3D Printing Financials: Medical Drives Materialise’s Q1 2025

Materialise (Nasdaq: MTLS) kicked off 2025 with solid momentum in its medical segment, while its software and manufacturing units slowed down. Revenue rose just over 4% year-over-year to €66.4 million ($75.5 million), but profits dropped, reflecting a tough climate for European manufacturers.

Leading the way was Materialise Medical, which grew nearly 19% year-over-year, reaching €31.1 million ($35 million) in revenue. That’s nearly half of Materialise’s total revenue for the quarter. CEO Brigitte de Vet-Veithen said this growth was driven by broader adoption of personalized solutions in areas like orthopedics, cardiac care, and respiratory treatment, along with the rollout of the cloud-based Mimics Flow platform.

Materialise said it is seeing strong adoption of the Mimics Flow platform, which helps doctors and engineers collaborate more easily when designing personalized implants and surgical plans. In Q1, customers reported “significant efficiency gains” using the software.

The CEO also said they continued integrating FEops, a company it acquired in late 2024, to support its expansion into cardiovascular care, as well as its specialized Mimics Enlight platform, which includes tailored tools for complex procedures like craniomaxillofacial (CMF) surgery and structural heart planning. One of these tools, Mimics Enlight CMF, was recently named a finalist for a TCT Award in the healthcare category.

Another strong investment point has been in personalized medical devices, including a new clinical trial launched this quarter with the University of Michigan. The study focuses on a 3D printed tracheal splint for infants with tracheobronchomalacia (TBM), a rare condition where the airway collapses.

“This bio-resolvable splint allows babies to grow up at home until the disease is resolved and the implant dissolves,” the executive explained during the call. “The trial will enroll 35 infants across several children’s hospitals and could open the door to a new market for Materialise.”

Even though the company is spending more on R&D, particularly for medical initiatives and regulatory approvals, the medical unit delivered an adjusted EBITDA of €9 million ($10 million). It maintained a strong margin of 29.1%.

The rest of the business had a tougher quarter. Revenue in the Software unit dropped 6.4% to €9.8 million ($11 million), and earnings were cut nearly in half to €599,000 ($681,000). Materialise is still shifting this business from one-time purchases to subscriptions. In Q1, more than 80% of software revenue came from recurring sources, the highest level so far. But that shift brings some early challenges, like lower revenue upfront, since payments are now spread out over time.

Notably, deferred revenue from software licensing and maintenance increased to €48.9 million ($55.6 million), a sign that the strategy is working behind the scenes, even if it doesn’t show up as topline growth just yet.

Manufacturing, which depends heavily on the European industrial market, was hit hard. Revenue dropped 5.5% year-over-year, and the unit ended up losing money. High inflation, geopolitical tension, and weak demand in areas like automotive prototyping took a toll. The segment lost €377,000 ($429,000) in EBITDA.

In fact, manufacturers across Europe are having a tough time right now. Growth is slowing in key countries like Germany, and experts believe company profits in the region will drop in the first quarter of 2025. The outlook is especially hard for industries like chemicals, metals, and car parts, where demand is weak.

At the same time, higher costs and new trade problems, like U.S. tariffs on European goods, are making things worse for factories. In the UK, factory jobs are being cut at the fastest rate in years. Overall, this creates a tough environment for companies like Materialise, especially in its manufacturing business, which mainly serves the European market.

Net loss for the period was €535,000 ($608,300), a sharp drop from the €3.6 million ($4 million) profit a year earlier. That loss, though, was offset by strong free cash flow. The company ended the quarter with €104 million ($118.3 million) in cash and improved its net cash position by nearly €7 million ($8 million).

Even with the hit to profitability, Materialise continues to invest. It launched its latest sustainability report earlier this month and says it will keep spending in areas that are growing, especially healthcare and factory software.

Looking ahead, management hasn’t changed the 2025 forecast. It expects total 2025 revenue to fall between €270 million ($307 million) and €285 million ($324 million) and projects adjusted EBIT in the €6 million ($6.8 million) to €10 million ($11.4 million) range.

Materialise expects its manufacturing business in Europe to stay weak for now. But the company says its core business is strong, and it remains focused on growing its medical and software segments over the long run.

“The fundamentals of our business segments are strong, and while we expect the current uncertain macroeconomic and geopolitical conditions to weigh on our 2025 results, in particular in the second quarter, we anticipate a stabilization in the second half of the year and therefore expect to be able to deliver on our earlier guidance,” concluded de Vet-Veithen during the earnings call.