ALIT Q3 Deep Dive: Guidance Cut Amid Weak Project Pipeline and Margin Focus

November 06, 2025 at 00:31 AM EST

ALIT Cover Image

Human capital management provider Alight (NYSE: ALIT) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 4% year on year to $533 million. The company’s full-year revenue guidance of $2.27 billion at the midpoint came in 1.4% below analysts’ estimates. Its non-GAAP profit of $0.12 per share was in line with analysts’ consensus estimates.

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: $1.31 billion

StockStory’s Take

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.

Looking ahead, Alight’s updated guidance reflects a cautious stance on both revenue and profitability, with management emphasizing the need for improved commercial execution and continued operational efficiency. CFO Jeremy Heaton warned that project revenue is at its lowest level in recent memory, which will weigh on both EBITDA and cash flow. The company aims to offset these headwinds by accelerating AI-driven service enhancements, expanding its partner ecosystem, and driving higher client retention through its Renew Everyday program. Guilmette stated, “We are intensely focused on execution and improving our top line performance and remain confident in our position for the long term.”

Key Insights from Management’s Remarks

Management attributed the quarter’s results to weak project revenues, slow new business activity, and ongoing efforts to optimize operations and technology investments.

Project revenue weakness: Management highlighted that project-based work underperformed expectations, with pipeline activity remaining subdued despite the annual enrollment period. CFO Jeremy Heaton described project revenue as being at “levels this low” for the first time, citing cautious client sentiment and delayed decision-making.
AI and automation investments: The company accelerated its rollout of AI-centric solutions, including conversational AI agents for client enrollment and AI-enabled search summaries, now available to over 95% of clients. These efforts are intended to reduce call volumes and improve participant satisfaction, which reached its highest level since Alight’s technology transformation.
Partner ecosystem expansion: Alight expanded its partner network by integrating new offerings from companies such as Sword Health and MetLife, and deepened collaborations with Goldman Sachs Asset Management and IBM. These partnerships are expected to broaden revenue streams and enhance the company’s value proposition.
Renew Everyday program progress: The Renew Everyday initiative drove higher client renewal rates, particularly among the company’s largest clients. Management reported that this program is being extended to smaller clients, aiming to further improve retention and cross-sell opportunities.
Operational model changes: Alight brought critical technology and delivery talent back in-house to better manage service quality and productivity. According to Heaton, these changes are already resulting in improved cost efficiency, particularly within the company’s call center operations.

Drivers of Future Performance

Alight expects muted revenue growth as it contends with ongoing project pipeline softness, margin pressures, and a greater reliance on client renewals and operational enhancements.

Commercial execution and pipeline recovery: Management believes a return to growth depends on improving sales pipeline momentum, especially in core benefits administration and leave management. CEO David Guilmette noted that new client wins, while promising, may not contribute meaningfully to revenue until 2027 due to long implementation cycles.
Margin improvement through technology: Alight is prioritizing AI-driven automation and insourcing delivery functions to drive margin expansion. Heaton stated that bringing work back in-house has proven more cost-effective and flexible, with continued investments expected to reduce call center expenses and increase productivity.
Retention as a growth lever: Maintaining high renewal rates, particularly among large clients, is central to mitigating attrition’s impact on revenue. Management expects the Renew Everyday program to decrease the amount of revenue at risk in 2026, and sees cross-sell opportunities as a source of incremental growth.

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 $2.60, down from $2.70 just before the earnings. At this price, 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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