Key Takeaways BFLY unveiled Compass AI to streamline and scale POCUS programs across health systems.The platform targets workflow and documentation gaps to lift compliance.Compass AI adds AI-based documentation, QA tools and integration features to improve revenue.Butterfly Network, Inc. (BFLY) recently introduced Compass AI, a next-generation enterprise software platform designed to streamline and scale point-of-care ultrasound (POCUS) programs across health systems. The company claims this shift can lift ...

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Core Insights - Butterfly Network, Inc. (BFLY) reported a third-quarter 2025 loss of $0.13 per share, which was wider than the Zacks Consensus Estimate of a loss of $0.07 per share, and compared to a loss of $0.08 per share in the same period last year [1][9] - Revenues for the third quarter reached $21.5 million, reflecting a year-over-year increase of 4.5% and exceeding the Zacks Consensus Estimate by 2.4% [1][9] Revenue Performance - International revenues increased by 4% year over year to $5.4 million, attributed to the higher price point of the iQ3 probe launched internationally in Q3 2024 [2] - The overall revenue growth indicates a positive trend despite the wider loss reported [6] Margin Performance - The company's gross loss for the third quarter was $3.8 million, a significant decline from a gross profit of $12.2 million in the same quarter last year, primarily due to a 203.2% increase in the cost of revenues [3] Expense Analysis - Selling and marketing expenses rose by 10.6% year over year to $10.6 million, while research and development expenses decreased by 1.6% to $8.7 million. General and administrative expenses saw a slight drop of 0.7% to $9 million [4] - The operating loss for the quarter was $32.3 million, compared to a loss of $15.6 million in the same period of 2024 [4] Future Guidance - For 2025, the company anticipates revenues between $91 million and $95 million, indicating approximately 13% growth, with the Zacks Consensus Estimate currently at $91 million [5] - The adjusted EBITDA loss is expected to be between $32 million and $35 million, a slight adjustment from the previous estimate of $32 million to $37 million [5] Innovations and Developments - Recent innovations include the launch of an AI-powered Gestational Age Calculator in Malawi and Uganda, which is pending FDA review [6] - The HeartFocus by DESKi app became the first FDA-cleared third-party app on Butterfly Garden, enabling AI-guided echo exams [7] - The company has completed the development of the P5.1 chip and initiated the development of the sixth-generation Apollo AI chip for enhanced edge AI capabilities [7]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $21.5 million, reflecting a 5% growth over the prior year, driven by higher average selling prices and increased volume, particularly in the U.S. [14][15] - Gross margin, including a non-cash inventory write-off of $17.4 million, was negative 17.5%, compared to 59.5% in the prior year. Adjusted gross margin increased to 63.9% from 60% in the prior year [17][18] - Adjusted EBITDA loss was $8.1 million, an improvement from a loss of $8.4 million in Q3 2024, leading to a normalized cash burn of $3.9 million [18][19] - Cash and cash equivalents at the end of the quarter were $148 million, with a trailing 12-month cash use of $31.5 million [19] Business Line Data and Key Metrics Changes - Product revenue was $14.6 million, an increase of 8% versus Q3 2024, driven by higher average selling prices in international markets and increased volume in e-commerce and veterinary channels [15][16] - Software and other services revenue was $6.9 million, flat compared to the prior year, with increased licensing and services revenue offset by lower renewals of individual subscriptions [16] Market Data and Key Metrics Changes - Total international revenue increased 4% over the prior year to $5.4 million, primarily driven by price increases following the international launch of iQ3 [15] - U.S. revenue was $16.1 million, slightly up from the previous year, attributed to e-commerce sales and improved performance in the veterinary distribution channel [15] Company Strategy and Development Direction - The company is focusing on enterprise sales by building a strategy that integrates Butterfly more holistically within health systems, despite facing headwinds in the second quarter [5][6] - The five-year plan introduced multiple growth pillars, including deeper engagement in core business areas and expansion into new markets [5][6] - The AI strategy is seen as a significant accelerator, with successful trials demonstrating the economic impact of Butterfly's AI tools on patient care and hospital efficiency [8][12] Management's Comments on Operating Environment and Future Outlook - Management noted that while Q3 is typically the quietest quarter, they are optimistic about returning to momentum in 2026, with increased pipeline opportunities [5][21] - The company reaffirmed its full-year revenue guidance of $91 to $95 million, indicating a need to close larger deals in the pipeline to reach the higher end of the range [22][23] - Management expressed confidence in the long-term positioning of Butterfly Network, emphasizing the affordability and flexibility of their technology compared to traditional ultrasound solutions [24] Other Important Information - The company has strengthened its information security posture with new certifications, enhancing its competitive advantage in the market [7][56] - The P5.1 chip development has been completed, expected to significantly enhance imaging capabilities and performance, with production set to begin [26][27] Q&A Session Summary Question: Can you quantify the size of some deals that have been pushed due to macro factors? - Management indicated that deals can range from 100 to 200 probes, with large medical school deals also in the pipeline [33][35] Question: What is the outlook for the sales pipeline heading into 2026? - Management noted that while the time to close has extended, there are more deals stacking up, and they expect a lift in 2026 as budgets reset [41][42] Question: How will the cost-effectiveness data from the Rutgers study impact future sales? - The study establishes significant economic benefits, which will strengthen the company's position in enterprise sales discussions [43][46] Question: What is the status of the HomeCare program? - Management remains optimistic about the channel but emphasized that until agreements are finalized, nothing is certain [47] Question: What is needed to de-risk the launch of the P5.1 chip? - Management expressed confidence in the low risk of execution for the new product launch, citing successful past launches as a precedent [50][52] Question: How does the new information security certification help win business? - The company believes its cloud connectivity and security posture provide a competitive advantage, especially as the industry shifts towards cloud solutions [56][57]

Revenue and Sales Performance - Units fulfilled increased by 221 units, or 4.7%, for the three months ended September 30, 2025 compared to the same period in 2024, driven by higher probe sales volume in US sales channels [89]. - Total revenue for the three months ended September 30, 2025 was $21.5 million, a 4.5% increase from $20.6 million in the same period of 2024, with product revenue increasing by $1.0 million, or 7.5% [104]. - Product revenue increased by $5.9 million, or 14.9%, for the nine months ended September 30, 2025, driven by semiconductor chip deliveries and higher average selling prices in international markets [114]. Expenses and Profitability - Cost of product revenue increased by $17.5 million, or 288.3%, for the three months ended September 30, 2025, primarily due to a non-recurring charge for excess and obsolete inventory [107]. - Gross profit for the three months ended September 30, 2025 was a loss of $3.8 million, compared to a profit of $12.2 million in the same period of 2024 [103]. - Research and development expenses for the three months ended September 30, 2025 were $8.7 million, representing 40.5% of total revenue [103]. - Total operating expenses for the three months ended September 30, 2025 were $31.4 million, or 146.0% of total revenue [103]. - Net loss for the three months ended September 30, 2025 was $34.0 million, compared to a net loss of $16.9 million in the same period of 2024 [103]. - Research and development expenses decreased by $2.0 million, or 7.0%, for the nine months ended September 30, 2025, primarily due to a reduction in personnel costs [119]. - Sales and marketing expenses increased by $4.1 million, or 13.8%, for the nine months ended September 30, 2025, driven by higher personnel and employment-related costs [120]. - General and administrative expenses decreased by $1.9 million, or 6.2%, for the nine months ended September 30, 2025, primarily due to reductions in insurance and personnel costs [121]. - Other expenses increased by $1.8 million, or 49.8%, for the nine months ended September 30, 2025, driven by higher legal costs due to litigation [122]. Cash Flow and Liquidity - The company reduced its annual cash requirements by approximately $180 million, to less than $50 million annually [85]. - Net cash used in operating activities decreased by $16.9 million, or 43.7%, for the nine months ended September 30, 2025, due to improvements in net loss and working capital cash usage [130]. - Net cash provided by financing activities increased by $79.5 million for the nine months ended September 30, 2025, primarily from the net proceeds of an $81.0 million public share offering [132]. - As of September 30, 2025, the company had cash and cash equivalents of $144.2 million, with expectations that existing cash will meet liquidity and capital expenditure needs for at least the next 12 months [124]. - The company raised $81.0 million through the issuance of 27.6 million shares of Class A common stock on January 31, 2025 [124]. Inventory and Charges - As of September 30, 2025, the company recognized an additional $17.4 million non-recurring charge for excess and obsolete inventory due to technological advancements and changes in the product portfolio [134]. - Cost of revenue as a percentage of revenue increased from 41.2% to 62.9% for the nine months ended September 30, 2025, primarily due to a $17.4 million excess and obsolete inventory charge [118]. Market and Economic Conditions - The company does not expect cash flows to be significantly affected by a sudden change in market interest rates, including an immediate change of 100 basis points [137]. - Inflation has not had a material effect on the company's business, but rising costs due to inflationary pressures may not be fully offset by price increases [138]. - The company operates primarily in the U.S. and executes most transactions in U.S. dollars, with limited foreign currency translation risk [139]. Accounting Policies - There have been no material changes to the critical accounting policies and estimates disclosed in the 2024 Annual Report [135]. - The company did not identify any significant recently issued accounting pronouncements that may impact its financial position [136].

Revenue Performance - Total revenue for Q3 2025 was $21.5 million, representing a 5% increase from $20.6 million in Q3 2024[4] - U.S. revenue was $16.1 million, while international revenue increased by 4% year-over-year to $5.4 million[4] - Total revenue for Q3 2025 was $21.489 million, a 4.5% increase from $20.561 million in Q3 2024[25] - Product revenue increased to $14.556 million in Q3 2025, up 7.5% from $13.538 million in Q3 2024[25] - The company reaffirmed its full-year revenue guidance of $91 million to $95 million, indicating approximately 13% growth[16] Profitability and Loss - Gross loss was $3.8 million, compared to a gross profit of $12.2 million in the prior year period, with total GAAP gross margin at (17.5)%[5] - Adjusted gross profit was $13.7 million, with adjusted gross margin increasing to 63.9% from 60.0% in the prior year[5] - Gross loss for Q3 2025 was $(3.757) million, compared to a gross profit of $12.233 million in Q3 2024, resulting in a gross margin of (17.5%) versus 59.5%[31] - Net loss for the quarter was $34.0 million, compared to $16.9 million in the prior year[9] - Net loss for Q3 2025 was $(33.971) million, compared to a net loss of $(16.924) million in Q3 2024, resulting in a net loss per share of $(0.13) versus $(0.08)[25] - Adjusted net loss for the nine months ended September 30, 2025, was $26.171 million, an improvement from a loss of $34.552 million in 2024[33] - Adjusted EBITDA loss was $8.1 million, an improvement from $8.4 million in the prior year[10] - Adjusted EBITDA for the three months ended September 30, 2025, was $(8.079) million, compared to $(8.445) million in 2024[33] Operating Expenses - Operating expenses were $31.4 million, up 6% from $29.5 million in the prior year[8] - Operating expenses rose to $31.377 million in Q3 2025, up from $29.479 million in Q3 2024, with R&D expenses at $8.703 million[25] - Stock-based compensation increased to $4.925 million in Q3 2025 from $4.411 million in Q3 2024[33] Cash and Assets - Cash and cash equivalents stood at $144.2 million as of September 30, 2025[12] - Cash and cash equivalents increased to $144.233 million as of September 30, 2025, compared to $88.775 million at December 31, 2024[27] - Total assets as of September 30, 2025, were $290.002 million, up from $256.082 million at December 31, 2024[27] Inventory and Write-downs - The company reported a write-down of inventories of $7.931 million for the nine months ended September 30, 2025[29] - Write-downs and write-offs of inventories and vendor advances were $17.486 million in Q3 2025, significantly higher than $97,000 in Q3 2024[33] Other Financial Metrics - Interest income for the nine months ended September 30, 2025, was $4.598 million, up from $4.023 million in 2024[33] - Depreciation and amortization expenses for the nine months ended September 30, 2025, were $6.327 million, down from $7.835 million in 2024[33] - Other income (expense), net for the nine months ended September 30, 2025, was $(2.824) million, compared to $(517,000) in 2024[33] Product Development - New product developments include the P5.1 chip moving to production and the Apollo AI chip initiating development[2]

Core Insights - Butterfly Network, Inc. reported its financial results for Q3 2025, highlighting foundational progress in its operations [1] Financial Performance - The company announced its financial results for the third quarter ended September 30, 2025 [1] - Specific financial metrics were not detailed in the provided text, but the emphasis was on the progress made during the quarter [1] Business Update - Joseph DeVivo, the President, CEO, and Chairman of Butterfly, characterized the quarter as a period of foundational progress [1]

Group 1 - Butterfly Network, Inc. is a digital health company focused on transforming care through handheld, whole-body ultrasound technology and intuitive software [1] - Joseph DeVivo, the President, CEO, and Chairman of Butterfly Network, along with Megan Carlson, the Senior Vice President and Interim CFO, will participate in a fireside chat and hold one-on-one investor meetings at the UBS Global Healthcare Conference [1]

Core Points - Butterfly Network, Inc. has achieved ISO 27001 certification, which is recognized as the leading standard for information security management systems globally [1] Company Summary - The company specializes in digital health, focusing on handheld, whole-body ultrasound technology [1] - The certification was published by the International Organization for Standardization (ISO) in collaboration with the International Electrotechnical Commission (IEC) [1]

Core Insights - Butterfly Network, Inc. (BFLY) is scheduled to release its third-quarter 2025 results on October 31, before market opening [1] - The company reported a loss of 6 cents in the last quarter, exceeding the Zacks Consensus Estimate by 14.29%, and has topped earnings estimates in the last four quarters with an average surprise of 21.91% [1] Q3 Estimates - The Zacks Consensus Estimate for Butterfly Network's revenues in Q3 2025 is $21 million, reflecting a 2.1% increase from the previous year [2] - The expected loss for the third quarter is 7 cents per share, indicating a 12.5% year-over-year improvement [2] Estimate Revision Trend - Estimates for Butterfly Network's Q3 earnings have remained stable over the past 90 days [3] Factors Influencing Q3 Performance - The company is in the second year of a strategic plan aiming for over $500 million in revenues by 2030 and break-even cash flows by the end of 2027 [4] - Product revenues are expected to benefit from strong uptake of the Butterfly iQ3 probe, both domestically and internationally, along with higher average selling prices [4] - Increased enterprise software revenues and contributions from partnerships are anticipated to enhance Software and other services sales [5] Strategic Initiatives - The introduction of Compass AI, a cloud-based enterprise software platform, is expected to simplify documentation and improve record completion [5] - Ongoing strategic initiatives like Octiv, HomeCare, and Butterfly Gardens are likely to support revenue growth [6][8] - The AI marketplace, Butterfly Gardens, has added new partners and received FDA clearance for AI-powered clinical applications, which may positively impact revenues [7] Challenges - Uncertainty regarding changes in funding and government programs may slow down customer purchasing decisions, affecting U.S. hospital and enterprise channels [9]