Alight, Inc.

Good morning, and thank you for holding. My name is Daryl, and I will be your conference operator today. Welcome to Alight's fourth quarter and full year 2021 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 on the investor relations section of the company's website. And now, I would like to turn the call over to Greg Fische, head of investor relations at Alight, to introduce today's speakers.

Good morning. Thank you for joining us today. Earlier today, the company issued a press release with fourth quarter and full year 2021 results. A copy of the release can be found on 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. 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 filing with the SEC, including the company's prospectus filed with the SEC on August 24, 2021, as such factors may be updated from time to time in the company's periodic filings with the SEC. The company does not undertake any obligation to update forward-looking statements. Also, throughout this conference call, the company will be presenting non-GAAP financial measures. reconciliation of the company's historical non-GAAP financial measures to the most directly comparable GAAP financial measures appear in today's earnings press release. On the call from management today are Stefan Scholl, CEO, and Katie Rooney, CFO. After their prepared remarks, we will open up the call for questions. I'll hand the call over to Stefan.

Thanks, Greg, and good morning, everyone. It's less than two years ago that we started on our journey to become a more tech-enabled company from the inside out. The pandemic and the tight talent market have highlighted that the current fragmented, silent approach to benefits and human capital management does not adequately address the two most important aspects of employee lives, keeping them financially secure and healthy. Our mission is to fundamentally change the employee experience by providing people with one simple, seamless, integrated platform supported by robust health, wealth, payroll and well-being content to provide meaningful outcomes for companies and their people. In 21, we made tremendous progress on our transformation to adopt a business process as a service model enabled by a platform strategy. First, in Q2, we announced the Alight WorkLife platform. Alight WorkLife, a mobile-first technology built on a modular cloud-based architecture has embedded AI and analytics that drives a personalized and unified experience to replace the siloed approach that is commonplace today. Second, we continue to focus on adding valuable content in the areas of healthcare navigation, well-being, health and wealth benefits, retiree benefits, and payroll. And third, the Alight Work-Life experience combined with compelling content will engage the over 30 million users we already have to drive differentiated outcomes for them their family members, and the organizations they are a part of. We've seen this platform approach drive success in both B2C and B2B enterprises. The progress we have made on this journey thus far contributed to our strong results in 2021 and gives us confidence as we look to 22. We are well on our way to double digit revenue growth in 2023. We secured $602 million in BPAS bookings, which is 52% higher versus our original goal of $395 million. And we achieved $390 million in BPAS revenue, which now accounts for 13.4% of revenue ahead of the 12% target we set earlier this year. Employer Solutions' gross profit margin grew to 33.2%. an increase of 260 basis points as our technology-led transformation continues to drive gross margin expansion, contributing positively to the total company EBITDA margin performance. We believe that the world is entering a new era, the era of the employee, where companies will be measured by how they treat their people, Alight's business has never been more relevant, and our ongoing technology transformation, visible through the positive early adoption of our mobile app, positions us well to build long-term value. Our headline results for 2021 underscore the momentum of our strategy. Full-year 2021 revenue grew 6.9%, well ahead of the expectations we set at the beginning of the year. Adjusted EBITDA for the full year grew 10%, also ahead. of our original estimate set in January. And finally, we accelerated our ability to invest in our transformation and our growth. We generated 507 million in free cash flow for the year as we began our journey as a public company. This positive momentum allows us to raise 2022 guidance from the initial estimates that we outlined when we went public. Revenue of 3.09 to 3.12 billion. growth of 6% to 7% on a higher 2021 revenue base than the company's original guidance. Current full-year 2022 outlook exceeds original outlook of $2.95 billion. Adjusted EBITDA of $650 to $662 million, which is ahead of our prior outlook of $640 million. These targets demonstrate our strong profitable growth orientation and we are well on our way to 10% revenue growth in 2023. Beyond the tailwinds of our 2021 results, we're confident in raising our guidance because our platform strategy is the right solution to meet the headwinds facing companies around the world. Corporate leaders, investors, and the market agree that there is an increasing business imperative to improve the employee experience, and there is a need for boards and leadership teams alike to focus on the capital S in ESG. It's hard to go a day without seeing some mention of the future of work, the great reshuffle or the great resignation, discussions that have all been accelerated by the global pandemic. Employees' expectations of their employers have changed. The risks are high. As employees continue to vote with their careers, employers need more agile ways to engage with the dynamic needs of their employees across the globe on benefits, well-being, payroll, and more. The Alight Work Life platform is the only company-wide employee engagement solution that can help companies meet these challenges head-on to support the full employee well-being experience and create meaningful results for employers and their people. We already serve more than 30 million people and their family members across more than 100 countries. When you consider that each of Alight WorkLife's primary users have the power to influence and change the behaviors of dependents or family members, it increases our ability to change outcomes, drive cost savings even higher. And with a cloud-based, scalable technology platform, as we add more content, we'll continue to attract more users. and engage those users with more meaningful content that provides more personalized, value-added offerings. Alight's transformational approach is changing the way companies like Inca Group, the largest IKEA retailer, which we signed in the fourth quarter, think about their benefits and the experience they bring to their employees and the outcomes we can drive for their business. This is also why existing clients like Walgreens continue to work with us to create a differentiated employee experience. In addition, we're increasingly seeing demand in international markets. We added several key payroll clients across EMEA and Latin America, including Mercado Libre, Prim, CM.com, and Calera in the fourth quarter. When we engage employees on the Alight Worklife platform, we can help workers make simpler, smarter decisions around their benefits, navigate complex healthcare challenges, manage their financial well-being to balance today's needs with tomorrow's goals, and care for their complete well-being. And the outcomes are powerful. A Light Work Life is making it easier to find the right health cares for a user's specific situation, guiding them to second opinions, navigating the complicated medical billing process. We can even suggest support groups to provide mental and emotional support. We are changing the trajectory of people's health, work, and lives. Think about someone suffering from degenerative disc disease. A light work life can help them navigate the entire experience from managing health costs, finding second opinions, to identifying the right care to help the person make the right choice for their unique situation. We helped an employee navigate a situation just like this and ultimately were able to make sure they got a second opinion which avoided unnecessary surgery and positively impacted their life. When that's your employer helping you navigate the system, your entire experience changes, and your perception about the value of your employer changes. Alight Work Life has the power to impact individual and business outcomes at an even bigger scale. One existing pharmaceutical client leveraged the Alight Work Life AI decision engine to identify and target a subset of their employees who were under-saving in their HSAs and 401Ks. Elight's technology, coupled with highly personalized communications, resulted in higher saving patterns and improved financial well-being for employees. The targeted program resulted in a 5.4% average increase in 401k contributions and $1,750 average increase in HSA contributions. As I shared, Elight has been on a journey to change the employee experience by transforming the human capital space and our business. Our transformation is focused on three things. The first is becoming a product-led organization. Second, investment in technology to bring differentiated value to employers and their people. And third, shifting from a siloed business model to what we call one of light to deliver a more powerful experience to our clients and accelerate our growth strategy. In 2021, we made progress across all three areas. The Alight Work Life mobile app is a great example of one of the 11 products we added. We've seen monthly average users grow 94% sequentially from approximately 65,000 in 3Q to 127,000 in 4Q, with annual enrollment season providing a nice boost to new users. And we are now working closely with clients to increase utilization. But the real hidden gem of our business is that we can harness the power of our primary user base that influences the choices, care, and decision-making of dependents and family members in their household. When we provide meaningful content that speaks to the needs of all those lives our primary users touch, we can change outcomes for more people and have an even bigger impact on companies' investments in benefits and well-being programs. At the same time, we're also focused on adding new content, which will encourage users to access the app more often and for longer durations. We also made two strategic acquisitions in 2021, including Consumer Medical, which strengthened our existing healthcare navigation and decision support capabilities. In Q4, we announced enhanced clinical guidance, which included completing the integration of data into our existing data lake and adding the services from the legacy Consumer Medical business onto the Alight Work Life platform to further enhance available content. And last, we continue to build on our sales team and in our value engineering teams. As we continue to drive our transformation strategy forward, we'll focus on two key areas. First, continuing to build, enhance, and innovate at all layers of Alight Work Life platform. This includes the next release of Alight Work Life, which enhances the engagement analytics and AI layers. We will also continue to add content to increase the utilization of the platform so we can deliver personalized insights and suggestions steering participants towards better outcomes. Second, we will focus on accelerating adoption of our mobile app. In 2021, we had approximately 180 million interactions on both the Alight Work Life desktop and mobile applications. with a majority of those interactions occurring via desktop. We have a tremendous opportunity to convert those desktop users to the mobile app by leveraging industry-proven conversion strategies like QR codes and mobile-only features. The ability to meet users in a mobile format that best suits their needs and how they are most comfortable is the path forward. It also allows for greater engagement that will enable Alight to drive even better outcomes. whether it is notifications to connect with a dedicated health pro, use navigation services, or locate a specialist doctor, or utilizing an HSA balance to pay for out-of-pocket healthcare costs. Before I turn the call over to Katie, I'd like to reiterate three things. Our strong 2021 results demonstrate that our relentless focus on improving the employee experience by transforming the human capital space and our business is paying off. Throughout 2021, we continued to see strong demand for our offering as clients realized the differentiated experience we can provide for their employees and the return on investment we can drive for them. We continue to invest in and innovate across our business to add value for the clients, employees, and families we serve. This positive momentum is why we're raising our 2022 guidance and feel confident in our growth trajectory looking out towards 2023. Finally, I'd like to thank our colleagues around the world for powering our transformation and our growth. Katie, over to you.