If there is one business model Wall Street loves, it is cloud-based software-as-a-service (SaaS). Well, let me introduce you to Mindbody Inc (NASDAQ:MB), which fits that description to a tee. This company is a leading cloud-based provider of management software and payment platforms for the health and wellness industry.
MB really does it all, basically allowing wellness facilities to run their entire businesses via the cloud. The company’s platform is a one-stop shop for small and mid-sized companies, offering everything from marketing, scheduling, data management, inventory, sales processing and more.
But the key to a great business model isn’t just helping the client, it’s helping the customers of your client as well. Not only can every fitness facility, yoga studio and cycling boutique market itself to new members and then charge those folks their monthly fees, they can also give their own customers the option to sign up for and manage their personal class schedule. And the fact that this is all done on the cloud means that the wellness facilities and their members can access the system from anywhere in the world that has an internet connection.
Plenty of Growth Potential for Mindbody Stock
Mindbody’s success has been apparent in the numbers. In 2017, the company grew revenue by 31% and was able to report an annual profit for the first time ever. This year it is expected to increase earnings from 2 cents a share to 22 cents a share, and in 2019 that number is estimated to grow to 47 cents a share.
The company also recently announced its $150 million acquisition of Booker Software, which runs a cloud-based management platform for salons and spas. This addition will allow MB to expand its business into a new industry that is closely related to the one it already occupies, and it will also increase the company’s marketplace by about 10,000 potential new customers.
The stock experienced a healthy pullback over the last few weeks, but after holding its 50-day moving average (the blue line) it has bounced back to prices above $40.
The strength has broken the short-term downtrend line and the chart suggests that the momentum will continue. In the future, I look for it to make a run at its highs above $43.
The ability of facilities to manage their business via the cloud and also store data is key to the success of MB. And along with that comes the data that these businesses are able to capture and use to market new classes and specials to their customers. MB offers it all, and it represents the future of how all companies in the sector will conduct business.
Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of FUTR Stocks and the ETF Bulletin. Matt just launched two new investment advisories focused around the “next” generation investing theme. His trademark three-prong investing approach targets the mega-trends old Wall Street is missing out on. Click here for more information on the “NexGen” Experience.