Alight’s third quarter results were met with a significant negative market reaction, as the company missed Wall Street’s revenue expectations and lowered its full-year outlook. Management pointed to persistent weakness in project revenue and a lack of improvement in the sales pipeline as core contributors to the underperformance. CEO David Guilmette acknowledged, “We just have not seen an inflection in pipeline and activity,” attributing the ongoing softness to both macroeconomic uncertainty and elongated client decision-making cycles. The company also cited a onetime revenue reduction related to its Strada business divestiture and noted that recurring revenue volumes remained under pressure.
Is now the time to buy ALIT? Find out in our full research report (it’s free for active Edge members).
Alight (ALIT) Q3 CY2025 Highlights:
- Revenue: $533 million vs analyst estimates of $536.6 million (4% year-on-year decline, 0.7% miss)
- Adjusted EPS: $0.12 vs analyst estimates of $0.13 (in line)
- Adjusted EBITDA: $138 million vs analyst estimates of $136.1 million (25.9% margin, 1.4% beat)
- The company dropped its revenue guidance for the full year to $2.27 billion at the midpoint from $2.31 billion, a 1.7% decrease
- Management lowered its full-year Adjusted EPS guidance to $0.56 at the midpoint, a 8.2% decrease
- EBITDA guidance for the full year is $607.5 million at the midpoint, below analyst estimates of $624.7 million
- Operating Margin: -248%, down from -7.6% in the same quarter last year
- Market Capitalization: $1.21 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Alight’s Q3 Earnings Call
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Kyle Peterson (Needham & Company) asked about the drivers behind the reduced guidance and timing for new business wins to impact results. CFO Jeremy Heaton explained that project revenue and pipeline softness were the main factors, with new deals likely to benefit revenue only after a long lag.
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Scott Schoenhaus (KeyBanc Capital Markets) pressed on the path back to top-line growth and the impact of sales cycle elongation. CEO David Guilmette outlined a focus on improving client retention and expanding the pipeline through new product and partner opportunities, noting implementation timelines for large clients can be 12-15 months.
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Scott Schoenhaus (KeyBanc Capital Markets) also questioned margin expansion strategies. Heaton stressed that technology investments and insourcing are already yielding efficiency gains, and further automation should help offset top-line pressure.
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Kevin McVeigh (UBS) inquired about the rationale for the board’s declassification initiative. Heaton clarified this was a move toward standard public company governance, with the intention to put all directors up for annual shareholder vote.
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Peter Heckmann (D.A. Davidson) sought updates on deferred payments from the Strada business divestiture and the outlook for attrition. Heaton elaborated on payment timelines, while Guilmette said improved client retention should ease attrition as more clients complete renewals.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) the pace of pipeline recovery and progress on securing new client wins, (2) the impact of AI-driven automation and insourcing on service delivery and margins, and (3) continued improvement in client renewal rates through the Renew Everyday program. Execution on partnership monetization and expansion into new product areas will also be important to track.
Alight currently trades at $2.31, down from $2.70 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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