BFLY Q3 2024: Management Guides Q4 Revenue Up 25%
- Breakthrough semiconductor technology: The executives highlighted the potential of the P5 chip to deliver advanced harmonic imaging with increased mechanical pressure—enabling higher image quality without proportional heat generation. This innovative technology could provide Butterfly with a significant competitive advantage in digital ultrasound.
- Robust multi-channel sales strategy: The company’s diverse approach to the U.S. iQ3 launch—across e-commerce, inside sales, and direct hospital sales—demonstrates strong customer demand and a healthy pipeline. This broad channel coverage supports growth and market penetration.
- Expanding revenue opportunities through home care: The planned home care pilot aims to reduce costly readmissions by deploying AI-powered imaging services, which could unlock a substantial new revenue stream and enhance patient outcomes in the healthcare setting.
- Technology Risks: Concerns were raised in the Q&A about whether the new P5 chip’s approach to generating harmonics might lead to unexpected heat buildup or reduced device lifespan if not properly managed.
- Regulatory Uncertainty: Management’s discussion about the EU RoHS process highlighted a lengthy approval timeline (up to 14 months), indicating potential delays or unfavorable regulatory outcomes that could impact Butterfly’s market rollout and cost structure.
- Revenue Execution Concerns: Analysts questioned the sequential growth, with management reconciling flat Q4 guidance despite strong year-over-year performance, suggesting potential challenges in sustaining momentum across channels.
-
Q4 Guidance
Q: How do Q4 numbers support a strong finish?
A: Management explained that while sequential comparisons vary per quarter, they've built in conservatism. They now expect around 25% growth in Q4, reflecting strong holiday performance and confidence in overall revenue momentum. -
US iQ3 Channels
Q: How are US channels performing for iQ3?
A: All US channels—e-commerce, inside sales, and direct—are active and delivering robust orders, underpinning a healthy pipeline and strong customer adoption. -
OCTIV Economics
Q: How does OCTIV’s licensing work?
A: Management described OCTIV as a dedicated subsidiary licensing Butterfly’s semiconductor technology, enabling tailored programming and recurring revenue through chip sales and software fees. -
EU RoHS Update
Q: What is the progress on the EU RoHS update?
A: They had productive discussions with EU officials and have submitted their dossier. A decision is expected by mid-2025, paving the way for improved environmental standards. -
iQ Station Strategy
Q: What is the plan for the new iQ Station?
A: The iQ Station will serve as an in-facility imaging workstation, complementing their handheld products with advanced workflow integration, with further details to be revealed as development proceeds. -
Health System Penalties
Q: What percentage of US systems are penalized?
A: Management cited that about 82% of US health systems face penalties from readmissions, highlighting a significant market opportunity to lower costs and improve patient care. -
Home Care Pilot
Q: How will the home care pilot operate?
A: The pilot will deploy a virtual care model combining ultrasound imaging and telehealth services, designed to ease bedside diagnostics and reduce costly hospital readmissions. -
P5 Harmonics
Q: How are P5’s heat and lifespan managed?
A: They clarified that increased mechanical pressure drives the harmonic effects without proportional heat buildup, thanks to advances in semiconductor efficiency that mitigate heat artifacts.
Research analysts covering Butterfly Network.