Q1 2021 Butterfly Network Inc Earnings Call
<unk>, President and Chief Executive Officer, and Stephanie Fielding butterflies, Chief Financial Officer will host this morning's call.
During today's call, we will be making certain forward looking statements.
These statements May include statements regarding among other things expectations with respect to financial results future performance development of products and services potential regulatory.
Regulatory approvals anticipated financial impacts and other effects of the business combination on our business the <unk>.
Size and potential growth of current or future markets for our products and services and the potential impact of the COVID-19 pandemic on our business.
These forward looking statements are based on current information assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward looking statements.
These and other risks are described in our filings made with the Securities and Exchange Commission.
You are cautioned not to place undue reliance on these forward looking statements and the company disclaims any obligation to update such statements.
During this call we will refer to non-GAAP financial measures, including adjusted gross margin adjusted gross profit and adjusted EBITDA.
These financial measures are not prepared in accordance with U S. Generally accepted accounting principles per GAAP.
These non-GAAP financial measures are not intended to be considered in isolation or to substitute the results prepared in accordance with GAAP.
The definitions and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures and the discussion of why we present. These non-GAAP financial measures are included in today's press release and at the end of the slide presentation.
As a reminder, this call is being webcast live and recorded and we will be referencing of slide presentation in conjunction with our remarks.
Because there is the short delay between the live telephone audio and the presentation being shown on the webcast for the best experience. Please use either of the webcast from both of the audio and video content or if you've dialed in by telephone download the slides from our website and advanced them yourselves.
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I would now like to turn the call over to Doctor procurement.
Thank you <unk> and good morning, everyone. We appreciate you taking the time to join US today I. Welcome you to this earnings call. Our second since butterfly became a public company and look forward to updating you on the results we achieved during the first quarter of the year. Following my overview of of butterflies performance.
Stephanie will walk through the details of our financial results with other.
I'll take your questions at the very end.
As I said on our first earnings call. What brought me to this company is butterfly immense potential to drive fundamental change in health care by delivering information at the point of care, enabling health care practitioners to make more informed clinical decisions and a variety of care settings.
This potential for transformation is what motivates every member of our team and their tireless efforts to bring breakthrough innovation to markets around the world.
During my first 90 days as CEO I have become even more excited about the potential for our technology and solutions to drive demand utilization and market expansion, our semiconductor based technology ultrasound on the chip is the foundation of our point of care solution that enables the.
Acquisition of information to inform clinical decision, making.
This technology gives us maximum flexibility in how we develop solutions both to deliver value and create new business models and as butterfly point of key differentiation.
And while we intend to continuously refine our longer term strategy. We are excited about the demand in the marketplace today and are pleased to reaffirm revenue guidance and provide additional transparency for 2021.
<unk> will walk through our guidance details later in the call.
But before I talk about our first quarter performance I want to take a moment to share of real world case of butterfly impact on health care.
With tens of thousands of people revenue butterfly across the globe. The impact of this company on patients is best represented by the lives of the touches and stories shared by the health care professionals, who are living examples of butterfly vision.
Here is one touch story from Austin, Texas.
Just as the Statoscope allows the doctor to make a cricket assessment of of patients condition butterfly as a powerful tool for our health care professionals to provide valuable clinical information and improve patient care the more they understand butterfly value the more they will use it with their patients.
This was on full display as the primary care physician was learning how to incorporate butterfly intuitive patients exam with our education team.
And the elderly patient presented to the physician's practice with an elevated heart rate slightly lower than expected blood pressure and complaints of dizziness. There were no. Other significant findings on standard physical exam, but in addition to listening to the patient's heart sounds and this exam the doctor image of the patients.
With butterfly.
Two of his surprise on large collection of fluid had accumulated around the heart of pericardial effusion.
Which in this case posed a significant risk to the patient and required immediate clinical attention.
The physician called 911 and contacted the emergency room staff.
With the team informed when the patient arrived at the ER. They were prepared to rapidly treat him and we're able to drain the fluid around the heart.
The patient's condition dramatically improved and the crisis was averted because of the treatment was administered rapidly.
And many traditional clinical scenarios. This could easily have been a lengthy journey comprising multiple visits and test to get to the right diagnosis all while the patient remained compromised and at risk.
While this is one specific case it is not unusual that the information gleaned from point of care ultrasound and of primary care setting better informs care and influences the outcomes of care.
And in the article from the British Medical Journal routine use of point of care ultrasound and of primary care practice changed clinical management and half of the patients on which it was used.
We believe the affordability versatility and usability of butterfly removes hurdles to adoption for primary care practices and will afford them and their patients the benefits of ultrasound technology.
This is just one of many stories about our impact on patients physicians and nurses.
Butterfly as a truly disruptive technology with the potential to allow more people than ever before to access information from inside the body at the point of care.
The flexibility of our ultrasound on a chip technology allows us to design different user experiences and build new form factors for the pro fit for purpose based on the application.
Additionally, within our core technology, we can bring unprecedented processing power to the probe compared to other commercially available point of care ultrasound devices. The probe when combined with our proprietary software enhances the user experience and makes the acquired imaging information practical actionable.
And valuable to that specific use case.
As a result, our point of care ultrasound solution can be tailored to different user needs and has the potential to be used across the continuum of care settings by a variety of practitioners.
Now I'd like to review, our Q1 2021 performance and give an update on our progress toward the near term foundational goals laid out in our last earnings call.
Reflecting the solid start to 2021 <unk>.
We reported a revenue increase of 44% compared to the first quarter of last year. We believe this demonstrates the excitement and demand for butterfly technology in the marketplace.
We continued to make strong progress in the first quarter towards putting butterfly into the hands of users across different disciplines and healthcare.
As our customer base expands and the demand for our products grows we expect of further broadening in the range of use cases and care settings, where our solutions can bring value.
You have my commitment to provide more insight on commercialization and our anticipated milestones as soon as it's appropriate to do so with the target of doing so by the end of the year.
However to help you think about our progress in 2021 I'd like to go back to the five near term foundational goals for butterfly that we introduced on the Q4 earnings call.
The first was to broaden and strengthen our team at butterfly.
The second was to broaden our partnerships with clinical leaders.
The third was to align with the payer community to improve health outcomes and reduce the cost of care.
The fourth was to develop commercial partnerships across care settings specialties and geographies to deliver patient centric value based healthcare and the fifth was to invest in our industry leading innovation.
As I noted, we expect that success against these five foundational goals team clinical partnerships payer alignment commercial expansion and innovation will help us to drive our societal impact our commercial growth and our ability to improve clinical care across the diversity of geographies applications.
And care settings.
During the quarter, we made significant progress in all of these foundational categories and I would like to share some of the progress we have made in the first quarter towards three of these goals.
The first and perhaps most important goal at this time.
Is to broaden and strengthen our team.
For me there is no version of success for butterfly without the right team operating in the right environment, where they can be successful.
This is why over the course of the quarter and looking ahead to the rest of the year. We are dedicating significant effort to building out of team that is ready to guide butterfly through the next stages of its growth and development. While also filling out the rest of our organization.
These hires will add to our core capabilities and enhance the ability of our team to succeed.
Given our growth objective and desire to create the best people environment possible. It is important that we also continued to strengthen our leadership team.
We recently welcomed him traven butterfly, new Chief Human resources officer to our team.
In this role Tim will oversee the development and implementation of butterfly people strategy, which will include hiring developing and retaining talent, while fostering the company's culture and upgrading HR practices and systems to drive business results.
Tim comes to butterfly after four years at Wellcare Health plans of Fortune 150 managed health care company, where he led and integrated HR function responsible for creating and driving an enterprise wide talent and culture strategy here.
He bring 16 years of prior experience as the leader at Johnson <unk> Johnson, where he was most recently head of human resources for the corporate enterprise functions.
We would also like the highlight two new vice president of appointments to lead critical roles and external affairs working more closely with investors and policymakers to key audiences for us as a public health care company.
Agnes Lee, our new Vice President of Investor Relations will help us connect more closely with our investor community, ensuring we give this critical stakeholder group the <unk>.
Finally, and useful information they need <unk>.
<unk> brings two decades of prior Investor Relations Finance and integrated communications experience across the medical device life science and diagnostic companies.
Our new Vice President of Government Affairs, Andrea Hawk of ARIA is another important hire for us.
We view better technology, as an enabler of global health equity and policy.
And as butterfly growth Andrea brings over a decade of experience as the staffer in the United States Senate.
And that is the government relations professional that will help us to connect with government and public officials more closely.
And to align on aspects of care provision pricing and product policy.
We also welcome Dr. Jill common to butterfly commercial leadership team.
Dr. Common is an expert in congestive heart failure, a significant opportunity for butterfly to create value and chronic disease management.
He is joining butterfly after previous role as executive director of Atlantic sale of hospital and director of the Cardiomyopathy program at both Beth Israel Medical Center and tissue Hospital.
In addition to Dr comment, we made meaningful progress in Q1 with our commercial organization doubling the size of our highly experienced sales team.
Overall, our team continues to evolve in key areas that dramatically increase our capacity and capabilities to deliver a butterfly to the market.
This critical investment in our people is essential to ensuring we have the coverage and sales bandwidth needed to convert demand for butterfly into revenue growth in.
In particular, we expect this investment to help drive penetration and adoption in the enterprise segment, starting this year.
I look forward to sharing more progress in coming months as we expect to bring on additional industry leaders and experts to help shape the future of butterfly.
Second we are hard at work developing commercial partnerships across care settings specialties and geographies.
These new relationships demonstrate how butterfly is being used to evolve the delivery of patient care in an expanding range of use cases across the growing number of settings. When thinking about these new relationships. It's important to consider how each is a demonstration of the power of butterfly.
And of our scope and scale to ultimately go to wherever the patient may be.
Recently, we announced an innovative partnership with the entre a leading manufacturer of plastic surgery implantable devices to expand butterfly footprint into the cosmetic and plastic surgery marketplace.
Our partnership with <unk> highlights butterfly has the ability to deliver actionable diagnostic insights as an advanced assessment tool, allowing for more informed clinical decision making.
Through this unique partnership butterfly and <unk> are enabling plastic surgeons to provide a better experience for patients improved resource planning and ultimately deliver more efficient care.
To operationalize this partnership Sandra has begun promoting butterfly IQ plus into the large plastic surgery market with the official launch of the partnership at the aesthetics meeting in April.
This partnership allows us the opportunity to fully reach of specialized cloud point by an experienced and entrenched team, while enabling us to focus on using our own expanded sales team and different commercial context.
Butterfly aspires to breakdown the legacy barriers to access imaging information through portability, usability versatility and affordability.
We believe the <unk> partnership in particular illustrates away of that butterfly can partnering with the clinicians across specialties and application.
Finally, I'd like to talk more about how we can use butterfly to servicing the expanding range of use cases, while we have already demonstrated butterfly potential among practitioners of the human medicine. We are very excited about the opportunity to transform animal health with butterfly Iq that.
Net.
Indeed, the veterinary market has both vast with over 120000 veterinarians in the United States alone.
And the need of more advanced assessment tools to improve care and deliver information faster right at the point of care wherever that may be.
While traditional ultrasound system kind of struggled to meaningfully penetrate this market because of cost and difficulty of youth and logistics related to portability.
Butterfly IQ that addresses these challenges through its affordability portability and ease of use as a result butterfly IQ that is already being embraced by veterinarians across companion animal equine medicine in academic settings.
<unk> diagnostic applications are an excellent example of a use case for butterfly veterinarians for instance, commonly use ultrasound to determine why of horses leanne.
If there are ligament or tendon issues or the perform injections.
However, the lack of portability of traditional ultrasound is of major barrier to care in the settings of our horses are capped with butterfly veterinarians have the ability to evaluate soft tissues and diagnose injuries with the truly portable ultrasound solution that can be used easily and reliably wherever.
The horses Stabled.
And the last quarter, we built a dedicated commercial team around our veterinary solution and plan to aggressively ramp the business. This year as we have the opportunity to not only expand ultrasound use in veterinary medicine, but also be a leader in the category.
You can expect additional updates on our technical and commercial progress of our veterinary solution along with its global expansion within the next few quarters.
As I mentioned on our last call butterfly is delivering technology with the solution to a global marketplace that we believe is anxious to receive it our technology captures information to inform clinical decision and it can be used across a range of care settings by a variety of practitioners.
I look forward to sharing more information on the evolution of our strategy as we put our plans together and continue to execute on the goals. We just discussed.
I will now turn the call over to Stephanie for a review of our financial results Stephanie.
Thank you Todd I will take you through the details of our Q1 financial performance shortly and then end with 2021 guidance.
First I would like to share highlights from the quarter in light of the forecast we share ahead of our February stock merger.
Notably our gross margin has turned positive over the course of the past two quarters from now outpaces the forecast we shared in November.
Total revenue for the first quarter 2021 was $12 $4 million, which is at 44% increase year over year from $8 $7 million in the first quarter of 2020.
Product revenue for the quarter was $9 $6 million, an increase of 33% from $7 2 million in the same period in 2020.
Units of build the main driver of product revenue were 5013 in the quarter compared with 3711 in Q1 2020.
An increase of 39%.
Reflecting the early steps and the expansion of our customer base within hospitals and larger institution.
Subscription revenue was approximately $2 $9 million in the first quarter growing approximately 93% from approximately $1 5 million in Q1 2020.
Our subscription mix, which we define as the percentage of our total revenue recognized in the reporting period for the subscription base was 23% compared with 17% in the first quarter of 2020, a six percentage point increase.
Subscription revenue increased along with device sales as well as with renewals on year on year sales.
Due to the timing of revenue recognition and mix of revenue.
Currently expect quarter to quarter variability per subscription revenue.
Overtime, we expect the recurring revenue such as subscription mix will continue to growth.
Turning to cost of revenue.
The cost of revenue for Q1, 2021 was $6 million of <unk>.
Decrease of approximately 37% from $9 5 million in the first quarter of 2020.
Cost of product revenues was five 6 million average for Q1 2021.
On 39% decrease from $9 $3 million in the same period in 2020.
On the cost of subscription revenue was $379000, increasing 55% from $244000 per year.
In line with our expectations on gross margin turned positive over the course of the past two quarters and in Q1 gross margin was 51, 6% while adjusted gross margin was 47, 8%.
Gross profit was $6 4 million for Q1 2021.
Compared to Q1 2020 on gross profit of negative $836000 on.
Adjusted gross profit, which includes a one time adjustment for warranty accrual methodology with $5 $9 million.
Adjusted gross margin and adjusted gross profit reconciliation calculations to GAAP net loss can be found in today's press release and at the end of the slide presentation.
Consistent with our intent to use the proceeds of the Longview merger to invest aggressively in long term capability.
Operating expenses were $60 $2 million per Q1, 2021 on.
The increase of $36 $5 million or 154 per cent compared to Q1 2020.
The increase was primarily due to head count growth and changes on the year on year basis ex.
Through the associated with stock based compensation and costs associated with growth outlook.
Loss from operations was $53 million, an increase from $24 $5 million in Q1 of 2020.
Primarily driven by higher operating expenses.
The increase from gross margin.
Net loss was $700000 as compared to a net loss of $24 4 million during the first quarter of 2020.
Adjusted EBITDA was the loss of $26 5 million compared with the loss of $21 $5 million from the same period in 2020.
Adjusted EBITDA reconciliation calculations to GAAP net loss can be found in today's press release.
Moving to the balance sheet throughout much of 2020, the focused on having adequate capital resources and liquidity to support the business over the near and long term.
As of March 31, 2021, cash on cash equivalents and marketable securities were $545 $3 million of.
Of note inventory in the first quarter was $36 $1 million of.
The $10 $3 million increase over $28 $8 million reported in the fourth quarter of 2020.
This increase was primarily related to our contractual wafer commitment that we described on our last earnings call.
It's inventory will help ensure we have access to products and innovation as the scale and innovate our business model.
I would now like to take a moment to update all of you on our recent SEC hiring.
The SEC issued a statement on accounting and reporting considerations for warrants issued.
This is the broad impact on Sac and former stocks generally not just butterfly.
As a result, we have filed an amendment to our annual report on form 10-K.
Of which we restated longest audited financial statements as on.
And for the year ended December 31, 2020 to account for on public warning and private placement lines as derivative liabilities rather than prior accounting as components of equity.
The classification of these warrants as liabilities did not had any impact on the company's previously reported operating expenses cash.
Ashford or cash.
And finally onto guidance as Todd discussed earlier now that he has been on board for three months and has had a chance to evaluate the business.
Want to provide an update on our 2021 financial plan the offer.
Don't expect to provide more transparency on our operating plan, which will inform our expectations for 2022 in the second half of this year.
For the full year 2021, total revenue is projected to be approximately $76 million to $80 million or 64% to 73% growth year over year.
Gross margin is expected to be 43% to 47% and <unk>.
Net loss is expected to be $135 million to $155 million.
Adjusted gross margin is expected to the 42% to 46% and adjusted EBITDA is expected to be negative $140 million to negative $160 million.
Our revenue guidance reflects the anticipated acceleration of our investment in enterprise sales.
But we believe there are attractive opportunities to implement the butterfly solution.
Has the potential to offer institution the benefits of access to critical information earlier to make more informed decisions, allowing for improvements across the care continuum device management and governance solutions, along with integrated work flow.
Finally, we plan to continue to build upon the touch point, we have the customers, including direct user, which we previously referred to as ecommerce the.
The Q that offering and the partnership arrangements like the one we just described the Sandra.
We expect revenue growth to accelerate in the second half of the year and we expect the investments we are making tier of both near and long term results.
Our guidance for gross margin and adjusted gross margin is influenced primarily on our expected revenue mix.
The net loss and adjusted EBITDA guidance reflects the investments we plan to make in the business.
We have opportunities to drive growth through people and infrastructure.
Typically we plan to invest in software solution enhancements.
The intuitive with customer work for <unk>, and AI to support of insight and critical decision making.
The breadth of regions reflects the uncertainty around the timing of our investment as we evolve our strategy and innovation.
And with that I will pass the Doctor pod for summary comments.
Thank you Stephanie.
And thank you all for participating and butterflies first quarter 2021 earnings call we.
We are still at the very beginning of our journey as a public company.
With our rapid and broad progress this quarter in areas, such as talent clinical partnerships and commercial models.
Gives me confidence that we are poised for continued success and growth.
I would like to thank the butterfly team for their dedication to our mission and the excellent progress we made in Q1 to expand our markets and partnerships I hope that you share my excitement and I look forward to our next update with you I will now turn the call over for questions.
Thank you at this time, if anybody would like to ask a question. Please press star one on your telephone keypad.
The first question comes from Josh Jennings from Cowen Your line is open.
Alright, good morning, John Stephanie Thanks for taking the questions.
I was hoping to just start off on the 2021 guidance, it's encouraging to see the pleasure of of nice nice ramp throughout the rest of this year.
I was hoping to just get a little bit more excited too.
As your team's visibility to revenue, but particularly on the on the enterprise contract side.
Help us understand one of your visibility of the two just remind us.
Just the kind of timing of the.
Book to Bill.
Those contract processes, because it sounds like that channel is already full and you're continuing to build out the pipeline that leaves us forward. The enterprise contracts continue to build up the sales force, but anyway.
One question, but wanted to just understand visibility of the revenues of the just a reminder, on how the enterprise contracts the timing sets up in terms of initial contact with these enterprise or the hospital system customers.
Generation of revenue.
Good morning, Josh and thanks for the question.
The first.
If you think about the bill right.
We are booking.
The more growth on the back half of the year with the platform improvement.
Continue to.
The revenue mix shift towards with the <unk>.
Product and user shift more from the day or activity enterprise.
And I think that the we have been.
Working through and I think youll see that bill after the quarter as the course of the year goes on.
And we're doing the investment.
To execute the Atlas the top three.
On the NFL.
The board.
Moving to do that and we also do sell.
Element of the realization of our product pipeline, enabling the.
As the year goes through.
It relates to how it fills in the enterprise segment does that segment.
We are working out of a process right now with partners.
We're having great conversations at the highest levels with lots of excitement.
And we are continuing.
Yes.
We're going to create the partnership.
We will see that happen over time, and really started accelerating towards the end of the year.
The into the next year.
I'll turn it over to Stephanie.
Hi, Matt.
How is that going to be realized.
The question I think yes go ahead.
The address user.
Finally, the ecommerce channel.
Media sales.
The sales cycle for the enterprise.
In the longer sales.
Thanks Al.
That enterprise or health system.
Group is not uniform blocks the customer so there is a range.
The process there as well.
As we continue to build there we get the patterns that are at that sales cycle and understanding our customer needs and working with that as well.
Hi, Mark.
<unk> experience.
With those customers on profit.
The truth of our time.
We do expect that happened in the year.
And kind of Macquarie Bank.
Now.
Cycle takes some additional high.
I would just say the last thing on that is that as the.
After entities relationship.
In spite of an increase of five two I think thats one of it then.
The pieces of our business is not the case of equipment that goes into the accounts, we're actually enabling value and how the practice that has been on getting value out of their execution.
That's why some of it.
It is evolving on that price actually really quite exciting.
Excellent.
So let me segue to my next question I appreciate the.
The clinical value proposition butterfly of Q.
On the anecdotal case, you share in your prepared remarks Todd.
I think thats very clear I was wondering if you could share.
Any anecdotes or.
The case study.
These are the other.
And then of how you're marketing the.
The financial of set of of butterfly adoption for both individual practitioners of enterprises, because that seems like another.
Track development of of the technology clearly from individual practitioners to have on alternative revenue stream.
And the practice within their business, but also on the enterprise side in terms of.
Using ultrasound imaging and with reimbursement fully in place capturing additional revenues, but I was wondering if you could.
Share any details there on the just the financial incentive for the person.
Back to customers of how Youre marketing net debt angle of the story. Thanks a lot.
Sure Josh actually stopped Neocart.
Yes. Thank you noted cash.
Have existing reimbursement codes or.
Are these.
I think what.
Exciting about five five.
Of this thing reimbursement model.
Also of the tailwind of value based care of habit.
Right.
Sorry on site.
<unk> been making and ultimately we believe of our cost.
Overall.
And we think debt in the range of customer of are seeing the effect.
From the direct reimbursement as well as kind of larger institutional change.
And there of cost structure.
The patient care and outcomes.
And just the follow on from that Josh to your quiet works on.
Moving to.
It's really the comp how do you bring the.
The information that you obtained with the butterfly and some of your clinical practice and into your workflow, it's really into the decision.
And how you realize that value of the institutional so we're seeing that in primary care practices now moving afterward, both end of the value of fueling of more than half of it down rapidly.
Quiet, but you made where you can get.
Different lateral of billing for doing that but being able to do it in a timely and efficient way net.
For the institutional piece of that realizing that value on what it can do later on.
The benefit of how carriers deliver the reduced the secondary.
The study.
Reducing unnecessary referral because you bring more valuable information to the actual decision making.
Okay, and that's where we see a lot of value there.
And then put that into the standardization in larger institutions of workload.
That's where you get a lot of value out of the information that we see the.
Both at the individual practitioner level and at the institutional level on its really about getting the powerful information at the right tie in that book Butterfly Bank really bring.
And the ability in a format.
At the level of information that you can kind of get at the primary decision making.
Excellent thanks for the help there.
Okay, and if anybody would like to ask a question. Please press star one on your telephone keypad. Your next question comes from Matt <unk> from UBS. Your line is open.
Alright, good morning, and thanks for taking the question.
Sure.
So the first one I wanted to ask about was.
Obviously, you assume sort of acceleration from the year. So there's two things that I wanted to touch on the first is in the <unk>.
Press release, and the comments you talked about the doubling of the sales force and continued commercial investments could you just give us an understanding of the cadence of hiring that you've been doing in the current state of the sales force how many folks you have and how you expect that to grow over the course of the year.
The last day.
So.
We're looking at EPS.
The building to meet the needs that we have and currently we have this out we've doubled the sales force from the first quarter. We're at about 27 currently and we're continuing to evaluate.
Where we think we need to and have covered debt. We look at how we use our direct out of court.
Ill.
The zip.
The value proposition and what we just talked about mainly.
The other product segment and we're continuing to look at as we are having the conversation.
We did continue to add so we doubled it in the in the first quarter.
So on so you did a little bit year over year, you just talk about the cadence of the hiring last year and how it has impacted sales or anything on productivity. How should we think about that in terms of sales per per person.
Yeah.
Scottsdale.
We doubled the app.
Im proud of the prior year in the first quarter prior year, but actually.
Sequentially the.
Yes.
The sales team.
The ramping but we're incredibly pleased with the.
Quality of the talent that we're getting.
Diversity of background and given the product in the solution that we felt it's really important that we find.
The digital which we're able to wrap up that the holistic breath of what we're offering.
We've been really pleased with that.
The quality of the people who are coming in the door and their cash.
The ability to work with the execution of our customers.
Okay cool thanks footprint.
Excuse me.
We haven't seen the.
The core earnings from last year I know the.
The typically a little bit more backend loaded can you talk about how you expect sales to fall through the year and in Q4 and given youre doing some different initiatives. This year like the enterprise selling do you think the cadence will be debt this year than last year.
Yeah.
Yes.
So it's because of the way that we're pivoting our debt.
That's not all because we have incremental resources to in fact grow.
And.
So we certainly expect activity of unique year in terms of the ramp.
Nowadays the prior year, we had been more highly.
The weighted towards the backend of particularly in Q4.
In part due to the draught to use there.
Yes, we do expect to be back end weighted this year.
Currently the.
In terms of our investment kind of bearing.
Eric I.
I would say that over time.
Analogy.
Is that the the.
The back end weighted slightly to balance out more.
Get more free cash subscription recurring revenue on.
L. A process of our customers, where we continue to add value.
And that would be more of a conversation.
On the timing variation.
The pressure we expect.
On the ramp.
Yes, just the amount as it relates to the productivity and to what Stephanie was talking about.
I think we tried to convey at this point in the journey.
There is so much excitement and interest and people are still the laid out the utility there was a lot about getting into the <unk>.
Into the workflows, whether at the practices or whether it's an institutional accounts.
As we get into the <unk>.
And then.
Both of the offering.
More more to find themselves if the comp a little bit clearer as to you.
Where are we selling and the that's the cap in the next the accounts there right now is actually quite an exciting high and there is.
Todd opportunity.
The accounts that we're working on.
The scope.
Are quite large because we're not just putting a single product into the accounts wax of that market.
On the value that we work with that growth.
How theyre going to use the butterfly and how in the stack across the variety of workflows and practices within the App and then how they take that data and then put it and put it into their into their institutional work flow.
I'll pass on decision, making.
That's why I think the question that we're evolving into the after the classic as we're evolving with our accounts and what I would say the opportunity of the demand is incredibly large and so we're working on.
In it.
Okay. Good good perspective.
Maybe I could sneak in one more on.
Just wanted to understand.
Pricing in units of you've made some disclosures here in the quarter it looks like price.
It was down about a percent and you realize that could be due to some of these bigger contracts, but you also had the IQ launch in Q3, so maybe just the.
Generally in the future how do you expect like for like pricing to trend, including some of these bigger deals and then when you come out with the product are they going to be priced higher of the same.
What's the right way to think about that.
Yes, I think the pricing.
Pricing over time.
Lot of factors that go into that I wouldn't read too much into that.
Minor variation.
On the international mix has an impact.
On the <unk>.
Yes.
There are a variety of things kind of filling of that revenue recognition standpoint.
So I think.
The way I would think about debt more broadly.
We have of pricing structure right now.
We've discussed.
The impact here was around.
And interact and.
And Mark our health expense accounts, but we are thinking carefully about the ways that we're creating value for our customers.
What's the structure of the.
Relationships overtime drive.
The value for the customer of at four of Firefly, We view that as the kind of partnership relationship.
On the.
Of the individual pricing variation on that I wouldn't read into the next quarter.
I think the other thing that's important to remember all the pump.
Revenue in the value.
Bring into the marketplace on what our customer we have the element of the device, which acquired the information on this.
Software that makes the information of usable and so that aggregate is the value of that and work with our customers over so it's not the price per unit basis, and I think as we are evolving our business model, you'll see that you'll see that evolve.
Okay, great. Thanks for the color.
We leave it there and let some other sort of thing, but thanks a lot.
Thank you.
Thank you everyone net branches to the end of our Q&A session of Q&A I turn the call back over to the presenters for closing remarks.
I just want to thank everyone for joining us today, and we look forward to our at call of yet.
Thank you everyone. This will conclude today's conference call you may now disconnect.
Okay.