Q1 2024 Alight Inc Earnings Call

May 8, 2024

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Ivo: Good morning and thank you for holding. My name is Ivo, and I will be your conference operator today. Welcome to Alight's First Quarter 2024 Earnings Conference Call. At this time, all parties are in a listen-only mode. As a reminder, today's call is being recorded, and a replay of the call will be available in the Investor Relations section of the company's website. Now, I would like to turn it over to Jeremy Cohen, Head of Investor Relations at Alight, to introduce today's speakers.

Speaker Change: Good morning, and thank you for holding my name is evil and I will be your conference operator today welcome to I like first quarter 'twenty 'twenty four earnings conference call. At this time all parties are in a listen only mode. As a reminder, today's call is being recorded and a replay of the call will be available on the <unk>.

Speaker Change: Mr Relations section of the company's website and now I would like to turn it over to Jeremy go ahead head of Investor Relations at I like to introduce today's speakers.

Jeremy Cohen: Good morning, and thank you for joining us. Earlier today, the company issued a press release with its first quarter 2024 results. A copy of the release can be found in the investor relations section of the company's website at investor.alight.com. Before we get started, please note that some of the company's discussion today will include forward-looking statements. Forward-looking statements are not guarantees of future performance. actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors.

Jeremy Cohen: Good morning, and thank you for joining us. Earlier today, the company issued a press release with its first quarter 2024 results. A copy of the release can be found in the investor relations section of the company's website at investor.alight.com. Before we get started, please note that some of the company's discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance, and actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors.

Jeremy: Good morning, and thank you for joining US earlier today the company issued a press release with first quarter 2024 results a copy of the release can be found in the Investor Relations section of the company's web site at Investor <unk> Dot com.

Jeremy Cohen: These factors are discussed in more detail in the company's filings with the SEC, including the company's most recent Form 10-K, and such factors may be updated from time to time in the company's periodic filings. However, the company does not undertake any obligation to update forward-looking statements. Also, during this conference call, the company will be presenting certain non-GAAP financial measures. Reconciliations of the company's historical non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's earnings press release.

Jeremy: Before we get started please note that some of the company's discussion today will include forward looking statements such forward looking statements are not guarantees of future performance.

Jeremy: Actual results may differ materially from those expressed or implied in the forward looking statements due to a variety of factors. These factors are discussed in more detail in the company's filings with the SEC, including the company's most recent Form 10-K as such factors may be updated from time to time in the company's periodic filings. The company does not undertake any obligation to update.

Jeremy: Forward looking statements.

Jeremy: Also during this conference call the company will be presenting certain non-GAAP financial measures reconciliations of the company's historical non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's earnings press release.

Jeremy Cohen: On the call for management today are Stephan Scholl, CEO, Jeremy Heaton, CFO, Greg Goff, President, and Katie Rooney, who, as announced earlier today, will be stepping down from her CFO position and focusing on the COO role supporting the payroll and professional services divestiture until closure. After the prepared remarks, we will open the call up for questions. I'll now hand the call over to Stephan.

Jeremy Heaton: On the call from management today are substantial CEO, Jeremy heating CFO, Greg Goff, President and Katie Rooney, who as announced earlier today will be stepping down from her CFO position and focusing on the C. O O role supporting the payroll and professional services divestiture until closure.

Stfan: After the prepared remarks, we will open the call up for questions I'll now hand, the call over to stfan, Thanks, Jeremy and good morning.

Stephan D. Scholl: Thanks, Jeremy, and good morning. It's an exciting time for Alight, with our first quarter highlighted by the announced sale of our professional services segment and HCM payable outsourcing businesses, which remains on track to close mid-year 2024. Expelling this transaction is a key priority for the long-term trajectory of Alight, and we have seen tremendous collaboration across both organizations as we prepare our clients and over 8,000 employees for this transformational deal. Based on the great progress we have made to date and looking ahead to the closing of the transaction, we are reaffirming our midterm outlook on the remaining business with revenue growth of 4 to 6 percent, BPAT's revenue growth of at least 15 percent, and an adjusted EBITDA margin of 28 percent, which would mark a total of 600 basis points of margin improvement versus 2023.

Jeremy: It's an exciting time for light with our first quarter highlighted by the announced sale of our professional services segment and HCM payroll outsourcing businesses, which remains on track to close midyear 2024.

Stfan: Executing this transaction is a key priority for the long term trajectory of our light and we have seen tremendous collaboration across both organizations as we prepare our clients and over 8000 employees for this transformational deal.

Stfan: Based on the Great progress, we have made to date and looking ahead to the closing of the transaction. We are reaffirming our mid term outlook on the remaining business with revenue growth of 4% to 6% <unk> revenue growth of at least 15% and adjusted EBITDA margin of 28%, which would mark a total of 600 basis points of margin improvement versus 2023.

Stephan D. Scholl: This will be complemented by a stronger balance sheet, including net leverage below three times, enhanced cash flow generation, and an investor-friendly capital allocation framework supported by $248 million of authorized funding for share buyback. With this attractive financial profile, we will emerge as a more simplified, focused company, steadfast in its mission to keep people healthy and financially secure. Turning to the quarter and then our view of 2024.

Stfan: This will be complemented by a stronger balance sheet, including net leverage below three times enhanced cash flow generation and an investor friendly capital allocation framework supported by $248 million authorized funding for share buybacks.

Stfan: With this attractive financial profile, we will emerge as a more simplified focused company steadfast in its mission to keep people healthy and financially secure.

Stephan D. Scholl: We started the year with total company revenues excluding hosted nearly flat, as lower non-recurring project revenue offsets strong growth of 22% from our BPAS solution. BFAS revenues represented more than a quarter of total company revenues. Profitability remains stable, a testament to our transformational efforts that have delivered productivity savings. And building off a strong 2023, our operating cash flow conversion was 67% in Q1, up a full 20 points from last year. Given our typical seasonality, we don't anticipate continuing at this rate all year.

Stfan: Turning to the quarter and then our view of 2024, we started the year with total company revenues, excluding hosted nearly flat.

Stfan: As lower nonrecurring project revenue offset strong growth of 22% from our <unk> solutions.

Stfan: <unk> revenues represented more than a quarter of total company revenue.

Stfan: Profitability remained stable a testament to our transformational efforts that have delivered productivity savings.

Stfan: And building off a strong 2023, our operating cash flow conversion was 67% in Q1 up a full 20 points from last year.

Stfan: Given our typical seasonality, we don't anticipate continuing at this rate all year. However by completing the restructuring program and continued execution on working capital initiatives, we are well positioned to drive stronger cash flow generation.

Stephan D. Scholl: However, by completing the restructuring program and continued execution on working capital initiatives, we are well-positioned to drive stronger cash flow generation. For the balance of the year, we expect 2024 to be a tale of two halves, with the first half adversely impacted by the timing of large-deal go-lives, lower non-recurring project revenue across both segments, and the exit from the hosted business. The second half will benefit from an increase in New Deal goal lies, for which we have high visibility today as we continue to build the book of revenue under contract, which at quarter end was up to $3.1 billion for 2024 for the total company.

Stephan D. Scholl: However, by completing the restructuring program and continued execution on working capital initiatives, we are well positioned to drive stronger cash flow generation. For the balance of the year, we expect 2024 to be a tale of two halves, with the first half adversely impacted by the timing of large deal goal lives, lower non-recurring project revenue across both segments, and the exit from the hosted business. The second half will benefit from an increase in New Deal goal lies, for which we have high visibility today as we continue to build the book of revenue under contract, which at quarter end was up to $3.1 billion for 2024 for the total company.

Stfan: For the balance of the year, we expect 2024 to be a tale of two halves with the first half adversely impacted by the timing of large deal go lives lower nonrecurring project revenue across both segments and the exit from the hosted business.

Stfan: The second half will benefit from an increase in new deal go lives for which we have high visibility today as we continue to build the book of revenue under contract, which at quarter end was up to $3 1 billion for 2024 for the total company.

Stephan D. Scholl: Coupled with sales momentum and operational execution, our growth will ramp this year and quickly return to our midterm revenue growth target before year-end. Our confidence to sustain that growth post-close is grounded in the recent history of the benefits business, which since 2020 includes a 10% total revenue CAGR with BPAS as a driver at over 50% growth and has resulted in a $700 million increase to revenue under contract. Profitability will also improve through multiple levers, including an immediate uplift of margins upon closing the transaction.

Stfan: Coupled with sales momentum and operational execution, our growth will ramp this year and quickly return to our mid term revenue growth target before year end.

Stfan: Our confidence to sustain that growth post close is grounded in the recent history of the benefits business, which since 2020 includes a 10% total revenue CAGR with be passed as a driver at over 50% growth and has resulted in a 700 million increase to revenue under contract.

Stfan: <unk>.

Stfan: Profitability will also improve through multiple levers, including an immediate uplift to margins upon closing the transaction at the same time, we are on track to complete the backend cloud migration in the second half, which should be a key inflection point for profitability with.

Stephan D. Scholl: At the same time, we are on track to complete the back-end cloud migration in the second half, which should be a key inflection point for profitability. With the data center exit, we continue to expect $100 million of annual run rate savings for the total company, with Alight retaining approximately $75 million of the annualized benefit.

Stfan: With the data center exit we continue to expect $100 million of annual run rate savings for the total company.

Stfan: The light retaining approximately $75 million of the annualized benefit.

Stephan D. Scholl: Commercially, we continue to close meaningful BPATH deals, and our results demonstrate that our strategy is working. This quarter included large expansions with existing clients, where Alight continues to bring a differentiated set of solutions integrated through the Alight Work Life platform. With one of the world's leading diversified manufacturing companies, our team demonstrated the value and outcomes with a real-life story of healthcare navigation. During the sales process, an executive asked if we could help one of their employees and their family who was facing a healthcare crisis.

Stephan D. Scholl: Commercially, we continue to close meaningful BPAS deals, and our results demonstrate that our strategy is working. This quarter included large expansions with existing clients, where Alight continues to bring a differentiated set of solutions integrated through the Alight Work Life platform. With one of the world's leading diversified manufacturing companies, our team demonstrated the value and outcomes with a real-life story of healthcare navigation. During the sales process, an executive asked if we could help one of their employees and their family who was facing a healthcare crisis.

Stfan: Commercially we continue to close meaningful be past deals and our results demonstrate that our strategy is working this quarter included large expansions with existing clients, where a light continues to bring a differentiated set of solutions integrated through the light work like platform.

Stephan D. Scholl: Our team quickly mobilized by leveraging both the technology and our medical experts to bring the right support and care to this family. And through this example, the company immediately saw the value and impact the solution delivered while our value engineering team quantified the definitive ROI for rolling out the solution across the company. In another example, our team closed a $50 million public sector contract where we will provide the technology, administration, and domain expertise across 60,000 active members. We won because our decades of experience in this space, working with the largest organizations, have solidified Alight as a tested and trusted partner. These wins are a microcosm of what we're seeing broadly.

Stfan: With one of the world's leading diversified manufacturing companies our team demonstrated the value and outcomes with a real life story of healthcare navigation during.

Stfan: During the sales process and executive asked if we could help one of their employees and family who was facing a health care crisis. Our team quickly mobilized by leveraging both the technology and our medical experts to bring the right support and care to this family.

Stfan: And through this example, the company immediately saw the value and impact the solution delivers while our value engineering team quantified the definitive ROI for rolling out the solution across the company and another example of our team closed a $50 million public sector contract, where we will provide the technology administration.

Stfan: And domain expertise across 60000 active members, we won because our decades of experience in this space working with the largest organizations have solidified a light as a tested and trusted partner.

Stfan: These wins are a microcosm of what we're seeing broadly large enterprises are continuing to invest in their people and solutions that drive engagement better outcomes and cost savings for the employer.

Stephan D. Scholl: Large enterprises are continuing to invest in their people and solutions that drive engagement, better outcomes, and cost savings for the employer. While competitive, we believe the market continues to validate that the winning formula is grounded in a platform-based approach that simplifies the end-user experience. And so, as we continue building and closing deals in our pipeline, we're also simultaneously advancing our technology roadmap and building upon our platform advantages. Ongoing product innovation is the core of the platform strategy, and we recently announced the latest release of Alight Work-Life.

Stfan: Competitive we believe the market continues to validate that the winning formula is grounded in a platform based approach that simplifies the end user experience and so as we continue building and closing deals in our pipeline. We're also simultaneously advancing our technology roadmap and building upon our platform advantages.

Stfan: Ongoing product innovation is core to the platform strategy and we recently announced the latest release of a light work life. This biannual release focused on three key areas strengthening our AI driven support.

Stephan D. Scholl: This biannual release focused on three key areas, strengthening our AI-driven support, deepening the integration of leads and health navigation, and delivering tools that empower greater financial well-being. Taken together, these updates will enhance the employee experience with greater self-service and personalization features and deliver improved employer ROI with greater functionality and improved cost savings.

Stfan: The integration of leaves in health navigation and.

Stfan: And delivering tools that empower greater financial well being taken together. These updates will enhance the employee experience with greater self service and personalization features and deliver improved employer ROI with greater functionality and improved cost savings.

Stephan D. Scholl: I'm also excited to discuss the leadership announcement this morning, which is the result of thoughtful, long-term planning publicly demonstrated by Katie's promotion into the COOC last summer. By extension of her promotion, Jeremy partnered closely with Katie for natural succession into the CFO role, with the global finance team reporting into him for the past nine months. I am thrilled to have Jeremy officially in the CFO role as he leverages his in-depth knowledge of our business, finance function, and investor base to advance our strategic initiatives.

Stfan: I'm also excited to discuss the leadership announcement. This morning, which is the result of thoughtful long term planning publicly demonstrated by cadence promotion into the seat last summer bye.

Stfan: By extension number of promotion Jeremy partnered closely with Katy for natural succession into the CFO role with the global finance team reporting into him for the past nine months.

Stfan: Im thrilled to have Jeremy officially in the CFO role as he leverages his in depth knowledge of our business finance function and investor base to advance our strategic initiatives.

Stephan D. Scholl: And with this transaction as a turning point, after 15 years with Aon and Alight, Katie will now focus on the COO role, supporting the closure of payroll and professional services divestiture, after which she will step down. Katie, as many of you know, has been instrumental to the foundation of Alight and our public listening. Personally, she has been a tremendous partner to me and a visionary for what Alight has become.

Stfan: And with this transaction as a turning point after 15 years with E on and delight Kt will now focus on the CEO role supporting the closure of payroll and professional services divestiture after which she will step down.

Stfan: As many of you know has been instrumental to the foundation of our light and our public listing personally she has been a tremendous partner to me and a visionary for what a light has become.

Stephan D. Scholl: Though we will miss her, she has built an outstanding team that we are confident will continue to execute on our transformation moving forward. I'm also pleased to announce Greg Goff's promotion to President of Alight, which includes his continued oversight of product, technology, and delivery. Greg and his team have moved mountains with their infrastructure planning, and post-transaction, his voice and expertise with AI, analytics, and platform will be even more important. Overseeing product and delivery, Greg is in the best position to lead our teams in integrating our platform technology with our world-class services on a day-to-day basis for clients. And we look forward to him taking on a more public-facing role, as you may have seen through recent investor meetings, including today's call. We're excited about what he'll accomplish in his new position as president.

Stephan D. Scholl: Though we will miss her, she has built an outstanding team that we are confident will continue to execute on our transformation moving forward. I'm also pleased to announce Greg Goff's promotion to President of Alight, which includes his continued oversight of product, technology, and delivery. Greg and his team have moved mountains with their infrastructure planning. And post-transaction, his voice and expertise with AI, analytics, and platform will be even more important. Overseeing product and delivery, Greg is in the best position to lead our teams in integrating our platform technology with our world-class services on a day-to-day basis for clients. And we look forward to him taking on a more public-facing role, as you may have seen through recent investor meetings, including today's call. We're excited about what he'll accomplish in his new position as president.

Stfan: Although we will Miss her she has built an outstanding team that we're confident will continue to execute on our transformation moving forward.

Stfan: I'm also pleased to announce Gregg golf's promotion to president of our light, which includes as continued oversight of product technology and delivery Gregg and his team have moved mountains with our infrastructure planning and post transaction is voice and expertise with AI analytics and platform will be even more important.

Stfan: Overseeing product and delivery Greg is the best positioned to lead our teams in integrating our platform technology with our World class services on a day to day basis for clients and we look forward to him taking on a more public facing role as you may have seen through recent investor meetings, including todays call.

Stfan: We're excited about what <unk> accomplished in his new position as President my congratulations to Katy Jeremy and Greg on their next chapters and my heartfelt thanks to each of them.

Stephan D. Scholl: My congratulations to Katie, Jeremy, and Greg on their next chapters, and my heartfelt thanks to each of them. And, as announced on Monday, we are also pleased to have reached a constructive settlement with Starboard, who sees the value in where we are headed, and we look forward to their continued engagement and support. We've added two new board members, Dave Gilmette and Karitha Rushing, and welcome their deep domain expertise and diverse perspectives as we collectively push Alight forward.

Stfan: And as announced on Monday. We are also pleased to have reached a constructive settlement with starboard who sees the value and where we are headed and we look forward to their continued engagement and support we've added two new board members, David Guilmette and treat the rushing and welcome their deep domain expertise and diverse perspectives as we collectively pushed a light forward.

Stfan: Over the past two years, we have now refreshed half of our board.

Stephan D. Scholl: Over the past two years, we have now refreshed half of our board. Overall, we're moving fast. And, as I stated, executing the transaction is a key priority to achieve our long-term goals. None of this would be possible without the hard work of our colleagues who continue to serve our clients with excellence. Their dedication to our clients and to each other is how we will continue to succeed and is why we recently had the honor of being named a Top 100 Places to Work by Fortune Magazine. With that, I'll turn it over to Jeremy to walk us through the financials. Thank you, Stefan.

Stfan: Overall, we are moving fast and as I stated executing the transaction as a key priority to achieve our long term goals.

Stfan: None of this is possible without the hard work of our colleagues who continue to serve our clients with excellence.

Stfan: Their dedication to our clients and to each other is how we will continue to succeed and is why we recently had the honor of being named a top 100 places to work by Fortune magazine.

Stfan: With that I'll turn it over to Jeremy to walk us through the financials.

Jeremy Heaton: Thank you, Stefan, and good morning, everyone. I want to add my personal thanks to Katie, who has been a tremendous mentor and surrounded me with a winning team. Alight's opportunity ahead is a testament to her hard work, team-building, and vision. I'm honored and excited to lead the team forward, continue driving the transformation of our company, and spend more time with many of our key stakeholders. As Stephan said, closing the transaction is front and center across our organization and is on track to close mid-year, which will accelerate many of our strategic and financial objectives.

Jeremy Heaton: Thank you, Stefan, and good morning, everyone. I want to add my personal thanks to Katie, who has been a tremendous mentor and surrounded me with a winning team. Alight's opportunity ahead is a testament to her hard work, team building, and vision. I'm honored and excited to lead this team forward, continue driving the transformation of our company, and spend more time with many of our key stakeholders. As Stephan said, closing the transaction is front and center across our organization and is on track to close mid-year, which will accelerate many of our strategic and financial objectives.

Jeremy Heaton: Thank you stfan and good morning, everyone I want to add my personal thanks to Katie who has been a tremendous mentor and surrounding me with a winning team a light opportunity ahead is a testament to her hard work team building envision.

Jeremy Heaton: I'm honored and excited to lead the team forward continued driving the transformation of our company and to spend more time with many of our key stakeholders.

Speaker Change: As Stfan said closing the transaction is front and center across our organization and is on track to close mid year, which will accelerate many of our strategic and financial objectives. Upon closing we estimate an immediate 300 basis point increase in our pro forma adjusted EBITDA margin to approximately 25%, which includes an estimated 20.

Jeremy Heaton: Upon closing, we estimate an immediate 300 basis point increase in our pro forma adjusted EBITDA margin to approximately 25%, which includes an estimated 20 million disenergies that are temporary and will be managed out within one year post-closing. Shortly after the closing, we expect to use net proceeds from the upfront $1 billion payment for debt paydown as we de-lever to below three times. And importantly, the difference in proceeds from gross to net of approximately $250 million will be 90% weighted toward paying down the TRA liability and will be paid in 2026. The remaining 10% will be a tax payment.

Jeremy Heaton: Upon closing, we estimate an immediate 300 basis point increase in our pro forma adjusted EBITDA margin to approximately 25%, which includes an estimated 20 million disenergies that are temporary and will be managed out within one year post-closing. Shortly after the closing, we expect to use net proceeds from the upfront $1 billion payment for debt paydown as we delever to below three times. And importantly, the difference in proceeds from gross to net of approximately $250 million will be 90% weighted toward paying down the TRA liability and will be paid in 2026. The remaining 10% will be a tax payment.

Speaker Change: One of the synergies that are temporary and will be managed out within one year post closing.

Speaker Change: Shortly after the closing we expect to use net proceeds from the upfront 1 billion payment for debt Paydown as we de lever to below three times and importantly, the difference and proceeds from gross to net of approximately $250 million will be 90% weighted toward paying down the TRA liability and will be paid in 2026, the remaining 10% will.

Speaker Change: Be a tax payment.

Jeremy Heaton: The additional $200 million seller notes should follow in a similar structure in terms of gross to net. Of that, $50 million is non-contingent, and $150 million is performance-based tied to the 2025 adjusted EBITDA of the divested business, serving as downside protection on performance at the current level. Coupled with our commercial agreement, this framework will drive continued focus on the shared success of both companies. Given the pending transaction, we have transitioned the payroll and professional services business into a discontinued operation.

Speaker Change: The additional $200 million seller notes should follow in a similar structure in terms of gross to net of that $50 million is non contingent and $150 million is performance based tied to the 2025 adjusted EBITDA of the divested business, serving us downside protection on performance at current levels coupled.

Speaker Change: Coupled with our commercial agreement. This framework will drive continued focus on the shared success of both companies.

Speaker Change: Given the pending transaction, we have transitioned the payroll and professional services business into discontinued operations going forward alight financials will be presented on a continuing operations basis.

Jeremy Heaton: Going forward, Alight Financials will be presented on a continuing operations basis. However, this quarter, we will also disclose our metrics on a total company basis, so you may more easily compare to our prior results. As you review the split between continuing and discontinued operations, I would note that we believe the continuing operations income statement understates the true earnings power for Alight.

Jeremy Heaton: Going forward, Alight Financials will be presented on a continuing operations basis. However, this quarter, we will also disclose our metrics on a total company basis, so you may more easily compare them to our prior results. As you review the split between continuing and discontinued operations, I would note that we believe the continuing operations income statement understates the true earnings power for Alight.

Speaker Change: However, this quarter, we will also disclose our metrics on a total company basis. So you mean more easily compared to our prior results.

Speaker Change: As you review the split between continuing and discontinued operations I would note that we believe the continuing operations income statement understates the true earnings power for a light for.

Jeremy Heaton: For example, the continuing operations financial results are fully burdened from certain shared costs that will move upon separation. Post-close, we expect EPS upside from the planned debt reduction, improved margin profile, and a more aggressive buyback program. Now to the quarterly financial performance. I will be speaking largely from a total company basis as it's more easily compared to history and prior guidance.

Speaker Change: For example, the continuing operations financial results are fully burden from certain shared costs that will move upon separation.

Speaker Change: Post close we expect EPS upside from the planned debt reduction improved margin profile and a more aggressive buyback program.

Jeremy Heaton: Total revenue was $816 million, a decline of less than 1% when excluding the impact of the hosted business. Importantly, our high growth category of BPAS revenue increased almost 22% and represented more than a quarter of total revenue for the company. Revenue from our non-BPAP solutions was impacted by several things. First, as I mentioned earlier, we no longer generate revenue from the hosted business, which delivered $10 million of revenue in the prior year. Second, as Stephan mentioned, our non-recurring project revenue finished below expectations by approximately $15 million, split evenly between professional services and employer solutions. Finally, the impact on go lies from softer bookings in early 2023.

Speaker Change: And now to the quarterly financial performance I will be speaking largely from a total company basis, as it's more easily compared to history and prior guidance.

Jeremy Heaton: Total revenue was $816 million, a decline of less than 1% when excluding the impact of the hosted business. Importantly, our high growth category of BPAS revenue increased almost 22% and represented more than a quarter of total revenue for the company. Revenue from our non-BPAT solutions was impacted by several things. First, as I mentioned earlier, we no longer generate revenue from the host business, which delivered $10 million of revenue in the prior year. Second, as Stephan mentioned, our nonrecurring project revenue finished below expectations by approximately $15 million, split evenly between professional services and employer solutions. Finally, the impact on go lives from softer bookings in early 2023.

Speaker Change: Total revenue was $816 million a decline of less than 1% when excluding the impact of the hosted business <unk>.

Speaker Change: Importantly, our high growth category of <unk> revenue increased almost 22% and represented more than a quarter of total revenue for the company.

Speaker Change: Revenue from our non <unk> solutions were impacted by several items first as I mentioned earlier, we no longer generate revenue from the hosted business, which delivered $10 million of revenue in the prior year.

Speaker Change: Second as the fan mentioned are nonrecurring project revenue finished below expectations by approximately $15 million split evenly between professional services and employer solutions. Finally, the impact on go lives from softer bookings in early 2023, we expect a more favorable trend later this year, where we have revenue under contract supporting our growth.

Jeremy Heaton: We expect a more favorable trend later this year, when we have revenue under contract supporting our growth plan. Adjusted gross profit was $278 million, with margins nearly flat at 34.1%, and adjusted EBITDA was $4 million lower at $150 million. Despite the revenue decline, we continue to benefit from our productivity efforts, which helped offset much of the revenue impact from a profitability perspective. In addition, our cash flow continued to expand materially. We generated operating cash flow of $100 million, reflecting growth of 39% or $28 million more than the prior year.

Speaker Change: Plan.

Speaker Change: Adjusted gross profit was 278 million with margins nearly flat at 34, 1% and adjusted EBITDA was $4 million lower at $150 million. Despite.

Speaker Change: Despite the revenue decline, we continue to benefit from our productivity efforts, which helped offset much of the revenue impact from a profitability perspective.

Speaker Change: In addition, our cash flow continued to expand materially we generated operating cash flow of $100 million, reflecting growth of 39% or $28 million more than the prior year.

Jeremy Heaton: This represents a conversion rate of 67% compared with 47% last year and is driven largely by a continued focus on working capital efficiencies. Capital expenditures in the quarter were also lowered by 20%, and our free cash flow improved significantly. Spending on our restructuring program resumed in the first quarter following the planned slowdown during annual enrollment last year.

Speaker Change: This represents a conversion rate of 67% compared with 47% last year and is driven largely by continued focus on working capital efficiencies.

Speaker Change: Capital expenditures in the quarter were also lower by 20% and our free cash flow improved significantly.

Speaker Change: Spending on our restructuring program resumed in the first quarter. Following the planned slowdown during annual enrollment last year, we continue to target. The second half of 2024 for completing the cloud migration and expect to see financial benefits in late 2024 with full annual run rate savings in 2025 of.

Jeremy Heaton: We continue to target the second half of 2024 for completing the cloud migration and expect to see financial benefits in late 2024 with full annual run rate savings in 2025. Of the expected $100 million of run rate savings, we expect a majority, approximately $75 million, to remain with Alight. Turning to the balance sheet, our quarter-end cash and cash equivalents balance was $286 million, which included $30 million that is in current assets held for sale. And total debt was $2.8 billion.

Jeremy Heaton: We continue to target the second half of 2024 for completing the cloud migration and expect to see financial benefits in late 2024 with full annual run rate savings in 2025. Of the expected $100 million of run rate savings, we expect the majority, approximately $75 million, to remain with Alight. Turning to the balance sheet, our quarter-end cash and cash equivalents balance was $286 million, which included $30 million that is in current assets held for sale. And total debt was $2.8 billion.

Speaker Change: Of the expected $100 million of run rate savings, we expect the majority approximately $75 million to remain with a light.

Speaker Change: Turning to the balance sheet, our quarter end cash and cash equivalents balance was $286 million, which includes $30 million that is in current assets held for sale and total debt was $2 8 billion.

Jeremy Heaton: As it relates to interest expense, continuing operations carries the full interest cost today. We expect after paying down debt post-transaction to under three times, annualized interest expense will be a tailwind for profitability while also providing greater balance sheet flexibility. Similar to our fourth quarter, there was no repurchase activity given the Strategic Portfolio Review and subsequent transaction announcement.

Jeremy Heaton: As it relates to interest expense, continuing operations carries the full interest cost today. We expect after paying down debt post-transaction to under three times, annualized interest expense will be a tailwind for profitability, while also providing greater balance sheet flexibility. Similar to our fourth quarter, there was no repurchase activity given the Strategic Portfolio Review and subsequent transaction announcements.

Speaker Change: As it relates to interest expense continuing operations carries the full interest cost today, we expect after paying down debt post transaction to under three times annualized interest expense will be a tailwind for profitability, while also providing greater balance sheet flexibility.

Speaker Change: Similar to our fourth quarter, there was no repurchase activity given the strategic portfolio review and subsequent transaction announcements.

Jeremy Heaton: We upsized our share repurchase authorization by $200 million and now have $248 million of availability, enabling a more consistent and aggressive buyback plan going forward. Turning to our outlook, while we'll formally update our 2024 guidance following the close of the transaction, I do want to provide some color on our near-term expectations. We continue to build revenue under contract, which for 2024 is now $3.1 billion, for 2025 is $2.2 billion, and for 2026 is $1.6 billion.

Speaker Change: We upsized our share repurchase authorization by $200 million.

Speaker Change: And now have $248 million of availability, enabling a more consistent and aggressive buyback plan going forward.

Speaker Change: Turning to our outlook, while we will formally update our 2024 guidance. Following the close of the transaction I do want to provide some color on our near term expectations.

Speaker Change: We continue to build revenue under contract, which for 2024 is now $3 1 billion for 2025 is $2 2 billion and for 2026 is $1 6 billion. Our sales momentum continues to provide greater long term visibility.

Jeremy Heaton: Our sales momentum continues to provide greater long-term visibility. Directionally, on a total company basis, we view the second quarter similarly to the first quarter from both a revenue and a margin perspective. Consistent with what we have said about our performance, we expect it to be second half weighted. We still expect 2024 revenue growth to ramp through the second half of the year, with continuing operations revenue growth being in line with its midterm outlook of 4 to 6% before year-end, as we benefit from new deals going live.

Speaker Change: Directionally on a total company basis, we view the second quarter. Similarly to the first quarter from both a revenue and margin perspective.

Speaker Change: Consistent with what we have said about our performance we expect it to be second half weighted.

Speaker Change: We still expect 2020 for revenue growth to ramp through the second half of the year with continuing operations revenue growth being in line with its midterm outlook of 4% to 6% before year end as we benefit from new deals going live.

Jeremy Heaton: We continue to watch our shorter-term project revenue pipeline and any impacts on the macro environment, and we will look to offset potential headwinds with continued growth and new deals. From a profitability perspective, we expect to see benefits from our customer care efficiencies, which come predominantly in the third and fourth quarter as our teams execute through the annual enrollment process, as well as from our restructuring program that I mentioned earlier. This progress and visibility enables us to reaffirm our midterm outlook.

Jeremy Heaton: We continue to watch our shorter-term project revenue pipeline and any impacts from the macro environment, and we will look to offset potential headwinds with continued growth and new deals. From a profitability perspective, we expect to see benefits from our customer care efficiencies, which come predominantly in the third and fourth quarter as our teams execute through the annual enrollment process, as well as from our restructuring program that I mentioned earlier. This progress and visibility enables us to reaffirm our midterm outlook.

Speaker Change: We continue to watch our shorter term project revenue pipeline and any impacts from the macro environment and we will look to offset potential headwinds with continued growth in new deals.

Speaker Change: From a profitability perspective, we expect to see benefits from our customer care efficiencies, which comes predominantly in the third and fourth quarter as our teams execute through the annual enrollment process as well as from our restructuring program that I mentioned earlier this.

Speaker Change: This progress and visibility enables us to reaffirm our mid term outlook.

Jeremy Heaton: Overall, we're making significant progress on a day-to-day basis while diligently working to close the transaction. In my new role, I look forward to meeting those of you I have not yet had the pleasure of meeting, and I would like to thank all of our Alight colleagues around the world for what they are doing every day. This concludes our prepared remarks, and we will now move into the question and answer session. Operator, would you please instruct participants on how to ask questions?

Jeremy Heaton: Overall, we're making significant progress on a day-to-day basis while diligently working to close the transaction. In my new role, I look forward to meeting those of you I have not yet had the pleasure of meeting. I would like to thank all of our Alight colleagues around the world for what they do every day. This concludes our prepared remarks, and we will now move into the question and answer session. Operator, would you please instruct the participants on how to ask questions?

Speaker Change: Overall, we're making significant progress on a day to day basis, while diligently working to close the transaction.

Speaker Change: My new role I look forward to meeting those of you I have not yet had the pleasure I would like to thank all of our colleagues around the world for what they are doing every day.

Speaker Change: This concludes our prepared remarks, and we will now move into the question and answer session. Operator would you. Please instruct participants on how to ask questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by number two. If you're using a speakerphone, please leave the handset before pressing any. One moment, please, for your first question. Your first question comes from the line of Kevin of UBS. Your line is now open.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by number one on your Touchtone phone, you'll hear a prompt that youre handling lease should you wish to decline from the polling process. Please press star followed by number two.

Speaker Change: Using a speakerphone please pick up the handset before pressing any keys one moment. Please for your first question.

Speaker Change: Your first question comes from the line of Kevin <unk> of UBS. Your line is now open. Please ask your question.

Unknown Speaker: Great, thanks so much and congratulations to everybody on all the... Management Changes and Katie Besta-Lock. Thanks, Kevin. Sure.

Kevin: Great, thanks so much, and congratulations to everybody on all the... Management Changes and Katie Besta-Walker. Thanks, Kevin. Sure.

Kevin: Great. Thanks, so much and congratulations to everybody.

Kevin: All those kind of management changes and any best of luck.

Kevin: Thanks, Kevin Thanks, Kevin Thanks, Kevin.

Speaker Change: For sure.

Unknown Speaker: Unknown Speaker, the context on the guidance was super helpful. Is there any way to think about kind of the total revenue for 24 relative to the initial guidance, you know, realizing there's a, there's a lot of moving parts there, but just. Unknown Speaker Any way to think about that? Are you seeing any initial thoughts from customers on some of the recent changes around the sale of professional services? [inaudible]

Kevin: Hey, Jeremy.

Jeremy Heaton: The context on the guidance was super helpful. Is there any way to think about kind of the total revenue for 24 relative to the initial guidance, you know, realizing there's a lot of moving parts there, but just. Anyway, to think about that, and are you seeing any, you know, any initial thoughts from customers on some of the recent changes around the sale of professional services?

Kevin: The context on our guidance, which was super helpful is there any way to think about kind of the total revenue.

Jeremy Heaton: For 24 relative to the initial guidance realizing theres, a theres a lot of moving parts there, but just.

Kevin: <unk>.

Kevin: Any way to think about that and are you seeing any any.

Kevin: Any initial thoughts.

Kevin: From the customers on some of the recent changes around the sale of professional services.

Kevin: Kind of the payroll business just any initial thoughts there would be helpful.

Jeremy Heaton: Sure, sure. So, maybe I'll take the first part and then give it to Katie for the second, just on the deal and with clients. I'd say, you know, for 2024, as we said, we will come out with the formal guide on once the remaining business once we get through the close. I would say, you know, the one element that we talked about was the non-recurring project revenue. And as we said before, but we expect growth to ramp up.

Jeremy Heaton: Sure, sure. So maybe I'll take the first part and then give it to Katie for the second, just on the deal and with clients. I'd say, you know, for 2024, as we said, we will come out with the formal guidance on the remaining business once we get through the close. I would say the one element that we talked about was the non-recurring project revenue. And as we said before, but we expect growth to ramp up.

Speaker Change: Sure sure. So maybe I'll take the first part and then you can give it to Katie for the second just on the deal and with clients I would say for 2024 as we said we will come out with a formal guide on on once the remaining business once we get through the close.

Speaker Change: I'd say the one element that we talked about has been the nonrecurring project revenue.

Katie Rooney: And as we said before but we expect growth to ramp we can see the revenue under contract building today as we have continuing momentum building on the sales on the bookings side and so we still see that path and that build and expect to be by the by the end of this year at a at a growth rate that was within the midterm outlook that we've laid out so.

Jeremy Heaton: We can see the revenue under contract building today as we have continuing momentum building on the sales side. And so, we still see that path and that build and expect it to be by the end of this year at a growth rate that is within the midterm outlook that we've laid out. So, versus what we talked about, you know, several months ago, we're seeing it line up as we expected. And we just need to continue to focus on the bookings momentum and the sales team, and our operational execution.

Jeremy Heaton: We can see the revenue under contract building today as we have continuing momentum building on the sales side. And so we still see that path and that build and expect it to be by the end of this year at a growth rate that is within the midterm outlook that we've laid out. So, versus what we talked about, you know, several months ago, we're seeing it line up as we expected. And we just need to continue to focus on the bookings momentum and the sales team, and our operational execution.

Katie Rooney: I think all else equal versus what we talked about several months ago. We're seeing it lineup as we expected and we just need to continue to focus on the bookings momentum in the sales team and our operational execution.

Katie Rooney: Yeah, and Kevin, I think just on the deal, listen, it's progressing really well. As you can imagine, we're talking with all of our major clients, and they're asking really good questions. But I think the great part of this deal is, you know, we maintain that level of commercial partnership and partnership in terms of delivery and execution. And so, you know, neither side wins if we don't, you know, navigate and land this for our customers in a, you know, kind of thoughtful way. And so, again, we're working through that. And I think customers have been really good partners as we continue to do that, and I think we're on track.

Speaker Change: Yes, and Kevin I think just on the deal listen it's progressing really well.

Speaker Change: As you can imagine we're talking with all of our major clients and Theyre asking really good questions, but I think the great part of this deal is we maintain that level of commercial partnership and partnership in terms of delivery and execution and so.

Speaker Change: Neither neither side wins, if we don't navigate in laminates for our customers.

Speaker Change: Kind of as thoughtful way and so again, we're working through that and I think customers have been really good partners as we continue to do that and think we're on track.

Jeremy Heaton: Great. And then just real quick, helpful commentary on the buyback. Can you be in the market before the deal closes now that everything's been disclosed, or is that something, because it sounds like you upsized the buyback, which is terrific. Is that something you have to wait until after the deal closes, or could we expect some activity before the transaction closes?

Speaker Change: Great and then just real quick.

Speaker Change: Helpful commentary on the buyback can you be in the market before the deal closes now that everything has been disclosed or is that something because it sounds like gifts as a buyback which is terrific.

Speaker Change: Is that something you have to wait till after the deal closes or could we expect some some some.

Speaker Change: Activities before the transaction closes.

Jeremy Heaton: Good question, Kevin. So, as we said, the deal is on track. So that's our focus right now in terms of getting that to close in the middle of this year. That being said, we continue to assess our portfolio composition and the strategic alternatives just to ensure we're maximizing shareholder value for the company upon the closing of Axiom. And so with that, we'll be open and in the market as much as we can as we go through that process.

Jeremy Heaton: Good question, Kevin. So, as we've said, the deal's on track. So that's our focus right now in terms of getting that to close here, in the middle of this year. That being said, we continue to assess our portfolio composition and the strategic alternatives just to ensure we're maximizing shareholder value for the company upon the closing of Axiom. And so with that, we'll be open and in the market as much as we can as we go through that process.

Speaker Change: Sure. Good question, Kevin So as we've said the deals on track so.

Kevin: Our focus right now in terms of getting that to close here middle of this year that being said, we continue to assess our portfolio composition and the strategic alternatives just to ensure we're maximizing shareholder value for the company upon the closing of axiom and so with that we'll be opening in the market as as we can as we go through that <unk>.

Speaker Change: Assets.

Speaker Change: Great. Thank you.

Operator: Thanks, Kevin. Thank you.

Speaker Change: Thanks, Kevin Thank you.

Operator: Your next question comes from Lion Scott of KeyBank. Your line is now open. Please ask your question.

Speaker Change: Your next question comes from the line Scott of Keybanc. Your line is now open. Please ask your question.

Scott Anthony Schoenhaus: Hi team. Apologies.

Unknown Speaker: Hi, team. Apologies. I've had several earnings calls this morning. I believe you mentioned the $15 million impact, revenue impact split evenly between employer solutions and professional services.

Scott Anthony Schoenhaus: I've had several earnings calls this morning. I believe you mentioned the $15 million impact. Revenue Impact, Split Evenly Between Employer Solutions and Professional Services. Can you guys just provide more color on that, if I missed, if you provided color earlier, on what exactly happened, what that shortfall was, if that continues into 2Q, and then a little bit more on that 2Q kind of guidance, Jeremy. Thanks.

Scott: Hi team apologies I have had several earnings calls this morning, I believe you mentioned the $15 million impact.

Scott: <unk> impact split evenly between employer solutions and professional services can you guys just provide more color on that if I missed if you've provided color earlier on what exactly happened with that shortfall was if that continues into <unk> and then I'll have a follow up question on that.

Jeremy Heaton: Can you guys just provide more color on that? If I missed what you provided earlier on what exactly happened, what that shortfall was, if that continues into 2Q. And then a little bit, I'll have a follow-up question on that 2Q kind of guidance, Jeremy. Thanks.

Speaker Change: <unk> kind of guidance Jeremy Thanks, sure sure Scott Good morning.

Jeremy Heaton: Sure. Sure, Scott. Good morning.

Jeremy Heaton: So yes, let me provide a little bit more color. There. So employer solutions revenue was down 1% year over year and professional services was up 2% year over year importantly to your point around project revenues that was really the driver across both segments as both were impacted on the project side project revenue in <unk>.

Jeremy Heaton: So, yeah, let me provide a little bit more color there. So, employer solutions revenue was down 1% year over year, and professional services was up 2% year over year. Importantly, to your point around project revenues, that was really the driver across both segments as both were impacted on the project side. Project revenue and employer solutions were down 11%, and project revenue and professional services were down 3%. And so that was the driver as a split across both of those across both of those segments. The driver and professional services are just lower deployments. A little bit of that's timing again.

Jeremy Heaton: Lawyer solutions was down 11% and project revenue and professional services was down 3% and so that was the driver or is it split across both of those are both cross both of those segments. The driver in professional services is just lower deployments a little bit of that's timing again, thats workday SAP deployments that we see in.

Jeremy Heaton: That's, you know, workday SAP deployments that we see and drive project revenue in the professional services business. And the project revenue on the employer solution side is really in the health business, driven by benefit plan changes and lower regulatory changes that drive projects in that business. And so, as we look at it today, as, you know, it's a shorter sales cycle as it's a non-recurring business, we do expect, and it's what we, when I talked to him, gave some color on the 2nd quarter.

Jeremy Heaton: Drives the project revenue in the professional services business and the project revenue on the employer solutions side is really in the health business driven by benefit plan changes and lower regulatory changes that drive projects in that business and so as we look at it today as you know, it's a shorter sales cycle as it's a nonrecurring.

Jeremy Heaton: <unk> business, we do expect and it's what we as I talked to and you gave some color on the second quarter, we don't expect to see a very different profile in the second quarter, but that starts to ramp as we get into annual enrollment within the health and wealth businesses that really starts to ramp with project work around the annual enrollment process and so.

Jeremy Heaton: We don't expect to see a very different profile in the second quarter, but that starts to ramp as we get into annual enrollment within the health and wealth businesses, which really starts to ramp with project work around the annual enrollment process. And so we do see a better path and are building the revenue under contract in that space later this year. And that's really how we think about the ramp.

Jeremy Heaton: We don't expect to see a very different profile in the 2nd quarter, but that starts to ramp as we get into annual enrollment within the health and wealth businesses, which really starts to ramp with project work around the annual enrollment process. And so we do see a better path and are building the revenue under contract in that space later this year. And that's really how we think about the ramp.

Jeremy Heaton: We do see a better path and are building the revenue under contract in that space later in this year and Thats really how we think about the ramp.

Stephan D. Scholl: Yeah, I think to your point, Scott, about looking ahead, this is the big one of the big reasons why I push so hard to have us sell some of these components of the business, that volatility of the people-based business. As you've heard me say on a few calls, 10 million here, 15 million there, you know; those are three or four or five projects around the world that just start later.

Stephan D. Scholl: Yeah, I think to your point, Scott, about looking ahead, this is the big one of the big reasons why I pushed so hard to have us sell some of these components of the business, that volatility of the people-based business, as you've heard me say on a few calls, 10 million here, 15 million there, you know, those are three or four or five projects around the world that just start later. So not having that as part of our portfolio, as we head into, you know, the back half of the year, is going to be really helpful in building a more credible backlog of business with a much higher percentage of recurring revenue as part of the baseline, so much less volatility.

Speaker Change: Yes, I think to your point Scott about looking ahead. This.

Jeremy Heaton: This is the big one of the big reasons, why a push so hard to have us sell some of these components of the business that volatility of the people based business as you've heard me say a few calls $10 million year $50 million. There those are three or four or five projects around the world that just start later, so not having that as part of our portfolio as we head into <unk>.

Stephan D. Scholl: So not having that as part of our portfolio as we head into the back half of the year is going to be really helpful in building a more credible backlog of business with a much higher percentage of recurring revenue as part of the baseline, so much less volatility.

Jeremy Heaton: The back half of the year is going to be really helpful. In building a more credible.

Jeremy Heaton: Backlog of business with a much higher percentage of recurring revenue as part of the baseline so much less volatility.

Jeremy Heaton: Absolutely. Thanks for all that color, guys. And just as a follow-up, Jeremy, on the actual 2Q, when you said similar kind of results as the first quarter, do you mean that from like an absolute basis as a trajectory? You don't mean like flat growth from the second quarter, like we saw, you know, kind of.

Speaker Change: Absolutely. Thanks for all that color guys and just as a follow up Jeremy on the actual <unk>. When you say, it's similar kind of results as first quarter do you mean that from like an absolute basis.

Jeremy Heaton: Trajectory you don't mean.

Jeremy Heaton: Flat growth from second quarter.

Jeremy Heaton: Like we saw kind of yes.

Jeremy Heaton: Yes.

Jeremy Heaton: Similar in growth rate and EBITDA margin in the second quarter. Similar in growth rate,

Jeremy Heaton: Similar in growth rate and EBIT down margin in the second quarter.

Jeremy Heaton: Similar in growth rate and EBITDA margin.

Speaker Change: And the second similar to growth rate, Okay alright.

Scott Anthony Schoenhaus: Okay. All right. I'll hop back in with you. Thank you, guys.

Unknown Speaker: I'll hop back in with you, thank you guys.

Unknown Speaker: Okay. All right. I'll hop back in here. Thank you.

Speaker Change: Hop back into queue. Thank guys.

Jeremy Heaton: Great.

Jeremy Heaton: Scott.

Operator: Thank you. Your next question comes from the line of Kyle of Needham. Your line is now open. Please ask your question.

Scott: Thank you.

Scott: Your next question comes from the line of Kyle Levine <unk>. Your line is now open. Please ask your question.

Unknown Speaker: Great, thanks guys. I appreciate you taking the time to answer the questions.

Kyle Peterson: Unknown Speaker Great. Thanks, guys. I appreciate you taking the questions.

Unknown Speaker: I just wanted to kind of drill down again on the first quarter results. I think, kind of, inter-quarter you guys had said, you expected things to be at least in the top line about flat year over year. I think that was... Unknown Speaker, Unknown Speaker, are going to still be part of Alight after this transaction goes through and what is more in the discontinued operations.

Kyle Peterson: Great. Thanks.

Kyle Peterson: Thanks, guys.

Kyle Peterson: Kate you taking the questions.

Kyle: Just wanted to.

Kyle Peterson: Kind of drill down again on the first quarter results of <unk> kind of intra quarter you guys had said.

Kate: Expected thanks fee based on the topline about flat year over year I think that was in March so I just wanted to see.

Kyle Peterson: I just want to kind of drill down again on the first quarter results. I think, kind of, in your quarter, you guys said, you know, you expected things to be at least on the top line about flat year over year. I think that was in March. So I just wanted to see on the Delta kind of what drove the shortfall in the last few weeks there. And of that, like kind of what is going to still be part of Alight after this transaction goes through and what is more in the discontinued operations.

Kyle Peterson: On the Delta.

Kate: Kind of what what drove the shortfall in the last few weeks, there and that kind of what is going to still be part of a late after this transaction goes through and what is.

Kyle Peterson: More in the discontinued ops.

Jeremy Heaton: Sure, it's split about half and half between what goes with the deal, Kyle, and what stays as part of the benefits remain co-business. That is, the mix between the two. As we've talked about, it's a shorter term, in some cases, can be very, we can, within a week, you know, build the pipe and execute on the revenue generated around the project business. So there are elements there as we look at when we build the pipeline and execute through it, it can be very quick.

Sure, it's split about half and half between what goes with the deal.

Kyle Peterson: And what stays as part of the benefits remain co business.

Jeremy Heaton: Is the mix between the two as we've talked about it's a shorter term in some cases can be very we can within a week.

Jeremy Heaton: <unk> the pipe and execute on the revenue generated around the project business. So there are elements there as we look at when we build the pipeline and execute through it.

Jeremy Heaton: Can can be very quick and so that was the dynamic that was different for us this quarter versus where we had our expectation set in terms of where we're going the other element that we had already talked about we knew we had the.

Jeremy Heaton: And so that was the dynamic that was different for us this quarter versus where we had our expectations set in terms of where we were going. You know, the other element that we had already talked about, we knew we had the comparison with the hosted business going away. We also knew that we had timing softness last year, which drove the ramp that we're going to see on the growth side coming into 2024.

Jeremy Heaton: The compare with the hosted business going away. We also knew that we had timing softness last year, which drove the ramp that we're going to see in the growth side.

Jeremy Heaton: Maybe, I don't know, Greg Goss with us, who leads delivery and product, can give you a flavor for, you know, some examples we're seeing today as we think about commercial execution and progress. Yeah, hi.

Jeremy Heaton: Into into 2024, maybe I don't know, Greg Goff with US who leads delivery and product and maybe you can give you a flavor for some examples we're seeing today as we think about commercial execution and progress, yes, hi, good morning.

Gregory Goff: Yeah, hi, good morning, just a little bit of commentary on a little on project and then a little bit broader. I mean, I think on the project side, as Jeremy said, that's typically driven by regulatory changes, plan changes, and I mean, activity among our clients. And so we just saw, you know, a little bit lower activity there, but we're bullish on that going into the sort of second half, as he said, you know, I think more broadly, as we look at commercial activity going forward, The strategy that we've been on we see we see resonating still in the market right in terms of, Cost being top of mind for clients in terms of the integration and employee experience being very top of mind for clients, and that platform strategy resonates, right, coupled with really strong delivery and care, and, you know, I think we're really well positioned to that as we head later into the year.

Greg Goff: Yeah, hi, good morning. Just a little bit of commentary on a little on project and then a little bit broader. I mean, I think on the project side, as Jeremy said, that's typically driven by regulatory changes, plan changes, and I mean, activity among our clients. And so we just saw, you know, a little bit lower activity there, but we're bullish on that going into the sort of second half, as he said, you know, I think more broadly as we look at commercial activity going forward, The strategy that we've been on we see we see resonating still in the market right in terms of, Cost being top of mind for clients in terms of the integration and employee experience being very top of mind for clients and that platform strategy resonates, right? Coupled with really strong delivery and care and, you know, I think we're really well positioned to that as we head later into the year.

Gregory Goff: Just a little bit of commentary on little on project and then I'll have a little bit broader I mean, I think on the project side as Jeremy said, that's typically driven by regulatory changes planned changes in M&A activity among our clients and so we just saw a.

Greg Goff: A little bit lower activity there.

Greg Goff: But we're bullish on that going into the second half as he said.

Greg Goff: I think more broadly as we look at commercial activity going forward.

Greg Goff: The strategy that we've been on and we see we see resonating still on the market right in terms of.

Greg Goff: Cost being top of mind for clients in terms of.

Greg Goff: The integration and employee experience being very top of mind for client and clients on the platform strategy resonate right, coupled with really strong delivery and care.

Greg Goff: And I think we're really well positioned to that.

Greg Goff: As we had later into the year.

Unknown Speaker: Mm hmm. Okay. Um, yeah, that's helpful. And then, I guess, just, you know, it does seem like this year, kind of as a follow up here, I guess this does seem like this year, the trend will be fairly back and weighted, but I guess, is Could you just remind us on the timing of ramps for some of these deals from last year's bookings as to what the kind of lag time is on some of these deals before they start contributing to revenue and just how we should think about the progression from here?

Greg Goff: Okay.

Speaker Change: Yes, that's helpful and then.

Greg Goff: I guess just it does seem like this year kind of a follow up here I guess it does seem like this year the trend will be fairly back end weighted but I guess.

Greg Goff: Is.

Greg Goff: Could you just remind us on the.

Greg Goff: The timing of ramps for some of these deals.

Greg Goff: From last years bookings.

Greg Goff: What kind of lag time is.

Greg Goff: Some of these deals before they start contributing to revenue and just how we should think about the progression from here.

Jeremy Heaton: Sure. It's, I'd say, on an average basis. 12 months is the right way to think about it, Kyle. I mean, you know, smaller, more vanilla deals can be as early as six months. And some, as you know, some of the bigger deals we've talked about can be, you know, 18 months or more. And so, as you think about the bookings and the timing, as you looked at last year, you start to get to that 12-month point as we get into the second half of this year. And then you also start to think about the calendar year, which can be important in parts of the business.

Greg Goff: Sure I'd say on an average basis 12 months is the right way to think about it.

Greg Goff: Smaller more vanilla I'd say deals can be as early as six months and some as you know some of the bigger deals we've talked about can be 18 months or more and so as you think about the bookings and the timing as you looked at last year, you start to get to that 12 month point as we get into the second half this year.

Jeremy Heaton: And so you start really, the enrollment work happens within the third quarter and the fourth quarter, where we start to generate revenue on those deals, and then certainly fully live in January. And so those are the elements that as we look at the revenue under contract today by quarter, compared to prior years, you start to see where the ramp is and which drives our growth and expectations this year. Again, and we'll come out, of course, as I said, with more, a formal guide to the remaining business as we go forward when we close the deal. You know, and I said this on the last call too, Kyle, right?

Greg Goff: And then you also start to think about the calendar year, which can be important in parts of the business and so you start really enrollment work happens within the third quarter and the fourth quarter, where we start to generate the revenue on those deals and then certainly fully live in January and so those are those are the elements that as we look at the revenue under contract today by quarter compare.

Greg Goff: To prior years, you start to see where the ramp is and which drives our growth and expectations. This year again, and we will come out of course as I said with more a formal guide on the remaining.

Greg Goff: Business as we go forward when we close the deal.

Greg Goff: <unk> said this on the last call to call right and when I say the words tale of two halves.

Stephan D. Scholl: And when I said the words tale of two halves, you know, with deals like Thrift fully online in the first half of this year, a lot of big deals were brought online last year. So to compare the first half, as you know, it's a 10% CAGR over the last couple of years on the revenue side. We added $700 million in backlog. As I said, in a perfect world, the minute Thrift ends, you get GE online, you know, another one of those massive deals that we announced not only last year but in the prior year. So that's going to be coming, you know, online in the second half.

Greg Goff: Deals like thrift fully online in the first half of this year a lot of big deals.

Greg Goff: Were brought online last year, so the compare in the first half as you know, it's a 10% CAGR over the last couple of years on the revenue side, we added $700 million of backlog as I said I wish in a perfect world. The minute Thrift ends you get GE online.

Greg Goff: Another one of those massive deals that we announced not only even last year, but in the prior year.

Greg Goff: That's going to be coming online in the second half. So you start seeing some of the bigger deals that we've closed but it's not a it's a volatile dynamic right, but so it's hard to see it within a quarter you just have to take a step back sometimes and let history be its guide right. As I said, if you look at the last three years, it's a 10% CAGR on an average basis.

Stephan D. Scholl: So you start seeing some of the bigger deals that we've closed, but it's not a, it's a volatile dynamic, right? But so it's hard to see it within a quarter. You just have to take a step back sometimes and let history be its guide, right? As I said, if you look at the last three years, it's a 10% CAGR on an average basis and almost 700 million more in backlog.

Greg Goff: Almost $700 million more in backlog.

Unknown Speaker: Makes sense. I appreciate the color. Thank you.

Speaker Change: Makes sense appreciate the color. Thank you.

Jeremy: Hey, Scott.

Operator: Your next question comes from the line of Peter from D.A. Davidson. Your line is now open. Please ask your question.

Greg Goff: Your next question comes from the line of Peter of D. A Davidson. Your line is now open. Please ask your question.

Unknown Speaker: Hey, good morning, everyone. I wanted to follow up and just see how The story, the Alight story, is being received by clients as we get a little further away from the Great Resignation and wage inflation. Has there been a shift in terms of what benefits Alight can bring to a company? Has there been a shift in terms of what companies value or what they're attracted to in terms of why they would make a change?

Speaker Change: Hey, good morning, everyone I wanted to follow up and just see how.

Greg Goff: The story the life story is being.

Greg Goff: Received by clients as we get a little further away from.

Greg Goff: Great resignation and wage inflation I guess has there been a shift in terms of what benefits to light can bring to our company has there been a shift in terms of what companies value or what they are attracted to in terms of why they would make a change.

Stephan D. Scholl: Yeah, great question, Pete. We talked a lot about this on the calls during the last few earnings calls, right? The sentiment, you know, across our, you know, fortune 100 or fortune 500 clients, as you know, we serve 70 plus of them and half the fortune 500. So, we're very deeply entrenched. And every single client meeting I have, and I'll ask Greg to jump in a minute, but because he's done. He just did a big 30 day tour with lots of big clients.

Greg Goff: Yes, Great question, Pete we talked a lot about this on the calls in the last few earnings right the sentiment.

Gregory Goff: The sentiment is the same, which is that CHROs, CFOs, and CIOs are banding together more than ever before. And when you think about what I've said over the years, the space of ERP, supply chain, financial systems, and controls, those have all gone from best of breed to enterprise in the last 20 years. And I've said this for over four years; this employee population, in terms of how we engage with them across these systems, is a multi-trillion dollar cost base when it comes to health.

Greg Goff: Across our <unk>.

Greg Goff: Fortune 100, or Fortune 500 client as you as you know we serve 70 plus of them and have a fortune 500. So we're very deeply entrenched in every single client meeting I have and I'll ask Greg to jump in in a minute, but because he has done. He just had a big 30 day tour with lots of big clients. The sentiment is the same which is they.

Greg Goff: <unk> CFO and CIO those three departments are banding together more than ever before and when you think about what I've said over the years the space of ERP supply chain financial systems and controls those of all for the last 20 years gone from best of breed Enterprise and I've said this for over four years this employee.

Gregory Goff: That hasn't been consolidated, right? So the engagement capability still is 30 4050 different systems. So the pressure on employees of employers to cut costs is at an all-time high and hasn't abated at all. So we're going in with a much more sophisticated model around value engineering and ROI. Greg can talk to you about a couple of key deals.

Greg Goff: E population in terms of how we engage with them across these systems is a multi trillion dollar cost base when it comes to health.

Greg Goff: That hasnt been consolidated right. So the engagement capability still is 30 40 50 different systems. So the pressure of employee of employers to cut costs.

Greg Goff: Is at an all time high it Hasnt abated at all so we're going in with a much more sophisticated model around value engineering and ROI.

Speaker Change: Greg can talk to.

Greg Goff: Couple of key deals just to just to give you. An example, I was with a big client a couple of weeks ago and.

Stephan D. Scholl: Just to give you an example, I was with a big client a couple of weeks ago, and as Stefan said, the CHRO side and the CIO side are now working together more than I've ever seen at these large clients, as cost becomes a pressure. Right.

Greg Goff: The defense at the <unk> side and the CIO side are now working together more than I've ever seen at these large clients.

Greg Goff: Cost becomes a pressure right.

Gregory Goff: And, you know, the IT side of the world is typically very good at managing cost. And so the story of platform, the idea of consolidating spend, the idea of doing that while still delivering a more compelling employee experience resonates, right? But that's also, you know, departments within clients working together that typically haven't worked together on that. And so we provide a lot of that, that kind of stitching together of how to bridge the IT world, how to bridge the HR world, and the employee world back together.

Greg Goff: Alright.

Greg Goff: The it side of the World is typically very good at managing cost and so the story of platform. The idea of consolidating spend the idea of doing that while still delivering a more compelling employee experience resonates right, but thats also departments within clients worked.

Greg Goff: Together typically haven't worked together on that and so we provide a lot of that.

Greg Goff: That kind of stitching together of how to bridge the it world how to bridge, the EHR World and the employee world's back together and I've seen that is defense.

Gregory Goff: And I've seen that as a fan that I've worked with a lot of clients over the last, you know, a couple of months. And I see that as a very consistent theme, certainly among our largest. And we're continuing to.

Greg Goff: With a lot of clients over the last cut.

Greg Goff: A couple of months in ICU that is a very consistent theme certainly among our largest and we're continuing to still see these big deals and maybe the last piece on this because as kind of a long answer but it's an important topic is a lot of our biggest clients looked to Microsoft or service now as that integration platform and I said this on a few calls before right.

Stephan D. Scholl: We're still seeing these big deals. And maybe the last piece on this, because it's kind of a long answer, but it's an important topic, is that a lot of our biggest clients looked to Microsoft or ServiceNow as that integration platform. And I said this on a few calls before, right?

Stephan D. Scholl: And what came back from those departments was that they're good companies, they're amazing places to integrate into, but they're static platforms; they're not dynamic platforms. So they found that when people log into these front doors of ServiceNow, it's just more informational than it is transactional. Because we own the sources of data, so remember, our approach is the best of both worlds. We own the most important sets of data; over $3 trillion of information across health and wealth comes through our transaction engines. Populating that through work life, and then engaging the employee before they actually make the decision is how you take cost out, and complexity out.

Greg Goff: What's what's come back from those departments as they are good companies. They are amazing places to integrate on but they are static platforms. They are not dynamic platform. So they find that when people log into these front doors of service now it's just more informational than it is transactional because we own the sources of data. So remember our approach is the best at.

Greg Goff: Both worlds, we own the most important setup data over three trillion dollars of information across health and wealth comes through our transaction engines populating that through work life and then engaging the employee before they actually make the decision is how you take cost out is how you take complexity out and Microsoft service now.

Stephan D. Scholl: And Microsoft, ServiceNow, Oracle, all the ones that have been trying to become these front doors, even worked on some of the cases; we have more content than some of them do. That's our secret sauce, the connection of those two components, and that's what's giving us an advantage still today.

Greg Goff: Oracle all the ones that had been trying to become this front doors, even work down some of the cases, we have more content than some of them do that's our secret sauce is the connection of those two components and Thats whats, giving us an advantage still today.

Unknown Speaker: Great, great. That's very helpful.

Speaker Change: Great Great that's helpful and.

Greg Goff: Any.

Greg Goff: Surprises in terms of the market reaction to the announcement of the divestiture either from current clients prospects or even software partners that do you think there'll be any.

Unknown Speaker: And any surprises in terms of the market reaction to the announcement of the divestiture, either from current clients, prospects, or even software partners? Do you think there'll be any? Any indigestion there as you separate those two units?

Greg Goff: Any indigestion there.

Greg Goff: As you separate those two those units.

Katie Rooney: Yeah, Pete, it's Katie. You know, listen, I actually would say that it's been, um..., integration. And I think that's really what's important, so that, you know, when you think about the experience for the client, it won't change. You know, the integration behind the scenes will be slightly different, but that partnership, that experience, that interaction model will still be valid, which I think has really resonated with folks

Speaker Change: Yes, Peter Katy listen.

Greg Goff: I actually would say that it's been.

Greg Goff: Really positive overall, I mean, even with the vendors that the idea of having that one that.

Greg Goff: Integration of professional services with payroll and a global platform with focus and investment really resonate and I think too with clients again remember we're trying to deliver the best of both worlds here. So you'll have the focus and investment for the payroll and professional services business along with the remaining light businesses with that continue.

Greg Goff: The integration and I think that's really what's important so that when you think about the experience for the client it won't change.

Greg Goff: The integration behind the scenes will be slightly different but that partnership that experience and that interaction model will still be valid, which I think has really resonated with them with with folks listen Pete I said this on the last call people get it that when payroll processing payroll.

Stephan D. Scholl: Folks, listen, Pete, I said this in the last call, people get it that when we do payroll, process payroll, and run a professional services business around SAP or Workday. Those are full-time jobs, right? And those were divisions within Alight. And that's why I keep saying being in that heavy labor-based or heavy capital-intensive payroll business, that takes 100% effort to do right. And we did well with it. Don't get me wrong.

Greg Goff: And running a professional services business around SAP or workday. Those are full time jobs right and those were divisions within our light and that's why I keep saying being in that heavy labor based or.

Greg Goff: Heavy capital intensive payroll business that takes a 100% effort to do right and we did well with it don't get me wrong I loved it it was a great contributor, but now having somebody completely solely focused on that and then as Katie said with a strong partnership.

Stephan D. Scholl: I loved it. It was a great contributor. But now, having somebody completely solely focused on that, and then, as Katie said, with a strong partnership, because they still want to come through Worklife as a platform to drive the engagement processes, that's kind of the best of both worlds. So we're pretty excited about it. Okay, that's great.

Greg Goff: Because they still want to come through work life as a platform to drive the engagement processes, that's kind of the best of both worlds. So we're pretty excited about it.

Unknown Speaker: Okay, that's great to hear. I'll get back in the queue and continue to monitor.

Speaker Change: Okay, that's great to hear I'll get back in the queue and continue to monitor.

Speaker Change: Thanks Pete.

Greg Goff: Yes.

Operator: Your next question comes from the line of Peter of TD. Your line is now open. Please ask your question.

Greg Goff: Your next question comes from the line of Peter of GP. Your line is now open. Please ask your question.

Unknown Speaker: Thank you. Good morning. Thanks for the question. Also, congrats to all and best of luck to Katie.

Speaker Change: Thank you good morning. Thanks for the question also congrats to warranty.

Greg Goff: <unk>.

Speaker Change: The Katy.

Unknown Speaker: Multiple calls going on right now. I'm just curious on the bookings front. Sounds like there's been a little bit of momentum there. Just curious if, since the divestiture, it's just a simpler sale, and you think, perhaps, maybe sale conversion, do you think that improves now with post-divestiture? And I have a quick follow-up.

Greg Goff: Sorry.

Speaker Change: Sorry, sorry, multiple calls going on right now I'm just curious on the bookings front it sounds like there has been.

Greg Goff: Little bit of momentum there.

Speaker Change: Just curious.

Greg Goff: Since the divestiture of <unk>.

Greg Goff: <unk> sale and you think perhaps maybe convert sale conversion.

Greg Goff: Do you think that improves now with.

Greg Goff: Post divestiture and a quick follow up.

Jeremy Heaton: Thanks, Pete. You know, listen, as we talked about the revenue under contract, which I think is important now that we disclosed the three years, you can see growth in both, you know, in 24, 25 and 26 as we're building the book. So we are seeing the results of continued momentum in what we're doing. I think with that focus, you do see more pipeline, and you see better conversion. And I don't, you know, from a deal perspective, this may be harder to say on the, you know, the simplified view of what the business is going forward and what we're driving.

Speaker Change: Thanks Pete.

Greg Goff: As we talked about the revenue under contract, which I think is important now that we disclosed the three years you could see growth in both 'twenty four 'twenty five 'twenty six as were building. The book. So we are seeing the results of continued momentum in what we're doing I think with that focus you do you see more pipeline you see better conversion.

Speaker Change: Jen and I don't from a deal perspective, it's maybe harder to say.

Greg Goff: On.

Greg Goff: The simplified view of what the business is going forward and what we're driving but.

Greg Goff: Today includes all parts of the business. So again as I think through the.

Jeremy Heaton: But, you know, that today includes all parts of the business. So again, as I think through the commercial agreement that we have with the business being divested to HIG, the shared success that we will both see from what we're doing, and we're building a book of revenue under contract that's going to benefit both of the businesses and supports our ramp and growth. And we're really excited, you know, again, getting this deal closed for the Alight business, and what it means going forward is that we've got a great track record here of history in growing this business.

Greg Goff: The commercial agreement that we have with with the business being divested to AIG. The shared success that we will both see from what we're doing and we're building. The book of revenue under contract that is going to benefit both of the businesses and supports our ramp in growth and we're really excited again getting this deal closed for the light business and what it means going forward.

Greg Goff: Third is we've got a great track record here of history in growing this business, we can see the ramp in the revenue under contract and its profitable growth right. We are really excited that we come out of getting the deal closed we get the immediate margin uplift where higher recurring so we have less of this volatility on the project revenue side.

Jeremy Heaton: We can see the ramp and the revenue under contract, and it's profitable growth, right? We are really excited that we come out of getting the deal closed, we get the immediate margin uplift, we're higher recurring, so we have less of this volatility on the project revenue side, better cash flow, lower leverage, and flexibility for us to operate the business in a simplified way. So I think all of that works, but you're right, we are seeing the momentum on the commercial side, and it's important for us to just drive that greater visibility, you know, for ourselves, but importantly for you and investors as they see the revenue under contract build.

Greg Goff: Better cash flow lower leverage and flexibility for us to operate the business in a simplified way. So I think all of that works, but youre right. We are seeing the momentum on the commercial side and it's important for us to just drive that greater visibility.

Greg Goff: For ourselves, but importantly for you and investors as they see the revenue under contract.

Jeremy Heaton: The only thing I would add to that, Pete, is on the people front. As you know, in the last year with Greg George coming on board, the new vice presidents we've hired, the professionalism, the scalability, the capability of driving these larger enterprise deals on one end, yet still going after the call, you know, the smaller best-of-breed deals. We've really gotten much better at that. And so I've been really pleased with the progress around hiring and recruiting.

Greg Goff: The thing I would add to that Peter is on the people front as you know in the last year with Greg George coming on.

Greg Goff: The new Vice Presidents, we have hired the professionalism the scalability.

Greg Goff: Capability of driving these larger enterprise deals on one and yet still going after the call. The smaller best of breed deals, we've really gotten much better at that.

Jeremy Heaton: And we have top talent from, I mean, we've hired probably some of the best reps from most of our competitors that are here, right? And so, as I always say, it's great when clients vote with their wallets, but it's even better when people vote with their careers. And so we've been able to recruit some incredible talent in commercial.

Greg Goff: So I've been really pleased with the progress around the hiring and recruiting and we have top talent from <unk>.

Greg Goff: We've hired probably some of the best reps for most of our competitors that are here right. So as I always say, it's great when clients vote with their wallets, but it's even better when people, but with their careers and so we've been able to recruit some incredible talent in commercial.

Stephan D. Scholl: Thanks, that's helpful. And then post-investiture, I would imagine the picture or the potential for Alight to form some solid go-to-market partnerships, perhaps, with other payroll providers. There's an opportunity there. Just curious if you have any comments on that and if you see any windows there to partner with another player. Thank you.

Speaker Change: Thanks, that's helpful and then post divestiture.

Greg Goff: Imagine the picture or the potential for life to form some.

Greg Goff: Go to market partnerships, perhaps with with all their payroll providers. There is an opportunity. There just curious if you have any comments on that.

Speaker Change: Do you see any any windows there to partner with another player. Thank you.

Unknown Speaker: Yeah, listen, absolutely. I mean, the topic we don't talk a lot about is the AI topic. I guess I just said trillions of dollars, not dollars, but trillions of data sets, you know, run through our platform on the wealth and health side. And every client is continuously asking us to leverage this consolidated platform to do what leverages analytics AI to give a recommendation engine down to the individual level. As you know, in the health and wealth world, everything is based on job codes; it's never down to the individual level that that's never been done on somebody. No, that's never been, you know, done at the level of specificity that we want to get to. So our partnerships are with some great AI companies. And maybe Greg, you want to jump in?

Speaker Change: Yes, listen absolutely I mean, the topic, we don't talk a lot about is VII topic as I, just said trillions of dollars.

Greg Goff: Not dollars, but trillions of datasets run through our platform on the wealth and health side. In every client is asking us continuously to leverage this consolidated platform to do what leverage analytics AI to give a recommendation engine down to the individual level as you know in the health and wealth World everything.

Greg Goff: <unk> is based on job codes, it's never down to the individual level that's never been.

Greg Goff: Somebody know.

Greg Goff: No.

Greg Goff: Never been.

Greg Goff: Done at the level of specificity that we want to get too. So our partnerships are with some great AI companies, maybe Greg you want to jump in.

Greg Goff: To your question certainly.

Gregory Goff: Yeah, I mean, I think about your question certainly. It opens up more possibilities, but that's something we pursue even today, right? In terms of, I think we have a very unique asset in terms of the data that we have. We also have unique assets in the AI and intelligence that we provide among and on top of those data sets. And it's in the domain, as Stephan said earlier, of health, wealth, and well-being, which is very unique to us as opposed to more sort of general software players.

Greg Goff: It opens up more possibilities, but thats something we pursue even today right in terms of <unk>.

Greg Goff: I think we have a very unique.

Greg Goff: Asset in terms of the data that we have we also have unique assets.

Greg Goff: AI and intelligence that we provide among and on top of those datasets and it's in the domain of defense had earlier of health wealth well.

Greg Goff: Well being which is very unique to us as opposed to a more sort of general software players.

Gregory Goff: And so we're additive to those. Any data sets that we can get, whether that be payroll, as you mentioned, that could be financial data sets, that could be social data sets, that can be anything health and wealth related, those are all additive to the outcome that we can provide, ultimately, on behalf of an employee.

Greg Goff: So were additive to those any datasets that we can get whether that be payroll as you mentioned that could be financial dataset that can be social data sets that can be anything health and wealth related those are all accretive to the outcome that we can provide ultimately on behalf of an employee and maybe the last piece.

Stephan D. Scholl: And maybe the last piece, because it's not a secret. I said ServiceNow and Microsoft, rather than debating who's a better front door for our topics, we realize there's room for both. What ServiceNow does is amazing for a lot of case management capabilities around help desk and providing a lot of skill sets there. But what we provide is really around that central nervous system around employee engagement. We are that better front door.

Greg Goff: It's not a secret.

Greg Goff: <unk> said service now in Microsoft.

Greg Goff: Rather than debating who has a better front door for our topics. We realize there is room for both what service now does is amazing on a lot of case management capabilities around help desk and providing a lot of skill sets there, but what we provide is really around that central nervous system around employee engagement, we are that better front door, so doesn't have to be.

Stephan D. Scholl: So it doesn't have to be either or. Same with Microsoft. They both realize that there's a strong partnership between the two of us rather than competing with each other like we did in some cases years back. So I think that's also exciting, a realization that that'll help our clients. Great.

Greg Goff: Either or same with Microsoft they both realized that there is a strong partnership between the two of us rather than competing with each other like we have in some cases years back. So I think that's also exciting a realization that will all help our clients.

Unknown Speaker: Great. Thank you, Rick Keller.

Speaker Change: Great. Thank you for your color.

Speaker Change: Thanks, Pete Thanks Pete.

Operator: Your next question comes from the line of Joseph of Kanekord. Your line is now open. Please ask your question.

Greg Goff: Your next question comes from the line of Joseph <unk> of Canaccord. Your line is now open. Please ask your question.

Unknown Speaker: Hey, everyone. Good morning. Congratulations on everybody's new roles. And to Katie, best of luck after the close on the deal. Thank you. Maybe just a lot of questions have already been asked, but maybe we could get a little update on where you see the macro, what clients are saying, how that may be affecting the cadence of discussions on new BPAS deals, and then I'll have a quick follow-up.

Speaker Change: Hey, everyone. Good morning, Congrats on everybody's new roles. So.

Greg Goff: <unk> best of luck after the close on the deal.

Speaker Change: Maybe just a lot of questions have already been asked but maybe get a little update on where you see the macro what clients are saying how that may be.

Greg Goff: Affecting the cadence of discussions on new be past deals and then I'll have a quick follow up.

Stephan D. Scholl: Yeah, listen, you know. As I said earlier, what we see is the continued dynamic of pressure on our installed base, especially who we serve. We serve the largest companies in the world. And every single CFO I've talked to, the CIO, and the CHRO is collectively trying to figure out how to get employee spend down, how to drive engagement across these disparate systems. So that theme is as loud as ever. There's been no abatement of the activity.

Speaker Change: Yes listen.

Greg Goff: So as I said kind of earlier, what we see is the continued dynamic of pressure in our install base, especially who we serve that we serve the largest companies in the world and every single CFO when I've talked to CIO and CH Aro are collectively trying to figure out how to get employees spend down how to drive engagement across these.

Greg Goff: Disparate systems, so that theme is as loud as ever.

Greg Goff: Theres no abatement of the activity so our investments in value engineering our investments.

Stephan D. Scholl: So our investments in value engineering, our investments in driving outcome-based deals versus transaction-based deals, I think is the most exciting chapter ahead because we're the only ones, when you go to our client base and consolidate the data set, we are underwriting to cost takeouts, but by driving better process engineering. And I think that's the holy grail that so few companies ever achieve, right? So most companies get stuck at the transaction level. And as we all know, the most powerful companies in the world truly are platform companies, right? I mean, there's no debate about that.

Greg Goff: And driving outcome based deals versus transaction based deals I think is the most exciting chapter ahead, because we're the only ones. When you go to our client base and consolidate the dataset, we are underwriting to cost take outs, but by driving better process engineering.

Greg Goff: And I think that's the Holy Grail that so few companies ever achieve right. So most companies get stuck at the transaction level and as we all know the most powerful companies in the world truly are platform companies right. I mean, that's there's no debate about that and so thats been our journey for the last 455 years on that path. We've also had to modernize our technology.

Stephan D. Scholl: And so that's been our journey for the last four and a half, five years. On that path, we've also had to modernize our technology over the last four years. So in four years, we're undoing 40 years of history. And as everybody else in the call knows, so few companies that scale tackle that problem, right? Most of them are Band-Aid solutions.

Greg Goff: Over the last four years. So in four years, we're undoing 40 years of history and as everybody else on the call knows so few companies at scale tackle that problem right. Most of them are band aid solutions. So we've done the heavy lifting so at the end of this year by being out of our data centers will also then allow us to be even more flexible in tooling and capability in <unk>.

Stephan D. Scholl: So we've done the heavy lifting. So at the end of this year, being out of our data centers will also allow us to be even more flexible in tooling and capability in being able to configure a truly personalized platform for a retail client that's going to be very different than a banking client that's going to be very different than a manufacturing client. So we continue to evolve our platform and technology to meet the needs of our clients and really help bring together an end-to-end true employee engagement platform which, up until today, has not existed by any company to truly drive an effective outcome for clients.

Greg Goff: Being able to configure a truly personalized platform for a retail client that's going to be very different than a banking client that's going to be very different than the manufacturing clients. So we continue to evolve our platform and technology to the needs of our clients and really helping bring together an end to end true employee engagement platform, which up until today.

Greg Goff: Has not existed by any company.

Greg Goff: To truly driving effective.

Greg Goff: <unk> for clients.

Jeremy Heaton: And maybe, Joe, what I'd add is, you can see in the results, right, the BPAS revenues being up over 20% for both the total company and the continuing operations business. So, you're seeing demand across the board in that space, and I think you look at those results in the totality of the company, but then you also, in the prepared remarks, Stephan talked about the example of the client, right?

Jeremy: And maybe Joe what I'd add is you can see in the results are as <unk> revenues being up over 20% for both the total company in the continuing operations business. So youre seeing demand across the board in that space and I think you look at those results in the totality of the company, but then you also.

Greg Goff: So in the prepared remarks, <unk> talked about the example of the client right, where you had a.

Jeremy Heaton: Where you had a critical medical need for somebody within the HR organization and really saw the value on a personal basis of the combination of the technology that we have but also the medical expertise and the services that we bring together with that to drive a solution for a family in need.

Greg Goff: A critical medical need for somebody within the HR organization and really solve the value on a personal basis of the combination of the technology that we have but also the medical expertise and the services that we bring together with that to drive a solution for a family of need and Thats really the.

Jeremy Heaton: And that's really the, you know, as a singular point, as you think about how we drive value and outcomes and how we showed that to that particular company. So, as Stephan said, demand in that space, right? We're in a differentiated space in the value proposition that we have and what we're able to do, and I think the results show that. And then finally, as in the macro, we'll always watch the non-recurring part of the business, right?

Greg Goff: As a singular point as you think about how we drive the value and outcomes and how we show that to that particular company. So as to fan said demand in that space right. We're in a differentiated space in the value proposition that we have and what we're able to do and I think the results show that and then finally in the macro will always watch.

Greg Goff: The nonrecurring part of the business right. We're pleased that part of that goes away with the deal and some of that volatility, but in the benefit space on the project side, it's a little bit of Youre always watching what that pipeline is the shorter term sales cycle M&A and regulatory as Greg talked about are areas that drive project revenue. So we watch.

Jeremy Heaton: We're pleased that part of that goes away with the deal and some of that volatility, but in the benefit space on the project side, it's a little bit of you're always watching what that pipeline is, the shorter-term sales cycle, M&A, and regulatory, as Greg talked about, are areas that drive project revenue. So, we watch that, but again, as we go to a business that is greater than 90% recurring revenue, that becomes less of what we need to be able to control – what we have to watch from our macro perspective.

Greg Goff: That but again as we go to a business that is greater than 90% recurring revenue that becomes less of what we need to be able to what we have to watch from a macro perspective.

Unknown Speaker: Unknown Speaker That's helpful. And then I know you mentioned the board composition has changed, I think, about a 50% clip over maybe the last year or so. And, you know, maybe that's reflective here of some of the changes going on in the organization. But how does that change in the board composition affect strategy or any other interesting points or salient points relative to, you know, the board driving strategy here? Thanks a lot.

Speaker Change: Sure that's helpful and then.

Greg Goff: I know you mentioned.

Greg Goff: The board composition has.

Greg Goff: Has changed.

Greg Goff: That's about a 50% clip over maybe the last year or so maybe thats reflective here.

Greg Goff: Sort of a change.

Greg Goff: Right.

Greg Goff: The change in the board composition.

Greg Goff: Affect strategy or any other.

Greg Goff: Interesting point for salient point throw up relative to the board driving strategy here. Thanks a lot.

Stephan D. Scholl: Yeah, thanks for that. And you know, we've been very thoughtful since a major sponsor, as you know, has left, you know, left the board. We've been able to fill that with Unknown Speaker Great content and voice of client capability. And so for us, we always look for the ability to speak to product and technology, speak to industry, you know, the notion of, you know, what it means to be in the wealth business, the retiree business, the benefits business in its entirety.

Speaker Change: Yes, thanks for that and we've been very thoughtful since a major sponsor as you know.

Greg Goff: Has.

Greg Goff: Left the board we've.

Greg Goff: We've been able to fill that with.

Greg Goff: Great content and voice of client capability and so for US we always look for ability to speak to product and technology speak to industry. The notion of what it means to be in the wealth business. The retiree business the benefits business in its entirety. So.

Stephan D. Scholl: So you know, the voice of the client around that in terms of the CHRO position, the voice of industry, and, of course, good stewards of cost and financial horsepower, right? So I think we have a really good cross section of capability. And then we also have really strong, you know, where's the puck going? As I, you know, I'm a Canadian, so I can say that, right? Where's the puck going to go where versus where it is.

Greg Goff: Voice of client around that in terms of Chr opposition voice of industry technology and product and then of course, good stewards of cost and and financial horsepower right. So I think we have a really good cross section of capability and then we also have really strong.

Greg Goff: Where's the puck going as the Canadian so I can say that right, whereas the puck going to wear it versus where it is.

Stephan D. Scholl: And so our board is very thoughtful on while we're always in this 90 day cycle. It's as you've heard us say, you know, we're willing to sacrifice a 90 day or even a six month window for the longer term strategy of this company, right, because many have asked, you know, you're selling some pretty good growth assets here. But you've seen the history of this business, which is that it's very volatile. And so we're making some big bets on better profitability.

Greg Goff: And so our board is very thoughtful on while we're always in this 90 day cycle.

Greg Goff: As you've heard US say, we're willing to sacrifice, a 90 day or even a six month window for the longer term strategy of this company alright, because many have asked youre selling some pretty good growth assets here.

Greg Goff: But you've seen the history of this business, which is it's very volatile and so we're making some big bets on better profitability and Jeremy you used the word profitable growth two or three times. So the orientation of the board around thinking long term more profitable growth orientation, even though it may mean, some as we've said till you have this year, it's worth it alright, its worth it for the long term.

Stephan D. Scholl: And Jeremy used the word profitable growth two or three times. So the orientation of the board around thinking long term, more profitable growth orientation, even though it may mean some, as we said, Taylor two halves this year, it's worth it, right? It's worth it for the long term game. So strong, strong board support for that objective. Great.

Operator: Great. Thank you, Stefan. Yeah, you bet. Your next question comes from the line of Heather from Bank of America. Your line is now open, please.

Greg Goff: Game, So strong strong board support towards that objective.

Speaker Change: Great. Thank you Stefan.

Speaker Change: Yes, you bet.

Operator: Your next question comes from the line of Heather from Bank of America. Your line is now open. Please ask your Hi, this is Emily Marzo for Heather Balsky. I'm wondering if we could

Greg Goff: Your next question comes from the line of Heather <unk> from Bank of America. Your line is now open. Please ask your question.

Emily Marzo: Hi Emily. Good morning.

Greg Goff: Hi, This is Emily <unk> on for Heather Belsky.

Speaker Change: I'm wondering if we could look at the go forward business, how did <unk> sales.

Greg Goff: Perform versus your internal plan and are there any areas of upside or opportunity that youre seeing.

Jeremy Heaton: Sure. So, I'd say that the drivers of, you know, if you think about the remaining business and growth, it is a ramp this year, as we've said, and we expected all along, given the timing of the bookings from last year and, of course, the hosted business today. That comparison sits within the continuing operations. So, that's a couple of points of a driver of the headwind from a growth perspective. The one piece, as we've said already, that was different from our early expectations was the non-recurring project revenue, which is split between both the continuing operations and discontinued.

Speaker Change: Hi, Emily Good morning, sure. So I'd say the drivers of if you think about the remaining business and growth. It is it is a ramp this year as we've said and we expected all along given the timing of the bookings from last year and of course, the hosted business today that comparison sits.

Greg Goff: Within the <unk> continuing operations. So that's a couple of points of of of a driver of the headwind from a growth perspective. The one piece as we've said already is is that with different in our.

Greg Goff: From our early expectations was the nonrecurring project revenue, which is split between both the continuing operations and discontinued, but we continue to build the revenue under contract.

Jeremy Heaton: But we continue to build revenue under contract. The BPAS revenue growth within continuing operations was over 20%. The revenue under contract is growing, and we continue to see the build of, you know, from commercial execution and on the operational side. So, I would say the only thing is just that non-recurring project revenue, but otherwise, we feel good, and we'll come out with formal guidance on this business when we close the deal. Thank you.

Greg Goff: The <unk> revenue growth within the continuing operations was over 20% the revenue under contract is growing and we continue to see the build of from from commercial execution and on the operational side. So I would say the only thing. It was just that nonrecurring project revenue, but otherwise we feel good and we will come out with.

Greg Goff: Formal guidance on this business when we close the deal.

Unknown Speaker: And as a follow-up, the revenue under contract, that's for the total business, Unknown Speaker Do you have it broken out for the continuation? Unknown Speaker Correct. Unknown Speaker Okay.

Speaker Change: Thank you and as a follow up the revenue under contract that's for the total business do you have it broken out correct.

Jeremy Heaton: We have not, so that will be part of the guidance that we give and disclosure when we close the transaction. But you can think about it relative to the size of revenue. They're slightly higher on the revenue under contract on the remaining business, just given the profile of that business.

Greg Goff: We have not so that will be part of the guidance that we give and disclosure when we close the transaction, but you can you can think about it relative to the size of revenue. They are slightly higher on the revenue under contract on the remaining business just given the profile of that business.

Speaker Change: Okay. Thank you.

Greg Goff: Sure.

Operator: Your next question comes from the line of Tian Xin from JPMorgan Chase. Your line is now open. Please ask your question.

Greg Goff: Your next question comes from the line of Janssen from Jpmorgan Chase. Your line is now open. Please ask your question.

Unknown Speaker: Hey, thanks so much. I know a lot of moving pieces, but just on the free cash flow side, the operating cash flow conversion, can you give us some directional views here in the..., in the coming quarters on that?

Speaker Change: Hey, Thanks, so much I know a lot of moving pieces, but just on the free cash flow side. The operating cash flow conversion can you give us some directional views here.

Greg Goff: In the coming quarters on that.

Jeremy Heaton: Sure. More intention. Yeah.

Speaker Change: Sure Good morning, Tien Tsin, yes. So.

Greg Goff: We said op cash flow was $100 million in the quarter, so up almost 40% versus versus last year, So which was the conversion of 67%. We guided this year at 55% to 65% I would say that's still the framework in there is obviously seasonality plays it plays a part in terms of what we're seeing but.

Jeremy Heaton: So, as you said, operating cash flow was $100 million in the quarter, so up almost 40% versus last year, so that was the conversion of 67%. We guided this year at 55% to 65%. I would say that's still the frame we're in. There's obviously seasonality plays a part in terms of what we're seeing, but generally speaking, 20 points up year over year, we are driving, you know, we've got a big focus on DSOs, working capital efficiencies, how we're generating revenue earlier into transactions that we're doing in deals, and so we're seeing the benefits of that as we go.

Greg Goff: Generally speaking 20 points up year over year, we are driving we've got a big focus around dsos working capital efficiencies, how we're generating revenue earlier into transactions that we're doing in deals and so we're seeing the benefits of that as we as we come through so the cash flow.

Jeremy Heaton: So the cash flow element on an operating basis, we were really pleased within the quarter, and as I said, with capital expenditures also down 20%, it drove a pretty significant, more than doubled the free cash flow for the business in the quarter.

Greg Goff: <unk> element on an operating basis, we were really pleased within the quarter and as I said with capital expenditures also down 20% drove drove a pretty significant more than doubled the free cash flow for the business in the quarter.

Jeremy Heaton: Yeah, I think the only thing I'd add, Tingen, is, you know, there will potentially be some additional transaction expenses in the second quarter, but then obviously, those go away in Q3 and Q4. So you'll see, you know, kind of as you think about the seasonality of it, down a bit in the second quarter and then back up in Q3 and Q4.

Speaker Change: And I think the only thing I'd add Tien tsin as well.

Greg Goff: We will potentially be some additional transaction expenses in the second quarter.

Greg Goff: But then obviously does go away in Q3 and Q4, so youll see kind of as you think about the seasonality of it.

Greg Goff: <unk> in the second quarter, and then back up in Q3 and Q4.

Greg Goff: Okay.

Unknown Speaker: That's good. That's helpful. That's very helpful.

Speaker Change: That's good that's helpful. That's helpful. So my follow up maybe just a bigger picture one for you Stefan just.

Greg Goff: With the cloud conversion underway almost there.

Greg Goff: Go into a lot of these different.

Greg Goff: Is your conferences and Investor days, it feels like the theme again towards not surprisingly component position modulus Asian, amplifying everything and so this whole best of breed versus best of suite conversation comes up a lot what does that mean for for a light as you guys have been going down this monetization journey yourself I mean do you see more.

Stephan D. Scholl: So, my follow-up, maybe just a bigger picture one for you, Stefan, just with the cloud conversion and almost underway, you know, been going to a lot of these different user conferences and investor days, it feels like the theme, again, is, not surprisingly, componentization, modularization, appifying everything. And so, this whole best of breed versus best of suite conversation comes up a lot. What does that mean for Alight as you guys have been going down this modernization journey yourselves? I mean, do you see more threats as you're going through this from point solution providers? I'm just curious what the latest thinking is there. Thanks.

Greg Goff: Threat as Youre going through this from point solution providers.

Greg Goff: Curious what the latest thinking is there thanks.

Gregory Goff: Yeah, it's been the one we've talked quite a bit about before, right? And if you look at, you know, my history, right? And I was on the forefront of Best of Breed to Enterprise. And there's not many places left where that battle still exists.

Speaker Change: Yes, it's been the one we've talked quite a bit about before right and if you look at you know my history, right and I've been on the forefront of best of breed enterprise and there's a there's not many places left for that.

Stephan D. Scholl: And this is the one that I'm in right now. And what I'll tell you is, the minute we send the value engineering team into some of the big banks or big utilities or telcos or manufacturing plants and we ask some basic questions, how many point solutions do you have across, you know, navigation and, you know, retiree and benefits? And if you ask the questions, the answer gets between 30 and 50 points; then you say, "How much are you spending on that?"

Greg Goff: <unk> still exists and this is the one that I am in right now.

Greg Goff: What I will tell you is the minute we send their value engineering team into some of the big banks are big utilities are telcos or manufacturing and we ask some basic questions. How many point solutions do you have across NAV.

Greg Goff: <unk> retiree and benefits I mean, if you ask you questions. The answer gets between 30% and 50 point solutions. Then you say how much are you spending on that and its use.

Stephan D. Scholl: And it's, you know, if you add up the category of claims, it begins with a B, right? You're talking about billions of dollars of expense. And then you ask the real home run question, which is, well, what engagement and success are you seeing?

Greg Goff: You start if you add the category of claims it begins with a b right Youre talking about billions of dollars of expense and then you ask the real Homerun question, which is what engagement and success are you seeing and you're seeing still I mean it still.

Stephan D. Scholl: And you're still seeing, I mean, it's still, despite how smart we've all gotten past COVID tension, it is shocking to see how many big, smart companies are getting between 1% and maybe 7 to 8% engagement on some of these key components. So very quickly, the ROI when you get the CFO in the room is, "Why are we wasting all this money for so little output?" How come we can't, you know, bend the claims curve, which is still going up, between 7 and 12% on average, and that's pure bottom-line EBITDA, right?

Speaker Change: Despite the how smart we've all gotten past Covid Tien tsin. It is shocking to see how many big smart companies are getting between 1% and may be 7% to 8% engagement on some of these key components. So very quickly the ROI when you get the CFO in the room is why are we wasting all this money for so little.

Greg Goff: Output how can we can bend the claims curve, which is still going up between 7% and 12% on average I mean, thats pure bottom line EBITDA right. Then you get the CIO in the room, which has become for us a much much larger client, especially in the banking world tension.

Stephan D. Scholl: Then you get the CIO in the room, which has become, for us, a much, much larger client, especially in the banking world. You know, the CIOs are very powerful individuals. Now, you know, seizing the day a little bit more in that department of saying, why do we do it this way? Why do we have all these point solutions? So, you know, the challenge has been that there's been nobody.

Greg Goff: The cio's are very powerful individuals' now.

Greg Goff: <unk> the day, a little bit more in that department of saying why do we do it this way why do we have all these point solutions. So.

Greg Goff: The challenge has been there's been nobody I mean, you see all my competitors in these point solution areas.

Gregory Goff: I mean, you see all my competitors in these point solution areas, you know, in their talk tracks talking about the importance of engagement and platform, yet they just don't have the capability like we do. So our advantage still is that engagement platform level, consolidation of all these point solutions into one place. And then the final piece is we have the financial horsepower and the technology and capability. And to your point, we've been doing a lot of deals, even though we've been in the midst of this massive technology transformation when Greg, that's why I wanted Greg, you know, his promotion and his visibility to clients is going to be super helpful, is when we're done with this, the tooling and the capability to take data and do a lot more So that'll really help us in the next chapter.

Greg Goff: They're in there.

Speaker Change: <unk> talking about the.

Greg Goff: The importance of engagement platform yet they just don't have the capability like we do so so our advantage still is that engagement platform level consolidation of all these point solutions into one place and then the final pieces, we have the financial horsepower in the technology and capability and to your point.

Greg Goff: We've been doing a lot of deals even though we've been in the midst of this massive technology transformation, when Greg and Thats why I wanted Greg his promotion and his visibility to clients is going to be Super helpful is when we're done this the tooling and the capability to take data and do a lot more with it to drive a truly individual level experience will be here by the end of this.

Greg Goff: Year, so that will really help us in the next chapter the one thing I would add is I think.

Stephan D. Scholl: The one thing I would add is, just like in other areas dominated by platforms, the ERP world, et cetera, in this space, the slicing up, the sort of amplifying of all the individual pieces, that sub-optimizes the decision process and the outcome you can create for an individual. If I'm having to go transact my leave in one place, and that's an individual thing, I'm going to have to transact my benefits in an area, and that's another thing.

Greg Goff: Sure.

Greg Goff: Just like in every other.

Greg Goff: The other area is dominated by platforms, the ERP world et cetera in this space the slicing up the sort of <unk> of all the individual pieces.

Greg Goff: That sub optimize the decision process and the outcome you can create for an individual.

Stephan D. Scholl: I'm going to have to transact my 401k in a different app, and that's a different thing; it hampers my ability to create the best outcome for the individual and the best outcome for the employer in terms of what they can utilize. And so we see this, right? We see companies choosing the best breed. We have to be great at the individual solutions, right? But the overarching opportunities, we talk about AI, we talk about intelligence, we talk about, you know, ROI, is to bring those things together under one roof. That's, that's really the benefit of being

Greg Goff: If I'm having to go transact might leave in one place and that's an individual thing I'm Gonna go ahead, and transact might benefit in an area and Thats one thing I am going to having to transact My 401, K and a different app and that's a different thing.

Greg Goff: Sort of it.

Greg Goff: Hampers my ability to create the best outcome for the individual and the best outcome for the employer in terms of what they can utilize and so we see this right. We see companies choosing best of breed, we have to be great at the individual solutions, but the.

Greg Goff: Overarching opportunities, we talk about AI, we talk about intelligence, we talked about.

Greg Goff: Roy is to bring those things together under one umbrella.

Greg Goff: That's really the benefit at the end of the day.

Gregory Goff: Okay, no, thanks for going through that. And Greg, congrats on the promotion. Same to Jeremy. And, of course, Katie, thank you to you and all the best. I'm sure we'll be talking.

Speaker Change: Thanks for going through that and Greg Congrats on the promotion seemed to Jeremy and of course, Katie. Thank you to you and the others.

Greg Goff: The best scenario would be Tony.

Unknown Speaker: Thanks, Christian. Thanks, Christian. I appreciate it.

Speaker Change: Thanks, Tien tsin, Thanks, guys I appreciate it.

Unknown Executive: That is the end of our question and answer session. I'll now turn it over to management for closing remarks.

Speaker Change: That is the end of our question and answer session I'll now turn it over to management for closing remarks.

Stephan D. Scholl: I really appreciate everybody's time early this morning and appreciate the questions and look forward to seeing so many of you at upcoming conferences. Have a great day.

Speaker Change: Okay I really appreciate everybody's time early this morning, and I appreciate the questions and look forward to seeing so many of you at upcoming conferences have a great day.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Greg Goff: Okay.

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