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Alight Inc (ALIT)
:ALIT
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Alight
(NYSE:ALIT)
50Neutral
Positive Factors
Financial Performance
ALIT's 4Q results were solid, with revenue coming in above expectations.
Growth Opportunities
Double-digit ARR bookings growth expected in 2025.
Shareholder Value
ALIT announced an increase to its buyback program and multiple leadership changes at the Board level, which are expected to further maximize shareholder value.
Negative Factors
Administrative Changes
The upcoming change in administration could have a modest negative impact to ALIT depending on the magnitude of cuts that the 'Department of Government Efficiency' is able to push through.
Revenue Headwinds
Some renewal losses in 2023 and what is a sector-wide lull in project based revenue are headwinds to the top line.
Volume Growth Limitation
Employment levels are pretty full which could limit volume growth to some extent in 2025.
Alight (ALIT) vs. S&P 500 (SPY)
Market Cap
$3.37B
Dividend Yield0.65%
Average Volume (3M)8.23M
Price to Earnings (P/E)―
Beta (1Y)1.19
Revenue Growth-31.61%
EPS Growth51.16%
CountryUS
Employees9,500
SectorTechnology
Sector Strength46
IndustrySoftware
Share Statistics
EPS (TTM)-0.27
Shares Outstanding532,668,800
10 Day Avg. Volume8,725,478
30 Day Avg. Volume8,231,299
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.41
Price to Cash Flow (P/CF)7.00
P/FCF Ratio6.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$10.25Price Target Upside65.06% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Alight Business Overview & Revenue Model
Company DescriptionAlight (ALIT) is a leading provider of integrated digital human capital and business solutions. Headquartered in the United States, Alight operates across various sectors, offering cloud-based solutions and services in human resources, payroll, benefits administration, and financial management. The company leverages its technology platform and expertise to help organizations improve their human capital management and employee engagement.
How the Company Makes MoneyAlight makes money primarily through subscription and service fees charged for its cloud-based human capital management solutions. The company's revenue streams include fees for technology platforms, consulting services, and outsourcing solutions. Alight partners with organizations to manage their HR functions, providing tools for benefits administration, payroll processing, and talent management. Significant factors contributing to its earnings include long-term contracts with large enterprises, cross-selling opportunities across its suite of services, and its ability to attract and retain a diverse client base across different industries.
Alight Financial Statement Overview
Summary
Alight faces challenges with profitability and revenue consistency, as indicated by its income statement. The balance sheet shows a strong equity position, but cash flow issues may constrain growth. Overall, the company must address operational inefficiencies to improve financial health.Income Statement
Alight's revenue has shown inconsistencies, with a significant drop in the latest year. The gross profit margin has been relatively stable, but the company has consistently reported net losses. Negative EBIT and EBITDA margins in recent years highlight operational challenges.45
Neutral
Balance Sheet
Alight has a strong equity position, with stockholders' equity exceeding total liabilities, indicating a healthy equity ratio. However, the debt-to-equity ratio improved significantly in the latest year due to reduced total debt, suggesting better leverage management.60
Neutral
Cash Flow
Operating cash flow has been positive but declining. Free cash flow has decreased notably, impacting growth potential. The free cash flow to net income ratio indicates reliance on cash flow rather than profitability to sustain operations.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.33B | 3.41B | 3.13B | 2.92B | 2.73B | Gross Profit |
| 794.00M | 1.14B | 996.00M | 693.00M | 834.00M | EBIT |
| -90.00M | -101.00M | 43.00M | 194.00M | 147.00M | EBITDA |
| 34.00M | 186.00M | 381.00M | 481.00M | 1.97B | Net Income Common Stockholders |
| -157.00M | -345.00M | -72.00M | -60.00M | -103.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 343.00M | 358.00M | 250.00M | 372.00M | 506.00M | Total Assets |
| 8.19B | 10.78B | 11.23B | 10.99B | 6.96B | Total Debt |
| 2.16B | 2.92B | 2.82B | 2.87B | 4.36B | Net Debt |
| 1.81B | 2.56B | 2.57B | 2.50B | 3.85B | Total Liabilities |
| 3.88B | 6.04B | 6.15B | 6.06B | 6.27B | Stockholders Equity |
| 4.31B | 4.46B | 4.44B | 4.14B | 683.00M |
| Cash Flow | Free Cash Flow | |||
| 131.00M | 226.00M | 138.00M | 1.00M | 143.00M | Operating Cash Flow |
| 252.00M | 386.00M | 286.00M | 115.00M | 233.00M | Investing Cash Flow |
| 836.00M | -159.00M | -235.00M | -1.91B | -142.00M | Financing Cash Flow |
| -1.07B | -231.00M | 54.00M | 2.34B | 463.00M |
Alight Technical Analysis
Negative
6.21
Price Trends
6.56
Negative
6.90
Negative
7.02
Negative
Market Momentum
-0.12
Negative
45.64
Neutral
63.23
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALIT, the sentiment is Negative. The current price of 6.21 is below the 20-day moving average (MA) of 6.24, below the 50-day MA of 6.56, and below the 200-day MA of 7.02, indicating a bearish trend. The MACD of -0.12 indicates Negative momentum. The RSI at 45.64 is Neutral, neither overbought nor oversold. The STOCH value of 63.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ALIT.
Alight Risk Analysis
Alight disclosed 43 risk factors in its most recent earnings report. Alight reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Alight Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $12.93B | 24.98 | 34.88% | 0.67% | 11.19% | 51.03% | |
77 Outperform | $124.27B | 31.55 | 83.72% | 1.90% | 7.09% | 11.51% | |
75 Outperform | $10.68B | 49.07 | 20.49% | ― | 15.96% | 31.76% | |
73 Outperform | $24.46B | 16.22 | 6.94% | 1.00% | 4.68% | 63.39% | |
58 Neutral | $21.67B | 10.60 | -18.43% | 2.42% | 4.66% | -24.45% | |
50 Neutral | $3.37B | ― | -3.15% | 0.65% | -31.61% | 51.16% |
* Technology Sector Average
Performance Comparison
ALIT
Alight
6.21
-3.33
-34.91%
ADP
Automatic Data Processing
305.43
65.28
27.18%
GPN
Global Payments
99.47
-29.41
-22.82%
PAYC
Paycom
225.82
29.09
14.79%
PCTY
Paylocity
191.13
23.43
13.97%
Alight Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -6.48% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive outlook with several strategic achievements, including strong ARR bookings growth, improved retention rates, and successful cloud migration. However, challenges remain with a decline in nonrecurring project revenues and temporary impacts from historical losses.Highlights
ARR Bookings Growth
The team delivered double-digit ARR bookings growth in the second half of 2024, ending the year up 18%. This reflects strong demand for mission-critical solutions and a sales pipeline increased by 54% from the prior year.
Improved Retention Rates
The company reported an 8-point improvement in retention rates during the 2024 renewal cycle, returning to near historical levels and indicating better client satisfaction and service stability.
Cloud Migration Completion
Alight completed its cloud migration, leading to operational improvements and allowing the company to benefit from $55 million in savings, contributing to margin expansion.
Share Repurchase Program
A $200 million increase in the share repurchase authorization was announced, reflecting a focus on returning capital to shareholders.
Recurring Revenue Growth
Recurring revenue comprised 91% of total revenue in Q4, showing a return to growth and stability in operations.
Lowlights
Nonrecurring Project Revenue Decline
Nonrecurring project revenues were down $13 million or 17%, with no improvement in client demand for these projects.
Historical Loss Impacts
The 2025 outlook includes a lag effect on revenue from historical losses in 2023, temporarily impacting overall performance.
First Half Revenue Decline
Total revenue is expected to decline by 3% to 4% in Q1 and 1.5% to 3% in Q2, primarily due to historical losses and a cautious view on projects.
Company Guidance
During Alight's Fourth Quarter 2024 Earnings Conference Call, the company provided guidance for 2025 that reflects anticipated year-over-year improvements across several key financial metrics. They expect recurring revenue to stabilize, profit margins to expand by 150 to 180 basis points, and free cash flow to grow by 13% to 29%, driven by cloud migration savings and productivity initiatives. The company forecasts annual revenue between $2.32 billion and $2.39 billion, with a revenue growth range of negative 1.5% to positive 1.5%. Alight anticipates double-digit growth in annual recurring revenue (ARR) bookings from $130 million to $145 million, supported by a strong sales pipeline that increased by 54% over the prior year. The retention rate improved by 8 percentage points in the most recent renewal cycle, approaching historical levels, and the company expects this to favorably impact revenue growth in the second half of 2025. Additionally, Alight announced a $200 million increase to its share repurchase authorization, indicating a focus on returning capital to shareholders.Alight Corporate Events
Business Operations and StrategyFinancial Disclosures
Alight Unveils Growth Strategy at Investor Day
Positive
Mar 20, 2025
On March 20, 2025, Alight, Inc. hosted an investor day at its headquarters, unveiling mid-term financial targets and presenting its strategy for long-term growth. The event included panels with clients and third-party evaluators discussing market trends and client needs. Alight aims for a total annual revenue growth rate of 4-6% and an adjusted EBITDA margin of approximately 30% by 2027, with a cumulative free cash flow of around $1 billion between 2025 and 2027. This strategic direction underscores Alight’s positioning within the benefits industry and its commitment to leveraging technology for innovation and shareholder value.
Executive/Board ChangesBusiness Operations and Strategy
Alight Announces New Board Leadership Changes
Neutral
Feb 20, 2025
On February 20, 2025, Alight, Inc. announced significant changes to its Board of Directors, effective March 1, 2025. Russell P. Fradin was appointed as the new Chairman of the Board, succeeding William P. Foley, II, who will remain a board member. The board also welcomed new directors Robert Schriesheim, Robert Lopes, Jr., and Mike Hayes, while Erika Meinhardt, Regina Paolillo, and Dan Henson stepped down. These changes are part of Alight’s strategy to enhance leadership and governance, positioning the company for future success and value creation, as noted in their cooperation with Starboard Value, LP.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.