Q3 2021 Butterfly Network Inc Earnings Call
Okay.
Good morning, My name is Emma and I will be the conference operator today at this time I would like to welcome everyone to the Butterfly network Q3 earnings call I'll.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
I would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
I would like to withdraw your question again press Star one. Thank you Agnes Lee you May begin your conference.
Okay.
Good morning, and thank you for joining us today.
Earlier this morning on slides at least financial results for the third quarter, which ended September 32021.
And provided a business update.
The release and earnings presentation, which include a reconciliation of management's use of non-GAAP financial measures compared to the most applicable GAAP measures.
Our currently available on the investors section of the company's website at IR Dot butterfly network Dot com.
Dr. Todd procurement butterflies, President and Chief Executive Officer, and Stefanie fielding.
<unk> 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.
Performing <unk>.
Our products and services.
Potential regulatory approval.
The anticipated financial impact.
Other restaurants.
This combination on the.
The size and potential growth.
Current or future markets for our products and services.
And the potential impact of the Covid.
<unk> 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 or 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 a discussion of why we present. These non-GAAP financial measures are included in today's press release and at the.
And the slide presentation.
As a reminder, this call is being webcast live and recorded and we will be blessed sensing a slide presentation in conjunction with our remarks.
Because there was a short delay between the live telephone audio and the presentation being shown on the webcast for the best experience. Please use either the webcast for both audio and video content.
Or if you've dialed in by telephone download the slides from our website in advance of them yourself.
To access the webcast. Please visit the events section in the investors section of our website and a replay of the event will be available following the call.
I would now like to turn the call over to Doctor practices.
Thank you Agnes and good morning, everyone.
We appreciate you taking the time to join us and learn of our progress this quarter.
There is much for our team to be proud of as we build our foundational strength and make advancements towards realizing our vision of democratizing medical imaging and transforming care by enabling more informed clinical decision making.
And while we are improving every day based upon our most recent experiences and the current health care environment.
We must reset expectations for revenue for the balance of the year.
While our revenues for Q3 grew 44% year over year, we are falling short of what's necessary to achieve the annual guidance provided by prior management, one year ago and reaffirmed by me in May of this year with the information I have having just joined the company.
For 2021.
We now expect full year revenue growth in the range of 30% to 34%.
This represents good progress in our current commercial activities and mountain user enthusiasm about butterfly, but is offset by health care logistical challenges and doctor nurse and medical technician fatigue, concurrent with COVID-19 conditions and its broad consequences.
To understand our user base. It is important to recognize that there are multiple layers of butterfly users.
Many individual practitioners and early technology adopters are excited about our portability affordability and breadth of utility.
We appreciate their early adoption advocacy and feedback.
Many of them have been engaged in lifesaving practice altering work and hold a deep understanding of how butterfly can improve decision, making to both accelerate and enhance care delivery.
Our second group of users across multiple specialties is increasingly adopting butterfly as we properly segment educate and integrate the power of butterfly into their respective areas of practice.
Here, we are focusing on specific capabilities of this system and helping users to rapidly incorporate it into their practices and workflows.
Over the coming quarters, we will continue to rollout programs targeted at specific specialties and procedural use cases.
And are aligning commercial energies around doing so.
Finally, because of the unique aspects of butterfly, we are well positioned to increasingly engage a third group of users.
Large integrated health systems.
Our value proposition reaches wide for the enterprise user.
Across many divisions departments and sites of care as we alone can integrate new clinical data and insights conveniently cost effectively and at enterprise scale.
We expect our journey with hospitals and health systems to be collaborative.
As we work together to practically unlock valuable clinical information that will fundamentally change the course of diagnosis and treatment of patients in a variety of care settings.
Such enterprise engagements require close integration to optimize enterprise workflows and systems and ensure a proper compliance security billion integrity and continuity.
Introducing butterfly to the enterprise is less about sales cycles and more about partnerships and we are pleased with our current momentum among this important user audience.
Across all three layers of customers in all geographies, we need to recognize that we are early in our journey and that commercialization development and clinical advancement will be iterative.
One clear thread that permeates all of our customer lanes is our commitment to consistently and persistently drive ease of use and simplicity.
Delivering ease of use and simplicity.
All we do is a north star for our journey.
We will be a clear value differentiator in the market.
And as a personal commitment from our team and from me as we support doctors nurses and technicians to help them more effectively transform the way they practice medicine.
It is important to note that there has been a significant management evolution since projections for first made that included an aggressive back half 2021 ramp.
While we have rapidly reoriented strategy team and the company overall to adjust to the need to shift from a direct to user led market approach to a more integrated commercial approach to health system and specialties. Our near term performance has been negatively influenced by a confluence of <unk>.
Factors, we believe that many of these factors are transitory and that our commitment to evolve and expand our commercialization approach whilst constructively supporting behavior change in clinical practice will be a long term competitive advantage and one that butterfly with its innovative.
<unk> solution is well positioned to do.
On a macro level it is well understood that the health care community is suffering from exhaustion and severe human resource constraints, resulting from the most recent COVID-19 delta wave as well as overall labor shortages.
<unk> was specifically developed to support these very medical professionals and their ability to diagnose and treat more effectively more rapidly and more affordably.
Amid these unprecedented times, however, we have seen prospects and customers alike have to shift their attention to the pressing issues of the times.
Rather than focusing on deploying new technology or adopting large scale behavior change. We expect that these conditions will pass, but we do not expect them to disappear during Q4.
To further respond to the needs and opportunities of the market.
We have strengthened our talent in areas to enhance enterprise customer and prospect engagement.
And augment solution ease of use these changes have resulted in high value work streams that are currently active and we believe will significantly accelerate growth in 2022 and beyond.
The leading indicators of this progress are.
The quality of the leadership team we are building.
Improving customer satisfaction, which is evident in our Q3 sequential uptick in net promoter scores.
And our in process discussions with large institutions to kickstart enterprise level implementations, all of which gives me great optimism about future business acceleration.
We believe Q3 and Q4 revenues are a lagging indicator that reflect the transitory challenges I just described.
Butterfly as digital health in practice are disruptive system is uniquely positioned to deliver the value a better clinical information at the time it is needed.
And our evolution to emphasize enterprise level commercial strategies carries with it our commitment to listen learn create collaborate and rapidly develop solutions that maximize not only the amazing utility of butterfly, but enhance ease of integration.
Those who will implement butterfly at scale.
Our goal is not simply to replace larger more expensive technology with one that is more affordable.
That alone is a laudable and an obtainable goal.
But it falls short of our societal and commercial aspiration.
The differentiated power butterfly is that guidance better clinical decision, making and subsequent care planning and a practical cost effective way.
Butterfly has the technology and capability to fundamentally change the way medical information is gathered decisions are made and care is delivered.
With butterfly clinicians can dramatically improve diagnosis accuracy and speed informed the course of treatment and provide an unmatched patient experience and better outcomes.
Guard list of care setting.
An important component of bringing butterfly public and obtaining more than $500 million of funding was the understanding that maximum impact would be created through connectivity and collaboration with frontline health care professionals and industry thought leaders.
Our commitment to that and the leadership team, we have assembled and the board members who have joined us.
And in the coming quarters, you will see that confirmed by larger collaborations with institutions of scale, who share our vision to dramatically improve the standard of care by deploying butterfly as an advanced assessment tool throughout their institutions and systems.
To further support our go to market approach.
And only a matter of months, we have reoriented, our technology group under the leadership of CTO Andre stake to include industry, leading best practices for enterprise and workflow software development to bring agility and speed to our enablement of larger scale enterprise collaborations.
<unk>.
This is not only reflective of the iterative journey of co development. We are undertaking but is demonstrative of our perpetual commitment to emphasize ease of use and <unk>.
Take more of the user burden onto the device and system, whether it be at the platform level the solution level or with our investment in AI.
Furthermore, we understand that a component of enabling ease of use requires removing implementation barriers to facilitate behavior in practice change.
And at the beginning of the journey enhancing education is critical.
This is why we continue to build and optimize our team around these critical priorities.
Have augmented our clinical leadership under the direction of Dr. John Martin to better participate and drive expansive clinical conversations with prospective partners as a means to advance the evolution and incorporation of ultrasound information into clinical workflows. We have also read.
Our sales organization under our Chief commercial officer, Stacy Pugh to give us the human capital necessary to more deeply engage with our clients.
And we have complemented our internal investment in AI with an exclusive agreement with caption health, which I will discuss in more detail later in the call.
I recognize that it is frustrating to the investment community and to our management team that you cannot see the full evidence of our progress and the revenue stream in the back half of 2021, but we believe we are making significant progress and are better positioned to capture the full <unk>.
Potential butterfly moving forward.
Despite our revenue shortfall, our adjusted gross margin and adjusted EBITDA are projected to exceed the original plan and we continue to invest aggressively in products people and commercial expansion.
Our underlying momentum is building and we expect to see accelerating revenue growth in 2022, we will communicate our complete 2022 forecast to the investment community concurrent with our Q4 earnings release and Investor call. However, I will share with you today that we are.
Confident that our rate of revenue growth for 2022 will exceed our projected full year 2021 growth rate.
We have made significant and measurable headway in 2021 and our team is sprinting forward as a true growth company I want to reiterate my personal passion and conviction that we are here to invest higher build partner collaborate and co create across.
All aspects of butterfly, we will enable superior image and data capture everywhere and anywhere.
From assessment in traditional healthcare channels alternative sites of care the home across specialties, who have never had access to timely imaging information before and within geographies that have never had high quality medical imaging.
We know that every version of success for butterfly starts with building a highly talented capable team to support our vision and growth.
I'd like to share a few leadership updates from this quarter.
To support oversight on our growth and innovation strategy, we expanded our board with the appointment of Doctor Erika Schwartz Dr. Schwartz brings a breadth of healthcare management and public health experience to the board of directors. Most recently, serving as deputy surgeon General for the U S Department.
Of health and human services, where she led the country as public health deployment in response to the COVID-19 pandemic. She also spent 24 years and the uniform service with the U S Coast Guard, serving as Chief Medical Officer, and then other leadership roles. Dr. Schwartz will serve on our <unk>.
<unk> <unk> Technology Committee with Dr. <unk> and Dr. Adelman, providing oversight of the role of technology in executing our strategy and supporting our business and operating requirements.
As we continue to scale and expand the business.
We have been adding executive leadership in areas that would support our strategy and initiatives to accomplish this in the.
The third quarter, we added Troy Quanta, as our senior Vice President regulatory and quality to lead this critical capability.
He brings over 25 years of FDA and industry experience with a focus on regulatory affairs compliance quality and post market surveillance teams.
Troy previously held roles at Olympus Roche Becton Dickinson.
Or a short technologies, Johnson and Johnson and <unk>.
With the addition of Troy to our existing regulatory and quality team butterfly further strengthened our ability to bring additional innovative solutions to market in a compliant and timely fashion.
I am very happy with the rapid evolution of the leadership team now.
Now with the addition of Troy, we have become even stronger to take us through the next part of our journey.
We also find confidence and are encouraged by the growing evidence and scientific publications that demonstrate butterflies use across different settings and phases of care <unk>.
<unk>, the New England Journal of Medicine, published an article that talked about the growing use of focus and factors that have led to broader adoption being driven by the advent of smaller more affordable ultrasound machines combined with evidence that physicians without a radiology background can.
And be confident and use them effectively in practice.
Beyond publications, there are more and more stories spanning a variety of procedural areas being told by physicians, who are using butterfly in their practices and institutions. One that I would like to highlight was presented at <unk> Biosciences recent Investor Day Paas.
<unk> is a specialty pharmaceutical company that creates therapeutics to manage pain.
And then Steve geologist from a leading academic medical center walked investors through a timeline about the use of regional anesthesia during surgery.
<unk> showed a picture of a butterfly as a disruptive technology that has enabled the broader adoption of regional anesthesia to improve patient care and post operative recovery.
Even with the extensive training it is challenging to administer regional anesthesia without complications.
Butterfly changes that with our solution and needle this technology.
The anesthesiologists can see the targeted area and safely and effectively administer the anesthetic.
This is what butterfly makes possible there is more to come as we meet the needs of our customers and innovate so that butterfly is not just accessible but present in the pocket of all physicians and health care providers everywhere and anywhere.
Another important enabler of behavior change is ease of use.
In August we announced an exclusive partnership with caption health the creator of caption AI, the first and only FDA cleared AI guidance ultrasound software and our recent recipient not only of a technology add on payment or <unk> from CMS.
But also of time magazine's best inventions of 2021 recognition.
With an AI powered butterfly and caption solution, we believe we can meaningfully enhance cardiac assessments.
Specifically, our integrated solution will take on more of the burden of capturing and interpreting the ultrasound, while providing practitioners with quick and relevant information about a patient's cardiac state.
Not only is there a significant opportunity to better manage identified cardiac conditions, but there is also considerable undetected disease and.
And across our communities as a recent study from circulation heart failure showed 46% of heart failure patients diagnosed and acute care settings has potential heart failure symptoms during primary care clinic visits in the previous six months.
We believe that advanced diagnostic solutions like the one we will bring to market with caption.
May be able to help identify and diagnose heart failure earlier, and bringing people to therapy sooner before they get sicker, resulting in fewer unnecessary acute care visits and decreased medical costs.
Butterfly and caption health are expected to introduce the combined platform butterfly IQ plus in the United States later this winter.
Another way to expand access to information is through unlocking new markets as we evolve as a company global expansion will become a greater focus as the demand for butterfly growth everywhere.
We're excited to share continued momentum and the growth of our distributor relationships.
A key mechanism to expand our reach.
Youll recall that last quarter, we shared our entry into the Hong Kong region with a partnership with <unk> medical and.
True to our mission to democratize care around the world I'm pleased that through partnerships. We entered into this quarter, we will make butterfly available in Chile, and Pakistan and through a more recent strategic partnership with Abdul achieved Shamil health, we will bring butterfly.
The Middle East North Africa, Turkey, and India.
With these activities, we are helping to address global health equity needs by introducing butterfly to markets that need better more advanced technology and information to deliver a higher standard of clinical care.
And this is not just about creating access.
One focus area for <unk>, our partner in Pakistan will be on improving health outcomes for expectant mothers leveraging the affordability portability and capabilities that are unique to the butterfly solution.
As the new Ob tools, including the gestation all age calculator that we launched last quarter. They will be partnering with provincial governments to aid health care workers to take Firefly devices into the homes of pregnant mothers and provide access to care that otherwise is just now.
Available.
Another important driver of our growth is organic innovation. This quarter, we released a new product for the veterinary market, we launched butterfly IQ plus that are second generation veterinary ultrasound device, which is designed to bring more valuable information and capabilities to veterans.
<unk> in a variety of clinical settings.
The IQ plus that has many new features comes with color Doppler sensitivity a needle this tool and notably was designed with a 15% smaller prophage and a 10% shorter probe for easier overall use and maneuvering.
With the introduction of IQ plus that we have also expanded our market reach and the product is now available for purchase and 19, New international markets and we continue to grow with large scale partnerships and distributor relationships in the U S and now the U K.
We are very excited to bring value to the veterinary market in parallel with our work in human health care.
Additionally, we announced a large scale partnership with rare breed to bring butterfly to all of their veterinary hospitals. This adoption reflects an important change in the perception and deployment of butterfly that is different from traditional ultrasound use in veterinary medicine.
<unk> had several experiences with butterfly that catalyze their decision to adopt across their hospitals.
There is one instance that I would like to share with you.
The veterinarian at a rare breed hospital worked with a dog with two reported do lumps by the owner.
Veterinarian performed a physical exam and used butterfly to perform a quick ultrasound, both lesions, where the vet noticed mark demographic differences between them.
This led the vet to pro forma quick fine needle aspirate, which led to a diagnosis of a tumor.
<unk> butterfly to ultrasound, the liver and spleen to look for metastatic disease.
All of this occurred during one appointment rather than waiting to obtain insight by referring out to a specialist veterinarian was able to acquire valuable information to guide an accurate diagnosis and provide information immediately to the pet owner, reducing the stress associated with waiting for diagnosis and allow.
Owing the owner to focus on the wellness of the Paas.
I Hope this story helps to illustrate yet another flavor of what butterfly makes possible.
Before I turn it over to Stephanie for a more detailed financial discussion I want to reiterate a number of points that I think are crucial to understanding our direction.
Butterflies, great potential is to re imagine healthcare by enabling more informed care decisions.
The differentiated power of butterfly is that it unlocks ultrasound information in a practical cost effective way.
Through the confluence of a transformational device that enables information acquisition and innovative software that makes the information usable we are creating an entirely new clinical experience.
And we know changing behavior requires hard work and we are now well positioned to drive this positive change.
We will relentlessly pursue simplicity and ease of use to enable butterfly to be used in the broadest number of locations by the broadest number of users across a broad range of clinically meaningful and impactful applications and setting.
We don't just want to make clinicians better Synagro first we want butterfly to make practitioners better clinician.
We are already in the process of changing clinical behavior, and we are continuing to see proof points that acknowledged the use of ultrasound to establish a clinical diagnosis or to guide a procedure.
Even with the challenges of the current environment, we continue to build momentum and are still seeing strong demand for butterfly and finally in my eight months at the company my commitment and excitement has only grown stronger.
I will now turn the call over to Stephanie for a review of our financial results Stephanie.
Thank you Todd and good morning, everyone.
Third quarter revenues grew 44% year over year to $14 6 million.
And adjusted gross margin came in at 49, 3%.
While these numbers are healthy they did fall short of the back half ramp that is necessary to meet our original revenue projections.
Product revenue for the quarter was $10 $8 million, an increase of 25, 8% from $8 6 million in the same period in 2020.
Units fulfilled the main driver of product revenue were 5556 in the quarter compared with 3947 in Q3 2020, an increase of 41%.
Growth was driven by increasing traction from our direct sales force performance and our met business new distributor relationships in Chile, and Pakistan, partially offset by direct end user sales that abated.
On a related note during the quarter, we increased the price of butterfly IQ platts to 'twenty $399.
We believe we are seeing the end of the individual early adopter curve and we believe direct user sales slowed this quarter due to a combination of the challenging environment for medical professional time and attention due to COVID-19 searches and labor shortages and resulting from what we believe is a short term reaction to our pricing actions in August.
It is also a reflection of the patterns with indirect teams our audience that we anticipated and which validates our expanded focus on health institution and a more tailored outreach to individual users.
We have no plans to offer any hardware price promotions during the holiday season as we did in Q4 of 2020, when we introduced the butterfly IQ plus and we are not modeling any significant acceleration in our direct to user trends other than normal buying patterns in Q4.
We continue to enhance our customer and prospect engagement through our web site expanding commercial activities targeting users by specialty and by supporting their education.
Subscription revenue was $3 $8 million in the third quarter growing approximately 149% from $1 5 million in Q3 2020.
Our subscription mix, which we define as a percentage of total revenue recognized in a reporting period that is subscription base was 26% compared with 15% in the third quarter of 2020, and 11 percentage point increase.
Turning now to adjusted gross profit and adjusted gross margin reconciliation calculations to GAAP can be found in today's press release and at the end of the slide presentation.
Adjusted gross profit was $7 $2 million in Q3 2021 compared to adjusted gross profit of negative $2 $7 million in Q3 2020.
Excluded from the adjusted gross profit in Q3, 2021 is a nonrecurring $11 $6 million loss on a purchase commitment with a third party manufacturing vendor.
Based on our current estimates we are taking a reserve on inventory that we may not be able to use.
There is no cash impact from this adjustment in.
In addition, this reserve does not preclude us from using the inventory in the future should circumstances change.
We continue to believe that our access to semiconductor wafers in such an uncertain environment is an advantage, enabling butterfly to support future demand.
Adjusted gross margin was 49, 3% for the third quarter and 49, 2% year to date, which compares to an adjusted gross margin of negative 26, 3% in Q3, 2020 and negative 10, 8% for the first three quarters of 2020.
Our healthy gross margin will provide leverage as we grow and is a significant improvement to our 2021 financial position.
Operating expenses were $51 9 million for Q3, 2021, an increase of $29 3 million or 130% compared to Q3 2020, due primarily to the build out of our team in 2021.
And innovation and public company expenses.
The growth in operating expenditures is a reflection both of the investments we are making to capitalize on the opportunities we see to transform care as.
As well as of the constrained spend environment in which the company was operating in the prior year.
Loss from operations was $57 million, a decrease from negative $91 8 million in Q3 of 2020.
Primarily driven by higher operating expenses.
Offset by the increase in gross margin.
Net loss was $13 6 million as compared to a net loss of $92 2 million.
During the third quarter of 2020.
Our net loss was positively impacted by a $43 million non operating gain due to the change in fair value of our warrant liabilities, which did not exist in 2020.
Adjusted EBITDA was a loss of $33 5 million compared with a loss of $22 6 million in the same period in 2020.
Adjusted EBITDA reconciliation calculations GAAP net loss can be found in today's press release.
Moving to our capital resources.
A strong cash position that allows us to continue investing in our journey.
As of September 32021, cash and cash equivalents and marketable securities were $468 $4 million.
Inventory in the third quarter was $23 8 million or.
$23 $1 million decrease from the $46 9 million reported in the second quarter of 2021.
This decrease was due to our balance sheet reclassification from our purchase commitment liability.
As we have continued upgrading our products to increase reliability and position us for future transformational technology, we have determined that older raw material is likely obsolete.
Consequently, we reclassified $35 million on that older raw material <unk>.
Prime reserve against the inventory to a reduction in inventory.
This decrease in inventory was partially offset by additional purchases of raw materials subject to a minimum purchase commitments.
In light of the themes Todd discussed earlier on the call, including the backdrop of Covid on health care, which is the lean system implementations institutions.
Longer sales and development cycle related to health systems adoption.
And the trends we are seeing interact to user purchases. We are adjusting our 2021 guidance to reflect our views on the current pace of market adoption.
For the full year 2021, total revenue is projected to be approximately $60 million to $62 million or.
Our 30% to 34% growth year over year.
Through the third quarter, we have seen consistent performance and adjusted gross margin and slower ramp in our expenses.
As a result, we have also updated these financial trends and our guidance for full year adjusted gross margin and adjusted EBITDA.
<unk> margin is expected to be 28% to 30% and net loss is expected to be $65 million to $75 million.
Assuming no change in the fair value of our warrants.
Adjusted gross margin is expected to be 48% to 50% and adjusted EBITDA is expected to be negative $125 million to $135 million.
And with that I will now turn it back over to Todd for summary comments.
Thank you Stephanie and thank you all for participating and butterflies third quarter 2021 earnings call.
I'd also like to thank the butterfly team for their dedication to our mission and the excellent progress we have made in Q3.
We are well on our journey of changing clinical behavior at scale.
From our innovation and momentum to empower individual practitioners and care teams to our ongoing expansion across the U S globally and with Spacex even beyond.
Thank you for your time today, and I look forward to providing ongoing updates as we deliver upon our mission to democratize medical imaging and to position butterfly as an indispensable tool and healthcare one that is truly unique in its capability to enable more accessible.
Paul Affordable health care to patients around the world.
Where and everywhere.
We will now turn the call over for questions.
Okay.
Your first question comes from the line of Josh.
Sorry.
Josh Jennings from Cowen.
My apologies, Matt Taylor from UBS. Your line is open.
Yeah.
Okay. Okay. Thanks, good morning, Thanks for taking the question.
Hey, I was wondering if you could maybe just give us a sense for.
What you think the overall market is growing and maybe just talk about your share within that any any updated views that you have.
On the market backdrop.
Okay.
Hi, good morning, Thanks for the question.
I think we continue to believe that the Tam for the opportunity is incredibly large given the versatility of the solution that we have.
And I don't think that our perspective on the opportunity has changed.
With any circumstances that this credit this quarter, we continue to see signs that the market responding and we sit in the New England Journal Medicine.
Types of indications that continue to give us kind of confidence and excitement about what we're seeing in the reactions in the market, but there is nothing short term thats adjusted our perspective on the opportunity.
And we continue to be excited about the size of that Tam.
And I think Matt the other thing is while we continue to be very excited about the opportunity.
Butterflies not traditional poker and really that's what we are evolving and working on right now so as we look at the Tam that is considered in the market around <unk>. It's a lot around current thinking and butterfly with all of its capabilities allows people to leverage.
The attribute and incorporate it into different workflows.
The capabilities of needle visualization.
<unk> scanning and you can bring it in as an assessment tool and to a workflow tool.
And also.
Use it as an advanced assessment tool leveraging ultrasound information into clinical workflows that are informing clinical decision, making so we see the opportunity as the <unk>.
Current focus Tam plus because of what butterfly can do with its affordability its portability and its capabilities.
Okay.
Okay.
Okay.
Your next question comes from the line of Josh Jennings with Cowen Your line is open.
Hi, good morning, Thanks for taking the questions.
Got it.
Thanks, Stephanie and good morning.
Understanding that the.
Q3, and Q4 results and the outlook is lagging indicator and just was hoping to learn a little bit more about what's driving the optimism in.
You talk about the momentum in the business I'm, assuming it's in the enterprise channel maybe are there any leading indicators.
For the outlook, there and how they've evolved since the <unk> COO and adjust to that.
And the risk of not being able to ask a follow up and getting disconnected.
Just on the 2022 outlook, just maybe you could just from high high level.
Outside of the stronger adoption in the U S enterprise channel any other growth drivers that you would call out there.
To drive.
The acceleration in revenue growth in 2022 of 2021.
And then any other any pipeline updates.
Were action that we should be thinking about as we move through the next 12 months. Thanks, Thanks for taking all the questions.
Okay.
Alright.
Thanks, Josh I'm going to try to package that so let me start and then if I.
If I captured all you can follow up.
First let me start by saying I think this is a lot less about things not happening and more about things not happening yet and so we're seeing a lot of positive conversations and signals.
This is really around behavior change in care evolution. So our optimism has driven a lot by the conversations that we're having and the larger institutional level about incorporating butterfly not add poke at not just that <unk> solution.
As an integral way to think differently about workflows in different aspects and different functions within the hospital. So that's driving a lot of our optimism as we think about how we are looking at the market.
When butterfly came about it was a real technological advance and we think that.
Yes.
A single <unk>.
Whole body ultrasound and ultrasound on a chip provides a lot of advantages to the evolution of ultrasound information across the continuum of care and when butterfly came to market. It was marketed as.
As a device that was here and I think that was a great way to introduce it into the market as we go into 2022, and we're taking a much more.
Targeted approach.
Much.
And much more connected approach to the users.
And both from an institutional perspective, but from a specialty perspective, how you can incorporate butterfly.
More seamlessly and into workflow and enter practice. So we're taking a more specialty approach and we're helping people absorb that behavior change.
Into the workflow so it's like a lot of new technologies, and when and when you start adopting something thats new that you haven't had it's about getting people comfortable with it and getting people to use it for specific cases, and then gave people to expand with it and we kind of made it available on butterfly answered the market now.
What we're doing is focusing very much on how people can get value by using it and so with the information you can acquire.
From the from the from the device itself and then how we can make that information incorporated into the workflows. So we're going to be taking a much more specialty approach with much more focused utilization to help people incorporated into their practices in the workflow and we're taking a much more partnered approach with enterprises and institutions that.
Really about co development for true value realization across the entire institutional approach and if you think about it and you think about traditional palca.
Madison, Kathy practice differently anymore, and one one building versus another and so to think that you have ultrasound machines and hospitals and you are delivering a certain level of care or getting information to make decisions and you don't have that elsewhere. So much character moving outside of the hot.
But all is just going to be a challenge moving forward do we see as more care and more decisions are being made outside of the hospital.
Even more excitement generated about butterfly, and then that continuum of the information be helping to drive.
Consistency of workflow and decision, making across the continuum as being a real advantage for butterfly and we think.
One of the things that's really exciting about that we have is a positive indicator.
Our customers are seeing that too.
Great. Thank you for that and then I mean, just.
Any.
I think you mentioned alternative sites of care or maybe not in the hospital, but how should we be thinking about the build out of international.
Channels.
As we as we enter 2022 just from a high level.
Those channels is going to be meaningful more meaningful contributors in 2022 versus 2021.
Absolutely Josh.
We've tried to be a super real let's think about things. We're very early in our journey and we are in our journey as a company and we're early in our journey.
As a technology thats evolving care so we.
We see in 2022.
Real good optimism and we see a lot of excitement in the enterprise and the institutions that I just talked to you about we see it across the continuum of care, we see it in geographical expansion. So how we're thinking about both developed and developing markets outside of the U S.
<unk> is a journey.
Across that continuum, and so we see that and then utilization of ultrasound outside of the human market. I mean, we're getting a tremendous amount of excitement for butterfly in the veterinary market and we're very excited about 2022, and what's really cool is that people in the veterinary market are starting to think about butterfly the same way we work.
Putting people on the human market to think about it how do you approach care delivery differently by incorporating butterfly and ultrasound information into your decision, making early and that's been really exciting.
We're really excited about.
Multiple.
Multiple avenues and generating growth in 2022.
Okay, Great and maybe I'll just ask one last later on pipeline and we have captured.
Coming on board any any way you can detail.
When the full launch of the <unk>.
Greater platform could currently tap is kicking in here, but just let me know.
The software.
Our next generation platform updates just in terms of timeline, we should think about that groups chattel technology introductions that could catalyze stronger adoption utilization trends. Thanks again.
So Josh thanks.
Like I said earlier on the call. We're on track for the launch with caption in the winter.
This year, we're excited about bringing it.
Into the market and we're.
We're really excited about bringing into the market because I think it's really just.
Exemplifies what we've been talking about which is taking.
The burden onto the device and away from the user and really getting it lasts about doing procedures and ultrasound and more about information and decision, making and we think caption really helps us demonstrate that.
<unk> allows people to think about that information and influencing carrier decisions earlier and differently and then than they have in the past because its information available that wasn't readily available broadly across <unk> across that.
Across that clinical situations and so we're excited about that will youll see that in.
The winter coming out here and.
And then as it relates to just our development pipeline, Yeah, we're really excited about and I spoke about this in the call.
The great progress that our technical teams have been making.
Andre has come in and the technical teams are.
Realigned.
And I think we're making a lot of progress on our software we are getting very close to our customer needs and being very customer centric and I think youll see the normal cadence of ice with software releases coming out.
In a timely fashion here.
In the near future and then.
Hardware releases like we've said in that.
That couple year timeframe.
As we look at where our where our evolution of our technology continues to open up the differentiation and enable value creation across.
They continue on with getting ultrasound technology. So we're really excited about how our technical organization is performing and.
I think we are bringing it all together, Josh without behavioral change with ease of use and we're starting that journey is the technical pieces are taking helping the device take more of the burden, we're really leaning into our clinical organization and generating data in our clinical education, helping users.
Incorporate this technology and information into their clinical practices, and Thats really where our lean for 2022 is to help accelerate our growth.
Excellent. Thanks, so much.
Okay.
There are no further questions at this time. This concludes today's conference call you may now disconnect.
Okay.
[music].
Okay.
Yes.
Yeah.
Okay.
[music].
Okay.
Okay.
[music].
Okay.
[music].
Yes.
Okay.
Yes.
Yes.
[music].
Okay.
Okay.
Okay.
Okay.
Thank you.
Okay.
Okay.
[music].
Okay.
[music].
Okay.
Okay.
Yes.
Sure.
Okay.
Sure.
Yes.
Okay.
Yes.
Yes.
[music].
Okay.
[music].
Okay.
Okay.
Okay.
Okay.
[music].
Thank you.
Yeah.
Okay.
Okay.
Okay.
Okay.
Thank you.
Okay.
Okay.
[music].
Okay.
[music].
Okay.
Yes.
Okay.
Yeah.
Okay.
Okay.
Yes.
Okay.
[music].
Okay.
Yes.
Okay.
Okay.
Okay.
Yes.
Okay.
[music].
Thank you.
Okay.
Okay.
Okay.
Okay.
Okay.
Thank you.
Okay.
Okay.
[music].
Okay.
Sure.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
Sure.
Okay.
Okay.
Yes.
[music].
Yes.
Sure.
Okay.
Okay.
Yes.
Okay.
[music].
Thank you.
Okay.
Okay.
Thanks.
Okay.
Okay.
Okay.
Okay.
Thank you.
Okay.
Thank you.
Okay.
[music].
Okay.
[music].
Yes.
Yes.
Yes.
Okay.
Yes.
Okay.
Okay.
Yes.
Okay.
Okay.
Yes.
Okay.
[music].
Okay.
Okay.
Okay.
Okay.
Sure.
[music].
Yes.
Yes.
Sure.
Okay.
Okay.
Okay.