Mindbody Earnings: Revenue Jumps 31% and Loss Narrows

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Mindbody (NASDAQ: MB) reported second-quarter 2017 results after the market closed on Wednesday. The company -- which provides an online platform for wellness class providers that allows users to book classes across venues -- posted healthy revenue growth of 31%, while its adjusted loss per share narrowed to $0.01 from $0.10 in the year-ago period. 

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Shares of Mindbody declined 2.3% on Thursday. The stock has gained 48.7% over the one-year period through Thursday, versus the S&P 500's 16.3% total return. 

Mindbody's results: The raw numbers

Metric

Q2 2017

Q2 2016

Year-Over-Year Change

Revenue

$44.1 million

$33.6 million

 31%

Operating income

($4.2 million)

($6.1 million)

N/A

GAAP net income

($4.4 million)

($6.6 million)

N/A

Adjusted net income

($0.5 million)

($4.1 million)

N/A

GAAP earnings per share (EPS)

($0.10)

($0.16)

N/A

Adjusted EPS

($0.01)

($0.10)

N/A

Both segments posted strong growth, with subscription and services revenue increasing 29% year over year to $26.0 million, and payments revenue jumping 37% to $17.6 million. (Total doesn't add up to $44.1 million because there's also a very small "other" category.)

Mindbody had guided for revenue in the range of $43.6 million to $44.6 million, so its revenue came in at the midpoint of its guidance. It had guided for an adjusted EPS loss in the range of $0.07 to $0.04, so it beat its adjusted earnings expectation.

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For additional context -- though long-term investors shouldn't pay too much attention to Wall Street's near-term estimates -- analysts were expecting Mindbody to post an adjusted EPS loss of $0.05 on revenue of $44.2 million. So the company beat Wall Street's earnings expectation and hit the revenue target.

What happened with Mindbody in the quarter?

  • The number of wellness business subscribers (at the end of the period) increased 6% year over year to 59,345, with high-value subscribers increasing 13%. 
  • Monthly average revenue per subscriber (ARPS) grew 21% year over year to approximately $244. This also represents a sequential increase, as monthly ARPS was about $230 in the first quarter.
  • Payments volume increased 22% year over year to more than $1.9 billion.
  • In June, the company named Mike Mansbach as President. He's held various executive roles at businesses focused on business and consumer software platforms.
  • In July, which was after the quarter ended, the company named Josh Todd as Chief Marketing Officer (CMO). He reportedly has nearly two decades of marketing experience, most recently in senior executive roles at Localytics and Constant Contact.

What management had to say

Here's what co-founder and CEO Rick Stollmeyer had to say in the press release about the quarter:

[W]e continued to focus our subscriber acquisition efforts on those businesses that contribute significant amounts of inventory to our platform, and we realized rapid growth in consumer adoption and engagement. This represents substantial progress toward our goal of a transaction-enabled marketplace that will serve more than one hundred million consumers.

CFO and COO Brett White added, "[W]e saw early positive effects of our refined subscriber growth strategy, demonstrated by our expanding year over year margins and accelerating ARPS [average revenue per subscriber] growth.

Looking ahead

Mindbody's management issued third-quarter guidance. Additionally, it edged up the lower end of its previously issued revenue guidance range for full-year 2017, and also increased its outlook for full-year adjusted EPS.  

Period

Revenue Guidance

Projected Year-Over-Year Revenue Change

Adjusted EPS Guidance*

Projected Year-Over-Year Adjusted EPS Change

Q3 2017

$45.1 million to $46.1 million

 28% to 31%

($0.5) to ($0.03)

N/A; a projected improvement from a loss of $0.09 in Q3 of 2016.

Full-year 2017

$179.5 million to $182.0 million

(Previous: $179.0 million to $182.0 million)

29% to 31%

($0.11) to ($0.06)

(Previous: ($0.19) to ($0.12))

N/A; a projected improvement from a loss of $0.35 in 2016.

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Beth McKenna has no position in any stocks mentioned. The Motley Fool recommends Mindbody. The Motley Fool has a disclosure policy.