Alight, Inc. (ALIT) on Q4 2021 Results - Earnings Call Transcript

Operator: Good morning and thank you for holding. My name is Daryl and I will be your conference operator today. Welcome to Alight's Fourth Quarter and Full-Year 2021 Earnings Conference Call. At this time, all parties are in a listen-only mode. 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 the call over to Greg Faje, Head of Investor Relations at Alight to introduce today's speakers. Greg Faje: Good morning. Thank you for joining us today. Earlier today, the company issued a press release for the fourth quarter and full-year 2021 results. A copy of the release can be found on the Investor Relations section of the company's website at investor.alight.com. Before we get started, please note that some of the company's discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are discussed in more detail in the company's filings with the SEC; including the company's perspectives filed with the SEC on August 24, 2021, as such factors may be updated from time to time in the company's periodic filings with the SEC. The company does not undertake any obligation to update forward-looking statements. Also throughout this conference call, the company will be presenting non-GAAP financial measures. Reconciliations of the company's historical non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's earnings press release. On the call from management today, are Stephan Scholl, CEO; and Katie Rooney, CFO. After their prepared remarks, we will open up the call up for questions. I will now hand the call over to Stephan. Stephan Scholl: Thanks, Greg, and good morning everyone. It's less than two years ago that we started on our journey to become a more tech-enabled company from the inside out. The pandemic and the tight talent market have highlighted that the current fragmented siloed approach to benefits and human capital management does not adequately address the two most important aspects of employee lives, keeping them financially secure, and healthy. Our mission is to fundamentally change the employee experience by providing people with one simple, seamless, innovative platform supported by robust health, wealth, payroll and wellbeing content to provide meaningful outcomes for companies and their people. In 2021, we made tremendous progress on our transformation to adopt a business process as a service model enabled by a platform strategy. First, in Q2, we announced the Alight Worklife platform. Alight Worklife a mobile first technology built on a modular cloud-based architecture has embedded AI and analytics that drives a personalized and unified experience to replace the siloed approach that is commonplace today. Second, we continue to focus on adding valuable content in the areas of healthcare navigation, wellbeing, health and wealth benefits, retiree benefits and payroll. And third, the Alight Worklife experience, combined with compelling content, will engage the over 30 million users we already have to drive differentiated outcomes for them, their family members and the organizations they are a part of. We've seen this platform approach drive success in both B2C and B2B enterprises. The progress we have made on this journey thus far contributed to our strong results in 2021 and gives us confidence as we look to 2022. We are well on our way to double-digit revenue growth in 2023. We secured $602 million in BPaaS bookings, which is 52% higher versus our original goal of $395 million. And we achieved $390 million in BPaaS revenue, which now accounts for 13.4% of revenue ahead of the 12% target we set earlier this year. Employer Solutions gross profit margin grew 233.2%, an increase of 260 basis points. as our technology-led transformation continues to drive gross margin expansion, contributing positively to the total company EBITDA margin performance. We believe that the world is entering a new era, the era of the employee, where companies will be measured by how they treat their people. Alight's business has never been more relevant and our ongoing technology transformation visible through the positive early adoption of our mobile app positions us well to build the long-term value. Our headline results for 2021 underscore the momentum of our strategy. Full-year 2021 revenue grew 6.9% well ahead of the expectations we set at the beginning of the year. Adjusted EBITDA for the full-year grew 10%, also ahead of our original estimate set in January. And finally, we accelerated our ability to invest in our transformation and our growth. We generated $507 million in free cash flow for the year as we began our journey as a public company. This positive momentum allows us to raise 2022 guidance from the initial estimates that we outlined when we went public. Revenue of $3.09 billion to $3.12 billion, growth of 6% to 7% on a higher 2021 revenue base than the company's original guidance. Current full-year 2022 outlook exceeds original outlook of $2.95 billion, adjusted EBITDA of $650 million to $662 million, which is ahead of our prior outlook of $640 million. These targets demonstrate our strong profitable growth orientation, and we are well on our way to 10% revenue growth in 2023. Beyond the tailwinds of our 2021 results, we're confident in raising our guidance because our platform strategy is the right solution to meet the headwinds facing companies around the world. Corporate leaders, investors, and the market agree that there is an increasing business imperative to improve the employee experience and there is a need for boards and leadership teams alike to focus on the capital S in ESG. It's hard to go a day without seeing some mention of the future of work, the great reshuffle or the great resignation discussions that have all been accelerated by the global pandemic. Employees expectations of their employers have changed, the risks are high as employees continue to vote with their careers, employers need more agile ways to engage with the dynamic needs of their employees across the globe on benefits, wellbeing, payroll and more. The Alight Worklife platform is the only company-wide employee engagement solution that can help companies meet these challenges head-on to support the full employee wellbeing experience and create meaningful results for employers and their people. We already served more than 30 million people and their family members across more than 100 countries. When you consider that each of Alight Worklife's primary users have the power to influence and change the behaviors of dependents or family members, it increases our ability to change outcomes drive cost savings even higher. And with a cloud-based scalable technology platform, as we add more content, we'll continue to attract more users and engage those users with more meaningful content that provides more personalized value-added offerings. Alight's transformational approach is changing the way companies like Ingka Group, the largest IKEA retailer, which we signed in the fourth quarter, think about their benefits and the experience that they bring to their employees and the outcomes we can drive for their business. This is also why existing clients like Walgreens continue to work with us to create a differentiated employee experience. In addition, we're increasingly seeing demand in International markets. We added several key payroll clients across EMEA and Latin America including Mercado Libre, Prym, CM.com, and Kalera in the fourth quarter. When we engage employees on the Alight Worklife platform, we can help workers make simpler, smarter decisions around their benefits, navigate complex healthcare challenges, manage their financial wellbeing to balance today's needs with tomorrow's goals and care for their complete wellbeing. And the outcomes are powerful. Alight Worklife is making it easier to find the right health cares for a user's specific situation, guiding them to second opinions, navigating the complicated medical billing process. We can even suggest support groups to provide mental and emotional support. We are changing the trajectory of people's health, work and lives. Think about someone suffering from degenerative disc disease. Alight Worklife can help them navigate the entire experience from managing health costs, finding second opinions, to identifying the right care to help the person make the right choice for their unique situation. We helped an employee navigate a situation just like this, and ultimately, we're able to make sure they got a second opinion, which avoided unnecessary surgery and positively impacted their life. When that's your employer helping you navigate the system, your entire experience changes and your perception about the value of your employer changes. Alight Worklife has the power to impact individual and business outcomes at an even bigger scale. One existing pharmaceutical client leverage the Alight Worklife AI decision engine to identify and target a subset of their employees who were under saving in their HSAs and 401(k). Alight's technology coupled with highly personalized communications resulted in higher saving patterns and improved financial wellbeing for employees. The targeted program resulted in a 5.4% average increase in 401(k) contributions, and $1,750 average increase in HSA contributions. As I shared, Alight has been on a journey to change the employee experience by transforming the human capital space and our business. Our transformation is focused on three things. The first, is becoming a product led organization; second, investment in technology to bring differentiated value to employers and their people; and third, shifting from a siloed business model to what we call one Alight to deliver a more powerful experience to our clients and accelerate our growth strategy. In 2021, we made progress across all three areas. The Alight Worklife mobile app is a great example of one of the 11 products we added. We've seen monthly average users grow 94% sequentially from approximately 65,000 in 3Q to 127,000 in 4Q with annual enrollment season providing a nice boost to new users. And we are now working closely with clients to increase utilization. But the real hidden gem of our business is that we can harness the power of our primary user base that influences the choices, care and decision-making of dependents and family members in their household. When we provide meaningful content that speaks to the needs of all those lives, our primary user's touch we can change outcomes for more people, and have an even bigger impact on companies investments in benefits and wellbeing programs. At the same time, we're also focused on adding new content, which will encourage users to access the app more often and for longer durations. We also made two strategic acquisitions in 2021 including ConsumerMedical, which strengthened our existing healthcare navigation and decision support capabilities. In Q4, we announced enhanced clinical guidance, which included completing the integration of data into our existing data lake and adding the services from the legacy ConsumerMedical business onto the Alight Worklife platform to further enhance available content. And last, we continue to build on our sales team and in our value engineering teams. As we continue to drive our transformation strategy forward, we'll focus on two key areas. First, continuing to build, enhance, and innovate at all layers of Alight Worklife platform. This includes the next release of Alight Worklife, which enhances the engagement analytics and AI layers. We'll also continue to add content to increase the utilization of the platform so we can deliver personalized insights and suggestions gearing participants towards better outcomes. Second, we will focus on accelerating adoption of our mobile app. In 2021, we had approximately 180 million interactions on both the Alight Worklife desktop and mobile applications, with a majority of those interactions occurring via desktop. We have a tremendous opportunity to convert those desktop users to the mobile app by leveraging industry proven conversion strategies like QR codes, and mobile-only features. The ability to meet users in a mobile format that best suits their needs and how they are most comfortable is the path forward. It also allows for greater engagement that will enable Alight to drive even better outcomes whether it is notifications to connect with a dedicated health probe, use navigation services, or locate a specialist doctor or utilizing an HSA balance to pay for out-of-pocket healthcare costs. Before I turn the call over to Katie, I'd like to reiterate three things. Our strong 2021 results demonstrate that our relentless focus on improving the employee experience by transforming the human capital space and our business is paying off. Throughout 2021, we continued to see strong demand for our offering as clients realized the differentiated experience we can provide for their employees, and the return on investment we can drive for them. We continue to invest in and innovate across our business to add value for their clients, employees and families we serve. This positive momentum is why we're raising our 2022 guidance, and feel confident in our growth trajectory looking out towards 2023. Finally, I'd like to thank our colleagues around the world for powering our transformation and our growth. Katie, over to you. Katie Rooney: Thank you, Stephan, and good morning, everyone. We continue to see positive trends across our business, as we make progress against our transformation objectives. We exceeded our expectations with our tech-enabled Alight BPaaS offerings. On a total contract basis, BPaaS bookings for the full-year grew a 128% to $602 million, which is 52% ahead of our original January full-year forecasts of $395 million. This bookings growth has translated into revenue growth and higher contracted revenue. Our BPaaS revenue growth was nearly 17% for the full-year and now comprises 13.4% of revenue versus our prior expectation of 12%. With our strong bookings, we now have over 80% of projected 2022 revenue under contract at year-end ahead of historic levels of 75%, which gives us added confidence in our ongoing transformation. Finally, across our consolidated results, we continue to see progress. Full-year total revenue increased 6.9% to $2.91 billion and total revenue excluding our legacy Hosted business increased 8.2% to $2.87 billion. Adjusted EBITDA increased 10% to $621 million, driven by over 350 basis points of gross margin expansion in Employer Solutions, which achieved a 35.2% gross margin. They also continue to drive profitable growth, which has funded our technology and commercial investments and delivered free cash flow of $507 million for the year. Next, I'm going to discuss performance for our two primary segments. First, for Employer Solutions, full-year revenue for Employer Solutions grew 9.4% to $2.5 billion, driven by 10% growth in recurring revenue. Fourth quarter revenue grew approximately 25%, which reflects a combination of the Health Exchange acquisition, which is seasonally concentrated in the fourth quarter with annual Medicare enrollment and net commercial activity. Fourth quarter recurring revenue increased 29%, which was partially offset by an 8% decline in project revenue driven by softer demand for one-time services. Full-year gross margin increased 350 basis points reflective of the strong revenue growth and lower expenses related to productivity actions. Fourth quarter gross margin increased by 740 basis points, again reflective of the seasonal nature of the acquired Health business. Full-year adjusted EBITDA increased 15.9% to $618 million and adjusted EBITDA of margin grew a 140 basis points to 24.7%. Fourth quarter adjusted EBITDA increased 34% to $193 million and adjusted EBITDA margin expanded a 180 basis points to 25.4%. Turning to our Professional Services segment. Full-year revenue for Professional Services expanded slightly to $370 million due to 16% growth in recurring revenue, partially offset by 6% lower project revenue. Fourth quarter revenue was down slightly to $93 million driven by growth in recurring revenue balanced by softer demand for one-time implementation services that has been driven by COVID-19 related cost cutting by clients. Gross margin declined 450 basis points in the full-year and was down by 870 basis points in the fourth quarter as we continue to invest in key talent to support a strong pipeline heading into 2022. Full-year adjusted EBITDA was $8 million and adjusted EBITDA margin was 2.2%. For the fourth quarter, adjusted EBITDA was a loss of $3 million and adjusted EBITDA margins decreased due to a negative 3.2%. Switching to M&A, we closed on the ConsumerMedical and Retiree Health Exchange transactions in the fourth quarter. Let me share with you a brief reminder of the strategic benefits each bolt-on deal brings. The Retiree Health Exchange provides us additional scale, expertise and capabilities in the Medicare enrolment base and expand our ability to serve employers from hire to retire. ConsumerMedical builds upon our existing clinical healthcare navigation capabilities and strengthens the content on our Alight Worklife platform through expert medical opinions and clinical advocacy for participants in areas such as second opinion, selecting the highest quality providers in claims advocacy. Turning to capital markets activity, near quarter-end, we completed our warrant redemption process. We redeemed a total of 60 million warrants, including 45 million public warrants and 15 million private warrants with the vast majority of warrant holders electing to redeem on a cashless basis. This resulted in 15.3 million shares being issued. This transaction cleaned up our capital structure and consequently we will incur less future dilution. At the beginning of this month, we refinanced $2.5 billion of term loans as we continue to take advantage of our strong credit profile and market conditions. The benefits from the refinancing are threefold. We converted our pricing benchmark from LIBOR to SOFR without having to pay a credit support adjustment. We lowered our term SOFR borrowing margin by 25 basis points on a $2 billion balance, resulting in approximately $5 million in annual interest expense savings at current rates. And we extended the maturity on our 2026 term loan to make it fungible with our 2028 term loan broadening the investor trading pool. Now let me briefly review our balance sheet and credit metrics. On December 31, our cash and cash equivalents were $372 million, which reflects the completion of the two acquisitions during the quarter, and our total debt was $2.87 billion. Given the company's strong free cash flow profile and current leverage levels, we believe we are well-positioned to invest both internally and externally to drive our continued transformation. As Stephan highlighted earlier, we had a robust start in our first year as a public company. Since we first presented our outlook back in January of 2021, we've raised our 2021 guidance twice over the course of the year driven by our strong business momentum. We're introducing our updated 2022 outlook, which is ahead of the initial estimates we shared in January of 2021. We now expect revenue of $3.09 billion to $3.12 billion or growth of 6% to 7% on a higher 2021 revenue base than our original outlook. We expect adjusted EBITDA of $650 million to $662 million, which is ahead of our prior outlook of $640 million and now includes public company costs. Adjusted EPS of $0.54 to $0.60, and BPaaS TCV bookings of $680 million to $700 million ahead of our prior outlook driven by strong client reception to-date. Let me share three key factors driving our outlook. First, the Federal Thrift Savings Plan is expected to go live in the second half of 2022. We are incurring the necessary investments to launch this flagship wealth client, with approximately 6.1 million federal employees and uniformed service members to participate in the thrift savings plan without any offsetting revenue in the first half of the year. Second, we continue to make investments in key commercial areas and technology. These investments represent an ongoing headwind in the first half of the year. Finally, we're cautiously optimistic in a project revenue rebound in Professional Services, as we have seen an improving pipeline as we start 2022 with a more normalized business environment. We anticipate that with these ongoing investments adjusted EBITDA will ramp over the course of the year to our adjusted EBITDA target of $650 million to $662 million, with growth more weighted towards the second half of the year. Furthermore, with the Retiree Health Exchange acquisition, our business results are now more seasonally weighted towards the fourth quarter due to the Medicare annual enrolment deadline of year-end. In closing, we are ahead of our initial estimates and we're building momentum as we look to 2022 and beyond. We're confident that our transformation journey and dual-pronged engagement platform and content strategy will continue to succeed and position us to achieve 10% revenue growth in 2023. This concludes our prepared remarks and now we will move into the question-and-answer session. Operator, would you please instruct participants on how to ask questions? Operator: Thank you. We will now be conducting a question-and-answer session. . Our first question comes from the line of Kevin McVeigh with Credit Suisse. Please proceed with your questions. Kevin McVeigh: Great, thanks so much, and congratulations on the results. Really, really nice outcome for you, folks. Hey, Katie, how are you? Hey, you really continue to execute well on kind of the BPaaS bookings obviously significant upside to the original targets. And even in Q4 as well, can you maybe unpack that for us a little bit on that. And then as we're thinking about that into 2022, obviously, the bookings look pretty strong as well. Just maybe what's been driving some of the near-term outperformance and then logos versus existing clients, things like that, and logos rather versus existing clients? Katie Rooney: Yes, thanks Kevin. Great question. You're right. I think as you see in the results, just in terms of BPaaS bookings and revenue, right, you're seeing bookings way outperform and you're also seeing the revenue growth outperform. I think a couple of points. First and we talked about it starting in the second quarter through to the fourth quarter, we've had some really nice new logo wins, I think ahead of our expectations, honestly, this really is resonating, as we're out there with new clients. And it's been a key area of focus from a commercial investment standpoint as well. I think the other piece is again, if you think about how we're talking with our existing client bases, we've kind of continued to add content, whether it be through acquisition, whether it be through the platform strategy, there's a way for us to in essence, kind of help move clients along in the journey. So we don't have to transform, fully transform and get them to for instance, a total health solution. We can help navigate them kind of step by step along the journey. And I think that's really resonating for folks, as they see the opportunity to start improving outcomes in the solutions that we're providing for their employees. Kevin McVeigh: Super helpful. Katie Rooney: So again, it's a mix of both, to be honest. Kevin McVeigh: That's helpful. And then I was kind of flipping through the fourth quarter deck, even going back to Investor Day. And what really jumped out at me was your average revenue retentions up about 100 basis points and your recurring revenue is up almost 200 basis points in, I think a lot of that to the effort in terms of the shift in the model, but maybe just remind us a little bit in terms of what's driving that, because obviously, it's going to anchor a lot of the predictability in the model. And there's a lot of hard work around that? Katie Rooney: Yes, you're right. I mean our average retention for the year was 97%. So I mean, it continues to strengthen, which I think is a testament to the stickiness of the revenue. And how again as you think about getting the employee population, leveraging the mobile app, right leveraging the platform, by definition, you're engaging with them more frequently, that revenue is stickier, because you're able to provide more content, right, you're able to retain kind of that relationship, and it helps the employer as well. I think the other piece, as you think about the subscription base, I mean that has been a focus for us, that is where we have really driven the discussions with our clients to ensure, we kind of have that lead time, right because the more as you think about our platform strategy, right, we're now into kind of semiannual upgrades, every upgrade, right, they're getting additional content, additional capabilities. And so by locking you into that contract, it gives you even more time to obviously show that that benefit, and I think that's resonating for clients as they're really seeing the roadmap and how quickly we can continue to enhance the experience for their employees. Stephan Scholl: Yes, Kevin, thanks for your earlier comments. I think just to double-click on Katie's subscription comment, we've also been really smart about taking what used to be some of the project-based type work and now make it more subscription-based as part of our Worklife strategy. So you're not only just seeing renewal rates higher, but you're also seeing us be very aggressive in our BPaaS strategy towards building out a longer-term more repeatable higher value revenue base, and that's a big shift that we started a couple years back and that's really an key element to our continued growth into this year and next. Kevin McVeigh: That makes a ton of sense. Thanks again. Katie Rooney: Thanks Kevin. Stephan Scholl: Thanks Kevin. Operator: Thank you. Our next question is coming from the line of Peter Heckmann with D.A. Davidson. Please proceed with your questions. Peter Heckmann: Hey, good morning. Thanks for taking my question. I just had a question on the thrift savings, if I remember correctly, that was booked in the fourth quarter of last year, but it doesn't appear to be reflected in the year-over-year comp for BPaaS bookings. Was that part of total bookings last year? Or are you just excluding it for purposes of this comparison? Katie Rooney: Yes, thanks, Pete. You're right. Just given the magnitude of it I mean, there, it really is kind of a one-time deal. We unfortunately, wish there were other 6 million live deals out there. But just given the magnitude of it, we did exclude it in the comparison. Peter Heckmann: Okay that's I just already thought it and remind me was it -- is this -- the 2 billion of -- what was the TCV for that? Katie Rooney: Unfortunately, just given our contract with the thrift we can't disclose kind of the overall financials around it. But again, it's 6 million participants a 10-year deal. It was obviously substantial. Peter Heckmann: Got it. All right, that's helpful. And then just in terms of your adjusted EPS guidance, what should we be thinking about for? Or what are you using there for weighted average shares for the year? Katie Rooney: Yes, if we think about the guidance, again, now that we've kind of cleaned up the warrant structure, I think it's a little more straightforward. So we've also posted a PowerPoint deck on our website that has a lot of detail in terms of kind of the current shares. So we've factored in basically, the basic shares, the non-controlling shares, the new warrants, and then the unvested RSUs. And so the number we're using right now is around $538 million. Peter Heckmann: Okay. And if I could sneak in one more. Katie Rooney: Yes, please. Peter Heckmann: Is that good revenue upside in the quarter and it sounds like both strong organic growth, but as well, the seasonality of the retiree business. I'm just thinking about the contribution for the quarter or the contribution for your guidance for next year, those two acquisitions, how much we think about in run rate revenue? Katie Rooney: Yes, good question. I mean, I think, we've said with both acquisitions, while they're not material, you're right. The retiree deal is more seasonally weighted to the fourth quarter. I think, what's important to keep in mind, as you think about kind of the overall transformation we're going through, you saw BPaaS revenue growth in the quarter 14%, for the year 17%. And today, if you think about that retiree business, that's not currently BPaaS revenue. I think there's an opportunity, as we kind of integrated in the platform and really driving outcome-based strategy around that solution, that will be an opportunity for us, but 17% annual BPaaS growth, kind of excluding acquisitions, and that's growing substantially, both in terms of dollars and growth rate into 2022, kind of even excluding that deal. Operator: Thank you. Our next question is coming from the line of Scott Schoenhaus with Stephens. Please proceed with your questions. Scott Schoenhaus: Hi, team. Stephan Scholl: Hi, Scott. Scott Schoenhaus: Great quarter and two logos. Got a question on the margins. I know historically you guided to gross margin expansion pretty significantly, and we've seen some gross margin expansion. How do we think about that, in terms of your fiscal 2022 guidance? Katie, I guess this question is for you. Katie Rooney: Yes, thanks, Scott. I mean, in terms of you're right. If you think about kind of the overall strategy, we said, we're going to absolutely finding the right balance of driving the top-line, but also investing to continue to drive the transformation. So we'll also show bottom-line growth and margin expansion, but you'll see that first in gross margin. And so, we continue to anticipate gross margin expansion in 2022. I think you've probably heard at the end of my comments, more of that will come in the back half of the year, given some of the first half investment. But I think importantly, if you think about the bookings, if you think about kind of where we're seeing demand in the growth, those investments are really starting to payoff. And so I do think, we're still finding the right balance in both of them. But, as you think about our guidance, we've kind of said EBITDA margins will be relatively flat, obviously, with dollar growth this year. And then some of the investments we've talked about become a tailwind in 2023. So you'll see gross margin expansion this year, and then that accelerating into 2023. Scott Schoenhaus: Great. And you have nice free cash flow, nice quarter again of generating nice cash flow. Can you tell us what opportunities are in the marketplace for you guys? Where you're looking to add to in terms of your capabilities and solutions? Stephan Scholl: Yes, sure, Scott. I think for us, you saw in Q4, the momentum we saw internationally. And I think it's an underserved market. When you see the people challenges that we talk a lot about the U.S., they definitely exist elsewhere. And they're just as a lack of capability and global support. So our size, our scale, our global footprint is a natural extension for us to continue to make great acquisitions in the international markets to support that whole notion of keeping employees healthy and financially secure. I think also, as you've seen in our recent announcements. We've won some of the biggest what we call hrX deals against, ADP and others. With Shell as an example, in this quarter, we had another seven key deals across some big companies that whole gig economy dynamic, which really started in Europe, more so than in the United States is continuing to be an aggressive footprint for us to double down on. So you'll see us in that particular hrX platform around payroll and well-being continue to make some investments there. Operator: Thank you. . There are no further questions at this time. I would like to turn the call back over to Stephan Scholl for any closing comments. Stephan Scholl: Great. Thank you. Thanks everyone for joining us today. We're exiting 2021 with strong momentum and are excited about the opportunities ahead in 2022 and beyond as we continue our transformation journey. We look forward to the chance to meet with many of you at a conference such as the Morgan Stanley TMT conference in March, and at other investor events in the months ahead and sharing our first quarter results in the spring. Have a great day everyone. Operator: This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
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Alight, Inc. (NYSE: ALIT) Q3 Earnings Overview

  • Alight reported a Q3 earnings per share (EPS) of $0.09, missing the Zacks Consensus Estimate.
  • The company's revenue for the quarter was $555 million, surpassing expectations.
  • Alight's financial ratios indicate a moderate level of debt and reasonable liquidity.

Alight, Inc. (NYSE:ALIT) is a leading provider of cloud-based digital human capital and business solutions. The company focuses on employee benefits and wellbeing services, supporting large and complex clients in their people strategy initiatives. Alight operates in the competitive Zacks Internet - Software industry, where it strives to maintain its market leadership.

On November 12, 2024, Alight reported its Q3 earnings, revealing an earnings per share (EPS) of $0.09, which fell short of the Zacks Consensus Estimate of $0.11. This represents an 18.18% negative surprise and a decline from the $0.14 EPS reported in the same quarter last year. Despite this, Alight has exceeded consensus EPS estimates twice in the past four quarters.

Alight's revenue for the quarter was $555 million, surpassing the Zacks Consensus Estimate of $539.68 million by 1.98%. However, this is a decrease from the $813 million reported in the same period last year. Over the last four quarters, Alight has only exceeded consensus revenue estimates once, highlighting challenges in maintaining consistent revenue growth.

Financially, Alight has a price-to-sales ratio of approximately 1.73 and an enterprise value to sales ratio of about 2.39. These metrics indicate how the market values the company's sales and total valuation relative to its revenue. The enterprise value to operating cash flow ratio is around 29.72, reflecting the valuation of cash flow in relation to enterprise value.

Alight's debt-to-equity ratio is approximately 0.47, suggesting a moderate level of debt compared to its equity. The current ratio stands at about 1.30, indicating a reasonable level of liquidity to cover short-term liabilities. 

Insider Selling at Alight, Inc.: A Deep Dive into Financial Health and Market Position

Insider Selling at Alight, Inc. Highlights Investment Considerations

On Tuesday, April 2, 2024, Rooney Katie J., an officer at Alight, Inc. (ALIT:NYSE), engaged in a significant financial transaction by selling 2,777 shares of the company's Class A Common Stock at a price of $9.48 each. This sale reduced Rooney's holdings but left her with a substantial stake of 2,924,537 shares in ALIT. This move, documented through a Form 4 filing with the SEC, provides a glimpse into the insider activities within Alight, Inc., a key player in the Internet - Software sector. Such insider transactions are often closely monitored by investors for insights into the company's health and the confidence levels of its top executives.

Investors analyzing the Internet - Software sector might juxtapose ALIT against its peer, Paycor HCM, Inc. (PYCR), to discern which entity presents a more compelling investment proposition. According to Zacks Investment Research, both companies are noteworthy, yet a detailed examination is essential for a well-informed decision. ALIT's current Zacks Rank of #2 (Buy) signals positive earnings estimate revisions, potentially positioning it as an attractive choice for value investors. Conversely, PYCR, with a Zacks Rank of #3 (Hold), advises a more guarded investor approach. This comparison underscores the significance of earnings estimate revisions and the insights provided by the Zacks Rank and Style Scores system in evaluating investment opportunities within the sector.

Delving into ALIT's financial metrics reveals a company grappling with profitability challenges, as evidenced by its price-to-earnings (P/E) ratio of approximately -17.37 on a trailing twelve months (TTM) basis. This figure indicates that ALIT is currently not generating profit from its operations. However, the price-to-sales (P/S) ratio of about 1.53 TTM suggests that investors are willing to pay $1.53 for every dollar of sales the company makes, reflecting a certain level of investor confidence in ALIT's revenue-generating capabilities. Additionally, the enterprise value to sales (EV/Sales) ratio of approximately 1.87 TTM offers insights into the company's valuation relative to its sales, further aiding investors in assessing ALIT's market position.

Moreover, ALIT's enterprise value to operating cash flow (EV/OCF) ratio of around 16.48 TTM highlights how the market values the company against its operating cash flows, an important indicator of financial health. The earnings yield of approximately -5.76% TTM provides a perspective on the earnings generated for each dollar invested, while the debt-to-equity (D/E) ratio of about 0.64 TTM sheds light on the company's use of debt in financing its assets. Lastly, the current ratio of approximately 1.25 TTM suggests that ALIT maintains a reasonable balance between its assets and liabilities, ensuring it can meet its short-term obligations. These financial metrics collectively offer a comprehensive view of ALIT's financial standing, aiding investors in making informed decisions.