Butterfly Network, Inc.

Hello, everyone, and welcome to the Butterfly Network Q3 2024 earnings call. My name is Carla, and I will be coordinating your call today. Once the presentation is completed, you can register a question by pressing star followed by one on your telephone keypad. And if you change your mind, please press star followed by two. I will now hand you over to Heather Katz, Chief Financial and Operations Officer at Butterfly Network to begin. Heather, please go ahead.

Good morning, and thank you for joining us. Earlier today, Butterfly released financial results for the third quarter ended September 30, 2024, and provided a business update. The release and earnings presentation, which include a reconciliation of management's use of non-GAAP financial measures compared to the most applicable GAAP measures, are currently available on the Investors section of the company's website at ir.butterflynetwork.com. I, Heather Goetz, 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 be making certain forward-looking statements. These statements may include, among other things, expectations with respect to financial results future performance, development and commercialization of products and services, potential regulatory approvals, and the size and potential growth of current or future markets for our products and services. These forward looking statements are based on current information, assumptions, and expectations that are subject to change and involve a number of known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our filings made with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, and the company disclaims any obligation to update such statements. As a reminder, this call is being webcast live and recorded and we will be referencing a slide presentation in conjunction with our remarks. There may be a short delay between the live audio and the presentation being shown. On the same page, you will also be able to access the webcast live and replay it once the call has been completed. I would now like to turn the call over to Joe. Joe?

Thank you, Heather. So good morning, everyone, and thanks for joining us. As you recall, On March 18th of this year, the Butterfly management team held an investor day. At the event, we introduced four key strategic pillars for Butterfly. And these were one, accelerating growth in our core POCUS business. Two, investing in R&D to maintain our tech leadership, especially in semiconductor innovation. Three, expanding our market into established non-POCUS markets like hospital carts and into new care settings like homes. And four, executing efficiently to drive double-digit growth, reach cash flow breakeven by 2027, and hit $500 million in revenue within five years. So with our third quarter results in hand, I'm pleased to say that we are executing in all phases. At various points throughout today's call, I'll refer back to these growth pillars and the progress that we've made against them. First, let's review this quarter's strong performance. We told you in pillar one that accelerating growth in our core business was a priority, and we're doing just that. Butterfly's team exceeded our operating plan this quarter, and we delivered top-line revenue growth of 33% year over year. This is our fifth consecutive quarter where we met or exceeded our expectations. We achieved this while simultaneously reducing our cash use to our lowest level in history, delivering reduced OPEX while investing in the key growth pillars outlined above what's more satisfying is that every sales channel hit their objectives and the quarter was not an anomaly there was no one-time big deal each channel delivered through execution it was a beautiful revenue quarter which was manifested through a collection of great products being consumed by happy customers and great people working together to meet our customers' needs. And this is just the beginning. We are also moving ahead with the fuel behind our health system approach. Our message is resonating. Every doctor and nurse wants their own butterfly. Care should be delivered where the patient is. Digital is winning over analog. So I'd like to focus on a few notable highlights. in our enterprise and med ed expansion areas. Our partnership with the University of Rochester Medical Center, the URMC, continues to flourish. Dr. Rotundo, CEO of URMC's faculty group, spoke at our investor day, emphasizing his belief that providing every doctor with imaging access would enhance patient care, boost physician satisfaction, and drive financial gains. His vision is now becoming a reality. A paper by Dr. David Waldman, URMC's Chief Medical IT Development Officer, highlights these accomplishments. The success of their system-wide deployment of butterfly, improving patient care, clinical operations, and financial outcomes. This paper has guided other institutions now towards similar focused deployments, and I expect more health systems to follow URMC's lead in 2025. In September, Dr. Steven Erickson from Jefferson Healthcare gave an award-winning presentation at the American Academy of Family Physicians' FXM conference. He concluded that not only does Butterfly make him a better doctor with greater ability to care for his patients, but the Butterfly device pays for itself quickly. As an individual family medicine doctor, he collected about $15,000 in reimbursement in just one year, already making back the more than 2x all-in cost of our probe, and software. And there's more supporting evidence to come. An important abstract from a major academic institution will reveal findings on a significant reduction in length of stay for in-facility management of congestive heart failure patients when using butterfly. I look forward to bringing that to you soon. I'd also like to briefly comment on our progress in medical education. on October 8th, Kansas City University's medical school announced its new POCUS curriculum using our ScanLab AI training app. Traditionally, ultrasound education requires dedicated instructors besides students to guide probe placement, making one-to-one instruction difficult, costly, and often not practical. Our ScanLab app is a game changer. It provides the necessary personal guidance through AI, including probe placement walkthroughs, reference images, and real-time anatomic labels so students can learn independently. We offer it for free to all Butterfly subscribers. Two universities in California are already performing trials to study its effectiveness, and now KCU has rolled out this curriculum using ScanLab as primary instruction for their first-year students. It's really cool. So moving on to international. The team overseas continues to deliver. In this quarter, we opened new markets in Indonesia, Netherlands, Belgium, and we successfully launched IQ3 in Europe. Our well-attended event at the Gherkin in London was simply electric. It was followed by several conferences in the UK and Austria where booths were oversubscribed for our training and scanning events. We have a global medical community who heard about IQ3 months before launch. and wanted to see it all for themselves. We look forward to our global distribution partners continuing to launch IQ3 through the end of the year and into 2025. We will benefit internationally from a higher ASP and now two probes in distribution. This should continue revenue growth in 2025. The VET team also saw strong growth. with a 50% year-over-year revenue increase in the sector. We continue to advance the cattle opportunity that I've introduced on past calls and are now disseminating research showing that Butterfly and POCUS is a worthy approach for monitoring bovine respiratory disease and can help cattle industry address its costly disease management crisis. Initial findings were presented by Kansas State University and the Beef Cattle Institute at several national meetings in the third quarter, and the final results are being submitted to peer-reviewed journals, which will be the basis of our go-to-market plan. Lastly, the butterfly garden AI marketplace also continues to grow. Not only did we sign two more partners in Q3, bringing our garden portfolio to 17 companies, But just this week, Heart Focus by Desky became our second partner to launch an educational tool commercially. The training application provides AI-powered guidance to learn 10 standard cardiac views and is available in Apple's App Store now for purchase. Desky intends to launch a clinical version of this AI tool for butterfly devices in 2025. Before I turn it over to Heather, I'd like to publicly welcome Steve Cashman, who joined Butterfly as chief business officer in September, which is great timing as we continue to accelerate growth. With a successful career in technology and healthcare, Steve is a dynamic executive and strategic thinker. We first worked together at InTouch Health when I was CEO and he led the commercial business. Together we achieved significant growth before selling to Teladoc Health. Then he became CEO of Caption Health where I served on his board. during its successful sale to GE. At evaluation, that's the envy of AI ultrasound developers. I look forward to having him lead our strategic and commercial efforts and will gradually involve him in conference calls with Heather and me as appropriate. So now I'd like to turn it over to Heather. Heather?