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InnerWorkings Inc. Reports Operating Results (10-Q)

May 10, 2010 | About:
10qk

10qk

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InnerWorkings Inc. (INWK) filed Quarterly Report for the period ended 2010-03-31.

Innerworkings Inc. has a market cap of $273.77 million; its shares were traded at around $6 with a P/E ratio of 30 and P/S ratio of 0.68.

Highlight of Business Operations:

Our revenue increased by $17.9 million, or 19.0%, from $94.3 million during the three months ended March 31, 2009 to $112.2 million during the three months ended March 31, 2010. The revenue growth reflects an increase in both enterprise and transactional clients. Our revenue from enterprise clients increased by $17.1 million, or 27.9%, from $61.4 million during the three months ended March 31, 2009 to $78.5 million during the three months ended March 31, 2010. As of March 31, 2010, we had 179 enterprise clients compared to 150 enterprise clients under contract as of March 31, 2009. Additionally, revenue from transactional clients increased by $838,000, or 2.5%, from $32.9 million during the three months ended March 31, 2009 to $33.8 million during the three months ended March 31, 2010. The incremental transactional revenue is largely a result of improving same customer spend due to the improving economic condition.

Other expense increased by $1.0 million, or 206.7%, from other expense of $492,000 for the three months ended March 31, 2009 to other income of $525,000 during the three months ended March 31, 2010. The increase is due to the gain on sale of 55,000 shares we hold in Echo Global Logistics, Inc., a related party, for a gain of $723,000, offset by a decrease in interest income of $241,000. We did not sell any Echo shares during the three months ended March 31, 2009.

At March 31, 2010, we had $7.4 million of cash and cash equivalents and $20.0 million in short-term investments, which includes approximately $7.4 million in available-for-sale securities and $12.6 million in auction-rate securities. In October 2008, we entered into an agreement with UBS regarding our outstanding auction-rate securities. Under the agreement, we have the right to sell all our outstanding auction-rate securities back to UBS at their par value. The agreement allows us to exercise this right starting June 30, 2010, and the right will expire June 30, 2012. As a result of this agreement, our auction-rate securities are classified as short-term investments at March 31, 2010.

Operating Activities. Cash provided by operating activities primarily consists of net income adjusted for certain non-cash items, including depreciation and amortization, and the effect of changes in working capital and other activities. Cash provided by operating activities for the three months ended March 31, 2010 was $4.2 million and primarily consisted of higher earnings offset by $1.8 million used by working capital and other activities. The most significant impact on working capital and other activities consisted of an increase in accounts receivable and unbilled revenue of $11.8 million and an increase in accounts payable of $10.4 million, offset by a decrease in customer deposits of $2.1 million, a decrease in inventories of $1.9 million and a decrease in accrued expenses and other of $1.1 million.

Cash provided by operating activities for the three months ended March 31, 2009 was $7.7 million and primarily consisted of earnings and $3.8 million provided by working capital and other activities. The most significant impact on working capital and other activities consisted of a decrease in unbilled revenue of $4.0 million and an increase in accounts payable of $13.7 million offset by a decrease in accrued expenses and other liabilities of $10.3 million.

Investing Activities. Cash provided by investing activities in the three months ended March 31, 2010 of $191,000 was attributable to the proceeds on sale of marketable securities of $2.7 million and proceeds on sale of Echo shares of $727,000, offset by capital expenditures of $1.4 million, a $1,725,000 payment to seller and $59,000 in payments made in connection with acquisitions.

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