative to inventory levels or a strategic decision to maintain higher inventory balances.

Summary and Insights

The combined trends of rising cost of revenue and inventory levels, coupled with a decreasing inventory turnover ratio, indicate that while the company is expanding its production or acquisition of goods, its efficiency in converting inventory into sales might be diminishing. The reduction in turnover rate could warrant closer examination to understand whether inventory accumulation is due to demand fluctuations, supply chain considerations, or other operational factors. Monitoring these metrics closely will be important to manage working capital effectively and to ensure holdings are aligned with market demand.

Revenue Trend

The revenue exhibited a general upward trend over the analyzed quarters, increasing from approximately $1.29 billion in the first quarter of 2021 to $2.51 billion by the third quarter of 2025. There were periods of consistent growth, notably from late 2023 to the end of 2024 and into 2025, with the most significant quarter-over-quarter increase observed in the final quarter of 2024. Some fluctuations are apparent, such as slight declines or stabilization phases in early 2022 and mid-2023, but the overall trajectory is positive, indicating strong revenue expansion over the period.

Accounts Receivable, Net

The net accounts receivable balance showed an increasing trend aligned broadly with revenue growth. It rose from about $654 million in early 2021 to approximately $1.26 billion by the third quarter of 2025. While the receivables balances generally increased, periodic fluctuations occurred. For example, in mid-2022, a decline is observed, possibly reflecting improved collections or changes in credit terms. Another notable jump in receivables is seen starting at the end of 2023, aligning with accelerating revenue increases. The growth in receivables appears steady but not disproportionately high compared to revenue increments.

Receivables Turnover Ratio

The receivables turnover ratio fluctuated between approximately 6.3 and 7.9 times across the quarters, indicating variability in the company's effectiveness at collecting receivables. The highest turnover was seen in late 2021, suggesting relatively quick collection cycles, while the lowest values occurred in late 2023. Despite these fluctuations, the ratio generally stabilized around the mid-6 to mid-7 range in recent periods. An increasing trend is observed in 2025, with the turnover ratio reaching its highest point since 2021 at 7.63, indicating improved cash collection efficiency relative to outstanding receivables.

Overall Analysis

The company's financial data reflects strong revenue growth accompanied by a corresponding rise in accounts receivable, which is typical for expanding businesses. The receivables turnover ratio indicates some variability in collection periods but generally remains stable, suggesting effective credit management. The more recent trend towards higher turnover ratios alongside increasing revenues and receivables points to an improvement in collection efficiency despite expanding sales volumes. Monitoring working capital components closely will remain important to sustain financial health as the company continues to grow.

Cost of Revenue

The cost of revenue exhibits an overall upward trend from March 31, 2021, through September 30, 2025. Initial values start at approximately $389.5 million and rise steadily each quarter, reaching over $842.7 million by the end of the period. Some fluctuations are observable, such as a moderate dip between December 31, 2023, and September 30, 2024, but the general pattern is consistent growth. The increase suggests rising expenses related to revenue generation, which may be linked to higher sales volumes or increased production costs.

Accounts Payable

Accounts payable also shows an increasing trend, growing from about $103.1 million in March 2021 to approximately $291.2 million by September 2025. The growth is not strictly linear; there are periods of more rapid increases, notably from June 2025 to September 2025, where payables climbed significantly. Some volatility occurs mid-period, such as a decrease from December 31, 2024, to June 30, 2025, but the overall direction indicates expanding liabilities to suppliers or vendors, potentially reflecting increased procurement or delayed payments.

Payables Turnover Ratio

The payables turnover ratio shows a downward trend from early 2021 through mid-2025, falling from 14.8 to around 11.1. This decline suggests the company is taking longer to settle its payables over time. There are some short-term oscillations in the ratio, with temporary increases and decreases, but the general pattern indicates a lengthening of the payment cycle. This trend may signal changes in payment terms, cash management strategy, or supplier negotiations.

Summary of Relationships

The concurrent increase in cost of revenue and accounts payable, alongside a decreasing payables turnover ratio, points to an expanding operational scale with progressively extended payment periods. The company's growing cost base correlates with rising outstanding payables, and the slower turnover indicates that it is allowing more time to pay its suppliers. This behavior may be intentional for cash flow optimization or reflective of operational dynamics requiring further investigation.

Working Capital

The working capital shows some fluctuations over the observed periods. Initially, it experienced a decline from approximately 5,161,800 thousand USD at the start of 2021 to about 4,691,000 thousand USD by March 2022. Subsequently, a recovery phase is noticeable as working capital rose to a peak around 7,226,500 thousand USD by September 2023. However, after reaching this peak, a downward trend ensued, with working capital decreasing to about 6,722,100 thousand USD by September 2025. These movements indicate alternating phases of liquidity expansion and contraction, possibly driven by operational or investment activities.

Revenue

Revenue exhibits a general upward trend throughout the periods analyzed. Starting at approximately 1,292,100 thousand USD in the first quarter of 2021, revenue gradually increased, with some seasonal fluctuations, reaching about 2,505,100 thousand USD by the third quarter of 2025. Noteworthy are the steady revenue increments in recent years, particularly from 2023 onward, suggesting strengthened sales or market demand. Short-term minor declines or plateaus appear sporadically but do not significantly detract from the overall growth trajectory.

Working Capital Turnover Ratio

The working capital turnover ratio reveals variability indicative of changing efficiency in utilizing working capital to generate revenue. Initially rising from 0.88 to a peak of about 1.29 in the final quarter of 2021, the ratio then declined to lows around 0.95 by the third quarter of 2023. Thereafter, a notable improvement is observed, with the ratio climbing steadily to approximately 1.56 by the final quarter of 2024, before experiencing a slight decrease to around 1.3 by September 2025. These shifts suggest phases where the company either enhanced or faced challenges in converting working capital into sales, with recent periods reflecting improved operational efficiency.

Summary of Key Patterns and Insights

Overall, revenue growth is steady and robust across the reported timeline, indicating positive business momentum. Working capital levels, while fluctuating, tend to reflect strategic liquidity management with cycles of accumulation followed by drawdowns. The working capital turnover ratio corroborates these dynamics by highlighting periods of varying efficiency in capital utilization. The recent trends suggest that as working capital expanded, operational efficiency improved significantly, leading to higher turnover ratios and supporting the revenue growth. Attention should be given to the moderate decline in working capital and turnover ratio towards the latest period, which may warrant monitoring to maintain the positive performance trajectory.

Inventory Turnover Trend

The inventory turnover ratio exhibits a general declining trend over the analyzed periods. Beginning at 2.64 in the first quarter of 2021, it rose slightly to peak at 2.98 in the fourth quarter of 2021. Subsequently, the ratio started to decrease, falling below 2.0 from the third quarter of 2023 onwards, and stabilizing around 1.8 by the end of the report in the third quarter of 2025. This downward movement indicates a slower rate at which inventory is sold and replaced over time.

Average Inventory Processing Period Trend

The average inventory processing period, measured in days, mirrors the inverse pattern of the inventory turnover ratio. It began at 138 days in the first quarter of 2021, gradually decreasing to 122 days by the end of 2021. From 2022 onwards, the processing period lengthened progressively, reaching 193 days by the first quarter of 2024 and continuing to trend upwards to about 201 days by the third quarter of 2025. This increase suggests an elongation in the time inventory remains before being sold.

Relationship Between Metrics

The inverse correlation between inventory turnover and the average inventory processing period is evident, with decreases in the turnover ratio corresponding to increases in the processing period. This relationship reflects less frequent inventory renewals and greater holding times.

Insights

The observed trends imply a deceleration in inventory movement over the period, potentially indicating changes in sales velocity, inventory management efficiency, or market demand. The lengthening inventory processing period may suggest challenges in inventory liquidation or an intentional strategy to hold more stock. These shifts warrant further examination of operational factors and market conditions influencing inventory dynamics.

Receivables Turnover

The receivables turnover ratio shows fluctuations over the analyzed periods, ranging from a low of 6.3 to a high of 7.9. Initially, there is an increasing trend from 6.96 to 7.9 during the first three quarters ending September 2021, indicating improving efficiency in collecting receivables. This is followed by a decline to 6.52 in March 2022, after which the ratio stabilizes mostly between 6.6 and 7.37 for the next several quarters.

Towards the most recent periods, starting in early 2024, the ratio exhibits a modest increase again, reaching 7.63 by September 2025. This suggests a renewed improvement in the company’s ability to collect receivables efficiently. The overall pattern demonstrates some volatility but generally reflects a capacity to maintain consistent receivables management with occasional improvements.

Average Receivable Collection Period

The average receivable collection period, measured in days, inversely reflects the trends seen in receivables turnover. It starts at 52 days in March 2021 and decreases to 46 days in September 2021, signifying faster collection times. Subsequently, it rises to 56 days in March 2022, indicating a slowing in collections.

In the following periods, the collection days fluctuate between approximately 50 and 58 days, showing some inconsistency but generally maintaining a range close to the company’s average cycle length. From early 2024 onward, the collection period gradually improves, lowering to 48 days by September 2025. This downward trend aligns with the rising receivables turnover ratio, suggesting enhanced efficiency in receivables collection processes during this recent timeframe.

Summary of Trends and Insights

The data reveals a cyclical pattern in both receivables turnover and average collection periods across the quarters. Periods of improved collection efficiency alternate with phases of slower receivables turnover. Despite some fluctuations, the company maintains overall control over its receivables management, avoiding significant deterioration in collection cycles.

Notably, the recent upward trend in receivables turnover coupled with a reduction in collection days points to operational improvements in credit and collections practices. These changes imply better cash flow management potential and could contribute positively to liquidity positions.

No extreme volatility or alarming shifts are observed, indicating a stable management approach to working capital concerning receivables. Continuous monitoring is advisable to sustain the positive trends noticed in the latest periods.

The financial data reveals notable trends in the company’s operational efficiency and working capital management over the examined periods.

Average Inventory Processing Period

The average inventory processing period shows a general upward trend from 138 days in March 2021 to a peak exceeding 208 days in March 2024. This increase reflects a lengthening time for inventory turnover, suggesting a potential accumulation of stock or slower inventory movement. After peaking in early 2024, the period stabilizes slightly but remains elevated near 200 days by the end of the analyzed timeline, indicating sustained slower inventory processing relative to the earlier periods.

Average Receivable Collection Period

The average receivable collection period fluctuates moderately across the timeline. Starting at 52 days in March 2021, it decreases to a low of 46 days in September 2021, indicating improved efficiency in collecting receivables at that point. However, it then rises again, reaching around 58 days by December 2023, before exhibiting slight fluctuations around the mid-50s days range thereafter. This suggests a somewhat less consistent collection period with some deterioration in collection speed in the latter periods, though no extreme variances are observed.

Operating Cycle

The operating cycle, which combines the inventory processing period and receivable collection period, shows an increasing trend over time. From 190 days at the start of the timeline in March 2021, it generally climbs to reach a peak near 261 days by March 2025. This steady increase implies an elongation of the overall cycle from inventory acquisition to cash collection, highlighting longer capital commitment periods in the operating process. The trend underscores challenges in reducing working capital needs efficiently.

Overall, the data illustrates a gradual lengthening of both the inventory processing period and the total operating cycle, with the receivable collection period showing moderate variability but no clear improvement. These trends suggest increasing capital tied up in operations over the observed periods, which may impact liquidity and operational efficiency if not addressed.

Payables Turnover Ratio

The payables turnover ratio exhibits a downward trend from the first quarter of 2021 through 2025, with fluctuations observed throughout the period. It started at 14.8 in March 2021 and generally declined, reaching lows around the range of 10.39 to 11.44 in 2025. Occasional rebounds occur, such as the increase to 14.05 in December 2024, but the overall movement indicates a reduction in the frequency at which the company turns over its payables. This could suggest a lengthening of payment cycles or more extended credit terms with suppliers.

Average Payables Payment Period

The average payables payment period, measured in days, has correspondingly increased over the same timeframe. Initial values were around 25 days in early 2021, rising steadily with some variability, reaching between 31 and 35 days by 2025. This trend complements the declining payables turnover ratio, confirming that the company takes longer to settle its payable obligations as time progresses. Periods with significant spikes, such as 33 days in June 2023 and 35 days in June 2025, indicate occasional peaks in payment delays or extended credit arrangements.

Overall Analysis

The inverse relationship between payables turnover and average payment period is consistent throughout the observed timeframe. The company appears to be managing its cash outflows by extending payment periods to suppliers. While this may improve short-term liquidity, it could imply potential pressures on supplier relationships or shifts in credit terms. The data shows no sudden or extreme volatility, suggesting that changes in payables management are gradual and possibly strategic.

The financial data reveals several key trends in the company's working capital management over the analyzed periods.

Average Inventory Processing Period

This metric shows a generally increasing trend from 138 days at the start through to a peak of 208 days in the March 2025 quarter, with only minor fluctuations. The inventory processing duration consistently lengthened, indicating that inventory is held for progressively longer periods over time, which could suggest slower inventory turnover or increased stock levels.

Average Receivable Collection Period

The receivable collection period fluctuates moderately, starting at 52 days and exhibiting minor variations, ranging mostly between 46 and 58 days across the quarters. There is no drastic upward or downward trend, suggesting relative stability in the efficiency of collecting receivables.

Average Payables Payment Period

The payables period modestly increases from 25 days to a range between 26 and 35 days over time, with some variability quarter by quarter. This indicates a slight extension in the duration the company takes to pay its suppliers, potentially reflecting changes in supplier payment terms or cash management strategy.

Cash Conversion Cycle (CCC)

The CCC presents a clear upward trend from 165 days to a peak around 230 days before slightly decreasing to approximately 216 days in the latest periods. This reflects an overall elongation in the time between cash outflows and inflows. The increase is primarily driven by the lengthening inventory processing period, despite relatively stable receivables and slightly increased payables durations.

Overall, the company's working capital cycle is becoming longer, principally due to an increase in inventory holding periods. While receivables collection remains steady, and payables payment periods increase slightly, the net effect is a longer cash conversion cycle. This trend may signal increased capital tied up in operations, which could impact liquidity and operational efficiency.