Butterfly Network(BFLY) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Butterfly Network reported Q3 2024 revenue of $20.6 million, a 33% increase year-over-year, marking the highest third-quarter result in the company's history [16][22] - Gross profit for Q3 2024 was$ 12.2 million, a 30% increase compared to $9.4 million in Q3 2023, with a gross margin percentage of 59.5% [19] - Adjusted EBITDA loss improved to$ 8.4 million from a loss of $12.5 million in the same period last year, reflecting higher revenue and cost efficiencies [20] Business Line Data and Key Metrics Changes - Product revenue reached$ 13.5 million, a 55% increase year-over-year, driven by higher average selling prices and volume across all channels [17] - Software and other services revenue was $7 million, up 5% year-over-year, but the mix decreased to 34% of total revenue, down approximately 9 percentage points from Q3 2023 [17][18] - Total annual recurring revenue (ARR) grew slightly, with enterprise software subscription ARR increasing by 19%, now representing 46% of total ARR [18] Market Data and Key Metrics Changes - U.S. revenue was$ 13.1 million, a 27% increase year-over-year, driven by higher average selling prices and strong demand [16] - International revenue increased by 36% to $5.2 million, supported by higher probe volume and geographic expansion [16] Company Strategy and Development Direction - The company is focused on four strategic pillars: accelerating growth in core business, investing in R&D for tech leadership, expanding into new markets, and executing efficiently to achieve double-digit growth and cash flow breakeven by 2027 [5][6] - Butterfly is developing the iQ Station, which aims to enhance in-facility imaging and workflow, leveraging advancements in semiconductor technology [26][67] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a strong finish to 2024, raising revenue guidance to$ 79 million to $81 million, reflecting about 20% growth [22] - The company anticipates at least 15% to 20% top-line growth in 2025, with plans to close on non-dilutive capital to support further investments [23] Other Important Information - The company is forming a subsidiary called Octiv to commercialize its semiconductor technology in non-competitive sectors, which could provide a significant revenue stream [34][35] - Butterfly HomeCare is set to pilot virtual chronic care management services aimed at reducing hospital readmissions, potentially creating a substantial new revenue stream [31][75] Q&A Session Summary Question: Can you break down the 23% units and 10% price increase between U.S. and international? - Management indicated that the increase was roughly half and half, with most price increases coming from the U.S. [39] Question: How does the penetration of iQ3 compare to the previous generation? - The iQ3 mix was just over 50% for the quarter, with over 80% domestically [42] Question: Can you elaborate on the harmonics and P5 technology? - Management explained that harmonics require increased mechanical pressure, which is achieved through advanced semiconductor technology, allowing for higher quality imaging [43][45] Question: What are the expectations for Q4 revenue growth? - Management expects around 25% growth for Q4, emphasizing that they build in some conservatism in their guidance [52][53] Question: Can you provide details on the U.S. iQ3 launch and pipeline? - All sales channels are performing well, with a strong pipeline being built, particularly in hospitals [56][59] Question: What are the next steps regarding the EU's RoHS update? - Management discussed the process for reactivating the RoHS exemption and expressed optimism about the EU's receptiveness to their innovative technology [61][65] Question: Can you explain the economics of the Octiv subsidiary? - The subsidiary will focus on licensing and developing technology for various industries, with a potential for significant revenue generation [80]