Butterfly Network (NYSE:BFLY) reported fourth-quarter and full-year 2025 results highlighted by record revenue, improved profitability metrics, and its first quarter of positive operating cash flow, which management said was driven by upfront payments tied to its Midjourney agreement.
Record fourth-quarter revenue and first positive operating cash flow
Chairman and CEO Joseph DeVivo said fourth-quarter revenue totaled $31.5 million, up 41% year-over-year, and characterized the period as the first quarter in company history to generate positive operating cash flow. CFO John Doherty said the quarter’s performance exceeded the company’s earlier expectations, noting the 41% growth rate was above the “at least 17%” year-over-year growth the company referenced in January, as Butterfly saw stronger-than-anticipated core business results and more revenue recognized from its embedded partnership work.
- U.S. revenue: $26.8 million, up 55% year-over-year, driven by Butterfly Embedded revenue and core demand; unit sales rose 44%.
- International revenue: $4.7 million, down 6% year-over-year; iQ3 sales increased 42% while iQ+ sales fell 79%.
- Product revenue: $18.1 million, up 23% year-over-year, driven by higher volumes across channels and higher international average selling prices due to iQ3 mix.
- Software and other services: $13.4 million, up 76% year-over-year; software and services were 43% of revenue versus 34% a year earlier, which Doherty attributed largely to Butterfly Embedded.
Full-year 2025 results: revenue growth and improved margins
For full-year 2025, Butterfly reported total revenue of $97.6 million, up 19% from 2024. Doherty said growth was driven by (1) expansion in the core “focused” point-of-care ultrasound (POCUS) business, including increased volume and higher average selling prices from iQ3 mix and channel performance, and (2) growth in Butterfly Embedded, “primarily from the execution of the Midjourney contract.”
Gross profit in Q4 rose to $21.2 million, a 55% increase compared with prior-year adjusted gross profit of $13.7 million. Gross margin improved to 67% from 61%, which management said reflected higher-margin Butterfly Embedded revenue and lower software amortization.
Adjusted EBITDA also improved. In Q4, adjusted EBITDA loss narrowed to $3.2 million from a $9.1 million loss a year earlier. For full-year 2025, adjusted EBITDA loss was $26.5 million, improving from $38.9 million in 2024. Doherty attributed the improvement to higher-margin revenue and “continued financial discipline,” including lower payroll costs year-over-year.
Butterfly ended 2025 with $154.5 million in cash and cash equivalents (including restricted cash). Doherty said 2025 cash use totaled $19.4 million (excluding funds from the prior year’s offering), improving from $45.9 million of cash use in 2024. He also said the company generated $6.3 million of positive cash flow in the fourth quarter.
Midjourney and the evolution of Butterfly Embedded
DeVivo said Butterfly’s “strategic growth plan” introduced in early 2024 centers on accelerating its core POCUS business, expanding into new care settings such as home care, and extending its semiconductor ultrasound platform beyond handheld devices through co-development efforts. He highlighted a November deal with Midjourney that contributed $6.8 million of revenue in Q4 and was a key driver of the quarter’s 41% year-over-year growth.
Management described Midjourney as an independent research lab focused on generative AI. DeVivo said the partnership combines Butterfly’s Ultrasound-on-Chip technology and imaging software with Midjourney’s AI compute capabilities for a new ultrasound application. He called the deal “pre-commercial” today, but said Butterfly could see additional revenue in “outer years” through chip sales and a revenue-share model if the technology is commercialized, in addition to ongoing licensing fees.
During Q&A, Doherty said the Midjourney agreement is a $74 million contract with multiple components, including an upfront payment, annual license fees, and milestone work that supports revenue recognition over time. He said the company expects “a good amount of contribution throughout 2026 into 2027” from the contract. DeVivo added that Butterfly Embedded is not limited to Midjourney, and said the company has “eight or nine embedded partners today” with a large pipeline.
Butterfly also said it has consolidated its semiconductor platform strategy under “Butterfly Embedded” and sunset the prior “Octave” name, describing the effort as reminiscent of an “Intel Inside” model.
Core business updates: enterprise momentum, Compass AI, and market expansion
In the core POCUS business, DeVivo said revenue grew 15% year-over-year (on top of 35% growth in the prior-year fourth quarter) and Butterfly closed a second large system-wide enterprise deal in Q4 2025. He and Doherty both said the company felt better about macro trends and the deal cycle than earlier in the year.
DeVivo cited the Q4 launch of Compass AI as a tailwind for enterprise adoption, saying it helped refresh existing accounts, attract new customers, and drove more than 50% growth in the enterprise pipeline since launch. He also pointed to ongoing investments in cloud infrastructure and security, including recent U.S. achievements of GovRAMP and TX-RAMP, with FedRAMP anticipated in the coming months.
Internationally, management said it sees meaningful opportunities in 2026 as it opens markets in South America and expands across the Middle East and Asia, alongside renewed momentum in global health. DeVivo said the company has surpassed 1,000 NGO partners worldwide.
Butterfly also discussed its partner ecosystem. DeVivo noted that HeartFocus became the first FDA-cleared app in 2025 and said he expects additional partners to reach that milestone in 2026. The company also plans to release a proprietary beam steering API in the first half of the year, which management said would open 3D imaging capabilities to partners.
2026 outlook: growth expected, with seasonality and tariff impacts
For the first quarter of 2026, Butterfly expects revenue of $24 million to $28 million, citing seasonality. The company expects adjusted EBITDA loss of $8 million to $10 million for Q1, reflecting payroll tax and 401(k) resets as well as costs tied to its national sales meeting and POCUS Innovators Forum.
For full-year 2026, Butterfly guided to revenue of $117 million to $121 million, representing approximately 20% to 24% growth. It expects an adjusted EBITDA loss of $21 million to $25 million, which Doherty said includes investments to support innovation and the embedded business, as well as impacts from tariffs initiated in 2025.
On macro conditions, Doherty said earlier concerns around regulatory processing delays and customer purchasing decisions were “very much behind us,” though he noted tariffs remained an unpredictable area and the company still expects some downward pressure from them.
DeVivo also provided product roadmap timing, saying the company’s P5.1 chip moved to production by year-end and management is targeting early 2027 to ship it in a next program, subject to validation and clearance. He said iQ Station is actively on the roadmap and targeted for a later 2027 timeframe.
On home care, DeVivo said the company expects to reach a first commercial agreement in the first half of 2026, with nominal revenue in 2026 and contribution starting in 2027. He reiterated prior commentary that a single national use case could represent a $40 million to $50 million revenue opportunity, while emphasizing the company still needs to prove scalability through early geographic expansion.
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.
