Alight, Inc. / Delaware

Previous wording

Revenues were $548 million for the three months ended March 31, 2025 as compared to $559 million for the prior year period. The decrease of $11 million, or 2.0%, was driven by lower project revenue and Net Commercial Activity.

Current wording

Revenues were $528 million for the three months ended June 30, 2025 as compared to $538 million for the prior year period. The decrease of $10 million, or 1.9%, was driven by lower project revenue and Net Commercial Activity. We experienced lower than expected bookings in the first half of 2025 which is expected to impact revenue in the second half of 2025.

Previous wording

Recurring revenues for the three months ended March 31, 2025 decreased by $1 million, or 0.2%, from $521 million in the prior year period to $520 million, primarily driven by lower Net Commercial Activity.

Current wording

Recurring revenues for the three months ended June 30, 2025 decreased by $1 million, or 0.2%, from $493 million in the prior year period to $492 million, primarily driven by lower Net Commercial Activity.

Previous wording

Depreciation and amortization expenses increased by $5 million, or 23.8%, as compared to the prior year period, primarily driven by capitalized software.

Current wording

Depreciation and amortization expenses increased by $1 million, or 3.8%, as compared to the prior year period, primarily driven by capitalized software.

Previous wording

There was an $8 million gain related to the change in the fair value of financial instruments for thethree months ended March 31, 2025 compared to a loss of $21 million for the prior year period. We are required to remeasure the financial instruments at the end of each reporting period and reflect a gain or loss for the change in fair value of the financial instruments in the period the change occurred. Changes in the fair value are primarily due to changes in the underlying assumptions of each respective instrument, including changes in the risk-free interest rate, volatility, cost of debt, forecasts, and the closing stock price for the period and are related to the Seller Earnout and Additional Seller Note. See Note 14 "Financial Instruments"within the Condensed Consolidated Financial Statementsfor additional information.

Current wording

There was a $28 million loss related to the change in the fair value of financial instruments for thethree months ended June 30, 2025 compared to a gain of $52 million for the prior year period, primarily due to the $36 million write down of our Additional Seller Note, partially offset by a gain on the remeasurement of the Seller Earnout. We are required to remeasure the financial instruments at the end of each reporting period and reflect a gain or loss for the change in fair value of the financial instruments in the period the change occurred. Changes in the fair value are primarily due to changes in the underlying assumptions of each respective instrument, including changes in the risk-free interest rate, volatility, cost of debt, forecasts, and the closing stock price for the period. See Note 14 "Financial Instruments"within the Condensed Consolidated Financial Statementsfor additional information.

Previous wording

The change in the fair value of the TRA resulted in a loss of $9 million for the three months ended March 31, 2025, a decrease of $46 million compared to a loss of $55 million for the prior year period. The change in fair value was due to changes in the Company's assumptions related to the timing of the utilization of tax attributes during the term of the TRA, changes in the discount rate and the passage of time.

Current wording

The change in the fair value of the TRA resulted in a loss of$23 million for the three months ended June 30, 2025, a decrease of$54 million compared to a gain of$31 million for the prior year period. The change in fair value was due to changes in the Company's assumptions related to the timing of the utilization of tax attributes during the term of the TRA, changes in the discount rate and the passage of time.

Previous wording

Interest expense decreased $9 million for the three months ended March 31, 2025 as compared to the prior year period. The decrease was primarily due to the partial repayment of debt in the prior year, the opportunistic repricing of our 2028 term loan and higher interest income, partially offset by the Company's hedges. See Note 8 “Debt” within the Condensed Consolidated Financial Statements for additional information.

Current wording

Interest expense decreased$11 million for the three months ended June 30, 2025, as compared to the prior year period. The decrease was primarily due to the partial repayment of debt in the prior year, the opportunistic repricing of our 2028 term loan and higher interest income, partially offset by the Company's hedges. See Note 8 “Debt” within the Condensed Consolidated Financial Statements for additional information.

Previous wording

Under the terms of the TSA as described in Note 4 "Discontinued Operations" within the Condensed Consolidated Financial Statements, the Company is providing technology infrastructure, risk and security, and various other corporate services to the Divested Business subsequent to the close. We recorded $10 million for services performed under the TSA for the three months ended March 31, 2025 in Other (income) expense, net, and the corresponding expenses were recognized in Cost of services and Selling, general and administrative expense in the Condensed Consolidated Statement of Comprehensive Income (Loss).

Current wording

Under the terms of the TSA as described in Note 4 "Discontinued Operations" within the Condensed Consolidated Financial Statements, the Company is providing technology infrastructure, risk and security, and various other corporate services to the Divested Business subsequent to the close. We recorded $8 million for services performed under the TSA for the three months ended June 30, 2025 in Other (income) expense, net, and the corresponding expenses were recognized in Cost of services and Selling, general and administrative expense in the Condensed Consolidated Statement of Comprehensive Income (Loss).

Previous wording

Income tax benefit was $3 million for the three months ended March 31, 2025, as compared to an income tax benefit of $27 million for the prior year period. The effective tax rate of 15% for the three months ended March 31, 2025 was lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible expenses, tax credits, and changes in valuation allowance. The effective tax rate of 18% for the three months ended March 31, 2024 was lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible expenses, tax credits, and changes in valuation allowance. See Note 7 “Income Taxes” within the Condensed Consolidated Financial Statements for additional information.

Current wording

Income tax benefit was $3 million for the three months ended June 30, 2025, as compared to an income tax expense of $2 million for the prior year period. The effective tax rate of 0% for the three months ended June 30, 2025 was lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible expenses, tax credits, changes in valuation allowance, and certain non-recurring items including non-deductible goodwill impairment. The effective tax rate of (100)% for the three months ended June 30, 2024 was lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible expenses, tax credits, and changes in valuation allowance. See Note 7 “Income Taxes” within the Condensed Consolidated Financial Statements for additional information.

Previous wording

Cost of services, exclusive of depreciation and amortization, decreased $5 million, or 1.4%, for thethree months ended March 31, 2025 as compared to the prior year period. The decrease was primarily driven by lower revenues and savings realized in conjunction with productivity initiatives.

Current wording

Cost of services, exclusive of depreciation and amortization, decreased $25 million, or 3.6%, for thesix months ended June 30, 2025 as compared to the prior year period. The decrease was primarily driven by lower revenues and savings realized in conjunction with productivity initiatives.

Previous wording

Selling, general and administrative expenses decreased $42 million, or 28.8%, for thethree months ended March 31, 2025 as compared to the prior year period. The decrease was driven by a reduction in compensation expenses primarily related to non-cash share-based awards, lower restructuring charges and lower professional fees incurred related to the sale and separation of the Divested business.

Current wording

Selling, general and administrative expenses decreased $58 million, or 19.9%, for thesix months ended June 30, 2025 as compared to the prior year period. The decrease was driven by a reduction in compensation expenses primarily related to non-cash share-based awards and lower professional fees incurred related to the sale and separation of the Divested business, partially offset by higher restructuring charges.

Previous wording

Depreciation and intangible amortization expenses decreased by$1 million, or 1.3%, and was consistent compared to the prior year period.

Current wording

Depreciation and intangible amortization expenses decreased by$1 million, or 0.7%, and were consistent with the prior year period.

Previous wording

Loss from continuing operations before taxes was $20 million for the three months ended March 31, 2025 as compared to loss from continuing operations before taxes of $148 million for the three months ended March 31, 2024. The decrease in loss was primarily attributable to the non-operating fair value remeasurements of financial instruments and the tax receivable agreement, lower selling, general and administrative expenses, lower interest expense as a result of the debt pay down and other income recorded in conjunction with the TSA entered into with the purchaser of the Divested Business.

Current wording

Loss from continuing operations before taxes was $1,096 million for the six months ended June 30, 2025 as compared to loss from continuing operations before taxes of $150 million for the six months ended June 30, 2024. The increase in loss was primarily attributable to the $983 million non-cash goodwill impairment charge, the non-operating fair value remeasurements of financial instruments and the tax receivable agreement, partially offset by lower selling, general and administrative expenses, lower interest expense as a result of the debt pay down and other income recorded in conjunction with the TSA entered into with the purchaser of the Divested Business.

Previous wording

(1)Excludes the impact of discontinued operations. Comparable periods have been recast to exclude these impacts.

Current wording

(1)Excludes the impact of discontinued operations.

Previous wording

(3)Income tax effects have been calculated based on statutory tax rates for both U.S. and foreign jurisdictions based on the Company's mix of income and adjusted for significant changes in fair value measurement.

Current wording

(4)Income tax effects have been calculated based on statutory tax rates for both U.S. and foreign jurisdictions based on the Company's mix of income and adjusted for significant changes in fair value measurement.

Previous wording

(4)Assumes the full exchange of the units held by noncontrolling interests for shares of Class A Common Stock of Alight, Inc. pursuant to the exchange agreement.

Current wording

(5)Assumes the full exchange of the units held by noncontrolling interests for shares of Class A Common Stock of Alight, Inc. pursuant to the exchange agreement.

Previous wording

(5)Includes non-vested time-based restricted stock units that were determined to be antidilutive for U.S. GAAP diluted earnings per share purposes.

Current wording

(6)Includes non-vested time-based restricted stock units that were determined to be antidilutive for U.S. GAAP diluted earnings per share purposes.

Previous wording

(6)Excludes two tranches of contingently issuable seller earnout shares: (i) 7.5 million shares will be issued if the Company's Class A Common Stock's volume-weighted average price ("VWAP") is >$12.50 for any 20 trading days within a consecutive period of 30 trading days; (ii) 7.5 million shares will be issued if the Company's Class A Common Stock VWAP is >$15.00 for any 20 trading days within a consecutive period of 30 trading days. Both tranches have a seven-year duration.

Current wording

(7)Excludes two tranches of contingently issuable seller earnout shares: (i) 7.5 million shares will be issued if the Company's Class A Common Stock's volume-weighted average price ("VWAP") is >$12.50 for any 20 trading days within a consecutive period of 30 trading days; (ii) 7.5 million shares will be issued if the Company's Class A Common Stock VWAP is >$15.00 for any 20 trading days within a consecutive period of 30 trading days. Both tranches have a seven-year duration.

Previous wording

(7)Excludes approximately 10.0 million and 14.4 million performance-based units, which represents the gross number of shares expected to vest based on achievement of the respective performance conditions as of March 31, 2025 and 2024, respectively.

Current wording

(8)Excludes approximately 5.9 million and 14.1 million performance-based units, which represents the gross number of shares expected to vest based on achievement of the respective performance conditions as of June 30, 2025 and 2024, respectively.

Previous wording

Adjusted EBITDA From Continuing Operations is defined as earnings before interest, taxes, depreciation and intangible amortization adjusted for the impact of certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance. Adjusted EBITDA Margin From Continuing Operations is defined as Adjusted EBITDA From Continuing Operations divided by revenue. Adjusted EBITDA and Adjusted EBITDA Margin

Current wording

Adjusted EBITDA From Continuing Operations is defined as earnings before interest, taxes, depreciation and intangible amortization adjusted for the impact of certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance. Adjusted EBITDA Margin From Continuing Operations is defined as Adjusted EBITDA From Continuing Operations divided by revenue. Adjusted EBITDA and Adjusted EBITDA Margin From Continuing Operations are non-GAAP financial measures used by management and our stakeholders to provide useful supplemental information that enables a better comparison of our performance across periods as well as to evaluate our core operating performance. A reconciliation of Adjusted EBITDA From Continuing Operations to Net Income (Loss) From Continuing Operations is as follows:

Previous wording

(1)Adjusted EBITDA excludes the impact of discontinued operations. Comparable periods have been recast to exclude these impacts.

Current wording

(1)Adjusted EBITDA excludes the impact of discontinued operations.

Previous wording

(3)Adjusted EBITDA Margin From Continuing Operations is defined as Adjusted EBITDA From Continuing Operations as a percentage of revenue.

Current wording

(4)Adjusted EBITDA Margin From Continuing Operations is defined as Adjusted EBITDA From Continuing Operations as a percentage of revenue.

Previous wording

Employer Solutions revenue was $548 million for thethree months ended March 31, 2025 as compared to $559 million for the prior year period. The overall decrease of $11 million was primarily driven by decreases in recurring revenues from lower project revenue and Net Commercial Activity.

Current wording

Employer Solutions revenue was $528 million for thethree months ended June 30, 2025 as compared to $538 million for the prior year period. The overall decrease of $10 million was primarily driven by decreases in project revenue and Net Commercial Activity.

Previous wording

Gross Profit to Adjusted Gross Profit Reconciliation

Current wording

Gross Profit to Adjusted Gross Profit Reconciliation for the Three and Six Months Ended June 30, 2025 Compared to the Three and Six Months Ended June 30, 2024

Previous wording

Employer Solutions gross profit was$171 million for thethree months ended March 31, 2025 compared to$182 million for the prior year period. The decrease of $11 million was driven by a decrease in revenue and increases in costs associated with funding growth of current and future revenues, partially offset by lower expenses related to productivity initiatives. Employer Solutions adjusted gross profit for thethree months ended March 31, 2025 decreased $8 million to $200 million from $208 million in the prior year period, primarily driven by a decrease in revenue and increases in costs associated with funding growth of current and future revenues, partially offset by lower expenses related to productivity initiatives.

Current wording

Employer Solutions gross profit was $347 million for the six months ended June 30, 2025 compared to $349 million for the prior year period. The decrease of $2 million was driven by a decrease in revenue and increases in costs associated with funding growth of current and future revenues, partially offset by lower expenses related to productivity initiatives. Employer Solutions adjusted gross profit remained consistent for the six months ended June 30, 2025, increasing $1 million to $405 million from $404 million in the prior year period.

Previous wording

Net cash provided by operating activities was $73 million for the three months ended March 31, 2025 as compared to $92 million for the three months ended March 31, 2024. The decrease in cash provided by operating activities was primarily due to an increase in our net working capital requirements.

Current wording

Net cash provided by operating activities was $159 million for the six months ended June 30, 2025 as compared to $93 million for the six months ended June 30, 2024. The increase in cash provided by operating activities was primarily due to changes in our net working capital requirements.

Previous wording

Free cash flow was $44 million for the three months ended March 31, 2025 compared to $61 million from the prior period. The decrease in free cash flow was primarily due to a decrease in cash provided from operations, partially offset by lower capital expenditures.

Current wording

Free cash flow was $102 million for the six months ended June 30, 2025 compared to $26 million from the prior period. The increase in free cash flow was primarily due to an increase in cash provided from operations, partially offset by lower capital expenditures.

Previous wording

During the three months ended March 31, 2025, there were 3,245,932 Class A Common Stock shares repurchased under the Program. As of March 31, 2025, the total remaining amount authorized for repurchase was $261 million.

Current wording

During the three and six months ended June 30, 2025, the Company repurchased 4,055,349 and 7,301,281 shares of Class A Common Stock for an aggregate amount of $20 million and $40 million, respectively. As of June 30, 2025, the total remaining amount authorized for repurchase was $241 million.

Previous wording

The following table provides information with respect to quarterly dividends on common stock during the three months ended March 31, 2025.

Current wording

The following table provides information with respect to quarterly dividends on common stock during the six months ended June 30, 2025.

Previous wording

Net cash provided by operating activities was $73 million for the three months ended March 31, 2025 as compared to $92 million for the three months ended March 31, 2024. The decrease in cash provided by operating activities was primarily due to an increase in our net working capital requirements.

Current wording

Net cash provided by operating activities was $159 million for the six months ended June 30, 2025 as compared to $93 million for the six months ended June 30, 2024. The increase in cash provided by operating activities was primarily due to changes in our net working capital requirements.

Previous wording

Cash used in investing activities was $29 million for the three months ended March 31, 2025 as compared to cash used in investing activities of $31 million for the three months ended March 31, 2024. The decrease in cash used in investing activities was primarily driven by a decrease in capital expenditures.

Current wording

Cash used in investing activities was $57 million for the six months ended June 30, 2025 as compared to cash used in investing activities of $67 million for the six months ended June 30, 2024. The decrease in cash used in investing activities was primarily driven by a decrease in capital expenditures.

Previous wording

Cash used in financing activities for the three months ended March 31, 2025 was $176 million as compared to cash used in financing activities of $118 million for the three months ended March 31, 2024. The primary drivers of cash used in financing activities for the three months ended March 31, 2025 were $100 million of TRA payments, $21 million of dividend payments, $20 million of share repurchases, a $12 million net decrease in fiduciary liabilities, $11 million of shares/units withheld in lieu of taxes, $5 million of debt repayments, and $5 million of finance lease payments. The decrease in fiduciary cash was primarily due to timing of client funding and subsequent disbursement of payments.

Current wording

Cash used in financing activities for the six months ended June 30, 2025 was $242 million as compared to cash used in financing activities of $244 million for the six months ended June 30, 2024. The primary drivers of cash used in financing activities for the six months ended June 30, 2025 were $100 million of TRA payments, $43 million of dividend payments, $40 million of share repurchases, a $24 million net decrease in fiduciary liabilities, $12 million of finance lease payments, $11 million of shares/units withheld in lieu of taxes, and $10 million of debt repayments. The decrease in fiduciary cash was primarily due to timing of client funding and subsequent disbursement of payments.

Previous wording

At March 31, 2025, our continuing operations cash and cash equivalents were $223 million, a decrease of $120 million from December 31, 2024. Of the total balances of cash and cash equivalents as of March 31, 2025 and December 31, 2024, none of the balances were restricted as to use.

Current wording

At June 30, 2025, our continuing operations cash and cash equivalents were $227 million, a decrease of $116 million from December 31, 2024. Of the total balances of cash and cash equivalents as of June 30, 2025 and December 31, 2024, none of the balances were restricted as to use.

Previous wording

Some of our client agreements require us to hold funds on behalf of clients to pay obligations on their behalf. The levels of Fiduciary assets and liabilities can fluctuate significantly, depending on when we collect the amounts from clients and make payments on their behalf. Such funds are not available to service our debt or for other corporate purposes. There is typically a short period of time between when the Company receives funds and when it pays obligations on behalf of clients. We are entitled to retain investment income earned on fiduciary funds, when investment strategies are deployed, in accordance with industry custom and practice, which has historically been immaterial. In our Condensed Consolidated Balance Sheets, the amount we report for Fiduciary assets and Fiduciary liabilities are equal. Our continuing operations Fiduciary assets included cash of $227 million and $239 million at March 31, 2025 and December 31, 2024, respectively.

Current wording

Some of our client agreements require us to hold funds on behalf of clients to pay obligations on their behalf. The levels of Fiduciary assets and liabilities can fluctuate significantly, depending on when we collect the amounts from clients and make payments on their behalf. Such funds are not available to service our debt or for other corporate purposes. There is typically a short period of time between when the Company receives funds and when it pays obligations on behalf of clients. We are entitled to retain investment income earned on fiduciary funds, when investment strategies are deployed, in accordance with industry custom and practice, which has historically been immaterial. In our Condensed Consolidated Balance Sheets, the amount we report for Fiduciary assets and Fiduciary liabilities are equal. Our continuing operations Fiduciary assets included cash of $215 million and $239 million at June 30, 2025 and December 31, 2024, respectively.

Previous wording

Actual tax benefits realized by Alight may differ from tax benefits calculated under the TRA as a result of the use of certain assumptions in the TRA, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits. While the amount of existing tax basis, the anticipated tax basis adjustments and the actual amount and utilization of tax attributes, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, we expect that the payments that Alight may make under the TRA will be substantial. For the three months ended March 31, 2025, we paid $100 million related to the TRA and no further payments are expected to be made during the remainder of 2025. As of March 31, 2025, we expect to make payments of approximately $188 million in 2026.

Current wording

Actual tax benefits realized by Alight may differ from tax benefits calculated under the TRA as a result of the use of certain assumptions in the TRA, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits. While the amount of existing tax basis, the anticipated tax basis adjustments and the actual amount and utilization of tax attributes, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, we expect that the payments that Alight may make under the TRA will be substantial. For the six months ended June 30, 2025, we paid $100 million related to the TRA and no further payments are expected to be made during the remainder of 2025. As of June 30, 2025, we expect to make payments of approximately $189 million in 2026.

Previous wording

On September 1, 2018, the Company executed an agreement to form a strategic partnership with Wipro, a leading global information technology, consulting and business process services company. Effective April 1, 2025, the Company executed Amendment No. 2 which adjusted the mix of services provided by Wipro. Following the Amendment, the Company’s expected remaining cash outflow for non-cancellable service obligations related to our strategic partnership with Wipro is $152 million, $170 million, $105 million, and $29 million for the remainder of 2025 and the years ended 2026, 2027, and 2028, respectively, and none thereafter, totaling $456 million.

Current wording

On September 1, 2018, the Company executed an agreement to form a strategic partnership with Wipro, a leading global information technology, consulting and business process services company. Effective April 1, 2025, the Company executed Amendment No. 2 which adjusted the mix of services provided by Wipro. Following the Amendment, the Company’s expected remaining cash outflow for non-cancellable service obligations related to our strategic partnership with Wipro is $103 million, $168 million, $104 million, and $28 million for the remainder of 2025 and the years ended 2026, 2027, and 2028, respectively, and none thereafter, totaling $403 million.

Previous wording

There were no material changes from the Critical Accounting Estimates disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024. Please refer to "Critical Accounting Estimates" described in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our Annual Report.

Current wording

There have been no material changes from the Critical Accounting Estimates disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024. Please refer to "Critical Accounting Estimates" described in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our Annual Report.