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InnerWorkings Announces Second Quarter 2008 Results

August 11, 2008

CHICAGO, Aug 11, 2008 (BUSINESS WIRE) -- InnerWorkings, Inc. (NASDAQ:INWK), a leading global provider of managed print and promotional solutions to corporate clients, today reported results for the three months ended June 30, 2008.

Quarterly Highlights:

-- Revenue grew 57 percent compared with the second quarter of 2007 to $105.3 million.

-- Net income increased 60 percent to $6.1 million, up from $3.8 million in the second quarter of 2007.

-- Quarter-over-quarter enterprise revenue increased 59 percent to $68.1 million.

-- Nine new enterprise clients were added during the quarter.

-- The Company increased its sales force through the addition of 25 new account executives during the quarter, increasing the total to 253 as of June 30, 2008.

-- Diluted earnings per share were $0.12, up from $0.08 in the second quarter of 2007.

Revenue for the Company's second quarter was $105.3 million, an increase of 57 percent compared to revenue of $67.3 million in the second quarter of 2007. Operating income was $5.1 million versus $5.6 million during the same quarter of 2007.

For the three months ended June 30, 2008, net income was $6.1 million, an increase of 60 percent from $3.8 million during the second quarter of 2007. For the quarter, diluted earnings per share were $0.12.

"We are particularly pleased with the momentum we are gaining with our enterprise solution as demonstrated by the quarter's nine new enterprise client wins," stated Eric D. Belcher, President and Chief Operating Officer of InnerWorkings. "In addition, our recent acquisition of etrinsic provides our first entree into Europe and effectively supports our goal of providing exceptional service to our rapidly expanding roster of multinational customers. Sustained execution of our growth strategy has positioned InnerWorkings to deliver on our stated goal of becoming a global multi-billion dollar business."

Additional second quarter 2008 financial and operational highlights include the following:

-- Cash flow generated from operations was a record $9.3 million, a four-fold increase over the first quarter of 2008.

-- For the second quarter of 2008, 65 percent of the Company's revenue was generated from sales to enterprise clients, with the remaining 35 percent derived from transactional clients.

-- On May 7, 2008, the Company sold 500,000 common shares of Echo Global Logistics, Inc. for $5 million in cash. This represents a significant gain as InnerWorkings' total investment in Echo was $125,000 in February 2005. The Company retains 1.5 million common shares of Echo.

-- As of June 30, 2008, the Company had a cash and marketable securities balance of $34.5 million.

-- The Company authorized a share repurchase program to buy back up to $50 million of its outstanding shares through December 31, 2009. Since the inception of the program, the Company has purchased approximately 581,000 shares of its common stock for $7.5 million at an average price of $12.95 per share.

"Given the significant size of our market opportunity and the stage of our development, we will continue to invest in the necessary people, processes and technology to support our growth initiatives," stated Joe Busky, Chief Financial Officer of InnerWorkings.

"We will continue to deploy capital with the goal of enhancing shareholder value," said Steven E. Zuccarini, Chief Executive Officer of InnerWorkings. "We have ample liquidity to repurchase additional shares of our common stock and further invest in strategic acquisitions. The buyback program reflects our strong confidence in the Company's near- and long-term prospects."


The Company is reaffirming 2008 revenue guidance of $450 million to $490 million. Annual earnings per share guidance is now projected to range between $0.50 and $0.54, with an anticipated $0.03 to $0.05 of earnings per share contributed from an additional sale of InnerWorkings' stock in Echo Global Logistics conducted throughout the remainder of the year. Operating earnings per share results are estimated to range from $0.25 to $0.28 for the remainder of the year, which reflect the Company's investments in infrastructure necessary to support the rapid revenue growth InnerWorkings continues to experience.

"We remain committed to funding the investments necessary to construct a platform for growth capable of yielding sustainable, long-term success," said Zuccarini. "The client relationships we have developed are growing in strength and depth, which further reinforces our belief that the investment decisions we are implementing today will pay large dividends in the future."

Conference Call

A conference call will be broadcast live on Monday, August 11, 2008, at 4:30 p.m. Central Time (5:30 p.m. Eastern Time). The live webcast discussion, which will include a Q&A session, will be hosted by Steven E. Zuccarini, Chief Executive Officer; Joseph M. Busky, Chief Financial Officer; and Eric D. Belcher, President and Chief Operating Officer. Interested parties are invited to listen to the live webcast by visiting the Investor "Events & Presentations" section of InnerWorkings' website at A replay of the webcast will be available later that day in the same section of the website.

About InnerWorkings, Inc.

InnerWorkings, Inc. (NASDAQ: INWK) is a leading global provider of managed print and promotional solutions to corporate clients across a wide range of industries. With proprietary technology, an extensive supplier network and domain expertise, the Company procures, manages and delivers printed materials and promotional products as part of a comprehensive outsourced enterprise solution. The Company is based in Chicago with other offices in the United States and in the United Kingdom. For more information on InnerWorkings, visit:

Forward-Looking Statements

This release contains statements relating to future results. These statements are forward-looking statements under the federal securities laws. We can give no assurance that any future results discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this release. For a discussion of important factors that could affect our actual results, please refer to our SEC filings, including the "Risk Factors" section of our Form 10-K for our most recently completed fiscal year.

Condensed Consolidated Statements of Income

                       Three months ended        Six months ended
                            June 30,                  June 30,
                    ------------------------ -------------------------
                       2007         2008         2007         2008
                    ----------- ------------ ------------ ------------

Revenue             $67,306,816 $105,346,429 $126,242,975 $192,538,015
Cost of goods sold   50,081,240   79,568,042   94,611,342  145,191,402
                    ----------- ------------ ------------ ------------
Gross profit         17,225,576   25,778,387   31,631,633   47,346,613
Operating expenses:
    general, and
    expenses         11,145,864   19,499,236   21,324,195   34,549,791
   Depreciation and
    amortization        495,289    1,147,080      939,118    1,870,003
                    ----------- ------------ ------------ ------------
Income from
 operations           5,584,423    5,132,071    9,368,320   10,926,819
Total other income      690,166    4,917,062    1,242,856    5,491,975
                    ----------- ------------ ------------ ------------
Income before taxes   6,274,589   10,049,133   10,611,176   16,418,794
Income tax expense    2,453,297    3,943,838    4,128,153    6,455,483
                    ----------- ------------ ------------ ------------
Net income           $3,821,292   $6,105,295   $6,483,023   $9,963,311
                    =========== ============ ============ ============

Basic earnings per
 share                    $0.08        $0.13        $0.14        $0.21
Diluted earnings
 per share                $0.08        $0.12        $0.13        $0.20

Consolidated Balance Sheets

                                             December 31,   June 30,
                                                 2007         2008
                                             ------------ ------------
Balance Sheet Data
Cash and cash equivalents                     $26,716,239  $19,617,235
Marketable securities                          17,975,000   14,893,230
Accounts receivable, net of allowance for
 doubtful accounts                             77,280,954   79,424,592
Unbilled revenue                               12,432,916   16,585,740
Inventories                                     5,455,083    5,889,908
Prepaid expenses                                6,653,493    9,192,543
Other current assets                            2,900,546   10,672,358
Total long-term assets                         57,418,999   67,852,440
                                             ------------ ------------
Total assets                                 $206,833,230 $224,128,046
                                             ============ ============

Accounts payable-trade                        $46,017,853  $58,317,314
Other current liabilities                      13,222,817   13,779,986
Total long-term liabilities                       147,481      325,920
Total stockholders' equity                    147,445,079  151,704,826
                                             ------------ ------------
Total liabilities and stockholders' equity   $206,833,230 $224,128,046
                                             ============ ============

Condensed Consolidated Statement of Cash Flows

                                             Six Months Ended June 30,
                                                 2007         2008
                                             ------------ ------------
Cash flow Data
Net cash provided by operating activities      4,335,160   11,094,355
Net cash used in investing activities        (10,945,764) (13,850,984)
Net cash provided by (used in) financing
 activities                                   40,829,168   (4,371,098)
                                             ------------ ------------
Effect of exchange rate changes on cash and
 cash equivalents                                      -       28,723
                                             ------------ ------------
Increase (decrease) in cash and cash
 equivalents                                  34,218,564   (7,099,004)
Cash and cash equivalents, beginning of
 period                                       20,612,944   26,716,239
                                             ------------ ------------
Cash and cash equivalents, end of period     $54,831,508  $19,617,235
                                             ============ ============


SOURCE: InnerWorkings, Inc.

InnerWorkings, Inc.
Mark Desky, 312-604-5470

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