Materialise NV (NASDAQ:MTLS) Q3 2019 Earnings Conference Call - Final Transcript

Oct 31, 2019 • 08:30 am ET

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Materialise NV (NASDAQ:MTLS) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions) Your first question comes from the line of Troy Jensen with Piper Jaffray.

Analyst
Troy Jensen

Hey, gentlemen, congrats on the nice results.

Executive
Peter Leys

Thank you, Troy.

Executive
Johan Albrecht

Thank you.

Analyst
Troy Jensen

Hey, Peter, for you, it sounds like the most convictions coming from the Software growth, right, when you look at kind of your Q4 forecast here. So just curious if you can dive in a little bit. Is it the traditional 3D software versus 3D healthcare? Is it OEM partners that are really ramping? Or is it these a new generation of APIs, that Fried mentioned in his prepared remarks, that are giving you guys that kind of confidence?

Executive
Peter Leys

No. The software growth that I referred to Troy, refers first and foremost to the sales of our traditional software tools that are sold within our Software segment. But I would like to add, and before, we touched upon that during the prepared remarks that we've seen a fairly strong rebound of our OEM sales, which were soft in the first half of the year. They were much stronger in Q3 and we expect that they will continue to contribute in Q4 and that they will continue to help us continue the trend of growing sales within the Software segment in Q4.

That being said, we will need all the help we can in Q4 and we also expect that the medical software sold within our Medical segment will also contribute to what we expect to be a good solid and strong fourth quarter.

Now the APIs, the new product introduction tools that Fried refer to, they will not contribute to our top-line in Q4. If anything they explain for a part, our continued investment in R&D that they are exciting because they show that we are just not relying on the successful products that we have been relying on for such a long time that we are revamping and actually making that software backbone fully ready for the next generation of end parts production applications.

Analyst
Troy Jensen

So then maybe for Fried, just to piggyback of Peter's comments on the strength in the OEM partners for software sales, I'm assuming that's production applications and be curious to know kind of what Materialise is also seeing in their manufacturing for kind of more of a effort to get a growth in production?

Executive
Wilfried Vancraen

Well, first of all, like Peter said, the tools we are currently selling are mostly the -- yes, legacy products of Materialise, albeit they're used more and more for production applications, especially on the metal side. We also see in our own production that there is an increase on demand for metal production components, where prototyping is playing a much smaller role. But if Materialise can maintain a steady position, at this moment in the soft climate, it is mostly because with the growth of certified manufacturing in our manufacturing operations. So this is showing that this transition to end part manufacturing continues.

Analyst
Troy Jensen

And how about Fried, I'd love to get your thoughts to on