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Butterfly Network, Inc. (BFLY)·Q4 2024 Earnings Summary

Executive Summary

  • Butterfly Network delivered record quarterly revenue of $22.4M in Q4 2024 (+35% YoY), with gross margin expanding to 61.4% and adjusted EBITDA loss improving to $9.1M; management attributed strength to iQ3 pricing/volume and enterprise software momentum .
  • FY25 guidance set at $96–$100M (+~20% growth) and adjusted EBITDA loss of $37–$42M; Q1 2025 revenue guided to $20–$23M with adjusted EBITDA loss of $9–$11M as seasonal hospital deal timing and event costs weigh near-term .
  • Operational progress highlighted: iQ3 adoption, EU expansion, Octiv partnerships (including Sonic Incytes), and HomeCare pilot with early positive outcomes (no readmissions to date in a small sample); capital raise added $81.7M net proceeds on Jan 31, reinforcing liquidity .
  • Narrative tailwinds include validation of ROI (URMC study) and AI ecosystem growth (Butterfly Garden, HeartFocus training app); watch EU RoHS exemption revocation process (recommendation expected by end of 2025), which could structurally favor chip-based ultrasound .

What Went Well and What Went Wrong

What Went Well

  • Record quarterly revenue ($22.4M) with product revenue up 45% YoY and units fulfilled up 22% YoY; software/other services grew 20% YoY, signaling balanced demand across channels .
  • Gross margin expanded to 61.4% (from adjusted 56.6% in 4Q23); operating expenses declined 9% YoY and adjusted EBITDA loss improved to $9.1M (vs. $15.7M) on cost reductions and execution discipline .
  • CEO: “We’re well-positioned to scale in 2025 and beyond,” and confirmed progress on strategic pillars—core POCUS growth, Octiv partnerships, and HomeCare services—supporting medium-term growth optionality .

What Went Wrong

  • Software mix declined to 34% of revenue (−4pp YoY) as hardware outpaced software; management noted higher production and warranty costs on iQ3 offset some margin benefits .
  • GAAP net loss remained elevated at $(18.1)M and cash/CE+restricted cash fell to $92.8M at year-end (from $97.8M at Q3), reflecting ongoing burn despite improvements .
  • ARR growth described as only “slight” with enterprise software ARR +8% in Q4; inventory stayed high at $70.8M, implying working capital tied up as scale builds .

Financial Results

Core P&L and Margins vs Prior Periods

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$21.487 $20.561 $22.351
GAAP Net Loss ($USD Millions)$(15.706) $(16.924) $(18.102)
GAAP EPS (Basic/Diluted, $)$(0.07) $(0.08) $(0.08)
Gross Margin (%)58.6% 59.5% 61.4%
Adjusted Gross Margin (%)—60.0% 61.4%
Operating Expenses ($USD Millions)$29.818 $29.479 $31.049
Adjusted EBITDA ($USD Millions)$(8.134) $(8.445) $(9.144)
Adjusted EPS ($)$(0.05) $(0.05) $(0.05)

Note: Q4 vs Q3 showed revenue +$1.79M and gross margin +190bps; adjusted EBITDA loss modestly wider due to Q4 event/seasonality patterns discussed by management .

Segment and Mix Breakdown

MetricQ2 2024Q3 2024Q4 2024
Product Revenue ($USD Millions)$14.648 $13.538 $14.723
Software & Other Services Revenue ($USD Millions)$6.839 $7.023 $7.628
Software & Services Mix (%)32% 34% 34%
U.S. Revenue ($USD Millions)$14.8 $13.1 $14.5
International Revenue ($USD Millions)$5.2 $5.2 $5.5
Other Revenue ($USD Millions)$1.5 $2.3 $2.4

KPIs and Balance Sheet

KPI / BalanceQ2 2024Q3 2024Q4 2024
Units Fulfilled YoY (%)+37% ex prior-year school deals +37% YoY (product driver) +22% YoY
Enterprise Software ARR Growth (%)+24% YoY (mix to 43% of total ARR) +19% YoY (46% of total ARR) +8% YoY; total ARR “grew slightly”
Cash, CE & Restricted Cash ($USD Millions, period-end)$106.146 $97.813 $92.790
Inventories ($USD Millions)$74.175 $73.271 $70.789
Weighted Avg Shares211.7M 212.8M 213.4M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025“At least 15–20% top-line growth” (Q3 commentary) $96–$100 (~20% growth) Raised/Specified
Adjusted EBITDA ($USD Millions)FY 2025N/A (no prior explicit range)$(37)–$(42) New range
Revenue ($USD Millions)Q1 2025N/A$20–$23 New
Adjusted EBITDA ($USD Millions)Q1 2025N/A$(9)–$(11) New

Note: FY2024 guidance was raised in Q3 to $79–$81M revenue and improved adjusted EBITDA loss to $(42)–$(40)M; company ultimately delivered FY revenue $82.1M and adjusted EBITDA loss $38.9M per CEO commentary .

Earnings Call Themes & Trends

TopicQ2 2024 (Prior Q-2)Q3 2024 (Prior Q-1)Q4 2024 (Current)Trend
AI/Technology initiativesGarden partners reached 15; ScanLab rollout; WHO compendium recognition P5 chip preview; harmonics breakthrough; Garden 17 partners; HeartFocus launch P5 actively in development; iQ station path; Garden 21 partners; more FDA-bound apps Accelerating roadmap and ecosystem
Product performance (iQ3)Record revenue; strong Canada launch; 75% US mix on iQ3 units Europe launch; broad channel strength; 33% YoY revenue growth Q4 product +45% YoY; ASP/pricing and volume drivers Sustained adoption and ASP uplift
Regional trendsIntl +57% YoY; new SE Asia markets Europe certification and launch; new markets in Indonesia/NL/Belgium Intl +19% YoY with new geos; dual iQ+ and iQ3 distribution Broadening footprint
Regulatory/legal (RoHS)Filed revocation petition; process initiated Positive engagement with EU and timeline outlined EU third-party review being set; recommendation expected by end-2025 Progressing through process
R&D executionCost optimization; continued chip/digital investment P5 harmonics; iQ station concept P5/iQ station work continues; capital supports investment pace Steady investment cadence
HomeCare/servicesDefined CHF and bladder use cases; pilot planning Announced CHF pilot start with Medicare Advantage provider Early outcomes: no transfers/readmissions; scalable training model From concept to pilot traction
Octiv (Powered by Butterfly)Third partner term sheet signed Formation announced; plan to sell minority stake; multiple sectors Named Sonic Incytes; two additional partners; 2025 revenue expected Pipeline maturing / revenue visibility

Management Commentary

  • “With strong revenue momentum, a successful capital raise, and a reinforced financial position, we have the ability to invest in strategic initiatives while maintaining a clear path to cash flow independence.” — CEO Joseph DeVivo .
  • “Gross profit margin percentage increased to 61%…benefits were offset by higher production costs of iQ3 and warranty costs.” — CFO Heather Getz .
  • “We are actively in development of a wearable…we’re developing the market [HomeCare] first, then easing in the wearable into that use case.” — CEO .
  • “We have revenue momentum…a runway to get to cash flow positive with our current balance sheet.” — CEO .
  • “Guide to FY 2025 revenue of $96–$100M (~20% growth) and adjusted EBITDA loss of $37–$42M…Q1 revenue $20–$23M; adjusted EBITDA loss $9–$11M.” — CFO .

Q&A Highlights

  • Long-term revenue target: Management reaffirmed confidence in multi-year path toward $500M+ revenue based on core growth plus Octiv and HomeCare optionality, while not yet guiding to these new streams .
  • HomeCare commercialization: Training of 18 nurses across two facilities; 200-patient pilot design underway; early anecdotal case management improvements; scalable telemedicine/Compass workflow .
  • Hardware/roadmap: Active P5 chip program and development of iQ station to enter lower-end cart business; capital raise allows continued R&D without sacrificing fiscal discipline .
  • Guidance composition: FY25 includes existing Octiv contracts (e.g., Forest Neurotech) but excludes any new 2025 partner additions and HomeCare revenue .
  • EU RoHS revocation: Process continues; recommendation expected end-2025, with potential 12–18 months for implementation if favorable .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 was unavailable at time of analysis due to data access constraints; therefore an estimates comparison cannot be reliably provided at this time. We will update this section when S&P Global consensus becomes accessible (S&P Global consensus data unavailable).

Key Takeaways for Investors

  • Revenue momentum and margin recovery: Q4 revenue set a new record with 61.4% gross margin; mix and ASP uplift from iQ3 underpin near-term growth, although warranty/production costs temper margin expansion .
  • FY25 setup: Guidance implies ~20% top-line growth with disciplined loss reduction; Q1 seasonality/costs likely produce a softer EBITDA quarter—set expectations accordingly .
  • Strategic optionality: Octiv partnerships (liver, neuroscience, generative AI) and HomeCare pilots provide incremental revenue paths not in guidance—potential upside as programs commercialize .
  • AI ecosystem leverage: Butterfly Garden expansions (21 partners) and education apps (HeartFocus) support device/software attach and recurring revenues, strengthening competitive differentiation .
  • Regulatory catalyst: EU RoHS revocation could structurally favor chip-based handheld ultrasound over legacy piezo devices; monitor end-2025 recommendation and potential 12–18 month implementation timeline .
  • Liquidity improved: The $81.7M follow-on offering coupled with year-end cash/CE provides runway to pursue growth initiatives while maintaining fiscal discipline; watch inventory unwinding over 2025 .
  • Trading implications: Near-term stock drivers include execution vs Q1 guide, incremental disclosures on Octiv/HomeCare commercialization, gross margin trajectory vs iQ3 cost curve and warranty costs, and any EU RoHS process updates .