Butterfly Network, Inc.BFLY
Butterfly Network, Inc. Revenue Disclosure
Revenue Recognition
Disaggregation of Revenue
The Company disaggregates revenue from contracts with customers by type of good or service and by geographical market. The Company believes that these categories aggregate the payor types by nature, amount, timing, and uncertainty of its revenue streams. The following table summarizes the Company’s disaggregated revenues (in thousands) for the years ended December 31:
| Pattern of Recognition | 2025 | 2024 | 2023 | ||||||||||||||||||||
| By type of good or service: | |||||||||||||||||||||||
| Devices and accessories | Point-in-time | $ | 63,443 | $ | 54,200 | $ | 40,036 | ||||||||||||||||
| Software and other services | Over time | 34,167 | 27,856 | 25,864 | |||||||||||||||||||
| Total revenue | $ | 97,610 | $ | 82,056 | $ | 65,900 | |||||||||||||||||
| By geographical market: | |||||||||||||||||||||||
| United States | $ | 77,437 | $ | 63,423 | $ | 52,116 | |||||||||||||||||
| International | 20,173 | 18,633 | 13,784 | ||||||||||||||||||||
| Total revenue | $ | 97,610 | $ | 82,056 | $ | 65,900 | |||||||||||||||||
Midjourney Co-Development and Licensing Agreement
In November 2025, the Company entered into the Co-Development and Licensing Agreement with Midjourney, granting Midjourney an exclusive, non-transferable license, within a specified field of use, to access and use certain of the Company's ultrasound-on-chip technology, software, and backend technology, subject to the Co-Development and Licensing Agreement. The Co-Development and Licensing Agreement has a five-year term.
Midjourney’s payment obligations to the Company under the Co-Development and Licensing Agreement include a one-time non-recurring fee of $15 million, which was paid upon entering into the Co-Development and Licensing Agreement, and a $10 million annual license fee, payable quarterly during the five-year term of the Co-Development and Licensing Agreement. The Co-Development and Licensing Agreement also contemplates that Midjourney will make (i) additional payments of up to $9 million upon the achievement of specified milestones, (ii) certain revenue sharing payments in connection with Midjourney’s commercialization of hardware products incorporating our chips, and (iii) payments in connection with any purchases of chips from the Company.
The Company evaluated the Co-Development and Licensing Agreement in accordance with Topic 606 and identified two performance obligations within the contract: 1) a combined performance obligation for the license of the Company’s intellectual property and the related research and development services provided for the co-development, and 2) a material right for potential future purchases of the Company’s semiconductor chips. The Company determined the transaction price, which includes estimates of variable consideration, and allocated the transaction price between the performance obligations based on their estimated relative SSPs. The combined performance obligation for the license and the related research and development services is satisfied over time using an input method as progress is made towards key project milestones. The material right will be satisfied at a point in time when control of the semiconductor chips is transferred from the Company to Midjourney.
Under the Co-Development and Licensing Agreement, the Company received payments of $17.5 million and recognized software and other services revenue of $6.8 million during the year ended December 31, 2025.
Contract Balances
Contract balances represent amounts presented in the consolidated balance sheets when the Company has either transferred goods or services to the customer or the customer has paid consideration to the Company under the contract. These contract balances include trade accounts receivable and deferred revenue. The Company recognizes a receivable when it has an unconditional right to payment, and payment terms are typically 30 to 90 days for sales on credit. The amount of revenue recognized during the years ended December 31, 2025 and 2024 that was included in the deferred revenue balance at the beginning of the period was $15.8 million and $15.6 million, respectively.
Transaction Price Allocated to Remaining Performance Obligations
As of December 31, 2025, the Company had $99.6 million of remaining performance obligations. The Company expects to recognize approximately 57% of its remaining performance obligations as revenue in the next twelve months and approximately 43% thereafter. Of the Company's total remaining performance obligations, $63.2 million was related to the Midjourney Co-Development and Licensing Agreement, and the Company expects to recognize approximately 56% of this remaining performance obligation as revenue in the next twelve months and approximately 44% thereafter.
Costs of Obtaining or Fulfilling Contracts
The Company incurs incremental costs of obtaining contracts and costs of fulfilling contracts with customers. Incremental costs of obtaining contracts, which include commissions and referral fees paid to third parties as a result of obtaining contracts with customers, are capitalized to the extent that the Company expects to recover such costs. Costs of fulfilling contracts that relate specifically to a contract with a customer, which result from activities that generate resources for the Company and enable the Company to satisfy its performance obligations in the contract with the customer, are capitalized to the extent that the Company expects to recover such costs. Capitalized costs are amortized in a pattern that is consistent with the Company’s transfer of the related goods and services to the customer. The Company had $0.7 million and $0.7 million of capitalized costs of obtaining or fulfilling contracts as of December 31, 2025 and 2024, respectively. The Company’s amortization costs for capitalized costs of obtaining or fulfilling contracts were $0.7 million, $0.7 million, and $0.6 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Practical Expedients and Accounting Policy Elections
In determining the transaction price of its contracts with customers, the Company estimates variable consideration using a portfolio of data from similar contracts.
As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component in contracts in which the period between when the Company transfers the promised good or service to the customer and when the customer pays for that good or service is a year or less.
The Company has made an accounting policy election to exclude all sales taxes from the transaction price of its contracts with customers. Accordingly, sales taxes collected from customers and remitted to government authorities are not included in revenue and are accounted for as a liability until they have been remitted to the respective government authority.
As a practical expedient, the Company does not capitalize incremental costs of obtaining contracts when the amortization period would be one year or less. Such incremental costs of obtaining contracts are recognized as expense when incurred.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Mar 4, 2024 | |
| 2021 | Feb 28, 2022 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.