Butterfly Network, Inc. (BFLY) Bundle
Understanding Butterfly Network, Inc. (BFLY) Revenue Streams
Understanding Butterfly Network, Inc.’s Revenue Streams
Primary Revenue Sources:
- Product Revenue: For the nine months ended September 30, 2024, product revenue was $39.478 million, a 32.1% increase from $29.874 million in the same period of 2023.
- Software and Other Services Revenue: For the same period, this revenue was $20.227 million, slightly up by 3.7% from $19.510 million in 2023.
Year-over-Year Revenue Growth Rate:
Total revenue for the nine months ended September 30, 2024, was $59.705 million, reflecting a 20.9% increase from $49.384 million in 2023. The quarterly revenue for Q3 2024 was $20.561 million, a 33.3% increase from $15.421 million in Q3 2023.
Contribution of Different Business Segments to Overall Revenue:
| Revenue Source | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|
| Product | $13,538 | $8,753 | $4,785 | 54.7% |
| Software and Other Services | $7,023 | $6,668 | $355 | 5.3% |
| Total Revenue | $20,561 | $15,421 | $5,140 | 33.3% |
Analysis of Significant Changes in Revenue Streams:
Product revenue growth was primarily driven by higher sales across nearly all channels, particularly due to the increased selling price of the iQ3 probe and a rise in international probe sales. The prior year saw two significant grant-based deployments which did not recur in 2024, but excluding those, product revenue would have increased by 44.2%.
Software and other services revenue growth was attributed to higher enterprise software sales and increased licensing revenue from partnerships, although it was partially offset by reduced renewals of individual subscriptions. The enterprise revenue component increased by approximately 7 percentage points year-over-year.
A Deep Dive into Butterfly Network, Inc. (BFLY) Profitability
A Deep Dive into Butterfly Network, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was $12,233,000, resulting in a gross profit margin of 59.5% compared to 60.8% for the same period in 2023. For the nine months ended September 30, 2024, the gross profit was $35,096,000, with a gross profit margin of 58.8%, down from 59.5% in 2023.
Operating Profit Margin: The operating loss for the three months ended September 30, 2024, was ($17,246,000), resulting in an operating margin of (83.9)%. For the nine months ended September 30, 2024, the operating loss was ($57,099,000), with a margin of (95.6)%.
Net Profit Margin: The net loss for the three months ended September 30, 2024, was ($16,924,000), translating to a net profit margin of (82.3)%. For the nine months ended September 30, 2024, the net loss was ($54,391,000)(91.1)%.
Trends in Profitability Over Time
Comparing the three months ended September 30, 2024, to the same period in 2023:
- Gross profit decreased from $9,382,000 in 2023 to $12,233,000 in 2024.
- Operating loss increased from ($32,563,000) in 2023 to ($17,246,000) in 2024.
- Net loss decreased from ($27,368,000) in 2023 to ($16,924,000) in 2024.
Comparison of Profitability Ratios with Industry Averages
As of 2024, the industry average gross profit margin for medical device companies is approximately 65%. The company's gross profit margin of 59.5% indicates it is below the industry average. The operating margin average for the industry is around 10%, while the company's operating margin of (83.9)% signifies significant operational challenges. The net profit margin average for the industry typically hovers around 5%, contrasting sharply with the company's (82.3)%.
Analysis of Operational Efficiency
The company's total operating expenses for the three months ended September 30, 2024, were $29,479,000, representing 143.4% of total revenue. This reflects a significant increase in operational costs, particularly in:
- Research and Development: Expenses were $8,844,000, or 43.0% of revenue.
- Sales and Marketing: Expenses were $9,607,000, or 46.7% of revenue.
- General and Administrative: Expenses were $9,353,000, or 45.5% of revenue.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit | $12,233,000 | $9,382,000 | +30.3% |
| Operating Loss | ($17,246,000) | ($32,563,000) | Improvement |
| Net Loss | ($16,924,000) | ($27,368,000) | Improvement |
| Total Operating Expenses | $29,479,000 | $41,945,000 | -29.8% |
Overall, the analysis shows improvements in gross profit and net losses, although the company remains below industry averages in profitability metrics. The increase in operating expenses, particularly in the research and development sector, suggests a focus on innovation despite current financial challenges.
Debt vs. Equity: How Butterfly Network, Inc. (BFLY) Finances Its Growth
Debt vs. Equity: How Butterfly Network, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the company had $0 in long-term debt and $928,000 in interest expense incurred during the nine months ended September 30, 2024. The total liabilities amounted to $83.4 million, while total stockholders' equity was $181.8 million.
Debt-to-Equity Ratio
The debt-to-equity ratio for the company stands at 0.46, indicating a conservative approach towards leveraging compared to the industry average of approximately 1.0. This ratio suggests that the company relies more on equity financing rather than debt financing.
Recent Debt Issuances and Credit Ratings
There have been no significant recent debt issuances or changes in credit ratings reported as of September 30, 2024. The company has maintained a stable financial outlook, with no floating rate debt.
Balancing Debt Financing and Equity Funding
The company has primarily financed its growth through equity, raising funds from stock issuances. As of September 30, 2024, total stockholders' equity was $181.8 million, reflecting an increase from $220.1 million in the previous year. The company continues to focus on maintaining liquidity through cash reserves, which amounted to $93.8 million as of the same date.
| Metric | Value |
|---|---|
| Long-term Debt | $0 |
| Short-term Debt | $928,000 |
| Total Liabilities | $83.4 million |
| Stockholders' Equity | $181.8 million |
| Debt-to-Equity Ratio | 0.46 |
| Cash Reserves | $93.8 million |
This strategic balance between equity funding and minimal debt reflects the company's approach to managing financial risk while pursuing growth opportunities.
Assessing Butterfly Network, Inc. (BFLY) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
As of September 30, 2024, the current ratio of the company was 3.29, indicating a strong liquidity position. The quick ratio stood at 3.12, suggesting that the company can cover its short-term liabilities without relying on inventory sales.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, was reported at $93.8 million. This represents a decrease from $220.1 million in the previous year, reflecting tighter liquidity conditions. The decline in working capital is primarily attributed to an increase in current liabilities, driven by increased operational expenses and ongoing legal obligations.
Cash Flow Statements Overview
The following table summarizes cash flow trends for the nine months ended September 30, 2024, compared to the same period in 2023:
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Net cash used in operating activities | $(38,587) | $(85,719) | $47,132 |
| Net cash (used in) provided by investing activities | $(2,250) | $72,926 | $(75,176) |
| Net cash provided by financing activities | $0 | $228 | $(228) |
| Net decrease in cash, cash equivalents and restricted cash | $(40,837) | $(12,565) | $(28,272) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had cash and cash equivalents of $93.8 million, along with restricted cash of $4.0 million to secure a letter of credit. The company’s fixed office lease payment obligations totaled $28.9 million, with $3.6 million due within the next 12 months. Technology license obligations were $15.5 million, with $1.5 million payable within the same period. Additionally, inventory supply agreements required $8.6 million, all due within the next 12 months, indicating a significant upcoming cash outflow that could impact liquidity if revenues do not increase as expected.
Is Butterfly Network, Inc. (BFLY) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of Butterfly Network, Inc. (BFLY) involves examining key financial metrics that help assess whether the company's stock is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company's net loss was $54,391,000 for the nine months ended, translating to a basic net loss per share of $0.26. Given that the company is currently operating at a loss, the P/E ratio is not applicable.
Price-to-Book (P/B) Ratio
As of September 30, 2024, the total stockholders' equity was $181,832,000, with total assets amounting to $265,272,000. The book value per share can be calculated as follows:
- Shares Outstanding: 186,557,521
- Book Value per Share: $0.97 (calculated as $181,832,000 / 186,557,521)
At a recent stock price of approximately $1.00, the P/B ratio is approximately 1.03.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the enterprise value is calculated as follows:
- Market Capitalization: $186,557,521 (current stock price multiplied by shares outstanding)
- Total Debt: $0 (the company has no debt).
- Cash and Cash Equivalents: $93,800,000.
Thus, the enterprise value (EV) is $92,757,521 (Market Cap - Cash). The EBITDA for the trailing twelve months (TTM) is not provided, but an approximation can be derived from the operating loss and adjustments for depreciation and amortization. For the last reported quarter, the loss from operations was $17,246,000.
Assuming depreciation and amortization expenses total approximately $7,835,000, the EBITDA would be approximately ($17,246,000 + $7,835,000) = -$9,411,000. Thus, the EV/EBITDA ratio is not calculable due to negative EBITDA.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated significantly. The stock opened at approximately $2.00 a year ago and has experienced a downward trend, reaching a low of $0.50 and a recent price of around $1.00.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, indicating a dividend yield of 0%. The payout ratio is also not applicable due to the absence of dividends.
Analyst Consensus on Stock Valuation
Analyst consensus currently leans towards a "Hold" rating, with a few analysts suggesting it may be undervalued given its growth potential in the medical device sector.
| Metric | Value |
|---|---|
| P/E Ratio | N/A (Net Loss) |
| P/B Ratio | 1.03 |
| EV/EBITDA Ratio | N/A (Negative EBITDA) |
| Recent Stock Price | $1.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Butterfly Network, Inc. (BFLY)
Key Risks Facing Butterfly Network, Inc. (BFLY)
Butterfly Network, Inc. faces several internal and external risks that could impact its financial health. These risks can broadly be categorized into industry competition, regulatory changes, and market conditions.
Industry Competition
The medical imaging market is highly competitive, with numerous established players as well as new entrants. As of September 30, 2024, the company's revenue from product sales was $13,538,000, a 54.7% increase from $8,753,000 in the same quarter of 2023. However, continued competition may pressure margins and market share.
Regulatory Changes
Regulatory risks are significant in the healthcare sector. The company must comply with regulations from bodies such as the FDA and other international regulatory authorities. Non-compliance could lead to penalties or restrictions on operations. As of September 30, 2024, the company incurred $1,675,000 in other expenses, a 81.9% decrease from $9,243,000 in the same quarter of 2023, which included legal costs related to regulatory compliance.
Market Conditions
Market conditions can affect demand for the company’s products. For instance, the overall market for medical imaging is influenced by healthcare spending trends, which can fluctuate based on economic conditions. The company's total revenue for the nine months ended September 30, 2024, was $59,705,000, reflecting a 20.9% increase compared to $49,384,000 for the same period in 2023.
Operational Risks
Operational risks include supply chain disruptions and production delays, which can impact the company's ability to meet customer demand. As of September 30, 2024, the company had fixed purchase obligations for inventory supply agreements amounting to $8,600,000, all payable within the next 12 months.
Financial Risks
The company has experienced significant net losses, with a net loss of $54,391,000 for the nine months ended September 30, 2024, compared to $89,579,000 for the same period in 2023. This raises concerns about the sustainability of its business model and future funding requirements.
Mitigation Strategies
The company has undertaken measures to mitigate risks, such as optimizing operational efficiencies and focusing on product innovation. For example, research and development expenses decreased to $28,975,000 in the nine months ended September 30, 2024, from $44,409,000 in the same period in 2023, indicating a potential shift in focus towards more efficient resource allocation.
| Risk Factor | Current Status | Financial Impact |
|---|---|---|
| Industry Competition | High | Product revenue increased by $4,785,000 (54.7%) YoY |
| Regulatory Changes | Ongoing compliance required | Legal costs reduced by $7,568,000 (81.9%) YoY |
| Market Conditions | Positive growth in revenue | Total revenue increased to $59,705,000 (20.9% YoY) |
| Operational Risks | Supply chain management critical | Fixed purchase obligations of $8,600,000 in the next 12 months |
| Financial Risks | Significant net losses | Net loss of $54,391,000 in 2024 |
Future Growth Prospects for Butterfly Network, Inc. (BFLY)
Future Growth Prospects for Butterfly Network, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers, including:
- Product Innovations: The introduction of the iQ3 probe has been pivotal, reflecting a 54.7% increase in product revenue for Q3 2024 compared to Q3 2023, amounting to $13.54 million from $8.75 million.
- Market Expansions: Increased international sales have contributed to growth, with a 32.1% increase in product revenue for the nine months ended September 30, 2024, totaling $39.48 million up from $29.87 million in the same period of 2023.
- Strategic Partnerships: Collaborations such as Butterfly Garden and Powered by Butterfly have bolstered software and service revenues, which saw a 5.3% increase in Q3 2024, totaling $7.02 million compared to $6.67 million in Q3 2023.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projects are optimistic, with analysts forecasting continued expansion driven by product innovations and market penetration. For 2024, expected revenue growth is anticipated to exceed 20% year-over-year, with earnings estimates projecting a reduction in net loss per share from $0.44 in 2023 to approximately $0.26 in 2024.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is actively pursuing strategic initiatives including:
- New Product Launches: The upcoming launches of the iQ+ Bladder and enhancements to existing product lines are expected to significantly contribute to revenue.
- Expansion of Enterprise Software Solutions: Increasing focus on enterprise solutions is likely to enhance recurring revenue streams, with enterprise software revenue rising 7% year-over-year as of September 30, 2024.
Competitive Advantages That Position the Company for Growth
The company maintains several competitive advantages:
- Innovative Technology: The proprietary technology behind the iQ3 probe sets the company apart in the ultrasound market.
- Strong Brand Recognition: Established partnerships and a growing customer base enhance market presence.
- Cost Structure Optimization: Operating expenses have decreased by 27.1% in R&D for Q3 2024, reflecting improved efficiency and reduced costs from previous years.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Product Revenue | $13.54 million | $8.75 million | 54.7% |
| Software and Services Revenue | $7.02 million | $6.67 million | 5.3% |
| Total Revenue | $20.56 million | $15.42 million | 33.3% |
| Net Loss per Share | $0.08 | $0.13 | -38.5% |
As of September 30, 2024, the company reported total stockholders' equity of $181.83 million, down from $220.05 million a year earlier, highlighting the need for sustained growth strategies to enhance financial health.
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Article updated on 8 Nov 2024
Resources:
- Butterfly Network, Inc. (BFLY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Butterfly Network, Inc. (BFLY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Butterfly Network, Inc. (BFLY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.