Butterfly Network Q3 2025 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: $21.5 million, up 5% year-over-year, driven by higher average selling prices and increased volume, particularly in the U.S.

U.S. Revenue: $16.1 million, slightly up from the prior year, attributed to e-commerce sales and veterinary distribution.

International Revenue: $5.4 million, a 4% increase, primarily due to the international launch of the iQ3.

Product Revenue: $14.6 million, an 8% increase year-over-year.

Software and Services Revenue: $6.9 million, flat compared to the prior year.

Gross Margin: Adjusted gross margin improved to 63.9% from 60% despite a noncash inventory write-off of $17.4 million, resulting in a negative gross margin of -17.5%.

Adjusted EBITDA Loss: $8.1 million, an improvement from a loss of $8.4 million in Q3 2024.

Cash Position: $148 million in cash and cash equivalents, with a trailing 12-month cash burn of $31.5 million.

2Strategic Updates and Business Highlights

Product Strategy: Continued focus on expanding the point-of-care ultrasound (POCUS) market with the iQ3 and upcoming P5.1 chip, which is expected to enhance imaging capabilities significantly.

AI Integration: Successful implementation of AI tools, including the auto beeline counter, which demonstrated improved patient management and cost savings in a recent study.

Education Initiatives: Launched Butterfly Garden, an ecosystem for AI tools aimed at increasing ultrasound adoption among healthcare professionals.

Partnerships: Development of the HeartFocus app, which aids in echocardiograms, and ongoing collaborations with the Gates Foundation for AI-powered gestational age calculators in low-resource settings.

3Forward Guidance and Outlook

Full Year Revenue Guidance: Reaffirmed at $91 million to $95 million, with Q4 expected to contribute $25 million to $29 million.

Adjusted EBITDA Loss Guidance: Tightened to a range of $32 million to $35 million for the full year, with Q4 expected to be between $9 million and $12 million.

Sales Pipeline: Anticipated improvement in sales momentum in 2026, with several large deals still in the pipeline.

4Bad News, Challenges, or Points of Concern

Government Shutdown: Ongoing federal government shutdown could potentially delay deal timing and impact customer cash flow, although currently not seen as a significant risk.

Purchase Delays: Some customers are delaying purchase decisions due to macroeconomic factors, affecting U.S. hospital and enterprise channels.

Subscription Revenue: Lower renewal rates for individual subscriptions noted, with churn impacting overall software revenue.

Inventory Write-Off: Noncash charge for excess inventory of previous generation chips, reflecting a shift in demand towards the iQ3.

5Notable Q&A Insights

Sales Pipeline Confidence: Management expressed confidence in the pipeline, noting that while deals are being delayed, they are not being lost. Anticipated larger deals range from 100 to 200 probes.

Impact of AI Studies: The economic benefits demonstrated in studies, such as the one from Robert Wood Johnson, are expected to strengthen sales arguments and drive interest in 2026.

Home Care Program: Management remains optimistic about the home care pilot program, emphasizing that the timing of finalization is beyond their control.

P5.1 Chip Development: Management is confident in the upcoming P5.1 chip launch, which is expected to significantly enhance product offerings and market competitiveness. Overall, Butterfly Network reported steady growth amid challenges, with a strong focus on innovation and strategic partnerships as it navigates a complex market landscape.