Butterfly Network, Inc. (BFLY): Business Model Canvas [Dec-2025 Updated]

You're digging into the mechanics of Butterfly Network, Inc., and what you'll find is a company executing a clear, if challenging, pivot from selling a cool ultrasound probe to building an AI-powered platform, which is where the long-term value is. Honestly, the numbers from late 2025 tell the story: while they booked $14.6 million in probe sales in Q3 2025, the focus is on recurring software revenue and that $10 million annual technology fee from Midjourney, all supported by a $144.2 million cash position as of September 30, 2025, to hit their full-year guidance between $91 million and $95 million. Below, we break down the nine building blocks to see precisely how they plan to make portable, whole-body imaging accessible while managing those heavy R&D costs.

Butterfly Network, Inc. (BFLY) - Canvas Business Model: Key Partnerships

The Key Partnerships block for Butterfly Network, Inc. centers on technology co-development, global health impact funding, third-party application expansion, and large-scale clinical integration.

Midjourney, Inc. Licensing and Co-development

Butterfly Network, Inc. entered a five-year, exclusive Co-Development and Licensing Agreement with Midjourney, Inc. on November 17, 2025.

Financial Component	Amount/Term
One-Time Upfront Fee	$15 million
Annual License Fee	$10 million
Maximum Milestone Payments	Up to $9 million
Agreement Term	Five-year

The agreement also includes provisions for revenue sharing from Midjourney's commercialization of hardware products incorporating Butterfly Network chips and payments for any chip purchases.

Gates Foundation Global Health Initiatives in Africa

A Gates Foundation-funded deployment involved 1,000 iQ+ handheld ultrasound probes distributed across South Africa and Kenya between September 2022 and December 2024. This program trained over 1,050 healthcare providers and integrated services in more than 697 public health facilities.

• Total scans conducted as of July 2025: 1.8 million
• Average monthly scans as of July 2025: 83,000
• Decrease in stillbirths in Eastern Cape province (12 months post-training): 1.13%
• Decrease in maternal mortality in Eastern Cape province (12 months post-training): 20.6%

Separately, a grant of $5 million from the Bill & Melinda Gates Foundation was received to provide 1,000 handheld probes to medical communities in sub-Saharan Africa.

Butterfly Garden Partners for Third-Party AI Apps

The Butterfly Garden ecosystem expanded, with two new AI development partners added in the second quarter of 2025, bringing the total portfolio to 23 partners.

• Partners receiving FDA clearance in the first half of 2025: iCardio, HeartFocus by DESKi, and Deep Echo
• HeartFocus by DESKi is expected to launch to Butterfly users in the third quarter of 2025

Large Health Systems for Enterprise-Wide Deployment

Butterfly Network, Inc. closed a system-wide enterprise deal in the second quarter of 2025 with one of the top 5 most recognized health systems in the world. The University of Rochester Medical Center (URMC) is a named customer, where nearly 900 devices were integrated across 64 departments.

URMC Key Metric	Data Point
Scanning Sessions Completed (to date)	Nearly 50,000
Images Generated (to date)	Over 175,000
Finalized Reports Produced (to date)	More than 15,500
Projected Probe Deployment by 2026	2,500 probes

Medical Schools for Student Device Programs

Device sales into U.S. medical schools more than doubled in volume in the first half of 2023 compared to the first half of 2022. The Indiana University School of Medicine (IUSM), the largest in the United States, adopted the one-probe-per-student training model using Butterfly iQ+ and Compass software.

Butterfly Network, Inc. (BFLY) - Canvas Business Model: Key Activities

You're looking at the core engine driving Butterfly Network, Inc. as of late 2025. This isn't just about selling hardware; it's about the continuous, high-stakes work in silicon, software, and clinical validation that underpins their platform strategy.

Developing the next-generation P5.1 and Apollo AI chips.

The silicon innovation pipeline is crucial for maintaining a competitive edge in imaging performance. You need to know where the next leap in capability is coming from. The development of the P5.1 chip is officially complete, and it has moved into fab production. This next-generation chip is targeted for launch in the second half of 2026. Management has stated that if the iQ3 established performance parity with other handhelds, the P5.1 will surpass them entirely. Furthermore, the company has started development on the sixth-generation Apollo AI chip, which is being engineered for advanced on-device Artificial Intelligence and improved power efficiency. An older announcement mentioned the Apollo chip is designed to produce 10 times the processing power of the iQ3.

Here are the technology milestones:

• Development of the P5.1 chip: Complete, entered fab production.
• P5.1 Target Launch: H2 2026.
• Development of the Apollo AI chip: Began.
• Apollo AI Chip Goal: Advanced on-device AI and power efficiency.

Enterprise sales and securing large health system contracts.

The shift to enterprise sales is where the recurring revenue story lives, but macro headwinds have definitely complicated the close times. For the full Fiscal Year 2025, Butterfly Network, Inc. reaffirmed its revenue guidance in the range of $91 million to $95 million. The most recent snapshot, Q3 2025, showed total revenue of $21.5 million, which was a 5% year-over-year growth. The U.S. segment contributed $16.1 million of that Q3 revenue. Management has expressed confidence in closing large deals from an active pipeline heading into Q4, despite noting that sales cycles are being lengthened. A significant win was the closure of a major enterprise-wide deal in Q2 2025 with one of the top 5 most recognized health systems in the world, though the customer remains unnamed.

Review the latest reported revenue breakdown:

Metric	Q3 2025 Amount	Year-over-Year Change
Total Revenue	$21.5 million	5% Growth
Product Revenue	$14.6 million	8% Increase vs Q3 2024
Software and Other Services Revenue	$6.9 million	Flat vs Prior Year Period
International Revenue	$5.4 million	4% Increase

Software development for Compass AI and Butterfly Garden ecosystem.

Software is key to scaling the platform beyond the initial hardware sale. You'll want to track the rollout of the next-generation enterprise platform. The next-gen enterprise software, Compass AI, is on track to launch before the end of 2025. This is intended to boost enterprise software adoption by streamlining documentation. In the Butterfly Garden ecosystem, which is the company's AI application marketplace, there were 23 portfolio companies as of Q1 2025. The first FDA-cleared partner app, HeartFocus, launched in Q2 2025, following two new partners added in Q1. Separately, an AI-powered gestational age calculator is currently available in Malawi and Uganda, with FDA review underway for broader deployment.

Manufacturing and managing the proprietary semiconductor-based probe.

The physical product is the foundation, but inventory management is a current challenge impacting reported margins. The Q3 2025 results included a significant non-cash charge of $17.4 million for the write-down of excess and obsolete inventory, which was primarily related to previous generation chips. Despite this, the adjusted gross margin improved to 63.9% in Q3 2025, up from 60.0% in the prior year period, reflecting higher average selling prices. The product revenue for Q3 2025 was $14.6 million.

Conducting clinical studies to prove economic value, like the JAMA POCUS CARE trial.

Clinical evidence, especially peer-reviewed validation of economic benefit, is a primary activity supporting enterprise sales. The POCUS for Cardiopulmonary Assessment and Resource Evaluation (POCUS-CARE) trial, published in JAMA Network Open, provides concrete numbers on system value. The study, which reached 208 patients over a six-month period, showed that the Butterfly-enabled program was associated with $751,537 in direct cost savings and 246 hospital bed-days saved. The incremental cost-effectiveness ratio calculated was $3,055 per hospital bed day saved. Clinically, the POCUS group (n=101) saw an overall 30% reduction in expected hospital length of stay, moving from a median of 11.9 days to 8.3 days. Furthermore, POCUS changed clinical management in 35% of cases, and the 90-day readmission rate was 17% for the POCUS group versus 23% for usual care.

Key economic validation points from the POCUS-CARE Trial:

• Direct Cost Saved: $751,537.
• Cumulative Bed-Days Saved: 246.
• LOS Reduction: 30% median reduction.
• Cost per Bed-Day Saved: $3,055.
• Clinical Management Change: 35% of cases.

Finance: review the impact of the Q3 inventory write-down on the full-year adjusted EBITDA guidance range of $32 million to $35 million loss by next Tuesday.

Butterfly Network, Inc. (BFLY) - Canvas Business Model: Key Resources

The Key Resources for Butterfly Network, Inc. as of late 2025 are centered on its unique semiconductor-based hardware, the growing software ecosystem, and its financial runway to support continued development.

Proprietary ultrasound-on-chip (semiconductor-based) technology.

This is the core differentiator, allowing for the creation of handheld, whole-body ultrasound systems that are significantly more accessible than traditional cart-based units. The latest iteration, the Butterfly iQ3 system, is powered by the Company's most advanced semiconductor chip, which features double the data transfer rate of its predecessor. This technology is foundational, enabling advanced 3D imaging capabilities like iQ Slice and iQ Fan. The development of this chip was done in partnership with TSMC, the world's leading semiconductor foundry.

Cloud-based software platform and AI algorithms (e.g., Compass AI).

The hardware is increasingly tied to the cloud platform, Butterfly Garden, which supports an evolving platform of apps. The rollout of Compass AI is a key resource, expected to enhance subscription retention and enterprise penetration by improving workflow and demonstrating return on investment. To support enterprise adoption, the Company achieved ISO 27001 certification, which reinforces the security and scalability of the cloud platform.

The following table summarizes key financial and operational metrics as of the third quarter of 2025, illustrating the resources supporting the business:

Resource Metric	Value as of September 30, 2025
Cash and cash equivalents	$144.2 million
Quarterly Revenue (Q3 2025)	$21.5 million
Adjusted Gross Margin (Q3 2025)	63.9%
Quarterly Cash Burn (Q3 2025)	$3.9 million (record low)
Fiscal Year 2025 Revenue Guidance (Reaffirmed)	$91 million to $95 million

Intellectual property and FDA clearances for hardware and partner AI apps.

The portfolio of intellectual property, stemming from the semiconductor technology, underpins the competitive moat. The Company's own hardware, the Butterfly iQ3 system, has received FDA clearance. Furthermore, the platform is opening up to third-party innovation, evidenced by the launch of HeartFocus by DESKi, which is the first FDA-cleared third-party app on the Butterfly Garden platform. The clinical validation of proprietary AI tools further solidifies this resource base. For example, a six-month quality-improvement study published in JAMA demonstrated that integrating Butterfly's Auto B-line Counter:

• Improved management in 35% of cases.
• Reduced Length of Stay (LOS) by 30%.
• Resulted in an estimated saving of $751K.

The Company is also advancing its silicon roadmap, completing development for its P5.1 chip and initiating the sixth-generation Apollo AI chip development.

Butterfly Network, Inc. (BFLY) - Canvas Business Model: Value Propositions

You're looking at the core reasons why a hospital system or clinician would choose Butterfly Network, Inc. (BFLY) over established cart-based ultrasound machines. It boils down to cost, portability, and now, sophisticated software integration.

The fundamental value proposition remains affordable, portable, whole-body imaging for point-of-care ultrasound (POCUS). While the specific device price point that might be too high for the EMS market-around $4,000 per unit mentioned in some commentary-is a near-term hurdle, the technology itself, powered by Ultrasound-on-Chip™, is inherently designed to be a disruptive, lower-cost alternative to traditional systems. The company achieved a record gross margin of 64% in Q2 2025, reflecting efficiency in their semiconductor-based manufacturing process.

The shift to a platform model is heavily emphasized through the AI-powered workflow software, Compass AI, which launched in November 2025. This software directly addresses administrative friction, which has historically limited the financial viability of POCUS programs. The value here is concrete:

• Documentation Agent: Cuts charting time by up to 25% using ambient voice dictation.
• Compliance Improvement: Enables documentation compliance rates up to 94%, compared to the traditional rate of only about 15% for radiology-style workflows.
• Revenue Potential: Translates that compliance into potentially five times more revenue from the same clinical volume.

This software integration also ties into direct cost reduction for health systems. Clinical publications suggest that pairing the handheld probes with Compass enterprise workflow software can help improve care workflows and reduce costs. Specifically, integrating POCUS into routine Congestive Heart Failure (CHF) management has been shown in case studies to contribute to faster discharges and an estimated ~50% cost reduction for lower-acuity patients.

The platform strategy extends outward via the Butterfly Garden, the planned AI Marketplace. Butterfly Network released its Software Development Kit (SDK) to allow third parties-AI developers, medical device companies, and telemedicine firms-to build custom applications leveraging the platform. This creates an ecosystem where new AI tools can be commercialized to Butterfly's customer base, which is described as the largest user network in handheld POCUS.

Finally, the overarching value is the democratizing access to medical imaging globally. This mission is mapped against a massive Total Addressable Market (TAM) estimated at over $350B Worldwide. The devices are commercially available to trained practitioners across numerous regions, including parts of Africa, Asia, Australia, Europe, the Middle East, North America, and South America.

Here's a quick look at the quantitative underpinning of these value propositions as of late 2025:

Value Proposition Metric	Associated Data Point (Late 2025)
Software Documentation Time Reduction	Up to 25% cut via Documentation Agent
Traditional Workflow Compliance Rate	Approximately 15% of studies compliant
Compass AI Compliance Rate Target	Up to 94% documentation compliance
Potential Revenue Uplift from Compliance	As much as five times more revenue from same volume
Estimated Cost Reduction (Specific Use Case)	~50% cost reduction for lower-acuity patients
Gross Margin (Q2 2025 Record)	64%
Global TAM	$350B+ Worldwide

The company's financial performance in 2025 shows the current reality of this mission: Q3 2025 revenue was $21.5 million, with a net loss of $13.8 million for Q2 2025. Finance: draft 13-week cash view by Friday.

Butterfly Network, Inc. (BFLY) - Canvas Business Model: Customer Relationships

The customer relationships for Butterfly Network, Inc. (BFLY) are segmented to address large institutional needs, recurring software value, and individual user enablement.

Metric	Q3 2025 Value	Q2 2025 Value	Q1 2025 Value
Total Revenue	$21.5 million	$23.4 million	$21.2 million
Software and Other Services Revenue	$6.9 million	$6.8 million	$7.1 million
Software and Other Services as % of Total Revenue	N/A	29%	N/A

Dedicated enterprise sales and account management for large deals.

Butterfly Network, Inc. (BFLY) focuses on large-scale deployments, evidenced by closing a major enterprise-wide deal with one of the top 5 most recognized health systems in the world during Q2 2025. The company is advancing its enterprise readiness with the next-generation enterprise software, Compass AI, on track for launch before the end of 2025. Macroeconomic uncertainties caused delays in closing some large deals in U.S. hospitals and global health programs, which factored into the reaffirmed full-year 2025 revenue guidance of $91 million to $95 million.

Software subscription model for recurring, high-margin revenue.

The recurring revenue component is tied to the software and services segment, which generated $6.9 million in the third quarter of 2025. This segment represented 29% of total revenue in Q2 2025. The company noted that total Annual Recurring Revenue (ARR), reported within software and other services, grew slightly versus the prior year period, led by an increase in enterprise software subscription ARR. However, in Q3 2025, software and other services revenue was flat year-over-year, with increased licensing revenue offset by lower individual subscriptions and warranty revenue.

Self-service and educational content via Butterfly Academy and ScanLab.

Educational tools are integrated into the customer relationship to drive adoption and proficiency. The company reported specific adoption in the medical education channel:

• Kansas City University now uses the ScanLab AI-powered app across all four years of its curriculum.
• The company is advancing its formal education programs through Butterfly Academy and Butterfly Certified courses.
• A clinical validation study published in JAMA demonstrated that integrating Butterfly's Auto B-line Counter into hospitalist workflows saved an estimated $751,537 in direct costs for patients with dyspnea.

Direct-to-consumer sales for individual clinicians.

Sales to individual clinicians are part of the broader product revenue, which was $14.6 million in Q3 2025. The company is seeing a mix shift where lower individual subscriptions contributed to the flat software/services revenue performance in Q3 2025. The CEO noted that the company is building a market for the first time, suggesting a focus on acquiring individual users alongside large systems. The company also has a strategic initiative focused on the Butterfly HomeCare congestive heart failure pilot program.

Butterfly Network, Inc. (BFLY) - Canvas Business Model: Channels

You're looking at how Butterfly Network, Inc. gets its innovative ultrasound technology and software into the hands of users, which is a mix of direct selling, digital distribution, and partnerships.

The company's channel strategy relies on a segmented approach, clearly separating the US market from international efforts, and balancing hardware sales with recurring software revenue.

Here is a look at the revenue breakdown from the third quarter of 2025, which gives you a snapshot of channel performance:

Channel Metric	Amount (Q3 2025)	Percentage of Total Revenue (Approx.)
Total Revenue	$21.5 million	100%
US Revenue	$16.1 million	74.9%
International Revenue	$5.4 million	25.1%
Product Revenue	$14.6 million	67.9%
Software and Other Services Revenue	$6.9 million	32.1%

The direct sales force targets US health systems, which accounted for $16.1 million of the $21.5 million total revenue in the third quarter of 2025. This channel is key for enterprise adoption, evidenced by signing a second top-five hospital customer in the first quarter of 2025 to integrate Compass software across approximately 600 probes and the entire network. Also, medical education adoption continues, with one-to-one student probe programs accelerating, including a leading osteopathic college purchasing a probe per incoming student in Q1 2025.

The Butterfly Garden digital platform is central to distributing the AI-powered apps. This ecosystem is growing its validated offerings:

• The portfolio expanded to 23 AI development partners as of Q2 2025.
• HeartFocus, the first FDA-cleared partner app, launched to Butterfly users in Q3 2025.
• The ScanLab AI-powered app expanded its reach in medical education, with Kansas City University using the technology across all four years of its curriculum.
• An AI-powered gestational age calculator is available in Malawi and Uganda, with FDA review underway for broader deployment.

E-commerce and direct online sales contribute to the overall product revenue, which reached $14.6 million in Q3 2025. While specific e-commerce revenue is not broken out separately from the US direct sales force, the overall US channel saw higher sales volume. To be fair, the Software and Other Services Revenue, which includes individual subscriptions, was $6.9 million in Q3 2025, representing about 32.3% of total revenue, showing a shift toward hardware sales in that quarter.

International distributors and global health partners drive the international segment, which generated $5.4 million in Q3 2025, a 4% year-over-year increase. This growth was partially attributed to the higher price point of the iQ3 probe following its international launch in the third quarter of 2024. Furthermore, the company has been delivering semiconductor chips to newly onboarded partners, as noted in Q1 2025 results, indicating expansion through strategic alliances.

Finance: review the Q4 2025 sales pipeline against the reaffirmed full-year revenue guidance of $91 million to $95 million by end of next week.

Butterfly Network, Inc. (BFLY) - Canvas Business Model: Customer Segments

You're looking at the specific groups Butterfly Network, Inc. (BFLY) targets with its diagnostic imaging and chip technology as of late 2025. It's a mix of high-volume institutional buyers and strategic technology licensees.

Large US and global health systems and hospitals represent a core segment, driving significant device and software revenue. For the second quarter of fiscal year 2025, total revenue hit a record of $23.4 million, with U.S. revenue at $17.2 million and international revenue at $6.2 million. By the third quarter of 2025, total revenue was $21.5 million, with U.S. revenue at $16.1 million and international revenue at $5.4 million. This segment is increasingly adopting the newer technology, as the iQ3 probe accounted for 85% of probe volume as of the third quarter of 2025. Furthermore, the company secured an unnamed deal in Q2 2025 with one of the top 5 most recognized health systems globally for system-wide deployment.

For medical schools and universities for student training programs, the strategy focuses on deep, long-term adoption. In the first quarter of 2025, Butterfly Network accelerated this by signing programs for a one-to-one student probe ratio, including one leading osteopathic college purchasing a probe for each incoming student. By Q3 2025, the ScanLab AI-powered educational app was being used across all four years of the curriculum at Kansas City University.

The segment of individual clinicians (e.g., emergency medicine, primary care) shows some headwinds. While product sales are strong, the software and services revenue stream saw a negative impact from lower renewals of individual subscriptions in both Q2 and Q3 2025. This suggests a shift in focus toward larger, recurring enterprise software contracts over single-user subscriptions.

Octiv partners licensing the chip technology for non-medical use is a growing, high-margin revenue driver. The sale of semiconductor chips to partners in the Octiv business contributed to the revenue growth in Q2 2025. A major development in late 2025 was the five-year co-development and licensing agreement with Midjourney, Inc., announced on November 17, 2025. This deal includes a $15 million upfront payment, an annual license fee of $10 million, and potential milestone payments up to $9 million.

For global health organizations in underserved regions, deployment is ongoing but faced external challenges; international and global health deals saw delays in Q1 2025 amid reports of USAID funding cuts. However, progress continues in specific areas, as an AI-powered gestational age calculator became available in Malawi and Uganda by Q3 2025.

Here's a quick look at the revenue segmentation based on the Q2 2025 data, which shows the relative contribution of the product versus services/licensing components of the customer base:

Customer Revenue Component	Q2 2025 Amount	Q3 2025 Amount
Total Revenue	$23.4 million	$21.5 million
Product Revenue	$16.6 million	$14.6 million
Software and Other Services Revenue	$6.8 million	$6.9 million
Octiv Chip Sales Impact (Included in Product Revenue)	Significant Driver	Implied in Product Revenue

The company is definitely seeing a mix of institutional adoption and strategic platform licensing. If onboarding for those large enterprise deals takes longer than expected, cash burn management becomes even more critical.

The customer base can be summarized by their primary interaction with Butterfly Network, Inc. (BFLY):

• Acquire the full imaging system (iQ3/iQ+).
• Subscribe to enterprise workflow software (Compass).
• License the core Ultrasound-on-Chip technology.
• Purchase probes per student for educational use.
• Utilize specialized apps like the AI-powered gestational age calculator.

Finance: draft 13-week cash view by Friday.

Butterfly Network, Inc. (BFLY) - Canvas Business Model: Cost Structure

You're looking at the costs that drive Butterfly Network, Inc. (BFLY)'s operations as of late 2025. The structure shows significant investment in future technology alongside the cost of delivering current hardware and services.

High Research and Development (R&D) expenses for chip and AI innovation are embedded within the total operating spend. The company is pushing forward on technology milestones, including the P5 chip and fourth-generation technology, alongside the launch of Compass AI software. Total operating expenses for the third quarter ended September 30, 2025, reached $31.4 million, which was up 6% from $29.5 million in the prior year period.

Sales, General, and Administrative (SG&A) costs for enterprise expansion are also part of this operating structure. The company is focused on strengthening enterprise readiness. When looking at the core operating spend, total operating expenses excluding stock-based compensation and other expenses were $23.7 million for Q3 2025, compared to $23.4 million in the prior year period. This suggests a relatively flat core operational spend year-over-year, despite the enterprise focus.

Cost of Goods Sold (COGS), including manufacturing and inventory, saw a major non-recurring impact in Q3 2025. The underlying adjusted gross margin improved, but the GAAP figures were heavily skewed by inventory charges. The adjusted gross margin for Q3 2025 was 63.9%, up from 60.0% in the prior year period, resulting in an adjusted gross profit of $13.7 million.

The impact on GAAP COGS is clear from the write-down. The cost of product revenue specifically soared by 288.3% to $25.24 million in Q3 2025, largely due to the inventory charge. Conversely, the cost of software and services revenue decreased by 25.1%, attributed to lower amortization expenses.

Non-cash charge for inventory write-down of $17.4 million in Q3 2025 is the most significant single cost event impacting the reported financials. This charge was for excess and obsolete inventory and is excluded from adjusted gross profit and adjusted gross margin calculations. This write-down drove the GAAP gross margin to (17.5)% for the quarter, compared to 59.5% in the prior year period.

Here is a look at the key Q3 2025 cost and expense figures:

Cost/Expense Category	Q3 2025 Amount (USD Millions)	Comparison/Context
Total Operating Expenses	$31.4	Up 6% year-over-year from $29.5 million
Operating Expenses (Ex-Stock Comp/Other)	$23.7	Essentially flat to $23.4 million in the prior year period
Inventory Write-Down (Non-Cash Charge)	$17.4	Recognized in Q3 2025; excluded from Adjusted Gross Profit
Cost of Product Revenue	$25.24	Increased by 288.3% due to inventory charge
Adjusted Gross Profit	$13.7	Up from $12.3 million in the prior year period

The company's overall financial performance in Q3 2025 reflected these costs, leading to a reported net loss of $34.0 million, compared to $16.9 million in the prior year period. The cash position, however, remained a focus, with cash and cash equivalents at $144.2 million as of September 30, 2025.

Key components driving the operating expenses include:

• Advancing AI development and technology milestones.
• Costs associated with strengthening enterprise readiness.
• Costs related to the launch of Compass AI.
• Manufacturing and supply chain costs for hardware units.

The company is managing its cash burn, reducing its quarterly cash burn to $3.9 million in Q3 2025, a new record low for quarterly cash usage.

Finance: draft 13-week cash view by Friday.

Butterfly Network, Inc. (BFLY) - Canvas Business Model: Revenue Streams

You're looking at how Butterfly Network, Inc. (BFLY) is bringing in cash as of late 2025. The business model clearly relies on a mix of hardware sales, recurring software revenue, and now, significant technology licensing income.

For the full fiscal year 2025, Butterfly Network, Inc. reaffirmed its revenue guidance to be in the range of $91 million and $95 million, which represents approximately 13% growth year-over-year.

Here's a look at the component parts of revenue based on recent performance metrics. The Q2 2025 results showed strong product revenue growth outpacing software, but the licensing component is now a major factor.

Revenue Component	Q2 2025 Amount	Q3 2025 Amount (as specified)
Product Revenue (iQ3 sales)	$16.6 million	$14.6 million
Software and Other Services Revenue	$6.8 million	Not specified
Total Reported Quarterly Revenue	$23.4 million	$21.5 million

Product Revenue from the sale of the iQ3 probe and related hardware remains a core stream. For the third quarter of 2025, this component was reported at $14.6 million. This contrasts with the second quarter of 2025, where product revenue reached $16.6 million, marking a 13% increase versus Q2 2024, partly due to higher average selling prices and chip sales to partners in the Octiv business.

Software and Other Services Revenue, which includes subscriptions, is the recurring element of the model. In the second quarter of 2025, this stream brought in $6.8 million, which was flat compared to the prior year period, despite an increase in enterprise software subscription Annual Recurring Revenue (ARR).

Technology licensing revenue has recently become a material component, highlighted by a major agreement.

• Butterfly Network, Inc. entered a five-year, exclusive co-development and licensing agreement with Midjourney on November 17, 2025.
• This deal includes an upfront, non-recurring fee of $15 million.
• It secures an ongoing $10 million annual license fee, which is paid quarterly over the five-year term.
• The agreement also allows for up to $9 million in additional milestone payments.
• Butterfly Network, Inc. is also eligible for revenue sharing and payments for chip purchases made by Midjourney.

The Octiv business was also noted as a contributor to Q2 2025 revenue through the sale of semiconductor chips to partners.