Core Viewpoint - Butterfly Network, Inc. (BFLY) has been upgraded to a Zacks Rank 2 (Buy), indicating an upward trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [4][6]. - Rising earnings estimates for Butterfly Network suggest an improvement in the company's underlying business, likely leading to an increase in stock price [5][10]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly Zacks Rank 1 stocks averaging a +25% annual return since 1988 [7][9]. - The upgrade of Butterfly Network to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions - Analysts have raised their earnings estimates for Butterfly Network, with the Zacks Consensus Estimate increasing by 7.5% over the past three months [8]. - The company is expected to earn -$0.25 per share for the fiscal year ending December 2025, showing no year-over-year change [8].

Core Insights - Butterfly Network reported a record gross margin of 63.7% and a revenue growth of 9.0% year-over-year for Q2 2025, although revenue slightly missed analyst expectations at $23.4 million [1][2] - The company narrowed its losses with non-GAAP earnings per share of $(0.03), better than the expected $(0.05) [1] - Management revised its full-year revenue guidance down to $91 million to $95 million for FY2025, indicating a shift from earlier expectations of approximately 20% year-on-year growth [1][10] Financial Performance - Revenue for Q2 2025 was $23.4 million, up 8.8% from $21.5 million in Q2 2024 [2] - Gross margin improved by 5.1 percentage points from 58.6% in Q2 2024 to 63.7% in Q2 2025 [2][6] - Product revenue increased by 25% to $14.2 million, while software and services revenue remained flat at $6.8 million [5] Strategic Developments - Butterfly Network focuses on handheld ultrasound devices using Ultrasound-on-Chip technology, targeting a wide range of healthcare providers [3] - The company is expanding clinical partnerships and launching new AI-driven software, including the iQ3 device and upcoming P5 chip [4][7] - Recent pilot programs, such as Butterfly HomeCare, have shown promising results in reducing hospital readmissions [8] Future Outlook - The updated revenue guidance suggests approximately 13% growth for FY2025, down from previous estimates [10] - Despite the reduced revenue outlook, the company expects adjusted EBITDA losses to improve to between $32 million and $37 million for FY2025 [10] - Key areas to monitor include the uptake of new AI-driven software, international expansion, and progress in securing additional hospital contracts [11]

[Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) Outlines forward-looking statements, their reliance on management's beliefs, and inherent uncertainties - The report contains forward-looking statements based on management's beliefs and assumptions, relating to future events or financial performance, including plans, strategies, and prospects[9](index=9&type=chunk) - Key areas of forward-looking statements include product development, regulatory authorization, market competition, market size and growth, financial estimates, and the ability to attract and retain customers[12](index=12&type=chunk) - These statements are subject to inherent risks, uncertainties, and assumptions, detailed in the 'Risk Factors' section of the 2024 Annual Report on Form 10-K and this 10-Q[10](index=10&type=chunk)[11](index=11&type=chunk) [Part I — Financial Information](index=5&type=section&id=Part%20I%20Financial%20Information) Presents unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements, including balance sheets, operations, equity, and cash flows [Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | **Assets** | | | | | | Total current assets | $253,747 | $192,613 | $61,134 | 31.7% | | Total assets | $313,278 | $256,082 | $57,196 | 22.3% | | **Liabilities** | | | | | | Total current liabilities | $44,666 | $48,215 | $(3,549) | -7.4% | | Total liabilities | $80,472 | $87,250 | $(6,778) | -7.8% | | **Stockholders' Equity** | | | | | | Total stockholders' equity | $232,806 | $168,832 | $63,974 | 37.9% | - The increase in total current assets was primarily driven by a significant increase in cash and cash equivalents from **$88,800 thousand to $148,136 thousand**[15](index=15&type=chunk) - The increase in total stockholders' equity is largely due to an increase in additional paid-in capital from **$970,900 thousand to $1,062,700 thousand**, partially offset by an accumulated deficit[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20(Unaudited)) Details the company's financial performance, including revenue, gross profit, and net loss, for the reported periods | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Change | % Change | | :---------------------------------- | :------------------------------- | :------------------------------- | :----- | :------- | | Total revenue | $23,383 | $21,487 | $1,896 | 8.8% | | Gross profit | $14,891 | $12,586 | $2,305 | 18.3% | | Loss from operations | $(16,100) | $(17,232) | $1,132 | -6.6% | | Net loss and comprehensive loss | $(13,834) | $(15,706) | $1,872 | -11.9% | | Net loss per common share (basic and diluted) | $(0.06) | $(0.07) | $0.01 | -14.3% | | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change | % Change | | :---------------------------------- | :------------------------------- | :------------------------------- | :----- | :------- | | Total revenue | $44,608 | $39,143 | $5,465 | 14.0% | | Gross profit | $28,272 | $22,863 | $5,409 | 23.7% | | Loss from operations | $(34,566) | $(39,852) | $5,286 | -13.3% | | Net loss and comprehensive loss | $(27,801) | $(37,467) | $9,666 | -25.8% | | Net loss per common share (basic and diluted) | $(0.12) | $(0.18) | $0.06 | -33.3% | - The company reported a reduced net loss for both the three and six months ended June 30, 2025, compared to the prior year periods, driven by increased revenue and improved gross profit[17](index=17&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Unaudited)) Outlines changes in stockholders' equity, reflecting share offerings, stock compensation, and net loss | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :---------------------------------- | :------------ | :---------------- | :----- | | Total Stockholders' Equity | $232,806 | $168,832 | $63,974 | - For the six months ended June 30, 2025, stockholders' equity increased significantly, primarily due to **$81,000 thousand in net proceeds** from a share offering and **$12,148 thousand in stock-based compensation expense**, partially offset by a net loss of **$27,801 thousand**[22](index=22&type=chunk) - The number of Class A common shares issued and outstanding increased from **188,626,154** at December 31, 2024, to **224,609,833** at June 30, 2025, largely due to the public share offering[15](index=15&type=chunk)[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Presents the company's cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash used in operating activities | $(18,844) | $(30,667) | $11,823 | | Net cash used in investing activities | $(1,249) | $(1,837) | $588 | | Net cash provided by financing activities | $79,454 | $0 | $79,454 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $59,361 | $(32,504) | $91,865 | | Cash, cash equivalents, and restricted cash, end of period | $152,151 | $106,146 | $46,005 | - Net cash used in operating activities decreased by **$11,823 thousand**, primarily due to an **$8,594 thousand improvement** in net loss adjusted for non-cash items and a **$3,229 thousand improvement** in net working capital cash usage[125](index=125&type=chunk) - Net cash provided by financing activities significantly increased by **$79,454 thousand**, mainly from **$81,000 thousand in net proceeds** from a public share offering in January 2025[127](index=127&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Provides detailed explanations and additional information supporting the condensed consolidated financial statements [Note 1. Organization and Description of Business](index=10&type=section&id=Note%201.%20Organization%20and%20Description%20of%20Business) Describes the company's core business as a digital health entity and its global operational structure - Butterfly Network, Inc. is a digital health business focused on transforming care through portable, semiconductor-based ultrasound technology, intuitive software, and educational offerings[28](index=28&type=chunk) - The company operates wholly-owned subsidiaries in the United States, Australia, Germany, the Netherlands, Taiwan, and the United Kingdom[29](index=29&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=10&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the key accounting principles and methods used in preparing the financial statements - The financial statements are prepared in accordance with U.S. GAAP and SEC interim reporting rules, with certain disclosures condensed or omitted[30](index=30&type=chunk) - The company operates in one reportable segment, with the CEO reviewing consolidated net loss for performance evaluation and resource allocation[35](index=35&type=chunk) - Operating expenses classified as 'other' include costs related to business transformation, reductions in force, litigation, and legal settlements[40](index=40&type=chunk) Other Operating Expenses (in thousands) | Other Operating Expenses (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Employment-related expenses | $488 | $26 | $520 | $(30) | | Legal-related expenses | $1,499 | $580 | $2,171 | $1,994 | | Total other | $1,987 | $606 | $2,691 | $1,964 | [Note 3. Revenue Recognition](index=12&type=section&id=Note%203.%20Revenue%20Recognition) Details revenue streams by product type, geographical market, and remaining performance obligations Revenue by Product Type (in thousands) | Revenue by Product Type (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Hardware | $16,621 | $14,648 | $30,785 | $25,939 | | Software and other services | $6,762 | $6,839 | $13,823 | $13,204 | | Total revenue | $23,383 | $21,487 | $44,608 | $39,143 | Revenue by Geographical Market (in thousands) | Revenue by Geographical Market (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $17,540 | $17,039 | $34,579 | $30,775 | | International | $5,843 | $4,448 | $10,029 | $8,368 | | Total revenue | $23,383 | $21,487 | $44,608 | $39,143 | - As of June 30, 2025, the company had **$40,500 thousand in remaining performance obligations**, with **50% expected to be recognized as revenue** in the next twelve months[46](index=46&type=chunk) [Note 4. Fair Value of Financial Instruments](index=12&type=section&id=Note%204.%20Fair%20Value%20of%20Financial%20Instruments) Explains the fair value measurement hierarchy and presents the fair value of financial instruments - The company measures fair value using a three-tier hierarchy (Level 1: quoted prices in active markets, Level 2: observable inputs for similar assets/liabilities, Level 3: unobservable inputs)[48](index=48&type=chunk)[53](index=53&type=chunk) Warrants (in thousands) | Warrants (in thousands) | June 30, 2025 (Total) | June 30, 2025 (Level 1) | June 30, 2025 (Level 2) | December 31, 2024 (Total) | December 31, 2024 (Level 1) | December 31, 2024 (Level 2) | | :---------------------- | :-------------------- | :---------------------- | :---------------------- | :------------------------ | :-------------------------- | :-------------------------- | | Public Warrants | $828 | $828 | $— | $1,794 | $1,794 | $— | | Private Warrants | $411 | $— | $411 | $891 | $— | $891 | | Total liabilities at fair value | $1,239 | $828 | $411 | $2,685 | $1,794 | $891 | - No warrants were exercised during the three and six months ended June 30, 2025 and 2024[50](index=50&type=chunk) [Note 5. Inventories](index=14&type=section&id=Note%205.%20Inventories) Provides a breakdown of inventory by type and highlights changes in total inventory levels Inventory Type (in thousands) | Inventory Type (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Raw materials | $47,200 | $47,642 | | Work-in-progress | $4,940 | $4,736 | | Finished goods | $16,767 | $18,411 | | Total inventories | $68,907 | $70,789 | - Total inventories decreased slightly from **$70,789 thousand** at December 31, 2024, to **$68,907 thousand** at June 30, 2025[54](index=54&type=chunk) [Note 6. Property and Equipment, Net](index=14&type=section&id=Note%206.%20Property%20and%20Equipment,%20Net) Details the company's property and equipment, net of accumulated depreciation and amortization Property and Equipment (in thousands) | Property and Equipment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Property and equipment, gross | $47,918 | $46,415 | | Less: accumulated depreciation and amortization | $(30,589) | $(26,897) | | Property and equipment, net | $17,329 | $19,518 | - Net property and equipment decreased by **$2,189 thousand** from December 31, 2024, to June 30, 2025, primarily due to increased accumulated depreciation and amortization[55](index=55&type=chunk) [Note 7. Restricted Cash](index=14&type=section&id=Note%207.%20Restricted%20Cash) Presents the composition of cash, cash equivalents, and restricted cash, including collateral for leases Restricted Cash (in thousands) | Restricted Cash (in thousands) | June 30, 2025 | June 30, 2024 | | :----------------------------- | :------------ | :------------ | | Cash and cash equivalents | $148,136 | $102,051 | | Restricted cash (current) | $0 | $80 | | Restricted cash (non-current) | $4,015 | $4,015 | | Total cash, cash equivalents and restricted cash | $152,151 | $106,146 | - Restricted cash of **$4,015 thousand** is held as collateral for an office lease and is classified as a non-current asset[56](index=56&type=chunk) - Restrictions on cash related to an agreement with the Bill & Melinda Gates Foundation lapsed as of December 31, 2024[56](index=56&type=chunk) [Note 8. Accrued Expenses and Other Current Liabilities](index=15&type=section&id=Note%208.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Details the components of accrued expenses and other current liabilities, including warranty activity Accrued Expenses (in thousands) | Accrued Expenses (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Employee compensation | $5,485 | $11,192 | | Professional fees | $3,923 | $2,015 | | Total accrued expenses and other current liabilities | $24,334 | $27,695 | Warranty Expense Activity (in thousands) | Warranty Expense Activity (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Balance, beginning of period | $735 | $644 | $1,023 | $697 | | Warranty provision charged to operations | $495 | $387 | $462 | $483 | | Warranty claims | $(314) | $(219) | $(569) | $(368) | | Balance, end of period | $916 | $812 | $916 | $812 | [Note 9. Stockholders' Equity](index=15&type=section&id=Note%209.%20Stockholders'%20Equity) Discusses changes in stockholders' equity, including share offerings, stock option, RSU activity, and compensation - On January 31, 2025, the company completed a public offering of **27,600,000 Class A common shares**, generating net proceeds of **$81,000 thousand**[58](index=58&type=chunk) Stock Option Activity | Stock Option Activity | Number of Options | | :-------------------- | :---------------- | | Outstanding at December 31, 2024 | 6,560,736 | | Exercised | (179,503) | | Forfeited | (324,195) | | Outstanding at June 30, 2025 | 6,057,038 | Restricted Stock Unit Activity | Restricted Stock Unit Activity | Number of RSUs | | :----------------------------- | :------------- | | Outstanding at December 31, 2024 | 21,250,230 | | Granted | 8,581,432 | | Vested | (7,993,382) | | Forfeited | (1,386,789) | | Outstanding at June 30, 2025 | 20,451,491 | - During Q2 2025, **400,000 RSUs** of a departing employee had their vesting accelerated, resulting in **$500 thousand incremental stock-based compensation expense**[63](index=63&type=chunk) Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total stock-based compensation expense | $5,864 | $5,858 | $12,148 | $11,383 | [Note 10. Net Loss Per Share](index=18&type=section&id=Note%2010.%20Net%20Loss%20Per%20Share) Explains basic and diluted net loss per share calculation, noting anti-dilutive common equivalent shares - Basic and diluted net loss per share were the same for all periods presented, as the inclusion of potential common shares would have been anti-dilutive[67](index=67&type=chunk) Net Loss Per Share (Basic and Diluted) | Net Loss Per Share (Basic and Diluted) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Class A and B common stockholders | $(0.06) | $(0.07) | $(0.12) | $(0.18) | Anti-Dilutive Common Equivalent Shares | Anti-Dilutive Common Equivalent Shares | June 30, 2025 | June 30, 2024 | | :------------------------------------- | :------------ | :------------ | | Outstanding options to purchase common stock | 6,057,038 | 7,022,739 | | Outstanding restricted stock units | 20,451,491 | 21,944,400 | | Outstanding employee stock purchase plan options | 1,949,593 | — | | Outstanding warrants | 20,652,690 | 20,652,690 | | Total anti-dilutive common equivalent shares | 49,110,812 | 49,619,829 | [Note 11. 401(k) Retirement Plan](index=20&type=section&id=Note%2011.%20401(k)%20Retirement%20Plan) Reports the company's expenses related to matching 401(k) contributions for the specified periods 401(k) Contributions (in thousands) | 401(k) Contributions (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Expenses for matching 401(k) contributions | $0.1 | $0.2 | $0.3 | $0.3 | [Note 12. Commitments and Contingencies](index=21&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) Details the company's lease costs, inventory purchase commitments, and ongoing legal proceedings - Total lease cost for the three and six months ended June 30, 2025, was **$700 thousand and $1,400 thousand**, respectively, primarily for operating leases[72](index=72&type=chunk) - As of June 30, 2025, the aggregate minimum inventory purchase commitments were **$4,500 thousand**, with a vendor advance asset of **$2,700 thousand**[73](index=73&type=chunk) - The company is involved in several legal proceedings, including a putative class action lawsuit and stockholder derivative actions, which it intends to vigorously defend against[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on financial condition, operations, key performance, revenue, expenses, and liquidity [Overview](index=23&type=section&id=Overview) Introduces Butterfly Network's business, strategic financial adjustments, and recent capital raise - Butterfly Network is a digital health company transforming care with portable, semiconductor-based ultrasound technology and cloud-connected software[81](index=81&type=chunk)[82](index=82&type=chunk) - Since 2022, the company has reduced annual cash requirements by approximately **$180,000 thousand to less than $50,000 thousand annually**, aiming to extend its cash runway[83](index=83&type=chunk) - On January 31, 2025, the company raised **$81,000 thousand in net proceeds** from a public offering of Class A common stock to support revenue growth[83](index=83&type=chunk) [Key Performance Measures](index=23&type=section&id=Key%20Performance%20Measures) Discusses changes in units fulfilled and the mix of software and other services revenue - Units fulfilled decreased by **5.1%** for the three months ended June 30, 2025, compared to the prior year, due to lower US probe sales volume partially offset by international and Vet channel growth[87](index=87&type=chunk) - Software and other services mix decreased by **2.9 percentage points to 28.9%** for the three months ended June 30, 2025, primarily reflecting increased product revenue[90](index=90&type=chunk) [Description of Certain Components of Financial Data](index=25&type=section&id=Description%20of%20Certain%20Components%20of%20Financial%20Data) Explains the recognition and classification of revenue, cost of revenue, and operating expenses - Revenue includes product sales (devices, accessories, chips) and software/services (SaaS, support, SDKs, partnerships); product revenue is recognized at a point in time, while software/services are recognized over time[91](index=91&type=chunk) - Cost of product revenue includes manufacturing, personnel, freight, warranty, and inventory costs; cost of software and other services revenue includes personnel, cloud hosting, and payment processing fees[94](index=94&type=chunk)[95](index=95&type=chunk) - Research and development expenses are primarily for new product/service development and improvements, expensed as incurred; sales and marketing expenses are for commercial capabilities, and general and administrative expenses cover personnel, insurance, patent fees, and professional services[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - Operating expenses classified as 'other' are non-recurring, such as employee severance, business transformation, and litigation costs[99](index=99&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, detailing revenue, gross profit, and operating expenses [Comparison of the three months ended June 30, 2025 and 2024](index=26&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030,%202025%20and%202024) Compares financial performance, including revenue and operating expenses, for the three-month periods | Metric (in thousands) | 2025 | 2024 | Change | % Change | | :-------------------- | :--- | :--- | :----- | :------- | | Product revenue | $16,621 | $14,648 | $1,973 | 13.5% | | Software and other services revenue | $6,762 | $6,839 | $(77) | -1.1% | | Total revenue | $23,383 | $21,487 | $1,896 | 8.8% | - Product revenue increased by **13.5%** due to higher selling prices of the iQ3 probe and semiconductor chip deliveries, partially offset by lower US probe sales volume[102](index=102&type=chunk)[103](index=103&type=chunk) - Cost of revenue as a percentage of revenue decreased from **41.4% to 36.3%**, driven by a decrease in software amortization expense and manufacturing efficiency improvements[105](index=105&type=chunk) Operating Expense (in thousands) | Operating Expense (in thousands) | 2025 | 2024 | Change | % Change | | :------------------------------- | :--- | :--- | :----- | :------- | | Research and development | $8,315 | $9,411 | $(1,096) | -11.6% | | Sales and marketing | $11,559 | $9,728 | $1,831 | 18.8% | | General and administrative | $9,130 | $10,073 | $(943) | -9.4% | | Other | $1,987 | $606 | $1,381 | 227.9% | - Sales and marketing expenses increased by **18.8%** due to investments in the sales force and marketing functions[107](index=107&type=chunk) - Other operating expenses increased significantly by **227.9%** due to higher legal costs from litigation and employment-related costs[109](index=109&type=chunk) [Comparison of the six months ended June 30, 2025 and 2024](index=29&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030,%202025%20and%202024) Compares financial performance, including revenue and operating expenses, for the six-month periods | Metric (in thousands) | 2025 | 2024 | Change | % Change | | :-------------------- | :--- | :--- | :----- | :------- | | Product revenue | $30,785 | $25,939 | $4,846 | 18.7% | | Software and other services revenue | $13,823 | $13,204 | $619 | 4.7% | | Total revenue | $44,608 | $39,143 | $5,465 | 14.0% | - Product revenue increased by **18.7%** due to higher iQ3 probe selling prices, increased international volume, and semiconductor chip deliveries[110](index=110&type=chunk) - Software and other services revenue increased by **4.7%** driven by software subscription revenue and partnership revenues[111](index=111&type=chunk) - Cost of revenue as a percentage of revenue decreased from **41.6% to 36.6%**, primarily due to decreased software amortization and manufacturing efficiencies[113](index=113&type=chunk) Operating Expense (in thousands) | Operating Expense (in thousands) | 2025 | 2024 | Change | % Change | | :------------------------------- | :--- | :--- | :----- | :------- | | Research and development | $18,239 | $20,131 | $(1,892) | -9.4% | | Sales and marketing | $23,179 | $20,106 | $3,073 | 15.3% | | General and administrative | $18,729 | $20,514 | $(1,785) | -8.7% | | Other | $2,691 | $1,964 | $727 | 37.0% | - Sales and marketing expenses increased by **15.3%** due to higher personnel costs from investments in sales and marketing functions[115](index=115&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses cash position, capital raising activities, and ability to meet future financial obligations - As of June 30, 2025, cash and cash equivalents totaled **$148,136 thousand**, with **$81,000 thousand raised** from a public share offering in January 2025[119](index=119&type=chunk) - The company expects existing cash and cash flows from operations to be sufficient to meet liquidity, capital expenditure, and working capital requirements for at least the next 12 months[119](index=119&type=chunk) Material Cash Requirements (as of June 30, 2025, in millions) | Material Cash Requirements (as of June 30, 2025, in millions) | Total Obligation | Payable within 12 months | | :------------------------------------------------ | :--------------- | :----------------------- | | Fixed office lease payment obligations | $26.2 | $3.7 | | Fixed technology license payment obligations | $14.0 | $3.5 | | Fixed purchase obligations for inventory supply agreements (net of vendor advances) | $1.8 | $1.8 | | Fixed outsourced services payment obligations | $4.2 | $1.4 | [Cash flows](index=32&type=section&id=Cash%20flows) Analyzes the company's cash movements from operating, investing, and financing activities Cash Flow Activity (in thousands) | Cash Flow Activity (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash used in operating activities | $(18,844) | $(30,667) | $11,823 | | Net cash used in investing activities | $(1,249) | $(1,837) | $588 | | Net cash provided by financing activities | $79,454 | $0 | $79,454 | - Net cash used in operating activities decreased by **$11,823 thousand**, driven by improvements in net loss (adjusted for non-cash items) and net working capital cash usage[125](index=125&type=chunk) - Net cash provided by financing activities increased by **$79,454 thousand**, primarily due to **$81,000 thousand** from the public share offering in January 2025[127](index=127&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=33&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) States no material changes to critical accounting policies and estimates - There have been no material changes to the critical accounting policies and estimates disclosed in the 2024 Annual Report on Form 10-K[129](index=129&type=chunk) [Recently Adopted Accounting Pronouncements](index=33&type=section&id=Recently%20Adopted%20Accounting%20Pronouncements) Indicates no significant impact from recently issued accounting pronouncements on the company's financials - The company did not identify any significant recently issued accounting pronouncements that may potentially impact its financial position and results of operations[130](index=130&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses exposure to market risks, including interest rate, inflation, and foreign exchange risks - The company has no floating rate debt and its cash and cash equivalents are primarily in bank deposits and money market accounts, with low exposure to interest rate fluctuations[131](index=131&type=chunk) - Inflation has not had a material effect on the business, but the company acknowledges potential harm if higher costs from inflationary pressures cannot be offset[132](index=132&type=chunk) - Operating primarily in the U.S. with transactions in U.S. dollars, the company has limited foreign currency translation risk and has not utilized hedging strategies[133](index=133&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Details evaluation of disclosure controls and procedures and reports on internal control changes - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[136](index=136&type=chunk) - No changes in internal control over financial reporting occurred during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[137](index=137&type=chunk) [Part II — Other Information](index=34&type=section&id=Part%20II%20Other%20Information) Provides additional information on legal proceedings, risk factors, equity sales, and other disclosures [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) Refers to the detailed discussion of legal proceedings and claims within the financial statement notes - The company is involved in litigation and legal matters arising in the normal course of business, with outcomes inherently uncertain[139](index=139&type=chunk) - Further information on legal proceedings is incorporated by reference from Note 12 'Commitments and Contingencies' in Part I, Item 1[140](index=140&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors described in the 2024 Annual Report on Form 10-K[141](index=141&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no unregistered sales or issuer repurchases of equity securities during the period - No unregistered sales of equity securities occurred during the period[142](index=142&type=chunk) - The company did not repurchase any of its equity securities during the three months ended June 30, 2025[143](index=143&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) Provides information on Rule 10b5-1 trading arrangements and new indemnification agreements - None of the company's directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[144](index=144&type=chunk) - On July 30, 2025, the board approved a new form of indemnification agreement for directors and certain officers, superseding previous agreements[146](index=146&type=chunk) - The new Indemnification Agreement provides for indemnification and expense advancement to the fullest extent permitted by law for losses incurred in connection with their status as a director or officer[147](index=147&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents, plans, and certifications - The exhibit index includes corporate governance documents (Certificate of Incorporation, Bylaws), executive compensation plans (Executive Severance Plan, Director Compensation Policy), and a new Form of Indemnification Agreement[151](index=151&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included[151](index=151&type=chunk) - Inline XBRL documents for financial data are also part of the exhibits[151](index=151&type=chunk)[152](index=152&type=chunk) [Signatures](index=39&type=section&id=Signatures) Confirms the report's official signing by the Executive Vice President and Chief Financial & Operations Officer - The report was signed on behalf of Butterfly Network, Inc. by Heather C. Getz, CPA, Executive Vice President and Chief Financial & Operations Officer, on August 1, 2025[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)

Financial Data and Key Metrics Changes - The company reported record revenue of $23.4 million for Q2 2025, representing a 9% increase year-over-year, driven by higher average selling prices and sales of semiconductor chips [16][20] - Gross margins reached an all-time high of 64%, up from 59% in the prior year, attributed to higher average selling prices and improved software and services margins [20] - Adjusted EBITDA loss improved to $6.2 million from $8.1 million in the same period last year, reflecting a 24% improvement [20][24] Business Line Data and Key Metrics Changes - Product revenue was $16.6 million, a 13% increase compared to Q2 2024, primarily due to higher average selling prices and chip sales [18] - Software and other services revenue remained flat at $6.8 million, impacted by lower renewals of individual subscriptions and implementation services revenue [19] - Total annual recurring revenue (ARR) grew slightly, led by an increase in enterprise software subscription ARR [19] Market Data and Key Metrics Changes - U.S. revenue was $17.2 million, essentially flat year-over-year, affected by lower probe volume despite chip sales [17] - International revenue increased by 19% to $6.2 million, driven by price and volume growth from the international launch of iQ3 [18] Company Strategy and Development Direction - The company is focusing on larger deals and expanding its enterprise and medical school pipeline, with a recent large enterprise deal closed in Q2 [7][8] - The launch of the next-generation software platform, Compass AI, is expected to enhance documentation processes and increase penetration within existing customers [27][28] - The company is optimistic about the long-term growth potential of handheld ultrasound technology and aims to leverage its core competencies to deliver new revenue streams [32][33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic headwinds affecting purchase decisions and delayed large deals, but remains confident in the long-term value proposition of its products [5][24] - The company adjusted its full-year revenue guidance to a range of $91 million to $95 million, emphasizing fiscal discipline while investing in growth areas [24][25] - Management believes that the current uncertainties are temporary and expects a return to normalcy as healthcare providers adapt to changes [60][61] Other Important Information - The company announced the departure of its CFO, Heather Getz, with Megan Carlson appointed as interim CFO [13][14] - The Butterfly Garden initiative is entering its commercial phase, with new AI tools expected to enhance clinical use [9][11] Q&A Session Summary Question: Competitive landscape and its impact - Management clarified that the guidance revision was not due to competitive pressures but rather delays in larger deals, emphasizing that they are pioneering new market segments [36][38] Question: Software subscription revenue trends - The software revenue is experiencing a mixed performance, with individual subscriptions facing churn while enterprise software is growing, aided by the upcoming Compass AI [41][42] Question: Guidance assumptions and enterprise side impact - Management noted that delays in global health deals and enterprise sales have led to a conservative guidance revision, but they remain optimistic about future opportunities [55][56] Question: Home care program details - The home care program is expected to generate revenue through a program fee based on enrolled patients and revenue per scan, with significant potential for scaling [67][69] Question: Readmission reduction in heart failure - Management indicated a significant reduction in readmissions, with plans to demonstrate the scalability of pilot results to secure broader agreements [84][85] Question: IQ Station and P5 updates - The IQ Station is expected to compete with existing ultrasound carts, while the P5 technology is anticipated to significantly enhance image quality, positioning the company favorably in the market [90][92]

Financial Data and Key Metrics Changes - The company reported record revenue of $23.4 million for Q2 2025, representing a 9% increase compared to the previous year, driven by higher average selling prices and sales of semiconductor chips [16][20] - Gross margins reached an all-time high of 64%, up from 59% in the prior year, attributed to higher average selling prices and improved software and services margins [20] - Adjusted EBITDA loss improved to $6.2 million from $8.1 million in the same period last year, reflecting a 24% improvement [20][24] Business Line Data and Key Metrics Changes - Product revenue was $16.6 million, a 13% increase year-over-year, primarily due to higher average selling prices and chip sales [18] - Software and other services revenue remained flat at $6.8 million, impacted by lower renewals of individual subscriptions and implementation services revenue [19] - Total Annual Recurring Revenue (ARR) grew slightly, led by an increase in enterprise software subscription ARR [19] Market Data and Key Metrics Changes - U.S. revenue was $17.2 million, essentially flat year-over-year, affected by lower probe volume despite higher average selling prices [17] - International revenue increased by 19% to $6.2 million, driven by the international launch of iQ3 and geographic expansion [17] Company Strategy and Development Direction - The company is focusing on larger deals and expanding its enterprise and medical school pipeline, despite delays in closing some larger deals [6][22] - The launch of the next-generation software platform, Compass AI, is expected to enhance documentation processes and improve enterprise sales [27][28] - The company is optimistic about the long-term growth potential of handheld ultrasound technology and its ability to drive worldwide adoption [34] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic headwinds affecting purchase decisions, particularly in the U.S. hospital and enterprise channels [22][60] - The company has adjusted its full-year revenue guidance to a range of $91 million to $95 million, reflecting the need to close delayed larger deals [23][24] - Management remains confident in the company's value proposition and believes it will thrive in a cost-contained healthcare environment [5][34] Other Important Information - The company announced the departure of its CFO, Heather Gatz, who will transition to an advisory role until early 2026 [13][15] - The Butterfly Garden initiative is entering its commercial phase, with new AI tools expected to enhance clinical use [9][11] Q&A Session Summary Question: Competitive landscape and headwinds - Management clarified that the guidance revision was not due to competition but rather delays in larger deals, emphasizing that they are pioneering new market segments [36][38] Question: Software subscription revenue trends - Management indicated that individual subscription renewals face challenges, while enterprise software is growing, aided by the upcoming Compass AI [42][44] Question: Guidance assumptions and enterprise side impact - Management noted that delays in global health deals and enterprise sales have led to a conservative guidance adjustment, but they remain optimistic about future opportunities [54][56] Question: Home care pilot program details - Management shared that the home care program has shown significant reductions in readmissions, and they are working to finalize commercial agreements [65][67] Question: IQ Station and P5 updates - Management confirmed that IQ Station will compete with existing ultrasound carts, and the P5 technology is expected to significantly enhance image quality [91][93]

Company Performance - Butterfly Network, Inc. reported a quarterly loss of $0.06 per share, which was better than the Zacks Consensus Estimate of a loss of $0.07, representing an earnings surprise of +14.29% [1] - The company posted revenues of $23.38 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 2%, but showing an increase from $21.49 million year-over-year [2] - Over the last four quarters, Butterfly Network has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Movement and Outlook - Butterfly Network shares have declined approximately 45.2% since the beginning of the year, contrasting with the S&P 500's gain of 7.8% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is -$0.07 on revenues of $24.42 million, and for the current fiscal year, it is -$0.27 on revenues of $97.39 million [7] Industry Context - The Medical Info Systems industry, to which Butterfly Network belongs, is currently ranked in the top 23% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Butterfly Network's stock performance [5]

[Executive Summary & Q2 2025 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q2%202025%20Highlights) Butterfly Network achieved record revenue and gross margins in Q2 2025, focusing on core business growth and innovation [CEO Commentary & Strategic Focus](index=1&type=section&id=CEO%20Commentary%20%26%20Strategic%20Focus) Butterfly Network achieved its strongest revenue quarter in company history at $23.4 million in Q2 2025, alongside record gross margins of 64% and the lowest cash use of $7.1 million. The company is focused on scaling its core business, unlocking new revenue streams, and leading the shift in handheld ultrasound technology with upcoming innovations like Compass AI, P5 chip, and fourth-generation technology - Q2 2025 marked the strongest revenue quarter in Company history at **$23.4 million**, with record gross margins of **64%** and lowest cash use at **$7.1 million**[2](index=2&type=chunk) - Strategic focus includes scaling the core business, unlocking new revenue streams, and innovating with upcoming Compass AI software, P5 chip, and fourth-generation technology[2](index=2&type=chunk) [Recent Operational and Strategic Highlights](index=1&type=section&id=Recent%20Operational%20and%20Strategic%20Highlights) Butterfly Network reported 9% YoY revenue growth and 64% gross margins in Q2, alongside reduced cash usage. Key operational advancements include expanding the Butterfly Garden partner portfolio, launching new educational resources like the Aorta Exam Protocol and MSK VUE, and significant clinical research findings. The company also announced the upcoming Q3 launch of Compass AI and progress in its Butterfly HomeCare pilot program | Metric | Q2 2025 | | :----- | :------ | | Quarterly Revenue | $23.4 million | | YoY Growth | 9% | | Gross Margins | 64% | | Quarterly Cash Used | $7.1 million | - Two new partners added to Butterfly Garden, and three existing partners received FDA clearance for AI-powered clinical applications (iCardio, HeartFocus by DESKi, Deep Echo), with HeartFocus expected to launch in Q3[5](index=5&type=chunk) - New educational resources released: Aorta Exam Protocol on ScanLab™ and MSK VUE, an AI-powered musculoskeletal ultrasound training app for Butterfly devices[5](index=5&type=chunk) - Announced Compass AI, a next-generation, cloud-based enterprise software platform, expected to launch in Q3 to optimize documentation processes with advanced AI tools and automated voice control[5](index=5&type=chunk) - Concluded Butterfly HomeCare pilot program, demonstrating meaningful reductions in readmissions for congestive heart failure patients, now working toward the first commercial agreement[5](index=5&type=chunk) [Q2 2025 Financial Performance](index=2&type=section&id=Q2%202025%20Financial%20Performance) The company reported Q2 2025 financial results, detailing revenue, profitability, operating expenses, net loss, and cash position [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Total revenue for Q2 2025 was $23.4 million, a 9% increase year-over-year. U.S. revenue remained flat at $17.2 million, influenced by semiconductor chip deliveries and higher average selling prices, offset by lower probe sales. International revenue grew 19% to $6.2 million, driven by both price and volume following the iQ3 international launch in Q3 2024 | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Total Revenue | $23.4 million | $21.5 million | +9% | | U.S. Revenue | $17.2 million | N/A | Flat | | International Revenue | $6.2 million | N/A | +19% | - U.S. revenue was essentially **flat** due to semiconductor chip deliveries to an Octiv partner and higher average selling prices, partially offset by lower probe sales volume[6](index=6&type=chunk) - International revenue increased due to both price and volume, driven by the international launch of iQ3 during the third quarter of 2024[6](index=6&type=chunk) [Profitability Metrics](index=2&type=section&id=Profitability%20Metrics) Gross profit for Q2 2025 increased to $14.9 million from $12.6 million in the prior year, with gross margin improving to 63.7% from 58.6%. This improvement was primarily attributed to higher average selling prices and enhanced software and other services margins due to reduced software amortization and lower hosting costs | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Gross Profit | $14.9 million | $12.6 million | +18.3% | | Gross Margin | 63.7% | 58.6% | +5.1 percentage points | - Increase in gross margin primarily due to higher average selling prices and improved software and other services margins from a reduction in software amortization and lower hosting costs[7](index=7&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Total operating expenses for Q2 2025 were $31.0 million, a 4% increase from $29.8 million in the prior year. However, excluding stock-based compensation and other expenses, operating expenses remained essentially flat at $23.1 million compared to $23.4 million in Q2 2024 | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Total Operating Expenses | $31.0 million | $29.8 million | +4% | | Operating Expenses (excl. stock-based comp & other) | $23.1 million | $23.4 million | -1.3% (flat) | [Net Loss and Adjusted Financial Metrics](index=2&type=section&id=Net%20Loss%20and%20Adjusted%20Financial%20Metrics) Butterfly Network reported a net loss of $13.8 million in Q2 2025, an improvement from $15.7 million in the prior year. Adjusted EBITDA loss also improved to $6.2 million from $8.1 million, and Adjusted EPS improved to $(0.03) from $(0.05) year-over-year | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Net Loss | $(13.8) million | $(15.7) million | -12.2% | | Adjusted EBITDA Loss | $(6.2) million | $(8.1) million | -23.5% | | Adjusted EPS | $(0.03) | $(0.05) | -40% | [Cash and Cash Equivalents](index=2&type=section&id=Cash%20and%20Cash%20Equivalents) As of June 30, 2025, Butterfly Network held $148.1 million in cash and cash equivalents | Metric | As of June 30, 2025 | | :----- | :------------------- | | Cash and Cash Equivalents | $148.1 million | [Outlook and Corporate Updates](index=2&type=section&id=Outlook%20and%20Corporate%20Updates) The company provided fiscal year 2025 guidance and announced a key executive transition [Fiscal Year 2025 Guidance](index=2&type=section&id=Fiscal%20Year%202025%20Guidance) Butterfly Network revised its full-year 2025 revenue guidance to $91 million to $95 million, representing approximately 13% growth. The company also improved its Adjusted EBITDA guidance, projecting a loss of $32 million to $37 million | Metric | FY 2025 Guidance | | :----- | :--------------- | | Revenue | $91 million - $95 million (approx. 13% growth) | | Adjusted EBITDA Loss | $32 million - $37 million | [Chief Financial and Operations Officer Transition](index=4&type=section&id=Chief%20Financial%20and%20Operations%20Officer%20Transition) Heather Getz resigned as Chief Financial and Operations Officer, effective August 1, 2025, to pursue other interests. Megan Carlson, Chief Accounting Officer and SVP of Finance and Accounting, will assume interim principal financial and accounting officer roles. The company has initiated a search for a permanent replacement - Heather Getz resigned as Chief Financial and Operations Officer, effective August 1, 2025, with her resignation not resulting from any disagreement regarding company operations or policies[13](index=13&type=chunk) - Megan Carlson, Chief Accounting Officer and Senior Vice President of Finance and Accounting, will assume the roles of principal financial and accounting officer on an interim basis[14](index=14&type=chunk) - Butterfly has begun the process of engaging a search firm to assist in identifying Ms. Get's replacement[15](index=15&type=chunk) [Additional Information](index=4&type=section&id=Additional%20Information) This section provides details on the conference call, company overview, non-GAAP measures, forward-looking statements, and contact information [Conference Call Details](index=4&type=section&id=Conference%20Call%20Details) Butterfly Network scheduled a conference call and webcast for August 1, 2025, at 8:00 am ET to discuss Q2 2025 financial performance and operational progress. Dial-in and webcast details were provided, along with information for a telephone replay - A conference call and webcast to discuss second quarter 2025 financial performance and operational progress is scheduled for 8:00 am ET on August 1, 2025[19](index=19&type=chunk) - Details for US domestic, international, and global dial-in numbers, along with access codes and webcast link, were provided, with a telephone replay available until August 15, 2025[20](index=20&type=chunk) [About Butterfly Network](index=4&type=section&id=About%20Butterfly%20Network) Butterfly Network, Inc. is a digital health company transforming medical imaging with its proprietary Ultrasound-on-Chip™ semiconductor technology and software solutions. The company launched its first handheld ultrasound system, Butterfly iQ, in 2018, followed by iQ+ in 2020 and iQ3 in 2024, which earned the Best Medical Technology award at the 2024 Prix Galien USA Awards. Butterfly aims to democratize healthcare by providing affordable, accessible imaging through advanced hardware, intelligent software, AI, services, and education, with devices commercially available globally - Butterfly Network is a healthcare company driving a digital revolution in medical imaging with its proprietary Ultrasound-on-Chip™ semiconductor technology and ultrasound software solutions[21](index=21&type=chunk) - Launched Butterfly iQ (2018), iQ+ (2020), and iQ3 (2024), with the iQ3 earning Best Medical Technology at the 2024 Prix Galien USA Awards[21](index=21&type=chunk) - Aims to democratize healthcare by addressing critical global healthcare challenges through affordable, accessible imaging, combining advanced hardware, intelligent software, AI, services, and education[22](index=22&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) The company presents non-GAAP financial measures, including adjusted gross profit, adjusted gross margin, adjusted EBITDA, and adjusted EPS, to help investors understand core operating results and compare financial performance across periods. These measures are used by management for business evaluation, planning, and forecasting, as they exclude items not representative of core business. The company emphasizes that non-GAAP measures should supplement, not replace, GAAP results and provides reconciliations - Non-GAAP financial measures (adjusted gross profit, adjusted gross margin, adjusted EBITDA, and adjusted EPS) are provided to assist readers in understanding core operating results and comparing financial performance over multiple periods[23](index=23&type=chunk)[24](index=24&type=chunk) - These non-GAAP measures are key performance indicators used by management for business planning and forecasting, facilitating internal comparisons by excluding items not representative of the core business[25](index=25&type=chunk) - Non-GAAP financial measures are not prepared in accordance with GAAP, should not be considered in isolation, and are intended as a supplement to, not a substitute for, GAAP financial results[26](index=26&type=chunk)[27](index=27&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements regarding financial results, future performance, product commercialization, and market growth, which are based on current beliefs and assumptions. These statements involve significant risks and uncertainties that could cause actual results to differ materially, including factors related to growth management, product development, regulatory approvals, competition, and intellectual property. Readers are cautioned not to place undue reliance on these statements, and the company does not undertake to update them - This press release includes forward-looking statements regarding financial results, future performance, commercialization plans, product development, and market growth, based on current beliefs and assumptions[28](index=28&type=chunk) - These statements involve significant known and unknown risks and uncertainties and other factors that could cause actual results to differ materially, including factors like growth management, product development, regulatory approval, competition, and intellectual property rights[28](index=28&type=chunk)[29](index=29&type=chunk) - Readers are cautioned not to place undue reliance upon any forward-looking statements, and the company does not undertake or accept any obligation to release publicly any updates or revisions[29](index=29&type=chunk) [Contacts](index=7&type=section&id=Contacts) Contact information for investor relations was provided, including Liz Learned Snyder (Director, Communications & Public Relations) and Steve Halper (Managing Director, LifeSci Advisors) - Investor relations contacts provided: Liz Learned Snyder (Director, Communications & Public Relations, Butterfly) and Steve Halper (Managing Director, LifeSci Advisors)[30](index=30&type=chunk) [Condensed Consolidated Financial Statements](index=8&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section presents the unaudited condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2025, and 2024, detailing revenue, cost of revenue, gross profit, operating expenses, and net loss | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Revenue | $23,383 | $21,487 | $44,608 | $39,143 | | Gross Profit | $14,891 | $12,586 | $28,272 | $22,863 | | Total Operating Expenses | $30,991 | $29,818 | $62,838 | $62,715 | | Loss from Operations | $(16,100) | $(17,232) | $(34,566) | $(39,852) | | Net Loss | $(13,834) | $(15,706) | $(27,801) | $(37,467) | | Net Loss per Common Share (basic & diluted) | $(0.06) | $(0.07) | $(0.12) | $(0.18) | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, outlining assets, liabilities, and stockholders' equity | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Current Assets | $253,747 | $192,613 | | Total Assets | $313,278 | $256,082 | | Total Current Liabilities | $44,666 | $48,215 | | Total Liabilities | $80,472 | $87,250 | | Total Stockholders' Equity | $232,806 | $168,832 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025, and 2024, detailing cash flows from operating, investing, and financing activities | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Net Cash Used in Operating Activities | $(18,844) | $(30,667) | | Net Cash Used in Investing Activities | $(1,249) | $(1,837) | | Net Cash Provided by Financing Activities | $79,454 | $0 | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | $59,361 | $(32,504) | | Cash, Cash Equivalents, and Restricted Cash, End of Period | $152,151 | $106,146 | [Adjusted Gross Profit and Adjusted Gross Margin Reconciliation](index=11&type=section&id=Adjusted%20Gross%20Profit%20and%20Adjusted%20Gross%20Margin%20Reconciliation) This section provides the reconciliation of GAAP gross profit and gross margin to adjusted gross profit and adjusted gross margin for the three and six months ended June 30, 2025, and 2024, primarily by adding back write-downs and write-offs of inventories | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Gross Profit | $14,891 | $12,586 | $28,272 | $22,863 | | Gross Margin | 63.7% | 58.6% | 63.4% | 58.4% | | Add: Write-downs and write-offs of inventories | $14 | $0 | $66 | $0 | | Adjusted Gross Profit | $14,905 | $12,586 | $28,338 | $22,863 | | Adjusted Gross Margin | 63.7% | 58.6% | 63.5% | 58.4% | [Adjusted EBITDA and Adjusted EPS Reconciliation](index=12&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20EPS%20Reconciliation) This section presents the reconciliation of GAAP net loss to adjusted EBITDA and adjusted EPS for the three and six months ended June 30, 2025, and 2024, by adjusting for stock-based compensation, inventory write-downs, changes in fair value of warrant liabilities, other expenses, interest, taxes, and depreciation/amortization | Metric (in thousands, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Loss | $(13,834) | $(15,706) | $(27,801) | $(37,467) | | Stock-based compensation | $5,864 | $5,859 | $12,148 | $11,383 | | Change in fair value of warrant liabilities | $(620) | $(620) | $(1,446) | $(413) | | Depreciation and amortization | $2,082 | $2,633 | $4,442 | $5,217 | | Adjusted EBITDA | $(6,153) | $(8,134) | $(15,219) | $(21,288) | | Adjusted EPS | $(0.03) | $(0.05) | $(0.07) | $(0.12) |

Butterfly Network (BFLY) FY Conference Summary Company Overview - Butterfly Network is focused on revolutionizing medical imaging, particularly ultrasound technology, by making it more accessible and cost-effective through semiconductor innovations [8][9][21] Industry Insights - The ultrasound market is projected to grow significantly, with the core point-of-care ultrasound market estimated at $600 million and the broader market potentially reaching $8 billion [50] - There is a notable lack of access to medical imaging globally, with two-thirds of the world lacking access to ultrasound [7] Key Financials - The company projects a 20% growth for the year, targeting revenues between $96 million and $100 million, with an EBITDA loss [8] - The first quarter of 2025 saw a revenue of $25 million, reflecting the anticipated growth trajectory [8] Technological Innovations - Butterfly Network utilizes MEMS semiconductor technology, allowing for a compact, cost-effective ultrasound device that can be used by various healthcare professionals [19][21] - The company has launched its third generation of ultrasound devices, with plans for a fourth generation expected by 2026 [39][41] - The device's capabilities are enhanced through a cloud-based software ecosystem, which allows for continuous updates and improvements [25][26] AI Integration - Butterfly has developed AI tools that assist in ultrasound scanning, including automatic bladder volume measurement and lung assessments for congestive heart failure [33] - The company is opening its ecosystem to third-party developers, allowing for the creation of additional AI applications that can be integrated with Butterfly devices [34] Market Position and Strategy - Butterfly Network claims the largest installed base for handheld ultrasound devices, surpassing competitors like GE and Philips [36] - The company is actively pursuing partnerships and licensing opportunities for its semiconductor technology, expanding its market reach beyond healthcare [62][63] Educational Initiatives - Approximately 70% of medical schools in the U.S. are incorporating Butterfly devices into their training programs, fostering a new generation of healthcare professionals skilled in ultrasound [55][56] - The company is developing educational tools to assist students in learning ultrasound techniques, enhancing their practical skills [58][59] Future Outlook - Butterfly Network aims to expand its presence in home healthcare by training nurses to perform ultrasound scans, potentially creating new revenue streams [61] - The company is committed to leveraging its $300 million investment in semiconductor technology to explore opportunities in various sectors, including wearables and non-healthcare applications [63] Conclusion - Butterfly Network is positioned as a disruptive force in the ultrasound market, with a strong focus on innovation, accessibility, and education, aiming to transform how ultrasound technology is utilized in healthcare and beyond [49][50]

Core Viewpoint - Tempus AI and Butterfly Network are two AI-driven healthcare companies that are transforming diagnostics through their innovative approaches, with Tempus focusing on precision oncology and Butterfly on point-of-care imaging [1] Company Performance - Tempus AI's shares have increased by 55.4% over the past year, while Butterfly Network's shares have surged by 114.8%, significantly outperforming the Medical Info Systems industry's gain of 13.6% and the S&P 500's rise of 10.8% [2] Tempus AI Highlights - Revenue Growth and Margin Expansion: Tempus AI reported a 75.4% year-over-year revenue increase in Q1 2025, with its data licensing segment growing by 58%, contributing to overall profitability [6][8] - Positive EBITDA Outlook: The company is on track to achieve adjusted EBITDA profitability in 2025, narrowing its adjusted EBITDA loss to $16.2 million from $43.9 million a year earlier, reflecting strong revenue growth and disciplined spending [7] - Strategic Partnerships and Contract Backlog: Tempus AI secured a $200 million deal with AstraZeneca and Pathos, alongside a remaining contract value of over $1 billion, ensuring predictable revenues and financial stability [8][9] Butterfly Network Highlights - Strong Financial Performance: Butterfly Network achieved 20% year-over-year revenue growth in Q1 2025, with gross margins rising to 63% and adjusted EBITDA loss narrowing to $9.1 million [10] - Diversified Product Portfolio: The company has expanded its offerings under CEO Joseph DeVivo, introducing multiple probes and the Butterfly Garden AI marketplace, which diversifies revenue streams [11] - International Growth: Despite challenges, Butterfly Network's international revenues grew by 9% year-over-year, supported by pricing gains and partnerships with over 800 NGOs [12] Valuation Comparison - Tempus AI has a forward price-to-sales (P/S) ratio of 7.90, while Butterfly Network's ratio is 5.00, indicating that Butterfly is attractively valued compared to the industry average of 5.51 [13] - Analysts suggest a 10.55% upside for Tempus AI based on price targets, while Butterfly Network's average target indicates a potential increase of 94.86% [14][16] Investment Recommendation - Butterfly Network is currently rated a Zacks Rank 2 (Buy), presenting a more compelling investment case compared to Tempus AI, which holds a Zacks Rank 3 (Hold), due to its improving financials and lower valuation [18]

Core Viewpoint - The article emphasizes the importance of investing in high-quality growth and momentum stocks that are reasonably priced, with a focus on long-term performance and market outperformance [1]. Group 1: Investment Strategy - The investment strategy involves focusing on growth and momentum stocks that are expected to outperform the market over the long term [1]. - The analyst has a history of advising investors to buy at market lows, specifically mentioning a recommendation in March 2009 during the financial crisis, which led to significant market gains [1]. Group 2: Market Performance - From 2009 to 2019, the S&P 500 increased by 367%, while the Nasdaq saw an increase of 685%, highlighting the potential for substantial returns in the stock market [1]. Group 3: Investor Guidance - The article aims to assist investors in making money through investments in high-quality growth stocks, indicating a commitment to guiding investors towards profitable opportunities [1].