Alight, Inc. · NYSE:ALIT
Alight — J.P. Morgan TMC Conference 2024
36 slides from Alight's conference presentation, May 2024
Slide 1: Alight Investor Presentation
Alight Investor Presentation J.P. Morgan TMC Conference May 2024
Slide 2: Disclaimer
Disclaimer Forward-looking statements management believes such measures are useful to investors. These non-GAAP financial measures should be considered only as supplemental to, This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as a
Slide 3: Alight Overview
Alight Overview 3 | © 2024 Alight. All rights reserved.
Slide 4: Investment highlights
SUMMARY Investment highlights Highly differentiated platform provides a one-stop shop for clients and an unparalleled set of data 1 to drive innovation and better participant outcomes Strong and growing recurring revenue and cash flow foundation from long-term contracts with 2 deep-rooted, blue-chip
Slide 5: Summary of initial 3-year execution ended 2023
Summary of initial 3-year execution ended 2023 $ in millions Initial 3-yr plan Alight Worklife Mobile Call Volumes Financial Metrics 2020A 2023A 2023 +/- 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 6: Strong core business built organically and via M&A into industry leader
Strong core business built organically and via M&A in 21st century into industry leader for integrated benefits & wellbeing offering 2002 2010 2018 2019 2020 2022 2024 Hewitt Associates IPOs Hewitt acquired by Alight acquires Future Alight acquires NGA Alight acquires Choice Launched Alight Alight a
Slide 7: What we do post-transaction / Alight by the numbers
WHAT WE DO POST-TRANSACTION ALIGHT BY THE NUMBERS Significant Through our proprietary integrated and growing install 35M+ 5,000+ base employees and dependents1 clients platform, Alight Worklife®, and combined with world-class service capabilities and commercial partnerships, we implement Durable and
Slide 8: Technology: how we do it
HOW WE DO IT Alight Worklife Alight Worklife 30+ year operating history across Benefits platform Employee Experience Platform Mobile App | Web | Engagement Content | Platform Tooling Mission-critical, cloud-based platform that manages, supports & AI Virtual Assistant | Analytics | Integrations | Sec
Slide 9: Comprehensive, integrated health offering drives unique outcomes
Comprehensive, integrated health offering drives unique outcomes COMPETITIVE ATTRACTIVE MARKET OPPORTUNITY DIFFERENTIATION Leading benefits administrator in North American • Evolving workforce dynamics drive greater complexity for employers market serving 700+ clients optimizing benefits and engagin
Slide 10: Significant track record of leadership in wealth benefits
Significant track record of leadership in wealth benefits COMPETITIVE ATTRACTIVE MARKET OPPORTUNITY DIFFERENTIATION Largest independent defined contribution (DC) recordkeeper and • US defined contribution market is $10T1, with top 5 recordkeepers covering 65% of AUM second largest overall market sha
Slide 11: Leaves (absence management) bolsters powerful platform offering
Leaves (absence management) bolsters powerful platform offering COMPETITIVE ATTRACTIVE MARKET OPPORTUNITY DIFFERENTIATION Largest tech-enabled provider to large • Increasingly complex regulatory environment, requiring expertise to navigate and driving employer North American market outsourcing • Mar
Slide 12: Go-forward Alight financial summary
Go-forward Alight financial summary
Slide 13: Benefits to anticipated divestiture of Professional Services and HCM & Payroll Outsourcing
Benefits to anticipated divestiture of Alight’s Professional Services and HCM & Payroll Outsourcing businesses $1B Up to $200M ~$20M Earnings upfront gross proceeds seller notes temporary stranded costs (assumed in PF margin of ~25%) Power • Net upfront proceeds estimate of $750 million, expected to
Slide 14: New Alight revenue growth profile & visibility
New Alight revenue growth profile & visibility Revenue under Contract1 (YoY compare as of May 2024) Typical seasonality of recurring revenue • Historic revenue retention of 96-98% with natural business cycle churn of 2-4% (large majority within non-BPaaS) taking place at end of year, offset through
Slide 15: Numerous building blocks for revenue growth
Numerous building Buy, Build, Partner blocks for revenue New logos • Commercial partnership with business being growth • Dedicated new divested logo team added • Strong acquisition activity Client upgrades in 2020 since 2017 building one- stop shop • Hundreds of new • Alight Marketplace Non-BPaaS TC
Slide 16: Strong New Alight normalized earnings power
Strong New Alight normalized earnings power Normalized Pro Forma (PF) Adj. EBITDA bridge ($ millions) ~$55 ~$690 1,2 ~$20 ~$615 ~$20 ~$595 Est. FY23 PF Adj. EBITDA 2024 savings from Est. PF Adj. EBITDA Eliminate temporary dis- Incremental savings from Est. Normalized PF Adj. restructuring synergy re
Slide 17: Key drivers of +600 bps Adj. EBITDA margin expansion opportunity
Key drivers of +600 bps. Adj. EBITDA margin expansion opportunity +50-100 bps. ~28% +100-150 bps. Approximately 300 basis points of +50-150 bps. expansion on day 1 post- divestiture close +25-50 bps. — +300 bps. 70 basis points of expansion in 2023 attributed to delivery 21.7% operating model and te
Slide 18: Growing operating cash flow conversion
Growing operating cash flow conversion 65-80% 55-65% 52% Operating 43% TARGET cash flow 2024E2 conversion % 2023 • Alight Worklife subscription fees & Capital expenditures accelerated time to cash 19% 1 Working capital • Mid-term target ~4-5% of improvements 2022 • Lower restructuring expenses reven
Slide 19: Capital allocation philosophy aligned with value creation
Capital allocation philosophy aligned with value creation Net leverage ratio1 Strengthen Expected to reduce net leverage ratio1 Accelerating the path to de-leveraging to <3x, accelerating achievement of balance sheet mid-term target 3.9x Evaluate share repurchase opportunities; 3.3x Capital increase
Slide 20: Medium-term targets for Alight post-transaction
Medium-term targets for Alight post-transaction Current Alight New Alight Commentary • Higher recurring revenue base Revenue growth 6-8% 4-6% • Additional upside from M&A given increased balance sheet flexibility • Higher margin technology led solutions Adj. EBITDA margin 25%+ ~28% • Benefits from t
Slide 21: Alight Worklife & BPaaS Strategy
Alight Worklife & BPaaS Strategy
Slide 22: Defining BPaaS and our winning strategy
Defining BPaaS and our winning strategy BPaaS is a technology-led product suite developed over the last 3+ years that leverages and builds upon Alight’s strong traditional core business, unparalleled data and artificial intelligence into one comprehensive enterprise offering. The defined set of SKUs
Slide 23: Examples of key BPaaS solutions
Examples of key BPaaS solutions Health and clinical Alight employee onboarding Program Optimization Alight Well and navigation Measurable outcomes: Measurable outcomes: Partner Network Measurable outcomes: Employee turnover (%), Employee Program utilization Measurable outcomes: Verified claims savin
Slide 24: Transforming through our BPaaS-led platform strategy
Transforming through our BPaaS-led platform strategy Established one common Ongoing back-end migration to cloud front-end for all clients simplifies infrastructure Development of comprehensive Restructuring program to exit physical data centers through employee experience platform, Alight Worklife 2
Slide 25: Alight Worklife is our proprietary engagement & insights platform
Alight Worklife is our proprietary engagement & insights platform Digital and mobile-based platform acting as connective tissue across benefits & wellbeing solutions A differentiated end-user Enhanced decision-making for experience employer • Consumer-grade front-end with • Fosters better employee e
Slide 26: 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 27: Platform approach supports integrated BPaaS offering
Platform approach supports integrated BPaaS offering Analytics and AI • Visibility into multiple information sources • Personalized and predictive, leveraging human 1 Customer experience and artificial intelligence and engagement (i.e. Alight Worklife) • Ability to provide industry insights • Seamle
Slide 28: AI engines power our platform
AI engines power our platform AI recommendation Automated decision support and choice optimization AI personalization AI insights Personalized engagement Data trend analysis for high- content for “next best action” precision analytics and recommendations Demographic Health claims Biometrics Search E
Slide 29: Bending the cost curve for clients - Health Navigation
Bending the cost curve for clients-Health Navigation WE DRIVE BETTER END-USER DRIVING HEALTH CLAIMS SAVINGS FOR SELF- DECISION-MAKING INSURED DRUG STORE • Sought to reduce healthcare claim costs and improve employee engagement by implementing digital healthcare journey solution — New software founda
Slide 30: Bending the cost curve for clients - Onboarding and Wealth
Bending the cost curve for clients -Onboarding and Wealth ONBOARDING EMPLOYEES AT GLOBAL BUILDING FINANCIAL SECURITY FOR TECH GIANT EMPLOYEES OF LARGE INDUSTRIAL COMPANY • Sought to reduce investment and time in hiring and training process • Sought to increase awareness of the Health Savings Account
Slide 31: 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 clients into larger and higher margin, BPaaS-led platform deals BPaaS Traditional Non-BPaaS Including Alight Worklife platform and
Slide 32: Appendix
Appendix alight
Slide 33: Lifecycle of a deal today (illustrative)
Lifecycle of a deal today (illustrative) Deal Go- Year 5 Signed Live Renewal Revenue Prof. Svcs. / Non-recurring (non-BPaaS) Per Employee Per Month (ARR – Recurring Revenue) Process Implementation Enrollment Ongoing Delivery & Customer Care Average 6–18 month timeline Upfront investment cycle throug
Slide 34: Alight's share classes
Alight’s share classes CLASS SHARES CONSIDERATIONS A ~550 million1 • Traditional common stock, disclosed in diluted share count • Unvested RSUs are time-based and are considered in adjusted diluted share count • Does not include PRSUs in advance of issuance; reassessed quarterly for likelihood to ve
Slide 35: Reconciliation of Net Income (Loss) to Adjusted EBITDA (unaudited)
Reconciliation of Net Income (Loss) to Adjusted EBITDA (unaudited) 35 | © 2024 Alight. All rights reserved.
Slide 36: Reconciliation of operating cash flow conversion rate (unaudited)
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