Q1 2022 Butterfly Network Inc Earnings Call

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Thank you for your pace earnings call will begin shortly.

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Hello and welcome to Butterfly Network's first quarter 2022 earnings call. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star 1 on your telephone keypad. If you'd like to withdraw your question, you may press star 2. I will now hand over to your host, Agnes Lee, Vice President of Investor Relations. Over to you, Agnes. Good morning and thank you for joining us today.

Hello, and welcome to <unk> first quarter 2022 earnings call. My name is Alex and I will be coordinating nickel today, if you'd like to ask a question in the presentation. You can press star one can your telephone keypad. If you would like to withdraw. Your question you May Press Star, Let's say I will now hand over to your host Ms. Li Vice President.

Investor Relations <unk> agonists, good morning, and thank you for joining us today earlier this morning.

Earlier this morning, Butterfly released financial results for the first quarter ended March 31, 2022 and provided a business update.

<unk> released financial results for the first quarter ended March 31 2022.

<unk> provided.

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, are currently available on the investor's section of the company's website at ir.butterflynetwork.com.

Right.

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 are currently available on the investors section of the company's website at IR Dot butterfly network Dot com.

Dr. Todd Fuckerman, Butterfly's President and Chief Executive Officer, will host this morning's call.

Talk to your time factor than other slides, president and Chief Executive Officer.

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, and financial

During today's call.

We'll be making certain forward looking statements.

Statements May include statements regarding among other things expectations with respect to the financial results.

Your coupon.

development and commercialization of products and services, potential regulatory approval, the size and potential growth of current or future markets for our products and services, and the impact of the COVID-19 pandemic on our business.

Development and commercialization of products and services.

Central regulatory approval.

Size and potential growth with current and future market for our products and services.

Impact of the COVID-19 pandemic.

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 statement.

Yes.

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 maintained and look forward looking statements.

These and other risks are described in our filings made with the Securities and Exchange Commission.

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.

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 nine 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.

During this call we will refer to non-GAAP financial measures, including adjusted gross margin adjusted gross profit and adjusted EBITDA.

Each 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 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.

non-GAAP financial measures are not intended to be considered in isolation.

As substitute for results prepared in accordance with GAAP.

The definitions and reconciliations of these non-GAAP financial measures to the most.

Most directly comparable GAAP financial measure.

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. We will be referencing a slide presentation in conjunction with our remarks. Because there is 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 dialed in by telephone, download the slides from our website and advance them yourself.

As a reminder, this call is being webcast live and recorded and we will be referencing a slide presentation in conjunction with our remarks.

There is a short term rate between telecom.

And the presentation being shown on the webcast.

For the best experience. Please either the webcast for both audio and video content or if you're dialed in by telephone download the slides from our website in advance of them yourself.

To access the webcast, please visit the event 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 Dr. Sekhadevan. Thank you, Agnes, and good night.

To access the webcast please visit the events.

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 Dr. Dr. Adnan.

Thank you Adnan.

Hey, everyone.

I'd like to start off by sharing that I'm joined by Heather Getz, our new Executive Vice President and Chief Financial Officer.

I'd like to start off by sharing while I'm joined by Heather Getz.

Our new executive Vice President and Chief Financial Officer.

While she will not be participating in today's call, I did want to briefly introduce her.

Also you will not be participating in todays call I did want to briefly introduce sir.

Heather is a proven CFO with deep experience in delivering results and value creation.

Hey, there is a proven CFO with deep experience in delivering results and value creation.

She brings 25 years of corporate finance and operating experience from both public and private companies, as well as a strong background in the digital health and medical devices.

She brings 25 years corporate finance and operating experience from both public and private company.

<unk> has a strong background in the digital health and medical device space.

Heather spent 12 years at Biotelemetry, a publicly traded remote medical technology company where she served as Executive Vice President and Chief Financial and Administrative Officer.

How do I spent 12 years at biotelemetry publicly traded remote medical technology company.

She served as executive Vice President and Chief financial and administrative officer.

Before this, Heather held various leadership positions at companies including Alita Pharmaceuticals, Bias Healthcare, and Shinope.

Before the <unk>.

Other held various leadership positions at companies, including albeit a pharmaceutical.

Bias healthcare Internet.

I have no doubt that it will be a strong partner as we continue to execute our strategy and introduce unique value for the healthcare ecosystem and our shareholders.

I have no doubt there will be a strong partner as we continue to execute our strategy and introduce unique value for the health care ecosystem and our shareholders.

Now to set the stage for our first quarter results.

I want to highlight the important progress we are making in building a mission-aligned culture throughout Butterfly.

I want to highlight the important progress we are making in building a mission aligned culture throughout butterfly.

Our team has come together to not only realize but to accelerate the vision of Dr. Jonathan Rothbard and Butterfly's early trailblazing scientists who set out to make healthcare more effective, more accessible, more equitable, and more affordable by enabling clinicians to accelerate diagnosis and care and to improve patient wellness and convenience.

Our team has come together to not only realize but to accelerate the vision of Dr. Jonathan Rockford and butterflies early Trailblazing science that we set out to.

Make health care more effective more accessible more equitable and more affordable by enabling permission to accelerated diagnosis and care.

To improve pacing walnut and can be.

In today's discussion we.

you will not only hear how we are catalyzing care transformation across health.

We will not only here, how we are catalyzing care transformation across health system.

but also how we are enabling maternal imaging in Africa, facilitating emergency care in Ukraine, providing EMS teams with imaging capabilities, and empowering veterinarians across the country to more quickly assess and address animal health.

But also how we are enabling maternal imaging in Africa.

Getting emergency care in Ukraine, providing EMS teams, the imaging capability and empowering veterinarian across the country to more quickly.

And the address animal health needs.

We are unified by a belief that our technology will dramatically elevate care across these cases and care continue.

We are unified by a belief that our technology will dramatically elevate care across use cases and care continuum.

And we are investing heavily in our people and product development to mutually capture our first mover advantage.

And we are investing heavily in our people and product development to meaningfully capture our first mover advantage.

From a revenue perspective, we opened the year with $15.6 million in quarterly revenue.

From a revenue perspective.

We opened the year with $15 6 million in quarterly revenues.

a 25% increase versus the first quarter of 2021. This was an excellent start to the year and in line with our expectations.

25% increase versus the first quarter of 2021.

This was an excellent start to the year and in line with our expectations.

I'm immensely proud of our Butterfly team for their work this past quarter and throughout the pandemic, which has been a challenging and chaotic period in healthcare delivery. The commitment of our people to transform care by providing valuable clinical insights earlier in the pathway has never wavered.

I'm immensely proud of our butterfly team for their work this past quarter and throughout the pandemic, which has been a challenging okay.

The period in healthcare delivery.

None of our people to transform care by providing valuable clinical insights earlier in the pathway has never wavered.

We endeavor to work as hard as clinicians and technicians have over the past several years and look forward to continuing to work alongside them in partnership to help them deliver the best possible care to all patients.

We endeavor to work with harvest permissions and techniques impact over the past several years and look forward to continuing to work alongside them in partnership to help them deliver the best possible care for all patients.

I'd now like to touch on some overarching market activity that is validating the transformational role of Butterfly.

I would now like to touch on some overarching market activity that is validating the transformational role of butterfly.

In Q1, at the American Institute of Ultrasound and Medicine Annual Meeting, Dr. Abraham Bergesi of Stanford University called out in a keynote speech that it was his hope that recent advancements in ultrasound technology would bring new life to the bedside exam and help foster greater connection between the doctor and the patient.

In Q1 at the American Institute of Ultrasound in Medicine annual meeting Dr. Abraham.

Stafford University called out any keynote speeds that it was hit hard that <unk>.

Advancements in ultrasound technology would bring new life to the bedside exam and help foster greater connection between the Doctor and the patient.

Further, the Institute's president, Dr. Nazarian, supported this sentiment by saying, resist the trend of commoditizing ultrasound as just another study that we read while seated in a dark room. Understand the importance of getting up, scanning, and interacting with patients. This is what

Further the Institute's President tuck in this area and supported this eminent by same resist the trend of Commoditizing ultrasound.

Just another study that we read what you did in the darkroom understand the importance of getting up scanning and interacting with patients.

This is what butterfly makes possible.

It's about establishing connections with patients and being present with them.

It's about establishing connections with patients.

Present with that asset.

Inside an opinion a window into the body to see and at times even show what's happening

As cited in obtaining a window into the body to see.

And at times, even shallow what's happening.

It's about using ultrasound information to inform clinical decisions.

It's about using ultrasound information to inform clinical decision.

rather than confirm that. This is a paradigm shift from how ultrasound has historically been used.

Rather than confirm that.

This is a paradigm shift in how ultrasound has historically been used.

We believe this shift has the potential to transform health care, to improve the patient-doctor relationship, and in time, to unlock multiple economic efficiencies and gains.

We believe this shift has the potential to transform health care to improve the patient Doctor relationship and then time to unlock multiple economic efficiencies and gains.

With that I'd like to shift to our business update.

Our team continues to make progress against our core principles of making butterfly easy everywhere and economical. Let's start with.

Our team continues to make progress against our core principles of making butterfly easy.

Everywhere and economical.

Let's start with an example of our principle.

in a landmark study published March 28th in the New England Journal of Medicine.

In a landmark study published March 28, and the New England Journal of Medicine evident.

Butterfly was found to be an effective tool to estimate fetal gestational age just as accurately as a trained sonographer using a standard ultrasound machine.

Butterfly was found to be an effective tool to estimate gestation all age just as accurately as it training for the other for using a standard ultrasound machine.

Dr. Joni Price at UNC, armed with a pocket-sized butterfly probe and a smartphone, a Zambian midwife with no prior training in sonography can assess gestational age as accurately as a certified sonographer using an expensive machine.

Dr Tony price.

Yes.

Armed with a pocket sized butterfly probe and the smartphone Zambian midway with no. Prior training demography can assess gestational age as accurately as a certified sonographer using an expensive machine.

This has the potential to revolutionize the delivery of obstetric care.

This has the potential to revolutionize the deliberate.

Although obstetric care settings like downbeat.

The results of this study offer hope to millions of mothers.

The results of this study offer hope to millions of mothers when it comes to determining risk and ensuring good quality maternal care.

The determining risks and ensuring good quality maternal care.

Access to low cost imaging devices and the expertise to perform scans asset historically presented challenging hurdle to overcome and lower resource care setting around the world.

access to low-cost imaging devices, and the expertise to perform scans has historically presented challenging hurdles to overcome in low-resource care settings around the world.

Additionally, ultrasound as part of routine care can demonstrate the benefits of a patient seeing their health, whether it be a greater willingness to seek out appropriate prenatal care.

Additionally, ultrasound as part of routine care and demonstrate the benefits of the <unk>.

<unk> seen there.

Whether it be a greater willingness to seek out appropriate prenatal care.

This study reinforces the ease in which butterflies can enter the equation and drive positive impact, and reinforces our belief that all levels of practitioners, when armed with the right tools, can meaningfully advance the standard of care.

This study reinforces the ease in which butterfly can enter the equation and drive positive impact and reinforces our belief that all level practitioners when armed with the right tool can meaningfully advance the standard of care.

In addition to subjects.

external validation, we continue to strengthen and differentiate our educational curriculum, in-app guidance, and associated services to take the burden off the user while increasing their confidence in scanning with a Butterfly.

Internal validation, we continued to strengthen and differentiate our educational curriculum in app guidance and associated services can take the burden off the user while increasing their confidence and standing with a butterfly.

This, alongside our team's ongoing development of AI to enable and simplify bedside ultrasound for those not traditionally trained in it, is core to making Butterfly adoptable at scale.

Fifth alongside our teams ongoing development of AI to enable and simplified bedside ultrasound.

Not traditionally trained and it is core to making butterfly adaptable at scale.

Now let's talk about our second core principle, everywhere. We believe Butterfly can be as ubiquitous as a step.

Now, let's talk about our second core principle everywhere.

We believe butterfly can be as ubiquitous as a surplus.

You can find a home in every practitioner's pocket and used for every patient, every time.

You can find a home in every practitioners pocket and used for every patient every time.

Our belief is materializing. The American Academy of Family Physicians is now recommending that family medicine residents be trained in point of care ultrasound.

Our belief is materializing the.

The American Academy of family Physicians is now recommending that family Medicine resident fee trained and point of care ultrasound and curriculum guidelines.

In curriculum guidelines, AASP called out that point-of-care ultrasound will transform family physicians' ability to arrive at a rapid diagnosis for patients.

<unk> called out the point of care ultrasound will transform families physicians ability to arrive at a rapid diagnosis.

Yes.

This is a meaningful recommendation with one in eight U.S. medical graduates entering family medicine residencies each year. It's this type of catalyst that our clinical education and commercial teams are prepared to quickly activate around and already have.

This isn't a meaningful recommendation with $1 <unk> U S medical graduates entering family medicine residency each year.

This type of catalyst that our clinical education and commercial teams are prepared to quickly activate around and.

And already have.

Also this past quarter, I was reminded of the importance of our everywhere principle as our team work to arm caregivers who are aiding in the humanitarian crisis in and around Ukraine.

Also this past quarter I was reminded of the importance of our everywhere principle as our team worked for harm caregivers, who are aiding in the humanitarian crisis in and around Ukraine.

True to our mission, we were able to equip care teams on the front lines of this crisis with Butterfly. And we're already hearing of the value it's bringing to this distressing situation.

True to our mission.

Equip care team on the frontline of this crisis with Firefly.

We're already hearing of the value, it's bringing to this distressing situation.

The use of butterfly in such a backdrop reinforces what we are doing innovating to inform better decisions so people everywhere get the care they need. It's moments like these that emphasize the great impact and utility of butterfly and drive our.

We use a butterfly and such a backdrop reinforces what we are doing innovating to inform better decision. So people everywhere get the care they need its moments like these that emphasize the great impact in utility a butterfly and drive our team.

If we take a quick look at our third principle, economical, one area where butterfly is increasingly seen as becoming a standard of care is with diagnostic assessment of the lungs.

So if we take a quick look at our third principle economical one area, where a butterfly is increasingly seen as becoming a standard of care.

With diagnostic assessment of the law.

In Q1, the Journal of Ultrasound in Medicine featured a retrospective, multi-center study of 479 patients that found ClonusCare Ultrasound to bring radiation-free, affordable, and equivalent diagnostic accuracy.

In Q1, the journal of ultrasound in Medicine featured a retrospective multicenter study of 479 patients that fast point of care ultrasound to bring radiation free affordable and equivalent diagnostic accuracy.

to lung assessment as compared to chest x-ray.

So long assessment as compared to chest X Ray.

Given the magnitude and regularity of patients who present with respiratory distress, we're encouraged that Butterfly is being increasingly used by, and adding value with, a wide range of clinicians to inform decision-making and in turn to expedite treatment.

Given the magnitude and regularity of patients who present with respiratory distress. We're encouraged that butterfly is being increasingly used by and adding value with a wide range of clinicians to inform decision, making and inherent to expedite treatment.

Studies like this one demonstrate Butterfly's momentum in challenging healthcare's traditional point-of-care toolkit and workflow.

Studies like this one demonstrate butterflies momentum in challenging healthcare's traditional point of care tool kit and workflow.

As you have just heard, we have made progress in the first quarter in reinforcing the vision of being easy everywhere and economic.

As you have just heard we have.

<unk> made progress in the first quarter and reinforcing the vision of being easy everywhere and the economics.

I will now provide some updates in line with each of our four strategic pillars.

I will now provide some updates and one with each of our four strategic pillars.

Let's start with hospitals and health systems.

We are pleased with our Q1 year-over-year growth in the hospital and health system space which benefited from solid momentum in software sales and from deeper penetration with current clients.

We are pleased with our Q1 year over year growth in the hospital and health system space, which benefited from solid momentum and software sale and from deeper penetration with current clients.

Looking ahead, we believe the industry's growing interest to educate and train practitioners to incorporate ultrasound information into the clinical workflow across the enterprise will help drive continued growth in our blueprint office.

Looking ahead, we believe the industry's growing interest to educate and train practitioners to incorporate ultrasound information into the clinical workflow across the enterprise.

Help drive continued growth in our blueprint offering.

In Q1, we began a number of installations in top hospitals across the country. We anticipate announcing additional partnerships in the near future.

In Q1, we began a number of installations in top hospitals across the country. We.

We anticipate announcing additional partnerships in the near future.

Our first enterprise-wide deployment with Rochester is the embodiment of our blueprint solution.

Our first enterprise wide deployment with Rochester is the embodiment of our blueprint solution.

utilizing Butterfly to advance care delivery, medical education, and clinical research.

Utilizing butterfly to advanced care delivery medical education and clinical research.

This project is fully on track, and we expect our device deployment to begin. Let's move on to our international code.

This project is fully on track and we expect our device deployment to begin.

Let's move on to our international Paul.

We continue to make progress in market outside of the U S.

I'm happy to share that in Q1 we solidified a distribution partnership with NovoLog, a leading healthcare services group in Israel. This will enable us to bring Butterfly into Israel and introduce its value as part of primary care.

Happy to share that in Q1, we solidified a distribution partnership with <unk>, a leading health care services group in Israel.

This will enable us to bring butterfly into Israel and introduced its value as part of primary care.

Additionally, we have made a number of segment penetrating deals.

Additionally, we have made a number of segments penetrate India.

One of these comes from the UK where we've begun working with East of England Ambulance Trust which provides accident and emergency services covering an area made up of around 6.2 million people. This will allow us to further demonstrate the value of Butterfly in the hands of EMS.

One of these come from the U K, where we began working with ease of England Ambulance Trust, which provides accident and emergency services Covenant area made up of around $6 2 million people.

This will allow us to further demonstrate the value of butterfly in the hands of BNS team, which represents a substantial opportunity for butterfly in many markets.

which represents a substantial opportunity for Butterfly in many markets.

Also as we previously announced the Bill and Melinda Gates Foundation provided a five million dollar grant to help bring Butterfly to sub-Saharan Africa to improve maternal and fetal health. This grant enables our teams to arm a thousand health care workers with Butterfly IQ Plus.

Also as we previously announced the Bill and Melinda Gates Foundation provided a $5 million grant to help bring butterfly to sub Saharan Africa to improve maternal and fetal health. This grant enables our teams on a 1000 health care workers.

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500 probes will be given to mid level practitioners in Kenya and.

500 probes will be given to mid-level practitioners in Kenya.

and 500 probes will be distributed to health care workers in South Africa later this year.

And 500 probes will be distributed to health care workers and South Africa later this year.

This work represents an important step toward improving worldwide access to medical imaging and advancing our commitment to global health equity.

This quarter represents an important step towards improving worldwide access to medical imaging and advancing our commitment to global health equity.

I look forward to sharing more progress on future calls as we roll out this initiative later in the year.

I look forward to sharing more progress on future calls as we rollout. This initiative later in the year.

Our third pillar is home-based care, in addition to the clinical evidence supporting butterflies.

Our third pillar is home based care in addition to the clinical evidence supporting butterfly.

The increasing prevalence of chronic diseases is spurring interest and use cases in in-home care.

The increasing prevalence of chronic diseases exploring interest and use cases and in home care.

This presents us with a market opportunity as Butterfly can enable improved disease management and early detection of some diseases.

This presents us with a market opportunity as butterfly can enable improved disease management and early detection of some diseases.

As part of our clinical program, we are launching multiple studies to evaluate the use of butterflies for bladder scanning, heart failure, and dialysis.

As part of our clinical program, we are launching multiple studies to evaluate the use of butterfly for bladder scanning heart failure and dialysis.

These are just a few of the scenarios where Butterfly could be used for home health assessment.

These are just a few of the scenarios, where butterfly could meaningfully used for home health assessments.

We believe this will reduce hospital visits, better manage conditions, and in some instances replace a more expensive workflow or device.

We believe this will reduce hospital visits better manage condition and in some instances we play it's a more expensive workflow or device.

And finally, as I've covered on past calls, we are exploring markets adjacent to health care. One such market is veterinary medicine.

And finally as I've covered on past calls we are exploring market adjacent to healthcare one such market as veterinary medicine.

I'm pleased to announce that we are welcoming Petco to Butterfly's customer ecosystem.

I am pleased to announce that we are welcoming and petco butterflies customer ecosystem.

Beginning this year, Waterfly IQ Plus beds will be deployed and become standard across 200 petco clinic locations in the United States.

Beginning this year RFID IQ plus that will be deployed and become standard across 200 at Cove clinic locations in the United States.

We are proud to be the first and only U.S. imaging provider to collaborate with TECO nationwide.

We are proud to be the first and only U S imaging provider to collaborate with tech nationwide.

and to lead the largest deployment of ultrasound into a practice group in veterinary medicine.

And to lead the largest deployment of ultrasound into a practice group in veterinary medicine.

Whether used as part of routine exams, for early detection, or for intervention, Butterfly IQ Plus Vets will expand the services offered to Petco pet owners, and more importantly, will deliver valuable insights to veterinarians, elevating the care delivered in Petco examiners.

Whether you as part of routine exam for OLED detection or for intervention butterfly IQ plus that will expand the services offered to petco pet owners and more importantly will deliver valuable insights to veterinarian.

Elevating the care delivered and Petco examiner.

This partnership is driven by an aligned vision and a mission with Petco.

This partnership is driven by and aligned vision and a mission with petco.

a health and wellness company focused on creating a better world for animals and the people who love and need it.

Our health and wellness company focused on creating a better world for animals, and the people, who love and need that.

Our team maintains focus on deploying Butterfly IQ Plus Vets to the more than 250,000 veterinarians and vet techs globally who could benefit from having Butterfly in their pocket.

Our team maintained focus on deploying butterfly IQ plus debt to the more than 250000, veterinarian and that tax globally, who could benefit from having butterfly in their pocket.

I'm excited about the progress we have made and will continue to make in the veterinary market as we evolve and expand our footprint.

I am excited about the progress we have made and will continue to make in the veterinary market as we evolve and expand our footprint.

I hope this recap illustrates the progress of our journey.

As we stated at the beginning of the year, we believe that butterfly can be as ubiquitous as the stethoscope across all specialties, species, and care settings.

As we stated at the beginning of the year, we believe that butterfly can be as ubiquitous statoscope across all specialties and care settings.

Over the past year, we've empowered the use of ultrasound where ultrasound is not traditionally utilized and where ultrasound expertise is not traditionally found.

Over the past year, we've empowered the use of ultrasound, where our ultrasound is not traditionally utilized.

Our ultrasound expertise is not traditionally found.

As we introduce more caregivers to the benefit of seeing inside the body, at the bedside, and as the industry's understanding of the value of imaging to inform first confirmed care decisions continues to grow, Butterfly is proving itself.

As we introduce more caregivers to the benefit of seeing inside the body at the bedside.

And as the industry is understanding the value of imaging to inform first confirmed care decisions continues to grow butterfly is proving itself.

And with that, I will now turn to the financial results.

And with that I will now turn to the financial results.

Revenue for Q1 2022 was $15.6 million, a 25% increase versus the prior year period and in line with our expectations.

Revenue for Q1 2022.

Was $15 6 million.

A 25% increase versus the prior year period and in line with our expectations.

product revenue was $11 million, an increase of 15% versus Q1 2021.

Product revenue was $11 million, an increase of 15% versus Q1 2021.

This increase was driven by higher average selling prices and volumes in both our U.S. and international health care channels, as well as in the debt market.

This increase was driven by a higher average selling prices and volume in both our U S and international Health care channel.

As well as in the vet market.

Partially offsetting this increase was a reduction in e-commerce or direct-to-user sales as our business model is evolving to enterprise sales across health systems.

Partially offsetting this increase was a reduction in e-commerce or direct to user sale as our business model's evolving to enterprise sales across health systems.

Subscription revenue was $4.6 billion in the first quarter, growing by approximately 60% over the prior year period. Subscription mix of 29.3% of revenue increased by approximately six percentage points versus Q1, 2021. This increase was due to a higher installed date of products with accompanying subscription software as well as increased renewals.

Subscription revenue was $4 6 billion in the first quarter growing by approximately 50% over the prior year period.

Subscription mix of 29, 3% of revenue increased by approximately six percentage points versus Q1 2021. This increase was due to a higher installed base of products with accompanying subscription software as well as increased renewal.

Turning now to adjusted gross profit.

Please note that a reconciliation of our adjusted numbers to GAP can be found in today's press release and at the end of the slide presentation.

Please note that a reconciliation of our adjusted numbers to GAAP can be found in today's press release and at the end of the slide presentation.

Adjusted gross profit was $8.8 million in Q1 2022 compared to $5.9 million in the prior year period.

Adjusted gross profit was $8 8 million in Q1, 2022 compared to $5 9 million.

Prior year period.

This increase was primarily due to product mix, reflecting a higher proportion of subscription revenue in addition to higher device prices and volume.

This increase was primarily due to product mix.

Collecting a higher proportion of subscription revenue.

In addition to higher device prices and volume.

Also contributing to the increased margin was higher manufacturing productivity, partially offset by the increased cost of manufacturing materials.

Also contributing to the increased margin was higher manufacturing productivity, partially offset by the increased cost of manufacturing materials.

Adjusted gross profit margin was 56.3% for the first quarter, which compares to 47.8% in Q1 2021, reflecting the positive mix, higher product ASP, and manufacturing efficiencies.

Adjusted gross profit margin was 56, 3% for the first quarter, which compares to 47, 8% in Q1 2021, reflecting the positive mix higher product Asps and.

And manufacturing efficiencies.

For the first quarter of 2022, adjusted EBITDA was a loss of $40 million compared with a loss of $26.5 million for the same period in 2021.

For the first quarter of 2022, adjusted EBITDA was a loss of $40 million compared with a loss of $26 5 million for the same period in 2021 the.

The increase in adjusted EVA dialogue of $13.5 million was driven by investment in our commercial and R&D functions.

The increase in adjusted EBITDA loss of $13 5 million was driven.

And by investments in our commercial and R&D function as we build out our commercial operations and product.

as we build out our commercial operations and products, as well as investment in future revenue streams.

As well as investment in future revenue streams. These.

These investments were partially offset by increased adjusted gross margin dollars driven by the aforementioned positive product mix, ASPs.

These investments were partially offset by increased adjusted gross margin dollars driven by the aforementioned positive product mix.

Asps.

And volume.

Moving to our capital resources, as of March 31st, 2022, cash and cash equivalents were $359.9 million.

Moving to our capital resources as of March 31, 2022, cash and cash equivalents were $359 9 million.

In addition to our operating expenses, our Q1 cash position was impacted by fiscal 2021 annual bonus payouts, capital expenditures for the build-out of our headquarters in Burlington, Massachusetts, and the annual renewal of insurance premiums.

In addition to our operating expenses, our Q1 cash position was impacted by fiscal 2021 annual bonus payout capital expenditures for the build out of our headquarters in Burlington, Massachusetts.

The annual renewal of insurance premiums.

We have a solid cash position and we plan to continue to invest in 2022 to maintain our momentum and continue to capitalize on this attractive market opportunity.

We have a solid cash position and we plan to continue to invest in 2022 to maintain our momentum and continue to capitalize on this attractive market opportunity.

Looking at our 2022 guidance, given the strong start to the year, we are reaffirming the previously issued annual revenue guidance of $83 to $88 million and the adjusted EBITDA guidance for a loss of $175 to $195 million.

Looking at our 2022 guidance given the strong start to the year. We are reaffirming the previously issued annual revenue guidance of $83 million to $88 million and.

And the adjusted EBITDA guidance for a loss of $175 million to $195 million.

As a reminder, we expected about 40 to 45 percent of 2022 revenue in the first half of the year and 55 to 60 percent in the second half.

As a reminder, we expected about 40% to 45% of <unk> pointing to revenue in the first half of the year and 55% to 60% in the second half.

This translates to approximately 25% to 30% growth in the first half and approximately 45% growth.

This translates to approximately 25% to 30% growth in the first half and approximately 45% growth.

In the second half.

The increased growth in the second half is due to strength in our international channel in addition to the evolution of our business model from e-commerce sales to institutional purchases and deployment.

The increased growth in the second half is due to strength in our international Channel. In addition to the evolution of our business model from the e-commerce sales to institutional purchases and deployments.

This evolution will be driven by the industry's building awareness of and appreciation for Butterfly's practical application of ultrasound information into the clinical workflow. In time, we believe this shift will not only accelerate our growth, but will also allow for more predictable growth expectations.

This evolution will be driven by the industry building awareness.

And appreciation for butterflies practical application of ultrasound information into the clinical workflow in.

In time, we believe this shift will not only accelerate our growth, but will also allow for more predictable growth expectations.

For some additional color, as mentioned, we are expecting 25 to 30% growth in the first half of the year and approximately 45% growth in the second half.

For some additional color as mentioned, we are expecting 25% to 30% growth in the first half of the year and approximately 45% growth in the second half.

We expect our gross margin percentage will fluctuate quarterly, along with the change in mix between product and software subscription sets. The first quarter tends to be the lightest in terms of product.

We expect our gross margin percentage will fluctuate quarterly along with the change in mix between product and software subscription set.

For the first quarter tends to be the lightest in terms of product set.

As such, we anticipate it will be our highest in terms of subscription sales as a percentage of revenue and gross margin percentage. We do, however, anticipate that our subscription sales as a percentage of revenue and gross margin percentage to increase for the full year 2022 versus 2021.

As such we anticipate it will be our highest in terms of subscription sales as a percentage of revenue and gross margin percentage. We do however, anticipate that our subscription sales as a percentage of revenue and gross margin percentage to increase for the full year 2022 versus <unk>.

'twenty one.

For operating expenses, please remember we are doing two things simultaneously. One, we are building a domestic and international commercial organization to support our current revenue base. And two, we are investing in R&D resources to create future revenue.

For operating expenses. Please remember we are doing two things simultaneously one where.

We are building a domestic and international commercial organization.

Support our current revenue base and two we are investing in R&D resources to create future revenue streams, because we are investing significantly for the future and expecting operating leverage on these investments in subsequent years. We believe at this time adjusted gross margin is the best.

Because we are investing significantly for the future and expecting operating leverage on these investments in subsequent years, we believe, at this time, adjusted gross margins are the best predictor of our future profitability.

Predictor of our future profitability.

In closing.

Time and time again, Butterfly's unique ability to surface valuable clinical information quickly and easily where it otherwise does not exist is winning the hearts and minds of practitioners and leaders across healthcare.

Time, and time again butterflies unique ability to surface valuable clinical information quickly and easily whereas otherwise does not exist is winning the hearts and minds of practitioners and leaders across health care.

Butterfly is the practical application of ultrasound information in the clinical workflow. This is not about doing more ultrasound, but about using the valuable information from ultrasound to better inform care decisions everywhere.

<unk> is the practical application of ultrasound information in the clinical workflow.

Is not about doing more ultrasound, but about using the valuable information from ultrasound to better inform care decisions everywhere.

Thank you for joining today's call. And thank you to the butterfly team for the amazing and important work you continue to do. Now

Thank you for joining today's call and thank you to the butterfly team for the amazing and important work you continue to do it.

Now I will open up for Q&A.

Alright.

Thank you. If you'd like to ask a question, you can press star one on your telephone keypad. If you'd like to withdraw your question, you may press star two. Please ensure you're unmuted locally when asking your question.

Thank you. Thank you I'd like to ask a question that you compress start one on the telephone keypad.

If you wanted to explore your question you May press Star Pizza.

Please ensure your unmetered locally when asking your question.

Our first question for today comes from Josh Jennings from Cohen. Josh, your line is now open.

First question for today comes from Josh Jennings from Cowen Josh Your line is now open.

Hi. Good morning and thanks for taking the questions. Todd I wanted to just start off on just the hospital capital spending environment. I think there's some med tech companies that have related kind of a slow start to the.

Hi, good morning, Thanks for taking my questions.

Todd I wanted to just start off on.

The hospital capital spending environment I think there is some.

Tech companies.

And kind of a slow start to the.

capital purchasing capital budgets for U.S. hospitals for for systems like robots. But Butterfly accused in a different category. I mean a couple thousand dollars per device versus a million plus for a robot or high ticket other capital equipment. But I understand it. The slower capital purchasing environment impacted your business at the start of this year.

Capital purchasing capital budgets for U S hospitals for assistance like robots.

A replay accused in a different category and maybe a couple of thousand dollars per day versus 10 million plus per robot or high ticket other capital equipment contributed to better understand their capital purchasing environment impacted your business at the start of this year.

So, first of all, good morning, Josh, and thanks for the question. You know, look, I think in general,

So.

First of all good morning, Josh.

Thanks for the question.

Look I think in general.

it's a challenging environment across healthcare, right? And I think we see that as it relates to a number of factors coming together, coming out of managing the pandemic, a whole bunch of dynamics with how care is being delivered, a whole bunch of things within society, employment, et cetera. That said, we think we're actually in a fairly good position, because we think we're not seeing.

It's a challenging environment across health care right.

And I think we see that as it relates to a number of factors coming together coming out of managing the pandemic.

Whole bunch of dynamics with how care is being delivered.

A whole bunch of things within society employment et cetera.

That said.

We think we're actually in a fairly good position because we think we're not seeing.

a lot of challenges, a lot of objections to working with Butterfly and exploring the solutions for healthcare systems. So we're not getting the initial resistance, we're working through the challenges that are going on in the healthcare system. And I think part of that is because Butterfly is more part of the solution.

A lot of challenges as it.

A lot of objection to working with butterfly and exploring the solutions for health care system. So we're not getting the initial resistance. We're working through the challenges that are going on in the healthcare system and I think part of that is because butterfly is more part of the solution.

So if you put together a butterfly solution and you have the ability to look at how you go about deploying, how you step into the software, how you step into deploying probes.

You put together a butterfly solution and you have the ability to look at how you go about deploying how you step into the software how you step into deploying probes. It actually becomes economically beneficial. So I think as systems get educated about it as they understand the utility of.

it actually becomes economically beneficial. So, I think as systems get educated about it, as they understand the utility of Butterfly in helping them provide more efficient, more effective care and workflows across the health system, you know, I think they see that as something they want to explore as a positive. So, economically, I think it's been, I think we don't benefit from the challenges, but I think

A butterfly in and helping them provide more efficient more effective care and workflows across their health system.

I think they see it as something they wanted to explore is a positive to economically.

I think it's been.

I think we we don't benefit from the challenges, but I think we.

we benefit from where we position as a solution moving forward in this environment that people are willing to talk to us. And we haven't seen a front objection due to the capital environment in health care today.

We benefit from where we are positioned as a solution moving forward in this environment. So people are willing to talk to us and we havent seen upfront objection to the capital environment in health care today.

great. That's helpful. And just on supply chains and strains. I mean I know historically you have this great relationship with the.

Great.

<unk>.

And just on supply chain constraints I mean, I know historically you have this great relationship with the.

Taiwanese semiconductor manufacturing company, but just wanted to check in on semiconductor chip supply, but also any other supply chain constraints that you're facing. It seems like you're navigating through these macro challenges effectively on the supply side, but just wanted to sanity check that.

Chinese semiconductor manufacturing company, but just wanted to check in on semiconductor chip supply, but also in the other supply chain constraints.

And it sounds it seems like Youre navigating through this these macro challenges effectively on the supply side, but just wanted to sanity check that so.

Thought.

So.

So right now, our relationship with TSMC is great. And we haven't had any issues as it relates to the semiconductor components of our device. As we've spoken to you before, I think that's an advantage for us as we've gone.

Right now our relationship with FMC is great and we haven't had any issues as it relates to the semiconductor components of our debate.

You can see before and I think that's an advantage for us.

As we have gone into that.

As it relates to overall supply chain, I think everybody's having challenges with increased prices, with challenges on supply. We have done a good job. We have good relationships with our supply partners.

As it relates to overall supply chain and I think everybody.

Having challenges with increased prices have increased with the <unk>.

<unk> is an on supply we have done a good job we have good relationships with our supplier partners and so we've been able to work with them to ensure that we're getting what we need to be able to produce product and to be able to keep things moving forward I think that's been an advantage of our SaaS by being.

And so we've been able to work with them to ensure that we're getting what we need.

to be able to produce product and to be able to keep things moving forward. So I think that's been an advantage of our staff by being in the market.

In the market.

You know, I think when people look at the landscape of devices, you know, we're here, we're working with our suppliers, we have relationships, we're in this mix, we're partnering, and so we're getting access to components, we have access to semiconductors, and we've been able to keep our supply chain and our product moving.

I think when people look at the landscape of devices.

We're here, we're working with our suppliers, we have relationships where in this mix for partnering and so we're getting access to components, we have access to semiconductors, and we've been able to keep our supply chain and our product moving.

Great. Great. And just want to ask about the battage reiteration that we've got its range intact.

Great.

Just wanted to ask about the guidance reiteration revenue guidance range intact.

understand the balance in terms of how we should be thinking about growth in the first half of the second half. That was very helpful. Are you able to share just any other

I understand there are balanced in terms of how we should be thinking about growth in the first half for the second half is very helpful.

You're able to share just any any other.

you're going to see a lot of incremental color just on what's giving your team confidence that you will see this acceleration over the next three quarters, but

Incremental color just on whats, giving your teen confidence that you will see this acceleration over the next three quarters with particularly in the second half.

And how.

<unk>.

I mean, I think you're, we're thinking that the.

I think youre right.

We're thinking that the.

sales pipeline on the enterprise channel is building up nicely, then the funnel is full. But that was giving me the confidence in the back half, but any other details you can share would be super helpful.

Sales pipeline on the enterprise channel is building up nicely the funnel.

Paul.

What's giving you the confidence in the back half, but any other details you can share would be it would be super helpful.

So, um, you know, I think you're, you're getting more familiar with the story. And, and I would start there, Josh, I would say that, you know, we see confidence in our sales pipeline building, um, as you know, we've gone through, we've, we've been, you know, in a number of conversations and we continue to have things working through our pipeline as we've evolved our value proposition into the enterprise channel, I think, uh, also, you know, it's, it's an evolution of the story, right. As more time goes on, we're being, we're, we're able to enhance our product offering, which is creating more value, which is helping us to be able to move through and be more aggressive.

So.

I think youre getting more familiar with the story and I would start there Josh I would say that we see confidence in our sales pipeline building.

We've gone through we've been.

A number of conversations and we continue to have things working through our pipeline as we've evolved our value proposition into the enterprise channel I think also.

It's an evolution of the story as more time goes on we're being we're able to enhance our product offering which is creating more value, which is helping us to be able to move through and be more aggressive.

No.

Through the pipeline and we signed more deals.

But in the back half of the quarter, we see external trends supporting our value proposition and where we're going as some of the guidelines and recommendations better come around we continue to produce clinical evidence.

Things are really starting to come together as people have the awareness to it. The guidelines are supporting it are evidenced continues to reinforce it and we're getting out there and we're building that pipeline and working with people to implementing.

Our natural cadence in the business and as we see things kind of evolving in coming together.

you know, we see the back half really pulling together nicely. And I think it's a much more balanced year, a much more balanced picture than what we had last year. Great. And just thinking about them, you laid it out in your prepared remarks, in your presentation, not just the people that are making nice progress in all four pillars, but enterprise channel, vet, and then even kind of start kicking off some of these clinical trials in the home channel. But is that the way to think about kind of the progress as you continue progress throughout the year that it's going to be balanced through each?

We see the back half.

really pulling together nicely and I think it's a much more balanced year, a much more balanced picture than what we had last year.

Pulling together nicely and I think it's a much more balanced year.

A much more balanced picture than what we had last year.

Great. And just thinking about them, you laid it out in your prepared remarks, your presentation, not just the people that can make a nice progress and.

Great and just thinking about I mean, you laid it out here.

In your prepared remarks in your presentation about just seems like you're making nice progress.

in all four pillars, but enterprise channel, international vet, and then even kind of start kicking off some of these clinical trials in the home channel. But is that the way to think about kind of the

And all four pillars.

The enterprise channel.

International.

And then even kind of start kicking off some of these clinical trials and the home channel, but is that the way to think about kind of the visit.

Yeah.

progress as you continue progress throughout the year that it's going to be balanced through each of those channels or should we be thinking that one of those channels either Enterprise Systems International or VET will outpace the others and drive the acceleration through the end of 2022.

Progress continued progress throughout the year.

It's going to be balanced with each of those channels are should we be thinking one of those channels, either enterprise systems international or that will outpace the others and drive the acceleration.

Through the end of 2022.

You know, I think this is where we're kind of balancing where we are in the story, which is the early part of the story, Josh. And that's how I think things will over a little bit of time here come into a more predictable pattern. But right now, given where we were and how we started out, we're seeing a lot of our efforts materializing in health systems. Or we're also moving in our geographical expansion. But, you know, that's coming right now. We've done a lot of work in our pipelines and the our our solution that we're offering. So, you know, we see right now a good momentum in the health system.

I think this is where we're kind of balancing where we are in the story, which is the early part of the story adoption. That's how I think things will over a little bit of time here coming through a more predictable pattern, but right now given where we were and how we started out we're seeing a lot of our efforts materializing in health system.

We're also moving in our geographical expansion, but that's coming right now we've done a lot of work in our pipelines and the art or solution that we're offering so we see right now a good momentum in the health system.

we're starting to get momentum in our international geographical expansion and you've seen that in some of our global health initiatives and we want to stay committed to our global health equity initiatives both here in the United States and around the world that continues to do well and so that you know we continue to do well that and we believe that.

We're starting to get momentum in our international geographical expansion and you've seen that in some of our global Health initiative, and we want to stay committed to our global health equity initiatives, both here in the United States and around the world.

That continues to do well and so that we continue to do that and we believe that really the embodiment of our strategy as we've talked about it in the health systems is important but what we've been all about is the utility of information from all of US and we believe that past at home as you.

really the embodiment of our strategy to talk about it in the health systems is important. But what we've been all about is the utility of information from all this time. And we believe that path to home as you think about where care is going how information drives that care and how standard of care across.

Think about where care is going how information drives that care and how standard of care across different setting to be equal in order to maintain a high quality of care and alternative settings is really important we see the path to home has been very important but thats. The one that we're really developing right now and we see.

different settings to be equal in order to maintain a high quality of care in alternative settings is really important. We see the path to home as being very important but that's the one that we're really developing right now and we see health systems international and that as more active and really home as more developmental and driving growth in the future.

Health systems International and bad as more active and really home as more development pencil in driving growth in the future.

And maybe just a follow up on <unk>, if I could just.

You guys are kicking off clinical studies. It sounded like in spider scanning, heart failure, some other indications, but I'm happy to think about the home channel evolving.

You guys are kicking up clinical studies, it sounded like butter scanning heart failures from other indications and how youre thinking about the home channel evolving.

in front of I guess data and then maybe when when she'll be expecting results from from some of these trials and then assume that the follow-up would be.

From the data and then maybe when should we be expecting results from from some of these trials.

Assume that the follow up would be.

a pretty short follow-up period, but could we see some outcomes from some of these clinical development initiatives or trial initiatives in 2022? Or should we be thinking about results coming in 2023? And just in front of results, sorry to repeat the question, but how do you see kind of revenue from the home channel evolving?

Pretty pretty short follow up periods, but it couldnt be see some outcomes from some of these clinical development initiatives or trial this year.

2022 should be picking up results coming in 2023, and just in front of results.

Good question, but how do you see kind of revenue from the home channel evolving.

prior to kind of re-establishing the evidence.

Prior to kind of really establishing the evidence.

I think if you think about home as a journey and it's a site and it's the site of care, you know, I think that home is a destination.

I think if you think about home as a journey and it's a site and the site of care.

No I think that.

<unk> is a destination.

So today, people are delivering care in the home. Butterfly provides benefits to people, to practitioners who are going out in the home setting and delivering care to patients.

Hey people are delivering care in the home butterfly provide benefit to people to practitioners, who are going out in that home setting.

In delivering care to patients. So that's really kind of the start because remember at its core Firefly is about information.

So that's really kind of the start. Because remember, at its core, Butterfly is about infamy.

right? It's about getting information and informing care decisions. So we're demonstrating the value of that in a different care setting today, by getting it in the hands of practitioners who are going out of the hospital to the home to deliver care. And we're already doing that.

About getting information and informing care decision. So we're demonstrating the value of that in a different setting today by getting in the hands of practitioners, who are going out of the hospital to the home to deliver carrier or already doing that.

And what we want to do is then expand that utility so we can bring more efficiencies to care. And that's the next step, right? So that as you use that information in managing disease, identifying disease, and then continuing to do that in ways of getting patients more involved in the

And what we want to do is then expand that utility that we can bring more efficiencies to care and that's the next step right to the ease of use that information and managing disease identifying disease, and then continuing to do that as ways of getting patients more involved in it.

getting that information, less as point in time but more as a continuum to practitioners and that's really evolution. So Butterfly is going in the home today with practitioners.

And their care getting that information last this point in time, but more of a continuum to practitioners and naturally evolutions of butterfly is going in the home today with practitioners. We then want to bring it in the hands of patients. So that information flow can continue and we want to ultimately evolve it to other form factors, where we can.

We then want to bring it in the hands of patients so that information flow can continue, and we want to ultimately evolve it.

All of that information more seamlessly coming so it's really about bringing information and evolution of care in different settings. That's what homes all about so we're already there today is just that we're starting that journey and we're going to continue that evolution of the arm that we're proving that so we have some of that data with practitioners during that evidence now.

information and evolution of care in different settings. That's what HOME is all about. So we're already there today. It's just that we're starting that journey and we're going to continue that evolution as we go on. So we're proving that. So we have some of that data with practitioners doing that evidence now. Some of those studies are going on and we hope to see some of that data towards the end of this year and at the beginning of next year. And then we are also starting studies to help this walk with patients becoming involved in their care. And then some of the evidence that we need to continue our form factor evolution and how we can get the continuation of the flow of information into decision making. So we have evidence as part of that journey towards the end of the year and then into

Now some of those studies are going on and we hope to see some of that data towards the end of this year and at the beginning of next year and then we are also starting studies to help us work with patients becoming involved in their care and then some of the evidence that we need to continue our form factor evolution and how we can get the continuation of the flow of information into this.

Isn't making so.

Cheers.

evidence as part of that journey towards the end of the year and then into next year and then this story is just going to keep evolving and we're just going to keep telling the story.

Evident as part of that journey towards the end of the year and then into next year and then this story is going to keep evolving and we're just going to keep telling the story.

Great.

<unk>.

A two-parallel, just maybe two last questions. Just thinking about enterprise contracts, you know, the big University of Rochester win, and then how we should be kind of incorporating that into those enterprise wins into our models. Just from a revenue generation standpoint, it looks like the Butterfly IQ device deployment will start in thousands of devices.

Two parallel just maybe two last questions just speaking about.

Enterprise contracts big.

Hershey Rochester win.

And then how we should be kind of incorporating those if those enterprise wins.

<unk> just from a revenue accretion standpoint looks like.

The butterfly acute advice deployment will start feeling thousands of.

Goodbye.

is being deployed, but any help just thinking through how revenue would kind of flows through and is recognized as you deploy these butterfly IQ devices over the next couple of years?

<unk> is being deployed.

Any help just thinking through.

Revenue.

Kind of flows through.

And is recognized as as you deploy.

Notify acute devices over over the next couple of years.

Okay.

So I think Josh, this is the part where we're working on and Heather coming in will help us as we continue to tax the revenue. I think what it demonstrates is that our revenue is multi-component and so that there's different elements to how we're going to be building, which hopefully we'll also get some confidence as we.

So I think Josh this is the part where we're working on and how they are coming in will help us as we continue to tax to revenue I think what it demonstrates is that our revenue is multi component and so that theres different elements to how we're going to be building, which hopefully will also give some comment there are some some comp.

That would be.

Because, you know, up front, actually, we look at some elements of the software which enable the deployment, right? So there's a capital element to the subscription. There are services elements to that. There are services elements to how we deploy. And then there's obviously the capital acquisition of the devices. So I think what it does is it helps us as we're evolving our business.

Because.

Upfront actually we look at.

Some elements of the <unk>.

Software, which enables the deployment right. So there is a capital element. The script sent there are services elements to that there are services elements to how we deploy and then there's obviously the capital outlook.

Physician of the devices.

No.

I think what it does is it helps us as we're evolving our business model to bringing diversification into our revenue and is also helping us understand how we can bring greater value faster into the health system and so right now we're at the phase where we're bringing in.

to bring diversification into our revenue. And it's also helping us understand how we can bring greater value faster into the health system. And so right now we're at the phase where we're bringing software up to speed and understanding the services component to maximize the deployment. We're gonna be bringing devices on board with time. We'll be doing that. But what I would caution you as we look to

We're up to speed and understanding the services component to maximize the deployment, we're going to be bringing devices onboard with time, we will be doing that but what I would caution you as we look to.

to look at as a predictor, right? Right now, what it is is an enabler. And so this is really what we're learning with them on how we can package this so it could be more.

So look it as a predictor right now what is the enabler and so this is really what we're learning with them on how we can.

Packaged it certainly could be more.

it can be more scalable and done faster and more segmented out to other institutions that we can accelerate their path onto the journey.

It can be more scalable and done faster and more segmented out to other institutions that we can accelerate their path onto the journey and so I think these big deployments early are a huge advantage for us because they are allowing us to absorb and learn the multi elements that are required to actually do something completely different.

And so I think these big deployments early are a huge advantage for us because they're allowing us to absorb and learn the multi elements that are required to actually do something completely different, which is to bring in counter based workflow with ultrasound into clinical care.

Which is to bring encountered based workflow with ultrasound into clinical care and it's an evolutionary change and so we're in it right now and then we're going to package. It and then it will be more predictable as we go through and then understanding.

and it's an evolutionary change and so we're in it right now and we're going to package it and then it'll be more predictable as we go through and then understanding.

and how it impacts revenue moving forward into the future. So that's how we're approaching these larger enterprise deployments right now. And then as we do some of the smaller ones, we're taking elements of it and bringing that together.

And how it impacts revenue moving forward into the future.

That's how we're approaching these larger enterprise deployments right now and then as we do some of the smaller ones, we're taking elements of it and bringing that together.

Excellent. And lastly, just thinking the Bill and Melinda Gates grants, you know, it's a good $5 million. Just how do we think about how that $5 million flows through the P&L or onto the balance sheet? Are you generating revenue as you deploy these devices out into Kenya, and I think South Africa? Is that...

Excellent.

Lastly, just speaking.

But Linda Gates Grant.

Good.

$5 million.

Just how do we think about recognized five.

<unk> 5 million flows through the P&L with her onto the balance sheet is that are you generating revenue as you deploy these devices out into Kenya.

And I think South Africa is that.

How should we think about that $5 million run into the P&L 2022?

And how should we think about that $5 million run in the P&L.

2022.

Yeah, so I think you're thinking about exactly correct, Josh. If we deploy the services elements and the devices into Kenya and to South Africa over the course of the year, we'll be recognizing the revenue. So it'll be recognized over the majority of the year.

Yes, so I think youre thinking about exactly correct, Josh as we deploy the services element and the devices into Kenya, and South Africa over the course of the year will be recognized in the revenue.

It'll be it'll be recognized.

The majority will be recognized over the course of the year.

Fantastic Thanks for putting up with all my questions really appreciate it.

Fantastic. Thanks for putting up with all my questions. Really appreciate it.

Okay.

Thanks for your interest us.

Thank you. As a reminder, if you'd like to ask a question, that's star 1 on your telephone keypad.

Thank you as a reminder, if you'd like to ask a question.

On your telephone keypad.

Okay, we have no further questions for today. That concludes today's conference disconnect.

Okay, we have further questions.

That concludes today's conference disconnect.

I liter eXp.

Okay.

Sure.