Mind Gym (LON: MIND) shares are down 35% on the release of trading numbers. As we can guess from the movement in MINS shares those results weren’t good. The base problem seems to be that folk just aren’t willing to spend money. It’s possible that they should be spending money, it’s even possible that they must - but if they won’t, they won’t. We saw this with Shearwater and other cybersecurity firms earlier in the year. Yes, everyone knows that more should be spent upon corporate network security. But while everyone was perfectly happy to discuss how important this was very few were willing to sign cheques. There’s not really much a supplier can do at that point other than hope they get over it.
Which is, rather, where Mind Gap is right now. From the announcement: “Trading in the first half of FY24 has been below our expectations as the challenging macro-economic environment has resulted in some clients undertaking restructuring programmes and so deferring training and commitment to new spend, and a greater number of clients being cautious, which has pushed out timeframes and procurement of new projects. In the US the effect has been particularly marked. In EMEA, performance has been more resilient with the exception of the delay in H1 of the start of a significant framework agreement of £2m, which has moved to H2 FY24.”
So, revenues are expected to be some 20% or so down, this pushes the group into a loss. The strain upon credit facilities should be manageable given the cost cutting being done.
Mind Gym share price from Google Finance
The real problem though is this: “Businesses continue to operate in a tight labour market with a shortage of skills. As companies seek to attract, retain and develop talent, they continue to see a compelling need to invest. There is no scale player in the highly fragmented £350bn L&D market and MindGym offers a standout proposition in culture, leadership and productivity with 23 years of proprietary IP, clients who include most of FTSE-100 and S&P-100 and an omnichannel solution that integrates live, virtual and digital, fuelled by data.”
People ought to be buying our training as they face a battle to hire staff. Therefore we expect matters to improve. Well, they might. Another possible response is for companies to ask why they should train people up if it’s so easy for them to leave for another job? And there’s also always that possibility that we actually do get a recession, rather than just corporate worrying about it, meaning a significant decline in corporate spend.
Which way it will turn out, well, sadly, there’s no substitute here for just waiting and seeing.