Alight(US:ALIT)2025-11-06 14:18Revenue Performance - Revenue for Q3 2025 was $533 million, a decrease of $22 million or 4.0% compared to $555 million in Q3 2024, driven by lower Net Commercial Activity and project revenue[182][193]. - Revenue for the nine months ended September 30, 2025, was $1,609 million, a decrease of $43 million or 2.6% compared to $1,652 million in the prior year period[207]. - Total Employer Solutions Revenue for Q3 2025 was $533 million, a decrease of $22 million from $555 million in Q3 2024, primarily due to declines in project revenue[230]. Recurring Revenues - Recurring revenues decreased by $15 million or 3.0%, from $504 million in Q3 2024 to $489 million in Q3 2025, primarily due to lower Net Commercial Activity[194]. - Recurring revenues decreased by $17 million or 1.1%, from $1,518 million in the prior year period to $1,501 million, primarily due to lower Net Commercial Activity[208]. Expenses and Costs - Cost of services, exclusive of depreciation and amortization, decreased by $31 million or 8.7% in Q3 2025 compared to the prior year, attributed to lower compensation expenses and productivity initiatives[195]. - Selling, general and administrative expenses decreased by $55 million or 38.7% in Q3 2025, driven by lower professional fees and a reduction in compensation expenses[197]. - Cost of services, excluding depreciation and amortization, decreased by $56 million or 5.3% for the nine months ended September 30, 2025, driven by productivity initiatives and lower revenues[209]. - Selling, general and administrative expenses decreased by $113 million or 26.0% for the nine months ended September 30, 2025, primarily due to lower compensation expenses and professional fees[211]. Goodwill Impairment - A non-cash goodwill impairment charge of $1,338 million was recorded in Q3 2025, with no impairment recognized in Q3 2024[199]. - The company recorded a non-cash goodwill impairment charge of $2,321 million for the nine months ended September 30, 2025, with no impairment recognized in the prior year[213]. - The company reported a Goodwill impairment charge of $1,338 million for Q3 2025, contributing to a net loss from continuing operations of $(1,054) million[226]. Loss from Operations - Loss from continuing operations before taxes was $1,253 million in Q3 2025, compared to a loss of $53 million in Q3 2024, primarily due to the goodwill impairment charge[204]. - Loss from continuing operations before taxes was $2,349 million for the nine months ended September 30, 2025, compared to a loss of $203 million in the prior year[219]. Tax and Interest - Income tax benefit was $204 million for the nine months ended September 30, 2025, with an effective tax rate of 9%, lower than the 21% U.S. statutory corporate income tax rate[220]. - The One Big Beautiful Bill Act (OBBBA) resulted in a deferred tax benefit of approximately $12 million for the three months ended September 30, 2025[221]. - Interest expense decreased by $15 million for the nine months ended September 30, 2025, primarily due to partial debt repayment and loan repricing[217]. Cash Flow and Liquidity - Free Cash Flow for the nine months ended September 30, 2025, was $151 million, a significant improvement from $(20) million in the same period of 2024[237]. - Cash provided by operating activities for the nine months ended September 30, 2025, was $236 million, compared to $75 million in the prior year, driven by lower separation costs[236]. - Cash provided by operating activities was $236 million for the nine months ended September 30, 2025, compared to $75 million for the same period in 2024[252]. - Cash used in investing activities was $98 million for the nine months ended September 30, 2025, compared to cash provided of $877 million in the prior year[253]. - Cash used in financing activities was $288 million for the nine months ended September 30, 2025, down from $1,028 million in the same period in 2024[254]. - The company anticipates that its liquidity position will remain strong, supported by cash flows from operations and availability under its revolving credit facility[239]. Share Repurchase and Dividends - As of September 30, 2025, the company repurchased 6,580,136 shares for $25 million and 13,881,417 shares for $65 million during the nine months[245]. - The company authorized a total of $281 million for share repurchases as of February 13, 2025[244]. - The quarterly dividend of $0.04 per share was approved for payment on December 15, 2025[248]. Adjusted Metrics - Adjusted Net Income from Continuing Operations for Q3 2025 was $62 million, compared to $48 million in Q3 2024, reflecting a 29.2% increase[226]. - Adjusted EBITDA from Continuing Operations for Q3 2025 was $138 million, up from $118 million in Q3 2024, resulting in an Adjusted EBITDA Margin of 25.9% compared to 21.3% in the prior year[228]. - Gross Profit for Q3 2025 increased to $178 million from $174 million in Q3 2024, with an Adjusted Gross Profit of $206 million, up from $200 million[233]. - Adjusted Gross Profit Margin for Q3 2025 was 38.6%, an increase from 36.0% in Q3 2024, indicating improved operational efficiency[233]. Other Financial Information - The change in fair value of the Tax Receivable Agreement resulted in a gain of $66 million in Q3 2025, an increase of $93 million compared to a loss of $27 million in Q3 2024[201]. - The change in fair value of the tax receivable agreement resulted in a gain of $34 million for the nine months ended September 30, 2025, an increase of $85 million compared to a loss of $51 million in the prior year[216]. - Depreciation and amortization expenses increased by $5 million or 21.7% in Q3 2025, primarily driven by capitalized software[196]. - Total operating expenses for Q3 2025 were $1,500 million, significantly higher than $216 million in Q3 2024, largely due to the goodwill impairment charge[182]. - The company has a remaining cash outflow of $49 million for 2025 related to its strategic partnership with Wipro[263]. - The company expects to make payments of approximately $164 million under the Tax Receivable Agreement in 2026[261].