ALIT - Earnings call transcript Q1 2024

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Operator

Good morning, and thank you for holding. My name is Evo and I will be your conference operator today. Welcome to Alight First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded, and a replay of the call will be available on the Investor Relations section of the company's website.

And now I would like to turn it over to Jeremy Cohen, Head of Investor Relations at Alight to introduce today's speakers.

Jeremy Cohen

you us. thank and morning, for joining Good Earlier first quarter company issued release with a press XXXX today, the results. website A copy Relations company's Investor found in investor.alight.com. of the release section can of be the at the

please Before include of will Such future note we statements. get that of discussion forward-looking not the are statements some forward-looking performance. today company's guarantees started,

in the in measures. Reconciliations to results differ their to time materially appear press will historical factors. in the filings due statements forward-looking variety the undertake company SEC in may company's from measures of implied The including statements. in factors of time Actual not most non-GAAP presenting XX-K, earnings to financial conference factors be does any update These non-GAAP certain more financial with the the discussed call, recent to company's be are obligation GAAP the measures from today's updated company's company's financial periodic and those Also, filings. expressed most detail company forward-looking during may comparable directly release. this a the or such Form

On for focusing up After questions. I'll role President; the services now the over who on professional the Stephan. open Katie today call her supporting from closure. announced CEO; Stephan and call the stepping CFO has be hand today COO down and earlier will Rooney, divestiture prepared will until Greg the CFO; and payroll the position remarks, from Jeremy to Heaton, Scholl, management we Goff, call are

Stephan Scholl

we to the of our transaction clients Services XXXX. announced over morning. as remains priority outsourcing quarter, key our and sale good on have X% remaining payroll on track our collaboration X,XXX and growth organizations across margin on at a XX%, long-term date to to exciting the the of versus midyear have with growth XXX are Professional points Executing businesses, outlook of great closing we is and with of which a XXXX. first close XX% and HCM we Jeremy, transformational progress for by of made adjusted revenue tremendous seen transaction, It's time an segment the which to margin ahead and revenue prepare and the business trajectory we the midterm this X%, of Alight for of deal. Based would employees basis both Alight, this mark looking our highlighted Thanks, improvement total EBITDA BPaaS of least for reaffirming

supported an stronger a enhanced sheet, secure. as This allocation capital will framework buybacks. below million we and profile, be of mission With authorized for leverage keep funding investor-friendly to by net its complemented by including generation flow company focused emerge balance steadfast healthy attractive in a will $XXX and financially Xx, cash simplified financial this more share

to year our productivity view total then revenues total project offset excluding stable, of the that a of company our company delivered quarter BPaaS Turning more We solutions. strong started remained lower X/X and testament nonrecurring nearly [ hosted savings. transformational revenues, Profitability to XX% with revenue the our than XXXX. have BPaaS from flat ] efforts revenue. represented of growth as

off last a from building year. points XX% And full a flow conversion XX operating in QX, our was up strong XXXX, cash

all year. don't typical this our Given continuing seasonality, anticipate at we rate

generation. However, by to positioned completing continued stronger are the initiatives, drive restructuring well working we program execution flow on and capital cash

nonrecurring across project segments be expect tale the a revenue For with X balance go-lives the the business. exit lower large timing of halves, impacted half adversely the XXXX from year, both of deal to of the and we the first by hosted

today momentum and midterm we our revenue year-end. sales revenue as new billion for $X.X year growth book to quickly high which under to to quarter ramp this will go-lives visibility up deal The have which before was second will at of contract, build an end from in operational for benefit continue target half we increase for and our company. Coupled execution, with growth XXXX total return the the

to the history a business, as XXXX with under benefits XX% the that growth over in million is revenue XX% a has BPaaS total resulted recent contract. confidence to post and driver since which grounded close of sustain Our CAGR $XXX includes growth at in revenue a increase

the multiple same margins to immediate Profitability transaction. time, key will track the we a to levers, uplift migration also improve the are should be in second At inflection closing for profitability. half, the complete through an back-end upon cloud on which including point

million $XX annual million exit, continue the Alight our expect BPaaS that annualized deals to working. results demonstrate of meaningful close for savings is total we rate to company strategy continue of with and benefit. Commercially, the With center run the approximately our $XXX data retaining we

This with our outcomes where quarter value team Worklife the story the through of Alight large of demonstrated companies, diversified with health included existing one continues differentiated and Alight bring the a of a care expansions leading world's navigation. clients, integrated solutions manufacturing to set real-life With platform.

the During facing process, family of ask a employees was help could and their care we health one executive an sales who if crisis.

a solidified tested seeing the XX,XXX employer. what engagement, with organizations We members. company. In for engineering team invest in experience our we where the trusted drive technology the immediately we're as continuing and savings people leveraging our impact family. quantified These of medical the administration our out have solutions another the solution space because and Our a our public to for million that solution value experts bring care delivers the across support right largest team value technology the rolling a team through quickly sector and of Large working to their ROI active the example, partner. closed microcosm to across expertise $XX outcomes this light decades and will this this won and cost example, definitive And broadly. a enterprises domain wins mobilized and saw are the better and company are contract, both the provide by this in while

continues the is in that believe platform-based the we grounded formula end winning validate that experience. competitive, a user approach to simplifies the While market

technology pipeline, also product Alight upon platform simultaneously the of to closing is we're advancing as and advantages. latest continue and innovation core Ongoing in platform so deals we And our road our strategy, Worklife. we the recently release building map our building announced and

This empower biannual areas: X key on release navigation, focused of support, strengthening financial AI-driven delivering integration health that our well-being. and leaves the tools deepening and greater

improved world-class their and about My as and to announced reached recent as step demonstrated planning Katie's promotion the are by Overseeing he'll forward. I'm and to excited finance you execute services which Monday, result of announce we important. expertise Katie on the investor the team business, product, investor meetings, accomplish infrastructure functionality this and We've as delivery. with closure a pleased support. of a Greg Alight his her, we and extension this expertise President headed, with partner Katie, are the these initiatives. And forward been a is a Guilmette and together, him chapters Alight, the today's savings. I'm outstanding summer. with our to of many to Though also his includes she is updates the my has of planning as into delivery, as Coretha have and the personalization Alight as function role members, know, morning, which a to to self-service engagement will settlement Goff's seen leadership you for for greater greater public-facing Alight, into moving on experience and in Taken And Jeremy their best confident leverages our deliver have collectively post-transaction clients, may Jeremy we'll seat look and professional ROI announcement our analytics and perspectives natural what next a years divestiture, improved teams By in promotion, into what sees continued focus team as has role enhance positioned call. We're product CFO the platform them. to also of and foundation Alight including me Board have to also our promotion added diverse with continued pleased instrumental public base voice the oversight we has and basis team value built we AI, and heartfelt to features our months. of Personally, constructive last the who has each cost the to been position COO and closely employer after visionary and Aon, now deep and COO our Starboard strategic Greg Greg advance excited continue our our to moved discuss publicly turning on welcome taking of and look will X role thoughtful will long-term past with partnered mountains on X domain on an down. with I congratulations with with new day-to-day and and technology we tremendous global XX will for supporting she to officially Rushing he push of of thrilled and his to his transformation and which that role Dave finance in through Katie, knowledge their become. she will forward. Katie point, thanks with even succession am payroll after with in we in-depth the more to services we Jeremy him reporting new be for integrating have this platform forward on technology employee the listing. CFO where our miss more are and lead a President. Greg transaction

and recently how Their have to continue work to a key and Top and our executing we're clients without Over the is honor our being stated, by other this as of goals. to each dedication excellence. Magazine. is with XXX the a named the X achieve is is to priority our years, we clients moving fast, past possible continue hard of we our our Places half Fortune long-term refreshed succeed will why Board. Overall, to I Work now serve None had to who the transaction colleagues of of we

With that, I'll Jeremy the turn us to to over financials. through walk it

Jeremy Heaton

to team. her mentor the and continue personal key who me honored opportunity my with building spend a a to transformation Stephan, company I'm to want team the work, many with has our testament time I and and morning, hard more winning of to vision. everyone. add good you, lead Alight is tremendous surrounded excited our team thanks to of Thank been forward, ahead a driving and and stakeholders. Katie,

organization accelerate many will center which our approximately pro temporary strategic close in increase Upon said, closing. forma the adjusted and Stephan point financial be midyear, is of on transaction front that to dissynergies XXX includes closing, of million an closing EBITDA an As objectives. which and across is we year estimated track estimate our post immediate to our within will managed basis out $XX margin XX%, are X and and

closing, net down delever of to divested agreement, to both serving this the toward billion our a we Shortly the debt follow tied to proceeds in at XX% is and TRA business, the expect similar be noncontingent liability net from of terms net. Of framework a after from below in $XXX gross million Xx. focus be performance XXXX. the downside paying weighted adjusted the on Coupled the on to use payment approximately million drive as gross million difference should commercial pay payment. shared and EBITDA proceeds paid of the of continued will will The XX% in will notes additional to for seller in The be companies. upfront $XX tax importantly, XXXX $XXX as $X down with remaining is we million that, levels. $XXX current success And protection performance-based structure will

the Given business payroll and operations. transitioned services the pending into discontinued transaction, professional we have

Going presented on financials be forward, Alight continuing will basis. operations a

metrics to this results. we will disclose you also compared our prior may However, our easily total a so on quarter, more company basis,

earnings statement income split believe and discontinued operations, between the we the true for would review that Alight. power the you continuing As I understates operations continuing note

reduction results certain For decline profile to will that from are aggressive program. be from improved largely close, burdened now the compared it's margin upon And move revenue a prior financial more costs than we fully expect debt and company X% Total the buyback will as upside a operations impact $XXX the of separation. Post more easily EPS the excluding financial performance, was history I of from and guidance. a planned continuing example, to million, shared less basis total hosted business. quarterly speaking when the

almost XX% BPaaS revenue increased our by category non company. Revenue solutions BPaaS represented ] Importantly, the impacted of were and X/X total more our of high-growth several revenue items. from than [ for

prior revenue hosted we business, longer million I revenue mentioned $XX of which from generate earlier, delivered First, no as year. the in the

below nonrecurring Stephan $XX professional evenly as our approximately services mentioned, Second, between split solutions. project employer million, and expectations revenue finished by

we gross the margins this our Finally, with on early profit in was bookings more under have year contract where expect impact we later go-lives a growth plan. Adjusted XXXX, favorable nearly from supporting XX.X%, adjusted at trend revenue and was million, the from the perspective. $XXX we efforts, lower profitability impact of million. flat at million a EBITDA continue much our which to decline, revenue $X Despite from revenue helped benefit $XXX offset productivity softer

rate the capital than largely of conversion year. also on program the during continued improved enrollment following million, by flow our last our is in lower on were materially. restructuring our XX% reflecting addition, year. $XXX the XX% last expenditures XX% quarter by with growth represents in XX% a free to continued cash flow This planned annual year significantly. In and slowdown $XX working first and efficiencies. Capital cash quarter the cash operating resumed a focus of generated driven more flow of or compared expand prior million We Spending

with We cloud rate XXXX of late target run completing the expected the continue savings XXXX full the in million run the approximately with rate to half second majority, Of annual $XXX of expect financial we see million and to $XX expect to for savings, XXXX. in benefits Alight. remain migration

Turning to sheet. balance the

debt $XXX $XX that includes million million cash end total $X.X for assets current cash which was and held is and in equivalents billion. balance was quarter sale Our

operations As expense, continuing interest it cost relates interest full to carries the today.

paying interest debt profitability a tailwind after be Xx, also expect greater providing to flexibility. will expense sheet for annualized down We post transaction balance under while

strategic more share fourth Similar our of forward. enabling announcement. by portfolio the and availability, no to quarter, million repurchase subsequent activity was there aggressive and authorization and going now We buyback plan a given $XXX million transaction our review repurchase $XXX upsized have consistent

Turning to our outlook.

transaction, While following the we our to near-term update XXXX I guidance expectations. will on do of color some want formally close our the provide

XXXX billion, build XXXX now and under We which is for continue billion. XXXX for is $X.X contract billion revenue is for to $X.X $X.X

margin greater both Our sales quarter on perspective. long-term quarter a we revenue momentum basis, provide visibility. total the Directionally, view continues to to second from a first similarly company the and

weighted. midterm to expect our continuing ramp what half still to going it Consistent the XXXX said from revenue performance, with we growth we of before expect year-end have with in about second new through deals with benefit growth we of be half year X% to its being live. second X% outlook We as the operations revenue line

growth impact will continue we deals. look shorter-term revenue the offset watch We to in new macro from headwinds pipeline our and any environment, and with continued to potential project

well to quarter comes expect process we our a annual progress This basis as earlier. mentioned fourth I the from perspective, see Overall, the day-to-day that efficiencies, predominantly care outlook. profitability on and our a as enrollment to execute reaffirm diligently program significant visibility third we're midterm as and close making working the through transaction. From to restructuring progress our benefits our from which customer while teams in enables us

my we I late the In and into instruct will you would the questions? question-and-answer all please ask meeting to to every prepared how have for world Operator, new on of day. the forward those would thank you yet session. not around I our now our what pleasure concludes look remarks, doing are to This they role, move and of colleagues like participants had

Operator

of the from comes question of first Your Kevin UBS. line Instructions] [Operator

Kevin McVeigh

there services way initial 'XX sale think be but kind parts Jeremy, on management of of of moving think the of realizing to the you to and thoughts was best about about initial total And around of the a thoughts everybody Congratulations there, business? kind professional and just any helpful. guidance are the the way there Just on from of revenue -- helpful. on initial the the to any changes seeing that? any of super context kind recent payroll lot to customers the Is would relative any changes for all some luck. the Katie, there's guidance,

Jeremy Heaton

Sure, sure.

the We building first maybe momentum second growth the guide with as I'll nonrecurring we say before, out one revenue but have take through with it on on and to see clients. side. XXXX, give we today and has revenue. Katie contract continuing the as I'd close. the under the element will about remaining we said said, business the to expect talked deal we So then that on And the bookings part as on the I'd say for just come formal once ramp. the can we get the we been we for sales building project the

that be this was end laid midterm of still that And growth that so by out. rate expect to and we've we the path at see a year the and build that within outlook

So we need And I the and our execution. up think to equal, seeing all talked we continue else about bookings as several months just the we're line momentum team to it on focus we operational what sales expected. and ago, versus

Katie Rooney

And Kevin, progressing just the listen, well. think I Yes. deal, on really it's

can of I really all we're part and clients, with questions. of that of our the commercial and level talking they're deal of maintain is think delivery this asking the partnership execution. you we As But good and in great terms major partnership imagine,

our And a and in so navigate land of wins way. customers kind neither thoughtful don't this side if for we

good on that. partners And customers really think And continue do I have we're track. to as so, working through we again, think been and we're that

Kevin McVeigh

of we is everything closures? the hopeful something transaction terrific. just now Or Great. buyback. in upsized has a before like deal before market be been some you expect commentary Is kind that the quick, the on buyback, activity talk something that then could Or ] the closes? disclosed? Can real that And sounds closes you which deal [ we after after is it because the the

Jeremy Heaton

Sure. Good Kevin. question,

track. the said, we on as is So deal

of in assess ensure upon closing to Acxiom. So now that this we're portfolio the middle right value year. our just getting the strategic That and composition continue of of the maximizing terms to focus our to close being for company said, here we alternatives, shareholder

that, as go open process. as through the we in so can, we'll market that And with be we

Operator

Your of from the Scott next line of comes KeyBanc. question

Scott Schoenhaus

if evenly Apologies, impact color you I've between professional I exactly and guys -- I believe ] just color that impact, solutions Jeremy. that more what then had you the earlier, I'll calls if little that, XQ missed continues provided follow-up on this provide was [ you a morning. split that if what on have employer $XX And on question several million what happened, earnings mentioned kind into guidance, services. Can shortfall -- XQ? revenue of a

Jeremy Heaton

Sure. Sure, Scott.

So let more little bit color a me there. provide

So Professional Services down revenue year-over-year Employer X% and was X% Solutions up was year-over-year.

as Importantly, revenue point down was Solutions driver project on Employer really was X%. were your both in revenues, to segments and across XX% in down that was impacted Services project around Professional both the side. Project the revenue Project

as revenue services those professional Again, services Workday, The And was across those project just that's is we across and driver driver in split in it of A the drives segments. SAP the professional the of that -- business. of both little that bit so timing. both see deployments lower that's deployments.

Solutions that that on drive project changes changes the regulatory side is in really lower business. health business, projects driven in the and by Employer benefit the And plan revenue

it's health today, We as that business. second shorter work we to know, to get in it so different We as some we and within do ramp it's quarter. and you as I color to the don't wealth a and quarter, businesses as that And to expect, gave profile but sales enrollment it's starts cycle nonrecurring second what at into look annual the -- on talked we starts really as a around expect enrollment annual the project the process. with ramp see a very

path And really this we that the so year, in revenue that's a think about under and later how contract we the better ramp. and building see space do in are

Stephan Scholl

of pushed about point, hard the us of a just say X X -- so you've $XX Scott, big to are there. components think of looking million have why or I the X projects Those business. people-based the volatility this these one around the reasons And to ahead the world calls, your big is I some sell That me heard start that business, $XX or later. as in few here, million of

of a revenue really our recurring is part as year as the a be helpful higher part that with credible portfolio much of of half much the the of less volatility. percentage back going head so having not baseline, of we backlog into So as more in to building business

Scott Schoenhaus

the similar a like it's quarter Jeremy, as And you XQ first like basis mean second when Do of on kind just of? growth actual from you You like kind from absolute don't as Absolutely. that follow-up, results a an this we said saw quarter. mean flat trajectory?

Jeremy Heaton

rate growth margin [ rate. in Similar EBITDA ] the in similar and growth

Operator

of next comes Your line Needham. from question Kyle the of

Kyle Peterson

Great.

to drill of results. wanted down first kind quarter Just again on the

kind had quarter, to about year-over-year. said expected think you top least in I you flat the on be guys things of at line the

March. in was that think I

discontinued just the is to I few part of the the to in And ops? drove goes in there? of transaction is of what weeks what So the And more of after through? that, delta see what the this going kind like wanted kind be Alight still last on shortfall

Jeremy Heaton

between Sure. RemainCo benefits business It's stays two. and as half part between [ the the and mix with goes of what what about the split half is deal ] the tile

week, it's pipe the -- about, a shorter in build talked on can execute we've be business. As we the term, project around revenue very within the can a and generated some cases,

there through So we the at can it as very execute be elements when there we quick. and look pipeline build are

expectations in of our we for quarter And where where were we was set terms so going. dynamic this the that was that different versus us had

business element away. we we about, had the we going the already hosted compare with knew other had talked that The --

into going which also timing ramp that softness We XXXX. growth that on see had side year, coming we're the we last knew drove to the

think flavor as product today commercial us we're know, seeing execution you I a some Greg Maybe don't and give about for progress. leads we who is delivery can with and examples maybe Goff

Gregory Goff

on little side, I on typically clients. little think commentary Just a of changes activity among regulatory that's broader. bit little our said, I on project changes, and then and plan Jeremy by bit mean, as a a driven the M&A project

there. saw said. as sort of we half, the bit we little that lower And but so we're second just bullish into a activity on going

I the we think right, integration clients we and I broadly, of for we really employee in going being commercial that and we're been as in with market, on, resonates, that coupled mind delivery cost top still care. at we year. of the to look really more experience activity strategy the being terms for later forward, clients see in of top into right, resonating see positioned strong very we've and strategy think the terms mind as platform head that And well of

Kyle Peterson

I is on the for progression of before year, weighted. I timing some And as and back is deals does the be bookings year's kind just of end helpful. then fairly year, will here? think could that's guess of how seem trends like it here. remind we lag I of the this But this contributing Yes, about guess on these these what just should guess a -- the us just to of -- from Okay. follow-up time does seem it you ramps like start to deals from they some revenue kind last

Jeremy Heaton

Kyle. mean more I I'd Sure. I'd months about average say, smaller, as basis, It's think early be say, months. XX X vanilla, deals right is can as an -- way it, on the to

the XX some know, or as more. deals talked you months And be bigger of about we've some, can

about as you think into the looked about And be half to you bookings get can so to of calendar business. this you the which at XX-month that important the second and as parts start the point then timing last start you year. And as think year, we to also year, the get in

quarter start you certainly quarter, within those deals, on enrollment live where the start to and then generate the fourth so third work fully happens we January. revenue the in and the really And

by guide revenue that quarter, as see ramp Again more the under -- year. the our And business forward we we to years, prior formal so which come go I a compared deal. the look are to out, remaining course, those you with is said, close of this contract. Today, as drives at as we growth expectations and where elements start we'll and the and on when the

Stephan Scholl

the the with like X in this call said And last year, too, a fully of year. right? word online brought Thrift I of of deals the said this ] first Kyle, [ And last on big tale were half when lot I online halves, deals

the half, So first the couple a the CAGR it's XX% in compare of over you know, last years. as

On revenue of backlog. added million we side, $XXX the

world thrift wish get I said, the I in As online. a minute perfect you ends, GE

in Another one of the not online second be those announced, half. massive deals even the that's in but year, only last to coming so going that we year, prior

so it's within to -- volatile dynamic, right? So -- some it's hard that you start a not it see seeing of the deals bigger a But we've closed, quarter. it's but a

a let have guide, and You back its history just step sometimes be take to right?

million an if basis I XX% last CAGR more at look $XXX and you As X the average a years, on said, it's backlog. in almost

Operator

comes Davidson. Peter the next question line Your of of D.A. from

Peter Heckmann

shift in terms what what or bring company? of they terms they're to of see just attracted get companies story the Alight we Has change? from make as great Alight follow and in been value the how is I been there being a received story little and what wanted clients shift there resignation to why by can away further Has wage of would a up inflation. a -- to a terms a benefits in

Stephan Scholl

half XXX the a them of We you last or the few about lot and Pete. in on XXX question, Fortune plus as know, right? clients, this earnings, we The the Great Yes. serve talked calls our Fortune sentiment Fortune XX XXX. across

is we CIOs, you a entrenched. the best consolidated, the is across had the deeply clients. The hasn't what departments this them over big in very And because gone comes have, going systems that last enterprise. single space chain, how employee Greg in And ever these said XX-day to lots to systems. we're a engage cost of XX said years, think And is CFOs than those about of are when and which I the more terms sentiment just before. years, when evolved CHROs, he's supply together base those financial capability population -- X I'll to XX, XX, of done for XX right? So controls, the and breed this engagement for he with a from same, jump different over of I'll big years, still it to So multitrillion X systems banding ask and ERP, been with is minute health client the tour meeting in, dollar I've every

So the It all. at all-time at to hasn't of is employers an costs pressure cut abated high.

So we're value much a can sophisticated in model key around and going engineering couple talk ROI. a deals. Greg with of to more

Gregory Goff

Just typically these the CHRO side example, a And the ago. I an are with to good right? was give is more clients than of couple weeks very seen Stephan now working large client world cost side at a that together the And the cost. side the managing said -- big a at of you pressure, IT I've ever and CIO as becomes

also compelling clients together idea story working worked the while of of a the doing consolidating together that delivering departments more right? that typically platform, of idea that. experience on resonates, haven't so And But that's employee spend, still the within

bridge that Stephan said, the that a world couple seen last of to lot a together. together very the stitching see HR of over provide world, back we months, so I of And to bridge theme consistent a how how employee with the our world as among as lot and of and certainly largest. IT And I've clients that kind of the

Jeremy Heaton

the said an but these they're to integration of And a as important they're answer, last this ServiceNow that platform. it's calls is on, dynamic piece of looked what's from Microsoft a big And And few lot long this we're continuing see those before, or amazing static I places not on it's to right? back still good a maybe clients topic, biggest platforms, because is our kind companies. departments platforms. And deals. on integrate They're they're to but come

data. of own transactional into we more front of ServiceNow, they log sources than So that these when find it's it is doors informational people because just the

our employee of $X health is worlds. Worklife best wealth is through that So across and engines, set decision cost complexity approach of they our engaging and trillion how you most is populating own transaction out. the take out how then the you actually data, remember, We over comes through take before both of important information the make the

Microsoft, of that an X Oracle, that's cases, become all to secret sauce of the that's today. Workday than those advantage And some giving is and some us doors, front still ones connection our the them more do. content the trying of we what's even ServiceNow, have have on been components, these

Peter Heckmann

the any Great. Great. as be in divestiture, of software announcement there'll any helpful. indigestion even Do you separate reaction And partners? terms units? market of That's from there those clients the to think surprises or current prospects you either

Katie Rooney

investment here. really would say it's worlds focus both with Listen, Yes, integration even overall. think one, of two, clients, professional actually it's positive the best global I trying to And a services that again, platform Katie. been vendors, having with deliver Pete, right, and the resonates. with of that remember, really and with the idea I we're I mean, payroll, of

slightly that's the investment have what's that model has I Alight behind that scenes the that about the But partnership, be the the you'll professional integration. it and for experience I The which with resonated with change. will interaction experience, that payroll for different. valid, folks. really services client, think still integration remaining important the won't when will be along really so that you focus continued and And with think think So business, businesses

Stephan Scholl

that I said services light. And -- SAP business this get within Workday, keep those Don't I professional a heavy call, labor-based being saying get people divisions payroll that heavy we payroll, last it. processing Pete, It that capital-intensive were full-time a contributor. wrong. I great And business, or to a why right. running are in those loved effort And Listen, around jobs, and with was it. right? a takes we did well it payroll, on the that's XXX% me when do

platform then the of And with as to that. still on said, strong worlds. of to processes. engagement partnership focused solely drive a That's Katie want a they completely as because somebody come having through kind both the Worklife now But best

So we're it. about excited pretty

Operator

line Citi. question next comes Peter the from of of Your

Peter Christiansen

all to of Katie. congrats to luck best Also, and

bit on bookings little on now. just multiple been of right sorry, sounds I'm a calls the there. like It there's Sorry, curious front. going momentum

sale you you the Just improves curious conversion I sale. think that maybe with have since simpler follow-up. divestiture, quick then And do think perhaps it's a now post just And a divestiture?

Jeremy Heaton

Thanks, Pete.

book. 'XX revenue we building growth So see the both -- about 'XX talked years, listen, as I disclosed is important in we're as you now in X the under contract, and think which 'XX, that the could we

we results what doing. seeing momentum So continued the of in we're are

you you pipeline, with more better -- focus, think conversion. I you do that see see

perspective, that business harder And going from on simplified maybe a the parts what But and what I deal the all includes don't today of the business. it's say view to of driving. forward we're -- is

I as through growth. building to that on have think the divested to success the that benefit in commercial both with of ramp the business we're that's being book the our again, and see the revenue and businesses from shared what going we're agreement we doing, will we the So contract of supports HIG, both

We are higher excited immediate in see profitable again, deal we're Alight got And means deal business. We We're it the this growth, forward revenue of history really here it's out going for of really business great ramp growing we closed the contract we've track can the is come in excited, under getting margin we the what and and this a closed get that record the uplift. getting right? recurring.

lower of business the less operate a leverage So Better the and side. simplified on revenue to us we flow, flexibility have cash this way. project volatility for in

importantly us and momentum on contract see but visibility commercial important we for So the I build. the are just but greater under and that side, drive that for seeing you're the you it's they think as for investors revenue ourselves, all to right, works, of

Stephan Scholl

we've at would these to last the the better capability after We've with gotten on really best-of-breed professionalism, the add one enterprise you larger new driving The George year, smaller the the I of deals thing people in only scalability, front, on, coming that. Greg, going as hired, that, on vice is Pete, know, much the presidents the deals. end, yet still

And the best that top I from as great their so when people talent are progress -- reps some their with vote better competitors we've it's the have of and So around vote hiring mean, say, probably been our wallets, I've I with of but always with here, most And pleased careers. we right? from really clients recruiting. when hired the it's even

able been commercial. we've some talent incredible to so And in recruit

Peter Christiansen

the with potential That's form the partnerships payroll there's there. some or providers, to helpful. would post solid imagine opportunity divestiture, perhaps go-to-market for And an other I then Alight picture

Just that to curious any see if partner player? another on with if you have you any comments there and windows

Stephan Scholl

our is -- Yes. lot trillions I about and health side. every this continuously Listen, what, data but absolutely. dollars, run I is platform us AI to of I talk topic. to mean analytics, the give just engine said, consolidated of And dollars leverage wealth topic of recommendation don't to a a the sets level. on through AI the trillions we not leverage platform to individual down client asking the do guess

at loss done never to on That's No. is specificity we wealth As It's never level of world, job you the the health everything down ]. the a based been individual and money to. that get never [ That's level. want codes. know, in been to

And you with So our Greg, companies. do are maybe, partnerships AI to great in? some jump want

Gregory Goff

mean, have Yes. I have. asset more think but today, terms in a In to certainly, the something right? think we question, your of opens we terms of we -- it up I even possibilities, data that's unique very I that pursue

in more We software we wealth, in top health, is those as sort players. of AI a assets data provide intelligence well-being, among and the as which earlier, opposed to very also and of domain, the that to general said sets. on unique And us Stephan unique have it's of

those. additive And so to we're

because that get, sets, payroll, data our we last rather secret. we that I who's health than room on to behalf be a debating ultimately of Any it's be can that that for accretive ServiceNow said related. And and set, realize for as anything outcome are mentioned, financial could the topics, that front be you social can can we data Those a be wealth and can an all sets Microsoft maybe door data both. piece employee. whether better the not provide that there's

a of front skill lot management does is we case ServiceNow there. around provide around what that and is employee Help Desk door. a engagement, better central What system providing around But really nervous sets we lot are amazing of on capabilities that

a the partnership doesn't other like with it each have strong competing between than both some years or. to of with us have in be either Same They So two there's back. Microsoft. we cases, that realize rather

That realization. exciting all help also clients. our that's think I So will

Operator

of line Your next the Joseph comes from Canaccord. question of

Joseph Vafi

Congrats roles. everybody's new on

and new update but the have a deal. may a of lot after are of a the on -- follow-up. questions then discussions asked, we deals? have So saying, to the clients cadence maybe what I Katie, luck see where BPaaS could of on already that close And just how best quick you Maybe the affecting on little been macro, get be

Gregory Goff

collectively down, talked to to of dynamic figure across largest as in the to systems. we Listen, pressure CFO single see CIO kind get and what the our I've to these especially when every how trying how continued companies right? We out the serve, we of is are Yes. serve earlier, who And disparate said I spend in drive world. engagement CHRO base employee installed

So that ever. loud There's as theme as no the abatement is of activity.

the achieve, level. engineering, So investments because most driving I So takeouts, we're stuck And so holy only and ahead that's versus the engineering. exciting think, data consolidate our driving ones. our you that we grail transaction-based are set ever deals companies few outcome-based think our underwriting right? the in most go base deals, get to to but better transaction When at by companies investments value the client in is the cost chapter process I

that. companies, that's -- And as mean the companies I all about no are right? platform truly we know, most the world, debate powerful in there's

been that's years. last the modernize our had to the we've over X.X, last On for And also our X so journey X path, technology years. that

them everybody X in solutions. band-aid of problem, history. years few years, at that as we're tackle so the So on else companies right? XX are undoing call scale And Most knows, of

done heavy So we've the lifting.

then also going more than to centers and by going will a of be for a allow to truly of in year, being data very out being different platform be different be capability us that's than end to our tooling flexible to the configure client, this very manufacturing in client, at able that's retail banking even personalized a So client.

needs and continue helping clients drive end-to-end employee today we engagement to an existed true by for has until to in together truly our bring the our to technology not of evolve platform an effective which outcome up company So clients. really any platform,

Jeremy Heaton

in for results, see both Joe, being maybe, I'd company And the up the can right, business. the operations and total is continuing XX% you revenues the add over what BPaaS

bring expertise organization really to basis that HR have, the the the a And board we you at of Stephan also you're that demand the critical need. space. So the results company. where in then of had remarks, services together and for drive the medical medical of a in within across client, and that that totality also, need those somebody you the But in with technology about solution prepared you think, on I personal right, the look the we talked for the example a a in seeing the value combination the saw family but of

the singular value and you and think as how how we to a -- that's drive And the about that we point showed that outcomes particular really as company.

differentiated I So space results demand in proposition the finally, the to we of that think the that we're business, as macro, always that with goes as and we're able the a that show and that. have do, in the watch part what Stephan right, volatility. said, in And some value space, right? of nonrecurring and pleased then the we'll that part of away deal We're and

side, on are revenue. and project about, is, shorter-term what of talked M&A sales that the cycle, in space always you're project bit watching little Greg areas benefit the regulatory, the that a But pipeline drive as it's

recurring than what we have a XX% So watch perspective. that. less -- watch as we we macro to to be greater becomes we of go that to that a need But what again, revenue to is from business able

Joseph Vafi

reflective to think, composition interesting or And some or maybe you here of points mentioned last the board organization, about maybe the or that's the strategy effect composition in XX% change the [indiscernible] year changes over any so of that Sure. other clip I the going know at has Board salient I points helpful. Board on and here? That's in relative the then changed, driving a strategy

Stephan Scholl

you of And the we've as thoughtful we've that. major left fill you for a client since been been content Thanks know, and board, that voice has very capability. able to great Yes. sponsor, know, with

means And speak us, industry, business always the its in for to the the we look it be so for technology, notion ability retiree to benefits to speak wealth and entirety. of product what in to business, the business,

of going industry, So pub And Canadian, in is. Where strong around I say voice of of to and we So a the is client that right? then I then, to financial it terms versus and really as product. -- cost I'm have the technology -- good is horsepower, of of And voice a -- cross-section of that, we can right? course, going CHRO where pub good stewards position, also think really where have so where capability.

this strategy or Board the longer-term you're assets a this our cycle, we're this so but us asked, have history which business, of pretty -- And is here. volatile. of Because some right? window XX-day in is very the you've growth many seen very company, selling good -- it's it's XX-day even as say, willing we're thoughtful a to sacrifice heard for while And X-month you've on always

the And times. word some big or used on better so growth profitability we're Jeremy X and making X profitable bets

said, Board worth the thinking it of more long-term tale year, as may game. the mean right? for we profitable orientation, orientation this it's it, X of long halves It's growth around it worth even the term, some, though So

strong board towards strong, support So objective. that

Operator

Your of from Bank Heather next question line of America. the comes from

Unknown Analyst

areas sales [ perform you ] This is at business, And the upside plan? opportunity Marzol seeing? internal look that Heather of for there how could if or any we Balsky. are Emily I'm on go-forward wondering XQ are did -- your versus

Jeremy Heaton

Sure.

business continuing a business ramp all in last along, drivers bookings within hosted of as today timing the we And the the is think expected the year. of sits said, given if from say this year, you and course, I'd remaining operations. comparison the we've it So growth, the about -- that of

points and already, discontinued. side. revenue, the which couple to build headwind that continue piece, early growing, the growth was within a that's see continue on build is execution of operational a is a the perspective. The between But -- the and commercial project So as -- revenue BPaaS the from in of The nonrecurring to we expectations operations of revenue from contract of XX%, over we've the said revenue different our split our we one the operations continuing growth under is continuing both under from was contract. and driver the was

close thing come So with say otherwise, this only just project good, out I but nonrecurring we we and deal. feel we'll the on business guidance the would was when revenue, that formal

Unknown Analyst

as And that's total continuing contract, for revenue this? follow-up, the the you Do have for it out business. under the broken a

Jeremy Heaton

We have not.

give it that under we They're revenue higher contract on that business. we revenue. disclosure So part relative and But will size the of think be remaining of of the close profile the to guidance the slightly when can that the business. the transaction. on about you given

Operator

Chase. next line from Your question JPMorgan Tien-Tsin of from the comes

Tien-Tsin Huang

you of conversion. us give on moving coming free on just a views the that? Can know the flow pieces, operating here I cash side, flow cash lot directional in the some quarters but

Jeremy Heaton

There's obviously at generally frame up seasonality points a still XX% part plays speaking, would We the which was in year-over-year. $XXX we I seeing. so last quarter, up the was as year so in conversion XX% almost the this cash Sure. we're what we're XX to of XX%. year, But that's op versus million terms say of XX%. Yes, flow in. guided said, so

driving we're doing deals. we're into capital -- got big in revenue earlier that are working a we've transactions efficiencies, how We around DSOs, focus generating

And benefits through. come so of we we're the that seeing as

really flow cash business -- an I doubled quarter. as the we operating flow more the said, for drove on than the basis, significant pleased quarter. And pretty a with XX% element free with down capital the in were also So in expenditures cash the

Katie Rooney

Yes.

and quarter. I'd think those in go the away is But there additional potentially thing transaction QX QX. expenses some only obviously, then will in the I add, second Tien-Tsin, be

you kind back as about So it, then QX the second QX. and a just think quarter bit the in seasonality and you'll of up down of see in

Tien-Tsin Huang

Okay. That's That's good. helpful. That's helpful.

So my just for follow-up, Stephan. one maybe a picture you, bigger

It there, conversion modularization, like towards to underway there's feels a going not user amplifying, of investor a conferences cloud the different days. almost theme again lot these with everything. componentization, surprisingly, and Just been

And versus a so this comes lot. of best best-of-breed up whole suite conversation

Alight you're down threat mean, What on through just you have more this as yourself? monetization for there? providers? the see you curious this solution been does as thinking from going latest that going I mean guys is do what I'm point

Stephan Scholl

of you you claims, then a And which a question, asked real you about gets right? XX-point Yes. some at big best-of-breed getting bit questions, between ask battle places run we billions know to despite you say And it's look or on And and big And and I'm begins of of -- of many You're some we And much with tension, before, my home companies those the enterprise. And answer components. still that into smart left of and is XX are now. banks expense. then the we've It's ask what or the telcos do minute maybe it's one basic And the manufacturing. about past-COVID one to all are quite that success if many still is -- in that? history, this -- you team right? if X% point mean across been it I've you're I'll key the spending of you And value big on on tell seeing talking or the retiree is these been -- benefits. I start navigation and and B, see shocking some solutions, are the have we've send engagement still not seeing? X% you you engagement questions, what category it and how exists, -- add how there's many forefront smart if the dollars the you is you you how talked I right? between where mean, engineering solutions how utilities X% gotten right

a ROI very this which when quickly, the the we client, you going tension. CIO between all pure bend so XX% room on CFO banking output? room, average? has which wasting we are get is X% especially become the get much up and So the bottom that's Then larger line curve, is money mean, claims How can't us, I in the for come the much, the in little still why you in EBITDA, for right? world

been my we powerful very do more talking in you do are CIOs all now So department have don't platform, been the individuals competitors bit their the this areas [ the solution why contracts has it capability nobody. the we see this, in we know You way? do. they these of all have about solutions? these and the a importance ] I there's day that saying, Why point do mean, engagement challenge yet point of in like seizing little just

we've into we've data and is advantage to point and technology that we with -- to a transformation. be why one take to even of done horsepower super this level platform the level, the Greg have been more his a place. individual this, these experience, I then by capability. final and Greg your of financial be that's end his and is piece do when this engagement we're our though point, promotion been year. and of to the doing the helpful solutions a going lot deals drive And tooling the we'll the When in here to of it wanted clients, is visibility the is truly capability midst lot So technology still And all consolidation massive

help really will next chapter. in that the So us

Gregory Goff

to slicing I the up in you other is area, just platforms, an et the in one the benefits right? I that by that's think areas in of add for amplifying I'm space, and can go transact The and thing. might individual going would all sub-optimizes sort one that's like an create ERP ahead go individual outcome I'm the world, and in process and my this an decision of thing. leave the to having transact the cetera, thing pieces, place, If individual, dominated one

create to my of that have to outcome outcome hampers different can app, a transact for what in they of the That that's to ability utilize. I'm the the you sort XXX(k) -- the different and in employer going for thing. terms individual best and my best a

And best-of-breed. so we see companies this, right? We see choosing

we we about We the about about together talk have we But the intelligence, ROI is to those the bring under right? talk really at individual to solutions, an overarching AI, umbrella. benefit be at opportunities, the the talk day. great things end That's of

Tien-Tsin Huang

promotion, you Katie, on course, Greg, thank the to congrats Jeremy. the Okay. and to And best. of same you all

Operator

to our question-and-answer session. I'll for That end is turn remarks. the of now closing over management it

Stephan Scholl

great questions, look I the so forward to of at day. you seeing many Have appreciate time really everybody's morning, upcoming and I and this early a appreciate conferences.

Operator

concludes conference call. you your today's Thank participation. for This

You may now disconnect.

Alight (ALIT) 8 May 242024 Q1 Earnings call transcript