3D Printing Financials: Materialise Leads with Profitable Q2 2024

In the turbulent economic landscape of 2024, Materialise (Nasdaq: MTLS) stands out as the one profitable public company in the 3D printing sector. With several firms facing significant financial challenges, including restructurings and delistings, the fact that Materialise not only reported a revenue increase but also profits is quite remarkable.

Materialise disclosed a 6.2% increase in total revenue for the second quarter of 2024, reaching €68.8 million compared to €64.8 million for the same period in 2023. This was mainly tied to its medical segment performing exceptionally well, with a 12.8% increase in revenue, totaling €28.1 million. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for this segment also rose significantly, hitting €8.2 million from €2.7 million the year before and pointing to improved profitability.

Although not as strong as the medical segment, Materialise’s software unit still managed to post a 1.8% increase in revenue, totaling €11.2 million. However, the adjusted EBITDA for this segment decreased slightly to €1.4 million from €2 million in the previous year, mostly because of increased spending on developing new products and technologies. Despite this, the division’s recurring revenue from software maintenance and license sales went up by 5%, showing the move to a subscription-based model. Over 70% of the revenue in this division is now recurring, and this share is expected to grow with the new version of Magics v28, available on a subscription basis only.

Finally, the brand’s manufacturing division also showed a revenue increase of 2.1%, totaling €29.4 million. However, its adjusted EBITDA decreased slightly to €2.4 million from €2.7 million in the previous year, mainly due to higher costs and reduced income from consulting services. Despite a challenging market with low prototyping demands, CFO Koen Berges explained to investors that the division grew thanks to strong performance in advanced manufacturing techniques (ACTech) and certified manufacturing processes, particularly in the aerospace and medical technology areas.

Berges also informed investors that in the second quarter, Materialise’s manufacturing division now accounts for 43% of total revenue, while its medical and software divisions represent 41% and 16%, respectively. He also noted that in the first half of 2024, the company generated over €132 million in revenue, a 1.3% increase compared to the strong first half of 2023.

Overall, Materialise’s gross profit for the second quarter of the year was €39.2 million, compared to €37 million in the same period last year. The gross profit margin stayed steady at 57%, reflecting how well the company managed its costs.

Despite an increase in R&D, sales and marketing, and general and administrative expenses, which collectively rose by 10.4% to €36.6 million, the business still managed to register a net profit of €3.9 million, or seven cents per share. This is a significant improvement compared to the net loss of €500,000, or one cent per share, reported for the same period last year.

During an earnings call with investors, Materialise CEO Brigitte de Vet-Veithen pointed out that “in my first six months as CEO, I have urged the industry to unite in removing the remaining obstacles to 3D printing adoption. Advancing our industry is possible, but to unlock the full potential, we need collaboration. In April, we brought a large group of industry stakeholders and customers together at our headquarters to discuss specific collaboration ideas. The response was overwhelmingly positive, and I was very encouraged to push ahead with the various initiatives that we will undoubtedly talk more about later this year.”

Building on this spirit of collaboration, de Vet-Veithen told investors about Materialise’s partnership with nTop, which was announced at the 2024 RAPID + TCT event in June. According to the executive, this partnership opens new opportunities for Materialise in the market of printing serial end-use parts. She said that by integrating nTop’s advanced modeling software with Materialise’s Next-Gen Build Processor, they can efficiently handle complex designs, reducing file size and processing time. This collaboration lets manufacturers speed up the design-to-production process and make intricate parts that were previously too difficult to print. What’s more, Materialise is starting to onboard customers into an Early Access Program, with Nikon SLM Solutions being the first partner.

The CEO also told investors that the solid topline performance helped Materialise boost its investments while maintaining net profitability. In July 2024, the company acquired FEops, a Belgian company specializing in AI-driven simulation technology for structural heart interventions. This acquisition is expected to advance the personalized treatment of patients with heart diseases, amplifying Materialise’s position in the medical segment, which is its highest-earning division.

As of June 30, 2024, the company had €125.5 million in cash, slightly down from €127.6 million at the end of 2023. But its total debt dropped to €58 million from €64.4 million. This means its net cash improved to €67.5 million, up by €4.3 million since the end of 2023. Cash flow from regular business activities for the second quarter of the year was €8.4 million, much higher than the €800,000 from the same period last year.

On the other hand, capital expenditures for the quarter were €8.5 million, mostly for new ACTech plants that will soon start operating. Despite these high expenses, free cash flow stayed close to breakeven, and Berges remarked that these investments would continue as the company added more machinery to increase capacity.

Looking ahead, Materialise is confident in its ability to grow. The executive team has maintained its full-year 2024 guidance, expecting consolidated revenue to be between €265 million and €275 million. Adjusted EBIT is projected to be between €11 million and €14 million, despite the recent acquisition of FEops, which will result in additional operating expenses in 2024 and 2025.

“Given the strength of our operational performance halfway through 2024, we believe that we are well on track to deliver the growth targets we set at the beginning of this year,” concluded de Vet-Veithen.