Alight Reports First Quarter 2025 Results

Business Wire

Thu, May 8, 2025, 5:30 AM 19 min read

"Our first quarter performance met expectations and we are off to a strong start to the year," said CEO Dave Guilmette. "We continue to bolster our leading capabilities through a focus on client-centricity and delivering with excellence, including important advancements across our artificial intelligence and delivery initiatives. As our talented team navigates the evolving global environment, the mission-critical work of helping people access and utilize their benefits to remain healthy and financially secure is as important as ever."

Presentation of Results

First Quarter 2025 Highlights (all comparisons are relative to first quarter 2024)

Revenue decreased 2.0% to $548 million
Gross profit of $171 million and gross profit margin of 31.2%, compared to $182 million and 32.6%, respectively, and adjusted gross profit of $200 million and adjusted gross profit margin of 36.5%, compared to $208 million and 37.2%, respectively
Net loss improved to $17 million compared to net loss of $121 million
Adjusted EBITDA improved to $118 million compared to $116 million
Diluted earnings (loss) per share of $(0.03) compared to $(0.22), and adjusted diluted earnings per share of $0.10 compared to $0.10 per share
New wins or expanded relationships with companies including US Foods, Markel and Delek
Repurchased $20 million of common stock under existing share repurchase program
Declared and paid a $0.04 per share dividend

First Quarter 2025 Results

Revenue decreased 2.0% to $548 million, as compared to $559 million in the prior year period. The change was primarily due to lower project revenue and net commercial activity. Recurring revenues were 94.9% of total revenue.

Gross profit was $171 million, or 31.2% of revenue, compared to $182 million, or 32.6% of revenue in the prior year period. The change in gross profit was primarily due to lower revenue as noted above, partially offset by productivity savings.

Selling, general and administrative expenses improved $42 million when compared to the prior year period. This was due to a reduction in compensation expenses primarily related to non-cash share-based awards, lower restructuring charges and lower professional fees incurred related to the sale and separation of the Payroll & Professional Services business.

Interest expense of $22 million improved $9 million from the prior year period. Interest expense benefited from the repricing of the 2028 term loan and the $740 million debt pay down in the third quarter of 2024.

The Company’s loss from continuing operations before income tax benefit improved to $20 million compared to a loss from continuing operations before income tax benefit of $148 million in the prior year period. The improvement was primarily attributable to the non-operating fair value remeasurements of financial instruments and the tax receivable agreement, lower selling, general and administrative expenses, lower interest expense as a result of the debt pay down and other income recorded in conjunction with the transition services agreement entered into with the purchaser of the divested Payroll & Professional Services business.

Balance Sheet Highlights

As of March 31, 2025, the Company’s cash and cash equivalents balance was $223 million, total debt was $2,019 million and total debt net of cash and cash equivalents was $1,796 million.

Business Outlook

"We continue to benefit from a long-cycle recurring business model that has insulated us from short-term market swings as we already have 92% of projected 2025 revenue under contract. While we are not immune to the market impacts, we feel good about the operational levers within our control and have reaffirmed our outlook based on the resilience of our model and visibility today," said Guilmette.

The Company's reaffirmed 2025 outlook includes:

Revenue of $2,318 million to $2,388 million.
Adjusted EBITDA of $620 million to $645 million.
Adjusted diluted EPS of $0.58 to $0.64.
Free cash flow of $250 million to $285 million.

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 first quarter 2025 financial results is scheduled for today, May 8, 2025 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 and 35 million people and dependents. Through the administration of employee benefits, Alight helps clients gain a benefits advantage while building a healthy and financially secure workforce by unifying the benefits ecosystem across health, wealth, wellbeing, absence management and navigation. 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 more about the Alight Benefits Advantage™ 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 related to our expected revenue under contract, statements related to our ability to execute on our strategy, and statements related to the expectations regarding the performance and outlook for Alight’s business, financial results, liquidity and capital resources, including statements in the "Business Outlook" section of this press release. In some cases, these forward-looking statements can be identified by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "would," "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 our ability to successfully execute the next phase of our strategic transformation, including our ability to effectively and appropriately separate the Payroll and Professional Services business, risks related to declines in economic activity in the industries, markets, and regions our clients serve, including as a result of macroeconomic factors beyond our control, heightened interest rates or changes in monetary, trade and fiscal policies, competition in our industry, risks related to cyber-attacks and security vulnerabilities and other significant disruptions in our information technology systems and networks, risks related to our ability to maintain the security and privacy of confidential, personal or proprietary data, risks related to actions or proposals from activist stockholders, and risks related to our compliance with applicable laws and regulations, including changes thereto. 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 27, 2025, 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

The Company 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, Free Cash Flow, 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.

Free Cash Flow is defined as cash provided by operating activities net of capital expenditures. Management believes that free cash flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to repay debt obligations, make strategic acquisitions and investments and for certain other activities such as dividends and stock repurchases.

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 March 31,
(in millions, except per share amounts)		2025			2024
Revenue	$	548		$	559
Cost of services, exclusive of depreciation and amortization		351			356
Depreciation and amortization		26			21
Gross Profit		171			182

Operating Expenses
Selling, general and administrative		104			146
Depreciation and intangible amortization		75			76
Total Operating expenses		179			222
Operating Income (Loss) From Continuing Operations		(8	)		(40	)
Other (Income) Expense
(Gain) Loss from change in fair value of financial instruments		(8	)		21
(Gain) Loss from change in fair value of tax receivable agreement		9			55
Interest expense		22			31
Other (income) expense, net		(11	)		1
Total Other (income) expense, net		12			108
Income (Loss) From Continuing Operations Before Taxes		(20	)		(148	)
Income tax expense (benefit)		(3	)		(27	)
Net Income (Loss) From Continuing Operations		(17	)		(121	)
Net Income (Loss) From Discontinued Operations, Net of Tax		(8	)		5
Net Income (Loss)		(25	)		(116	)
Net income (loss) attributable to noncontrolling interests		—			(2	)
Net Income (Loss) Attributable to Alight, Inc.	$	(25	)	$	(114	)

Earnings (Loss) Per Share
Basic and Diluted
Continuing operations	$	(0.03	)	$	(0.22	)
Discontinued operations	$	(0.02	)	$	0.01
Net Income (Loss)	$	(0.05	)	$	(0.21	)


Condensed Consolidated Balance Sheets
*(Unaudited)*

	March 31, 2025			December 31, 2024
(in millions, except par values)
Assets
Current Assets
Cash and cash equivalents	$	223		$	343
Receivables, net		438			471
Other current assets		174			214
Fiduciary assets		227			239
Total Current Assets		1,062			1,267
Goodwill		3,212			3,212
Intangible assets, net		2,784			2,855
Fixed assets, net		397			396
Deferred tax assets, net		47			41
Other assets		411			422
Total Assets	$	7,913		$	8,193

Liabilities and Stockholders' Equity
Liabilities
Current Liabilities
Accounts payable and accrued liabilities	$	296		$	355
Current portion of long-term debt, net		20			25
Other current liabilities		358			273
Fiduciary liabilities		227			239
Total Current Liabilities		901			892
Deferred tax liabilities		22			22
Long-term debt, net		1,999			2,000
Long-term tax receivable agreement		578			757
Financial instruments		29			51
Other liabilities		151			158
Total Liabilities	$	3,680		$	3,880
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; 563.9 and 560.5 shares issued, and 531.9 and 531.7 shares outstanding as of March 31, 2025 and December 31, 2024, respectively		—			—
Class B Common Stock: $0.0001 par value, 20.0 shares authorized; 10.0 and 10.0 issued and outstanding as of March 31, 2025 and December 31, 2024, respectively		—			—
Class V Common Stock: $0.0001 par value, 175.0 shares authorized; 0.5 and 0.5 issued and outstanding as of March 31, 2025 and December 31, 2024, respectively		—			—
Class Z Common Stock: $0.0001 par value, 12.9 shares authorized; 0.0 and 0.0 issued and outstanding as of March 31, 2025 and December 31, 2024, respectively		—			—
Treasury stock, at cost (32.0 and 28.8 shares at March 31, 2025 and December 31, 2024, respectively)		(239	)		(219	)
Additional paid-in-capital		5,114			5,141
Accumulated deficit		(685	)		(660	)
Accumulated other comprehensive income		39			47
Total Alight, Inc. Stockholders' Equity	$	4,229		$	4,309
Noncontrolling interest		4			4
Total Stockholders' Equity	$	4,233		$	4,313
Total Liabilities and Stockholders' Equity	$	7,913		$	8,193


Condensed Consolidated Statements of Cash Flows
*(Unaudited)*

	Three Months Ended March 31,
(in millions)		2025		2024
Operating activities:
Net Income (Loss) From Continuing Operations	$	(17)	$	(121)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		30		26
Intangible asset amortization		71		71
Noncash lease expense		2		3
Financing fee and premium amortization		—		(1)
Share-based compensation expense		6		28
(Gain) loss from change in fair value of financial instruments		(8)		21
(Gain) loss from change in fair value of tax receivable agreement		9		55
Deferred tax expense (benefit)		(4)		(26)
Changes in operating assets and liabilities:
Accounts receivable		33		42
Accounts payable and accrued liabilities		(60)		(47)
Other assets and liabilities		11		41
Cash provided by operating activities - continuing operations		73		92
Cash provided by operating activities - discontinued operations		—		8
Net cash provided by operating activities	$	73	$	100
Investing activities:
Capital expenditures		(29)		(31)
Cash provided by (used in) investing activities - continuing operations		(29)		(31)
Cash used in investing activities - discontinued operations		—		(5)
Net cash provided by (used in) investing activities	$	(29)	$	(36)
Financing activities:
Dividend payments		(21)		—
Net increase (decrease) in fiduciary liabilities		(12)		16
Repayments to banks		(5)		(6)
Principal payments on finance lease obligations		(5)		(9)
Payments on tax receivable agreements		(100)		(62)
Tax payment for shares/units withheld in lieu of taxes		(11)		(57)
Repurchase of shares		(20)		—
Other financing activities		(2)		—
Cash used for financing activities - continuing operations		(176)		(118)
Cash provided by (used in) financing activities - discontinued operations		—		44
Net Cash provided by (used in) financing activities	$	(176)	$	(74)
Effect of exchange rate changes on cash, cash equivalents and restricted cash - discontinued operations		—		(2)
Net increase (decrease) in cash, cash equivalents and restricted cash		(132)		(12)
Cash, cash equivalents and restricted cash balances from:
Continuing operations - beginning of year	$	582	$	558
Discontinued operations - beginning of year		—		1,201
Less discontinued operations - end of period		—		1,241
Continuing operations - end of period	$	450	$	506


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

	Three Months Ended March 31,
(in millions)		2025			2024
Net Income (Loss) From Continuing Operations ⁽¹⁾	$	(17	)	$	(121	)
Interest expense		22			31
Income tax expense (benefit)		(3	)		(27	)
Depreciation		30			26
Intangible amortization		71			71
EBITDA From Continuing Operations		103			(20	)
Share-based compensation		6			28
Transaction and integration expenses ⁽²⁾		3			17
Restructuring		4			15
(Gain) Loss from change in fair value of financial instruments		(8	)		21
(Gain) Loss from change in fair value of tax receivable agreement		9			55
Other		1			—
Adjusted EBITDA From Continuing Operations	$	118		$	116
Revenue	$	548		$	559
Adjusted EBITDA Margin From Continuing Operations ⁽³⁾		21.5	%		20.8	%

(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 March 31,
		2025			2024
(in millions, except share and per share amounts)
Numerator:
Net Income (Loss) From Continuing Operations Attributable to Alight, Inc. ⁽¹⁾	$	(17	)	$	(119	)
Conversion of noncontrolling interest		—			(2	)
Intangible amortization		71			71
Share-based compensation		6			28
Transaction and integration expenses ⁽²⁾		3			17
Restructuring		4			15
(Gain) Loss from change in fair value of financial instruments		(8	)		21
(Gain) Loss from change in fair value of tax receivable agreement		9			55
Other		1			—
Tax effect of adjustments ⁽³⁾		(17	)		(29	)
Adjusted Net Income From Continuing Operations	$	52		$	57

Denominator:
Weighted average shares outstanding - basic		532,297,681			540,780,315
Dilutive effect of the exchange of noncontrolling interest units		—			1,189,156
Dilutive effect of RSUs		—			—
Weighted average shares outstanding - diluted		532,297,681			541,969,471
Exchange of noncontrolling interest units⁽⁴⁾		510,115			4,471,277
Impact of unvested RSUs⁽⁵⁾		8,464,404			10,158,541
Adjusted shares of Class A Common Stock outstanding - diluted⁽⁶⁾⁽⁷⁾		541,272,200			556,599,289

Basic (Net Loss) Earnings Per Share From Continuing Operations	$	(0.03	)	$	(0.22	)
Diluted (Net Loss) Earnings Per Share From Continuing Operations	$	(0.03	)	$	(0.22	)
Adjusted Diluted Earnings Per Share From Continuing Operations	$	0.10		$	0.10

(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 10.0 million and 14.4 million performance-based units, which represents the gross number of shares expected to vest based on achievement of performance conditions as of March 31, 2025 and 2024, respectively.


Gross Profit to Adjusted Gross Profit Reconciliation
*(Unaudited)*

	Three Months Ended
($ in millions)	March 31, 2025			March 31, 2024
Gross Profit	$	171		$	182
Add: stock-based compensation		3			5
Add: depreciation and amortization		26			21
Adjusted Gross Profit	$	200		$	208
Gross Profit Margin		31.2	%		32.6	%
Adjusted Gross Profit Margin		36.5	%		37.2	%


Free Cash Flow Reconciliation
*(Unaudited)*

	Three Months Ended
($ in millions)	March 31, 2025			March 31, 2024
Non-GAAP free cash flow reconciliation:
Cash provided by operating activities - continuing operations	$	73		$	92
Capital expenditures		(29	)		(31	)
Non-GAAP free cash flow	$	44		$	61


Other Select Financial Data
*(Unaudited)*

	Three Months Ended March 31,
($ in millions)		2025			2024
Revenue Disaggregation
Recurring	$	520		$	521
Project		28			38
Total revenue	$	548		$	559

BPaaS revenue	$	126		$	117

Gross Profit
Total gross profit	$	171		$	182
Total gross margin		31.2	%		32.6	%

Adjusted Gross Profit
Total adjusted gross profit	$	200		$	208
Total adjusted gross margin percent		36.5	%		37.2	%

Adjusted EBITDA From Continuing Operations
Adjusted EBITDA From Continuing Operations	$	118		$	116
Adjusted EBITDA Margin From Continuing Operations		21.5	%		20.8	%

Free Cash Flow
Free Cash Flow From Continuing Operations	$	44		$	61