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InnerWorkings, Inc. (INWK) reported its financial results on Wednesday for results for the second quarter ended June 30, 2009.
The Company generated second quarter revenue of $100.1 million compared to revenue of $105.3 million in the year-earlier period. Second quarter net income was $2.1 million, or $0.05 per diluted share, versus net income of $6.1 million, or $0.12 per share. This missed estimates from analysts of $0.06 per share.
Eric Belcher, CEO of InnerWorkings, commented in a conference call, "We have just completed our 21st consecutive quarter of positive earnings in a difficult environment. We signed nine new enterprise contracts during the quarter, two of which are expected to generate in excess of $10 million in revenue when finally implemented. This was accomplished despite a substantial drop in print spend from our existing customers. We lost over $30 million in revenue due to the macro-economic factors that were primarily related to reduction in advertising and promotion spending by our clients."
He added, "With the inevitable rebound of consumer and business spending, we expect our clients to begin adding back to their print budgets and allow us to return to our overall historical organic growth rates of 15%-20%. We draw our confidence from the fact that with every new quarter we are taking a greater percentage of the overall print that is bought and sold in this world."
Mr. Belcher explained, "With 17 new enterprise wins in the first half of the year, and our expectation for 12-16 additional signings by the end of the year, we expect our 2009 enterprise clients to generate at least $50 million in revenues in 2010. Many of our new enterprise contracts also include minimum volume commitments with associated penalty clauses if they are not met. This gives us increased visibility into our enterprise clients' expected spend and insures that we also cover our shareholders' upfront investment in staffing and implementation."
He noted, "We now have 72 customers that we billed at least $1 million over the last 12 months. This is up from 48 a year ago, and with our new enterprise wins, our customer concentration from our top ten accounts has fallen to 31% of total revenues in Q2 from 39% a year ago."
Mr. Belcher said, "While our customers are spending less on print than a year ago, we are retaining our customer relationships. We are also proactively managing our current cost structure to insure the we are executing accoring to the reality of the print industry today. This is a challenge. Despite the drop in spend from our clients, the number of orders has actually increased. Our customers are simply putting in smaller orders, but the time and expense to support these orders has not decreased at the same rate. Despite these pressures, we continue to take costs out of the business."
To prepare for potential continued organic revenue declines, the Company will reduce costs by an additional $1.2 million during the second half of the year through salary reductions and mandatory unpaid furloughs.
Mr. Belcher concluded, "While most companies in our space will have a down year, we expect growth across almost every metric. We are now one of the largest, and certainly most sophisticated, buyers of printed materials in the world."
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