BFLY - NYSE

Hello. Thank you for attending the Butterfly Network Q3 2023 Earnings Call. My name is Victoria, and I'll be your moderator today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. In the upcoming remarks, there will be references to video clips that will not be animated on the live slides. We anticipate the animated video version of the slides will become available online at ir.butterflynetwork.com, within 24 hours of today's call. I would now like to pass the conference over to your host, Heather Getz. Thank you. You may proceed, Heather.

Good morning, and thank you for joining us today. Earlier today, Butterfly released financial results for the third quarter ended September 30, 2023, and provided a business update the release and earnings presentation, which include a reconciliation of management's use of non-GAAP financial measures compared to the most applicable GAAP measures are currently available on the Investors section of the company's website at ir.butterflynetwork.com. I Heather Getz, Chief Financial and Operations Officer of Butterfly, alongside Joseph DeVivo, Butterfly's Chairman and Chief Executive Officer, will host today's call. During today's call, we will be making certain forward-looking statements. These statements may include, among other things, expectations with respect to financial results, future performance, development and commercialization of products and services, potential regulatory approvals and the size and potential growth of current or future markets for both our products and services. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our filings made with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, and the company disclaims any obligation to update such statements. As a reminder, this call is being webcast live and recorded, and we will be referencing a slide presentation in conjunction with our remarks. There may be a short delay between the live telephone audio and the presentation being shown. To access the webcast, please visit the Events section of the Investor Relations section of our website, and a replay of the event will be available following the call. I would now like to turn the call over to Joe. Joe?

Thank you, Heather. So it's a pleasure to speak with you all today. I'm excited to share our results and the progress we've made in our business transformation since I joined just about 6 months ago. As I noted on our last earnings call, Butterfly Network is a great technology platform with leading products and services. We're now focused on not only providing the best point of care ultrasound solutions, but also expanding our addressable market through adjacencies to return the company to organic growth. We've made some great progress in the third quarter, including a number of exciting announcements while continuing to execute against our operational plan. And as a result, we remain on track to meet our fiscal 2023 guidance of at least $64 million in revenue and provide improved EBITDA guidance. Butterfly's go-to-market strategy is centered on our proprietary semiconductor technology and accompanying software. We continue to successfully execute against it, positioning us on a path to growth. First, we sought to identify and disrupt the market that our product and technology can displace and we did, point-of-care ultrasound. Here, we have the most versatile handheld device at the most competitive price point, and we already have a large and growing share in terms of units sold globally. With new entrants and established players following the path to investment in ultrasound AI, even introducing new devices that are also chip-based, albeit still relying on piezo crystals. We've successfully proven this to be a viable and growing market that we will continue to win in. The next part of our roadmap, which we are currently executing on is to continue to grow and develop a focused market, while identifying new use cases for our proprietary semiconductor chip and software to address. The upcoming launch of Butterfly iQ3 and our recent co-development partnership announcement, which I'll discuss in a few minutes, are but two examples of Butterfly successfully executing this strategy as we move through the second half of 2023 and into 2024. And further out, as our core technology and software evolve, we'll move into wearable form factors to build markets that no one else can. On the last call, I shared with you a number of near-term strategic initiatives our team is taking to accelerate our growth. Namely, these are one, introducing new products like iQ3 to strengthen and solidify our position as the leading focus handheld, two, introducing new education offerings to enhance focus competency and drive awareness and adoption, three, accelerating ease of use and access to AI tools through Butterfly Garden, our partner ecosystem, and four, identifying growth areas outside of focus application through our Power by Butterfly chip development partnerships. I'm happy to report that our team is delivering on all of these efforts with significant progress made in this past quarter. We're confident that these will be meaningful contributors to our 2024 numbers. Operationally, as we mentioned last quarter, from August of 2022 to July of '23, management took steps to eliminate $170 million of operating costs from our expense structure. In this transition year, we're making business more efficient while we continue to invest in long-term growth and innovation. Importantly, our focus on expense reduction and cash preservation does not end here as we continue to identify ways to increase productivity and efficiency. Simultaneously, we've been investing in new product development to support Butterfly's growth. In the U.S., we hired several new salespeople and managers to increase the footprint of our U.S. organization, focused on enterprise deals. For international, under new sales leadership, we're working on opening several new markets while partnering with distributors to move current inventory. And in that, we're testing our current AI tools on other more lucrative animal groups, including cattle. We're confident that these investments in our team and capabilities will reap benefits going forward. Now I'll move to our strategic initiatives. As mentioned, Education is a top priority and one are the ways we're expanding our addressable market. The Butterfly paradox is that we continue to make Ultrasound accessible through cost and product quality, yet Ultrasound remains the most difficult to master imaging modality. This quarter, we're attacking this challenge head on by introducing two new additions to our suite of educational offerings. In September, we launched the Butterfly Certified program, which is actively being quoted by our sales force. Butterfly Certified is a series of live training opportunities with virtual and in-person options that target improving user proficiency for one or multiple exams. The customer can purchase a range of services from a virtual scan review to a full year course to be a certified trainer. By providing these solutions, we can accelerate focus adoption and give a clear roadmap of success to our customers. So continuing education, recently at the American College of Emergency Physicians Annual Meeting known as ACEP, Butterfly previewed our new ScanLab app. The app uses AI anatomical labeling tools to demystify ultrasound to a new user and teaches learners how to place a probe on the body to get the desired image. As you can see on this slide, the user has selected an apical 4 chamber view. On the left, there's a walk-through with a reference imaging and specific instructions. Before the user scans, they see an example of what the video should look like on the right. And when they plug their Butterfly probe and start scanning, live ultrasound image comes up and the anatomic labels tag each part of the anatomy. This helps to make ultrasound imaging more approachable, building users confidence as they begin their ultrasound imaging journey. The app also support existing users in extending their skills and drive success in medical education by helping schools further engage and empower students to embrace ultrasound learning and development. Early reception at ACEP for ScanLab was very encouraging, and we look forward to launching the app to all existing Butterfly subscribers for free. We expect ScanLab access to continue to drive adoption and software sales to existing and new users once launched in early 2024. With our Butterfly Academy online modules, ScanLab app, Butterfly Certified services, today, we have the most powerful and complete pathway to success for new ultrasound users. I'm proud of the team for making both of these initiatives happen so quickly and executing effectively this quarter. Last quarter, we introduced Butterfly Garden and our plans to build a partnership ecosystem for accelerating access to new ultrasound AI. As you know, Butterfly has the largest handheld installed base in the world with over 100,000 units placed and growing. AI developers want access to our customers who want access to their solutions on their Butterfly. We launched Butterfly Garden at the beginning of the quarter. Since then, we've received inquiries from over 100 prospective partners. We've already signed three universities, including Caltech, University of Maryland and UNC. Dr. Stringer's team at UNC recently published impressive findings about the auto gestational age AI tool they built on Butterfly for maternal health, which you can see on the slide. And under Butterfly Garden, they're expanding that into a tool to auto detect multiple fetal conditions. We've also signed leading AI companies like ThinkSono and others not yet announced publicly. Our business model is to charge partners an annual fee to maintain the software development kit, or SDK, as well as a revenue share on their future apps sold to Butterfly customers. So relatedly, we also announced our first powered by Butterfly deal with Forest Neurotec. Powered by Butterfly represents the next level of Butterfly and naval development, where partners not only have access to our SDK, but also to our novel ultrasound on chip. This allows them to develop around the core technology and bring it to non-competitive markets to Butterfly. This way, Butterfly investors can capitalize on those new markets and gain significant leverage as each of these companies reach their goals through commercial success. Forest Neurotec is founded by a group of brilliant engineers and entrepreneurs with track records of bringing disruptive health care technology in the market. It is backed by Eric Schmidt, a founder of Google and Citadel's, Ken Griffin. They intend to use our chip to create a brain computer interface, which will be a minimally invasive implant able to scan and process the brain to understand where therapies are needed. The jointly developed technology will also treat those areas. Remember, our chip is uniquely capable of moving the ultrasound beam through the body without having to move the device. We look forward to announcing another powered by Butterfly deal in the fourth quarter. Again, I'm proud of our team for executing on these growth initiatives. Both powered by Butterfly and Butterfly Garden offer meaningful new sources of revenue for the company. We anticipate them becoming positive contributors to our numbers in 2024 and beyond, while also enriching our platform for our users. So moving on. Many of you know Moore's Law, as seen on this slide states that the number of transistors on a chip will double every 2 years, meaning the computer processing power doubles every 2 years. We all know how many industries were transformed using digital technology. So what I'd like to highlight is photography, which is similar to ultrasound imaging. After the digital camera was launched in 1993, most users saw it as an interesting and novel tool, but didn't really take it seriously because image quality did not rival film. In 1997, 2001 and 2003, digital camera manufacturers continued to benefit from Moore's Law and delivered 2, 5 and 7 megabyte images. And in 1995 for the first time in history, digital cameras outsold film cameras when the image quality was perceived to be equal. Once digital equals analog, analog loses because all the digital benefits such as no cost of developed film, better storage, become the tiebreaker and buyer behavior shifts to those benefits. I believe it's inevitable that analog piezo crystal-based ultrasound will be a thing of the past, like film camera is today. Piezo crystals make good images but provide fixed lenses are limited and in their frequencies and are heat inefficient. They also require multiple probes to achieve Butterfly's whole body scanning range. That will never change. It's just physics. That goes for piezo-based chips or PMOTs as well. Crystal based carts require sophisticated arrays in wiring. These mechanisms are fragile and expensive to fix. With digital scanning instead, I believe piezo-based carts will be obsolete by the end of the decade. With that said, on my first call, I told you, I felt like I was a kid in a candy store when I reviewed all that is in Butterfly's R&D pipeline. I also told you that I show you one of our new hardware devices before the end of the year. And now I'm going to do just that. This is iQ3, our third-generation platform and fifth iteration of our processor. In addition to a marked improvement in image clarity and better ergonomic design, there will be many new one-of-a-kind capabilities that will change the way we can capture and review images. I'm not going to unveil them today. We need to keep a couple of competitors select the copy Butterfly guessing, but what I'll show you is iQ3's improved processing power and image quality. This next-generation device has double the data rate transfer for better and faster ultrasound beam control and improved image quality and will fully charge in less than half the time. The improved process is so powerful, its image quality is now equal to an arguably exceeds analog devices like GE's Vscan, a benchmark competitor for cardiac imaging. We believe iQ3 even rivals some cart-based systems. In our opinion, we've met that turning point where image quality associated with more expensive handhelds will no longer be a barrier. And our digital capabilities will compel users to move completely to Butterfly, all while being at a more competitive price point. So let's look at a couple of images. We'll start with lung. Our lung scanning is already best-in-class. As you can see, iQ+ here in the middle delivers excellent images. And for most ER and primary care use cases, it's an excellent option. You can see the middle image iQ+ shows a distinct set of a lines visible as bright horizontal lines throughout the image with minimal drop off in the far field or the bottom of the image. iQ+ A lines are arguably even more distinct than these scans on the left. But when you look at the right in iQ3, the bar is clearly raced. It has sharp defined a lines all the way into the far field. Now here's a four chamber view, or kind of a cardiac money shot. You can see Vscan here on the left, and iQ+ is right next to it. Quite close in quality, though the slower frame rate of Vscan gives the perception of the heart feeding slower. And iQ+ already has a wider field of view that's able to include the ventricular walls. Now take a look at iQ3, just incredible what it looks like with even better frame rate and fewer ventricular artifacts. It's amazing how this much clarity can be delivered in a compact all-in-one probe that is still less expensive than analog counterparts. You can see here clearly that iQ3 can be used for the most challenging images as a single probe allowing the user to effortlessly choose a different preset and scan anywhere in the body. The benefits of digital come shining through when all becomes equal. Did I mention that our next-generation ship is well underway, for those carts be beware. So we've heard about the new PMUT chipping previewed by a competitor. We haven't gotten a device to test with it like we have with the others, but we have taken all the images they've put online and compared them to our images, assuming that they put their best foot forward. Here is a PMUT, then iQ+ and then iQ3. Butterfly IQ+ maintains the B-mode image quality simultaneously with color doppler enabled, and the hemodynamic color fill is good. Then with iQ3, we have even better color sensitivity and true real-time hemodynamic flow. In our opinion, the PMUT chip image doesn't present even as well as our second generation iQ+, nevertheless, iQ3. Let's see for yourself. So we're hopeful the iQ3 is approved for sale by the end of the first quarter of 2024 and will be off to the races event. We're preparing every phase of our business for this launch and are gearing for the demand. At the recent ACEP meeting, we previewed iQ3 for thought leaders around the country. I personally saw their excitement when they view the image that they didn't think would be possible this soon on a Butterfly. They also love the new advanced digital capabilities, which I'll show you next quarter. So thank you for indulging me in this demonstration. I look forward to unpacking more about iQ3 for you soon. We believe 2024 will be the year where digital ultrasound imaging becomes equivalent to higher-end handheld probes, all this to say, why should hospitals own multiple probes with poor battery life and run times that are too hot to the touch. Very soon, they can just put them in the drawer next to their Kodak cameras. With that, I'll turn it over to Heather. Heather?

Thank you, Joe. Revenue for the third quarter of 2023 was $15.4 million, down compared to the prior year revenue of $19.6 million, driven by lower volume, partially offset by higher price. The lower volume was driven by two large deals last year, Gates and Rochester that did not repeat in the current year. In the U.S., we've realized $10.4 million in total sales lower than prior year. This was driven by lower probe [ph] sales, largely from Rochester, which was partially offset by higher subscription revenue and higher ASPs. Total international declined to $3.8 million. This is due to the second deployment of the probes for the Gates grant in Africa in the prior year quarter. Excluding Rochester Engage, the U.S. and international were essentially flat. Breaking our revenue down between products and software. Product revenue was $8.8 million, a decrease of 34% versus Q3 2022. This decrease was driven by lower volume, spread largely across U.S. and international due to the large deals in 2022 that I mentioned. Software and services revenue was $6.7 million in the third quarter, growing by 3% over the prior year period. Software and services mix was 43% of revenue and increased approximately 10 percentage points versus Q3 2022. This increase was due to a higher installed base of subscription software as compared to interior probe sales, renewals on the existing base of software users and software implementations completed during the quarter. Our total annual recurring revenue, which is reported as part of software and other services, grew by 19%. This was led by a strong increase of 51% in our enterprise software, which increased from 31% to 40% of our total ARR. Turning now to gross profit. Gross profit was $9.4 million in Q3 '23 compared to $11 million in the prior year period. Gross profit margin was 61% for the third quarter, which compares to 56% in the third quarter of 2022. This increase was primarily due to a higher average selling price in addition to the shift in product mix, reflecting a higher proportion of higher-margin software and other services revenue. Also contributing to the increased margin was higher manufacturing productivity and other efficiencies. Offsetting these benefits was higher amortization for the third quarter of 2023, adjusted EBITDA loss was $12.5 million compared with a loss of $31.8 million for the same period in 2022. The improvement in adjusted EBITDA loss was driven by the implemented cost reductions, which led to lower payroll, consulting and other outside services. Moving to our capital resources. As of September 30, 2023, cash and cash equivalents, including restricted cash, were $154 million. Our total use of cash in the third quarter was $17 million. If I exclude $3 million of nonrecurring expenses, our monthly use of cash was down to under $5 million in the third quarter. Moving on to guidance. As Joe discussed, we have been executing against the roadmap we laid out in August. We launched Butterfly Garden, filed iQ3 with the FDA, completed our education app and reinvested in our sales teams. In addition, we completed a reorganization that conservatively extends our cash into 2026. As such, we are reiterating our full year 2023 revenue guidance of at least $64 million and are able to once again provide an improved adjusted EBITDA guide for the full year loss of $75 million to $70 million. This is an improvement of an additional $5 million versus our previous number. As a reminder, this guidance reflects revenue that is based on our existing run rate, resources and product offerings, assuming no large onetime deals occur for the remainder of the year. And while there is a strong market that will continue for the iQ+ following the launch of iQ3, we are also factoring in a temporary Osborne effect where purchases may be delayed pending the launch of the new product. To summarize, the reorganization and the investments we announced in August have been completed, including increasing the direct sales force, launching Butterfly Garden and ScanLab as well as our submission of iQ3 to the FDA. While our overall revenue is currently facing some headwinds, there is upside to this plan. Furthermore, we have maintained a solid cash position and have once again guided to improved adjusted EBITDA loss. Conservatively, we have a cash runway that takes us into 2026. While this has been a transition year, we are executing against our plan and the outcome is that we have a company rightsized to accomplish its goals with a strong base of technological and organizational assets that we are continuing to invest in and the people who are energized and excited about the future of butterfly. And with that, I will turn the call back over to Joe for closing remarks. Joe? Joseph DeVivo Thanks, Heather. As you mentioned, 2023 is a transition year. We're resetting, reinvesting and recharging, repairing for sustained execution and success. We have new leadership, a clear and focused plan and technology that will take to market. 2024 will be a very good year. We expect to return to double-digit growth, continue to improve our efficiency and cash management, and we'll keep building our AI ecosystem with Butterfly Garden becoming the AI marketplace for the industry, helping customers gain access to the best ultrasound AI players out there. The candy store shelves are full. We look forward to an Analyst Day in early 2024, where we will unveil even more solutions to come that will have us creating new markets only Butterfly ton plan, expanding the market opportunity for Butterfly even further. So thank you for your time. And now I'd like to open it up for questions.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Joshua Jennings with TD Cowen. Your line is now open.

Hi, good afternoon. Thanks for the questions, and congratulations on all the pipeline progress. So appreciate the download on IQ3. Great to see. I wanted to just ask, Joe, about and Heather about the – so the return to double-digit revenue growth in 2024. I know there are a couple of moving parts, including the Osborne [ph] effect in front of the iQ3 launch, it sounds like at the end of 1Q. But maybe just put - take us through some of the drivers of that return to growth? And then maybe just remind us of some of the comp set up for next year. And as we're forecasting quarterly in for '24 should we thinking about a return to double-digit growth in the midyear, second half? And maybe if you could take it through the drivers both the U.S. and the international business and give an update on the kind of the restructuring and the commercial infrastructure build out - we build out internationally. Sorry, there's like three questions in one there, but I'll stop there and - sorry about that.

No problem, Josh. We're happy to answer all of them. The catalyst for us, first of all, we we've been spending time since the last restructuring, strengthening our sales and marketing team, both in the U.S. and international. We've been refining our messaging and our direct-to-consumer marketing. We've been working diligently on our new product launches and understanding where our customers are today and what it is that we need to grow. And we have the largest installed base in the world, and we need to help them - we have a lot of people using probes every day. We have people who have moderate utilization and we have people who have low utilization. And we know that it's one thing to sell new probes. But as you start building scale, the more same-store sales or the more software that people consume on your base, it also creates a national natural growth. So we lost some momentum with all the changes that were made in reorg over the last year because with a CEO change and then with all the cost cutting that we've done earlier in 2023, I feel we lost some momentum. And now we're building it up. The teams are fired up. We have a very clear plan. We know where to sell. We know what levers to pull. And we believe iQ3 is not the next iPhone, which is great incremental improvements. iQ3 is a step function. It is a significant leap in the evolution of our technology. And by getting and reinforcing the comments that were made, we've done great in individual physician practices and emergency rooms, all the places where the jack of all trades really values all the things that Butterfly does. But being able to now penetrate into the subspecialties to get into cardiac, to get into OB, to get into all the different areas that depend on higher-level ultrasound and also carp [ph] based ultrasound, that's the next phase for us. And as we go upstream, the training requirements for those customers are less and less and less. So we're going to be able to start selling upstream more. We're going to be able to start selling broad based more on the enterprise side because our software is already doing great and our enterprise software and our enterprise customers are doing fantastic. We're going to be focusing now on a system sell, an enterprise sell that includes our mobile solutions, our hardware as well as our enterprise software, and we're very bullish on it. And so yes, we are going to return to that growth. And also on the international side. Our - we have been working with our partners. We've been working with inventory. We've been resetting our expectations on utilization and our expectations on education, our expectation of our distributors of true organic market development and they're responding. And our leadership in international right now is second to none. So I've done this many times. Our team that we have in place are experienced. The company has been through a lot. And now we've had some stability recently and I think we're starting to get excited about what's to come. So I think you also talked about some - do you want to talk about on any other questions you had? Or should we ask them to...

Yes, Josh. I think we hit on the revenue question.

You hit on the revenue question. Do you want to ask us to talk about operations at all?

Yes. Great. Just within that question, sorry, and it was multilayered. I wanted to just talk about, I guess, the timing of that return to growth. Could you just don't want to admit too aggressive in our forecasting in the early part of the year by Q3 launching in Q1 and then just one is international get back to growth? I know you've had some tough comps this year with some strong distributor orders in '22. And when does that tail off and could internationally return to growth earlier than the U.S.? Or should we be thinking about midyear when that revenue growth really starts to kick in? Thanks for taking the questions.

Josh, I'll take that one. Yes, I would expect international to come into play sooner than domestic. But we're still working through our '24 plan and the cadence of that. And obviously, some of it will be dependent on ultimately when we can get the iQ3 launch. So stay tuned. We can give you some additional detail. But we are confident on that double-digit growth over the course of next year.

Great. Great. Thanks so much.

Thanks you for your question. The next question comes from the line of Suraj Kalia with Oppenheimer. Your line is now open.

Good afternoon, Joe. Heather, can you hear me all right?

Yes.

Yes, Suraj.

Hi, Suraj.

Doing well. So all is well on your end. So Joe, first and foremost, congrats on the quarter in terms of stabilizing the business. Forgive me, Joe, many calls going on at the same time. So if I ask a redundant question, again, apologies. Joe, in terms of direct territories, I know that was one of the things that you had highlighted on the last call to increase direct territories by, I believe, 40% or 50%, somewhat of that ballpark. Any update on that in terms of where we are? How does the sales rep churn look like?

Yes, it's been - the sales return has been very low. We've put the people in place that we've wanted to put in place. And now I think it's going to take 6 months for them to get up to speed. But as I mentioned in the half - in the midpoint of the year, we did allocate the budget for it and the team has successfully brought those people on. And so that's one of the things I'm excited about as we get into the early part of '22. We have some new additions to the team to augment a lot of the great people that are here at Butterfly. So those investments have been made and the people are there.

Got it. I have two other follow-up questions, and I'll just pose them together. Heather, one for you in case you all have quantified or at least directionally, given us an idea about a pending backlog, so to speak, post-iQ3 clearance. And Joe, you mentioned something about cart-based systems and going upstream. And I'm not sure I completely understood that. If you could just kind of unspook the thread a little more and talk us about that strategy. Pretty interesting, it seems like a complete shift from where we were. Just some additional commentary would be greatly appreciated. Thank you for taking my questions.

Okay. Yes. So I'll take the first one, Suraj. We don't have a backlog. We're actually not permitted to sell the product until it's been FDA approved, so it's pending approval. So stay tuned. We'll be able to provide some additional information on our next call once we receive approval.

And regarding the comment on carts. It's just a function of the type of progress we're able to make with our chip and our processes, between now and, say, the next - say, over the next 10 years, every 2 years, we're going to continue to double our processing power and increase our capabilities to get image quality packed into a very small device. And so we're going to be focusing on all of the calculations and settings that exist on carts and create ways for them to present themselves into the devices. We're going to continue to dramatically increase the power of the device. So the image quality continues to progress at this clip. And we're also going to work on our workflows in each of the hospitals as to how to manage individual devices, how to store them, charge them and how to keep them into the workflow because the best clinical care is not running to grab a cart or going to a room when a patient needs care. The best clinical care is delivering it to them where they're at that moment. And that means that each doctor will have a Butterfly with them. And as time goes on, there's 60% of medical schools today are teaching ultrasound as a part of their curriculum, 42% of residency programs has it in this curriculum. So over the next decade, people - the doctors are going to be trained on ultrasound, and they are going to expect to have it not as, oh, let's go do that one scan. But hey, I'm really curious about what's going on here. Instead of you waiting a day and now ordering a scan and having to go some place or may have to run and get a car, I'm going to take care of you right now. And so we started with this universal device that can do everything. And it's been in all of these different points of care. And right now, we're all the crises that are happening around the world, the first device, those charitable organizations are reaching to a Butterfly. And as a part of our growth evolution as those devices become more and more powerful. You have in your hand today, basically what would have been the most powerful supercomputer in the world 20 years ago. So think about open your mind to that. And on that supercomputer that you have that you carry around as your phone, it's also your camera. Why? Because the processing power has been able to now create imaging in such a small form factor. So why should a card exist? If you have an iPhone that is the most powerful supercomputer that would have existed 10, 15, 20 years ago, why would you need a card in the future if over the next 10 years, we're going to have 5 different doubling terms in processing cloud. So imagine all the capabilities that exist in parts are going to be in a device, the size of a Butterfly.

Thank you.

Thanks, Neil.

Thanks, Neil.

Thank you for your question. There are no additional questions waiting at this time. I would now like to pass the conference back to Joe for further remarks.

Well, thank you all for joining. We're very excited about where we are. We know we're in a transition. We're mindful as to exactly where the company is. And I'd have to say we're excited about '24 in the developments. So stay tuned. We'll unpack iQ3 and the software and the power of iQ3 at our next quarter's conference call. So thank you.