Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39292

Butterfly Network, Inc.

(Exact name of registrant as specified in its charter)


Delaware		84-4618156
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1600 District Avenue Burlington, Massachusetts		01803
(Address of principal executive offices)		(Zip Code)

(781) 557-4800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	BFLY	The New York Stock Exchange
Warrants to purchase one share of Class A common stock, each at an exercise price of $11.50 per share	BFLY WS	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 18, 2024, the registrant had 186,635,110 shares of Class A common stock outstanding and 26,426,937 shares of Class B common stock outstanding.

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TABLE OF CONTENTS

		Page

	Cautionary Statement Regarding Forward-Looking Statements	3

Part I	Financial Information	4

Item 1.	Financial Statements	4

	Condensed Consolidated Balance Sheets (Unaudited)	4

	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	5

	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27

Item 4.	Controls and Procedures	27

Part II	Other Information	28

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 5.	Other Information	28

Item 6.	Exhibits	29

Signatures		32

In this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” the “Company,” and “Butterfly” mean Butterfly Network, Inc. and our subsidiaries.

Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that relate to future events or our future financial performance regarding, among other things, our plans, strategies, and prospects, both business and financial. These statements are based on the beliefs and assumptions of our management team. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

●

the success, cost, and timing of our product development activities;

●

the potential attributes and benefits of our products and services;

●

our ability to obtain and maintain regulatory approval for our products, and any related restrictions and limitations of any authorized product;

●

our ability to identify, in-license, or acquire additional technology;

●

our ability to maintain our existing license, manufacturing, and supply agreements;

●

our ability to compete with other companies currently marketing or engaged in the development of ultrasound imaging devices, many of which have greater financial and marketing resources than us;

●

the size and growth potential of the markets for our products and services, and the ability of each to serve those markets, either alone or in partnership with others;

●

our estimates regarding expenses, revenue, capital requirements, and needs for additional financing;

●

our ability to raise financing in the future; and

●

our financial performance.

These statements may be preceded by, followed by, or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates,” “intends,” similar expressions or phrases, or the negative of those expressions or phrases. The forward-looking statements are based on projections prepared by, and are the responsibility of, our management. Although we believe that our plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions relating to, among other things:

●

our growth depends on our ability to attract and retain customers;

●

our business could be harmed if we fail to manage our growth effectively;

●

our projections are subject to risks, assumptions, estimates, and uncertainties;

●

our business is subject to a variety of U.S. and foreign laws, which are subject to change and could adversely affect our business;

●

the pricing of our products and services, and reimbursement for medical procedures conducted using our products and services;

●

changes in applicable laws or regulations;

●

failure to protect or enforce our intellectual property rights could harm our business, results of operations, and financial condition;

●

the ability to maintain the listing of our Class A common stock on the New York Stock Exchange; and

●

economic downturns and political and market conditions beyond our control could adversely affect our business, financial condition, and results of operations.

These and other risks and uncertainties are described in greater detail under the caption “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report on Form 10-K”), in Item 1A of Part II of this Quarterly Report on Form 10-Q, and in other filings that we make with the Securities and Exchange Commission (“SEC”). The risks described under the caption “Risk Factors” are not exhaustive. New risk factors emerge from time to time, and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

BUTTERFLY NETWORK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)


	September 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	93,758	$	134,437
Accounts receivable, net		20,621		13,418
Inventories		73,271		73,022
Current portion of vendor advances		4,351		2,815
Prepaid expenses and other current assets		7,492		7,571
Total current assets		199,493		231,263
Property and equipment, net		21,176		25,321
Intangible assets, net		9,266		10,317
Non-current portion of vendor advances		15,082		15,276
Operating lease assets		14,606		15,675
Other non-current assets		5,649		6,422
Total assets	$	265,272	$	304,274
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,651	$	5,090
Deferred revenue, current		16,425		15,625
Accrued purchase commitments, current		131		131
Accrued expenses and other current liabilities		22,585		23,425
Total current liabilities		42,792		44,271
Deferred revenue, non-current		7,035		7,394
Warrant liabilities		1,652		826
Operating lease liabilities		21,030		22,835
Other non-current liabilities		10,931		8,895
Total liabilities		83,440		84,221
Commitments and contingencies (Note 12)
Stockholders’ equity:
Class A common stock $.0001 par value; 600,000,000 shares authorized at September 30, 2024 and December 31, 2023; 186,557,521 and 181,221,794 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		19		18
Class B common stock $.0001 par value; 27,000,000 shares authorized at September 30, 2024 and December 31, 2023; 26,426,937 shares issued and outstanding at September 30, 2024 and December 31, 2023		3		3
Additional paid-in capital		965,839		949,670
Accumulated deficit		(784,029)		(729,638)
Total stockholders’ equity		181,832		220,053
Total liabilities and stockholders’ equity	$	265,272	$	304,274

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

BUTTERFLY NETWORK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Revenue:
Product	$	13,538	$	8,753	$	39,478	$	29,874
Software and other services		7,023		6,668		20,227		19,510
Total revenue		20,561		15,421		59,705		49,384
Cost of revenue:
Product		6,065		3,929		17,739		13,765
Software and other services		2,263		2,110		6,870		6,226
Total cost of revenue		8,328		6,039		24,609		19,991
Gross profit		12,233		9,382		35,096		29,393
Operating expenses:
Research and development		8,844		12,130		28,975		44,409
Sales and marketing		9,607		9,012		29,713		28,776
General and administrative		9,353		11,560		29,868		37,239
Other		1,675		9,243		3,639		17,848
Total operating expenses		29,479		41,945		92,195		128,272
Loss from operations		(17,246)		(32,563)		(57,099)		(98,879)
Interest income		1,221		1,903		4,023		5,714
Interest expense		(319)		—		(928)		—
Change in fair value of warrant liabilities		(1,239)		3,511		(826)		3,924
Other income (expense), net		717		(217)		517		(256)
Loss before provision for income taxes		(16,866)		(27,366)		(54,313)		(89,497)
Provision for income taxes		58		2		78		82
Net loss and comprehensive loss	$	(16,924)	$	(27,368)	$	(54,391)	$	(89,579)
Net loss per common share attributable to Class A and B common stockholders, basic and diluted	$	(0.08)	$	(0.13)	$	(0.26)	$	(0.44)
Weighted-average shares used to compute net loss per share attributable to Class A and B common stockholders, basic and diluted		212,774,085		206,740,234		211,109,792		204,749,108

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

BUTTERFLY NETWORK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)


Three months ended September 30, 2024

	Class A			Class B
	Common			Common			Additional				Total
	Stock			Stock			Paid-In		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity
June 30, 2024	186,037,697	$	19	26,426,937	$	3	$	961,363	$	(767,105)	$	194,280
Net loss	—		—	—		—		—		(16,924)		(16,924)
Common stock issued upon vesting of restricted stock units	519,824		—	—		—		—		—		—
Stock-based compensation expense	—		—	—		—		4,476		—		4,476
September 30, 2024	186,557,521	$	19	26,426,937	$	3	$	965,839	$	(784,029)	$	181,832


Three months ended September 30, 2023

	Class A			Class B
	Common			Common			Additional				Total
	Stock			Stock			Paid-In		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity
June 30, 2023	179,720,918	$	18	26,426,937	$	3	$	935,833	$	(658,149)	$	277,705
Net loss	—		—	—		—		—		(27,368)		(27,368)
Common stock issued upon exercise of stock options	55,807		—	—		—		92		—		92
Common stock issued upon vesting of restricted stock units	856,430		—	—		—		—		—		—
Stock-based compensation expense	—		—	—		—		6,990		—		6,990
September 30, 2023	180,633,155	$	18	26,426,937	$	3	$	942,915	$	(685,517)	$	257,419


Nine months ended September 30, 2024

	Class A			Class B
	Common			Common			Additional				Total
	Stock			Stock			Paid-In		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity (Deficit)
December 31, 2023	181,221,794	$	18	26,426,937	$	3	$	949,670	$	(729,638)	$	220,053
Net loss	—		—	—		—		—		(54,391)		(54,391)
Common stock issued upon vesting of restricted stock units	5,335,727		1	—		—		—		—		1
Stock-based compensation expense	—		—	—		—		16,169		—		16,169
September 30, 2024	186,557,521	$	19	26,426,937	$	3	$	965,839	$	(784,029)	$	181,832


Nine months ended September 30, 2023

	Class A			Class B
	Common			Common			Additional				Total
	Stock			Stock			Paid-In		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity
December 31, 2022	174,459,956	$	17	26,426,937	$	3	$	921,278	$	(595,938)	$	325,360
Net loss	—		—	—		—		—		(89,579)		(89,579)
Common stock issued upon exercise of stock options	180,467		—	—		—		228		—		228
Common stock issued upon vesting of restricted stock units	5,992,732		1	—		—		—		—		1
Stock-based compensation expense	—		—	—		—		21,409		—		21,409
September 30, 2023	180,633,155	$	18	26,426,937	$	3	$	942,915	$	(685,517)	$	257,419

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BUTTERFLY NETWORK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine months ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(54,391)	$	(89,579)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization, and impairments		7,835		8,332
Non-cash interest expense		926		—
Write-down of inventories		15		—
Stock-based compensation expense		15,794		20,924
Change in fair value of warrant liabilities		826		(3,924)
Gain on lease termination		—		(214)
Other		945		(478)
Changes in operating assets and liabilities:
Accounts receivable		(8,158)		711
Inventories		(264)		(34,046)
Prepaid expenses and other assets		681		2,354
Vendor advances		(1,342)		15,646
Accounts payable		(1,440)		1,092
Deferred revenue		441		(423)
Accrued purchase commitments		—		(1,934)
Change in operating lease assets and liabilities		(549)		(671)
Accrued expenses and other liabilities		94		(3,509)
Net cash used in operating activities		(38,587)		(85,719)

Cash flows from investing activities:
Purchases of marketable securities		—		(297)
Sales of marketable securities		—		76,484
Purchases of property, equipment, and intangible assets, including capitalized software		(2,286)		(3,271)
Sales of property and equipment		36		10
Net cash (used in) provided by investing activities		(2,250)		72,926

Cash flows from financing activities:
Proceeds from exercise of stock options and warrants		—		228
Net cash provided by financing activities		—		228
Net decrease in cash, cash equivalents, and restricted cash		(40,837)		(12,565)
Cash, cash equivalents, and restricted cash, beginning of period		138,650		166,828
Cash, cash equivalents, and restricted cash, end of period	$	97,813	$	154,263

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BUTTERFLY NETWORK, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Description of Business

The Company is an innovative digital health business transforming care with hand-held, whole-body ultrasound. Powered by its proprietary Ultrasound-on-Chip™ technology, the Company’s solution enables the acquisition of imaging information from an affordable, powerful device that fits in a healthcare professional’s pocket with a combination of cloud-connected software and hardware technology that is easily accessed through a mobile app.

The Company was incorporated in Delaware on February 4, 2020 as Longview Acquisition Corp. (“Longview”). Following a business combination between the Company and BFLY Operations, Inc. (formerly Butterfly Network, Inc.) on February 12, 2021 (the “Business Combination”), the Company’s legal name became Butterfly Network, Inc.

The Company operates wholly-owned subsidiaries in Australia, Germany, the Netherlands, Taiwan, and the United Kingdom.

The Company has incurred net losses and negative cash flows from operating activities in each year since inception, and we expect to continue to incur losses for at least the next few years. The Company expects its cash and cash equivalents of $93.8 million at September 30, 2024 will be sufficient to fund operations and capital requirements for at least the next twelve months from the date the condensed consolidated financial statements are issued. We may need to satisfy our future cash needs through the sale of equity securities, debt financings, working capital lines of credit or partnerships, or a combination of one or more of these sources.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and the accounting disclosure rules and regulations of the SEC regarding interim financial reporting. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the 2023 Annual Report on Form 10-K. All intercompany balances and transactions are eliminated upon consolidation.

The condensed consolidated balance sheet as of December 31, 2023, included herein, was derived from the audited consolidated financial statements as of that date but does not include all disclosures, including certain notes, required by U.S. GAAP for annual reporting.

In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods. The results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December 31, 2024, or any other period.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents and accounts receivable. As of September 30, 2024, substantially all of the Company’s cash and cash equivalents were invested in money market accounts with one financial institution. The Company also maintains balances in various operating accounts above federally insured limits. The Company has not experienced any significant losses on such accounts and does not believe it is exposed to any significant credit risk of its cash and cash equivalents.

As of September 30, 2024 one customer accounted for more than 10% of the Company’s accounts receivables. As of December 31, 2023, no customer accounted for more than 10% of the Company’s accounts receivable. No customer

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accounted for more than 10% of the Company’s total revenue for the three and nine months ended September 30, 2024 and 2023.

Segment Reporting

The Company’s Chief Operating Decision Maker (“CODM”), its Chief Executive Officer, reviews the Company’s financial information on a consolidated basis for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates as a single reportable segment. Substantially all of the Company’s long-lived assets are located in the United States. Since the Company operates as a single reporting segment, all required segment reporting disclosures can be found in the condensed consolidated financial statements.

Use of Estimates

The Company makes estimates and assumptions about future events that affect the amounts reported in its condensed consolidated financial statements and accompanying notes. Future events and their effects cannot be determined with certainty. On an ongoing basis, management evaluates these estimates and assumptions.

The Company bases these estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions about future events. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s condensed consolidated financial statements. There have been no material changes to the Company’s use of estimates as described in the consolidated financial statements for the year ended December 31, 2023.

Operating Expenses – Other

The Company classifies certain operating expenses that are not representative of the Company’s ongoing operations as other on the condensed consolidated statements of operations and comprehensive loss. These include costs related to the Company’s reductions in force, global workforce optimization, litigation, and legal settlements. The following table summarizes the types of expenses classified as other in the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Employment-related expenses	$	1,254	$	4,755	$	1,224	$	8,634
Legal-related expenses		421		4,488		2,415		9,214
Total other	$	1,675	$	9,243	$	3,639	$	17,848

On July 1, 2024, the Company entered into an agreement with a third-party global technology and business transformation partner to optimize and lower the cost of certain non-specialized technical functions. As part of the transition into this new partnership, a portion of the Company's workforce will be in lower-cost geographies. The Company estimates it will incur approximately $1.0 million of severance costs for impacted employees that continue providing transition services to the Company through February 2025. These costs were recognized as other in the condensed consolidated statements of operations and comprehensive loss during the three and nine months ended September 30, 2024. As of September 30, 2024, a total of $1.0 million of accrued severance related to our global workforce optimization is included in accrued expenses and other current liabilities and other non-current liabilities on the condensed consolidated balance sheets.

Recent Accounting Pronouncements Issued but Not Yet Adopted

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which introduced new guidance on disclosures for reportable segments and significant segment expenses, including for entities with a single reportable segment. This guidance is effective for the Company for annual reporting periods beginning January 1, 2024 and interim periods beginning January 1, 2025. The Company is currently evaluating the impact that the adoption of this pronouncement will have on the Company’s consolidated financial statements and disclosures.

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In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which introduced new guidance on disclosures for income taxes, including enhancements to the rate reconciliation and income taxes paid disclosures. This guidance is effective for the Company for annual reporting periods beginning January 1, 2025. The Company is currently evaluating the impact that the adoption of this pronouncement will have on the Company’s consolidated financial statements and disclosures.

Note 3. Revenue Recognition

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers by product type 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 revenue (in thousands):


	Pattern of	Three months ended September 30,				Nine months ended September 30,
	Recognition	2024		2023		2024		2023
By product type:
Devices and accessories	Point-in-time	$	13,538	$	8,753	$	39,478	$	29,874
Software and other services	Over time		7,023		6,668		20,227		19,510
Total revenue		$	20,561	$	15,421	$	59,705	$	49,384

By geographical market:
United States		$	15,366	$	12,230	$	46,141	$	39,726
International			5,195		3,191		13,564		9,658
Total revenue		$	20,561	$	15,421	$	59,705	$	49,384

Contract Balances

Contract balances represent amounts presented in the condensed 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 days for sales on credit of product, software, and other services. The allowance for doubtful accounts was $2.4 million and $1.8 million as of September 30, 2024 and December 31, 2023, respectively. For the three months ended September 30, 2024 and 2023, the Company recognized $5.7 million and $6.7 million, respectively, of revenue that was included in the deferred revenue balance at the beginning of the period. For the nine months ended September 30, 2024 and 2023, the Company recognized $14.3 million and $15.2 million, respectively, of revenue that was included in the deferred revenue balance at the beginning of the period.

Transaction Price Allocated to Remaining Performance Obligations

As of September 30, 2024 and December 31, 2023, the Company had $33.0 million and $32.0 million, respectively, of remaining performance obligations. As of September 30, 2024, the Company expects to recognize 61% of its remaining performance obligations as revenue in the next twelve months and an additional 39% thereafter.

Note 4. Fair Value of Financial Instruments

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value.

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The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The Company utilizes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

●

Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.

●

Level 2 — Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

●

Level 3 — Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company has no assets or liabilities valued with Level 3 inputs.

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their fair values due to the short-term or on-demand nature of these instruments.

There were no transfers between fair value measurement levels during the periods ended September 30, 2024 and December 31, 2023.

The Company’s outstanding warrants include publicly traded warrants (the “Public Warrants”) which were issued as one-third of a warrant per unit during Longview’s initial public offering and warrants sold in a private placement to Longview’s sponsor (the “Private Warrants”). As of September 30, 2024, there were an aggregate of 13,799,357 and 6,853,333 outstanding Public Warrants and Private Warrants, respectively. Each whole warrant entitles the registered holder to purchase one share of Class A common stock at an exercise price of $11.50 per share, subject to adjustment per the warrant agreements. The warrants will expire on February 12, 2026 or earlier upon redemption or liquidation. The Company recognizes the change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive loss. During the three and nine months ended September 30, 2024 and 2023, the number of exercises and the amount reclassified into equity upon the exercise of the Public Warrants and Private Warrants were not significant.

The Company measures its Public Warrants using Level 1 fair value inputs based on quoted prices in active markets for the Public Warrants. Because any transfer of Private Warrants from the initial holder of the Private Warrants would result in the Private Warrants having substantially the same terms as the Public Warrants, management determined that the fair value of each Private Warrant is the same as that of a Public Warrant. Accordingly, the Company measures its Private Warrants using Level 2 fair value inputs based on quoted prices in active markets for the Public Warrants.

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The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis, by level within the fair value hierarchy (in thousands):


			Fair Value Measurement Level
	Total		Level 1		Level 2		Level 3
September 30, 2024:
Warrants:
Public Warrants	$	1,104	$	1,104	$	—	$	—
Private Warrants		548		—		548		—
Total liabilities at fair value on a recurring basis	$	1,652	$	1,104	$	548	$	—

December 31, 2023:
Warrants:
Public Warrants	$	552	$	552	$	—	$	—
Private Warrants		274		—		274		—
Total liabilities at fair value on a recurring basis	$	826	$	552	$	274	$	—

Note 5. Inventories

The following table summarizes the Company’s inventories (in thousands):


	September 30,		December 31,
	2024		2023
Raw materials	$	49,038	$	49,366
Work-in-progress		4,070		3,384
Finished goods		20,163		20,272
Total inventories	$	73,271	$	73,022

Work-in-progress represents inventory items in intermediate stages of production by third-party manufacturers. For the three and nine months ended September 30, 2024 and 2023, net realizable value inventory adjustments and excess and obsolete inventory charges were not significant and were recognized in product cost of revenue. See Note 12 “Commitments and Contingencies” for additional information regarding the Company’s inventory supply arrangements.

Note 6. Property and Equipment, Net

The following table summarizes the Company’s property and equipment, net (in thousands):


	September 30,		December 31,
	2024		2023
Property and equipment, gross	$	45,945	$	43,516
Less: accumulated depreciation and amortization		(24,769)		(18,195)
Property and equipment, net	$	21,176	$	25,321

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Note 7. Restricted Cash

The following table reconciles cash, cash equivalents, and restricted cash from the condensed consolidated balance sheets to the condensed consolidated statements of cash flows (in thousands):


	September 30,
	2024		2023
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	93,758	$	150,006
Restricted cash included within prepaid expenses and other current assets		40		243
Restricted cash included within other non-current assets		4,015		4,014
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	97,813	$	154,263

Restricted cash included within prepaid expenses and other current assets is restricted by an agreement with the Bill & Melinda Gates Foundation (“Gates Foundation”). The restriction on these funds lapses as the Company fulfills its obligations in the agreement. Restricted cash included within other non-current assets is held as collateral to secure a letter of credit for one of our office leases and is expected to be maintained as a security deposit throughout the duration of the lease.

Note 8. Accrued Expenses and Other Current Liabilities

The following table summarizes the Company’s accrued expenses and other current liabilities (in thousands):


		September 30,			December 31,

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