Mind Gym Returns to Profitability in H2 as Recurring Revenue Base Grows

Mind Gym’s FY26 results are a classic turnaround-style update: the headline revenue number looks weak, but underneath it the business is starting to look more stable and more repeatable. The company is shrinking its reliance on one-off training projects and pushing harder into recurring membership and licensing income – and that matters because repeat revenue is usually higher quality, easier to forecast and often valued more highly by the market.

That said, this is not a clean victory lap. Revenue still fell, the group still made a statutory loss, and the balance sheet is tighter than investors would like. So the big takeaway is this: progress is real, but the recovery is not finished.

Mind Gym FY26 results: the key numbers retail investors need to know

Metric	FY26	FY25	Change
Revenue	£29.9 million	£38.6 million	-23%
Revenue like for like	£29.9 million	£32.3 million	-7%
Gross profit margin	87.2%	86.6%	+0.6 percentage points
Adjusted EBITDA	£0.6 million profit	£1.9 million profit	Lower
Statutory loss before tax	£5.2 million	£6.2 million	Improved
Adjusted diluted EPS	(2.15p)	(4.16p)	Improved
Cash generated from operations	£0.6 million	£1.5 million	Lower
Net debt	£0.3 million	Net cash £0.6 million	Weaker

Mind Gym revenue fell, but the quality of sales improved meaningfully

The ugly bit is straightforward: revenue dropped to £29.9 million from £38.6 million. That is a 23% fall on the statutory view, although the company says the better comparison is like for like, where revenue fell 7% after stripping out a £6.3 million framework contract that benefited FY25 and ended in that year.

That distinction matters. A business losing a chunky one-off contract is not ideal, but it is different from a business seeing its whole customer base collapse. On the like-for-like measure, the decline is still a decline, just a much less dramatic one.

There was also a definite improvement through the year. H1 revenue was £13.5 million and H2 revenue was £16.4 million, with the second half around 20% higher than the first half. For investors, that sequential trend is one of the more encouraging features in the whole announcement.

Recurring revenue growth is the most important positive in these Mind Gym results

The real strategic story is recurring income. Licensing and membership revenue rose to 17% of total revenue in FY26 from 9% in FY25, and reached approximately 26% of revenue in Q4.

Mind Gym Membership customers increased to 62 from 11 a year earlier, a 463% jump. Membership revenue contributed approximately £5.0 million, and the company says recurring membership revenue was around 17% of total revenue in the year and 21% in the second half, or about £3.5 million in total.

In plain English, recurring revenue means customers pay for ongoing access rather than buying a one-off workshop and disappearing. That usually makes earnings more durable. It also tends to reduce the quarter-to-quarter lumpiness that smaller listed companies often struggle with.

Mind Gym profitability in H2 shows the cost-cutting is working

Mind Gym did what plenty of companies talk about but do not always deliver: it cut costs hard enough to offset weaker sales. Adjusted administrative expenses fell 19% to £25.5 million from £31.7 million, while statutory administrative expenses dropped to £31.0 million from £39.6 million.

The result was an adjusted EBITDA profit of £0.6 million for the full year, despite an adjusted EBITDA loss of around £1.0 million in H1. So the company genuinely did return to profitability in H2, exactly as the headline says.

Gross margin also improved to 87.2% from 86.6%, helped by a greater mix of licensing revenue. That is another good sign because licensing tends to be more scalable than delivery-heavy work.

There were still £4.2 million of exceptional costs, including a £3.0 million digital asset impairment and £1.2 million of staff restructuring. An impairment is basically an accounting write-down – in this case, old internally developed digital assets were marked down as Mind Gym moves to partner platforms instead. That £3.0 million charge is non-cash, which softens the blow, but it still tells you previous tech investment did not fully deliver.

Mind Gym balance sheet risks: net debt, overdraft reliance and going concern uncertainty

This is the part investors should not gloss over. The group ended the year with net debt of £0.3 million, compared with net cash of £0.6 million a year earlier. It had cash and cash equivalents of £494,000, but had utilised £798,000 of its overdraft facility.

The overdraft facility was renewed after year-end, but it was cut from £4.0 million to £2.0 million and now runs to 31 March 2027. That is still enough for current plans, according to the board, but it gives the company less breathing room.

Most importantly, the auditor drew attention to a material uncertainty related to going concern. That sounds dramatic, so here is the plain version: the business is still expected to continue trading, but there is uncertainty tied to future funding needs and the assumption that banking support will remain available if required beyond the current facility period.

I would not ignore that. It does not mean Mind Gym is in immediate trouble, but it does mean the recovery has to keep moving in the right direction.

Mind Gym strategy update: better products, partner platforms and stronger sales discipline

Operationally, management looks focused. The company is moving away from building everything internally and is instead using external partners such as EvolveAssess for diagnostics and Thought Industries for its digital learning platform.

That should lower cost, speed up rollout and reduce the burden of maintaining bespoke tech. For a business of this size, that feels sensible rather than glamorous.

Sales execution also appears to be improving. New logo revenue – meaning revenue from new clients – rose from 4% in Q1 FY26 to 19% in Q4 FY26, and the company has changed incentives again in FY27 to focus on new business bookings and membership renewals.

Strategic review and takeover possibility: why Mind Gym shareholders should pay attention

One wildcard here is the ongoing strategic review. The board said in January it was in discussions with selected third parties and repeated that the process remains ongoing and could result in an offer for the company.

That is clearly significant. If the transformation starts to show traction while the market value remains depressed, Mind Gym could look more interesting to a buyer than the raw revenue decline suggests.

There are no details yet on timing, valuation or likely outcome, so investors should treat it as a possibility rather than a promise. Still, it adds a layer of optionality to the story.

Mind Gym outlook for FY27: modest growth promised, but the market is still tough

Management says FY27 has started slowly, with pressure on HR budgets continuing. Even so, it expects a return to modest revenue growth, positive EBITDA and a strengthened cash position.

To help that happen, the company is taking out another £2.0 million of annualised costs. That feels prudent, although there is always a limit to how much a company can cut before it starts to affect growth capacity.

What these Mind Gym final results really mean for investors

My view is that this update is cautiously positive, but only cautiously. The revenue line is still under pressure, and the going concern wording plus reduced overdraft headroom are real negatives.

But there is also proper evidence that the business model is improving. Recurring revenue is rising, H2 was profitable, margins improved, costs are lower, and the sales mix is moving in a better direction.

If Mind Gym can convert that improving pipeline into modest top-line growth in FY27, these results may end up looking like the year the turnaround started to become credible. If not, investors will focus much more heavily on cash, funding and the strategic review. Right now, this is a recovery story that has earned attention – but not blind trust.