BFLY Q2 Earnings Call Spotlights Embedded Growth and Raised Outlook

Management also raised 2026 guidance, detailed a more scalable Embedded model and outlined 2027 product launches. 

BFLY Raises Its Full-Year Outlook

Executive vice president and CFO John Doherty said third-quarter revenues are expected between $26 million and $30 million, with an adjusted EBITDA loss of $6 million to $9 million.

For 2026, Butterfly raised revenue guidance to $119-$123 million and adjusted EBITDA loss forecast to $19-$23 million.

Doherty said second-quarter gross margin reached 71%, while the adjusted EBITDA loss improved to $1.4 million. He said guidance incorporates expected effects from tariffs, Middle East conflict and AI-driven supply-chain shortages. 

Butterfly Embedded Builds Scale

Chairman and CEO Joseph DeVivo said Butterfly added two Embedded partnerships in the second quarter, bringing the total to 11. Embedded revenues reached $10.8 million, up 439% year over year, primarily on the Midjourney partnership.

During Q&A, a TD Cowen analyst asked about revenue cadence. Doherty said Embedded had been expected to generate roughly $7-$8 million per quarter, with fluctuations of $1-$2 million, before contributions from new partners.

DeVivo added that the model is becoming standardized around common chips, software licenses and paid development work. A William Blair analyst pressed on commercialization timing, and DeVivo identified Mendaera and Sonic Incytes as nearer-term opportunities while describing neurotechnology programs as longer-cycle. 

BFLY Deepens Enterprise POCUS Exposure

DeVivo said Butterfly signed six additional enterprise Compass AI software deals in the second quarter. He also said the Compass AI pipeline has increased fivefold since last year.

Doherty reported core business revenues of $21.9 million, up 2% year over year. Probe unit sales rose 23%, while a VCOM agreement carries potential total contract value exceeding $10 million over four years.

International revenues fell 14% to $5 million as several larger orders shifted into the third quarter. DeVivo highlighted Brazil regulatory authorization and said full FedRAMP certification is anticipated in the third quarter after provisional authorization to sell across the VA. 

Butterfly Home Moves Toward Revenues

DeVivo said the first commercial Home and Community Care state is scheduled to begin Oct. 1, with nurses being trained during the third quarter. Doherty said the program is included in 2026 guidance and should contribute revenues in the fourth quarter.

A Lake Street Capital Markets analyst asked about deployment scale. DeVivo said Butterfly expects to train roughly 15 to 30 nurses in the first state and can use education partners if expansion accelerates.

In response to William Blair, DeVivo described a revenue model combining a fee tied to managed population size with per-scan charges. He said Butterfly can share in savings if readmissions decline, while bearing additional cost if agreed outcomes are not achieved. 

BFLY Sets Up a 2027 Product Push

DeVivo said Butterfly remains on track to launch its next-generation P5.1-based probe in the first quarter of 2027. The device is designed to add harmonic imaging, with management emphasizing improved cardiac imaging.

He also expects iQ Station to enter the POCUS cart market later in 2027. In response to a Freedom Brokers analyst, DeVivo cited an existing compact and POCUS cart market of about $1.6-$2 billion.

The Apollo chip program is progressing toward deliveries to Midjourney by late 2027 or early 2028. Butterfly also expects three Garden partner tools to become commercially available by year-end with direct access to its cloud workflows. 

Butterfly Keeps Focus on Scalable Growth

Doherty emphasized operating efficiency and resource allocation toward higher-return opportunities while funding product, semiconductor and commercial expansion.

DeVivo framed POCUS, Home and Embedded as reinforcing growth engines centered on Ultrasound-on-Chip. Management’s priorities include scaling Embedded partnerships, executing the Home launch and keeping the 2027 product roadmap on schedule. 

BFLY’s Zacks Signals Remain Mixed

BFLY carries a Zacks Rank #2 (Buy). Its Value Score is F, Growth Score is C, Momentum Score is F and VGM Score is F. Zacks Style Score guidance favors pairing top Zacks Ranks with A or B Style Scores, making the current combination mixed. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Rank can change as analysts revise earnings estimates following the just-reported results. The current rank and Style Scores represent point-in-time signals rather than a conclusive forecast.

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