Butterfly Network, Inc. ((BFLY)) has held its Q1 earnings call. Read on for the main highlights of the call.
Butterfly Network’s latest earnings call paints a picture of robust performance, marked by significant revenue growth and strategic advancements, particularly within the U.S. market and medical schools. Despite facing challenges in international revenue due to funding cuts and economic pressures, the company remains optimistic about overcoming these hurdles with its diversified growth strategies.
Strong Revenue Growth
Butterfly Network reported an impressive 20% growth in revenue for the first quarter of 2025, totaling $21.2 million. This growth was primarily driven by higher sales volumes in U.S. sales channels and the successful launch of the iQ3 probe, highlighting the company’s strong market presence and product appeal.
Improved Gross Margins
The company saw an improvement in gross margins, which increased from 58% to 63% year-over-year. This enhancement was attributed to higher average selling prices and reduced costs associated with software amortization and hosting, reflecting effective cost management strategies.
Enterprise Hospital Program Success
Butterfly Network is nearing the signing of its second hospital enterprise customer. This new partnership will see the integration of Butterfly’s Compass software throughout the hospital’s network, following the widespread adoption of Butterfly probes, showcasing the company’s growing influence in the healthcare sector.
Expansion in Medical Schools
The company has made significant strides in medical education, with more institutions adopting programs that provide one probe per student. This initiative not only supports educational advancement but also establishes a sustainable, recurring revenue model for Butterfly Network.
Launch of Octiv and Butterfly Garden
Butterfly Network continues to make progress with its Octiv program, including an upcoming partnership announcement in the generative AI space. Additionally, the expansion of the Butterfly Garden AI marketplace with new FDA-cleared applications signifies the company’s commitment to innovation and technological advancement.
Impact of USAID Funding Cuts
The company faces challenges in its international revenue base due to USAID funding cuts, which have led to delays in several opportunities, particularly affecting partnerships in low- and middle-income countries. This situation underscores the external pressures impacting Butterfly Network’s global operations.
Economic and Tariff Pressures
Potential tariff impacts could lead to additional costs for importing probes to the U.S., and broader economic pressures might delay deal closures. These factors highlight the economic challenges that could affect Butterfly Network’s future operations.
Lower Software Renewal Rates
While software and services revenue increased by 11%, this growth was partially offset by lower renewals of individual subscriptions. This indicates a need for the company to address customer retention in its software segment.
Forward-Looking Guidance
During the earnings call, Butterfly Network reiterated its full-year guidance of 20% revenue growth, with an adjusted EBITDA loss projected between $37 million and $42 million. Despite economic uncertainties and potential tariff impacts, the company remains confident in its growth trajectory, driven by increased sales of the iQ3 probe and higher demand in U.S. sales channels.
In summary, Butterfly Network’s earnings call reflects a strong performance with significant revenue growth and strategic advancements, particularly in the U.S. market and medical schools. While international revenue faces challenges, the company’s diversified growth strategies and commitment to innovation position it well for future success.