Alight — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue for the three months ended September 30, 2026, was $500 million, a 6.2% decrease from $533 million in the prior year period, primarily driven by lower net commercial activity.
• Year-to-date revenue for the nine months ended September 30, 2026, was $1,545 million, down from $1,609 million in the prior year.
• Recurring revenues represented 91.6% of total revenue for the quarter.
• Gross profit was $135 million (27.0% of revenue) for the quarter, compared to $178 million (33.4% of revenue) in the prior year; year-to-date gross profit was $433 million (28.0% of revenue) versus $525 million (32.6% of revenue) in the prior year.
• Adjusted Gross Profit was $168 million for the quarter (33.6% margin) compared to $206 million (38.6% margin) in the prior year; year-to-date Adjusted Gross Profit was $533 million (34.5% margin) versus $611 million (38.0% margin) in the prior year.
• Net loss from continuing operations was $51 million for the quarter, compared to a loss of $1,068 million in the prior year; year-to-date net loss from continuing operations was $80 million versus $2,145 million in the prior year.
• Adjusted EBITDA from continuing operations was $86 million (17.2% margin) for the quarter, down from $138 million (25.9% margin) in the prior year; year-to-date Adjusted EBITDA was $282 million (18.3% margin) versus $383 million (23.8% margin) in the prior year.
• Year-to-date Cash From Operations was $181 million, and Free Cash Flow was $108 million.
• Selling, general and administrative expenses increased by $35 million to $122 million for the quarter compared to the prior year, primarily due to higher severance, restructuring costs, compensation, and professional fees.
• Interest expense was $25 million for the quarter, an increase of $1 million from the prior year.
• Loss from continuing operations before income tax was $70 million for the quarter, an improvement from a loss of $1,253 million in the prior year, largely due to a $1,338 million non-cash goodwill impairment in the prior year.

Guidance and Future Outlook:

• The company raised its full-year 2026 business outlook.
• Full-year 2026 revenue guidance is now in the range of $2,115 million to $2,125 million.
• Full-year 2026 Adjusted EBITDA guidance is now in the range of $410 million to $420 million.

Business Segments and Product Lines:

• The company reported significantly improved retention metrics.
• Alight added differentiating capabilities through the acquisition of Abett.
• The company delivered several features on its AI roadmap.
• The company expanded account coverage to relationships representing over 95% of recurring revenue.
• Bruce Wolfe was added as the Wealth leader to strengthen the leadership team.
• The company won several new logos and expanded relationships with existing clients.

Market and Competitive Landscape:

• Alight is described as a leading benefits administration provider of health, wealth, and leave solutions for many of the world's largest organizations and over 30 million people.
• The company is executing a long-term strategy to bolster its leadership position in the market and return to positive commercial momentum.

Risks and Challenges:

• Revenue decline was attributed to lower net commercial activity.
• Gross profit decrease was driven by lower revenues and an increase in compensation expense, partially offset by cost savings initiatives.
• SG&A expenses increased due to higher severance, restructuring costs, compensation, and professional fees.
• Forward-looking statements note risks including competition, execution of strategic transformation, operational and technological enhancements, use of AI/ML, cyber-attacks, data handling, activist stockholders, and compliance with laws.

Management Commentary and Tone:

• CEO Rohit Verma stated the company surpassed revenue and adjusted EBITDA expectations for the third consecutive quarter.
• Management expressed confidence in having the team, tools, and strategy in place to deliver enhanced operational and service excellence.
• The tone reflects optimism regarding the transformation initiatives enabling new business wins and client expansion.

Other Key Points:

• A 1-for-20 reverse stock split of Class A, Class B, and Class V common stock was effective June 30, 2026; all share and per share amounts have been retroactively adjusted.
• As of September 30, 2026, cash and cash equivalents were $212 million, total debt was $1,991 million, and total debt net of cash was $1,779 million.
• The company paid $1 million in dividends and $136 million on tax receivable agreements during the nine months ended September 30, 2026.
• No share repurchases occurred in the nine months ended September 30, 2026, compared to $65 million in the prior year period.
• Goodwill impairment was $0 for the current quarter and year-to-date, compared to $1,338 million and $2,321 million respectively in the prior year.
• A conference call to discuss results was held on November 3, 2026.