Business

Mindbody, SLO-based software company, files for IPO

Mindbody was co-founded by Rick Stollmeyer.
Mindbody was co-founded by Rick Stollmeyer. dmiddlecamp@thetribunenews.com

MindBody Inc. of San Luis Obispo, which sells business management software for clients in the beauty, health and wellness industries, is seeking to go public.

It filed a registration statement Monday with the U.S. Securities and Exchange Commission for an initial public offering (IPO) of common stock, citing a nominal fundraising target of about $100 million. That’s not a true indicator of what it might raise, however.

The amount of money a company says it plans to raise in its first public filing is used to calculate the registration fees. The final size of the IPO could be different, according to Reuters News Service.

MindBody said that the number of shares to be sold and the price range for the proposed offering have not yet been determined.

Reuters News Service reported in January that Mindbody was working with banks for an initial public offering that could value it at more than $700 million.

Morgan Stanley & Co., Credit Suisse Securities and UBS Securities are among the underwriters.

The news was generally expected, as co-founder and chief executive officer Rick Stollmeyer said previously that he intended to position the company to go public.

He was mum about the possibility at the grand opening of the company’s new San Luis Obispo headquarters on April 24, however. When asked about it then, Stollmeyer declined to disclose future plans, only saying that he has “no plans to sell” and expected to own the company for many years.

Contacted Monday, Stollmeyer said he was then — and still is — bound by SEC confidentiality rules.

He declined to state how much MindBody hopes to raise through the public offering, noting only that it’s pursuing the IPO to finance a global expansion in Europe, Latin America and the Pacific Rim.

Even though the company reported net losses in its SEC filing, Stollmeyer said that “We have plenty of cash in the bank. … If for any reason we can’t go public or going public is delayed, we have the highest confidence in our ability to continue to grow and succeed.’’

The quest to go public is a milestone, Stollmeyer said, “reflective of the success we’ve had to date and indicative of our desire to keep growing.”

Founded in 1998, MindBody has more than 42,000 business subscribers that pay a monthly fee to use its mobile-enabled SaaS (Software as a Service) platform in 124 countries and territories employing more than 250,000 practitioners.

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

For the first quarter, which ended March 31, revenue was $22.26 million, up 42 percent from $15.65 million in the same period a year ago, and its net loss was $7.86 million, compared to $4.84 million.

The company employs about 900 people in San Luis Obispo, plus 200 more in New York, the United Kingdom and Sydney, Australia, and has the capacity to grow to about 1,100 employees locally with its recent expansion, Stollmeyer said last month.

To help fuel its growth through the years, MindBody has raised slightly more than $100 million, including $35 million from investors in 2012 and an additional $50 million in 2014.

According to the prospectus, MindBody’s main reason to go public is to increase its capitalization and financial flexibility, create a public market for its Class A common stock and gain access to stock markets.

“We intend to use the net proceeds from this offering for general corporate purposes, including working capital, operating expenses and capital expenditures,” the prospectus stated. “Additionally, we may use a portion of the net proceeds to acquire businesses, products, services or technologies. However, we do not have agreements or commitments for any material acquisitions at this time.”

The market for business management software solutions aimed at wellness businesses is expected to grow by 17 percent to $15.3 billion in 2018, according to research firm Frost and Sullivan, Reuters reported Monday.

MindBody said it intended to list its Class A common stock under the symbol “MB,” but did not disclose the exchange it plans to list on.

According to the prospectus, Stollmeyer currently owns 11.2 percent of the company and chief operating officer Robert Murphy owns 7.8 percent.

In addition, entities affiliated with Bessemer Venture Partners own 20.3 percent; entities affiliated with Catalyst Investors own 15.5 percent; Institutional Venture Partners XIII owns 10 percent; W Capital Partners III owns 8.9 percent; and entities affiliated with J.P. Morgan own 10.1 percent.

The rest is owned by minor shareholders, including employees.

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