Executive Summary

Q4 2024 revenue was $680 million (down 0.3% YoY) and adjusted EBITDA was $217 million with a 31.9% margin; GAAP diluted EPS was $0.05 while adjusted diluted EPS was $0.24, reflecting stronger profitability despite modest top-line pressure .
Recurring revenue expanded and comprised ~90.7% of total, while BPaaS revenue grew 9.8% YoY to $146 million (21.5% of revenue), underscoring increased mix quality and operating leverage .
2025 outlook introduced: revenue $2.318–$2.388B, adjusted EBITDA $620–$645M, adjusted EPS $0.58–$0.64, and free cash flow $250–$285M; management expects recurring revenue growth and EBITDA margin expansion, even with lingering impacts from 2023 contract losses .
Capital return remains a catalyst: second quarterly dividend of $0.04 and an additional $200M buyback authorization (total $281M), alongside a Board refresh led by incoming Chairman Russell P. Fradin; these actions highlight confidence in execution and cash generation .

What Went Well and What Went Wrong

What Went Well

Adjusted EBITDA rose to $217M (vs. $206M in Q4’23) and margin expanded to 31.9%, benefiting from productivity initiatives and cloud migration savings; CEO emphasized “recurring revenue expansion and strong cash flow” as the quarter met expectations .
BPaaS revenue increased 9.8% YoY to $146M (21.5% mix), and adjusted gross margin improved to 44.1%, highlighting mix shift and operational efficiencies .
Management booked $114M ARR in 2024 (+18% YoY) with a 54% pipeline uplift; CFO projects sustained double-digit ARR growth in 2025, noting 89% ($2.1B) of 2025 revenue already under contract at the year’s start .

Quote: “We expect 2025 will be a transitional year focused on execution and steady progress across the key financial measures that drive profitable growth and attractive cash flow.” — CEO Dave Guilmette .

What Went Wrong

Total revenue decreased 0.3% YoY (to $680M) on lower project revenue despite improving recurring revenue, evidencing ongoing softness in nonrecurring client projects .
Management is “maintaining a cautious view” on nonrecurring projects; first-half 2025 project revenue expected to decline ~25% each quarter before a modest second-half stabilization .
Historical contract losses from 2023 and early 2024 are a headwind to 2025 growth; absent these losses, revenue growth would be over two points higher, with recurring growth expected to ramp through 2025 .

Financial Results

Revenue, EPS, and Margins vs. Prior Quarters

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$538	$555	$680
Diluted EPS – Continuing Ops ($)	$(0.01)	$(0.08)	$0.05
Adjusted Diluted EPS ($)	$0.05	$0.09	$0.24
Gross Profit Margin (%)	31.0%	31.4%	39.9%
Adjusted Gross Margin (%)	36.4%	36.0%	44.1%
Adjusted EBITDA ($USD Millions)	$105	$118	$217
Adjusted EBITDA Margin (%)	19.5%	21.3%	31.9%

Note: Q4 2024 YoY revenue was $680M vs. $682M in Q4 2023 (−0.3%); adjusted EBITDA was $217M vs. $206M in Q4 2023 (+5.3%) .

Segment and Mix

Metric	Q2 2024	Q3 2024	Q4 2024
Employer Solutions – Recurring ($USD Millions)	$493	$504	$617
Employer Solutions – Project ($USD Millions)	$45	$51	$63
Employer Solutions – Total ($USD Millions)	$538	$555	$680
BPaaS Revenue ($USD Millions)	$115	$121	$146
BPaaS as % of Total Revenue (%)	21.4%	21.8%	21.5%
Recurring Revenue % of Total (%)	91.6%	90.8%	90.7%

KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Adjusted Gross Profit ($USD Millions)	$196	$200	$300
Recurring Revenue ($USD Millions)	$493	$504	$617
Nonrecurring Project Revenue ($USD Millions)	$45	$51	$63

Cross-reference: CFO stated recurring revenue comprised ~91% in Q4, consistent with but slightly above the 8-K’s 90.7% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Billions)	FY 2025	N/A	$2.318–$2.388	Introduced
Adjusted EBITDA ($USD Millions)	FY 2025	N/A	$620–$645	Introduced
Adjusted Diluted EPS ($)	FY 2025	N/A	$0.58–$0.64	Introduced
Free Cash Flow ($USD Millions)	FY 2025	N/A	$250–$285	Introduced
ARR Bookings ($USD Millions)	FY 2025	N/A	$130–$145	Introduced
Revenue	Q1 2025	N/A	Down 3%–4% YoY	Introduced
Recurring Revenue	Q1 2025	N/A	Down 1.5%–2.5% YoY	Introduced
Revenue	Q2 2025	N/A	Down 1.5%–3% YoY	Introduced
Recurring Revenue	Q2 2025	N/A	−1% to +0.5% YoY	Introduced
Project Revenue	H1 2025	N/A	~−25% each quarter	Introduced
Revenue	H2 2025	N/A	Return to low-to mid-single-digit growth	Introduced

Result vs prior Q4 guidance (from Q3’24 PR):

Q4 2024 revenue: guided $665–$685 vs. actual $680 — Achieved within range .
Q4 2024 adjusted EBITDA: guided $208–$233 vs. actual $217 — In range .
Q4 2024 adjusted diluted EPS: guided $0.22–$0.27 vs. actual $0.24 — In range .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Cloud migration & tech stack	Completed cloud migration and decommissioned data center; margin and stability benefits expected .	Operational stability cited during annual enrollment; improved efficiency and client satisfaction .	Structural tech tailwinds realized; supports margin expansion.
AI and automation in Worklife	Platform positioning and product investment, less explicit AI detail .	New AI features delivered to Worklife to deepen analytics and automation .	Increasing AI feature delivery; supports automation and value proposition.
Recurring revenue & retention	H2’24 guidance framed recurring strength; 97% 2024 revenue under contract (Q2 PR) .	2024 retention rates up 8 points; recurring mix ~90.7%; revenue growth expected to resume in H2 2025 .	Retention normalization from 2023 lows; mix quality sustained.
Project revenue	Softness cited in Q2/Q3; cautious outlook .	H1’25 projects down ~25% each quarter; modest improvement in H2 off low base .	Continued caution near term; potential H2 stabilization.
Tariffs/macro/public sector	Macro risk disclosures; limited direct operational impact noted .	Tariffs immaterial; public sector exposure limited; participant counts 0–1% growth assumed .	Monitoring macro; minimal expected impact.
Leaves & product attach	Growing BPaaS; cross-sell opportunities implied .	Leaves + health integration can add up to 30% contract value; low penetration in top 100 clients (~10%) .	Large cross-sell runway; attach-driven ARR growth.
Retiree health	Prior-year negative surprise from one client (easier comps) .	Regulatory loophole now closed; business performed well in Q4; pipeline looks attractive .	Normalizing performance; supportive pipeline.
Governance & capital return	Buybacks and ASR in Q2/Q3; initiated dividend in Q3 .	+$200M authorization (total $281M) and second $0.04 dividend; Board refresh with new Chair .	Strengthened capital return; governance enhancements.

Management Commentary

CEO perspective: “We enter 2025 as a market-leading, technology-enabled services provider… we expect 2025 will be a transitional year focused on execution and steady progress across the key financial measures that drive profitable growth and attractive cash flow.” — Dave Guilmette .
CFO outlook: “We expect full year adjusted EBITDA of $620 million to $645 million… margin expansion between 150 and 180 basis points… Free cash flow outlook of $250 million to $285 million or growth of 13% to 29%.” — Jeremy Heaton .
Strategic focus: Double-digit ARR growth, improved retention, and cautious stance on projects; AI-driven enhancements to Worklife to deepen analytics and automation .
Governance: “Effective March 1, [William P. Foley II] will step down from his Chairman role… [Russell P. Fradin] appointed Chairman… we have refreshed and expanded our Board with industry veterans…” — Dave Guilmette .

Q&A Highlights

Historical losses and 2025 ramp: Losses from 2023 hit on Jan 1, depressing recurring revenue; growth ramps through 2025 with ARR go-lives and stronger 2024 renewal cycle, leading to H2 revenue growth .
Projects and implementations: Implementation work is separate from project revenue; project demand remains cautious near term, with second-half typically less volatile around enrollment cycles .
Capital allocation: Company will be opportunistic on buybacks given increased authorization, while maintaining the dividend .
Retention and pricing: Retention improved 8 points from a 2023 low-watermark, approaching historical levels; some pricing compression is contemplated within overall retention metrics .
Capex trajectory: Lower 2025 capex expected due to completion of cloud migration and more efficient product investment profile .

Estimates Context

S&P Global Wall Street consensus estimates were unavailable via the tool at time of retrieval; comparisons to consensus cannot be provided at this time due to API request limit errors. We benchmark results against company guidance instead and note that Q4 revenue, adjusted EBITDA, and adjusted EPS all landed within guidance ranges provided in November (Q3 PR) .
Directionally, Street models may need to reflect: (i) recurring revenue growth resuming in H2 2025 despite first-half pressure from historical losses; (ii) 150–180 bps adjusted EBITDA margin expansion driven by $55M cloud savings and productivity efforts; and (iii) free cash flow growth of 13%–29%, with reduced capex and lower interest expense after term loan repricing .

Key Takeaways for Investors

Mix and margin quality improved meaningfully in Q4 (adj. EBITDA margin 31.9%; adj. gross margin 44.1%), validating benefits from tech modernization and productivity actions even with flattish revenue .
2025 setup calls for H1 caution (projects down ~25% each quarter; recurring down modestly) and H2 acceleration as ARR go-lives and normalized retention drive growth .
Large cross-sell runway: Leaves administration integrated with health can add up to 30% contract value; penetration remains low among top clients, supporting ARR growth targets .
Capital return remains supportive: $0.04 quarterly dividend and $281M total repurchase authorization, coupled with improved leverage (net leverage 2.8x at YE) and repriced term loan lowering interest by ~$10M annually .
Board refresh and Starboard engagement signal strengthened oversight and focus on revenue growth, profitability, and FCF generation, potentially a sentiment catalyst .
Watch list: reconciliation between ~91% recurring share in call remarks vs. 90.7% in the 8-K; monitor project demand volatility and participant count sensitivity (assumed 0–1%) .
Near-term trading: Expect investors to focus on margin/FCF execution and H2 revenue trajectory; medium-term thesis hinges on ARR growth, retention normalization, AI/automation leverage, and disciplined capital allocation .

Additional Reference Data

Q4 2024 condensed income statement and balance sheet detail (including net debt, share counts, and adjustments) are provided in the 8-K exhibit and press release for precise reconciliation and modeling .
Full-year 2024: revenue $2.332B (−2.3% YoY), adj. EBITDA $556M (+$19M YoY), and BPaaS revenue $499M (+15% YoY), evidencing structural progress despite exited Hosted business and project softness .

Alight, Inc. / Delaware (ALIT)·Q4 2024 Earnings Summary