Good day, and thank you for standing by. Welcome to Butterfly Network 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. I would now like to hand the conference over to your first speaker today, Mike Cavanaugh, Investor Relations. Thank you. Please go ahead.

Good afternoon and thank you for joining us today. Earlier this afternoon, Butterfly Network released financial results for the year ended December 31, 2020, and provided a business update. The release is currently available on the investor section of the company's website.

Thank you, Mike, and good afternoon, everyone. I'm excited to be hosting the first earnings call for Butterfly Network, and I am grateful for the opportunity to lead this incredible company and talented team. On today's call, I'll provide an overview of our full year 2020 performance and the momentum we built last year before discussing the longer-term outlook for the company. Then Stephanie will review our 2020 financial results. And we will conclude with the question-and-answer session. So, this being my first earnings call as CEO and our first such call as a public company, I'd like to say a few words about why I was attracted to Butterfly, what we do, and why we're so excited about it. For the last 25 years, I've been passionate about driving change and innovation in healthcare. I wake up every day wanting to make a difference in people's lives, and now more than ever, change is needed in healthcare on a global scale, and that's why I joined Butterfly, because we have the technology and the platform that can enable change of that magnitude.

Thank you, Todd. Total revenue for the full year 2020 was $46.3 million, which as Todd noted earlier, is a 68% year-over-year increase from $27.6 million in 2019. Product revenues for the full year 2020 were $38.3 million, an increase of 53% from $25.1 million in 2019. Units fulfilled, which is the primary driver of product revenue, were 20,208 in 2020 compared with 12,941 in 2019, reflecting continued excitement and demand in the market, international expansion, and a positive reception for our new probe, the iQ+, which was introduced in October 2020. Subscription revenues were $7.9 million in 2020, growing 216% from $2.5 million in 2019. Our subscription mix, defined as the percentage of our total revenue recognized in a reporting period that is subscription-based, was 17.1% in 2020 compared with 9.1% in 2019, an eight percentage point increase. Subscription revenues increased with device sales, as well as with renewals on prior year sales. Turning to expenses, the cost of revenue for 2020 was $107.5 million, an increase of 122% from $48.5 million in 2019. The cost of product revenues was $106.4 million, a 122% increase from $47.9 million in 2019. And the cost of subscription revenue was $1.1 million, increasing 72% from $621,000 in 2019. The increase in cost of revenue included non-recurring charges totaling $62.7 million this year.

Thank you, Stephanie, and thank you all for participating in Butterfly's first earnings call as a public company. We hope you have come away with a better understanding of our company, a sense of the accomplishment of our team in 2020, and excitement about the opportunity for Butterfly Network. We have the foundation in place for the next stage of our growth and evolution, supported by talent from our sector, as well as broader healthcare and societal trends. We believe that our technology is unique, disruptive, and able to drive a fundamental change in the way healthcare is practiced. By delivering the information necessary to make more informed clinical decisions earlier, truly affordable and accessible point-of-care ultrasound information can provide real value to healthcare providers, and we believe that Butterfly's solution will result in many new use cases for ultrasound information, unlimited by physical location. Our organization is vibrant, growing, and in an excellent position for this stage of Butterfly's life as a public company. I look forward to our next update with you, and I will now turn the call over for questions.

First question comes from Matt Taylor from UBS. Matt Taylor, your line is open.

Sorry. I was on mute. Thanks for taking the question. I was hoping you could give us some perspective on the Plus launch and how long you're going to be able to ride that new product launch for? And is this the kind of thing we should expect from you in the future, kind of a regular cadence of new handpieces, new features, and add-ons? Maybe you could talk a little bit about that?

So, Matt, thanks for the question. One of the core fundamentals that we have in having Ultrasound-on-Chip is our ability to bring new features and benefits to the product. So, you can think about a cadence that we have introducing new technology over an appropriate period, that over the life cycle of every couple of years or so, we would do major technology upgrades. And then within those time periods, we would be able to add functionality and capability to it. That's really the benefit that we have of our fundamental platform of having ultrasound off a semiconductor-based technology. And so, that's really, I think, the cadence that you would have, and you've seen that with iQ+. We were able to bring the iQ+ out, we added some benefits and features to it. You saw us add biplane, which was a really nice addition to the product and gave more capabilities to our users. As we work closely with our users and understand the problems the customers have, that will be the approach to our roadmap, and it's really the advantage of our technology platform.

Great. Thanks. Thanks for that. And I just wanted to ask a follow-up on the ACC partnership, the study that you talked about. It sounds pretty exciting. Can you give us some color on the size of that, the enrollment, what some of the endpoints, or anything to help us understand that a little bit better?

So the ACC collaboration is in its early stages, and we're in the planning part of that with them right now. As that develops, we will inform you as this study materializes. One of the areas that we're focusing on is going to be in congestive heart failure, which I think is a large chronic condition. If you see now having point-of-care ultrasound starting to be used in some of these more chronic conditions in different care settings, the opportunity becomes really exciting to have an impact in managing the health of broad populations of people in a variety of care settings. Those are the types of studies that we're looking at right now to create with ACC.

Great. Thank you.

Your next question comes from Josh Jennings from Cowen.

Hi. Good afternoon. Congratulations on the strong growth in 2020. I wanted to just ask about your go-to-market strategies here that you guys are talking about rapidly scaling up, and anything you can provide in terms of how you're thinking about building out the enterprise sales force and emphasizing that channel versus the historic e-commerce channel would be helpful.

Yeah. So thanks for the question. One of the things, with me coming in right now as a new CEO and analyzing all the opportunities we have, is Butterfly is to challenge all the opportunities we have in our business model. The enterprise is an area that we're definitely excited about. There's strong demand in enterprise right now for Butterfly, not only as a unique ultrasound device but for our total solution. Our Salesforce expansion is on track there. We continue to drive that expansion to help us take advantage of the opportunity in enterprise. We're also focused on customer success to help usability and deployment of the solution. We see a lot of opportunities in the enterprise channel, not just using point-of-care ultrasound but also the ability to deploy our Butterfly solution across the enterprise and maximize the value out of the information.

Excellent. Well, thanks for those details. I hate to ask this question, realizing that you just launched Butterfly iQ+, but our checks with some Butterfly iQ adopters have been very positive around image quality. I was just curious about the roadmap and where you go from here strictly thinking about image quality, where it sits today and where it can go. Is it essential for Butterfly to improve on image quality from here? I mean, clearly, you're seeing very strong early adoption trends for the last two years. But I'd like to bounce that question off you. And then, sorry to sneak in one last one, but just wanted to ask about the global chip shortage. You have a clear line of supply, but anything you can share there as well on where Butterfly sits in the midst of this global chips shortage. Thanks so much for taking the questions.

I'll take the first one. I'll let Stephanie take the second one. One of the advantages of our technology is that we can continue to improve our capabilities. We can enhance usability and the capabilities of the device, as we're able in a semiconductor-based technology platform. We absolutely will continue to enhance our image capabilities and our image quality over time. Right now, I think we have a very solid device that allows for the binary decision-making that's often required at point-of-care, enabling decision-making. Point-of-care ultrasound allows you to do that. Where we are right now with our technology adequately allows that. We have the ability to increase our image quality and capabilities on a fairly regular cadence, which is the advantage of semiconductor-based technology, alongside improving our cost basis, which obviously becomes important in the overall economics of care. Stephanie, I'll let you take the second one.

Sure. Thanks for the question, Josh. We have a very strong partnership with TSMC, both an engineering partnership that has been going for the last few years, as well as a manufacturing partnership. As part of that, we do have a committed supply agreement with them. We feel very confident, both in their ability to deliver the semiconductor wafers that we need for our current production and to help us meet additional demand should it materialize. We think this partnership is a competitive strength, and the availability of wafers amidst the global shortage is just one example of the value of that partnership.

Excellent. Thank you.

That's all the time we have allotted for Q&A today. I will turn the call back over to Dr. Todd Fruchterman for closing remarks.

I just want to thank all of you for participating in Butterfly Network's first-ever earnings call. I can't tell you how excited we are about the future of the company, our technology, and the solution. We look forward to embarking on this exciting journey with all of you. Thank you again for your time today.

This concludes today's conference call. Thank you for participating. You may now disconnect.