Butterfly Network, Inc. (BFLY) Q1 2021 Earnings Report, Transcript and Summary

Hello and thank you for standing by. And welcome to Butterfly Networks First Quarter 2021 Earnings Call. [Operator Instructions] Please be advised that today's call is being recorded. I would now like to hand the conference over to your speaker today, Agnes Lee, Vice President of Investor Relations. Please go ahead.

Good morning and thank you for joining us today. Earlier this morning, Butterfly released its financial results for the first quarter which ended March 31, 2021 and provided the business update. The release and earnings presentation which include a reconciliation of management's use of non-GAAP financial measures, compared to the most applicable GAAP measures are currently available on the Investors Section of the company's website at ir.butterflynetwork.com. Dr. Todd Fruchterman, Butterfly Networks' President and Chief Executive Officer; and Stephanie Fielding, Butterfly Networks' Chief Financial Officer, will host this morning's call. During today's call, we will be making certain forward-looking statements. These statements may include statements regarding, among other things, expectations with respect to financial results, future performance, development of products and services, potential regulatory approvals, anticipated financial impacts and other effects of the business combination on our business, the size and potential growth of current or future markets for our products and services, and the potential impact of the COVID-19 pandemic on our business. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and evolve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our filings made with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, and the company disclaims any obligation to update such statements. During this call, we will refer to non-GAAP financial measures, including adjusted gross margin, adjusted gross profit and adjusted EBITDA. These financial measures are not prepared in accordance with US Generally Accepted Accounting Principles or GAAP. These non-GAAP financial measures are not intended to be considered in isolation or to substitute the results prepared in accordance with GAAP. The definitions and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures and a discussion of why we present these non-GAAP financial measures are included in today's press release and at the end of the slide presentation. As a reminder, this call is being webcast live and recorded. And we will be referencing a slide presentation in conjunction with our remarks. Because there is a short delay between the live telephone audio and the presentation being shown on the webcast. For the best experience, please use either the webcast or both the audio and video content. Or if you dialed in by telephone, download the slides from our website and advance them yourself. To access the webcast, please visit the events section in the investor section of our website and a replay of the event will be available following the call. I would now like to turn the call over to Dr. Todd Fruchterman.

Thank you, Agnes, and good morning, everyone. We appreciate you taking the time to join us today. I welcome you to this earnings call. Our second since Butterfly became a public company and look forward to updating you on the results we achieved during the first quarter of the year. Following my overview of Butterfly's performance, Stephanie will walk through the details of our financial results. We will take your questions at the very end. As I said on our first earnings call, what brought me to this company is Butterfly's immense potential to drive fundamental change in healthcare by delivering information at the point of care, enabling healthcare practitioners to make more informed clinical decisions in a variety of care settings. This potential for transformation is what motivates every member of our team and their tireless efforts to bring breakthrough innovation to markets around the world. During my first 90 days as CEO, I have become even more excited about the potential for our technology and solutions to drive demand, utilization, and market expansion. Our semiconductor based technology, Ultrasound-on-Chip is the foundation of our point of care solution that enables the acquisition of information to inform clinical decision making. This technology gives us maximum flexibility and how we develop solutions, both to deliver value and create new business models, and is Butterfly's point of key differentiation. And while we intend to continuously refine our longer term strategy, we are excited about the demand in the marketplace today, and are pleased to reaffirm revenue guidance and provide additional transparency for 2021. Stephanie will walk through our guidance details later in the call. But before I talk about our first quarter performance, I want to take a moment to share a real world case of Butterfly's impact on healthcare, with 10s of 1000s of people who have used Butterfly across the globe, the impact of this company on patients is best represented by the lives it touches and stories shared by the health care professionals who are living examples of Butterfly's vision. Here is one such story from Austin, Texas. Just as the stethoscope allows a doctor to make a quick assessment of a patient's condition. Butterfly is a powerful tool for healthcare professionals to provide valuable clinical information and improve patient care. The more they understand Butterfly's value, the more they will use it with their patients. This was on full display as a primary care physician was learning how to incorporate Butterfly into his patient's exams with our education team. An elderly patient presented to the physicians practice with an elevated heart rate, slightly lower than expected blood pressure and complaints of dizziness. There were no other significant findings on standard physical exam. But in addition to listening to the patient's heart sounds in this exam, the doctor image the patient's heart with Butterfly. To his surprise, a large collection of fluid had accumulated around the heart, pericardial effusion, which in this case posed a significant risk to the patient and required immediate clinical attention. The physician called 911 and contacted the emergency room staff. With the team informed when the patient arrived at the ER, they were prepared to rapidly treat him and were able to drain the fluid around the heart. The patient's condition dramatically improved, and the crisis was averted because the treatment was administered rapidly. In many traditional clinical scenarios, this could easily have been a lengthy journey comprising multiple visits and tests to get to the right diagnosis, all while the patient remained compromised and at risk. While this is one specific case, it is not unusual that the information gleaned from point of care ultrasound in a primary care setting better informs care and influences the outcomes of care. In an article from the British Medical Journal, routine use of point of care ultrasound in a primary care practice changed clinical management in half of the patients on which it was used. We believe the affordability, versatility and usability of Butterfly removes hurdles to adoption for primary care practices, and will afford them and their patients the benefits of ultrasound technology. This is just one of many stories about our impact on patients, physicians and nurses. Butterfly is a truly disruptive technology with the potential to allow more people than ever before to access information from inside the body at the point of care. The flexibility of our Ultrasound-on-Chip technology allows us to design different user experiences and build new form factors for the probe fit for purpose based on the application. Additionally, within our core technology, we can bring unprecedented processing power to the probe compared to other commercially available point of care ultrasound devices. The probe, when combined with our proprietary software enhances the user experience and makes the acquired imaging information practical, actionable and valuable to that specific use case. As a result, our point of care ultrasound solution can be tailored to different user needs and has the potential to be used across the continuum of care settings by a variety of practitioners. Now, I'd like to review our Q1 2021 performance and give an update on our progress toward the near term foundational goals laid out in our last earnings call reflecting a solid start to 2021, we reported a revenue increase of 44% compared to the first quarter last year. We believe this demonstrates the excitement and demand for Butterfly technology in the marketplace. We continue to make strong progress in the first quarter towards putting Butterfly into the hands of users across different disciplines in healthcare. As our customer base expands, and the demand for our product grows, we expect a further broadening in the range of use cases and care settings where our solution can bring value. You have my commitment to provide more insight on commercialization and our anticipated milestones, as soon as it's appropriate to do so with a target of doing so by the end of the year. However, to help you think about our progress in 2021, I'd like to go back to the five near term foundational goals for Butterfly that we introduced on the Q4 earnings call. The first was to broaden and strengthen our team at Butterfly. The second was to broaden our partnerships with clinical leaders. The third was to align with the payer community to improve health outcomes and reduce the cost of care. The fourth was to develop commercial partnerships across care settings, specialties and geographies, to deliver patient centric, value based healthcare, and the fifth was to invest in our industry leading innovation. As I noted, we expect that success against these five foundational goals, team clinical partnerships, payer alignment, commercial expansion, and innovation will help us to drive our societal impact, our commercial growth, and our ability to improve clinical care across a diversity of geographies, applications and care settings. During the quarter, we made significant progress in all of these foundational categories. And I would like to share some of the progress we have made in the first quarter towards three of these goals. The first and perhaps most important goal at this time, is to broaden and strengthen our team. For me, there is no version of success for Butterfly without the right team operating in the right environment or they can be successful. This is why over the course of the quarter and looking ahead to the rest of the year, we are dedicating significant effort to building out a team that is ready to guide Butterfly through the next stages of its growth and development, while also filling out the rest of our organization. These hires will add to our core capabilities and enhance the ability of our team to succeed. Given our growth objective and desire to create the best people environment possible, it is important that we also continue to strengthen our leadership team. We recently welcome Tim Trodden, Butterfly's new Chief Human Resources Officer to our team. In this role, Tim will oversee the development and implementation of Butterfly's people strategy, which will include hiring, developing and retaining talent, while fostering the company's culture and upgrading HR practices and systems to drive business results. Tim comes to Butterfly after four years at WellCare Health Plans, where he led an integrated HR function responsible for creating and driving an enterprise-wide talent and culture strategy. He brings 16 years of prior experience as a leader at Johnson and Johnson, where he was most recently Head of Human Resources for the Corporate Enterprise Functions. We would also like to highlight two new Vice President Appointments to lead critical roles in external affairs, working more closely with investors and policymakers to key audiences for us as a public health care company. Agnes Lee, our new Vice President of Investor Relations will help us connect more closely with our investor community, ensuring we give this critical stakeholder group the timely and useful information they need. Agnes brings two decades of prior Investor Relations, finance and integrated communications experience across medical device, life science and diagnostic companies. Our new Vice President of Government Affairs, Andrea Hechavarria is another important hire for us. We view better technology as an enabler of global health equity and policy. And as Butterfly grows, Andrea brings over a decade of experience as a staffer in the United States Senate, and as a Government Relations professional that will help us to connect with government and public officials more closely and to align on aspects of care provision, pricing and product policy. We also welcomed Dr. Jill Kalman to Butterfly's commercial leadership team. Dr. Common is an expert in congestive heart failure, a significant opportunity for Butterfly to create value in chronic disease management. She is joining Butterfly after her previous role as Executive Director at Lenox Hill Hospital and Director of the cardiomyopathy program at both Beth Israel Medical Center and Tisch hospital. In addition to Dr. Kalman, we made meaningful progress in Q1 with our commercial organization, doubling the size of our highly experienced sales team. Overall, our team continues to evolve in key areas that dramatically increased our capacity and capabilities to deliver Butterfly to the market. This critical investment in our people is essential to ensuring we have the coverage and sales bandwidth needed to convert demand for Butterfly into revenue growth. In particular, we expect this investment to help drive penetration and adoption in the enterprise segment starting this year. I look forward to sharing more progress in coming months, as we expect to bring on additional industry leaders and experts to help shape the future of Butterfly. Second, we are hard at work developing commercial partnerships across care settings, specialties and geographies. These new relationships demonstrate how Butterfly is being used to evolve the delivery of patient care in an expanding range of use cases across a growing number of settings. When thinking about these new relationships, it's important to consider how each is a demonstration of the power of Butterfly and of our scope and scale to ultimately go to wherever the patient may be. Recently, we announced an innovative partnership with Sientra, a leading manufacturer of plastic surgery implantable devices to expand Butterfly's footprint into the cosmetic and plastic surgery marketplace. Our partnership with Sientra highlights Butterfly's ability to deliver actionable diagnostic insights as an advanced assessment tool, allowing for more informed clinical decision making. Through this unique partnership, Butterfly and Sientra are enabling plastic surgeons to provide a better experience for patients, improve resource planning, and ultimately deliver more efficient care. To operationalize this partnership, Sientra has begun promoting Butterfly iQ plus into the large plastic surgery market, with the official launch of the partnership at the Aesthetics meeting in April. This partnership allows us the opportunity to fully reach a specialized call point by an experienced and entrenched team, while enabling us to focus on using our own expanded sales team in different commercial contexts. Butterfly aspires to break down the legacy barriers to access imaging information through portability, usability, versatility, and affordability. We believe the Sientra partnership in particular illustrates a way that Butterfly can partner with clinicians across specialties and applications. Finally, I'd like to talk more about how we can use Butterfly to service an expanding range of use cases. While we have already demonstrated Butterfly's potential among practitioners of human medicine, we are very excited about the opportunity to transform Animal Health with Butterfly iQ Vet. Indeed, the veterinary market is both vast with over 120,000 veterinarians in the United States alone, and in need of more advanced assessment tools to improve care and deliver information faster, right at the point of care wherever that may be. While traditional ultrasound systems have struggled to meaningfully penetrate this market, because of cost, difficulty of use, and logistics related to portability, Butterfly iQ Vet addresses these challenges through its affordability, portability and ease of use. As a result, Butterfly iQ Vet is already being embraced by veterinarians across companion animal, equine medicine and academic settings. Equine diagnostic applications are an excellent example of a use case for Butterfly. Veterinarians for instance, commonly use ultrasound to determine why horses lame if there are ligament or tendon issues, or to perform injections. However, the lack of portability of traditional ultrasound is a major barrier to care in the settings where our horses are kept. With Butterfly, veterinarians have the ability to evaluate soft tissues and diagnose injuries with a truly portable ultrasound solution that can be used easily and reliably wherever the horse is stabled. In the last quarter, we built a dedicated commercial team around our veterinary solution and plan to aggressively ramp the business this year. As we have the opportunity to not only expand ultrasound use in veterinary medicine, but also be a leader in the category. You can expect additional updates on our technical and commercial progress of our veterinary solution, along with its global expansion within the next few quarters. As I mentioned on our last call, Butterfly is delivering technology with a solution to a global marketplace that we believe is anxious to receive it. Our technology captures information to inform clinical decisions, and it can be used across a range of care settings by a variety of practitioners. I look forward to sharing more information on the evolution of our strategy as we put our plans together and continue to execute on the goals we just discussed. I will now turn the call over to Stephanie for a review of our financial results. Stephanie?

Thank you, Todd. I will take you through the details of our Q1 financial performance shortly, and then end with 2021 guidance. But first, I would like to share a highlight from the quarter in light of the forecast we shared ahead of our February SPAC merger. Notably, our gross margin has turned positive over the course of the past two quarters and now outpaces the forecast we shared in November. Total revenue for the first quarter of 2021 was $12.4 million, which is a 44% increase year-over-year from $8.7 million in the first quarter of 2020. Product revenue for the quarter was $9.6 million, an increase of 33% from $7.2 million in the same period in 2020. Units fulfilled the main driver of product revenue were 5,013 in the quarter, compared with 3,711 in Q1 2020, an increase of 35%, reflecting the early steps in the expansion of our customer base within hospitals and larger institutions. Subscription revenue was approximately $2.9 million in the first quarter, growing approximately 93% from approximately $1.5 million in Q1 2020. Our subscription mix, which we define as a percentage of our total revenue, recognized in reporting periods that is subscription based was 23% compared with 17% in the first quarter of 2020, up six percentage point increase. Subscription revenues increased along with device sales, as well as with renewals on year-on-year sales. Due to the timing of revenue recognition, and mix of revenue, we currently expect quarter-to-quarter variability for subscription revenue. But over time, we expect that recurring revenues such as subscription mix will continue to grow. Turning to cost of revenue, the cost of revenue for Q1 2021 was $6 million, a decrease of approximately 37% from $9.5 million in the first quarter of 2020. Cost of product revenues was $5.6 million for Q1 2021, a 39% decrease from $9.3 million in the same period in 2020. And the cost of subscription revenue was $379,000 increasing 55% from $244,000 year-over-year. In line with our expectations, our gross margins turned positive over the course of the past two quarters and in Q1 gross margin was 51.6% while adjusted gross margin was 47.8%. Gross profit was $6.4 million for Q1 2021 compared to Q1 2020 gross profit of negative $836,000. Adjusted gross profit which includes a one time adjustment for warranty accrual methodology was $5.9 million. Adjusted gross margin and adjusted gross profit reconciliation calculations to GAAP net loss can be found in today's press release and at the end of the slide presentation. Consistent with our intent to use the proceeds of the Longview merger, to invest aggressively in long- term capabilities, operating expenses were $60.2 million for Q1 2021, an increase of $36.5 million, or 154%, compared to Q1 2020. The increase was primarily due to headcount growth and changes on a year-on-year basis. Expenses associated with stock-based compensation and costs associated with going public. Loss from operations was $53.7 million, an increase from $24.5 million in Q1 of 2020, primarily driven by higher operating expenses, offset by the increase in gross margin. Net loss was $700,000 as compared to a net loss of $24.4 million during the first quarter of 2020. Adjusted EBITDA was a loss of $26.5 million, compared with a loss of $21.5 million in the same period in 2020. Adjusted EBITDA reconciliation calculations to GAAP net loss can be found in today's press release. Moving to the balance sheet. Throughout much of 2020, we focus on having adequate capital resources and liquidity to support the business over the near and long term. As of March 31, 2021, cash and cash equivalents and marketable securities were $545.3 million. Of note inventory in the first quarter was $36.1 million, a $10.3 million increase over $25.8 million reported in the fourth quarter of 2020. This increase was primarily related to our contractual wafer commitments that we described in our last earnings call. This inventory will help ensure that we have access to product and innovation as we scale and innovates our business models. I would now like to take a moment to update all of you on a recent SEC 8-K filing; the SEC issued a statement on accounting and reporting considerations for warrants issued by SPAC. This has a broad impact on SPAC and former SPAC generally, not just Butterfly. As a result, we have filed an amendment to our annual report on Form 10-K, in which we restated Longview's audited financial statements, as us and for the year ended December 31 2020, to account for our public warrants, and private placement warrants as derivative liabilities, rather than prior accounting as components of equity. The classification of these warrants as liabilities did not have any impact on the company's previously reported operating expenses, cash flows or cash. And finally, on to guidance, as Todd discussed earlier, now that he has been on Board for three months, and has had a chance to evaluate the business, we want to provide an update on our 2021 financial plan. We also expect to provide more transparency on our operating plans, which will inform our expectations for 2022 in the second half of this year. For the full year 2021, total revenue is projected to be approximately $76 million to $80 million, or 64% to 73% growth year-over-year. Gross margin is expected to be 43% to 47%. And net loss is expected to be $135 million to $155 million. Adjusted gross margin is expected to be 42% to 46%. And adjusted EBITDA is expected to be negative $140 million to negative $160 million. Our revenue guidance reflects the anticipated acceleration of our investment in enterprise sales, where we believe there are attractive opportunities to implement the Butterfly solution. This has the potential to offer institutions the benefits of access to clinical information earlier to make more informed decisions, allowing for improvements across the care continuum, device management and governance solutions, along with integrated workflow. Finally, we plan to continue to build upon the touch points we have with customers, including direct-to-user, which we previously referred to as ecommerce, the iQ Vet offering and the partnership arrangements like the one we just described with Sientra. We expect revenue growth to accelerate in the second half of the year, and we expect the investments we are making to yield both near and long-term results. Our guidance for gross margin and adjusted gross margin is influenced primarily by our expected revenue mix. The net loss and adjusted EBITDA guidance reflects the investments we plan to make in the business. We have opportunities to drive growth through people and infrastructure; specifically we plan to invest in software solution enhancements designed to assist with customer workflows and AI to support insight and clinical decision making. Te breadth of ranges reflects the uncertainty around the timing of our investments as we evolve our strategy and innovation roadmap. And with that, I will pass it back to Todd for summary comments.

Thank you, Stephanie. And thank you all for participating in Butterfly's first quarter 2021 earnings call. We are still at the very beginning of our journey as a public company. But our rapid and broad progress this quarter in areas such as talent, clinical partnerships, and commercial models, gives me confidence that we are poised for continued success and growth. I would like to thank the Butterfly team for their dedication to our mission and the excellent progress we made in Q1 to expand our markets and partnerships. I hope that you share my excitement. And I look forward to our next update with you. I will now turn the call over for questions.

[Operator Instructions] Your first question comes from Josh Jennings from Cowen.

Hi, good morning, Todd and Stephanie. Thanks for taking the questions. So hoping to just start off on the 2021 guidance. It's encouraging to see and implies a nice ramp throughout the rest of this year. And I was hoping to just get a little bit more insight into your team's visibility into revenues. But particularly on the enterprise contract side, if you could help us understand when your visibility and then to just remind us just the kind of timing of book-to-bill and those contract processes. Because it sounds like that channel is already full. And you're continuing to build out that pipeline is full with enterprise contracts and continue to build up that salesforce. But anyway, a lot in that one question. But wanted to just understand visibility and revenues and then just a reminder on how the enterprise contracts, the timing sets up in terms of initial contact with these enterprise or these hospital system customers and then generation revenue.

Good morning, Josh. And thanks for the question. So first, if you think about the build, right, we are looking to see more growth than the back half of the year with sequential improvement, as we continue to see the revenue mix shift, both with the product and usership more from the direct to the enterprise. And I think that's what we've been working through. And I think you'll see that build as the course of the year goes on. And we're doing the investment behind that to execute that which we talked to you about investing in the salesforce and continue to do that. And we also see some elements of the realization of our product pipeline, enabling that as the year goes through, as it relates to how it builds in the enterprise segment, it's a vast segment. And we are working at approaches right now with partners where we're having great conversations at the highest level with lots of excitement in that and we are continuing to begin to create these partnerships. And we will see that happen over time, and really start accelerating towards the end of the year and into next year. And I turn it over to Stephanie, for a few comments on how that's starting to be realized.

Thanks for the questions, Josh. Yes, I think as you noted, the direct user is formerly ecommerce channel is an immediate sales, the sales cycle for the enterprise is a longer sale. And so but as Todd noted that enterprise or Health Systems Group is not a uniform walk of customers. And so there is a range of the sales process there as well. As we continue to build there, we get better and better at that sales cycle and understanding our customer needs and working with them. And as we bring on a sales team that gets more experienced in engaging with those customers, that process also improves over time. So we do expect that ramp happen in the back half of the year, both because we're investing now. And because that sales cycle take some additional time.

And I just say the last thing about from that is that as we enter into this relationship, the scope and standards then increase the time too. So I think that's one of the nice things, the nice pieces of our business is not just a piece of equipment that goes into the account, we're actually enabling value in how they practice medicine and getting value out of their institution. So that's why some of this is evolving. And that's why it's actually really quite exciting.

No, excellent. And so it segue to my next question; we appreciate the clinical value proposition of Butterfly iQ. And then the anecdotal case you shared in your prepared remarks, Todd, I think that's very clear. I was wondering if you could share any anecdotes or case studies on and how you're marketing the financial instead of a Butterfly iQ adoption for both individual practitioners and enterprises. Because that seems like another attractive element of the technology clearly for individual practitioners to have an alternate revenue stream in their practice and in their business, but also on the enterprise side, in terms of using ultrasound, more imaging and with reimbursement fully in place capturing additional revenues, but I was wondering if you could share any details there on the -- just the financial incentive for prospective customers and how you're marketing that angle of the story. Thanks a lot.

Sure, Josh. Actually Stephanie we'll start.

Yes, as you noted, Josh, we have existing reimbursement codes for these use cases, I think what's exciting about Butterfly is that there's both the existing reimbursement model, but also the tailwind to value based care and how this can drive better insight, better decision making, and ultimately, we believe a lower cost of care overall. And we think that the range of customers are seeing those benefits, both from the direct reimbursement as well as the kind of larger institutional change in their both cost structure and patient care outcomes.

And just a follow on to that, Josh to your point, we're starting to -- it's really become how you bring the information that you obtained with the Butterfly, into your clinical practice and into your workflow and your -- it's really into the decision making, and how you realize that value in the institutional view. So we're seeing that in primary care practices, now moving that forward, both in the value of doing a more enhanced exam rapidly to your point that you made, where you can get a different level of feeling for doing that, but being able to do it in a timely and efficient way. And then for the institutional piece of that, realizing that value in what it can do later on in the economic benefit of how care is delivered, that reducing secondary imaging studies, reducing unnecessary referrals, because you bring more valuable information to the actual decision making point of care. And that's where we see a lot of value. There's and then as you put that into standardization, and larger institutions and workflows, that's where you get a lot of value out of the information. So we see that both at the individual practitioner level and at the institutional level, and it's really about getting powerful information at the right time. And that's what Butterfly I think, really brings is an ability in a format that you can get a level of information that you couldn't get at that primary decision making.

Your next question comes from Matt Taylor from UBS.

Hi. Good morning and thanks for taking the question. So the first one I wanted to ask about was, obviously you assume some acceleration from the year so there's two things that I wanted to touch on. The first is in the press release and in your comments, you talked about the doubling of a salesforce and continued commercial investments, could you just give us an understanding of the cadence of hiring that you've been doing and the current state of salesforce how many folks you have and how you expect that to grow over the course of the year?

So, Matt thanks. So we're looking at, obviously, building to meet the needs that we have, and currently we have the Delta 00 we've doubled the Delta Force in the first quarter. We're at about 27 heads currently, and we're continuing to evaluate where we think we need to enhance coverage as we look at how we use our direct sales force to help with the value proposition and what we just talked about mainly in the enterprise segment, and we're continuing to look at as we are having these conversations, having to, you need to continue to add, but we add, we doubled it in the first quarter.

So you doubled it year-over-year, again, you talk about the cadence of the hiring last year, and how it's impacted sales and or anything on productivity, how should we think about that in terms of sales per person?

Happy to that, so we doubled it from the prior year, not in the first quarter prior year, but actually, sequentially, the sales team is obviously ramping, but we're incredibly pleased with the quality of the talent that we're getting, and the diversity of backgrounds. And given the product and the solution that we sell, it's really important that we find individuals who are able to represent the holistic breadth of what we're offering. And we've been really pleased at the quality of the people who are coming in the door and their connections and ability to work with the institutions that are their customers.

Okay, cool. Thanks for that. And then since we haven't seen the quarterly from last year, I know that it's typically a little bit more backend loaded. Can you talk about how you expect sales to fall through the year and in Q4? And, given you're doing some different initiatives this year, like the enterprise selling, do you think the cadence will be different this year than last year?

Yes, I think this is a unique year for us, both because of the way that we're pivoting our business model, because we have incremental resources to invest as we grow. And so we certainly expect this to be a unique year in terms of the ramp. As you noted, in prior years, we had been more heavily weighted towards the back end and particularly in Q4. That was in part due to the direct to user approach that we've had. Again, we do expect to be backend weighted this year, but for slightly different reasons. In terms of our investment, kind of bearing fruit, I would say that over time the seasonality, the backend weightiness is likely to balance out more as we get more of the kind of subscription, recurring revenues and have that ongoing sales process with our customers where we continue to add value. And that will be more of a conversation that has less of the timing variation to it. But for this year, for sure, we expect that kind of ramp.

Yes, it didn't matter as it relates to the productivity and to what Stephanie was talking about. I think we tried to convey that at this point in the journey it's -- there's just so much excitement and interest, and people are still filling out the utility. So it's a lot about getting into the workflows, whether it's in practices, or whether it's an institutional account. As we get into those and then the scope of the offerings, more defined themselves, it becomes a little bit clearer as to where we sell in the next account and the next account. So right now, it's actually quite an exciting time. And there's a ton of opportunity in each of the accounts that we're working on because this scope are quite large, because we're not just putting a single product into the account, we're actually unlocking a lot of value. So we work with them both on how they're going to use Butterfly, and how it makes sense across a variety of workflows and practices within them. And then how they take that data and then put it into their institutional workflow and health outcome decision making. And that's why I think the question we're evolving into the after the question, because we're evolving with our account. And what I would say is the opportunity and the demand is just incredibly large. And so we're working on meeting it.

Okay, good. That's good perspective. Maybe I could sneak in one more. I just wanted to understand pricing and unit. So you made some disclosures here in the quarter, it looks like pricing was down about a 1%. I mean, I realized that could be due to some of these bigger contracts. You also have the iQ launch in Q3. So, maybe, generally, in the future, how do you expect like for like pricing to trend and including some of these bigger deals? And then when you come out with new products, are they going to be priced higher or the same? What's the right way to think about them?

Yes, so I think the pricing over time there, there are a lot of factors that go into that I wouldn't read too much into kind of minor variation. It's the international mix has an impact. So there are a variety of things kind of going into that from revenue recognition standpoint. And so I think, the way I would think about this more broadly is we have a pricing structure right now that we've discussed, and it's got different kind of tiers around direct to user and larger health systems accounts. But we are thinking carefully about the ways that we're creating value for our customers, and how we want to structure the relationships over time. So they drive value for the customer and for a Butterfly, because we view that as a kind of partnership relationship. The individual pricing variation I wouldn't read into for this quarter.

And, Matt, I think the other thing that's important is to remember we're a digital health company. So and the value we bring into the marketplace and with our customers, we have the element of the device which acquires the information, and then we have the software that makes the information usable. And so that aggregate is the value that we work with our customers over. So it's not just on a price per unit basis. And I think as we are evolving our business model, you'll see that evolve with that.

Thank you, everyone. This brings us to the end of our Q&A session today. I turn the call back over to the presenters for closing remarks.

I just want to thank everyone for joining us today. And we look forward to our next call with you.

Thank you everyone. This will conclude today's conference call. You may now disconnect.