Financial Data and Key Metrics Changes - Revenue for the second quarter was $528 million, with adjusted EBITDA at $127 million, reflecting an 80 basis point margin increase year-over-year [6][17] - Free cash flow for the first half increased over 30%, reaching $102 million [6][18] - Non-recurring project revenues decreased by $9 million or 20% [17] - A non-cash goodwill impairment charge of $983 million was taken due to current market valuation conditions [19] Business Line Data and Key Metrics Changes - Recurring revenue comprised over 93% of total revenue, amounting to $492 million for the quarter, with participant counts remaining flat [17] - Adjusted gross profit was $205 million, with an adjusted EBITDA margin expansion attributed to prior transformational initiatives [18] Market Data and Key Metrics Changes - The pace of Annual Recurring Revenue (ARR) bookings was slower than expected, with client expansion opportunities taking longer to close [12] - The company updated its expectations for second-half revenue, anticipating a decrease of approximately $45 million at the midpoint [23] Company Strategy and Development Direction - The company is focusing on enhancing client management and delivery capabilities through AI, automation, and strategic partnerships [7][9] - A partnership with Goldman Sachs Asset Management was announced to expand wealth offerings, viewed as a significant revenue growth opportunity [10] - The company is building a management team with both internal and external talent to strengthen competitive advantages [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a transitional year and emphasized the need for improved commercial execution to close deals [6][12] - The company remains confident in its health solutions reporting unit despite current market challenges [19] - Management expects a stronger retention rate in 2026, although they have become more cautious about second-half performance [21] Other Important Information - The company returned $42 million to shareholders through dividends and share repurchases [19] - The cash and cash equivalents balance at quarter-end was $227 million, with total debt at $2 billion [20] Q&A Session Summary Question: Sales cycle and client conversations - Management noted that client conversations are taking longer, impacting revenue timing, but they remain confident in growth opportunities [28][30] Question: Goldman Sachs partnership benefits - The partnership is expected to generate significant revenue in the future and strengthen the company's competitive positioning [33][35] Question: Revenue impact details - The $35 million revenue impact is primarily from smaller client deals being delayed, affecting start dates [40][42] Question: Sales team changes and expertise - Management emphasized the need for deep domain expertise in sales to improve execution and close more deals [44][46] Question: Salesforce hiring plans - The company is focused on hiring specialty expertise and has already brought in new talent to enhance sales capabilities [58] Question: Composition of late-stage deals - Late-stage deals are primarily from existing client relationships, with a focus on large Fortune 500 companies [61][62]

Financial Data and Key Metrics Changes - Revenue for the second quarter was $528 million, with adjusted EBITDA at $127 million, reflecting an 80 basis point margin increase year-over-year [6][17] - Free cash flow for the first half increased by over 30%, reaching $102 million, on track towards an annual target of $250 to $285 million [6][19] - Non-recurring project revenues decreased by $9 million or 20% [17] - A non-cash goodwill impairment charge of $983 million was taken due to current market valuation conditions [20] Business Line Data and Key Metrics Changes - Recurring revenue comprised over 93% of total revenue, amounting to $492 million for the quarter, with participant counts remaining flat [17] - Adjusted gross profit was $205 million, with an adjusted EBITDA margin expansion attributed to prior transformational initiatives [18] Market Data and Key Metrics Changes - The pace of Annual Recurring Revenue (ARR) bookings was slower than expected, with client expansion opportunities taking longer to close [12][22] - The company expects project revenue in the third quarter to align with the second quarter's rate, which was down 20% [23] Company Strategy and Development Direction - The company is focusing on enhancing client management and delivery capabilities through AI, automation, and partnerships, including a significant partnership with Goldman Sachs Asset Management [7][10] - The management team is being strengthened with new hires, including a chief strategy officer and a chief human resources officer, to enhance competitive advantages [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging operating environment, with longer sales cycles impacting revenue expectations for the second half of the year [12][22] - The company remains confident in its long-term growth opportunities, particularly through upselling and cross-selling to existing clients [30] Other Important Information - The company returned $42 million to shareholders through dividends and share repurchases during the quarter [20] - The cash and cash equivalents balance at the end of June was $227 million, with total debt at $2 billion [21] Q&A Session Summary Question: Sales cycle and client conversations - Management noted that client conversations are taking longer, impacting revenue for the current year, but expressed confidence in meeting targets for the following year [28][30] Question: Goldman Sachs partnership benefits - The partnership is expected to generate significant revenue in the future and strengthen the company's competitive position in wealth solutions [33][36] Question: Impact of revenue push out - The revenue impact of $35 million is primarily from smaller client deals being delayed, affecting start dates and overall revenue [40][42] Question: Sales team changes and domain expertise - Management emphasized the need for deep domain expertise in sales to improve execution and close more deals [44][48] Question: Salesforce hiring plans - The company is focused on hiring specialty expertise to enhance sales execution and is confident in attracting the right talent [58][60] Question: Composition of late-stage deals - Late-stage deals are primarily from existing client relationships, with a focus on large companies and significant opportunities in navigation and retiree health solutions [62]

Financial Performance - Q2 2025 - Recurring revenue for Q2 2025 was $492 million, a decrease of 2.6% compared to the proforma adjusted Q2 2024[13] - Project revenue for Q2 2025 was $36 million, a decrease of 20% compared to Q2 2024's $45 million[13] - Total revenue for Q2 2025 was $528 million, a decrease of 4% compared to the proforma adjusted Q2 2024's $250 million[13] - Adjusted Gross Profit for Q2 2025 was $205 million, a decrease of 6.4% compared to the proforma adjusted Q2 2024's $219 million, with a margin of 38.8%, down 100 bps[13] - Adjusted EBITDA for Q2 2025 was $127 million, a decrease of 0.8% compared to the proforma adjusted Q2 2024's $128 million, but the margin increased by 80 bps to 24.1%[13] Revenue Growth Drivers & Outlook - The initial 2025 outlook for revenue from new wins was ~5-7%, which was updated to ~3.5-5.5%[16] - The initial 2025 outlook for revenue from volumes was ~0-1%, which was updated to ~0%[16] - The contract renewals are expected to have a negative impact of (6.5)% on revenue, consistent with the initial outlook[16] - The overall revenue impact is projected to be between (3)% and (1)%, with revenue between $2.282 billion and $2.329 billion[16,18] - The company has 95% of projected 2025 revenue under contract[18] FY25 Outlook - Adjusted EBITDA is projected to be between $620 million and $645 million, representing a growth of 4% to 9%[18] - Adjusted EPS is projected to be between $0.58 and $0.64, representing a growth of 2% to 12%[18] - Free Cash Flow is projected to be between $250 million and $285 million, representing a growth of 13% to 29%[18]

[Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Results%20Overview) Alight reported $528 million in Q2 2025 revenue, with adjusted profitability growth, a significant net loss due to goodwill impairment, and a new wealth solutions partnership [Key Highlights](index=1&type=section&id=1.1%20Key%20Highlights) Alight's Q2 2025 highlights include $528 million in revenue, strong adjusted profitability, a substantial net loss from goodwill impairment, and a new strategic partnership - **95% of 2025 projected revenue** is under contract[1](index=1&type=chunk) - New or expanded relationships with Thermo Fisher Scientific, Highmark Health, Reinsurance Group of America, Incorporated (RGA), and Trinity Industries[1](index=1&type=chunk)[4](index=4&type=chunk) - Announced a new wealth solutions partnership with Goldman Sachs Asset Management[1](index=1&type=chunk)[10](index=10&type=chunk) - Repurchased **$20 million** of common stock and paid a dividend of **$0.04 per share**[4](index=4&type=chunk) Q2 2025 Financial Performance Summary | Metric | Q2 2025 ($ Million) | Q2 2024 ($ Million) | Change (YoY) | | :-------------------------------- | :--------------- | :--------------- | :---------- | | Revenue | $528 | $538 | -1.9% | | Gross Profit | $176 | $167 | +5.4% | | Gross Profit Margin | 33.3% | 31.0% | +2.3 pp | | Adjusted Gross Profit | $205 | $196 | +4.6% | | Adjusted Gross Profit Margin | 38.8% | 36.4% | +2.4 pp | | Net Loss | $1,073 | $4 | -26725% | | Adjusted EBITDA | $127 | $105 | +21.0% | | Diluted Loss Per Share | $2.03 | $0.01 | -20200% | | Adjusted Diluted EPS | $0.10 | $0.05 | +100% | [CEO Commentary](index=1&type=section&id=1.2%20CEO%20Commentary) CEO Dave Guilmette stated that core business operations continued to strengthen in Q2, with significant strategic advancements in client management and delivery capabilities through automation, AI, innovation, and partnerships, leading to enhanced client ROI and strong retention - Core business operations continued to strengthen in the second quarter[2](index=2&type=chunk) - Achieved significant strategic progress in client management and delivery capabilities through automation, artificial intelligence, innovation, and partnerships[2](index=2&type=chunk) - These initiatives helped clients improve the return on investment of their benefits solutions and drove continued growth in client retention[2](index=2&type=chunk) [Detailed Financial Performance (Q2 2025)](index=1&type=section&id=Detailed%20Financial%20Performance%20(Q2%202025)) This section provides a detailed analysis of Alight's financial performance for the second quarter of 2025, covering revenue, profitability, operating expenses, and balance sheet highlights [Revenue Analysis](index=1&type=section&id=2.1%20Revenue%20Analysis) Q2 2025 revenue decreased by 1.9% year-over-year to $528 million, primarily due to reduced project revenue and net commercial activity, with recurring revenue comprising 93.2% of the total Revenue Breakdown | Metric | Q2 2025 ($ Million) | Q2 2024 ($ Million) | Change (YoY) | | :----------- | :--------------- | :--------------- | :---------- | | Total Revenue | $528 | $538 | -1.9% | | Recurring Revenue | $492 | $493 | -0.2% | | Project Revenue | $36 | $45 | -20.0% | - Revenue decline primarily attributed to lower project revenue and reduced net commercial activity[3](index=3&type=chunk) - Recurring revenue constituted **93.2%** of total revenue[3](index=3&type=chunk) [Profitability Metrics](index=1&type=section&id=2.2%20Profitability%20Metrics) This section details Alight's profitability metrics for Q2 2025, including gross profit, net income, EPS, and adjusted EBITDA, highlighting the impact of goodwill impairment on net loss [Gross Profit](index=1&type=section&id=2.2.1%20Gross%20Profit) Q2 2025 gross profit increased to $176 million, with gross profit margin rising to 33.3%, and adjusted gross profit and margin also growing, primarily driven by productivity savings Gross Profit Performance | Metric | Q2 2025 ($ Million) | Q2 2024 ($ Million) | Change (YoY) | | :------------------- | :--------------- | :--------------- | :---------- | | Gross Profit | $176 | $167 | +5.4% | | Gross Profit Margin | 33.3% | 31.0% | +2.3 pp | | Adjusted Gross Profit | $205 | $196 | +4.6% | | Adjusted Gross Profit Margin | 38.8% | 36.4% | +2.4 pp | - Gross profit growth primarily resulted from productivity savings[5](index=5&type=chunk) [Net Income and EPS](index=1&type=section&id=2.2.2%20Net%20Income%20and%20EPS) In Q2 2025, the company's net loss significantly expanded to $1,073 million, with diluted loss per share at $2.03, mainly due to a $983 million non-cash goodwill impairment charge in the Health Solutions reporting unit; however, adjusted diluted EPS increased to $0.10 Net Income and EPS Summary | Metric | Q2 2025 ($ Million) | Q2 2024 ($ Million) | Change (YoY) | | :------------------- | :--------------- | :--------------- | :---------- | | Net Loss | $1,073 | $4 | -26725% | | Diluted Loss Per Share | $2.03 | $0.01 | -20200% | | Adjusted Diluted EPS | $0.10 | $0.05 | +100% | - Net loss was primarily driven by a **$983 million non-cash goodwill impairment charge** in the Health Solutions reporting unit[4](index=4&type=chunk)[7](index=7&type=chunk) [Adjusted EBITDA](index=1&type=section&id=2.2.3%20Adjusted%20EBITDA) Q2 2025 adjusted EBITDA increased to $127 million from $105 million in the prior year period, with the adjusted EBITDA margin also improving from 19.5% to 24.1% Adjusted EBITDA Performance | Metric | Q2 2025 ($ Million) | Q2 2024 ($ Million) | Change (YoY) | | :------------------- | :--------------- | :--------------- | :---------- | | Adjusted EBITDA | $127 | $105 | +21.0% | | Adjusted EBITDA Margin | 24.1% | 19.5% | +4.6 pp | [Operating Expenses and Other Items](index=2&type=section&id=2.3%20Operating%20Expenses%20and%20Other%20Items) Operating expenses and interest costs decreased in Q2 2025, but a $1,076 million pre-tax loss from continuing operations was driven by goodwill impairment and financial instrument re-measurement - Selling, general, and administrative expenses decreased by **$16 million** year-over-year, primarily due to lower professional fees associated with the divestiture of the payroll and professional services business and reduced non-cash equity compensation expense[6](index=6&type=chunk) - Interest expense decreased by **$11 million** to **$22 million**, benefiting from the repricing of the 2028 term loan and a **$740 million** debt repayment in Q3 2024[7](index=7&type=chunk) - Pre-tax loss from continuing operations was **$1,076 million**, compared to **$2 million** in the prior year period, primarily attributable to the non-cash goodwill impairment charge in the Health Solutions reporting unit and non-operating fair value re-measurements of financial instruments and tax receivable agreements[8](index=8&type=chunk) [Balance Sheet Summary](index=2&type=section&id=2.4%20Balance%20Sheet%20Summary) As of June 30, 2025, the company reported cash and cash equivalents of $227 million, total debt of $2,015 million, and net debt of $1,788 million Balance Sheet Highlights (as of June 30, 2025) | Metric | June 30, 2025 ($ Million) | | :----------------------- | :--------------- | | Cash and Cash Equivalents | $227 | | Total Debt | $2,015 | | Net Debt (Total Debt less Cash) | $1,788 | [Strategic Initiatives and Business Outlook](index=2&type=section&id=Strategic%20Initiatives%20and%20Business%20Outlook) This section outlines Alight's strategic partnerships and its financial outlook for 2025, emphasizing expected profitability, cash flow, and customer retention despite adjusted revenue forecasts [New Partnerships](index=2&type=section&id=3.1%20New%20Partnerships) Alight partnered with Goldman Sachs Asset Management to enhance wealth solutions, expanding client value and benefit portfolios through sub-advisory roles for Defined Contribution and IRA solutions - Partnered with Goldman Sachs Asset Management to advance Alight's wealth solutions offerings[10](index=10&type=chunk) - Goldman Sachs Asset Management will serve as a sub-advisor for Alight Financial Advisors Defined Contribution solutions and Alight IRA solutions[10](index=10&type=chunk) - This collaboration aims to deliver additional value to clients and expand their benefit portfolio options, driving growth in new categories[10](index=10&type=chunk) [2025 Business Outlook](index=2&type=section&id=3.2%202025%20Business%20Outlook) The company anticipates strong profitability and cash flow in 2025, maintaining high client retention, and while revenue forecasts were adjusted due to extended transaction closing times in the current environment, the sales pipeline remains robust, particularly in later stages - Expect strong profitability and cash flow through transformational initiatives, along with high client retention[11](index=11&type=chunk) - Revenue forecasts were adjusted due to extended transaction closing times in the current environment, but the sales pipeline remains strong, especially in later stages[11](index=11&type=chunk) 2025 Business Outlook | Metric | 2025 Outlook Range ($ Million) | | :------------------- | :--------------- | | Revenue | $2,282 - $2,329 | | Adjusted EBITDA | $620 - $645 | | Adjusted Diluted EPS | $0.58 - $0.64 | | Free Cash Flow | $250 - $285 | [Corporate Information and Disclosures](index=3&type=section&id=Corporate%20Information%20and%20Disclosures) This section provides an overview of Alight Solutions, details forward-looking statements and associated risks, and explains the non-GAAP financial measures used in the report [About Alight Solutions](index=3&type=section&id=4.1%20About%20Alight%20Solutions) Alight is a leading cloud-based human capital technology and services provider, serving 35 million individuals globally, enhancing employee well-being and productivity through its Worklife platform and benefits management - Alight is a leading cloud-based human capital technology and services provider, serving numerous large organizations and **35 million** individuals and their families globally[15](index=15&type=chunk) - Helps clients gain benefits advantage by managing employee benefits while building a healthy and financially secure workforce[15](index=15&type=chunk) - The Alight Worklife platform empowers employers with deeper insights into their workforce and enhances employee well-being, engagement and productivity through personalized benefits management and data-driven insights[15](index=15&type=chunk) [Forward-Looking Statements](index=3&type=section&id=4.2%20Forward-Looking%20Statements) This press release contains forward-looking statements about future performance and strategic outlook, subject to various risks and uncertainties, including economic, competitive, and regulatory factors, as detailed in the company's Form 10-K - This press release contains forward-looking statements regarding the company's expected revenue, strategic progress, client retention, partnership with Goldman Sachs Asset Management, profitability, and cash flow[16](index=16&type=chunk) - These statements are subject to various risks and uncertainties, including the successful execution of strategic transformation, economic downturns, industry competition, cyberattacks and information technology system disruptions, data security and privacy, activist shareholder actions, and compliance with applicable laws and regulations[16](index=16&type=chunk)[17](index=17&type=chunk) - Investors should refer to the "Risk Factors" section in the company's Form 10-K annual report filed with the U.S. Securities and Exchange Commission (SEC) for additional factors that could cause actual results to differ materially from forward-looking statements[17](index=17&type=chunk) [Explanation of Non-GAAP Financial Measures](index=4&type=section&id=4.3%20Non-GAAP%20Financial%20Measures%20Explanation) The company uses non-GAAP financial measures like adjusted EBITDA and free cash flow to enhance investor understanding of performance, providing detailed definitions and calculations, while clarifying they are not GAAP substitutes - Non-GAAP financial measures used by the company include: Adjusted EBITDA from continuing operations, Adjusted EBITDA margin from continuing operations, Adjusted Net Income from continuing operations, Adjusted Diluted EPS from continuing operations, Free Cash Flow, Adjusted Gross Profit, and Adjusted Gross Profit Margin[18](index=18&type=chunk) - These non-GAAP financial measures are intended to enhance the understanding of the company's financial performance for investors and lenders but are not substitutes for GAAP financial measures[18](index=18&type=chunk) - Detailed definitions for each non-GAAP metric are provided, such as Adjusted EBITDA excluding the impact of interest, taxes, depreciation and amortization, and certain non-cash and other items; Free Cash Flow defined as cash provided by operating activities less capital expenditures; and Revenue Under Contract as management's estimate of anticipated revenue[19](index=19&type=chunk)[22](index=22&type=chunk)[25](index=25&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including statements of income (loss), balance sheets, and cash flows, for the specified periods, offering a comprehensive view of the company's financial position and performance [Condensed Consolidated Statements of Income (Loss)](index=6&type=section&id=5.1%20Statements%20of%20Income%20(Loss)) This section provides the unaudited condensed consolidated statements of income (loss) for the three and six months ended June 30, 2025 and 2024, detailing key financial metrics such as revenue, costs, gross profit, operating expenses, net income (loss), and earnings (loss) per share Condensed Consolidated Statements of Income (Loss) (Selected) | ($ Million, except per share amounts) | Q2 2025 ($ Million) | Q2 2024 ($ Million) | H1 2025 ($ Million) | H1 2024 ($ Million) | | :----------------------------------- | :--------------- | :--------------- | :--------------- | :--------------- | | Revenue | $528 | $538 | $1,076 | $1,097 | | Gross Profit | $176 | $167 | $347 | $349 | | Selling, General and Administrative Expenses | $130 | $146 | $234 | $292 | | Goodwill Impairment | $983 | — | $983 | — | | Operating Income (Loss) from Continuing Operations | $(1,010) | $(52) | $(1,018) | $(92) | | Net Income (Loss) from Continuing Operations | $(1,073) | $(4) | $(1,090) | $(125) | | Net Income (Loss) Attributable to Alight, Inc. | $(1,073) | $23 | $(1,098) | $(91) | | Diluted Loss Per Share from Continuing Operations | $(2.03) | $(0.01) | $(2.05) | $(0.23) | [Condensed Consolidated Balance Sheets](index=7&type=section&id=5.2%20Balance%20Sheets) This section presents the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, outlining the company's assets, liabilities, and stockholders' equity at the end of the reporting periods Condensed Consolidated Balance Sheets (Selected) | ($ Million, except par value) | June 30, 2025 ($ Million) | December 31, 2024 ($ Million) | | :----------------------------------- | :--------------- | :--------------- | | Cash and Cash Equivalents | $227 | $343 | | Goodwill | $2,229 | $3,212 | | Intangible Assets, Net | $2,714 | $2,855 | | Total Assets | $6,777 | $8,193 | | Long-Term Debt, Net | $1,995 | $2,000 | | Long-Term Tax Receivable Agreement | $600 | $757 | | Total Liabilities | $3,656 | $3,880 | | Total Stockholders' Equity Attributable to Alight, Inc. | $3,118 | $4,309 | | Total Stockholders' Equity | $3,121 | $4,313 | | Total Liabilities and Stockholders' Equity | $6,777 | $8,193 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=5.3%20Statements%20of%20Cash%20Flows) This section provides the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024, detailing net cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Selected) | ($ Million) | H1 2025 ($ Million) | H1 2024 ($ Million) | | :----------------------------------- | :--------------- | :--------------- | | Net Income (Loss) from Continuing Operations | $(1,090) | $(125) | | Goodwill Impairment | $983 | — | | Net Cash Provided by Operating Activities | $159 | $158 | | Net Cash Used in Investing Activities | $(57) | $(78) | | Net Cash Used in Financing Activities | $(242) | $(222) | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | $(140) | $(145) | [Non-GAAP Financial Reconciliations and Supplemental Data](index=9&type=section&id=Non-GAAP%20Financial%20Reconciliations%20and%20Supplemental%20Data) This section provides detailed reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures, along with other selected financial data, for a comprehensive understanding of Alight's adjusted performance [Adjusted EBITDA Reconciliation](index=9&type=section&id=6.1%20Adjusted%20EBITDA%20Reconciliation) This section presents the reconciliation of net income (loss) from continuing operations to adjusted EBITDA from continuing operations for the three and six months ended June 30, 2025 and 2024, demonstrating the significant improvement in adjusted EBITDA and its margin Adjusted EBITDA Reconciliation from Continuing Operations (Selected) | ($ Million) | Q2 2025 ($ Million) | Q2 2024 ($ Million) | H1 2025 ($ Million) | H1 2024 ($ Million) | | :----------------------------------- | :--------------- | :--------------- | :--------------- | :--------------- | | Net Income (Loss) from Continuing Operations | $(1,073) | $(4) | $(1,090) | $(125) | | Goodwill Impairment and Other | $984 | $1 | $985 | $1 | | Adjusted EBITDA from Continuing Operations | $127 | $105 | $245 | $221 | | Adjusted EBITDA Margin from Continuing Operations | 24.1% | 19.5% | 22.8% | 20.1% | [Adjusted Net Income and Diluted EPS Reconciliation](index=10&type=section&id=6.2%20Adjusted%20Net%20Income%20and%20Diluted%20EPS%20Reconciliation) This section provides the reconciliation of net income (loss) from continuing operations to adjusted net income and adjusted diluted EPS for the three and six months ended June 30, 2025 and 2024, illustrating the growth in adjusted metrics Adjusted Net Income and Diluted EPS Reconciliation from Continuing Operations (Selected) | ($ Million, except per share amounts) | Q2 2025 ($ Million) | Q2 2024 ($ Million) | H1 2025 ($ Million) | H1 2024 ($ Million) | | :----------------------------------- | :--------------- | :--------------- | :--------------- | :--------------- | | Net Income (Loss) from Continuing Operations Attributable to Alight, Inc. | $(1,072) | $(4) | $(1,089) | $(123) | | Goodwill Impairment and Other | $984 | $2 | $985 | $2 | | Adjusted Net Income from Continuing Operations | $56 | $29 | $108 | $86 | | Adjusted Diluted EPS from Continuing Operations | $0.10 | $0.05 | $0.20 | $0.15 | [Adjusted Gross Profit Reconciliation](index=11&type=section&id=6.3%20Adjusted%20Gross%20Profit%20Reconciliation) This section presents the reconciliation of gross profit to adjusted gross profit for the three and six months ended June 30, 2025 and 2024, demonstrating the improvement in adjusted gross profit and margin Gross Profit to Adjusted Gross Profit Reconciliation | ($ Million) | Q2 2025 ($ Million) | Q2 2024 ($ Million) | H1 2025 ($ Million) | H1 2024 ($ Million) | | :------------------- | :--------------- | :--------------- | :--------------- | :--------------- | | Gross Profit | $176 | $167 | $347 | $349 | | Add: Stock-Based Compensation | $2 | $3 | $5 | $8 | | Add: Depreciation and Amortization | $27 | $26 | $53 | $47 | | Adjusted Gross Profit | $205 | $196 | $405 | $404 | | Gross Profit Margin | 33.3% | 31.0% | 32.2% | 31.8% | | Adjusted Gross Profit Margin | 38.8% | 36.4% | 37.6% | 36.8% | [Free Cash Flow Reconciliation](index=11&type=section&id=6.4%20Free%20Cash%20Flow%20Reconciliation) This section provides the reconciliation of cash provided by operating activities from continuing operations to non-GAAP free cash flow for the six months ended June 30, 2025 and 2024, indicating significant growth in free cash flow Non-GAAP Free Cash Flow Reconciliation | ($ Million) | H1 2025 ($ Million) | H1 2024 ($ Million) | | :----------------------------------- | :--------------- | :--------------- | | Cash Provided by Operating Activities from Continuing Operations | $159 | $93 | | Capital Expenditures | $(57) | $(67) | | Non-GAAP Free Cash Flow | $102 | $26 | [Other Select Financial Data](index=11&type=section&id=6.5%20Other%20Select%20Financial%20Data) This section presents other selected financial data, including revenue breakdown (recurring and project revenue), BPaaS revenue, gross profit, adjusted gross profit, adjusted EBITDA, and free cash flow, for the three and six months ended June 30, 2025 and 2024 Other Select Financial Data | ($ Million) | Q2 2025 ($ Million) | Q2 2024 ($ Million) | H1 2025 ($ Million) | H1 2024 ($ Million) | | :----------------------------------- | :--------------- | :--------------- | :--------------- | :--------------- | | Revenue Breakdown: | | | | | | Recurring Revenue | $492 | $493 | $1,012 | $1,014 | | Project Revenue | $36 | $45 | $64 | $83 | | Total Revenue | $528 | $538 | $1,076 | $1,097 | | BPaaS Revenue | $124 | $115 | $250 | $232 | | Total Gross Profit | $176 | $167 | $347 | $349 | | Total Gross Profit Margin | 33.3% | 31.0% | 32.2% | 31.8% | | Total Adjusted Gross Profit | $205 | $196 | $405 | $404 | | Total Adjusted Gross Profit Margin | 38.8% | 36.4% | 37.6% | 36.8% | | Adjusted EBITDA from Continuing Operations | $127 | $105 | $245 | $221 | | Adjusted EBITDA Margin from Continuing Operations | 24.1% | 19.5% | 22.8% | 20.1% | | Free Cash Flow from Continuing Operations | | | $102 | $26 |

Core Viewpoint - Alight, Inc. (ALIT) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that revisions in earnings estimates can lead to significant price changes [4][6]. - For Alight, the recent increase in earnings estimates reflects an improvement in the company's underlying business, which is expected to positively influence its stock price [5]. Zacks Rating System - The Zacks Rank stock-rating system categorizes stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - The upgrade of Alight to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions for Alight - For the fiscal year ending December 2025, Alight is expected to earn $0.61 per share, which remains unchanged from the previous year, but the Zacks Consensus Estimate has increased by 1% over the past three months [8].

```markdown [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's comprehensive financial information, including statements and detailed notes [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of comprehensive income (loss), stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, revenue recognition, discontinued operations, and other financial data [Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) This section presents the company's financial position at specific dates, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (in millions) | Item | March 31, 2025 | December 31, 2024 | Change (M) | | :-------------------------------- | :------------- | :---------------- | :--------- | | Cash and cash equivalents | $223 | $343 | $(120) | | Receivables, net | $438 | $471 | $(33) | | Total Current Assets | $1,062 | $1,267 | $(205) | | Goodwill | $3,212 | $3,212 | $0 | | Intangible assets, net | $2,784 | $2,855 | $(71) | | Total Assets | $7,913 | $8,193 | $(280) | | Accounts payable and accrued liabilities | $296 | $355 | $(59) | | Other current liabilities | $358 | $273 | $85 | | Total Current Liabilities | $901 | $892 | $9 | | Long-term debt, net | $1,999 | $2,000 | $(1) | | Long-term tax receivable agreement | $578 | $757 | $(179) | | Total Liabilities | $3,680 | $3,880 | $(200) | | Total Stockholders' Equity | $4,233 | $4,313 | $(80) | [Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(Unaudited)) This section details the company's financial performance over a period, including revenues, expenses, and net income or loss Condensed Consolidated Statements of Comprehensive Income (Loss) (Three Months Ended March 31, in millions, except per share amounts) | Item | 2025 | 2024 | Change (M) | Change (%) | | :-------------------------------------------------- | :--- | :--- | :--------- | :--------- | | Revenue | $548 | $559 | $(11) | -2.0% | | Gross Profit | $171 | $182 | $(11) | -6.0% | | Operating Income (Loss) From Continuing Operations | $(8) | $(40) | $32 | 80.0% | | Income (Loss) From Continuing Operations Before Taxes | $(20) | $(148) | $128 | 86.5% | | Net Income (Loss) From Continuing Operations | $(17) | $(121) | $104 | 86.0% | | Net Income (Loss) From Discontinued Operations, Net of Tax | $(8) | $5 | $(13) | -260.0% | | Net Income (Loss) Attributable to Alight, Inc. | $(25) | $(114) | $89 | 78.1% | | Basic and Diluted EPS (Continuing operations) | $(0.03) | $(0.22) | $0.19 | 86.4% | | Basic and Diluted Net Income (Loss) EPS | $(0.05) | $(0.21) | $0.16 | 76.2% | [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Unaudited)) This section outlines changes in the company's equity, including net income, share-based compensation, and dividends Changes in Stockholders' Equity (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | | :----------------------------------- | :--- | :--- | | Balance at December 31, | $4,313 | $4,742 | | Net income (loss) | $(25) | $(116) | | Other comprehensive income (loss), net | $(8) | $4 | | Share-based compensation expense | $6 | $28 | | Shares withheld in lieu of taxes | $(11) | $(57) | | Share repurchases | $(20) | — | | Dividends | $(21) | — | | Conversion of noncontrolling interest | — | $(65) | | Balance at March 31, | $4,233 | $4,528 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) This section reports on the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, in millions) | Activity | 2025 | 2024 | Change (M) | | :------------------------------------------ | :--- | :--- | :--------- | | Net cash provided by operating activities | $73 | $100 | $(27) | | Net cash provided by (used in) investing activities | $(29) | $(36) | $7 | | Net Cash provided by (used in) financing activities | $(176) | $(74) | $(102) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(132) | $(12) | $(120) | | Cash, cash equivalents and restricted cash (end of period) | $450 | $506 | $(56) | - Key financing outflows in Q1 2025 included **$100 million** for Tax Receivable Agreement payments, **$21 million** for dividend payments, and **$20 million** for share repurchases[21](index=21&type=chunk)[221](index=221&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1. Basis of Presentation and Nature of Business](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Nature%20of%20Business) This section describes the company's business, its services, and the basis for preparing the financial statements - The company is a technology-enabled services provider delivering human capital management solutions, including employee benefits, healthcare navigation, financial wellbeing, and retiree healthcare, primarily through its Alight Worklife® platform[26](index=26&type=chunk)[27](index=27&type=chunk) - The sale of Alight's Professional Services segment and Payroll & HCM Outsourcing business (Divested Business) was completed on **July 12, 2024**, and its results are reported as discontinued operations for all periods presented[25](index=25&type=chunk) [Note 2. Significant Accounting Policies](index=9&type=section&id=Note%202.%20Significant%20Accounting%20Policies) This section outlines the key accounting principles and methods used in preparing the financial statements - There have been no material changes to the company's significant accounting policies from its Annual Report on Form 10-K for the fiscal year ended **December 31, 2024**[28](index=28&type=chunk) - The company is evaluating new accounting pronouncements: ASU No. **2023-09** (Income Taxes) effective **December 31, 2025**, and ASU No. **2024-03** (Expense Disaggregation Disclosures) effective **December 31, 2027**[32](index=32&type=chunk)[33](index=33&type=chunk) [Note 3. Revenue from Contracts with Customers](index=10&type=section&id=Note%203.%20Revenue%20from%20Contracts%20with%20Customers) This section details the company's revenue recognition policies and disaggregation of revenue from customer contracts - The majority of the company's revenue is highly recurring and derived from contracts to provide integrated, cloud-based human capital solutions, primarily recognized over time as services are consumed[34](index=34&type=chunk)[35](index=35&type=chunk) - Revenue is disaggregated into recurring and project revenues within the Employer Solutions segment, with fees typically based on a contracted fee per participant per period over three to five-year terms[34](index=34&type=chunk)[39](index=39&type=chunk) [Note 4. Discontinued Operations](index=12&type=section&id=Note%204.%20Discontinued%20Operations) This section reports on the financial results and details of business segments that have been divested or are held for sale - The sale of the Divested Business (Professional Services and Payroll & HCM Outsourcing) was completed on **July 12, 2024**, for total consideration of up to **$1.2 billion**, including **$1.0 billion** cash, a **$50 million** Seller Note, and a contingent Additional Seller Note of up to **$150 million**[50](index=50&type=chunk) - A loss on sale of the Divested Business of **$7 million**, net of tax, was recorded for the three months ended **March 31, 2025**[54](index=54&type=chunk) Results from Discontinued Operations (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Revenue | $24 | $257 | | Gross Profit | — | $67 | | Income (loss) from Discontinued Operations | — | $22 | | Net Income (Loss) from Discontinued Operations, Net of Tax | $(8) | $5 | [Note 5. Other Financial Data](index=13&type=section&id=Note%205.%20Other%20Financial%20Data) This section provides additional financial data and selected balance sheet components for further analysis Selected Balance Sheet Components (in millions) | Item | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Receivables, net | $438 | $471 | | Other current assets | $174 | $214 | | Other assets | $411 | $422 | | Other current liabilities | $358 | $273 | | Other liabilities | $151 | $158 | - Other current liabilities as of **March 31, 2025**, included a current portion of tax receivable agreement liability of **$188 million**, up from **$100 million** at **December 31, 2024**[63](index=63&type=chunk) [Note 6. Goodwill and Intangible assets, net](index=15&type=section&id=Note%206.%20Goodwill%20and%20Intangible%20assets,%20net) This section details the company's goodwill and intangible assets, including their carrying values and amortization expenses Goodwill and Intangible Assets (in millions) | Item | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Goodwill | $3,212 | $3,212 | | Intangible assets, net | $2,784 | $2,855 | | Amortization expense (Q1) | $71 | $71 | Expected Annual Amortization Expense (in millions) | Year | Customer-Related and Contract Based Intangibles | Technology Related Intangibles | Trade Name Intangibles | Total | | :------------------------ | :------------------------------------ | :--------------------------- | :--------------------- | :---- | | 2025 (April - December) | $160 | $29 | $21 | $210 | | 2026 | $214 | $38 | $27 | $279 | | 2027 | $214 | $19 | $27 | $260 | | 2028 | $214 | $1 | $27 | $242 | | 2029 | $214 | — | $27 | $241 | | Thereafter | $1,380 | — | $172 | $1,552 | | Total amortization expense | $2,396 | $87 | $301 | $2,784 | [Note 7. Income Taxes](index=16&type=section&id=Note%207.%20Income%20Taxes) This section explains the company's income tax expense, effective tax rates, and related tax assets and liabilities Effective Tax Rates (Three Months Ended March 31) | Period | Effective Tax Rate | | :----- | :----------------- | | 2025 | 15% | | 2024 | 18% | - The effective tax rates were lower than the **21%** U.S. statutory corporate income tax rate primarily due to non-deductible expenses, tax credits, and changes in valuation allowance[67](index=67&type=chunk) [Note 8. Debt](index=16&type=section&id=Note%208.%20Debt) This section provides details on the company's outstanding debt, interest expense, and contractual payment obligations Debt Outstanding (in millions) | Item | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Total debt, net | $2,019 | $2,025 | | Less: current portion | $(20) | $(25) | | Total long-term debt, net | $1,999 | $2,000 | - In **January 2025**, the company repriced its Sixth Incremental Term Loans to Seventh Incremental Term Loans, reducing the applicable interest rate from SOFR + **2.25%** to SOFR + **1.75%**[70](index=70&type=chunk) Interest Expense (Three Months Ended March 31, in millions) | Period | Interest Expense | | :----- | :--------------- | | 2025 | $32 | | 2024 | $55 | Aggregate Remaining Contractual Principal Payments (as of March 31, 2025, in millions) | Year | Amount | | :---------------------- | :----- | | 2025 (April - December) | $15 | | 2026 | $20 | | 2027 | $20 | | 2028 | $1,970 | | Total payments | $2,025 | [Note 9. Stockholders' Equity](index=17&type=section&id=Note%209.%20Stockholders'%20Equity) This section outlines the components of stockholders' equity, including common stock, share repurchases, and dividends - As of **March 31, 2025**, **531,870,154** shares of Class A Common Stock were outstanding[78](index=78&type=chunk) - Class B-1 and Class B-2 Common Stock are earnouts that convert to Class A Common Stock if the VWAP of Class A shares reaches **$12.50** and **$15.00**, respectively[82](index=82&type=chunk)[85](index=85&type=chunk) - On **February 13, 2025**, the Board authorized an additional **$200 million** for the share repurchase program, bringing the total authorized to **$281 million**. As of **March 31, 2025**, **$261 million** remained authorized[98](index=98&type=chunk) Quarterly Dividends on Common Stock (Three Months Ended March 31, 2025) | Declaration Date | Dividends Per Share | Total Payment (in millions) | Record Date | Payable Date | | :--------------- | :------------------ | :-------------------------- | :---------- | :----------- | | February 13, 2025 | $0.04 | $21 | March 3, 2025 | March 17, 2025 | [Note 10. Share-Based Compensation](index=22&type=section&id=Note%2010.%20Share-Based%20Compensation) This section details the company's share-based compensation plans and the associated expenses recognized Total Share-Based Compensation Expense (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Cost of services, exclusive of depreciation and amortization | $3 | $5 | | Selling, general and administrative | $3 | $23 | | Total share-based compensation expense | $6 | $28 | - As of **March 31, 2025**, total future compensation expense for unvested RSUs was **$57 million** (**2.33 years** remaining amortization) and for unvested PRSUs was **$50 million** (**1.97 years** remaining amortization)[112](index=112&type=chunk) [Note 11. Earnings Per Share](index=24&type=section&id=Note%2011.%20Earnings%20Per%20Share) This section presents the basic and diluted earnings per share calculations for continuing and discontinued operations Basic and Diluted Earnings Per Share (Three Months Ended March 31, in millions, except per share amounts) | Item | 2025 | 2024 | | :-------------------------------------------------- | :--- | :--- | | Net Income (Loss) from continuing operations attributable to Alight, Inc. | $(17) | $(119) | | Net Income (Loss) Attributable to Alight, Inc. - basic | $(25) | $(114) | | Weighted-average shares outstanding - basic | 532,297,681 | 540,780,315 | | Basic and Diluted (net loss) earnings per share (Continuing operations) | $(0.03) | $(0.22) | | Basic and Diluted (net loss) earnings per share (Net Income (Loss)) | $(0.05) | $(0.21) | - For Q1 2025, **510,115** noncontrolling interest units, **8,464,404** unvested RSUs, **14,999,998** Seller Earnouts, and **9,969,087** unvested PRSUs were excluded from diluted EPS calculations due to anti-dilutive impact or unmet market/performance conditions[117](index=117&type=chunk) [Note 12. Segment Reporting](index=25&type=section&id=Note%2012.%20Segment%20Reporting) This section provides financial information for the company's reportable segments, including revenue and net income - The company operates under one reportable segment, Employer Solutions, which provides integrated benefits administration, healthcare navigation, financial wellbeing, leave of absence management, and retiree healthcare[119](index=119&type=chunk) Employer Solutions Segment Revenue (Three Months Ended March 31, in millions) | Revenue Type | 2025 | 2024 | | :------------- | :--- | :--- | | Recurring | $520 | $521 | | Project | $28 | $38 | | Total Revenue | $548 | $559 | Employer Solutions Segment Net Income (Loss) From Continuing Operations (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Net Income (Loss) From Continuing Operations | $(17) | $(121) | [Note 13. Derivative Financial Instruments](index=25&type=section&id=Note%2013.%20Derivative%20Financial%20Instruments) This section describes the company's use of derivative instruments for hedging and their fair value measurements - The company uses interest rate swap agreements, designated as cash flow hedges, to fix floating interest rates associated with its Term Loan[127](index=127&type=chunk) Fair Values of Outstanding Derivative Instruments (in millions) | Item | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Assets (Interest rate swaps) | $21 | $31 | | Liabilities (Interest rate swaps) | $1 | — | - Approximately **$17 million** of derivative gains included in Accumulated other comprehensive income as of **March 31, 2025**, are expected to be reclassified into earnings over the next twelve months[128](index=128&type=chunk) [Note 14. Financial Instruments](index=26&type=section&id=Note%2014.%20Financial%20Instruments) This section details the fair value measurement of various financial instruments, including contingent consideration liabilities - Seller Earnouts (Class B-1 and B-2 Common Stock) are accounted for as contingent consideration liabilities at fair value, subject to remeasurement each period[131](index=131&type=chunk) Fair Value of Seller Earnouts and Additional Seller Note (in millions) | Item | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Seller Earnouts | $29 | $51 | | Additional Seller Note | $36 | $50 | - For Q1 2025, a **$22 million** gain was recorded from the fair value remeasurement of Seller Earnouts, compared to a **$19 million** loss in Q1 2024. A **$14 million** loss was recorded for the Additional Seller Note in Q1 2025[131](index=131&type=chunk)[135](index=135&type=chunk) [Note 15. Tax Receivable Agreement](index=27&type=section&id=Note%2015.%20Tax%20Receivable%20Agreement) This section explains the company's obligations under the Tax Receivable Agreement and changes in its related liability - The company will pay certain sellers **85%** of realized tax savings from tax basis adjustments and attribute utilization under the Tax Receivable Agreement (TRA)[137](index=137&type=chunk) Changes in TRA Liabilities (in millions) | Item | Amount | | :------------------------------------------ | :----- | | Beginning balance as of December 31, 2024 | $857 | | Fair value remeasurement | $9 | | Payments | $(100) | | Ending balance as of March 31, 2025 | $766 | | Less: current portion in other current liabilities | $(188) | | Total long-term tax receivable agreement liability | $578 | - The TRA liability balance at **March 31, 2025**, assumes a blended U.S. federal, state, and local income tax rate of **26.3%** and a discount rate of **7.9%**[139](index=139&type=chunk) [Note 16. Fair Value Measurement](index=28&type=section&id=Note%2016.%20Fair%20Value%20Measurement) This section provides disclosures on the fair value measurements of financial assets and liabilities Financial Assets and Liabilities Measured at Fair Value (in millions) | Item | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Total assets recorded at fair value | $57 | $81 | | Total liabilities recorded at fair value | $563 | $677 | - The fair value of the company's debt is classified as Level 2, with a carrying value of **$2,019 million** and a fair value of **$2,004 million** as of **March 31, 2025**[146](index=146&type=chunk) [Note 17. Restructuring](index=30&type=section&id=Note%2017.%20Restructuring) This section details the costs and progress of the company's restructuring initiatives and related liabilities - The two-year 'Transformation Program' initiated in **February 2023**, aimed at optimizing back-office infrastructure and operating model, was substantially complete as of **March 31, 2025**, incurring total expenses of **$140 million**[150](index=150&type=chunk) Total Restructuring Costs (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | | :---------------------- | :--- | :--- | | Total Restructuring Costs | $4 | $15 | - As of **March 31, 2025**, approximately **$11 million** of the total restructuring liability remained unpaid[151](index=151&type=chunk)[152](index=152&type=chunk) [Note 18. Employee Benefits](index=30&type=section&id=Note%2018.%20Employee%20Benefits) This section outlines the expenses related to the company's defined contribution savings plans for employees Defined Contribution Savings Plan Expenses (Three Months Ended March 31, in millions) | Period | Expenses | | :----- | :------- | | 2025 | $7 | | 2024 | $9 | [Note 19. Commitments and Contingencies](index=30&type=section&id=Note%2019.%20Commitments%20and%20Contingencies) This section discloses the company's material contractual obligations, purchase commitments, and potential liabilities - The company is committed to purchasing cloud services totaling **$250 million** over a **5-year** term, with total expected cash outflow for non-cancellable purchase obligations of **$262 million** through **2029**[158](index=158&type=chunk) - Expected remaining cash outflow for non-cancellable service obligations related to its strategic partnership with Wipro is **$456 million** through **2028**[159](index=159&type=chunk) [Note 20. Subsequent Event](index=31&type=section&id=Note%2020.%20Subsequent%20Event) This section reports on significant events that occurred after the balance sheet date but before the financial statements were issued - On **May 6, 2025**, the Audit Committee approved a fifteen-month 'Post-Separation Plan' (PSP) to further optimize operations post-divestiture, with expected pre-tax restructuring costs of approximately **$65 million** and estimated annual savings of over **$75 million**[161](index=161&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an overview of its business, a summary of financial results, a detailed review of continuing operations, and an analysis of liquidity and capital resources [BUSINESS](index=32&type=section&id=BUSINESS) This section provides an overview of the company's operations, services, and strategic initiatives [Overview](index=32&type=section&id=Overview) This section describes the company's core business, its technology platform, and value proposition to clients - Alight is a technology-enabled services company delivering human capital management solutions, including integrated benefits administration, healthcare navigation, financial wellbeing, and retiree healthcare, powered by its Alight Worklife® platform[163](index=163&type=chunk) - The company leverages data, analytics, and AI to provide personalized employee experiences and drive measurable outcomes for organizations[163](index=163&type=chunk) [Business Combination](index=32&type=section&id=Business%20Combination) This section details the historical business combination that led to the current corporate structure - The business combination with a special purpose acquisition company was completed on **July 2, 2021**, with Alight, Inc. becoming the successor entity and owning approximately **99%** of the economic interest in the Predecessor as of **March 31, 2025**[164](index=164&type=chunk) [Divestiture](index=32&type=section&id=Divestiture) This section provides information on the sale of business segments, including consideration and financial impact - The sale of the Divested Business was completed on **July 12, 2024**, for total consideration of up to **$1.2 billion**, consisting of **$1.0 billion** in cash, a **$50 million** Seller Note (fair value **$35 million**), and a contingent Additional Seller Note of up to **$150 million** (initial fair value **$43 million**)[165](index=165&type=chunk) [EXECUTIVE SUMMARY OF FINANCIAL RESULTS](index=33&type=section&id=EXECUTIVE%20SUMMARY%20OF%20FINANCIAL%20RESULTS) This section offers a high-level overview of the company's key financial performance indicators for the period Executive Summary of Financial Results (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | Change (%) | | :-------------------------------------------------- | :--- | :--- | :--------- | :--------- | | Revenue | $548 | $559 | $(11) | -2.0% | | Gross Profit | $171 | $182 | $(11) | -6.0% | | Operating Income (Loss) From Continuing Operations | $(8) | $(40) | $32 | 80.0% | | Net Income (Loss) Attributable to Alight, Inc. | $(25) | $(114) | $89 | 78.1% | [REVIEW OF RESULTS](index=33&type=section&id=REVIEW%20OF%20RESULTS) This section provides a detailed analysis of the company's financial performance from continuing operations [Key Components of Our Continuing Operations](index=33&type=section&id=Key%20Components%20of%20Our%20Continuing%20Operations) This section describes the primary revenue and expense drivers within the company's ongoing business activities - Revenue is primarily recurring, driven by fees for services based on a contracted fee per participant per period, with contracts typically having three to five-year terms[167](index=167&type=chunk) - Cost of services includes compensation-related and vendor costs directly attributable to client services, application development, and client-related infrastructure[168](index=168&type=chunk) - Selling, general and administrative expenses cover compensation for administrative and management employees, system and facilities expenses, and external professional and consulting services[170](index=170&type=chunk) [Results of Continuing Operations for the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024](index=34&type=section&id=Results%20of%20Continuing%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031,%202025%20Compared%20to%20the%20Three%20Months%20Ended%20March%2031,%202024) This section compares the financial performance of continuing operations for the current and prior year's three-month periods [Revenue](index=34&type=section&id=Revenue) This section analyzes the company's revenue performance, including changes in recurring and project revenues Revenue (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | Change (%) | | :---------------- | :--- | :--- | :--------- | :--------- | | Total Revenue | $548 | $559 | $(11) | -2.0% | | Recurring revenues | $520 | $521 | $(1) | -0.2% | - The decrease in total revenue was driven by lower project revenue and Net Commercial Activity[176](index=176&type=chunk) [Cost of Services, exclusive of Depreciation and Amortization](index=34&type=section&id=Cost%20of%20Services,%20exclusive%20of%20Depreciation%20and%20Amortization) This section details the costs directly associated with providing services, excluding non-cash depreciation and amortization Cost of Services, exclusive of Depreciation and Amortization (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | Change (%) | | :------------------------------------------ | :--- | :--- | :--------- | :--------- | | Cost of services, exclusive of depreciation and amortization | $351 | $356 | $(5) | -1.4% | - The decrease was primarily driven by lower revenues and savings realized in conjunction with productivity initiatives[178](index=178&type=chunk) [Depreciation and Amortization](index=34&type=section&id=Depreciation%20and%20Amortization) This section reports on the depreciation and amortization expenses recognized during the period Depreciation and Amortization (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | Change (%) | | :-------------------------- | :--- | :--- | :--------- | :--------- | | Depreciation and amortization | $26 | $21 | $5 | 23.8% | - The increase was primarily driven by capitalized software[179](index=179&type=chunk) [Selling, General and Administrative](index=34&type=section&id=Selling,%20General%20and%20Administrative) This section covers the company's administrative, sales, and marketing expenses, including compensation and professional fees Selling, General and Administrative Expenses (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Selling, general and administrative | $104 | $146 | $(42) | -28.8% | - The decrease was driven by a reduction in compensation expenses (primarily non-cash share-based awards), lower restructuring charges, and reduced professional fees related to the Divested Business sale and separation[180](index=180&type=chunk)[181](index=181&type=chunk) [Depreciation and Intangible Amortization](index=36&type=section&id=Depreciation%20and%20Intangible%20Amortization) This section details the combined depreciation and intangible asset amortization expenses Depreciation and Intangible Amortization (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Depreciation and intangible amortization | $75 | $76 | $(1) | -1.3% | [Change in Fair Value of Financial Instruments](index=36&type=section&id=Change%20in%20Fair%20Value%20of%20Financial%20Instruments) This section reports on gains or losses resulting from the remeasurement of financial instruments at fair value (Gain) Loss from Change in Fair Value of Financial Instruments (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | | :------------------------------------------------ | :--- | :--- | :--------- | | (Gain) Loss from change in fair value of financial instruments | $(8) | $21 | $(29) | - The **$8 million** gain in Q1 2025 (compared to a **$21 million** loss in Q1 2024) was primarily due to changes in underlying assumptions for the Seller Earnout and Additional Seller Note[183](index=183&type=chunk) [Change in Fair Value of Tax Receivable Agreement](index=36&type=section&id=Change%20in%20Fair%20Value%20of%20Tax%20Receivable%20Agreement) This section details the gains or losses from changes in the fair value of the Tax Receivable Agreement liability (Gain) Loss from Change in Fair Value of Tax Receivable Agreement (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | | :------------------------------------------------ | :--- | :--- | :--------- | | (Gain) Loss from change in fair value of tax receivable agreement | $9 | $55 | $(46) | - The decrease in loss was due to changes in assumptions related to the timing of tax attribute utilization, changes in the discount rate, and the passage of time[184](index=184&type=chunk) [Interest Expense](index=36&type=section&id=Interest%20Expense) This section analyzes the company's interest expenses, including factors influencing changes year-over-year Interest Expense (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | | :------------- | :--- | :--- | :--------- | | Interest expense | $22 | $31 | $(9) | - The decrease was primarily due to partial debt repayment, opportunistic repricing of the **2028** term loan, and higher interest income, partially offset by the company's hedges[185](index=185&type=chunk) [Other (Income) Expense, net](index=36&type=section&id=Other%20(Income)%20Expense,%20net) This section reports on miscellaneous non-operating income and expenses, including TSA income Other (Income) Expense, net (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | | :-------------------------- | :--- | :--- | :--------- | | Other (income) expense, net | $(11) | $1 | $(12) | - The company recorded **$10 million** in Transition Services Agreement (TSA) income for services provided to the Divested Business in Q1 2025[186](index=186&type=chunk) [Income (Loss) From Continuing Operations Before Taxes](index=36&type=section&id=Income%20(Loss)%20From%20Continuing%20Operations%20Before%20Taxes) This section presents the company's pre-tax income or loss from its ongoing business activities Income (Loss) From Continuing Operations Before Taxes (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | | :------------------------------------------ | :--- | :--- | :--------- | | Income (Loss) From Continuing Operations Before Taxes | $(20) | $(148) | $128 | - The significant decrease in loss was primarily attributable to improved non-operating fair value remeasurements of financial instruments and the tax receivable agreement, lower selling, general and administrative expenses, reduced interest expense, and income from the TSA[187](index=187&type=chunk) [Income Tax Expense (Benefit)](index=36&type=section&id=Income%20Tax%20Expense%20(Benefit)) This section details the income tax expense or benefit recognized and the effective tax rate Income Tax Expense (Benefit) (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | | :-------------------------- | :--- | :--- | :--------- | | Income tax expense (benefit) | $(3) | $(27) | $24 | - The effective tax rates were **15%** for Q1 2025 and **18%** for Q1 2024, both lower than the **21%** U.S. statutory rate due to non-deductible expenses, tax credits, and changes in valuation allowance[188](index=188&type=chunk) [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations and explanations for non-GAAP financial measures used by management - Non-GAAP financial measures, such as Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, and Adjusted EBITDA Margin, are used by management and stakeholders to understand financial performance and evaluate core operating performance, despite their limitations[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[195](index=195&type=chunk) [Adjusted Net Income From Continuing Operations and Adjusted Diluted Earnings Per Share From Continuing Operations](index=37&type=section&id=Adjusted%20Net%20Income%20From%20Continuing%20Operations%20and%20Adjusted%20Diluted%20Earnings%20Per%20Share%20From%20Continuing%20Operations) This section presents adjusted net income and diluted EPS from continuing operations, excluding certain non-recurring items Adjusted Net Income and Adjusted Diluted EPS (Three Months Ended March 31, in millions, except per share amounts) | Item | 2025 | 2024 | | :-------------------------------------------------- | :--- | :--- | | Adjusted Net Income From Continuing Operations | $52 | $57 | | Adjusted Diluted Earnings Per Share From Continuing Operations | $0.10 | $0.10 | - Adjustments include intangible amortization, share-based compensation, transaction and integration expenses, restructuring, and fair value changes of financial instruments and the tax receivable agreement[194](index=194&type=chunk) [Adjusted EBITDA From Continuing Operations and Adjusted EBITDA Margin From Continuing Operations](index=38&type=section&id=Adjusted%20EBITDA%20From%20Continuing%20Operations%20and%20Adjusted%20EBITDA%20Margin%20From%20Continuing%20Operations) This section details the adjusted EBITDA and its margin for continuing operations, providing a view of core profitability Adjusted EBITDA and Margin (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | Change (%) | | :------------------------------------------ | :--- | :--- | :--------- | :--------- | | Adjusted EBITDA From Continuing Operations | $118 | $116 | $2 | 1.7% | | Adjusted EBITDA Margin From Continuing Operations | 21.5% | 20.8% | 0.7% | 3.4% | [Employer Solutions Results of Operations for the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024](index=39&type=section&id=Employer%20Solutions%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031,%202025%20Compared%20to%20the%20Three%20Months%20Ended%20March%2031,%202024) This section analyzes the financial performance of the Employer Solutions segment for the current and prior year's three-month periods [Revenue Disaggregation](index=39&type=section&id=Revenue%20Disaggregation) This section breaks down the Employer Solutions segment revenue into recurring and project components Employer Solutions Revenue (Three Months Ended March 31, in millions) | Revenue Type | 2025 | 2024 | Change (M) | | :------------- | :--- | :--- | :--------- | | Recurring | $520 | $521 | $(1) | | Project | $28 | $38 | $(10) | | Total | $548 | $559 | $(11) | - The overall decrease in Employer Solutions revenue was primarily driven by decreases in recurring revenues from lower project revenue and Net Commercial Activity[199](index=199&type=chunk) [Gross Profit to Adjusted Gross Profit Reconciliation](index=39&type=section&id=Gross%20Profit%20to%20Adjusted%20Gross%20Profit%20Reconciliation) This section reconciles gross profit to adjusted gross profit, highlighting adjustments for non-GAAP measures Gross Profit and Adjusted Gross Profit (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | | :-------------------------- | :--- | :--- | :--------- | | Gross Profit | $171 | $182 | $(11) | | Adjusted Gross Profit | $200 | $208 | $(8) | | Gross Profit Margin | 31.2% | 32.6% | -1.4% | | Adjusted Gross Profit Margin | 36.5% | 37.2% | -0.7% | - The decrease in gross profit and adjusted gross profit was driven by lower revenue and increased costs associated with funding growth, partially offset by productivity initiatives[202](index=202&type=chunk) [Free Cash Flow Reconciliation](index=40&type=section&id=Free%20Cash%20Flow%20Reconciliation) This section reconciles cash flow from operations to non-GAAP free cash flow, detailing capital expenditures Free Cash Flow Reconciliation (Three Months Ended March 31, in millions) | Item | 2025 | 2024 | Change (M) | | :------------------------------------------ | :--- | :--- | :--------- | | Cash provided by operating activities - continuing operations | $73 | $92 | $(19) | | Capital expenditures | $(29) | $(31) | $2 | | Non-GAAP free cash flow | $44 | $61 | $(17) | - The decrease in free cash flow was primarily due to a decrease in cash provided from operations, partially offset by lower capital expenditures[205](index=205&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=40&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's ability to generate and manage cash, including debt, share repurchases, and dividends [Executive Summary](index=40&type=section&id=Executive%20Summary) This section provides a high-level overview of the company's liquidity position and capital management strategy - The company's primary liquidity sources are existing cash and cash equivalents, cash flows from operations, and availability under its revolving credit facility[206](index=206&type=chunk) - Management believes these sources will be sufficient to meet liquidity needs, including debt obligations, capital expenditures, dividends, TRA payments, and working capital, for the foreseeable future[207](index=207&type=chunk) [Indebtedness](index=40&type=section&id=Indebtedness) This section details the company's debt structure, repayment activities, and interest rate adjustments - In **July 2024**, the company paid down **$440 million** of the Sixth Incremental Term Loans and fully repaid **$300 million** Secured Senior Notes with proceeds from the Divestiture[208](index=208&type=chunk) - In **January 2025**, the company repriced the Sixth Incremental Term Loans to Seventh Incremental Term Loans, reducing the applicable rate from SOFR + **2.25%** to SOFR + **1.75%**[209](index=209&type=chunk) [Share Repurchases](index=41&type=section&id=Share%20Repurchases) This section reports on the company's share repurchase program, including authorized amounts and shares bought back - On **February 13, 2025**, the Board authorized an additional **$200 million** for the share repurchase program, bringing the total authorized to **$281 million**[211](index=211&type=chunk) - During Q1 2025, **3,245,932** Class A Common Stock shares were repurchased under the program, leaving **$261 million** authorized as of **March 31, 2025**[212](index=212&type=chunk) [Cash Dividends](index=41&type=section&id=Cash%20Dividends) This section outlines the company's dividend policy and payments made to shareholders - The company maintains a quarterly dividend program, with a **$0.04** per share dividend paid in Q1 2025 (**$21 million** total payment) and another **$0.04** per share dividend approved for **June 16, 2025**[213](index=213&type=chunk)[215](index=215&type=chunk) [Cash, Cash Equivalents and Fiduciary Assets](index=41&type=section&id=Cash,%20Cash%20Equivalents%20and%20Fiduciary%20Assets) This section details the company's cash holdings, cash equivalents, and fiduciary assets held on behalf of clients - Continuing operations cash and cash equivalents were **$223 million** at **March 31, 2025**, a decrease of **$120 million** from **December 31, 2024**[222](index=222&type=chunk) - Fiduciary assets, held on behalf of clients and not available for corporate use, were **$227 million** at **March 31, 2025**, down from **$239 million** at **December 31, 2024**[223](index=223&type=chunk) [Other Liquidity Matters](index=42&type=section&id=Other%20Liquidity%20Matters) This section addresses additional factors affecting the company's liquidity and financial stability - The company's cash flows and overall liquidity are subject to risks and uncertainties, as detailed in the 'Risk Factors' section of its Annual Report[224](index=224&type=chunk) - The company has no business, operations, or assets in Russia, Belarus, or Ukraine and has not been materially impacted by related events[224](index=224&type=chunk) [Tax Receivable Agreement](index=42&type=section&id=Tax%20Receivable%20Agreement) This section discusses the company's obligations and expected payments under the Tax Receivable Agreement - The company paid **$100 million** related to the Tax Receivable Agreement (TRA) during Q1 2025, with no further payments expected for the remainder of **2025**[226](index=226&type=chunk) - As of **March 31, 2025**, the company expects to make payments of approximately **$188 million** under the TRA in **2026**[226](index=226&type=chunk) [Contractual Obligations and Commitments](index=42&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's significant contractual obligations and future cash commitments - Material contractual obligations include debt, non-cancellable contractual service, and purchase obligations[227](index=227&type=chunk) - Expected remaining cash outflow for non-cancellable service obligations related to the strategic partnership with Wipro is **$456 million** for the remainder of **2025** through **2028**[229](index=229&type=chunk) [OFF BALANCE SHEET ARRANGEMENTS](index=43&type=section&id=OFF%20BALANCE%20SHEET%20ARRANGEMENTS) This section discloses any off-balance sheet arrangements that could impact the company's financial position - The company does not have any off-balance sheet arrangements[231](index=231&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=43&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section highlights the accounting estimates that require significant judgment and could materially affect financial results - There were no material changes from the Critical Accounting Estimates disclosed in the Annual Report on Form 10-K for the year ended **December 31, 2024**[232](index=232&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to the Annual Report for detailed disclosures on market risk, stating that there have been no material changes since its filing - The company's exposures to market risk have not changed materially since the filing of the Annual Report[233](index=233&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures and any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=43&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section assesses the effectiveness of the company's controls designed to ensure timely and accurate financial disclosures - Management concluded that the company's disclosure controls and procedures were effective as of **March 31, 2025**[234](index=234&type=chunk) [Changes in Internal Control Over Financial Reporting](index=43&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes to the company's internal control over financial reporting - There has been no change in internal control over financial reporting that materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting during the period[235](index=235&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity transactions, and other disclosures [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses the company's involvement in legal proceedings, stating that their outcome is not expected to have a material adverse effect - The company is a party to various legal proceedings in the ordinary course of business, but believes their final outcome will not have a material adverse effect on its results of operations or financial condition[237](index=237&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the Annual Report for a comprehensive discussion of risk factors, noting no material changes since its previous filing - There have been no material changes from the risk factors previously disclosed in the company's Annual Report filed on **February 27, 2025**[239](index=239&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides information on the company's share repurchase activities during the quarter [Issuer Purchases of Equity Securities](index=44&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) This section provides details on the company's share repurchase activities during the reporting period Issuer Purchases of Equity Securities (Three Months Ended March 31, 2025) | Period | Total shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) | | :--------------------------------------- | :--------------------- | :--------------------------- | :----------------------------------------------------------------- | :------------------------------------------------------------------------------------------------- | | March 1, 2025 through March 31, 2025 | 3,245,932 | $6.17 | 3,245,932 | $261 | | Balance as of March 31, 2025 | 3,245,932 | $6.17 | 3,245,932 | $261 | [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) This section includes disclosures on trading arrangements of directors and officers [Trading Arrangements](index=44&type=section&id=Trading%20Arrangements) This section reports on any Rule 10b5-1 trading arrangements or other trading plans by company insiders - None of the company's directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended **March 31, 2025**[242](index=242&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists all documents filed as exhibits to the report, including agreements and certifications - Exhibits include Amendment No. **11** to Credit Agreement (dated **January 29, 2025**) and certifications of the Principal Executive Officer and Principal Financial Officer[243](index=243&type=chunk) [Signatures](index=46&type=section&id=Signatures) This section contains the formal attestations and signatures of the company's authorized officers for the report - The report was signed on **May 8, 2025**, by Jeremy Heaton, Chief Financial Officer[248](index=248&type=chunk) ```

Core Viewpoint - Alight, Inc. reported quarterly earnings of $0.10 per share, missing the Zacks Consensus Estimate of $0.12 per share, and showing a decline from $0.13 per share a year ago, indicating a negative earnings surprise of -16.67% [1] Financial Performance - The company posted revenues of $548 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.75%, but down from $816 million year-over-year [2] - Over the last four quarters, Alight has not surpassed consensus EPS estimates, although it has topped consensus revenue estimates three times [2] Stock Performance - Alight shares have declined approximately 24.4% since the beginning of the year, compared to a -4.3% decline in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.11 on revenues of $531.75 million, and for the current fiscal year, it is $0.61 on revenues of $2.35 billion [7] Industry Outlook - The Internet - Software industry, to which Alight belongs, is currently ranked in the top 37% of over 250 Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8]

Revenue Performance - Revenue for Q1 2025 was $548 million, a decrease of 2.0% compared to $559 million in Q1 2024[3] - Total revenue for Q1 2025 was $548 million, a decrease of 2% from $559 million in Q1 2024[38] - Recurring revenues accounted for 94.9% of total revenue in Q1 2025[3] - Recurring revenue slightly decreased to $520 million from $521 million year-over-year[38] Profitability - Gross profit was $171 million, representing a gross profit margin of 31.2%, down from $182 million and 32.6% in the prior year[4] - Total gross profit for Q1 2025 was $171 million, down from $182 million in Q1 2024, resulting in a gross margin of 31.2%[38] - Adjusted gross profit decreased to $200 million from $208 million, with an adjusted gross margin of 36.5%[38] - Adjusted EBITDA increased to $118 million, up from $116 million year-over-year[5] - Adjusted EBITDA from continuing operations increased to $118 million in Q1 2025, up from $116 million in Q1 2024, with an adjusted EBITDA margin of 21.5% compared to 20.8%[29][30] - Free cash flow for Q1 2025 was $44 million, down from $61 million in Q1 2024, reflecting a decrease of approximately 27.9%[37] - Free cash flow from continuing operations was $44 million, down from $61 million in Q1 2024[38] Loss and Debt Management - Net loss improved to $17 million compared to a net loss of $121 million in the prior year[5] - Net income from continuing operations improved to a loss of $17 million for Q1 2025, compared to a loss of $121 million in Q1 2024, representing a 85.7% reduction in losses[28] - Total debt as of March 31, 2025, was $2,019 million, with cash and cash equivalents of $223 million[9] Operational Efficiency - Selling, general and administrative expenses decreased by $42 million compared to the prior year, primarily due to lower compensation expenses[6] - The company reported a share-based compensation expense of $6 million in Q1 2025, down from $28 million in Q1 2024, indicating a reduction of approximately 78.6%[28] - The company continues to focus on improving operational efficiency despite the revenue decline[38] Asset and Liability Management - Total assets decreased from $8,193 million as of December 31, 2024, to $7,913 million as of March 31, 2025, a decline of approximately 3.4%[26] - Total current assets decreased from $1,267 million as of December 31, 2024, to $1,062 million as of March 31, 2025, a decline of approximately 16.2%[26] - Total liabilities decreased from $3,880 million as of December 31, 2024, to $3,680 million as of March 31, 2025, a reduction of approximately 5.2%[26] - Cash and cash equivalents decreased from $343 million as of December 31, 2024, to $223 million as of March 31, 2025, a decline of approximately 35%[26] Future Outlook - The company has 92% of projected 2025 revenue under contract, indicating strong revenue visibility[10] - The company reaffirmed its full-year 2025 financial outlook, projecting revenue between $2,318 million and $2,388 million[13] Client Acquisition - New client wins included US Foods, Markel, and Delek, contributing to business growth[5] Project Revenue - BPaaS revenue increased to $126 million, up from $117 million year-over-year[38] - Project revenue decreased to $28 million from $38 million in the same quarter last year[38]

Group 1 - Alight, Inc. (NYSE: ALIT) has experienced a 26% decline in stock price since the last analysis, with full year revenues projected to decrease by 2.3% in 2024 [1] - The company is perceived to be trading at an expensive valuation with limited growth prospects [1] Group 2 - The analysis reflects a value investment approach, focusing on identifying bargains in various markets, particularly emerging markets [1] - The author emphasizes an owner-mindset in investment strategy, largely disregarding macroeconomic factors [1]

Financial Risks - The company has a substantial amount of goodwill and purchased intangible assets on its consolidated balance sheet, which may be subject to impairment charges that could materially impact financial statements [116]. - A portion of the company's revenues is derived from government contracts, which are subject to heightened risks, including potential civil and criminal penalties for non-compliance [117]. - Changes in government funding or political developments could result in lower governmental sales and may adversely affect the company's financial condition and operating results [119]. - The company is subject to taxation-related risks in multiple jurisdictions, with significant judgment required in determining global provisions for income taxes [120]. - New tax laws and interpretations globally could increase the company's tax obligations, particularly with proposals for digital services taxes in the European Union [121]. - The OECD's proposed Pillar Two framework could impose a global minimum corporate tax rate of 15%, potentially increasing tax complexity and uncertainty for the company [122]. Market Performance - The market price of the company's Class A Common Stock has fluctuated significantly, with a trading range from $6.52 to $10.32 during the year ended December 31, 2024 [130]. - The company's decision to maintain or discontinue cash dividends could cause the market price of its Class A Common Stock to decline significantly [132]. - The existence of anti-takeover measures could limit the price that investors might be willing to pay for the company's shares and deter potential acquirers [128]. Debt and Liquidity - As of December 31, 2024, the Company had approximately $2.0 billion of outstanding debt at variable interest rates, exposing it to interest rate risk [142]. - Payments under the Tax Receivable Agreement (TRA) may significantly exceed actual tax benefits realized, potentially impacting liquidity [140]. - The Company expects substantial payments under the TRA in the event of a change of control, which may impair the ability to consummate such transactions [141]. - Alight Holdings is obligated to make tax distributions to unit holders, which may lead to excess cash accumulation at the Company [136]. - A hypothetical increase of 25 basis points in term loans, net of hedging activity, would result in a change to annual interest expense of approximately $1 million in fiscal year 2024 [263]. - The Company utilizes interest rate swap agreements to fix portions of floating interest rates through December 2026 [263]. - Credit rating changes could adversely impact operations and profitability, affecting access to debt markets [143]. - The Company is subject to restrictions on distributions based on financial performance and applicable laws [135]. - The Company has no obligation to distribute accumulated cash, which may benefit Continuing Tempo Unitholders [136]. Corporate Structure - The Company is a holding entity with no material assets other than its interests in Alight Holdings, relying on distributions from Alight Holdings for dividends and expenses [134].