Release Date: November 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Butterfly Network Inc (BFLY, Financial) reported a 33% year-over-year revenue growth for Q3 2024, marking the highest third-quarter revenue in the company's history.
- The company successfully reduced its cash use to the lowest level in its history while maintaining investment in key growth areas.
- Butterfly Network Inc (BFLY) expanded its market presence internationally, launching in new markets such as Indonesia, Netherlands, and Belgium, and successfully launched IQ3 in Europe.
- The company is making significant strides in medical education with the introduction of the Scan Lab AI training app, which is being adopted by universities like Kansas City University.
- Butterfly Network Inc (BFLY) is forming a wholly-owned subsidiary, Octave, to commercialize and monetize its ultrasound-on-chip technology in non-competitive industries, potentially providing a new revenue stream.
Negative Points
- Despite the revenue growth, Butterfly Network Inc (BFLY) reported an adjusted EBITDA loss of $8.4 million for Q3 2024.
- The gross margin percentage decreased slightly to 59.5% due to a lower proportion of higher-margin software and other services revenues.
- The company faces challenges in maintaining software revenue growth, as product revenue growth outpaced software revenue with the launch of IQ3.
- Butterfly Network Inc (BFLY) is still in the early stages of its home care pilot, which may take time to demonstrate significant financial impact.
- The company is navigating regulatory challenges in the European Union regarding the ROSS compliance and exemption process, which could impact future operations.
Q & A Highlights
Q: How did the 23% unit growth and 10% price increase split between the US and international markets?
A: Heather Getz, CFO, explained that the growth was roughly half and half, with most of the price increase coming from the domestic market, although international markets also contributed.
Q: Can you discuss the penetration of IQ3 versus the previous generation during the quarter?
A: Heather Getz noted that IQ3 accounted for just over 50% of total sales, with over 80% penetration domestically. The international market saw some uptake following the September launch, but not to the same extent as the domestic market.
Q: How does the introduction of harmonics in the P5 chip affect heat generation and device lifespan?
A: Joseph DeVivo, CEO, explained that the P5 chip increases mechanical pressure, allowing for harmonics without the heat issues associated with piezoelectric crystals. The semiconductor chips do not produce the same level of heat, allowing for higher quality imaging without the same heat artifact.
Q: The Q4 guidance appears sequentially flat. Is there conservatism built into this, or are there other factors at play?
A: Joseph DeVivo and Heather Getz both acknowledged that while there is some conservatism, they are projecting a 20-25% growth quarter, which they consider a strong finish to the year.
Q: Can you provide more details on the EU's ROSS update and the next steps for Butterfly Network?
A: Joseph DeVivo shared that the company had productive discussions with EU officials, who were receptive to Butterfly's innovation. The process involves public comments and due diligence, with a decision expected by the end of next year. If positive, enforcement plans would begin a year following that.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
