What an IPO could mean for Mindbody

Mindbody employees celebrated the grand opening of the company's new headquarters on Tank Farm Road in April.
Mindbody employees celebrated the grand opening of the company's new headquarters on Tank Farm Road in April.

Mindbody Inc. of San Luis Obispo, which filed documents to go public Monday, is believed to be only the second local, technology-based business to make such a bid.

The San Luis Obispo-based company sells business management software for clients in the health and wellness industry.

SpendSmart Payments Co., which provides pre-paid payment cards, is publicly traded as an over-the-counter stock, which means that it’s a small company not listed or traded on a formal stock exchange. SpendSmart merged with SMS Masterminds, a local mobile marketing firm founded by Alex Minicucci in 2014.

If Mindbody's initial public offering succeeds, the company would be listed as a Class A common stock under the symbol MB. It's not yet known on which exchange it would be listed.

Nor has the price range for the proposed offering, or the number of shares to be sold, been determined yet.

Mindbody’s filing with the U.S. Securities and Exchange Commission set a nominal fundraising target of about $100 million to finance a global expansion. But the final size of the initial public offering could be different. Reuters News Service reported in January that Mindbody was working with banks for an IPO that could value it at more than $700 million.

Kathleen Smith, manager of IPO-focused exchange traded funds for Renaissance Capital, a Greenwich, Conn., money management firm that provides institutional research on newly public companies, said the fact that Mindbody is expanding and growing in a specialized category bodes well for a successful IPO.

Mindbody could officially go public at the end of June, she said. There will be a final SEC filing, which will provide further information about its range of valuation, and then the company will begin marketing the initial public offering to investors.

"It looks like the IPO market is in good shape, and they've got a decent business, so I don't see why it doesn't get done," said Smith, whose firm has been researching Mindbody.

There are always risks associated with any initial public offering, she said. As a publicly traded company, Mindbody would be subject to more scrutiny and shareholders would expect to see continued growth, she said.

"Can they get to the point where they grow revenue, and do they have a path to profitability?" Smith said, noting that the company has suffered net losses in recent years.

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 with a net loss of $16.25 million the year earlier.

For the first quarter 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 with $4.84 million.

According to MindBody’s prospectus, it has more than 42,000 local business subscribers on its platform in 124 countries and territories.

Smith, who compared going public to being "a little bit like growing up," said Mindbody has to be ready for its change from a private company.

"You're talking about other people's money," she said. "But it's a small price to pay for the liquidity they will get with an IPO."

Locally, business leaders expressed enthusiasm for the public offering.

"It's a really positive thing for the SLO community to have a company go public that has 900 employees locally and big investors," said Jo Anne Miller. She’s co-founder of SLO Seed Ventures, which provides local start-ups with business advice, mentoring and funds, and a member of Milk Street Ventures, which buys venture capital and private equity portfolios. "It will go a long way to putting San Luis Obispo on the map for technology companies and software companies."

Mindbody's effort to become public has already energized a growing technology scene in the county and will help raise the bar on compensation for employees working at those firms, said Mike Manchak, president of the Economic Vitality Corporation of San Luis Obispo County.

"It's something we've talked about for a long time attracting more companies to get a critical mass," he said. "Mindbody getting noticed helps other companies get noticed."