Q4 2021 Materialise NV Earnings Call
Ladies and gentlemen, todays conference is scheduled to begin shortly please continue to standby. Thank you for your patients again to this conference is scheduled to begin shortly please continue to standby. Thank you for your patience.
[music].
Good day, and thank you for standing by and welcome to Materialise fourth quarter 2021, see natural resources conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session to ask the question you will need to press star one wonder if that is all set to anytime during the conference you need.
To reach an operator, please press star zero.
And now I would like to turn the conference over to Mr. Harris You May go ahead ma'am.
Thank you for joining us today for Materializes quarterly conference call.
On the call are freed Sunrun, founder and Chief Executive Officer of Materialise.
As executive Chairman and Johan Albrecht Chief Financial Officer.
Today's call and webcast are being accompanied by a slide presentation that reviews, Materialises strategic financial and operational performance for the fourth quarter of 2021.
To access the slides if you happen to have already done. So please go to the Investor Relations section of the company's website at Www Dot materialized Dot com. Our earnings release that was issued earlier today can also be found on that page.
We get started I'd like to remind you that management may make forward looking statements regarding the companys plans expectations and growth prospects among other things.
These forward looking statements are subject to known and unknown uncertainties and risks that could cause actual results to differ materially from the expectations expressed <unk>.
Including competitive dynamics and industry change.
Any forward looking statements, including those related to the company's future results and activities represent managements estimates as of today and should not be relied upon as representing their estimates as of any subsequent date.
Management disclaims any duty to update or revise any forward looking statements to reflect future events or changes in expectations.
A detailed description of the risks and uncertainties and other factors that could impact the company's future business or financial results can be found in the company's most recent annual report on form 20-F filed with the SEC.
Finally management will discuss certain non ifr S measures on today's call. A reconciliation table is contained in the earnings release and at the end of the slide presentation.
With that introduction I'd like to turn the call over to Peter Nice go ahead. Please Peter.
Thank you Harry.
And good morning, and good afternoon everybody.
Before turning to slide four which summarizes the highlights of our Q4 and 2021 full year financial results.
I would like to emphasize that our thoughts and actions today.
<unk> focused on the safety and wellbeing of our Ukrainian collaborators.
Their lives and security out of utmost importance to us.
Fred will address the actions we are taking to the system during his remarks.
No.
Turning to our 2021 results.
As some of you may remember in the third quarter of 2021 materialize posted all time quarterly records. Both in terms of revenues and in terms of EBITDA.
Today, we can announce that none of the Q3 records are still on the books for the simple reason that they have been surpassed by the all time high revenues and adjusted EBITDA that we posted in the fourth quarter.
Driven by a very robust revenue growth in each of our segments. Our consolidated Q4 revenues increased by more than 25% to a quarterly all time high of close to 57 million Euro.
Our adjusted EBITDA for the quarter was $10 5 million Euro.
Representing a margin of 18, 4%.
And our net profit for the quarter was almost $4 8 million Europe .
In particular, our software and medical segments realized very strong EBITDA margins in the fourth quarter software more than 45% and medical more than 30%.
For completeness sake, I should add that also for the full year 2021, our revenue adjusted EBITDA and net profit are all time records Johan will fill you in on those numbers later.
Sure.
These results show that our strategy of continuing to invest.
Throughout the COVID-19 pandemic.
And our people in general and in the research and development in particular was the right choice.
<unk> is already paying off in the short term.
I would like to now pass the floor to fleet, who will walk you through some of the key operational achievements ultimately realized in 2023.
Good morning, and good afternoon, everyone.
Before turning to our operational achievements in 2021, I want to reiterate what Peter just said with respect to crane.
I am.
Together with other members of our Executive Committee in daily contact with the leadership provided a credit Union office and we are trying to help our team members there as much as we can through a variety of different avenues.
The assistance, we offer includes providing alternative housing and office space.
We did an outside Ukraine.
In spite of the hostilities they are facing many of our collaborators continue to contribute to the project they're working on.
By making maximum use of the flexible working conditions, we installed during the Corona crisis.
Simultaneously many of our people around the globe are adjusting their activities and priorities and stepping into assist wherever they can.
We want to express deep admiration and respect for the dedication.
Nation and professionalism.
Collaborators in Ukraine offshore.
In circumstances, where the safety and the safety of their beloved ones.
Is constantly at stake.
In 2021 .
Yes that was still dominated by government jurisdictions and impacted by supply chain issues.
I'm very proud of the collective performance of old materialized employees.
As Peter already outlined we delivered.
Performance.
In terms of revenue and profitability and this is for the second quarter in a row.
In a world with many restrictions and tank budgets, we do.
Through our top end button compared to not.
Not only to 2020, but also 2019.
While also reducing our carbon footprint.
Likely.
In all our segments.
Our global operations performed well in the new digital and.
Work from home context.
Our production lines.
All shown to provide safe and effective work environment for our workforce during the differently.
Covid infections.
Most importantly.
We did all this while maintaining our R&D spending in order to secure our future.
Most of the new products that will ensure the companys future growth would not be possible without the sustained research and development efforts.
Overall, we believe our consistent performance during the crisis period has strengthened our position in the markets. We serve and is demonstrated to our customers and partners that materialized is a sustainable company.
One they can rely on for the long term future.
Let's look at some of the specific achievements and the level of our three segments.
Our medical software for engineering on anatomy.
The mimics innovation suite.
Realized revenues of almost 23 million euro in 2021.
Doug roofs that mimics innovation suite is it reversed course for many engineers.
Want to develop or produce medical devices based on medical image data.
The growth was driven by new models that aimed to make use of artificial intelligence that ourselves or then enabling users to link with their own artificial intelligence development.
Similarly.
The <unk> innovation suite has also become an engine to explore and develop new augmented reality.
And virtual reality applications in the medical field.
This has led to growth in both the medical device company and the hospital markets.
And we will be able to help support the medical treatments over the future.
Medical device activity.
Very strong growth, especially.
Actually in granule maxillofacial surgery.
And in an extremely volatile environment with hospitals, making certain shifts in prioritization due to COVID-19 .
Our design and production teams succeeded in providing constant service.
In addition.
In the middle of the challenging Covid related circumstances, we were one of the first companies to bring our mass customization of medical guidance and implants.
Fully in line with the new European Medical device directive.
This significantly increases the hurdles for new medical product introductions in the European market.
The audit.
We managed to clear several CMS products in our subsidiary engine plan for the European market.
Finally engine plant itself became 100% daughter company of materialize.
Really focused on Sam and Osteo synthesis.
As we spun out despite in line of the business to the former owners.
Increased focus and stronger offering should enable us to capture additional market share.
In Brazil and in Europe .
Our manufacturing is.
<unk> on track with the highest growth numbers of all of our segments.
Despite the production limitations in the civil aerospace on which we focus.
We are seeing healthy growth thanks to the promising segment.
E vehicles as explained during our Q3 call.
But the key driver and the recovery is a segment of business systems will be focusing a lot on health care equipment.
Did we have been seeing a structural increase in the use of additive manufacturing for small production series.
Thanks to our wide offering with engineering support and multiple technologies.
<unk> is well placed to support companies in those markets.
Which we expect healthy growth and development in the near future.
Finally.
Also important to the manufacturing segment's growth is a considerable growth in the either in motion business or motion, we integrated at a scan in EDA spent into materialized motion and did the preparatory work to launch new product clients during 2022.
Our software segment has launched a series of very impactful innovative innovation initiatives from a strong base.
The strong basis matches.
Which consistently grew its user community during 2021.
Even after being on the market for Turkey is magic was chosen by the readers of three D printing dot com and the Es and software of <unk> 2021 .
And we are confident that the R&D initiatives, we executed in 2021 are going to make it even stronger.
We will launch metrics.
In 2002.
With the fully integrated but a solid kafka from Siemens.
This will enable us to integrate even better with design and post processing workflows.
The new metrics will also be compatible.
The link to the EMEA system.
It is now in beta testing.
The beta tests for closest unit and workflow automation are also running successfully and as we speak the belt assisting of storefront is being launched.
In short.
After the serious development efforts of 2021, 2022 will be the year when multiple diseases of new products.
In our broader cloud strategy will take place.
During our next earnings call with.
With the official releases at aim and rapid I will provide further details on our growth strategy.
Thank you Kris.
I'll begin with a brief review of our consolidated revenue on slide six level.
<unk> when we refer to sales in our presentation, we will revenues plus deferred revenues.
Also please note that unless otherwise stated all comparisons in this call are against the results for the fourth quarter of 2020 and full year 2020.
For the quarter revenue increased 25 point to 8% to 57 million Euro.
The growth took place in all three segments.
Our software segment grew by 19%, but to utilize medical increased 20%.
Revenue in manufacturing grew by 35%.
For the quarter materialized software accounted for 22% over total revenue Materialise medical for 36% and Materialise manufacturing for 42%.
For the full year revenue grew 35 million euro or $20 <unk> to 200.
<unk> 5 million.
The 4 million euro increase or deferred revenue from software license and maintenance fees compared to 20.
December 2020, and underscores the strong sales performance of our software and medical segments.
Core segments revenue from software products represented 32% over total revenue for both the quarter and the full year.
Moving to slide seven you will see our consolidated adjusted EBITDA numbers for the fourth quarter.
Consolidated adjusted EBITDA increased $3 1 million to $10 million 490000, euro compared to Q4 last year.
The new quarterly records.
Our EBITDA margin grew to 18, 4% two percentage points above last year's 16, 3%.
EBITDA decreased.
From $20 4 million in 2020 to $32 5 million Euro in 2021.
EBITDA margin for the full year reached 15, 8% compared to 12% last year.
This increase was the result of a variety of positive factors.
Our strong revenue growth.
And improved gross margin despite increased in sourcing and continuous productivity improvements.
Disciplined spending in particular with respect to overheads.
Importantly, our EBITDA increase did not come at the <unk>.
<unk> or R&D spending in.
In addition, the initiatives previously described one homes, our internal business application platform continued and are on track.
Slide eight summarizes the results of our Materialise software segment.
Software revenue increased 19, 3% to $12 2 million Euro.
While recurrent revenue was flat monthly recurring revenue grew 33, 6% driven by new perpetual license fees.
EBITDA increased 43% to 5.518 million Bureau.
The adjusted EBITDA margin grew to 45% as a result of the solid revenue grew and our operating expenses kept well under control even as our digital transformation project continues.
Moving now to slide nine you will see the total revenue.
To utilize medical segments increased 23%.
For the first time broke 20 million Euro area.
Revenue from medical software sales grew 25%, while revenue for medical devices and services increased 18% compared to last year.
Revenue for medical software sales the Gulf of four 1% over the segment revenue.
Adjusted EBITDA grew 31% to 6 million $358 and euro compared to $4 8 million Euro.
The segment's adjusted EBITDA margin was 13 points.
Compared to 28, 2% last year.
Now, let's turn to slide 10 for an overview of the Q4 performance of what materializes and our factoring segments.
Revenue increased 34, 9% to $24 1 billion Euro.
Importantly revenue was approximately $5 million higher than in the first quarter of 2021, when we first notice of positive signs from industrial goods and all the business lines.
Adjusted EBITDA for the quarter was $1 2 million Euro EBITDA margin was only 5% negatively impacted by temporary higher production variables in our additive manufacturing business volumes.
Full year adjusted EBITDA increased $3 9 million to $6 4 million Euro was EBITDA margin increased to seven 2% from three points.
As a result of the revenue growth optimized capacity usage and improved production efficiencies.
Slide 11 provides the highlights of our income statement for the fourth quarter and the full year 2021.
For the quarter revenue increased 11, 7 million Euro with 25, 8% and gross profit increased 7 million euro or 26, 9%.
Gross profit was positively impacted by efficiency gains and the growing software and services portion.
Revenue sales mix.
As a result gross profit margin increased pistol.
Brazil percentage point.
The eight 3%.
For the full year this margin even increased one nine percentage points.
Operating expenses increased five 9% compared to last year's quarter our.
Our sales and marketing spending increased 22, 7% of <unk>.
Sales and marketing projects were refinanced.
G&A expenses increased 11, 3% and.
An increase due to the rollout of the ongoing into digital transformation project that we discussed in our previous earnings calls.
In line with our strategy.
Search and development expenses increased 12, 2% compared to Q4.
If you exclude last used $2 $12 million impairment cost electric disciplined program.
This quarter net operating income was 1 million $260 in judo.
As a result of these elements the group's operating profit amounted to $4 million 976000, Judah compared to a loss of almost 2 million in last year's periods.
For the full year operating profit growth of $12 million 217000 judo from levels of.
$4 million 639000.
Net financial income was 275000 judo compared to a loss of 596000 Euro last year.
Income tax expense amounted to 490000 euro compared to Q4 2020 positive selection Ko 531000.
Profits for the fourth quarter was $4 million 762000, euro compared to the multiples of $2 million and 39000 quarter 2020 period.
For the full year with profit rose to $13 million 145000, Juno, resulting in 23 <unk> per share permanent loss of $7 2 million or minus 13 <unk> per share.
Now please turn to slide 12 for a recap of balance sheets and cash flow highlights.
This fourth quarter, our balance sheet remains strong cash flow cash amounted to 196 million euro compared to 111 and a half million.
As of December 31st 2020.
But over the same period of borrowings decreased by 16 million to $99 12 billion Euro.
Only 21 $3 million of our debt as short term.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Zero.
In Brazil.
Okay.
Chemical increased 85 8 million euro.
The exercise of stock options for $2 4 million euro impairment of financial lessons in assumption of $3 4 million euro over the year 'twenty one.
This conversion differences of 1 million euro mainly from the strong purchase bonds and U S dollar against the Euro.
Total deferred revenue increased to $38 3 million euro compared to $34 9 million.
<unk> 2020.
Of the $38 3 million $24 three were related to annual software sales and maintenance contracts.
32 million as well.
Number 230% 2020.
Cash flow from operating activities for the full year amounted to 25.8 million euro compared to $13 million last year.
The increased operating results was partly offset by unfavorable working capital requirements as a result of ultra strong activity growth.
Capital expenditures for the quarter amounted to $4 5 million Euro and $11 7 million for the year and they were not clients.
Our financial reports are excluding linked treaty.
Of which we acquired 100% of the shares from January 4th 2002.
As a reference in 2021 linked to Didi realized revenue of approximately $2 3 million U S dollar and a negative EBITDA of approximately $4 6 million U S. Dollar.
Peter.
Thank you Johan.
If you could kindly turn to slide 13.
Encouraged by our very strong results in the second half of 2021, we.
We believe our more mature business lines in particular are magic's software suite.
Our mimics innovation suite.
And our personalized medical device business lines.
<unk> have the potential of continuing to scale solidly with a healthy margin.
And we plan to support these businesses accordingly in 2022.
Simultaneously.
We have the ambition to significantly increase our spending in 2020, due especially in R&D and sales and marketing.
With a view to accelerating the development of our new growth businesses.
<unk> includes our software cloud platform, including the newly acquired <unk> and <unk> solutions.
And our medical and wearable verticals.
We believe that the combined growth of our more mature and our newer business lines, including activity will generate consolidated revenue growth in 2022.
Of at least 10% compared to the previous year.
As we will be allocating significant portions of the expanding EBITDA margins of some of our more mature business lines.
Towards increased investments in our newer growth businesses in particular, the linked <unk> product portfolio.
We expect our consolidated adjusted EBITDA to decrease by approximately 10% compared to last year.
This outlook for 2022 does not take into account the very recent events in Ukraine.
As a reminder, we have no meaningful sales in Ukraine for introduction.
Our 430 collaborators in Ukraine are mainly active in engineering software development and supporting it and staff functions.
As explained earlier, we believe that the impact of the war in Ukraine for our customers and for the continuity of our business will be minimal.
Because many of our people in Ukraine continue to work whenever they can and <unk>.
Materialized colleagues with similar skills and competencies elsewhere in the world are stepping in to the system.
That is needed.
Nonetheless.
The recent onset of hostilities in Ukraine.
This adds a level of complexity to our outlook for 2022.
As we currently cannot assess how long they will last or how the global economy will react to the sanctions that are being imposed upon Russia.
We hope to have more visibility on these events, which are very disturbing to all of us.
And their potential short term impact on our business.
When we release, our first quarter results.
And on this note.
I would now like to open the floor for questions operator.
Operator, Please go ahead.
In Q as a reminder to ask a question you will need to press star one on your telephone to enjoy your question press. The pound again. The Star then the number one on your telephone keypad assay question.
Our first question comes from the line of Troy Jensen from Lake Street Capital. Your line is open.
Hey, gentlemen, congrats on the great fourth quarter.
Thank you.
Hey, Peter I guess I wanted to start out with software I guess I was happy to see that up nicely. It had been stuck at about a $10 million quarterly level.
It sounds like mimics grew faster I think it isn't I read in the press or in the slides. It was 25% growth, but the segment was up 19, but I guess I just want to confirm that magic's stream X is still growing kind of high teens is that correct.
Sure.
Well actually no dimensions growth is it's not high teens, but close to 10%.
<unk>.
Yes.
Actually being replaced by linked <unk> in the future.
But we.
We see a healthy growth in the sales.
And we expect.
The new growth platform.
Well, yes.
Really become a growth driver in the future.
Alright understood hope so.
How about just specifically to like Q1 in the health care segment. I think of you guys is fairly are exposed to elective surgeries.
And obviously with Covid kind of a spike in that can kind of January February just the thought that Q1, maybe seasonally weaker than we've historically seen.
Troy, we had that experience.
Elective surgeries being postponed for COVID-19 related treatments.
Earlier.
But frankly.
The impact as our numbers show.
Of Covid.
On businesses on the surgeries that we support being again picked up.
Is there is minimal.
Good alright, Okay, I was thinking omicron spike you might slow that down.
How about you.
Two our freedom medical point of care I guess I hear more point of care applications for medical is that something that you guys favor or would you guys prefer a more centralized or I guess to me its good for mimic sales but.
Just thoughts on the implants and stuff like that.
Well no.
We have a balanced view.
John .
We favor.
Point of care.
Pollutions.
Especially.
With respect to two visualization models and.
Surgery planning models and.
<unk>.
We do believe that.
On the other side on the implant side.
A more centralized approach.
Uh huh.
The only.
Yup feasible, one if you want to comply with all regulatory requirements.
We have proven that we can.
Yeah.
Elaborate high volume patient specific.
<unk> solutions of implants.
Yes.
Quality level that is similar to standardized implants.
And I think it is very difficult if you're doing this in a very distributed.
Wei.
Okay.
Working right I would agree with that okay. How about last question for me on manufacturing.
Great segment here.
Recently could you just call out again I thought I heard you say, maybe European auto was weak, but what was strong in the quarter for you guys on the manufacturing side.
Well.
We see in the segment.
What we call industrial and healthcare equipment.
Jerome.
Use of three D printing and we believe this is quite structural change that.
<unk> plus small units.
Complex pieces of equipment.
<unk> printing is more and more confident.
This is what.
We believe one of the and yes they had.
Yeah additive manufacturing has a serious growth potential and in a sustainable way.
Great. Okay that sounds like it's more end part production applications driving the business and correct.
Yep Yep.
Awesome, Alright, guys keep up the good work.
Thank you Troy.
Your next question is from Jason <unk> from Keybanc capital markets. Your line is open.
Hi, Vijay.
Thank you Ashley.
Got it just lastly, Kevin on for Jason.
First question I have and around getting to guidance I know that there's a lot of near term geopolitical uncertainty, but in terms of.
Other macro factors like supply chain disruptions that you and your customers, particularly within auto.
Space.
I've worked with in the past couple of years, what is your expectation of kind of book.
Macro challenge to get fat and point of fine tuning to be expecting sort of Goldman.
Any color you can put on that.
As you I mean.
Fried explained earlier.
We have strong growth in manufacturing has been realized I mean to some extent by us being able to focus on.
<unk> other.
Sectors than just the.
The automotive huh.
The business systems in general and then the half healthcare applications. In particular is something that we have focused on and that has helped us.
And restoring the growth.
Yeah.
So I mean that that shift to some extent.
Allows us to have additional strong growth now.
If oh.
Automotive picks up.
In the course of 2022, we've been saying this for a couple of years now, but if it does pick up and that should only further foster.
Strong performance of our manufacturing in 2022.
Let's wait and see.
Got it no that's helpful.
And then maybe one more on gross margin.
It's a nice step up to 57% in 2021.
Just maybe any color you can provide on how we should think about that margin.
Can you I know manufacturing rebounded nicely and palm 'twenty, one should we continue to expect a gradual step up in margin.
All of that.
So I can get all of them benefit from leverage.
We expect.
Quite.
A gradual improvement of the margins in manufacturing.
We had a temporary elisa.
Alyssa margin in the fourth quarter, which accounted in the next quarters the improvement.
Gradually.
Got it.
Thanks, guys and congrats on the good results.
Thank you. Thank you hi.
We have a question from Noelle Dilts from Stifel. Your line is open.
Hi, good morning.
The strong quarter.
I really only have one major question, which is you know I think the investments that you're talking about making in R&D and sales and marketing a lot of sense for 2022 .
Hoping you could discuss sort of how we should think about.
The returns on those investments are you expecting to maintain higher levels of investment going into 2023 and 2024, how should we just think about that.
Longer term business model perspective. Thanks.
Yeah.
Well done.
Just for 2020.
Two to begin with I think.
Yes.
You can expect.
And uptake of those investments.
More in the second half of it in the first half of the year as we are ramping up.
Recruitment.
The developers that we are currently looking for.
These investments will not stop in 2023.
We do expect that.
Sales and then in particular of the linked <unk> and more in general the magics cloud platform.
We expect those to actually start showing up in our P&L.
More in 2023, then in 2022, and 2020 to really be a year, where it will be significant investment with.
Not that much additional revenue coming from these investments so hitting our P&L significantly as of 2023 and more importantly, the years thereafter.
We expect that our investments and the link to the platform will actually.
Sure.
The recurring revenue that we are aiming for.
Okay. Thank you.
They can also ask that question.
Sorry, again to ask a question Thats Star one.
Again, if you'd like to ask a question press Star then the number one partner telephone keypad.
Next question is from Gregory Ramirez from Bryan Garnier Your line is open.
Hi, good afternoon, and thank you for taking my questions just a few on my side.
Yes.
First of all on the software division in Q4.
How do we have.
The search and software revenues not on me on the road.
Product sides.
Jakes et cetera, but.
I would say as it is.
It looks to be driven by.
New licenses.
Is it a is it related to a.
Two specific.
Older on the side of <unk> printing manufacturers.
Do we have to consider it as a one off because it was at the end of three years maybe.
<unk> printing manufacturers.
Some others.
Or is it some upgrades on existing machines.
I have another question regarding <unk>.
Okay.
The structure of the growth, which is expected for 2022.
10% plus.
So you mentioned that software and medical.
We've got senior to generate solid trends.
What changed I would say are the specific situation of <unk>.
Restructuring.
It's really.
What I understand is that it.
This option may be related to that's.
So there are situations in the automotive sector.
Is there any specific reason.
Which.
It doesn't make us believe pets.
Growth will be significantly lower in the manufacturing division in 'twenty between systems.
And much like <unk> then last.
Last question is regarding to your adjusted EBITDA.
On slide 22.
<unk>.
What do we have to expect a.
From two.
Potentially a negative contribution to EBITDA from being freely.
Because it looks to be about.
Most of the decline.
Right.
Declines in 'twenty two specifically.
Explain.
Bye.
Billings for the acquisition.
Yes, Thank you Gregory.
Many questions I Hope we took we took good note if not interrupt us.
In short you. Your first question on the software growth.
Close to 20% in Q4.
Yes, I mean Q4 is always a.
Q4 is always a strong quarter four for software sales.
As you know so that is definitely the the 20% growth that we posted in the last quarter is definitely to some extent linked to the fact that the quarter that we're reporting on is that is.
Q4 is the last quarter of the year.
Mhm.
Uh huh.
Your second question relating to.
The growth that we expect in.
In manifest in.
<unk>.
Yeah.
Well I mean manufacturing boasted a spectacular 35% plus growth this quarter is basically.
The significant growth because of the comparison with <unk>.
A previous quarter that was significantly.
Weak because of the COVID-19 crisis.
So we're basically.
Filling.
Our capacity again.
And.
Our I mean, we will continue to fill our capacity in 2022.
Once we get to that level of focus will be on making the right choices and making sure we fill our capacity.
Products that generate the best possible margin and there we believe that some of the health care applications that fit alluded to earlier should.
It should help us in improving the margin of.
Of manufacturing.
It was basically a rebound.
What is the manufacturing is currently doing.
That being said.
As part of our manufacturing segment, we are reporting also our variables businesses, our eyewear and our motion business.
And they will we believe they will.
Contribute to some of the continued growth that we will intend to continue to report in 2022.
Uh huh.
Okay.
Our last question related to the.
EBITDA profile for 2022 and the role that.
Linked III Levo play there the short answer to your question is yes.
Bulk of the negative investments contributing negatively to our EBITDA in 2022.
B.
<unk> linked to the development of our software cloud platform and that obviously includes continued investments also in the product portfolio that we acquired from <unk>.
Okay. Thank you and just to come back on the first.
Christian.
So do your contemporaries have let's say no specific one offs in there.
They are almost 20% growth in software.
Thank you for that.
There is no specific one offs, it's well distributed but.
Again here, we also have a budget.
<unk> mentioned for manufacturing.
The reference year of 'twenty 'twenty was of course, a weak year.
Uh huh.
It's <unk>.
Very much the normal good Q4 compared to Q4 is good compared to a not so good Q4 last year or the year before.
Okay.
Thank you very much.
Thank you Gregory.
Sure.
And our last question from burner Advani with JP Morgan Your line is open.
Hi, This is from now on for Paul Chung from Jpmorgan.
Our last question.
Okay.
So on the EBITDA margins, just going back can you talk a little bit about.
You see that going in 'twenty.
They were trying and backman on top line.
How can we get a couple of months.
Yes, we try to.
Guides for.
The year so.
For 2022, we're not really guiding for 2023, but as I said.
Earlier.
While 2022 will be hit significantly.
With lots of investments and not that much additional.
Revenue.
We expect to still in 2023 to continue the level of investments, but we do expect already some revenue compensating those revenues in 2023.
But the bulk of the return.
I mean is more likely to come in the years thereafter.
And as our core business will also continue to grow that so as we said through whom having expanding margins and realizing scale effects, so which goes back to the the higher margins that we realized this year on the longer term continue evolving positively.
Yes. Thank you my comment only related to basically investments into software cloud platform and not not on a consolidated basis in general. Thank you.
Okay, and then kind of going to the revenue contribution.
Can you speak at all about what you can expect linked <unk> to bring in in 2022.
Both on sales and also Opex.
Okay, we do not think Theres nothing material acquisition, we do not intend to do continue to.
Give separate numbers offering <unk> also because we will be very quickly integrating.
The products, but roughly.
We.
We gave you the numbers of the revenue that link to the.
<unk> generated in 2021 in terms of contribution by linked <unk> to revenue in 2022, we do not expect significant increases there.
Got it that's all my questions. Thank you congrats on the people we do expect an increase I mean, it wasn't a negative $4 6 million being spent expect just to be sure to increase.
The quote unquote negative EBITDA coming from that product lineup.
Got it thank you.
Sure.
There are no further question at this time I would now like to turn the conference back to Mr. Peter Leys.
Thank you operator and.
And thank you again, all for joining us today.
We also want to thank our employees around the globe for their dedication and contributions.
On behalf of all members of the materialized family I would like to convey the following closing message to our colleagues and friends in Ukraine.
Dear colleagues, we admire your courage you are an inspiration to all of US we stand behind each and every one of you.
<unk>.
Take good care of yourselves.
Thank you.
This concludes today's conference call. Thank you for joining you may now disconnect.
Okay.
Thank you.
Thank you.
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