Gary Guthart
Good afternoon. And thank you for joining us on the call today. Our second quarter of 2018 was a strong one in pursuit of our mission to improve the availability and quality of minimally invasive surgery. Customer use of our systems and procedures exceeded our expectations in the quarter with good performance in new system placements and increased system utilization at existing customer sites.
We believe acceptance of da Vinci in general surgery in the United States, growth internationally and appreciation of our generation-four platform by surgeons underpins our recent growth. That said we’re neither satisfied nor comfortable. There is substantial opportunity for improvement in surgery, and our customer base has demonstrated sustained interest in our new approaches to old problems. Global procedure growth was approximately 18% in the second quarter of 2018 compared with the second quarter of 2017, accelerating from our Q1 growth rate.
Regionally, the United States showed particular strength with healthy growth in hernia repair and colorectal procedures. Mature procedure growth in the United States, including prostatectomy and hysterectomy, continue to top our expectations. Our first quarter aggregate procedure growth in Japan, after reimbursement listing, was in line with our expectations. European procedure growth was generally in line with our expectations with particular strength in the UK and mix performance elsewhere. Calvin will review procedure trends in greater detail later in the call.
Our capital placement performance in the second quarter of 2018 accelerated relative to 2017 with growth in total placements rising 33% from 166 to 220. Net of trade-ins and retirements, our da Vinci install base grew 12% over Q2 of 2017. The mix of system placements between our flagship Xi systems, our [Value-X] system and refurbished X SI systems, align with our strategy regionally. Capital placements have historically been lumpy and we anticipate volatility in placements for the remainder of 2018.
Turning to operating performance. Our teams execute its plan with manufacturing and quality cost meeting our goals, and average selling prices within our expected ranges. On the investment front, we are building our organization and making targeted infrastructure investments to deepen both our technological and regional capabilities. Fixed costs spending in the quarter was slightly lower than we anticipated, largely due to timing issues that we anticipate will catch up in the back half of the year.
Highlights for our second quarter operating results are as follows; procedures grew approximately 18% over the second quarter of last year; we placed 220 da Vinci surgical systems, up from 166 in the second quarter of 2017; our install base grew 12% from a year ago; revenue for the quarter was $909 million, up 20%; pro forma gross profit margin was 71.1% compared to 71.4% in the second quarter last year. Instrument and accessory revenue increased to $476 million, up 20%.
Total recurring revenue in the quarter was $643 million, representing 71% of total revenue. We generated a pro forma operating profit of $389 million in the quarter, up 23% from the second quarter of last year. And pro forma net income was 327 million, up 42%. Marshall will take you through our finances in greater detail shortly.
Delivery of substantive technology and service improvements are core to continued progress in surgery. We measure our innovations by their ability to positively impact outcomes in the hands of our customers to be used efficiently, while lowering the total cost of treatment per patient episode and for their positive impact on the experience of surgical patients. With increased interest in da Vinci from general surgeons, we have added our 60 millimeter SureForm surgical stapler to our product portfolio, with 510 (NYSE:K) clearance this month joining its prior CE Mark.
Our second-generation cut and seal instrument, Vessel Sealer Extend, is in its first quarter of U.S. launch with outstanding customer feedback. And we have submitted our 510 (k) for enhanced grasper for hernia repair. As weve said in the past we design our product systems, instruments and software to work together seamlessly as an ecosystem, to enable a holistic approach to a surgical procedure. These latest instruments and software releases are optimized for our generation-four platform and general surgery.
We obtained FDA clearance for our da Vinci SP surgical system for neurologic surgical procedures in Q2 this year, and we are finalizing our transoral clinical IDE for SP this quarter. We plan to launch the da Vinci SP surgical system in the United States in phases with first customer shipments expected to begin late Q3 or early Q4 this year. Our first access sites will focus on clinical data generation and customer feedback. Surgeon interest in SP is high and we believe SP to be a platform technology with potential application in a number of surgical specialties.
Consistent with our history, we will engage surgeons and regulators in clinical assessments for new applications of SP and anticipate filing additional 510 (k) applications over the next couple of years. Our team is progressing to plan on our flexible robotics platform, initially targeted to address the acute need in diagnosis of lung cancer, one of the most commonly diagnosed forms of cancer in the world and for which early detection is important. Feedback from physicians evaluating our technology relative to existing and recently announced alternatives remained strongly supportive of our efforts. We anticipate submitting our 510 (k) in this back half of 2018, and are working through final design validations and to bring up of our supply chain.
As our approach to surgery has gained traction, organizations large and small, are hurrying to participate in the market. Their entry is an inevitable reaction to positive change in the operating room. Customers appreciate options from Intuitive and others, and we anticipate customers will evaluate alternative as they appear. At Intuitive, we are sharply focused on understanding our customers’ world and providing them with products and services they value highly.
To take a simple example, our systems are available to start and able to complete cases with remarkable predictability, considering their use of a wide range of sophisticated technologies. This is a consequence of our holistic design and integration principles, the capability of our staff and our deep commitment to understanding the surgical team’s world. We believe this sets a high bar for new entrants in the eyes of the thousands of surgeons who use da Vinci weekly.
For the balance of 2018, our focus remains in completing the tasks we set for ourselves; first, continued adoption of da Vinci in general surgery; second, continued development of European markets and access to customers in Asia; third, advancing our new platforms, imaging, advanced instruments, da Vinci SP and our flexible catheter platform; and finally, support for additional clinical and economic validation by global region.
Intuitive Surgical, Inc. (ISRG) CEO Gary Guthart on Q2 2018 Results - Earnings Call Transcript | Seeking Alpha
