8-K: Butterfly Network Inks $15M Deal with Midjourney

Butterfly Network's subsidiary BFLY Operations, Inc. entered a five-year Co-Development and Licensing Agreement with Midjourney, Inc. for its ultrasound technology.

Summary

• Butterfly Network, Inc., through its wholly owned subsidiary BFLY Operations, Inc., entered into a Co-Development and Licensing Agreement with Midjourney, Inc. on November 17, 2025.
• The agreement grants Midjourney an exclusive, non-transferable license within a specified field of use to access and use certain of Butterfly Network's semiconductor-based ultrasound technology, software, and backend technology.
• Butterfly Network will receive a one-time non-recurring fee of $15 million from Midjourney.
• An annual license fee of $10 million will be paid quarterly by Midjourney during the five-year term of the agreement.
• Additional payments of up to $9 million are contingent upon the achievement of specified milestones by Midjourney.
• Butterfly Network is also entitled to certain revenue sharing payments from Midjourney's commercialization of hardware products incorporating Company chips.
• Payments will also be made in connection with any purchases of chips from Butterfly Network by Midjourney.
• The agreement has a five-year term, subject to earlier termination for certain breaches and insolvency events, and includes customary confidentiality, intellectual property ownership, and license-back provisions.
• Midjourney also has an option to upgrade its license in certain circumstances.

Sentiment

Score: 8

Explanation: The agreement brings significant upfront cash, a substantial recurring revenue stream, and potential for further upside through milestones and revenue sharing, leveraging the company's core technology in a new partnership. The exclusivity and contingent payments are minor drawbacks compared to the overall financial and strategic benefits.

Positives

• Secured a significant one-time non-recurring fee of $15 million, providing immediate cash flow.
• Established a new, stable, and recurring annual revenue stream of $10 million from license fees for a five-year term.
• Potential for substantial additional payments of up to $9 million upon the achievement of specified milestones.
• Opportunity for ongoing revenue sharing from Midjourney's commercialization of hardware products incorporating Butterfly Network's chips, indicating long-term growth potential.
• Potential for direct sales of chips to Midjourney, further diversifying revenue streams.
• Strategic partnership with Midjourney validates Butterfly Network's core semiconductor-based ultrasound technology and expands its application into new fields.

Negatives

• The license granted to Midjourney is exclusive within a specified field of use, which could limit Butterfly Network's ability to pursue other partnerships or commercialize its technology independently within that specific area.
• The full details of the 'specified field of use' and other terms are not provided in this 8-K and will require review of the upcoming 10-K filing.
• Payments related to milestones, revenue sharing, and chip purchases are contingent and not guaranteed, introducing an element of uncertainty to future revenue projections.

Risks

• Execution Risk: Midjourney may not achieve the specified milestones, which would impact Butterfly Network's ability to receive up to $9 million in additional payments.
• Commercialization Risk: The success of Midjourney's hardware products incorporating Butterfly Network's chips is uncertain, potentially affecting the expected revenue sharing payments.
• Termination Risk: The agreement can be terminated early for certain breaches or insolvency events, which could prematurely end the revenue streams and strategic partnership.
• Market Adoption Risk: The ultimate financial benefit from revenue sharing and chip purchases depends on the market acceptance and success of Midjourney's products utilizing Butterfly Network's technology.
• Intellectual Property Risk: While the agreement includes IP provisions, the specifics of the license-back and potential for future disputes over intellectual property are not fully detailed in this filing.

Future Outlook

The agreement establishes a five-year strategic partnership with Midjourney, providing Butterfly Network with a significant upfront payment, a stable recurring annual revenue stream, and potential for additional income through milestone achievements, revenue sharing, and chip sales. This indicates a positive outlook for leveraging its core ultrasound technology in new applications and expanding its market presence.

Management Comments

• The registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. (Joseph M. DeVivo, Chief Executive Officer, President, and Chairman of the Board)

Industry Context

This agreement positions Butterfly Network's semiconductor-based ultrasound technology for broader application, potentially extending beyond traditional medical diagnostics into new, innovative fields, given Midjourney's likely focus on AI and creative applications. It highlights a growing trend of core technological advancements being licensed for diverse industry uses, potentially expanding the market for advanced imaging and sensing solutions and fostering cross-industry innovation.

Comparison to Industry Standards

• NA

Stakeholder Impact

• Shareholders: Likely to experience a positive impact due to new, significant, and recurring revenue streams, increased financial stability, and validation of the company's technology through a strategic partnership with a prominent entity like Midjourney.
• Employees: Potential for increased work related to co-development efforts and chip production, which could lead to growth opportunities and job security.
• Customers: Potential for new applications and products utilizing Butterfly Network's core technology through Midjourney's commercialization efforts, expanding the ecosystem of solutions available.

Next Steps

• The full text of the Co-Development and Licensing Agreement will be filed as an exhibit to Butterfly Network's Annual Report on Form 10-K for the fiscal year ending December 31, 2025.

Key Dates

Recommendation

The agreement with Midjourney represents a significant positive development for Butterfly Network. The $15 million upfront payment and $10 million annual recurring license fee provide immediate and stable revenue, while additional milestone payments and revenue sharing offer substantial upside potential. This validates the company's core ultrasound-on-chip technology and expands its market reach beyond traditional medical applications. The five-year term provides long-term visibility. This strategic partnership is likely to be viewed very favorably by the market, suggesting a strong buy recommendation.

Keywords

Butterfly Network, Midjourney, Ultrasound Technology, Semiconductor, Licensing Agreement, Co-Development, Medical Devices, Hardware, Software, Exclusive License, Revenue Sharing, BFLY