Slide 1: 2nd Quarter 2023 Earnings Presentation
2 nd Quarter 2023 Earnings Presentation Alight, Inc. August 1, 2023 © 2023 Alight. All rights reserved.
Slide 2: Disclaimer
Disclaimer Forward-looking statements This presentation contains forward-looking statements within the meaning of Section 27A of the Non-GAAP financial measures Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Included in this presentation are c
Slide 3: Strong 2Q performance with revenue growth of 12.7% versus prior year
Strong 2Q performance with revenue growth of 12.7% versus prior year 2Q revenue ($ in millions) $806 KEY HIGHLIGHTS $715 $100 $91 Recurring Revenue ↑13.6% 84.7% of total revenue $697 BPaaS Revenue ↑39.8% $614 Professional services 22.2% of total revenue Employer solutions Other Employer Solutions Ad
Slide 4: Delivering strong results as transformation progresses
Delivering strong results as transformation progresses 1 Building momentum from technology transformation • Strong growth in both segments with BPaaS revenue advancing nearly 40% • Adjusted EBITDA1 grew 10.6% while still investing in our product roadmap, go-to market strategy and in the transformati
Slide 5: Two high-performing complementary models driving strong enterprise results
Two high-performing complementary models driving strong enterprise results Traditional non-BPaaS business generates strong, recurring cash flow and enables us to upgrade customers into larger, BPaaS-led platform deals BPaaS Non-BPaaS Including Alight Worklife platform and engagement Including Profes
Slide 6: Second Alight Worklife update in 2023 improves upon the user experience and delivers tools to aid employer ROI
Second Alight Worklife update in 2023 improves upon the user experience and delivers tools to aid employer ROI Mobile-based engagement Simplifying access to information and enabling smarter wellbeing decisions – anytime, anywhere Platform tooling & integrations Advanced administrator tooling and par
Slide 7: Launched second global impact report
Launched second global impact report CHAMPION OUR PEOPLE – Created an Inclusion and Diversity Policy to formalize our DEI commitments – Filled a record 25% of job openings with internal candidates Environment 2023 – Reported an employee satisfaction score of 72, in-line with our global benchmark SOC
Slide 8: Financial results & outlook
Financial results & outlook 8 © 2023 Alight. All rights reserved.
Slide 9: 2Q summary of consolidated results
2Q summary of consolidated results ($ in millions) 2Q23 2Q22 Change 2Q Highlights Revenue • Top-line growth of 12.7% driven by substantial BPaaS revenue growth Total Revenue $806 $715 +12.7% • Recurring revenue grew 13.6% Revenue ex-Other $797 $705 +13.0% and accounted for 84.7% of total revenue BPa
Slide 10: Employer Solutions recurring revenue growth is driving strong margin expansion
Employer Solutions recurring revenue growth is driving strong margin expansion Revenue ($M) Adjusted Gross Profit ($M)1 2Q Highlights • 14.3% growth in recurring revenue +13.5% +21.3% • Two months of Federal Thrift benefit with $697 $268 June anniversary $614 $221 • Adjusted gross profit margin incr
Slide 11: Professional Services sustains strong revenue growth
Professional Services sustains strong revenue growth Revenue ($M) Adjusted Gross Profit ($M) 1 2Q Highlights • Strong bookings from +9.9% 2022 led to near double digit revenue $100 growth $91 (4.8)% • Recurring revenue increased 9.4% Project $21 $20 • Project revenue driven by large implementations,
Slide 12: Strong cash flow generation enhances business resilience
Strong cash flow generation enhances business resilience Operating Cash Flow ($M) ($ millions) 6/30/2023 12/31/2022 $162 Total Debt $2,809 $2,823 Less Cash $271 $250 $118 Net Debt $2,538 $2,573 • Well protected in a volatile interest rate environment • 84% fixed through 2024 and 60% through 2025 • E
Slide 13: 2023 guidance (Over 90% of revenue under contract)
2023 guidance (Over 90% of revenue under contract)1 FY 2023 Guidance Key Factors • Accelerating growth driven by BPaaS bookings & full year impact of Federal Thrift Revenue $3.47 – $3.51B • Professional Services project revenue expected to rebound with +11 - 12% higher backlog entering the year Adju
Slide 14: Appendix – Non-GAAP Reconciliations
Appendix – Non-GAAP Reconciliations © 2023 Alight. All rights reserved.
Slide 15: Adjusted diluted EPS and modeling notes
Adjusted diluted EPS and modeling notes Adjusted diluted EPS bridge 2023 Notes Additional Modeling Notes Adjusted EBITDA $735-750M See page 16 • CapEx usage of ~5% revenue and W/C Depreciation $105-110M ~3% of revenue usage of ~4% revenue Interest Expense $140-150M Based on current forward curve • 2
Slide 16: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Net Income (Loss) to Adjusted EBITDA Reconciliation of Net Loss to Adjusted EBITDA (Unaudited) Three Months Ended June 30 Six Months Ended June 30 (in millions) 2023 2022 2023 2022 Net Income (Loss) $ (72) $ 52 $ (146) $ 39 Interest expense 33 29 66 58 Income tax expense (benefit)
Slide 17: Reconciliation of Gross Profit to Adjusted Gross Profit
Reconciliation of Gross Profit to Adjusted Gross Profit Three Months Ended June 30, 2023 ($ in millions) Employer Solutions Professional Services Other Total Gross Profit $ 240 $ 19 $ (2) $ 257 Add: stock-based compensation 8 1 — 9 Add: depreciation and amortization 20 — 1 21 Adjusted Gross Profit $
Slide 18: Reconciliation of Net (Loss) Income Attributable to Alight, Inc. to Adjusted Net Income & Adjusted Diluted EPS
Reconciliation of Net (Loss) Income Attributable to Alight, Inc. to Adjusted Net Income & Adjusted Diluted Earnings per Share Reconciliation of Net Income (Loss) Attributable to Alight, Inc. to Adjusted Net Income and Adjusted Diluted Earnings per Share (1) Income tax effects have been calculated ba