Butterfly's AI Expansion Drives 5% Revenue Growth, But Net Loss Soars to $34M

Butterfly Network Inc (BFLY) reported a 5% year-over-year increase in revenue for the third quarter of 2025, reaching $21.5 million, surpassing the estimated $21.22 million, according to a GuruFocus report. The digital health company, known for its Ultrasound-on-Chip technology, highlighted strategic advancements in AI and affordability as key drivers of growth despite a seasonally softer period. However, the company faced a net loss of $34.0 million for the quarter, a significant increase from the $16.9 million loss in the same period last year. This loss was exacerbated by a $17.4 million non-cash inventory write-down for excess and obsolete stock, which impacted the GAAP gross margin, resulting in a gross loss of $3.8 million compared to a gross profit of $12.2 million in the prior year, as reported in a Yahoo Finance article.

Despite these challenges, Butterfly Network's adjusted gross margin improved to 63.9% from 60.0% in the prior year, driven by higher average selling prices and reduced software amortization costs, according to the GuruFocus report. The company also reported a cash and cash equivalents balance of $144.2 million as of September 30, 2025, reflecting a slight increase from previous periods, per the GuruFocus report. Operating expenses rose to $31.4 million, a 6% year-over-year increase, as the firm continues to invest in technology and enterprise sales initiatives, the GuruFocus report added.

Butterfly Network reaffirmed its full-year 2025 revenue guidance of $91 million to $95 million and narrowed its adjusted EBITDA loss guidance to a range of $32 million to $35 million, according to the GuruFocus report. The company emphasized its commitment to innovation, including the development of the P5.1 chip and the upcoming Apollo AI chip, which promises enhanced processing power and local AI capabilities, as noted in the Yahoo Finance article. Additionally, Butterfly Network's AI lung tool, Auto B-line Counter, demonstrated clinical and economic benefits, including a 30% reduction in hospital length of stay and over $750,000 in cost savings, the Yahoo Finance article reported.

Challenges remain, however. The company noted headwinds in enterprise sales due to hospitals prioritizing broader macroeconomic concerns, and ongoing churn in individual subscriptions is affecting software and services revenue, per the Yahoo Finance article. The federal government shutdown also poses potential risks to deal timing and regulatory processing, though these are not currently significant, the Yahoo Finance article added.