Alight (ALIT) Q3 2026 earnings summary

Executive summary

• Q3 revenue was $500M, down 6.2% YoY, and adjusted EBITDA was $86M, down $52M; both exceeded expectations for a third consecutive quarter, while lower net commercial activity weighed on revenue.

• Retention improved to the high 90s, and account coverage extended to relationships representing over 95% of recurring revenue; management expects renewal benefits to emerge in H2 2027 and beyond.

• Transformation priorities include service excellence, faster technology delivery, improved user experience, stronger retention, and renewed commercial growth.

Financial highlights

• Q3 recurring revenue was $458M, down 6.3% YoY; project revenue was $42M, down 4.5%; total revenue was $500M, down 6.2%.

• Q3 adjusted gross profit was $168M versus $206M; adjusted net income was $19M versus $62M, and adjusted EPS was $0.66 versus $2.32.

• Q3 adjusted EBITDA was $86M versus $138M; 9M adjusted EBITDA was $282M versus $383M.

• 9M revenue was $1.545B versus $1.609B; recurring revenue was $1.427B, down 4.9%, while project revenue was $118M, up 9.3%.

• 9M cash from operations was $181M and free cash flow was $108M, versus $236M and $151M, respectively, in 2025.

Outlook and guidance

• FY2026 revenue guidance was raised to $2.115B–$2.125B and adjusted EBITDA guidance to $410M–$420M.

• Prior-year client losses and lower bookings are expected to weigh on revenue through the remainder of FY2026 and into FY2027; net commercial momentum is expected sometime in 2027.

• Management expects commercial momentum to build in 2027 and accelerate in 2028; more 2027 revenue and margin detail is planned with Q4 results.

• Near-term cost actions are intended to protect margins and cash, alongside investments in user experience, AI enablement, and sales coverage.

• Post-Separation Plan restructuring costs are expected to total ~$115M, with annual savings of up to $90M and substantial completion by FY2026 year-end.