Mind Gym PLC

("MindGym", the "Group" or the "Company")

Final results for the year ended 31 March 2025

Return to adjusted EBITDA profitability as MindGym executes on its strategy to transition from episodic training provider to become a behaviour change partner

MindGym (AIM: MIND), the global provider of human capital and business improvement solutions, announces its audited results for the year ended 31 March 2025.

Results summary

¹Adjusted results exclude the impact of £5.4m (FY24: £8.9m) of exceptional costs incurred in the period

Strategic progress building the foundations for scalable growth by making MindGym solutions easier to buy, easier to sell, and easier to renew

·      MindGym is executing on a transformation strategy to move from an episodic training provider to a strategic behavioural-change partner. The group has made good progress against this strategy:

o  The launch of packaged subscription solutions that enables clients to license MindGym's content while selecting their preferred method of delivery (either in-house or through MindGym's facilitator network). This new go-to-market approach will increase client stickiness and recurring revenues.

o  Signing new technology partnerships to improve operational efficiency and enhance product features and reporting capabilities. This included a new third-party coaching platform and a new booking management system, replacing internally developed tools. This led to the £4.4m digital asset impairment charge recognised in H2.

o  Introducing new products including Lio, the new AI based coaching tool. Significant progress has also been made on developing MindGym's High Performance Behaviour Model, powered by our predictive diagnostic, 10X, which links key behaviours to business performance outcomes and MindGym products.

·      Entering the second year of the three-year plan the business will focus on:

o  Driving commercial rigour through our globally aligned sales team with strategic clarity and clear accountability. The Group will implement simplified contracting models and focus activities on targeting new client acquisition driven by the new sales commission scheme and marketing-generated leads.

o  Aligning all core product assets to the new High-Performance Behavioural Model by hardwiring its IP into existing and new solution sets, while building a unified data and analytics infrastructure to support and scale its impact.

·      In the medium-term, a key focus will be on accelerating the digitisation of our products to enable integration into partner platform ecosystems.

Financial and Operating summary

·      Trading conditions were challenging in FY25, resulting in revenues of £38.6m down 14% on FY24's £44.9m:

o  HR investments have continued to face greater scrutiny and slower decision making by business leaders.

o  At the same time, the talent and HR landscape is also undergoing rapid transformation, with an influx of technology platforms. MindGym's competitive advantage in this landscape is the combination of our IP and integrated product offering including coaching, diagnostics, training and digital reinforcement tools tied to client business outcomes. 

o  EMEA performance was resilient to market challenges being +1% on prior year.

§ FY25 represented the final year of the multi-year energy framework agreement which contributed £6.4m of revenue

o  US revenues were down 31% on prior year, impacted by the uncertain political and economic environment and contracted DEI spend as businesses reacted to the executive orders by the new US administration.

·      In a year of recalibration, the cost reduction measures have enabled the business to deliver adjusted EBITDA profit despite the challenging market conditions:

o  Return to adjusted EBITDA profitability of £1.9m, a £2.2m improvement on the £0.3m loss in FY24.

o  £13.8m reduction across operating and capital expenditure in FY25, despite investments continuing to be made in strategic product development and marketing activities. This was driven by:

§ Adjusted operating expenditure (excluding exceptional items, depreciation and amortisation) of £31.7m, down 19% on FY24 (£39.1m)

§ Capital expenditure of £1.6m, down 62% on FY24 (£4.3m)

o  Exceptional costs of £5.4m (FY24: £8.9m), comprised the following items:

§ Digital asset impairment - £4.4m (FY24: £6.6m)

§ Restructuring costs - £1.0m (FY24: £1.8m)

§ FY24 comparatives also included a non-cash impairment of the US office lease of £0.5m

o  Loss before tax of £6.2m (FY24: loss of £12.1m), driven by reduced revenue and the impact of exceptional costs

·      MindGym retains sufficient cash and liquidity:

o  At 31 March 2025, the Group had cash of £0.6m (FY24: £1.4m), a decline of £0.8m from FY24, but in line with expectations as the business focused cash generated from operations into strategic investments.

o  A further cost reduction exercise implemented in early FY26 will reduce operating and capital expenditure further ensuring the business will remain cash neutral.

o  The Group retains access to its £4m overdraft facility successfully renewed in March 2025.

Current Trading and Outlook

·      Given the continued macroeconomic uncertainty and unpredictability of client purchasing decisions, the Group is taking a more cautious view on anticipated revenue growth and now expects to deliver modest underlying revenue growth in FY26 (excluding the effect of the multi-year energy framework which represented c.£6.4m of revenues in FY25).

·      Cash generated from operations will be reinvested in the business to fund strategic investments in long-term growth initiatives and the Group expects to end the year in a cash neutral position.

·      In the medium-term, the Board remains confident of returning to revenue growth of more than 10% CAGR, with EBITDA margins exceeding 15%.

Christoffer Ellehuus, Chief Executive Officer of MindGym, said:  

"We have made good progress in year one of our three-year transformation strategy to transition from episodic training provider to become the preferred behaviour change partner of our customers. Despite a challenging year and market headwinds, we delivered a return to adjusted EBITDA profitability, whilst laying strong foundations, remaining laser-focused on execution, and making significant strides towards our longer-term goal of returning to growth." 

The Company will host a webcast and conference call for analysts and investors at 9:00am BST today. If you would like to attend the webcast and conference call, please contact mindgym@mhpgroup.com.

Enquiries    

MHP (for media enquiries)                                            +44 (0) 7885 447 944

  Reg Hoare                                                                    mindgym@mhpgroup.com

  Katie Hunt

  Veronica Farah

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated by the Market Abuse Regulation EU no.596/2014, as it forms part of the UK law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

About MindGym

MindGym is a company that delivers business improvement solutions using scalable, proprietary products which are based on behavioural science. The Group operates in three global markets: business transformation, human capital management and learning & development.

MindGym is listed on the London Stock Exchange Alternative Investment Market (ticker: MIND) and headquartered in London. The business has offices in London, New York and Singapore.

Further information is available at www.themindgym.com

Statement of the Executive Chair

The talent and HR landscape is undergoing a particularly rapid transformation due to an influx of private equity-backed HR tech platforms and digital solutions - from talent platforms to wellbeing apps - that have crowded the market.  Nonetheless, most L&D leaders concede that up to a quarter of their annual spend isn't used or doesn't deliver value and in response, we believe a more commercial, results-driven era for HR is emerging - one in which business leaders are demanding clear evidence of return on investment.

This is a trend that plays directly to MindGym's strengths. We have always placed behavioural science and measurable impact at the heart of what we do. Our Galderma case study illustrates the positive impact on top line and EBITDA growth MindGym leadership programmes can have.

I'm pleased that, with the realignment of our cost base and a refocus of investments, the Group has managed to navigate the market headwinds and returned to EBITDA profitability.

This provides a firm foundation as we enter the second year of our three-year transformation strategy to evolve the business from episodic training provider to behaviour change partner.

At the core of the strategy is licensing our market-leading IP to clients.  IP licensing both creates more SaaS style, repeatable revenue, and provides the basis for building a deeper and more sustainable relationship as clients buy additional services such as delivery through MindGym certified coaches, digital eWorkouts and Performa, our 1:1 coaching service.

This will lead to a significant change in MindGym's business model, moving to a much greater proportion of subscription revenues and opportunities to cross-sell across the full range of leadership, performance and professional capabilities, creating deeper, multi-year relationships. 

Looking ahead, we believe there is a significant and growing opportunity for organisations to rethink how they deliver talent development. Just as functions like Marketing have evolved by becoming more data-driven, so too will HR and, in particular, the talent market in which MindGym operates. 

MindGym is well positioned to lead this change as we build the unified High Performance Behavioural Model, with our predictive diagnostic 10X at the heart of the model.  This will enable us to provide data-driven, targeted, scalable, and highly personalised development that will remove waste and deliver measurable business impact faster. 

We are also seizing the benefits of AI.  We have launched an AI Coach (Lio) for tricky conversations, where you choose the profile of your interlocutor (passive, aggressive, etc) and practice live with a bot that talks back in the style you have chosen.  Lio, who has been taught 25 years of MindGym's unique IP about what really works, then gives you detailed feedback on everything from tone and language to messaging and manner.

With the combination of diagnostics, live and virtual workshops, 1:1 coaching, AI coaching and digital learning across the full range of leadership and professional skills, MindGym will be able to offer clients a highly differentiated and powerful talent ecosystem. This will allow companies to cut costs and to pinpoint investments which will deliver greater and more certain impact on business KPIs.

We believe that MindGym's new talent ecosystem will differentiate us in this highly fragmented market (the largest companies in L&D account for less than 1% of market share).  As businesses increasingly recognise the value of deep partnerships with one or two best in class providers, there is a substantial opportunity for MindGym which we are very focussed on capturing.

Founder and CEO transition

I'm delighted to say that the CEO succession has seen the smooth passing of the baton from me to Christoffer Ellehuus who took over as CEO at the start of the year.

Christoffer has built strong relationships with the team and now, increasingly, with clients, and has been adept at nourishing MindGym's core strengths while also making the necessary changes to set the business up for sustainable growth.

As Executive Chair, along with my co-founder, MindGym President Dr Sebastian Bailey, my executive involvement is predominantly in those areas where founder contributions are still helpful, namely market presence, innovation and some key client relationships.

It is our intention to continue to reduce founder involvement at the pace which the business performance allows. 

The Board

In October 2024 Dominic Neary stepped down as Chief Financial Officer to pursue a new opportunity.  Emily Fyffe, formerly Group Finance Director, was appointed as his successor and joined the Board on 22 October 2024.  This transition aligned with the Board's succession plans and I'm delighted with this appointment and Emily's progress in this role.

The search for a new Independent Non-Executive Director continues as we seek to diversify the skills and enhance the ratio of independent directors on the Board, and an update will be provided in due course. 

Non-profit activities: ParentGym

In 2009, we launched ParentGym, a programme providing free training to parents of children aged 2-11. It has been shown by independent academic studies to have a significant impact on parenting self-confidence and mental health as well as childhood outcomes.  In FY25, we ran sessions for over 900 parents with the aim of helping them to grow our next generation, and certified 16 additional teachers and volunteers to deliver Parent Gym.  We will continue this in FY26 with the intention of making more primary schools self-sustaining Parent Gym hubs. Many of our employees use their charity days to support ParentGym as well as their chosen charities.

Dividend

No dividend has been paid or proposed for the year ended 31 March 2025.  The Board will continue to keep the appropriateness of dividend payments under periodic review.

Outlook

We are beginning the second year of a 3-year transformation. In the first year we completed much of the infrastructure simplification and rationalisation of investments to provide the platform for growth. This year's focus is on commercial excellence.

The actions taken during FY24 and FY25 to realign the Group's cost base are expected to provide greater resilience and to ensure that MindGym is cash neutral in the current challenging Human Capital market conditions.

We are excited about the road ahead. With our strong foundations, differentiated capabilities, and a growing demand for accountability in talent investments, MindGym's proposition is well placed for the future of people development. I want to extend my sincere thanks to our clients for their partnership, our exceptional team for their commitment, and our shareholders for their continued support for MindGym plc.

Octavius Black

Executive Chair

11 June 2025

CEO's review

FY25

FY25 was a challenging year for the business as the Human Capital market continued to be impacted by economic headwinds and increased competition from PE-backed HR platforms and technologies.

The US market was most impacted driven by the challenging political and economic environment. DEI spend continued to contract as businesses reacted to the executive orders by the new US administration.  EMEA remained flat, supported by the multi-year energy framework agreement, which has now concluded, having delivered the expected levels of revenue over its 3-year term.  The IP we developed to support this game-changing solution is expected to provide significant future benefits as it is leveraged for MindGym's core content.

Despite these challenging market conditions, we are pleased to deliver a return to adjusted EBITDA profitability, a significant improvement on the loss in FY24.  This was driven by the annualised impact of the restructuring undertaken in FY24 and on-going activities to manage the cost base of the organisation. 

In a year of recalibration, we made significant progress on our strategic priorities for FY25 to make MindGym easier to buy, easier to sell, and easier to renew. We implemented several new platform partnerships to streamline and upgrade our client experience such as our new AI speech coaching platform Lio. We also evolved our go-to-market strategy with the launch of a new packaged subscription solution and a new website to clarify our value proposition.

Market Opportunity:

The Learning and Development (L&D) sector is vast and highly fragmented with the $353bn market forecasted to grow by 12% CAGR between 2025 and 2030.

Client budgets are typically allocated across large numbers of suppliers, often with overlapping concepts and messages. This can result in ineffective programs with low utilisation and little data to provide visibility into the overall impact. Due to the increase in remote working, the market has also seen a significant increase in new HR tech platforms related to coaching, talent mobility, and development most of them backed by significant private equity investments.

In addition, challenging macroeconomic conditions are making businesses more cautious with their investment decisions. In response, MindGym is focusing on the most prominent talent management issues facing businesses: leadership, productivity and culture change and also by highlighting the Groups unique combination of IP, technology and diagnostics to deliver proven business impact.

MindGym is uniquely positioned as a true behaviour change partner: delivering data-driven diagnostics, actionable insights, world-class learning experiences, and measurable behaviour change at scale.  Clients are seeking partners who move beyond basic skills training to deliver lasting behavioural change that directly impacts performance outcomes. They also want comprehensive global L&D solutions delivered both virtually and in person - especially in MindGym's core focus areas of leadership and interpersonal skills.

3-year transformation journey

Year one of our transformation journey focussed on strengthening the operational foundations for growth, making MindGym easier to buy, easier to sell and easier to renew.  We transitioned operationally from a "build to partner" model, enabling greater scalability, reporting and insights and delivery capabilities. On the product side, we advanced our offering with the launch of content subscriptions and our new AI coaching tool Lio.  We sharpened our commercial and brand presence - introducing a refreshed website, evolving our tone of voice and grounding our marketing approach in data and client insights. 

In FY26, we will continue to build on these foundations with an increased focus on commercial effectiveness. We have a globally aligned sales team under new global sales leadership with consistent expectations and performance standards.  The focus will be increasingly geared towards new client acquisition, in part facilitated by new marketing generated leads.  We will continue to improve our go-to-market proposition by simplifying our pricing strategy and maturing our packaged subscription offering. 

In FY27, we plan to evolve the MindGym offering through the digitisation of our content and solutions, which will in turn allow us to scale the business through strategic commercial partnerships and platforms.

MindGym's Behaviour Change Model

As we enter a new fiscal year, I am excited to launch our new integrated leadership model and client solutions to the market. This new offering will unify 25 years of MindGym IP and psychometric data under a new Behaviour Change Model linked to business performance outcomes.  This will be powered by the world's most predicative diagnostic, 10X: and provides us with a "Rosetta Stone" of behavioural change that in turn allows us to link MindGym's individual diagnostics, training content, and coaching platform into a unified set of solutions that help drive client performance outcomes. 

Outlook

Given the continuing macro-economic uncertainty and unpredictability of client purchasing decisions, the Group is taking a more cautious view on expected revenue growth and therefore expects modest underlying revenue growth in FY26 (excluding the effect of the multi-year energy framework).  Cash generated from operations will be reinvested as we continue to focus on strategic marketing, product priorities and rebuilding our sales team as we prioritise commercial execution.

In the medium term, the opportunity for MindGym in this highly fragmented market is significant. We remain confident of returning the business to revenue growth of >10% p.a. and >15% operating EBITDA margins.  I joined MindGym for the exceptional IP, talent of our team and the strength of our client relationships and am excited to continue leveraging these on our journey to profitable, sustainable growth.

Christoffer Ellehuus

Chief Executive Officer

11 June 2025

Financial review

Revenue for the year of £38.6m represented a year-on-year reduction of 14% (FY24: £44.9m) reflecting challenging macroeconomic conditions in the professional services sector. Client decision-making slowed: in the US, budgets were held back driven by hesitancy over the political and regulatory changes, particularly in DEI, whilst the UK market was impacted by the impending National Insurance changes and new employment rights legislation. HR investments continue to face greater scrutiny by business leaders, with clients increasingly requiring 'pilots' before committing to extensive contracts.   As a result, underlying performance excluding the impact of the energy framework agreement was £32.2m, down £6.9m (18%) versus FY24.

Due to the ongoing market headwinds, we continued to focus on realigning the cost base and implementing operational efficiencies to deliver a return to adjusted EBITDA profitability. This involved reducing annualised expenditure by over £5.9m.

These changes resulted in one-off exceptional charges in the period of £5.4m comprising of:

-     £4.4m digital asset impairment

-     £1.0m staff restructuring

As a result of the cost-mitigating actions and increased vendor scrutiny, there was half-on-half improvement in profitability across the period, £0.8m adjusted EBITDA in H1 and £1.1m in H2. This resulted in an overall adjusted EBITDA for the year of £1.9m (FY24: £0.3m loss).

There was a loss before tax for the year of £6.2m, impacted by the exceptional charges for the period. This compared to a loss in FY24 of £12.1m.

This loss resulted in an adjusted diluted EPS of (2.92p) (FY24: 4.25p loss) and an unadjusted diluted EPS of (6.92p) (FY24: 10.86p loss). 

As at 31 March 2025, the Group has sufficient liquidity with cash of £0.6m and access to a £4m bank overdraft facility. We expect to deliver a cash neutral position in FY26 as operating profits are reinvested in the business. 

Revenue

The economic headwinds, which impacted performance in the period, were most pronounced in the US, particularly in the technology and healthcare sectors. As a result, revenue for the US region fell 31% YoY to £14.7m (FY24: £21.2m) or 29% in constant currency.

Revenue performance in EMEA was resilient during the first half of the year, as performance was boosted by the multi-year energy framework agreement, which has now concluded having delivered the expected levels of revenue. The second half saw a decline, in part due to the conclusion of the multi-year agreement and a slowdown in the services sector. On an underlying basis (excluding the impact of the energy framework agreement) revenue reduced £6.9m versus FY24 (18%).

Delivery revenue remained the primary driver, contributing 66.3% of total FY25 revenue (FY24: 67.4%), with 43% being delivered face-to-face as clients increasingly seek to connect colleagues in person.

Digital revenues decreased to 7.3% of total revenue (FY24: 10.2%), as client appetite for digital eLearning decreased, driven by low employee engagement and take-up. During the period, the Group contracted a new third-party coaching platform for one-to-one coaching that will provide improved features for clients. The AI coaching tool, Lio, was introduced to the market late in Q4 and enables clients to offer employees tailored coaching in a scalable and cost-effective way.

Design and Advisory (D&A) services saw a net 2.8% increase, underpinned by the successful acquisition of several large, multi-year programmes.

Licensing revenue increased by 1.9% year-on-year, driven by the launch of the content subscription packages, granting clients greater flexibility to leverage our content using their own in-house certified MindGym facilitators. This growth is expected to accelerate in FY26 with the continued improvement of the packages, designed to increase stickiness with clients and generate recurring revenue.

Revenue mix by type compared to previous year

Gross profit

Gross margin increased to 86.6% (FY24: 86.2%), up 0.4%, primarily reflecting a lower mix of delivery revenue and increase in licensing.

Both regions saw an improvement in gross margin; EMEA gross margin of 85.9% represented an increase of 0.5% on FY24 (85.4%), and US gross margin of 87.8% represented an increase of 0.7% on FY24 (87.1%).

Operating expenditure and profitability

Adjusted administrative expenses, excluding depreciation, amortisation and exceptional costs, of £31.7m represented a year-on-year reduction of 19% (FY24: £39.1m), reflecting the annualised impact of the FY24 major cost reduction exercise, further rationalisation of the cost-base including annualised headcount reductions of £5.3m and annualised vendor savings of £0.6m.

This resulted in an adjusted EBITDA profit for the period of £1.9m (FY24: £0.3m loss), at a margin of 4.8% (FY24: -0.8%).

The loss before tax for the year was £6.2m (FY24: loss of £12.1m). This figure was impacted by £5.4m of exceptional costs, which included £1.0m in restructuring costs and £4.4m non-cash impairment of digital assets. 

Capital expenditure

In FY24, a major review of digital product expenditure was undertaken, which resulted in a decision to focus investment on digital assets that were already revenue generating, principally Performa and Diagnostics. This contributed to a 62% year-on-year reduction in capital expenditure to £1.6m (FY24: £4.3m), with investment activities focused on building out Diagnostics.  

In H2, in line with the Group's strategy to leverage digital partnerships to drive operational efficiencies and deliver scalable programmes, the Group signed two vendor agreements which replaced internally developed intangible assets that were in use, including the Performa platform. This resulted in a one-off non-cash £4.4m impairment charge, £3.6m of which related to Performa. MindGym's award winning Precision coaching methodology will continue to be delivered through the new vendors platform in a more scalable and cost-effective way.  

Taxation

A net full year tax charge of £2m was booked in FY25 (FY24: -£1.3m).

The tax credit generated from the loss before tax was offset by a reduction in the deferred tax asset recognised. 

The Group policy is to recognise deferred tax assets for carried forward losses expected to be used in a 3-4 year period following year end.  At year end, the Group reassessed the recoverability of its deferred tax asset related to previously recognised tax losses and determined it is appropriate that a deferred tax asset on carried forward losses should be recognised up to the value of the existing deferred tax liability in the UK. As a result, a deferred tax asset of £0.5m has been recognised on carried forward losses of £2.0m. 

The Board has full confidence in the strategy and generating future profits and will reassess the recognition of deferred tax assets in future reporting periods.  The Group carries £14.2m of unrecognised tax losses (FY24: nil) resulting in an unrecognised deferred tax asset of £3.5m. 

There is no time limit for utilising trade losses in the UK and the Board remains confident of fully utilising the tax losses in the future.

During the period, HMRC introduced a merged R&D scheme, which changes the method of obtaining relief for MindGym. Under the new scheme, an above-the-line credit is recorded in the P&L on qualifying expenditure. This resulted in £0.1m in other income being recognised.  The new scheme results in a net benefit of 16.2% versus 18.6% under the previous regime.