SVB Financial Group (NASDAQ: SIVB) stock trades firm driven by higher system ASPs

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SVB Financial Group (NASDAQ: SIVB) stock rose over 0.8% on 24th January, 2020 (As of 11:00 am GMT-5; Source: Google finance) after the company posted better than expected results for the fourth quarter of FY 19. The company’s pro forma gross margin for the fourth quarter of 2019 was 72.2%, compared to 71.8% for the fourth quarter of 2018 and 72% last quarter. The increase compared with the fourth quarter of 2018 and last quarter, is mainly due to higher system ASPs and product cost reductions.

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SIVB in the fourth quarter of FY 19 has reported the adjusted earnings per share of $5.06, beating the analysts’ estimates for the adjusted earnings per share of $4.59, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 22 percent to $847.01 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue by 7.65%. For the fourth quarter, global procedure growth was approximately 19%, which is driven by general surgery in the United States, with positive contributions to the global growth rate from Japan, China, Germany and Korea. In the United States, the company posted 18% year-over-year procedure growth for the quarter. General surgery accounted for the largest increase along with stable growth in urology and gynecology. Within general surgery, hernia repair, cholecystectomy, bariatric and colorectal surgery showed strength.

Further, Procedures posted the growth of approximately 19% over the fourth quarter last year. The company placed 336 da Vinci Surgical Systems, up from 290 in the fourth quarter of 2018. The installed base grew 12% from a year ago. Instrument and accessory revenue rose to $671 million, which is up 24%. Total recurring revenue in the quarter was $896 million, which is up 24% over Q4 of 2018 and representing 70% of total revenue.  The company had generated a pro forma operating profit of $506 million in the quarter, up 23% from the fourth quarter of last year, and pro forma net income was $417 million, up 18%.

Moreover, Systems revenue for the fourth quarter 2019 grew 22% to $416 million compared with the fourth quarter of 2018, and an increase of 23% compared with last quarter. Compared to the fourth quarter of 2018, systems revenue reflected higher system placements, higher ASPs and higher lease-related revenue. The company had completed 126 operating lease transactions, representing 38% of total placements, compared with 84% or 29% of total placements in the fourth quarter of 2018 and 92% or 33% of total placements last quarter.

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