Butterfly Network, Inc. (BFLY): BCG Matrix [Dec-2025 Updated]

You're looking at Butterfly Network, Inc. (BFLY) right now, and the story isn't just about selling hardware anymore; it's about the software pivot that defines its future. We've mapped their portfolio using the four-quadrant BCG lens, and the picture is clear: the future Stars are the enterprise subscription growth and next-gen iQ3 adoption, while the existing subscription base and core CMUT IP form the reliable Cash Cows. Still, we have to watch the Dogs-those legacy accessories and failed DTC efforts-and decide quickly on the high-stakes Question Marks, like those big bets on non-ultrasound tech and aggressive emerging market entry. Dive in below to see exactly where your capital allocation focus should land for the rest of 2025.

Background of Butterfly Network, Inc. (BFLY)

You're looking at Butterfly Network, Inc. (BFLY), which is a digital health company focused on transforming care delivery using its portable, semiconductor-based ultrasound technology paired with intuitive software. They aim to make ultrasound imaging more accessible globally, moving beyond traditional, bulky systems.

Looking at their performance as of the third quarter ended September 30, 2025, Butterfly Network reported total revenue of $21.5 million. This represented a modest year-over-year growth rate of 5% compared to the same period last year. The company reaffirmed its full-year 2025 revenue guidance, sticking to a range between $91 million and $95 million, which implies about 13% growth for the full fiscal year.

Profitability remains a challenge, as is common for growth-focused medical device firms. For Q3 2025, the net loss widened to $34.0 million from $16.9 million the year prior. However, on an adjusted basis, the Adjusted EBITDA loss improved slightly to $8.1 million from $8.4 million year-over-year. Honestly, the operational efficiency is showing in the margins; the adjusted gross margin actually increased to 63.9% from 60.0% a year ago, though a $17.4 million write-down of excess inventory pushed the GAAP gross margin into negative territory at (17.5)%.

On the cash front, you'll see real progress in discipline. The company achieved a record low quarterly cash burn of just $3.9 million in the third quarter. This improved cash usage, combined with the prior quarter's performance, left Butterfly Network with $144.2 million in cash and cash equivalents on the balance sheet as of September 30, 2025.

The business is segmented, with product revenue-driven by devices like the iQ3-reaching $14.6 million in Q3, an 8% increase. Software and other services revenue remained flat year-over-year at $6.9 million. Strategically, the company is pushing forward on its technology roadmap; development of the next-generation P5.1 chip is complete and entering production, with a launch targeted for the second half of next year. Plus, they initiated development on the sixth-generation Apollo AI chip and expect the enterprise software, Compass AI, to launch before the end of 2025.

Butterfly Network, Inc. (BFLY) - BCG Matrix: Stars

You're looking at the business units within Butterfly Network, Inc. (BFLY) that are currently dominating a rapidly expanding market space, which is the classic definition of a Star in the Boston Consulting Group Matrix. These segments require significant investment to maintain their lead, but they are the most likely candidates to become future Cash Cows when the overall market growth rate inevitably slows down. For Butterfly Network, Inc. (BFLY), the evidence points toward the next-generation hardware and the newly launched enterprise software platform as these high-potential areas as of late 2025.

The overall market context for Butterfly Network, Inc. (BFLY) is one of solid, though moderating, growth. The company reaffirmed its full-year 2025 revenue guidance to be in the range of $91 million to $95 million, which represents approximately 13% growth over the prior year. This growth rate, combined with the specific product successes, helps categorize these units as Stars.

The high-growth, high-share products are centered around the latest hardware and the new software ecosystem designed to embed the technology deeper within large health systems. The Butterfly iQ3 device, launched in 2024, continues to be a primary driver, commanding a premium price point and capturing significant relative market share in the premium handheld ultrasound category. This is supported by the improvement in the company's profitability metrics, with the adjusted gross margin reaching 63.9% in the third quarter of 2025, up from 60.0% in the prior year period, largely due to these higher average selling prices.

The push into enterprise readiness is now being solidified by the launch of the Compass AI platform in November 2025. This is the key to locking in high market share in the point-of-care ultrasound (POCUS) software segment. The company claims this AI-enhanced, encounter-based workflow can lift documentation compliance rates up to 94%, a massive jump from the 15% compliance traditional, radiology-style workflows capture. This directly addresses the need for support in promotion and placement within large hospital systems, as it promises to translate existing clinical volume into as much as five times more revenue.

Here's a look at how the key growth drivers performed across the most recent reported quarters:

The international segment shows strong growth potential, even if the Q3 2025 figure moderated slightly. The Q2 2025 international revenue growth was 19% year-over-year, driven by the iQ3 launch in Europe in late 2024. This suggests that while the overall market growth rate might be slowing slightly, specific geographic penetration and product adoption are still strong enough to warrant continued investment.

The investment thesis for these Stars is clear: sustain success until the market matures. The company is clearly investing heavily in the software layer to ensure retention and recurring revenue, which is what turns a Star into a Cash Cow. You can see the focus on operational efficiency supporting this investment:

• Reduced quarterly cash burn to a record low of $3.9 million in Q3 2025.
• Cash and cash equivalents stood at $144.2 million as of September 30, 2025.
• The new Compass AI Documentation Agent aims to cut charting time by up to 25%.
• The iQ3 device was responsible for 80% of U.S. sales in Q3 2024, indicating strong initial market share capture.

The rapid expansion of AI-enabled tools, such as the newly launched Compass AI, is designed to drive high user engagement and subscription retention, which is the lifeblood of a future Cash Cow. The company is actively working to embed itself as a core infrastructure partner, moving beyond just hardware sales. If onboarding takes 14+ days, churn risk rises, so the efficiency gains from the new software are critical to realizing the Star's potential.

Butterfly Network, Inc. (BFLY) - BCG Matrix: Cash Cows

You're looking at the established revenue streams for Butterfly Network, Inc. (BFLY) that generate more cash than they consume, which is the classic definition of a Cash Cow in the Boston Consulting Group Matrix. These are the products and services with a high market share in a mature segment, ideally providing the financial stability for the rest of the portfolio.

The recurring revenue stream from the established base of Butterfly iQ+ subscriptions is a key component here. For the third quarter of fiscal year 2025, the Software and other services revenue was \$6.9 million. This figure was flat year-over-year for Q3 2025. The overall company revenue growth in Q3 2025 was 4.5% year-over-year, suggesting the core installed base market is indeed moving into a lower growth phase, which aligns with the Cash Cow profile.

The installed base of first and second-generation Butterfly iQ devices supports this predictable revenue. While the newer iQ3 drives product revenue growth, the older installed base is what feeds the subscription component. To illustrate the margin potential, which is crucial for a Cash Cow, consider the gross margin achieved in the second quarter of 2025, which reached a record 64%. However, you must note the Q3 2025 performance showed a gross loss of \$3.8 million compared to a gross profit of \$12.2 million in the prior year period, largely due to a 203.2% increase in the cost of revenues.

Here are the key financial metrics related to the established revenue streams as of the latest reported periods:

For the core intellectual property (IP) and patent portfolio, the value is secured through licensing agreements, which require minimal ongoing investment to support the existing core technology. A recent example is the co-development and licensing agreement entered into in November 2025. This agreement provides Butterfly Network, Inc. with a one-time, non-recurring fee of \$15 million, plus an annual license fee of \$10 million, payable quarterly. There is also the potential for up to \$9 million in additional payments upon milestone achievement.

Regarding educational and training services, which often bundle with enterprise contracts, the data shows that Enterprise as a percentage of software revenue increased 5 percentage points year-over-year in Q3 2024, indicating a shift toward higher-value, potentially more stable contracts. The company launched Compass AI in Q3 2025, an enterprise software platform aimed at enhancing point-of-care ultrasound programs, which suggests a focus on improving the financial viability of these programs, a characteristic of milking a mature segment.

The structure of the established business unit suggests the following characteristics:

• The recurring software revenue stream is a foundational element of the current financial structure.
• The installed base supports the \$6.9 million in software revenue in Q3 2025.
• IP monetization, such as the Midjourney deal, provides immediate, high-margin cash injections separate from core device sales.
• The company is focused on efficiency, having reduced Q3 2024 Net Cash Used in Operations by 50% year-over-year.

The full-year 2025 revenue guidance of \$91 million to \$95 million implies a growth rate of approximately 13% over the prior year, which is a moderate rate consistent with a segment where market share is already high but growth is slowing.

Butterfly Network, Inc. (BFLY) - BCG Matrix: Dogs

You're looking at the parts of Butterfly Network, Inc. (BFLY) that aren't pulling their weight, the units that tie up capital without delivering significant returns. These are the Dogs, characterized by low market share in markets that aren't expanding quickly. Honestly, the focus here should be on minimizing exposure, not pouring in expensive turnaround money.

The clearest indicator of a Dog category is the $17.4 million noncash inventory charge recorded in the third quarter of 2025. This charge was directly related to lower-than-expected demand for the older iQ+ probes. Even as the newer iQ3 probe captured 85% of the total probe volume in that quarter, the older hardware required ongoing support while necessitating a massive write-down, effectively consuming cash tied up in obsolete inventory.

We can map the other Dog characteristics to specific business areas:

• Legacy accessories and older, discontinued peripheral hardware that require ongoing support but contribute negligibly to overall revenue and are in a low-growth market.
• Direct-to-consumer (DTC) sales channels that have proven to be a high-cost, low-return effort compared to the high-volume enterprise sales model.
• Non-core, low-adoption software features that have not gained traction with the user base and divert engineering resources without a clear return on investment (ROI).
• Initial, low-volume distribution partnerships in smaller, fragmented markets that have failed to scale and show minimal growth.

The international segment, while growing, shows signs of being a Dog compared to the core U.S. business. For the third quarter of 2025, international revenue grew 4% year-over-year to $5.4 million, significantly lagging the U.S. revenue of $16.1 million and the overall company revenue growth of 5% for the quarter. This suggests that scaling in smaller, fragmented international markets through initial partnerships hasn't yet achieved the necessary market share or growth velocity to move out of this quadrant.

Software and other services revenue, which should ideally be a Cash Cow or Star, shows mixed signals that suggest some components are Dogs. In Q3 2025, this revenue line was $6.9 million, reported as flat year-over-year. While enterprise software and the upcoming Compass AI are growth drivers, the flat performance suggests that older, lower-adoption software features or individual subscription tiers are not generating meaningful incremental revenue, thus acting as a drain on engineering resources.

Here's a quick comparison of the growth rates for the segments that show Dog-like characteristics versus the overall company performance in Q3 2025:

These units frequently break even or consume cash indirectly through maintenance and support overhead. The $17.4 million inventory charge is a direct example of cash being trapped in a low-demand asset. Management should be looking at divestiture or aggressive wind-down plans for the legacy hardware supporting the iQ+ line, rather than funding expensive updates to catch up to the iQ3 platform.

Butterfly Network, Inc. (BFLY) - BCG Matrix: Question Marks

These areas of Butterfly Network, Inc.'s business fit the Question Mark profile: operating in markets with high growth prospects but currently holding a low market share, thus consuming significant cash while generating limited immediate returns.

New, high-risk, high-reward software applications targeting non-traditional medical markets, such as veterinary or industrial inspection, where market share is currently near zero, are being pursued through the subsidiary Octiv™. As of the first quarter of 2025, Octiv had five signed partners and over 25 prospects in its pipeline, aiming to leverage Butterfly Network, Inc.'s core technology in these new sectors. The potential market for veterinary diagnostics alone is cited at $1.78 billion.

Significant investment is directed toward the development of next-generation, non-ultrasound diagnostic technologies, specifically the P5.1 chip, which is in a high-growth potential market but has unproven commercial viability as of late 2025. Development of the P5.1 chip was reported as complete, entering fab production, with a launch targeted for the second half of 2026.

Aggressive expansion into emerging markets requires substantial upfront capital. In the third quarter of 2025, Butterfly Network, Inc.'s international revenue was $5.4 million, representing only 4% year-over-year growth. A major initiative in Sub-Saharan Africa, funded by the Gates Foundation, involved a deployment of 1,000 iQ+ probes which had conducted 1.8 million scans as of July 2025. Butterfly devices are commercially available across parts of Africa, Asia, Australia, Europe, the Middle East, North America, and South America.

The success of the company's new cloud-based data management and integration services, like the enterprise workflow software Compass AI, which is on track for launch before the end of 2025, represents a high-growth area facing intense competition from established medical record system providers. The company's overall financial consumption reflects the investment needed to grow these areas:

These Question Marks require a clear path to market share gain to avoid becoming Dogs. The company has a longer-term target of reaching $500 million in revenue within five years and achieving cash flow breakeven by 2027.

• New AI application partners added in Q2 2025: Two.
• FDA-cleared AI partner applications as of Q2 2025: Three (iCardio, HeartFocus by DESKi, Deep Echo).
• Kansas City University now uses ScanLab across all four years of its curriculum.
• AI-powered gestational age calculator deployed in Malawi and Uganda.