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Materialise NV (NASDAQ:MTLS)
Q3 2020 Earnings Call
Oct 29, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2020 Materialise Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Harriet Fried of LHA. Thank you. Please go ahead.

Harriet Fried -- Senior Vice President

Thank you for joining us today for Materialise's quarterly conference call. With us Fried Vancraen, Founder and Chief Executive Officer of Materialise; Peter Leys, Executive Chairman; and Johan Albrecht, 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 2020. 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 release issued earlier this morning 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 on any subsequent day. Management disclaims any duty to update or revise forward-looking statements to reflect future events or changes in expectations. A more detailed description of the risks and uncertainties and other factors that could 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 certain non-IFRS measures on today's call. A reconciliation table is contained in the earnings release and at the end of the slide presentation. With that introduction, I'd like to turn the call over to Peter Leys. Go ahead, please, Peter.

Peter Leys -- Executive Chairman

Thank you, Harriet, and thank you, everyone, for joining us on the call today. You can find the agenda for our call on Slide #3. While we fully recognize that the continuing COVID-19 pandemic is having a devastating impact on the personal lives of many people around us, we believe that nonetheless, the third quarter of 2020 has been a promising period for Materialise as a company. First and foremost, we have experienced an exceptional sense of commitments, responsibility and solidarity throughout our entire workforce worldwide. The solid results for the quarter and the many initiatives that we will talk about during this call illustrates the dedication and tenacity that the more than 2,000 Materialise team members have shown over the last couple of months. As a first item on our agenda, I will summarize, as always, the highlights of our third quarter results. During the last couple of months, Materialise has done much more, however, than just weather the storm. As most of you undoubtedly noticed, we announced strategic collaborations and investments in both our eyewear and footwear verticals. I will share some further transactional and financial data about the Ditto and RS Print transactions as a second item of the agenda. Then I will pass the floor to Fried, who will give you more context about our wearable strategy in general.

Fried will also spend some time explaining how these two transactions will strengthen the position that we are building in both the eyewear and the footwear industry. After that, as always, Johan will walk you through our third quarter numbers in more detail. This time, Johan will also spend some extra time on the international -- internal digitization project that we have launched recently. Finally, I will come back to give you some qualitative insights into what we currently believe the rest of the year may bring for Materialise. And when we have 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 our financial results for the past quarter. In Q3 of 2020, our Medical business rebounded exceptionally well with a revenue growth of more than 10% compared to the same period last year and with a record EBITDA margin in excess of 30%. Our other software and manufacturing businesses continued to be impacted negatively by the crisis. And as a result, our consolidated revenue decreased by almost EUR10 million to EUR40.8 million. Still, disciplined spending, in particular, in G&A and in sales and marketing, resulted in a solid EBITDA margin of 14.8%, a small decline of roughly one percentage point compared to last year.

Importantly, these solid results allowed us to increase our R&D spending by more than 4% as compared to last year's periods. At the end of the third quarter of 2020, we had cash and cash equivalents in excess of EUR110 million, with short-term debt at the end of the quarter of less than EUR18 million. Now turning to Slide 5. As indicated earlier, I would like to briefly talk about the two transactions that we announced earlier. On September 21, we announced a strategic partnership with the California-based developer of virtual eyewear try-on platforms, Ditto Inc. Earlier today, we announced the acquisition of the shares of RS Print and of the key assets of RS Scan from our Washington-based partner Superfeet, the market leader for insoles in the U.S. As I mentioned earlier, Fried will expand more on the strategic rationality of these two transactions. But before he does so, I will give you some of the key transaction highlights. First, eyewear with respect to Ditto. In September, we extended to Ditto a USD nine million convertible loan facility to enable it to accelerate and expand in collaboration with Materialise its frontend digital eyewear solutions. In the third quarter, Ditto drew USD2.5 million from the facility, and we expect that the remainder of the facility will be drawn in the next few quarters. Ditto will use the proceeds of the loan to finance its software development work, including with the help of Materialise and also to expand its global sales team.

The purpose of the collaboration is to strengthen Ditto's state-of-the-art virtual try-on platform by adding Materialise's customization and 3D printing functionalities. The sales of Ditto's digital eyewear solutions will generate a royalty stream for Materialise. We also believe that the collaboration with Ditto will help boost other pioneering initiatives that we have taken in the eyewear market, including our collaboration with HOYA. Now turning to footwear. As you may know, we currently operate our footwear platform through RS Print and RS Scan. RS Print, a 50-50 joint venture between Materialise and Superfeet develops, produces and sells the Phits personalized insoles and owns the related IP. RS Scan, a Superfeet company, develops themselves intelligent foot and gait analysis software and devices. The RS Scan product captures foot-related digital data that are generated by pressure plates and scanners and translate these data into personalized science-based foot-care solutions, including the design of customized [Indecipherable] printed insoles. Under the transaction that we announced earlier today, Materialise will become the 100% owner of RS Print and RS Print will subsequently acquire substantially all assets of RS Scan, including importantly the foot and gait analysis tools.

The total price of this transaction is EUR8.2 million. Importantly, Superfeet remains very much involved in the project and has committed to invest significantly over the next three years in the distribution of the Phits insoles and the RS Scan technology in North America. Superfeet, which remains the manufacturer of the Phits insoles in North America, will work alongside our existing distributor GO4D in that region. So now that we have those financial and transactional data behind us, I would like to turn over the call to Fried to give you some more context. Fried?

Wilfried Vancraen -- Chief Executive Officer

Good morning, and good afternoon, everyone. Thank you for joining us today. As Peter already mentioned, our medical activities rebounded quickly and solidly after the lockdown in Q2. Interestingly, but not surprisingly, we saw a similar swift rebound to pre-COVID levels of both our eyewear and footwear activities. The good results of our healthcare and wearables focus underscore that on the short term, meaningful applications of 3D printing are less cyclical and resisting sensitive. In our opinion, these good numbers also indicate that on the longer term, these applications will gain more and more traction in the new post-corona economy. Encouraged by the success of our investments in healthcare applications, Materialise started developing personalized solutions for the wearables market as early as 2014, because we realized that 3D printing in general, and personalization, in particular, can offer exceptional value in wearable applications as much as it does in medical applications. There is indeed a great analogy that can be drawn between the suite of solutions that we offer in the medical market and the personalized solutions that we offer to the eye and footwear markets.

In both instances, our solutions start by scanning patient or customer-specific data. On the basis of that custom input, we then offer the expert being a surgeon, a podologist or an optician, unique insights in the morphology and needs of his patient or customer. Both our Medical and Wearable Solutions subsequently involve an important design step that is, on the one hand, highly automated in order to be cost-effective. But on the other hand, remains human-centric as it always requires the control and input of the healthcare professional. Also, in both instances, we can offer customized 3D printed devices in the world of custom implants, insoles or eyewear frames if the expert concludes that this is the best solution in the given circumstance. Finally, our Medical and Wearable Solutions meet some of the high sustainability standards of the current generation as they remain purely data-driven until the decision is made to produce a device, which will only be produced to order, reducing risk associated with over production and inventories, which will be produced at the location that is as close as possible to the point of care or point of sale, further reducing waste resulting from unnecessary transportation.

Scientific research and good relations with academics in the respective fields are critical ingredients for the solutions that we develop. Equally essential to turn our science-based intelligence into practical and affordable applications are artificial intelligence-based software tools that assist the healthcare professionals to help their patients with the right diagnosis and treatment options. Finally, advanced certified 3D printing capabilities are required to make personalized, high-value products that outperform traditional manufactured alternatives and that enable the end customers to have a better and healthier life. In other words, a lot of knowledge, tools and processes that we have acquired and developed for our medical applications over the last few decades can be recycled to help to advance eyewear and footwear initiatives. We are truly excited that despite the difficulties caused by the COVID-19 pandemic, but also thanks to our financial strength, we have been able to structurally enhance our position in both the eyewear and the footwear sector over the past quarter. Thanks to the deals we have closed with market leaders Ditto and Superfeet, we are able to cover the complete customer journey of people who need a new pair of eyewear, glasses or a new pair of insoles.

Additionally, we covered this entire customer journey in a full digital backlog that has the potential to develop into a de facto standard digital platform. This is situation similar to the one we obtained with the Mimics Innovation Suite that has become the de facto standard for engineering on anatomy. It will give us the opportunity to accelerate the development of new applications that allow support of healthcare providers and to accelerate the scaling of the market access. With Ditto, we developed more accurate mobile scanning solutions that allow the visualization, fit and design of frames virtually on the basis of a scan of the consumer's face. This virtual try-on tool supports both in-store and online sales of eyewear shops and chains. The tool serves as a critical frontend in the digitization of the customer journey and the logistical chain with 3D printing as the production technology of choice at the back end. 3D printing enables one of a kind eyewear frame production as well as more optimized standard sizes for standard frames. Ditto and Materialise Researches has joined forces to support the opticians with better tools to ensure not only the optimal solution for the patient or customers from a technical perspective, but also to assist in the best choice from an aesthetic perspective. ADA Scan is a leading provider of pressure plates, optical scanners and software analysis tools that enable dynamic foot and gait analysis. It was already our joint venture partner in RS Print.

Together, we developed Phits insoles, a range of science-based personalized insoles for runners, bikers, skiers, golfers and more sport activities. This range is now being expanded to enable a wide variety of personalized corrective treatments for patients suffering with problems. Thanks to the integration of the ADA Scan and ADA Print teams and the support of Materialise R&D specialists, we intend to further accelerate our application-oriented development efforts. Health care professionals, such as orthopedic or sports doctors, physiotherapists, chiropractics, the doctors will receive new software tools to deal with the foot and gait problems of their patients in a better way. It will also provide those specialists access to new revenue sources, such as insole sales and in the long term, even complete footwear solutions. Our collaboration with Superfeet, a leading provider of standard insoles, will ensure a capable and strong distribution channel in U.S. Superfeet will also provide localized production in the U.S. The focus of the ADA Scan and ADA Print sales teams will consequently be on the rollout of a distribution network and over time accelerate sales in Europe and the rest of the world. We also believe that the comprehensive product portfolio and distributed production with 3D printing will allow us to develop partnerships for distribution that span Asia. After the integration offers in 2021 are completed, we believe that wearables will contribute considerably to the growth of Materialise.

I would like to close by stating that our industrial activities are also slowly recovering from the steep declining orders we experienced in Q2 and during the summer holiday. This recovery is not immediately visible in the financial numbers as the decline in Q2 was still moderated by the execution of orders from Q1, a reduction of work-in-progress and a reduction of working capital. This trend is now gradually being reversed in a buildup of orders, in a buildup of working process and working capital. However, the second wave of COVID-19 cases may undermine this positive trend. Nevertheless, Materialise is continuing its efforts in R&D, resulting in a renewed product portfolio that is preparing to allow our activities and those of our 3D printing customers to choose more sustainable solutions in the long run. If you are interested in learning more about these new offerings, we invite you to our new virtual product launch event on November the 18. And with this message, I will pass the floor back to Johan.

Johan Albrecht -- Chief Financial Officer

Thank you, Fried. I'll begin with a brief review of our consolidated revenue on Slide 8. As a reminder, when we refer to sales in our presentation, we mean revenue plus deferred revenues. Also, please note that unless otherwise stated, all comparisons in this call are against our results for the third quarter of 2019. In this year's third quarter, revenue decreased 19.2% to EUR40.8 million. Although COVID continued impacting our Software and even more our Manufacturing segments, our Medical segment grew by double-digits again. For the quarter, Materialise Software accounted for 23% of our total revenue, Materialise Medical for 42% and Materialise Manufacturing for 35%. Cross-segment revenue from software products increased to 36% of our total revenue. Moving to Slide 9, you will see our consolidated adjusted EBITDA numbers for the third quarter. Consolidated adjusted EBITDA amounted to EUR6,023,000, a decrease of EUR two million compared to Q3 last year, where we reported a record quarter of EUR8,022,000. This EUR two million decrease should be seen in the light of a quarterly revenue decline of EUR9.7 million. And besides the effect of reduced variable cost of sales, the medical saving initiatives we implemented had a substantial impact on keeping our EBITDA margin at 14.8%, just one percentage point below last year's 15.9%. Slide 10 summarizes the results of our Materialise Software segment. Here, revenue decreased 12.7%. Sales were 16% below last year's period, but also 16% above Q2 2020. Compared to the third quarter of last year, nonrecurring revenue decreased 39%, while recurrent revenue increased 16%.

In fact, increased sales from renewed licenses and maintenance fees softened the decreases in new licenses and services cost by continued industry weakness, especially in Europe. Although OEM sales decreased 30% from last year's period, they also recovered and grew again by 30% compared to the second quarter of 2020. EBITDA amounted to EUR3,144,000 EUR3,114,000 compared to EUR3.8 million. The EBITDA margin remained strong at 32.9% compared to 34.7%. In fact, while revenue decreased EUR1.4 million, cost containment measures amounted to EUR800,000. Moving now to Slide 11. You will see that total revenue in our Materialise Medical segment increased 10.8% for the quarter to EUR17.2 million. We are proud of this result that during the full COVID-19 pandemic matches the quarterly record of Q4 2019. Revenue for medical device solutions increased 14.5%. We didn't only increase services for elective surgery for our partners, but also rolled out different development programs for those partners. Our direct sales, though, decreased 7%, mainly due to our Engimplan business line as COVID-19 continued raging in Brazil in Q3. Revenue from medical software sales grew 3% and accounted for 30% of the segment revenue. This 3% growth rate may not seem that exceptional, but here as well, we reported a new quarterly record. Moreover, our medical software line has now realized four consecutive quarters exceeding EUR five million revenue, a level never reported before Q4 2019.

Medical software sales were boosted by new annual license fees. The EBITDA almost doubled to EUR5,477,000 from EUR2.8 million, while revenue grew EUR1.7 million. We succeeded in reducing operating expenses by EUR1.2 million as well, while the segment increased its R&D program efforts by 14%, in line with our strategy. As a result, the EBITDA margin was an all-time medical record of 31.9%. Now let's turn to Slide 12 for an overview of the Q3 performance of our Materialise Manufacturing Segment. The revenue was down by 41%, almost EUR10 million. The high-tech business was the most affected by the crisis and decreased 60%. But our other traditional business lines also declined approximately 25%. COVID-19 negatively affected our automotive and aerospace markets, but also impacted our other sectors. Eyewear and medical business lines showed sparkles of strong growth, but could not offset the negative impact of the other business lines. Despite the mitigating effects of lower variable expenditures and labor cost reduction efforts, gross profit was affected negatively because of the fixed cost of capacity. Savings measures resulted in a decrease of operating expenses of 26%, almost EUR two million. As a combined result, EBITDA decreased EUR4.2 million to a loss of EUR293,000, where the EBITDA margin was negative 2.1%. Slide 13 provides the highlights of our income statement for the third quarter. Revenue decreased EUR9.7 million or 19.2%, and gross profit decreased EUR5.8 million or 20%.

Gross profit was affected negatively by the cost of capacity in our manufacturing business lines. Gross profit margin decreased only slightly to 56.9% compared to 57.7%, also impacted positively by the growing software and services portion in our revenue. While revenue fell 19%, our sales and marketing and G&A expenses decreased 19% and 12% respectively. G&A expenditures were affected negatively this quarter by share-based remuneration cost of EUR900,000. As a result of specific savings measures we undertook, a remuneration cost on a comparable basis decreased EUR4.4 million and third-party operating expenses decreased by EUR1.1 million. As we mentioned in our previous earnings call, we continue to invest in our key development initiatives to position Materialise for future growth. Accordingly, R&D spending increased 4%. Other operating expenses amounted to EUR1,157,000 compared to EUR1.3 million. As a result of these elements, the group's operating result was positive again, EUR201,000 compared to a profit of EUR2,916,000 in last year's period. As a reminder, we reported an operating loss of EUR1.8 million in the last Q2 of 2020. Net financial cost was negative EUR1,331,000 compared to a cost of EUR one million last year.

Income tax expense amounted to an income of EUR764,000, mainly as a result of deferred tax asset booking. In last year's period, income tax cost was negative EUR908,000. Net loss for the third quarter was EUR366,000 compared to a net profit of EUR one million for the same period in 2019. Now please turn to Slide 14 for a recap of balance sheet and cash flow highlights. In this quarter, our balance sheet remains strong. Cash amounted to EUR110.7 million compared to EUR128.9 million at December 31, 2019. But over the same period, our borrowings position decreased by EUR10 million to EUR117.9 million. As Peter already mentioned, only EUR17.8 million of our debt is short-term at September 30. Equity decreased EUR11.3 million to EUR131.4 million as a combined result of the year-to-date net loss amounting to a loss of EUR5.2 million and of the conversion differences on the equity values of affiliated companies amounting to EUR6.6 million. Of this amount, EUR4.8 million reflects the effect of the weakened Brazilian real on Engimplan's equity position. Total deferred revenue amounted to EUR30.6 million as compared to EUR32.7 million as of December 31, 2019. Of the EUR30.6 million, EUR26.8 million were related to annual software sales and maintenance contracts versus EUR27.7 million as of December 31, 2019.

Cash flow from operating activities for the quarter amounted to EUR426,000 compared to EUR13.9 million. The quarter's operating cash flow was impacted negatively by 2019 income tax payment and working capital. In fact, there was the usage of deferred revenue and temporary variances on short-term balance sheet positions. Our days of sales outstanding, the DSO position, remained stable as in the past quarters. And so far, our customers have not shown any material payment difficulties. As Peter mentioned before, we disbursed USD2.5 million of the USD nine million convertible loan facility to Ditto. Capital expenditures for the quarter amounted to EUR7.5 million and were not financed. This quarter's capex includes a EUR1.9 million first investment related to Project Tiger, an ambitious internal digital transformation project. Please now turn to Slide 15 for a summary and for some more details of this project. We are investing in our IT system landscape and upgrading and/or standardizing part of our digital core business. In the course of the next 2.5 years, we will invest in state-of-art technology that is available on the market to upgrade our CRM, ERP and license management software. Together with this implementation, we will also upgrade and further develop those internal software programs that are close to 3D printing and the specific needs that arise from this.

Some of these programs are also commercialized by Materialise, such as [Indecipherable] and SurgiCase. The integration of both standard and internal systems in the digital chain of Materialise is crucial and requires deep analysis, development and technical validation. It will not only streamline our processes internally and help us reduce cost in maintenance in the short term, but it also allows us to learn from this and commercialize this knowledge by making our software even easier to integrate with standard systems. This competitive advantage will become even more important in the coming years, that 3D printing will be more and more integrated onto the traditional manufacturing floor. Concretely, we are looking at a total investment of approximately EUR15 million. This quarter, we have spent EUR2,086,000 on this project, of which EUR1,884,000 was booked as capital expenditure. The rest of the costs will be spread over the next 2.5 years, partly as capital expenditure and partly as P&L cost according to GAAP standards. Peter?

Peter Leys -- Executive Chairman

Thank you, Johan. Before we open the floor to questions, we want to try and give some positive insights about what the fourth quarter of 2020 may still have in store for us. The fourth quarter is traditionally our most important and strongest period of the year. However, as the COVID-19 pandemic continues to disrupt everyday life, the markets in which we operate and macroeconomic conditions in general, it is difficult to predict how this will impact our final quarter this year in 2020. Our software business, like many software businesses traditionally peaks in the last quarter of the calendar year. In the current circumstances, however, it is uncertain to predict to what extent frozen budgets and spending cuts in the manufacturing market may continue to impact our software sales, even in this important fourth quarter. As you definitely will remember, our Medical business was impacted abruptly and significantly during the second quarter of this year, but rebounded even stronger this year. While we are working hard together with our customers to continue the third quarter's upward trend into the fourth quarter, there is a risk that history will repeat itself and that a second abrupt shutdown of the hospitals that we serve will impact our medical sales significantly again in Q4. Finally, our manufacturing activity, which has traditionally relied heavily on the automotive and aerospace industries, is expected to continue to suffer significantly. Yes, our sales teams are focusing on new business opportunities with success, but those will not impact our revenues sufficiently in Q4 to counterbalance the decline of our existing businesses in the coming months. Accordingly, the outlook for the short-term remains unclear. You can be sure, though, that we are being disciplined in managing our business. And just as importantly are dedicated to pursuing our vital R&D programs and our strategic investment initiatives, which we believe will position Materialise very well for the coming years. Obviously, our balance sheet and liquidity are areas of strength in this respect. This, operator, concludes our prepared remarks. So we are now ready to open the call to questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Jason Celino with KeyBanc.

Jason Celino -- KeyBanc. -- Analyst

Hello. Thanks for taking my question. Fried, you mentioned you're seeing a buildup of orders. I know it won't maybe impact kind of the financials near term, but which verticals in -- are you seeing this buildup come from? What types of customers? And were these projects that were previously delayed? Or any other commentary that you can provide.

Wilfried Vancraen -- Chief Executive Officer

Yes. First of all, we see -- we are not talking about the manufacturing segments and then what I would call the traditional industrial segments, where we see that at least the automotive sector is very prudently reinvesting in projects. It's still compared to the summer holiday period, we see that several projects that were on hold are being, I will stress it, slowly released. We do see a healthier situation in what I would call industrial machines and medical devices, for instance, where business is getting back to a more normal level. And finally, we also see that our online business is recovering to, let's call it normal level. But as you know, the impact of aerospace and automotive, which represents more than half of the normal industrial activities, is still huge. And in any state, we don't see any positive sign at this moment.

Jason Celino -- KeyBanc. -- Analyst

Okay. Great. And then another question for me. Nice to see the kind of investments on the wearable side. But how should we think about the opportunity in eyewear and footwear in particular?

Wilfried Vancraen -- Chief Executive Officer

Well, like we try to indicate the -- yes, those are two lines that compared to medical are still in an early phase. So the numbers are quite small, but nevertheless, at this moment, on an annual basis already in the order of magnitude of EUR five million. But we see there big growth opportunities for Materialise in the longer term, as these are really multibillion-dollar markets overall in which this can be significant measure.

Jason Celino -- KeyBanc. -- Analyst

Okay. Great. And then maybe last one and maybe for everyone on the call, it'd be a good reminder. But what is Materialise's involvement in 3D metal printing today? And what are the -- how do we think about the opportunities there longer term?

Wilfried Vancraen -- Chief Executive Officer

Well, you know that we have a limited metal activity compared to the plastics activity in manufacturing. Nevertheless, as Johan indicated, it is growing at this moment, yes. And when I'm talking about metal activity, I'm talking about new metal direct printing with selective laser melting technologies. Because on the other hand, we have the AC Tech activities that do the prototyping project for the automotive industry that are more considerable, but are severely hit by the crisis situation. So the metal 3D printing is also in the order of magnitude of a few million euro.

Jason Celino -- KeyBanc. -- Analyst

Great. Thank you. I appreciate the opportunity to ask questions.

Operator

And there are no further questions at this time. I would like to turn the call -- I do apologize. We do have an additional question from the line of Gregory Ramirez with Bryan Garnier.

Gregory Ramirez -- Bryan Garnier -- Analyst

Yes. Thank you. Thank you for taking my question. Come back to the medical division because the EBITDA margin is very impressive. Obviously probably very positive impact on cost management because probably there is the immediate effect of what you did at the end of Q1 and in Q2 regarding cost. But I would like to figure out both for the Medical division and for Materialise as a group what is the cost savings you have done at this point which are sustainable for next year? Is it something around 20%, 30%, 40%?

Johan Albrecht -- Chief Financial Officer

Yes. The cost savings they are in cost containment in hiring that we work in a more efficient -- even more efficient way.

Wilfried Vancraen -- Chief Executive Officer

Percentage of revenue.

Johan Albrecht -- Chief Financial Officer

Excuse me, the percentage of revenue.

Wilfried Vancraen -- Chief Executive Officer

Yes. To what extent do those cost savings as a percentage of revenue?

Gregory Ramirez -- Bryan Garnier -- Analyst

No, no, not as a percentage of revenues, but I would say, compared to the EUR one million that you have made in cost savings, what percentage of this amount is sustainable for next year?

Wilfried Vancraen -- Chief Executive Officer

Yes. Yes. I mean... Thank you.

Johan Albrecht -- Chief Financial Officer

Excuse me, I didn't hear the question well. But the savings that we have realized were approximately EUR1.2 million in the quarter in the Medical Segment.

Wilfried Vancraen -- Chief Executive Officer

Gregory, we were a bit confused by the question. But maybe let me rephrase it. And please, but then if I rephrase it wrongfully, we probably are hitting it to what extent, very high record EBITDA margin within Medical is actually sustainable. Or to what extent it is the results of cost-saving measures that are not structural and it will not be maintained.

Gregory Ramirez -- Bryan Garnier -- Analyst

Yes. This is -- yes, this is true. This is obviously my question, but also looking at Materialise as a group, all the cost savings you have made up to now? And what is the percentage of these cost savings for the group which can be sustainable for next year? Whatever, I would say, the level of revenues that you can generate next year? Anyway we don't really know what will happen for next year. Yes.

Johan Albrecht -- Chief Financial Officer

The cost savings that we have realized to a certain extent are temporary measures that will not be continued, but other way, there are a lot of scale effects that have been realized that we will maintain in future as well. So -- and that will happen as well for the other segments as well. We have realized cost savings. We have found in certain places ways to work more -- even more efficiently. And that will be continued in future. But certain measures that are being given and supported by the governments, when that stops, that will be -- it will not be 100% that can be continued. But at that moment, we will also -- we count as well to have the top line growth as well and to continue realizing nice margins.

Gregory Ramirez -- Bryan Garnier -- Analyst

Okay. Okay. Thank you very much.

Wilfried Vancraen -- Chief Executive Officer

Okay. Thank you, Gregory.

Operator

And there are no further questions at this time. I would now like to turn the call back over to the speakers for closing remarks.

Wilfried Vancraen -- Chief Executive Officer

Thank you all for joining us today. In closing, we would like to emphasize that, well, the morale at Materialise is energizing and very positive. Our thoughts are also with those who are suffering from the crisis, be it from a health or financial perspective or otherwise. We wish them strength and courage. We didn't have any trips or conferences scheduled at the moment that can bring us physically closer to you. Also, we decided not to attend Formnext this year. However, you are all invited to attend the digital Materialise Think-in series, where our software and manufacturing segments will present some of the new products and solutions that will hit the market shortly. The launch event of the digital Think-in series is scheduled for November 18. Attendance is free, but requires a simple preregistration through our website. We hope to see you there. Thank you, and goodbye for now.

Operator

[Operator Closing Remarks]

Duration: 51 minutes

Call participants:

Harriet Fried -- Senior Vice President

Peter Leys -- Executive Chairman

Wilfried Vancraen -- Chief Executive Officer

Johan Albrecht -- Chief Financial Officer

Jason Celino -- KeyBanc. -- Analyst

Gregory Ramirez -- Bryan Garnier -- Analyst

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