Additive manufacturing service provider and software developer Materialise (NASDAQ:MTLS) has announced financial results for the fourth quarter and full-year ended December 31, 2019.
Consolidated revenue for FY2019 increased 6.5 percent to €196.7 million for 2019, from €184.7 million for 2018. Total deferred revenue from annual software sales and maintenance contracts increased by 22.3 percent to €27.7 million from €22.6 million at the end of 2018.
For Q4 2019, Materialise’s revenue was reported at €50.7 million, a 3.5 percent increase compared to the same period in 2018 which was €49 million.
The Medical and Software segments of Materialise are credited as the main drivers of Q4 2019 and FY2019 revenue growth, whereas Materialise Manufacturing revenues were flat.
Executive Chairman of Materialise, Peter Leys, commented: “In 2019 we increased our revenues by almost 12 million EUR and grew our deferred revenues from software license and maintenance fees by an additional 5 million EUR. Our Adjusted EBITDA rose by more than 13 percent to 26,7 million EUR. Materialise Software and Materialise Medical both achieved record quarterly revenues while Materialise Manufacturing experienced headwinds from a difficult macro-environment.”
“We believe our continued solid and profitable growth and financial strength position us well to expand our existing business and capture new growth opportunities as our company enters its fourth decade and the additive manufacturing market continues to develop.”
Materialise revenue by segment
Materialise revenue is reported in three business segments: Software, Medical and Manufacturing. Of the total revenue for FY2019, Materialise Manufacturing accounts for the largest share of earnings, contributing €94.2 million. This represents a 0.8 percent decrease compared to the year ended December 31, 2018, where the Manufacturing segment produced €95 million in revenue.
Revenues from the Materialise Software segment increased 11.4 percent to €41.7 million for FY2019 compared to €37.4 million for 2018. The largest growth came from the Materialise Medical segment, which increased by 16.4 percent to €60.8 million in FY2019, compared to €52.3 million in the previous full year.
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For the three months ended December 31, 2019 revenue from the Materialise Manufacturing segment decreased 11.0 percent to € 21.3 million, compared to €23.9 million for the same period in 2018. As with the full-year financial results, growth came from the Medical and Software segments.
For Q4 2019, the Materialise Software segment experienced the most growth with a 20.7 percent increase to €12.1 million from €10 million for Q4 2018. The Medical segment revenue for Q4 2019 was reported at €17.2 million, compared to €15 million for the same period in 2018, representing a 14.1 percent growth.
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Revenue from Medical Device solutions specifically rose 16.9 percent, accounting for 70 percent of the total Medical segment revenue. This includes the impact of the Engimplan acquisition that Materialise completed on August 1 2019. Materialise acquired a 75 percent stake of the company, a Brazil-based manufacturer of orthopedic and cranio-maxillofacial (CMF) implants and instruments.
Gross profit for the quarter was reported at €28.6 million, constituting 56.4 percent of total Q4 2019 revenue. In Q4 2018, gross profit represented 55.6 percent of the total revenue.
During the conference call following the announcement of the results, Leys commented on the strong performance of the Medical and Software segments: “While the short-term macroeconomic outlook is not crystal clear, we believe that the consistent good performance of our Software and Medical segments, and our strong balance sheet positioned us well to continue to realize our growth ambitions both organically and non-organically.”
Sustainability and the impact of COVID-19
As well as its 75 percent acquisition of Engimplan, Materialise demonstrated strong output in the medical sector throughout 2019. The company secured FDA clearance for cardiovascular 3D toolkit Mimics Enlight, and also invested in respiratory imaging specialist Fluidda.
Materialise has also focused its efforts on developing its software solutions as well. The company introduced new features to its Magics 24 software in November 2019, with the inclusion of next-generation Build Processors designed to drive serial additive manufacturing. Additionally, Materialise introduced its Streamics 8 software at RAPID + TCT 2019, which intends to increase connectivity with the industrial factory floor.
Looking forward in 2020 and the next decade, Wilfried Vancraen CEO of Materialise made extensive comments on the importance of sustainability during the call: “What is going to be the core theme of this fourth decade? We strongly believe it will be sustainability. Our planet is in jeopardy. The younger generations challenge us to take action. Now is the time to show that technology and innovation in general, and 3D printing in particular, are part of the solution. The role that additive manufacturing can play in our joint quest to make the world more sustainable will be the main theme for the fourth decade of 3D printing.” Vancraen’s comments echoes those made by his colleague Bart Van der Schueren, CTO of Materialise, when asked about the 3D printing trends to watch in 2020.
Furthermore, Vancraen also commented on the impact that the COVID-19 virus could have for Materialise in 2020, which has delayed the company’s World Summit event: “The summit has been postponed however to November 5 and 6 because of the worldwide both mandatory and voluntary restrictions on mobility in response to the COVID-19 virus. That brings us from the great opportunities of tomorrow to the harsh situation today. The global impact of the coronavirus that is also impacting Materialise.”
“The region that is affected the most aided by the virus itself or by the drastic measures that aim at containing its spread is Asia. That region is a growth market for both the additive manufacturing in general and for Materialise […] The second region at this being impacted by the virus is Europe, the key region for our Manufacturing segment.”
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Featured image shows Engimplan implants. Image via Materialise.