On February 21, 2024, Alight Inc (ALIT, Financial), a leading provider of integrated, cloud-based human capital solutions, released its 8-K filing, detailing its financial performance for the fourth quarter and full year ended December 31, 2023. The company, which primarily serves the United States market, has shown robust growth in its Business Process as a Service (BPaaS) bookings and an increase in annual cash from operations. However, it also reported a significant net loss, largely due to non-cash charges.
Financial Performance and Challenges
Alight's revenue for the full year 2023 increased to $3.41 billion, up 8.9% from the previous year, with BPaaS revenue growing by 34% to $756 million. The company's gross profit improved, with a margin increase of over 150 basis points, and operating cash flow grew by 35%. Despite these achievements, Alight reported a net loss of $278 million for the year, which was significantly higher than the $72 million loss in 2022, primarily due to a $271 million increase in non-cash charges.
The company's fourth-quarter performance also reflected a mixed outcome. Revenue increased by 1.9% to $960 million, with BPaaS revenue growing by 29.8% to $222 million. However, the net loss for the quarter widened to $86 million from $66 million in the prior year period, again driven by an increase in non-cash charges.
Strategic Portfolio Review and Business Outlook
Alight's CEO, Stephan Scholl, highlighted the company's three-year transformation and the strong demand for its solutions. Scholl mentioned,
Our 2023 highlights include strong demand for our solutions with BPaaS revenue growth of 34%, gross margin improvement of over 150 basis points and growth of 35% in operating cash flow."He also noted the strategic portfolio review initiated by the Board of Directors, aimed at advancing the company's platform and wellbeing strategy.
For 2024, Alight anticipates revenue growth of 4-6%, with BPaaS revenue expected to grow by over 15%. The company has $3 billion in revenue under contract for 2024, providing confidence in its mid-term outlook.
Financial Statements Highlights
Alight's balance sheet as of December 31, 2023, showed a cash and cash equivalents balance of $358 million, with total debt at $2,794 million. The interest rates on the company's debt are 84% fixed through 2024, providing some stability in its financial obligations.
The company's adjusted EBITDA for the fourth quarter grew by 11.6% to $270 million, and for the full year, it increased by 12.1% to $739 million. Alight's operating cash flow conversion rate was 52.2% for the year.
Conclusion
Alight Inc (ALIT, Financial) has demonstrated resilience with revenue growth and strong BPaaS bookings, yet faces challenges with widening net losses due to non-cash charges. The strategic portfolio review could be a pivotal step in the company's evolution, as it seeks to enhance its platform and wellbeing strategy. Investors and stakeholders will be watching closely as Alight navigates through these changes and strives to deliver value in a competitive market.
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Explore the complete 8-K earnings release (here) from Alight Inc for further details.
