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MINDBODY Reports Fourth Quarter and Full Year 2017 Financial Results

Full Year Total Revenue Grows 31% Year over Year

Fourth Quarter Average Revenue Per Subscriber Grows 31% Year over Year

SAN LUIS OBISPO, Calif., Feb. 21, 2018 (GLOBE NEWSWIRE) -- MINDBODY, Inc. (NASDAQ:MB), the leading technology platform for the wellness services industry, today announced financial results for the fourth quarter and full year ended December 31, 2017.

“This was the most successful year in MINDBODY history,” said Rick Stollmeyer, co-founder and chief executive officer of MINDBODY.   “Throughout 2017, our platform delivered strong growth in total sessions booked, payments volume, and direct consumer engagement. We also saw rapid expansion of promoted introductory offer purchases and impressive early adoption of dynamic pricing in Q4. These results all point to the growing momentum of our transaction-enabled marketplace, which focuses on adding the right customers to our platform and promoting their offerings to an ever larger consumer audience. In the year ahead, we will leverage this momentum and the acquisition of FitMetrix to further engage with the best customers and accelerate consumer adoption. Our purpose is connecting the world to wellness, and we intend to help more people live healthier, happier lives than ever before.”

“The fourth quarter underscored the ongoing success of our refined growth strategy, with consistent revenue growth, record ARPS growth and the best margins in our history,” said Brett White, chief operating officer and chief financial officer. “Our excellent unit economics and improving operating leverage enabled us to deliver positive non-GAAP net income for the fourth quarter and the full year, while still investing substantially in product and growth.”

Fourth Quarter 2017 Financial Results

  • Total revenue for the fourth quarter of 2017 was $49.7 million, a 30% increase year over year.
  • Subscription and services revenue for the fourth quarter of 2017 was $29.9 million, a 34% increase year over year.
  • Payments revenue for the fourth quarter of 2017 was $19.1 million, a 25% increase year over year.
  • GAAP net loss for the fourth quarter of 2017 was $(2.9) million, or $(0.06) per share, compared to a GAAP net loss for the fourth quarter of 2016 of $(3.9) million, or $(0.10) per share. 
  • Non-GAAP net income1 for the fourth quarter of 2017 was $1.7 million, or $0.03 per share, compared to a non-GAAP net loss for the fourth quarter of 2016 of $(1.6) million, or $(0.04) per share.
  • Adjusted EBITDA1 for the fourth quarter of 2017 was $3.6 million, compared to Adjusted EBITDA for the fourth quarter of 2016 of $0.6 million.

Full Year 2017 Financial Results

  • Total revenue for the full year of 2017 was $182.6 million, a 31% increase year over year. 
  • Subscription and services revenue for the full year of 2017 was $109.2 million, a 32% increase year over year.
  • Payments revenue for the full year of 2017 was $71.3 million, a 32% increase year over year.
  • GAAP net loss for the full year of 2017 was $(14.8) million, or $(0.33) per share, compared to a GAAP net loss of $(23.0) million, or $(0.58) per share for the full year 2016.
  • Non-GAAP net income1 for the full year of 2017 was $0.7 million, or $0.02 per share, compared to a non-GAAP net loss of $(13.8) million, or $(0.35) per share for the full year 2016.
  • Adjusted EBITDA 1 for the full year of 2017 was $8.9 million, compared to an Adjusted EBITDA loss of $(4.8) million for the full year 2016.

Recent Business Highlights

  • Acquired FitMetrix in Q1 2018, which provides performance tracking integrations with fitness studio equipment and wearables, enabling fitness businesses to deliver a more immersive experience to their clients. Consumers in turn are able to reserve specific, integrated equipment while booking a class, gaining invaluable insights into their performance and progress. 
  • Appointed Mark Baker as Chief Revenue Officer of MINDBODY. Baker will focus on aligning the customer facing teams and building sales strategies and structures that contribute to the company’s growth. Baker will report directly to MINDBODY President Mike Mansbach, and will oversee global sales, customer support and business development.
  • Named to Deloitte’s 2017 Technology Fast 500 for the sixth time.

Fourth Quarter Key Metrics

We regularly review the following key metrics to measure our performance, identify trends affecting our business, formulate financial projections, make strategic business decisions and assess working capital needs.

  As of and for the Quarter Ended December 31,
2017   2016   YoY
Subscribers (end of period) 58,584     60,385     (3 )%
Average monthly revenue per subscriber $ 278     $ 212     31 %
Payments volume (in billions) $ 2.1     $ 1.7     23 %
Dollar-based net expansion rate (end of period) 107 %   108 %    

1               A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures”.

Outlook

On January 1, 2018, MINDBODY adopted the new revenue recognition standard, ASC 606, using the modified retrospective method. The guidance below is provided utilizing ASC 606.

For the first quarter and full year 2018, MINDBODY expects to report:

  • Revenue for the first quarter of 2018 in the range of $53.0 million to $54.5 million, representing 26% to 29% growth over the first quarter of 2017.
  • Revenue for the full year of 2018 in the range of $230.0 million to $236.0 million, representing 26% to 29% growth over the full year of 2017.
  • Non-GAAP net income for the first quarter of 2018 in the range of $1.3 million to $2.3 million and diluted weighted average shares outstanding for the first quarter of approximately 50.1 million shares. 
  • Non-GAAP net income for the full year of 2018 in the range of $9.0 million to $13.0 million and diluted weighted average shares outstanding for the full year of approximately 50.6 million shares. 

The outlook for non-GAAP net income excludes estimates for, among others, stock-based compensation expense and amortization of acquired intangible assets. A reconciliation of these non-GAAP financial guidance measures to corresponding GAAP measures is not available on a forward-looking basis because we do not provide guidance on GAAP net loss, primarily as a result of the uncertainty regarding, and the potential variability of, stock-based compensation expense and amortization of acquired intangible assets.  In particular, stock-based compensation expense is impacted by MINDBODY’s future hiring and retention needs, as well as the future fair market value of MINDBODY’s Class A common stock, all of which is difficult to predict and is subject to constant change.  The actual amount of these expenses during 2018 will have a significant impact on MINDBODY’s future GAAP financial results. Accordingly, a reconciliation of the non-GAAP financial guidance measures to the corresponding GAAP measures is not available without unreasonable effort.

Quarterly Conference Call and Related Information

MINDBODY will discuss its quarterly results today at 1:30 p.m. PT (4:30 p.m. ET)

  • Dial in: To access the call, please dial (844) 494-0191, or outside the U.S. (508) 637-5581, with Conference ID# 2857818 at least five minutes prior to the 1:30 p.m. PT start time.
  • Webcast and Related Investor Materials: A live webcast and replay of the call, as well as related investor materials, will be available at http://investors.mindbodyonline.com/ under the Events and Presentations menu.
  • Audio replay: An audio replay will be available between 4:30 p.m. PTFebruary 21, 2018 and 7:30 p.m. PTFebruary 28, 2018 by calling (855) 859-2056 or (404) 537-3406 with Passcode 2857818. The replay will also be available at investors.mindbodyonline.com.

About MINDBODY

MINDBODY, Inc. (NASDAQ:MB) is the leading technology platform for the wellness services industry. Local wellness entrepreneurs worldwide use MINDBODY’s integrated software and payments platform to run, market and build their businesses. Consumers use MINDBODY to more easily find, engage and transact with wellness providers in their local communities. For more information on how MINDBODY is helping people lead healthier, happier lives by connecting the world to wellness, visit mindbodyonline.com.

© 2018 MINDBODY, Inc. All rights reserved. MINDBODY, the Enso logo and Connecting the World to Wellness are trademarks or registered trademarks of MINDBODY Inc. in the United States and/or other countries. Other company and product names may be trademarks of the respective companies with which they are associated.

Forward Looking Statements

This press release and the accompanying conference call contain forward-looking statements including, among others, current estimates of first quarter and full year 2018 revenue, non-GAAP net income, and diluted weighted average shares outstanding; leveraging momentum in the business and the acquisition of FitMetrix to further engage with customers and accelerate consumer adoption and engagement; further ramping investments in 2018 in product and marketing to drive future growth of the two-sided marketplace; 2018 consumer development roadmap, including the timing of the release of the redesigned MINDBODY app and a web version of the MINDBODY App, extending promoted offers capability worldwide, and expanding consumer partnerships; plans to expand adoption of FitMetrix and accelerate the development of workout innovations; plans for the new software packages; expectations of the impact of ASC 606 on 2018 revenue; and the impact of FitMetrix on first quarter 2018 revenue and first half of 2018 bottom line.

These forward-looking statements involve risks and uncertainties. If any of these risks or uncertainties materialize, or if any of our assumptions prove incorrect, our actual results could differ materially from the results expressed or implied by these forward-looking statements. These risks and uncertainties include risks associated with: continued market acceptance of our platform; engagement of our customers and consumers; our ability to continue to successfully develop new products and enhance our existing products to meet the needs of our customers and consumers; the return on our strategic investments; our ability to successfully integrate FitMetrix on our platform; execution of our plans and strategies, including with respect to consumer development, pricing, dynamic pricing, mobile products and features and the MINDBODY Network; any failure of our security measures, including the risk that such measures may be insufficient to secure our customer and consumer data adequately or that we may become subject to attacks that degrade or deny the ability of our customers and consumers to access our platform; our ability to grow and develop our payment processing activities; our ability to timely and effectively scale and adapt our existing technology and network infrastructure to ensure that our solutions are accessible at all times with short or no perceptible load times; our ability to maintain our rate of revenue growth and manage our expenses and investment plans; any decrease in customer demand for our software products, features and/or service offerings; changes in privacy or other regulations that could impact our ability to serve our customers and consumers or adversely impact our monetization efforts; increasing competition; our ability to manage our growth, including internationally; our ability to recruit and retain employees; general economic, market and business conditions; and the risks described in the other filings we make with the Securities and Exchange Commission from time to time, including the risks described under the heading “Risk Factors” in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 1, 2017 and the risks described under the heading “Risk Factors” in our subsequent Quarterly Reports on Form 10-Q, which should be read in conjunction with our financial results and forward-looking statements and are available on the SEC Filings section of the Investor Relations page of our website at http://investors.mindbodyonline.com/.

All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

Non-GAAP Financial Measures

In this press release, MINDBODY has provided financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). We disclose the following historical non-GAAP financial measures in this press release: Adjusted EBITDA, non-GAAP net income (loss), and non-GAAP net income (loss) per share. We use these non-GAAP financial measures internally in analyzing our financial results and evaluating our ongoing operational performance. We believe that these non-GAAP financial measures provide an additional tool for investors to use in understanding and evaluating ongoing operating results and trends in the same manner as our management and board of directors.  Our use of these non-GAAP financial measures has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under GAAP.  Because of these and other limitations, you should consider these non-GAAP financial measures along with other GAAP-based financial performance measures, including various cash flow metrics, net loss, and our GAAP financial results. We have provided a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.

Adjusted EBITDA

We define Adjusted EBITDA as our net loss before stock-based compensation expense, depreciation and amortization, provision for income taxes, and other expense, net, which consisted of interest income (expense), net, and other income (expense), net.

We have provided below a reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure.  We have presented Adjusted EBITDA in this press release because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short and long-term operational plans. In particular, we believe that the exclusion of the amounts eliminated in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Adjusted EBITDA has a number of limitations, including the following: (1) although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (2) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs, the potentially dilutive impact of stock-based compensation, or tax payments that may represent a reduction in cash available to us; and (3) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure.

Non-GAAP net income (loss) and non-GAAP net income (loss) per share

We define non-GAAP net income (loss) as the respective GAAP balance attributable to common stockholders adjusted for: (1) stock-based compensation expense and (2) amortization of acquired intangible assets. Non-GAAP net income per share is calculated as non-GAAP net income divided by the diluted weighted-average shares outstanding. Non-GAAP net loss per share, is calculated as non-GAAP net loss divided by the weighted-average shares outstanding. These non-GAAP financial measures have a number of limitations, including the following: these non-GAAP financial measures exclude stock-based compensation expense, which has been and will continue to be for the foreseeable future a significant recurring expense in MINDBODY’s business; and other companies, including companies in our industry, may exclude different non-recurring items in their calculation of these non-GAAP financial measures, which reduces their usefulness as a comparative measure.

Contact:

Investor Relations:
Nicole Gunderson
IR@mindbodyonline.com
888-782-7155

Media Contact:
Jennifer Saxon
jennifer.saxon@mindbodyonline.com
805-419-2839

 
MINDBODY, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(Unaudited)
    December 31,   December 31,
    2017   2016
ASSETS        
Current assets:        
Cash and cash equivalents   $ 232,019     $ 85,864  
Accounts receivable   10,917     9,129  
Prepaid expenses and other current assets   5,612     3,702  
    Total current assets   248,548     98,695  
Property and equipment, net   32,871     33,084  
Intangible assets, net   7,377     2,047  
Goodwill   11,583     9,039  
Other noncurrent assets   934     650  
TOTAL ASSETS   $ 301,313     $ 143,515  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Accounts payable   $ 7,448     $ 4,827  
Accrued expenses and other liabilities   13,099     10,470  
Deferred revenue, current portion   6,318     4,859  
Other current liabilities   1,828     581  
   Total current liabilities   28,693     20,737  
Deferred revenue, noncurrent portion   3,201     3,269  
Deferred rent, noncurrent portion   1,966     1,387  
Financing obligation on leases, noncurrent portion   14,932     15,450  
Other noncurrent liabilities   585     1,016  
   Total liabilities   49,377     41,859  
Stockholders' equity:        
Class A common stock, par value of $0.000004 per share; 1,000,000,000 shares authorized,
43,041,405 and 30,820,502 shares issued and outstanding as of December 31, 2017 and 2016, respectively.
  1      
Class B common stock, par value of $0.000004 per share; 100,000,000 shares authorized,
3,901,966 and 9,777,757 shares issued and outstanding as of December 31, 2017 and 2016, respectively.
       
Additional paid-in capital   454,196     289,317  
Accumulated other comprehensive loss   (108 )   (300 )
Accumulated deficit   (202,153 )   (187,361 )
   Total stockholders' equity   251,936     101,656  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 301,313     $ 143,515  
                 

 

MINDBODY, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
Revenue(1) $ 49,693     $ 38,191     $ 182,626     $ 139,021  
Cost of revenue(2) 13,990     11,423     51,870     43,080  
Gross profit 35,703     26,768     130,756     95,941  
Operating expenses:              
Sales and marketing(2) 19,615     14,926     71,825     56,460  
Research and development(2) 9,384     7,558     35,810     30,316  
General and administrative(2) 9,664     7,947     37,471     30,497  
   Total operating expenses 38,663     30,431     145,106     117,273  
Loss from operations (2,960 )   (3,663 )   (14,350 )   (21,332 )
Interest income (expense), net 234     (258 )   109     (1,123 )
Other income (expense), net (328 )   23     (384 )   (203 )
Loss before provision for income taxes (3,054 )   (3,898 )   (14,625 )   (22,658 )
Provision for income taxes (176 )   42     167     321  
Net loss $ (2,878 )   $ (3,940 )   $ (14,792 )   $ (22,979 )
Net loss per share, basic and diluted $ (0.06 )   $ (0.10 )   $ (0.33 )   $ (0.58 )
Weighted-average shares used to compute net loss per share, basic and diluted   46,783       40,521       44,309       39,913  
               
(1) Total revenue by category is presented below: Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
Revenue:              
Subscription and services $ 29,946     $ 22,365     $ 109,174     $ 82,919  
Payments 19,108     15,268     71,263     53,808  
Product and other 639     558     2,189     2,294  
   Total revenue $ 49,693     $ 38,191     $ 182,626     $ 139,021  
               
(2) Stock-based compensation expense included above was as follows:
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
Cost of revenue $ 420     $ 244     $ 1,334     $ 910  
Sales and marketing 859     423     2,872     2,059  
Research and development 1,190     515     3,864     1,971  
General and administrative 1,707     975     6,031     3,823  
   Total stock-based compensation expense $ 4,176     $ 2,157     $ 14,101     $ 8,763  
                               


 
MINDBODY, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
  Year Ended December 31,
2017   2016
CASH FLOWS FROM OPERATING ACTIVITIES      
Net loss $ (14,792 )   $ (22,979 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      
Stock-based compensation expense 14,101     8,763  
Depreciation and amortization 9,150     7,755  
Other 342     265  
Changes in operating assets and liabilities net of effects of acquisitions:      
Accounts receivable (1,739 )   (2,561 )
Prepaid expenses and other current assets (1,871 )   (638 )
Other assets (277 )   (132 )
Accounts payable 1,965     92  
Accrued expenses and other liabilities 2,307     2,631  
Deferred revenue 1,351     2,775  
Deferred rent 573     133  
   Net cash provided by (used in) operating activities 11,110     (3,896 )
CASH FLOWS FROM INVESTING ACTIVITIES      
Purchase of property and equipment (6,850 )   (8,591 )
Additions to internally developed software (1,963 )    
Acquisition of business (1,700 )   (4,138 )
   Net cash used in investing activities (10,513 )   (12,729 )
CASH FLOWS FROM FINANCING ACTIVITIES      
Net proceeds from follow-on public offering 134,266      
Proceeds from exercise of equity awards 10,040     6,626  
Proceeds from employee stock purchase plan 3,238     3,040  
Payment related to shares withheld for taxes (1,704 )    
Repayment on financing and capital lease obligations (511 )   (466 )
Other (33 )   (33 )
   Net cash provided by financing activities 145,296     9,167  
Effect of exchange rate changes on cash and cash equivalents 262     (83 )
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 146,155     (7,541 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 85,864     93,405  
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 232,019     $ 85,864  
               


               
Reconciliation of Adjusted EBITDA:      
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
  (in thousands)
Net loss $                             (2,878 )   $     (3,940 )   $             (14,792 )   $     (22,979 )
Stock-based compensation expense 4,176     2,157     14,101     8,763  
Depreciation and amortization 2,414     2,084     9,150     7,755  
Provision for income taxes (176 )   42     167     321  
Other expense, net 94     235     275     1,326  
Adjusted EBITDA $ 3,630     $ 578     $ 8,901     $ (4,814 )
               
Reconciliation of net income (loss):              
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
  (in thousands)
GAAP net loss attributable to common stockholders $
(2,878 )   $     (3,940 )   $             (14,792 )   $     (22,979 )
Stock-based compensation expense 4,176     2,157     14,101     8,763  
Amortization of acquired intangible assets 410     165     1,401     426  
Non-GAAP net income (loss) $ 1,708     $ (1,618 )   $ 710     $ (13,790 )
               
Reconciliation of net income (loss) per share:
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
GAAP net loss per share attributable to common stockholders, basic and diluted: $                             (0.06 )   $     (0.10 )   $             (0.33 )   $     (0.58 )
Non-GAAP adjustments to net loss per share 0.10     0.06     0.35     0.23  
Non-GAAP adjustments to weighted-average shares used to compute net loss per share (0.01 )            
Non-GAAP net income (loss) per share $ 0.03     $ (0.04 )   $ 0.02     $ (0.35 )
               
Reconciliation of weighted-average shares:
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
  (in thousands)
GAAP weighted-average shares used to compute net loss per share, basic and diluted                               46,783           40,521                   44,309           39,913  
Potentially dilutive shares 2,267         2,073      
Non-GAAP diluted weighted-average shares used to compute non-GAAP net income (loss) per share 49,050     40,521     46,382     39,913  
                       

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