Slide 1: Fourth Quarter and Full Year 2023 Earnings Presentation
4 th Quarter and Full Year 2023 Earnings Presentation Alight, Inc. February 21, 2024 © 2024 Alight. All rights reserved.
Slide 2: Disclaimer
Disclaimer Forward-looking statements Company, LLC (formerly known as Tempo Holding Company, LLC) (“Alight Holdings”) and its subsidiaries. This presentation contains forward-looking statements within the meaning of Section 27A of the In connection with the completion of Alight’s business combinatio
Slide 3: Alight Transformation: Summary of initial 3-year execution
Alight Transformation: Summary of initial 3-year execution Initial 3-yr plan Alight Worklife® Call Volumes Financial Metrics 2020A 2023A 2023 +/- Mobile App (per participant) (MAUs) Total Revenue $2,728 $3,410 $3,235 + $175 Up Down BPaaS Revenue $334 $756 $743 + $13 1000% 20% Adj. EBITDA1 $564 $739
Slide 4: Executing transformational initiatives & driving profitable growth
Executing transformational initiatives & driving profitable growth 4Q revenue ($ in millions) $942 $960 $95 $118 KEY HIGHLIGHTS BPaaS Revenue ↑29.8% 23.1% of total revenue $836 $842 Professional Services Revenue ↑24.2% Professional services 31.1% increase in project revenue Employer solutions Other
Slide 5: Recent highlights reflect success of transformation
Recent highlights reflect success of transformation 1 Sustained demand for mission-critical solutions reflected in strong quarterly bookings • Delivered $261 million in BPaaS bookings; second half bookings of $523 million outpaced strong 2022 second half • Cumulative bookings at 12/31/23 of over $2.
Slide 6: Alight Worklife product roadmap journey
Alight Worklife product roadmap journey 2022 2023 2024 Engagement Platform Launch Wellbeing Expansion Outcomes Platform A new, unified One Alight value proposition Expanded solutions for integrated total wellbeing Advancing the employee experience Alight Worklife launch/rollout Program Optimization
Slide 7: Looking ahead – 2024 product focus areas
Looking ahead – 2024 product focus areas Engagement Expansion Integrated HR Solutions Connecting the Ecosystem New engagement features, experience further New integrated HR solutions increase One Alight Unifying the employee experience and simplifying differentiates Alight Worklife value value propo
Slide 8: Financial results & outlook
Financial results & outlook 8 © 2024 Alight. All rights reserved.
Slide 9: 2023 performance reflects strong top and bottom-line growth
2023 performance reflects strong top and bottom-line growth ($ in millions) 2023 2022 Change 2023 Highlights • Top-line growth driven by strong Revenue performance from both segments and 34% increase in Total Revenue $3,410 $3,132 +8.9% BPaaS revenue • Robust profitability and profit Revenue ex-Othe
Slide 10: Strong BPaaS revenue growth complements robust margin expansion
Strong BPaaS revenue growth complements robust margin expansion ($ in millions) 4Q23 4Q22 Change 4Q Highlights • Revenue driven by substantial Revenue BPaaS revenue growth and record performance in Total Revenue $960 $942 +1.9% Professional Services • Continued strong expansion in Revenue ex-Other $
Slide 11: Employer Solutions maintains strong profitability despite Retiree Health impact
Employer Solutions maintains strong profitability despite Retiree Health impact Revenue ($M) Adjusted Gross Profit ($M)1 4Q Highlights • Project revenue growth of 9.9% +0.7% +2.9% • Isolated impact from $836 $842 $355 Retiree Health $345 • Adjusted gross profit margin1 increased 90 basis points Recu
Slide 12: Professional Services accelerates to record performance driven by new client wins
Professional Services accelerates to record performance driven by new client wins Revenue ($M) Adjusted Gross Profit ($M)1 4Q Highlights • Project revenue grew +24.2% +88.0% 31.1% led by support for new client $47 implementations $118 • Recurring revenue $95 increased 11.8% Project $25 • Significant
Slide 13: $100M of Incremental Operating Cash Flow with Continued Deleveraging
$100M of Incremental Operating Cash Flow with Continued Deleveraging Full Year Operating Cash Net Leverage Ratio2 Flow ($M) ($ millions) 12/31/2023 12/31/2022 Total Debt $2,794 $2,823 +35.0% $386 Less Cash $358 $250 3.9x 0.6x Net Debt $2,436 $2,573 $286 • Well-protected in volatile interest rate env
Slide 14: 2024 Guidance (83% of revenue under contract)
2024 Guidance (83% of revenue under contract)1 FY 2024 Guidance Modeling Considerations $3.55 – $3.61B • Revenue growth to ramp through year with second half weight due Revenue to timing of 2023 bookings profile and go-live timing of large new +4 - 6% clients with first quarter revenue growth expect
Slide 15: Adjusted diluted EPS and modeling notes
Adjusted diluted EPS and modeling notes Adjusted diluted EPS bridge 2024 Notes Additional Modeling Notes Adjusted EBITDA $800-815M See page 19 • CapEx usage of 4-5% of revenue and Depreciation $130-140M 3-4% of revenue W/C usage of 3-4% of revenue Interest Expense $140-150M Based on current forward
Slide 16: Appendix – Non-GAAP Reconciliations
Appendix – Non-GAAP Reconciliations © 2024 Alight. All rights reserved.
Slide 17: Key drivers of EBITDA margin expansion opportunity
Key drivers of +400-500 bps. EBITDA margin expansion opportunity +50-100 bps. 25%+ +100-200 bps. +100-200 bps. +50-100 bps. 21% 2022 Adj. Alight Worklife Delivery operating Technology & Operating Mid-term Adj. EBITDA margin1 Products & Pricing model digital care leverage EBITDA margin 17 1Adjusted E
Slide 18: Growing operating cash flow conversion
Growing operating cash flow conversion ~$2B Operating cash generation through mid-term 60-80% 55-65% 52% Operating 43% TARGET cash flow 2024E conversion % 2023 • Alight Worklife subscription fees & Capital expenditures accelerated time to cash 19% 1 Working capital • Mid-term target ~4% of improveme
Slide 19: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income (Loss) to Adjusted EBITDA (unaudited) Three Months Ended December 31, Year ended December 31, (in millions) 2023 2022 2023 2022 2020 - predecessor Net Income (Loss) $ (86) $ (66) $ (278) $ (72) $ (103) Interest expense 31 33 131 122 234 Income tax expense (benefit) (30)
Slide 20: Reconciliation of operating cash flow conversion rate
Reconciliation of operating cash flow conversion rate (unaudited) Successor Predecessor Year Ended Year Ended Six Months Ended Six Months Ended ($ in millions) December 31, 2023 December 31, 2022 December 31, 2021 June 30, 2021 Adjusted EBITDA $ 739 $ 659 $ 343 $ 278 Cash provided by operations $ 38
Slide 21: Reconciliation of Gross Profit to Adjusted Gross Profit
Reconciliation of Gross Profit to Adjusted Gross Profit (unaudited) Three Months Ended December 31, 2023 ($ in millions) Employer Solutions Professional Services Other Total Gross Profit $ 324 $ 45 $ - $ 369 Add: stock-based compensation 11 1 - 12 Add: depreciation and amortization 20 1 - 21 Adjuste
Slide 22: Reconciliation of Net Loss Income to Adjusted Net Income
Reconciliation of Net (Loss) Income Attributable to Alight, Inc. to Adjusted Net Income & Adjusted Diluted Earnings per Share (unaudited) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 (1) Transaction and integration expenses primarily relate to acquisition and (in milli