Alight Inc, a provider of integrated, cloud-based human capital solutions, reported its second-quarter 2024 earnings, revealing a mixed performance. The company, which generates a majority of its revenue from the United States, saw a decline in revenue but managed to narrow its net loss compared to the previous year.
Performance Overview
Alight Inc (ALIT, Financial) reported a 4.1% decrease in revenue to $538 million, down from $561 million in the same period last year. This decline was primarily driven by lower volumes, net commercial activity, and project revenue within the Employer Solutions segment, as well as the wind-down of its Hosted business operations. Despite the revenue drop, the company achieved a significant improvement in its net loss, which narrowed to $4 million from $72 million in the prior year period.
Key Financial Metrics
Alight Inc (ALIT, Financial) reported a gross profit of $167 million, representing a gross profit margin of 31.0%, compared to $187 million and 33.3% in the prior year period. Adjusted gross profit was $196 million with an adjusted gross profit margin of 36.4%, down from $212 million and 37.8%, respectively. The company's adjusted EBITDA stood at $105 million, a decrease from $119 million in the previous year.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $538 million | $561 million |
| Gross Profit | $167 million | $187 million |
| Net Loss | $4 million | $72 million |
| Adjusted EBITDA | $105 million | $119 million |
CEO Succession and Strategic Moves
Alight Inc (ALIT, Financial) announced a CEO succession plan in line with the closing of its Payroll & Professional Services sale. Stephan Scholl will step down as CEO and member of the Board once a successor is named. The company also completed a cloud migration program and fully decommissioned its data center, which is expected to enhance operational efficiency.
"Alight is entering its next chapter following the accomplishment of several key strategic milestones including its recent divestiture," said CEO Stephan Scholl. "As a simplified and focused wellbeing & benefits company, we have accelerated our financial profile, underscored by the immediate margin expansion and future earnings power."
Balance Sheet and Cash Flow
As of June 30, 2024, Alight Inc (ALIT, Financial) had cash and cash equivalents of $183 million and total debt of $2,780 million. The company repurchased $80 million of common stock under its existing share repurchase program. Additionally, Alight completed a repricing of its 2028 term loan, reducing its interest rate by 50 basis points, which is expected to save $10 million annually in interest expenses.
Outlook
For the second half of 2024, Alight Inc (ALIT, Financial) expects revenue between $1.207 billion and $1.232 billion, BPaaS revenue of $265 to $275 million, and adjusted EBITDA of $326 million to $351 million. The company also anticipates an adjusted EBITDA margin range of 26.5% to 29.1% and adjusted diluted EPS of $0.31 to $0.36.
Alight Inc (ALIT, Financial)'s performance in Q2 2024 highlights both challenges and opportunities. While the revenue decline is a concern, the company's strategic moves and improved net loss position it well for future growth. Investors will be keen to see how the new CEO and ongoing strategic initiatives impact the company's performance in the coming quarters.
Explore the complete 8-K earnings release (here) from Alight Inc for further details.
