---
title: "OpenAI-backed Merge Labs licensed Butterfly Network's ultrasound chip for brain interfaces; Q3 due October 29"
description: "Butterfly's ultrasound-on-chip is now the hardware inside two brain-computer-interface startups backed by OpenAI money, and Thursday's Q3 is the first print that could show licensing revenue against a loss-making quarter. The market has priced none of it."
publisher: "The Inference"
section: "Chips"
published: 2026-10-26T14:35:58.415Z
modified: 2026-10-26T14:35:58.415Z
canonical: https://theinference.org/article/openai-backed-merge-labs-licensed-butterfly-network-s-ultrasound-chip-for-brain-interfaces-q3-due-october-29
language: en
keywords: "Butterfly Network, Brain Computer Interfaces, Ultrasound, Earnings, Semiconductors, Medical Devices"
---

# OpenAI-backed Merge Labs licensed Butterfly Network's ultrasound chip for brain interfaces; Q3 due October 29

> Butterfly's ultrasound-on-chip is now the hardware inside two brain-computer-interface startups backed by OpenAI money, and Thursday's Q3 is the first print that could show licensing revenue against a loss-making quarter. The market has priced none of it.

[Butterfly Network](https://theinference.org/markets/companies/butterfly-network) makes a semiconductor ultrasound chip, and since September that chip has been sold twice as brain-interface hardware: Merge Labs, the startup seeded by [OpenAI](https://theinference.org/markets/companies/openai) and Bain Capital, [licensed it on September 1](https://www.streetinsider.com/Corporate+News/Butterfly+Network+and+Merge+Labs+sign+BCI+ultrasound+licensing+deal/27009277.html) and made Butterfly its exclusive CMOS-MEMS ultrasound partner, paid in upfront and milestone payments, hardware commitments, access fees and royalties on future sales [2][5][7]. [Bridge Neurotech followed on October 6](https://www.wired.com/story/bridge-neurotech-startup-rival-sam-altman-merge-labs/) [2][5][7]. Nobody prices this [2][5][7].

The stock fell 6.76% last week to $6.76 on no company news, and [Thursday's Q3, due before the open on October 29](https://transcriptdaily.com/2026/10/22/butterfly-network-bfly-projected-to-post-quarterly-earnings-on-thursday.html), is the first report where the licensing line can show up [2].

## One chip design, many products

The mechanism matters because it changes what Butterfly is selling. In a hospital probe, one chip is one exam; in a licensed interface program, one chip design earns fees and royalties on someone else's product category. Merge Labs raised $252 million to build ultrasound brain interfaces; Bridge, [launched with $13.5 million from General Catalyst](https://thenextweb.com/news/bridge-neurotech-13-5m-ultrasound-brain-computer-interface), is [already enrolling a human study](https://www.morningstar.com/news/business-wire/20261006815892/bridge-neurotech-and-butterfly-network-announce-partnership-to-develop-fully-non-invasive-brain-computer-interface) on probes built from Butterfly's chips [5][7][10][11]. Neither deal's dollar value is disclosed, so the royalty economics cannot be modeled yet [5][7][10][11].

## Thursday is the test

The question is whether any of it reaches revenue. Consensus wants $28.37 million and a loss near $0.035 a share, but the June quarter already hinted: revenue rose 39% to $32.6 million and gross margin hit 71.4%, helped by higher-margin Embedded licensing, with the adjusted EBITDA loss cut to $1.4 million [1][8]. If Q3 shows a growing licensing line against a still-negative net margin, the margin math starts to bend; if it is another quarter of probes, the story stays the old one [1][8].

*Chart: **Revenue has reaccelerated into the quarter where licensing could show up** Column chart of Butterfly Network quarterly revenue from Q1 2024 to Q2 2026, rising from $17.7 million to $32.6 million.*

*Quarterly revenue in US$ millions, from Butterfly Network's SEC filings. Q2 2026 revenue of $32.6 million was up 39% year over year with a 71.4% gross margin, helped by higher-margin Embedded licensing. Q3 2026 consensus wants $28.37 million. Source: Butterfly Network SEC filings, retrieved 26 October 2026. [12]*

The filings show a board positioning for the chip game. Director Michael Noonen joined on October 9, [filed a Form 3 owning no shares](https://www.stocktitan.net/sec-filings/BFLY/form-3-butterfly-network-inc-initial-statement-of-beneficial-ownershi-02c6a956e8c7.html), then [took 37,037 RSUs vesting from October 2027 only if he stays](https://www.stocktitan.net/sec-filings/BFLY/form-4-butterfly-network-inc-insider-trading-activity-69209c762f87.html); he brings three decades of semiconductor leadership from [GlobalFoundries](https://theinference.org/markets/companies/globalfoundries) and [NXP](https://theinference.org/markets/companies/nxp) [1][3][4][8]. Meanwhile [insiders sold $2.97 million of stock in 90 days](https://theinference.org/article/butterfly-s-chip-ships-inside-mendaera-s-robot-while-insiders-sold-31-95-million), and director Louise Phanstiel's August buy at $8.68 sits well underwater [1][3][4][8].

*Chart: **Analysts see $10 to $15; the stock closed last week at $6.76** Analyst price targets for Butterfly Network clustered at $10 to $15 while the stock trades at $6.76.*

*Analyst price targets against the October 24 close of $6.76, in US dollars. Sources: Longbridge weekly recap, 26 October 2026; Transcript Daily, 22 October 2026. [1][2]*

## What the market is still paying for

The sell side reads [the VCOM alliance, one iQ3 probe per incoming medical student](https://uk.finance.yahoo.com/news/vcom-ultrasound-deal-altering-investment-111637437.html), as the catalyst: education deals drive installed base and data [1][2][6]. That is real, but it is still the probe business. Analysts see $10 to $15; the tape says they are paying for probes, and royalties are the proof they should not [1][2][6].

## Takeaway

Butterfly's ultrasound chip now sits inside two OpenAI-backed brain-interface startups, but neither deal's value is disclosed, so Thursday's Q3 report is the first test of whether licensing revenue bends the margin math against a stock trading at $6.76.

## Sources

1. [Transcript Daily, Butterfly Network (BFLY) Projected to Post Quarterly Earnings on Thursday, 22 October 2026](https://transcriptdaily.com/2026/10/22/butterfly-network-bfly-projected-to-post-quarterly-earnings-on-thursday.html)
2. [Longbridge, Weekly Recap: Butterfly Network -6.76%, consensus target above spot, 26 October 2026](https://longbridge.com/en/news/302949818)
3. [Stock Titan, [Form 3] Butterfly Network Initial Statement of Beneficial Ownership (Michael Noonen), filed 15 October 2026](https://www.stocktitan.net/sec-filings/BFLY/form-3-butterfly-network-inc-initial-statement-of-beneficial-ownershi-02c6a956e8c7.html)
4. [Stock Titan, [Form 4] Director Michael Noonen receives 37,037 restricted stock units, filed 15 October 2026](https://www.stocktitan.net/sec-filings/BFLY/form-4-butterfly-network-inc-insider-trading-activity-69209c762f87.html)
5. [StreetInsider, Butterfly Network and Merge Labs sign BCI ultrasound licensing deal, 1 September 2026](https://www.streetinsider.com/Corporate+News/Butterfly+Network+and+Merge+Labs+sign+BCI+ultrasound+licensing+deal/27009277.html)
6. [Simply Wall St via Yahoo Finance UK, Is VCOM Ultrasound Deal Altering The Investment Case For Butterfly Network?, 22 October 2026](https://uk.finance.yahoo.com/news/vcom-ultrasound-deal-altering-investment-111637437.html)
7. [Wired, A New Neurotech Startup Launches to Rival Sam Altman's Merge Labs, 6 October 2026](https://www.wired.com/story/bridge-neurotech-startup-rival-sam-altman-merge-labs/)
8. [Stock Titan, Butterfly Network (BFLY) stock news feed: Noonen board appointment, Q2 2026 results, Mendaera Embedded milestone, VCOM alliance](https://www.stocktitan.net/news/BFLY/)
10. [Business Wire via Morningstar, Bridge Neurotech and Butterfly Network Announce Partnership, 6 October 2026](https://www.morningstar.com/news/business-wire/20261006815892/bridge-neurotech-and-butterfly-network-announce-partnership-to-develop-fully-non-invasive-brain-computer-interface)
11. [The Next Web, Bridge Neurotech raises $13.5M to read brains with ultrasound, no implant, 7 October 2026](https://thenextweb.com/news/bridge-neurotech-13-5m-ultrasound-brain-computer-interface)
12. [Butterfly Network, quarterly figures from its SEC filings, retrieved 26 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001804176)


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OpenAI-backed Merge Labs licensed Butterfly Network's ultrasound chip for brain interfaces; Q3 due October 29 — The Inference. Canonical: https://theinference.org/article/openai-backed-merge-labs-licensed-butterfly-network-s-ultrasound-chip-for-brain-interfaces-q3-due-october-29