Butterfly Network, Inc. Q1 FY2025 earnings call

• Core POCUS Business: Medical schools are increasingly adopting student probe programs, with more schools signing up, including a large osteopathic college. The enterprise hospital selling program is progressing, near signing a second hospital enterprise customer. International efforts focus on expanding iQ3 and markets in Asia, Latin America, and global health.
• Strategic Initiatives: Octiv is making progress with partnerships, gearing up to announce a major generative AI partnership. Butterfly Garden has 23 partners, with FDA-cleared clinical applications expected. Butterfly Home Care pilot activity is increasing. Compass2.0 is planned to launch in the second half of 2025.
• Brand Momentum: Butterfly has seen viral moments in media, including coverage on CBS News and social media influencers, enhancing brand awareness.

In the first quarter of 2025, Butterfly Network achieved $21.2 million in revenue, representing a 20% growth. U.S. revenue was $16.6 million, a 24% increase year-over-year, driven by strong demand. International revenue stood at $4.6 million, a 9% increase year-over-year, largely due to price. Product revenue was $14.2 million, a 25% increase versus Q1 2024, primarily from higher volume. Software and other services revenue was $7.1 million, up 11% year-over-year, boosted by enterprise software revenue and partnerships but offset by lower individual subscription renewals. Gross profit was $13.4 million, a 30% increase from the prior year, with a gross margin of 63% (up from 58% in the prior year). Adjusted EBITDA loss for Q1 2025 was $9.1 million, an improvement from the $13.2 million loss in the same period of 2024.

Butterfly maintains its full-year guidance for 2025, expecting approximately 20% revenue growth and adjusted EBITDA loss in the range of $37 million to $42 million. For the second quarter of 2025, the guidance is $23 million to $24.5 million in revenue and $9 million to $10 million in adjusted EBITDA loss. The company will continue disciplined expense control while investing appropriately in growth areas.

• Tariff Impacts: Potential additional costs from tariffs on probe imports to the U.S. are manageable, with mitigation measures like alternative assembly locations considered. Annualized impact if tariffs were in effect for 2025 is estimated to be under $1 million for a 10% tariff and just over $1.5 million for a 36% tariff.
• Healthcare Funding Uncertainty: Uncertainty around healthcare funding through programs like NIH, USAID, or Medicaid has impacted the global health business, factored into Q2 2025 guidance.
• Policy Decisions: Uncertainty regarding administration policies that may affect business operations, though the company's diversification and strength position it well.

Q: Andrew Brackmann asked about the process for securing the second hospital enterprise contract and the school funnel for additional opportunities.

A: Joseph DeVivo discussed that the groundswell of doctor adoption of Butterfly led to the hospital enterprise contract, with medical schools having active conversations about one-to-one programs for students, creating recursive revenue opportunities.

Q: Josh Jennings inquired about the mix of iQ3 and iQ+, currency impact, and tariff manageability.

A: Heather Getz stated iQ3 is seeing strong adoption across channels, with iQ3 sales outpacing iQ+; the company has virtually no foreign currency risk, and tariff impacts are manageable with mitigation measures considered.

Q: Suraj Kalia asked about price volume split, competitive displacements, and Octiv applications.

A: Heather Getz said price volume split is ~80% volume and 20% price, with price pickup in international market. Joseph DeVivo explained competitive displacements in software and hardware, with Octiv having partnerships in generative AI and various industries.

Q: Benjamin Haynor asked about Octiv applications, future chip and form factors, and medical school decision timeline.

A: Joseph DeVivo discussed Octiv's foundational technology and upcoming commercial partners, with future chips and form factors in development. Medical school decisions pulse in the second calendar quarter, with new students entering annually.