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Butterfly Network, Inc. (BFLY)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarter: revenue $23.383M (+9% YoY) and gross margin 63.7%—both all‑time highs; adjusted EPS improved to $(0.03) and adjusted EBITDA loss to $(6.153M) .
  • Guidance reset: FY25 revenue lowered to $91–$95M (from $96–$100M) while FY25 adjusted EBITDA loss improved to $32–$37M (from $37–$42M); Q3 guide $20–$22M revenue and $(8)–$(9)M adjusted EBITDA loss .
  • Strategic traction: enterprise‑wide deployment signed at a top‑five global health system, Butterfly Garden apps gaining FDA clearances, and Compass AI targeted to launch in Q3 to accelerate enterprise software adoption .
  • Operating discipline: quarterly cash used reduced to $7.1M, lowest to date; cash and cash equivalents $148.136M as of 6/30/25 underpin investment in Octiv and HomeCare initiatives .

What Went Well and What Went Wrong

What Went Well

  • New quarterly highs in revenue ($23.383M) and gross margin (63.7%), driven by higher ASPs, chip sales (Octiv), and improved software margins from lower amortization and hosting costs .
  • Enterprise momentum: “We did close the large enterprise‑wide deal... fully deploy in every department, every campus, in one of the top five most recognized health systems in the world” (CEO) .
  • AI/product ecosystem: HeartFocus cardiac app cleared and launching; Tufts’ study validated ML model accuracy for AS screening on Butterfly devices; Compass AI slated to streamline documentation and drive enterprise adoption .

What Went Wrong

  • Guidance cut reflects elongated sales cycles and funding uncertainty across U.S. hospital/enterprise and global health channels; several large deals pushed out .
  • U.S probe volumes softer YoY despite higher ASPs; software/other services mix down as product growth outpaced software .
  • Individual subscription renewals show notable churn; management working to improve stickiness as enterprise software grows .

Financial Results

Consolidated Results vs Prior Periods and Estimates

MetricQ4 2024Q1 2025Q2 2025Q2 2025 Consensus*
Revenue ($USD Millions)$22.351 $21.225 $23.383 $23.724*
Gross Profit ($USD Millions)$13.734 $13.380 $14.891 —
Gross Margin (%)61.4% 63.0% 63.7% —
Net Loss ($USD Millions)$(18.102) $(13.967) $(13.834) —
Adjusted EBITDA ($USD Millions)$(9.144) $(9.068) $(6.153) —
Adjusted EPS ($USD)$(0.05) $(0.04) $(0.03) $(0.07)*

Footnote: *Values retrieved from S&P Global.

Segment and Geographic Breakdown

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Product Revenue ($USD Millions)$14.648 $14.723 $14.164 $16.621
Software & Other Services ($USD Millions)$6.839 $7.628 $7.061 $6.762
U.S. Revenue ($USD Millions)$17.2 approx flat YoY $14.5 $16.6 $17.2
International Revenue ($USD Millions)$5.2 (implied)$5.5 $4.6 $6.2

Notes: Q2 2024 U.S/$17.2M and International/$6.2M explicitly disclosed for YoY comparison in Q2 2025 commentary .

KPIs and Operating Metrics

KPIQ4 2024Q1 2025Q2 2025
Total Operating Expenses ($USD Millions)$31.049 $31.848 $30.991
Weighted‑Avg Shares (Basic & Diluted)213,389,209 234,923,536 248,393,811
Cash & Cash Equivalents ($USD Millions)$88.775 $155.212 $148.136
Quarterly Cash Used ($USD Millions)——$7.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$96–$100 $91–$95 Lowered
Adjusted EBITDA Loss ($USD Millions)FY 2025$(37)–$(42) $(32)–$(37) Improved (less loss)
Revenue ($USD Millions)Q3 2025—$20–$22 New
Adjusted EBITDA Loss ($USD Millions)Q3 2025—$(8)–$(9) New
Revenue ($USD Millions)Q2 2025 (delivered vs guided)$23–$24.5 (guided on Q1 call) $23.383 actual In‑range (low end)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Enterprise adoptionURMC ROI publication catalyzing C‑suite; second enterprise customer near signing Enterprise‑wide deployment signed at top‑five health system; broader RFP wins Accelerating
AI/Technology (Compass AI)Compass 2.0 planned for 2H25 to expedite workflows Compass AI launching in Q3 to automate documentation, voice notes, QA Advancing to launch
Butterfly Garden apps21–23 partners; DESKi HeartFocus FDA clearance expected HeartFocus U.S. commercial launch; AI aortic stenosis research published Commercializing
HomeCare CHF programPilot started; no readmissions yet; training 18 nurses across two facilities Pilot concluded successfully; targeting first commercial state before year‑end; revenue model per‑member + per‑scan Scaling to commercial
Macro/funding/tariffsTariff impact < $1–$1.5M annual if imposed; global health delays; Q2 guide reflected uncertainty Continued delays in hospital and global health deals; FY guide lowered Persistent near‑term headwind
Product performance (iQ3)Higher ASPs; mix shifting to iQ3 across channels Record gross margin; U.S volume down YoY but ASPs and Octiv chip sales offset Mixed (ASP strong; volume softer U.S.)
Regulatory/legal (RoHS)EU review/third‑party assessment underway; decision expected end‑2025 Stakeholder review phase initiated; Oeko‑Institut engaged Ongoing

Management Commentary

  • “Our strongest revenue quarter in Company history at $23.4 million… record gross margins of 64%… lowest cash use yet at $7.1 million” — Joseph DeVivo, CEO .
  • “We did close the large enterprise‑wide deal… fully deploy in every department, every campus, in one of the top five most recognized health systems in the world” — CEO .
  • “Compass AI… automated voice control to capture the doctor's notes, and auto‑populate fields in just seconds” — CEO .
  • “U.S. revenue was $17.2M… driven by chip delivery to Octiv partners and higher ASPs, partially offset by lower probe sales volume; International revenue +19% to $6.2M” — Company press release .
  • CFO transition announced; interim CFO Megan Carlson appointed; FY25 guidance revised .

Q&A Highlights

  • Competitive landscape: Guidance revision driven by elongated sales cycles and funding uncertainty, not competition; Butterfly pioneering large‑scale handheld deployments .
  • Software dynamics: Enterprise software growing; churn in individual subscriptions remains a headwind; Compass AI expected to support pricing and adoption .
  • HomeCare economics: Program fee per enrolled member plus per‑scan revenue with remote reads; first commercial state targeted before year‑end; pilot cut CHF readmissions “at least by half” (partner data) .
  • Hardware roadmap: iQ station to compete with lower‑end cart budgets; P5 next‑gen chip expected to deliver a step‑change in image quality and support upstream/downstream expansion .
  • Macro: Ongoing global health funding uncertainty delaying deals; domestic hospital budgets recalibrating; management taking conservative stance in FY guide .

Estimates Context

  • Q2 2025: Revenue $23.383M vs consensus $23.724M* (≈1.4% miss); adjusted EPS $(0.03) vs consensus EPS $(0.07)* (beat by $0.04) .
  • Forward consensus: Q3 2025 revenue ~$21.225M* and EPS $(0.065)* vs company guidance $20–$22M revenue and $(8)–$(9)M adjusted EBITDA loss; Q4 2025 consensus revenue ~$25.525M* and EPS $(0.07)* .
  • Implication: FY revenue guide down to $91–$95M likely necessitates modest downward revisions to outer‑quarter revenue while EBITDA loss guide improving supports estimate cuts to loss trajectory.
    Footnote: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • High‑quality beat on profitability: despite a slight revenue shortfall vs consensus, record gross margin and a $(0.04) EPS beat reflect strong ASPs, chip revenue and cost discipline—supportive for multiple expansion .
  • Guidance reset de‑risks 2H: Lower FY revenue with improved EBITDA loss embeds elongated sales cycles; Q3 guide provides near‑term guardrails for positioning .
  • Enterprise/software catalysts: Signed top‑five system and Compass AI launch should accelerate enterprise software adoption and hardware pull‑through; watch for named customer disclosure and pricing leverage .
  • HomeCare optionality: Transition from pilot to commercial state could unlock recurring revenue (per‑member and per‑scan) with demonstrated clinical impact on CHF readmissions .
  • AI ecosystem building: Butterfly Garden FDA clearances (HeartFocus) and published research on AS detection broaden clinical use cases and monetization avenues .
  • Balance sheet supports execution: $148.136M cash and reduced cash burn ($7.1M) provide runway to invest in Octiv, Compass AI, and HomeCare without compromising discipline .
  • Monitor macro risk: Funding uncertainty in global health and hospital channels remains the key headwind; track conversion of delayed pipeline and any incremental policy clarity .

Appendix: Additional Data Points

  • Cash flows (six months ended): Net cash used in operating activities $(18.844)M; net share offering proceeds $81.006M .
  • CFO transition details including advisory and interim arrangements filed in 8‑K .