Oct 29, 2026 earnings call — Embedded revenue surge and Compass AI deals
Q3 revenue $32.6 million, beat guidance by 9%, with record gross margin and strong Embedded growth.
Revenue $0.0B (est $0.0B) · EPS $-0.01 (est $-0.04) · Next-quarter revenue outlook $0.1B–$0.1B
Key quotes
"Today, the majority of our Embedded partners pay us for development work, licenses, and chips while they're doing technology development."
"Our Compass AI pipeline is converting, and we are now closing software and hardware enterprise deals each quarter."
"Scanning starts in November, and we expect initial revenue in this Q4."
Analyst Q&A 8
AI on device and wearables
Q (Joshua Jennings · TD Cowen): Analyst asked how the new semiconductor (Ultrasound-on-Chip) enables running AI on the device and how wearable devices will evolve with partners.
A: Management said the new chip will let full AI models run on the device for immediate feedback without cloud delays. They described a wearable prototype and said use cases must be proven (breast, cardiac, abdominal) and partners will develop specific markets while Butterfly supplies the core platform.
"What that means is that today when we interact with AI, we do a query on our phones or on our computers, and then those queries are run actually in data centers in the cloud." — Joseph DeVivo (CEO·CHAIR)
Enterprise deals timing and guidance
Q (Bill Plovanic): Analyst asked how the 15 enterprise deals (including five large ones) will convert to revenue and probe sales over months and into 2027, and whether guidance is conservative.
A: Management explained enterprise deals start with software, then add probes over time as programs roll out; probe sales build weekly or monthly rather than as one big purchase. They said annual guidance was recently raised and narrowed, they guide conservatively by quarter, and will update guidance if a large deal closes.
"We just increased our annual guidance, the top and bottom." — Joseph DeVivo (CEO·CHAIR)
Embedded outlook and competition
Q (David Saxon · Needham): Analyst asked for guardrails for Embedded revenue in 2027 given 2026 milestones, and how Butterfly is positioned versus larger competitors.
A: Management said Embedded is trending above prior expectations and they expect that trajectory into 2027, though they won't give full-year Embedded guidance yet. On competition, they emphasized Butterfly's patents, multi-generation chips, and a strong competitive moat built over years as the basis to capture more market share.
"Our competitive moat is big, our competitive moat is real, and our competitive moat is long." — Joseph DeVivo (CEO·CHAIR)
Midjourney revenue disclosure
Q (Daniel Markowitz · Evercore): Analyst asked if the company can quantify Q3 Midjourney revenue and how Midjourney lumpiness will affect Embedded growth in 2027.
A: Management refused to disclose Midjourney-specific revenue and said they will not call out individual customer revenue except when required. They called Midjourney foundational but said Embedded guidance as a whole still stands and they will announce deals and revenue each quarter without giving customer-level detail.
"Daniel, we're not going to specifically call Midjourney revenue." — John Doherty (CFO)
Home care impact and early results
Q (Steven Lichtman · William Blair): Analyst asked when data will show healthcare cost savings from the Home & Community Care program (CHF focus) and whether partner discussions include other indications.
A: Management said the initial use case is congestive heart failure to reduce admissions and readmissions, and that each avoided admission saves about 10,000-12,000 dollars. They said the same partner also wants other scans (bladder, sepsis, echoes) but Butterfly is focusing first on CHF; the partner restricts public data so results will be communicated carefully.
"Putting a protocol in place that allows us to manage those patients and keep them healthier and better managed, and having a virtual cardiologist with them, and having them getting pulmonary scans for pulmonary wetness really is a major deal." — Joseph DeVivo (CEO·CHAIR)
Embedded sales pipeline and cost to scale
Q (Chase Knickerbocker · Craig-Hallum): Analyst asked how proactive outbound sales for Embedded changes pipeline size/mix and what hiring or OpEx is needed to support Embedded growth in 2027.
A: Management said the pipeline is broadening and could produce both many base hits and some large deals that convert quickly, but they remain conservative in guidance and won’t extrapolate. They acknowledged development resource needs, are hiring top talent, R&D was up 17% year over year, and they expect to continue investing while moving toward Adjusted EBITDA and cashflow positivity.
"We're still on track to be Adjusted EBITDA positive and cashflow positive in 2028." — John Doherty (CFO)
Embedded sales organization and targets
Q (Ben Haynor · Lake Street): Analyst asked how the Embedded sales force is structured, which markets they target (BCI, industrial, etc.), and how decisions are made to add staff.
A: Management said they are moving through the pipeline and building a team of sellers and application specialists to run demos and labs. They target large ultrasound markets and incumbents proactively, pursue market-by-market decisions, and are also exploring some non-healthcare industries while protecting competitive confidentiality.
"There are very large ultrasound markets, and there are very large players that we are proactively targeting, and we are looking at it from a market by market basis." — Joseph DeVivo (CEO·CHAIR)
Compass AI and hospital standardization
Q (Arailym Kanatkyzy · Freedom Broker): Analyst asked whether the enterprise wins signal system-wide hospital standardization on Butterfly or are they still departmental, and what to expect from recurring enterprise software revenue and contract structure.
A: Management said Compass AI was built to solve hospitals' POCUS workflow problems across devices, not just Butterfly hardware, enabling land-and-expand into handheld and cart programs. They explained Compass AI integrates with Butterfly hardware best but often ingests scans from competitors, and that Compass plus iQ Station aims to convert existing competitive footprints over time.
"When we put Compass AI in place, we are solving a major problem that the hospital has, whether or not they're a Butterfly customer." — Joseph DeVivo (CEO·CHAIR)