For MindBody, going public is 'the beginning of a new chapter'

MindBody CEO Rick Stollmeyer celebrates as the San Luis Obispo software company goes public Friday, June 19.
MindBody CEO Rick Stollmeyer celebrates as the San Luis Obispo software company goes public Friday, June 19. Courtesy photo

Nearly a month has passed since MindBody, a global software company serving the health, beauty and wellness industries, transitioned from a private business to one that’s publicly traded on the Nasdaq stock exchange.

But in many ways, going public was just one step along the path of continued growth and expansion, said Rick Stollmeyer, MindBody co-founder and chief executive officer of the San Luis Obispo-based company.

“This is not the end of anything,” said Stollmeyer, who spoke to The Tribune on Wednesday, following a quiet period imposed by the Securities and Exchange Commission. “This is the beginning of a new chapter. We have more possibility and more reach.”

With the initial public offering behind it, MindBody is now focused on, among other things, growing its subscriber base — at home and abroad — building on its relationships with existing subscribers and increasing its presence in corporate wellness programs.

MindBody already has 42,700 business subscribers that pay a monthly fee to use its mobile-enabled SaaS (Software as a Service) platform in 124 countries and territories. The subscribers employ more than 250,000 practitioners who provide services to more than 24 million consumers.

Although MindBody has seen significant subscriber growth and increasing revenue per subscriber, it has had a history of losses.

The company reported $70 million in revenue for the year that ended Dec. 31, up 44 percent from $48.7 million in 2013. Its net loss last year was $24.6 million, compared with a net loss of $16.25 million the year before, according to MindBody’s prospectus filed with the SEC.

For the first quarter that ended March 31, revenue was $22.26 million, up 42 percent from $15.65 million in the same period a year ago, and the company’s net loss was $7.86 million, compared with $4.84 million the year before. The company’s second quarter financial results will be released on Aug. 4.

Stollmeyer noted the company had costs related to research and development, sales and marketing expenses, and the hiring of additional employees. The company, he said, “fully intends to be profitable.”

“We’re heading toward profitability as we’re growing this base,” he said, adding that profitability alone, while important, is not the only way to measure a company’s success.

Stollmeyer believes that MindBody has tremendous potential and has only begun to tap into a growing marketplace of individuals and employers who are placing a greater emphasis on health and wellness.

MindBody helps wellness providers — such as spas, yoga and fitness studios, music schools, beauty salons and others — through its cloud-based business management software and payments platform, which allows it to manage client information, class schedules, staff, online bookings, inventory and payroll.

In addition, the company’s Connect platform — a suite of mobile apps — helps consumers to find, book and pay for wellness services at home or on the go.

An analysis by research firm Frost and Sullivan estimated a $9.5 billion market for business software solutions targeted at wellness businesses this year and expects the market to grow to $15.3 billion in 2018, according to MindBody’s prospectus summary.

“The market has never been hotter than it is right now,” Stollmeyer said. “We don’t see that changing.”

Stollmeyer, who started the company in his San Luis Obispo garage about 17 years ago, said serious discussions about taking MindBody public began a few years ago. For MindBody, it would open up access to more capital to help propel it forward, and build and promote its corporate brand.

The experience of going public was like a “rite of passage” and felt like bootcamp, said Stollmeyer, a former Navy submarine officer.

However, he considers the IPO a success.

“Raising $101 million is not trivial,” he said of the amount the company generated through its public offering.

The company, which recently opened a new headquarters off Tank Farm Road complete with a soon-to-be-opened on-site child care center, is less focused on the daily fluctuations of its stock price, which Stollmeyer said is to be expected, than on its long-term vision and staying true to its core values.

For now, the company is getting used to what he calls the “new normal” while focusing on retaining and maintaining company principles, even as it grows.

With about 900 employees locally and about 200 more in New York, the United Kingdom and Sydney, MindBody has its sights on opening additional offices around the world and domestically, including a satellite office in Dallas. Other offices could be opened in Santa Maria and the North County to support employees who live in those communities.

Stollmeyer is proud of MindBody’s accomplishments, and he’s hopeful that other local companies will follow suit.

“We’ve proven it can be done; that you can start a business in this community, stay in this community and reach a global scale,” he said. “I see it as a milestone for us. This has built a path to fund our future.”