Breaking Down Butterfly Network, Inc. (BFLY) Financial Health: Key Insights for Investors

You're looking at Butterfly Network, Inc. (BFLY) and seeing a classic growth-stage dilemma: great technology but a tough path to profitability. The direct takeaway is that while the company is managing its cash burn exceptionally well, the market still needs to see those large enterprise deals close to justify its valuation. For the full fiscal year 2025, the company reaffirmed revenue guidance of $91 million to $95 million, which is solid, but the adjusted EBITDA loss is still projected to be between $32 million and $35 million. Honestly, that gap is what we're focused on. The good news is they've tightened their belt, reducing quarterly cash burn to a record low of just $3.9 million in Q3 2025, which, coupled with a cash and equivalents balance of $144.2 million, buys them significant time. But, to be fair, the Q3 GAAP net loss hit $34.0 million, partly due to a large non-cash inventory write-off, so you defintely need to look past the headlines and into the core operating performance, especially as they roll out the new Apollo AI chip and Compass AI software.

Revenue Analysis

The core takeaway for Butterfly Network, Inc. (BFLY) is that revenue growth is solid but moderating, with the company guiding for a full-year 2025 revenue between $91 million and $95 million, an approximate 13% year-over-year increase. Your investment thesis needs to account for this shift toward more sustainable, albeit slower, expansion compared to the high-growth periods immediately following a major product launch.

Butterfly Network, Inc.'s revenue streams are clearly split between hardware and recurring software, a classic 'razor-and-blade' model. The semiconductor-based ultrasound device sales-the product revenue-drive the initial adoption, but the software and services are what create the long-term, high-margin revenue base. In the third quarter of 2025 (Q3 2025), total revenue hit $21.5 million, a 5% growth over the prior year period.

Here's the quick math on the Q3 2025 revenue mix, which shows where the company is making its money:

• Product Revenue: Generated $14.6 million, representing about 67.9% of total revenue.
• Software & Services Revenue: Contributed $6.9 million, or roughly 32.1% of the total.

Product revenue, driven by the higher average selling price of the iQ3 probe, saw an 8% increase year-over-year in Q3 2025, which is defintely a good sign for hardware adoption. But, honestly, the software side was flat at $6.9 million compared to the previous year, with increased licensing revenue from partnerships being offset by lower individual subscription renewals. That flatness is a near-term risk you need to watch, as subscription revenue is key to long-term valuation.

Looking at the geographic split, the company remains heavily reliant on the U.S. market, though international expansion is starting to gain traction. The U.S. brought in $16.1 million in Q3 2025, a slight gain year-over-year, largely from e-commerce and improved performance in the veterinary distribution channel. International revenue grew 4% to $5.4 million in the same quarter, primarily due to the higher price point of the iQ3 probe, which launched internationally in Q3 2024.

The biggest change in the revenue stream is the clear pivot toward the latest technology. The iQ3 probe is outperforming earlier forecasts for the iQ+ model, now representing 85% of probe volume. This strong adoption of the higher-priced, next-generation device is the main driver of the improved gross margin you're seeing. You can see the full-year guidance and segment performance mapped out here:

If you want a deeper dive into the valuation and strategic frameworks, you can check out the full post at Breaking Down Butterfly Network, Inc. (BFLY) Financial Health: Key Insights for Investors. Your next step should be to model the impact of that flat software revenue on the company's long-term discounted cash flow (DCF) valuation.

Profitability Metrics

You're looking at Butterfly Network, Inc. (BFLY) and asking the right question: is this business model actually profitable yet? The short answer is no, not on a GAAP (Generally Accepted Accounting Principles) basis, but the underlying operational efficiency is defintely improving. The path to profitability is visible, but it's still a long road.

For the third quarter of 2025, Butterfly Network reported a GAAP net loss of $34.0 million on revenue of $21.5 million, which gives you a net profit margin of approximately (158.1%). This is a massive loss, but you need to look closer at the gross margin to understand the core business health, especially the one-time charges that skew the GAAP numbers.

Gross Profit: The Core Operational Story

The gross profit margin is the most important number here, separating the cost of making the product from the cost of running the company. Butterfly Network's Q3 2025 GAAP gross margin was a negative (17.5%). That's bad, but here's the quick math: this was primarily due to a single, non-recurring $17.4 million write-down of excess and obsolete inventory.

If you back out that one-time charge-which is what the company's management wants you to do-the adjusted gross margin for Q3 2025 jumps to a much stronger 63.9%. That's a great number for a hardware-and-software medical device company, and it reflects higher average selling prices for the Butterfly iQ3 probe and better cost management.

• GAAP Gross Margin (Q3 2025): (17.5%)
• Adjusted Gross Margin (Q3 2025): 63.9%
• Core business efficiency is strong, but inventory management needs work.

Operating and Net Profit Margins: The Cost of Growth

When you move down the income statement, the losses pile up because of high operating expenses (OpEx), which cover research and development (R&D) and sales, general, and administrative (SG&A) costs. For Q3 2025, operating expenses were $31.4 million.

Here's what that means for the bottom line:

The GAAP Operating Loss of $35.2 million shows that even with the strong 63.9% adjusted gross margin, the company is spending aggressively to capture market share and develop its next-generation technology. The Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) loss of $8.1 million is a better indicator of the cash burn from operations, and management is guiding for a full-year 2025 Adjusted EBITDA loss of $32 million to $35 million, a slight improvement from earlier guidance.

Industry Comparison and Trend Analysis

Butterfly Network's adjusted gross margin of 63.9% is competitive in the MedTech space. For context, a peer company in the medical device sector, Profound Medical, reported a Q3 2025 gross margin of 74.3%. While BFLY is still below that top-tier peer, its margin is well within the range of high-growth technology hardware companies.

The trend is a move toward better cost control, but the net result is still a loss. The company has been gradually reducing its losses over the past five years at a rate of 8.8% per year. The current focus is on scaling the core business and leveraging its platform, which you can read more about in their Mission Statement, Vision, & Core Values of Butterfly Network, Inc. (BFLY). The key risk remains the high OpEx required to transition from a single-product company to a platform-based ultrasound solution.

Your action item is to watch the adjusted gross margin: if it continues to hold above 60% while the quarterly Adjusted EBITDA loss shrinks below $8 million, the company is on a clear path to breakeven. If the adjusted margin starts to slip, the cost-cutting efforts won't be enough.

Debt vs. Equity Structure

You're looking at Butterfly Network, Inc.'s (BFLY) balance sheet to gauge risk, and the quick takeaway is simple: this company is not relying on debt to fund its growth. They are an equity story, plain and simple, which is typical for a high-growth, pre-profit health technology firm.

As of mid-2025, the company's total debt is remarkably low at approximately $21.65 million USD. This figure covers both short-term and long-term obligations, and it's a drop in the bucket compared to their cash reserves. For a company still focused on research and development (R&D) and market penetration, this low debt profile is a deliberate strategic choice to maintain financial flexibility.

Here's the quick math on their leverage:

• Butterfly Network, Inc.'s Debt-to-Equity (D/E) Ratio is a lean 0.10.

For context, the median Debt-to-Equity ratio for the broader Surgical and Medical Instruments and Apparatus industry was around 0.70 in 2024, and the average for Health Care Technology is about 0.8323 in 2025. Butterfly Network, Inc.'s 0.10 ratio tells you they are significantly less leveraged than most of their peers. This is a huge advantage in a rising interest rate environment; they don't have large interest payments eating into their operating cash flow.

The company's financing strategy clearly favors equity funding over taking on new debt. This preference was made concrete in the first quarter of 2025 when they closed a public offering, raising $81.7 million of net proceeds. This move injected substantial capital directly into the business, bolstering their cash and equivalents to $148.1 million as of June 30, 2025. That's a strong cash-to-debt position.

What this estimate hides, however, is the dilution risk. While a low D/E ratio is great for solvency, funding rapid growth exclusively through equity means issuing more shares, which dilutes the ownership stake of existing shareholders. It's the trade-off for keeping the balance sheet clean. They are prioritizing a strong Mission Statement, Vision, & Core Values of Butterfly Network, Inc. (BFLY).-driven focus over minimizing share count.

The low debt and high cash balance mean Butterfly Network, Inc. has a long cash runway, which is defintely a key factor for a growth company that is not yet profitable. They have the capital to weather market volatility and fund their product roadmap without immediate pressure from creditors.

Your action item is to monitor the use of that $81.7 million in new equity. Is it driving revenue growth and margin expansion, or is it merely covering operational burn? That's the real test of this capital structure.

Liquidity and Solvency

You're looking at Butterfly Network, Inc. (BFLY) and wondering if they have enough short-term cash to fuel their growth without hitting a wall. The direct takeaway is this: Butterfly Network, Inc.'s liquidity position is strong, largely due to a recent capital raise, but their cash burn, while improving, still requires close monitoring.

A quick look at the liquidity ratios tells a clear story. As of the most recent quarter in 2025, Butterfly Network, Inc. boasted a Current Ratio of 4.80 and a Quick Ratio (acid-test ratio) of 3.35. For context, a ratio of 1.0 is the baseline for health, and anything over 2.0 is generally considered excellent. This means the company has $4.80 in current assets for every dollar of current liabilities, and even after stripping out inventory (the Quick Ratio), they still have $3.35. That's a defintely solid buffer.

Working Capital and Cash Flow Trends

The high liquidity ratios translate directly into a robust working capital position. Working capital, simply current assets minus current liabilities, is clearly positive and provides a significant cushion for day-to-day operations and strategic investments. The trend here is less about the ratio itself and more about how the company is managing its cash usage to sustain this position.

Here's the quick math on their cash flow statements for the Trailing Twelve Months (TTM) ending Q3 2025, showing where the cash is coming and going (all figures in millions of USD):

• Operating Cash Flow: -$24.85
• Investing Cash Flow: -$2.67

The negative operating cash flow of $24.85 million is typical for a growth-stage medical technology company that is still scaling its commercial operations. The good news is that management is showing real discipline in controlling the cash bleed. In Q3 2025, the quarterly cash burn was a record low of just $3.9 million, a sharp reduction from prior periods.

What this estimate hides is the significant capital injection that fortified the balance sheet. In Q1 2025, Butterfly Network, Inc. raised $81.7 million in net proceeds from a public offering, which is the primary driver of their current cash strength. This financing activity is why their cash and equivalents stood at a healthy $144.2 million as of September 30, 2025. This is the runway they need to achieve their goal of cash flow independence.

The table below summarizes the core liquidity metrics:

The key risk is that the cash burn, despite its reduction, remains negative. They are relying on that 2025 capital raise to fund operations until they reach profitability. The opportunity, though, is clear: the high liquidity gives them the freedom to invest in strategic initiatives like their Compass AI software and new chip development, which are critical for future revenue growth. If you want to dig deeper into who is backing this strategy, you can read Exploring Butterfly Network, Inc. (BFLY) Investor Profile: Who's Buying and Why?

Your next step should be to track Q4 2025 results closely to see if the quarterly cash burn continues its downward trend toward zero. Finance: project the current cash burn rate against the $144.2 million cash balance to determine the exact runway length by the next quarter's earnings call.

Valuation Analysis

You're looking at Butterfly Network, Inc. (BFLY) and trying to figure out if the current price reflects the company's future potential. The short answer is that traditional valuation metrics suggest the stock is a speculative growth play, not a value stock, because it is not yet profitable. The market is pricing in significant future growth, but the near-term volatility is defintely real.

As of November 2025, the stock has been volatile, showing a -22.75% decrease over the last year, with a recent price around $1.97. This is a classic high-risk, high-reward profile in the medical technology space.

Is Butterfly Network, Inc. (BFLY) Overvalued or Undervalued?

When a company like Butterfly Network, Inc. is in a heavy growth and investment phase, its valuation ratios are often negative or elevated. This is why you see a negative Price-to-Earnings (P/E) ratio and Enterprise Value-to-EBITDA (EV/EBITDA) ratio-they are losing money as they scale. Analysts anticipate the company will post an Earnings Per Share (EPS) of approximately -$0.35 for the full 2025 fiscal year, which confirms the unprofitability.

Here's the quick math on the key metrics based on trailing twelve months (TTM) data as of late 2025:

• P/E Ratio: -7.57 (TTM Nov 2025)
• EV/EBITDA Ratio: -6.23 (TTM Sep 2025)
• P/B Ratio: 2.34 (Nov 2025)

A negative P/E and EV/EBITDA ratio tells you that the company is trading at a multiple of its losses, not its earnings, so you must use other metrics. The Price-to-Book (P/B) ratio of 2.34 is the clearest non-loss-based metric here; it means the market values the company at over twice its net asset value (what the company says its assets are worth on paper). That's a premium for future growth, not a bargain.

Stock Price Trend and Analyst Sentiment

The stock's journey over the last year has been a rocky one. While the all-time high was a staggering $29.13 back in February 2021, the stock hit an all-time low of $0.67 in April 2024 before recovering somewhat. This kind of volatility is typical for a disruptive technology company.

Looking forward, the Wall Street consensus is a pragmatic 'Hold.' Out of five analysts covering the stock, the split is three 'Buy' ratings, one 'Hold,' and one 'Sell.' This mixed bag suggests a lack of strong conviction either way, which is why the average 12-month price target is a modest-but-significant jump to $3.00. That implies a potential upside of over 50% from the recent price of $1.97, but it's still a cautious outlook.

Dividend Policy: No Payouts

As a growth company focused on reinvesting capital into research, development, and scaling its Ultrasound-on-Chip™ technology, Butterfly Network, Inc. does not pay a dividend. Its dividend yield and payout ratio are both 0.00%. This is standard for a company prioritizing market penetration and product development over shareholder distributions. You should not be looking at this stock for income.

To be fair, the company needs every dollar to fund its path to profitability. If you want to dive deeper into who is actually buying the stock and why, you should check out Exploring Butterfly Network, Inc. (BFLY) Investor Profile: Who's Buying and Why?

Risk Factors

You're looking at Butterfly Network, Inc. (BFLY) because of its disruptive ultrasound-on-a-chip technology, but you have to be a trend-aware realist. The company is in a high-growth, high-risk sector, and while the technology is compelling, the financial reality in the 2025 fiscal year shows significant hurdles. Honestly, the biggest near-term risk is simply the path to profitability.

The company is still burning cash, with a reaffirmed full-year 2025 Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) loss guidance of between $32 million and $37 million, even as they project revenue of $91 million to $95 million. That's a lot of red ink, and it puts pressure on their cash reserves, which stood at about $148 million at the end of Q3 2025.

Operational and Financial Risks

The internal risks are centered on sales execution and product transition. We're seeing elongated sales cycles for large hospital and enterprise deals, mostly due to macroeconomic uncertainty and hospital IT resource allocation delays, not competition. Plus, individual subscription churn is still a headwind, even as enterprise subscriptions tick up.

A concrete example of execution risk is the Q3 2025 noncash inventory write-off of $17.4 million. That charge was necessary because the newer iQ3 probe adoption outperformed the older iQ+ probes, making the older inventory less valuable. It's a sign of successful innovation, but it hits the balance sheet hard. Here's the quick math on profitability for Q3 2025:

• Q3 2025 Revenue: $21.5 million
• Q3 2025 Adjusted EBITDA Loss: $8.1 million

External and Strategic Headwinds

The external landscape is a classic innovator's dilemma. Butterfly Network, Inc. faces fierce competition in the point-of-care ultrasound (POCUS) market from established, cash-rich players like Philips and Siemens Healthineers. These companies can counter Butterfly Network, Inc.'s AI-driven offerings with their own innovations or aggressive pricing strategies.

Regulatory risk is another constant. The medical device industry is highly regulated, and any delays in FDA submissions-or even the potential impact of a government shutdown-can slow down product launches. Also, the stock is defintely volatile, with a beta as high as 3.21, meaning it swings much more wildly than the overall market.

Clear Actions and Mitigation

The company is taking clear actions to mitigate these risks. They are doubling down on their AI strategy with the upcoming Compass AI software and new chips like the P5.1. This is a smart move because it drives higher-margin software subscription revenue. A recent win is the Midjourney licensing agreement, which provides a non-recurring $15 million fee and an annual $10 million license fee, bolstering their balance sheet with non-core, high-margin revenue. This is a critical buffer against the core business's volatility. To dive deeper into the full financial picture, you should read Breaking Down Butterfly Network, Inc. (BFLY) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for a clear path to profitability for Butterfly Network, Inc. (BFLY), and the answer lies in their shift from a purely hardware company to a software-led enterprise solution. The near-term growth is anchored by the adoption of their latest probe and a new AI platform that directly addresses a major revenue bottleneck for health systems. That's a smart move.

For the 2025 fiscal year, management reaffirmed a revenue guidance of $91 million to $95 million, which represents an approximate 13% growth year-over-year. While the consensus earnings per share (EPS) estimate remains negative at -$0.25 per share, the focus is on scaling the higher-margin software business to narrow that loss.

The company's multi-pillar strategy is built on three core growth vectors, plus two emerging ones that could become significant revenue streams.

• Product Innovations: The international rollout of the Butterfly iQ3 probe, launched in 2024, continues to drive higher average selling prices and international revenue, which grew 19% year-over-year in Q2 2025. They are also developing the next-generation P5.1 chip, targeting a launch in the second half of 2026, which should further improve imaging quality.
• Software and AI Ecosystem: The launch of Compass AI, their next-generation enterprise software, is a game-changer. This AI-enhanced platform is designed to streamline point-of-care ultrasound (POCUS) workflows, enabling documentation compliance rates of up to 94%. Here's the quick math: traditional POCUS workflows often leave up to 85% of exams unbilled, so Compass AI can help health systems unlock up to five times more revenue from the same clinical volume by ensuring compliance.
• Strategic Partnerships: The Butterfly Garden is the AI application marketplace, and it is growing. The launch of the first FDA-cleared partner app, HeartFocus, demonstrates the potential for new, recurring revenue streams from third-party applications that integrate with the Butterfly platform.

Butterfly Network, Inc.'s primary competitive advantage is their proprietary Ultrasound-on-Chip™ semiconductor technology, which allows for a whole-body, single-probe, handheld device at a much lower cost than traditional cart-based systems. This core technology, combined with their integrated software and AI, positions them to 'democratize healthcare' by making imaging affordable and accessible globally.

The company is also strategically expanding its reach beyond the hospital, focusing on medical education-like the use of their ScanLab AI-powered app at Kansas City University-and international markets, including the deployment of an AI-powered Gestational Age tool in Malawi and Uganda. This focus on underserved markets and education is defintely a long-term play for market share. For a deeper dive into the company's long-term vision, you should review their Mission Statement, Vision, & Core Values of Butterfly Network, Inc. (BFLY).

What this estimate hides is the speed of enterprise adoption for Compass AI; if onboarding takes 14+ days, churn risk rises, but the potential revenue uplift is too significant to ignore. The shift to a software-led model is crucial for achieving their long-term goal of reaching cash flow breakeven by 2027.

Next step: Dig into the Q4 2025 earnings call transcript to see the initial traction and customer feedback on the Compass AI platform.