The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto contained in our 2025 Annual Report on Form 10-K. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described under the caption "Risk Factors" in Item 1A of Part I of our 2025 Annual Report on Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. Overview We are an innovative digital health business transforming care through a unique combination of portable, semiconductor-based ultrasound technology, intuitive software, services, and educational offerings that can make medical imaging more accessible than ever before. Butterfly’s solution enables the practical application of ultrasound information into the clinical workflow through affordable hardware that fits in a healthcare professional’s pocket and is paired with cloud-connected software that is easily accessed through a mobile application. Butterfly developed ultrasound devices that can perform whole-body imaging in a single handheld probe because they are powered by our proprietary semiconductor technology instead of piezoelectric crystals. Our Ultrasound-on-Chip™ makes ultrasound more accessible outside of large healthcare institutions, while our software is intended to make the product easy to use, fully integrated with the clinical workflow, and accessible on a user’s smartphone, tablet, and almost any hospital computer system connected to the Internet. We aim to enable the delivery of imaging information anywhere at point-of-care to drive earlier detection throughout the body and remote management of health conditions. We market and sell the Butterfly system, which includes probes, related accessories, and software subscriptions (which we refer to herein as our "core business"), to healthcare systems, physicians, and healthcare providers through a direct sales force, distributors, and our eCommerce channel. We also license our proprietary Ultrasound-on-Chip™ semiconductor platform for co-development of novel technologies in non-competitive markets through our Embedded program. Key Performance Measures We review the key performance measures discussed below to evaluate the business and measure performance, identify trends, formulate plans, and make strategic decisions. Our key performance measures may fluctuate over time as the adoption of our devices increases, which may shift the revenue mix more toward software and other services. The quarterly measures may be impacted by the timing of device sales. Units fulfilled We define units fulfilled as the number of devices whereby control is transferred to a customer. We do not adjust this measure for returns as our volume of returns has historically been low. We view units fulfilled as a key indicator of the growth of our business. We believe that this measure is useful to investors because it presents our core growth and the performance of our business period over period. 20 Table of Contents For the three months ended Units fulfilled increased by 1,176 units, or 22.5%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was largely driven by higher probe sales volume in the U.S. through direct sales to health systems and medical schools as well as our eCommerce sales channel. Software and other services mix We define software and other services mix as a percentage of our total revenue recognized in a reporting period that is based on software subscriptions and other related services, consisting primarily of our software as a service ("SaaS") offering. We view software and other services mix as a key indicator of the profitability of our business, and thus we believe that this measure is useful to investors. Software and other services mix increased by 22.9 percentage points, to 51.8%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This increase was primarily driven by increases in software and other services revenue generated by our Embedded partnerships, including our co-development partnership with Midjourney, Inc. 21 Table of Contents Description of Certain Components of Financial Data Revenue Product revenue consists of revenue from the sale of products, such as medical devices, accessories, and semiconductor chips. Our software and other services revenue consists of revenue from the sale of SaaS subscriptions, extended warranties, services related to our Embedded partnerships, implementation and integration services, and software development kits ("SDKs"), which may be perpetual or term-based. SaaS subscriptions include licenses for teams and individuals as well as enterprise-level subscriptions. Services related to our Embedded partnerships include out-licensing arrangements and related research and development services. For sales of products and perpetual SDKs, revenue is recognized at a point in time upon transfer of control to the customer. Sales of SaaS subscriptions, extended warranties, and term-based SDKs are generally related to stand-ready obligations or continued provision of access, and the revenue for those offerings is recognized ratably over time. For sales of services related to our Embedded partnerships and implementation and integration services, revenue is recognized over time using input methods to determine a measure of progress. Over time, as adoption of our devices increases through further market penetration, as practitioners in the Butterfly network continue to use our devices, and as our Embedded collaborations continue to grow and develop, we expect our annual revenue mix to shift more toward software and other services. The quarterly revenue mix may be impacted by the timing of device sales. To date, we have invested in building out our commercial footprint, with the ultimate goal of growing adoption at large-scale healthcare systems and driving awareness of the usability of ultrasound. As we expand our healthcare system software offerings and develop relationships with larger healthcare systems, we continue to expect a higher proportion of our sales in healthcare systems compared to eCommerce. Cost of revenue Cost of product revenue includes manufacturing costs, personnel costs and benefits, inbound freight, packaging, warranty replacement costs, royalty fees for licensed intellectual property, payment processing fees, and inventory obsolescence and write-offs. We expect our cost of product revenue to fluctuate over time due to the level of units fulfilled in any given period and to fluctuate as a percentage of product revenue over time as our focus on operational efficiencies in our supply chain may be offset by increased prices of certain inventory components. Cost of software and other services revenue includes personnel costs, cloud hosting costs, and payment processing fees. Because the costs and associated expenses to deliver our software and other service offerings are less than the costs and associated expenses of manufacturing and selling our products, we anticipate an improvement in profitability and margin expansion over time as our revenue mix shifts increasingly towards software and other services. We plan to continue to invest additional resources to expand and further develop our SaaS and other service offerings which will be reflected in cost of revenue as amortization expense. Research and development Research and development expenses primarily consist of personnel costs and benefits, professional services, facilities-related expenses and depreciation, fabrication services, and software costs. Most of our research and development expenses are related to developing new products and services that have not reached the point of commercialization and improving our products and services that have been commercialized. Fabrication services include certain third-party engineering costs, product testing, and test boards. Research and development expenses are expensed as incurred. We expect to continue to make substantial investments in our product and software development, clinical, and regulatory capabilities. Sales and marketing Sales and marketing expenses primarily consist of personnel costs and benefits, advertising, conferences and events, facilities-related expenses, and software costs. We expect to increase our investments in our commercial capabilities. General and administrative General and administrative expenses primarily consist of personnel costs and benefits, insurance, patent fees, software costs, facilities-related expenses, and outside services. Outside services consist of professional services, legal fees and other professional fees. 22 Table of Contents Other Operating expenses classified as other are expenses which we do not consider representative of our ongoing operations. These other expenses primarily consist of employee severance and benefits costs related to reductions in force, litigation costs, loss contingencies and related loss recoveries related to ongoing litigation, and legal settlements. Results of Operations We operate as a single reportable segment to reflect the way our CODM reviews and assesses the performance of the business. The accounting policies are described in Note 2 "Summary of Significant Accounting Policies" in our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Dollars % of revenue Dollars % of revenue Dollars % of revenue Dollars % of revenue Revenue: Product $ 15,720 48.2 % $ 16,621 71.1 % $ 30,373 51.4 % $ 30,785 69.0 % Software and other services 16,892 51.8 6,762 28.9 28,769 48.6 13,823 31.0 Total revenue 32,612 100.0 23,383 100.0 59,142 100.0 44,608 100.0 Cost of revenue: Product 7,370 22.6 6,670 28.5 13,725 23.2 12,494 28.0 Software and other services 1,954 6.0 1,822 7.8 3,843 6.5 3,842 8.6 Total cost of revenue 9,324 28.6 8,492 36.3 17,568 29.7 16,336 36.6 Gross profit 23,288 71.4 14,891 63.7 41,574 70.3 28,272 63.4 Operating expenses: Research and development 10,542 32.3 8,315 35.6 20,080 34.0 18,239 40.9 Sales and marketing 11,467 35.2 11,559 49.4 22,884 38.7 23,179 52.0 General and administrative 11,355 34.8 9,130 39.0 22,173 37.5 18,729 42.0 Other 3,588 11.0 1,987 8.5 3,973 6.7 2,691 6.0 Total operating expenses 36,952 113.3 30,991 132.5 69,110 116.9 62,838 140.9 Loss from operations (13,664) (41.9) (16,100) (68.9) (27,536) (46.6) (34,566) (77.5) Interest income 1,079 3.3 1,503 6.4 2,265 3.8 3,155 7.1 Interest expense (282) (0.9) (368) (1.6) (561) (0.9) (715) (1.6) Change in fair value of warrant liabilities — — 620 2.7 413 0.7 1,446 3.2 Other income (expense), net (43) (0.1) 531 2.3 (168) (0.3) 2,906 6.5 Loss before provision for income taxes (12,910) (39.6) (13,814) (59.1) (25,587) (43.3) (27,774) (62.3) Provision for income taxes — — 20 0.1 — — 27 0.1 Net loss and comprehensive loss $ (12,910) (39.6) % $ (13,834) (59.2) % $ (25,587) (43.3) % $ (27,801) (62.3) % Comparison of the three months ended June 30, 2026 and 2025 Revenue Three months ended June 30, (in thousands) 2026 2025 Change % Change Product $ 15,720 $ 16,621 $ (901) (5.4) % Software and other services 16,892 6,762 10,130 149.8 $ 32,612 $ 23,383 $ 9,229 39.5 % Product revenue decreased by $0.9 million, or 5.4%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The overall decrease was driven by the non-recurrence of prior-year sales of semiconductor 23 Table of Contents chips to our Embedded partners, reducing current-year product revenue by $1.3 million. This decrease was partially offset by $0.4 million of higher product revenue generated from the increase in probe sales volume within our core business. Software and other services revenue increased by $10.1 million, or 149.8%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This increase was primarily driven by increases in software and other services revenue generated by our Embedded partnerships, including our co-development partnership with Midjourney, Inc. Cost of revenue Three months ended June 30, (in thousands) 2026 2025 Change % Change Product $ 7,370 $ 6,670 $ 700 10.5 % Software and other services 1,954 1,822 132 7.2 $ 9,324 $ 8,492 $ 832 9.8 % Percentage of revenue 28.6 % 36.3 % Cost of product revenue increased by $0.7 million, or 10.5%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily driven by the increased cost of devices sold as a result of our higher probe sales volume. Cost of software and other services revenue remained relatively flat for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, increasing by $0.1 million, or 7.2%. This increase was primarily driven by a $0.6 million increase in costs related to providing services to our Embedded partners, partially offset by a $0.4 million decrease in amortization expense for software development investments that we made in prior years. Research and development Three months ended June 30, (in thousands) 2026 2025 Change % Change Research and development $ 10,542 $ 8,315 $ 2,227 26.8 % Percentage of revenue 32.3 % 35.6 % Research and development expenses increased by $2.2 million, or 26.8%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This increase was primarily driven by a $1.2 million increase in personnel costs as we invested in additional headcount for our product and software development projects, a $0.7 million increase in product engineering costs as we progressed along our product development roadmap, and a $0.3 million increase in software costs as we leveraged more third-party AI tools to optimize our employee workflows during the period. Sales and marketing Three months ended June 30, (in thousands) 2026 2025 Change % Change Sales and marketing $ 11,467 $ 11,559 $ (92) (0.8) % Percentage of revenue 35.2 % 49.4 % Sales and marketing expenses remained relatively flat for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, decreasing by $0.1 million, or 0.8%. General and administrative Three months ended June 30, (in thousands) 2026 2025 Change % Change General and administrative $ 11,355 $ 9,130 $ 2,225 24.4 % Percentage of revenue 34.8 % 39.0 % 24 Table of Contents General and administrative expenses increased by $2.2 million, or 24.4%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This increase was primarily driven by a $1.5 million increase in personnel and other employment-related costs, including stock-based compensation expenses, and the recognition of a $0.4 million provision for credit losses in the current period related to a prior sale to one international distributor. Other Three months ended June 30, (in thousands) 2026 2025 Change % Change Other $ 3,588 $ 1,987 $ 1,601 80.6 % Percentage of revenue 11.0 % 8.5 % Other increased by $1.6 million, or 80.6%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This increase was driven by the recognition of $4.0 million of estimated liabilities for loss contingencies related to ongoing litigation and $2.0 million of higher legal costs due to litigation. These increases were partially offset by the recognition of a $4.0 million loss recovery for expected insurance recoveries related to our estimated liabilities for loss contingencies and a $0.4 million reduction in employment-related costs. We believe these costs are not representative of our ongoing operations. Comparison of the six months ended June 30, 2026 and 2025 Revenue Six months ended June 30, (in thousands) 2026 2025 Change % Change Product $ 30,373 $ 30,785 $ (412) (1.3) % Software and other services 28,769 13,823 14,946 108.1 $ 59,142 $ 44,608 $ 14,534 32.6 % Product revenue decreased by $0.4 million, or 1.3%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The overall decrease was driven by the non-recurrence of prior-year sales of semiconductor chips to our Embedded partners, reducing current-year product revenue by $2.8 million. This decrease was partially offset by $2.4 million of higher product revenue generated from the increase in probe sales volume within our core business. Software and other services revenue increased by $14.9 million, or 108.1%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily driven by increases in software and other services revenue generated by our Embedded partnerships, including our co-development partnership with Midjourney, Inc. Cost of revenue Six months ended June 30, (in thousands) 2026 2025 Change % Change Product $ 13,725 $ 12,494 $ 1,231 9.9 % Software and other services 3,843 3,842 1 — $ 17,568 $ 16,336 $ 1,232 7.5 % Percentage of revenue 29.7 % 36.6 % Cost of product revenue increased by $1.2 million, or 9.9%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily driven by the increased cost of devices sold as a result of our higher probe sales volume. Cost of software and other services revenue remained flat for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. 25 Table of Contents Research and development Six months ended June 30, (in thousands) 2026 2025 Change % Change Research and development $ 20,080 $ 18,239 $ 1,841 10.1 % Percentage of revenue 34.0 % 40.9 % Research and development expenses increased by $1.8 million, or 10.1%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily driven by a $0.7 million increase in product engineering costs as we progressed along our product development roadmap, a $0.4 million increase in personnel costs as we invested in additional headcount for our product and software development projects, and a $0.4 million increase in software costs as we leveraged more third-party AI tools to optimize our employee workflows during the period. Sales and marketing Six months ended June 30, (in thousands) 2026 2025 Change % Change Sales and marketing $ 22,884 $ 23,179 $ (295) (1.3) % Percentage of revenue 38.7 % 52.0 % Sales and marketing expenses remained relatively flat for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, decreasing by $0.3 million, or 1.3%, largely driven by optimization of our marketing investments while delivering higher sales volume. General and administrative Six months ended June 30, (in thousands) 2026 2025 Change % Change General and administrative $ 22,173 $ 18,729 $ 3,444 18.4 % Percentage of revenue 37.5 % 42.0 % General and administrative expenses increased by $3.4 million, or 18.4%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily driven by a $2.2 million increase in personnel and other employment-related costs, including stock-based compensation expenses; a $0.4 million increase in professional service costs for consulting, accounting, and auditing services; and the recognition of a $0.4 million provision for credit losses in the current period related to a prior sale to one international distributor. Other Six months ended June 30, (in thousands) 2026 2025 Change % Change Other $ 3,973 $ 2,691 $ 1,282 47.6 % Percentage of revenue 6.7 % 6.0 % Other increased by $1.3 million, or 47.6%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was driven by the recognition of $7.3 million of estimated liabilities for loss contingencies related to ongoing litigation and $4.3 million of higher legal costs due to litigation. These increases were partially offset by the recognition of a $10.0 million loss recovery for expected insurance recoveries related to our estimated liabilities for loss contingencies and a $0.2 million reduction in employment-related costs. We believe these costs are not representative of our ongoing operations. Liquidity and Capital Resources Since our inception, our primary sources of liquidity are cash flows from operations and proceeds from stock issuances and the Business Combination. Our primary uses of liquidity are operating expenses, working capital requirements, and capital expenditures. 26 Table of Contents During the three months ended June 30, 2026, we utilized $13.3 million of cash and cash equivalents for ongoing operations. As of June 30, 2026, our cash and cash equivalents balance was $124.7 million. Our future spending will depend on various factors, including our rate of revenue growth and the timing and extent of spending on strategic business initiatives. We expect that our existing cash and cash flows from operations will be sufficient to meet our anticipated liquidity, working capital, and capital expenditure requirements and fund our operations for at least the next 12 months. As of June 30, 2026, we have restricted cash of $4.0 million to secure a letter of credit for one of our leases, which is expected to be maintained as a security deposit for the duration of the lease. Our material cash requirements include contractual obligations with third parties for office leases, technology licensing agreements, inventory supply agreements, and outsourced services. Our fixed office lease payment obligations were $22.5 million as of June 30, 2026, with $3.8 million payable within the next 12 months. Our fixed technology license payment obligations were $10.5 million as of June 30, 2026, with $1.5 million payable within the next 12 months. Our fixed purchase obligations for inventory supply agreements, net of vendor advances, were $1.7 million as of June 30, 2026, all of which is payable within the next 12 months. Our fixed outsourced services payment obligations were $3.4 million as of June 30, 2026, with $1.4 million payable within the next 12 months. As of June 30, 2026, we had no obligations, assets or liabilities, which would be considered off-balance sheet arrangements. Cash flows Comparison of the six months ended June 30, 2026 and 2025 The following table summarizes our sources and uses of cash for the six months ended June 30, 2026 and 2025: Six months ended June 30, (in thousands) 2026 2025 Net cash used in operating activities $ (30,163) $ (18,844) Net cash used in investing activities (1,924) (1,249) Net cash provided by financing activities 6,257 79,454 Net increase (decrease) in cash, cash equivalents, and restricted cash $ (25,830) $ 59,361 Net cash used in operating activities Net cash used in operating activities represents the cash receipts and disbursements related to our activities other than investing and financing activities. We expect cash provided by historical financing activities will continue to be our primary source of funds to support operating and capital expenditure needs for the foreseeable future. Net cash used in operating activities increased by $11.3 million, or 60.1%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was comprised of a $14.5 million increase in net working capital cash usage, partially offset by a reduction of $3.2 million in net loss adjusted for certain non-cash items. The increase in net working capital cash usage was primarily driven by a $10.1 million increase in cash used for changes in deferred revenue, an $8.8 million increase in cash used for changes in prepaid expenses and other assets, and a $4.7 million increase in cash used for changes in accounts receivable. These increases in cash usage were partially offset by a $9.3 million decrease in cash used for changes in accounts payable and accrued expenses. Net cash used in investing activities Net cash used in investing activities increased by $0.7 million, or 54.0%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily driven by increased investment in the development of our internal-use software. Net cash provided by financing activities Net cash provided by financing activities decreased by $73.2 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This decrease was primarily due to the $81.0 million provided by the net proceeds from our public share offering during the prior year period, partially offset by a $5.1 million increase in cash provided by exercises and purchases of our shares pursuant to our stock plans. 27 Table of Contents Critical Accounting Policies and Significant Judgments and Estimates This discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, contingent assets and liabilities, and related disclosures. Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, and these form the basis for making judgments about items that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. As of June 30, 2026, we concluded that revisions to our estimated liabilities for loss contingencies related to ongoing litigation and a related insurance recovery asset were appropriate. As a result, we recognized an additional $4.0 million estimated loss and a $4.0 million loss recovery in our other operating expenses during the three months ended June 30, 2026. See the "Use of Estimates" subheading in Note 2 "Summary of Significant Accounting Policies" and see Note 12 "Commitments and Contingencies" in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 "Financial Statements" of this Quarterly Report on Form 10-Q for additional information about our estimated liabilities for loss contingencies and the related insurance recovery asset. For our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no other material changes to the critical accounting policies and estimates disclosed in our 2025 Annual Report on Form 10-K. Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is set forth in Note 2 "Summary of Significant Accounting Policies" in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 "Financial Statements" of this Quarterly Report on Form 10-Q.