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01/10 16:56
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: while there is growth in international and product revenue, U.S. revenue remains flat, and software revenue is stagnant. The Q&A highlights delays in deals, but management remains optimistic about future prospects. The company's strategic initiatives and disciplined cash use are positive, but uncertainties in global health funding and competitive pressures temper enthusiasm. Overall, the sentiment is neutral, reflecting balanced positive and negative elements.
Quarterly Revenue $23.4 million, a 9% year-over-year growth. This growth was driven by higher average selling prices, the sale of semiconductor chips to partners in the Octiv business, and increased volume in international markets. However, it was partially offset by lower domestic volume.
Gross Margins 64%, an increase from 59% in the prior year. This improvement was due to higher average selling prices, the positive impact of chip sales, and improvements in software and services margins, including reduced software amortization and lower hosting costs.
Adjusted EBITDA Loss $6.2 million, a 24% improvement compared to a loss of $8.1 million in the prior year. This improvement was driven by higher revenue and improved gross profit.
Cash Use $7 million, the lowest of any quarter. This reflects the company's disciplined approach to expense control and operational efficiency.
U.S. Revenue $17.2 million, flat compared to the prior year. This was driven by chip sales to Octiv partners and higher average selling prices, offset by lower probe volume. The prior year included 700 trade-in/upgrades that did not repeat this quarter.
International Revenue $6.2 million, a 19% increase year-over-year. This growth was driven by higher prices, increased volume due to the international launch of iQ3, and geographic expansion.
Product Revenue $16.6 million, a 13% increase year-over-year. This was driven by higher average selling prices and chip sales.
Software and Other Services Revenue $6.8 million, flat compared to the prior year. Higher enterprise software revenue and increased licensing and services revenue from partnerships were offset by lower renewals of individual subscriptions and implementation services revenue.
Total ARR (Annual Recurring Revenue) Slight growth year-over-year, led by an increase in enterprise software subscription ARR.
Cash and Cash Equivalents $152 million at the end of the quarter, with a trailing 12-month cash use of $46 million.
Butterfly iQ3: Achieved highest quarterly revenue in company history ($23.4 million) and continues to lead market share and RFP wins. Integrated into medical school programs and recognized as the best handheld ultrasound.
Compass AI: New software platform launching in the second half of 2025, aimed at simplifying documentation with advanced AI tools, automated voice control, and scan quality checks.
Butterfly Garden: Added two new partners and entered the commercial phase. AI tools for cardiac and pulmonary scanning to be launched in Q3 2025.
MSK VUE: Educational app launched to help caregivers identify nerves in musculoskeletal scans, developed in collaboration with the University of Rochester Medical Center.
International Expansion: International revenue increased by 19% to $6.2 million, driven by the iQ3 launch and geographic expansion.
Enterprise Deals: Closed a large enterprise-wide deal with a top 5 global health system, deploying Butterfly in every department and campus.
Revenue Growth: Achieved record revenue of $23.4 million in Q2 2025, driven by higher average selling prices and international market growth.
Gross Margin Improvement: Gross margins reached an all-time high of 64%, supported by higher selling prices and improved software margins.
Cash Use Reduction: Cash use was the lowest of any quarter at $7 million, reflecting disciplined expense control.
HomeCare Initiative: Concluded pilot program and negotiating first commercial agreement. Potential revenue opportunity of $40-$60 million from one customer.
Octiv: Partnering with a generative AI company to develop new imaging technology. Expected to become a meaningful part of the business.
Macroeconomic Conditions: The company is facing macroeconomic headwinds that are impacting its core business. These conditions are expected to persist through the end of the year, leading to a modification of full-year guidance.
Sales Cycle Delays: The sales cycle for larger deals has been lengthened, delaying anticipated revenue growth. Customers are delaying purchase decisions due to uncertainties in funding and government programs.
Regulatory and Funding Uncertainty: Changes in healthcare funding and government programs are causing delays in purchase decisions, particularly in the U.S. hospital and enterprise channels as well as publicly funded global health deals.
Revenue Guidance Adjustment: The company has revised its full-year revenue guidance downward to $91 million to $95 million, reflecting the impact of delayed deals and macroeconomic uncertainties.
Domestic Volume Decline: Lower domestic probe volume has partially offset revenue growth, despite higher average selling prices and international expansion.
Dependence on Large Deals: The company’s ability to meet the higher end of its revenue guidance depends on closing delayed large deals, which introduces uncertainty.
Operational Challenges in New Markets: While international revenue has grown, geographic expansion and the launch of new products like iQ3 have created operational complexities.
Compass AI Launch: Butterfly Network plans to launch a new software platform, Compass AI, in the second half of 2025. This platform aims to simplify documentation with advanced AI tools, automated voice control, and features to enhance scan quality and completeness. It is expected to increase penetration within existing customers and attract new enterprise customers.
Octiv Strategic Initiative: The Octiv initiative is gaining traction, with partnerships in generative AI and increasing interest from technology circles. A major announcement from a partner is anticipated in Q3 2025. Octiv is expected to become a significant revenue driver in the future.
HomeCare Commercialization: Butterfly Network has concluded a pilot program for its HomeCare initiative and is negotiating its first commercial agreement, expected within a few months. The program demonstrated the ability to use ultrasound for remote cardiology diagnoses, potentially generating $40-$60 million in revenue from one customer.
Revenue Guidance for 2025: The company has revised its full-year revenue guidance to a range of $91 million to $95 million, reflecting macroeconomic uncertainties and delayed deal closures. Q3 2025 revenue is expected to be between $20 million and $22 million.
Adjusted EBITDA Guidance: Despite lower revenue projections, the company has improved its adjusted EBITDA loss guidance to a range of $32 million to $37 million for 2025, reflecting fiscal discipline and expense control.
Market Conditions and Opportunities: The company anticipates continued delays in purchase decisions due to changes in funding and government programs. However, it remains optimistic about long-term growth, particularly in the handheld ultrasound market and new revenue streams like Octiv and HomeCare.
The selected topic was not discussed during the call.
The earnings call reveals mixed signals: strong product revenue growth and improved EBITDA loss contrast with a negative gross margin due to inventory write-off. Optimistic guidance for Compass AI and Octiv initiatives is offset by delayed deals and flat software revenue. Q&A highlights confidence in the pipeline but acknowledges extended sales cycles and uncertain timelines for partnerships. Without a market cap, the impact is hard to gauge, but overall, the balanced positives and negatives suggest a neutral sentiment, indicating a stock price movement between -2% and 2%.
The earnings call presents a mixed picture: while there is growth in international and product revenue, U.S. revenue remains flat, and software revenue is stagnant. The Q&A highlights delays in deals, but management remains optimistic about future prospects. The company's strategic initiatives and disciplined cash use are positive, but uncertainties in global health funding and competitive pressures temper enthusiasm. Overall, the sentiment is neutral, reflecting balanced positive and negative elements.
The earnings call highlights strong financial performance with 20% revenue growth and improved gross margins. Despite a secondary offering potentially affecting stock price, the substantial cash position and optimistic guidance, along with strategic partnerships and product success, indicate positive sentiment. The Q&A session further emphasized strong adoption and interest in their products, suggesting potential for continued growth. However, concerns about regulatory issues and economic factors pose risks. Overall, the positive factors outweigh the negatives, suggesting a likely stock price increase in the short term.
The earnings call presents a mixed outlook. Positive aspects include strong revenue growth, improved gross margins, and successful product launches. However, concerns arise from funding uncertainties, competitive pressures, and a secondary offering which typically dilutes share value. The Q&A section reveals positive sentiment towards strategic partnerships and product adoption but lacks clarity on competitive positioning. Despite optimistic guidance, potential tariff impacts and supply chain issues pose risks. Overall, the stock price is likely to remain stable, with a neutral movement expected over the next two weeks.
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