Alight (NYSE: ALIT), a leading cloud-based provider of integrated digital human capital and business solutions, today reported results for the first quarter ended March 31, 2022.
"Coming out of the pandemic, companies continue to struggle with attracting and retaining a more discerning workforce. When we combine the simple and seamless technology experience of the Alight Worklife(R) platform with the data and analytics of our content cloud solutions, and global delivery capabilities, we can power more confident decisions for employees and provide companies with the information they need to make smarter decisions around their people. This powerful combination is the Alight BPaaS model," said Chief Executive Officer Stephan Scholl. "Our first quarter results illustrate the traction we are getting with new and expanded client relationships in the marketplace with BPaaS revenue and bookings all showing strong growth."
First Quarter 2022 and Subsequent Highlights* (all comparisons are relative to first quarter 2021)
-- Increased revenue 5.2% to $725 million and improved net loss to $(13) million from $(21) million
-- Adjusted EBITDA grew 6.8% to $142 million
-- Business Process as a Service (BPaaS) revenue grew 22.6%, represents 15.7% of total revenue
-- BPaaS bookings on a total contract value basis more than tripled to $122 million
-- Have over 85% of anticipated 2022 revenue under contract
-- Secured new wins and expanded relationships with NEC, Genuine Parts Company, Adevinta and Rituals
* The Company's discussion of the results of operations compares the results of the Successor three months ended March 31, 2022 ("Successor") to the results of the Predecessor three months ended March 31, 2021 ("Predecessor").
First Quarter 2022 Consolidated Results
For the first quarter, total revenue for the Successor three months ended March 31, 2022 increased 5.2% to $725 million, as compared to $689 million for the Predecessor prior year period. The growth was driven by a 6.1% increase in Employer Solutions revenue due to acquisitions, increased volumes and net commercial activity along with growth in the legacy Hosted Business segment. This growth was partially offset by a 2.2% reduction in Professional Services revenue.
Gross profit for the Successor three months ended March 31, 2022 increased 2.3% to $223 million or 30.8% of revenue, from $218 million, or 31.6% of revenue for the Predecessor prior year period. The improvement in gross profit was primarily driven by revenue growth, partially offset by higher costs associated with investments in the business and key resources.
Selling, general and administrative expenses for the Successor three months ended March 31, 2022 were $140 million, compared to $117 million for the Predecessor prior year period. The increase was primarily due to the issuance of equity compensation related incentive awards.
Interest expense for the Successor three months ended March 31, 2022 improved to $29 million as compared to $62 million for the Predecessor prior year period. The reduction was primarily due to the redemption of our Unsecured Senior Notes and the partial paydown of a Term Loan in conjunction with the Business Combination completed during the third quarter of 2021.
Loss before income tax expense for the Successor three months ended March 31, 2022 was $12 million compared to a loss before income tax benefit of $24 million for the Predecessor prior year period.
First Quarter 2022 Segment Results
Employer Solutions
Employer Solutions is driven by Alight's digital, software and AI-led capabilities and spans total employee wellbeing and engagement, including integrated benefits administration, healthcare navigation, financial health, employee wellness and payroll.
Employer Solutions total revenues for the Successor three months ended March 31, 2022 increased 6.1% to $623 million, as compared to $587 million for the Predecessor prior year period, as a result of acquisitions, and increases in volumes and net commercial activity. Recurring revenue grew 6.9% to $570 million, while project revenue declined 1.9% to $53 million.
Employer Solutions gross profit for the Successor three months ended March 31, 2022 was $204 million, as compared to $201 million for the Predecessor prior year period.
Employer Solutions Adjusted EBITDA for the Successor three months ended March 31, 2022 was up 4.4% to $142 million, as compared to $136 million for the Predecessor prior year period.
Professional Services
Professional Services total revenues for the Successor three months ended March 31, 2022 were $90 million as compared to $92 million for the Predecessor prior year period down 2.2% or $2 million due to a decrease in project revenues of $3 million partially offset by an increase in recurring revenue of $1 million due to net commercial activity.
Professional Services gross profit for the Successor three months ended March 31, 2022 was $19 million as compared to $20 million for the Predecessor prior year period.
Professional Services Adjusted EBITDA for the Successor three months ended March 31, 2022 was an immaterial amount as compared to an immaterial amount for the Predecessor prior year period.
Hosted Business
Hosted Business revenues for the Successor three months ended March 31, 2022 were $12 million as compared to $10 million for the Predecessor prior year period. The increase of $2 million was due to higher volumes.
Hosted Business gross profit (loss) for the Successor three months ended March 31, 2022 was an immaterial amount as compared to a loss of ($3) million for the Predecessor prior year period.
Hosted Business Adjusted EBITDA for the Successor three months ended March 31, 2022 was an immaterial amount compared to a loss of ($3) million for the Predecessor prior year period. The increase of $3 million was driven by revenue growth.
Balance Sheet Highlights
As of March 31, 2022, the Company's cash and cash equivalents balance was $326 million, total debt was $2,858 million and total debt net of cash and cash equivalents was $2,532 million.
In the first quarter 2022, the Company updated the benchmark reference rate on $2.5 billion of term loans to Term secured overnight financing rate (SOFR) from LIBOR. It also extended the maturity date and reduced the Term SOFR borrowing margin by 25 basis points on $2.0 billion of those term loans.
Business Outlook
The Company is affirming its full-year 2022 outlook:
-- Revenue of $3.09 to $3.12 billion (growth of 6% to 7%).
-- Adjusted EBITDA in the range of $650 million to $662 million.
-- Adjusted diluted EPS of $0.54 to $0.60.
-- BPaaS total contract value bookings of $680 to $700 million.
Earnings Conference Call and Webcast Information
A conference call to discuss the Company's first-quarter 2022 financial results is scheduled for today, May 9, 2022 at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). Interested parties can listen to the conference call by dialing 1-877-407-0792 or 1-201-689-8263, or by accessing the live webcast and accompanying presentation materials by logging on to the Investor Relations section on the Company's website at http://investor.alight.com. A replay of the conference call and the accompanying presentation materials will be available on the investor relations website for approximately 90 days.
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