Butterfly Network, Inc.BFLY
Butterfly Network, Inc. Stock Compensation Disclosure
Stock-Based Compensation
Equity Incentive Plans
The 2012 Plan was approved by the board of directors and the stockholders of the Company's subsidiary in March 2012. The Company has not granted any additional awards under the 2012 Plan since 2021 and will not grant any additional awards under the 2012 Plan in the future. However, the 2012 Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder. As of December 31, 2025, the number of shares of common stock reserved for issuance under the 2012 Plan was 4.1 million.
The 2020 Plan was approved by the Board in the fourth quarter of 2020 and by the Company's stockholders in the first quarter of 2021. The 2020 Plan is administered by the Board. The Board may grant stock options to purchase shares either as incentive stock options or non-qualified stock options, stock-based awards, and stock units, including RSUs. The RSU grants are subject to certain terms and conditions, and the stock option grants are subject to certain option periods and conditions and exercise rights, and in each case are fully discussed in the 2020 Plan. As of December 31, 2025, the number
of shares of common stock reserved for issuance under the 2020 Plan was 62.4 million and 16.1 million common shares remain available for issuance under the 2020 Plan.
Grants under both of the Plans are included in the disclosures below.
Stock Options
Each stock option grant carries varying vesting schedules whereby the options may be exercised at the participant’s sole discretion provided they are an employee, director, or consultant of the Company on the applicable vesting date. Each option shall terminate not more than ten years from the grant date.
A summary of the stock option activity under the Plans is presented in the table below:
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
| Outstanding at December 31, 2023 | 7,439,187 | 6.17 | 4.68 | — | |||||||||||||||||||
| Exercised | (36,340) | 1.77 | |||||||||||||||||||||
| Forfeited | (842,111) | 8.98 | |||||||||||||||||||||
| Outstanding at December 31, 2024 | 6,560,736 | 5.88 | 3.56 | 1,963 | |||||||||||||||||||
| Exercised | (423,120) | 1.93 | |||||||||||||||||||||
| Forfeited | (586,389) | 9.11 | |||||||||||||||||||||
| Outstanding at December 31, 2025 | 5,551,227 | 5.84 | 2.66 | 2,188 | |||||||||||||||||||
| Options exercisable at December 31, 2024 | 6,222,073 | 5.94 | 3.48 | 1,799 | |||||||||||||||||||
| Options exercisable at December 31, 2025 | 5,387,925 | 5.95 | 2.68 | 1,928 | |||||||||||||||||||
The company did not grant any stock option awards during the years ended December 31, 2025, 2024 and 2023. The total intrinsic value excludes those options whereby the stock price does not exceed the exercise price of the option.
Additional information about the Company’s stock option activity during the years ended December 31, 2025, 2024 and 2023 is presented in the table below:
| 2025 | 2024 | 2023 | |||||||||||||||
| Cash proceeds from the exercise of stock options (in millions) | $ | 0.8 | $ | 0.1 | $ | 0.2 | |||||||||||
| Total intrinsic value of stock options exercised (in millions) | 0.6 | — | 0.2 | ||||||||||||||
The intrinsic value of a stock option that’s been exercised is the amount by which the stock price exceeds the exercise price of the option on the date of exercise.
RSUs
A summary of the RSU activity under the Plans is presented in the table below:
| Number of RSUs | Weighted Average Grant Date Fair Value | ||||||||||
| Outstanding at December 31, 2023 | 15,569,983 | 2.61 | |||||||||
| Granted | 15,838,283 | 1.10 | |||||||||
| Vested and converted to shares | (6,906,452) | 2.69 | |||||||||
| Forfeited | (3,251,584) | 2.34 | |||||||||
| Outstanding at December 31, 2024 | 21,250,230 | 1.52 | |||||||||
| Granted | 12,560,510 | 3.01 | |||||||||
| Vested and converted to shares | (9,966,244) | 1.62 | |||||||||
| Forfeited | (2,305,933) | 2.11 | |||||||||
| Outstanding at December 31, 2025 | 21,538,563 | 2.28 | |||||||||
The total fair value of the RSUs vested and converted to shares was $26.9 million, $10.4 million, and $7.3 million during the years ended December 31, 2025, 2024, and 2023, respectively.
Included in the table above are market-based RSUs that include a service condition. During the years ended December 31, 2025, 2024 and 2023, the Company granted 0.7 million, 1.0 million, and 1.8 million, respectively, of these awards to certain executives. The market-based conditions for these awards are objective metrics related to the Company’s stock price defined in the award agreement. The service condition for these awards is satisfied by providing service to the Company through the achievement date of the market-based conditions. The grant date fair value of the awards is recognized as stock-based compensation expense over the derived service period. The grant date fair value and derived service period were determined by using a Monte Carlo simulation with the risk-free interest rate, expected dividend yield, expected term, and expected volatility assumptions detailed below. The Company recognized $0.6 million, $2.0 million, and $2.5 million, respectively, of expense for these awards during the years ended December 31, 2025, 2024 and 2023.
Valuation Assumptions
In accordance with ASC Topic 718, Compensation-Stock Compensation, the Company estimates and records the compensation cost associated with the grants described above with an offsetting entry to paid-in capital. As described in Note 2 “Summary of Significant Accounting Policies”, the Company selected the Black-Scholes option pricing model for determining the estimated fair value of its service-based stock option awards. The Black-Scholes model requires the use of subjective assumptions which determine the fair value of stock-based awards. These assumptions are also used to determine the fair value of market-based RSUs via Monte Carlo simulations. The assumptions used to value market-based RSUs granted to employees during the years ended December 31, 2025, 2024 and 2023 were as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Risk-free interest rate | 3.7% | 3.6% | 3.6% – 3.9% | ||||||||||||||
| Expected dividend yield | 0% | 0% | 0% | ||||||||||||||
| Expected term | 5.0 years | 5.0 years | 5.0 years | ||||||||||||||
| Expected volatility | 89% – 96% | 89% | 76% | ||||||||||||||
The Company did not grant any stock options or market-based RSUs to non-employees during the years ended December 31, 2025, 2024, and 2023.
Risk-free interest rate
The risk-free interest rate for periods within the expected term of the awards is based on the U.S. Treasury yield curve in effect on the grant date.
Expected dividend yield
The Company has never declared or paid any cash dividends and does not expect to pay any cash dividends in the foreseeable future.
Expected term
For market-based RSUs, the expected term is based on the length of the award's performance period.
Expected volatility
The Company considers the historical volatility of its stock price and the implied stock price volatility derived from the price of exchange-traded options on the Company's stock. Because the Company's operations changed significantly after Longview and Butterfly Network, Inc. completed a business combination on February 12, 2021, pursuant to which Longview acquired Butterfly Network, Inc. and was renamed Butterfly Network Inc. (the “Business Combination”), and because the acquired company was privately held from its inception until its acquisition by the Company, there is no reliable historical or implied volatility information available prior to 2021. Accordingly, when the Company calculates the historical stock price volatility for awards with expected terms greater than the length of time since the closing of the Business Combination, the Company supplements its own historical stock price volatility with the historical stock price volatility of a group of publicly-traded peer companies that have been publicly traded over a period equivalent to the expected term of the awards.
Award Modifications and Accelerations
In 2025, certain service-based RSUs of a departing employee were modified pursuant to a separation agreement to have their vesting accelerated into the second quarter of 2025. In total, 0.4 million RSUs had their vesting accelerated. For the year ended December 31, 2025, the incremental stock-based compensation expense resulting from the acceleration was $0.5 million.
Employee Stock Purchase Plan
The ESPP was approved by the Board and the Company’s stockholders in the second quarter of 2024, with 4.2 million shares of common stock initially reserved and available for issuance. Under the ESPP, each eligible employee is granted an option to purchase shares of common stock, with the purchase price paid through payroll deductions, subject to the plan’s limitations on the number and value of shares purchasable. Each offering period under the ESPP has an expected duration of 24 months, divided into four six-month purchase periods, with purchases typically occurring in June and December. The purchase price per share is equal to the lower of 85% of the closing market price on the first day of the offering period, or 85% of the closing market price on the applicable purchase date. Proceeds received from the issuance of shares are credited to stockholders’ equity in the period that the shares are issued. The grant date fair value of the awards is recognized as stock-based compensation expense over the requisite service period. The grant date fair value was determined using similar methods and assumptions as those used for the Company’s stock option awards granted under the Plans. The Company's employees purchased 1.6 million shares and 0.7 million shares, respectively, of newly issued common stock through the ESPP during the years ended December 31, 2025 and 2024.
Stock-Based Compensation Expense
The Company’s stock-based compensation expense for the periods presented was as follows (in thousands):
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of revenue – software and other services | $ | 371 | $ | — | $ | — | |||||||||||
| Research and development | $ | 6,389 | $ | 6,950 | 9,772 | ||||||||||||
| Sales and marketing | 7,139 | 4,871 | 4,260 | ||||||||||||||
| General and administrative | 9,536 | 9,211 | 13,448 | ||||||||||||||
| Total stock-based compensation expense | $ | 23,435 | $ | 21,032 | $ | 27,480 | |||||||||||
No related tax benefits of the stock-based compensation expense have been recognized and no related tax benefits have been realized from the exercise of stock options due to the Company’s net operating loss carryforwards and valuation allowance. The Company has capitalized $0.3 million, $0.4 million and $0.7 million of stock-based compensation expense as part of the cost of its capitalized internally developed software assets during the years ended December 31, 2025, 2024 and 2023, respectively.
Total unrecognized stock-based compensation expense as of December 31, 2025 was $32.6 million which will be recognized over the remaining weighted average vesting period of 2.3 years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Mar 4, 2024 | |
| 2021 | Feb 28, 2022 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.