Alight, Inc. / Delaware Q3 FY2024 earnings call

• Dave Guilmette discussed his first 60 days as CEO, focusing on a listening tour to understand client needs. - Highlighted Alight's winning combination of the Alight Worklife platform and talented team serving over half the Fortune 500. - Mentioned progress in integrating solutions across the platform and a differentiated value proposition. - Outlined process redesign initiatives for efficiency and better client experience. - Noted wins in Q3 with Hewlett Packard Enterprise, Nokia, and Siemens. - Annual enrollment progress with over 50% completed, increased digital channel utilization, and mobile enrollments up 35%. - Announced initiation of a quarterly dividend of $0.04 per share starting in the fourth quarter. - Jeremy Heaton discussed improved revenue performance, stronger profitability, raised full-year revenue guidance, adjusted EBITDA margin of 21.3% (up 90 basis points from prior year), and details on balance sheet, capital allocation, and outlook.

Technology-enabled BPaaS solutions delivered growth of nearly 19% and represented 22% of total revenue. Recurring revenue comprised 91% of total revenue in the quarter. Non-recurring project revenues, less than 10% of total revenue, were down $2 million (roughly 4%) in Q3 but expected to be down approximately 20% in Q4.

• Raised full-year revenue guidance, with midpoint equating to a $10 million increase. - Expect total fourth quarter revenue of $665 million to $685 million and full year revenue of $2.338 billion to $2.358 billion. - Reaffirmed adjusted EBITDA guidance for full year: $585 million to $610 million, with fourth quarter adjusted EBITDA expected between $208 million and $233 million. - Continues to expect full year operating cash flow conversion of 55% to 65% when adjusted for transaction and separation costs. - Initiated a quarterly dividend of $0.04 per share beginning in the fourth quarter. - Settled a $75 million accelerated share repurchase program, returning $155 million to shareholders via buybacks with $93 million remaining in authorization.

Actual results may differ materially from forward-looking statements due to a variety of factors discussed in the company's filings with the SEC, including the company's most recent Form 10-K and Form 10-Q. These factors may be updated in periodic filings and the company does not undertake to update forward-looking statements.

Q: Kevin McVeigh asked about COBRA runoff and wins from Siemens, Nokia, and HP.

A: Dave Guilmette said the wins were a continuation of the great work by the commercial team and account executives, and they are new logos. Jeremy Heaton added COBRA was a 3Q runoff with a small tail end in Q4.

Q: Scott Schoenhaus asked about growth from new logos vs. existing clients and margin efficiency.

A: Dave Guilmette said it's a combination of working with existing clients and seeking new ones. Jeremy Heaton discussed margin improvement tied to technology, mobile enrollment growth, and work with AlixPartners for operating model streamlining.

Q: Tien-Tsin Huang asked about revenue raise details and 2025 outlook.

A: Jeremy Heaton explained revenue raise was due to overperformance in Q3, with project revenue cautious and recurring revenue factors. Dave Guilmette and Jeremy Heaton discussed 2025 being a better year with COBRA behind and monitoring environment and client cost consciousness.

Q: Kyle Peterson asked about capital allocation and balance between dividends and buybacks.

A: Dave Guilmette said capital allocation remains a combination of dividends and buybacks, based on free cash flow profile. Jeremy Heaton mentioned remaining share buyback authorization of $93 million.

Q: Pete Christiansen asked about channel partners and pipeline conversion.

A: Dave Guilmette discussed messaging around cloud migration and Alight Worklife platform, while Jeremy Heaton noted pipeline conversion patterns for enterprise clients are long but win rates are up.

Q: Pallav Saini asked about pipeline mix and go-to-market optimization.

A: Dave Guilmette said integrated platform is resonating, combining best-in-breed solutions with integrated value. Jeremy Heaton discussed go-to-market team maturity and pipeline growth contributing to 60% pipeline increase