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InnerWorkings Announces First Quarter 2016 Results

Tuesday, May 10, 2016

Press release from the issuing company

First quarter revenue grew 12%; significant profit improvement; continued momentum of new contract wins

CHICAGO - InnerWorkings, Inc. (NASDAQ: INWK), the leading global marketing execution firm, today announced financial results for the three months ended March 31, 2016. For all Non-GAAP references below, please refer to the non-GAAP reconciliation tables at the end of this release for more information.

"InnerWorkings is off to a very strong start in 2016 in terms of profitable organic growth and new contracts signed," said Eric D. Belcher, Chief Executive Officer of InnerWorkings. "By leveraging our technology, breadth of capabilities, and strong reputation, we are on track to achieve our financial targets in 2016 while continuing to deliver greater value for large, marketing-intensive companies globally."

First Quarter 2016 Highlights

  • Revenue was $271.1 million, an increase of 12.0% compared with $242.1 million in the first quarter of 2015.
  • Gross profit was $61.9 million, or 22.9% of revenue, a 12.5% increase compared to $55.1 million, or 22.7% of revenue, in the same period of last year.
  • Non-GAAP adjusted EBITDA was $12.6 million, reflecting 32.5% growth as compared to $9.5 million in the first quarter of 2015.
  • GAAP net loss per share was $0.04 and GAAP net loss was $2.1 million, mainly due to an after-tax cash charge of $3.0 million related to the global realignment strategy and a $1.9 million increase in our earnout obligation due to the strong performance of two previously-acquired businesses. Non-GAAP diluted earnings per share were $0.06, an increase of 112.2% compared to $0.03 in the first quarter of 2015.

Operational Highlights

  • InnerWorkings has been awarded several new enterprise contracts so far during 2016, which collectively are expected to exceed $30 million of annual revenue at full run-rate, with nearly half stemming from expanded relationships with active clients.
  • The largest of the new client wins includes managing several marketing execution services for a large direct and franchise consumer and commercial services company through a dedicated onsite team of seven production managers and technology professionals.

"We succeeded in growing the top line while managing our cost structure to achieve meaningful operating leverage in the first quarter," said Jeffrey P. Pritchett, Chief Financial Officer of InnerWorkings. "We expect to achieve additional margin improvement as we move through the year, and to increase operating leverage beyond 2016 as we on-board a growing list of new enterprise clients and continue to expand our partnerships with current clients."

Financial Results

First quarter non-GAAP diluted earnings per share were $0.06 and GAAP net loss per share was $0.04. The two largest components of the difference between the GAAP and non-GAAP earnings per share were the strong financial performance of two businesses acquired several years ago, which created an increase in the value of our contingent consideration balance, and employee severance and contract termination costs in connection with the global realignment strategy announced in December 2015. InnerWorkings expects the realignment to be substantially complete by the end of the second quarter, leading to at least $3.0 million in profit improvement realized during 2016 and $5.0 - $6.0 million annually thereafter.

Outlook

The Company's guidance for 2016 remains unchanged. InnerWorkings expects 2016 annual revenue to range between $1.06 billion and $1.08 billion, non-GAAP adjusted EBITDA to be between $58.0 million and $62.0 million, and non-GAAP diluted earnings per share to be $0.30 to $0.33.

 

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