Technology

Mindbody on track to earn $250 million in revenue this year

Health and wellness company Mindbody is headquartered in San Luis Obispo. FitMetrix, a company acquired by Mindbody in February, accidentally leaked millions of users’ personal information.
Health and wellness company Mindbody is headquartered in San Luis Obispo. FitMetrix, a company acquired by Mindbody in February, accidentally leaked millions of users’ personal information. dmiddlecamp@thetribunenews.com

Revenue is on the rise at Mindbody this quarter, with sales projected to reach the quarter-of-a-billion-dollars mark by the end of the year, but the company is still operating at a loss after a major acquisition temporarily pushed up operating expenses.

Mindbody, which sells business management software worldwide for the health and wellness industry, on July 31 reported total revenue of $61.6 million in the second quarter of 2018, a 40 percent increase over the same quarter in 2017.

Meanwhile, net loss for the quarter ending June 30 was $16.9 million, nearly quadrupling from the same period in 2017, according to a company news release.

Mindbody has operated at a loss under generally accepted accounting principles (GAAP) methodology since it went public in June 2015, though until the most recent quarter its financial reports showed it was steadily closing the gap between revenue and operating expenses.

Most recently in the first quarter of this year, net loss was only $1.7 million — its smallest since going public.

Though it seemed like Mindbody was on its way to turning a profit for the first time in its public history, the company will have to wait a little longer after finalizing the acquisition of Booker Software earlier this year.

The company purchased the New York City-based software business for $150 million in cash in April. That purchase has temporarily driven up operating expenses, according to Mindbody, because Booker was still relatively small and not yet profitable itself. The San Luis Obispo company also faced increased transaction and integration costs, the amortization of acquired intangible assets and a related increase in stock-based compensation expenses from the acquisition.

Mindbody expects to be profitable under its own non-GAAP accounting standards in 2019 (non-GAAP excludes one-time expenses that are factored into GAAP figures). A spokesperson said they did not have an anticipated date at which they project the company could be GAAP profitable.

“Q2 marks our first quarter post-Booker acquisition, and we are pleased to report strong operating results and progress on integration of the two companies,” CEO and co-founder Rick Stollmeyer said in the news release. “With more fitness, beauty and wellness businesses on our platform than ever before, and the best go-to-market team in the industry, we have taken a substantial step towards our purpose of helping hundreds of millions of people live healthier, happier lives.”

MindBody CEO and co-founder Rick Stollmeyer told winners of The Tribune's 2017 Top 20 Under 40 awards on Jan. 25, 2018, that the first step to becoming a conscious leader is knowing yourself. "What do you stand for?" he asked. "...What do you want

Subscription and services revenue for the tech company grew 48 percent to $38.5 million this quarter.

The company ended the quarter with 68,142 subscribers — a 15 percent increase from 2017 — and those subscribers were spending more on average per month compared with the year prior: $293 per month this year compared with $244 per month in 2017, according to the release.

Brett White, chief operating officer and chief financial officer said: “We delivered strong revenue growth in the second quarter, driven by the continued shift of our subscriber base into higher priced software tiers. These customers drive our business as they deliver the vast majority of GMV and payments volume.”

Other recent highlights for the company, according to the release:

  • Raised net proceeds of approximately $265 million in convertible senior notes, enabling the company to invest in growth with flexibility to pursue merger and acquisition.

  • Partnered with the nonprofit Partnership for a Healthier America (PHA) with their Healthier Campus Initiative, helping young adults more easily engage with fitness and wellness activities.

Going forward, the company expects to report 35 percent to 39 percent growth in revenue for the third quarter of the year, in the range of $63 million to $65 million.

Mindbody projects revenue for 2018 to range between $246 million and $250 million.

The San Luis Obispo County Office of Education, SLO Partners in Education and Creating IT Futures are launching a new program aimed at training new tech workers. Video footage courtesy of SLO Partners and Creating IT Futures.

Correction: A previous version of this article gave an incorrect figure for how revenues compared this quarter to last. It grew 40 percent.

Kaytlyn Leslie: 805-781-7928; @kaytyleslie
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