A former Navy SEAL built this $1.8 billion company to help book hair and yoga appointments — and Wall Street thinks it’s about to get huge (MB)


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MindBody, a public Software-as-a-Service (SaaS) company, may seem innocuous, but some on Wall Street anticipate big gains from the company if its strategy plays out as planned.
That strategy is customer acquisition through a push into salons and spas — aided in part by two big acquisitions in the first half of 2018.
Those acquisitions lowered MindBody’s guidance and sent its stock down 19% in the day after first quarter earnings.
But some on Wall Street have high hopes that MindBody could grow more than 25% annually for the few years.

One of the most inconspicuous software stocks of 2018 is a little-discussed fitness app called MindBody, valued by the public markets at about $1.8 billion, which helps exercise studio owners manage reservations and payments for classes like yoga and boxing.

Despite a 19% price drop following first quarter earnings in May, some on Wall Street are doubling down on the company and preparing for major gains on the back of an unprofitable, but growth-focused 2018.

Among them is KeyBanc analyst Brent Bracelin, who thinks MindBody could double its revenue by 2020, and easily maintain near hyper-growth for the next several years — despite the fact that it’s now three years out from its 2015 IPO.

“MindBody has emerged as the leading cloud software pure-play addressing the fitness, health, and beauty verticals with nearly 60,000 customers,” Bracelin wrote in May. “We see ample opportunity for MindBody to sustain 25%+ revenue growth for several years.”

For it to work, MindBody will have to make good on its strategy to expand into salons and spas, in order to bring in users who may not already be committed to fitness.

“It represents a larger market and consumer audience,” MindBody CEO Rick Stollmeyer told Business Insider. “Our app today has over 10 million registered users, and I think we do a really good job of connecting people who are already engaged in fitness, and increasing the number of classes they take and committing them further.”

“But I don’t think we have yet to do a good job of getting people who aren’t yet in that lifestyle. And so the salon and spa strategy is about doing just that,” Stollmeyer said.

A veteran of the Navy, MindBody’s CEO wanted to find his purpose

MindBody was launched around 2001 by Blake Beltram and Stollmeyer, who met in high school and became best friends.

Beltram, now an evangelist for the company, had been building software for small fitness studios in the late 1990s. Stollmeyer — who at the time had never done yoga – was working in technology after spending time as a submarine officer with the Navy.

“I was not terribly inspired by my career at that point. I was out of the Navy, I wasn’t seeing the great sense of purpose and mission, and [Beltram] was looking for a business partner,” Stollmeyer said. “At the time I remember he said, ‘We had 20 customers, I think we can take it to 200. And we’ll build a scalable business out of this.'”

With Stollmeyer as CEO, the team …read more

Source:: Business Insider

      

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