Q2 2024 Butterfly Network Inc Earnings Call

Speaker Change: Excuse me, ladies and gentlemen. Thank you for your patience. The call will begin momentarily. Again, thank you for your patience. The call will begin momentarily.

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Unknown Moderator: Thank you for attending Butterfly Network's second quarter 2024 earnings call. My name is Megan, and I'll be your moderator for today.

Speaker Change: Good evening.

Megan: Thank you for attending Butterfly Network's second quarter 2024 earnings call. My name is Megan and I'll be your moderator for today.

Megan: All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to Heather Getz with Butterfly Network. Please go ahead.

Unknown Moderator: All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to Heather Getz with Butterfly Network. Please go ahead.

Heather Getz: Good afternoon, and thank you for joining us. Earlier today, Butterfly released financial results for the second quarter ended June 30th, 2024 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, are currently available on the investor section of the company's website at ir.butterflynetwork.com. I, Heather Getz, Chief Financial and Operations Officer of Butterfly, alongside Joseph DeVivo, Butterfly's Chairman and Chief Executive Officer, will host this afternoon's call.

Heather Getz: I, Heather Getz, Chief Financial and Operations Officer of Butterfly, alongside Joseph DeVivo, Butterfly's Chairman and Chief Executive Officer, will host this afternoon's call.

Heather Getz: During today's call, we will be making certain forward-looking statements. These statements may include, among other things, expectations with respect to financial results, future performance, development and commercialization of products and services, potential regulatory approvals, and the size and potential growth of current or future markets for our products and services. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change and involve a number of known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those contained in the forward-looking statement.

Speaker Change: These statements may include, among other things, expectations with respect to financial results, future performance, development and commercialization of products and services, potential regulatory approvals, and the size and potential growth of current or future markets for our products and services.

Megan: These forward-looking statements are based on current information, assumptions, and expectations that are subject to change and involve a number of known and unknown risks.

Megan: 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.

Heather Getz: These and other risks are described in our filings 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. 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 may be a short delay between the live audio and the presentation being shown. On the same page, you will also be able to access the webcast live and as a replay once the call has been completed. I would now like to turn the call over to Joe. Joe

Heather Getz: On the same page, you will also be able to access the webcast live and as a replay once the call has been completed.

Joseph DeVivo: Thank you, Heather, and good afternoon, everyone. 2024 has been a great year for Butterfly so far. During the quarter, we continued to accelerate our revenue momentum, continue to become more efficient, and continue our investment in our future. Earlier this year, we held an Investor Day, where we gave a look under the hood at our most robust roadmap and introduced pillars for our strong path forward. These pillars include one, accelerating growth and our core focus business, expanding our market, and becoming more accessible to new user bases and new care settings, such as the home.

Joseph DeVivo: Three, investing in R&D to maintain our differentiated tech, and especially in our semiconductor innovation. And four, executing these pillars to drive our pathway to profitability. And we have a plan to get there. Throughout today's call, it should be clear that we are executing against these goals.

Joseph DeVivo: So last quarter, we raised our guidance to 75 to 80 million, or 15 to 20% growth year over year. As part of this, we mentioned that the second quarter would be our toughest comp for the year due to two non-recurring large medical school deals that happened the year prior. Regardless of this one-time event, we blew past our. In Q2, we posted $21.5 million in revenue, which represented 16% year-over-year growth, the highest quarterly revenue in Butterfly's history.

Speaker Change: So last quarter, we raised our guidance to 75 to 80 million or 15 to 20% growth year-over-year.

Joseph DeVivo: This outcome demonstrates that we're delivering and our plan is working. So before I get into commercial progress, I'd like to discuss the cost side of the business. In July, we completed an initiative that achieved an additional annualized cost reduction of $10 million. Heather will go into more detail shortly.

Heather Getz: In July , we completed an initiative that achieved an additional annualized cost reduction of $10 million.

Joseph DeVivo: Over the past two years, we've reduced our cash use to now under $50 million a year while re-energized our top line and extending our cash runway into 2027. All the while, we're continually identifying ways to become more efficient while investing in our commercial organization and maintaining the commitment to our technological advancements in chips, digital, and new forms. This is not an easy task to balance growth investment and cost reduction. I am so proud of the team.

Joseph DeVivo: They're maturing into an execution machine, delivering increasing value to our shareholders every day. Now turning to sales, as I mentioned, we grew revenue 16%. This was driven by IQ3 sales and an ASP uplift in the US, as well as stellar performance from our international team who launched IQ3 in Canada at the start of the quarter, added newly EUMDR cleared advanced features on our international IQ Plus product, and opened New Markets in Southeast Asia.

Joseph DeVivo: On top of that, it was a quarter of strong enterprise software. I am very pleased with the quality of this quarter's revenue because we delivered sustainable and repeatable business across our channel. In Q2, IQ3 continued to be a complete success commercially and clinically. We are actively involved in several health system deals that we previously would not have been competitive in. Our online customers purchased IQ3 74% of the time. In Canada, IQ3 represented 89% of sales across all channels.

Heather Getz: I am very pleased with the quality of this quarter's revenue because we delivered sustainable and repeatable business across our channels.

Heather Getz: In Q2, IQ3 continued to be a complete success commercially and clinically.

Heather Getz: We are actively involved in several health system deals that we previously would not have been competitive in.

Joseph DeVivo: We've upgraded over 1000 pros this quarter to IQ3 and just launched a competitive device upgrade, allowing customers to turn their old non-Butterfly product into Butterfly for a new IQ3. When we look at utilization data since launching IQ3, we're pleased to see accelerated use of our CARDIAC and OB pre-seq. We'll continue to analyze these trends, but we believe this to be a testament to our improved image quality that's critical for these advanced specialists. I mentioned that Q2 was our toughest comp due to last year's large medical school deal.

Heather Getz: We've upgraded over 1,000 probes this quarter to IQ3 and just launched a competitive device upgrade allowing customers to turn their old non-Butterfly product into Butterfly for a new IQ3.

Heather Getz: When we look at utilization data launching IQ3, we're pleased to see accelerated use of our cardiac and OB presets.

Heather Getz: We'll continue to analyze these trends, but we believe this to be a testament to our improved image quality that's critical for these advanced specialists.

Joseph DeVivo: We've had tremendous success over the years in placing our technology in medical school programs. Historically, Butterfly built the medical school segment primarily relying on a combination of smaller deals, putting probes in the lab for students to share, or large-scale one-to-one deployments that were typically made possible by medical school donor funds. We, of course, enjoy those large orders. It's just as a public company; big one-time events are hard to predict.

Heather Getz: I mentioned that Q2 was our toughest comp due to last year's large medical school deals.

Heather Getz: We've had tremendous success over the years in placing our technology in medical school programs. So historically, Butterfly built the medical school segment, primarily relying on a combination of smaller deals, putting probes in the lab for students to share.

Heather Getz: Or large-scale one-to-one deployments that were typically made possible by medical school donor funding.

Heather Getz: We, of course, enjoy those large orders. It's just as a public company, big one-time events are hard to anniversary.

Joseph DeVivo: So this quarter, we saw a large number of medical schools purchasing probes to record, showing us the market is ever maturing. Scan Lab has been huge. Scan Lab has strengthened our position by proving to be a very valuable asset in helping medical schools be more and more confident in going to a one-to-one model since they often lack ultrasound educators. A student truly learns ultrasound when they have their own device because they can practice on it. ScanLab gives them their own AI instructor on their iPad to be there with them, helping them hone their skills, making a one-to-one model even easier to implement.

Heather Getz: Scan Lab has been huge for us.

Heather Getz: ScanLab has strengthened our position by proving to be a very valuable asset in helping medical schools be more and more confident in going to a one-to-one model since they often lack ultrasound educators.

Heather Getz: A student truly learns ultrasound when they have their own device because they can practice on their own.

Heather Getz: ScanLab gives them their own AI instructor on their iPad to be there with them, helping them hone their skills, making a one-to-one model even easier to implement.

Joseph DeVivo: So, to expand on this, like Apple did in the 80s and 90s, Butterfly is partnering with schools to create a seamless pathway for their students to purchase a butterfly through a campus store. They get their textbooks, their pencils, and laptops and the butter, all essentials for the next chapter of their careers.

Speaker Change: They get their textbooks, their pencils and laptops, and their butterfly. All essentials for the next chapter of their careers.

Joseph DeVivo: This quarter's Campus Door pilot program at a leading medical school offered 300 eligible students the opportunity to purchase their own butterfly, their choice of an IQ plus or an IQ three. 232 of them bought a probe before the semester started, and a third of those students even opted to buy the premium IQ3. Like Apple, when you engage them young, you develop a lifetime of familiarity and relationship, you develop a common language, and then you do everything to maintain that belonging into the future, with several years of building medical school programs behind us.

Heather Getz: This quarter's Campus Door pilot program at a leading medical school offered 300 eligible students the opportunity to purchase their own butterfly, their choice of an IQ plus or an I Q3 .

Heather Getz: 232 of them bought a probe before the semester started, and a third of those students even opted to buy the premium IQ3.

Speaker Change: Like Apple, when you engage them young, you develop a lifetime of familiarity and relationship, you develop a common language, and then you do everything to maintain that belonging into the future.

Joseph DeVivo: It's exciting to see many graduating classes this year heading into residency with ultrasound skills. The Butterfly Army is growing. Students trained on Butterfly are transforming health care by being the most sought-after candidates for residency programs and shepherding in the new era of point of care ultrasound when they get into clinical practice. Gosh, residents with ultrasound skills are just invaluable.

Speaker Change: With several years building medical school programs behind us, it's exciting to see many graduating classes this year, heading into residency with ultrasound skills. The butterfly army is growing.

Speaker Change: Students trained on Butterfly are transforming healthcare by being the most sought-after candidates for residency programs and shepherding in the new era of point-of-care ultrasound when they get into clinical practice.

Joseph DeVivo: It's where the industry is headed. Ultrasound capability is being demanded at. Doctors without ultrasound skills need to learn them or will simply be marginalized by their juniors. There is a seismic shift happening in diagnostic imaging, and Butterfly is the catalyst. Our medical school strategy is shaping the future.

Speaker Change: Gosh, residents with ultrasound skills are just invaluable. It's where the industry is headed. Ultrasound capability is being demanded at hospitals. Doctors without ultrasound skills need to learn them or will simply be marginalized by their juniors.

Speaker Change: There is a seismic shift happening in diagnostic imaging and Butterfly is a catalyst. Our medical school strategy is shaping the future.

Joseph DeVivo: So in sum, we have a really bright outlook with medical schools. Butterfly no longer needs to depend on large donation-based opportunities, given that we've built a model that will support sustainable revenue growth. There are about 100,000 medical students at any given time, and 25,000 new first-year students annually in the US alone.

Speaker Change: There are about 100,000 medical students at any given time.

Speaker Change: and 25,000 new first-year students annually in the U.S. alone.

Joseph DeVivo: Ten other programs have agreed to go live on our Campus Essentials program, and we're working on many more. This will not only deliver a more stable recurring revenue model for the company, but it will also allow for evergreen purchasing that is not based on hospital budget cycles as they are now. So let's now discuss our developments in AI. Butterfly posted more wins this quarter for Butterfly Garden, powered by AI. In-house, we have many AI tools that we're developing, and we'll have a series of releases scheduled for next year.

Speaker Change: Ten other programs have agreed to go live on our Campus Essentials program and we're working on many more.

Speaker Change: So let's now discuss our developments in AI.

Speaker Change: Butterfly posted more wins this quarter for Butterfly Garden, powered by Butterfly, and our internal AI developments.

Speaker Change: In-house, we have many AI tools that we're developing and we'll have a series of releases scheduled for next year.

Joseph DeVivo: As a reminder, we have the largest private ultrasound image repository in the world, 21 million images growing at about 30,000 a day, and that enables us to quickly develop new tools. It also allows us to use our capabilities to amplify other ultrasound A.I. companies and expose them to the largest handheld ultrasound marketplace in the world. In Q2, we increased our butterfly garden partners to a total of 15 and have also signed the term sheet for our third chip-powered by butterfly chip licensing.

Speaker Change: It also allows us to use our capabilities to amplify other ultrasound AI companies and expose them then to the largest handheld ultrasound marketplace in the world.

Speaker Change: In Q2, we increased our Butterfly garden partners to a total of 15 and have also signed the term sheet for our third Howard by Butterfly chip licensing deal.

Joseph DeVivo: We announced that Heart Focus by Deskey, Ultrasight, and Southwood have signed to the Butterfly Garden. We're very excited to have them join our effort and are pleased with the number of new cardiac AI platforms that are choosing Butterfly Garden as the marketplace to bring their advanced technology, while Big Ultrasound is buying a few AI companies for themselves. Butterfly is building a premier AI ecosystem for everyone. This makes Butterfly the only independent AI ultrasound marketplace.

Speaker Change: We announced that Heart Focus by Deskey

Speaker Change: Ultrasight, and Southwood signed to the Butterfly Garden. We're very excited to have them join our effort and are pleased with the amount of new cardiac AI platforms that are choosing Butterfly Garden as the marketplace to bring their advanced technologies.

Speaker Change: while Big Ultrasound is buying a few AI companies for themselves.

Speaker Change: Butterfly is building a premier AI ecosystem for everyone.

Joseph DeVivo: And it will also allow Butterfly customers access to the best new AI tools available without needing multiple platforms. Butterfly customers will purchase new ultrasound AI products to advance their clinical, and all independent developers will build with us to access the marketplace. This is a win, win, win, and it's happening now.

Speaker Change: This makes Butterfly the only independent AI ultrasound marketplace, and it also will allow Butterfly customers access to the best new AI tools available without needing multiple platforms.

Speaker Change: Butterfly customers will purchase new ultrasound AI products to advance their clinical care.

Speaker Change: And all independent developers will build with us to access the marketplace.

Joseph DeVivo: Our partners think Sono was the first garden partner to commercially launch their deep vein thrombosis training. We launched it to all of our customers, and we are making progress getting the message out. Next year, they expect to launch their clinical DVT guidance tool upon winning regulatory clearance. In 2025, we will also see a cohort of Butterfly Garden and Powered by Butterfly partners commercialize their offer, providing a new and growing recurring revenue stream for Butterfly.

Speaker Change: This is a win, win, win.

Speaker Change: And it's happening now. Our partners think Sono was the first garden partner to commercially launch their deep vein thrombosis training tool.

Speaker Change: Next year, they expect to launch their clinical DVT guidance tool upon winning regulatory clearance.

Joseph DeVivo: This quarter, we also signed a term sheet for our third Powered by Butterfly partner. This company is already commercial, and the next version of their product will leverage our proprietary ultrasound on chip. We are not announcing their name yet, so we don't disrupt their current commercial activity. Of the three partners, we anticipate they will be the first to go to market next year. So they will not only deliver some technical revenue this year for Butterfly, but we expect them to deliver revenue from commercial activities as soon as next.

Speaker Change: Providing a new and growing reoccurring revenue stream for Butterfly.

Speaker Change: We are not announcing their name yet, so we don't disrupt their current commercial activities.

Joseph DeVivo: We look forward to announcing this partnership when they're ready to launch commercially and are excited today to share the continued success of our Powered by Butterfly program. I want to remind you that each of these Powered by Butterfly deals is complex, requiring research and development and a regulatory strategy, yet has a very high opportunity ceiling for Butterfly. We have at least 15 other partners in our pipeline and are actively negotiating with five of them concurrently. The interest in Butterfly and accessing our proprietary and protected technology has been extraordinary. We are doing everything we can to keep up with demand.

Speaker Change: We look forward to announcing this partnership when they're ready to launch commercially and are excited today to share the continued success of our Powered by Butterfly program.

Speaker Change: I want to remind you that each of these Powered by Butterfly deals are complex, requiring research and development and a regulatory strategy, yet have a very high opportunity ceiling for Butterfly.

Speaker Change: We have at least 15 other partners in our pipeline and are actively negotiating with five of them concurrently.

Speaker Change: The interest in Butterfly and accessing our proprietary and protected technology has been extraordinary.

Joseph DeVivo: As I've stated in the past, this effort has the opportunity to deliver non-dilutive capital to the company. And at the right time, I'll update you more on. So before I turn it over to Heather, I'd like to touch on a few parallel momentum drivers in the clinical and regulatory space. So first on the clinical front, we told you at our investor day that heart failure management is an area of great opportunity for Butterfly.

Speaker Change: So first on the clinical front, we told you at our investor day that heart failure management is an area of great opportunity for Butterfly, with a rising patient population and hospitals working hard to tackle readmission challenges.

Joseph DeVivo: With a rising patient population and hospitals working hard to tackle readmission challenges, recent research has been published in the Academic Emergency Medicine Journal, further validating the clinical significance of the butterfly in space. The studies demonstrated that not only was it easy for paramedics to master lung ultrasound with butterfly devices, but the pre-hospital scanning reduced time to acute heart failure treatment by over two hours compared to routine care. This early initiation of heart failure therapy is crucial, and it's associated with lower mortality and hospital readmission.

Speaker Change: Recent research has been published in the Academic Emergency Medicine Journal, further validating the clinical significance of butterfly in this space.

Speaker Change: The studies demonstrated that not only was it easy for paramedics to master lung ultrasound with butterfly devices, but the pre-hospital scanning reduced time to acute heart failure treatment by over two hours compared to routine care.

Joseph DeVivo: We also introduced bladder scanning as our second primary use case for home. Progress is happening here too. The Christopher Reeve Foundation just launched a study of their own to validate that bladder self-scanning can revolutionize care management for patients with spinal cord injury.

Speaker Change: and it's associated with lower mortality and hospital readmission rates.

Speaker Change: We also introduced bladder scanning as our second primary use case for home care.

Speaker Change: Progress is happening here too.

Speaker Change: The Christopher Reeve Foundation just launched a study of their own to validate that bladder self-scanning can revolutionize care management for patients with spinal cord injuries.

Joseph DeVivo: So next, we're proud to share that after rigorous vetting, Butterfly IQ Plus was recognized by the World Health Organization in its 2024 Compendium of Innovative Health Technologies for low-resource settings. Inclusion in this manual further legitimizes our device, and we continue engaging with foreign governments and funders for our global health initiative. Lastly, I'd like to update you on our efforts to overturn the exemption Big Ultrasound gets from the RoHS standards in Europe. We've been working closely this quarter with the European Commission on how the butterflies petition can be heard.

Speaker Change: So next, we're proud to share that after rigorous vetting, Butterfly IQ Plus was recognized by the World Health Organization in its 2024 Compendium of Innovative Health Technologies for low-resource settings.

Speaker Change: Lastly, I'd like to update you on our efforts to overturn the exemption Big Ultrasound gets from the RoHS standards in Europe .

Speaker Change: We've been working closely this quarter with the European Commission on how Butterfly's petition can be heard.

Joseph DeVivo: You see, for the last 20 years or so, the ultrasound industry has gained compliance with the E-Use Restrictions on Hazardous Substances Directive, or ROHAS, only via an exam. These incumbent ultrasound devices contain hazardous levels of lead in their piezoelectric crystal, above the standards set for toxic materials and electronic devices and are exempted now only because there's been no clean alternative presented to the commission. These exemptions are time limited and intended to bridge compliance until Big Ultrasound can produce a cleaner product. But since they get this exemption, why should they invest in an alternative?

Speaker Change: You see, for the last 20 years or so, the ultrasound industry has gained compliance to the E-Use Restrictions on Hazardous Substances Directive, or ROHAS.

Speaker Change: only via an exemption.

Joseph DeVivo: Periodically, Big Ultrasound files for exemption renewals, stating that there's no alternative and their toxic devices remain worthy of the exemption. In my view, that's all about the Butterfly is demonstrating to the European Commission that there is now a clean alternative that doesn't rely on lead crystals or the exemption, and that the alternative is the CMUT technology utilized in our devices, including Butterfly IQ3. And this showcases the rapid technological evolution of our SEMA chip.

Speaker Change: But since they get this exemption, why should they invest in an alternative?

Speaker Change: In my view, that's all about the change.

Joseph DeVivo: Just weeks ago, we filed for what is called revocation. Revocation is a formal process to petition for cancellation of a prior exemption granted. After going through this process, it seems Butterfly may be one of, if not the first company filing for such a request in the 20-year history of Rojas Direct. While the EC is currently reviewing previously filed applications by Big Ultrasound to renew their exemption, in parallel, they will now be considering whether it's warranted in the first instance and whether it should be revoked for all piezo-based handheld devices altogether. So stay tuned because we believe an exemption renewal decision will be made one way or the other in the first half of 2020. Now, I'll turn it back over to Heather. Thank you.

Speaker Change: In parallel, they will now be considering whether it's warranted in the first place.

Speaker Change: So stay tuned because we believe an exemption renewal decision will be made one way or the other in the first half of 25.

Heather Getz: Thank you. As Joe noted, we saw continued strength in the second quarter of 2024 with revenue of $21.5 million, the highest quarterly revenue in the company's history. This represents a 16% increase versus the prior year period. The increase was driven by price and volume positively impacted by the launch of I-23 and higher software sales. Of note, in the second quarter of 2023, we had two large grant-based deals at medical schools that did not repeat in 2024.

Heather Getz: Excluding these deals, our volume grew 37%, demonstrating strong core demand for our product. Looking at the U.S. and international channels, during the quarter, U.S. revenue was $14.8 million, which was 3% higher than the prior year. Excluding the aforementioned medical school deals in 2023, U.S. revenue grew 25 percent versus Q2'23 and 21 percent sequentially from Q1'2024.

Heather Getz: Total international revenue increased 57% over the prior year period to $5.2 million, driven by higher probe volume, partially offset by lower average selling prices due to a higher mix of sales to distributors, which carry a lower selling price as compared to our direct business, as well as due to a lower mix of software revenue and sales through the e-commerce channel. Breaking down our revenue between product and software and other services, product revenue was $14.6 million, an increase of 19% versus Q2 2023. This increase was driven by higher average selling price and volume, mainly in international distribution and e-commerce, and approximately 50% of our total volume was I-2-3 and 75% domestic.

Speaker Change: These results were driven by higher average selling price and strong demand.

Speaker Change: Total international revenue increased 57% over the prior year period to $5.2 million, driven by higher probe volume, partially offset by lower average selling price due to a higher mix of sales to distributors.

Speaker Change: which carry a lower selling price as compared to our direct business.

Speaker Change: Breaking down our revenue between product and software and other services.

Speaker Change: Product revenue was $14.6 million, an increase of 19% versus Q2'23.

Speaker Change: This increase was driven by higher average selling price and volume, mainly in international distribution and e-commerce, and approximately 50% of our total volume was IQ3 and 75% domestically.

Heather Getz: Software and Other Services revenue was $6.9 million in the second quarter, a 10% versus the prior year period. Software and Other Services Mixed was 32% of revenue, decreasing by approximately two percentage points versus Q2'23. This decrease can be attributed to product revenue growth outpacing software revenue with the launch of our IQ3 earlier this year. However, our total annual recurring revenue, which is reported as part of software and other services, was flat versus the prior year period. This was due to an increase in our enterprise software subscription ARR that grew 24%, an increase to 43% of our total ARR. However, this increase in enterprise software revenue was offset by declines in our individual subscriptions.

Speaker Change: Our total annual recurring revenue, which is reported as part of software and other services, was flat versus the prior year period.

Speaker Change: This was due to an increase in our enterprise software subscription ARR that grew 24% and increased to 43% of our total ARR. This increase in enterprise software revenue was offset by declines in our individual subscriptions.

Heather Getz: Turning now to gross profit, first profit was $12.6 million in Q2 2024, a 15% increase as compared to $10.9 million in the prior year period. Gross Margin Percentage remains relatively flat at 59%, and while Gross Margin Percentage was positively impacted by the higher average selling prices, these benefits were offset by higher software amortization, a lower proportion of higher-margin software and other services revenue, and inefficiencies associated with the launch of I-2-3, including warranty costs.

Speaker Change: Turning now to gross profit. Gross profit was $12.6 million in Q2 2024, a 15% increase as compared to $10.9 million in the prior year period.

Heather Getz: Moving to EBITDA and capital resources, for the second quarter of 2024, adjusted EBITDA loss was $8.1 million compared with a loss of $17 million for the same period in 2023. The $8.8 million improvement in adjusted EBITDA loss was driven by higher revenue, cost reductions, and efficiencies, which led to lower payroll, consulting, and other outside services. Cash and cash equivalents, including restricted cash, as of June 30th, 2024, was $106 million. Our total use of cash in the second quarter was $11 million.

Speaker Change: Moving to EBITDA and capital resources, for the second quarter of 2024, adjusted EBITDA loss was $8.1 million, compared with a loss of $17 million for the same period in 2023.

Speaker Change: The $8.8 million improvement in adjusted EBITDA loss was driven by higher revenue, cost reductions and efficiencies, which led to lower payroll, consulting, and other outside services.

Heather Getz: As we have previously discussed, we have taken significant cost out of the business and reduced our annual cash burn, but we are not done yet. We will continue to find ways of being more and more cost efficient. In keeping with this principle, on July 1st, we entered into an agreement with a third-party partner to optimize and lower the cost of certain non-specialized technical functions. With this agreement, we will have a tightly knit team located across the globe with increased access to talent 24 seven.

Speaker Change: As we have previously discussed, we have taken significant costs out of the business and reduced our annual cash burn, but we are not done yet. We will continue to find ways of being more and more cost efficient.

Heather Getz: As part of the transition into this new partnership, a portion of the company's workforce will be in lower cost geographies, resulting in an estimated annual cost savings of $10 million. The cost of this program will be recognized as an expense in the second half of 2024, but the cash payment will be deferred and paid ratably starting in July of 2025 through the end of 2028.

Speaker Change: As part of the transition into this new partnership, a portion of the company's workforce will be in lower-cost geographies, resulting in an estimated annual cost savings of $10 million.

Speaker Change: The cost of this program will be recognized as an expense in the second half of 2024, but the cash payment will be deferred and paid ratably starting in July of 25 through the end of 2028.

Heather Getz: With this program, we have further extended our cash runway into 2027 from our previous estimate of early 2026. Moving out of that, in the first half of the year, we have made significant progress in delivering against our priorities. We launched IQ3 in the U.S., launched ScanLab and IQ Plus Bladder, reached 15 butterfly garden partners, and signed the term sheet for a third Powered by Butterfly partner. Internationally, we received EUMDR for advanced features of IQ+, and are applying for IQ3, while adding additional geographical footprint.

Speaker Change: With this program, we have further extended our cash runway into 2027 from our previous estimate of early 2026.

Speaker Change: In the first half of the year, we have made significant progress in delivering against our priorities.

Speaker Change: We launched IQ3 in the U.S., launched ScanLab and IQ Plus Bladder, reached 15 Butterfly garden partners, and signed the term sheet for a third Powered by Butterfly partner.

Heather Getz: We invested in our commercial teams and will continue to expand our sales footprint, both domestically and internationally, all the while reducing our cash consumption and conservatively extending our cash runway into 2027. In addition, I am pleased to report that yesterday we regained compliance with the New York Stock Exchange Minimum Bid Price Rule and received official notification from the exchange. As we look at the second half of 2024, our commercial organization atomic, As mentioned, we are adding additional commercial resources in the U.S. and internationally, and we expect to open more countries and launch IQ3 in Europe. Our work is not done.

Speaker Change: We invested in our commercial teams and will continue to expand our sales footprint both domestically and internationally, all the while reducing our cash consumption and conservatively extending our cash runway into 2027.

Speaker Change: In addition, I am pleased to report that yesterday we regained compliance with the New York Stock Exchange Minimum Bid Price Rule and received official notification from the exchange.

Speaker Change: As we look at the second half of 2024, our commercial organization is humming.

Speaker Change: As mentioned, we are adding additional commercial resources in the U.S. and internationally, and we expect to open more countries and launch IQ3 in Europe .

Heather Getz: We will continue to find efficiencies and are exploring opportunities for non-diluted financing, for example, grants and licensing deals. This will provide us with maximum flexibility as we continue on the pathway to profitability. As always, we will keep you updated on this front. For 2024 guidance, we are reiterating our revenue guide in the range of $75 to $80 million, or about 15 to 20% growth, and improving our adjusted EBITDA guide by $5 million for the full year to a loss of $45 to $50 million.

Speaker Change: Our work is not done. We will continue to find efficiencies and are exploring opportunities for non-diluted financing, for example, grants and licensing deals. This will provide us with maximum flexibility as we continue on the pathway to profitability. As always, we will keep you updated on this front.

Speaker Change: For 2024 guidance, we are reiterating our revenue guide in the range of $75 to $80 million, or about 15 to 20% growth, and improving our adjusted EBITDA guide by $5 million for the full year to a loss of $45 to $50 million.

Heather Getz: Specifically looking at Q3, which tends to be the toughest quarter for demand in health care, we expect to see revenue growth of around 20 to 25%, bringing us to approximately $19 million in revenue. For Q3 adjusted EBITDA, we expect a loss of approximately $9 to $10 million.

Speaker Change: Specifically looking at Q3, which tends to be the toughest quarter for demand in health care, we expect to see revenue growth of around 20 to 25%, bringing us to approximately $19 million of revenue.

Speaker Change: For Q3 Adjusted EBITDA, we expect a loss of approximately $9 to $10 million.

Heather Getz: To summarize, we had a strong second quarter and first half of 2024. We look forward to continued double-digit growth in 2024 and beyond with the realization of additional efficiencies that will further extend our cash runway into 2027. We've been delivering against our plan and will continue to do so with a strong base of technological and organizational assets and a team that is energized to capitalize on this attractive market opportunity over the long term. And with that, I will turn the call back to Joe. Thanks.

Speaker Change: To summarize, we had a strong second quarter and first half of 2024. We look forward to continued double-digit growth in 2024 and beyond with the realization of additional efficiencies that will further extend our cash runway into 2027.

Speaker Change: We have been delivering against our plan and will continue to do so with a strong base of technological and organizational assets and a team who is energized to capitalize on this attractive market opportunity over the long term.

Joseph DeVivo: Butterfly today is undoubtedly leading the digital revolution in ultrasonography. We're making it less expensive and easier to gain access to necessary medical imaging. We're helping low and middle-income countries, areas of conflict, medical students, nurses, veterinarians, and point of care doctors all gain access to the tools and skills necessary to provide life-saving diagnostic technology where they need it most, at the patient's side. I am very pleased with our success. And I'm just as eager to forge ahead with the exciting plan and roadmap that we unveiled at our March Investor Day.

Speaker Change: And with that, I will turn the call back to Joe.

Joe: Thanks, Heather.

Joe: Butterfly today is undoubtedly leading the digital revolution in ultrasound.

Joe: We're making it less expensive and easier to gain access to necessary medical imaging.

Speaker Change: We're helping low and middle income countries, areas of conflict, medical students, nurses, veterinarians, and point of care doctors all gain access to tools and skills necessary to provide life-saving diagnostic technology where they need it most.

Joe: at the patient's side.

Speaker Change: I am very pleased with our success this quarter.

Speaker Change: And I'm just as eager to forge ahead on the exciting plan and roadmap that we've unveiled at our March Investor Day.

Joseph DeVivo: There, we spoke of our future, our technology roadmap, our semiconductor investment, and our pathway to profitability. We showed how our wearable technology will transform care for patients in the home, and how they can do their own. It's all happening.

Speaker Change: There we spoke of our future.

Speaker Change: our technology roadmap, our semiconductor investment, and our pathway to profitability.

Speaker Change: We showed how our wearable technology will transform care for patients in the home,

Joseph DeVivo: So if you're interested in Butterfly, I'd urge you to revisit those Investor Day materials. While we can't give you a thorough update on everything going on, just know that while we work to deliver you great numbers each quarter, we are simultaneously dedicated to executing on our commitments over the long term with that North Star strategy. So I want to leave you today with this: there is no longer any doubt where Point of Care Ultrasound is going.

Speaker Change: and how they can do their own scans.

Joe: It's all happening.

Joe: So if you're interested in Butterfly, I'd urge you to revisit those Investor Day materials.

Joe: So I want to leave you today with this.

Joseph DeVivo: Butterfly is delivering at every level and, in my view, is now in control of our destiny. Change is hard for healthcare. History has proven that, but we are drivers of change. And our results demonstrate that we are succeeding. Butterfly is a great company with massive growth potential, and we will continue to deliver strong performance. Quarter after quarter after quarter. Just sit back and watch. We hope you join the ride with us. With that operator, let's open it up for questions.

Joe: There is no longer any doubt where Point of Care Ultrasound is going.

Joe: Butterfly is delivering at every level and in my view is in control now of our destiny.

Operator: If you would like to ask a question, please press star followed by one on your telephone keypad. If, for any reason, you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause for you briefly as questions are registered. Our first question goes to the line of Josh Jennings with TV Cowan. Your line is open.

Speaker Change: Our first question goes to the line of Josh Jennings with TV Cowan. Your line is now open.

Joshua Jennings: Oh, great. Thanks for taking the questions. I wanted to start on the IQ three launch. It sounds like you're having significant early success. And I apologize if I'm repeating some things from your prepared remarks. I jumped in late, but I just wanted to hear about the launch in the U.S. where you're having the most success, either on the hospital enterprise channel or e-commerce channel or another. And then also, sorry for the multi-tiered one here, but just the international launch coming up and any expectations there in terms of just high-level color and contributions in the second half.

Josh Jennings: Oh, great. Thanks for taking the questions. I wanted to start on the IQ3 launch. It sounds like you're having significant early success.

Joseph DeVivo: Awesome. Thanks, Josh.

Josh Jennings: And then also, sorry for the multi-tiered one here, but just the international launch coming up and any expectations there in terms of just high-level color and contributions in the second half.

Joseph DeVivo: I appreciate the question. What's really exciting about the revenue and the progress right now is that it's very broad-based. It's not lumpy.

Joseph DeVivo: It's not one or the other. We're not sweating this or sweating that. We're seeing a lot of traffic on the website. We're seeing our e-comm up. We're seeing our inside sales team really crush it and do a great job. We're seeing our direct team build out the pipeline. We have our software selling. We're seeing a lot of health system deals. I think what's really good is that our commercial team at all phases is delivering.

Speaker Change: We're seeing a lot of traffic to the website. We're seeing our e-comm up.

Speaker Change: We're seeing our inside sales team really crushing it, doing a great job. We're seeing our direct team build out the pipeline. We have our software selling. We're seeing a lot of health system deals.

Speaker Change: So, um, I think.

Joseph DeVivo: We're seeing very strong clinical acceptance for multiple specialties. We're seeing the emergency room, please; we're seeing new cardiology grow new interest. We're seeing our EMS business grow with our inside sales team. I can't point to one particular thing saying, hey, this is happening that's outside.

Josh Jennings: Our commercial team at all phases are delivering.

Joe: Please for seeing new cardiology grow a new interest for seeing our EMS business grow with our inside sales team. So I can't point to one particular thing saying hey this is happening that's outsized.

Joseph DeVivo: I'm really just seeing a nice groundswell. I'm seeing average daily sales go up, and there is great activity across our presets and our platform. What makes us confident about our future is it's not like we're with our tongues out through the quarter and, oh, boy, we hope we get that one big order coming in. It's just not like that.

Joe: I'm really just seeing a nice

Josh Jennings: groundswell, I'm seeing, you know, average daily sales go up, seeing great activity across our presets in our platform. So, you know, what what makes us confident about our future is, you know, it's not like

Joseph DeVivo: Of course, we're trying to close orders at the end of the quarter, but it's more we're seeing the business pay off strong. We're seeing ourselves delight new users. We're seeing ourselves reinvigorate existing users, so it's a pretty broad-based type of success. I think in the US, about 75% of our sales were IQ3 on a unit basis this quarter. It's just showing the acceptance of the product, but it's also been a lot of fun having two products to sell. We have price when we need it, and we have premium when we need it in the strategy.

Speaker Change: You know, in the U.S., about 75% of our sales were IQ3 on a unit basis this quarter, and

Speaker Change: It's just showing the acceptance of the product, but also it's been a lot of fun having two products to sell. So we have price when we need it, and we have premium when we need it.

Joseph DeVivo: and The strategy is working.

Joshua Jennings: Excellent. And I guess my follow-up questions. Sorry, I've got two.

Joshua Jennings: First, is just anything. Just want to pipe the sales funnel and the sales pipeline. I mean, I think your answers and your prepared remarks suggest that that is building nicely. But any way to kind of quantify the pipeline relative to where things stood last year?

Joseph DeVivo: Well, well, first of all, I realized I didn't answer the second part of your first question, which was international, so let me do that because I wrote that down.

Speaker Change: Well, first of all, I realized I didn't answer the second part of your first question, which was international. So let me do that. Actually, I wrote that down. Oh, thank you. Thank you. Appreciate it.

Joseph DeVivo: Thank you. Thank you. I appreciate it.

Joseph DeVivo: So I apologize for that. So our first international market to see IQ3 was Canada. And it was nice because Canada is not a massive market for us, and we didn't really know how in tune they would be with this. And it was great.

Joe: So international, our first international market to see IQ3 was Canada.

Joseph DeVivo: I mean, our distributor had had great success, our online sales had great success. And one of the things that we're finding is, you know, while we are, you know, it's approved in the US today, ultrasound, radiology, and imaging is a small community, actually, and it's a global community. And so we've had trade shows in different markets where, you know, we're not really cleared yet. We're selling our current product, but we have people coming up to the booth saying, Hey, you know, can I see IQ three? When are you going to bring IQ three out?

Joseph DeVivo: So we're excited about the you know, what happened in Canada; we were actually pretty surprised. And we have a launch event in London on September 8, where we have thought leaders from across markets who are going to be there in the room and, and will be launching in Europe at the end of this third quarter. So very excited about the global reach, about the acceptance, and how this is going to roll.

Joe: We're excited about the, you know, what happened in Canada. We were actually pretty surprised.

Joe: and where we have a launch event in London on September 8th where we have thought leaders from.

Joe: throughout markets who are going to be there in the room and and will be launching in Europe in the end of this third quarter. So very excited about the global reach, about the acceptance, and how this is going to roll.

Joseph DeVivo: You know, market by market, because, you know, people are talking, people see what's happening online. Some people follow us even as a public company and hear these calls, and I get, I hear things rebuffed back that we've told investors. So everyone's listening and watching and waiting for them to be able to actually start buying product. As far as the pipeline is concerned, I really can't give you any numbers on that pipeline. But the best way is, you know, everyone wants it.

Joe: You know market by market because you know people are talking people see what's happening online Some people follow us even as a public company and hear these calls and I get

Joseph DeVivo: Pipeline to cover your forecast, right? So you have a certain amount of coverage. Hopefully, your pipeline is in excess of what your numbers are, and I think the best way for me to communicate right now is that our coverage hasn't been higher. So our pipeline coverage is at a place where, you know, there's a certain multiple of our forecasts, which gives us great confidence because everything doesn't have to come in for us to be successful.

Joe: But the best way is, you know, everyone wants.

Speaker Change: to communicate right now is that our coverage hasn't been higher. So our pipeline coverage is at a place where, you know, there's a certain multiple of, of our forecasts, which gives us great confidence because everything doesn't have to come in for us to be successful.

Joseph DeVivo: Great to hear. Last question is just wanted to, you know, we've spoken about this before, and you addressed it at the investor, but just think about it because you're calling out to Butterfly Garden and Powered by Butterfly opportunities. How and we're updating our models for 2025, just maybe talk about revenue contributions from those two channels, and they're not going to quantify them, but should they start some flow start flowing in here before the end of the year or into 2025 within the same vein, but totally off base potentially just thinking about it.

Speaker Change: It's great to hear. Um, last question is, is just wanted to, you know, we, we've spoken about this before and you address it at the investor, but just to think it because you're calling out to Butterfly Garden and Powered by Butterfly opportunities, um, just how, and we're updating our models for 2025, just maybe talk about,

Speaker Change: Revenue Contributions from those two channels. I know you're not going to quantify them, but should they start some flow start flowing in here before the end of the year or into 2025 within the same vein, but totally off base potentially just thinking about.

Joseph DeVivo: The intracardiac ultrasound market, left atrial appendage occlusion, pulse field ablation is coming in, and cardiac ablation, polystructural heart procedures, intracardiac ultrasound is becoming much more important, but also, taking off. Are there any partnerships in the works? And is that a channel that excites you guys? Thanks.

Speaker Change: the intracardiac ultrasound market, left atrial appendage occlusion, pulse field ablation is coming in, cardiac ablation, polystructural heart procedures, intracardiac ultrasound is becoming much more important, but also,

Speaker Change: taking off. Is there are there any partnerships in the works? And is that a channel that excites you guys? Thanks.

Joseph DeVivo: So Josh, Cardiac certainly excites us. I'm not aware of any particular partnerships yet in that space, and so if anyone out there is listening, give us a call. But no, I can't say that there's anything specific.

Speaker Change: So Josh, cardiac certainly excites us. I'm not aware of particular partnerships yet in that space.

Speaker Change: And so if anyone out there is listening, give us a call. But no, I can't say that there's something specific.

Joseph DeVivo: I will say that ultrasound AI companies are, in our view, kind of flocking to Garden, you know, and it's like we will have 13 or 15 different partners live on Garden. And so for us, that's providing 15 different AI tools, ultimately, to our customers. And, you know, what that means is, if we're a big ultrasound company, we have to purchase 15 companies to kind of offer them to customers. And we don't have to do that.

Speaker Change: I will say that Ultrasound AI companies are, in our view, kind of flocking to Garden.

Speaker Change: You know, and it's like we will have 13 or 15 different partners live on garden, you know, and so for us, that's providing 15 different AI tools, ultimately.

Speaker Change: you know, to our customers. And, you know, what that means is...

Speaker Change: You know, if we're a big ultrasound, we'd have to find we have to purchase 15 companies to kind of offer them to customers. And we don't have to do that. We just create these partnerships and we

Joseph DeVivo: We just create these partnerships, and we share success with each other. So I think that's going to accelerate. Now, you know, where the rubber hits the road is when they turn into a commercial.

Speaker Change: and we share success with each other. So I think that's going to accelerate now. You know, where the rubber hits the road is when they turn into commercial. And this year, we've had one partner, as I mentioned in my prepared remarks, ThinkSono.

Joseph DeVivo: And this year we've had one partner, as I mentioned in my prepared remarks, think Sono, who have an education app. And I think, you know, it's going to take a bit before these companies kind of stack up against each other. And we start seeing that revenue build from, you know, software sales that pull through. So, it's hard to really predict, but I think we're going to start to feel it in 25. Some of the tech is there, and there is some revenue there.

Speaker Change: have an education app. And I think.

Speaker Change: It's going to take a bit before these companies kind of stack up on each other and we start seeing that revenue build from software sales that pull through.

Speaker Change: So, you know, it's hard to really predict, but I think we're going to start to feel it in 25. Now, the powered by customers, there's R&D expense, there's, you know, access to

Joseph DeVivo: And it's, you know, it's I don't know how to quantify it. You can decide, Heather, if you want to quantify it or not. But I do think that as the powered by partners become commercial, and we have one next year, we're going to start feeling that revenue. So, you know, I don't know, Heather, how you want to quantify it this year or next year. But I do think by the end of 25, the contribution from both of those is going to be felt. Heather, do you want to jump in? Sure.

Speaker Change: Some of the tech and there is some revenue there and it's you know

Speaker Change: I don't know how to quantify it. You can decide, Heather, if you want to quantify it or not.

Heather Getz: I do think that as the Powered By partners become commercial, and we have one next year, we're going to start feeling that revenue.

Heather Getz: You know, I don't know, Heather, how you want to quantify it this year or next year, but I do think by the end of 25, the contribution from both of those are going to be felt. Heather, you want to jump in?

Heather Getz: Sure. Yeah, no.

Heather Getz: In 2024, we've had, can you hear me? Yes. Yeah, in 2024, we are recognizing some licensing revenue, but that's done over the course of the arrangement. We expect that to build into 25. And as Joe mentioned, with the commercialization of some of our partners, we will see that accelerate, in addition to as we sign additional partners, we'll pull in some additional licensing. So right now, not material enough to speak of in 24, but we will see that build in 25. Thanks.

Heather Getz: Sure. Yeah, no. In 2024, we've had, can you hear me?

Heather Getz: Yes.

Heather Getz: Yeah, in 2024, we are recognizing some licensing revenue, but that's that's done over the course of the arrangement.

Speaker Change: And we expect that to build into 25. And as Joe mentioned, with the commercialization of some of our partners, we will see that accelerate in addition to as we sign additional partners.

Joe: We'll pull in some additional licensing. So right now, not material enough to speak of in 24. But we will see that build in 25.

Joshua Jennings: Thanks for taking all those questions. I appreciate it.

Joe: Thanks for taking all those questions. Appreciate it.

Suraj Kalia: Our next question goes to the line of Suraj Kalia with Oppenheimer. Your line is open.

Josh Jennings: Thanks, Josh.

Joe: Thanks, Josh. Thank you, Josh.

Speaker Change: Our next question goes to the line of Suraj Kalia with Oppenheimer. Your line is open.

Suraj Kalia: Good afternoon, Joe, and Heather. Congratulations on a nice quarter. Thanks so much.

Suraj Kalia: Good afternoon, Joe, Heather, congrats on a nice quarter.

Suraj Kalia: I have a couple of questions for you and a couple for Heather. Joe, I'll start out with AI and ultrasound. At the macro level, Joe. Are there any specific structural shifts happening in ultrasound? Where all the key players are now talking about pushing AI and ultrasound, obviously, GE with caption health, and I guess some... I'm more curious as to the more recent drivers, for which everyone has started talking about AI integration, whether it's a fax, EMR, and more so, just kind of putting it into their systems. Any color there would be great.

Suraj Kalia: So, Joe, a couple of questions for you and a couple for Heather. Joe, let me start out with AI and ultrasound, more macro level, Joe.

Suraj Kalia: Are there any specific structural shifts happening in ultrasound?

Speaker Change: They're all the key players are now talking about pushing AI and ultrasound, obviously, GE with caption health, and I guess some

Speaker Change: I'm more curious as to the more recent drivers for which everyone has started talking about AI integration, whether it's a fax, EMR, and more so just kind of putting it into their systems. Any color there would be great.

Joseph DeVivo: Thank you for the question. I think there is a broad realization that AI is a major accelerant to ultrasound usage and ultrasound in the home, and ultrasound in the hands of less trained users. We've now, you know, trained more midwives in South Africa. We had our Kenya deployment; we then had our South African deployment, and these are midwives who are now doing ultrasounds for childbirth to understand fetal position.

Speaker Change: Thank you for the question. I think there is a broad-based realization.

Joe: that AI is a major accelerant to ultrasound.

Joe: and Ultrasound Usage and Ultrasound.

Joe: in the home ultrasound in the hands of

Speaker Change: less trained users. I mean, we've

Speaker Change: We've now, you know, in the quarter, trained more midwives in South Africa, we had our Kenya deployment, we then had our South Africa deployment. And these are midwives who are now doing ultrasound.

Joseph DeVivo: And whether it's that experience, or whether it's the caption experience that GE is having, or other companies are having, they're realizing that handheld ultrasound is a really low-cost, easy way to deploy advanced imaging into the hands of clinicians and to be able to help patients. And so I think there's a broad understanding that this is not, you know, some niche or something that's nascent.

Speaker Change: you know, for childbirth to understand fetal position. And whether it's that experience, or whether it's the caption experience that she is having, or other companies are having, they're realizing

Speaker Change: That handheld ultrasound is a really low cost, easy way to deploy advanced imaging into the hands of clinicians.

Speaker Change: and to be able to help patients. And so I think there's a broad based understanding that this is not

Joseph DeVivo: The Gates Foundation has now invested over $100 million in all the different ultrasound industries to all the different companies to develop applications specifically for third world countries for ultrasound AI. And I think, you know, the large players in the space, cloud players, software players, are realizing that there can be a lot done here. So I think the AI ultrasound field is going to completely explode. And, and, you know, if you just think about in the US, we have a million doctors, 4 million, 5 million nurses, but we only have 80,000 ultrasound machines.

Speaker Change: you know, some niche or something that's nascent. The Gates Foundation has now invested over $100 million.

Speaker Change: in all the different ultrasound industries to all the different companies to develop applications specifically for third world countries for ultrasound AI. And I think, you know, the large players in the space.

Speaker Change: Cloud players, software players are realizing

Speaker Change: that that there can be a lot done here. So I think the AI ultrasound field is going to completely explode. And, and, you know, if you just think about in the US, we have a million doctors, 4 million, 5 million nurses, we only have 80,000 ultrasonographers.

Joseph DeVivo: And so that's a major constraint in the ability to deliver ultrasound to the general public. When you empower people who don't have legacy ultrasound skills, you dramatically improve not only throughput, but you deliver care to where it's needed most. So I think the big players, and I don't just mean the big ultrasound players, but I think the big tech players, realize this is an opportunity, and you know we're right in the thick of it.

Speaker Change: And so that's a major constraint.

Speaker Change: and the ability to deliver ultrasound out into the general public. When you when you empower people who don't have legacy ultrasound skills,

Speaker Change: you dramatically not only improve throughput, you deliver care to where it's needed most. So I think the big players, and I just don't mean the big ultrasound players, but I think the big tech players.

Speaker Change: realize this is an opportunity and, you know, we're right in the thick of it.

Joseph DeVivo: Joe, in terms of the Rojas revocation letter, obviously, you guys are going against the three big dogs in the field, right? What would you consider mission accomplished?

Speaker Change: Fair enough. Joe, in terms of the Rojas revocation letter, obviously you guys are going against the three big dogs in the field, right? What would you consider mission accomplished?

Joseph DeVivo: No, obviously, obviously, I'd love to see there be a date associated with it. There would be no more purchases of piezoelectric handheld devices. I'd love to see a date established so that you can't buy any of these devices beyond a particular date.

Joe: Obviously, I'd love to see.

Joe: there'd be a date associated with when there would be no

Speaker Change: more purchases of piezoelectric handheld devices. I'd love to see a date established.

Joseph DeVivo: That's what I'd like because truthfully, RIQ3 can do... [inaudible] Political discomfort and other stuff. So I mean, technically, clinically, we could do it all. And why have a directive if we're not going to, you know, we're not going to allow it to meet its original intent? So I understand politically. Companies are going to have to, it's going to be discomfort. But actually, if you look at handhelds, handhelds are such a small minuscule part of their business.

Joe: You can't buy any of these devices beyond a particular date. That's what I'd like to see.

Joe: Because truthfully, our IQ3 can do...

Suraj Kalia: pretty much everything that they that all the other ones can do today. You can't point to something that we can't do. Actually, I could point to things that we can do that they can't. So what would the argument be, Suraj, to keep them on the market other than

Suraj Kalia: political discomfort and other stuff. So I mean, technically, clinically, we could do it all. And if why have a directive, if we're not going to, you know, we're not going to allow it to meet its original intent. So I understand, politically,

Speaker Change: Some big companies are going to it's going to be discomfort. But actually, if you look at handheld, handheld is such a small minuscule part of their business.

Joseph DeVivo: It won't affect them really. So, success for me is a date being established, whatever that is, for those products to no longer be sold. You know, it doesn't have to be pulled off the market, but why should we be selling technology that doesn't meet the standard when there is a complete green, clean alternative that can do what it can clinically.

Joe: It won't affect.

Joe: them really. So

Speaker Change: I mean, success for me is a date being established, whatever that is.

Speaker Change: are for those products to no longer be sold. You know, it doesn't have to be pulled off the market, but why should we be selling technology?

Speaker Change: that doesn't meet the standard when there is a complete green clean alternative that can do what it can clinically. So that's how I feel. But we're walking in unchartered territory here. And who knows,

Joseph DeVivo: So that's how I feel. But we're walking in uncharted territory here. And who knows? What will happen?

Joseph DeVivo: But I think it's such a potential big event. I've decided that it's hard not to talk about and educate investors that there is a possibility. But of course, just in incumbent in your question, Suraj, the probability is low because of, you know, because of market might and, and, and lobbying, etc. But I'm trying to build awareness. And truthfully, you know, I think that there's very good intent behind this law, and I hope that the regulators see that we meet the initial spirit of their intent.

Speaker Change: what will happen. But I think it's such a potential big event. I've decided that it's hard to not talk about and educate investors, that there is a possibility. But of course, just in incumbent in your question, Suraj, you know, the probability is low, because of

Speaker Change: You know, because of market might and, and, and lobbying, etc. But I'm trying to build awareness. And truthfully, you know, I think that

Speaker Change: There's very good intent with this law and I hope that the regulators see that we meet the initial spirit of their intent.

Suraj Kalia: Got it. Heather, just a couple of questions. I'll put both of them together.

Suraj Kalia: It wasn't maybe I read this wrong, rather, Heather, so units were up 37% year over year, but sales, product sales were up 4%. Obviously, I'm screwing up somewhere. If you could help clarify that, I guess what I'm trying to get at is price versus volume split. And the second thing, Heather, is IQ three's contribution in the quarter. Thanks again for taking my question, folks, and congrats

Suraj Kalia: Got it. Heather, a couple of questions. I'll put both of them together. It wasn't, maybe I read this wrong, rather, Heather. So units were up 37% year over year.

Heather Getz: But sales product sales were up 4%. Obviously, I'm screwing up somewhere. If you could help clarify that, I guess what I'm trying to get at this price versus volume split. And the second thing, Heather is I Q3 contribution in the quarter. Thanks again for taking my question, folks, and congrats. Transcribed by https://otter.ai

Heather Getz: Sure, of course. So as to your first question, the volume and the price, if we backed out two large deals that occurred in 2023, they were grant-based medical school deals. That's where the volume, if you look at the..., if you look at the domestic number, revenue grew 25%, and the 37% was the volume excluding those deals. So it's both including and excluding.

Heather Getz: So the lower number was including the deals. What I was trying to demonstrate there was the high core demand for the product left by these large grant-based deals. Yeah, if I could just comment.

Suraj Kalia: The

Speaker Change: The volume and the price, if we backed out two large deals that occurred in 2023, they were grant-based medical school deals. That's where the volume, if you look at the

Speaker Change: If you look at the domestic number, revenue grew 25% and the 37% was the volume excluding those deals.

Suraj Kalia: So it's both including and excluding, so the lower number was including the deals. What I was trying to demonstrate there was the high core demand for the product left these large grant-based deals.

Joseph DeVivo: Yeah, if I could just jump in on that, Heather, I mean, we certainly had 1300 probes. Yeah, we had 1300 probes for some kind of anniversary. And you know, we went into the quarter thinking we didn't have a shot at, you know, overcoming that with basic consumption. But we did. And so we're thrilled with the high quality, broad-based type of consumption that we had. And we overcame, you know, that big one-timer. And on top of that, we benefit from the ASP uplift, too. So, but I'm sorry, Heather, to interrupt you. I just wanted to clarify. No, no.

Speaker Change: If I could just jump in on that Heather, I mean we had 1300 probes.

Heather Getz: Yeah, we had 1300 probes to kind of anniversary.

Speaker Change: And, you know, we went into the quarter thinking we didn't have a shot to, you know, to overcome that with basic consumption. But we did.

Speaker Change: And so we're thrilled with the high-quality, broad-based type of consumption that we had. And we overcame...

Speaker Change: You know, that big one timer. And on top of that, we benefit from the ASP uplift, too. So, but I'm sorry, Heather, to interrupt you. I just wanted to clarify. No, no, no, go ahead.

Heather Getz: No, no, no; go ahead.

Suraj Kalia: and Siraj, what was your second question? I apologize.

Heather Getz: Well, just the IQ three contribution in the quarter, just additional metrics in terms of penetration rates, you know, what percent of your base is now using an IQ 3, just additional metrics that we can slice and dice. Yeah, so the volume in the quarter.

Heather Getz: And Seraj, what was your what was your second question? I apologize.

Heather Getz: Well, just the I Q3 contribution in the quarter, just additional metrics in terms of penetration rates, you know, what percent of your base is now has an I Q3 , just additional metrics that we can slice and dice.

Heather Getz: Yeah, so the volume in the quarter overall was just shy of 50% IQ3. Domestically, it was about 75%.

Speaker Change: Yeah, so, so the volume in the quarter overall was just shy of 50% IQ3, domestically it was about 75%.

Operator: Thank you, Suraj. There are currently no other questions registered. As a reminder, to register a question, please press star one on your telephone keypad. There are currently no other questions registered, so I'll pass the conference back over to you, Mr. DeVivo, for closing remarks.

Speaker Change: Thank you.

Heather Getz: Mm-hmm.

Suraj Kalia: Thank you, Suraj.

Speaker Change: There are currently no other questions registered, so as a reminder, to register a question, please press star 1 on your telephone keypad.

Speaker Change: There are currently no other questions registered, so I'll pass the conference back over to you, Mr. DeVivo, for closing remarks.

Joseph DeVivo: Well, everyone, thank you so much for joining us. There's a lot of content, a lot of things happening. And this turnaround for Butterfly continues. We see the balance of the year being very strong. We see that we're building momentum, a broad base, repeatable business. And we're very excited about how our team has delivered and appreciate all your time and attention. So thanks, everybody.

Unknown Moderator: That concludes today's earnings call. Thank you for your participation. I hope you have a wonderful rest of your day.

Mr. DeVivo: That concludes today's earnings call. Thank you for your participation. I hope you have a wonderful rest of your day.

Speaker Change: Can you hear me?