Q2 2024 Alight Inc Earnings Call

Ryan: Good morning, and thank you for holding. My name is Ryan, and I will be your conference operator today. Welcome to Alight's Second 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. Please.

Unknown Executive: Good morning, and thank you for holding.

Unknown Executive: My name is Ryan, and I will be your conference operator today. Welcome to a live second quarter to 24 earnings conference call. At this time, all parties are in a listen-only mode.

Ryan: Good morning and thank you for holding. My name is Ryan and I will be your conference operator today.

Speaker Change: Welcome to Alight's Second Quarter 2024 Earnings Conference Call.

Unknown Executive: As a reminder, today's call is being recorded. And a replay of the call will be available on the Investor Relations section of the company's website.

Speaker Change: 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 Investor Relations section of the company's website.

Jeremy Gohan: And now I would like to turn it over to Jeremy Gohan, head of investor relations at The Light, to introduce today's speakers. Please go ahead, sir.

Jeremy Cohen: And now, I would like to turn it over to Jeremy Cohen, Head of Investor Relations at Alight, to introduce today's speakers. Please go ahead, sir.

Jeremy Cohen: Good morning, and thank you for joining us. Earlier today, the company issued a press release with its second 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 Gohan: Good morning, and thank you for joining us. Earlier today, the company issued a press release with second quarter 2024 results. A copy of the release can be found in the Investor Relations section of the company's website at investor.com.

Jeremy Cohen: Good morning and thank you for joining us. Earlier today, the company issued a press release with second quarter 2024 results.

Jeremy Cohen: A copy of the release can be found in the Investor Relations section of the company's website at Investor.Alight.com.

Jeremy Gohan: 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. 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 and 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 forward-looking statements.

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 Form 10-Q, as 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.

Speaker Change: 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. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors.

Speaker Change: 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 Form 10-Q , as such factors may be updated from time to time in the company's periodic filings.

Jeremy Cohen: 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. On today's call, when we refer to ARR, we are speaking of annual recurring revenue, which is derived from long-term contracts with high retention. We see ARR as a key metric in understanding our top-line growth and will provide transparency to ARR bookings and ARR revenue.

Speaker Change: The company does not undertake any obligation to update forward-looking statements.

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

Speaker Change: 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 Gohan: On today's call, when we refer to ARR, we are speaking of annual recurring revenue, which is derived from long-term contracts with high retention. We see ARR as a key metric in understanding our top-line growth and will provide transparency to ARR bookings and ARR revenue. ARR revenue may vary based on overall client head count as our pricing includes revenue per employee.

Speaker Change: On today's call, when we refer to ARR, we are speaking of annual recurring revenue, which is derived from long-term contracts with high retention.

Speaker Change: We see ARR as a key metric in understanding our top-line growth and will provide transparency to ARR bookings and ARR revenue. ARR revenue may vary based on overall client headcount, as our pricing includes revenue per employee.

Jeremy Gohan: On the call from management today, ARR's substantial CEO, Jeremy Heaton, CFO, and Greg Goff, President. Dave Gilmatt, a light-ficed share, is also with us today.

Jeremy Cohen: ARR revenue may vary based on overall client headcount, as our pricing includes revenue per employee. On the call for management today are Stephan Scholl, CEO, Jeremy Heaton, CFO, and Greg Goff, President. Dave Gilmatt, Alight's vice chairperson, is also with us today.

Speaker Change: On the call for management today are Stephan Scholl, CEO , Jeremy Heaton, CFO , and Greg Goff, President. Dave Gilmatt, Alight's Vice Chair, is also with us today. After the prepared remarks, we will open the call up for questions. I will now hand the call over to Stephan.

Jeremy Gohan: After the prepared remarks, we will open the call up for questions, and we will now hand the call over to staff.

Stephan Scholl: Thanks, Jeremy, and good morning. A light-head a transformational quarter, where we delivered on key strategic milestones. We continue to accelerate our go-to-market momentum, completed our two-year cloud migration program, and now begin a new chapter as a simplified company with higher margins, greater capital efficiency, and a stronger balance sheet.

Stephan Scholl: Thanks, Jeremy. And good morning.

Stefan: Thanks, Jeremy, and good morning. Alight had a transformational quarter where we delivered on key strategic milestones.

Stephan Scholl: Alight had a transformational quarter where we delivered on key strategic milestones. We continue to accelerate our go-to-market momentum, completed our two-year cloud migration program, and now begin a new chapter as a simplified company with higher margins, greater capital efficiency, and a stronger balance sheet. We see increased cost consciousness and lower client demand for our non-recurring project-based work, which, as a reminder, is less than 10% of our revenue.

Stefan Scholl: We continue to accelerate our go-to-market momentum, completed our two-year cloud migration program, and now begin a new chapter as a simplified company with higher margins, greater capital efficiency, and a stronger balance sheet.

Stephan Scholl: With the sale of our payroll and professional services business, we gain a new commercial partner and retain a superior financial model. Our adjusted gross margins are 350 basis points higher at over 40%. And adjusted EBITDA margins have increased from 21.7% to 25%. Our singular focus is on our differentiated technology-rich benefit services business with long-term annual recurring revenue, higher margins, and improved cash flow. We are an industry leader with four decades of experience serving 70% of the Fortune 100 and half of the Fortune 500. And we have created a better experience for our clients and their employees with the Elite Work Life platform, creating a more valuable and durable enterprise.

Stefan Scholl: With the sale of our payroll and professional services business, we gain a new commercial partner and retain a superior financial model. Our adjusted gross margins are 350 basis points higher, at over 40%, and adjusted EBITDA margins have increased from 21.7%.

Speaker Change: We are an industry leader with four decades of experience, serving 70% of the Fortune 100 and half of the Fortune 500. And we have created a better experience for our clients and their employees with the Alight WorkLife platform, creating a more valuable and durable enterprise.

Stephan Scholl: Heal proceeds were better than plan, and we retired 740 million in debt, reducing our net leverage to 2.8 times on last 12 months, adjusted EBITDA. We also announced 155 million of share buybacks, which will retire over 3% of our shares. Completing our cloud migration program has removed decades of tech debt and will generate 75 million of annual run rate cost savings, which is a key component of our additional gross margin and adjusted EBITDA margin expansion to 28%. We continue to win in the market with our transformed go-to-market strategy. We delivered 9% growth in ARR bookings in the first half of this year, including great wins this quarter from UPS, Wayfair, American Honda Motor Company, and the Adeco Group.

Stefan Scholl: Completing our cloud migration program has removed decades of tech debt and will generate 75 million of annual run rate cost savings which is a key component of our additional gross margin and adjusted EBITDA margin expansion to 28%.

Stephan Scholl: We see strong demand for our high value solutions and expect double digit ARR bookings growth in the second half of 2024 and continued growth thereafter. Our second quarter results were in line with the expectations we laid out last quarter, and for our core ARR business, we expect sequential growth through the second half of 2024. We see increased cost consciousness in lower client demand for our non-recurring project-based work, which, as a reminder, is less than 10% of our revenue.

Stephan Scholl: This influences how we think about 2024 and have updated our revenue outlook accordingly. Within our light core ARR business, we expect sequential revenue improvements quarterly through to the end of 2024, and ARR is over 90% of our revenue and comes from long-term contracts with relationships that span decades with some of the world's largest and most complex companies. As Jimmy will outline in more detail, we have billions of revenue under contract to 2026 and beyond. We are intensely focused on accelerating ARR with our transformed go-to-market model and by ensuring our clients and their employees have an extraordinary service experience.

Speaker Change: Within Alight's core ARR business, we expect sequential revenue improvements quarterly through to the end of 2024. And ARR is over 90% of our revenue and comes from long-term contracts with relationships that span decades with some of the world's largest and most complex companies.

Speaker Change: As Jeremy will outline in more detail, we have billions of revenue under contract through 2026 and beyond. We are intensely focused on accelerating ARR with our transformed go-to-market model, and by ensuring our clients and their employees have an extraordinary service experience.

Stephan Scholl: Our revenue under contract focused on client retention and high quality ARR bookings growth will yield revenue growth of 4% to 6% annually over time. Our transformed business will generate adjusted EBITDA margin expansion from 21.7% in 2023 to 25% to 26% in 2024. We also reaffirm our midterm adjusted EBITDA target of 28%. Over 600 basis points of margin improvement, and we are also reaffirming our midterm guidance on operating cash flow conversion of 65 to 80%, and maintaining net leverage of less than three times. We are confident in this guidance independent of top line growth.

Jeremy Cohen: We also reaffirm our midterm adjusted EBITDA target of 28 percent, over 600 basis points of margin improvement, and we are also reaffirming our midterm guidance on operating cash flow conversion of 65 to 80 percent and maintaining net leverage of less than three times.

Speaker Change: We are confident in this guidance, independent of top-line growth.

Stephan Scholl: In line with the closing of the divestiture and after almost five years in my role, it's the right time for a new leader to take the company forward in this exciting next chapter. I'm very proud of what we've accomplished during my time, including taking the company public, our cloud transformation with the alumni work life platform, and now with the sale, a light is a new company simplified and focused with a tremendous opportunity ahead. The board and I have been succession planning for months, and we've announced today that I will step down when a new leader has been named.

Stephan Scholl: In line with the closing of the divestiture, and after almost five years in my role, it's the right time for a new leader to take the company forward in this exciting next chapter. I'm very proud of what we've accomplished during my time, including taking the company public, our cloud transformation with the Alight WorkLife platform, and now, with the sale, Alight is a new company, simplified and focused, with a tremendous opportunity ahead.

Speaker Change: In line with the closing of the divestiture, and after almost five years in my role, it's the right time for a new leader to take the company forward in this exciting next chapter.

Speaker Change: I'm very proud of what we've accomplished during my time, including taking the company public.

Speaker Change: Our cloud transformation with the Alight WorkLife platform, and now with the sale, Alight is a new company, simplified and focused, with a tremendous opportunity ahead.

Stephan Scholl: The board and I have been succession planning for months, and we've announced today that I will step down when a new leader has been named. In the meantime, I will continue to lead the company alongside our highly experienced management team. Dave Gilmette, Vice Chairman of Alight's Board of Directors, will work closely with me to support an organized transition. I want to thank all of our colleagues around the world for their tireless efforts to deliver on these key milestones and to deliver for our clients each and every day. Jeremy, it's over to you.

Speaker Change: The board and I have been succession planning for months.

Stephan Scholl: In the meantime, I will continue to lead the company alongside our highly experienced management team. Dave Gillmett, Vice Chairman of a Light Sported Directors, will work closely with me to support an organized transition.

Speaker Change: And we've announced today that I will step down when a new leader has been named.

Jeremy Cohen: Dave Gilmette, Vice Chairman of Alight's Board of Directors, will work closely with me to support an organized transition. I want to thank all of our colleagues around the world for their tireless efforts to deliver on these key milestones and delivering for our clients each and every day. Jeremy, over to you.

Stephan Scholl: I want to thank all of our colleagues around the world for their tireless efforts to deliver on these key milestones and delivering for our clients each and every day.

Jeremy Gohan: Jeremy, over to you. Thank you, Stephan.

Jeremy Heaton: Good morning. Before I get into the quarter, I have a few notes on presentation. First, the payroll and professional services business is included in discontinued operations.

Jeremy Heaton: 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 of the light. In the presentation file this quarter, we highlight the accounting view of continuing and discontinued operations and also include certain performance supplemental financial information, which aligns with the normalized view of historic information we provided investors on July 18. We believe this normalized view better reflects our go-forward well-being and benefits business, and that is what I will speak to today. Second, when we refer to ARR, we are speaking of Annual Recurring Revenue, which is derived from long-term contracts with high retention.

Jeremy Cohen: 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 of Alight.

Jeremy Heaton: In the presentation filed this quarter, we highlight the accounting view of continuing and discontinued operations and also include certain pro forma supplemental financial information which aligns with the normalized view of historic information we provided investors on July 18th. We believe this normalized view better reflects our go-forward well-being and benefits business, and that is what I will speak to today. ARR revenue may vary based on overall client headcount, as our pricing includes revenue per employee.

Jeremy Cohen: In the presentation filed this quarter, we highlight the accounting view of continuing and discontinued operations, and also include certain pro forma supplemental financial information, which aligns with the normalized view of historic information we provided investors on July 18th.

Jeremy Cohen: We believe this normalized view better reflects our go-forward well-being and benefits business, and that is what I will speak to today.

Jeremy Cohen: Second, when we refer to ARR, we are speaking of annual recurring revenue, which is derived from long-term contracts with high retention. We see ARR as a key metric in understanding our top-line growth and will provide transparency to ARR bookings and ARR revenue.

Jeremy Heaton: We see ARR as a key metric in understanding our top line growth and will provide transparency to ARR bookings and ARR revenue. ARR revenue may vary based on overall client headcount, as our pricing includes revenue per employee.

Jeremy Cohen: ARR revenue may vary based on overall client headcount, as our pricing includes revenue per employee.

Jeremy Heaton: First, I will cover our commercial progress. Last year, we re-aligned our go-to-market structure to drive more sales intensity and greater demand generation. Our teams are incentivized to sell high-quality ARR, which flows into our long-term revenue under contract, and we are now seeing the results. Our ARR bookings were of 9% in the first half versus prior year. We also see a stronger ARR pipeline and an 8% increase in our wind rates to the first half. Based on our current pipeline, we expect double-digit ARR bookings growth in the second half of 2024 and continued momentum thereafter.

Jeremy Cohen: First, I will cover our commercial progress.

Jeremy Cohen: Last year, we realigned our go-to-market structure to drive more sales intensity and greater demand generation. Our teams are incentivized to sell high-quality ARR, which flows into our long-term revenue under contract, and we are now seeing the results.

Jeremy Cohen: Our ARR bookings were up 9% in the first half versus prior year. We also see a stronger ARR pipeline and an 8% increase in our win rates through the first half.

Jeremy Heaton: Based on our current pipeline, we expect double-digit ARR bookings growth in the second half of 2024 and continued momentum thereafter. Today, we have $93 million remaining share buyback authorization, and we will continue to make share repurchases a priority.

Jeremy Heaton: Now, let me turn to our second quarter performance on a pro-forma adjusted basis. Total revenue was 550 million, a decline of 2% when excluding the impact of the exited hosted business, which represents a 100 basis point improvement versus the first quarter. B-pass revenue increased 12.7% and represented 21% of total revenue for the company. A dusted gross profit was 219 million, with a adjusted gross margin of 39.8%. A dusted EBITDA was 128 million, with an adjusted EBITDA margin of 23.3%, 20 basis points ahead of first quarter profitability. Our year-to-date operating cash flow was 145 million, which represents a conversion rate of 56%.

Jeremy Cohen: Now let me turn to our second quarter performance on a pro forma adjusted basis.

Jeremy Cohen: Total revenue was $550 million, a decline of 2% when excluding the impact of the exited hosted business, which represents a 100 basis point improvement versus the first quarter.

Jeremy Cohen: BPAS revenue increased 12.7% and represented 21% of total revenue for the company.

Jeremy Cohen: Adjusted gross profit was $219 million, with adjusted gross margin of 39.8%.

Jeremy Cohen: Adjusted EBITDA was $128 million with an adjusted EBITDA margin of 23.3%, 20 basis points ahead of first quarter profitability.

Jeremy Cohen: Our year-to-date operating cash flow was $145 million, which represents a conversion rate of 56%.

Jeremy Heaton: Excluding separation costs, operating cash flow was 181 million, or a conversion of 70%. Capital expenditures year-to-date were 67 million, down 11 million, or 14% from a year ago, as we begin to benefit from lower spend on our cloud transformation. A dusted EPS for the year-to-date period was 25 cents, compared to 28 cents, driven by depreciation from the cloud migration. We will benefit from the share repurchases moving forward. Turning to the balance sheet, our quarter-end cash and cash equivalent balance was 183 million, and total debt was 2.8 billion. After quarter end, we used transaction proceeds to repay $740 million of debt.

Jeremy Cohen: Excluding separation costs, operating cash flow was $181 million, or a conversion of 70%.

Jeremy Cohen: Capital expenditures year-to-date were $67 million, down $11 million, or 14% from a year ago, as we begin to benefit from lower spend on our cloud transformation.

Jeremy Cohen: Adjusted EPS for the year-to-date period was $0.25 compared to $0.28 driven by depreciation from the cloud migration. We will benefit from the share repurchases moving forward.

Jeremy Cohen: Turning to the balance sheet, our quarter-end cash and cash equivalents balance was $183 million, and total debt was $2.8 billion.

Jeremy Heaton: As a result, we reduced our net leverage to 2.8 times, below 3 times is committed, and our remaining debt is 100% fixed for 2024, and 70% fixed for 2025. From a capital return perspective, we have been more active since May, with announced share repurchases of $155 million.

Jeremy Cohen: From a capital return perspective, we have been more active since May with announced share repurchases of $155 million.

Jeremy Heaton: Today, we have $93 million remaining share buyback authorization, and we will continue to make share repurchases a priority.

Jeremy Cohen: Today, we have $93 million remaining share buyback authorization, and we will continue to make share repurchases a priority.

Jeremy Heaton: Next, I'll cover our 2024 outlook, starting with revenue. We expect that our core ARR business, which represents over 90% of total revenue, will improve sequentially through the remainder of 2024. This is the core long-term contract base of our business that is stable and resilient. From a bookings perspective, we expect the momentum will continue.

Jeremy Heaton: Next, I'll cover our 2024 outlook starting with revenue. This is the core long-term contract base of our business that is stable and resilient. From a bookings perspective, we expect the momentum will continue. Now turning to our non-recurring project revenue, which represents less than 10% of our total business. Continued go-to market progress will increase ARR.

Jeremy Cohen: This is the core long-term contract base of our business that is stable and resilient.

Jeremy Cohen: From a bookings perspective, we expect the momentum will continue.

Jeremy Heaton: Now, turning to our non-recurring project revenue, which represents less than 10% of our total business, revenue is down 7.8% through the first half of 2024, and we are seeing even less demand today, driven by increasingly cost-conscious customers for this project work and is limiting large-scale projects related to benefit plan rollouts, regulatory changes, and M&A. So the second half, we expect non-recurring project revenues to be down approximately 20%. This project work will return as it has before, and with more clients in ARR, so we all have an even larger base to drive project growth in the future.

Speaker Change: Revenue is down 7.8% through the first half of 2024, and we are seeing even less demand today driven by increasingly cost-conscious customers for this project's work and is limiting large-scale projects related to benefit plan rollouts, regulatory changes, and M&A.

Speaker Change: For the second half, we expect non-recurring project revenues to be down approximately 20%. This project work will return as it has before, and with more clients in ARR, so we'll have an even larger base to drive project growth in the future.

Jeremy Heaton: Given this context we outlined and impacts on non-recurring project revenue, we expect second half revenue down 1 to 3% with total year revenue down 2 to 3%. Revenue under contract for the second half of 2024 is 1.2 billion, or 97% of our expected 2024 total revenue. For a full year 2025 revenue under contract is now 1.7 billion, and for 2026 is 1.3 billion. We expect total year adjusted EBITDA margin of 25 to 26%, which includes the start of run rate savings from the cloud migration. On a quarterly basis, third quarter profitability will likely be lower compared to 2023, given our lower project revenue.

Speaker Change: Revenue under contract for the second half of 2024 is $1.2 billion, or 97% of our expected 2024 total revenue.

Speaker Change: We expect total year adjusted EBITDA margin of 25 to 26%, which includes the start of run rate savings from the cloud migration.

Speaker Change: On a quarterly basis, third quarter profitability will likely be lower compared to 2023, given our lower project revenue.

Jeremy Heaton: In the fourth quarter, we will begin seeing the benefits of the cloud migration and expect stronger profitability versus the prior year. From a cash flow perspective, we expect our operating cash flow conversion in the range of 55 to 65%. We believe our revenue model of 4 to 6% annual growth is supported by our long-term revenue under contract, historic revenue retention of 95 to 99%, continued go to market progress that will increase ARR, and our history of growth, as you saw from the supplemental investor deck we shared last month. Also, we reaffirmed our midterm targets related to operating cash flow of 65 to 80%, maintaining net leverage below three times, and finally, an adjusted EBITDA margin of 28%.

Speaker Change: In the fourth quarter, we will begin seeing the benefits of the cloud migration and expect stronger profitability versus the prior year.

Speaker Change: From a cash flow perspective, we expect our operating cash flow conversion in the range of 55 to 65 percent.

Speaker Change: We believe our revenue model of 4-6% annual growth is supported by our long-term revenue under contract, historic revenue retention of 95-99%,

Jeremy Heaton: And we're not stopping there. We have a value creation program underway with Alex Partners to leverage our technology to drive better quality and experience for our clients and to streamline the company. This is a new chapter for our light, and we are energized by the opportunity in front of us to continue building the go-to-market momentum and ARR growth.

Speaker Change: And we're not stopping there. We have a value creation program underway with Alex Partners to leverage our technology, to drive better quality and experience for our clients, and to streamline the company.

Speaker Change: This is a new chapter for Alight, and we are energized by the opportunity in front of us to continue building the go-to-market momentum and ARR growth.

Jeremy Heaton: We will be holding an investor day before the end of this year, where we look forward to sharing more detail on our strategic and financial objectives.

Speaker Change: We will be holding an Investor Day before the end of this year, where we look forward to sharing more detail on our strategic and financial objectives.

Unknown Executive: James, with that, let's open it up for Q&A. Thank you.

Speaker Change: With that, let's open it up for Q&A.

Unknown Executive: Ladies and gentlemen, we will now be conducting a question-and-answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question Q. You may press star and two if you would like to remove your question from the Q. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we pull for questions.

Speaker Change: If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue.

Operator: Ladies and gentlemen, we will wait for a moment while we poll you for questions.

Speaker Change: Ladies and gentlemen, we will wait for a moment while we poll for questions.

Scott Schoenhaus: Our first question is from the line of Scott Schoenhaus with KeyBang Capital Markets. Please go ahead.

Speaker Change: Our first question is from the line of Scott Schoenhaus with KeyBank Capital Markets. Please go ahead.

Scott Schoenhaus: Hi, team. First, Stephan, it was really a pleasure working with you over the last several years. You're really leaving the next CEO a really, really great asset.

Unknown Speaker: Hi, team. First, Stefan, it was really a pleasure working with you over the last several years. You're really leaving the next CEO a really, really great asset.

Scott Schoenhaus: Hi, team. First, Stephan, it was really a pleasure working with you over the last several years. You're really leaving the next CEO a really, really great asset.

Stephan Scholl: Thank you.

Stephan Scholl: I guess this is a question for both, Stephan and Jeremy. Jeremy, you gave a lot of color there on the back half guidance. Project revenue being down. I think it's a 20%, but you noted that you should see sequential improvement in ARR, and I think you noted about double digits booking growth. That's right.

Scott Schoenhaus: Thank you, Scott. I guess this is a question for both Stephan and Jeremy. I mean, Jeremy, you gave a lot of color there on the back half guidance project revenue being down.

Speaker Change: I think you said 20%, but you noted that you should see sequential improvement in ARR, and I think you noted about double digits booking growth.

Stephan Scholl: I just kind of want to break down the back half if you could. Can you provide more color on the revenue dynamics in the third quarter versus the fourth quarter? Because I think that's important for investors to understand the moving dynamics between those two quarters.

Speaker Change: I just kind of want to break down the back half, if you could, can you provide more color on the revenue dynamics in third quarter versus fourth quarter, because I think that's important for investors to understand, you know, the moving dynamics between those two quarters.

Stephan Scholl: Sure. Thanks, Scott.

Jeremy Heaton: Good morning. On the recurring revenue side, we still have a slight headwind from the Cobra volumes last year, so for on a comparable basis, that's upside at the end of the third quarter. The growth will accelerate through the second half, with higher growth in the fourth quarter. We would expect the third quarter to be better growth than the second quarter, and then the fourth quarter to be the highest growth for the year as we continue on. On the project side, we'd expect to see almost the inverse, which is the fourth quarter typically carries even more project revenue.

Speaker Change: Sure, sure. Thanks, Scott. Good morning. So, on the recurring revenue side,

Speaker Change: We still have a slight headwind from the COBRA volumes last year, so on a comparable basis, that subsides.

Speaker Change: at the end of the third quarter. And so that, you know, the growth will accelerate through the second half with higher growth in the fourth quarter.

Speaker Change: And so we would expect the third quarter to be better growth than the second quarter, and then the fourth quarter to be the highest growth for the year.

Speaker Change: On the project side, we'd expect to see almost the inverse, which is the fourth quarter typically carries even more project revenue, and so as we see that impact

Jeremy Heaton: As we see that impact of the project revenue and more cost consciousness, that will impact the fourth quarter more. You'll still on an absolute basis. You'll still have a fourth quarter that's larger in revenue sizing, but I would say you have more improvement in the fourth quarter on the recurring side from the ARR and less so. It's a greater decline in the fourth quarter. Is that helpful? Yeah, that's helpful.

Speaker Change: of the project revenue and more cost consciousness, that'll impact the fourth quarter more. So you'll still on an absolute basis, you'll still have a fourth quarter that's larger in revenue sizing.

Speaker Change: Unknown Speaker But I would say you have more improvement in the fourth quarter on the recurring side from the ARR and less so, so it's a greater decline in the fourth quarter. Is that helpful?

Jeremy Heaton: Then my next question is on the margins, clearly a nice acceleration in the second half outlook given the devastature. How should we think about the cadence of margin expansion in the back half from third quarter to fourth quarter? Then what are the opportunities you're looking for post? What are the opportunities in the near and longer term there?

Speaker Change: Yeah, that's helpful. And then my next question, I was on the margins, clearly a nice acceleration in the second half outlook, given the divestiture.

Speaker Change: How should we think about the cadence of margin expansion in the back half from third quarter to fourth quarter? And then, you know, what are the opportunities you're looking for post, you know, what are the opportunities in the nearer and longer term there? Thanks.

Jeremy Heaton: Thanks.

Jeremy Heaton: Third quarter will be slightly lower profitability than we had last year. That's just driven by some of that project revenue decline; drops through, so from a margin perspective, is slightly lower than last year. In the fourth quarter, we start to realize that’s really one of the run rate savings from the cloud migration kick in for a full quarter's worth of benefit. So we're expecting, you know, typically you would have, I think last year, we had it on a 25% margin business. We had over 30% EBITDA margins.

Speaker Change: So third quarter will be slightly lower profitability than we had last year, and that's just driven by some of that project revenue decline drops through. So, from a margin perspective, slightly lower than last year.

Speaker Change: In the fourth quarter, we start to really, that's really when the run rate savings from the cloud migration kick in for a full quarter worth of benefit. So we're expecting, you know, typically you would have

Speaker Change: I think last year we had on a 25% margin business, we had over 30% EBITDA margins. We would expect

Jeremy Heaton: We would expect this year in the fourth quarter to be slightly higher than we were last year in the fourth quarter. So you do get the typical ramp, and that gets accelerated slightly just given the cloud migration benefits that we have coming through. And so that'll be, you know, and again, that starts the run rate of the $75 million of annual cost savings that we will get now that the cloud migration is completed.

Speaker Change: this year in the fourth quarter to be slightly higher than we were last year in the fourth quarter.

Speaker Change: So you do get the typical ramp.

Speaker Change: And that gets accelerated slightly just given the cloud migration benefits.

Speaker Change: And so that'll be, you know, and again, that starts the run rate of the $75 million of annual.

Jeremy Heaton: So that's the next big step for us as we think through the next couple of years. We've got the cloud migration benefits, as well as, as I mentioned, Alex Partners has kicked off with us to support us in removing any disenergies from the transaction, as well as driving the streamlining across the rest of the company.

Speaker Change: cost savings that we will get now that the cloud migration is completed. So that's the next big step for us as we think through the next couple of years. We've got the cloud migration benefits, as well as, as I mentioned, Alex Partners has kicked off with us to support us in removing any disenergies from the transaction, as well as driving the streamlining across the rest of the company.

Scott Schoenhaus: Thank you very much. Thanks, Scott.

Unknown Executive: Thank you.

Speaker Change: Thank you very much.

Kevin Mcveigh: Our next question is from the line of Kevin McVeigh with UBS. Please go ahead.

Scott Schoenhaus: Sure. Thanks, Scott.

Speaker Change: Thank you.

Speaker Change: Our next question is from the line of Kevin McVeigh with UBS. Please go ahead.

Kevin Mcveigh: Great, thanks so much.

Kevin Mcveigh: Morning, Kevin. Good morning, and Stephan, best of luck. It's, you know, pleasure working with you.

Speaker Change: Thanks so much. Morning, Kevin. Morning, Kevin. Good morning.

Speaker Change: and Stephan, best of luck, it's, you know.

Kevin Mcveigh: I wanted to thank you for the second half guidance just a little bit because it made me think about this wrong, but it was thought typically that the professional services was lower margin. But it seems like if you look at kind of the pacing of the EBITDA relative to the revenue, it looks like the underperforming the revenue in the second half. I guess is that right? Is there anything else in there that's driving that?

Speaker Change: I wanted to... Thank you.

Speaker Change: Talk to the second half guidance just a little bit, because it made me think about this wrong, but it was thought typically that the professional services was lower margin, but it seems like if you look at kind of the pacing of the EBITDA relative to the revenue, it looks like the EBITDA is lower.

Unknown Speaker: I always thought, typically, that the professional services were lower-margin, but it seems like if you look at kind of underperforming the revenue in the second half, I guess, is that right, or is there anything else in there that's driving that?

Speaker Change: underperforming the revenue in the second half. I guess, is that right? Or is there anything else in there that's driving that? And then what's the dollar amount of the cloud migration in the fourth quarter of the 75 million? How much comes in the fourth quarter? I just want to start there.

Kevin Mcveigh: And then what's the dollar amount of the cloud migration in the fourth quarter of the 75 million? How much comes in the fourth quarter is one to start there?

Kevin Mcveigh: Sure, thank you, Kevin. So, so it's about I would say 20 million for this year. You start to get some of the benefits in the third quarter on the cloud migration. And then I call it, you know, we were at run rate in the fourth quarter on that. So just think about that as, you know, call it, you know, 18 to 19 million dollars of benefit in the fourth quarter as we're running on the cloud migration.

Speaker Change: Thanks, Kevin. So it's about, I would say, $20 million for this year. You start to get some of the benefits in the third quarter on the cloud migration.

Speaker Change: And then I'd call it, you know, we're at run rate in the fourth quarter on that, so just think about that as, you know, call it, you know, $18 to $19 million of benefit in the fourth quarter as we're at run rate on the cloud migration.

Kevin Mcveigh: On the first part of your question, it relates to project revenue. I think about it differently. So the professional service of the divested professional services business and carry a lower margin on that revenue, but the project revenue that we're talking about now in the second half with the go forward benefits business can carry a higher margin. So that can be upwards of call it 50% margin because it's our client delivery teams that are working in early on site with our clients driving that project revenue. So that that's what you see there. And that's the impact as we think about the third quarter.

Speaker Change: On the first part of your question as it relates to project revenue, I think about it differently. So the professional service, so the divested professional services business,

Speaker Change: did carry a lower margin on that revenue.

Speaker Change: But the project revenue that we're talking about now in the second half with the Go Forward Benefits business can carry a higher margin.

Speaker Change: So that can be upwards of...

Speaker Change: Call it 50-ish percent margin because it's our client delivery teams that are working and already on site with our clients driving that project revenue. So that's what you see there, and that's the impact as we think about the third quarter. Again, that gets more than offset from the cloud migration benefits in the fourth quarter.

Kevin Mcveigh: Again, that gets more than offset from the cloud migration benefits in the fourth quarter.

Kevin Mcveigh: It's helpful.

Kevin Mcveigh: So it sounds like Jeremy that maybe that the core business is outperforming on the margin, just given some of the pressure from the professional service. That's right.

Speaker Change: It's helpful so it sounds like Jeremy that maybe that the core business is out performing on the margin just given

Kevin Mcveigh: Which is great.

Jeremy Cohen: Correct. That's right. That's right.

Kevin Mcveigh: And then incremental buyback any sense of timing and pacing on that and just maybe lend it there. Thanks. So on the 75 million, we executed the accelerated share repurchase program on July 15. That will run through likely the end of August, beginning of September timeframe. So that's when that 75 million will fully become executed and bought back. And then, as I said, we've got the 93 million dollars of remaining authorization. So we will look to be opportunistic in terms of that as we move forward through the remainder of the year.

Speaker Change: Which is great. And then...

Speaker Change: The incremental buyback, any sense of timing and pacing on that, and I'll just, maybe I'll end it there. Thanks.

Speaker Change: So, on the $75 million, we executed the Accelerated Share Repurchase Program on July 15th. That will run through, likely...

Speaker Change: The end of August , beginning of September time frame.

Speaker Change: So that's when that $75 million will fully become executed and bought back, and then as I said, we've got the $93 million of remaining authorization, so we will look to be opportunistic in terms of that as we move forward through the remainder of the year.

Kevin Mcveigh: Thank you. Thanks, Kevin.

Speaker Change: Thank you very much.

Joseph Vafi: Thank you. Our next question is from the line of Joseph Vaffy with Canacard Generity. Please go ahead.

Kevin Mcveigh: Thanks, Kevin.

Speaker Change: Thank you. Our next question is from the line of Joseph Vafi with Canaccord Genoviti. Please go ahead.

Joseph Vafi: Hey, everyone. Good morning. And also my best wishes to find on your next chapter as well here.

Unknown Speaker: Hey, everyone. Good morning. And also, my best wishes to Stefan on your next chapter as well here. Maybe we should just kind of start on the ARR commentary. I know you're looking for, you know,

Joseph Vafi: Hey everyone, good morning, and also my best wishes to Stefan on your next chapter as well here. Maybe we just kind of start on the ARR commentary. I know you're looking for, you know,

Joseph Vafi: Maybe we just kind of start on the AR commentary. I know you're looking for some good acceleration AR bookings in the second half.

Speaker Change: Some good acceleration and AR bookings in the second half. Could you just kind of remind us, you know, kind of what the compare is looking like in the second half?

Joseph Vafi: Could you just kind of remind us kind of what the compare is looking like in the second half versus a year ago to get a feel of, you know, is it a tougher, easier compare? And then if you look at AR bookings, you know, on a dollar basis, first half, second half, is, there's some commentary there. Are we up in second half on dollar volume basis and then of a quick follow up? Sure, sure.

Speaker Change: versus a year ago to, you know, get, you know, get a feel of, you know, you know, was it a, is it a tougher, easier compare? And then if you look at ARR bookings, you know, on a dollar basis, first half.

Speaker Change: Second half, is there some commentary there? Are we up in the second half on dollar volume basis? And then I'll have a quick follow-up.

Joseph Vafi: Thanks, Joe. Yeah, so, so as you remember from in 2023, we did have an acceleration in our bookings. We had a slow start in 2023 around bookings. We saw acceleration in the second half. So the comparing it's harder in the second half of 2024 for us, but we still see double digits as a view from the field and how we look at pipeline and wind rates today, where we expect that momentum to continue. Typically, we would have call it 60 to 65% of dollar amount of bookings would happen in the second half of the year.

Speaker Change: Sure, sure. Thanks, Joe. Yeah, so as you remember from in 2023, we did have an acceleration in our bookings. We had a slow start in 2023 around bookings. We saw acceleration in the second half. So the compare gets harder in the second half of 2024 for us, but we still see

Joseph Vafi: double digits as a, you know, a view from the field and how we look at pipeline and win rates today, where we expect that momentum to continue. Typically, we would have call it

Joseph Vafi: 60-65% of dollar amount of bookings would happen in the second half of the year.

Joseph Vafi: And so it's always a tougher compare in terms of dollars. But again, it's also the buying season continuing right now. And we've got a nice pipeline of deals. You saw the key wins that we've announced. So some really nice momentum in the Benadman space and the navigation world leaves administration. So that's really the drivers for us. So it's a bit of a tougher compare from last year.

Joseph Vafi: And so it's always a tougher compare in terms of dollars. But again, it's also the buying season continuing right now. And we've got a nice pipeline of deals. You saw the key wins that we've announced. So some really nice momentum in the admin space, in the navigation world, leaves administration. So that's really the drivers for us. So it's a bit of a tougher compare from last year. But

Joseph Vafi: But you know, we reorganize this go to market structure last year. We've got better coverage now in terms of how we think about strategic and enterprise accounts. How we're going after new logos. And so that's a lot of the driver in terms of just building an overall larger pipeline, higher quality pipeline around AR and then our wind rates and being able to execute, Joe. We're definitely seeing with this cost conscious environment that are, you know, it's to our benefit on the AR side. You know, you look at UPS moving away from best of breed to a more enterprise approach.

Joseph Vafi: You know

Joseph Vafi: We reorganized this go-to-market structure last year. We've got better coverage now in terms of how we think about strategic and enterprise accounts.

Joseph Vafi: How we're going after new logos.

Joseph Vafi: And so that's a lot of the driver in terms of just building an overall larger pipeline.

Joseph Vafi: [inaudible]

Joseph Vafi: We're seeing lots of more deals like that in our pipeline. So we're excited about what we see ahead. And yeah, the compares tougher, but the pipeline is larger than we've seen in a while.

Joseph Vafi: We're seeing lots of more deals like that in our pipeline, so we're excited about what we see ahead. And yeah, the compare is tougher, but the pipeline is larger than we've seen in a while.

Joseph Vafi: Great. That's great color.

Joseph Vafi: And then I know you're obviously not, you know, providing 25 guidance, but just on the project-based business, you know, is there some normalization. You see kind of looking out, you know, given where the macro is given kind of what, you know, the have been flow of kind of different projects are and kind of a historical backdrop to get a feel for, you know, to when or, you know, what you'll be looking for for normalization and that business, you know, not looking for real growth, but just, you know, what would be some of the big macro factors that could help us from our seat.

Speaker Change: Great, that's great color. And then I know you're obviously not, you know, providing 25 guidance, but

Speaker Change: just on the project-based business, you know, is there some normalization you see?

Speaker Change: kind of looking out, you know, given where the macro is given kind of

Speaker Change: What, you know, the ebb and flow of kind of different projects are and kind of a historical backdrop to get a feel for

Speaker Change: you know, when or, you know, what you'll be looking for, for normalization in that business, you know, not looking for real growth, but just, you know, what would be some of the big macro factors that could help us from our seat? Thanks a lot.

Joseph Vafi: Thanks a lot. Sure, thanks. So, you know, again, I think the next six months of execution on what we're just talking around the AR are bookings, as well as, you know, time to, you know, this project work. I wouldn't say it's as sensitive to macro, but you do see more cost consciousness, as we talked about. And, you know, we have a project-based business, which once again is less than 10% of the revenues on our business. We have seen this, you know, flow and go through the peaks and valleys over periods of time. We wouldn't expect that it continues for an extended period of time, but I think the next few months will give us a better view on pipeline, what we see coming into the early parts of 2025.

Unknown Speaker: Thanks, Joe. So, you know, again, I think the next six months of execution on what we're just talking about in terms of the ARR bookings, as well as time to make this project work, I wouldn't say it's.

Speaker Change: Thanks, Joe. So, you know, again, I think the next six months of execution on what we're just talking around the ARR bookings, as well as, you know, time to, you know, this project work, I wouldn't say it's

Speaker Change: as sensitive to macro, but you do see more cost consciousness as we talked about. And, you know, we have a project based business, which once again, is less than 10% of the revenues on our business.

Speaker Change: We have seen this, you know, flow and go through the peaks and valleys over periods of time.

Speaker Change: We wouldn't expect that it continues for an extended period of time, but I think the next few months will give us a better view on pipeline, what we see coming into the early parts of 2025.

Joseph Vafi: And I think it'll be important for us, as you saw, we announced the investor day later this year, where we can watch, you know, execution on the air booking side, as well as see what this environment looks like as we head into 2025. But I, you know, I wouldn't expect this for a very extended period of time, but again, it is project dependent.

Speaker Change: And I think it'll be important for us, as you saw, we announced the Investor Day later this year, where we can watch, you know, execution on the booking side, as well as see what this environment looks like as we head into 2025. But I, you know, I wouldn't expect this for a very extended period of time. But again, it is project dependent. M&A activity is a driver for us.

Joseph Vafi: M&A activity is a driver for us in terms of these large projects, as well as the regulatory environment. So it's an election year. So coming out of an election year, you would typically see some public policy changes, and you can see some pick up and project work. I mean, our go get Joe is a lot less going into next year and the other years. As you know, our revenue under contract and backlog used to be in the 80s. Now we're going to be in the 90s, but that doesn't give us a lot of room to drive a lot of in your revenue, right?

Speaker Change: In terms of these large projects as well as

Speaker Change: The regulatory environment. So it's an election year. So coming out of an election year, you would typically see some public policy changes and you can see some some pickup in project work. I mean, our go-get Joe is a lot less going into next year and the other years, as you know, our revenue under contract and backlog used to be in the 80s. Now we're going to be in the 90s.

Unknown Speaker: Unknown Speaker Our Go-Get Joe is a lot less going into next year and the other years. As you know, our revenue under contract and backlog used to be in the 80s. Now we're going to be in the 90s.

Unknown Speaker: But that doesn't give us a lot of room to drive a lot of in-year revenue, right? So the ARR bookings are going to be, to your point, a key metric to look at. And we're going to continue to support that data set with what we just gave today, and you'll see over the next six months that that'll help drive a good quality book of business in terms of helping sustain a better, you know, profitable growth orientation for the company.

Joseph Vafi: So the ARR bookings is going to be, to your point, a key metric to look at, and we're going to continue to support that data set with what we just gave today. You'll see over the next, you know, six months that that'll help drive a good quality book of business in terms of helping sustain a better, you know, profitable growth orientation for the company.

Speaker Change: But that doesn't give us a lot of room to drive a lot of in-year revenue, right? So the ARR bookings is going to be it, to your point.

Speaker Change: a key metric to look at. And we're going to continue to support that data set with what we just gave today. And you'll see over the next, you know, six months that that'll help drive a good quality book of business in terms of helping sustain a better, you know, profitable growth orientation for the company. Transcribed by https://otter.ai

Joseph Vafi: Thank you. Great guys, thank you very much.

Joseph Vafi: Thanks, Joe.

Speaker Change: Great, guys. Thank you very much.

Tian Sim Huang: Our next question is from the line of Tian Sim Huang with JP Morgan. Please go ahead. Thank you, and yeah, all the best to you to fan. I'm just curious; you know, you brought a lot of tech and software experience to light. What do you think, or what can you share with us on what the board is looking for and a successor here in the next step of the light? Well, listen, yeah, I appreciate that comment, tension, and I think it's, it's as you know, it's in my 50 year, and we've done a lot to modernize and, you know, undo the last 40 years of technology into a better platform to all to do what to meet the needs of what, you know, our customers are looking for, which is this best of breed point solutions environment is not supportive of driving better engagement with their employees, not talked about that for years.

Operator: Our next question is from the line of Tianxin Huang with J.P. Morgan. Please go ahead.

Joe: Thanks, Joe.

Speaker Change: Our next question is from the line of Tian-Hsing Huang with J.P. Morgan. Please go ahead.

Tian-Hsing Huang: Thank you, and yeah, all the best to you, Stefan. I'm just curious, you know, you brought a lot of tech and software experience.

Unknown Speaker: What do you think, or what can you share with us about what the board is looking for in a successor here in the next step of Alight?

Tian-Hsing Huang: What can you share with us on what the board is looking for in a successor here in the next step of Alight?

Stefan Scholl: Yeah, no, I appreciate that comment, and I think it's, it's, as you know, it's in my fifth year, and we've done a lot to modernize and, you know, undo the last 40 years of technology into a better platform.

Tian-Hsing Huang: To all to do what to meet the needs of what you know our customers are looking for which is this best of breed point solutions Environment is not supportive of driving better engagement with their employees. I've talked about that for years

Tian Sim Huang: This cost conscious environment has even brought up more of the forefront. And again, you look at the deals I announced: Honda, you look at UPS, you look at Wayfair, you look at a Deco. All of them are coming to us and talking about we need to simplify, we need to consolidate, we need to take cost out. And now with this, this that best of sure of the business tension, you know, 80, 700 people out of the company into a new business, we got rid of payroll, proserve, capital intensive, labor intensive. So getting back to the core of benefits administration and getting back to the service delivery elements of what that core business is, that's a great combination that we're excited about how the platform together with strong service delivery really gives us an advantage on the enterprise side.

Tian-Hsing Huang: This cost-conscious environment.

Tian-Hsing Huang: has even brought it more to the forefront. And again, you look at the deals I announced, Honda, you look at UPS, you look at Wayfair, you look at Adeco, all of them are coming to us and talking about, we need to simplify, we need to consolidate, we need to take cost out.

Tian-Hsing Huang: And now with this divestiture of the business tension.

Tian-Hsing Huang: You know, 8700 people out of the company into a new business, we got rid of payroll, pro serve, capital intensive, labor intensive. So getting back to the core of benefits administration.

Tian-Hsing Huang: And getting back to the service delivery elements of what that core business is, that's a great combination that we're excited about how the platform together with strong service delivery really gives us an advantage on the enterprise side. So that's why the pipeline is where we see it in the second half and beyond. That's why we're committing publicly on paper to say

Tian Sim Huang: So that's why the pipeline is where is where we see it. The second half and beyond. That's why we're committing, you know, publicly on paper to say that we're going to drive, you know, double digits booking into the second half. So I'm really excited about where the company is today.

Tian-Hsing Huang: That we're going to drive, you know, double digits booking into the second half. So really excited about where the company is today.

Tian Sim Huang: Yeah, my follow up. Thanks for that. My follow up just on the, I know a lot of questions been asked and answered on the non recurring side.

Speaker Change: Got it. My follow-up, thanks for that. My follow-up, just on the, I know a lot of questions have been asked and answered on the non-recurring side, just big, big picture, is this just a cyclical issue or are there some structural issues as well as we think about things like benefit changes? I'm curious, I'm curious of automation or

Tian Sim Huang: Just big, big picture is this just a cyclical issue or are there some structural issues as well as we think about things like benefit changes. I'm curious, curious of automation or, you know, some of these AI tools that are coming out. Is that playing a role in some of them? The effort change? I'm just trying to understand a little bit better.

Unknown Speaker: You know, some of these AI tools that are coming out, is that playing a role in some of the effort change? I'm just trying to understand it a little bit better.

Tian-Hsing Huang: you know, some of these AI tools that are coming out. Is that playing a role in some of the effort change? I'm just trying to understand it a little bit better. Thank you.

Tian Sim Huang: Thank you.

Greg Goff: Yeah, do you want to jump in? Yes. Good. I want you to see us closer though. This is Greg.

Tian Sim Huang: Yeah, do you want to jump in? Good. Once you guys are closer.

Tian Sim Huang: I don't see anything structured with that. I view it as much more cyclical. If you think about some of the macro factors, the Jeremy said, you know, plan design changes, sometimes that that's higher in certain years than other years, regulatory environment, the M&A environment, those are really what drive it, not a macro technology trend, certainly in the, in the large and enterprise market are still driven by the same factors that they have been for quite a long time. So I don't see anything structural there.

Speaker Change: I don't see anything structural with that. I view it as much more cyclical if you think about some of the macro factors that Jeremy said.

Greg Goff: I don't see anything structural with that. I view it as much more cyclical. If you think about some of the macro factors that Jeremy said, you know, plan design changes, sometimes they're higher in certain years than other years, the regulatory environment, the M&A environment, those are really what drive it, not a macro technology trend. Certainly, the large and enterprise markets are still driven by the same factors that they have been for quite a long time. So I don't see anything structural there. Yeah, I mean, I'll probably give you a great example. You know, we're in an election year.

Jeremy Cohen: You know, plan design changes, sometimes that's higher in certain years than other years, regulatory environment, the M&A environment, those are really what drive it, not a macro technology.

Speaker Change: are still driven by the same factors that they have been for quite a long time, so I don't see anything structural there. Yeah, I'll probably give you a great example. We're in an election year.

Tian Sim Huang: Yeah, I'll probably give you a great example. You know, we're in an election year; benefits changes aren't as much this year. So the core part of our business around this upcoming annual enrollment is super strong, and the bookings and the deals we're getting are amazing wins that we've had. But when you get to annual enrollment, to your point on what's different, is that small 8% book of business, which is the project stuff. As you know, during annual enrollment, a lot of clients want to do communications to their employees on what are the benefits changes. What are some of the new things you should be excited about?

Speaker Change: Benefits changes aren't as much this year so the core part of our business around this upcoming annual enrollment is super strong and the bookings and the deals we're getting are amazing wins that we've had.

Speaker Change: But when you get to annual enrollment, to your point on what's different,

Speaker Change: is that small 8% book of business, which is the project stuff. As you know, during annual enrollment, a lot of clients want to do communications to their employees on what are the benefits changes? What are some of the new things you should be excited about? We make millions of dollars in comms in the communications category.

Tian Sim Huang: We make millions of dollars in comms in the communications category. That's exactly what that is. So whether that comes or goes, there's peaks and values to that book of business this year. Pre-election is a lighter year in that comms business. You know, with if M&A comes back next year with the new government dynamics potentially with new rules and regulations, there'll be new plan changes going in the beginning of the year; that's rising increased communications requirements. So that's that project part of our business when you talk about structure versus, you know, what's different. So it adds and flows, and that's why you're seeing us be so aggressive on the more ARR focus, which really, you know, transcends these, you know, short term trends.

Speaker Change: That's exactly what that is. So whether that comes or goes, there's peaks and valleys to that book of business. This year, pre-election, is a lighter year in that comes business. If M&A comes back next year with the new government dynamics, potentially with new rules and regulations, there'll be new plan changes going in the beginning of the year. That drives increased communications requirements.

Speaker Change: So that's that project part of our business when you talk about structure versus, you know, what's what's different. So it ebbs and flows. And that's why you're seeing us be so aggressive on the more ARR focus, which really, you know, transcends these, you know, short term trends.

Tian Sim Huang: That's right, they are our growth is what drives that project business and see it in any way. Yeah, thank you.

Speaker Change: AR growth is what drives that project business, and it feeds it anyways, you know, feeds the project.

Tian Sim Huang: Thanks, engine.

Unknown Speaker: Thanks, Jim. Thanks, Jim.

Tian Sim Huang: Thanks, Engine.

Speaker Change: Thank you.

Pete Christensen: Our next question is from the line of Pete Christensen with City. Please go ahead. Good morning. Thanks for the question.

Jim: Thanks, Jim. Thanks, Jim.

Speaker Change: Our next question is from the line of Pete Christiansen with Citi. Please go ahead.

Unknown Speaker: Good morning. Thanks for the question. Best of luck to Stefan. I'm just curious, in terms of the renewable season upon us, how are you thinking about the degree of contracts that are optimal versus this year and

Pete Christensen: Best of luck to the fan.

Pete Christiansen: Good morning. Thanks for the question. Best of luck to Stefan. I'm just curious, in terms of the renewal season upon us, how are you thinking about

Pete Christensen: I'm just curious in terms of the renewable season upon us. How are you thinking about the really a contract that are on the road versus this year? And on, on, on, you're, you're, you're, you're really breaking up. Pete can't hear you very well. Sorry. Is that better? There we go. Oh, there we go. Much better. Yeah. Well, thanks again for the question. Best of luck to fan. I'm just curious as it relates to the upcoming renewal season. How are you seeing the degree or the amount of contracts that are up to renewal in the back half of this year?

Speaker Change: The degree of contracts that are optimal versus this year and

Speaker Change: I'm sorry, you're really breaking up Pete, we can't hear you very well, sorry.

Operator: You're really breaking up, Pete; we can't hear you.

Operator: Oh, there we go. Much better. Yeah.

Pete: Sorry, is that better? There we go.

Unknown Speaker: All right, apologies, apologies. Well, thanks.

Speaker Change: I'm just curious, as it relates to the upcoming renewal season, how are you seeing the degree or the amount of contracts that are up for renewal?

Pete Christensen: I guess versus last year and any sense on how the renewal season is shaping up or, you know, early sense there. Thanks, Pete. We have; it's a pretty standard set every year in terms of how much is up for renewal. And you just think about our kind of three to five year long-term contracts. I think our teams are very focused on retention, right? The value that we can drive, you know, to some extent reorienting ourselves on the service. You know, Greg Golf is here with us. I mean, spending time with our clients from a delivery perspective and the ability to, you know, once again differentiate ourselves. We're the leader in the space.

Speaker Change: In the back half of this year, I guess, versus last year in any sense on on how the renewal season is shaping up or, you know, early sense there, I have a follow up.

Speaker Change: Thanks Pete. We have, it's a pretty standard set every year in terms of how much is up for renewal. If you just think about our kind of three to five year long-term contracts.

Speaker Change: I think our teams are very focused on retention,

Speaker Change: You know, to some extent, reorienting ourselves on the service, you know, Greg Goff is here with us. I mean, spending time with our clients.

Greg Goff: from a delivery perspective.

Speaker Change: and an ability to, you know, once again, differentiate ourselves. We're, we're the leader in this space. We've got.

Stephan Scholl: We've got a long, you know, long term relationships average 10 year over 15 years. And so I wouldn't say the dynamics are any different this year going in, and how we think about 24 and 25 and into the midterm. Very focused on how we differentiate ourselves with our clients. We're very close, you know, every day with them. And as you can see, we've got between 95 and 99% retention levels that we expect to maintain as we go through the long term here for the company. Yeah, and as I said on the macro side earlier, this environment helps us on that high value air our business companies are looking to us to help them consolidate and simplify and drive more of an enterprise approach.

Speaker Change: A long, you know, long term relationships, average tenure over 15 years. And so I wouldn't say the dynamics are any different this year going in and how we think about.

Greg Goff: 24 and 25 and into the midterm.

Speaker Change: Uh, very focused on how we differentiate ourselves with our clients. We're very close every day with them and as you can see, we've got between 95 and 99 percent retention levels that we expect to maintain as we as we go through the long term here for the company Yeah. And as I said on the macro side earlier,

Speaker Change: This environment helps us on that high-value ARR business. Companies are looking to us to help them consolidate and simplify and drive more of an enterprise approach. So that plays to us because we're the only ones who can really provide a true benefits and navigation and leads integration capability.

Stephan Scholl: So that placed us because we're the only ones who can really provide a true benefits and navigation and leads integration capability. That that's helpful.

Stephan Scholl: And then I'm just looking at slide nine and the volume comparison in the growth model here, obviously impacted by changes in Cobra, likely the bulk of the attribution for this year's performance. But I guess, as you think about going forward, notwithstanding what's going on in the employment environment, but just generally, how are you thinking about pricing as a potential uplift as you think about 25. Sure, so as you know, we roll out the new pricing model about a year ago, and that has particular skews in it, which have annual increases, which is an offset to some extent to how our typical contracts work in terms of inflation area, ECI protections.

Speaker Change: That's helpful. And then I'm just looking at slide nine and the volume comparison in the growth model here obviously impacted.

Speaker Change: by changes in COBRA.

Speaker Change: likely the bulk of the attribution for this year's performance. But I guess as you think about going forward,

Speaker Change: Notwithstanding what's going on in the employment environment, but just generally, how are you thinking about pricing as a potential uplift as you think about 25?

Speaker Change: So, as you know, we rolled out the new pricing model about a year ago, and that has particular SKUs in it, which have annual increases, which

Speaker Change: is an offset to some extent to how our typical contracts work in terms of inflationary, you know, ECI protections.

Stephan Scholl: And so I think we think about prices as an opportunity with the new technology and some of the SKUs. As we roll out and go through the renewal cycle and additional products and services and solutions for our customers. So I don't think about it as a large driver either up or down, frankly, from a price perspective as we go through the renewal cycle. But you're right. We do. Yeah, sure. I was just going to say on the you're right on the coverside on volumes. That's just comparable to last year. And that just, you know, it's a fixed headwind that goes away here in September.

Speaker Change: And so I think we think about price as an opportunity with the new technology and some of the SKUs.

Speaker Change: as we roll out and go through the renewal cycle and additional products and service and solutions for our customers. So I don't think about it as a large driver, either up or down, frankly, from a price perspective as we go through the renewal cycle.

Speaker Change: But you're right, we do. Sure, I was just going to say, you're right, on the COBRA side on volumes, that's just a comparable to last year, and that just, you know, it's a fixed headwind that goes away here in September .

Pete Christensen: That's good to hear. Last one from me. Just curious if you have any sense of any decision delay or go live delays or any any chatter on that. I know it's been an issue in previous quarters here and there. I can maybe be in terms of the bookings, but given the volatility in the environment these days, just curious if there's been any sense of decision delay creeping in.

Speaker Change: That's good to hear. Last one from me, just curious if you have any sense of...

Speaker Change: Any decision delay or go live delays or any

Speaker Change: Any chatter on that? I know it's been an issue in previous quarters here and there, maybe in terms of the bookings, but given the volatility in the environment these days, just curious if there's been any sense of decision delay creeping in.

Greg Goff: Yeah, I'll let Greg answer that since he runs delivery, but to your second part of your point, the previous delivery delays were in our work day implementation business, which no longer sits with the like business today. So those were the previous delays. Yeah, that's that's right. That's exactly the way to think about it. This is from an implementation on going delivery perspective. We don't see anything changing there. It's very much on course, and that's partially driven by the benefits side of the business has very specific timing. The implementation need to happen in order to hit renew an annual enrollment cycles in order to hit contract ends.

Greg Goff: Yeah, I'll let Greg answer that since he runs delivery, but to your second part of your point, the previous delivery delays were in our workday implementation business, which no longer sits with the light business today. So those were the previous delays. Yeah, that's right. That's exactly the way to think about it.

Unknown Speaker: We don't see anything changing there. It's very much on course, and that's partially driven by the benefits side of the business. That's very specific timing that implementations need to happen in order to hit annual enrollment cycles and hit contract ends.

Greg Goff: From an implementation and ongoing delivery perspective...

Greg Goff: We don't see anything changing there. It's very much on course, and that's partially driven by the benefits side of the business. That's very specific timing that implementations need to happen in order to hit annual enrollment cycles, in order to hit contract ends.

Greg Goff: You saw that dynamic much more is defense that on the work day professional services side and the payroll business that tended to be much more subject to implementation delays. That's super helpful.

Stefan Scholl: You saw that dynamic much more, as Stephan said, on the workday professional services side and the payroll business that tended to be much more subject to implementation delays.

Stephan Scholl: Thank you all. That's for the fan.

Speaker Change: That's super helpful. Thank you all. Best of luck, Stephan.

Stephan Scholl: Yeah, thank you.

Stephan Scholl: Appreciate that.

Unknown Executive: Thanks, Pete.

Emily Marzoan: Our next question is from the line of header balls with Bank of America. Please go ahead.

Stefan Scholl: Yeah, thank you. Appreciate that. Thanks, Pete.

Speaker Change: Our next question is from the line of Heather Balsky with Bank of America. Please go ahead.

Emily Marzoan: Hi, this is Emily Marzoan for Heather Belsky. Thank you for taking the questions. I think I'm going to ask one of the other questions a little bit differently with the double-digit ARR expected in the second half. And an improvement from where we are today. What do you see that you can achieve that target, especially with the slow growth this year?

Emily Marzullan: Hi, this is Emily Marzullan for Heather Balsky. Thank you for taking the question. I think I'm going to ask one of the earlier questions a little bit differently. With the double digit ARR expected in the second half,

Speaker Change: and an improvement from where we are today. What are you seeing that you can achieve that target, especially with the slower growth this year? Is it from new products, new customers, upsell, that target of the mid-market? If you could give us some color there.

Emily Marzoan: Is it from new products, customer new customers, upsell that target of the mid market if you could give us some color there. Sure, I think I'll start maybe Savannah. I mean, I think Emily it's its pipeline, right? It just I go back to, you know, realigning our go to market team last year, and it does take some time to get, you know, better coverage of the market, both with how we expand with our current relationships. We have but also driving new logo wins, and so it takes time to build that pipeline, mature that pipeline, and as you build a higher quality AR pipeline to have higher win rates and execute on it.

Speaker Change: Sure, I think I'll start and maybe Stefan can add. I mean, I think, Emily, it's pipeline, right? It just, I go back to

Speaker Change: How we expand.

Speaker Change: are with our current relationships we have, but also driving new logo wins. And so it takes time to build that pipeline, mature that pipeline. And as you build a higher quality AR pipeline to have higher win rates and execute on it. So that was a big driver now, in terms of, you know, as we do a bottoms up build in terms of the forecasting, it's really looking at the pipeline that we've got today, the stages of the deals within the pipeline, and working with our teams in terms of win rates and execution moving forward. So it really starts in the bottoms up, you know, basis of what the funnel is and the pipeline going forward. So, and again, the new products, absolutely, as you think about expansions of current relationships, if I've got

Stephan Scholl: So that was a big driver now in terms of, you know, as we do a bottoms up build in terms of the forecasting. It's really looking at the pipeline that we've got today. The stages of the deals within the pipeline and working with our teams in terms of win rates and execution moving forward, so it really starts in the bottoms up. You know basis of what the funnel is and the pipeline going forward so and again the new products absolutely as you think about expansions of current relationships if I've got long 10 year benefits administration clients.

Stephan Scholl: We now have you know the newer products and solutions over the last couple of years. Navigation leads administration retiree, so we've got a number of newer products over the last couple of years. As you think through either going through renewal cycle or even outside of the renewal cycle to just build pipeline.

Emily Marzullan: Long-Tenured Benefits Administration Clients.

Speaker Change: We now have, you know, the newer products and solutions over the last couple of years. Navigation leaves administration, retiree. So we've got a number of newer products over the last couple of years, as you think through either going through renewal cycle or even outside of the renewal cycle.

Stephan Scholl: I really want to give hats off to Greg George, our new leader we brought in last year, who heads up our commercial business, and he has brought in a great new team. Our net new expansion has really helped us with some great new wins. Sarah, who works for him, is also new in the last year and has just driven an incredible amount of capability in our install base. As I said earlier, the macro environments that were seeing help us in this environment because a lot of clients are looking to cost the value engineering capability we built up the last four years, really helping customers understand the roadmap of how to consolidate service delivery capabilities across a lot of point solutions into a more enterprise approach takes us to a new outcomes based approach that is unique to us, and I think we're now, Greg, what on our sixth release of work life.

Greg George: to just build pipeline. I really want to give a hats off to Greg George, our new leader we brought in last year, who heads up our commercial business, and he has brought in a great new team.

Speaker Change: Our net new expansion has really helped us with some great new wins. Sarah, who works for him, is also new in the last year and has just driven an incredible amount of capability in our install base.

Emily Marzullan: As I said earlier, the macro environments that we're seeing help us in this environment because a lot of clients are looking to cut costs.

Emily Marzullan: The value engineering capability we built up the last four years really helping customers understand the roadmap of how to consolidate service delivery capabilities across a lot of point solutions into a more enterprise approach.

Emily Marzullan: takes us to a new outcomes-based approach that is unique to us. And I think we're now, Greg, what, on our sixth release of Work-Life

Stephan Scholl: Where we continue to deliver integrations and capability and functionality that allows people to make better decisions that allows to drive higher engagement. We put a whole bunch of new functionality into our products that allow to really build a personalized experience to each individual, which is hard, as you know. We serve some of the largest clients with millions and millions of employees, and trying to build an individualized experience in the category of benefits is really hard to do. So we've cracked the code on that, and I think that's really going to help us continue to drive momentum and helping clients do better with less.

Greg Goff: where we continue to deliver integrations and capability and functionality.

Emily Marzullan: that allows people to make better decisions, that allows to drive higher engagement. We put a whole bunch of new functionality into our products that allow to really build a personalized experience to each individual, which is hard. As you know, we serve some of the largest clients with millions and millions of employees.

Emily Marzullan: And trying to build an individualized experience in the category of benefits is really hard to do. So we've cracked the code on that, and I think that's really going to help us continue to drive momentum in helping clients do better with less.

Emily Marzoan: Thank you.

Stephan Scholl: And turning to project revenue. Have you seen any project, project delays are being canceled? I guess what gives you the confidence that the business is going to come back? This project work is, you know, it's pipeline driven as the team said earlier. Family, it says you build your ARR base. It drives this work that goes through again. If M&A is lower, you know, it, you know, as it rebounds, we do a lot of work around acquisitions and divestitures, regulatory changes, impacts almost every one of our large enterprise clients, so that project work comes back. So there's a lot of history around this business in terms of what drives and how we sit as partners and communications for large benefit plan changes that exist in this space.

Speaker Change: Thank you. And turning to project revenue, have you seen any project delays or being canceled? I guess, what gives you the confidence that the business is going to come back?

Speaker Change: This project work is pipeline driven. As the team said earlier, Emily, as you build your ARR base, it drives this work that goes through. Again, if M&A is lower, as it rebounds, we do a lot of work around acquisitions and divestitures.

Speaker Change: Regulatory changes impacts almost every one of our large enterprise clients so that project work comes back. So there's a lot of history around this business in terms of what drives and how we sit as partners and communications for large benefit plan changes that exist in this space. So that you know has not gone away over the long term as we look at this business but it's just the project work we really look from a pipeline perspective of what's in the near term as we go through. So I think we'll look forward to updating more as we go through and think through investor day towards the end of this year of what the outlook is for 25.

Stephan Scholl: So that, you know, has not gone away over the long term as we look at this business, but it's just the project work. We really look from a pipeline perspective. Of what's in the near term as we go through?

Stephan Scholl: So I think we'll look forward to updating more as we go through and think through Investor Day towards the end of this year of what the outlook is for 25. And the project business is a derivative of the ARR business. So let's not forget that the continued focus for us to get to this higher quality net new wins. Expanding the footprint of our products into our clients all leads to further downstream project business. So I want to make sure that's a clear point going to make.

Speaker Change: And the project business is a derivative of the ARR business, so let's not forget that. The continued focus for us to get to this higher quality, net new wins, expanding the footprint of our products into our clients, all lead to further downstream project business. So I want to make sure that's a clear point we want to make.

Emily Marzoan: Thank you.

Operator: You're welcome. Thanks, Emily.

Emily Marzoan: Thanks, Emily.

Stephen Warhol: Our next question comes from the line of Stephen War have take with Wet Bush Securities. Please go ahead. Hi guys, this is Stephen Warhol's egg on for Dan.

Speaker Change: Thank you.

Emily Marzullan: You're welcome. Thanks, Emily.

Greg Goff: Our next question comes from the line of Stephen Warhaftek with Wedbush Securities. Please go ahead.

Unknown Speaker: Hi guys, this is Stephen Warhofsig on behalf of Dan Ives.

Stephen Warhol: I'm here for you guys. Step on best of last year. I was working with you over the past couple of years. Thank you. I wanted to talk a little bit about the cadence of this annual run rate cost savings that you guys are seeing from the cloud migration. He just clarify a little bit of what the factors are thriving both the growth margin EBITDA over the next 12 to 18 months. And is this 75 million of cost savings going to be realized upon a sequential basis, more straight line to, or are you expecting more fluctuation to be there.

Stephen Warhaftek: Hi guys, this is Stephen Warhoff, DIG on for Dan Ives. It's great to hear from you guys. Stephan, best of luck, and it was a pleasure working with you over the past couple of years.

Unknown Speaker: Great to hear from you guys. Stephan, best of luck, and it was a pleasure working with you over the past couple of years. Thank you. I wanted to talk a little bit about the cadence of this annual run rate cost savings that you guys are seeing from this cloud migration. Can you just clarify a little bit on what the factors are driving both the growth margin and EBITDA over the next 12 to 18 months? And is this $75 million of cost savings going to be realized on a sequential basis, more straight-lined, or are you expecting more fluctuations? Thanks, Stephen. Now, think about this.

Speaker Change: I wanted to talk a little bit about the cadence of this annual run rate cost savings that you guys are seeing from this cloud migration. Can you just clarify a little bit on what the factors are driving both the growth margin EBITDA over the next 12 to 18 months?

Speaker Change: And is this $75 million of cost savings going to be realized on a sequential basis, more straight-lined, or are you expecting more fluctuations?

Jeremy Heaton: Thanks, David. So think about 20 million of the 75 annual run rate starts this year. So we'll get some savings that come into the back end of the third quarter. And then effectively at full run rate into the fourth quarter, and that'll drive 75 million of annual run rate savings next year. So call it 55 million incremental in 2025 as a benefit. But what it really does importantly is you look as you think about how we laid out the K to you know 28% in the midterm as an EBITDA margin. The drivers of that now that the cloud migrations completed is our ability to standardize the operating model and how we deliver for clients.

Speaker Change: Thanks, Stephen. So think about 20 million of the 75 annual run rate starts this year. So we'll get some savings that come into the back end of the third quarter, and then effectively at full run rate into the fourth quarter. And that'll drive 75 million of annual run rate savings next year. So call it 55 million incremental in 2025 as a benefit.

Speaker Change: But what it really does, importantly, is you look, is you think about how we laid out the K to, you know, 28% in the midterm as an EBITDA margin.

Speaker Change: The drivers of that now that the cloud migration is completed is our ability to standardize the operating model and how we deliver for clients.

Jeremy Heaton: The history is a bit more customized right on for specific clients. This because of the standard backend infrastructure, the standard standardized technology allows Greg and his teams now to build process COEs to deliver for our clients. You leverage the technology. You can drive better quality of service for our clients and but also streamline the costs around the delivery side of the business. And we'll continue to also leverage the technology within our customer care centers, as we talked about last year going through annual enrollment. We brought down call volumes, you know, 10 to 20%. We expect to continue that again once again with the right levels of technology and AI to drive a better service quality there.

Speaker Change: The history is a bit more customized, right on for specific clients.

Greg Goff: This, because of the standard back-end infrastructure, the standardized technology, allows Greg and his teams now to build process COEs to deliver for our clients. You leverage the technology. You can drive better quality of service.

Greg: And we'll continue to also leverage the technology within our customer care centers.

Speaker Change: As we talked about last year going through annual enrollment, we brought down call volumes 10 to 20 percent. We expect to continue that once again with the right levels of technology.

Jeremy Heaton: And so those are the big drivers as we think about out to 28%, but you know I want to make sure you know the cloud migration is really the pivot point for that. And so that was a huge element for us to successfully migrate all of our clients, all of our applications into the cloud. Now that allows a lot of this work to move forward.

Speaker Change: and AI to drive a better service quality there. And so those are the big drivers as we think about out to 28%. But, you know, I want to make sure, you know, the cloud migration is really the pivot point for that. And so that was a huge element for us to successfully migrate all of our clients, all of our applications into the cloud now that allows a lot of this work to move forward.

Unknown Executive: Thank you.

Speaker Change: Great, thank you.

Stephan Scholl: Ladies and gentlemen, this concludes our question-and-answer session.

Speaker Change: Thank you. Ladies and gentlemen, this concludes our question and answer session. I would now hand the conference over to Stephan Scholl for closing comments.

Stephan Scholl: I would now hand the conference over to Stephan Scholl for closing comments. Great, thanks. I appreciate everybody joining me and Jeremy and the team here this morning. Great questions, good discussion, good dialogue. I look forward to seeing all of you out there. Thanks very much.

Stephan Scholl: Great, thanks. I appreciate everybody joining me and Jeremy and the team here this morning. Great questions, good discussion, good dialogue. I look forward to seeing all of you out there. Thanks very much. Have a great day.

Stefan Scholl: Great, thanks. I appreciate everybody joining me and Jeremy and the team here this morning. Great questions, good discussion, good dialogue. I look forward to seeing all of you out there. Thanks very much and have a great day.

Unknown Executive: Have a great day.

Operator: Thank you. The Alight conference has now concluded. Thank you for your participation. You may now disconnect your lines.

Unknown Executive: Thank you.

Unknown Executive: The conference of Alight has now concluded. Thank you for your participation. You may now disconnect your lines.

Speaker Change: Thank you. The conference of Alight has now concluded. Thank you for your participation. You may now disconnect your lines.

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