Good day, and thank you for standing by. Welcome to the Q3 2023 Materialise Financial Results Conference Call. [Operator Instructions]. I would now like to hand the call over to our first speaker for today. Let me please introduce Harriet Fried of LHA.

Thank you for joining us today for Materialise's quarterly conference call. With us on the call are Fried Vancraen, Founder and Chief Executive Officer of Materialise; Peter Leys, Executive Chairman; and Koen Berges, Chief Financial Officer. Today's call and webcast are being accompanied by a slide presentation that reviews Materialise's strategic, financial and operational performance for the third quarter of 2023. To access the slides, if you've not already done so, please go to the Investor Relations section of the company's website at www.materialise.com. The earnings press release issued earlier today can also be found on that page. Before we get started, I'd like to remind you that management may make forward-looking statements regarding the company's plans, expectations and growth prospects, among other things. These forward-looking statements are subject to known and unknown uncertainties and risks that could cause actual results to differ materially from the expectations expressed, including competitive dynamics and industry change. Any forward-looking statements, including those related to the company's future results and activities, represent management's estimates as of today and should not be relied upon as representing their estimates as of any subsequent date. Management disclaims any duty to update or revise any forward-looking statements to reflect future events or changes in expectations. A more detailed description of the risks and uncertainties and other factors that may impact the company's future business or financial results can be found in the company's most recent annual report on Form 20-F filed with the SEC. Finally, management will discuss non-IFRS measures on today's call. A reconciliation table is contained in the earnings release and also at the end of the slide presentation. With that, I'd like to turn the call over to Peter Leys. Go ahead, please, Peter.

Thank you, Harriet, and thank you, everyone, for joining us today. As always, you can find the agenda for our call on Slide #3. First, I will summarize the highlights of our financial results for the third quarter of this year. Then I will pass the floor immediately to Koen, who will go through our third quarter numbers in more detail. And after that, Fried will give you some insights on the dynamics of the changing landscape of additive manufacturing software and also on the exciting upcoming changes within our company Materialise. And finally, I will come back and explain what we believe the rest of the year will bring. When we've completed our prepared remarks, we will be happy to respond to any questions that you may have. So let's turn to Slide 4, which summarizes the highlights of the previous quarter. In the third quarter of 2023, we recorded €60.1 million in revenues, which represents a growth of 3% compared to last year's period. And this in spite of the difficult economic circumstances. Our adjusted EBITDA for the quarter increased by 55% to €7.9 million compared to €5.1 million last year, representing an EBITDA margin of 13.1%. Our net results for the quarter amounts to €4 million or €0.07 per share. And with that, I would like to now pass the floor to Koen. Koen?

Thank you, Peter. Good morning or good afternoon to all of you on this call. I'll begin with a brief review of our consolidated revenue on Slide 5. Please note that unless stated otherwise, all comparisons in this call are against our results for the third quarter of 2022. As mentioned by Peter, revenue increased 3.2% to €60.1 million. Over the past summer months, less favorable market conditions mainly impacted our manufacturing segment, which decreased by 4%, while our software segment remained stable. Our medical segment, on the other hand, continued its double-digit revenue growth and grew by 13%. Deferred revenue from software licenses and maintenance fees carried on our balance sheet amounted to €40.1 million at the end of September, representing a decrease of €2.7 million compared to the end of 2022, but still up by €1.7 million compared to September of last year. As you can see from the graph on the right, Materialise Software accounted for 18% of our total Q2 revenue. Materialise Medical for 40% and Materialise Manufacturing for 42%. Moving on to Slide 6, you will see that our consolidated adjusted EBITDA numbers for the third quarter of 2023. The consolidated adjusted EBITDA grew to €7.9 million, representing an adjusted EBITDA margin of 13.1% compared to €5.1 million of adjusted EBITDA for the same period last year, which is an increase of almost 55%. Despite the more moderate revenue growth this quarter, we were able to significantly improve our profitability through a continued focus on scaling effects and cost control. At the same time, we continued R&D investments in our growth businesses. Slide 7 summarizes the results of our Materialise Software segments. Software revenue remained stable at €10.8 million, while recurring revenue from maintenance contracts and renewed licenses, including CO-AM subscription fees, increased by 10%.…

Thank you, Koen. Good morning or good afternoon to all of you listening to this call. A steady bottom line performance even in a quarter where the economic conditions of our industrial activities were unfavorable confirms the build-to-last nature of Materialise. In 1919, my wife Hilde and I founded Materialise, driven by a desire to make use of 3D printing and to make a difference with this technology. Its applications we thought could contribute to a better and healthier world. Thanks to many people around us, all over the world that started sharing the dream, we were able to build a sustainable organization called Materialise. An organization, a company that executes step-by-step on this mission of creating a better and healthier world. We are proud of the results we achieved through relentless focus on meaningful applications of 3D printing. We are proud of the thousands and thousands of products we have improved through prototyping. And we are proud about the thousands and thousands of patients we made healthier with patient-specific instruments and implants. And the best news is that the journey we started will be continued in a sustainable way. In a build-to-last context, this means that we have to embrace change while preserving the core mission and values of Materialise. And we are in front of significant changes both in our environment in the markets that we serve and the top management structure of Materialise. Let me address both aspects. First, the market and technology fundamentals. While I continue to believe that 3D printing is a slow revolution, the dynamic and some circumstances of the revolution are changing. For many years, the necessity of 3D printing as a manufacturing technology was questioned by money. Why would you choose 3D printing? Was a key question to answer in order to…

Thank you. Thank you so much, Fried. Currently, with respect to our financial outlook, we continue to expect our full year revenues to be between €255 million and €260 million. And this in spite of the more challenging macroeconomic conditions that we are in. When we reported our first quarter results in April, we increased, as you may remember, the expected range of our adjusted EBITDA for 2023 by 10% to an amount between €28 million and €33 million. Today, we are maintaining that increased EBITDA guidance. This concludes our prepared remarks. This actually also concludes my active participation in the quarterly calls with the investor community. I would like to thank everybody on the other side of the call for the constructive relationship that we have built over the last decade. It has been a pleasure and an honor to engage in dialogues with you about one of my and hopefully, also your favorite topics, the execution of the mission and vision of Materialise. Together with Fried and Hilde, I will continue to serve Materialise and to support Brigitte and the entire executive management team as a member of the Board. I have full confidence that in this new constellation, Materialise remains in good, safe and innovative hands. And with that, operator, I would like to open the call to questions.

[Operator Instructions]. Our first question comes from the line of Jacob Stephan from Lake Street Capital Markets.

Fried, Peter, I just want to congratulate you guys on what you built and what you guys have accomplished. And Brigitte, I want to congratulate you on the new role as well. I look forward to working with you. I just want to touch on kind of the medical device market. What are the trends that you're seeing? And if you could kind of help us think about what does the pipeline look like over, let's say, the next 12 months?

Well, Jason -- Jacob, sorry, we see a real robust demand for our, yes, personalized instruments and guides and implants, of course. And we believe that we will be able to continue closing interesting contracts with medical device manufacturers. At the same time, the medical device industry is also a little bit affected by the current economic situation and it being careful in its investments, and that weighs a little bit on the growth of our software activities in medical. It's -- yes. It's not dramatic, but at the same time, it is a little -- going a little bit slower than we expected in the beginning of the year. If you remember, we were over performing. So it's still a balanced view at the moment, but we definitely hope that the economic activities for the medical device companies will pick up again.

Okay. And maybe just in addition to kind of the med device and implantables. Are there any other markets that you would kind of point to as areas of strength or that are showing increasing interest in the medical segment?

In the medical segment, yes, we have a couple of applications that we are starting to bring to the market relating to, for instance, , where we see also opportunities for the personalization, especially in the context of tumor surgery in which we launched earlier this year a solution. So personalization is a fundamental tendency in the medical device sector, in which, as you know, we are well pleased with our complete platform of research tools and later on solutions to support the rollout of the personalized approaches in different surgical disciplines.

Got it. And maybe just on the software side. Is there anything you can talk about that would help us kind of quantify what percent of your customers are still kind of that nonrecurring revenue? So how much is kind of left to convert over to recurring?

Let me take that one. In our software revenue, about 30% is now nonrecurring and the recurring part represents currently about 70% of our revenue. And it's gradually going up quarter after quarter.

Okay. Great. That's very helpful. That's all the questions I had. Best of luck going forward here and congrats again, guys.

[Operator Instructions]. Our next question comes from the line of Troy Jensen of Cantor Fitzgerald.

Gentlemen, a big day today. I also want to say congratulations to Fried and Hilde for all you guys have done for the industry. It's been fantastic working with you guys. So Fried, do I understand you're still going to be the Executive Chairman, but not the President? And Peter, you're just going to be a Board member and no longer active?

Well, we -- Troy, actually, I will be non-Executive Chairman of the Board. So they will become the biggest separation between our Board and the Executive Committee. In the past, we were with 3 people, Peter, Hilde and myself who were both in the Board and in the Executive Committee. So the governance of Materialise will change a little bit, but we see that in the next step in the growth of the maturity of the company.

You guys will be missed. Thanks for all you've done, but I got a couple of quick questions for you guys. Link 3D, I just love to get an update on where you guys are with kind of cloud-based software and your thoughts on kind of that segment of the business.

Yes. Well, we continue to invest and see a couple of companies pick up the cloud-based solutions that we offer. At the same time, that is what my key comments on the industry were about. We are confronted with the situation that the cloud environment in a business-to-business context is actually a more difficult sale than just the, yes, Wintel based, as I said, software programs that run on a laptop because those cloud environments are so different. And the good thing is that we are really having our APIs, our libraries that are compatible and that can be deployed in different server or cloud settings. The bad thing is that, of course, it requires a more intensive investment from our side in order to support all those platforms. And that's where we are confronted with some delays and some issues in order to roll out more platforms. But what is even more important is that companies are doubting what choices they have to make. And in an economic environment that is not that favorable, doubt is a reason to postpone.

Understood. All right. Then how about a question for Koen. Can you just touch on deferred revs? You guys maxed out here at about €43 million, and we've had a couple of quarters sequentially that it's declined. I guess, I would assume deferred continues to grow with the software offerings but just could you help us out on that?

Yes. Your statement is correct. Troy, we did see our deferred revenue going down in the third quarter, also in the second quarter. But you have to take into account that there is a timing effect, though, included in these numbers. If you look historically at our deferred revenues, numbers, you will notice that we typically build up deferred revenue in the first -- in the last quarter of the year. And typically, in the second quarter, you see a depletion. So if you look -- if you compare the current number to beginning of the year, there is indeed a decline . But if you, on the other hand, compared to where we were in September of last year and take a full year cycle, then there's still an increase of about €1.7 million. Now that being said, the depletion in the third quarter was a bit higher than we anticipated, and that is, in our belief, linked to the current economic situation. It's definitely an point as we move now into the fourth quarter where we should see looking back at historic trends, the deferred revenue pick up again.

Understood. Well, guys, congrats really solid results given what we've seen from some of the other companies in the space here. So congrats to you, and I look forward to seeing you guys next week at and Frankfurt.

This now concludes the question-and-answer session. I would now like to turn the call back over to Peter Leys for closing remarks.

Thank you, operator. And thank you all again for joining us on the call. As we are entering the transition phase, I would like to close this call by symbolically handing the floor to Brigitte.

Thank you, Peter, and good morning or good afternoon to all of you. I very much look forward to continuing the dialogue with all of you as of 2024, together with Koen through investor conferences or one-on-one virtual meetings or calls. Upcoming Formnext in November will hopefully give the chance to already meet some of you in person. Thank you, and goodbye for now.

Goodbye.

Bye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.