Butterfly (BFLY) Q3 2026 Earnings Call Transcript

Joseph DeVivo:Thank you, John, and Welcome everybody to our Q3 Conference Call in 2026. I remain extremely pleased with our execution across the business. We delivered $32.6 million in revenue, beating top end of our guidance by 9%. We delivered the highest gross margin in Butterfly's history, and we are raising our full year guidance on the top and bottom lines. What I am most proud of is how revenue is being built. It is durable and it compounds. In the U.S., our core business is increasingly anchored in multi-year enterprise contracts with a pipeline that has grown sixfold since introducing Compass AI.

Internationally, we have developed a plan to take what is working in the U.S. and put that playbook to work in global markets. In Embedded, every new partnership brings development and licensing revenue today. More importantly, the potential for revenue share if and when they commercialize means it builds on itself. As Home & Community Care begins generating revenue, that is upside. Each of these wins can expand our addressable markets. For me, I see our opportunity growing every day. I become more and more excited by Butterfly's potential for significant growth over the next few years. Starting with our POCUS business, I am very proud of our domestic team. We delivered 15% revenue growth in our U.S.

HHS business this quarter. Our enterprise strategy is taking effect, and we are talking to new enterprise accounts on a regular basis. We are seeing a rapidly maturing POCUS landscape. Health systems are listening to clinicians who want to perform ultrasound, and they are providing more and more CME education for them. It is also becoming more recognized that a health system POCUS program and data management system like Compass AI is essential. Our Compass AI pipeline is converting, and we are now closing software and hardware enterprise deals each quarter. The Q3 included five seven-figure TCV deals, and then ten six-figure TCV deals. A clear demonstration that this pipeline is materializing.

Being mostly software, that revenue also compounds over time. These are also multi-year contracts, and that is exactly the kind of revenue that builds durability into our business. We expect this to keep accelerating. Continuing in the U.S., our partnerships with the Edward Via College of Osteopathic Medicine, known as VCOM, has kicked off. Through the new Lighthouse program, VCOM is committed to providing a Butterfly probe to every one of its students. That is about 670 new students per year across four schools, and then upperclassmen are receiving devices this year also. I attended one of their white coat ceremonies where I stood on stage with the dean.

He handed each student their stethoscope, and I handed them their new Butterfly. The look of joy on their faces is a memory I will not soon forget. Graduates will take their probes with them into residency now, which is new. Because every device is networked through Compass AI, we will work with VCOM to understand postgraduate activity and use it to inform best practices going forward. To wrap up the U.S., we achieved FedRAMP authorization in the quarter as anticipated, which enables us to do business with the federal government at scale. Our government pipeline is now building organically, and we are now being proactively included in RFIs from government agencies on much larger efforts.

This is entirely new for Butterfly. FedRAMP could be a real catalyst for Butterfly's POCUS business by creating access to the largest purchaser of healthcare in the world. More to come on that front. Turning to international POCUS. After deal timing shifts last quarter and continued softness this quarter, we took a closer look at our international commercial strategy and identified clear opportunities to improve our performance. Historically, we've relied heavily on distributors focused on individual clinicians. We now see real opportunity to pursue larger institutional and enterprise customers, much like we've successfully done domestically, where our market share is more than double that of any international region.

For competitive reasons, I won't share the specifics, but we are preparing to put our U.S. playbook to work internationally. We expect improved performance in the Q4 and into 2027. We believe this is an important step towards building a stronger, more durable, and scalable international business. Moving to our partnership ecosystems, we signed five new Garden partners this quarter spanning emergency medicine, global health, telemonitoring, and veterinary applications. We should now begin to see a steady stream of partners coming to market. Every Garden app can expand what the probes already do in the field and become an enabler of adoption. Just this week, DeepEcho launched its app into the Butterfly Garden.

It brings Butterfly users AI-powered fetal imaging analysis and automated measurements designed to expand access to critical maternal healthcare. DeepEcho marks our first international Garden application to go live. Its initial commercial focus is underserved international markets where access to prenatal imaging is limited, and it is also available in the U.S. for educational purposes now. We congratulate our friends at DeepEcho on this accomplishment. On Embedded, I want to take a moment to reiterate how this revenue builds because it's one of the most important things to understand about Butterfly. Today, the majority of our Embedded partners pay us for development work, licenses, and chips while they're doing technology development.

Assuming products reach market, we then receive software licensing, ongoing chip purchases, and in some cases, commercial licensing. Each new partnership isn't a one-time event. It adds a layer of immediate and long-term revenue that compounds as partners commercialize. Embedded revenue won't always move in a straight line quarter to quarter, especially at this early phase. But what matters is that the underlying base keeps growing with every partner we add. This quarter, we hosted an event in the Bay Area that brought together the founders, researchers, and VCs at the forefront of brain computer interface innovation.

Ultrasound is one of the few modalities that can interface with the brain non-invasively, both sensing neural activity and stimulating neurons, and Butterfly's Ultrasound-on-Chip is emerging as a key enabler. While early BCI work has focused on restoring function for people with injuries or disabilities, we're seeing growing interest in approaches that would also enhance human capability in entirely new ways. Some of these applications will take years of clinical study, while others may have shorter paths to market. But each new partnership expands our reach into what we believe could be a significant new market for our technology. We added three new partners over the quarter, all in the BCI space.

Two we've already announced, Merge Labs and Bridge Neurotech. Both incorporate founders from our partner Forest Neurotech, recently renamed Arbor Neuroscience, which continues to incubate new ideas from some of the brightest minds at Caltech. Both contributed to Embedded revenue in the quarter, and our third partner is still stealth. Our pipeline continues to grow and mature with compelling ideas from startups to very large companies. We've also strengthened our commercial efforts with new sales executives dedicated to specific categories of Embedded. The future's exciting and partner innovation is already becoming a reality today. That's the moment where long-term revenue begins.

Mendaera, a pioneer in vascular robotics and one of the first announced Embedded partners, has now launched its product with Butterfly Technology, a handheld robotic system for real-time needle guidance. We're proud of our partnership and the enhanced capability it provides physicians in critical use cases. We continue to make strong progress also with our Midjourney partnership and remain on track to achieve previously communicated milestones. Development of Apollo is also progressing on schedule. Apollo is a critical technology for Midjourney and several of our other Embedded partners. We believe it could be transformational, representing the first convergence of semiconductor-based ultrasound and physical AI. It's a platform investment serving not just us, but many of our partners.

Our R&D team has also advanced our wearable form factor, which has been one of the most requested capabilities from current and prospective partners. We plan to release a limited batch of wearables to Embedded co-development partners for research and development. We see it as a potential enabler of future Embedded opportunities. Shifting to Home & Community Care, we finally moved from program building to execution. We completed all program approvals in the Q3 and are now delivering the implementation phase we committed to last quarter. Scanning starts in November, and we expect initial revenue in this Q4.

We hope to expand to other markets through 2027 and are also active in discussions with other large potential partners about this application while exploring new service opportunities enabled by emerging use cases and advances in AI. I believe this revenue will grow throughout 2027 and could become meaningful in 2028. With that, I'll turn it over to John. John?

John Doherty:Thanks, Joseph. Butterfly continued its strong and focused execution in the Q3 of 2026 with an increase in revenue driven by strong growth in our Embedded business. Core POCUS was also solid, with performance reflecting our increased and expanding focus on the enterprise market. Gross margin increased, and we saw a continued improvement in operating performance, with further reallocation of resources towards higher ROI opportunities and markets. Building on the operational highlights Joseph outlined, let me translate these into the financial highlights in the quarter. We had strong revenue attainment, 9% above the top end of our guidance. The highest gross margin for Butterfly in its history.

Adjusted EBITDA that was above consensus and our guidance range, with improvement driven by our revenue performance, higher gross margin, and continued financial discipline while investing for growth. And growth in probe unit sales of 5%. With that, let me move on to our results. Q3 revenue was $32.6 million, an increase of 52% year over year. Our growth was primarily driven by Butterfly Embedded. In addition, in Core, we had strong performance across every segment in the U.S., including U.S. HHS business, Medical Education, Out of Hospital, Federal, Global Health, and E-com. This helped to drive strong year-over-year unit volume growth, along with Compass AI sales gaining traction with key wins in major institutions.

Breaking things down between the U.S. and international channels, during the Q3, U.S. revenue was $27.5 million, which was 71% higher year over year, driven by revenue from Embedded as well as solid demand in the Core business, with unit sales up 9%. As Joseph mentioned, international was down year over year. Total international revenue decreased by 5% year over year to $5.1 million in the quarter. Once again, we had a few deals expected to close in the previous quarters move out into the Q4, and we have some partners working through inventory. As we execute our U.S. playbook globally, we expect improved performance in the Q4 and as we move into 2027.

The launch in the Brazil market is gaining traction. We have a new distributor in Taiwan, and we are continuing to expand our global footprint and commitment to key markets. Let's turn to our revenue split between our Core POCUS business and Butterfly Embedded. As a reminder, the Core business includes probe sales and related software, Compass AI, other services, and Home & Community Care, which launched in the Q4. Embedded revenue currently includes one-time NRE payments, annual license fees, devices and accessories, revenue from SOW-driven development work, and chip sales to Embedded partners. With that, Core revenue for the Q3 was $21.5 million, an increase of 5% versus the Q3 of 2025.

This increase was driven primarily by growth in volume in most of our U.S. segments, as I mentioned. Of note, and as Joseph touched on earlier, the Core result includes five seven-figure TCV deals, as well as 10 six-figure TCV deals demonstrating our continued traction as we move deeper into the enterprise market. Sales of the iQ3 were up 8% in the quarter year over year, while sales of iQ+ were down 9% in the quarter year over year. ASP was up 1% year over year, driven by the higher mix of iQ3, offset somewhat by a Labor Day subscription holiday promotion we ran in September.

Butterfly Embedded revenue was $11.1 million, an increase of over 1,000% versus the Q3 of 2025. This increase was primarily driven by the Midjourney partnership and the new partnership agreements with Merge Labs and Bridge Neurotech. Moving on to gross profit. Gross profit was also a record at $23.8 million in the Q3 2026, an increase of $27.6 million as compared to the prior year gross loss of $3.8 million. You will recall we took a write-down of $17.5 million in the Q3 of 2025. Normalizing for this, gross profit was up $10.1 million or 74% year over year. Adjusted gross profit margin percentage increased to 73% from 64% in the prior year period, a 913 basis point increase.

Gross margin percentage was positively impacted by the increased mix and higher margin of Butterfly Embedded revenue, as well as a tariff refund under the International Emergency Economic Powers Act. Moving to EBITDA and cash. For the Q3 of 2026, Adjusted EBITDA loss was $1.2 million, compared with a loss of $8.1 million for the same period in 2025, an improvement of 85%. The improvement in Adjusted EBITDA loss in the Q3 was driven by contribution from higher margin revenue and continued financial discipline. Our cash and cash equivalent balance, excluding restricted cash at the end of the Q3, was $122 million, and the use of cash in the quarter was $2.4 million.

This compares to a use of cash of $3.9 million in the prior year quarter. I want to speak further to our capital structure for a moment and the financial announcements made this morning. With our shelf registration expiring in August, we filed a new universal shelf registration statement on Form S-3 today. This filing allows us the flexibility to issue up to $150 million in various types of securities over the next three years. As part of this shelf registration, we have also established an at-the-market, or ATM, equity program for up to $150 million. I want to emphasize a few critical points regarding this ATM program. This is good corporate housekeeping.

We have no immediate need for cash and are still on course to be Adjusted EBITDA and cash flow positive by 2028 as our results this quarter reinforce. This is purely a proactive measure to provide us with an efficient, low-cost tool to raise capital directly or in response to inbound interest if we need to at some point over the next three years. In terms of use of proceeds, any capital raised under this program will be deployed for general corporate purposes, focusing on high ROI opportunities specifically related to where we can accelerate our strategic roadmap. We are committed to dilution discipline. We are highly sensitive to shareholder dilution.

The ATM structure gives us complete control over the timing, price, and volume of any potential share issuance, ensuring that we only issue equity when it creates long-term value for our existing shareholders.

With a strong cash position and this enhanced financial flexibility, we are well positioned to execute on a sustained long-term growth plan and to continue to invest in our business in areas where we see significant opportunities for additional growth and disruption, which includes scaling our POCUS business through global market and market segment expansion, continued penetration of Compass AI as a core operating system for health systems, app releases in Butterfly Garden and 2027 new product launches, continued AI and semiconductor innovation with the development of our fourth generation chip, broadening and deepening Butterfly Embedded partnerships, and moving Home & Community Care to the commercial phase.

Before turning to guidance, I want to update you on the general global macroeconomic environment relative to Butterfly. We continue to monitor the conflict in the Middle East and the ripple effects on the global economy, as well as pressure from tariffs in certain markets and AI-driven supply chain shortages. We have mentioned in the past that there are some impacts to our business. However, they continue to be minor, and we continue to manage through it and make the appropriate adjustments. Our Q3 2026 results are indicative of this, and our full year 2026 guidance includes any expected impacts. I would now like to turn to our outlook for the balance of the year.

Our full year 2026 guidance reflects continued strength across the business, and we feel good about where we are heading into the Q4. For the full year 2026, we are increasing our guidance for both revenue and Adjusted EBITDA, as well as narrowing the range. We expect revenue to be between $123 million and $126 million, an improvement of $4 million at the bottom and $3 million at the top of the range from our previous guidance, and an increase of approximately 26%-29% over 2025. This implies $31 million to $34 million in revenue for the Q4.

One item that I would like to call out, and that Joseph DeVivo mentioned in his remarks, is that Embedded revenue does not recognize evenly quarter to quarter. It is tied to partner program timing and development milestones and the movement of pipeline into contractual revenue. I also want to remind you that the Q4 of 2025 was the Q1 of material Embedded revenue. That said, interest in Embedded remains strong, and our pipeline is growing. We are being thoughtful about how this is ultimately reflected in our guidance.

We expect our Adjusted EBITDA loss to be between $12 million and $15 million, an improvement of $8 million at the bottom and $7 million at the top of the range from our previous guidance. This implies an Adjusted EBITDA loss between $3 million and $6 million for the Q4. Our guidance for Adjusted EBITDA for the full year includes continued investment in key areas to support innovation and revenue growth in our core business and our emerging Embedded business for 2026 and beyond. In summary, we had another strong quarter. We had 52% revenue growth for the quarter and improving Adjusted EBITDA. We beat both our revenue and Adjusted EBITDA guidance.

We are very well positioned to close 2026 out strong. As the raise to our full year guidance reflects, we look forward to continued strong growth this year and beyond. We remain focused on gaining share through deeper penetration of existing customers and adding new customers in our Core POCUS business and expanding our Ultrasound-on-Chip partnerships. The business continues to get stronger across Core POCUS and Embedded. This is happening while we continue our intense focus on driving operating efficiency across the business and return on investment. I continue to be excited about what is ahead for the company for the rest of the year and beyond. Now, let me hand it back to Joseph DeVivo for some closing comments.

Joseph DeVivo:Thanks, John. Before I look ahead, I would like to comment that my intention for the ATM is purely opportunistic and strategic. I remain committed to get cash flow breakeven with our current capital in 2028, as John stated. I want to leave you with a few thoughts on where Butterfly is going. First, Butterfly's diversified strategy is working. Our core POCUS business continues to grow, driven by enterprise adoption, our expanding Garden ecosystem, and leadership in medical education. Now we are preparing for what we believe will be another major inflection point for our business. Our next generation product in early 2027 with our P5.1 chip, the final chip in the Poseidon family.

This new chip will introduce tissue harmonics. What's exciting is that we are already scanning with our prototypes internally, and our KOLs are very excited with the image quality that we are seeing. With iQ3, we reached image quality parity with our largest handheld competitors. With our next generation device, we expect to move beyond parity and set an entirely new standard with the best image quality in handheld ultrasound. This is the power of semiconductor technology. We are marching with the inevitability of Moore's Law, and we are continuing to push the boundaries of what's possible. Better image quality doesn't just mean a better product. It opens doors.

We expect it to strengthen our ability to compete in demanding clinical environments like intensive care and cardiology, where image quality is critical. It is essential as we enter the cart market in 2028. When combined with AI applications from partners like HeartFocus and DeepEcho, it could also expand our opportunity in cardiac care and women's health. This is where the pieces of our strategy really start coming together. Best-in-class digital imaging, enterprise infrastructure through Compass AI, education and training through ScanLab and our medical school partnerships, a growing ecosystem of AI applications through Butterfly Garden, and new care delivery models through Home & Community Care. These aren't independent initiatives. They tie together.

They are reinforcing one another, creating a flywheel that becomes more powerful with every new product, partner, and customer. We are building that momentum while the competitive landscape shifts. Some smaller competitors are struggling to find their way, and larger incumbents are actually pulling back from markets they've erroneously under-invested in. Butterfly is doing the opposite. We are leaning in by imagining, investing, and creating a new future. That brings me back to our first cart form factor. As we look towards 2028, we are preparing to enter the $8 billion cart-based ultrasound market. We are not simply building another cart.

We are bringing our semiconductor platform, digital infrastructure, AI ecosystem, and connected workflows into a market dominated by a conventional technology for decades, which frankly, has become unimaginative. We see an opportunity to fundamentally rethink how ultrasound is delivered, managed, and used across healthcare. Then there's Apollo. Apollo represents our next major leap forward. Apollo will usher in extraordinary imaging and physical AI. Midjourney and other Embedded partners are asking for these capabilities with applications that extend well beyond the handheld probe. Wearable devices, implantable chips, extraordinary machines. New ways for ultrasound to interact and power an entirely new age of human interaction. This is the bigger Butterfly story.

We started with a mission to democratize medical imaging, and today we are building a semiconductor-based ultrasound platform that can serve traditional healthcare, enable new models of care, and power entirely new industries. Our core business is growing. We continue to compete at a high level, and our technology roadmap is delivering. With each advancement, our addressable market gets bigger. We've spent more than a decade building the foundation for this moment, and now we're just beginning to see the scale of what that investment is unlocking. We're excited about what's ahead. With that, operator, let's open it up for questions.

Operator:We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Joshua Jennings with TD Cowen. Your line is open. Please go ahead.

Joshua Jennings:Hi, good morning. Thanks for taking the questions, John.

Joseph DeVivo:Morning, Josh.

Joshua Jennings:Great to see the momentum continuing across the board. Wanted to just start with a follow-up just on your last comments, Joseph, just on the innovation pipeline and the progress there. Two things that stuck out that seemed a little bit new to me, maybe a little bit behind, but maybe you could just build out on this physical AI channel and how Ultrasound-on-Chip and semiconductor technology can enable that, and then also just the limiters of wearable research devices and how you see that wearable opportunity evolving with future Embedded partners.

Joseph DeVivo:Great. So thank you for that, Josh. It's really, really exciting when we think about what the continued development of semiconductors can bring. We've been fixated on improving image quality, and that has been a function of data processing speeds, and the quality of the MEMS capabilities and voltage generations. I think this next generation, it is extraordinary. We've seen what P5.1 can do, and we are thrilled for what that means for 2027. Our Apollo chip will have 20 times the processing power. It'll be 20 times the processing speeds for data.

What that means is that today when we interact with AI, we do a query on our phones or on our computers, and then those queries are run actually in data centers in the cloud. Then that information is sent back to our devices that we use. In a hospital setting, that is relatively suboptimal when you're in front of a patient delivering care, and especially with hospital networks and connectivity, et cetera. The ability to actually bring AI models into the device itself, because today when a Butterfly captures an image, it's actively communicating to the cloud, and it's using some of the processing power to be able to deliver some of the extraordinary capabilities that we're delivering today.

Now having a semiconductor that can literally take a full AI model and process it on the chip means that it can be encapsulated for immediate feedback for the clinicians, so they don't have to be tethered and processed. A lot of times, even advanced cardiac images have to be pushed to a cloud, processed, and wait several minutes to come back, which is suboptimal. There are many different use cases where that processing and that demand and the immediacy is essential, and we'll be bringing that to healthcare. What was the wearables.

Joshua Jennings:Wearables.

Joseph DeVivo:We've had a wearable form factor in prototype form for several years. The key for a wearable is not that you can wear it. The key to the wearable is really to zero in on the use case and to do the final mile type research where that wearable blends into what could it be used for? Is it for breast imaging? Is it for cardiac imaging? Is it for some general abdominal imaging? Those use cases, one of the incredible things about Embedded is our core business is a major investment. We are doing market development in point-of-care ultrasound. We have sales and marketing teams. We have R&D teams. We have implementation teams. Full organization to build one market.

What Embedded is giving us is the ability to have a shot on goal and to have a revenue opportunity into many different markets that we don't have to develop ourselves. We develop the core platform, and then those who are in these different specific subspecialties can invest to develop that business. Our shareholders win because we take the same technology and now leverage it over multiple markets without having to make the type of investment that today we are making to grow the POCUS business. We are now feeding our partners with these wearables, and the wearables can be anything from an implantable or something that can be a wearable for a patient in the home.

When we really vision cast the future, we're the only company in the world on a single device that can move the beam on a mobile device. Conceptually, we can put a wearable on a patient's chest in the home. We can actually move the beam in an automated fashion. AI can determine if there's any anomalies, and then that image can be sent to a subspecialty clinic for diagnosis, taking out even having to have a caregiver to acquire the image. These are the things that we've been dreaming about for years. Now amplifying our partners with a wearable is a way for us to accomplish those dreams.

Joshua Jennings:Thanks for the answer, John. Just my follow-up, you mentioned that you're going to launch the U.S. playbook globally. Maybe you could just build out on that, help us think about the steps, and John, any incremental spend and when this initiative could bear fruit. Maybe just some more details on using the U.S. playbook that's been so successful and building that internationally. Thanks a lot.

Joseph DeVivo:Well, thank you, Josh. We are hitting our stride now on the enterprise side in the U.S. It is becoming aware now finally to administrators, health systems, department heads that having a centralized data management tool is not only necessary for compliance, but it has a very good ROI because we are capturing scans and capturing reimbursement. We built a team and an infrastructure and a marketing plan that allows us to go and access those health systems. It has to do with our platform architecture, it has to do with our infrastructure. We have then basically outsourced our international business to partners, and we have not empowered them with that type of infrastructure and that type of selling capability.

There have been some large deals that we could have won, but we did not because we did not set ourselves up like we have in the U.S. It is more about making technology available, it is more about now investing, and it is also more about taking the marketing capabilities that we have built in the U.S. and bringing it around the world. When you are a small company and you are trying to make investment decisions, there are things that hit the cutting floor, and we have not invested in international as much as we have in the U.S., and that is going to change. But I think we can do it through operating.

I think we can do it by leveraging the capabilities. I do not think it is a massive new spend, but it is one that it has just become stark. We had actually a distributor meeting in September in Amsterdam, and I had the opportunity to look eye to eye with all of our distributors to talk about our plans. It became evident to me that we need to bring the type of energy to the U.S. We need to support our international team more. We need to put more resources, and we need to take the technology solutions that we have been so successful with in the States to the rest of the world. It is an evolution thing.

It is something that I would love to be able to spend maybe a half a billion dollars in OPEX a year and just do everything. But you have to make your decisions, and now with the market maturing the way it is, Josh, I think it is time for us to be able to get to that next level.

John Doherty:Yeah. Josh, just on investment, this is really more about driving operating efficiency and doing what we do in the U.S. globally. It is investment that pays for itself. As I mentioned in the prepared remarks, we are looking to allocate capital to higher ROI opportunities, and this is absolutely one of those. The investment will pay for itself given what we expect to be able to drive globally, and the improvement in our overall revenue results there. Everything that it requires is included in the guidance that we give.

Joshua Jennings:Excellent. Thanks again.

Operator:Your next question comes from the line of Bill Plovanic. The line is open. Please go ahead.

Bill Plovanic:Great. Thanks. Good morning, and thanks for taking my questions. I wanted to start off just on the enterprise. You signed 15 deals in the quarter, and I am curious, five super scaled, and I am curious as to how should we think about the forward revenue contribution timing. Does this drive incremental unit sales as well? Just how should we think about it as we go into Q4 and then even into 2027, and maybe frame it as over the first 6 or 12 months, kind of what that kind of cadence looks like from a deal amount nature? Thanks.

Joseph DeVivo:I will start and then I will ask John to fill in. The way our enterprise deals work today is we solve the problem initially of deploying software. Deploying software allows them to connect all their point-of-care ultrasound devices, allows them to compile all their patient data from the POCUS scans, allows them to bring the DICOM images into their DICOM servers, and then allows them to have the data ready for their revenue cycle management platforms for reimbursement. What we normally do is we put the software in.

We normally start a program up with a smaller amount of probes, and then over time, as we are rolling the software out through the enterprise, we see sales of probes kind of occur on a weekly, if not monthly basis, and whether it is one by one or whether it is in chunks. It's a way of building up the enterprise. There's no big bangs where someone buys 1,000 probes day one. It's all about the evolution of the software, building of the systems.

I can tell you, there's a top five customer who started off with a couple hundred probes, and had put their enterprise platform in, and they're probably at 700 or 800 probes today, and so that over a year and a half. That's an evolution of what it takes. Now we have to implement all these, and so we have implementation timelines, and then once the programs start, then these are monthly type SaaS revenue for the software. It'll take time for it to get into the pipeline, but also, the ones that we've closed before are also in the pipeline. John, any other comments on how we would phase that?

John Doherty:Yeah. Just for crystal clarity here. Of the 15 deals that we mentioned, they include Compass deals. They also include non-Compass deals. For example, the Merge deal, the Bridge deal are also deals that would be included in that count. On the core business side of things, I look at it primarily with the Compass deals and some of these deals being larger deals. They're also multi-year deals. As kind of firming up the foundation of our revenue over time in the core business.

It's like a layering effect and, like I said, over a three-year window of time, but it's a mix of deals, and they contribute a bit differently in each of the Embedded side as well as the core side. But ultimately, just improving the overall foundation by which we're growing revenue off of.

Bill Plovanic:Okay, and then just following up on guidance, if you look at the Q4, the high end of the guide is kind of where consensus sits now. I think the general question is just, obviously it's the lumpiness of the software sales component, but is this conservatism? Do you have expectations that maybe with the new P5.1 coming out in early 2027, that could have some impact on the product side? How should we think about the guidance relative to where consensus sat prior to the report? Thanks for taking my questions.

Joseph DeVivo:Thank you, Bill. Well, first of all, next quarter we'll be able to guide for 2027, and we'll give a view as to how 2027 looks. We've been guiding this guidance the entire year. We gave our annual guidance in the Q1. We've updated it, I think, in the Q2, and we've now increased our guidance in the Q3. Our annual guidance really hasn't changed. I think you're looking at what the quarter-to-quarter growth rate is. We just increased our annual guidance, the top and bottom. We narrowed the range and so our annual guidance improved. Now when we look at the individual quarter, we guide what we know we can deliver, and then we look to exceed that.

We have a very large pipeline in Embedded, and I know everyone is asking when's the next Midjourney, when's the next pop? It'll happen. We're working on a ton of stuff. I think when you look at the year-over-year growth percentage, we're anniversarying the Midjourney deal in the Q4. You'll see, the numbers are as we've guided all throughout the year. We've been very consistent in what we said we were going to deliver. I think if we have the next big deal and the next thing happens, we will update our guidance accordingly. We don't get ahead of ourselves, and we don't guide to things that we don't have in our hand.

The ability to grow this business, the amount of opportunities we're looking to close across all the different areas have never been better. John, do you want to add anything to that?

John Doherty:Yeah, just to say, as we said up front, we're incredibly positive on the business as we close out 2026 and head into 2027. Just a couple of numbers. In the Q4 of 2025, Embedded was $7.3 million. Everybody will recall that's when we announced the Midjourney deal. That was the first step in our journey up the Embedded curve of revenue growth, and we do continue to expect that to move up to the right. The other point is, we've talked about what we expected Embedded to be each and every quarter this year.

In the last couple of quarters, frankly, we're trending well above what we had anticipated through the signing of the two new deals this quarter, as well as the work we're doing against the Midjourney contract. We continue to expect that trend to continue. However, we just want to be thoughtful as we close out the year. To Joseph's point, we upped guidance in the Q2, we upped guidance in the Q3 based on the beats that we had in both the second and Q3, and we're being prudent about what we're putting out there for the Q4. Nothing's changed.

We're well on track, and we're excited about being able to do what we usually do, which is put out revenue results at the JP Morgan conference in the second week of January. At that time, we'll likely also talk about 2027. We're really excited about where the company is and where the company's going.

Bill Plovanic:Thank you.

Joseph DeVivo:Thanks, Bill.

Operator:Your next question comes from the line of David Saxon with Needham. Your line is open. Please go ahead.

David Saxon:Great. Good morning, Joseph and John. Thanks for taking the questions and this quarter here. I will maybe just follow up to how to think about Embedded revenue in 2027. We have been getting a lot of questions on how to think about Embedded revenue in 2027, particularly since there has been a lot of milestones recognized in 2026 I will not repeat. I think you have historically talked about $7 million-$8 million a quarter for Embedded. Last two quarters were obviously above that. Any framework or guardrails you would point to as we look out to 2027 for Embedded, just given the milestones in 2026 and how you are thinking about the portfolio?

Joseph DeVivo:You want to start?

John Doherty:Yeah, sure. To my comments based on the last question, we are trending above what we had said. We do expect to live in the space that we are in now. We also expect to carry that on into 2027. Of course, we are not prepared to give full year guidance on that, but our trajectory is we expect it to be consistent. In addition, as Joseph has said in the past and as well as I have, we are folks that will tell you what we do when we do it.

As and when we get additional partners into Embedded, we will make sure that we announce that, and we will be very clear about it as we have in the past. As we said, we remain incredibly confident about what is happening with Embedded. In addition, as we have talked about and we will talk more about in early 2027, the core business is also moving in a really strong direction, with what we are doing with international, with what we are doing in preparation for our new product launches next year, with the launch of Home this quarter. Things are looking very, very positive for us.

Joseph DeVivo:The only other thing I'd say on Embedded is, we have the contract signed that we have and the work that we are doing, and it's reflected in a line of sight as we see things, and we'll communicate that for 2027. We also have a very large pipeline. Now we have a commercial team that is actively engaging new opportunities. The more and more we get comfortable with the ability to close those opportunities and the more that repeats them, the more we'll be willing to take some more risk in the guidance looking forward. John and I, first of all, we're very conservative. We've hit everything we've told you guys.

We want to make sure that we support our investors and we support the way that we put our vision forward. We don't get ahead of ourselves. The tailwinds in this business are real, and they're real across the board. I wouldn't look too much into I wouldn't get too spooked with some guidance that's basically been there since the beginning of the year.

John Doherty:Has improved each quarter.

Joseph DeVivo:Has improved each quarter.

David Saxon:Yeah. Okay. Appreciate the color there. Then, in the script you talked about some competitive dynamics, Healthineers moving out of general ultrasound, and then Philips recall. How are you thinking about Butterfly's positioning to catch some of that demand, particularly with the kind of next-gen probe and iQ Station around the corner? I do not know if you have any data that you could quantify how you think about that competitive opportunity or how meaningful it could be. Thanks so much.

Joseph DeVivo:Thank you, David. I do not want to make a comment about a specific company. That is really not my objective. I do think that when it comes to semiconductor-based ultrasound, when it comes to point-of-care ultrasound, when it comes to the next wave, I think what you see in the larger companies is this desire to continually move upstream and to move into more and more niche capabilities. Look, if I am a patient, I want those capabilities. I want you to be able to see my disease even better and better in these different care settings.

So I do not begrudge a strategy, but I do think there is the part of the market or the individual user and the expanding out into homes and empowering individuals in the main part of the market. I think that is an area that big ultrasound is under-invested in. I think they have looked down their nose at this. I think they have looked down their nose at Butterfly, and that builds a chip on our shoulder. We do have a chip on our shoulder, and we are proving the world, just like every other digital company that has disrupted analog, we are going to do it, and we actually are doing it.

I think what is important is we have 600 or 700 patents now. We are going to launch our fourth-generation chip, and our first generation cost, it took $300 million to get the first chip out the door. Our competitive moat is big, our competitive moat is real, and our competitive moat is long. I think, if you really sit back and look at this segment, and I think if people are being honest with you, they would say, "Wow, that thing has really taken off, and what are we going to do about it?" Now, I do not think we factor into any of those other companies' decisions.

I think they are bigger with a bunch of other things that they are concerned about. But from our perspective, we are making big investments in the future of this industry, and we have been building a moat, whether it has been quietly or not, but I think that is real, and it is hard to be able to just now decide today. It would be five years if someone decided today to replicate what we are doing. I think what's so exciting is not only is our technology getting better, but the health systems are waking up to this now, and this is becoming more present, and we're seeing more activity.

Competition will definitely get harder, any market that matures, segments, and you'll see more and more people getting in and more and more competition. But specifically in how we address this problem, it's a very unique situation where we've been so far ahead for so long, and I think we're about to reap the rewards of that.

David Saxon:Great. Thanks so much, and congrats.

Joseph DeVivo:Thank you.

Operator:Your next question comes from the line of Daniel Markowitz with Evercore ISI. Your line is open. Please go ahead.

Joseph DeVivo:Hey, Daniel.

Daniel Markowitz:Hey, thank you for taking my question, and good morning. Number one, I wanted to ask on Embedded, firstly, are you able to quantify the Q3 revs for Midjourney? Then I recognize Midjourney might be somewhat lumpy going forward, but I wanted to talk about the overall Embedded business ability to grow in 2027 versus 2026. In framing that question, can you talk about how big of a factor the Midjourney lumpiness will be versus the ramp that you'll be able to see in some of your other Embedded partners, and whether that should be kind of moving in the right direction?

John Doherty:Daniel, we're not going to specifically call Midjourney revenue. We'll obviously continue to talk about Embedded revenue. If things are material over time, and we have to file, we'll put things out there. Yes, Midjourney is foundational for us in Embedded, but we're not going to talk specifically to it. The guidance that I've given in the past around Embedded, as a whole, it still kind of stands. We've trended a little better than that. Some of that is driven by Midjourney, but also driven by some of the new partnerships that we've signed this quarter. Merge was a big contributor in the quarter. We've talked about this in the past, and I want to remind folks, too.

We said if Midjourney current course and speed is successful what they're doing, there's nothing we've seen so far in working with them that proves anything that they're not going to be. In 2030, our revenue will be at least $550 million. That is what we have talked about. We have also talked about how that would be effectively only taking into account a quarter of what we would expect from Midjourney. We called it out at the time because it was such a large partnership. They had the announcement in mid-June. We thought it was important and prudent that we were open and transparent with you guys, the analyst community, as well as with our investors.

Your current course and speed, if we just achieve the mid-range of our revenue for this year, that would be 124.5. Certainly Joseph and I, as we have said, we do what we say, and we feel we are going to do better than that. Even at that level, that is a 45% compound annual growth rate for revenue for the business as a whole. As I said, we feel that is somewhat conservative. On a quarter-to-quarter basis, we will announce the deals that we sign. We will obviously announce revenue each quarter. We will continue to break out Embedded, but we are not going to talk specifically to any individual customer.

We did it for the one time because of the journey that we are on with them. I will leave it at that.

Joseph DeVivo:I think the only thing I would add is if we sign something of a magnitude of Midjourney, it will be material, there will be an 8-K on it. We are in this really kind of uncomfortable place where we are a public company, and our investors want to have a very clear model and roadmap for the future. Our partners want everything, but they do not want us to talk about this. Midjourney hated the fact we had to put the 8-K out. All these companies, unless there is a press release that is associated on the technology, whatever is in the press release is what they want to talk about.

We want to be able to inform you, but we also have to protect kind of the roadmap and the privacy of our partners. It is really a tightrope that at times is uncomfortable. The thing I would say is we have a big pipeline. We have a lot of conversations. There are many big deals out there, and there is a ton of base hits that pretty quickly add up to big deals. I think it is going to be a beautiful contributor through 2027. John and I are not in the business of guiding to something that within a period we do not have in our fingertips and cannot deliver.

You are going to see everything that we say is going to have a conservative side to it.

Daniel Markowitz:Super helpful, and I definitely appreciate it. It is a tricky one, but that is a really helpful answer. The second thing, hopefully an easier question on Core POCUS. It is encouraging to see the acceleration from low single-digit growth last quarter to mid-single digit growth in the Q3. It seems like there are more catalysts for acceleration in 4Q and beyond between Home & Community Care, Compass AI contracts. Is it fair to say we should continue to expect acceleration into 4Q and 2027 on the back of these tailwinds?

Joseph DeVivo:Yeah, I don't think there is any reason to be looking back, and one of the things I mentioned in the prepared remarks was FedRAMP. FedRAMP is the hardest security clearance to get in the world. That means that we can operate inside the federal government systems, and we are a cloud-based vendor. So we are not some brick device that we claim that we are FedRAMP. Our stuff is networked. That means we have to ride their rails. So for us to be able to get FedRAMP and ride inside the government is nuts. We now are having conversations that are meaningful.

Actually, I didn't realize it would happen this quickly, but I don't think there are many companies that get across that FedRAMP threshold. Once it happens now, there are things there. I think the government is the biggest purchaser of healthcare, and from what I am seeing, I think that is going to be, not a Q4, that is a little too soon. Although we have seen some really nice base hits. But I think there is an opportunity in 2027 for it to really catalyze a whole new opportunity for us. I am very appreciative of our IT security leadership who have led this for us.

Daniel Markowitz:Very helpful. Thank you so much.

Joseph DeVivo:Thank you.

Operator:Your next question comes from the line of Steven Lichtman with William Blair. Your line is open. Please go ahead.

Joseph DeVivo:Hey, Steven.

Steven Lichtman:Thank you. Good morning, guys, and congrats on the progress. This is first question, thinking about the Home & Community Care opportunity with that kicking off here in earnest. You've talked about the healthcare cost savings as an important aspect to that story. When do you think we'll start to see enough data from the first partner to start showing those savings? As you're talking with other potential customers, are the discussions focused on CHF or moving to other indications as well?

Joseph DeVivo:Yeah, I wish we could do an investor day just on answering that question because it is really, really exciting. Because remember, our device has many different use cases, and the initial use case we're doing with our partner is for congestive heart failure and to reduce the revolving door into hospitals, which every patient that you can eliminate an admission or readmission saves them $10,000-$12,000 for each patient. So putting a protocol in place that allows us to manage those patients and keep them healthier and better managed, and having a virtual cardiologist with them, and having them getting pulmonary scans for pulmonary wetness really is a major deal.

But the same partner also now wants to do bladder scanning, wants to do scanning for sepsis, wants to do cardiac echoes, and we're telling them, "No, let's just focus on this first." There are other types of clinical opportunities, and right now this opportunity is in nursing homes to keep the revolving door, but there are opportunities where millions of patients are being managed in their home, and they are being managed by home healthcare nurses that come in and see them. There are use cases that we are working towards with other large organizations too.

As far as the data is concerned, that is another really delicate source because our partner is not one to want their data to be marketed out in the marketplace. We will find an elegant way to communicate the progress without violating their trust. Thank you.

Steven Lichtman:Yeah. We have been there. Just really quickly, one test on Mendaera and any initial feedback you have heard from the field, obviously understand of the Embedded opportunity, maybe not the largest, but it is sort of the first to hit here commercially. Any initial feedback that you have heard from them relative to Focalist?

Joseph DeVivo:Yeah. Well, actually, they were in our offices yesterday, and we had a great update, and we are very excited for their launch and what will occur with them in 2027. They are a startup, so it is not like there is all this existing revenue that just pops over, but they are out there selling, and they are in account by account by account. It is just such a wonderful multiplier for us because on one side, they are bringing ultrasound into some interventional cases, doing some more complex cases that would be hard to do with the human hand.

It is leveraging our core platform, and it is a part of that flywheel because as they go into health systems doing more advanced procedures, leveraging on a Butterfly imaging stack, and then they are doing these advanced procedures, there are a lot of synergies in our sales process. It will be a year or two before that becomes meaningful revenue for us, but they are launching now, and the revenue is coming in, and we are very excited.

Steven Lichtman:Great. Thanks Joseph.

Joseph DeVivo:Thank you.

Operator:The next question comes from the line of Chase Knickerbocker with Craig-Hallum. Your line is open. Please go ahead.

Joseph DeVivo:Hey, Chase.

Chase Knickerbocker:Hey, guys. Yeah, this is Nick on for Chase. Thanks for taking our questions. You guys touched on this a bit in the previous question, but just as you guys build out more of a proactive outbound sales effort for Embedded, how is that changing the size and mix of the pipeline, and what could this mean for the pace of new partner adds in 2027? And then also on top of that, just any verticals outside of healthcare where you guys are seeing strong interest?

Joseph DeVivo:Yep. Thank you for that. The base is definitely broadening, and the question really is as we broaden the base, I think there's going to be a lot more base hits. There's going to be a lot more opportunities to get people on and then just to start seeing some revenue, and I think they're all going to stack. And then we hope to pull some diamonds out of that stack and create more Midjourneys as we. The thing right now is so much of our earlier conversations have been with more startup, new tech generation, and some of our conversations are now being held with much larger entities, and some of them are large entities with mature products.

There is the possibility if we sign a deal with a large entity with a mature product, that revenue happens very quickly because they are already standing on hundreds of millions or billions of dollars of product revenue of things that they are already selling. So us getting into that environment all of a sudden would be like you are not in the R&D of a new market, you are converting or you are upgrading their technology to new capability. There are so many different things, and it is early, and it is very hard to predict, and that is why John and I are taking a conservative posture that we basically guide what is signed.

We are not going to extrapolate, we are not going to guess because each of these are our unique deals, and each of these are unique situations. But one deal can completely change the complexion of the company. I have a friend of mine who is a CEO of biotech. I just checked their revenue today. They are about $5 million in revenue as a biotech, and their market cap is about $3 billion. Because people look at and say, "Okay, if this molecule can do what this can, then this opportunity is massive." We are signing deals like that every day. Butterfly should not be looked at as a revenue multiple today.

It should be looked at as the magnitude of opportunity that we are capturing for our future and for investors. It becomes very difficult to predict each one of these. But as I said in my prepared remarks, we are layering in opportunity on top of opportunity on top of opportunity, and it expands our TAM, and it expands the leverage. The beautiful part is that it is leveraging our core tech.

We just had a laboratory two days ago with a very large potential partner who came up with a very specific use case and said, "Can you do this?" Our team spent a month, looked at exactly what they were trying to do, and we knocked it out of the park in the lab yesterday, or two days ago. It is a very, very exciting time, and I would be looking at what is Butterfly able to deliver over the next several years than worry about how this phases on a quarter-by-quarter basis.

Chase Knickerbocker:Got it. That kind of leads into my next question is just as these existing Embedded partners progress and you continue to add new ones, how much capacity do you guys have within the current engineering team, and how should we think about any incremental operating expense going into next year to support Embedded growth?

Joseph DeVivo:Yeah. I think there is a variable component there. So, as we sign new deals, there is a demand on development resources, and we will continue to grow it. Again, we won't get ahead of ourselves. The first parts of these deals, we get a lot of leverage off of what we've already done. Then the incremental, we will bring in the best talent. We've been very fortunate, actually, in 2026 so far. We've brought on some extraordinary people, and we're so delighted, and we do need to continue to do that as we sign these deals. But it's something that we will be able to just create more and more leverage.

But yes, of course, we will have to continue to invest as well. Anything?

John Doherty:Yeah. Our results reflect that. R&D was up 17% year over year in the quarter. Not that I want to sit there and call out an increase in operating expense, but effectively, as we've also said, our Adjusted EBITDA was down, and we're trending in the absolute right direction. We're still well on track to be-

Joseph DeVivo:Our Adjusted EBITDA loss was down.

John Doherty:Yeah. I'm sorry. Adjusted EBITDA loss was down. We're still on track to be Adjusted EBITDA positive and cashflow positive in 2028. Actually, as our results are being driven out, I would say that's moving closer for us. In addition, we haven't really talked about it much on the call, we talked about it in the prepared remarks. We did file a new shelf. I want to remind folks, that's over a three-year period of time that would be active for us, in addition, an ATM. So should we need capital at some point in time, we're prepared for that. It was just good general corporate housekeeping.

But current course and speed, we're headed in the right direction, and we are investing in the areas of the business that we need to, and our results are reflective of that.

Chase Knickerbocker:Great. Thanks for taking the questions.

Joseph DeVivo:Thank you.

Operator:The next question comes from the line of Ben Haynor with Lake Street Capital Markets. Your line is open. Please go ahead.

Ben Haynor:Good morning, gentlemen. Thanks for taking the question.

Joseph DeVivo:Hey, Ben.

Ben Haynor:Just following up on kind of the Embedded. Hey, Joseph. Just following up on the Embedded sales force, how is that kind of structured? Are they going after individual areas, BCI, industrial, what have you? How do you make the decision where to add folks to that group?

Joseph DeVivo:So, thank you for the question. First of all, we are trying to get through the pipeline. It is not just in the selling folks, but there are application specialists who are able to do labs and able to do demos, et cetera. First of all, we are getting through the pipeline and trying to get the pipeline closed because each one of these, it is not just a cookie cutter sale, it is a partnership, and we have to learn about the partners and tailor ourselves to their needs. There are very large ultrasound markets, and there are very large players that we are proactively targeting, and we are looking at it from a market by market basis.

It starts off by cultivating the pipeline and then learning from the pipeline to extrapolate it into different markets. Now, we are starting for the first time. We are in the process of being proactive, cold calling, having dialogue. We can be more proactive with existing incumbents by communicating to them and by going out and having that dialogue. Usually, the startup companies are the inbounds to us, and the more existing ultrasound companies are the ones that we are outbound to. We are also starting to target certain markets where we think we have great applicability.

I wish I could outline them for you, but if I outline them for you, then you will be like, "Oh, so you are talking to this company or that company." I do not want to do that, but we are proactively going into the largest ultrasound markets that are not competitive with Butterfly and talking to them about what we think we can do to refresh and upgrade and take their current technology to the next level.

We are also, though, targeting some non-healthcare industries, and I think I mentioned in the last quarter that we are talking to someone who is not a traditional healthcare company, and it is our first market that we are having dialogue in and doing labs. We are going to do everything we can to build on that. But we have been building our infrastructure, building the team. It is one thing to talk to a customer, it is another thing to have the technical support in the lab, the ability to make modifications that they might want to see and show them. We have been building that all together, and right now, I am very pleased.

We have been blessed with David Horsley and Steve Cashman, who have been leading this effort. We are very excited about the new people that we have brought on. The more I can tell you, the more I will. But I cannot outline each of the markets for competitive reasons.

Ben Haynor:Understandable. That makes a lot of sense. I guess I will leave it at one question before someone pulls the fire alarm.

John Doherty:I believe we have one more.

Joseph DeVivo:Thank you, Ben.

John Doherty:One more analyst.

Operator:Your next question comes from the line of Arailym Kanatkyzy with Freedom Broker. Your line is open. Please go ahead.

Arailym Kanatkyzy:Hi, everyone. Thank you.

Joseph DeVivo:Good morning.

Arailym Kanatkyzy:Thank you for taking my question. This is Arailym Kanatkyzy. Good morning.

Joseph DeVivo:Hello.

Arailym Kanatkyzy:Congrats on a strong quarter and record gross margin. I also want to focus on Compass AI. This quarter you closed 5 seven-figure and 10 six-figure enterprise deals, which suggests that health systems are starting to buy point-of-care ultrasound as a managed program. But historically, hospital POCUS adoption has dealt less on hardware and more on workflow, and that is exactly the layer Compass AI is designed to solve. My question is, how do these enterprise wins represent system-wide standardization on Butterfly, or are they still mostly departmental deployments that can expand over time? Over the long term, what do you expect to come from recurring enterprise software, and how should we think about the contract structure behind these deals?

Thank you.

Joseph DeVivo:That is a beautiful question. A very, very good question. Because when we built Compass AI, we didn't build it for Butterfly alone, because we knew if we were going to put an enterprise software in place, you can't put enterprise software in for one product. What we're doing is solving a problem the hospital has. The hospitals are buying GE POCUS carts. They're buying SonoSite POCUS carts. They're buying carts from Mindray and all these other companies that have POCUS is divided into two different pieces of hardware, a handheld device and then a scaled-down version of a cart.

That's again why we are getting into the iQ Station market and to get into that cart market to begin with. Hospitals have POCUS carts all over the hospital, and probably 30% of the scans are getting recorded into their EMR, so they're not compliant and they're losing revenue. So when we put Compass AI in place, we are solving a major problem that the hospital has, whether or not they're a Butterfly customer.

When we solve that problem for them and we put our infrastructure in place, of course, Compass AI integrates with our hardware much better than anyone else because we can control both sides, and we have the ability to make the software that sits inside of our hardware more capable. So, it starts off with solving a problem that the entire industry is creating by putting POCUS into hospitals. Then once we are in, then we use that as a land expand by building out the handheld program.

That's why our iQ Station dovetails so beautifully in, because now we will have a handheld, we'll have a cart, and we'll have the enterprise software platform to be able to have a really smooth, elegant, and incredibly modern way of managing these programs. But it's a very astute question because a lot of times, sometimes 80% of the scans that are coming into Compass are from all of our competitive companies. So Butterfly's vision has been to promulgate and to move point-of-care ultrasound forward, and Compass AI is dedicated to solving health system problems in point-of-care ultrasound, and then second, to be able to pull through our hardware.

That's why our iQ Station is going to be such an important launch, because we're going to go after existing business, we're going to go after the competitive footprint on point-of-care ultrasound, and the integration of our software and hardware is going to be so tight that it's going to make us the choice for the future. But thank you for such a great question.

Arailym Kanatkyzy:Thank you so much.

Operator:There are no further questions at this time. I will now turn the call back to Joseph DeVivo, President and CEO, for closing remarks.

Joseph DeVivo:I know it's been a long call. We've been blessed with having three more analysts this quarter. We're so appreciative of the attention and support. We're going to have to reduce our prepared remarks and have more conversation going forward because those questions were just fantastic. I just want to thank everybody for their support. We are so excited about our future. So much is happening, and can't wait to provide more updates at the end of the year and of course, at the upcoming JP Morgan conference. Thank you all, and have a wonderful holiday season.

Operator:This concludes today's call. Thank you for attending. You may now disconnect.

Should you buy stock in Butterfly Network right now?

Before you buy stock in Butterfly Network, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Butterfly Network wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflixmade this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $334,308!* Or when Nvidiamade this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,323,413!*

Now, it's worth noting Stock Advisor's total average return is 897% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor , and join an investing community built by individual investors for individual investors.

See the 10 stocks »

*Stock Advisor returns as of October 29, 2026.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

Butterfly (BFLY) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool