ALIT 10-K & 10-Q changes, risk factors and insider trading

We rely on the efficient, uninterrupted and secure operation of complex information technology systems, and networks and data centers, some of which are outsourced to third-party providers, including cloud infrastructure service providers such as Amazon Web Services (AWS) and Microsoft Azure Cloud. We do not have control over the operations of such third parties. We also may decide to employ additional offsite data centers in the future to accommodate growth. Problems faced by our data center locations, with the telecommunications network providers with whom we or they contract, or with the systems by which our telecommunications providers allocate capacity among their clients, including us, could adversely affectaffect, and in some instances have adversely affected, the availability and processing of our solutions and related services and the experience of our clients. If our data centers are unable to keep up with our growing needs for capacity, this could have an adverse effect on our business and cause us to incur additional expense. In addition, any financial difficulties faced by our third-party data center’s operator or any of the service providers with whom we or they contract may have negative effects on our business, the nature and extent of which are difficult to predict. These facilities are vulnerable to damage or interruption from catastrophic events, such as earthquakes, hurricanes, floods, fires, cyber security attacks (including "ransomware" and phishing attacks), terrorist attacks, power losses, telecommunications failures and similar events. The risk of cyber-attacks could be exacerbated by geopolitical tensions, including the ongoing Russia-Ukraine conflict, or other hostile actions taken by nation-states and terrorist organizations. While we have adopted, and continue to enhance, business continuity and disaster recovery plans and strategies, there is no guarantee that such plans and strategies will be effective, which could interrupt the functionality of our information technology systems or those of third parties. The occurrence of a natural disaster (or other extreme weather as a result of climate change or otherwise) or an act of terrorism, a decision to close the facilities without adequate notice, or other unanticipated problems could result in lengthy interruptions in our services and solutions. The facilities also could be subject to break-ins, computer viruses, sabotage, intentional acts of vandalism and other misconduct. Any errors, failures, interruptions or delays experienced in connection with these third-party technologies and information services, or our own systems could negatively impact our relationships with clients and adversely affect our business and could expose us to third-party liabilities. Any errors, defects, disruptions or other performance problems with our information technology systems including any changes in service levels at our third-party data center could adversely affect our reputation and may damage our clients’ stored files or result in lengthy interruptions in our services. Interruptions in our services might reduce our revenues, subject us to potential liability or other expenses or adversely affect our renewal rates.

One of our significant responsibilities is to maintain the security, including cybersecurity, and privacy of our employees’ and clients’ confidential and proprietary information and the confidential information about our clients’ employees’ health, financial and wellbeing information and other personally identifiable information. However, all information technology systems are potentially vulnerable to damage or interruption from a variety of sources, including but not limited to cyber-attacks, computer viruses, malware, hacking, fraudulent use attempts, “ransomware” and phishing attacks and security breaches. Our systems are also subject to compromise from internal threats such as improper action by employees, vendors and other third parties with otherwise legitimate access to our systems. Despite our efforts, from time-to-time, we and our third-party vendors experience attacks and other cyber-threats to our systems and networks and have from time-to-time experienced cyber security incidents such as computer viruses, unauthorized parties gaining access to our information technology systems and similar matters, which to date have not had a material impact on our business. These attacks can seek to exploit, among other things, known or unknown vulnerabilities in technology included in our information systems or those of third-party providers. Because the techniques used to obtain unauthorized access are constantly changing and becoming increasingly more sophisticated and often are not recognized until launched against a target, we or our third-party providers may be unable to anticipate these techniques or implement sufficient preventative measures. If we, or our third-party providers, are unable to efficiently manage the vulnerability of our systems and effectively maintain and upgrade our system safeguards, we may incur unexpected costs and certain of our systems may become more vulnerable to unauthorized access. For example, there has been a stark increase in new financial fraud schemes akin to ransomware attacks on large companies whereby a cybercriminal installs a type of malicious software, or malware, that prevents a user or enterprise from accessing computer files, systems, or networks and demands payment of a ransom for their return. Cyber criminals may also attempt to fraudulently induce employees, clients or other users of our systems to disclose sensitive information in order to gain access to our data or that of our clients or users. In addition, while we have certain standards for all vendors that provide us services, our vendors, and in turn, their own service providers, have experienced and in the future may continue to become subject to the same types of security breaches. In the future, these types of incidents could result in intellectual property or other confidential information being lost or stolen, including client, employee or business data. In addition, we may not be able to detect breaches in our information technology systems or assess the severity or impact of a breach in a timely manner.

Certain of the measures we disclose publicly, includingwhich could include our “annual recurring revenue,” “revenue under contract” and “bookings” measures, are calculated using metrics tracked by our internal teams. While these numbers are based on what we believe to be reasonable calculations for the applicable period of measurement, there are inherent challenges in deriving contract-based measures and our measure may differ from similar terms used by other companies. For example, an engagement accounted for in calculating one of these measures could abruptly end for reasons out of our control. If we determine that we can no longer calculate these metrics with a sufficient degree of accuracy, and we cannot find an adequate replacement for the metric, our business or revenue may be harmed. In addition, if investors do not perceive our metrics to be accurate representations of our business prospects, or if we discover material inaccuracies in our metrics, our reputation may be harmed, which could have a material adverse effect on our business, financial condition and results of operations.

We are subject to, and may become a party to, various claims, lawsuits or other proceedings that arise in the ordinary course of our business. Our business is subject to the risk of litigation or other proceedings involving current and former employees, clients, partners, suppliers, shareholders or others. For example, participants in our clients’ benefit plans could claim, and have claimed, that we did not adequately protect their data or secure access to their accounts. Regardless of the merits of the claims, the cost to defend these claims may be significant, and such matters can be time-consuming and divert management’s attention and resources. The outcomes of such matters in the ordinary course of our business are inherently uncertain, and adverse judgments or settlements could have a material adverse impact on our financial position or results of operations. In addition, we may become subject to future lawsuits, claims, audits and investigations, or suits, any of which could result in substantial costs and divert our attention and resources. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future. See Note 20, “Commitments and Contingencies” within the Consolidated Financial Statements within Item 8 of this Annual Report for further information regarding our active legal matters.

We may not successfully identify additional suitable investment opportunities. We expect to continue pursuing strategic and targeted acquisitions, investments and joint ventures to enhance or add to our skills and capabilities or offerings of services and solutions, or to enable us to expand in certain geographic and other markets. There can be no assurance that pursuing strategic opportunities will result in any transactions or arrangements, and even if we do consummate a transaction or arrangement, there is no guarantee that such development will be accretive to our financial condition or results of operations. For more information on recent acquisitions, see Note 4, "Acquisitions" within the Consolidated Financial Statements.

We depend, to a large extent, on our relationships with our clients and our reputation to understand our clients’ needs and deliver solutions and services that are tailored to satisfy those needs. If a client is not satisfied with our services, it may be damaging to our business and could cause us to incur additional costs and impairimpact profitability. Many of our clients are businesses that band together in industry groups and/or trade associations and actively share information among themselves about the quality of service they receive from their vendors. Accordingly, poor service to one client may negatively impact our relationships with multiple other clients. Moreover, if we fail to meet our contractual obligations, we could be subject to legal liability or loss of client relationships.

•difficulties in staffing and managing our offices, such as unexpected wage inflation, worker attrition, visa requirements, or job turnover, increased travel and infrastructure costs, as well as legal and compliance costs associated with multiple international locations;

Our business model is dependent on our global delivery capability, which includes employees and third-party personnel based at various delivery centers around the world. While these delivery centers are located throughout the world, we or third parties operating on our behalf have based large portions of our delivery capability in India, Poland and the Philippines. Concentrating our global delivery capability in these locations presents operational risks, many of which are beyond our control. For example, natural disasters (including those as a result of climate change) and public health threats could impair the ability of our people to safely travel to and work in our facilities and disrupt our ability to perform work through those delivery centers. Additionally, other countries may experience political instability, worker strikes, civil unrest and hostilities with neighboring countries. If any of these circumstances occurs, we have a greater risk that interruptions in communications with our clients and other locations and personnel, and any downtime in important processes we operate for clients, could result in a material adverse effect on our results of operations and our reputation in the marketplace.

The profitability of our engagements with clients may not meet our expectations due to unexpected costs, cost overruns, early contract terminations, unrealized assumptions used in our contract bidding process or the inability to maintain our prices in light of any inflationary and competitive circumstances.

Our profit margin, and therefore our profitability, is largely a function of the rates we are able to charge for our services and the staffing costs for our personnel. Accordingly, if we are not able to maintain the rates we charge for our services or appropriately manage the staffing costs of our personnel, we may not be able to sustain our profit margin and our profitability will suffer. The prices we are able to charge for our services are affected by a number of factors, including competitive factors, cost of living adjustment provisions, the extent of ongoing clients’ perception of our ability to add value through our services and general economic conditions such as inflation (including wage inflation). Our profitability is largely based on our ability to drive cost efficiencies and maintain competitive rates during the term of our contracts for our services provided to clients. If we cannot drive suitable cost efficiencies, our profit margins will suffer.

On February 20, 2023, the Company approved a restructuring program that includes, among other things, the elimination of full-time positions, termination of certain contracts, and asset impairments, primarily related to facilities consolidations. We recorded in the aggregate approximately $136 million in pre-tax restructuring charges associated with the restructuring program and the program was substantially complete as of December 31, 2024. We cannot guarantee that the restructuring program will achieve or sustain the targeted benefits, or that the benefits, even if achieved, will be adequate to meet our long-term profitability expectations. Risks associated with the restructuring program could also include additional unexpected costs, negative impacts on our cash flows from operations and liquidity, employee attrition and adverse effects on employee morale and our potential failure to meet operational and growth targets due to the loss of employees, any of which may impair our ability to achieve anticipated results from operations or otherwise harm our business. See Note 1717, of"Restructuring" within the Consolidated Financial Statements within Item 8 of this Annual Report for additional information on our restructuring program.

We have a substantial amount of goodwill and purchased intangible assets on our consolidated balance sheet as a result of the Business Combination (as defined in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Business - Business Combination") and other acquisitions. Under GAAP, we review our long-lived assets, such as goodwill, intangible assets and fixed assets, for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is assessed for impairment at least annually. Factors that may be considered in assessing whether goodwill or other long-lived assets may not be recoverable include reduced estimates of future cash flows and slower growth rates in our industry. We may experience unforeseen circumstances that adversely affect the value of our goodwill or other long-lived assets and trigger an evaluation of the recoverability of the recorded goodwill and other long-lived assets. Future goodwill or other long-lived asset impairment charges could materially impact our financial statements.

The market price of our Class A Common Stock has fluctuated significantly in response to numerous factors and may continue to be subject to wide fluctuations. Securities markets worldwide experience significant price and volume fluctuations. During the year ended December 31, 2024,2025, the per share trading close price of our Class A Common Stock fluctuated from a low of $6.52$1.94 to a high of $10.32.$7.05. This market volatility, as well as general economic, market or political conditions, could reduce the market price of shares of our Class A Common Stock regardless of our operating performance. In addition, our operating results may fail to match our past performance and could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly operating results or dividends, if any, to shareholders, additions or departures of key management personnel, failure to meet analysts’ earnings estimates, publication of research reports about our industry, the performance of direct and indirect competitors, announcements of technological developments, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about the industries we participate in or individual scandals. In addition, the market price of shares of our Class A Common Stock could be subject to additional volatility or decrease significantly,significantly as a result of speculation in the press or the investment community about our industry or our company, including, as a result of short sellers who publish, or arrange for the publication of, opinions or characterizations of our business prospects or similar matters calculated to create negative market momentum in order to profit from a decline in the market price of our Class A Common Stock. Stock markets and the price of our Class A Common Stock have, and may in the future, experience extreme price and volume fluctuations. In the past, following periods of volatility in the overall market and the market price of a company’s securities, including as a result of reports published by short sellers, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, as well as responding to reports published by short sellers or other speculation in the press or investment community, could result in substantial costs and a diversion of our management’s attention and resources.

Our Board of Directors recentlypreviously adopted a dividend program, pursuant to which we intend to paypaid a cash dividend on our Class A Common Stock on a quarterly basis. The declaration and payment of any dividend is subject to the approval of our Board of Directors and ourany dividend program may be discontinued or reduced at any time. On February 19, 2026, we announced we are replacing our cash dividend with more efficient capital allocation activities. Separately, as of December 31, 2024,2025, we had approximately $81$216 million remaining of authorization under our existing share repurchase program. The share repurchase program does not obligate the Company to purchase any particular number of shares and there is no guarantee as to any number of shares being repurchased by the Company. Because we are a holding company with no material assets other than its direct and indirect ownership of equity interests in Alight Holdings, the Company has no independent means of generating revenue or cash flow, and our ability to pay cash dividends or repurchase shares is dependent on the financial results and cash flows of Alight Holdings and its subsidiaries and the distributions that we receive from Alight Holdings.

Any decisions made regarding our quarterly dividend payments or our repurchase activities could have a negative effect on our reputation and could cause the market price of our Class A Common Stock to decline significantly. In addition, the payment of dividends and repurchases of shares are uses of cash, which may reduce the availability of cash for other business purposes, including investments, acquisitions, or repayment of indebtedness.

In connection with the Business Combination, we entered into a tax receivable agreement (the "Tax Receivable Agreement" or the "TRA") with certain of our pre-Business Combination owners (including their assignees, the "TRA Parties") that provides for the payment by the Company to suchthe TRA Parties of 85% of the benefits, if any, that the Company is deemed to realize (calculated using certain assumptions) as a result of (i) the Company’s direct and indirect allocable share of existing tax basis acquired in the Business Combination, (ii) increases in the Company’s allocable share of existing tax basis and tax basis adjustments that will increase the tax basis of the tangible and intangible assets of Alight Holdings as a result of the Business Combination and as a result of sales or exchanges of Alight Holdings Units for shares of Class A Common Stock after the Business Combination and (iii) certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. These increases in existing tax basis and tax basis adjustments generated over time may increase (for tax purposes) depreciation and amortization deductions and, therefore, may reduce the amount of tax that the Company would otherwise be required to pay in the future, although the Internal Revenue Service (the "IRS") may challenge all or part of the validity of that tax basis, and a court could sustain such a challenge. Actual tax benefits realized by the Company may differ from tax benefits calculated under the Tax Receivable Agreement as a result of the use of certain assumptions in the Tax Receivable Agreement, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits. The payment obligation under the Tax Receivable Agreement is an obligation of the Company and not of Alight Holdings. While the amount of existing tax basis, the anticipated tax basis adjustments and the actual amount and utilization of tax attributes, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of exchanges of Alight Holdings Units for shares of our Class A Common Stock, the applicable tax rate, the price of shares of our Class A Common Stock at the time of exchanges, the extent to which such exchanges are taxable and the amount and timing of our income, we expect that as a result of the size of the transfers and increases in the tax basis of the tangible and intangible assets of Alight Holdings and our possible utilization of tax attributes, including existing tax basis acquired at the time of the Business Combination, the payments that the Company may make under the Tax Receivable Agreement will be substantial. The payments under the Tax Receivable Agreement are not conditioned on the exchanging holders of Alight Holdings Units or other TRA Parties continuing to hold ownership interests in us. To the extent payments are due to the TRA Parties under the Tax Receivable Agreement, the payments are generally required to be made within ten business days after the tax benefit schedule (which sets forth the Company’s realized tax benefits covered by the Tax Receivable Agreement for the relevant taxable year) is finalized.finalized, and the calculations used to derive such payments are subject to review by the TRA Parties. The Company is required to deliver such a tax benefit schedule to the TRA Parties’ representative, for its review, within ninety calendar days after the due date (including extensions) of the Company’s federal corporate income tax return for the relevant taxable year.

Alight is a technology-enabled services company delivering human capital management solutions to many of the world’s largest and most complex organizations. This includes the implementation and administration of employee benefits (e.g. health, wealth and leaves benefits) solutions. Alight’s numerous solutions and services are utilized year-round by employees and their family members in support of their overall health, wealth and wellbeing goals. Participants can access their solutions digitally, including through a mobile application on Alight Worklife®, our intuitive, cloud-based employee engagement platform. Through Alight Worklife, the Company believes it is defining the future of employee benefits by providing an enterprise level, integrated offering designed to drive better outcomes for organizations and individuals.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Alight. This MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements (Part II, Item 8 of this Form 10-K). This section generally discusses the results of our operations for the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. For a discussion of the year ended December 31, 20232024 compared to the year ended December 31, 2022,2023, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023,2024, filed with the SEC on February 29,27, 2024,2025, notingwhich theis resultsincorporated forherein theby year ended December 31, 2023 and year ended December 31, 2022 have since been recast in this Form 10-K.reference.

Our clients’ demand for our services ultimately drives our revenues. We generate primarily all of our revenue, which is highly recurring, from fees for services provided from contracts across all solutions, which is primarily based on a contracted fee charged per participant per period (e.g., monthly or annually, as applicable). Our contracts typically have three to five-year terms for ongoing services with mutual renewal options. The majority of the Company’s revenue is recognized over time when control of the promised services is transferred, and the customers simultaneously receive and consume the benefits of our services. Payment terms are consistent with industry practice. We calculate growth rates for each of our solutions in relation to recurring revenues and revenues from project work. One of the components of our growth in recurring revenues is the increase in net commercial activity which reflects items such as client wins and losses (“Net Commercial Activity”). We define client wins as sales to new clients and sales of new solutions to existing clients. We define client losses as instances where clients do not renew or terminate their arrangements in relation to individual solutions or all of the solutions that we provide. We measure revenue growth as it relates to the cloud-based products and solutions that are central to our Alight Worklife® platform and next generation product suite, BPaaS Solutions. We use annual revenue retention rates as an important measure to manage our business. We calculate annual revenue retention on a gross basis by identifying the clients from whom we generated revenue in the prior year and determining what percentage of that revenue is generated from those same clients for the same solutions in the subsequent year.

Interest expense primarily includes interest expense related to our outstanding debt.debt and is net of interest rate swap derivative gains recognized and interest income.

Revenues were $2,332$2,262 million for the year ended December 31, 20242025 as compared to $2,386$2,332 million for the prior year period.year. The decrease of $54$70 million, or 2.3%,3.0%, was driven by lower volumes, Net Commercial Activity,Activity and lower project revenuerevenue. The Company experienced lower than expected bookings and thelarger wind-downthan ofanticipated ourlosses Hostedfrom businesscontract operations.renewals We experienced short term impacts in the first half of 2024 when compared to the prior year period as a result of large deal go-live timing and softness in BPaaS bookings in the first half of 2023. We also measure revenue growth as it relates to our cloud-based products and solutions that are central to our Alight Worklife® platform and our next generation product suite, BPaaS Solutions. Forduring the year ended December 31, 2024,2025, wewhich recorded BPaaSimpacted revenue ofgrowth $499and million,is whichalso representedexpected to impact revenue growth ofin 15.0% compared to the priorfiscal year period.2026.

Recurring revenues for the year ended December 31, 20242025 decreased by $32$27 million, or 1.5%,1.3%, from $2,167$2,135 million in the prior year period to $2,135$2,108 million and weremillion, primarily driven by lower volumes and Net Commercial Activity.

Cost of services, exclusive of depreciation and amortization, decreased $62$56 million, or 4.1%,3.9%, for the year ended December 31, 20242025 as compared to the prior year period.year. The decrease was primarily driven by lowera revenuesdecrease and,in lower compensation and benefits expenses, primarily stock-based compensationrevenue and savings realized in conjunction with productivity initiatives.initiatives, partially offset by an increase in compensation .

Depreciation and amortization expenses increased by $24$15 million, or 33.3%,15.6%, for the year ended December 31, 2025 as compared to the prior year period,year, primarily driven by capitalized software.

Selling, general and administrative expenses decreased $5$150 million, or 0.8%,25.6%, for the year ended December 31, 20242025 as compared to the prior year period.year. The decrease was driven by lower compensation expenses primarily related to share-based awards and lower costs incurred from our restructuring program, partially offset by higher professional fees incurred related to the sale and separation of ourthe PayrollDivested Business, a reduction in stock based compensation expense and Professionalproductivity Servicessavings, businesses.partially offset by an increase in compensation expense.

Depreciation and intangible amortization expenses decreased by $2$3 million, or 0.7%,1.0%, andfor wasthe consistentyear ended December 31, 2025 as compared to the prior year period.year.

There was a $57$1 million gain related to the change in the fair value of financial instruments for the year ended December 31, 20242025 compared to a lossgain of $10$57 million for the prior year, primarily due to the $50 million write down of our Additional Seller Note in the year period.ended December 31, 2025, partially offset by a gain on remeasurement of the Seller Earnout. We are required to remeasure the financial instruments at the end of each reporting period and reflect a gain or loss for the change in fair value of the financial instruments in the period the change occurred. Changes in the fair value are primarily due to changes in the underlying assumptions of each respective instrument, including changes in the risk-free interest rate, volatility, cost of debt, forecasts, and the closing stock price for the period and are primarily related to the Seller Earnout and Additional Seller Note.period. See Note 1414, "Financial Instruments" within the Consolidated Financial Statements within Item 8 of this Annual Report for additional information.

The change in the fair value of the TRA resulted in a lossgain of $34$93 million for the year ended December 31, 2024,2025, aan decreaseincrease of $84$127 million compared to a loss of $118$34 million for the prior year period.year. The change in fair value was due to the conversion of non-controlling interests during the year ended December 31, 2024, changes in the Company's assumptions related to the timing of the utilization of tax attributes during the term of the TRA, changes in the discount rate and the passage of time.

Interest expense decreased $28$11 million for the year ended December 31, 20242025, as compared to the prior year period.year. The decrease was primarily due to the partial repayment of debt duringin the year,prior year and the opportunistic repricing of our 2028 term loan and higher interest income,loan, partially offset by the Company's hedges.hedges and lower interest income. See Note 88, “Debt” within the Consolidated Financial Statements within Item 8 of this Annual Report for additional information.

Under the terms of the TSA as described in Note 44, "Discontinued Operations", within the Consolidated Financial Statements within Item 8 of this Annual Report, the Company is providing technology infrastructure, risk and security, and various other corporate services to the Divested Business subsequent to the close. We recorded $26 million and $19 million for services performed under the TSA for the yearyears ended December 31, 20242025 and 2024, respectively, in Other (income) expense, net,net. and theThe corresponding expenses were recognized in Cost of services and Selling, general and administrative expense in the consolidatedConsolidated statementStatement of comprehensiveComprehensive incomeIncome (lossLoss).

Loss from continuing operations before taxes was $3,062 million for the year ended December 31, 2025 as compared to a loss from continuing operations before taxes of $148 million for the year ended December 31, 2024 as compared to loss from continuing operations before taxes of $337 million for the year ended December 31, 2023.2024. The decreaseincrease in loss was primarily attributable to the $3,124 million non-cash goodwill impairment charge and the non-operating fair value remeasurements of financial instruments, partially offset by lower selling, general and administrative expenses, a change in fair value remeasurements of the tax receivable agreement and lower interest expense as a result of the partial debt repaymentpay and other income recorded in conjunction with the TSA and the non-operating fair value remeasurements of financial instruments and the TRA.down.

Income tax benefitexpense was $20$16 million for the year ended December 31, 2023,2025, as compared to an income tax expensebenefit of $16$8 million for the prior year period.year. The effective tax rate of 6%(1)% for the year ended December 31, 20232025 was lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible expenses, tax credits, and changes in valuation allowance.allowance, and certain non-recurring items, including non-deductible goodwill impairment. The effective tax rate of 13%5% for the year ended December 31, 20222024 was lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible expenses, tax credits, and changes in valuation allowance. See Note 77, “Income Taxes” within the Consolidated Financial Statements within Item 8 of this Annual Report for additional information.

Adjusted Net Income From Continuing Operations, which is defined as net income (loss) from continuing operations attributable to Alight, Inc., adjusted for intangible amortization and the impact of certain non-cash itemsitems, including goodwill impairment charges, that we do not consider in the evaluation of ongoing operational performance, is a non-GAAP financial measure used solely for the purpose of calculating Adjusted Diluted Earnings Per Share From Continuing Operations.

(78)Excludes approximately 0.7 million, 10.9 millionmillion, and 27.4 million performance-based units, which represents the gross number of shares expected to vest based on achievement of the respective performance conditions as of December 31, 20242025, 2024, and 2023, respectively.

Adjusted EBITDA From Continuing Operations is defined as earnings before interest, taxes, depreciation and intangible amortization adjusted for the impact of certain non-cash and other itemsitems, including goodwill impairments, that we do not consider in the evaluation of ongoing operational performance. Adjusted EBITDA Margin From Continuing Operations is defined as Adjusted EBITDA From Continuing Operations divided by revenue. Adjusted EBITDA and Adjusted EBITDA Margin From Continuing Operations are non-GAAP financial measures used by management and our stakeholders to provide useful supplemental information that enables a better comparison of our performance across periods as well as to evaluate our core operating performance. A reconciliation of Adjusted EBITDA From Continuing Operations to Net Income (Loss) From Continuing Operations is as follows:

Employer Solutions revenue was $2,332$2,262 million for the year ended December 31, 20242025 as compared to $2,360$2,332 million for the prior year period.year. The overall decrease of $28$70 million was primarily driven by decreases in recurringnet revenuescommercial fromactivity and lower volumes, Net Commercial Activity and project revenue. We experienced annual revenue retention rates of 95%94% and 97%95% in 20242025 and 2023,2024, respectively.

Gross Profit to Adjusted Gross Profit Reconciliation for the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024

Factors that could cause our actual results to differ materially from those in this Quarterly Report on Form 10-Q are any of the risks described in our Annual Report filed with the SEC on February 24, 2026. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. There have been no material changes from the risk factors previously disclosed under "Part I, Item IA. Factors" in the Company’s filing mentioned in the aforementioned paragraph.

On July 2, 2021 (the “Closing Date”), Alight Holding Company, LLC (the "Predecessor" or "Alight Holdings") completed a business combination (the "Business Combination") with a special purpose acquisition company. On the Closing Date, pursuant to the Business Combination Agreement, the special purpose acquisition company became a wholly owned subsidiary of Alight, Inc. (“Alight”, the “Company”, “we” “us” “our” or the “Successor”). As of MarchJune 31,30, 2026, Alight owned approximately 99% of the economic interest in the Predecessor, had 100% of the voting power and controlled the management of the Predecessor. The non-voting ownership percentage held by noncontrolling interest was less than 1% as of MarchJune 31,30, 2026.

Interest expense primarily includes interest expense related to our outstanding debt and,and is net of interest rate swap derivative gains recognized and interest income.

Other (income) expense, net includes non-operating expenses and income, including realized (gains) and losses from remeasurement of foreign currency transactions,transactions and Transition Services Agreement (the "TSA") income for providing various corporate services to the Divested Business.

Results of Continuing Operations for the Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

Revenues were $534$511 million for the three months ended MarchJune 31,30, 2026 as compared to $548$528 million for the prior year period. The decrease of $14$17 million, or 2.6%,3.2%, was driven by lower Net Commercial Activity, partially offset by higher project revenue. The Company continues to experience largerthe lossesimpact from prior year client contract renewalslosses and lower than expected bookings, which has impacted revenue growth and is expected to continue to impact revenue growth during the remainder of fiscal year 2026.

Recurring revenues for the three months ended MarchJune 31,30, 2026 decreased by $22$21 million, or 4.2%,4.3%, from $520$492 million in the prior year period to $498$471 million, primarily driven by lower Net Commercial Activity.

Cost of services, exclusive of depreciation and amortization decreasedincreased $4$12 million, or 1.1%,3.7%, for the three months ended MarchJune 31,30, 2026 as compared to the prior year period and was primarily attributable to productivityhigher savings.compensation expense.

Selling, general and administrative expenses increaseddecreased $1$21 million, or 1.0%,16.2%, for the three months ended MarchJune 31,30, 2026 primarily driven by lower severance and wereother consistentrestructuring with the prior year period.costs.

There was no gain or loss related to the change in the fair value of financial instruments for the three months ended MarchJune 31,30, 2026 compared to a gainloss of $8$28 million for the prior year period. We are required to remeasure the financial instruments at the end of each reporting period and reflect a gain or loss for the change in fair value of the financial instruments in the period the change occurred. Changes in the fair value are primarily due to changes in the underlying assumptions of each respective instrument, including changes in the risk-free interest rate, volatility, cost of debt, forecasts, and the closing stock price for the period. See Note 14, "Financial Instruments" within the Condensed Consolidated Financial Statements for additional information.

The change in the fair value of the TRA resulted in a gain of $19$46 million for the three months ended MarchJune 31,30, 2026, an increase of $28$69 million compared to a loss of $9$23 million for the prior year period. The change in fair value was due to changes in the Company's assumptions related to the timing of the utilization of tax attributes during the term of the TRA, changes in the discount rate and the passage of time.

Interest expense increased $2 million for the three months ended MarchJune 31,30, 2026 as compared to the prior year period. The increase was due to higher interest expense net of swaps and lower interest income.swaps.

Under the terms of the TSA as described in Note 44, "Discontinued Operations" within the Condensed Consolidated Financial Statements, the Company had provided technology infrastructure, risk and security, and various other corporate services to the Divested Business subsequent to the close. For the three months ended MarchJune 31,30, 2026, we recorded an immaterial amount of income for services performed under the TSA. For the three months ended MarchJune 31,30, 2025, we recorded $10$8 million for services performed under the TSA. TSA services income is recorded in Other (income) expense, net. The corresponding expenses were recognized in Cost of servicesservices, exclusive of depreciation and amortization, and Selling, general and administrative expense in the Condensed Consolidated Statement of Comprehensive Income (Loss).

Loss from continuing operations before taxes was $26$19 million for the three months ended MarchJune 31,30, 2026 as compared to a loss from continuing operations before taxes of $20$1,076 million for the three months ended MarchJune 31,30, 2025. The increasedecrease in loss was primarily attributable to lowera operatingdecrease profitin the non-cash goodwill impairment and the change in fair value of financialthe instruments,TRA, partially offset by thelower changegross in fair value of the TRA.profit.

Income tax benefit was $7$9 million for the three months ended MarchJune 31,30, 2026, as compared to an income tax benefit of $3 million for the prior year period. The effective tax rate of 27%47% for the three months ended MarchJune 31,30, 2026 was higher than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible expenses, tax credits, and changes in valuation allowance. The effective tax rate of 15%0% for the three months ended MarchJune 31,30, 2025 was lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s non-deductible expenses, tax credits, and changes in valuation allowance.allowance, and certain non-recurring items including non-deductible goodwill impairment. See Note 7, “Income Taxes” within the Condensed Consolidated Financial Statements for additional information.

Adjusted Net Income From Continuing Operations, which is defined as net income (loss) from continuing operations attributable to Alight, Inc., adjusted for intangible amortization and the impact of certain non-cash itemsitems, including goodwill impairment charges, that we do not consider in the evaluation of ongoing operational performance, is a non-GAAP financial measure used solely for the purpose of calculating Adjusted Diluted Earnings Per Share From Continuing Operations.

(78)Excludes approximately 33.21.9 million and 10.00.3 million performance-based units, which represents the gross number of shares expected to vest based on achievement of the respective performance and market conditions as of MarchJune 31,30, 2026 and 2025, respectively.

Adjusted EBITDA From Continuing Operations is defined as earnings before interest, taxes, depreciation and intangible amortization adjusted for the impact of certain non-cash and other itemsitems, including goodwill impairments, that we do not consider in the evaluation of ongoing operational performance. Adjusted EBITDA Margin From Continuing Operations is defined as Adjusted EBITDA From Continuing Operations divided by revenue. Adjusted EBITDA and Adjusted EBITDA Margin From Continuing Operations are non-GAAP financial measures used by management and our stakeholders to provide useful supplemental information that enables a better comparison of our performance across periods as well as to evaluate our core operating performance. A reconciliation of Adjusted EBITDA From Continuing Operations to Net Income (Loss) From Continuing Operations is as follows:

Employer Solutions Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 Compared to the Three and Six Months Ended MarchJune 31,30, 2025

Employer Solutions revenue was $534$511 million for the three months ended MarchJune 31,30, 2026 as compared to $548$528 million for the prior year period. The overall decrease of $14$17 million was primarily driven by decreases in Net Commercial Activity, partially offset by an increase in project revenue.

Gross Profit to Adjusted Gross Profit Reconciliation for the Three and Six Months Ended MarchJune 31,30, 2026 Compared to the Three and Six Months Ended MarchJune 31,30, 2025

Employer Solutions gross profit was $156$142 million for the three months ended MarchJune 31,30, 2026 compared to $171$176 million for the prior year period. The decrease of $15$34 million was primarily driven by lower revenues. Employer Solutions adjusted gross profit decreased $11$29 million for the three months ended MarchJune 31,30, 2026 to $189$176 million from $200$205 million in the prior year period, primarily driven by lower revenues.

FreeCash cashprovided flowby operating activities - continuing operations was $53$152 million for the threesix months ended MarchJune 31,30, 2026 as compared to $44$159 million fromfor the priorsix period.months ended June 30, 2025. The increasedecrease in free cash flowprovided by operating activities - continuing operations was primarily due to anlower increasegross profit partially offset by changes in cashour providednet from operations and lowerworking capital expenditures.requirements.