Executive Summary / Key Takeaways

• Materialise is strategically positioned at the forefront of additive manufacturing, leveraging its integrated software, medical solutions, and specialized 3D printing services to drive mass personalization and industrial automation.
• The Medical segment is a robust growth engine, consistently delivering double-digit revenue increases and high profitability, fueled by its innovative "mass personalization" strategy and expansion into new, high-potential markets like respiratory and trauma.
• Materialise Software is undergoing a pivotal transition to a recurring, cloud-based business model, which, despite creating near-term revenue headwinds, is enhancing long-term revenue stability and enabling end-to-end automation through strategic partnerships.
• The Manufacturing segment is contending with significant macroeconomic and geopolitical challenges, particularly in Europe and the automotive sector, necessitating strategic restructuring and a focus on high-value, certified production to improve profitability.
• Despite a slightly reduced revenue outlook for 2025, Materialise's reconfirmed Adjusted EBIT guidance underscores management's confidence in its disciplined cost control and targeted investments in its high-growth Medical and Software segments.

The Additive Manufacturing Frontier: Materialise's Strategic Blueprint

Materialise NV, a pioneer in additive manufacturing for 35 years, has evolved into a leading force in 3D printing software solutions and services. Headquartered in Belgium, the company's overarching strategy is to empower sustainable 3D printing applications, enabling flexible industrial manufacturing and mass personalization across diverse sectors including healthcare, automotive, and aerospace. This vision, initiated by founders Wilfried Vancraen and Hilde Ingelaere, has shaped Materialise's current strategic focus on specific, high-value customer and market segments, underpinned by continuous R&D investments aimed at long-term value creation.

The broader additive manufacturing industry is experiencing a transformative period, characterized by increasing demand for customized solutions and a critical need to overcome barriers to adoption, such as reducing part costs and enhancing automation. Growth in industrial markets is primarily driven by specific sectors and existing users already familiar with additive technologies, rather than new adopters. Materialise's strategic responses, including its emphasis on software-driven automation and specialized medical applications, directly address these industry trends, positioning the company as a niche leader in integrated 3D solutions.

Technological Edge: Fueling Precision and Efficiency

Materialise's core competitive advantage lies in its differentiated technology, spanning integrated software platforms and advanced 3D printing processes. These technologies are designed to enhance functionality, streamline workflows, and enable applications previously deemed too complex or costly.

In the Medical segment, Materialise's Mimics platform, including Mimics Flow and Mimics Enlight CMF, provides sophisticated tools for medical-image based analysis, planning, and engineering. This technology leverages AI-based algorithms to make segmentation and planning faster and more user-friendly, facilitating effortless collaboration among clinicians and engineers. For instance, Mimics Enlight CMF enables orthognathic cases to be completed in under 25 minutes, significantly reducing planning time. The Mimics thoracic planner, a 3D surgical planning solution for lung cancer patients, allows surgeons to visualize and simulate complex interventions, such as comparing 3-centimeter versus 4-centimeter tumor margins, leading to more precise surgical plans. Furthermore, the company's U.S. manufacturing plant has enabled Materialise to triple the number of trauma cases treated per quarter, delivering solutions faster than any other provider in the U.S. market. This speed and precision contribute directly to better patient outcomes and a stronger competitive moat in the rapidly expanding personalized medicine market.

Within the Software segment, Materialise's flagship Magics software for data and build preparation, along with its Magics SDKs and next-generation Build Processors (NxG BPs), are critical differentiators. The Magics SDKs, launched in 2024, empower users to create custom workflows, protect intellectual property, and print high-performance geometries, enabling economic scaling of additive manufacturing operations. The 2025 release of Magics introduced seamless processing of nTop-implicit geometries, which can characterize complex, high-performance designs at a fraction of traditional file formats. This capability allowed DMG Mori (DMG.F), a leader in precision machining, to process a high-performance geometry file in seconds, a task that previously took days. The NxG BPs, developed through partnerships with companies like Raplas and One Click Metal, translate 3D design files into optimized printing instructions. For example, the combination of Raplas' SLA 3D printing technology with Materialise's build processor has demonstrated a remarkable 30% to 40% increase in printing speed. These technological advancements directly address the industry's need for automation, cost reduction, and improved throughput, strengthening Materialise's position as a software leader.

The "so what" for investors is clear: Materialise's continuous innovation in these core technologies translates into tangible benefits for customers, driving adoption, enabling higher-value applications, and fostering recurring revenue streams. These technological moats underpin the company's ability to command premium services and solutions, contributing to its long-term growth strategy and competitive resilience.

Segment Performance: A Tale of Growth and Resilience

Materialise operates through three distinct segments: Medical, Software, and Manufacturing, each contributing uniquely to the company's overall performance and strategic direction.

Materialise Medical: The High-Growth Catalyst

The Materialise Medical segment continues to be a standout performer, demonstrating robust growth and strong profitability. In the second quarter of 2025, the segment reported revenue of 32,850 kEUR, marking a significant 16.7% increase compared to the same period in 2024. For the first half of 2025, Medical revenue reached 63,928 kEUR, up 17.7% year-over-year. This impressive growth is driven by both Medical Software, which grew 14%, and Medical Devices sales, which increased by 18% in Q2 2025. The segment's Adjusted EBITDA for Q2 2025 was 10,728 kEUR, yielding a healthy margin of 32.7%.

Management's "mass personalization" strategy is clearly paying off, with strong uptake in various anatomical areas, including orthopedics, CMF, cardiac, and respiratory. Key milestones include a pilot collaboration with Johnson & Johnson 's Surgical business in EMEA to advance the adoption of the Mimics thoracic planner, a "game changer" for the nascent respiratory market. The segment also secured 510(k) U.S. market clearance for a personalized alignment feature in its knee planner, set for Q3 2025 launch, further enhancing its offerings in a mature market. These initiatives, coupled with ongoing R&D investments, position the Medical segment as a sustained double-digit growth engine for Materialise.

Materialise Software: Navigating Transition for Future Stability

The Materialise Software segment is undergoing a strategic transition to a cloud subscription-based business model, which has introduced some near-term revenue pressure. In Q2 2025, Software revenue decreased by 12.1% to 9,872 kEUR, and for the first half of 2025, it declined by 9.3% to 19,647 kEUR. This decline is partly attributable to the revenue deferral inherent in the subscription model, but also to macroeconomic uncertainty and unfavorable foreign exchange fluctuations, particularly impacting the U.S. market. Despite the top-line pressure, the segment's Adjusted EBITDA remained stable at 1,373 kEUR in Q2 2025, with an improved margin of 13.9%, reflecting strict cost control.

The transition to recurring revenue is progressing, with approximately 84% of Software revenue being recurring in Q2 2025. Materialise is actively building partnerships, such as the collaboration with Synera, to establish direct connectivity between Magics SDKs and Synera's agenetic AI platform. This aims to create end-to-end automation workflows, significantly reducing manual effort and build failures, thereby scaling additive manufacturing operations more efficiently. While the shift impacts reported revenue in the short term, it is a crucial step towards long-term revenue stability and scalability, leveraging Materialise's deep algorithmic expertise.

Materialise Manufacturing: Strategic Realignment Amidst Headwinds

The Materialise Manufacturing segment continues to face significant challenges from geopolitical volatility and macroeconomic uncertainty, particularly in the European industrial environment and the automotive sector. In Q2 2025, Manufacturing revenue decreased by 24.9% to 22,109 kEUR, and for the first half of 2025, it fell by 15.6% to 47,635 kEUR. The segment's Adjusted EBITDA was negative at -807 kEUR in Q2 2025, though this was an improvement from -3,000 kEUR in Q4 2024, reflecting operational optimizations.

In response to these pressures, Materialise has implemented a restructuring, deciding to stop metal prototyping operations to focus exclusively on metal series production. Growth is observed in strategic focus areas like aerospace, which saw 23% growth in Q1 2025, and the production of "Huge and Heavy parts" at its ACTech facilities, which grew over 30% in 2024. The opening of the second ACTech plant expands capacity for complex metal parts and small series, strengthening its position in automotive (for electric drivetrains) and opening opportunities in new segments like agriculture and marine vehicles. The company is also exploring broader engagement in the defense sector to bolster its aerospace presence. This strategic shift aims to move towards higher-value, certified manufacturing, which is crucial for improving the segment's long-term profitability amidst a difficult market.

Consolidated Financial Health and Liquidity

On a consolidated basis, Materialise reported total revenue of 64,831 kEUR in Q2 2025, a 5.8% decrease year-over-year. For the first half of 2025, total revenue was 131,210 kEUR, a marginal decrease of 0.9% from the prior year. Despite the revenue pressure, the gross profit margin improved to 58.3% in Q2 2025, up from 57% in Q2 2024, driven by a favorable revenue mix (more Medical, less Manufacturing) and production efficiencies.

Adjusted EBIT for Q2 2025 was 3,058 kEUR, representing a 4.7% margin. While lower than Q2 2024, it marked a significant sequential improvement from 600 kEUR in Q1 2025, reflecting disciplined cost control and targeted reduction measures. However, net profit for Q2 2025 was a modest 199 kEUR, heavily impacted by large unfavorable unrealized exchange rate fluctuations, which resulted in a net financial loss of 3,100 kEUR.

Materialise maintains a strong balance sheet and healthy liquidity. As of June 30, 2025, cash and cash equivalents stood at 116,712 kEUR, with a net cash position of 63,045 kEUR, an increase of 2,025 kEUR from December 31, 2024. The company's gross debt increased to 53,667 kEUR, partly due to drawing 20 million EUR on an existing 50 million EUR bank credit facility, with the remaining 30 million EUR to be drawn over the next 12 months for future CapEx or M&A investments.

Cash flow from operating activities for the first half of 2025 was positive at 9,686 kEUR, and free cash flow was 6 million EUR, despite capital expenditures of 4,729 kEUR in Q2 2025, including significant non-recurring investments for the ACTech plants. This financial strength provides the flexibility to continue strategic investments while navigating market uncertainties.

Competitive Landscape: A Niche Leader's Strategic Moats

Materialise occupies a specialized and strong position within the additive manufacturing industry, particularly in its software and medical applications. The company's competitive advantages are primarily derived from its proprietary software platforms, deep medical expertise, and strategic partnerships, which collectively form robust moats against rivals.

Compared to broader 3D printing players like Stratasys (SSYS) and 3D Systems (DDD), Materialise's strength lies in its integrated software ecosystem. While SSYS and DDD often emphasize hardware, Materialise's Mimics and Magics platforms offer superior integration with design tools and imaging systems, leading to enhanced workflow efficiency and precision in patient-specific designs. For instance, Materialise's ability to deliver patient-specific trauma solutions faster than any other U.S. provider highlights a key operational edge. This software-centric approach allows Materialise to capture higher-value applications, particularly in regulated medical fields where design accuracy and traceability are paramount.

In the manufacturing services space, Materialise differentiates itself from rapid prototyping specialists like Proto Labs (PRLB) by focusing on certified manufacturing of complex, end-use parts. While PRLB excels in speed for general industrial needs, Materialise's ACTech facilities, with their expanded capacity for "Huge and Heavy parts" and metal series production, cater to more demanding applications in automotive, aerospace, and heavy industries. This strategic shift towards higher-value, complex manufacturing, coupled with its aerospace competence center, positions Materialise to serve segments where its deep expertise in high-precision printing, casting, and post-treatment is critical.

Materialise's strategic partnerships, such as the collaboration with Synera for automation and with Johnson & Johnson (JNJ) for the Mimics thoracic planner, further strengthen its competitive standing. These collaborations enable Materialise to offer comprehensive, end-to-end solutions without solely relying on internal R&D, thereby expanding its market reach and reinforcing customer loyalty. While Materialise may not lead in sheer hardware variety or broad industrial prototyping speed, its technological leadership in software and specialized medical applications provides a distinct advantage, driving higher margins and more stable revenue streams in its chosen niche markets.

Outlook and Risks: Balancing Growth with Prudence

Materialise has adjusted its full-year 2025 revenue guidance to a range of €265 million to €280 million, a slight reduction from the previously communicated €270 million to €285 million. This revision reflects management's expectation that geopolitical volatility and macroeconomic uncertainty will intensify and continue to impact the business climate, particularly in the industrial division, for the remainder of the year. Unfavorable foreign exchange fluctuations are also anticipated to exert pressure on revenue and reported net results.

Despite the lowered revenue outlook, Materialise has reconfirmed its Adjusted EBIT guidance for fiscal year 2025, maintaining a range of €6 million to €10 million. This reconfirmation signals management's confidence in the underlying fundamentals of its business and its ability to implement further structural cost efficiencies to safeguard operational profitability. The company expects continued strong growth in its Medical segment and a stabilization in the Software segment as its recurring revenue model matures. However, the Manufacturing segment is expected to continue facing headwinds, particularly in the European industrial and automotive sectors.

Key risks to this outlook include the persistence of macroeconomic uncertainty, which could further delay customer investment decisions, and the ongoing impact of foreign exchange rate volatility on reported financials. The operational ramp-up of the new ACTech plant, while a long-term growth driver, also presents temporary challenges to capacity and profitability. Materialise's strategic response involves sustained investments in its high-growth Medical and Software segments, coupled with disciplined cost control and optimization efforts across the organization, particularly in Manufacturing.

Conclusion

Materialise NV stands as a compelling investment opportunity, strategically positioned at the intersection of advanced additive manufacturing software, personalized medical solutions, and specialized 3D printing services. The company's 35-year history of innovation has culminated in a robust technological foundation, particularly in its Mimics and Magics platforms, which drive precision, efficiency, and automation across its diverse offerings. While the Manufacturing segment faces significant macroeconomic headwinds, the consistent double-digit growth and high profitability of the Medical segment, coupled with the long-term stability promised by the Software segment's transition to a recurring revenue model, underscore Materialise's resilience. The reconfirmed Adjusted EBIT guidance for 2025, despite a cautious revenue outlook, reflects management's commitment to profitability through strategic investments and disciplined cost management. Investors should recognize Materialise's unique competitive advantages in mass personalization and software-driven automation as key drivers for sustained value creation in the evolving additive manufacturing landscape.