Alight Inc Delaware

Previous wording

Alight delivers human capital management solutions to many of the world’s largest and most complex companies. This includes the implementation and administration of both employee wellbeing (e.g. health, wealth and leaves benefits). In addition, the Company implements and runs human capital management software platforms on behalf of third-party providers. Alight’s numerous solutions and services are utilized year-round by employees and their family members in support of their overall health, wealth and wellbeing goals. Participants can access their solutions digitally, including through a mobile application on Alight Worklife®, our intuitive, cloud-based employee engagement platform. Through Alight Worklife, the Company believes it is defining the future of employee wellbeing by providing an enterprise level, integrated offering designed to drive better outcomes for organizations and individuals.

Current wording

Alight delivers human capital management solutions to many of the world’s largest and most complex companies. This includes the implementation and administration of employee wellbeing (e.g. health, wealth and leaves benefits). In addition, the Company implements and runs human capital management software platforms on behalf of third-party providers. Alight’s numerous solutions and services are utilized year-round by employees and their family members in support of their overall health, wealth and wellbeing goals. Participants can access their solutions digitally, including through a mobile application on Alight Worklife®, our intuitive, cloud-based employee engagement platform. Through Alight Worklife, the Company believes it is defining the future of employee wellbeing by providing an enterprise level, integrated offering designed to drive better outcomes for organizations and individuals.

Previous wording

On July 12, 2024, Alight, Inc. and Tempo Acquisition LLC, a subsidiary of the Company, completed the previously announced sale (the “Transaction”) of Alight’s Professional Services segment and Alight’s Payroll & HCM Outsourcing business within the Employer Solutions segment (collectively, the “Divested Business”) to Axiom Buyer, LLC, a newly-formed entity and an affiliate of H.I.G. Capital, L.L.C. (“Buyer”), pursuant to the terms of the Stock and Asset Purchase Agreement (the “Purchase Agreement”), dated as of March 20, 2024. The Company has incurred, and expects to continue to incur, higher operating expenses in 2024 as a result of professional fees incurred in conjunction with the transaction.

Current wording

On July 12, 2024, Alight, Inc. and Tempo Acquisition LLC, a subsidiary of the Company, completed the previously announced sale (the “Transaction”) of Alight’s Professional Services segment and Alight’s Payroll & HCM Outsourcing business within the Employer Solutions segment (collectively, the “Divested Business” or “Strada”) to Axiom Buyer, LLC, a newly-formed entity and an affiliate of H.I.G. Capital, L.L.C. (“Buyer”), pursuant to the terms of the Stock and Asset Purchase Agreement (the “Purchase Agreement”), dated as of March 20, 2024. The Company has incurred, and expects to continue to incur, higher operating expenses in 2024 as a result of professional fees incurred in conjunction with the transaction.

Previous wording

(Gain) loss from change in fair value of financial instruments includes the impact of the revaluation to fair value at the end of each reporting period for the Seller Earnouts contingent consideration.

Current wording

(Gain) loss from change in fair value of financial instruments includes the impact of the revaluation to fair value at the end of each reporting period for the Seller Earnouts contingent consideration and Additional Seller Note.

Previous wording

Revenues were $1,097 million for the six months ended June 30, 2024 as compared to$1,147 million for the prior year period. The decrease of $50 million or 4.4% was driven by lower volumes, Net Commercial Activity and project revenue within our Employer Solutions segment and the wind-down of our Hosted business operations. We experienced short term impacts in the first half of 2024 when compared to the prior year period as a result of large deal go-live timing and softness in BPaaS bookings in the first half of 2023. We continue to expect incremental improvement in year-over-year recurring revenue growth for the third and fourth quarters, relative to the growth in the first half of 2024. However, we anticipate continued headwinds with non-recurring project revenue in the second half of 2024 on a year-over-year basis, which we expect to temper total revenue in the second half of the year. We also measure revenue growth as it relates to our cloud-based products and solutions that are central to our Alight Worklife® platform and our next generation product suite,

Current wording

Revenues were $555 million for the three months ended September 30, 2024 as compared to $557 million for the prior year period. The decrease of $2 million or 0.4% was driven by lower volumes and project revenue within our Employer Solutions segment and the wind-down of our Hosted business operations, partially offset by higher Net Commercial Activity. We also measure revenue growth as it relates to our cloud-based products and solutions that are central to our Alight Worklife® platform and our next generation product suite, BPaaS Solutions. For the three months ended September 30, 2024, we recorded BPaaS revenue of $121 million, which represented growth of 18.6% compared to the prior year period.

Previous wording

Cost of services, exclusive of depreciation and amortization, decreased $11 million, or 3.1%, for the three months ended June 30, 2024 as compared to the prior year period. The decrease was primarily driven by lower revenues, lower share-based compensation and productivity initiatives, partially offset by continued investments in key resources.

Current wording

Cost of services, exclusive of depreciation and amortization, decreased $14 million, or 3.8%, for the three months ended September 30, 2024 as compared to the prior year period. The decrease was primarily driven by lower share-based compensation and the benefit from productivity initiatives.

Previous wording

Selling, general and administrative expenses decreased $3 million or 2.0%for the three months ended June 30, 2024 as compared to the prior year period. This was driven by lower compensation expenses primarily related to share-based awards and lower costs incurred from our restructuring program, partially offset by professional fees incurred related to the sale of our Payroll and Professional Services businesses.

Current wording

Selling, general and administrative expenses increased $6 million, or 4.4%, for the three months ended September 30, 2024 as compared to the prior year period. This was driven by professional fees incurred related to the separation of our

Previous wording

Depreciation and intangible amortization expenses decreased$1 million or 1.4% for the three months ended June 30, 2024 as compared to the prior year period.

Current wording

Depreciation and intangible amortization expenses decreased$1 million, or 1.3%, for the three months ended September 30, 2024 as compared to the prior year period.

Previous wording

There was a $52 million gain related to the change in the fair value of financial instruments for the three months ended June 30, 2024 compared to no gain 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 due to changes in the underlying assumptions, including changes in the risk free interest rate, volatility, and the closing stock price for the period. See Note 14 "Financial Instruments" for additional information.

Current wording

There was a $23 million gain related to the change in the fair value of financial instruments for the three months ended September 30, 2024 compared to a $36 million gainfor 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 and the closing stock price for the period and are primarily related to the Seller Earnout and Additional Seller Note. See Note 14 "Financial Instruments" for additional information.

Previous wording

The change in the fair value of the TRA resulted in a gain of $31 million for the three months ended June 30, 2024, an increase of $42 million compared to a loss of $11 million for the prior year period. This revaluation gain is 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 passage of time.

Current wording

The change in the fair value of the TRA resulted in a loss of $27 million for the three months ended September 30, 2024, an increase of $16 million compared to a loss of $11 million for the prior year period. This revaluation loss 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 passage of time.

Previous wording

Interest expense of $33 million remained consistent for the three months ended June 30, 2024 as compared to the prior year period. See Note 8 “Debt” for additional information.

Current wording

Interest expense decreased$15 million or 44.1%for the three months ended September 30, 2024 as compared to the prior year period, primarily driven by the partial repayment of debt. See Note 8 “Debt” for additional information.

Previous wording

Loss before taxes from continuing operations was $2 million for the three months ended June 30, 2024 as compared to loss before taxes from continuing operations of $80 million for the three months ended June 30, 2023. The decrease was primarily due to non-operating fair value remeasurements associated with financial instruments and the TRA.

Current wording

Loss before taxes from continuing operations was $53 million for the three months ended September 30, 2024 as compared to loss before taxes from continuing operations of $54 million for the three months ended September 30, 2023. The decrease in loss was primarily attributable to lower interest expense as a result of the partial debt repayment and other income recorded in conjunction with the TSA, partially offset by the non-operating fair value remeasurements of financial instruments and the TRA.

Previous wording

Income tax expense was $2 million for the three months ended June 30, 2024, as compared to an income tax benefit of $8 million for the prior year period. 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 non-deductible portion of share-based compensation expense, the tax receivable agreement fair value adjustment, and the seller earnout liability fair value adjustment. The effective tax rate of 10% for the three months ended June 30, 2023 was lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible portion of share-based compensation expense, tax receivable agreement fair value adjustment, and the seller earnout liability fair value adjustment. See Note 7 “Income Taxes” for additional information.

Current wording

Income tax benefit was $9 million for the three months ended September 30, 2024, as compared to an income tax benefit of $14 million for the prior year period. The effective tax rate of 17% for the three months ended September 30, 2024 was lower than the 21% U.S. statutory corporate income tax rate primarily due to non-deductible portion of share-based compensation expense, the tax receivable agreement fair value adjustment, and the seller earnout liability fair value adjustment. The effective tax rate of 26% for the three months ended September 30, 2023 was higher than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible portion of share-based compensation expense, TRA fair value adjustment, and the seller earnout liability fair value adjustment. See Note 7 “Income Taxes” for additional information.

Previous wording

Results of Continuing Operations for the Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

Current wording

Results of Continuing Operations for the Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

Previous wording

Revenues were $538 million for the three months ended June 30, 2024 as compared to $561 million for the prior year period. The decrease of $23 million or 4.1% was driven by lower volumes, Net Commercial Activity and project revenue within our Employer Solutions segment and the wind-down of our Hosted business operations. We experienced short term impacts in the first half of 2024 when compared to the prior year period as a result of large deal go-live timing and softness in BPaaS bookings in the first half of 2023. We continue to expect incremental improvement in year-over-year recurring revenue growth for the third and fourth quarters, relative to the growth in the first half of 2024. However, we anticipate continued headwinds with non-recurring project revenue in the second half of 2024 on a year-over-year basis, which we expect to temper total revenue in the second half of the year. We also measure revenue growth as it relates to our cloud-based products and solutions that are central to our Alight Worklife® platform and our next generation product suite, BPaaS Solutions. For the three months ended June 30, 2024, we recorded BPaaS revenue of $115 million, which represented growth of 12.7% compared to the prior year period.

Current wording

Revenues were $1,652 million for the nine months ended September 30, 2024 as compared to $1,704 million for the prior year period. The decrease of $52 million, or 3.1%, was driven by lower volumes, Net Commercial Activity and project revenue within our Employer Solutions segment and the wind-down of our Hosted business operations. We experienced short term impacts in the first half of 2024 when compared to the prior year period as a result of large deal go-live timing and softness in BPaaS bookings in the first half of 2023. We also measure revenue growth as it relates to our cloud-based products and solutions that are central to our Alight Worklife® platform and our next generation product suite, BPaaS Solutions. For the nine months ended September 30, 2024, we recorded BPaaS revenue of $353 million, which represented growth of 17.3% compared to the prior year period.

Previous wording

Recurring revenues decreased by $43 million, or 4.1%, from $1,057 million in the prior year period to $1,014 million and are related to decreases in our Employer Solutions segment, driven by lower volumes and Net Commercial Activity.

Current wording

Recurring revenues decreased by $43 million, or 2.8%, from $1,561 million in the prior year period to $1,518 million and are related to decreases in our Employer Solutions segment, driven by lower volumes and Net Commercial Activity.

Previous wording

Cost of services, exclusive of depreciation and amortization, decreased $37 million, or 5.0%, for the six months ended June 30, 2024 as compared to the prior year period. The decrease was primarily driven by lower revenues, lower stock-based compensation and productivity initiatives, partially offset by continued investments in key resources.

Current wording

Cost of services, exclusive of depreciation and amortization, decreased $51 million, or 4.6%, for the nine months ended September 30, 2024 as compared to the prior year period. The decrease was primarily driven by lower revenues, lower stock-based compensation and productivity initiatives.

Previous wording

Selling, general and administrative expenses decreased $8 million, or 2.7%, for the six months ended June 30, 2024 as compared to the prior year period. The decrease was driven by lower compensation expenses primarily related to share-based awards and lower costs incurred from our restructuring program, partially offset by professional fees related to the sale of our Payroll and Professional Services businesses.

Current wording

Selling, general and administrative expenses decreased $2 million, or 0.5%, for the nine months ended September 30, 2024 as compared to the prior year period. The decrease was driven by lower compensation expenses primarily related to share-based awards and lower costs incurred from our restructuring program, partially offset by professional fees related to the sale and separation of our Payroll and Professional Services businesses.

Previous wording

Depreciation and intangible amortization expenses decreased by$1 million, or 0.7%, when comparing the six months ended June 30, 2024 to the prior year period.

Current wording

Depreciation and intangible amortization expenses decreased by$2 million, or 0.9%, when comparing the nine months ended September 30, 2024 to the prior year period.

Previous wording

There was a $31 million gain related to the change in the fair value of financial instruments for the six months ended June 30, 2024 compared to a loss of $25 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 due to changes in the underlying assumptions, including changes in the risk-free interest rate, volatility, and the closing stock price for the period. See Note 14 "Financial Instruments" for additional information.

Current wording

There was a $54 million gain related to the change in the fair value of financial instruments for the nine months ended September 30, 2024 compared to a gain of $11 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 and the closing stock price for the period and are primarily related to the Seller Earnout and Additional Seller Note. See Note 14 "Financial Instruments" for additional information.

Previous wording

The change in the fair value of the TRA resulted in a loss of $24 million for the six months ended June 30, 2024, an increase of $5 million compared to a loss of $19 million for the prior year period. This revaluation loss is due to conversion of non-controlling interest during the six months ended June 30, 2024, 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 passage of time.

Current wording

The change in the fair value of the TRA resulted in a loss of $51 million for the nine months ended September 30, 2024, an increase of $21 million compared to a loss of $30 million for the prior year period. This revaluation loss was due to conversion of non-controlling interest during the nine months ended September 30, 2024, 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 passage of time.

Previous wording

Interest expense decreased $2 million for the six months ended June 30, 2024 as compared to the prior year period. The decrease was primarily due to increased hedging activity at favorable market rates, the opportunistic repricing of our 2028 term loan and higher interest income. See Note 8 “Debt” for additional information.

Current wording

Interest expense decreased $17 million for the nine months ended September 30, 2024 as compared to the prior year period. The decrease was primarily due to the partial repayment of debt andincreased hedging activity at favorable market rates, the opportunistic repricing of our 2028 term loan and higher interest income. See Note 8 “Debt” for additional information.

Previous wording

Loss before taxes from continuing operations was $150 million for the six months ended June 30, 2024 as compared to loss before taxes from continuing operations of $187 million for the six months ended June 30, 2023. The decrease was primarily due to non-operating fair value remeasurements associated with financial instruments and the TRA.

Current wording

Loss before taxes from continuing operations was $203 million for the nine months ended September 30, 2024 as compared to loss before taxes from continuing operations of $241 million for the nine months ended September 30, 2023. The decrease in loss was primarily attributable to lower interest expense as a result of the partial debt repayment and other income recorded in conjunction with the TSA, partially offset by the non-operating fair value remeasurements of financial instruments and the TRA.

Previous wording

Income tax benefit was $25 million for the six months ended June 30, 2024, as compared to an income tax benefit of $31 million for the prior year period. The effective tax rate of 17% for the six 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 portion of share-based compensation expense, the tax receivable agreement fair value adjustment, and the seller earnout liability fair value adjustment. The effective tax rate of 17% for the six months ended June 30, 2023 was lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible portion of share-based compensation expense, tax receivable agreement fair value adjustment, and the seller earnout liability fair value adjustment. See Note 7 “Income Taxes” for additional information.

Current wording

Income tax benefit was $34 million for the nine months ended September 30, 2024, as compared to an income tax benefit of $45 million for the prior year period. The effective tax rate of 17% for the nine months ended September 30, 2024 was lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible portion of share-based compensation expense, the tax receivable agreement fair value adjustment, and the seller earnout liability fair value adjustment. The effective tax rate of 19% for the nine months ended September 30, 2023 was lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible portion of share-based compensation expense, TRA fair value adjustment, and the seller earnout liability fair value adjustment. See Note 7 “Income Taxes” for additional information.

Previous wording

(7)Excludes approximately 14.1 million and 30.2 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, 2024 and 2023, respectively.

Current wording

(7)Excludes approximately 10.2 million and 28.5 million performance-based units, which represents the gross number of shares expected to vest based on achievement of the respective performance conditions as of September 30, 2024 and 2023, respectively.

Previous wording

Employer Solutions revenue was $1,097 million for the six months ended June 30, 2024 as compared to $1,128 million for the prior year period. The overall decrease of $31 million was primarily driven by decreases in recurring revenues from lower volumes, Net Commercial Activity and project revenue.

Current wording

Employer Solutions revenue was $555 million for the three months ended September 30, 2024 as compared to $550 million for the prior year period. The overall increase of $5 million was primarily driven by increases in recurring revenues from higher volumes and Net Commercial Activity, partially offset by lower project revenue.

Previous wording

Employer Solutions gross profit was $167 million for the three months ended June 30, 2024 compared to $189 million for the prior year period. The decrease of $22 million was driven by a decrease in revenue and lower expenses related to productivity initiatives, partially offset by increases in costs associated with funding growth of current and future revenues. Employer Solutions adjusted gross profit for the three months ended June 30, 2024 decreased $17 million to $196 million from $213 million in the prior year period primarily driven by a decrease in revenue and lower expenses related to productivity initiatives, partially offset by increases in costs associated with funding growth of current and future revenues.

Current wording

Employer Solutions gross profit was $174 million for the three months ended September 30, 2024 compared to $166 million for the prior year period. The increase of $8 million was driven by an increase in revenue and lower expenses related to productivity initiatives, partially offset by increases in costs associated with funding growth of current and future revenues. Employer Solutions adjusted gross profit for the three months ended September 30, 2024 increased $8 million to $200 million from $192 million in the prior year period, primarily driven by an increase in revenue and lower expenses related to productivity initiatives, partially offset by increases in costs associated with funding growth of current and future revenues.

Previous wording

Employer Solutions Segment Results of Operations for the Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

Current wording

Employer Solutions Segment Results of Operations for the Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

Previous wording

Employer Solutions revenue was $538 million for the three months ended June 30, 2024 as compared to $552 million for the prior year period. The overall decrease of $14 million was primarily driven by decreases in recurring revenues from lower volumes, Net Commercial Activity and project revenue.

Current wording

Employer Solutions revenue was $1,652 million for the nine months ended September 30, 2024 as compared to $1,678 million for the prior year period. The overall decrease of $26 million was primarily driven by decreases in recurring revenues from lower volumes, Net Commercial Activity and project revenue.

Previous wording

Employer Solutions gross profit was $349 million for the six months ended June 30, 2024 compared to $376 million for the prior year period. The decrease of $27 million was driven by a decrease in revenue and lower expenses related to productivity initiatives, partially offset by increases in costs associated with funding growth of current and future revenues. Employer Solutions adjusted gross profit for the six months ended June 30, 2024 decreased $19 million to $404 million from $423 million in the prior year period primarily driven by a decrease in revenue and lower expenses related to productivity initiatives, partially offset by increases in costs associated with funding growth of current and future revenues.

Current wording

Employer Solutions gross profit was $523 million for the nine months ended September 30, 2024 compared to $542 million for the prior year period. The decrease of $19 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 the nine months ended September 30, 2024 decreased $11 million to $604 million from $615 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.

Previous wording

We believe that our available cash and cash equivalents, cash flows from operations and availability under our revolving credit facility will be sufficient to meet our liquidity needs, including principal and interest payments on debt obligations, capital expenditures, payments on our Tax Receivable Agreement and anticipated working capital requirements for the foreseeable future. We believe our liquidity position at June 30, 2024 remains strong. We will continue to closely monitor and proactively manage our liquidity position in light of changing economic conditions and the volatility of interest rates. In July 2024, we paid down $440 million of the Sixth Incremental Term Loans balance and the remaining principal balance of $300 million Secured Senior Notes with proceeds from the sale of our Payroll and Professional Services business that closed on July 12, 2024. We expect to use the remainder of after-tax cash proceeds to return capital and general corporate purposes, including reinvestment into growth opportunities.

Current wording

We believe that our available cash and cash equivalents, cash flows from operations and availability under our revolving credit facility will be sufficient to meet our liquidity needs, including principal and interest payments on debt obligations, capital expenditures, payments on our TRA and anticipated working capital requirements for the foreseeable future. We believe our liquidity position at September 30, 2024 remains strong. We will continue to closely monitor and proactively manage our liquidity position in consideration of the evolving economic outlook and changing interest rate environment. In July 2024, we paid down $440 million of the Sixth Incremental Term Loans balance and we fully repaid the principal balance of $300 million Secured Senior Notes with proceeds from the sale of our Payroll and Professional Services business that closed on July 12, 2024. We expect to use the remainder of after-tax cash proceeds to return capital and general corporate purposes, including reinvestment into growth opportunities.

Previous wording

In August 2022, we established a repurchase program allowing for up to $100 million in authorized share repurchases. In March 2024, the Company’s Board of Directors authorized the repurchase of up to an additional $200 million of the Company’s Class A common stock. During the three and six months ended June 30, 2024, there were 10,134,600 Class A Common Stock shares repurchased under the Program for $80 million inclusive of shares repurchased under the ASR discussed below. Accordingly, as of June 30, 2024, the total amount authorized for repurchase remaining was $168 million.

Current wording

In August 2022, we established a repurchase program allowing for authorized share repurchases. In March 2024, the Company’s Board of Directors authorized the repurchase of up to an additional $200 million of the Company’s Class A common stock. As of September 30, 2024, the total remaining amount authorized for repurchase was $93 million.

Previous wording

On June 18, 2024, the Company announced that it entered into an accelerated share repurchase agreement (the "ASR") with Barclays Bank PLC ("the ASR counterparty") to repurchase $75 million of Alight's Class A Common Stock, as part of the Company's existing share repurchase program. On July 16, 2024, the Company made an initial payment of $75 million to the ASR counterparty and received an initial delivery of shares equal in value to 80% of the prepayment amount of $75 million, based on Alight’s closing share price on July 15, 2024. The final number of shares to be repurchased will be based on the volume-weighted average price of Alight's common stock during the term of the transaction, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR. The final settlement of the transaction under the ASR is expected to occur during the third quarter of 2024.

Current wording

On June 18, 2024, the Company announced that it entered into an accelerated share repurchase agreement (the "ASR") with Barclays Bank PLC (the "ASR counterparty") to repurchase $75 million of Alight's Class A Common Stock, as part of the Company's existing share repurchase program. On July 16, 2024, the Company made an initial payment of $75 million to the ASR counterparty and received an initial delivery of shares equal in value to 80% of the prepayment amount of $75 million, based on Alight’s closing share price as of the effective date of July 15, 2024. The final number of shares repurchased was based on the volume-weighted average price of Alight's common stock during the term of the transaction, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR. The ASR was settled on September 23, 2024, resulting in an additional delivery of 2,400,041 shares of Alight's Class A Common Stock.

Previous wording

Net cash provided by operating activities was $93 million for the six months ended June 30, 2024 compared to $113 million for the six months ended June 30, 2023. The decrease in cash provided by operating activities was primarily due to increased overhead expenses related to the sale of the Payroll and Professional Services business.

Current wording

Net cash provided by operating activities was $75 million for the nine months ended September 30, 2024 compared to $226 million for the nine months ended September 30, 2023. The decrease in cash provided by operating activities was primarily due to increased overhead expenses related to the sale of the Payroll and Professional Services business.

Previous wording

Cash used for investing activities decreased $11 million to $67 million for the six months ended June 30, 2024 from $78 million for the prior year period, driven by less capital expenditures.

Current wording

Cash provided by investing activities increased $991 million to $877 million for the nine months ended September 30, 2024 from cash used in investing activities of $114 million for the prior year period, driven by net proceeds from the sale of Strada, partially offset by less capital expenditures.

Previous wording

Cash used for financing activities for the six months ended June 30, 2024 was $244 million as compared to cash used for financing activities of $74 million in the prior year. The primary drivers of cash used for financing activities were $80 million of share repurchases, $62 million of TRA payments, $58 million of shares/units withheld in lieu of taxes, $14 million of finance lease payments, $13 million of debt repayments, and a $17 million net decrease in fiduciary liabilities. The decrease in fiduciary cash is primarily due to timing of client funding and subsequent disbursement of payments.

Current wording

Cash used in financing activities for the nine months ended September 30, 2024 was $1,028 million as compared to cash used in financing activities of $135 million in the prior year. The primary drivers of cash used for financing activities were $759 million of debt repayments, $155 million of share repurchases, $62 million of TRA payments, $58 million of shares/units withheld in lieu of taxes, and $22 million of finance lease payments, partially offset by a $28 million net increase in fiduciary liabilities. The increase in fiduciary cash is primarily due to timing of client funding and subsequent disbursement of payments.

Previous wording

At June 30, 2024, our continuing operations cash and cash equivalents were $183 million, a decrease of $141 million from December 31, 2023. Of the total balances of cash and cash equivalents as of June 30, 2024 and December 31, 2023, none of the balances were restricted as to use.

Current wording

At September 30, 2024, our continuing operations cash and cash equivalents were $300 million, a decrease of $24 million from December 31, 2023. Of the total balances of cash and cash equivalents as of September 30, 2024 and December 31, 2023, 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 $217 million and $234 million at June 30, 2024 and December 31, 2023, 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 $262 million and $234 million at September 30, 2024 and December 31, 2023, 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 six months ended June 30, 2024, we paid $62 million related to the TRA and no further payments are expected to be made during the remainder of 2024. As of June 30, 2024, we expect to make payments of approximately $89 million in 2025 and in the range of $190 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 nine months ended September 30, 2024, we paid $62 million related to the TRA and no further payments are expected to be made during the remainder of 2024. As of September 30, 2024, we expect to make payments of approximately $119 million in 2025 and in the range of $155 million in 2026.

Previous wording

In March 2024, the Company entered into an agreement with a third-party provider in the ordinary course of business for the use of certain cloud services. Under this agreement, the Company is committed to purchase services totaling $250 million over a 5-year term. There have been no other material changes to our obligations and commitments during the six months ended June 30, 2024.

Current wording

In March 2024, the Company entered into an agreement with a third-party provider in the ordinary course of business for the use of certain cloud services. Under this agreement, the Company is committed to purchase services totaling $250 million over a 5-year term. There have been no other material changes to our obligations and commitments during thenine months ended September 30, 2024.