MindBody Inc., a global company based in San Luis Obispo, reported a second-quarter net loss Tuesday of $13.3 million, according to generally accepted accounting principles, compared to a net loss of $8.8 million in the second quarter of last year.
But MindBody co-founder and CEO Rick Stollmeyer and chief financial officer Brett White assured analysts that the company was on a path to profitability, fueled by a growing base of subscribers, strategic partnerships and strong demand for its products and services among small business owners.
The company sells business management software for clients in the health and wellness industry.
MindBody's revenue is growing, with total revenue for the second quarter of $24.8 million, a 49 percent year-over-year increase. The company anticipates third-quarter revenue in the range of $25 million to $26 million, representing growth of 42 percent to 48 percent over the third quarter of 2014.
For the full year, MindBody expects to report revenue in the range of $98 million to $100 million, a 40 percent to 43 percent growth over 2014.
Gross profits rose to nearly $16 million in the second quarter of this year from about $9.6 million in the same quarter last year.
"Our strong second-quarter results demonstrate the powerful network effects taking hold across our SaaS (software as a service platform)," Stollmeyer said. "As more wellness businesses adopt our software, they bring more consumers to our web and mobile applications, who then bring additional partners to our platform. In the second quarter, these network effects accelerated our subscriber and revenue growth, increased average monthly revenue per subscriber and improved our gross margin."
The company, White said, would be able to accelerate the point at which it would be profitable, which would be earlier than 2018. The company declined to select a specific date.
Stollmeyer explained to analysts that the company had costs related to building the infrastructure it needed to "support a high-growth company," but that the bulk of those costs were behind them.
Moreover, as fitness is gaining ground worldwide, MindBody is gaining a foothold in Europe in Germany, Austria, Switzerland and the Netherlands, as well as gaining traction in the Pacific Rim with Australia and New Zealand.
"We've built sales and engineering support in the EU and are adding sales reps in Australia," Stollmeyer said.
MindBody also has opened up a new strategic partnership with Xero, a global company specializing in cloud accounting software for small businesses. MindBody and Xero developed a joint integrated system to make tasks like tracking sales data easier and more efficient. MindBody hopes the partnership will fuel its subscriber growth.
MindBody already has more than 45,000 business subscribers in 132 countries and territories. Those subscribers offer wellness services to more than 25 million active consumers.
Other second-quarter financial results include:
- Subscription and services revenue of $14.9 million, a 56 percent year-over-year increase.
Stollmeyer said the company is on the right track.
"This is a team that has been doing this for a very long time. We truly know what we're doing and will see great results in the future," he said.
Shares of MindBody (MB), which became a public company in June, closed on Tuesday at $9.24, down 0.31 or 3.25 percent, but rose to $9.87, up 0.63 or 6.82 percent in after hours trading.