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Butterfly Network(BFLY) - 2024 Q1 - Earnings Call Transcript
BFLYButterfly Network(BFLY)2024-05-02 02:40
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Financial Data and Key Metrics - Revenue growth of 14% in Q1 2024, exceeding expectations, with full-year revenue guidance raised to 75−80million,representing15−2075-80 million, representing 15-20% growth [5][24] - Gross profit increased by 12% to 10.2 million in Q1 2024, with gross margin remaining relatively flat at 58% [18] - Adjusted EBITDA loss improved by 9.1millionto9.1 million to 13.2 million in Q1 2024, driven by higher revenue and cost reductions [23] - Cash and cash equivalents stood at 117millionasofMarch31,2024,withacashrunwayextendinginto2026[16][138]BusinessLinePerformance−Productrevenueincreasedby28117 million as of March 31, 2024, with a cash runway extending into 2026 [16][138] Business Line Performance - Product revenue increased by 28% to 11.3 million in Q1 2024, driven by higher volume and average selling prices [142] - Software and services revenue decreased slightly to 6.4millioninQ12024,butenterprisesoftwareupsellsgrew256.4 million in Q1 2024, but enterprise software upsells grew 25% from Q4 2023 [11][12] - ScanLab contributed significantly to Q1 success, enhancing medical education and training with AI-guided tools [13][141] Market Performance - U.S. sales grew 19% to 12.2 million in Q1 2024, driven by increased volume and higher average selling prices [15] - International sales grew 14% to 4.2millioninQ12024,despitetheabsenceofiQ3andEUMDRcertification[51]−iQ3launchintheU.S.sawover1,200unitssold,withhalfbeingnewusersandhalftrade−inupgrades[37]StrategicDirectionandIndustryCompetition−ThecompanyisfocusingoniQ3−drivengrowth,globalexpansion,andmedicalschooladoption,withadditionalopportunitiesintheveterinarymarket[6][130]−iQ3ispositionedasacompetitiveproductwithsuperiorimagequalityandcostadvantagescomparedtocart−basedsystems[38][60]−Thecompanyisexploringnon−dilutivefinancingoptions,suchasgrantsandlicensingdeals,toextenditscashrunway[2][45]ManagementCommentaryonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinsustaininggrowth,drivenbyiQ3adoptionandnewproductlaunches[52][134]−ThecompanyisoptimisticabouttheEuropeanmarket,withiQ3expectedtogainapprovalandpotentiallybenefitfromtheRoHSdirective[22][29]−Managementhighlightedthepotentialofhomecareinitiatives,withrevenueopportunitiesexpectedtomaterializein2025[75][102]OtherImportantInformation−Thecompanyreceivedanon−compliancenoticefromtheNYSEduetoitsstockpricefallingbelow4.2 million in Q1 2024, despite the absence of iQ3 and EU MDR certification [51] - iQ3 launch in the U.S. saw over 1,200 units sold, with half being new users and half trade-in upgrades [37] Strategic Direction and Industry Competition - The company is focusing on iQ3-driven growth, global expansion, and medical school adoption, with additional opportunities in the veterinary market [6][130] - iQ3 is positioned as a competitive product with superior image quality and cost advantages compared to cart-based systems [38][60] - The company is exploring non-dilutive financing options, such as grants and licensing deals, to extend its cash runway [2][45] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth, driven by iQ3 adoption and new product launches [52][134] - The company is optimistic about the European market, with iQ3 expected to gain approval and potentially benefit from the RoHS directive [22][29] - Management highlighted the potential of home care initiatives, with revenue opportunities expected to materialize in 2025 [75][102] Other Important Information - The company received a non-compliance notice from the NYSE due to its stock price falling below 1, but it plans to regain compliance through business execution [16][133] - Butterfly Garden and Powered by Butterfly programs are expected to generate meaningful revenue over the next five years [87][127] Q&A Session Summary Question: Adoption curve of iQ3 compared to previous products - The adoption curve for iQ3 is difficult to compare directly with previous products due to different market conditions and the simultaneous presence of iQ+ [66][73] Question: Revenue potential from home care initiatives - The company is focusing on service revenue and success-based models for home care, with potential revenue streams starting in 2025 [26][27] Question: Non-dilutive financing and path to profitability - The company is exploring non-dilutive financing options, such as licensing deals, to extend its cash runway and reach profitability by 2027 [101][131] Question: Key areas of uptake for iQ3 - Cardiology has shown strong uptake for iQ3, with cardiologists appreciating the high-quality imaging capabilities [106] Question: RoHS directive and its impact - The company is confident about the RoHS directive potentially banning lead-based handheld ultrasound devices in the EU by 2025, which would benefit Butterfly [29][109] Question: Revenue capture potential with Compass software - Hospitals using Butterfly probes and Compass software have seen significant revenue capture, with some achieving 60-80% reimbursement rates [96][120]