Breaking Down Alight, Inc. (ALIT) Financial Health: Key Insights for Investors

Are you keeping a close watch on Alight, Inc. (ALIT) and trying to gauge its financial stability? In 2024, Alight reported a revenue of $2,332 million, a slight decrease of 2.3% year-over-year. However, its Business Process as a Service (BPaaS) revenue grew by 15% to $499 million, representing 21.4% of the total revenue. The company's Q4 net income stood at $29 million, a significant turnaround from a $121 million loss in the prior year period. With a debt-to-equity ratio of 47% and a substantial stock repurchase program increased by $200 million, how should investors interpret these figures? Read on to explore a detailed analysis of Alight's financial health, providing you with key insights for making informed investment decisions.

Alight, Inc. (ALIT) Revenue Analysis

Understanding Alight, Inc.'s revenue streams is crucial for investors seeking insights into the company's financial health and growth potential. A detailed look at where Alight, Inc. generates its revenue, how quickly those streams are growing, and the relative importance of each segment provides a clearer picture of its business performance. Let's examine the key aspects of Alight, Inc.'s revenue composition.

Alight, Inc. primarily generates revenue through its services in benefits administration, cloud-based human capital management, and technology solutions. These services cater to a wide range of clients, helping them manage their employee benefits, HR functions, and overall workforce management.

Year-over-year revenue growth is a critical indicator of Alight, Inc.’s performance. Recent data shows the following revenue trends:

• In the fourth quarter of 2023, Alight reported revenue of $851 million, reflecting a 3.9% increase compared to the fourth quarter of 2022.
• For the full year 2023, Alight's revenue reached $3.4 billion, up 4.4% year-over-year.

These figures indicate steady growth, driven by increased demand for Alight's services and effective execution of its business strategy.

To understand the nuances of Alight’s revenue, it’s important to consider the contribution of different business segments. Alight organizes its operations into key segments, each playing a vital role in the company's overall financial performance. Here’s a simplified view of how these segments contribute:

• Employer Solutions: This segment, focused on benefits administration and HR solutions, remains a significant revenue driver for Alight.
• Professional Services: Revenue from professional services, including consulting and implementation, contributes substantially to the overall revenue.
• Cloud Solutions: As more companies migrate to cloud-based HR solutions, this segment is becoming increasingly important.

Here is a table summarizing Alight's revenue by segment for fiscal year 2023 (in millions of U.S. dollars):

Analyzing changes in revenue streams helps identify growth areas and potential challenges. For instance, a significant increase in cloud solutions revenue may indicate a successful shift towards more technology-driven offerings, while a decline in a particular segment might signal the need for strategic adjustments. For additional insights into Alight's strategic direction, see: Mission Statement, Vision, & Core Values of Alight, Inc. (ALIT).

Alight, Inc. (ALIT) Profitability Metrics

Assessing Alight, Inc.'s (ALIT) financial health requires a detailed look into its profitability metrics, which reveal how efficiently the company converts revenue into profit. Key indicators such as gross profit, operating profit, and net profit margins provide insights into the company's operational effectiveness and overall financial performance.

Gross Profit reflects the revenue remaining after deducting the cost of goods sold (COGS). Analyzing Alight's gross profit margin helps to understand how efficiently the company manages its production costs. An increasing gross profit margin typically indicates better cost management and pricing strategies.

Operating Profit is derived by deducting operating expenses from gross profit. This metric illustrates the profitability of Alight's core business operations, excluding interest and taxes. Monitoring the operating profit margin can highlight the company's ability to control its operational costs and generate profit from its primary activities.

Net Profit represents the actual profit earned by Alight after accounting for all expenses, including interest, taxes, and other deductions. The net profit margin is a critical indicator of overall financial health, reflecting the percentage of revenue that translates into profit for shareholders.

Examining the trends in these profitability metrics over time is crucial for investors. Consistent improvement in gross, operating, and net profit margins suggests enhanced operational efficiency and financial stability. Conversely, declining margins may signal potential challenges in cost management or revenue generation.

Comparing Alight's profitability ratios with industry averages provides valuable context. If Alight's margins are higher than its peers, it may indicate a competitive advantage. Conversely, lower margins may suggest areas where the company needs to improve its performance.

Analysis of operational efficiency involves scrutinizing cost management practices and gross margin trends. Effective cost management is essential for maintaining and improving profitability. Monitoring gross margin trends can reveal the impact of pricing strategies, cost of goods sold, and overall operational efficiency on Alight's financial performance.

For instance, let's consider a hypothetical scenario based on fiscal year 2024 data:

Suppose Alight, Inc. reported the following for the fiscal year 2024:

• Revenue: $3 billion
• Cost of Goods Sold (COGS): $1.8 billion
• Operating Expenses: $800 million
• Interest Expenses: $50 million
• Tax Expenses: $100 million

Based on these figures, we can calculate the following profitability metrics:

• Gross Profit: $3 billion - $1.8 billion = $1.2 billion
• Gross Profit Margin: ($1.2 billion / $3 billion) 100 = 40%
• Operating Profit: $1.2 billion - $800 million = $400 million
• Operating Profit Margin: ($400 million / $3 billion) 100 = 13.33%
• Earnings Before Tax (EBT): $400 million - $50 million = $350 million
• Net Profit: $350 million - $100 million = $250 million
• Net Profit Margin: ($250 million / $3 billion) 100 = 8.33%

A detailed breakdown might look like this:

In this scenario, Alight's gross profit margin of 40% indicates efficient cost management, while the net profit margin of 8.33% shows the actual profit earned after all expenses. Comparing these figures with industry benchmarks and historical data would offer deeper insights into Alight's financial health and operational performance.

More information is available here: Breaking Down Alight, Inc. (ALIT) Financial Health: Key Insights for Investors

Alight, Inc. (ALIT) Debt vs. Equity Structure

Understanding how Alight, Inc. (ALIT) finances its operations and growth is crucial for investors. This involves examining the company's debt levels, its debt-to-equity ratio, and how it strategically uses debt versus equity to fund its activities.

As of December 31, 2023, Alight, Inc. (ALIT) reported the following debt levels:

• Long-term debt: $2.474 billion
• Short-term debt: $60 million

The debt-to-equity ratio is a key metric for assessing a company's financial leverage. As of December 31, 2023, Alight, Inc.'s (ALIT) debt-to-equity ratio can be calculated using the total liabilities and total equity from its balance sheet. The total equity was reported as $1,029.4 million. Given the total liabilities (which includes both current and non-current liabilities) were $4.587 billion, the debt-to-equity ratio is approximately 4.46. This indicates that Alight, Inc. (ALIT) has a significant amount of debt compared to its equity.

To provide further context, here's a snapshot of Alight, Inc.'s (ALIT) debt and equity figures:

Keeping track of Alight, Inc.'s (ALIT) financing strategies, including any new debt issuances, credit ratings, or refinancing activities, helps stakeholders understand the company's approach to managing its capital structure. For example, in November 2023, Alight Solutions LLC successfully repriced its existing $625 million term loan B due November 2029, reducing the applicable interest rate margin by 0.50% to 2.75% per annum over the secured overnight financing rate.

Balancing debt and equity is crucial for sustainable growth. While debt can provide leverage and potentially increase returns, excessive debt can also increase financial risk. Alight, Inc.'s (ALIT) strategy involves a mix of both, carefully managed to support its operational needs and strategic initiatives.

Learn more about Alight, Inc. (ALIT) investors: Exploring Alight, Inc. (ALIT) Investor Profile: Who’s Buying and Why?

Alight, Inc. (ALIT) Liquidity and Solvency

When evaluating Alight, Inc.'s financial health, understanding its liquidity and solvency is crucial. Liquidity refers to the company's ability to meet its short-term obligations, while solvency indicates its ability to meet long-term obligations. Let's delve into key financial ratios and indicators to assess Alight's position.

Assessing Alight, Inc.'s Liquidity:

Analyzing Alight's liquidity involves examining its current and quick ratios, working capital trends, and cash flow statements.

Current and Quick Ratios:

The current ratio and quick ratio are fundamental metrics for evaluating a company's liquidity position. The current ratio measures a company's ability to pay off its current liabilities with its current assets. The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets.

• A current ratio of around 1.0 or greater generally indicates a company has enough current assets to cover its current liabilities.
• The quick ratio offers a more conservative view by excluding inventories, which may not be easily converted to cash.

For the fiscal year 2024, need to get updated data to provide a more accurate assessment of Alight, Inc.'s current and quick ratios.

Analysis of Working Capital Trends:

Working capital, calculated as current assets minus current liabilities, is a measure of a company's short-term financial health. Monitoring the trends in working capital can provide insights into Alight's operational efficiency and liquidity management. A positive and increasing working capital balance typically suggests improving liquidity, while a negative or decreasing balance may raise concerns.

Cash Flow Statements Overview:

An overview of Alight's cash flow statements, including operating, investing, and financing activities, provides a comprehensive view of its liquidity. Here's what to look for:

• Operating Cash Flow: Positive and consistent operating cash flow indicates that the company is generating enough cash from its core business operations to cover its expenses and investments.
• Investing Cash Flow: This section reflects cash spent on investments, such as property, plant, and equipment (PP&E). Significant outflows in this area may indicate expansion or strategic investments.
• Financing Cash Flow: Financing activities involve transactions related to debt, equity, and dividends. Positive cash flow from financing may indicate the company is raising capital, while negative cash flow may indicate it is paying down debt or returning capital to shareholders.

Potential Liquidity Concerns or Strengths:

Based on the analysis of these metrics, potential liquidity concerns or strengths can be identified. For example, a consistently high current ratio coupled with strong operating cash flow would suggest a solid liquidity position. Conversely, a declining current ratio, negative working capital, and reliance on financing activities to cover operational expenses may indicate liquidity challenges.

For a deeper dive into Alight, Inc.'s investors, check out: Exploring Alight, Inc. (ALIT) Investor Profile: Who’s Buying and Why?

Alight, Inc. (ALIT) Valuation Analysis

To assess whether Alight, Inc. (ALIT) is overvalued or undervalued, several key financial metrics and analyses can be considered. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield and payout ratios (if applicable), and analyst consensus.

Valuation Ratios:

• Price-to-Earnings (P/E): Alight's P/E ratio as of April 2025 is -9.66. A negative P/E ratio suggests the company has negative earnings. For 2024, the P/E ratio is around 12.63 to 13.78. The forward P/E for 2024 is 8.35.
• Price-to-Book (P/B): The price-to-book ratio is 0.62 as of December 31, 2024.
• Enterprise Value-to-EBITDA (EV/EBITDA): Alight's EV/EBITDA ratio is 12.33 as of December 2024. Another source indicates an EV/EBITDA of 9.53.
• Enterprise Value-to-EBIT (EV/EBIT): The EV/EBIT ratio is -95.89 as of December 2024.
• Price-to-Sales: The price-to-sales ratio is 1.16 as of December 2024.

Stock Price Trends:

Alight's stock price has fluctuated over the last 12 months. As of April 17, 2025, the stock price is around $4.99. Recent data shows:

• April 17, 2025: $4.99
• April 16, 2025: $5.03
• April 15, 2025: $5.00

The 52-week high is $9.45, and the 52-week low is $4.49.

Dividend Yield and Payout Ratios:

• Forward Annual Dividend Yield: 3.21%
• Forward Annual Dividend Rate: $0.16
• Annual Dividend: $0.04 per share.
• Dividend Payout Ratio: 0.00%.

Analyst Consensus:

Based on ratings from 8 Wall Street analysts, the consensus rating for Alight is 'Moderate Buy'. The average price target is $10.19, with a high estimate of $12.00 and a low estimate of $8.00. This suggests a potential upside of over 103.95% from the current price of $5.00.

Additional Valuation Metrics:

To provide a more comprehensive view, here's a table summarizing Alight's valuation metrics:

For further insights into Alight, Inc.'s financial health, you can refer to: Breaking Down Alight, Inc. (ALIT) Financial Health: Key Insights for Investors

Alight, Inc. (ALIT) Risk Factors

Investing in Alight, Inc. (ALIT) involves understanding several key risks that could impact its financial health and future performance. These risks span internal operational challenges, external market pressures, and strategic considerations.

Here's a breakdown of the risk factors:

• Industry Competition: The market for benefits administration and HR solutions is highly competitive. Alight, Inc. faces competition from established players and new entrants, which could pressure pricing and market share.
• Regulatory Changes: Changes in regulations related to healthcare, retirement plans, and data privacy can create compliance challenges and increase operational costs.
• Market Conditions: Economic downturns or shifts in employment rates can affect the demand for Alight, Inc.'s services, as companies may reduce investments in HR and benefits programs.

Specific risks highlighted in Alight, Inc.'s recent filings and reports include:

• Operational Risks:
  • Technology Disruptions: Dependence on technology infrastructure means that system failures or cybersecurity breaches could disrupt services and harm client relationships.
  • Service Delivery Issues: Failure to meet service level agreements or manage large client implementations effectively could lead to client attrition and revenue loss.
• Financial Risks:
  • Debt Burden: High levels of debt could restrict Alight, Inc.'s financial flexibility and ability to invest in growth opportunities.
  • Interest Rate Fluctuations: Changes in interest rates could increase the cost of servicing Alight, Inc.'s debt, impacting profitability.
• Strategic Risks:
  • Integration Challenges: Difficulties in integrating acquired businesses or technologies could lead to inefficiencies and failure to realize expected synergies.
  • Client Concentration: Dependence on a few large clients could create vulnerability if those clients terminate their contracts or reduce their spending.

Mitigation strategies and plans that Alight, Inc. may employ to address these risks can include:

• Diversifying the client base to reduce reliance on a few major clients.
• Investing in cybersecurity measures and disaster recovery plans to protect against technology disruptions.
• Implementing robust project management practices to ensure successful client implementations.
• Hedging strategies to mitigate the impact of interest rate fluctuations on debt.

For more insights into Alight, Inc. (ALIT) and its investors, check out: Exploring Alight, Inc. (ALIT) Investor Profile: Who’s Buying and Why?

Alight, Inc. (ALIT) Growth Opportunities

Alight, Inc. (ALIT) is focusing on several key areas to drive future growth. These include product innovation, market expansion, strategic partnerships, and leveraging competitive advantages.

Key growth drivers for Alight, Inc. (ALIT) include:

• Product Innovations: Alight, Inc. (ALIT) is consistently investing in new solutions and technologies to enhance its offerings.
• Market Expansion: Expanding its reach into new geographic regions and client segments.
• Acquisitions: Strategically acquiring companies to broaden its capabilities and market presence.

While specific future revenue growth projections and earnings estimates beyond 2024 are difficult to pinpoint, several strategic initiatives are expected to contribute positively:

• Cloud-Based Solutions: Transitioning clients to cloud-based platforms for improved efficiency and scalability.
• Digital Transformation Services: Helping clients modernize their HR and benefits administration through digital solutions.
• Data and Analytics: Leveraging data analytics to provide insights and personalized experiences for employees.

Alight, Inc.'s (ALIT) competitive advantages include its established client base, comprehensive service offerings, and technological capabilities. These strengths position the company to capitalize on the growing demand for HR and benefits solutions.

Here's a look at some financial highlights based on available information:

For more insights into Alight, Inc. (ALIT) and its investors, check out: Exploring Alight, Inc. (ALIT) Investor Profile: Who’s Buying and Why?