Alight Reports Second Quarter 2024 Results

– Announces CEO succession plan –

– Continuing operations BPaaS revenue increased 13% –

– 97% of 2024 Revenue Under Contract –

– Key wins with UPS, Wayfair, American Honda Motor Company & The Adecco Group –

– Completed cloud migration program and fully decommissioned data center –

– Repurchased $80 million of common stock –

Alight, Inc. (NYSE: ALIT), a leading cloud-based provider of integrated digital human capital and business solutions, today reported results for the second quarter ended June 30, 2024.

“Alight is entering its next chapter following the accomplishment of several key strategic milestones including its recent divestiture,” said CEO Stephan Scholl. “As a simplified and focused wellbeing & benefits company, we have accelerated our financial profile, underscored by the immediate margin expansion and future earnings power. As I look to what is next for Alight, we are well-positioned to navigate a dynamic environment with tremendous long-standing relationships, world class services & technology, and highly impressive colleagues to serve our thousands of clients.”

CEO Succession Plan

In line with the closing of the Payroll & Professional Services sale, the Company announced that Stephan Scholl will step down as CEO and member of the Board, effective after the Board names a successor. Scholl will continue as CEO and Director during the search process. In addition, the Board has appointed Dave Guilmette, an independent Director, as Vice Chair of the Board. In this role, he will work closely with Scholl to ensure a smooth transition.

Chair of the Board William P. Foley, II, said, “On behalf of the entire Board, I want to thank Stephan for his commitment and vision. He has made a meaningful impact as our CEO, bringing the company public amidst the challenging COVID environment, and overseeing our path in developing the Alight Worklife® platform for employee wellbeing and benefits. With the divestiture behind us we are well positioned to deliver differentiated benefit services to our clients and profitable growth with significant margin and cash flow expansion for our shareholders. Stephan’s continued efforts and support through this transitionary period will help our next CEO hit the ground running with a substantially improved financial and operating model.”

Foley continued, “The Board has for months been actively planning for CEO succession and with the divestiture now closed, we look forward to bringing in a new leader to guide Alight in its exciting next chapter."

Presentation of Results

Beginning with the quarter ended March 31, 2024, the Company began accounting for the assets and liabilities of the Payroll & Professional Services business as “held for sale” and its operating results as discontinued operations. As such, the financial information contained in this release is presented on a continuing operations basis, unless otherwise noted. The Payroll & Professional Services business transaction closed subsequent to the end of the second quarter and accordingly, this press release also presents total company results.

Second Quarter 2024 Continuing Operations Highlights (all comparisons are relative to second quarter 2023)

Revenue decreased 4.1% to $538 million
Business Process as a Service (BPaaS) revenue grew 12.7% to $115 million, representing 21.4% of total revenue
Gross profit of $167 million and gross profit margin of 31.0%, compared to $187 million and 33.3% in the prior year period, respectively, and adjusted gross profit of $196 million and adjusted gross profit margin of 36.4%, compared to $212 million and 37.8%, in the prior year period, respectively
Net loss of $4 million compared to the prior year period net loss of $72 million primarily driven by non-operating fair value remeasurements of financial instruments and the tax receivable agreement
Adjusted EBITDA of $105 million compared to the prior year period of $119 million
Diluted earnings (loss) per share of $(0.01) compared to $(0.14) in the prior year period, and adjusted diluted earnings per share of $0.05 compared to $0.11 per share in the prior year period
New wins, including new logos or expanded relationships with companies including UPS, Wayfair, American Honda Motor Company and The Adecco Group
Repurchased $80 million of common stock under existing share repurchase program

Continuing Operations Second Quarter 2024 Results

Revenue decreased 4.1% to $538 million, as compared to $561 million in the prior year period. Excluding the exited Hosted business, revenue decreased 2.5%. The decrease was driven by lower volumes, net commercial activity, and project revenue within our Employer Solutions segment and the wind-down of our Hosted business operations. Recurring revenues were 91.6% of total revenue.

Gross profit was $167 million, or 31.0% of revenue, compared to $187 million, or 33.3% of revenue in the prior year period. The decrease in gross profit was primarily driven by lower revenue as noted above, and partially offset by productivity savings.

Selling, general and administrative expenses decreased $3 million when compared to the prior year period. This was driven by lower compensation expenses primarily related to share-based awards and lower costs incurred from our previously announced restructuring program, partially offset by professional fees incurred related to the sale of our Payroll & Professional Services business.

Interest expense of $33 million was flat from the prior year period. Interest expense benefited from the opportunistic repricing of our 2028 term loan and higher interest income and was offset by lower swap payments.

The Company’s loss from continuing operations before income tax expense was $2 million compared to loss from continuing operations before income tax benefit of $80 million in the prior year period. The improvement was primarily due to the non-operating fair value remeasurements of financial instruments and the tax receivable agreement.

Balance Sheet Highlights

As of June 30, 2024, the Company’s cash and cash equivalents balance was $183 million, total debt was $2,780 million and total debt net of cash and cash equivalents was $2,597 million.

During the quarter, the Company completed a repricing of its 2028 term loan that decreased its interest rate by 50 basis points for $10 million of anticipated annualized interest expense savings following the Company's deleveraging in July 2024.

Subsequent Events

On July 12, 2024, the Company announced that it completed the sale of its Payroll and Professional Services business.

On July 15, 2024, the Company commenced its $75 million accelerated share repurchase agreement with final settlement expected in the third quarter of 2024.

Following the repayment of $740 million of debt during July 2024, the interest rates on the Company’s debt are 100% fixed through 2024 and 70% through 2025.

Second Half 2024 Business Outlook

For the second half of 2024, we expect:

Revenue of $1.207 billion to $1.232 billion.
BPaaS Revenue of $265 to $275 million.
Adjusted EBITDA of $326 million to $351 million.
Adjusted EBITDA margin range of 26.5% to 29.1%.
Adjusted diluted EPS of $0.31 to $0.36.
Operating Cash Flow Conversion rate of 55-65%.

Reconciliations of the historical financial measures used in this press release that are not recognized under U.S. generally accepted accounting principles ("GAAP") are included below. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.

Earnings Conference Call and Webcast Information

A conference call to discuss the Company’s second quarter 2024 financial results is scheduled for today, August 6, 2024 at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). Interested parties can access the live webcast and accompanying presentation materials by logging on to the Investor Relations section on the Company’s website at http://investor.alight.com. A replay of the conference call and the accompanying presentation materials will be available on the investor relations website for approximately 90 days.

About Alight Solutions

Alight is a leading cloud-based human capital technology and services provider for many of the world’s largest organizations. Through the administration of employee benefits, Alight powers confident health, wealth, leaves and wellbeing decisions for 35 million people and dependents. Our Alight Worklife® platform empowers employers to gain a deeper understanding of their workforce and engage them throughout life’s most important moments with personalized benefits management and data-driven insights, leading to increased employee wellbeing, engagement and productivity. Learn how Alight unlocks growth for organizations of all sizes at alight.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements regarding our management and director succession plans, statements regarding the anticipated benefits of the sale of our Payroll & Professional Services business including the achievement of our financial objectives, statements related to our cloud migration project and its expected impact, statements related to our expected revenue under contract and statements related to the expectations regarding the performance and outlook for Alight’s business, financial results, liquidity and capital resources. In some cases, these forward-looking statements can be identified by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties including, among others, risks related to declines in economic activity in the industries, markets, and regions our clients serve, including as a result of elevated interest rates or changes in monetary and fiscal policies, competition in our industry, risks related to our ability to successfully separate our Payroll and Professional Services business, risks related to the performance of our information technology systems and networks, risks related to our ability to maintain the security and privacy of confidential and proprietary information, risks related to actions or proposals from activist stockholders, risks related to the ability to meet the contingent payment conditions of the seller note, and risks related to changes in regulation, including developments on the use of artificial intelligence and machine learning. Additional factors that could cause Alight’s results to differ materially from those described in the forward-looking statements can be found under the section entitled “Risk Factors” of Alight’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on February 29, 2024 and in the Quarterly Report on Form 10-Q filed with the SEC on May 8, 2024, as such factors may be updated from time to time in Alight's filings with the SEC, which are, or will be, accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be considered along with other factors noted in this presentation and in Alight’s filings with the SEC. Alight undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Non-GAAP Financial Measures and Other Information

This press release includes supplemental information presenting the results of our operations on a total company basis that includes the Payroll & Professional Services business. This presentation is not considered to be prepared in accordance with GAAP. However, as the Payroll & Professional Services business continued to operate as a business of Alight until the closing of the transaction, we believe the total company results provide a meaningful basis of comparison and are useful in identifying current business trends for the periods presented.

The Company also refers to certain non-GAAP financial measures in this press release, including: Adjusted EBITDA From Continuing Operations, Adjusted EBITDA Margin From Continuing Operations, Adjusted Net Income From Continuing Operations, Adjusted Diluted Earnings Per Share From Continuing Operations, Operating Cash Flow Conversion, Adjusted Gross Profit and Adjusted Gross Profit Margin. Please see below for additional information and for reconciliations of such non-GAAP financial measures. The presentation of non-GAAP financial measures is used to enhance our investors’ and lenders’ understanding of certain aspects of our financial performance. This discussion is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.

Adjusted EBITDA From Continuing Operations, which is defined as earnings from continuing operations before interest, taxes, depreciation and intangible amortization adjusted for the impact of certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance. Adjusted EBITDA Margin From Continuing Operations is defined as Adjusted EBITDA From Continuing Operations divided by revenue. Both Adjusted EBITDA From Continuing Operations and Adjusted EBITDA Margin From Continuing Operations are non-GAAP financial measures used by management and our stakeholders to provide useful supplemental information that enables a better comparison of our performance across periods as well as to evaluate our core operating performance.

Adjusted Net Income From Continuing Operations, which is defined as net income (loss) from continuing operations adjusted for intangible amortization and the impact of certain non-cash items that we do not consider in the evaluation of ongoing operational performance, is a non-GAAP financial measure used solely for the purpose of calculating Adjusted Diluted Earnings Per Share From Continuing Operations.

Adjusted Diluted Earnings Per Share From Continuing Operations is defined as Adjusted Net Income From Continuing Operations divided by the adjusted weighted-average number of shares of Alight Inc. common stock, diluted. Adjusted Diluted Earnings Per Share From Continuing Operations is used by us and our investors to evaluate our core operating performance and to benchmark our operating performance against our competitors.

Operating Cash Flow Conversion is defined as cash provided by operating activities divided by Adjusted EBITDA. Operating Cash Flow Conversion is used by management and stakeholders to evaluate our core operating performance.

Adjusted Gross Profit is defined as revenue less cost of services adjusted for depreciation, amortization and share-based compensation, and Adjusted Gross Profit Margin is defined as Adjusted Gross Profit divided by revenue. Management uses Adjusted Gross Profit and Adjusted Gross Profit Margin as key measures in making financial, operating and planning decisions and in evaluating our performance. We believe that presenting Adjusted Gross Profit and Adjusted Gross Profit Margin is useful to investors as it eliminates the impact of certain non-cash expenses and allows a direct comparison between periods.

Revenue Under Contract is an operational metric that represents management’s estimate of anticipated revenue expected to be recognized in the period referenced based on available information that includes historical client contracting practices. The metric does not reflect potential future events such as unexpected client volume fluctuations, early contract terminations or early contract renewals. Our metric may differ from similar terms used by other companies and therefore comparability may be limited.

Condensed Consolidated Statements of Income (Loss)

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

(in millions, except per share amounts)

2024

2023

2024

2023

Revenue

538

561

1,097

1,147

Cost of services, exclusive of depreciation and amortization

345

356

701

738

Depreciation and amortization

Gross Profit

167

187

349

374

Operating Expenses

Selling, general and administrative

146

149

292

300

Depreciation and intangible amortization

149

150

Total Operating expenses

219

223

441

450

Operating Income (Loss) From Continuing Operations

(52

)

(36

)

(92

)

(76

)

Other (Income) Expense

(Gain) Loss from change in fair value of financial instruments

(52

)

—

(31

)

(Gain) Loss from change in fair value of tax receivable agreement

(31

)

Interest expense

Other (income) expense, net

—

Total Other (income) expense, net

(50

)

111

Income (Loss) From Continuing Operations Before Taxes

)

(80

)

(150

)

(187

)

Income tax expense (benefit)

)

(25

)

(31

)

Net Income (Loss) From Continuing Operations

)

(72

)

(125

)

(156

)

Net Income (Loss) From Discontinued Operations, Net of Tax

—

Net Income (Loss)

(72

)

(93

)

(146

)

Net income (loss) attributable to noncontrolling interests

—

)

(11

)

Net Income (Loss) Attributable to Alight, Inc.

(67

)

(91

)

(135

)

Earnings Per Share

Basic and Diluted

Continuing operations

(0.01

)

(0.14

)

(0.23

)

(0.30

)

Discontinued operations

0.05

0.00

0.06

0.02

Net Income (Loss)

0.04

(0.14

)

(0.17

)

(0.28

)

Condensed Consolidated Balance Sheets

(Unaudited)

June 30, 2024

December 31, 2023

(in millions, except par values)

Assets

Current Assets

Cash and cash equivalents

183

324

Receivables, net

372

435

Other current assets

210

260

Fiduciary assets

217

234

Current assets held for sale

2,461

1,523

Total Current Assets

3,443

2,776

Goodwill

3,212

Intangible assets, net

2,995

3,136

Fixed assets, net

393

331

Deferred tax assets, net

Other assets

344

341

Long-term assets held for sale

—

948

Total Assets

10,473

10,782

Liabilities and Stockholders' Equity

Liabilities

Current Liabilities

Accounts payable and accrued liabilities

249

325

Current portion of long-term debt, net

329

Other current liabilities

261

233

Fiduciary liabilities

217

234

Current liabilities held for sale

1,461

1,370

Total Current Liabilities

2,517

2,187

Deferred tax liabilities

Long-term debt, net

2,451

2,769

Long-term tax receivable agreement

757

733

Financial instruments

109

Other liabilities

159

142

Long-term liabilities held for sale

—

Total Liabilities

5,996

6,040

Commitments and Contingencies

Stockholders' Equity

Preferred stock at $0.0001 par value: 1.0 shares authorized, none issued and outstanding

—

Class A Common Stock: $0.0001 par value, 1,000.0 shares authorized; 541.4 and 510.9 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

—

Class B Common Stock: $0.0001 par value, 20.0 shares authorized; 9.8 and 9.9 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

—

Class V Common Stock: $0.0001 par value, 175.0 shares authorized; 0.6 and 29.0 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

—

Class Z Common Stock: $0.0001 par value, 12.9 shares authorized; 0.6 and 3.4 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

—

Treasury stock, at cost (16.6 and 6.4 shares at June 30, 2024 and December 31, 2023, respectively)

(132

)

(52

)

Additional paid-in-capital

5,134

4,946

Retained deficit

(594

)

(503

)

Accumulated other comprehensive income

Total Alight, Inc. Stockholders' Equity

4,473

4,462

Noncontrolling interest

280

Total Stockholders' Equity

4,477

4,742

Total Liabilities and Stockholders' Equity

10,473

10,782

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Six Months Ended June 30,

(in millions)

2024

2023

Operating activities:

Net Income (Loss) From Continuing Operations

(125

)

(156

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation

Intangible asset amortization

140

141

Noncash lease expense

Financing fee and premium amortization

)

Share-based compensation expense

(Gain) loss from change in fair value of financial instruments

(31

)

(Gain) loss from change in fair value of tax receivable agreement

Release of unrecognized tax provision

)

Deferred tax expense (benefit)

(39

)

Other

Changes in operating assets and liabilities:

Accounts receivable

Accounts payable and accrued liabilities

(75

)

(120

)

Other assets and liabilities

Cash provided by operating activities - continuing operations

113

Cash provided by operating activities - discontinued operations

Net cash provided by operating activities

158

162

Investing activities:

Capital expenditures

(67

)

(78

)

Cash used for investing activities - continuing operations

(67

)

(78

)

Cash used in investing activities - discontinued operations

(11

)

(11

)

Net cash used in investing activities

(78

)

(89

)

Financing activities:

Net increase (decrease) in fiduciary liabilities

(17

)

(17

)

Repayments to banks

(13

)

(13

)

Principal payments on finance lease obligations

(14

)

(13

)

Payments on tax receivable agreements

(62

)

Tax payment for shares/units withheld in lieu of taxes

(58

)

Deferred and contingent consideration payments

—

)

Repurchase of shares

(80

)

(14

)

Cash used for financing activities - continuing operations

(244

)

(74

)

Cash provided by (used in) financing activities - discontinued operations

(201

)

Net Cash provided by (used for) financing activities

(222

)

(275

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash - discontinued operations

)

Net increase (decrease) in cash, cash equivalents and restricted cash

(145

)

(197

)

Cash, cash equivalents and restricted cash balances from:

Continuing operations - beginning of year

558

482

Discontinued operations - beginning of year(a)

1,201

1,277

Less Discontinued operations - end of period(a)

1,214

1,079

Continuing operations - end of period

400

483

(a)Reported as assets held for sale on our condensed consolidated balance sheets.

Reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA from Continuing Operations (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

(in millions)

2024

2023

2024

2023

Net Income (Loss) From Continuing Operations (1)

)

(72

)

(125

)

(156

)

Interest expense

Income tax expense (benefit)

)

(25

)

(31

)

Depreciation

Intangible amortization

140

141

EBITDA From Continuing Operations

130

110

Share-based compensation

Transaction and integration expenses (2)

Restructuring

(Gain) Loss from change in fair value of financial instruments

(52

)

—

(31

)

(Gain) Loss from change in fair value of tax receivable agreement

(31

)

Other

—

Adjusted EBITDA From Continuing Operations

105

119

221

231

Revenue

538

561

1,097

1,147

Adjusted EBITDA Margin From Continuing Operations (3)

19.5

21.2

20.1

(1)

Adjusted EBITDA excludes the impact of discontinued operations. Comparable periods have been recast to exclude these impacts.

(2)

Transaction and integration expenses primarily relate to acquisition and divestiture activities.

(3)

Adjusted EBITDA Margin From Continuing Operations is defined as Adjusted EBITDA from Continuing Operations as a percentage of revenue.

Reconciliation of Net Income (Loss) From Continuing Operations to Adjusted Net Income and Adjusted Diluted Earnings per Share From Continuing Operations (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

(in millions, except share and per share amounts)

Numerator:

Net Income (Loss) From Continuing Operations Attributable to Alight, Inc. (1)

)

(67

)

(123

)

(145

)

Conversion of noncontrolling interest

—

)

(11

)

Intangible amortization

140

141

Share-based compensation

Transaction and integration expenses (2)

Restructuring

(Gain) Loss from change in fair value of financial instruments

(52

)

—

(31

)

(Gain) Loss from change in fair value of tax receivable agreement

(31

)

Other

—

Tax effect of adjustments (3)

(12

)

(12

)

(41

)

(41

)

Adjusted Net Income From Continuing Operations

111

Denominator:

Weighted average shares outstanding - basic

546,174,400

490,306,205

543,376,024

483,358,533

Dilutive effect of the exchange of noncontrolling interest units

554,568

—

554,568

—

Dilutive effect of RSUs

374,688

—

Weighted average shares outstanding - diluted

547,103,656

490,306,205

543,930,592

483,358,533

Exchange of noncontrolling interest units(4)

107,673

44,103,939

2,714,155

51,055,250

Impact of unvested RSUs(5)

9,222,832

10,109,595

9,597,520

10,109,595

Adjusted shares of Class A Common Stock outstanding - diluted(6)(7)

556,434,161

544,519,739

556,242,267

544,523,378

Basic (Net Loss) Earnings Per Share From Continuing Operations

(0.01

)

(0.14

)

(0.23

)

(0.30

)

Diluted (Net Loss) Earnings Per Share From Continuing Operations

(0.01

)

(0.14

)

(0.23

)

(0.30

)

Adjusted Diluted Earnings Per Share From Continuing Operations

0.05

0.11

0.15

0.20

(1)

Excludes the impact of discontinued operations. Comparable periods have been recast to exclude these impacts.

(2)

Transaction and integration expenses primarily relate to acquisition and divestiture activities.

(3)

Income tax effects have been calculated based on the statutory tax rates for both U.S. and foreign jurisdictions based on the Company's mix of income and adjusted for significant changes in fair value measurement.

(4)

Assumes the full exchange of the units held by noncontrolling interests for shares of Class A Common Stock of Alight, Inc. pursuant to the exchange agreement.

(5)

Includes non-vested time-based restricted stock units that were determined to be antidilutive for U.S. GAAP diluted earnings per share purposes.

(6)

Excludes two tranches of contingently issuable seller earnout shares: (i) 7.5 million shares will be issued if the Company's Class A Common Stock's volume-weighted average price ("VWAP") is >$12.50 for any 20 trading days within a consecutive period of 30 trading days; (ii) 7.5 million shares will be issued if the Company's Class A Common Stock VWAP is >$15.00 for any 20 trading days within a consecutive period of 30 trading days. Both tranches have a seven-year duration.

(7)

Excludes approximately 14.1 million and 30.2 million performance-based units, which represents the gross number of shares expected to vest based on achievement of performance conditions as of June 30, 2024 and 2023, respectively.

Gross Profit to Adjusted Gross Profit Reconciliation by Segment

(Unaudited)

Three Months Ended June 30, 2024

($ in millions)

Employer Solutions

Other

Total

Gross Profit

167

—

167

Add: stock-based compensation

—

Add: depreciation and amortization

—

Adjusted Gross Profit

196

—

196

Gross Profit Margin

31.0

0.0

31.0

Adjusted Gross Profit Margin

36.4

0.0

36.4

Three Months Ended June 30, 2023

($ in millions)

Employer Solutions

Other

Total

Gross Profit

189

)

187

Add: stock-based compensation

—

Add: depreciation and amortization

Adjusted Gross Profit

213

)

212

Gross Profit Margin

34.2

(22.2

33.3

Adjusted Gross Profit Margin

38.6

(11.1

37.8

Other Select Financial Data

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

($ in millions)

2024

2023

2024

2023

Segment Revenues

Employer Solutions:

Recurring

493

505

1,014

1,038

Project

Total Employer Solutions

538

552

1,097

1,128

Other (1)

—

Total revenue

538

561

1,097

1,147

Segment Gross Profit

Employer Solutions

167

189

349

376

Other

—

)

—

)

Total gross profit

167

187

349

374

Segment Gross Margin

Employer Solutions

31.0

34.2

31.8

33.3

Other

0.0

(22.2

0.0

(10.5

Total gross margin

31.0

33.3

31.8

32.6

Segment Adjusted Gross Profit

Employer Solutions

196

213

404

423

Other

—

)

—

Total adjusted gross profit

196

212

404

423

Segment Adjusted Gross Margin Percent

Employer Solutions

36.4

38.6

36.8

37.5

Other

0.0

(11.1

0.0

Total adjusted gross margin percent

36.4

37.8

36.8

36.9

Adjusted EBITDA From Continuing Operations

105

119

221

231

Cash provided by continuing operating activities

113

Other Key Statistics

Recurring revenue, Ex. Other

493

505

1,014

1,038

BPaaS revenue

115

102

232

199

BPaaS revenue as % of total revenue

21.4

18.2

21.1

17.3

(1)

Other primarily attributable to the former Hosted Segment.

Supplemental Financial Information

(Continuing Operations and Discontinued Operations)

Alight, Inc. Condensed Consolidated Statements of Income (Loss)

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

(in millions, except per share amounts)

2024

2023

2024

2023

Revenue

787

806

1,603

1,637

Cost of services, exclusive of depreciation and amortization

512

528

1,055

1,083

Depreciation and amortization

Gross Profit

249

257

498

514

Operating Expenses

Selling, general and administrative

197

193

380

378

Depreciation and intangible amortization

157

170

Total operating expenses

269

278

537

548

Operating Income (Loss)

(20

)

(21

)

(39

)

(34

)

Other (Income) Expense

(Gain) Loss from change in fair value of financial instruments

(52

)

—

(31

)

(Gain) Loss from change in fair value of tax receivable agreement

(31

)

Interest expense

Other (income) expense, net

Total other (income) expense, net

(48

)

117

Income (Loss) Before Income Tax

(69

)

(100

)

(151

)

Income tax expense (benefit)

)

Net Income (Loss)

(72

)

(93

)

(146

)

Net loss attributable to noncontrolling interests

—

)

(11

)

Net (Loss) Income Attributable to Alight, Inc.

(67

)

(91

)

(135

)

Earnings Per Share

Basic (net loss) earnings per share

0.04

(0.14

)

(0.17

)

(0.28

)

Diluted (net loss) earnings per share

0.04

(0.14

)

(0.17

)

(0.28

)

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Net Income (Loss)

(72

)

(93

)

(146

)

Interest expense

Income tax expense (benefit)

)

Depreciation

Intangible amortization

149

160

EBITDA

159

171

125

Share-based compensation

Transaction and integration expenses (1)

Restructuring

(Gain) Loss from change in fair value of financial instruments

(52

)

—

(31

)

(Gain) Loss from change in fair value of tax receivable agreement

(31

)

Other

—

Adjusted EBITDA

145

157

295

311

Revenue

787

806

1,603

1,637

Adjusted EBITDA Margin (2)

18.4

19.5

18.4

19.0

(1)

Transaction and integration expenses primarily relate to acquisition and divestiture activities.

(2)

Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of revenue.

Reconciliation of Net Income (Loss) to Adjusted Net Income and Adjusted Diluted Earnings per Share (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Numerator:

Net (Loss) Income Attributable to Alight, Inc.

(67

)

(91

)

(135

)

Conversion of noncontrolling interest

—

)

(11

)

Intangible amortization

149

160

Share-based compensation

Transaction and integration expenses (1)

Restructuring

(Gain) Loss from change in fair value of financial instruments

(52

)

—

(31

)

(Gain) Loss from change in fair value of tax receivable agreement

(31

)

Other

—

Tax effect of adjustments (2)

(15

)

(18

)

(47

)

(51

)

Adjusted Net Income

133

149

Denominator:

Weighted average shares outstanding - basic

546,174,400

490,306,205

543,376,024

483,358,533

Dilutive effect of the exchange of noncontrolling interest units

554,568

—

554,568

—

Dilutive effect of RSUs

374,688

—

Weighted average shares outstanding - diluted

547,103,656

490,306,205

543,930,592

483,358,533

Exchange of noncontrolling interest units (3)

107,673

44,103,939

2,714,155

51,055,250

Impact of unvested RSUs(4)

9,222,832

10,109,595

9,597,520

10,109,595

Adjusted shares of Class A Common Stock outstanding - diluted (5)(6)

556,434,161

544,519,739

556,242,267

544,523,378

Basic (Net Loss) Earnings Per Share

0.04

(0.14

)

(0.17

)

(0.28

)

Diluted (Net Loss) Earnings Per Share

0.04

(0.14

)

(0.17

)

(0.28

)

Adjusted Diluted Earnings Per Share

0.11

0.14

0.24

0.27

(1)

Transaction and integration expenses primarily relate to acquisition and divestiture activities.

(2)

(3)

Assumes the full exchange of the units held by noncontrolling interests for shares of Class A Common Stock of Alight, Inc. pursuant to the exchange agreement.

(4)

Includes non-vested time-based restricted stock units that were determined to be antidilutive for U.S. GAAP diluted earnings per share purposes.

(5)

(6)

Gross Profit to Adjusted Gross Profit Reconciliation

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

($ in millions)

2024

2023

2024