Alight, Inc. / Delaware Q1 FY2025 earnings call

• Started 2025 strong with first quarter results aligning with the strategy outlined at Investor Day. Market leader in employee benefits delivery with an integrated Alight Worklife platform and data lake for AI and automation. - Renewal trends on track with the Renew Everyday program, having renewed top clients like Starbucks, Baxter, etc. - Launched self-service leaves administration reporting platform with AI insights; 80% of clients leveraging AI. - Enhancing delivery operating model to a balanced centers of excellence approach, with progress in COE services. - NPS score related to annual enrollment improved 12 points.

Total revenue for the first quarter was $548 million. Recurring revenue comprised nearly 95% of total revenue. Adjusted EBITDA was $118 million. Adjusted gross profit was $200 million. Free cash flow was $44 million. Quarter end cash and cash equivalents balance was $223 million, total debt was $2 billion, and the net leverage ratio was 3.1x.

• Reaffirming financial outlook for 2025. Full year expectations: revenue of approximately $2.32 billion to $2.39 billion (±1.5% growth), adjusted EBITDA $620 million to $645 million, adjusted EPS $0.58 to $0.64, and free cash flow $250 million to $285 million (13%-29% growth). - 92% of 2025 projected revenue is under contract.

• Increasing market volatility could elongate client decision-making for project and ARR deals. - Assets managed by financial advisers subject to fees pressured by protracted market downturn, with exposure less than $10 million.

Q: Focus on project revenue, updated thoughts on first quarter trends, comps in back half, macro noise.

A: First quarter played out as expected, with softness in M&A. The second quarter is key, and the pipeline is up 30% across core admin, leave, and navigation solutions.

Q: Pipeline up 30%, color on expansion, middle markets.

A: Across the board, with momentum in core admin, leave, and navigation solutions.

Q: Guide, sales cycle, deal cycles extended due to macro, client behavior change.

A: No material shift in buying patterns, bigger moves underway, some short-term expansions may be pushed.

Q: Capital allocation, buyback, tactical/aggressive if cash builds.

A: $261 million buyback authorization, flexible and opportunistic.

Q: Pipeline pacing, rescheduled implementations, wealth side exposure.

A: 92% of 2025 revenue under contract, no material rescheduling, wealth side exposure less than $10 million from fee managed assets.