InnerWorkings Inc. Posts Q4 2018 Net Loss of $29.3 Million
InnerWorkings Inc., Chicago, announced financial results for the three and 12 months ended Dec. 31, 2018.
“Our solution is resonating more than ever in the marketplace and we're excited by the global brands we're onboarding or who are expanding their work with InnerWorkings already in 2019,” said CEO Rich Stoddart. “It has become clear that translating this growth into returns for our shareholders requires a multiyear transformation to drive sustainable operating leverage in our business. Through the progress we've made on our cost reduction plan, we've also developed a better understanding of what is required to realize the full potential of this business. We are committed to doing the hard work to significantly improve the return on every dollar spent serving our clients, while still delivering the same excellent service quality they expect.”
Financial and Business Highlights
- Gross revenue was $294.2 million in the fourth quarter of 2018, a decrease of 4 percent compared to $305.4 million in the fourth quarter of 2017. Excluding currency impacts, fourth quarter gross revenue decreased 2 percent compared to the same period of last year. Full-year gross revenue was $1,121.6 million, a decrease of 1 percent compared to $1,138.4 million in 2017.
- Gross profit (net revenue) was $60.1 million, or 20.4 percent of gross revenue in the fourth quarter of 2018, compared to $68.8 million, or 22.5 percent of revenue, in the same period of last year.
- Net loss for the fourth quarter of 2018 was $29.3 million, or $0.57 per diluted share, compared to net loss of $0.7 million, or $0.01 per diluted share in the fourth quarter of 2017. Fourth quarter net loss includes $20.9 million of goodwill and other asset impairment charges, $5.5 million of inventory and other operational adjustments impacting gross profit, and $2.7 million of bad debt expense. The impacts to gross profit and bad debt mainly result from unprofitable client relationships that have been terminated.
- Non-GAAP diluted loss per share for the fourth quarter of 2018 was $0.11, compared to earnings of $0.01 in the fourth quarter of 2017.
- Adjusted EBITDA was $1.3 million in the fourth quarter of 2018, compared to $10.8 million in the fourth quarter of 2017.
- Additional work from new and existing clients awarded during 2018 amounts to $136 million of annual revenue at full run-rate and more than $40 million was awarded in year-to-date 2019. The 2019 multi-year agreements span across five clients, including an expansion with global premium spirits producer Beam Suntory and a new engagement with one of the world's top commercial and retail banks.
“At year-end 2018, we had actioned nearly $15 million of the $20 million in previously announced cost reduction measures, with another $3 million being actioned in the first quarter of 2019,” said Don Pearson, chief financial officer. “But, this original scope is not enough as our cost to serve our clients is still too high. With the assistance of third-party experts, we have launched a second phase of further profit enhancement opportunities, focused on driving consistency and sustainable efficiencies in our operations. We expect to realize $3 million of cost savings from this phase in the second half of 2019 and another $12 million in 2020 and beyond.
These initiatives are designed to put in place a cost structure and operating platform that will deliver sustainable profitable growth. We look forward to updating you on our progress.”
The company expects gross revenue to be in a range of $1.15 to $1.18 billion, which represents growth of 3 percent to 5 percent compared to 2018. Adjusted EBITDA is expected to be in a range of $42 to $46 million dollars, which represents growth of 45 percent to 58% compared to 2018. Non-GAAP diluted earnings per share guidance for 2019 is expected to be $0.20 to $0.24.
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