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Butterfly Network, Inc. (BFLY)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered solid execution: revenue $21.23M (+20% YoY), gross margin expanded to 63.0%, and adjusted EPS improved to $(0.04) from $(0.07) YoY .
  • Results modestly beat S&P Global consensus: revenue +$0.07M and EPS +$0.045 versus Street; adjusted EBITDA loss stayed roughly in line with recent trend but improved YoY *.
  • Full-year FY25 guidance was reiterated (revenue $96–$100M; adjusted EBITDA loss $37–$42M); management added Q2 guidance: revenue $23.0–$24.5M and adjusted EBITDA loss $9–$10M .
  • Catalysts: near-term enterprise hospital win, continued medical education one-to-one device programs, progression of Butterfly HomeCare pilot (early zero readmissions), and a pending Octiv generative AI partnership; Compass 2.0 targeted for 2H25 .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expansion to 63.0% (from 58.2% YoY), driven by higher ASPs and improved software margins (lower amortization and hosting costs) .
  • Medical education momentum with a major U.S. College of Osteopathic Medicine committing to one probe per student; enterprise pipeline strengthened with a top-5 global hospital near signing .
  • Strategic progress: Butterfly Garden reached 23 partners (DESKi HeartFocus FDA clearance), Octiv licensing delivered chips to a new partner, and HomeCare pilot showed zero rehospitalizations to date .

Management quote: “We’re pleased to deliver another quality quarter in line with our guidance of 20% growth and making meaningful profitability improvement with gross margins of 63%…” — Joseph DeVivo .

What Went Wrong

  • Software and services mix fell to 33% as product growth outpaced software (pressure on margin mix despite ASP benefit) .
  • Global health opportunities experienced delays amid USAID funding uncertainty; management expects peak uncertainty in Q2 2025 .
  • Tariff risk scenarios modeled; while limited, a 10% tariff could add < $1M to annual costs and 36% just over ~$1.5M (mitigation underway) .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$20.56 $22.35 $21.23
Gross Profit ($USD Millions)$12.23 $13.73 $13.38
Gross Margin %59.5% 61.4% 63.0%
Operating Expenses ($USD Millions)$29.48 $31.05 $31.85
Net Loss ($USD Millions)$(16.92) $(18.10) $(13.97)
GAAP EPS ($USD)$(0.08) $(0.08) $(0.06)
Adjusted EBITDA ($USD Millions)$(8.45) $(9.14) $(9.07)
Adjusted EPS ($USD)$(0.05) $(0.05) $(0.04)
Cash & Equivalents ($USD Millions)$93.76 $88.78 $155.21
Revenue BreakdownQ3 2024Q4 2024Q1 2025
Product Revenue ($USD Millions)$13.54 $14.72 $14.16
Software & Other Services ($USD Millions)$7.02 $7.63 $7.06
U.S. Revenue ($USD Millions)$13.10 $14.50 $16.60
International Revenue ($USD Millions)$5.20 $5.50 $4.60
Margins & MixQ3 2024Q4 2024Q1 2025
Gross Margin %59.5% 61.4% 63.0%
Adjusted Gross Margin %60.0% 61.4% 63.3%
Software & Services Mix (% of Revenue)34% 34% 33%
Q1 2025 vs Street Consensus (S&P Global)ConsensusActualSurprise
Revenue ($USD Millions)$21.16M*$21.23M +$0.07M*
Primary EPS ($USD)$(0.085)*$(0.04) +$0.045*

Values with asterisk (*) retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$96–$100M $96–$100M Maintained
Adjusted EBITDA LossFY 2025$(37)–$(42)M $(37)–$(42)M Maintained
RevenueQ2 2025N/A$23.0–$24.5M New
Adjusted EBITDA LossQ2 2025N/A$(9)–$(10)M New

Earnings Call Themes & Trends

TopicQ3 2024 (Prev-2)Q4 2024 (Prev-1)Q1 2025 (Current)Trend
AI/technology initiatives (Octiv, Garden, P5)Octiv announced; Garden 17 partners; P5 harmonics breakthrough discussed Record revenue; continued R&D; new partners in Neuroscience/GenAI; capital raise supports initiatives Octiv delivering chip sales; largest GenAI partnership pending; Garden to 23; DESKi HeartFocus FDA clearance Accelerating execution
Product performance (iQ3 vs iQ+)iQ3 adoption across channels; higher ASP; ~50% unit mix in Q3 iQ3 driving Q4 growth; higher ASPs iQ3 adopted “across the board” with stronger hospital mix; iQ+ still relevant in med schools/e-comm Favoring iQ3
Enterprise hospital adoptionURMC system-wide case study; pipeline building Q4 commentary on C-suite conversations Second enterprise deal near signing at a top-5 hospital; ~600 probes in circulation Strengthening
Medical educationScanLab curriculum at KCU; education focus Continued student programs One-to-one device programs expanding; annuity-like demand Expanding
Supply chain/tariffs/macroNot highlightedNot highlightedTariff impact modeled (10% < $1M; 36% just over $1.5M); USAID cuts delaying global health deals Cautious Q2
Regulatory/legal (RoHS)EU revocation process outlined; timeline expectations EU review by end of 2025; resubmission in Oct 2024 Continued advocacy; multi-language RoHS communications in June Ongoing
Software roadmapCompass enterprise traction Reinforced Compass role Compass 2.0 planned for 2H25 Upcoming launch
HomeCare & clinical outcomesPilot announcement (CHF) Early PACE/myPlace validation; pilots progressing Pilot scanning underway; early readmissions: zero; commercialization targeted by year-end Positive traction

Management Commentary

  • “Our results highlight the strength of our opportunities in medical education and enterprise adoption… progress across our strategic initiatives, Octiv and Butterfly HomeCare.” — Joseph DeVivo .
  • “Software and other services mix was 33% of revenue… decreased as product revenue growth outpaced software… ARR grew slightly with enterprise subscription ARR up.” — Heather Getz .
  • “We estimate that at 10% tariff the impact would be under $1M and at 36%, just over $1.5M… looking at alternative assembly locations.” — Heather Getz .
  • “In second half of 2025, we plan on launching our Compass 2.0 software… new features, expedited workflows and capabilities.” — Joseph DeVivo .

Q&A Highlights

  • Enterprise deal mechanics: doctor-led groundswell drives enterprise software wins first, then hardware standardization; pipeline large but long-dated; near-term second enterprise signing at a top-5 hospital .
  • Medical education funnel: schools moving to one-to-one programs via campus stores or tuition; creates recurring annual device demand (~25k incoming students/year) .
  • Pricing vs volume: ~80% volume, ~20% price contribution; price uptick more pronounced internationally with iQ3 rollout .
  • iQ3 vs iQ+: stronger iQ3 adoption across channels, especially hospitals; iQ+ remains relevant for med schools and e-comm .
  • Macro/tariffs/currency: minimal FX exposure; tariff scenarios manageable with mitigation plans .

Estimates Context

  • Q1 2025 beat Street: revenue $21.23M vs $21.16M consensus; Primary EPS $(0.04) vs $(0.085) consensus — a notable EPS beat likely aided by ASP lift and cost discipline; adjusted EBITDA improved YoY *.
  • Q2 2025: Company guides revenue $23.0–$24.5M and adjusted EBITDA loss $(9)–$(10)M; revenue guide midpoint aligns with consensus ($23.72M*), supporting expectations amid funding/tariff uncertainty *.
  • FY 2025: Guidance maintained at ~$20% growth and adjusted EBITDA loss $(37)–$(42)M; Street revisions may modestly reflect margin expansion and enterprise/education tailwinds.
    Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Margin story strengthening: gross margin at 63.0% with ASP and software efficiency; watch mix between product and software as iQ3 adoption scales .
  • Pipeline catalysts: imminent second enterprise win and expanding medical education one-to-one programs underpin multi-quarter visibility .
  • Strategic optionality: Octiv chip licensing and Butterfly Garden (23 partners) add non-core revenue avenues; pending GenAI partnership could be a narrative driver .
  • HomeCare monetization: pilot with early zero readmissions supports PMPM services path; commercialization targeted by year-end could unlock a new revenue stream .
  • Guidance posture: FY25 reiterated; Q2 guide in line with consensus, prudently reflecting macro funding uncertainty and tariff scenarios .
  • Risk management: limited FX exposure and manageable tariff impacts; mitigation (alt assembly) underway .
  • Medium-term thesis: mix shift to higher-ASP iQ3, enterprise software integration (Compass/Compass 2.0) and licensing/services (Octiv/HomeCare) position BFLY to compound beyond handhelds.

Additional Q1 Contextual Press Releases

  • HBO Max “The Pitt” unpaid placement highlighting point-of-care ultrasound in trauma settings; visibility supports mainstream adoption narrative .
  • Q1 reporting date and call logistics .