Butterfly Network, Inc. (BFLY) Cash Flow Statement

The OCF/NI ratio of 1.26 in 2026Q2 suggests that cash burn is outpacing accounting losses, largely due to unfavorable working capital changes. This pattern, where working capital absorbs cash, indicates that reported losses may understate the true cash consumption, especially as revenue growth accelerates. Investors should monitor whether working capital drags persist as the company scales.

The FCF margin improved from -123.5% in 2024Q1 to -52.9% in 2026Q2, indicating that revenue growth is gradually covering fixed costs, yet the positive FCF in 2025Q4 was an anomaly driven by a $15.9M working capital inflow. Excluding that, the underlying FCF trend remains negative, suggesting that the company has not yet achieved sustainable cash generation. The recent revenue acceleration may eventually translate into FCF improvement, but the path is uneven.

The absolute CapEx has remained modest, averaging around $1M per quarter, which is low for a hardware manufacturer, suggesting that the company outsources manufacturing or that the semiconductor-based probes require less capital investment. This declining capital intensity may indicate that the business is transitioning to a software-centric model, which could improve future FCF margins if revenue continues to grow.

The large swings in working capital, particularly in receivables and inventory, appear to be tied to the timing of hardware shipments and partner launches. The negative working capital impact in 2026Q2 may reflect inventory build-up ahead of anticipated demand, while the positive swing in 2025Q4 suggests aggressive collections. These fluctuations obscure the underlying cash burn and warrant close monitoring to assess whether they are seasonal or indicative of structural inefficiencies.

The absence of capital returns is consistent with a company in a growth phase that is still burning cash. Management appears to be prioritizing investment in R&D and sales over shareholder distributions, which is typical for a pre-profit medtech firm. However, the lack of buybacks may also signal that management views the stock as overvalued or that cash preservation is paramount given the uncertain path to profitability.

The gap between net income and operating cash flow is largely attributable to stock-based compensation, which averaged $5.9M per quarter, and depreciation, which totaled $21.0M over the period. This suggests that the accounting losses overstate the actual cash consumption, but the cash burn remains substantial. The cumulative FCF of -$92.3M underscores the company's reliance on external financing, and investors should monitor whether revenue growth can eventually close this gap.