BFLY Q1 2025: Enterprise Deals & 25K Students Drive Recurring Revenue
- Enterprise adoption driven by grassroots usage: Executives highlighted that the strong underlying demand from individual doctors is prompting hospitals to aggregate and institutionalize Butterfly technology—resulting in new enterprise contracts and software integrations for data management and revenue optimization.
- Recurring revenue potential from medical school programs: Q&A discussions emphasized that converting medical schools to a one-to-one probe program creates a long-term, recurring revenue stream. With 25,000 new students entering medical education annually, this deep market penetration provides an enduring annuity effect for Butterfly.
- Innovative product mix and AI integration: The discussion underscored the competitive strength of the iQ3 platform over alternative solutions and highlighted strategic partnerships in AI—such as the groundbreaking work with Octiv—positioning Butterfly to disrupt legacy technologies and drive further market expansion.
- Extended enterprise sales cycle: Executives noted that the hospital channel deals involve long sales cycles and prolonged decision-making processes, which could delay revenue recognition and momentum despite strong underlying demand.
- Uncertainties in global funding: There are concerns over delayed opportunities and uncertainties in funding from sources like U.S. Aid and other governmental programs, potentially impacting the growth in international and global health revenue.
- Tariff exposure risk: While manageable, there remains a risk that full-year tariffs could add incremental costs (up to just over $1.5 million) that may negatively impact margins if mitigation measures do not materialize as expected.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue growth | FY 2025 | 20% growth; $96M–$100M | Approximately 20% growth | no change |
Adjusted EBITDA Loss | FY 2025 | $37M–$42M | $37M–$42M | no change |
Revenue | Q2 2025 | no prior guidance | $23M–$24.5M | no prior guidance |
Adjusted EBITDA Loss | Q2 2025 | no prior guidance | $9M–$10M | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
iQ3 Platform Adoption and Competitive Advantage | Q4 2024 called it a resounding commercial success with increasing mix and sales ; Q3 2024 detailed its significant revenue contribution and market penetration ; Q2 2024 noted strong adoption with high domestic sales and year‐on‐year revenue growth | Q1 2025 reported widespread adoption across hospital channels, a shift toward iQ3 over iQ+ sales, and strong positioning for new POCUS programs | Consistent and expanding adoption with an evolving competitive narrative. |
AI Integration and Ecosystem Partnerships | Q4 2024 and Q3 2024 emphasized AI tools enhancing image capture and diagnostics via Butterfly Garden and early Octiv partnerships ; Q2 2024 highlighted AI as a major accelerant and ecosystem development with 15 partners | In Q1 2025, new partnerships boosted Butterfly Garden to 23 partners, introduced the Octiv licensing program with discussions in generative AI, and added a research partnership with Forest Neurotech | Robust AI efforts continue with expanded partner counts and entry into new sectors such as generative AI. |
Enterprise Adoption Dynamics and Extended Sales Cycle Risks | Q3 2024 discussed a strong pipeline and long sales cycles in enterprise hospital deals ; Q2 2024 and Q4 2024 had little or no mention [N/A] | Q1 2025 revisited enterprise adoption with a groundswell of independent doctor purchases prompting institutional deals and the signing of a second enterprise hospital customer | Re-emerging as a focus, with refined strategies leveraging organic adoption to drive institutional deals. |
Diversified Sales Pipeline and Revenue Momentum | Q4 2024 and Q3 2024 showcased record quarterly revenues and strong contributions across channels ; Q2 2024 reported record revenue growth and solid contributions from both product and software sales | Q1 2025 reported 20% revenue growth, with highlighted contributions from enterprise sales, medical schools, and international channels | Continued robust pipeline performance with expanding channel contributions and market reach. |
HomeCare Initiatives | Q4 2024 detailed pilots in long-term care and assisted living with promising early outcomes ; Q3 2024 described pilots for congestive heart failure and virtual chronic care management ; Q2 2024 mentioned bladder scanning and wearable technology for home care | Q1 2025 focused on a congestive heart failure pilot showing no patient readmissions, combined with AI-powered in‐home monitoring and integration of the HeartFocus app | An evolving clinical program showing growing optimism and a clear path to commercialization. |
Recurring Revenue Potential from Medical School Programs | Q2 2024 explained the Campus Essentials program and discussed direct purchases from medical schools ; Q3 2024 introduced the ScanLab app in medical curricula with free access driving long-term adoption ; Q4 2024 mentioned the one probe per student model without explicit revenue details | Q1 2025 stressed the annuity-like potential of one-to-one programs, noting that 25,000 new students yearly create a steady, growing revenue stream | Consistent emphasis with an increasing focus on long-term, recurring revenue through educational partnerships. |
Regulatory and ROHS Challenges | Q2 2024 discussed efforts to revoke exemptions and align with environmental standards ; Q3 2024 detailed active refiling and environmental leadership to meet RoHS without exemptions ; Q4 2024 reiterated the regulatory process and ongoing review in Europe | Q1 2025 did not mention regulatory and RoHS challenges [N/A] | Previously a strong focus, now absent—suggesting possible resolution or deprioritization. |
Breakthrough Semiconductor Technology (P5 chip) | Q3 2024 emphasized the breakthrough nature of the P5 chip for advanced imaging and competitive positioning ; Q4 2024 was focused on hardware developments around the P5 chip ; Q2 2024 referred more generally to semiconductor innovation | Q1 2025 only briefly noted that production of the P5 chip is planned for late 2025, with less emphasis overall | A marked de‐emphasis in Q1 2025 compared to earlier periods. |
Global Funding Uncertainties Impacting International Growth | Q2 2024, Q3 2024, and Q4 2024 did not mention global funding issues [N/A] | Q1 2025 introduced concerns as U.S. Aid funding cuts led to delays in Global Health opportunities | A new topic in Q1 2025, signaling emerging external risks that may impact international expansion. |
Tariff Exposure Risk Affecting Margins | No mentions in Q2, Q3, or Q4 2024 [N/A] | Q1 2025 outlined that tariff exposure is minimal, with projected incremental costs and mitigation strategies in place | A newly introduced minor risk with quantifiable, limited impact. |
Butterfly Garden and Powered by Butterfly Licensing Initiatives | Q2 2024 detailed the ecosystem with 15 Garden partners and early Powered by Butterfly licensing deals, with a gradual revenue impact expected ; Q3 2024 reported 17 Garden partners and outlined OCTIV’s strategic role ; Q4 2024 showed growth to 21 Garden partners and active licensing agreements with expected future revenue | Q1 2025 noted further expansion to 23 Butterfly Garden partners, highlighted the FDA clearance of the HeartFocus app, and detailed active discussions with over 25 prospects through the Octiv program | An upward trajectory with an expanding partner network and delayed revenue impact anticipated in 2025. |
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Enterprise Contract
Q: How was the second hospital deal secured?
A: Management noted that strong doctor-led adoption and showcasing compelling institutional data from leaders like Rochester helped win this contract, reinforcing Butterfly’s market position. -
Hospital Adoption
Q: How did clinical publications affect uptake?
A: The impactful Rochester and Rutgers data spurred hospital executives to recognize the economic and clinical benefits, significantly boosting enterprise pipeline interest. -
Product Mix
Q: What distinguishes iQ3 from iQ+?
A: iQ3 is showing robust adoption in hospital and international channels, while iQ+ remains steady in medical school and e-commerce segments, reflecting a clear market segmentation strategy. -
Tariff & Currency
Q: What’s the impact of tariffs and currency?
A: The company faces minimal foreign currency risk, and any tariffs—if applied at a 10% rate—would have only a modest cost impact, ensuring their cost structure remains stable. -
Partnership Update
Q: What are the details on Forest Neurotech?
A: Butterfly’s collaboration in a five-year brain-computer interface study using ultrasound exemplifies an innovative approach, potentially opening large-scale applications and future revenue streams. -
Hardware Roadmap
Q: What’s next regarding future chips/wearables?
A: The development is advancing on the P5 version, with production underway and regulatory validations expected to start, aiming for market readiness by end-2026. -
School Programs Funnel
Q: What is the outlook for school adoption?
A: Conversations with osteopathic schools reveal a solid and growing funnel for one-to-one probe programs, promising recurring revenue from steady annual enrollments. -
Medical Schools Timing
Q: When do schools decide on programs?
A: Decisions typically occur as the fiscal year ends on June 30, with most new adoption plans forming in the first and second quarters, setting the stage for ongoing recurring sales.
Research analysts covering Butterfly Network.