Butterfly Network NYSE: BFLY reported first-quarter 2026 results that management said reflected continued momentum across its core point-of-care ultrasound (POCUS) business and its growing Butterfly Embedded segment, while also highlighting new regulatory and commercial milestones tied to its artificial intelligence roadmap.
Q1 revenue up 25% as Embedded accelerates
Chief Financial Officer John Doherty said Butterfly “started the year strong,” delivering revenue of $26.5 million, up 25% year-over-year. Doherty attributed the growth primarily to strength in U.S. health, international, and veterinary channels, a higher mix of iQ3 device sales that lifted average selling price (ASP), and contributions from Butterfly Embedded.
By geography, Doherty said U.S. revenue was $21.4 million, up 25% year-over-year, driven by Embedded and “solid demand in the core business,” with unit sales up 5% in what he described as a seasonally slower quarter. International revenue increased 23% to $5.2 million. He added that iQ3 sales were up 39% year-over-year while lower-priced iQ+ sales declined 43%, contributing to higher ASP.
For the first time, management provided a revenue split between the core business and Embedded, noting it also appeared in the company’s 10-Q. Doherty said core revenue was $20.8 million, up 10% year-over-year, driven by higher volume and price from iQ3 mix and strength in U.S. health, international, e-commerce, and veterinary channels. Butterfly Embedded revenue was $5.7 million, up 147% year-over-year, which Doherty said was “primarily driven by the Midjourney partnership.”
Margins improve; adjusted EBITDA loss narrows
Doherty reported gross profit of $18.3 million, up 37% from $13.4 million a year earlier, with gross margin rising to 69% from 63%. He said margins benefited from higher-margin Embedded revenue, a higher mix of iQ3 devices, and lower software amortization.
Operating performance also improved. Doherty said adjusted EBITDA loss was $6.1 million, compared with a loss of $9.1 million in the prior-year quarter, a 32% improvement. He attributed the change to “contribution from higher margin revenue and continued financial discipline.”
Butterfly ended the quarter with $138 million in cash and cash equivalents (excluding restricted cash), and Doherty said cash used in the quarter was $12.5 million, compared with $14.7 million a year ago.
FDA clearance for gestational age “blind sweep” AI tool
Chairman and CEO Joseph DeVivo highlighted what he described as a major regulatory milestone: Butterfly becoming “the first company ever to earn FDA clearance of a blind sweep AI tool,” which he said can determine gestational age in two minutes. DeVivo also noted that the FDA publicly highlighted the clearance on social media.
DeVivo said the application is designed for settings where patients may not know key dates or cannot communicate them, making clinical decisions more complex. He said the gestational age (GA) tool was built on deep learning models from Dr. Jeffrey Stringer’s team at the University of North Carolina and trained on “over 21 million images.”
Butterfly is “in the process of launching this tool” in the U.S. and in global health settings that rely on FDA pathways, according to DeVivo, who emphasized that Butterfly can deploy new capabilities via cloud-based software updates to existing users in cleared markets.
Responding to a question about whether the GA clearance could “derisk” future blind sweep tools, DeVivo said Butterfly took a longer validation path and treated the software with the seriousness of a device given the clinical consequences. He said the process created “a moat” and added that the company is working with partners and ministries of health that have been waiting for such a capability. He also cited prior work training “1,000 midwives in Africa,” saying Butterfly can push the new tool to existing devices through its platform.
Compass AI, Butterfly Garden, and enterprise momentum
DeVivo said Butterfly’s “Compass AI launch last quarter is showing early success,” and that the company’s pipeline of software deals measured in total contract value (TCV) was “up sharply” versus the first quarter of 2025. Doherty said Butterfly executed a “large seven-figure TCV Compass AI contract,” while DeVivo added on the call that the company had also closed its first enterprise deal in the second quarter and cited “a seven-figure software TCV deal with a customer committing to the long-term Compass AI roadmap.”
Asked about whether enterprise deals would contribute materially to revenue this year, DeVivo said pipeline growth was an indicator “enterprise sales will follow,” adding, “I’d expect this to be a very good enterprise year. I’d expect this to be a very good Compass AI year.”
DeVivo also discussed the company’s third-party developer ecosystem, saying two new partners joined the Butterfly Garden during the quarter, bringing the total to 30. He said four existing partners have received FDA clearance for versions of their software and noted DeepEcho received breakthrough designation and “expects clearance of a robust prenatal AI application potentially by the end of this year.” He also said Butterfly anticipates iCardio going live with an FDA-cleared model “this year, beginning of next year as well,” and said HeartFocus has made progress following the launch of a clinical app late last year.
On the commercial front, DeVivo said medical schools are “accelerating one-to-one adoption,” with “nearly 1,000 probes sold so far this year across six institutions.” In Q&A, he said the second quarter is typically the biggest medical school quarter due to fiscal year timing and expects activity to be “very positive” in the period.
Management also highlighted security milestones. DeVivo said Butterfly achieved HITRUST r2 certification and entered the FedRAMP marketplace “as in process with VA sponsorship,” which he said enhances its ability to support large health systems and pursue federal opportunities.
Home and Community Care timelines; Embedded pipeline and product roadmap
DeVivo said the company’s home-focused initiative is now officially named Butterfly Home and Community Care. He said Butterfly expects its first commercial agreement to be signed in the first half of 2026 and to begin training nurses to support patient scanning across a full state in the third quarter. In Q&A, DeVivo described a prior feasibility pilot of about 100 patients and said the company saw a “meaningful reduction of admissions and readmissions.” He said Butterfly expects some revenue contribution in the second half of 2026 and aims to expand to more states and “throughout the entire country” in 2027 if the initial commercial deployment demonstrates similar economic benefits.
On Embedded, DeVivo said the business signed its ninth partner during the month and expects to add at least two more by mid-year. He told analysts Butterfly is working on opportunities that “could present similar type of near-term” financial impact as the Midjourney partnership, while also emphasizing partner confidentiality.
DeVivo also outlined a product roadmap update not included in prepared remarks, telling analysts the company expects a new probe “early next year” and plans to provide more details closer to the end of 2026 or early 2027. He said it would be the first ultrasound-on-chip device from Butterfly to include “harmonics with CMUT.” He also said the company’s station remains in development with an “early to mid 2027 timeframe.”
Separately, DeVivo discussed Butterfly’s efforts related to the EU RoHS lead exemption for handheld ultrasound, saying a third-party reviewer confirmed CMUT as a technically viable alternative. He said the reviewer recommended reapproval of the exemption for two years, which he characterized as the lowest possible term.
Looking ahead, Doherty guided second-quarter 2026 revenue to $27 million to $31 million and adjusted EBITDA loss to $6 million to $8 million. For the full year, Butterfly reaffirmed guidance for revenue of $117 million to $121 million and adjusted EBITDA loss of $21 million to $25 million. Doherty said guidance includes increased investment to support innovation and growth in both the core and Embedded businesses, including investments tied to the Home and Community Care launch.
About Butterfly Network NYSE: BFLY
Butterfly Network, Inc is a medical technology company focused on democratizing access to diagnostic imaging through its proprietary ultrasound-on-chip platform. The company's flagship device, the Butterfly iQ, leverages semiconductor technology to deliver whole-body ultrasound imaging in a handheld form factor. This portable system connects to a compatible smart device, enabling point-of-care scanning across a variety of clinical settings.
Beyond its hardware offering, Butterfly Network provides a cloud-based software suite that supports image storage, analysis and remote collaboration.
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