Q1 2025 Butterfly Network Inc Earnings Call

May 2, 2025

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Carla: Good morning, and welcome to the Butterfly network first quarter 'twenty 25 earnings call. My name is Carla and I will be coordinating the call today.

Carla: My name is Carla and I will be coordinating your call today. During the presentation, you can register to ask questions by pressing star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2.

Carla: During the presentation you to register to ask questions by pressing star followed by one on your telephone keypad. If you change your mind. Please press star followed by cheap.

Carla: I would now like to hand you over to the Chief Financial Officer Heather Getz to begin. Heather, please go ahead when you're ready. Good morning, and thank you for joining us. Earlier today, Butterfly released financial results for the first quarter ended March 31, 2025, and provided a business update.

Speaker Change: I'd now like to hand, you over to the Chief Financial Officer, Heather Getz to begin Heather. Please go ahead when you're ready.

Heather Getz: Good morning, and thank you for joining US earlier today butterfly released financial results for the first quarter ended March 31, 2025, 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 apple.

Heather Getz: 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.

Heather Getz: Gabor GAAP measures are currently available on the investors section of the company's website at IR Dot butterfly network Dot com.

Heather Getz: I, Heather Getz, Chief Financial and Operations Officer at Butterfly, alongside Joseph DeVivo, Butterfly's Chairman and Chief Executive Officer, will host this morning's call. During today's call, we will make 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, uncertainties regarding the potential impact of healthcare funding, 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.

Heather Getz: Hi, Heather Getz, Chief financial and operations Officer, a butterfly alongside Joseph Devivo butterflies, Chairman and Chief Executive Officer will host this morning's call.

Heather Getz: During today's call we will make 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 uncertainties regarding the potential impact of health care funding.

Heather Getz: And the size and potential growth of current or future markets for our products and services.

Heather Getz: 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 statements.

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

Heather Getz: 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: 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. To access the webcast, please visit the events section of our investor website. A replay will also be available on the page following the call.

Heather Getz: 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 to access the webcast. Please visit the events section of our Investor website.

Heather Getz: Play will also be available on the page and following the call.

Heather Getz: I would now like to turn the call over to Joe. Joe.

Joe Joe: I would now like to turn the call over to Joe Joe.

Joe Joe: Good morning, everyone and thank you for being with US on our first quarter 2024 call.

Joseph DeVivo: Good morning, everyone, and thank you for being with us on our first quarter 2025 call. We're pleased to deliver another quality quarter in line with our guidance of 20% growth and making meaningful profitability improvement with gross margins of 63% while improving adjusted EBITDA loss from $13.2 million a year ago to $9.1 million now. We accomplished this while delivering our strategic priorities and now a quarter into year two of our five-year plan. When I joined two years ago, Butterfly was selling an iCube Pro with a subscription software as well as an enterprise software program. Today, our portfolio includes two generations of probes with different price points, which allows us to bring in more value for premium technology while keeping a lower-cost probe on the market for more price-sensitive customers.

Joe Joe: We're pleased to deliver another quality quarter in line with our guidance of 20% growth and meaningful profitability improvement with gross margins of 63%, while improving adjusted EBITDA loss of $13 2 million a year ago to $9 1 million now.

Joe Joe: We accomplished this while delivering on our strategic priorities and now a quarter into year two of our five year plan.

Speaker Change: When I joined two years ago butterfly I was selling in our queue prove with a subscription software as well as an enterprise software program.

Speaker Change: Today, our portfolio includes two generations of probes with different price points, which allows us to bring in more value for premium technology, while keeping a lower cost improve on the market for more price sensitive customers.

Joseph DeVivo: We've added an AI marketplace called Butterfly Garden, a chip licensing program called Octave, and now Butterfly Home. You heard about progress setting up each of these programs over the last couple of years, and now in 2025 we expect them to make headway and begin contributing revenue. We've upheld our commitment to R&D, helping us maintain our leadership in focused technology and stay ahead of the first mover status in digital, cloud-connected, open platform, and EMR-integrated systems. I'll share more on this, including the upcoming launch of Compass 2.0 towards the end of the I'm very pleased with how our company is maturing, diversifying to have many paths to grow.

Speaker Change: We've added an AI marketplace called butterfly gardening.

Speaker Change: Chip licensing program will doctors.

Speaker Change: And now butterfly homecare.

Speaker Change: You heard about progress setting up each of these programs over the last couple of years and now in 2025, we expect them to make headway.

Speaker Change: Began contributing revenue.

Speaker Change: Upheld our commitment to R&D, helping us maintain our leadership in purpose technology to stay ahead of the first mover status in digital cloud connected open platform and a more integrated systems.

Speaker Change: I'll share more on this including the upcoming launch of companies to point out towards the end of the call.

Speaker Change: Very pleased with how our company is maturing diversifying to have many paths to growth. This will build upon our resilience and ability to consistently deliver our results.

Joseph DeVivo: This will build upon our resilience and ability to consistently deliver our results.

Joseph DeVivo: So let's jump in with our core focus. The first half of our fiscal year is usually filled with medical school opportunities, and this quarter was no different. It's clear the students want to begin their medical training with a butterfly of their own. The transformation from schools having a few probes in the laboratory for many students to share to a personal probe being purchased for each four-year student is well on its way. During the quarter, we saw more schools sign up for student probe programs. Among them was one of the country's largest colleges of osteopathic medicine who placed an order for one probe per student and committed to this model going forward.

Speaker Change: So let's jump in with our core focus business.

Speaker Change: The first half of our fiscal year is usually filled with medical school opportunities in this quarter was no different.

Speaker Change: It's clear the students wanted to begin their medical training with a butterfly of their own.

Speaker Change: The transformation from schools, having a few probes in the laboratory for many students per share through a personal approach being purchased for each for your students as well as well.

Speaker Change: During the quarter, we saw more schools signed up versus approved programs.

Speaker Change: Among them was one of the country's largest colleges of Osteopathic medicine, who placed an order for one crew pursued.

Speaker Change: Two minutes for this model going forward.

Joseph DeVivo: Schools are also lining up through the creation of their own campus stores for students to buy or just incorporating the device into the cost of tuition. We've been building our strategy for years to target medical schools, much like Apple. You know, so when students first got their Apple laptop, it opened the door to build a lifetime of brand loyalty. Similarly, when students start their ultrasound journey with Butterfly, it builds a path for loyal users for the future generations of our technology. So to remind you, there's about 25,000 incoming first year students a year that start medical school.

Speaker Change: Schools are also running up through the creation of their own campus stores for students to buy or just incorporating the devices to the cost of tuition.

Speaker Change: We've been building our strategy for years further medical schools much live Aqua.

Speaker Change: So our students first got their Apple laptop it opens the door to build a lifetime of brand loyalty similar.

Speaker Change: Similarly, with students start their ultrasound journey with butterfly it builds a path for loyal users for the future generations of our technology.

Speaker Change: Mind, you, there's about 25000 coming first year students a year, let's start medical school.

Joseph DeVivo: And in 2025, we're going to see the first graduating class who's had four years of training on a butterfly. And when they go into residency, they'll be clearly distinguished and simply better residents than their peers without that.

Speaker Change: In 2025.

Speaker Change: To see the first graduating class who's had four years of training on a butterfly and when they go into residency there'll be clearly distinguished and simply better residents than their peers without that trade.

Joseph DeVivo: This is how the flywheel turns. We are also making very good progress on our Enterprise Hospital Selling Program. We're on the verge of signing our second hospital enterprise custody. who plans to integrate our Compass software throughout every department and hospital in their network. They've amassed about 600 probes in circulation and have committed to Butterfly as their focus probe of choice for the future. We do not yet have permission to share their name at this time, but I will say they're consistently voted one of the top five hospitals in the world. This will be another tailwind for our enterprise strategy.

Speaker Change: This is how the flywheel terms.

Speaker Change: We are also making very good progress on our enterprise hospital selling program.

Speaker Change: We're on the verge of signing our second hospital enterprise customer.

Speaker Change: <unk> immigrated accomplished software throughout every department.

Speaker Change: In hospital and their network.

Speaker Change: They've been asked about 600 probes in circulation and have committed to butterfly as Theyre focused program choice for the future.

Speaker Change: We do not yet have permission to share their name at this time, but I will say this.

Speaker Change: Distantly voted one of the top five hospitals in the world.

Speaker Change: This will be another tailwind for our enterprise strategy and as you know hospitals learn from each other even more from most respected.

Joseph DeVivo: And as you know, hospitals learn from each other and even more from the most respected. I am very pleased with this accomplishment, and this will add momentum to the pipeline that we're working on.

Speaker Change: I am very pleased with this accomplishment.

Speaker Change: As I mentioned for the pipeline that we're working.

Joseph DeVivo: On the international front, our focus remains on bringing IQ3 to more areas while continuing our expansion in Asia and Latin America, as well as high potential global health markets. I'd like to briefly comment here on some economic headwinds, first on the global health front. As you all know, Butterfly partners with over 800 NGOs worldwide to bring imaging to low and middle income countries that historically had no access. This has been a growing part of our international revenue. With USAID funding cuts, we've seen several opportunities get delayed this quarter while partners recalibrate. We're hopeful that this is a temporary disruption and that our growing ties with ministries of health and charitable organizations can help sustain the progress regardless.

Speaker Change: On the international front, our focus remains on bringing our Q3 to more areas, while continuing our expansion in Asia, and Latin America, as well as high potential global health markets.

Speaker Change: I'd like to briefly comment here on some economic headwinds first on a global health front.

Speaker Change: As you all know butterfly partners with over 800 engineers worldwide to bring imaging to low and middle income countries.

Speaker Change: But historically had no access.

Speaker Change: This has been a growing part of our international revenue base.

Speaker Change: With U S. Aig's funding cuts we've seen several opportunities get believes this quarter while partners recalibrate.

Speaker Change: We're hopeful that this is a temporary disruption and there are growing ties with ministries of health and charitable organizations can help sustain the progress regardless.

Joseph DeVivo: We're also closely monitoring discussions on broader economic pressures, which, if anything, can cause some deals to take longer to close.

Speaker Change: We're also closely monitoring the discussions on broader economic pressures, which have been really can cause some deals take longer to close.

Heather Getz: Heather will provide additional context on this, along with her analysis of the tariff impact.

Speaker Change: Although we will provide additional context on this along with her analysis of the tariff impacts so before I get into updates on our strategic initiatives I'll turn it over to Heather <unk>.

Heather Getz: So before I get into updates on strategic initiatives, I'll turn it over to Heather to walk you through the. Heather. Thank you, Joe. We started 2025 with 20 percent growth for $21.2 million of revenue for the first quarter. Our growth was primarily driven by higher sales volume in our U.S. sales channels, the impact of the IT3 probe's higher selling price after its launch in 2024, and the delivery of semiconductor chips to one of our newly onboarded partners. Breaking things down between the U.S. and international channels, during the first quarter, revenue was $16.6 million, which was 24% higher than the prior year, driven by strong demand, and total international revenue increased 9% over the prior year period to $4.6 million, largely driven by price.

Are you through the numbers.

Speaker Change: Heather.

Speaker Change: Thank you Joe.

Speaker Change: We started 2025 with 20% growth for 'twenty $1.2 million of revenue for the first quarter. Our growth was primarily driven by higher sales volume in our U S sales channels the impact of the three periods higher selling price after its launch in 2024.

Speaker Change: And the delivery of semiconductor chips to one of our newly on boarded partners.

Speaker Change: Breaking things down between the U S and international channels. During the first quarter revenue was $16 $6 million, which was 24% higher than the prior year driven by strong demand and total international revenue increased 9% over the prior year period to $4 6 million largely driven by price.

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

Heather Getz: Breaking our revenue down between product and software and other services, product revenue was $14.2 million, an increase of 25% versus Q1 2024. This increase was largely driven by the higher volume. Software, and other services revenue was $7.1 million in the first quarter, up 11% versus the prior year period due to the higher enterprise software revenue and increased licensing and services revenue from our partnerships, partially offset by lower renewals of individual subscriptions. Software and other services mix was 33% of revenue. The percentage of revenue from software and services has decreased as our product revenue growth outpaced software revenue with the launch of our IQ3 early in 2024, as well as our geographic expansion.

Speaker Change: Product revenue was $14 2 million, an increase of 25% versus Q1 2024.

Speaker Change: This increase was largely driven by the higher volume.

Speaker Change: Software and other services revenue was $7 1 million in the first quarter up 11% versus the prior year period due to the higher enterprise software revenue and increased licensing and services revenue from our partnerships, partially offset by lower renewals of individual subscriptions.

Speaker Change: Software and other services was 33% of revenue.

Speaker Change: The percentage of revenue from software and services has decreased as our product revenue growth outpaced software revenue with the launch of our IQ3 early in 2024 as well as our geographic expansion.

Heather Getz: Our total ARR, which is reported as part of software and other services, grew slightly versus the prior year period, led by an increase in our enterprise software subscription ARR.

Speaker Change: Our total E R, which is reported as part of software and other services grew slightly versus the prior year period led by an increase in our enterprise software subscription a R. R.

Heather Getz: Turning now to gross profit. Gross profit was $13.4 million in Q1 2025, a 30% increase as compared to the prior year gross profit of $10.3 million. Gross margin percentage increased to 63% from 58% in the prior year. Gross margin percentage was positively impacted by higher average selling prices, as well as improvements in our software and services margin due to a reduction in software amortization and lower hosting costs.

Speaker Change: Turning now to gross profit.

Speaker Change: Gross profit was $13 $4 million in Q1, 2025% to 30% increase as compared to the prior year gross profit of $10 $3 million gross margin percentage increased to 63% from 58% in the prior year.

Speaker Change: Gross margin percentage was positively impacted by higher average selling prices as well as improvements in our software and services margin due to a reduction in software amortization and lower hosting costs.

Speaker Change: Moving to adjusted EBITDA and capital resources for the first quarter of 2025, adjusted EBITDA loss was $9 $1 million compared with a loss of $13 2 million for the same period in 'twenty four.

Heather Getz: Moving to adjusted EBITDA and capital resources. For the first quarter of 2025, adjusted EBITDA loss was $9.1 million, compared with a loss of $13.2 million for the same period in 2004. The 31% improvement in adjusted EBITDA was driven by higher revenue, the previously mentioned improvement in gross profit, and lower operating expenses year over year. These reductions and improvements led to a normalized cash burn of $6.7 million during the quarter after adjusting for bonus payments.

Speaker Change: 31% improvement in adjusted EBITA was driven by higher revenue. The previously mentioned improvement in gross profit and lower operating expenses year over year. These reductions and improvements led to a normalized cash burn of $6 7 million during the quarter after adjusting for bonus payments.

Heather Getz: As we previously shared, in January, we completed a secondary public offering of 27.6 million shares, which generated proceeds of $81 million net of underwriting costs and related expenses. This capital will enable us to maintain our current level of investment to sustain our revenue growth, as well as the option to opportunistically invest in strategic initiatives that can expand our market. The capital raise, along with our continued discipline in our cash use, resulted in cash and cash equivalents at the end of the quarter of $155 million.

Speaker Change: As we previously shared in January we completed a secondary public offering of 27 6 million shares which generated proceeds of $81 million net of underwriting costs and related expenses. This capital will enable us to maintain our current level of investment to sustain our revenue growth as well as the option to opportunistically invest in strategic initiative.

Speaker Change: Is that can expand our market.

Speaker Change: The capital raised along with our continued discipline in our cashiers resulted in cash and cash equivalents at the end of the quarter of $155 million.

Heather Getz: Before touching on guidance, I would like to provide some additional color about our risks and opportunities for 2025. Our direct exposure to tariffs is quite small. As many of you know, our chips are manufactured in Taiwan, and our probes are assembled in Thailand. In the U.S., we have about six to nine months of inventory on hand. In order to meet the estimated demand for the remainder of 2025, if the 10% or 36% tariff were to be in effect, we would incur a few hundred thousand dollars of additional costs to import our probes to the U.S.

Speaker Change: Before touching on guidance I would like to provide some additional color about our risks and opportunities for 2025.

Speaker Change: Our direct exposure to tariffs is quite small as many of you know our chips are manufactured in Taiwan, and our probes are assembled in a pilot in the U S. We have about six to nine months of inventory on hand in order to meet the estimated demand for the remainder of 2025, if the 10% or 36% tariff were to be in effect we wouldn't.

Speaker Change: Her a few hundred thousand dollars of additional cost to import our probes to the U S.

Heather Getz: For more information visit www.fema.gov On an annualized basis, had the tariffs been in effect for all of 2025, we estimate that at 10%, the impact would be under $1 million, and at 36%, just over $1.5 million. We are looking at different mitigation measures that include alternative assembly locations. Other changes the administration has made or is considering making are more challenging to precisely model.

Speaker Change: On annualized basis had the terrorists been in effect for all of 2025, we estimate that at 10% the impact would be under $1 million and at 36% just over one and a half million. We're looking at different mitigation measures that include alternative assembly locations.

Speaker Change: Other changes the administration has made or is considering making are more challenging to precisely model.

Heather Getz: We know some of our customers face increased uncertainty on funding through the NIH, USAID, or Medicaid programs. And while small, we did see an impact on our global health business in the first quarter. We believe the peak of uncertainty is likely to be in the second quarter of 2025 as institutions seek clarity on funding plans going forward. As such, we have factored this uncertainty into our second quarter guidance.

Speaker Change: We know some of our customers face increased uncertainty on funding through the NIH USAID or Medicaid programs.

Speaker Change: And while small we did see an impact on our global health business in the first quarter we.

Speaker Change: We believe the peak of uncertainty is likely to be in the second quarter of 'twenty five as institutions seek clarity on funding plans going forward as such we have factored this uncertainty into our second quarter guidance.

Heather Getz: the positive, both we and our customers are enthusiastic about Butterfly's medical and commercial value in home services and success in these initiatives may be quite impactful on an annualized basis. Furthermore, the pipeline of licensing opportunities at Octave continues to build. And while the timing of such transactions is difficult to pinpoint, this is a second source of potential upside.

To the positive both we and our customers are enthusiastic about butterflies medical and commercial value in home services and success in these initiatives may be quite impactful on an annualized basis.

Speaker Change: Furthermore, the pipeline of licensing opportunities that octave continues to build and while the timing of such transactions is difficult to pinpoint. This is a second source of potential upside.

Heather Getz: When we weigh these risks and opportunities together, we feel it is prudent to maintain our full year guidance of approximately 20% growth in revenue and adjusted EBITDA loss in the range of $37 to $42 million, while providing guidance for the second quarter of $23 million to $24.5 million in revenue and $9 to $10 million in adjusted EBITDA loss. We will continue to maintain our disciplined approach to expense control that has generated meaningful positive revisions to EBITDA, but we'll also invest appropriately behind our growth areas to enhance our delivery capabilities should upside revenue opportunities crystallize.

Speaker Change: When we weigh these risks and opportunities together, we feel it is prudent to maintain our full year guidance of approximately 20% growth in revenue and adjusted EBITDA loss in the range of $37 million to $42 million, while providing guidance for the second quarter of 23 million to $24 5 million in revenue and $9 million to $10 million and adjusted <unk>.

Speaker Change: I'm at a loss.

Speaker Change: We will continue to maintain our disciplined approach to expense control that has generated meaningful positive revisions to EBITDA, but we'll also invest appropriately behind our growth areas to enhance our delivery capabilities should upside revenue opportunities crystallize.

Heather Getz: To summarize, we delivered strong results in the first quarter, and while uncertainties exist around the impact of policy decisions that the administration may make, we have the strength in diversification in our business and are excited about opportunities in front of us enabling us to reiterate our four-year guidance. We certainly hope that healthcare providers receive appropriate funding going forward to best serve all patients. Nonetheless, should funding pressures come to fruition for domestic healthcare providers, Butterfly is extremely well positioned as our technology not only enables superior flexibility and strong image quality, but has allowed us to be a much more affordable solution at scale than the current car-based ultrasound solutions.

Speaker Change: To summarize we delivered strong results in the first quarter well uncertainties exist around the impact of policy decisions that the administration may make we have the strength and diversification in our business and are excited about opportunities in front of us, enabling us to reiterate our full year guidance, we certainly hope that health care providers receive a P.

Speaker Change: Corporate funding going forward to best serve all patients Nonetheless should funding pressures come to fruition for domestic health care providers butterfly is extremely well positioned as our technology not only enables superior flexibility and strong image quality, but has allowed us to be a much more affordable solution at scale than the current car.

Speaker Change: Ultrasound solutions. In addition, our semiconductor development path will continue to improve this price performance advantage with each subsequent generation simply put we see butterfly as a long term winner in ultrasound in any macro environment.

Heather Getz: In addition, our semiconductor development path will continue to improve this price performance advantage with each subsequent generation. Simply put, we see Butterfly as a long-term winner in ultrasound in any macro environment.

Heather Getz: and thank you.

Joe Joe: And thank you with that I will turn the call back to Joe.

Joseph DeVivo: With that, I will turn the call back to Joe. So thanks, Heather. So I'll wrap up today's call talking through some of our strategic initiatives. to First Octave. So we're continuing to make meaningful progress across growing our portfolio of partners. and delivered strongly in the first quarter. We're gearing up to publicly announce the biggest partnership yet. This partner, who I mentioned on our year-end call. and I can't yet identify their name, is in the generative AI space and is developing a groundbreaking technology that may not only have implications for ultrasound imaging. but for all medical imaging in general.

Joe Joe: Thanks Heather.

Speaker Change: So I'll wrap up today's call talking through some of our strategic initiatives. So first boxes. So we're continuing to make meaningful progress across growing our portfolio of partners.

Speaker Change: And delivered strongly in the first quarter.

Speaker Change: We are gearing up to publicly announce the biggest partnership.

Speaker Change: This partner, who I mentioned on our year end call.

Speaker Change: And I can't yet identify their name is in the generally the high Stakes and is developing a groundbreaking technology.

Speaker Change: That may not only have implications for ultrasound imaging.

Speaker Change: But for all medical imaging in general.

Joseph DeVivo: This partner has already purchased our ultrasonic chip technology and will likely consume much more.

Speaker Change: This partner has already purchased our ultrasound technology and will likely consume much more.

Joseph DeVivo: We are excited to share this game changing innovation with you soon. The ACTIV team is actively in discussion with over 25 other process including some of the leading medical device, pharmaceutical, surgical robotics, and plannable companies, as well as a growing number of non-healthcare opportunities across generative AI, blue chip technology, defense, aerospace, and even oil and gas. We remain extremely excited about the potential and the growth of Octave and see this as a material driver of value as we look to realize our long-term growth plans and unlock the value of ultrasound on chip for investors. On the Butterfly Garden front, we signed two more partners in the first quarter, bringing the portfolio to 23 total.

Speaker Change: We are excited to share this game changing innovation with you soon.

Speaker Change: The occupancy was actively in discussion with over 25, other prospects, including some of the leading medical device pharmaceutical and surgical robotics implantable companies.

Speaker Change: As well as a growing number of non health care opportunities across generative AI Blue Chip technology defense aerospace and even oil and gas.

Speaker Change: We remain extremely excited about the potential and the growth of active.

Speaker Change: I see this as a material driver of value as we look to realize our long term growth plans and unlock the value of ultrasound on ship for investors.

Speaker Change: On the Butterfly Garden front, we signed two more partners in the first quarter, bringing our portfolio to 23 total.

Joseph DeVivo: As I mentioned last call, we expect our first partners to launch FDA cleared clinical applications this year, and we remain right on track for that. Our partner Desi just received FDA clearance for their Heart Focus app and aims to commercialize with Butterfly in Q3. Their app uses advanced AI that makes it simple for non-specialists to perform cardiac echo studies. This will not only allow us to deliver yet another AI tool to Butterfly customers, it'll provide a new capability to our home care business to more holistically help partners manage their congestive heart failure patients. So, for example, historically, patients in a skilled nursing facility had to get transported to a hospital via ambulance and wheeled into radiology suite or cardiology suite to receive a cardiac ectoscopy.

Speaker Change: As I mentioned last call, we expect our first partners to launch the FDA cleared critical applications. This year and we remain right on track for this.

Speaker Change: Our partner Dusty just received FDA clearance for their hard work focus and aims to commercialize with butterfly in Q3.

Speaker Change: The App users advanced AI that makes it simple for non specialists to perform cardiac Echo studies.

Speaker Change: This will not only allow us to deliver yet another AI tool the butterfly customers.

Speaker Change: It will provide a new capability to our homecare business to more Holistically hope partners manage their congestive heart failure patients.

Speaker Change: So for example, historically patients in a skilled nursing facility has it been transported to a hospital via ambulance and wheels into radiology suite or cardiology suite to receive a cardiac echo sir.

Joseph DeVivo: That could be a multi-thousand dollar event for transport alone. With Heart Focus and Butterfly, they will be able to get the echo scan at their bedside, no transport, by a butterfly trained nurse. and have the scan read by a remote cardiologist for a fraction of the cost.

Speaker Change: That could be a multi thousand dollar event for transport alone.

Speaker Change: With her focus and butterfly.

Speaker Change: I'll be able to get echo scan at their best New transport.

Speaker Change: Butterfly trades nurse and.

Speaker Change: The scan read by a remote cardiologist refraction multiples.

Speaker Change: Moving more on homecare.

Joseph DeVivo: Moving more on home care. So in the first quarter, our pilot activity increased as the program shifted into clinical execution. So we've been scanning the identified pilot population of congestive heart failure patients and those discharged following an in-hospital setting. So as you recall, it's reported that between 25 and 40% of patients that are hospitalized with congestive heart failure are readmitted within 30 days. So while it remains early, we're pleased to share that still none of the patients in this category have had to be readmitted. We are more encouraged than ever that this pilot demonstrates the opportunity for repeatable, meaningful clinical difference and economic impact.

Speaker Change: In the first quarter of our pilot activity increased as the program shifted into clinical execution.

Speaker Change: <unk> been scanning the identified pilot population consists of heart failure patients.

Speaker Change: Those discharged following an in hospital staff.

Speaker Change: You recall as reported is up between 25% to 40% of patients that are hospitalized with congestive heart failure are readmitted within 30 days.

Speaker Change: So while it remains early we're pleased to share that still none of the patients in this category.

Speaker Change: It has to be readmitted.

Speaker Change: We are more encouraged than ever that this private demonstrates the opportunity for repeatable meaningful clinical difference.

Speaker Change: Or is.

Joseph DeVivo: It has proven to be a real solution. And we're able to deploy our technology, train nurses without previous ultrasound skills, to do pulmonary scans using proprietary techniques in AI tools. and then monitor and remotely assist them with clinical diagnosis in a rapid, asynchronous fashion. Our confidence is building that we can move towards commercial terms this summer while targeting our first agreement in place by the end of the year. Once we sign our first commercial deal, we will prepare for expansion of this AI-powered in-home monitoring solution for congestive heart failure across the country.

Speaker Change: This has proven to be a real solution.

Speaker Change: And we're able to deploy our technology trained nurses without previous ultrasound skills.

Speaker Change: Pulmonary scanned using proprietary techniques.

Speaker Change: Our tools.

Speaker Change: And then monitor and remotely assisted them with clinical diagnosis and a rapid asynchronous fashion.

Speaker Change: Our confidence is building that we can move towards commercial terms. This summer while targeting our first agreement in place by the end of the year.

Speaker Change: Once we signed our first commercial deal we will prepare for expansion of this AI powered and home monitoring solution for congestive heart failure across the country.

Speaker Change: So to wrap up I wanted to circle back to what I mentioned at the start of the call.

Joseph DeVivo: So to wrap up, I want to circle back to what I mentioned at the start of the call. In the second half of 2025, we plan on launching our Compass 2.0 software, which will have many new features, expedited workflows and new capabilities. It'll fill a major unmet need in POCUS and provide us a new revenue stream to help hospitals reduce costs as POCUS continues to mature and our software becomes more and more essential. I share this as a reminder that Butterfly is shepherding a whole new area of clinical care and excellence. We're not just a focus.

Speaker Change: In the second half of 2025, we plan on launching our Compass Tucano software, which will have many new features expedited workflows and new capabilities.

Speaker Change: So a major unmet need and focus and provide us a new revenue stream to help hospitals reduce costs and focus continues to mature and our software becomes more and more essential.

Speaker Change: Sure. This is a reminder, that butterfly of shepherding, a whole new area of clinical care and excellence, we're not just a focus to us.

Joseph DeVivo: We have developed the most groundbreaking solution in imaging and continue to develop delivery mechanisms that help it proliferate through device sales and AI environment and service solutions at the point of care. Butterfly is in a league of its own. We continue to innovate for customers and deliver results for investors. Today, it's clearer than ever that the healthcare ecosystem is embracing Butterfly. we're seeing it be incorporated as the standard of care. Not only that, but it's becoming viral and Butterfly is time and again emerging as the household name synonymous with poke.

Speaker Change: We have developed the most groundbreaking solution and imaging and continues to develop delivery mechanisms that help it proliferate through device sales.

Speaker Change: Environment and service solutions.

Speaker Change: Sure.

Speaker Change: Butterfly isn't a league of its own we continue to innovate for our customers and deliver results for our investors.

Speaker Change: Today, it's clearer than ever that the health care ecosystem is embracing butterfly.

Speaker Change: We're seeing it being incorporated as a standard of care.

Speaker Change: Not only that but it's becoming viral and book is.

Speaker Change: His time and again emerging as the household name synonymous with purpose.

Speaker Change: This quarter alone we saw multiple viral moments.

Joseph DeVivo: This quarter alone, we saw multiple viral moments. From the unpaid placement of Butterfly in HBO's hit medical drama, The Pit, go watch episode 12 and 13 and tell us what you think. to a social influencer posting her own real-time gender reveal being scanned at home with a butterfly by a sonographer. which got over 13 million views across Instagram and TikTok. The national coverage on CBS News featuring a butterfly-trained Rutgers physician diagnosing a life-threatening AAA at the bedside in minutes. Butterfly's impact is showing up everywhere. The momentum is now and we are crossing that cut.

Speaker Change: From the unpaid placement of butterfly and Hbo's hit medical drama. The pit go watch episode, 12, and 13 and tell us what you're saying.

Two a social influencer posting for one real time gender reveal be scanned at home with a butterfly bias sonographer friend, which got over 13 million views across Instagram and sector.

The national coverage on CBS news, featuring a butterfly trained ruckus physicians diagnosing a life threatening AAA at the bedside minutes.

Speaker Change: Butterflies impact is showing up everywhere.

Speaker Change: Momentum is now and we are crossing that chasm.

Carla: With that operator, please open the call. Thank you.

Speaker Change: With that operator, please open the call for questions.

Speaker Change: Thank you we will now begin the question and answer session. If you'd like to ask your question. Please press star followed by one on your telephone keypad. If you change your mind. Please press star followed by Chi.

Carla: We will now begin the question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by.

Carla: When preparing to ask your question, please ensure your device is unmuted locally. We will make a quick pause here for the questions to be written.

Speaker Change: When preparing to ask your question. Please ensure your devices are muted locally.

Speaker Change: I'll make a quick pause here for the questions there'll be registered.

Speaker Change: Our first question comes from Andrea Brotzman with William Blair.

Andrew Bretman: Our first question comes from Andrew Bretman with William Blair. Great.

Andrea Brotzman: Great Hi, Joe Hi, there good morning, Thanks for taking the question.

Andrew Bretman: Hi, Joe. Hi, Heather. Good morning. Thanks for taking the question. It sounds like you had some positive momentum with the second hospital enterprise contract in the quarter.

Speaker Change: It sounds like you had some positive momentum with a second hospital enterprise contract in the quarter can you, maybe just sort of talk about the process for securing that and some of the key learnings there from that process that can be applied to some of the additional opportunities that exist in that.

Joseph DeVivo: Can you maybe just sort of talk about the process for securing that and some of the key learnings there from the process that can be applied to some of the additional opportunities that exist in that area moving forward?

Andrea Brotzman: Area moving forward.

Speaker Change: Hfcs there'll be having some difficulties with D audio please standby, while we sell tissue.

Carla: It appears that we're having some difficulties with the audio. Please stand by while we solve the issue.

Speaker Change: [music].

Speaker Change: Hello, everyone. We are back the issue has been felt.

Joseph DeVivo: Hello, everyone. We are back. The issue is being solved. All right, Andrew, can you hear me? I got you, Joe. All right, great. So hey, I apologize for that. Not sure where that glitch came from. But Andrew, great question. We've spoken a lot about our work with the University of Rochester. And that was a deal very early on in POCUS, where there was leadership at the top who believed in the ability of this growing and made, you know, a top-down decision to deploy technology. And so what's occurring is there's just a groundswell of activity. And what we've been doing is working with health systems to identify and show them not only what's happening in facility, but what's happening with their doctors throughout the facility.

Speaker Change: Alright, Andrew can you hear me.

Andrew: I got you Jeff.

Andrew: Alright, great. So I apologize for that I'm, not sure where that came from but Andrew great question.

Speaker Change: We've spoken a lot about our work with the University of Rochester, and that was a deal very early on and focus where there was leadership at the top we believed in the ability of.

Andrew: Of this growing and made at <unk>.

Speaker Change: Top down decision to deploy technology.

Speaker Change: Since then what's happened is thousands of doctors.

Speaker Change: Thousands of doctors have been purchasing butterfly and butterflies proliferation throughout health systems, whether they know it or not has has actually been extending it. So what's occurring is there is a groundswell of activity and what we've been doing is working with health systems to identify.

Speaker Change: And show them not only what's happening in facility, but what's happening with their with.

Speaker Change: Other doctors throughout the facility and as that scale grows they realize that they're from compliance reasons. There is a need to compile that data and from.

Joseph DeVivo: And as that scale grows, they realize that they're, from compliance reasons, there's a need to compile that data. And from a responsiveness standpoint, they need to pull that data in for patient management, et cetera. And that is the way, because of the proliferation of Butterfly, that we see ourselves. And we have a list of enterprise accounts that will go enterprise with our software, will continue, or will then start buying more of our hardware, and will commit to the education of their physicians to build the competencies to have ultrasound at the bedside. So I hope that's helpful.

Speaker Change: Our responsiveness standpoint, they need to pull that data and four.

Speaker Change: Patient management et cetera, So a lot of like this second deal is because of a groundswell because doctors are selecting butterfly and we're seeing that an institution. After institution. After institution, that's very much a blackberry to iPhone business case, where while institutions are.

Speaker Change: Using a certain older technology people are.

Speaker Change: Wanting to have the newest and so we're seeing so this particular institution over the years has been seeing more and more butterflies proliferate. They made a decision to.

Speaker Change: I hope to institutionalize it to build a software throughout the network and then I will make this prime vendor and that is the way because of the proliferation of butterfly that we see ourselves and we have a list of enterprise.

Speaker Change: That will go enterprise with our software will continue or will then start buying more of our hardware.

Speaker Change: And we will commit to the education of their physicians to build the competencies to have ultrasound at the bedside. So I hope that's helpful.

Speaker Change: Yeah, that's terrific I think it's a great sort of case for the flywheel working here. So I guess is that sort of thing about the inputs to that flywheel you caught out momentum.

Andrew Bretman: Yeah, that's terrific.

Joseph DeVivo: I think it's a great sort of case for the flywheel working here. So I guess as I sort of think about the inputs to that flywheel, you called out momentum and more one-on-one, one-to-one models for students by programs. Can you just sort of talk about the funnel there for additional opportunities with schools? Any conversations that sort of have picked up over the last handful of quarters?

Speaker Change: More one on one one to one models for students by programs can you just sort of talk about the funnel there for additional opportunities with schools any conversations that sort of has picked up over the last handful of quarters.

Speaker Change: Yes. Thank you. So we just had a conference a month ago, a com, which is a collection of osteopathic schools, who.

Joseph DeVivo: Well, thank you. So we just had a conference a month ago, AACOM, which is a collection of osteopathic schools who, you know, have their annual meeting. And at that meeting, it was standing room only, as schools were talking about the one-to-one programs that they were building, whether it's being through a campus store program, or whether being a single purchase where they'll have it as a part of their tuition. You know, medical students go in to school with a list of things that they're required to have. And the beautiful thing is, it's not a one-time capital purchase.

Speaker Change: Have their annual meeting and at that meeting it was standing room only.

Speaker Change: Schools were talking about the one to one programs that they were building, whether it's being through a campus store program or whether it being a single purchase where they will have it as a part of their tuition medical students go in to school with a list of things that they're required to have and the beautiful thing is.

Speaker Change: It's not a onetime capital purchase this is a type of thing where every year 25000, new students come into medical education and every every time we convert.

Joseph DeVivo: This is the type of thing where every year, 25,000 new students come into medical education, and every time we convert a medical school to a one-to-one program, we didn't just sell it one time into the laboratory. We've locked in now a program in perpetuity, creating a kind of annuity that's incredibly valuable. You know, continuing to sell hardware and growing it off of a base business, you know, sometimes you struggle to get that recursive revenue to make it easier, you know, to go year over year. The medical school opportunity is going to create a recursive year after year and growing ability for us to improve our capital sales.

Speaker Change: Our medical school to a one to one program. We didn't just sell one time into the laboratory, we have locked in our program in perpetuity, creating a kind of annuity that's incredibly valuable.

Speaker Change: To sell hardware and growing it off of a base business.

Speaker Change: Times, you struggled to get that recursive revenue to make it easier.

Speaker Change: To go year over year Medical school opportunity.

Speaker Change: Is going to create a recursive year after year and growing ability for us to improve our capital sales and we're now seeing.

Joseph DeVivo: And we're now seeing, from the meetings that we've had with schools, it's not a matter of if, it's when. It's, can we do one-to-one this year? Do we have the budget to do this this year? Do we do a campus store this year and build it in the budget for next? Those are the conversations. Whether or not they're building ultrasound into the program, that's now a foregone conclusion. Okay, that's great color.

Speaker Change: From the meetings that we've had with schools, it's not a matter of if it's when it's can we do one to one this year do we have the budget to do the CFC or do we do a campus stores this year and build it in the budget for next those are the conversations whether or not they are building ultrasound into the program. That's now a foregone conclusion.

Speaker Change: Okay, that's great color I'll keep it there thank you.

Andrew Bretman: I'll keep it there. Thank you. All right, thank you. Thank you.

Speaker Change: Alright, thank you.

Speaker Change: Thank you and the next question comes from Josh Jennings with Cowen.

Josh Jennings: And the next question comes from Josh Jennings with TD Coal. Hey, Josh. Hi, good morning.

Speaker Change: Hey, Josh Hi, good morning congratulations.

Josh Jennings: Congratulations. We can, we can. It's great to see this strong start to the year here. I wouldn't have followed up on the on the hospital channel. I mean, you there were publications by Rochester and Rutgers on that. Clinical Benefits and Economic Benefits of Adopting the Butterfly Platform. And just how impactful has that been and maybe tie that into just the hospital channel pipeline and anything you can share on just, you know, conversion that you've seen to date and how that's kind of informing the guidance reiteration here for 2025. Thanks, I really appreciate that.

Speaker Change: Thanks Carolyn.

Speaker Change: We can we can.

Speaker Change: It's great to see.

Speaker Change: <unk> start to the year here I wanted to follow up on the on the hospital channel.

Speaker Change: There were publications by Rochester, Chris on that.

Speaker Change: Clinical benefits and economic benefits of adaptive flash platform. It just how impactful has that been and maybe tie that into just the.

Speaker Change: Hospital channel pipeline.

Speaker Change: And anything you can share on just.

Speaker Change: Conversion that you've seen to date and how thats kind of informing the guidance reiteration here for 2025.

Speaker Change: Thanks, I really appreciate that.

Joseph DeVivo: You know, the the publication of the Rochester data was actually a seminal moment for us. It's taken us from, you know, an individual doctor sale or an individual department sale to start having conversations in the C-suite. And I think it's opened their eyes to realize, I think people are surprised. Like, you know, we literally will sit with a hospital. Um, you know, I wish I can just, you know, rattle them through to you, but it's just, I don't have approval to mention hospital names, but I mean, we sat with, we've sat with chief medical officers and then we'll tell them, you know, did you know.

Speaker Change: The publication of the Rochester data was actually a seminal moment for us it's taken us from.

Speaker Change: And individual doctor sale or an individual department sale to start having conversations in the C suite of hospitals and I think it's open their eyes to realize I think people are surprised like we literally will sit with the hospital.

Speaker Change: I wish I can just.

Speaker Change: Rattle them through to you, but its just I don't have approval mentioned hospital names, but.

Speaker Change: We sat with Chief Medical officers and then we will tell them did you know that 200 of your existing doctors affiliated with your system have butterflies and they're blown away. They have no idea that this is proliferated like this and then we show them the Rochester, David and we say well look at this institution look it was.

Joseph DeVivo: That, you know, 200 of your existing doctors affiliated with your system have butterflies and they're blown away. They have, they have no idea that this is proliferated like this. And then we show them the Rochester data and we say, well, look at this institution and look at what's occurred with the captured scans, the economics. And then now also us, there's doing a wonderful job building all of their clinical impacts on how this changes the care pathways for patients to be getting diagnosed earlier and how that affects costs. So having that paper and having that, you know, line in the sand, um, plus just the simple groundswell that doctors are doing this without that, without the.

Speaker Change: Occurred with their captured scans the economics and then now also Roger is doing a wonderful job building all of their clinical impacts on how this changes the care pathways for patients to be getting diagnosed earlier and how that affects costs, so having that paper and having that line in the sand.

Speaker Change: Plus just the simple groundswell that doctors are doing this without the without the institutions. We walk into institutions say look do you have an enterprise probably we don't even know it.

Joseph DeVivo: we walk into institutions, we say, look, you have an enterprise program, you don't even know it. And they can't believe how many of their doctors have butterfly. And that kind of puts them a bit, you know, at risk if they're not compiling all that data. And also, there's a lot of leakage, because those scans they're getting is not something that can be reimbursed, obviously, if it's not aggregated. Now, everything we have is in the cloud. And the moment we do an integration to their systems, they have access to all that data. And so it's a very, very powerful thing.

Speaker Change: And they can't believe how many of their doctors have butterfly and that kind of put some a bit at risk if they're not compiling all that data in there and also there is a lot of leakage because those scans are getting.

Speaker Change: <unk> is not something that can be reimbursed obviously.

Not aggregated now everything we have is in the cloud and the moment, we do an integration to their systems. They have access to all that data and so it's a very very powerful thing I mean, we don't see helps us theres not a helps us market that says okay, well, what's my enterprise budget for next year I mean, that's just not on their radar screens historically.

Joseph DeVivo: I mean, we don't see health, there's not a health system out there that says, okay, well, what's my enterprise budget for next year? I mean, it's just not on their radar screens, historically, but it's becoming on their radar screens now. And then when, when the second deal becomes public, it's going to raise eyebrows, it's going to be like, wow, this is happening. And the conversations that we have with individual institutions become more and more. Now, again, these are not areas that are in the core budget. They have to, you know, just like the medical schools, they have to build room and figure it out.

Speaker Change: But it's becoming on their radar screens now and then when the second becomes public it's going to raise eyebrows, assuming like Wow.

Speaker Change: This is happening and the conversations that we have within individual institutions become more and more real.

Speaker Change: So again these are not areas that are in the core budget. They have to just like the medical schools, they have to build room and figure it out so our pipeline is very large.

Joseph DeVivo: So our pipeline is very large, but it takes a long time to get them across the finish line. And, you know, as Heather mentioned, there are some new things out on the horizon as far as, you know, people really looking at their budgets that slow things down a bit.

Speaker Change: It takes a long time to get them across the finish line and as Heather mentioned there are some new things out on the horizon as far as people really looking at their budgets that slow things down a bit, but we have josh as much of a tailwind behind butterflies I've seen in our business in my career.

Josh Jennings: But we have, Josh, as much of a talent behind Butterfly's I've seen in a business in my career, the positive energy, the fact that we're on the right side of history, the fact that our data is so clean, and the fact that the economics point to all the favorable economics you need. And then, of course, you know, the most important thing, the impact to patients is just very clear. So we're going to win this battle. And we're just excited to be doing what we're doing. So I appreciate the question. No, thanks for that answer.

Speaker Change: Positive energy the fact that we're on the right side of history. The fact that our data.

Speaker Change: <unk> clean and the fact that the economics.

To all the favorable economics, you need and then of course, the most important thing.

Speaker Change: The impact of the patients.

Speaker Change: Is this very clear so we're going to win this battle.

Speaker Change: We're just very excited to be doing what we're doing so I appreciate the question Doug.

Speaker Change: Okay. Thanks for that answer.

Josh Jennings: And I wanted to follow up on just, you know, how you guys are segmenting or what you're seeing in the market for IQ 3 versus IQ plus, maybe a more affordable solution. I mean, our assumption has been IQ 3 is more prominent in terms of how it's being adopted in the hospital channel, maybe IQ plus a little more in the e-commerce channel. But I wanted to hear about the mix and just the strategy for continuing to have both platforms available for the clinicians and hospitals and institutions.

Speaker Change: I wanted to follow up on just how you guys are segmenting, what youre seeing in the market for IQ.

Speaker Change: Q3 versus Q, plus maybe a more affordable solution I mean, our assumption has been three years.

Speaker Change: More prominent in terms of how it's being impacted in the hospital channel, maybe hiseq plus a little more.

Speaker Change: The E Commerce channel, but wanted to hear about the mix and just the strategy for continuing to have both platforms.

Speaker Change: Available for the physicians and hospitals and institutions.

Speaker Change: Do you want to start on mix and then I'll do the second part yes.

Heather Getz: Do you want to start on mix and then I'll do the second part? Yeah, so Josh, we're actually seeing strong adoption of IQ3 across the board in all of our channels. Obviously, most significantly within the hospital channel. In Q1, it was the, since we launched in Q4 of last year internationally, we actually saw a pickup in the overall mix in total of our IQ3 versus IQ+. IQ plus still does remain strong in the med schools and somewhat on e-comm, but overall we're selling more IQ3s than plus. Is that helpful, Josh? Excellent. That is. I appreciate that.

Speaker Change: Hey, Josh.

Speaker Change: Actually seeing strong adoption of IQ3 across the board.

Speaker Change: All of our channels, obviously, most significantly within the hospital channel.

Speaker Change: And in Q1.

Speaker Change: It was the since we launched in Q4 of last year internationally, we actually saw a pickup in the overall mix in total of our of our IQ3 versus IQ plot.

Speaker Change: IQ plus still does remain strong and in the med schools and somewhat on E com.

Speaker Change: But overall, we're selling more IQ3 and profit.

Josh: Is that helpful Josh excellent.

Josh: That is and I appreciate that and I'll just sneak one more.

Heather Getz: Now, I just need one more. It's great to hear that the new tariff policies are manageable for Butterfly, but I wanted to just ask about how maybe currency is, or the stronger dollar, is impacting Guyana dip at all, and especially just any exposure to the Taiwan dollar, which is appreciating greatly over the last couple of weeks, including today. Thanks. Thanks for taking all the questions. Sure. We have virtually no foreign currency right now. So, so that's not an issue for us. And obviously on the tariff side, while if the tariffs were in effect for the full year, they would have had an impact.

Josh: Great to hear.

Josh: Does the tariff policies are manageable fruit for butterfly.

Josh: But wanted to just ask about how maybe currency is with the stronger dollar is impacting guidance if at all and especially just any exposure to the Taiwan dollar, which is appreciating greatly over the last couple of weeks, including today. Thanks, Thanks for taking our questions.

Speaker Change: Sure Yeah, we have virtually no foreign currency risk.

Speaker Change: So that's not an issue for us and obviously on the tariff side.

Speaker Change: While if the tariffs were in effect for the full year. They would've had an impact we are still.

Heather Getz: We are still looking at ways of mitigating it. And, you know, we're what we're leaning more toward is seeing that 10% versus the 36% number.

Speaker Change: Looking at ways of mitigating it.

Speaker Change: We're what we're leaning more toward is seeing that 10% versus the 36% number.

Speaker Change: Great. Thanks, so much.

Heather Getz: Great. Thanks so much.

Speaker Change: Thank you Angie next question comes from Suraj Kalia with Oppenheimer.

Suraj Kalia: Thank you, and the next question comes from Siraj Kalia with Oppenheimer Morning Joe, Heather, can you hear me all right? Yeah, we can. Hopefully you can hear us. Perfect. Yeah, so I'll throw in both my questions here, guys.

Speaker Change: Good morning, Joe Heather can you hear me alright.

Speaker Change: Yes, we can.

Speaker Change: So you can hear a perfect.

Speaker Change: Yes.

Speaker Change: So.

Speaker Change: Ill throw in both my questions here guys.

Suraj Kalia: What is the split between price and volume, specifically in the US and product sales? And also, Joe, maybe if you could shed some light on how should we think about competitive displacements, if any, with IQ3? You mentioned the top five hospital partners. Was that sort of a de novo get? Was that a competitive get? Any additional color to help us assess the landscape would be appreciated.

Speaker Change: The split between price and volume.

Speaker Change: Typically in the U S and product sales.

Speaker Change: And also Joe maybe if you could shed some light on how should we think about competitive displacements if any with IQ. Three you mentioned the five top five hospital partner, what that sort of de Novo get was that a competitive gap.

Speaker Change: Any additional color to help us assess the law.

Speaker Change: Lance Cape would be appreciated. Thank you for taking my questions.

Joseph DeVivo: Thank you for taking my question. So let me answer that first. So it is a very new market to build a POCUS program. And so I don't believe it is a displacement, because that would denote there was a program to begin with. I think it's a choice of a winner. So they'll have a bunch of vendors or a bunch of technologies in the hospital, they decide to build a program, and then they choose Butterfly. So on the hardware side, I believe that's more the selection of the winner than taking an incumbent out, because again, having an incumbent for an enterprise program denotes that there was one to begin with and there wasn't.

Speaker Change: So let me answer.

Speaker Change: Let me answer that first.

Speaker Change: So.

Speaker Change: These this is it is a very new market too.

Speaker Change: To build a focused program.

Speaker Change: And so.

Speaker Change: I don't believe it is a displacement because that would that would do.

Speaker Change: Note there was a program to begin with.

Speaker Change: I think it's a choice of a winter.

Speaker Change: So they'll have a bunch of vendors are a bunch of technologies in the hospital. They decide to build a program and then they choose butterfly so on the hardware side.

Speaker Change: I believe thats more the selection of the winter then.

Speaker Change: Taking an incumbent out because again, having an incumbent for.

Speaker Change: For Enterprise program.

Speaker Change: The notes that there was one to begin within there wasn't but there is a winter and thats butterfly now on the software front there are smaller companies who have.

Joseph DeVivo: But there is a winner, and that's Butterfly. Now, on the software front, there are smaller companies who have certain products that are focusing on data aggregation that have been around a while. And so typically, in an enterprise win, we first win the software deal. We win software to go throughout the enterprise, and then we win the hardware, and that's kind of a two-step process, because remember that our software works with other platforms. So if you have Point of Care Ultrasound and you have a bunch of different products, when you put our software in place, it now can pull all the data from all the devices and then help you to bridge to data management, the bridge to PACS, and the bridge to revenue cycle management.

Speaker Change: Certain products that are focusing on data aggregation that have been around awhile.

Speaker Change: Typically in an enterprise when we first when the software deal.

Speaker Change: <unk> software to go throughout the enterprise and then we win the hardware and Thats kind of a two step process because.

Speaker Change: Remember that our software works with other platforms. So if you have point of care ultrasound and you have a bunch of different products. When you put our software in place it now.

Speaker Change: And pull all the data from all the devices and then help you the bridge data management to bridge two packs in the bridge.

Speaker Change: To revenue cycle management.

Joseph DeVivo: So that is very competitive and that is very contested, but we win well more than the majority and we're displacing a lot of older, let's say, more limited technology. So that is when we look at the dynamic, it starts there, and then when they decide to go throughout the hospital, they choose who's the best and most fungible, and that's where we win.

Speaker Change: So that is very competitive and that is very competitive.

Speaker Change: But we win well more than the majority and we are displacing a lot of older Let's say more limited technology.

Speaker Change: So that that is when we look at the dynamic it.

Speaker Change: It starts there and then when they decide to go throughout the hospital they choose.

Speaker Change: Who is the best and most vulnerable and that's where we win.

Suraj: And then suraj.

Heather Getz: And then Suraj, on the on the price volume, when we look at the curves, it's about 80% volume, 20% price, where we really saw the pickup on the price was in the international market. If you recall, we launched IT3 in Q1 of last year. So we didn't have the pickup in domestically, but we did internationally.

Speaker Change: <unk> volume when we look at the curve, it's about 80% volume 20% quarry.

Speaker Change: We really saw the pick up on the price was in the international market.

Speaker Change: If you recall, we launched <unk> three in Q1 of last year.

Speaker Change: So we didn't have the pick up in domestically, but we did internationally.

Speaker Change: Yeah.

Suraj Kalia: Thank you. Yes.

Speaker Change: Thank you.

Yes.

Speaker Change: Just as a reminder, if you would like to ask a question. Please press star followed by one on your telephone keypad.

Carla: Just as a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad.

Ben Haynor: The next question comes from Ben Haynor with Lake Street Cup. Good day, folks. Thanks for taking the questions.

Speaker Change: The next question comes from Ben Hayner of Reed Lake Street capital.

Ben Hayner: Thanks for taking the questions just first for me on the active partnerships that you have planned it sounds like we're going to hear a lot more on one of them in relatively short order, but I was wondering if there's any more color on the ones that maybe haven't been talked about more prominently.

Ben Haynor: Just first for me on the active partnerships that you have signed, it sounds like we're going to hear a lot more on one of them in relatively short order, but I was wondering if there's any more color on the ones that maybe haven't been talked about more prominently, like, of course, Neurotech One, where you can maybe share a little bit more about the applications, you know, potential launch timing, anything else you can share on that front? You know, if you humor me, I'll just tell you an anecdote, an anecdote from Forrest. So, again, this is a five-year research project for brain-computer interface, very similar to Neuralink, but it's not using wires to go in different parts of the brain.

Speaker Change: Permanently like of course neuro Tech one.

Speaker Change: Where you can maybe share a little bit more about the applications potential launch timing any anything else you can share on that front.

Speaker Change: If if if you humor me al.

Speaker Change: I will just tell you an anecdote.

Speaker Change: An anecdote from for US. So again this is a five year research project for brain computer interface.

Speaker Change: Very similar to neuro link.

Speaker Change: But it's not using wires to go in different parts of the brain, it's using ultrasound.

Joseph DeVivo: It's using ultrasound. Xi, and then ultimately, potentially intervene. There was this one use case just a month ago, where they've been searching for patients who actually have an open skull due to some other injury. There's access to the brain. And so they were able to place the technology directly onto the brain for someone in a coma. and you would be able to see the brain act. And in this particular setting, the brain was dark. and then when they would add. the patient a question, a specific question, they would see brain activity through ultrasound. Think about that.

Speaker Change: To see and then ultimately potentially intervene.

Speaker Change: There was just one use case just.

Speaker Change: Just a month ago, where they've been searching for patients who actually have an open skull due to some other injury. There is access to the brain.

Speaker Change: So they were able to place the technology directly onto the brain for someone in a coma.

Speaker Change: Yeah.

Speaker Change: And you would be able to see the brain activity.

Speaker Change: And in this particular in this particular setting.

Speaker Change: <unk> was dark.

Speaker Change: And then when they would ask.

Speaker Change: The patient a question specific question, they would see brain activity through ultrasound.

Speaker Change: Think about that.

Joseph DeVivo: That's a that's a patient who's in a coma and the family doesn't know. if that patient can hear them. The family doesn't know if they're awake or not, but with having the ability of using Forrest's advanced algorithms and on top of our core technology. they found out that that patient was actually a present in that coma. And those are the types of things that they're doing. And that's why when we talk about. our Technology Foundation. It's not point-of-care ultrasound, that's just the first application of our technology. But the ability to tune it, the ability to program it, the ability to miniaturize and then the ability to learn from it and for it to dynamically cycle on its learning through AI.

Speaker Change: That's a that's a patient who is in a coma.

Speaker Change: In the family doesn't know.

Speaker Change: If that patient can hear them.

Speaker Change: Our family doesn't know.

Speaker Change: If there are weak or not but with having the ability of using for its advanced algorithms and on top of our core technology.

Speaker Change: They found out that that patient was actually it.

Speaker Change: Present in that coma and those are the types of things that theyre doing and Thats why when we talk about octave.

Speaker Change: Our technology is foundational.

Speaker Change: It's not point of care ultrasound. It that's just the first application of our technology with the ability to tune it the ability to program it the ability to miniaturize it.

Speaker Change: And then the ability to learn from it and it proved to dynamically cycle on this learning through AI.

Joseph DeVivo: makes it probably one of the most important imaging innovations. And our partners are all developing on this platform. And I believe one of our partners, Mendera, will be commercial in the near term. We're going to see another partner be commercial. So this is going to, Octave creates an exponential flywheel because every time our partner succeeds, we succeed. We do everything to help them. And as they succeed in the marketplace in the future, that amplifies our technology through and through. So literally, Octave, I think I've mentioned this, could be bigger than Butterfly. Butterfly could be a division of Octave in the is so fungible and has such an incredible talent.

Speaker Change: Makes it probably one of the most important imaging innovations and.

Speaker Change: Our partners are all developing on this platform and.

Speaker Change: I believe one of our partners Madera will be commercial.

Speaker Change: In the near term.

Speaker Change: We're going to see another partner to be commercial. So this is going to this active creates an exponential flywheel because every time our partner succeed we succeed.

Speaker Change: We do everything to help them and as they succeed in the marketplace in the future that amplifies our technology.

Speaker Change: Through and through so.

Speaker Change: Literally.

Speaker Change: I think I've mentioned this could be bigger than butterfly butterfly it could be a division of Oxford in the future because the technology is so core.

Is so fungible and has such an incredible Tam.

Speaker Change: No.

Ben Haynor: Excellent. Thanks for the color there and the anecdotes.

Speaker Change: Excellent thanks for the color there and the anecdotes.

Joseph DeVivo: You know, just following up on kind of the foundational aspect of the technology, any more updates you can kind of provide on the, you know, future chips, the IQ station, form factors, whether it's wearable, anything of that nature. It's all moving. You know, we have, you know, the flywheel is continuing to turn, I think, by the end of 2025. Sometime by the end of 2025, we'll be in production. on the P5 version of our technology and able to then start the regulatory process and validations for us to be ready by the end of 26. So everything there is proceeding exactly the plan.

Speaker Change: Just following up on kind of the foundational aspect of the technology any any more updates you can provide on.

Speaker Change: The future chips eustachian form factors, whether its wearable.

Speaker Change: Of that nature.

Speaker Change: It's all moving we have.

Speaker Change: Flywheel is continuing to turn I think by.

Speaker Change: By the end of 'twenty five.

Speaker Change: Some time by the end of 'twenty five we'll be in production.

Speaker Change: On on the P. Five version of our technology and enable to then start the regulatory process and validation.

Speaker Change: For us to be ready.

Speaker Change: By the end of 2006 so.

Speaker Change: We're everything there is proceeding exactly.

Speaker Change: Exactly the plan.

Joseph DeVivo: We are in development of all the other items that you mentioned. And I think there's going to be a few surprises, you know, around that time frame as well.

Speaker Change: We are in development of all the other items that you've mentioned.

Speaker Change: And.

Speaker Change: I think theres going to be a few surprises.

Speaker Change: Around that time frame as well, but we're trying to show our roadmap without completely showing our hand.

Joseph DeVivo: But we're trying to show our roadmap without, you know, completely showing our And then last, for me, just following up on an earlier question, on these medical schools kind of making the decision to, you know, adopt POCUS and go, you know, potentially one probe per student, is there kind of a general cutoff in terms of, you know, when they would need to make that decision for a given school year? Yeah, actually, great question. So their fiscal year ends June 30. And then they have new budgets going forward. And so typically, whenever whenever they are making a decision for the next school year, it occurs either at the end of our first calendar quarter, or mostly in the second calendar quarter.

Tom: Thanks, Tom.

Tom: And then lastly for me just following up on an earlier question.

Tom: Medical school is kind of making the decision to.

Tom: Adopt focus and go potentially one one per student is there kind of a general cutoff in terms of.

Tom: When they would need to make that decision for a given school year.

Tom: Yes, actually a great question so their fiscal year.

Tom: Ends June 30, and then they have new budgets going forward and so typically whenever whenever they are making a decision for the next school year. It occurs either at the end of our first calendar quarter or mostly in the second calendar quarter and Thats why.

Joseph DeVivo: And that's why, you know, if you look at our historic phasing quarter to quarter, our first quarter is usually kind of the slowest or second quarter is usually, you know, up there as either the highest or equal to our third or fourth quarter. And our third quarter is usually, you know, like the first, so we go, you know, we're kind of a baseline, we go up and then down and then up. And that's just because the medical school business pulses in that second quarter. So that activity, like literally, our team is very active with customers right now.

Tom: If you look at our historic phasing quarter to quarter.

Tom: First quarter is usually kind of a slow with our second quarter is usually.

Tom: Up there is either the highest or equal to our third or fourth quarter and our third quarter is usually like the first so we go.

Tom: We're kind of a baseline would go up and down and up.

Tom: And Thats, just because the medical school business pulses in that second quarter, so that activity like literally our team is very active with customers right now and literally all of the conversations are.

Joseph DeVivo: And literally, all the conversations are, you know, how do we get there? Can we do it now? Or, you know, do we budget it for next year? How do we get this in? You know, and then another interesting anecdote is, several of the most progressive medical schools with POCUS are graduating their first four year class in 2025. Rochester being one of them, but there's several other schools that those kids are graduating when they go into residence. They have a completely different, incredibly valuable skill set that their colleagues and their mentors, on average, don't have. And they're they're going to be distinguishing themselves and the ability to do better diagnosis and deliver care.

Tom: How do we get there can we do it now.

Tom: Or do we budget for next year, how do we get this end.

Speaker Change: And then another interesting anecdote is several of the most progressive medical schools with focus are graduating.

Speaker Change: First for your class in 2025, Rochester, being one of them, but there are several other schools that those kids are graduating them.

Speaker Change: When they go into residency.

Speaker Change: They're going to have a company they have a completely different.

Speaker Change: Credibly valuable skill set.

Speaker Change: Their colleagues and their mentors.

Speaker Change: On average don't have.

Speaker Change: And they're going to be distinguishing themselves and the ability to.

Speaker Change: Do better diagnosis and deliver care.

Ben Haynor: And that again is going to be just one one more step in the flywheel of mass adoption of butterflies. and make all the other residents jealous. and get them into Butterfly and get them into our training courses and we will get them there as fast as possible. Excellent. Well, thanks a lot for taking the questions. That's it for me. Appreciate it, Ben. Thanks, Ben.

Speaker Change: And that again is going to be just one one more step in the flywheel of mass adoption of butterflies ultrasound.

Speaker Change: Yeah.

Speaker Change: Yes, I think all the other rather than scale.

Speaker Change: And get and get them into butterfly and get them into our training courses and we will get them there as fast as possible.

Speaker Change: Excellent well thanks, a lot. Thanks, a lot for taking the questions guys. That's it for me.

Speaker Change: I appreciate it thanks Ben.

Speaker Change: Just as a final reminder, if you'd like to ask a question. Please press star followed by one.

Carla: Just as a final reminder, if you'd like to ask a question, please press star followed by one.

Speaker Change: Okay.

Speaker Change: As we currently have no further questions in the queue I will hand back over to Joe Devivo for any final comments.

Joseph DeVivo: As we currently have no further questions in the queue, I will hand back over to Joy DeVivo for any final comments. So first of all, thank you for joining us this morning. We continue to make progress on all the fronts. As we mentioned, we continue to believe that we have. Core, Market Tailwinds, and our adoption. And we're building the right businesses that are gonna get us to the right place. you know, we know that we are entering in some uncertain times. And, you know, we have a lot of shots on goal. And if one thing slows down, another thing will speed up.

Joe DeVivo: So first of all thank you for joining us this morning.

Speaker Change: We continue to make progress on all the fronts as we mentioned we continue to believe that we have.

Joe DeVivo: Core market tailwind and our adoption.

Speaker Change: Building the.

Speaker Change: The rate businesses that.

Speaker Change: We're going to get us to the right place.

Speaker Change: We know that we are entering in some uncertain times.

Speaker Change: And we have a.

Speaker Change: Lot of shots on goal and if one thing slows down another thing we will speed up but we are focused on hitting our objectives and delivering for our investors. So.

Joseph DeVivo: But we are focused on hitting our objectives and delivering for our investors. So we appreciate your support and look forward to continued success this quarter and then our next update. So thank you very much for joining.

Speaker Change: We appreciate your support and look forward to continued success this quarter and then our next update so thank you very much for joining the call.

Speaker Change: This concludes today's call. Thank you everyone for joining you may now disconnect.

Carla: This concludes today's call. Thank you everyone for joining.

Carla: You may now disconnect.

Speaker Change: [music].

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