Q3 2025 Materialise NV Earnings Call
Speaker #2: To . Good day and welcome to the Q3 2025 Materialized Financial Results conference call . At this time , all participants are in a listen only mode .
Speaker #2: After the speaker presentation , there will be a question and answer session . To ask a question during the session , you will need to press star one one on your telephone .
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Speaker #2: I would now like to hand the conference over to your speaker . Miss Harriet Fried , with Alliance advisors . Please go ahead .
Speaker #3: Thank you , everyone , for joining us today for Materialize Quarterly Conference Call . With us on the call are Brigitte Vet Chief Executive Officer and Koen Berges chief Financial Officer .
Speaker #3: Today's call and webcast are being accompanied by a slide presentation that reviews materialize . Strategic , financial and operational performance for the third quarter of 2025 .
Speaker #3: To access the slides, if you have not done so already, please go to the Investor Relations section of the company's website.
Speaker #3: The earnings release that was issued earlier today can also be found on that page . Before we begin , I'd like to remind you that management may make forward looking statements regarding the company's plans , expectations and growth prospects , among other things .
Speaker #3: These forward-looking statements are subject to known and unknown certainties and risks that could cause actual results to differ materially from the expectations expressed, including competitive dynamics and industry change.
Speaker #3: Any forward looking statements , including those related to the company's future results and activities , represent management's estimates as of today and should not be relied upon as representing their estimates as of any subsequent date .
Speaker #3: Management disclaims any duty to update or revise any forward looking statements to reflect future events or changes in expectations . A more detailed description of the risks and uncertainties and other factors that may 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 .
Speaker #3: Finally , management will discuss certain non-IFRS measures on today's call . A reconciliation table is contained in the earnings release and at the end of the slide presentation .
Speaker #3: With that introduction , I'd like to turn the call over to Brigitte Vet . Go ahead please . Birgitta .
Speaker #4: Good morning and good afternoon . And thank you all for joining us today . You can find the agenda for our call on slide three .
Speaker #4: First , I will summarize the business highlights for the third quarter of 2025 . Then I will pass the floor to kun , who will take you through the third quarter financials .
Speaker #4: Finally , I will come back and explain what we expect for the remaining months of 2025 . When we've completed our prepared remarks .
Speaker #4: We'll be happy to respond to questions . Moving to slide four for the highlights of the third quarter 2025 . While our overall revenue remained under pressure , I am very pleased with the continued strong growth of our medical unit where we achieved double digit growth again on the back of an exceptionally strong third quarter last year .
Speaker #4: Today , I would like to highlight the progress that we're making in the cardiac segment . One of our newer markets in 2025 , we acquired a company specializing in AI driven simulation technology for structural heart interventions .
Speaker #4: Predictive simulation technology complemented our Mimics planner , adding advanced simulations to its anatomical measurements . We have now taken two important steps in this market .
Speaker #4: First , we recently released the next version of VPCs Hard Guide for Transcatheter Aortic valve replacements , adding important features to the planner in addition to giving physicians insights into the right size and position of the device in the aortic root .
Speaker #4: This release helps them to manage the lifetime of the patient . Specifically , this new release includes a predictive simulation of the potential ways to treat the patient should he or she come back for Reintervention a couple of years down the line .
Speaker #4: Secondly , we generated additional clinical evidence to underline the benefits of our cardiac planners . As an example , in a prospective study with 126 patients , a leading cardiac center demonstrated time savings of up to 91% for patients undergoing transcatheter aortic valve replacement .
Speaker #4: This important time saving came with high accuracy combined compared to standard planning tools . Also , the fact that the cardiac Planner is a cloud based system that can be accessed from anywhere by the heart team , which typically consists of several specialties , facilitated the discussions in the preparation of the intervention .
Speaker #4: This evidence shows that our AI-enabled automatic case planning could play a role in generating efficiencies in this type of procedure, thus potentially enabling the treatment of more patients with a personalized approach in the future.
Speaker #4: The improved features of our planners and the additional evidence will strengthen our position in this market and provide a great foundation to treat more patients in the cardiac space .
Speaker #4: I would also like to highlight the progress we made in our existing markets. As an example, we released a new version of our Mimics and Lite CMF Planner.
Speaker #4: You might remember that this software was one of the finalists for the TCT award in the healthcare category earlier this year . In this new version , customers can now benefit from a range of AI algorithms that enable them to plan cases faster and more efficiently .
Speaker #4: And this is particularly important , for example , for trauma cases , trauma patients come to the hospitals after accidents , sometimes with complicated fractures and multiple fragments of the jaw that the surgeon needs to puzzle together .
Speaker #4: The trauma planner of mimics and CMF now gives the surgeons the ability to efficiently plan the procedures and piece those fragments together . This planning also helps to gain time during the procedures , because the surgeon knows how to treat the patient in addition , the surgeon knows what the what type of device to use in the procedure .
Speaker #4: And in a world where more and more devices come in , as package , it saves a lot of cost . If you only open what you need , rather than trying multiple products and then having to resterilize and repackage or in some cases throw away what you don't need .
Speaker #4: So in summary , this new release of mimics CMF enables us to target the trauma segment , which is in significant part of the market .
Speaker #4: And first , feedback from customers is encouraging . Turning now to our materialized software segment , we continue to make progress to establish Coem as the ecosystem for all Am operations .
Speaker #4: In the last 12 months , we launched our Magix SDKs and the next generation of our build processors . As a reminder , our matrix SDKs allow users to create custom preprint workflows by tapping into more than 800 algorithms built over 35 years .
Speaker #4: These SDKs enable customers to scale Am operations efficiently and print complex , high performance geometries , while avoiding field builds and improving part quality .
Speaker #4: All of this while protecting the intellectual property behind component designs . Similarly , the advanced algorithms of the next generation build processors significantly improve build time and quality .
Speaker #4: Thanks to , for example , its advanced strategies for multi lasers , and enable a variety of coloration models , including the possibility for customers to build their own build processors .
Speaker #4: Thanks to the availability of our SDKs . We are now going a step further by launching a low code enabling technology on OEM , making these SDKs more accessible for customers without a deep engineering background .
Speaker #4: This facilitates new product introductions of our customers and enable easy workflow automation for large scale applications . The new capabilities therefore have the potential to drive efficiencies and optimize the cost of additive parts .
Speaker #4: We are currently preparing for next month's Formnext , where you will hear more about this and our other capabilities on the OEM ecosystem .
Speaker #4: Finally , in our materialized manufacturing segment , we continue to execute on our strategy while facing continued headwinds in some market segments , including the automotive sector , specifically at Agtech , we continue to invest in a huge and heavy segment by adding machines able to produce giga castings and other large and complex parts , often at a significant weight .
Speaker #4: As a reminder , in the third quarter 2024 , we celebrated the opening of our second Agtech plant and shipped first parts in the fourth quarter 2024 .
Speaker #4: In segments beyond automotive , such as aquaculture , mining , maritime or energy . Parts are typically not only larger and heavier , but also more complex .
Speaker #4: For example , to achieve better thermodynamic cycles in the large engines with maximum fuel efficiency . The combination of high precision sand printing , casting , and complex post treatment that we can now offer at Agtech is ideal for these parts .
Speaker #4: Also, the machines installed in 2025 enable the automation required to produce these complex parts not only for prototypes, but also in small series.
Speaker #4: I would also like to highlight the progress we are making in the defense sector , where , in light of the current geopolitical landscape and the breakdown of traditional global alliances , spending is increasing , in particular in Europe .
Speaker #4: In order to strengthen resilience and resilience and autonomy of the various regions . After the announcement of our broad engagement in this sector , we attended DSI , one of the world's largest defense and security trade exhibitions and attended a series of other events , engaging with major crimes in showcasing our capabilities .
Speaker #4: Additive manufacturing addresses the defense industries challenges as additive manufacturing enables rapid , flexible and sustainable production of mission critical components , reduces logistical constraints , fosters innovation , and strengthens strategic autonomy in a complex and evolving security environment .
Speaker #4: The positive interactions with stakeholders in the industry confirmed that our additive production capabilities in Europe and our software capabilities globally are valuable assets to address the current challenges of the defense industry .
Speaker #4: I will now turn over to kun , who will present the financial results . Thank you . Brigitta . Good morning or good afternoon to .
Speaker #5: All of you on this call, I'll begin with a brief overview of our key financial results. As shown on slide five, our consolidated revenue grew by 2% compared to Q2 of this year.
Speaker #5: But ended with €66.3 million , 3.5% lower than last year's strong third quarter . Our gross profit margin remained strong at 56.8% in the third quarter of this year , fully in line with the margin realized over the first nine months of 2025 .
Speaker #5: Adjusted Ebit for the third quarter of 25 amounted to €2.9 million , representing an adjusted Ebit margin of 4.4% of revenue over the third quarter of this year .
Speaker #5: We generated a net profit of €1.8 million , driven by strong free cash flow in the third quarter of this year . We further increased our net cash position to €67.7 million .
Speaker #5: In the following slides , I will elaborate further on these results . As a reminder , please note that unless stated otherwise , all comparisons are against our results .
Speaker #5: For the third quarter of 2020 . For . Turning now to slide six . You will see an overview of our consolidated revenue in the third quarter of this year .
Speaker #5: Materialized medical posted an all time revenue record of €33.3 million , growing by more than 10% compared to a particularly strong third quarter of last year .
Speaker #5: On the other hand , revenues from our software and manufacturing segments continued to be impacted by macroeconomic headwinds . As a result , revenue in both segments declined by seven and 17% , respectively , leading to an overall decrease of 3.5% of our consolidated revenue compared to last year's period .
Speaker #5: While unfavorable forex effects , mainly due to a weaker US dollar , also impacted our top line this quarter . As you can see in the graph on the right side of the slide .
Speaker #5: Materialized medical accounted for 50% Materialise NV for 16 and materialized manufacturing for 34% of our total revenue . Over the third quarter of 2025 .
Speaker #5: Our deferred revenue balance related to software maintenance and license fees coming from both our medical and software segments , decreased in the third quarter of this year , which is fully in line with our seasonal pattern over the last 12 months .
Speaker #5: However , the balance increased by €4.2 million , bringing the total amount carried on our balance sheet at the end of the third quarter of 2025 to €45.3 million .
Speaker #5: On slide seven , you will see our consolidated adjusted Ebit and EBITDA numbers for the third quarter of 2025 . Consolidated adjusted Ebit totaled €2.9 million , compared to €4.4 million for the same period of 24 , representing an adjusted Ebit margin of 4.4% .
Speaker #5: Consolidated adjusted EBITDA for the third quarter amounted to €8.4 million , decreasing from €9.9 million in 2024 , representing an adjusted EBITDA margin of 12.7% .
Speaker #5: Given current market volatility , we believe that it's important to also compare our operational performance on a quarter over quarter basis in this context , both adjusted Ebit and EBITDA remained roughly stable compared to the second quarter of this year .
Speaker #5: And are significantly up from the beginning of 2025 . As a result of disciplined cost control and of targeted cost reduction measures . We have taken to safeguard operational profitability .
Speaker #5: Year to date , we generated now €6.6 million of adjusted Ebit and €22.9 million of adjusted EBITDA . Moving now to slide eight , you will notice that the revenue in our materialized medical segment has already mentioned increased by 10% compared to the particularly strong third quarter of 2020 .
Speaker #5: The growth was again generated by both medical software and by revenue from medical device sales, which grew respectively by 6% and 12%.
Speaker #5: Within our medical devices and services activity , we saw continued growth in both our direct and our partner sales in line with top line growth .
Speaker #5: Adjusted EBITDA grew further to €10.2 million , resulting in an adjusted EBITDA margin of more than 30% . We further increased our R&D investments in medical and will continue to do so in the coming months .
Speaker #5: In order to drive future growth . Year to date , our medical segment realized revenue of €97.2 million , up by 15% from last year , with an adjusted EBITDA of €30 million , which represents a 31% adjusted EBITDA margin .
Speaker #5: Slide nine summarizes the results of our materialized software segment in the third quarter . Software revenue decreased by 7% to €10.3 million . This was partly due to unfavorable forex impacts , while macroeconomic and geopolitical uncertainty also continue to put pressure on our sales volumes , especially in the US market .
Speaker #5: During the third quarter , we continued our transition to cloud subscription based business model . Over the quarter , around 83% of the software revenue was over .
Speaker #5: Recurring nature versus 74% in the same quarter of last year , demonstrating the progress we keep making here despite the lower top line effective cost management allowed us to keep the adjusted EBITDA margin stable at around 18% compared to the same period of last year , leading to an adjusted EBITDA of €1.8 million .
Speaker #5: Year to date . Our software segment realized €30 million of revenue and an adjusted EBITDA of €3.8 million . Now , let's turn to slide ten for an overview of the performance of our materialized manufacturing segment in the third quarter of this year .
Speaker #5: The performance of manufacturing remained weak, with revenue declining by 17% compared to last year's third quarter, ending at €22.7 million compared to Q2 of this year.
Speaker #5: However , revenue increased slightly . The macroeconomic headwinds we have been facing for some time continue to impact our operational results , mainly as a result of the lower top line .
Speaker #5: The adjusted EBITDA of the manufacturing segment ended negative this quarter at minus oh point €8 million , stable compared to this year's second quarter , though year to date , our manufacturing segment realized revenue of adjusted EBITDA of -€2 million .
Speaker #5: Slide 11 provides the highlights of our consolidated income statement for the third quarter of this year . And over the period , our gross profit amounted to €37.7 million , representing a set , a stable gross profit margin of 56.8% compared to the previous quarters of this year .
Speaker #5: But slightly below the 57.2% realized in a strong Q3 of 2020 . For our operating expenses in the quarter , increased only by €0.2 million , or less than 1% in aggregate , compared to the same period of last year .
Speaker #5: With R&D expenses increasing 4% year over year . During the quarter , we invested again over €11 million in R&D . The majority of which was in our medical segment .
Speaker #5: Sales and marketing remained flat year over year , while G&A expenses decreased by almost 3% , reflecting the impact of continued cost control .
Speaker #5: Net operating income in the quarter was oh point €9 million , remaining stable compared to prior year . As a result of all of these elements , the group's operating results in the quarter was €2.5 million .
Speaker #5: In Q3 of 2025 , the net financial result amounted to a limited loss for oh point €1 million . Interest income on our cash reserves offset the interest expense on our financial debt and the negative impact from foreign exchange fluctuations in last year's corresponding period .
Speaker #5: The net financial loss was -€1.1 million , mainly due to large unfavorable exchange rate effects at that time , income tax expense in the quarter amounted to €0.6 million , compared to a tax expense of €0.1 million in the corresponding period of last year , and as a result , we once again generated positive net result in the third quarter of this year , amounting to €1.8 million , representing €3 cents per share .
Speaker #5: Now please turn to slide 12 for a recap of balance sheet and cash flow highlights . And also for the third quarter of 2025 , we can report strong balance sheet .
Speaker #5: Our cash reserve further increased to €132 million at the end of the quarter . At the same time , a gross debt also increased to €64 million .
Speaker #5: Both changes were impacted by an additional €15 million , drawing . We made during Q3 on an existing bank credit facility , in line with contractually agreed drawing periods in the next 12 months , we will be drawing the remaining 15 million of this facility .
Speaker #5: The net cash position at the end of the quarter , which is not impacted by these additional drawings , amounted to €67.7 million , up by almost €7 million compared to the beginning of this year , mainly driven by strong free cash flow trade receivables , inventory and trade payables .
Speaker #5: Positions are now balance sheet all decreased compared to the position at the end of last year . The total deferred income position decreased to €58 million , out of which 45 million was related to deferred revenue from software , license and maintenance contracts .
Speaker #5: As mentioned earlier , reflecting the seasonal seasonal pattern of deferred revenue evolutions . As you can see from the graphs on the right side of the page , the operating cash flow in the third quarter amounted to €10.4 million , significantly up from the €6.9 million generated in the third quarter of 2020 .
Speaker #5: For capital expenditures . For the third quarter amounted to €5.3 million , including €3.1 million of non-recurring CapEx , mainly spent on remaining machinery for the new plant and on the installation of a solar panel park at HQ .
Speaker #5: Year to date, total CapEx amounts to €11.8 million, out of which 60%, or close to €7 million, can be considered to be of non-recurring nature.
Speaker #5: Over the first nine months of this year , the operating cash flow amounted to €20 million , while the year to date free cash flow is positive at around €11 million .
Speaker #5: And with that , I'd like to hand the call back to Brigitta .
Speaker #4: Thank you . Q1 . Let's now turn to page 13 . I'll conclude my remarks with a discussion of our full year 2025 guidance .
Speaker #4: As we approach the end . Continue to impact the business environment in which we operate in our manufacturing and software segments for fiscal year 2025 , we therefore maintain our guidance as previously communicated , with revenues in the range of 265 to €280 million and adjusted Ebit in the range of 6 to €10 million .
Speaker #4: We remain confident that our business is solid and resilient, and that Materialise is strongly positioned to capture growth opportunities once market conditions improve.
Speaker #4: This concludes our prepared remarks . Operator , we now ready to call to questions .
Speaker #2: Thank you . As a reminder to ask a question , please press star one one on your telephone and wait for your name to be announced .
Speaker #2: To withdraw your question , press star one one again . One moment . While we compile the Q&A roster . And our first question will come from the line of Troy Jensen with Cantor Fitzgerald .
Speaker #2: Your line is open .
Speaker #6: Hey . Good
Speaker #6: morning . Good afternoon . Brigida . And open the thanks for taking my question here .
Speaker #4: Hi .
Speaker #6: Troy . Congrats on the nice results . Hello . Hey . So I'd just like to just unpack a little bit in medical .
Speaker #6: Could you give us an update on . I guess I'm trying to figure out , relative exposure . I think of you guys .
Speaker #6: Is probably CMF and Hips is the two biggest sections . I just would be curious if you could kind of rank order and then those cardiac and some of these other things , how big and important can they be for next year ?
Speaker #6: Here ?
Speaker #4: Yeah . So I think in general , Troy , I mean , obviously very good . I think what we've repeatedly communicated is that we have our existing markets and some new markets .
Speaker #4: So CMF , orthopedics and our research and engineering segment are the existing markets where we've already been active for quite a long time .
Speaker #4: And those markets are a little more mature than the others in our new markets . We we address the cardiac and the respiratory space in particular , as new markets .
Speaker #4: So of course , the majority of our revenue comes from our existing markets . The new markets are still small , but we expect them to grow faster than the existing markets in the future .
Speaker #4: That's kind of how you need to think about that now within the existing markets . All three markets remain very important for us .
Speaker #6: Okay . All right . And then how about just manufacturing here I guess a bunch of questions I'll just rattle them off quick and see if you can hit them all .
Speaker #6: But . You just hopes on a recovery . And I'm just kind of curious how big is aerospace and defense as a percentage of revenue .
Speaker #4: Our space has been a focus segment for us for quite a while. We see, in the aerospace segment in general, that we have seen continuous growth in that segment, and we do believe that that's going to continue.
Speaker #4: Now the defense industry is a newer industry for us , at least with the broad engagement that we have communicated about . You know , earlier this year .
Speaker #4: So the defense area at this point in time is not a significant market for us yet at the same time , with , as I mentioned earlier in my remarks , I think with the interactions we had so far , I see potential in that defense segment as our capabilities that we have built for our space can particularly be leveraged in the defense industry going forward .
Speaker #6: As on the defense side , is it more on the metals front or is it the polymers ? Also .
Speaker #4: It's actually a combination of polymer and metal. I give you an example in the aerospace segment where our polymer offering is really important.
Speaker #4: There's two different applications on the polymer side that you can think about . One is interiors for the iris space segment at large , in particular for commercial aircraft .
Speaker #4: As an example , the second is tooling where our polymer capabilities are helpful for aerospace companies . And in particular the larger OEMs driving this .
Speaker #4: As an example, we were the first qualified supplier for Airbus in the polymer segment, and that's a couple of years back.
Speaker #6: Okay , if I could sneak one more in , can you just talk about just the manufacturing profitability ? I mean , obviously there's been a drag on you guys .
Speaker #6: Unfortunately , here at these revenue levels . Any thoughts on either recovery in kind of European industrial markets to drive better profitability , or are there other things you can do to kind of cut costs to try to prevent that from diluting the profitability level ?
Speaker #4: Yeah . So I'll give you a double answer . So the first part of the answer is that as highlighted in this review of the financials , we have taken measures to significantly reduce our cost end of last year .
Speaker #4: Earlier this year . And we do see the impact on our financials in manufacturing already . They might not be super visible on the Ebit and EBITDA lines , given the weakness , the continued weakness we see on the revenue line .
Speaker #4: But they have been making a difference . As highlighted . So that's the first one . The second element to the answer . I would give is there is two things really we need to see recovery on the revenue line .
Speaker #4: As you mentioned , the European environment is a really important one for us . So recovery in the European markets will certainly be a driver in to to bring our revenues to a more usual level .
Speaker #4: The second element that is important to keep an eye on is the automotive sector. As such, because admittedly, in manufacturing at large, we are still exposed to the automotive industry.
Speaker #4: And that is in Europe and in the US and the recovery of the automotive industry will help us to recover to a more normal level .
Speaker #4: On the revenue side as well . So it's really those two drivers that we need to keep in mind on . .
Speaker #6: All right . Well good luck going forward and I'll see you soon .
Speaker #4: Thank you Troy . See you at forum next .
Speaker #2: Thank you . I'm showing no further questions in the queue at this time . I would now like to turn the call back over to Miss Brigitte Vet for any closing remarks .
Speaker #4: Thanks again for joining us today . We obviously look forward to continuing our dialogue with you through investor conference or in one on one virtual meetings or calls , and we are also looking forward to meeting some of you in person at the upcoming forum next event in November .
Speaker #4: In the meantime , please reach out if you have any questions . Thank you and goodbye for now .