The growth engine behind Butterfly Network's (BFLY) Q2 — which combines chip-based ultrasound devices with cloud software and AI — was the United States. U.S. revenue reached $27.6 million, up 57% YoY, supported by chip licensing and co-development (embedded) partner revenue, as well as higher probe sales to medical institutions, medical schools, and e-commerce channels. Software and other services revenue jumped to $16.89 million from $6.76 million a year earlier. The rising licensing mix also pushed gross margin up 7.7 percentage points, from 63.7% to 71.4%.

The adjusted EBITDA loss shrank roughly 78% to about $1.4 million from about $6.2 million a year earlier, and adjusted EPS improved from -$0.03 to -$0.01, beating the consensus estimate of -$0.04. GAAP EPS was -$0.05, but since the consensus is on an adjusted basis, the comparison should be made using adjusted figures. Management said the quarter came in above the high end of guidance and also lifted its full-year revenue and adjusted EBITDA outlook.

The other growth pillar moved in the opposite direction. Lower probe sales to international distribution partners were the main driver of the decline, though the company noted this was partially offset by a regulatory approval in the Brazilian medical device market. The fact that product revenue slipped versus the prior year shows that this beat relied less on hardware volume and more on the embedded licensing and software mix. That kind of revenue can fluctuate quarter to quarter, so it is difficult to declare a trend from a single strong quarter.

The company is still posting a quarterly net loss, and operating expenses rose 19% YoY to $37 million, driven by hiring to support growth and product and software development. Cash and equivalents stood at $124.7 million as of the end of June — still comfortable, but down from $150.49 million at year-end, with operating cash outflows continuing. The midpoint of Q3 revenue guidance ($26 million–$30 million) is below the Q2 result, so investors will need to wait until next quarter to determine whether the embedded-related revenue was one-off.

Management characterized the quarter as record-setting and exceeding the top end of guidance, emphasizing that revenue, gross margin, and adjusted EBITDA all hit all-time highs. At the same time, the company highlighted that two embedded partners unveiled new applications on its chip-based ultrasound platform, framing this as technology validation and confirmation of the long-term opportunity. The tone was confident and assertive, with a strong message that redefines the company's identity as a multi-engine growth story where point-of-care ultrasound, enterprise software, government markets, and home and community care reinforce each other.

The guidance matched that tone. The company improved both the full-year revenue outlook and the expected adjusted EBITDA loss range, and outlined a YoY growth picture for Q3 as well. Rather than a granular walk through specific numbers, however, the key takeaway for the market was that the company is more confident in pulling up its growth trajectory for the year, and that a higher mix of licensing and software is lifting margins. Operational items — progress on federal cloud security authorization, a provisional sales approval from the Department of Veterans Affairs, the Brazil regulatory clearance, and preparations for the second-half commercial launch of home and community care — were also flagged, underscoring the pipeline beyond near-term results.

The market appears to have taken the combination of revenue and adjusted earnings beats plus a raised full-year guide positively. In particular, the sharp jump in gross margin and the higher software and licensing mix reinforce the narrative that the path to narrower losses is starting to show up in the numbers. That said, since the Q2 beat may include one-time contributions from co-development and licensing, whether the after-hours strength translates into a confirmed trend shift will depend on Q3's actual revenue mix and delivery against guidance.