Mind Gym (AIM:MIND) told investors it expects full-year revenue of circa £25m, the AIM-listed human capital and business improvement group said in a trading update on Monday, downgrading its outlook after corporate clients slashed HR spending in the first half.
The group, which is transforming itself from an episodic training provider into what it calls a strategic behavioural-change partner, said half-year revenue for the six months to 30 September will come in at £11.5m, down 15% from £13.5m a year earlier. Clients cut back amid uncertainty over AI, supply chain pressures and energy costs, Mind Gym said.
The adjusted EBITDA loss for the half is expected to widen to £2.6m, against a £1m loss in the same period last year, driven by the lower revenue and a higher proportion of face-to-face delivery at lower gross margins.
Recurring licence revenue bucked the trend, rising 45% year-on-year to an expected £2.1m and reaching around 17% of total first-half revenue, continuing the shift toward licensing, non-cancellable contracted revenue and the newer MindGym Membership product that drove a similar recurring-revenue increase in the last full year.
The group has stripped out a further £0.9m of annualised costs so far in the current year, taking total cost reductions over the past eighteen months to £9.4m.
Net debt stood at £1.6m as of 30 September, against £1m a year earlier, even as cash collections of around £16m in the period reflected efforts to accelerate cash receipts; the company said it retains adequate liquidity.
Pipeline additions in the first half totalled £47m, down from £55m a year earlier, with MindGym Memberships and associated revenues now making up over half of the second-half pipeline, though the board flagged slower conversion and smaller-value deals than historically seen, prompting a more cautious view for the remainder of the year.
Mind Gym said it expects the second half to be both profitable and cash generative, helped by anticipated growth in membership subscription revenue and the lower cost base, and now guides to a full-year underlying EBITDA loss of between £1.2m and £1.5m.
The private strategic review the board announced on 27 January, under which it is in discussions with selected third parties that could result in an offer for the company, remains ongoing.
Mind Gym expects to publish half-year results in the first half of December.