Alight, Inc.

Good morning and thank you for holding. My name is Paul and I will be your conference operator today. Welcome to Alight's fourth quarter and full year 2022 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 Jeremy Heaton, Executive Vice President, Finance at Alight, to introduce today's speakers.

Good afternoon. Thank you for joining us. Earlier today, the company issued a press release with fourth quarter and full year 2022 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 filings with the SEC, including the company's most recent Form 10-K, as such factors may be updated from time to time in the company's subsequent 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. Reconciliations of the company's historical non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's earnings press release. On the call for management today are Stefan Scholl, CEO, and Katie Rooney, CFO. After their prepared remarks, we will open the call up for questions. I will now hand the call over to Stefan.

Thank you and good afternoon, everyone. We are excited to share our Q4 results where we finished the year with great momentum delivering another quarter ahead of expectations with revenue up 9% and adjusted EBITDA up 27%. Our strong finish to 2022 completes year two of the three-year plan we outlined in 2021 ahead of expectations. Our consistent performance is a testament to the differentiated value we deliver for our clients and their employees and the attractive market opportunity that Alight is uniquely positioned to meet. Our BPAS offerings have accelerated our strategy by connecting the power of data with our products and capabilities across the spectrum of human capital solutions to redefine the future of employee well-being. This strategy has culminated with transformational wins for Alight with PWC, Shell, and the Federal Thrift, and this quarter is no different. We signed company-defining long-term agreements with GE and another Fortune 10 company where our Alight Work Life platform serves as the front door to connecting high value content and driving employee engagement. With these new wins, we are accelerating our investments while delivering double digit growth in 2023. Since going public, we have met or exceeded expectations each quarter. More specifically, in 2022, full year total revenue increased 7% to $3.1 billion, driven by 9% growth in recurring revenue, which now represents approximately 84% of total revenue. On a total contract basis, the bookings of our technology-led BPAS solutions grew nearly 45% to $871 million, well ahead of our $680 to $700 million annual target. And BPAS revenue for 2022 was $564 million, up 45% versus prior year, and now comprises 18% of total revenue, up from 13% in 2021. Adjusted EBITDA increased 6% to $659 million, even with $38 million of incremental investments in the year. And finally, we achieved operating cash flow conversion of 43%, up from 19% in 2021. I'm incredibly proud of the way our team continues to deliver on our commitments while making meaningful progress on our transformation. We have focused in three key areas, products and technology, our commercial go-to-market, and how we deliver for clients. First, in product and technology, we launched a light work life and migrated all of our clients onto our enterprise-wide employee experience platform. This is the foundation for engagement. Work Life has become the single resource from daily well-being to complex care. And the Alight Work Life mobile app is key to digital engagement. In 2022, the app was downloaded 1.2 million times. Our monthly active users increased 170%. And through annual enrollment, we saw a 200% increase in digital benefit enrollments with higher overall client satisfaction. Next, our commercial go-to-market. We've built out our new logo team as well as value engineering and solution architects to accelerate our growth. Since 2021, we have won over 700 new logos, including Navistar, PwC, Sartorius, Shell, Genuine Parts, Siemens Energy, and AutoZone, in addition to our great Q4 wins. We are just shy of our three-year BPAS bookings TCV target by the end of year two. Finally, we are delivering for our clients. As I said before, we believe Alight is in a category of one when it comes to bringing our platform and content approach combined with decades of services expertise. In 2022, we onboarded the Federal Thrift, the largest transaction of its kind with over 6 million participants. And through annual enrollment this past quarter, our digital CSAT, or customer satisfaction, was up 10 points, while reducing overall live call volumes, a significant factor in how we staff and manage while delivering for our clients moving forward. The momentum we have heading into 2023 is because of these focus areas that bring together the power of One Alight and is the reason we are winning these transformational new deals that support both the employer and the employee. For the employee, a light work life simplifies and improves the experience and value they're able to derive from the complex ecosystem across employers' benefits and well-being investments. For the employer, these solutions help them achieve a higher ROI while improving employee satisfaction and engagement. A real life example we come across often is family planning. In the traditional model of support, an employee needs to navigate multiple siloed applications to get support with medical or adoption planning, insurance coverage options and plan selection, HSA, FSA, and 401K decisions, and leave management. This places tremendous mental stress on the employee trying to manage it all in what is supposed to be an exciting time of life. Now with our integrated Alight Work Life platform, one status change for the employee triggers a proactive, data-driven, personalized message with support and options to address all dimensions of family planning, even surfacing new wellbeing programs and resources they typically wouldn't have known existed, all in a seamless experience. Another example of a high-impact life event is divorce. and the connection between employees' financial stress and anxiety, driving a need for mental illness support. This employee may have multiple 401K loans, no remaining holiday time. Typically, a company will not be able to connect all the dots on this specific employee unless they have the data on them in one connected Alight Work Life platform. Just two examples of many, but this is the value of Alight Work Life engagement platform. As we enter 2023 year three of our transformation, I am more confident than ever that we are focused in the right areas. And as I said earlier, we will continue to accelerate our investments, strengthening our competitive advantage and further developing our differentiated solutions, which are winning in the market with our strong bookings growth and highly recurring revenue model. We ended the year with over 2.9 billion of revenue under contract for 2023, the highest starting point for a light ever for context, $2.9 billion was our entire revenue in 2021. This gives us confidence that we can continue to improve growth, margin, and operating cash flow in 2023 while accelerating our technology roadmap, despite what we and others believe will be a tougher macroeconomic backdrop. For 2023, we will complete our three-year plan ahead of the original outlook. We expect total revenue growth of 11% to 12%. adjusted EBITDA growth of 12% to 14%, and operating cash flow conversion of 45% to 55%. Importantly, when you look at the quality of the mix of our business in 23, following the strong execution of our transformation in prior years, we expect the higher value BPAS revenue dollars to grow over 25% for the year. Now let's dive more into 2023 so I can share some key areas of focus. We believe that in a recessionary environment, employers are under increased pressure to hold the line on spending. Proving out the ROI on benefit spend is even more critical. Additionally, we believe that companies with truly differentiated well-being programs will be those that retain top talent during challenging times and ultimately position themselves well for long-term success. To continue to execute on our strategy, we are accelerating our investments across three priorities. First is the Alight Work-Life platform. Our 2023 product roadmap kicks off with the first release date this month, where we will expand access of a Light Work Life to all family members, which we believe will make it the first corporate platform of its kind. The expanded access will allow us to move the needle in an even more meaningful way on caring for the well-being of the entire family unit. Additionally, we are seeing higher engagement through our Light Work Life AI engine. Recent entrants have validated the importance of AI being at the center of our platform strategy. Last year, our engagement channels, such as our intelligent virtual assistant, were up 20%, and we are seeing significantly higher conversion rates on campaigns leveraging AI for clients. Finally, we are accelerating the move to the cloud on our back office infrastructure. This will enable us to better manage seasonal peaks in demand while improving the employee experience for our customers. Second, we are strengthening our operating model to showcase the power of One Alight, By shifting our content aligned care and services model to be more standardized and automated, we can leverage our global capabilities and improve the customer experience while reducing the cost to serve for all our clients. Third, we are evolving our BPaaS solutions across wellbeing, driving more differentiation and increasing our revenue potential as we address a bigger need for our clients. Today, we have over 1 billion of upside in our installed base alone. As we work towards having 90% of our sales team certified on One Alight and launch the next phase of our well-being and engagement solutions, we will capitalize on our growing total addressable market. Now, I'll turn the call to Katie to dive more into our financial performance and provide our outlook for the new year.