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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39299

Alight, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware | 86-1849232
( State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
4 Overlook Point Lincolnshire, IL | 60069
(Address of principal executive offices) | (Zip Code)

(224) 737-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share |  | ALIT |  | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer |  | ☒ |  | Accelerated filer |  | ☐
Non-accelerated filer |  | ☐ |  | Smaller reporting company |  | ☐
Emerging growth company |  | ☐ |  |  |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 4, 2023, the registrant had 497,234,220 shares of Class A Common Stock, par value $0.0001 per share, 4,990,453 shares of Class B-1 Common Stock, par value $0.0001 per share, 4,990,453 shares of Class B-2 Common Stock, par value $0.0001 per share, 44,135,874 shares of Class V Common Stock, par value $0.0001 per share, 4,663,187 shares of Class Z-A Common Stock, par value $0.0001 p er share, 266,947 shares of Class Z-B-1 Common Stock, par value $0.0001 per share, and 266,947 shares of Class Z-B-2 Common Stock, par value $0.0001 per share, outstanding.

Table of Contents

|  | Page
| Forward-Looking Statements |
PART I. | FINANCIAL INFORMATION | 1
Item 1. | Financial Statements | 3
| Condensed Consolidated Balance Sheets (Unaudited) | 3
| Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) | 4
| Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) | 5
| Condensed Consolidated Statements of Cash Flows (Unaudited) | 6
| Notes to Unaudited Condensed Consolidated Financial Statements | 7
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 31
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 39
Item 4. | Controls and Procedures | 39
PART II. | OTHER INFORMATION |
Item 1. | Legal Proceedings | 41
Item 1A. | Risk Factors | 41
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 41
Item 3. | Defaults Upon Senior Securities | 41
Item 4. | Mine Safety Disclosures | 41
Item 5. | Other Information | 41
Item 6. | Exhibits | 42
Signature | 43

i

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements include, but are not limited to, statements that relate to expectations regarding future financial performance, and business strategies or expectations for our business. Forward-looking statements can often be identified by the use of words such as “anticipate,” “appear,” “approximate,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “would” or similar expressions or the negative thereof. These forward-looking statements are based on information available as of the date of this report and the Company’s management’s current expectations, forecasts and assumptions, and involve a number of judgments, known and unknown risks and uncertainties and other factors, many of which are outside the control of the Company and its directors, officers and affiliates. Accordingly, forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date. The Company does not undertake any obligation to update, add or otherwise correct any forward-looking statements contained herein to reflect events or circumstances after the date they were made, whether as a result of new information, future events, inaccuracies that become apparent after the date hereof or otherwise, except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

•
declines in economic activity in the industries, markets, and regions our clients serve, including as a result of macroeconomic factors beyond our control, increases in inflation rates or interest rates, changes in monetary and fiscal policies or bank failures;
•
the possibility that the Company may be adversely affected by other economic, business or competitive factors;
•
risks associated with competition with the Company’s competitors;
•
cyber-attacks and security vulnerabilities and other significant disruptions in the Company’s information technology systems and networks that could expose the Company to legal liability, impair its reputation or have a negative effect on the Company’s results of operations;
•
our handling of confidential, personal or proprietary data;
•
changes in applicable laws or regulations;
•
an inability to successfully execute on operational and technological enhancements designed to drive value for our clients or drive internal efficiencies;
•
claims (particularly professional liability claims), litigation or other proceedings against us;
•
the inability to adequately protect key intellectual property rights or proprietary technology;
•
past and prospective acquisitions, including the failure to successfully integrate operations, personnel, systems, technologies and products of the acquired companies, adverse tax consequences of acquisitions, greater than expected liabilities of the acquired companies and charges to earnings from acquisitions;
•
the success of our strategic partnerships with third parties;
•
the possibility of a decline in continued interest in outsourced services;
•
our inability to retain and attract experienced and qualified personnel;
•
recovery following a catastrophic event, disaster or other business continuity problem;
•
our inability to deliver a satisfactory product to our clients;
•
damage to our reputation;
•
our reliance on third-party licenses and service providers;
•
our handling of client funds;
•
changes in regulations that could have an adverse effect on the Company’s business;
•
the Company’s international operations;
•
the profitability of our engagements due to unexpected circumstances;

1

•
changes in accounting principles or treatment;
•
contracting with government clients;
•
the significant control certain legacy investors have over us;
•
the potential for conflicts of interest arising out of any members of our board of directors allocating their time to other businesses and not exclusively to us, and the fact that our charter contains a corporate opportunities waiver so directors will not be required to present potential business opportunities to us;
•
the incurrence of increased costs and becoming subject to additional regulations and requirements as a result of being a public company, including those related to internal controls over financial reporting;
•
an inability to successfully remedy the material weakness in our tax accounting identified during the 2022 fiscal year or the identification of any future deficiencies in internal controls over financial reporting;
•
changes in our capital structure, including from the issuance of new shares by us or sales of shares by legacy investors, which could adversely affect the market price of our stock;
•
our obligations under our Tax Receivable Agreement (as defined below);
•
changes to our credit ratings or interest rates which could affect our financial resources, ability to raise additional capital, generate sufficient cash flows, or generally maintain operations; and
•
other risks and uncertainties indicated in this report and our other public filings, including those set forth under the section entitled “Risk Factors” in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on March 1, 2023 (the "Annual Report").

These risk factors do not identify all risks that we face, and our business, financial condition and results of operations could also be affected by factors, events or uncertainties that are not presently known to us or that we currently do not consider to present material risks.

Website and Social Media Disclosure

We use our website (www.alight.com) and our corporate Facebook (http://www.facebook.com/AlightGlobal), Instagram (@alight_solutions), LinkedIn (www.linkedin.com/company/alightsolutions), Twitter (@alightsolutions), and YouTube (www.youtube.com/c/AlightSolutions) accounts as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, filings made with the SEC and public conference calls and webcasts. The information on our website is not part of this Quarterly Report.

The Company makes available free of charge on its website or provides a link on its website to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the SEC. To access these filings, go to the Company’s website and under the “Investors” heading, click on “Financials.”

2

PART I—FINANCI AL INFORMATION

Item 1. Financi al Statements.

Alight, Inc.

Condensed Consolida ted Balance Sheets

(Unaudited)

|  | March 31, |  |  | December 31, |
|  | 2023 |  |  | 2022 |
(in millions, except par values) |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Current Assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ |  | 239 |  |  | $ |  | 250 |
Receivables, net |  |  |  | 638 |  |  |  |  | 678 |
Other current assets |  |  |  | 312 |  |  |  |  | 379 |
Total Current Assets Before Fiduciary Assets |  |  |  | 1,189 |  |  |  |  | 1,307 |
Fiduciary assets |  |  |  | 1,387 |  |  |  |  | 1,509 |
Total Current Assets |  |  |  | 2,576 |  |  |  |  | 2,816 |
Goodwill |  |  |  | 3,680 |  |  |  |  | 3,679 |
Intangible assets, net |  |  |  | 3,793 |  |  |  |  | 3,872 |
Fixed assets, net |  |  |  | 342 |  |  |  |  | 320 |
Deferred tax assets, net |  |  |  | 11 |  |  |  |  | 6 |
Other assets |  |  |  | 515 |  |  |  |  | 542 |
Total Assets |  | $ |  | 10,917 |  |  | $ |  | 11,235 |
Liabilities and Stockholders' Equity |  |  |  |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  | $ |  | 392 |  |  | $ |  | 508 |
Current portion of long-term debt, net |  |  |  | 25 |  |  |  |  | 31 |
Other current liabilities |  |  |  | 335 |  |  |  |  | 300 |
Total Current Liabilities Before Fiduciary Liabilities |  |  |  | 752 |  |  |  |  | 839 |
Fiduciary liabilities |  |  |  | 1,387 |  |  |  |  | 1,509 |
Total Current Liabilities |  |  |  | 2,139 |  |  |  |  | 2,348 |
Deferred tax liabilities |  |  |  | 34 |  |  |  |  | 60 |
Long-term debt, net |  |  |  | 2,791 |  |  |  |  | 2,792 |
Long-term tax receivable agreement |  |  |  | 594 |  |  |  |  | 568 |
Financial instruments |  |  |  | 122 |  |  |  |  | 97 |
Other liabilities |  |  |  | 270 |  |  |  |  | 281 |
Total Liabilities |  | $ |  | 5,950 |  |  | $ |  | 6,146 |
Commitments and Contingencies |  |  |  |  |  |  |  |
Stockholders' Equity |  |  |  |  |  |  |  |
Preferred stock at $0.0001 par value: 1.0 shares authorized, none issued and outstanding |  | $ |  | — |  |  | $ |  | — |
Class A Common Stock: $0.0001 par value, 1,000.0 shares authorized; 497.2 and 478.3 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively |  |  |  | — |  |  |  |  | — |
Class B Common Stock: $0.0001 par value, 20.0 shares authorized; 10.0 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively |  |  |  | — |  |  |  |  | — |
Class V Common Stock: $0.0001 par value, 175.0 shares authorized; 44.1 and 63.5 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively |  |  |  | — |  |  |  |  | — |
Class Z Common Stock: $0.0001 par value, 12.9 shares authorized; 5.2 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively |  |  |  | — |  |  |  |  | — |
Treasury stock, at cost (2.7 and 1.5 shares at March 31, 2023 and December 31, 2022, respectively) |  |  |  | (22 | ) |  |  |  | (12 | )
Additional paid-in-capital |  |  |  | 4,690 |  |  |  |  | 4,514 |
Retained deficit |  |  |  | (226 | ) |  |  |  | (158 | )
Accumulated other comprehensive income |  |  |  | 81 |  |  |  |  | 95 |
Total Alight, Inc. Stockholders' Equity |  | $ |  | 4,523 |  |  | $ |  | 4,439 |
Noncontrolling interest |  |  |  | 444 |  |  |  |  | 650 |
Total Stockholders' Equity |  | $ |  | 4,967 |  |  | $ |  | 5,089 |
Total Liabilities and Stockholders' Equity |  | $ |  | 10,917 |  |  | $ |  | 11,235 |

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

3

Alight, Inc.

Condensed Consolidated Statement s of Comprehensive Income (Loss)

(Unaudited)

| Three Months Ended |  | Three Months Ended |
| March 31, |  | March 31, |
(in millions, except per share amounts) | 2023 |  | 2022 |
Revenue | $ |  | 831 |  | $ |  | 725 |
Cost of services, exclusive of depreciation and amortization |  |  | 555 |  |  |  | 491 |
Depreciation and amortization |  |  | 19 |  |  |  | 11 |
Gross Profit |  |  | 257 |  |  |  | 223 |
Operating Expenses |  |  |  |  |  |
Selling, general and administrative |  |  | 185 |  |  |  | 140 |
Depreciation and intangible amortization |  |  | 85 |  |  |  | 85 |
Total Operating expenses |  |  | 270 |  |  |  | 225 |
Operating Income (Loss) |  |  | (13 | ) |  |  | (2 | )
Other (Income) Expense |  |  |  |  |  |
(Gain) Loss from change in fair value of financial instruments |  |  | 25 |  |  |  | (13 | )
(Gain) Loss from change in fair value of tax receivable agreement |  |  | 8 |  |  |  | (5 | )
Interest expense |  |  | 33 |  |  |  | 29 |
Other (income) expense, net |  |  | 3 |  |  |  | (1 | )
Total Other (income) expense, net |  |  | 69 |  |  |  | 10 |
Income (Loss) Before Taxes |  |  | (82 | ) |  |  | (12 | )
Income tax expense (benefit) |  |  | (8 | ) |  |  | 1 |
Net Income (Loss) |  |  | (74 | ) |  |  | (13 | )
Net income (loss) attributable to noncontrolling interests |  |  | (6 | ) |  |  | (2 | )
Net Income (Loss) Attributable to Alight, Inc. | $ |  | (68 | ) | $ |  | (11 | )
Earnings Per Share |  |  |  |  |  |
Basic (net loss) earnings per share | $ |  | (0.14 | ) | $ |  | (0.02 | )
Diluted (net loss) earnings per share | $ |  | (0.14 | ) | $ |  | (0.02 | )
Net Income (Loss) | $ |  | (74 | ) | $ |  | (13 | )
Other comprehensive income (loss), net of tax: |  |  |  |  |  |
Change in fair value of derivatives |  |  | (23 | ) |  |  | 47 |
Foreign currency translation adjustments |  |  | 3 |  |  |  | (3 | )
Total Other comprehensive income (loss), net of tax: |  |  | (20 | ) |  |  | 44 |
Comprehensive Income (Loss) Before Noncontrolling Interests |  |  | (94 | ) |  |  | 31 |
Comprehensive income (loss) attributable to noncontrolling interests |  |  | (12 | ) |  |  | 6 |
Comprehensive Income (Loss) Attributable to Alight, Inc. | $ |  | (82 | ) | $ |  | 25 |

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

4

Alight, Inc.

Condensed Consolidated Sta tements of Stockholders’ Equity

(Unaudited)

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Accumulated |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Additional |  |  |  |  |  | Other |  |  | Total |  |  |  |  |  | Total |
|  | Common |  |  | Treasury |  |  | Paid-in |  |  | Retained |  |  | Comprehensive |  |  | Alight, Inc. |  |  | Noncontrolling |  |  | Stockholders' |
(in millions) |  | Stock |  |  | Stock |  |  | Capital |  |  | Deficit |  |  | Income |  |  | Equity |  |  | Interest |  |  | Equity |
Balance at December 31, 2022 |  | $ |  | — |  |  | $ |  | (12 | ) |  | $ |  | 4,514 |  |  | $ |  | (158 | ) |  | $ |  | 95 |  |  | $ |  | 4,439 |  |  | $ |  | 650 |  |  | $ |  | 5,089 |
Net loss |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (68 | ) |  |  |  | — |  |  |  |  | (68 | ) |  |  |  | (6 | ) |  |  |  | (74 | )
Other comprehensive income (loss), net |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (14 | ) |  |  |  | (14 | ) |  |  |  | (6 | ) |  |  |  | (20 | )
Distribution of equity |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |
Conversion of noncontrolling interest |  |  |  | — |  |  |  |  | — |  |  |  |  | 145 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 145 |  |  |  |  | (194 | ) |  |  |  | (49 | )
Share-based compensation expense |  |  |  | — |  |  |  |  | — |  |  |  |  | 37 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 37 |  |  |  |  | — |  |  |  |  | 37 |
Shares vested, net of shares withheld in lieu of taxes |  |  |  | — |  |  |  |  | — |  |  |  |  | (6 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | (6 | ) |  |  |  | — |  |  |  |  | (6 | )
Share repurchases |  |  |  | — |  |  |  |  | (10 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (10 | ) |  |  |  | — |  |  |  |  | (10 | )
Balance at March 31, 2023 |  | $ |  | — |  |  | $ |  | (22 | ) |  | $ |  | 4,690 |  |  | $ |  | (226 | ) |  | $ |  | 81 |  |  | $ |  | 4,523 |  |  | $ |  | 444 |  |  | $ |  | 4,967 |

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

|  |  |  |  |  |  |  |  |  |  |  |  | Accumulated |  |  |  |  |  |  |  |  |  |
|  |  |  |  | Additional |  |  |  |  |  | Other |  |  | Total |  |  |  |  |  | Total |
|  | Common |  |  | Paid-in |  |  | Retained |  |  | Comprehensive |  |  | Alight, Inc. |  |  | Noncontrolling |  |  | Stockholders' |
(in millions) |  | Stock |  |  | Capital |  |  | Deficit |  |  | Loss |  |  | Equity |  |  | Interest |  |  | Equity |
Balance at December 31, 2021 |  | $ |  | — |  |  | $ |  | 4,228 |  |  | $ |  | (96 | ) |  | $ |  | 8 |  |  | $ |  | 4,140 |  |  | $ |  | 788 |  |  | $ |  | 4,928 |
Net income (loss) |  |  |  | — |  |  |  |  | — |  |  |  |  | (11 | ) |  |  |  | — |  |  |  |  | (11 | ) |  |  |  | (2 | ) |  |  |  | (13 | )
Other comprehensive income, net |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 36 |  |  |  |  | 36 |  |  |  |  | 8 |  |  |  |  | 44 |
Measurement period adjustment |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (1 | ) |  |  |  | (1 | )
Conversion of non-controlling interest |  |  |  | — |  |  |  |  | 7 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 7 |  |  |  |  | (13 | ) |  |  |  | (6 | )
Share-based compensation expense |  |  |  | — |  |  |  |  | 33 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 33 |  |  |  |  | — |  |  |  |  | 33 |
Shares vested, net of shares withheld in lieu of taxes |  |  |  | — |  |  |  |  | (1 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | (1 | ) |  |  |  | — |  |  |  |  | (1 | )
Balance at March 31, 2022 |  | $ |  | — |  |  | $ |  | 4,267 |  |  | $ |  | (107 | ) |  | $ |  | 44 |  |  | $ |  | 4,204 |  |  | $ |  | 780 |  |  | $ |  | 4,984 |

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

5

Alight, Inc.

Condensed Consolidated S tatements of Cash Flows

(Unaudited)

|  | Three Months Ended |  | Three Months Ended |
|  | March 31, |  | March 31, |
(in millions) |  | 2023 |  | 2022 |
Operating activities: |  |  |  |  |  |  |
Net income (loss) |  | $ |  | (74 | ) | $ |  | (13 | )
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |  |  |  |  |
Depreciation |  |  |  | 24 |  |  |  | 17 |
Intangible asset amortization |  |  |  | 80 |  |  |  | 79 |
Noncash lease expense |  |  |  | 6 |  |  |  | 7 |
Financing fee and premium amortization |  |  |  | (1 | ) |  |  | (1 | )
Share-based compensation expense |  |  |  | 37 |  |  |  | 33 |
(Gain) loss from change in fair value of financial instruments |  |  |  | 25 |  |  |  | (13 | )
(Gain) loss from change in fair value of tax receivable agreement |  |  |  | 8 |  |  |  | (5 | )
Release of unrecognized tax provision |  |  |  | (1 | ) |  |  | — |
Deferred tax expense (benefit) |  |  |  | (7 | ) |  |  | — |
Other |  |  |  | 1 |  |  |  | 3 |
Changes in operating assets and liabilities, net of business combinations: |  |  |  |  |  |  |
Accounts receivable |  |  |  | 40 |  |  |  | (37 | )
Accounts payable and accrued liabilities |  |  |  | (117 | ) |  |  | (82 | )
Other assets and liabilities |  |  |  | 51 |  |  |  | 31 |
Cash provided by operating activities |  | $ |  | 72 |  | $ |  | 19 |
Investing activities: |  |  |  |  |  |  |
Capital expenditures |  |  |  | (45 | ) |  |  | (41 | )
Cash used in investing activities |  | $ |  | (45 | ) | $ |  | (41 | )
Financing activities: |  |  |  |  |  |  |
Net increase (decrease) in fiduciary liabilities |  |  |  | (121 | ) |  |  | 327 |
Borrowings from banks |  |  |  | — |  |  |  | 54 |
Financing fees |  |  |  | — |  |  |  | (3 | )
Repayments to banks |  |  |  | (6 | ) |  |  | (60 | )
Principal payments on finance lease obligations |  |  |  | (7 | ) |  |  | (8 | )
Payments on tax receivable agreements |  |  |  | (7 | ) |  |  | — |
Tax payment for shares/units withheld in lieu of taxes |  |  |  | (6 | ) |  |  | (1 | )
Deferred and contingent consideration payments |  |  |  | (3 | ) |  |  | — |
Repurchase of shares |  |  |  | (10 | ) |  |  | — |
Other financing activities |  |  |  | — |  |  |  | (4 | )
Cash provided by (used in) financing activities |  | $ |  | (160 | ) | $ |  | 305 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |  |  |  | — |  |  |  | (2 | )
Net increase (decrease) in cash, cash equivalents and restricted cash |  |  |  | (133 | ) |  |  | 281 |
Cash, cash equivalents and restricted cash at beginning of period |  |  |  | 1,759 |  |  |  | 1,652 |
Cash, cash equivalents and restricted cash at end of period |  | $ |  | 1,626 |  | $ |  | 1,933 |

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

6

Alight, Inc.

Notes to Unaudited Condensed Co nsolidated Financial Statements

1. Basis of Presentation and Nature of Business

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”). A s of March 31, 2023, Alight owned 92% 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 approximately 8% as of March 31, 2023.

As a result of the Business Combination, for accounting purposes, the Company is the acquirer and Alight Holdings is the acquiree and accounting predecessor. Within this Quarterly Report on Form 10-Q, there are some instances where we reference activity that relates to this Predecessor period or accounting as a result of the Business Combination.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and should be read in conjunction with the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 1, 2023. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair presentation have been included. All significant intercompany transactions and balances have been eliminated upon consolidation. The results of operations for interim periods are not necessarily indicative of the results to be expected for future quarters or for the full fiscal year ending December 31, 2023.

Segment Reporting

Effective January 1, 2023, the Company's former Hosted business revenues and gross margin are reported in Other as the business is no longer core to the Company’s operations. There is no change in composition among the Employer Solutions and Professional Services segments. Additionally, the Company changed its measure of segment profit and loss that is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the Company’s segments and assessing business performance. See Note 12 “Segm ent Reporting” for additional information.

Nature of Business

We are a leading cloud-based provider of integrated digital human capital and business solutions. We have an unwavering belief that a company’s success starts with its people, and our solutions connect human insights with technology. The Alight Worklife® employee engagement platform provides a seamless customer experience by combining content, plus artificial intelligence (“AI”) and data analytics to enable Alight’s business process as a service ("BPaaS") model. Our mission-critical solutions enable employees to enrich their health, wealth and wellbeing which helps global organizations achieve a high-performance culture. Our solutions include:

•
Employer Solutions: driven by our digital, software and AI-led capabilities powered by the Alight Worklife® platform and spanning total employee wellbeing, including integrated benefits administration, healthcare navigation, financial wellbeing, leave of absence management, retiree healthcare and payroll. We leverage data across all interactions and activities to improve the employee experience, reduce operational costs and better inform management processes and decision-making. Our clients' employees benefit from an integrated platform and user experience, coupled with a full-service customer care center, helping them manage the full life cycle of their health, wealth and careers.
•
Professional Services: includes our project-based cloud deployment and consulting offerings that provide expertise with both human capital and financial platforms. Specifically, this includes cloud advisory and deployment, and optimization services for cloud platforms such as Workday, SAP SuccessFactors, Oracle, and Cornerstone OnDemand.

7

2. Accounting Policies and Practices

Use of Estimates

The preparation of the accompanying Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of reserves and expenses.

These estimates and assumptions are based on management’s best estimates and judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Management believes its estimates to be reasonable given the current facts available. Management adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets, and foreign currency exchange rate movements increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be predicted with certainty, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the financial statements in future periods.

Tax Receivable Agreement

In connection with the Business Combination, we entered into a Tax Receivable Agreement (the “TRA”) with certain of our pre-Business Combination owners that provides for the payment by Alight to such owners of 85% of the benefits that Alight is deemed to realize as a result of the Company’s share of existing tax basis acquired in the Business Combination and other tax benefits related to entering into the TRA. The Company accounts for the TRA as a liability at fair value and is subject to remeasurement at each balance sheet date. Any change in fair value is recognized within the Condensed Consolidated Statements of Comprehensive Income (Loss).

Subsequent to the Business Combination, upon equity exchanges of the noncontrolling interests, the Company records obligations under the TRA at the gross undiscounted amount of the expected future payments as an increase to the liability with an offset to Additional paid-in capital.

New Accounting Pronouncements

There are no recently issued accounting pronouncements that are expected to have a material impact upon our Condensed Consolidated Financial Statements.

3. Revenue from Contracts with Customers

The majority of the Company’s revenue is highly recurring and is derived from contracts with customers to provide integrated, cloud-based human capital solutions that empower clients and their employees to manage their health, wealth and HR needs. The Company’s revenues are disaggregated by recurring and project revenues within each reportable segment. Recurring revenues are typically longer term in nature and more predictable on an annual basis, while project revenues consist of project work of a shorter duration. See Note 12 “Segment Reporting” for quantitative disclosures of recurring and project revenues by reportable segment. The Company’s reportable segments are Employer Solutions and Professional Services. Employer Solutions are driven by our digital, software and AI-led capabilities powered by the Alight Worklife® platform and spanning total employee wellbeing and engagement, including integrated benefits administration, healthcare navigation, financial health and employee wellbeing and payroll. Professional Services includes project-based cloud deployment and consulting offerings. The Company believes these revenue categories depict how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors.

Revenues are recognized when control of the promised services is transferred to the customer in the amount that best reflects the consideration to which the Company expects to be entitled in exchange for those services. The majority of the Company’s revenue is recognized over time as the customer simultaneously receives and consumes the benefits of our services. We may occasionally be entitled to a fee based on achieving certain performance criteria or contract milestones. To the extent that we cannot estimate with reasonable assurance the likelihood that we will achieve the performance target, we will constrain this portion of the transaction price and recognize it when or as the uncertainty is resolved. Any taxes assessed on revenues relating to services provided to our clients are recorded on a net basis. All of the Company’s revenues are described in more detail below.

8

Administrative Services

We provide benefits, human resource and payroll administration services across all of our solutions, which are highly recurring. The Company’s contracts may include administration services across one or multiple solutions and typically have three to five-year terms with mutual renewal options.

These contracts typically consist of an implementation phase and an ongoing administration phase:

Implementation phase – In connection with the Company’s long-term agreements, highly customized implementation efforts are often necessary to set up clients and their human resource, payroll or benefit programs on the Company’s systems and operating processes. Work performed during the implementation phase is considered a set-up activity because it does not transfer a service to the customer. Therefore, it is not a separate performance obligation. As these agreements are longer term in nature, our contracts generally provide that if the client terminates a contract, we are entitled to an additional payment for services performed through the termination date designed to recover our up-front costs of implementation. Any fees received from the customer as part of the implementation are, in effect, an advance payment for the future ongoing administration services to be provided.

Ongoing administration services phase – For all solutions, the ongoing administration phase includes a variety of plan and payroll administration services and system support services. More specifically, these services include data management, calculations, reporting, fulfillment/communications, compliance services, call center support, and in our Health Solutions agreements, annual on-boarding and enrollment support. While there are a variety of activities performed across all solutions, the overall nature of the obligation is to provide integrated administration solutions to the customer. The agreement represents a stand-ready obligation to perform these activities across all solutions on an as-needed basis. The customer obtains value from each period of service, and each time increment (i.e., each month, or each benefit cycle in the case of our Health Solutions arrangements) is distinct and substantially the same. Accordingly, the ongoing administration services for each solution represents a series and each series (i.e., each month, or each benefit cycle including the enrollment period in the case of our Health Solutions arrangements) of distinct services are deemed to be a single performance obligation. In agreements that include multiple performance obligations, the transaction price related to each performance obligation is based on a relative stand-alone selling price basis. We establish the stand-alone selling price using observable market prices that the Company charges separately for similar solutions to similar customers.

Our contracts with our clients specify the terms and conditions upon which the services are based. Fees for these services are primarily based on a contracted fee charged per participant per period (e.g., monthly or annually, as applicable). These contracts may also include fixed components, including lump-sum implementation fees. Our fees are not typically payable until the commencement of the ongoing administration phase. Once fees become payable, payment is typically due on a monthly basis as we perform under the contract, and we are entitled to be reimbursed for work performed to date in the event of termination.

For Health Solutions administration services, each benefits cycle inclusive of the enrollment period represents a time increment under the series guidance and is a single performance obligation. Although ongoing fees are typically not payable until the commencement of the ongoing administrative phase, we begin transferring services to our customers approximately four months prior to payments being due as part of our annual enrollment services. Although our per-participant fees are considered variable, they are typically predictable in nature, and therefore we do not generally constrain any portion of our transaction price estimates. We use an input method based on the labor costs incurred relative to total labor costs as the measure of progress in satisfying our Health Solutions performance obligation commencing when the customer’s annual enrollment services begin. Given that the Health Solutions enrollment and administrative services are stand-ready in nature, it can be difficult to estimate the total expected efforts or hours we will incur for a particular benefits cycle. Therefore, the input measure is based on the historical effort expended, which is measured as labor cost.

For all other benefits administration, human resources and payroll services where each month represents a distinct time increment under the series guidance, we allocate the transaction price to the month we are performing our services. Therefore, the amount recognized each month is the variable consideration related to that month plus any fixed monthly or annual fee, which is recognized on a straight-line basis. Revenue for these types of arrangements is therefore more consistent throughout the year.

In the normal course of business, we enter into change orders or other contract modifications to add or modify services provided to the customer. We evaluate whether these modifications should be accounted for as separate contracts or a modification to an existing contract. To the extent that the modification changes a promise that forms part of the underlying series, the modification is not accounted for as a separate contract.

9

Other Contracts

In addition to the ongoing administration services, the Company also has services across all solutions that represent separate performance obligations and that are often shorter in duration, such as our cloud deployment services, cloud advisory services, participant financial advisory services, and enrollment services not bundled with ongoing administration services. Fee arrangements can be in the form of fixed-fee, time-and-materials, or fees based on assets under management. Payment is typically due on a monthly basis as we perform under the contract, and we are entitled to be reimbursed for work performed to date in the event of termination. Services may represent stand-ready obligations that meet the series provision, in which case all variable consideration is allocated to each distinct time increment. Other services are recognized over-time based on a method that faithfully depicts the transfer of value to the customer, which may be based on the value of labor hours worked or time elapsed, depending on the facts and circumstances.

The majority of the fees for enrollment services not bundled with ongoing administration services may be in the form of commissions received from insurance carriers for policy placement and are variable in nature. These annual enrollment services include both employer-sponsored arrangements that place both retiree Medicare coverage and voluntary benefits and direct-to-consumer Medicare placement. Our performance obligations under these annual enrollment services are typically completed over a short period upon which a respective policy is placed or confirmed with no ongoing fulfillment obligations. For both the employer-sponsored and direct-to-consumer arrangements, we recognize the majority of the placement revenue in the fourth quarter of the calendar year, which is when most of the placement or renewal activity occurs. However, the Company may continue to receive commissions from carriers until the respective policy lapses or is cancelled. The Company bases the estimates of total transaction price on supportable evidence from an analysis of past transactions, and only includes amounts that are probable of being received or not refunded.

As it relates to the direct-to-consumer arrangements, because our obligation is complete upon placement of the policy, we recognize revenue at that date, which includes both compensation due to us in the first year as well as an estimate of the total renewal commissions that will be received over the lifetime of the policy. The variable consideration estimate requires significant judgement, and will vary based on product type, estimated commission rates and the expected lives of the respective policies and other factors. For both the employer-sponsored and direct-to-customer arrangements, the estimated total transaction price may differ from the ultimate amount of commissions we may collect. Consequently, the estimate of total transaction price is adjusted over time as the Company receives confirmation of cash received, or as other information becomes available.

A portion of the Company's revenue is subscription-based where monthly fees are paid to the Company. The subscription-based revenue is recognized straight-line over the contract term, which is generally three years.

The Company has elected to apply practical expedients to not disclose the revenue related to unsatisfied performance obligations if (1) the contract has an original duration of one year or less, or (2) the variable consideration is allocated entirely to an unsatisfied performance obligation which is recognized as a series of distinct goods and services that form a single performance obligation.

Contract Costs

Costs to obtain a Contract

The Company capitalizes incremental costs to obtain a contract with a customer that are expected to be recovered. Assets recognized for the costs to obtain a contract, which primarily includes sales commissions paid in relation to the initial contract, are amortized over the expected life of the underlying customer relationships, which is 7 years for our payroll and cloud solutions and 15 years for all of our other solutions. For situations where the duration of the contract is 1 year or less, the Company has applied a practical expedient and recognized the costs of obtaining a contract as an expense when incurred. These costs are recorded in Cost of services, exclusive of depreciation and amortization in the Condensed Consolidated Statements of Comprehensive Income (Loss).

Costs to fulfill a Contract

The Company capitalizes costs to fulfill contracts which includes highly customized implementation efforts to set up clients and their human resource, payroll or benefit programs. Assets recognized for the costs to fulfill a contract are amortized on a systematic basis over the expected life of the underlying customer relationships, which is 7 years for our payroll and cloud solutions and 15 years for all of our other solutions.

Amortization for all contracts costs is recorded in Cost of services, exclusive of depreciation and amortization in the Condensed Consolidated Statements of Comprehensive Income (Loss), see Note 5 “Other Financial Data”.

10

4. Acquisitions

2022 Acquisitions

In December 2022, the Company completed the acquisition of ReedGroup for a preliminary purchase price of approximately $87 million, net of cash acquired. This acquisition was not material to the Company’s results of operations, financial position, or cash flows. The Company accounted for the acquisition as a business combination under Accounting Standards Codification Topic 805, Business Combinations. The goodwill identified by this acquisition is primarily attributed to the synergies that are expected to be realized as well as intangible assets that do not qualify for separate recognition, such as assembled workforce. None of the goodwill is expected to be deductible for income tax purposes. The preliminary purchase price allocation was based upon a preliminary valuation, and the Company's estimates and assumptions are subject to change within the measurement period (not to exceed twelve months following the acquisition date). For the period ended March 31, 2023, there were immaterial changes to the preliminary purchase price allocation. The business is now wholly owned by the Company and is included within the Employer Solutions segment.

5. Other Financial Data

Condensed Consolidated Balance Sheets Information

Receivables, net

The components of Receivables, net are as follows (in millions):

|  | March 31, |  |  |  | December 31, |
|  | 2023 |  |  |  | 2022 |
Billed and unbilled receivables |  | $ |  | 648 |  |  |  | $ |  | 687 |
Allowance for expected credit losses |  |  |  | (10 | ) |  |  |  |  | (9 | )
Balance at end of period |  | $ |  | 638 |  |  |  | $ |  | 678 |

Other current assets

The components of Other current assets are as follows (in millions):

|  | March 31, |  |  |  | December 31, |
|  | 2023 |  |  |  | 2022 |
Deferred project costs |  | $ |  | 44 |  |  |  | $ |  | 43 |
Prepaid expenses |  |  |  | 62 |  |  |  |  |  | 68 |
Commissions receivable |  |  |  | 100 |  |  |  |  |  | 149 |
Other |  |  |  | 106 |  |  |  |  |  | 119 |
Total |  | $ |  | 312 |  |  |  | $ |  | 379 |

Other assets

The components of Other assets are as follows (in millions):

|  | March 31, |  |  |  | December 31, |
|  | 2023 |  |  |  | 2022 |
Deferred project costs |  | $ |  | 347 |  |  |  | $ |  | 342 |
Operating lease right of use asset |  |  |  | 81 |  |  |  |  |  | 86 |
Commissions receivable |  |  |  | 26 |  |  |  |  |  | 28 |
Other |  |  |  | 61 |  |  |  |  |  | 86 |
Total |  | $ |  | 515 |  |  |  | $ |  | 542 |

The current and non-current portions of deferred project costs relate to costs to obtain and fulfill contracts (see Note 3 “Revenue from Contracts with Customers”). During the three months ended March 31, 2023 and 2022, total amortization expense of $15 million and $12 million, respectively, was recorded in Cost of services, exclusive of depreciation and amortization in the Condensed Consolidated Statements of Compr ehensive Income (Loss), respectively.

Other current assets and Other assets include the fair value of outstanding derivative instruments related to interest rate swaps. The balances in Other current assets as of March 31, 2023 and December 31, 2022 were $72 million and $72 million, respectively. The balances in Other assets as of March 31, 2023 and December 31, 2022 were $37 million and $62 million, respectively (see Note 13 “Derivative Financial Instruments” for additional information).

11

Other current liabilities

The components of Other current liabilities are as follows (in millions):

|  | March 31, |  |  |  | December 31, |
|  | 2023 |  |  |  | 2022 |
Deferred revenue |  | $ |  | 140 |  |  |  | $ |  | 141 |
Operating lease liabilities |  |  |  | 34 |  |  |  |  |  | 34 |
Finance lease liabilities |  |  |  | 25 |  |  |  |  |  | 25 |
Other |  |  |  | 136 |  |  |  |  |  | 100 |
Total |  | $ |  | 335 |  |  |  | $ |  | 300 |

Other liabilities

The components of Other liabilities are as follows (in millions):

|  | March 31, |  |  |  | December 31, |
|  | 2023 |  |  |  | 2022 |
Deferred revenue |  | $ |  | 96 |  |  |  | $ |  | 93 |
Operating lease liabilities |  |  |  | 95 |  |  |  |  |  | 103 |
Finance lease liabilities |  |  |  | 16 |  |  |  |  |  | 18 |
Unrecognized tax positions |  |  |  | 12 |  |  |  |  |  | 13 |
Other |  |  |  | 51 |  |  |  |  |  | 54 |
Total |  | $ |  | 270 |  |  |  | $ |  | 281 |

The current and non-current portions of deferred revenue relates to consideration received in advance of performance under client contracts. During the three months ended March 31, 2023 and 2022, revenue of approximately, $113 million and $79 million was recognized and recorded as deferred revenue at the beginning of eac h period.

Other current liabilities as of March 31, 2023 and December 31, 2022, included the current portion of tax receivable agreement liability of $49 million and $7 million, respectively (see Note 15 "Tax Receivable Agreement" for additional information).

Other current liabilities and Other liabilities include the fair value of outstanding derivative instruments related to interest rate swaps. There were no interest rate swaps recorded in Other current liabilities as of March 31, 2023 and December 31, 2022, respectively. The balance in Other liabilities was $5 million as of March 31, 2023. There were no interest rate swaps recorded in Other liabilities as of December 31, 2022 (see Note 13 “Derivative Financial Instruments” for additional information).

6. Goodwill and Intangible assets, net

The changes in the net carrying amount of goodwill are as follows (in millions):

|  | Employer |  |  | Professional |  |  |  |  |
|  | Solutions |  |  | Services |  |  | Total |
Balance as of December 31, 2022 |  | $ |  | 3,606 |  |  |  |  | 73 |  |  |  |  | 3,679 |
Foreign currency translation |  |  |  | 1 |  |  |  |  | — |  |  |  |  | 1 |
Balance as of March 31, 2023 |  | $ |  | 3,607 |  |  |  |  | 73 |  |  |  |  | 3,680 |

Intangible assets by asset class are as follows (in millions):

|  | March 31, 2023 |  |  | December 31, 2022 |
|  | Gross |  |  |  |  |  |  | Net |  |  | Gross |  |  |  |  |  |  | Net |
|  | Carrying |  |  | Accumulated |  |  | Carrying |  |  | Carrying |  |  | Accumulated |  |  | Carrying |
|  | Amount |  |  | Amortization |  |  | Amount |  |  | Amount |  |  | Amortization |  |  | Amount |
Intangible assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer-related and contract based intangibles |  | $ |  | 3,670 |  |  | $ |  | 426 |  |  | $ |  | 3,244 |  |  | $ |  | 3,670 |  |  | $ |  | 364 |  |  | $ |  | 3,306 |
Technology related intangibles |  |  |  | 263 |  |  |  |  | 74 |  |  |  |  | 189 |  |  |  |  | 263 |  |  |  |  | 63 |  |  |  |  | 200 |
Trade name (finite life) |  |  |  | 409 |  |  |  |  | 49 |  |  |  |  | 360 |  |  |  |  | 408 |  |  |  |  | 42 |  |  |  |  | 366 |
Total |  | $ |  | 4,342 |  |  | $ |  | 549 |  |  | $ |  | 3,793 |  |  | $ |  | 4,341 |  |  | $ |  | 469 |  |  | $ |  | 3,872 |

The change in gross carrying amounts for customer-related and contract-based intangibles includes the unfavorable impact of foreign currency translation adjustments.

Amortization expense from finite-lived intangible assets for the three months ended March 31, 2023 and 2022, was $80 million and $79 million, respectively, which was recorded in Depreciation and intangible amortization in the Condensed Consolidated Statements of Comprehensive Income (Loss).

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The following table reflects intangible assets net carrying amount and weighted-average remaining useful lives as of March 31, 2023 (in millions, except for years):

|  | Net |  |  | Weighted-Average |
|  | Carrying |  |  | Remaining |
|  | Amount |  |  | Useful Lives |
Intangible assets at March 31, 2023: |  |  |  |  |  |  |  |
Customer-related and contract-based intangibles |  | $ |  | 3,244 |  |  |  |  | 13.2 |
Technology-related intangibles |  |  |  | 189 |  |  |  |  | 4.2 |
Trade name (finite life) |  |  |  | 360 |  |  |  |  | 13.1 |
Total |  | $ |  | 3,793 |  |  |  |  |

Subsequent to March 31, 2023, the annual amortization expense is expected to be as follows (in millions):

|  | Customer-Related |  |  | Technology |  |  | Trade |
|  | and Contract Based |  |  | Related |  |  | Name |
|  | Intangibles |  |  | Intangibles |  |  | Intangibles |
2023 (April - December) |  | $ |  | 184 |  |  | $ |  | 34 |  |  | $ |  | 22 |
2024 |  |  |  | 246 |  |  |  |  | 45 |  |  |  |  | 29 |
2025 |  |  |  | 246 |  |  |  |  | 45 |  |  |  |  | 28 |
2026 |  |  |  | 246 |  |  |  |  | 44 |  |  |  |  | 27 |
2027 |  |  |  | 246 |  |  |  |  | 21 |  |  |  |  | 27 |
Thereafter |  |  |  | 2,076 |  |  |  |  | — |  |  |  |  | 227 |
Total amortization expense |  | $ |  | 3,244 |  |  | $ |  | 189 |  |  | $ |  | 360 |

7. Income Taxes

The Company’s effective tax rates for the three months ended March 31, 2023 and 2022 were 10% and (12)%, respectively.

The changes in the effective tax rates were primarily driven by the Company’s forecasted ability to partially benefit from current year anticipated tax attributes for which a full federal valuation allowance was provided for in the prior period. The effective tax rates for the three months ended March 31, 2023 was lower than the 21% U.S. statutory corporate income tax rate. This difference is primarily due to the Company’s inability to benefit from certain tax attributes in the US, as well as losses in certain non-U.S. jurisdictions for which a tax benefit has not been recorded.

8. Debt

Debt outstanding consisted of the following (in millions)

|  |  |  | March 31, |  |  | December 31, |
|  | Maturity Date |  | 2023 |  |  | 2022 |
Term Loan |  | May 1, 2024 |  | $ |  | — |  |  | $ |  | 65 |
Term Loan, B-1(1) |  | August 31, 2028 |  |  |  | 2,507 |  |  |  |  | 2,448 |
Secured Senior Notes |  | June 1, 2025 |  |  |  | 309 |  |  |  |  | 310 |
$300 million Revolving Credit Facility, Amended |  | August 31, 2026 |  |  |  | — |  |  |  |  | — |
Total debt, net |  |  |  |  |  | 2,816 |  |  |  |  | 2,823 |
Less: current portion of long-term debt, net |  |  |  |  |  | (25 | ) |  |  |  | (31 | )
Total long-term debt, net |  |  |  | $ |  | 2,791 |  |  | $ |  | 2,792 |

(1)
The net balance for the B-1 Te rm Loan at March 31, 2023 includes unamortized debt issuance costs of $9 million. The net balance for the B-1 Te rm Loan at December 31, 2022 includes unamortized debt issuance costs of $8 million.

Term Loan

In May 2017, the Company entered into a 7-year Initial Term Loan. During November 2017 and November 2019, the Company entered into Incremental Term Loans under identical terms as the Initial Term Loan. In August 2020, the Company refinanced a portion of the Term Loan by paying down $270 million of principal using the proceeds from the August 2020 Unsecured Senior Notes issuance, extending the maturity date on $1,986 million of the balance to October 31, 2026, and adding an interest rate floor of 50 bps (the "Amended Term Loan"). As part of the consideration transferred in the Business Combination, $556 million of principal was repaid on

13

the portion of the Term Loan that was not amended. In August 2021, the Company entered into a new Third Incremental Term Loan facility for $525 million that matures August 31, 2028. In January 2022, the Company refinanced the Amended Term Loan and the Third Incremental Term Loan to have a concurrent maturity date of August 31, 2028 and updated interest rate terms as described below (the "B-1 Term Loan"). In March 2023, the Company refinanced the remaining portion of the 7-year Term Loan in full by increasing the existing B-1 Term Loan by approximately $65 million under identical terms as the B-1 Term Loan.

Interest rates on the B-1 Term Loan borrowings are based on the Secured Overnight Financing Rate ("SOFR") plus a margin of 300 bps. The Company is required to make principal payments at the end of each fiscal quarter based on defined terms in the agreement with the remaining principal balances due on the maturity dates.

During the three months ended March 31, 2023 and 2022, the Company made total principal payments o f $6 million and $8 million, respectively. The Company utilized swap agreements to fix a portion of the floating interest rates through December 2026 (see Note 13 “Derivative Financial Instruments”).

Secured Senior Notes

In May 2020, the Company issued $300 million of Secured Senior Notes. These Secured Senior Notes have a maturity date of June 1, 2025 and accrue interest at a fixed rate of 5.75% per annum, payable semi-annually on June 1 and December 1 of each year, beginning on December 1, 2020.

Revolving Credit Facility

In May 2017, the Company entered into a 5-year $250 million revolving credit facility with a multi-bank syndicate with a maturity date of May 1, 2022. During August 2020, the Company extended the maturity date for $226 million of the revolving credit facility to October 31, 2024. In August 2021, the Company replaced and refinanced the revolving credit facilities with a $294 million revolving credit facility with a maturity date of August 31, 2026. In March 2023, the Company amended and upsized the revolving credit facility to $300 million and updated the benchmark reference rate from LIBOR to Term SOFR. No changes were made to the maturity date. At March 31, 2023, $3 million of unused letters of credit related to various insurance policies and real estate leases were issued under the revolving credit facility and there were no borrowings. The Company is required to make periodic payments for commitment fees and interest related to the revolving credit facility and outstanding letters of credit. During the three months ended March 31, 2023 and 2022, respectively, the Company made immaterial payments related to these fees.

Financing Fees, Premiums and Interest Expense

The Company capitalized financing fees and premiums related to the Term Loan, Revolver and Secured Senior Notes issued. These financing fees and premiums were recorded as an offset to the aggregate debt balances and are being amortized over the respective loan terms.

Total interest expense related to the debt instruments for the three months ended March 31, 2023 and 2022 was $51 million an d $27 million, respectively, which included immaterial amortization of financing fees and $1 million benefit for the three months ended March 31, 2023 and 2022, respectively. Interest expense is recorded in Interest expense in the Condensed Consolidated Statements of Comprehensive Income (Loss).

Principal Payments

Aggregate remaining contractual principal payments as of March 31, 2023 are as follows (in millions):

2023 |  | $ |  | 19 |
2024 |  |  |  | 25 |
2025 |  |  |  | 325 |
2026 |  |  |  | 25 |
2027 |  |  |  | 25 |
Thereafter |  |  |  | 2,395 |
Total payments |  | $ |  | 2,814 |

9. Stockholders' Equity

Preferred Stock

Upon the Closing of the Business Combination, 1,000,000 preferred shares, par value $0.0001 per share, were authorized. There were no preferred shares issued and outstanding as of March 31, 2023.

Class A Common Stock

14

As of March 31, 2023, 497,234,220 shares of Class A Common Stock, including 6,992,844 of shares of unvested Class A Common Stock, were legally issued and outstanding. Holders of shares of Class A Common Stock are entitled to one vote per share, and together with the holders of shares of Class B Common Sto ck, will participate ratably in any dividends that may be declared by the Company’s Board of Directors.

Class B Common Stock

Upon the Clo sing of the Business Combination, certain equityholders of Alight Holdings received earnouts (the "Seller Earnouts") that resulted in the issuance of a total of 14,999,998 Class B instruments (including 764,301 unvested shares of Class B Common Stock related to employee compensation as of March 31, 2023) to the equityholders of the Predecessor. The equityholders of the Predecessor that exchanged their Predecessor Class A units for shares of Class A Common Stock in the Business Combination received shares of Class B Common Stock, and the equityholders of the Predecessor that continue to hold Class A units of Alight Holdings (“Continuing Unitholders”) received Class B common units of Alight Holdings.

The Class B Common Stock and Class B common units are not entitled to a vote and accrue dividends equal to amounts declared per corresponding share of Class A Common Stock and Class A unit; however, such dividends are paid if and when such share of Class B Common Stock or Class B unit converts into a share of Class A Common Stock or Class A unit. If any of the shares of Class B Common Stock or Class B common units do not vest on or before the seventh anniversary of the Closing Date, such shares or units will be automatically forfeited and cancelled for no consideration and will not be entitled to receive any cumulative dividend payments.

These Class B instruments (excluding the unvested shares of Class B Common Stock related to employee compensation) are liability classified; refer to Note 14 “Financial Instruments” for additional information.

As further described below, there are two series of Class B instruments outstanding.

Class B-1

As of March 31, 2023, 4,990,453 shares of Class B-1 Common Stock were legally issued and outstanding, including 382,151 unvested shares of Class B-1 Common Stock related to employee compensation. Shares of Class B-1 Common Stock vest and automatically convert into shares of Class A Common Stock on a 1-for-1 basis if the volume weighted average price (“VWAP”) of the shares of Class A Common Stock equals or exceeds $12.50 per share for 20 or more trading days within a consecutive 30-trading day period (or in the event of a change of control or liquidation event that implies a $12.50 per share valuation on a diluted basis).

To the extent any unvested share of Class B-1 Common Stock automatically converts into a share of Class A Common Stock, (i) such share or unit shall remain unvested in accordance with the terms and conditions of the applicable award agreement until it vests or is forfeited in accordance with the terms thereof and (ii) such share or unit shall be treated as unvested Class A consideration as if such share or unit was part of the unvested Class A consideration as of the Closing Date.

As of March 31, 2023, 2,509,546 Class B-1 common units of Alight Holdings were legally issued and outstanding. Class B-1 common units vest and automatically convert into Class A common units of Alight Holdings on a 1-for-1 basis if the VWAP of the shares of Class A Common Stock equals or exceeds $12.50 per share for 20 or more trading days within a consecutive 30-trading day period (or in the event of a change of control or liquidation event that implies a $12.50 per share valuation on a diluted basis).

Class B-2

As of March 31, 2023, 4,990,453 shares of Class B-2 Common Stock were legally issued and outstanding, including 382,151 unvested shares of Class B-2 Common Stock related to employee compensation. Shares of Class B-2 Common Stock vest and automatically convert into shares of Class A Common Stock on a 1-for-1 basis if the VWAP of the shares of Class A Common Stock equals or exceeds $15.00 per share for 20 or more trading days within a consecutive 30-trading day period (or in the event of a change of control or liquidation event that implies a $15.00 per share valuation on a diluted basis).

To the extent any unvested share of Class B-2 Common Stock automatically converts into a share of Class A Common Stock, (i) such share or unit shall remain unvested in accordance with the terms and conditions of the applicable award agreement until it vests or is forfeited in accordance with the terms thereof and (ii) such share or unit shall be treated as unvested Class A consideration as if such share or unit was part of the unvested Class A consideration as of the Closing Date.

As of March 31, 2023, 2,509,546 Class B-2 common units of Alight Holdings were legally issued and outstanding. Class B-2 common units vest and automatically convert into Class A common units of Alight Holdings on a 1-for-1 basis if the VWAP of the shares of Class A Common Stock equals or exceeds $15.00 per share for 20 or more trading days within a consecutive 30-trading day period (or in the event of a change of control or liquidation event that implies a $15.00 per share valuation on a diluted basis).

Class B-3

Upon the Closing of the Business Combination, 10,000,000 shares of Class B-3 Common Stock, par value $0.0001, were authorized. There are no shares of Class B-3 Common Stock issued and outstanding as of March 31, 2023.

Class V Common Stock

15

As of March 31, 2023, 44,135,874 shares of Class V Common Stock were legally issued and outstanding. Holders of Class V Common Stock are entitled to one vote per share and have no economic rights. The Class V Common Stock is held on a 1-for-1 basis with Class A Units in Alight Holdings held by Continuing Unitholders. The Class A Units, together with an equal number of shares of Class V Common Stock, can be exchanged for an equal number of shares of Class A Common Stock.

Class Z Common Stock

Upon the Closing of the Business Combination, a total of 8,671,507 Class Z instruments were issued to the equityholders of the Predecessor. The equityholders of the Predecessor that exchanged their Predecessor Class A units for shares of Class A Common Stock in the Business Combination received shares of Class Z Common Stock, and the Continuing Unitholders received Class Z common units of Alight Holdings. The Class Z instruments were issued to the equityholders of the Predecessor to allow for the re-allocation of the consideration paid to the holders of unvested management equity (i.e., the unvested shares of Class A, Class B-1, and Class B-2 Common Stock) to the equityholders of the Predecessor in the event such equity is forfeited under the terms of the applicable award agreement and will only vest in connection with any such forfeiture.

As of March 31, 2023, 5,197,081 shares of Class Z Common Stock (4,663,187 Class Z-A, 266,947 Class Z-B-1, and 266,947 Class Z-B-2) were legally issued and outstanding. Holders of shares of Class Z-A, Class Z-B-1 and Class Z-B-2 Common Stock are not entitled to voting rights. The Class Z shares convert into shares of Class A Common Stock, Class B-1 Common Stock or Class B-2 Common Stock, as applicable, in connection with the ultimate forfeiture of the shares of unvested Class A, unvested Class B-1, and unvested Class B-2 common stock issued to participating management holders.

As of March 31, 2023, 2,856,875 Class Z common units (2,563,387 Class Z-A, 146,744 Class Z-B-1, and 146,744 Class Z-B-2) were legally issued and outstanding. Holders of Class Z-A, Class Z-B-1 and Class Z-B-2 common units are not entitled to voting rights. The Class Z units convert into units of Alight Holdings Class A common units, Alight Holdings Class B-1 or Alight Holdings Class B-2 common units, as applicable, in connection with the ultimate forfeiture of the shares of unvested Class A, unvested Class B-1, and unvested Class B-2 common stock issued to participating management holders.

Class A Units

Holders of Alight Holdings Class A units can exchange all or any portion of their Class A units, together with the cancellation of an equal number of shares of Class V Common Stock, for a number of shares of Class A Common Stock equal to the number of exchanged Class A units. Alight has the option to cash settle any future exchange.

The Continuing Unitholders’ ownership of Class A units represents the noncontrolling interest of the Company, which is accounted for as permanent equity on the Condensed Consolidated Balance Sheets. As of March 31, 2023, there wer e 541,370,094 Class A Units outstanding, of which 497,234,220 are held by the Company and 44,135,874 are held by the noncontrolling interest o f the Company.

The Alight Holdings limited liability company agreement contains provisions which require that a one-to-one ratio is maintained between each class of Alight Holdings units held by Alight and its subsidiaries (including the Alight Group, Inc. and certain tax blocker entities, but excluding subsidiaries of Alight Holdings) and the number of outstanding shares of the corresponding class of Alight common stock, subject to certain exceptions (including in respect of management equity in the form of options, rights or other securities which have not been converted into or exercised for Alight common stock). In addition, the Alight Holdings limited liability company agreement permits Alight, in its capacity as the managing member of Alight Holdings, to take actions to maintain such ratio, including undertaking stock splits, combinations, recapitalizations and exercises of the exchange rights of holders of Alight Holdings units.

Exchange of Class A Units

During the three months ended March 31, 2023, 19,345,591 Class A units and a corresponding number of shares of Class V Common Stock were exchanged for Class A Common Stock. As a result of th e exchanges, Alight, Inc. increased its ownership in Alight Holdings and accordingly increased its equity by approxim ately $194 million, recorded in Additional paid-in capital. Pursuant to the TRA, described in Note 15 "Tax Receivable Agreement," the Class A unit exchanges created additional TRA liabilities of $67 million, with offsets to Additional paid-in-capital. An additional $18 million increase to Additional paid-in-capital was due to exchanges as a result of deferred tax assets due to our change in ownership.

Secondary Offering

On March 6, 2023, the Company completed a secondary offering of 46,000,000 shares of the Company’s Class A Common Stock by certain selling stockholders at a public offering price of $9.00 per share. In connection with the offering, the selling stockholders granted the underwriters a 30-day option to purchase up to 6,900,000 additional shares of the Company’s Class A Common Stock, which the underwri ters exercised in full. The Company did not sell any shares of Class A Common Stock in the offering and did not receive any proceeds from the offering. Alight paid the costs associated with the sale of shares by the selling stockholders, net of the underwriting discounts.

Share Repurchase Program

16

On August 1, 2022, the Company's Board of Directors authorized a share repurchase program (the "Program"), under which the Company may repurchase up to $100 million of issued and outstanding shares of Class A Common Stock, par value $0.0001 per share, from time to time, depending on market conditions and alternate uses of capital. The Program has no expiration date and may be suspended or discontinued at any time. The 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.

During the three months ended March 31, 2023, 1,148,435 Class A Common Stock shares were repurchased under the Program for a total cost o f $10 million. As of March 31, 2023, there was $78 million remaining under the Program authorization for future share repurchases. Repurchased shares are reflected as Treasury Stock on the Consolidated Balance Sheets as a component of equity.

The following table reflects the changes in our outstanding stock:

|  | Class A |  |  | Class B-1 |  |  | Class B-2 |  |  | Class V |  |  | Class Z |  |  | Treasury |
Balance at December 31, 2022 |  |  | 470,756,961 |  |  |  | 4,990,453 |  |  |  | 4,990,453 |  |  |  | 63,481,465 |  |  |  | 5,595,577 |  |  |  | 1,506,385 |
Conversion of noncontrolling interest |  |  | 19,345,591 |  |  |  | — |  |  |  | — |  |  |  | (19,345,591 | ) |  |  | — |  |  |  | — |
Shares granted upon vesting |  |  | 1,035,470 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (398,496 | ) |  |  | — |
Issuance for compensation to non-employees(1) |  |  | 18,059 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Share repurchases |  |  | (1,148,435 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,148,435 |
Balance at March 31, 2023 |  |  | 490,007,646 |  |  |  | 4,990,453 |  |  |  | 4,990,453 |  |  |  | 44,135,874 |  |  |  | 5,197,081 |  |  |  | 2,654,820 |

(1) Issued to certain members of the Board of Directors in lieu of cash retainer.

17

Dividends

There were no dividends declared during the three months ended March 31, 2023.

Accumulated Other Comprehensive Income

As of March 31, 2023, the Accumulated other comprehensive income ("AOCI") balance included unrealized gains and losses for interest rate swaps and foreign currency translation adjustments related to our foreign subsidiaries that do not have the U.S. dollar as their functional currency. The tax effect on the Company's pre-tax AOCI items is recorded in the AOCI balance. This tax is comprised of two items: (1) the tax effects related to the unrealized pre-tax items recorded in AOCI and (2) the tax effect related to certain valuation allowances that have also been recorded in AOCI. When unrealized items in AOCI are recognized, the associated tax effects on these items will also be recognized in the tax provision.

Changes in accumulated other comprehensive income, net of noncontrolling interests, are as follows (in millions):

|  | Foreign |  |  |  |  |  |  |  |  |
|  | Currency |  |  | Interest |  |  |  |  |
|  | Translation |  |  | Rate |  |  |  |  |
|  | Adjustments(1) |  |  | Swaps(2) |  |  | Total |
Balance at December 31, 2022 |  | $ |  | (11 | ) |  | $ |  | 106 |  |  | $ |  | 95 |
Other comprehensive (loss) income before reclassifications |  |  |  | 3 |  |  |  |  | (7 | ) |  |  |  | (4 | )
Tax expense (benefit) |  |  |  | (1 | ) |  |  |  | 7 |  |  |  |  | 6 |
Other comprehensive (loss) income before reclassifications, net of tax |  |  |  | 2 |  |  |  |  | — |  |  |  |  | 2 |
Amounts reclassified from accumulated other comprehensive income |  |  |  | — |  |  |  |  | (16 | ) |  |  |  | (16 | )
Tax expense |  |  |  | — |  |  |  |  | — |  |  |  |  | — |
Amounts reclassified from accumulated other comprehensive income, net of tax |  |  |  | — |  |  |  |  | (16 | ) |  |  |  | (16 | )
Net current period other comprehensive income, net of tax |  |  |  | 2 |  |  |  |  | (16 | ) |  |  |  | (14 | )
Balance at March 31, 2023 |  | $ |  | (9 | ) |  | $ |  | 90 |  |  | $ |  | 81 |

(1) Foreign currency translation adjustments did no t include any losses related to intercompany loans that have been designated long-term investment nature.

(2) Reclassifications from this category are recorded in Interest expense. See Note 13 “Derivative Financial Instruments” for additional information.

18

10. Share-Based Compensation Expense

Predecessor Plans

Prior to the Business Combination, share-based payments to employees include grants of restricted share units (“RSUs”) and performance based restricted share units (“PRSUs”), which consist of both Class A-1 and Class B common units in each type, are measured based on their estimated grant date fair value. The grant date fair value of the RSUs is equal to the value of the shares acquired by the Predecessor’s initial investors at the time of Alight Holding’s formation in 2017. The grant date fair values of the PRSUs are based on a Monte Carlo simulation methodology, which requires management to make certain assumptions and apply judgement.

Management determined the expected volatility based on the average implied asset volatilities of comparable companies as we do not have sufficient trading history for the PRSUs. The expected term represents the period that the PRSUs are expected to be outstanding. Because of the lack of sufficient historical data necessary to calculate the expected term, we used the contractual vesting period of five years to estimate the expected term. For the Predecessor period, the key assumptions included in the Monte Carlo simulation were expected volatility of 45%, a risk-free interest rate of 1% and no expected dividends.

The Company recognizes share-based compensation expense on a straight-line basis over the requisite service period for awards expected to ultimately vest. As a result of the change in control related to the Business Combination, the vesting of the time-based PRSU Class B units accelerated on the Closing Date. Prior to the Closing Date, the time-based PRSUs vested ratably over periods of one to five years. The remaining unvested PRSU Class B units have vesting conditions that are contingent upon the achievement of defined internal rates of return and multiples on invested capital occurrence and of certain liquidity events. The Class A-1 RSUs and PRSUs that were unvested as of the Closing Date have time-based and/or vesting conditions that are contingent upon the achievement of defined internal rates of return and multiples on invested capital occurrence and of certain liquidity events. Both the unvested Class A-1 and Class B units were replaced with unvested shares of Alight common stock as discussed below.

Successor Plans

Share-based payments consist of grants of RSUs and PRSUs. The Company recognizes compensation expense on a straight-line basis over the requisite service period for awards expected to ultimately vest.

Predecessor Replacement Awards

In connection with the Business Combination, the holders of certain unvested awards under the Predecessor plans were granted replacement awards in the Successor company.

•
Class B units: The unvested Class B units of Alight Holdings were granted replacement unvested shares of Class A Common Stock, unvested shares of Class B-1 common stock, and unvested shares of Class B-2 common stock of the Company that ultimately vest on the third anniversary of the Closing Date, but could vest earlier based on the achievement of certain market-based conditions.
•
Class A-1 units: The unvested Class A-1 units of Alight Holdings were granted replacement unvested shares of Class A Common Stock, unvested shares of Class B common stock, and unvested shares of Class B-2 common stock of the Company on an equivalent fair value basis. The service-based portion of the grant vests ratably over periods of two to five years and the remaining portion vests upon achievement of certain market-based conditions.

The Class B and Class A-1 units that were replaced represent the unvested Class A, unvested Class B-1 and unvested Class B-2 common stock subject to the forfeiture re-allocation provision per the Class Z instruments discussed in Note 9 “Stockholders’ Equity”. These unvested shares are accounted for as restricted stock in accordance with Accounting Standards Codification ("ASC") 718.

Successor Awards

In connection with the Business Combination, the Company adopted the Alight, Inc. 2021 Omnibus Incentive Plan. Under this plan, for grants issued during the three months ended March 31, 2023, approximately 60% of the units are subject to time-based vesting requirements and approximately 40% are subject to performance-based vesting requirements. The majority of the time-based RSUs vest ratably each March 10 over a three-year period with one-third vesting on each of March 10, 2024, 2025 and 2026. The PRSUs granted in 2023 vest upon achievement of the Company’s performance goal, Total Business Process as a Service ("BPaaS") Revenue and Adjusted EBITDA.

The Company begins to recognize expense associated with the PRSUs when the achievement of the performance condition is deemed probable. During the three months ended March 31, 2023, expected achievement levels did not change for any of the performance periods based on management's analysis of the corresponding performance conditions.

The fair value of each RSU and PRSU is based upon the grant date market price. The aggregate grant date fair value of RSUs and PRSUs granted during the three months ended March 31, 2023 was approximately $44 million and $29 million, respectively.

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Restricted Share Units and Performance Based Restricted Share Units

The following tables summarizes the unit activity related to the RSUs and PRSUs during the three months ended March 31, 2023:

|  |  |  |  | Weighted |  |  |  |  |  | Weighted |
|  |  |  |  | Average |  |  |  |  |  | Average |
|  |  |  |  | Grant Date |  |  |  |  |  | Grant Date |
|  |  |  |  | Fair Value |  |  |  |  |  | Fair Value |
|  | RSUs(1) |  |  | Per Unit |  |  | PRSUs(1)(2) |  |  | Per Unit |
Balance as of December 31, 2022 |  |  | 7,766,161 |  |  | $ |  | 10.28 |  |  |  | 30,085,723 |  |  | $ |  | 11.38 |
Granted |  |  | 4,915,639 |  |  |  |  | 8.86 |  |  |  | 3,327,804 |  |  |  |  | 8.86 |
Vested |  |  | (1,754,312 | ) |  |  |  | 9.24 |  |  |  | - |  |  |  |  | — |
Forfeited |  |  | (507,752 | ) |  |  |  | 9.70 |  |  |  | (1,596,278 | ) |  |  |  | 9.44 |
Balance as of March 31, 2023 |  |  | 10,419,736 |  |  | $ |  | 9.82 |  |  |  | 31,817,249 |  |  | $ |  | 11.22 |

(1) These share totals include both unvested shares and restricted stock units.

(2) PRSUs granted includes both new grants in the period as well as adjustments in the period to existing grants to account for the expected level of achievement of the performance-based vesting requirements.

Share-based Compensation

Total share-based compensation costs related to the RSUs and PRSUs are recorded in the Condensed Consolidated Statements of Comprehensive Income (Loss) as follows (in millions):

|  |  | Three Months Ended |  |  | Three Months Ended |
|  |  | March 31, |  |  | March 31, |
|  |  | 2023 |  |  | 2022 |
Cost of services, exclusive of depreciation and amortization |  |  | $ |  | 9 |  |  | $ |  | 7 |
Selling, general and administrative |  |  |  |  | 28 |  |  |  |  | 26 |
Total share-based compensation expense |  |  | $ |  | 37 |  |  | $ |  | 33 |

As of March 31, 2023, total future compensation expense related to unvested RSUs was $90 million, which will be recognized over a remaining weighted-average amortization period of approximately 1.6 years. As of March 31, 2023, total future compensation expense related to PRSUs was $161 million, which will be recognized over a remaining weighted-average amortization period of approximately 1.5 years.

Employee Stock Purchase Plan

In December 2022, the Company began offering its employees an Employee Stock Purchase Plan (the “ESPP”). Under the ESPP, all full-time and certain part-time employees of the Company based in the U.S. and certain other countries are eligible to purchase Class A Common Stock of the Company twice per year at the end of a six-month payment period (a “Payment Period”). During each Payment Period, eligible employees who so elect may authorize payroll deductions in an amount no less than 1% nor greater than 10% of his or her base pay for each payroll period in the Payment Period. At the end of each Payment Period, the accumulated deductions are used to purchase shares of Class A Common Stock from the Company up to a maximum of 1,250 shares for any one employee during a Payment Period. Shares are purchased at a price equal to 85% of the fair market value of the Company’s Class A Common Stock on the last business day of a Payment Peri od. As of March 31, 2023, no shares had been issued under the ESPP and the amount of share-based compensation costs related to the ESPP were not material.

11. Earnings Per Share

Basic earnings per share is calculated by dividing the net income (loss) attributable to Alight, Inc. by the weighted average number of shares of Class A Common Stock issued and outstanding. The computation of diluted earnings per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue shares were exercised or converted into shares or resulted in the issuance of shares that would then share in the net income of Alight, Inc. The Company’s Class V Common Stock and Class Z Common Stock do not participate in the earnings or losses of the Company and are therefore not participating securities and have not been included in either the basic or diluted earnings per share calculations.

In conjunction with the Business Combination, the Company issued Seller Earnouts contingent consideration, which is payable in the Company’s Common Stock when the related market conditions are achieved. As the related conditions to pay the consideration had not been satisfied as of March 31, 2023, the Seller Earnouts were excluded from the diluted earnings per share calculations.

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Basic and diluted (net loss) earnings per share are as follows (in millions, ex cept for share and per share amounts):

|  | Three Months Ended |  |  | Three Months Ended |
|  | March 31, |  |  | March 31, |
|  | 2023 |  |  | 2022 |
Basic and diluted (net loss) earnings per share: |  |  |  |  |  |  |  |
Numerator |  |  |  |  |  |  |  |
Net (loss) income attributable to Alight, Inc. - basic and diluted |  | $ |  | (68 | ) |  | $ |  | (11 | )
Denominator |  |  |  |  |  |  |  |
Weighted-average shares outstanding - basic |  |  |  | 476,145,761 |  |  |  |  | 456,838,216 |
Basic and diluted (net loss) earnings per share |  | $ |  | (0.14 | ) |  | $ |  | (0.02 | )

For the three months ended March 31, 2023, 44,135,874 Alight Holdings Class A units related to noncontrolling interests and 10,412,840 unvested RSUs were not included in the computation of diluted shares outstanding as their impact would have been anti-dilutive. For the three months ended March 31, 2022, 76,220,431 Alight Holdings Class A units related to noncontrolling interests and 11,137,394 unvested RSUs, were not included in the computation of diluted shares outstanding as their impact would have been anti-dilutive.

In addition, for the three months ended March 31, 2023 and 2022, 14,999,998 shares, respectively, related to the Seller Earnouts were excluded from the calculation of basic and diluted earnings per share. For the three months ended March 31, 2023 and 2022, 31,079,227 and 35,501,399, respectively, unvested PRSUs were excluded from the calculation of basic and diluted earnings per share. These share amounts were calculated based on expected achievement levels and were excluded as the performance conditions were not met as of the end of the respective periods.

12. Segment Reporting

Effective January 1, 2023, the Company's former Hosted business revenues and gross profit are reported in Other as the business is no longer core to the Company’s operations. There is no change in composition among the Employer Solutions and Professional Services segments.

Additionally, the Company changed its measure of segment profit and loss that is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the Company’s segments and assessing business performance.

Prior to January 1, 2023, the Company reported its measure of segment profit as earnings before interest, taxes, depreciation and intangible amortization adjusted for the impact of certain non-cash and other items that the Company does not consider in the evaluation of ongoing operational performance. Effective January 1, 2023, the Company's measure of segment profit is gross profit, which is defined as revenue less cost of services. Accordingly, prior period amounts have been reclassified to conform to the current period presentation, in all material respects.

The Company’s reportable segments have been determined using a management approach, which is consistent with the basis and manner in which the Company’s chief operating decision maker (“CODM”) uses financial information for the purposes of allocating resources and evaluating performance. The Company’s Chief Executive Officer is its CODM. The CODM evaluates the performance of the Company based on its total revenue and segment profit.

The CODM also uses revenue and segment gross profit to manage and evaluate our business, make planning decisions, and as performance measures for Company-wide bonus plans. These key financial measures provide an additional view of our operational performance over the long-term and provide useful information that we use in order to maintain and grow our business.

The accounting policies of the segments are the same as those described in Note 2 “Accounting Policies and Practices.” The Company does not report assets by reportable segments as this information is not reviewed by the CODM on a regular basis.

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Information regarding the Company’s current reportable segments is as follows (in millions):

|  | Revenue |
|  | Three Months Ended |  | Three Months Ended |
|  | March 31, |  | March 31, |
|  | 2023 |  | 2022 |
Employer Solutions |  |  |  |  |  |  |
Recurring |  | $ |  | 669 |  | $ |  | 570 |
Project |  |  |  | 54 |  |  |  | 53 |
Total Employer Solutions |  |  |  | 723 |  |  |  | 623 |
Professional Services |  |  |  |  |  |  |
Recurring |  |  |  | 33 |  |  |  | 30 |
Project |  |  |  | 65 |  |  |  | 60 |
Total Professional Services |  |  |  | 98 |  |  |  | 90 |
Total Reportable Segments |  |  |  | 821 |  |  |  | 713 |
Other |  |  |  | 10 |  |  |  | 12 |
Total revenue |  | $ |  | 831 |  | $ |  | 725 |

There was no single client who accounted for more than 10% of the Company’s revenues in any of the periods presented.

|  | Segment Profit |
|  | Three Months Ended |  | Three Months Ended |
|  | March 31, |  | March 31, |
|  | 2023 |  | 2022 |
Employer Solutions |  | $ |  | 238 |  | $ |  | 204 |
Professional Services |  |  |  | 19 |  |  |  | 19 |
Total Gross Profit |  |  |  | 257 |  |  |  | 223 |
Selling, general and administrative |  |  |  | 185 |  |  |  | 140 |
Depreciation and intangible amortization |  |  |  | 85 |  |  |  | 85 |
Operating Income (Loss) |  |  |  | (13 | ) |  |  | (2 | )
(Gain) Loss from change in fair value of financial instruments |  |  |  | 25 |  |  |  | (13 | )
(Gain) Loss from change in fair value of tax receivable agreement |  |  |  | 8 |  |  |  | (5 | )
Interest expense |  |  |  | 33 |  |  |  | 29 |
Other (income) expense, net |  |  |  | 3 |  |  |  | (1 | )
Income (Loss) Before Taxes |  | $ |  | (82 | ) | $ |  | (12 | )

Recast of Segment Information

As a result of the Company’s segment changes noted above, the Company recast its segment revenues and profit measure to conform to current year presentation for the three and six months ended June 30, 2022, the three and nine months ended September 30, 2022 and for the fiscal year ended December 31, 2022.

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|  | Revenue |
|  | Three Months Ended |  | Six Months Ended |  | Three Months Ended |  | Nine Months Ended |  | Twelve Months Ended |
|  | June 30, |  | June 30, |  | September 30, |  | September 30, |  | December 31, |
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2022 |
Employer Solutions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recurring |  | $ |  | 559 |  | $ |  | 1,129 |  | $ |  | 583 |  | $ |  | 1,712 |  | $ |  | 2,467 |
Project |  |  |  | 55 |  |  |  | 108 |  |  |  | 62 |  |  |  | 170 |  |  |  | 251 |
Total Employer Solutions |  |  |  | 614 |  |  |  | 1,237 |  |  |  | 645 |  |  |  | 1,882 |  |  |  | 2,718 |
Professional Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recurring |  |  |  | 32 |  |  |  | 62 |  |  |  | 32 |  |  |  | 94 |  |  |  | 128 |
Project |  |  |  | 59 |  |  |  | 119 |  |  |  | 63 |  |  |  | 182 |  |  |  | 243 |
Total Professional Services |  |  |  | 91 |  |  |  | 181 |  |  |  | 95 |  |  |  | 276 |  |  |  | 371 |
Total Reportable Segments |  |  |  | 705 |  |  |  | 1,418 |  |  |  | 740 |  |  |  | 2,158 |  |  |  | 3,089 |
Other |  |  |  | 10 |  |  |  | 22 |  |  |  | 10 |  |  |  | 32 |  |  |  | 43 |
Total |  | $ |  | 715 |  | $ |  | 1,440 |  | $ |  | 750 |  | $ |  | 2,190 |  | $ |  | 3,132 |

|  | Segment Profit |
|  | Three Months Ended |  | Six Months Ended |  | Three Months Ended |  | Nine Months Ended |  | Twelve Months Ended |
|  | June 30, |  | June 30, |  | September 30, |  | September 30, |  | December 31, |
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2022 |
Employer Solutions |  | $ |  | 200 |  | $ |  | 404 |  | $ |  | 189 |  | $ |  | 593 |  | $ |  | 911 |
Professional Services |  |  |  | 20 |  |  |  | 39 |  |  |  | 23 |  |  |  | 62 |  |  |  | 86 |
Other |  |  |  | (1 | ) |  |  | (1 | ) |  |  | — |  |  |  | (1 | ) |  |  | (1 | )
Total Gross Profit |  |  |  | 219 |  |  |  | 442 |  |  |  | 212 |  |  |  | 654 |  |  |  | 996 |
Selling, general and administrative |  |  |  | 157 |  |  |  | 297 |  |  |  | 178 |  |  |  | 475 |  |  |  | 671 |
Depreciation and intangible amortization |  |  |  | 85 |  |  |  | 170 |  |  |  | 84 |  |  |  | 254 |  |  |  | 339 |
Operating Income (Loss) |  |  |  | (23 | ) |  |  | (25 | ) |  |  | (50 | ) |  |  | (75 | ) |  |  | (14 | )
(Gain) Loss from change in fair value of financial instruments |  |  |  | (50 | ) |  |  | (63 | ) |  |  | 10 |  |  |  | (53 | ) |  |  | (38 | )
(Gain) Loss from change in fair value of tax receivable agreement |  |  |  | (38 | ) |  |  | (43 | ) |  |  | (20 | ) |  |  | (63 | ) |  |  | (41 | )
Interest expense |  |  |  | 29 |  |  |  | 58 |  |  |  | 31 |  |  |  | 89 |  |  |  | 122 |
Other (income) expense, net |  |  |  | (7 | ) |  |  | (8 | ) |  |  | (6 | ) |  |  | (14 | ) |  |  | (16 | )
Income (Loss) Before Taxes |  | $ |  | 43 |  | $ |  | 31 |  | $ |  | (65 | ) | $ |  | (34 | ) | $ |  | (41 | )

13. Derivative Financial Instruments

The Company is exposed to market risks, including changes in interest rates. To manage the risk related to these exposures, the Company has entered into various derivative instruments that reduce these risks by creating offsetting exposures.

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Interest Rate Swaps

The Company has utilized swap agreements that will fix the floating interest rates associated with its Term Loan as shown in the following table:

Designation Date |  | Effective Date |  | Initial Notional Amount |  |  | Notional Amount Outstanding as of March 31, 2023 |  |  | Fixed Rate |  | Expiration Date
December 2021 |  | August 2020 |  | $ |  | 181,205,050 |  |  | $ |  | 522,934,227 |  |  |  | 0.7203 |  | % |  | April 2024
December 2021 |  | August 2020 |  | $ |  | 388,877,200 |  |  | $ |  | 651,065,293 |  |  |  | 0.6826 |  | % |  | April 2024
December 2021 |  | May 2022 |  | $ |  | 220,130,318 |  |  | $ |  | 272,061,373 |  |  |  | 0.4570 |  | % |  | April 2024
December 2021 |  | May 2022 |  | $ |  | 306,004,562 |  |  | $ |  | 347,501,107 |  |  |  | 0.4480 |  | % |  | April 2024
December 2021 |  | April 2024 |  | $ |  | 871,205,040 |  |  |  | n/a |  |  |  | 1.6533 |  | % |  | June 2025
December 2021 |  | April 2024 |  | $ |  | 435,602,520 |  |  |  | n/a |  |  |  | 1.6560 |  | % |  | June 2025
December 2021 |  | April 2024 |  | $ |  | 435,602,520 |  |  |  | n/a |  |  |  | 1.6650 |  | % |  | June 2025
March 2022 |  | June 2025 |  | $ |  | 1,197,000,000 |  |  |  | n/a |  |  |  | 2.5540 |  | % |  | December 2026
March 2023 |  | March 2023 |  | $ |  | 150,000,000 |  |  | $ |  | 150,000,000 |  |  |  | 3.9025 |  | % |  | December 2026
March 2023 |  | March 2023 |  | $ |  | 150,000,000 |  |  | $ |  | 150,000,000 |  |  |  | 3.9100 |  | % |  | December 2026

Concurrent with the refinancing of certain term loans, we amended our interest rate swaps to incorporate Term SOFR. In accordance with ASC Topic 848, Reference Rate Reform, we did not redesignate the interest rate hedges when they were amended from LIBOR to SOFR; as we are permitted to maintain the designation through the transition. During the three months ended March 31, 2023, we executed two additional interest rate swaps, which have been designated as cash flow hedges.

Certain swap agreements amortize or accrete based on achieving targeted hedge ratios. All interest rate swaps have been designated as cash flow hedges. As a result of hedge amendments in December 2021 and July 2021, the fair value of the instruments at the time of re-designation are being amortized into interest expense over the remaining life of the instruments.

Financial Instrument Presentation

The fair values and location of outstanding derivative instruments recorded in the Condensed Consolidated Balance Sheets are as follows (in millions):

|  | March 31, |  |  |  | December 31, |
|  | 2023 |  |  |  | 2022 |
Assets |  |  |  |  |  |  |  |  |
Other current assets |  | $ |  | 72 |  |  |  | $ |  | 72 |
Other assets |  |  |  | 37 |  |  |  |  |  | 62 |
Total |  | $ |  | 109 |  |  |  | $ |  | 134 |
Liabilities |  |  |  |  |  |  |  |  |
Other current liabilities |  | $ |  | — |  |  |  | $ |  | — |
Other liabilities |  |  |  | 5 |  |  |  |  |  | — |
Total |  | $ |  | 5 |  |  |  | $ |  | — |

The Company does not expect any derivative gains or losses included in Accumulated other comprehensive income as of March 31, 2023 will be reclassified into earnings over the next twelve months.

14. Financial Instruments

Seller Earnouts

Upon completion of the Business Combination, the equity owners of Alight Holdings received an earnout in the form of non-voting shares of Class B-1 and Class B-2 Common Stock, which automatically convert into Class A Common Stock if, at any time during the seven years following the Closing Date certain criteria are achieved. See Note 9 “Stockholders’ Equity” for additional information regarding the Seller Earnouts.

The portion of the Seller Earnouts related to employee compensation is accounted for as share-based compensation. See Note 10 “Share-Based Compensation Expense” for additional information.

The portion of the Seller Earnouts, which are not related to employee compensation, are accounted for as a contingent consideration liability at fair value within Financial instruments on the Condensed Consolidated Balance Sheets because the Seller Earnouts do not meet the criteria for classification within equity. This portion of the Seller Earnouts are subject to remeasurement at each balance sheet date. At March 31, 2023 and December 31, 2022, the Seller Earn outs had a fair value of $109 million and $96 million, respectively. For

24

the three months ended March 31, 2023 and 202 2, a loss of $13 million and a gain of $14 million, respectively, was recorded in (Gain) Loss from change in fair value of financial instruments in the Condensed Consolidated Statements of Comprehensive Income (Loss).

The fair value of the Class B-1 and B-2 Seller Earnouts, and the Class Z-B-1 and Z-B-2 contingent consideration instruments, is determined using Monte Carlo simulation and Option Pricing Methods (Level 3 inputs, see Note 16 "Fair Value Measurements"). Significant unobservable inputs are used in the assessment of fair value, including the following assumptions: volatility of 50%, risk-free interest rate of 3.59%, expected holding period of 5.26 years and probability assessments based on the likelihood of reaching the performance targets defined in the Business Combination. An increase in the risk-free interest rate or expected volatility would result in an decrease in the fair value measurement of the Seller Earnouts and vice versa.

In addition, the Class Z instruments are also accounted for as a contingent consideration liability at fair value within Financial instruments on the Condensed Consolidated Balance Sheets because these instruments do not meet the criteria for classification within equity. The fair value of the Class Z-A contingent consideration is determined using the ending share price as of the last day of each quarter. For the three months ended March 31, 2023 and 2022, the Company recorded expense of $12 million and $1 million, respectively, in (Gain) Loss from change in fair value of financial instruments in the Condensed Consolidated Statements of Comprehensive Income (Loss) as a result of the forfeiture of unvested management equity relating to the consideration that will be re-allocated to the holders of Class Z instruments upon vesting. See Note 9 “Stockholders’ Equity” for additional information regarding these instruments.

15. Tax Receivable Agreement

In connection with the Business Combination, Alight entered into the TRA with certain owners of Alight Holdings prior to the Business Combination. Pursuant to the TRA, the Company will pay certain sellers, as applicable, 85% of the tax benefits, of any savings that we realize, calculated using certain assumptions, as a result of (i) tax basis adjustments from sales and exchanges of Alight Holdings equity interests in connection with or following the Business Combination and certain distributions with respect to Alight Holdings equity interests, (ii) our utilization of certain tax attributes, and (iii) certain other tax benefits related to entering into the TRA.

Actual tax benefits realized by Alight may differ from tax benefits calculated under the TRA as a result of the use of certain assumptions in the TRA, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits. 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 TRA, will vary depending upon a number of factors, we expect that the payments that Alight may make under the TRA will be substantial.

The Company’s TRA liability established upon completion of the Business Combination is measured at fair value on a recurring basis using significant unobservable inputs (Level 3). The TRA liability balance at March 31, 2023 assumes: (i) a constant blended U.S. federal, state and local income tax rate of 26.4%; (ii) no material changes in tax law; (iii) the ability to utilize tax attributes based on current tax forecasts; and (iv) future payments under the TRA are made when due under the TRA. The amount of the expected future payments under the TRA has been discounted to its present value using a discount ra te of 8.8%.

Subsequent to the Business Combination, we record additional liabilities under the TRA as and when Class A units of Alight Holdings are exchanged for Class A Common Stock. Liabilities resulting from these exchanges will be recorded on a gross undiscounted basis and are not remeasured at fair value. During the three months ended March 31, 2023, an additional TRA liability of $67 million was established as a result of these exchanges. This amount along with the total impact of exchanges of $43 million for the year ended December 31, 2022, are excluded from the portion of the TRA liability that is measured at fair value on a recurring basis.

The following table summarizes the changes in the TRA liabilities (in millions):

|  | Tax Receivable |
|  | Agreement Liability |
Beginning balance as of December 31, 2022 |  | $ |  | 575 |
Fair value remeasurement |  |  |  | 8 |
Payments |  |  |  | (7 | )
Conversion of noncontrolling interest |  |  |  | 67 |
Ending Balance as of March 31, 2023 |  |  |  | 643 |
Less: current portion included in other current liabilities |  |  |  | (49 | )
Total long-term tax receivable agreement liability |  | $ |  | 594 |

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16. Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting standards related to fair value measurements include a hierarchy for information and valuations used in measuring fair value that is broken down into three levels based on reliability, as follows:

•
Level 1 – observable inputs such as quoted prices in active markets for identical assets and liabilities;
•
Level 2 – inputs other than quoted prices for identical assets in active markets that are observable either directly or indirectly; and
•
Level 3 – unobservable inputs in which there is little or no market data which requires the use of valuation techniques and the development of assumptions.

The Company’s financial assets and liabilities measured at fair value on a recurring basis are as follows (in millions):

|  | March 31, 2023 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ |  | — |  |  | $ |  | 109 |  |  | $ |  | — |  |  | $ |  | 109 |
Total assets recorded at fair value |  | $ |  | — |  |  | $ |  | 109 |  |  | $ |  | — |  |  | $ |  | 109 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ |  | — |  |  | $ |  | 5 |  |  | $ |  | — |  |  | $ |  | 5 |
Contingent consideration liability |  |  |  | — |  |  |  |  | — |  |  |  |  | 13 |  |  |  |  | 13 |
Seller Earnouts liability |  |  |  | — |  |  |  |  | — |  |  |  |  | 122 |  |  |  |  | 122 |
Tax receivable agreement liability (1) |  |  |  | — |  |  |  |  | — |  |  |  |  | 533 |  |  |  |  | 533 |
Total liabilities recorded at fair value |  | $ |  | — |  |  | $ |  | 5 |  |  | $ |  | 668 |  |  | $ |  | 673 |

|  | December 31, 2022 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ |  | — |  |  | $ |  | 134 |  |  | $ |  | — |  |  | $ |  | 134 |
Total assets recorded at fair value |  | $ |  | — |  |  | $ |  | 134 |  |  | $ |  | — |  |  | $ |  | 134 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration liability |  |  |  | — |  |  |  |  | — |  |  |  |  | 13 |  |  |  |  | 13 |
Seller Earnouts liability |  |  |  | — |  |  |  |  | — |  |  |  |  | 96 |  |  |  |  | 96 |
Tax receivable agreement liability (1) |  |  |  | — |  |  |  |  | — |  |  |  |  | 532 |  |  |  |  | 532 |
Total liabilities recorded at fair value |  | $ |  | — |  |  | $ |  | — |  |  | $ |  | 641 |  |  | $ |  | 641 |

(1)
Excludes the portion of liability related to the exchanges of Class A Units not measured at fair value on a recurring basis.

Derivatives

The valuations of the derivatives intended to mitigate our interest rate risk are determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each instrument. This analysis utilizes observable market-based inputs, including interest rate curves, interest rate volatility, or spot and forward exchange rates, and reflects the contractual terms of these instruments, including the period to maturity. In addition, credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, are incorporated in the fair values to account for potential non-performance risk.

Contingent Consideration

The contingent consideration liabilities relate to an acquisition completed by the Predecessor in 2018, and are included in Other current liabilities and Other liabilities on the Condensed Consolidated Balance Sheets. The fair value of these liabilities is determined using a discounted cash flow analysis. Changes in the fair value of the liabilities are included in Other (income) expense, net in the Condensed Consolidated Statements of Comprehensive Income (Loss). Significant unobservable inputs are used in the assessment of

26

fair value, including assumptions regarding discount rates and probability assessments based on the likelihood of reaching the various targets set out in the acquisition agreements.

The following table summarizes the changes in deferred contingent consideration liabilities (in millions):

|  | Three Months Ended |  |  | Three Months Ended |
|  | March 31, |  |  | March 31, |
|  | 2023 |  |  | 2022 |
Beginning balance |  | $ |  | 13 |  |  | $ |  | 33 |
Measurement period adjustments |  |  |  | — |  |  |  |  | (2 | )
Accretion of contingent consideration |  |  |  | — |  |  |  |  | 1 |
Remeasurement of acquisition-related contingent consideration |  |  |  | — |  |  |  |  | — |
Payments |  |  |  | — |  |  |  |  | — |
Ending Balance |  | $ |  | 13 |  |  | $ |  | 32 |

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No n-Recurring Fair Value Measurements

The Company’s financial liabilities not measured at fair value on a recurring basis are as follows (in millions):

|  | March 31, 2023 |  |  |  | December 31, 2022 |
|  | Carrying Value |  |  | Fair Value |  |  |  | Carrying Value |  |  | Fair Value |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |
Current portion of long-term debt, net |  | $ |  | 25 |  |  | $ |  | 25 |  |  |  | $ |  | 31 |  |  | $ |  | 31 |
Long-term debt, net |  |  |  | 2,791 |  |  |  |  | 2,782 |  |  |  |  |  | 2,792 |  |  |  |  | 2,780 |
Total |  | $ |  | 2,816 |  |  | $ |  | 2,807 |  |  |  | $ |  | 2,823 |  |  | $ |  | 2,811 |

The carrying value of the Term Loan, Secured Senior Notes include the outstanding principal balance, less any unamortized premium. The carrying value of the Term Loan approximates fair value as it bears interest at variable rates and we believe our credit risk is consistent with when the debt originated. The outstanding balances under the Senior No tes have fixed interest rates and the fair value is classified as Level 2 within the fair value hierarchy and corroborated by observable market data (see Note 8 “Debt”).

The carrying amounts of Cash and cash equivalents, Receivables, net and Accounts payable and accrued liabilities approximate their fair values due to the short-term maturities of these instruments.

During the three months ended March 31, 2023 and 2022, there were no transfers in or out of the Level 1, Level 2 or Level 3 classifications.

17. Restructuring

Transformation Program

On February 20, 2023, the Company approved a two-year strategic transformation restructuring program (the “Transformation Program”) intended to accelerate the Company’s back-office infrastructure into the cloud and transform its operating model leveraging technology in order to reduce its overall future costs. The Transformation Program includes process and system optimization, third party costs associated with technology infrastructure transformation, and elimination of full-time positions. The Company currently expects to record in the aggregate approximately $140 million in pre-tax restructuring charges over the next two years. The restructuring charges are expected to include severance charges with an estimated range from $20 million to $30 million over the two-year period and other restructuring charges related to items such as data center exit costs, third party fees, and costs associated with transitioning existing technology and processes with an estimated range of $100 million to $120 million over the two-year period. The Company estimates an annual savings of over $100 million after the Transformation Program is completed. The Transformation Program commenced in the first quarter of 2023 and is expected to be substantially completed over an estimated two-year period.

From the inception of the plan through March 31, 2023, the Company has incurred total expenses of $26 million. These charges are recorded in Selling, general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income (Loss).

The following table summarizes restructuring costs by type that have been incurred.

|  | Three Months Ended |  |  |  |  |  |  | Estimated |  |  | Estimated |
|  | March 31, |  |  | Inception to |  |  | Remaining |  |  | Total |
|  | 2023 |  |  | Date |  |  | Costs |  |  | Cost |
Employer Solutions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and Related Benefits |  | $ |  | 1 |  |  | $ |  | 1 |  |  | $ |  | 15 |  |  | $ |  | 16 |
Other Restructuring Costs(1) |  |  |  | 19 |  |  |  |  | 19 |  |  |  |  | 80 |  |  |  |  | 99 |
Total Employer Solutions |  | $ |  | 20 |  |  | $ |  | 20 |  |  | $ |  | 95 |  |  | $ |  | 115 |
Professional Services |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and Related Benefits |  | $ |  | — |  |  | $ |  | — |  |  | $ |  | 5 |  |  | $ |  | 5 |
Other Restructuring Costs(1) |  |  |  | — |  |  |  |  | — |  |  |  |  | 4 |  |  |  |  | 4 |
Total Professional Services |  | $ |  | — |  |  | $ |  | — |  |  | $ |  | 9 |  |  | $ |  | 9 |
Corporate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and Related Benefits |  | $ |  | 5 |  |  | $ |  | 5 |  |  | $ |  | 8 |  |  | $ |  | 13 |
Other Restructuring Costs(1) |  |  |  | 1 |  |  |  |  | 1 |  |  |  |  | 2 |  |  |  |  | 3 |
Total Corporate |  | $ |  | 6 |  |  | $ |  | 6 |  |  | $ |  | 10 |  |  | $ |  | 16 |
Total Restructuring Costs |  | $ |  | 26 |  |  | $ |  | 26 |  |  | $ |  | 114 |  |  | $ |  | 140 |

(1)
Other restructuring costs associated with the Transformation Program primarily include data center exit costs, third party fees associated with the restructuring, and costs associated with transitioning existing technology and processes.

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As of March 31, 2023, approximatel y $12 million of the Company's total restructuring liability is unpaid and is recorded in Accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheets.

| Severance and |  |  | Estimated |  |  |  |  |
| Related Benefits |  |  | Remaining Costs |  |  | Total |
Accrued restructuring liability as of December 31, 2022 | $ |  | — |  |  | $ |  | — |  |  | $ |  | — |
Restructuring charges |  |  | 6 |  |  |  |  | 20 |  |  |  |  | 26 |
Cash payments |  |  | (1 | ) |  |  |  | (16 | ) |  |  |  | (17 | )
Accrued restructuring liability as of March 31, 2023 | $ |  | 5 |  |  | $ |  | 4 |  |  | $ |  | 9 |

Plan

During the third quarter of 2019, management initiated a restructuring and integration plan (the “Plan”) following the completion of the Hodges acquisition and in anticipation of the NGA HR acquisition, which was completed on November 1, 2019. The Plan was intended to integrate and streamline operations across the Company and to generate cost reductions related to position eliminations and facility and system rationalizations. This restructuring and integration plan was complete as of December 31, 2022.

The following table summarizes the changes in the accrual balance:

| Severance and |  |  | Estimated |  |  |  |  |
| Related Benefits |  |  | Remaining Costs |  |  | Total |
Accrued restructuring liability as of December 31, 2022 | $ |  | 4 |  |  | $ |  | 4 |  |  | $ |  | 8 |
Cash payments |  |  | (1 | ) |  |  |  | (4 | ) |  |  |  | (5 | )
Accrued restructuring liability as of March 31, 2023 | $ |  | 3 |  |  | $ |  | — |  |  | $ |  | 3 |

18. Employee Benefits

Defined Contribution Savings Plans

Certain of the Company’s employees participate in a defined contribution savings plan sponsored by the Company. For the three months ended March 31, 2023 and 2022, expenses were $19 million a nd $17 million, respectively. Expenses were recognized in Cost of services, exclusive of depreciation and amortization and Selling, general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income (Loss).

19. Commitments and Contingencies

Legal

The Company is subject to various claims, tax assessments, lawsuits, and proceedings that arise in the ordinary course of business relating to the delivery of our services and the effectiveness of our technologies. The damages claimed in these matters are or may be substantial. Accruals for any exposures, and related insurance or other receivables, when applicable, are included on the Condensed Consolidated Balance Sheets and have been recognized in Selling, general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income (Loss) to the extent that losses are deemed probable and are reasonably estimable. These amounts are adjusted from time to time as developments warrant. Management believes that the reserves established are appropriate based on the facts currently known. The reserves recorded at March 31, 2023 and December 31, 2022 were not significant.

Guarantees and Indemnifications

The Company provides a variety of service performance guarantees and indemnifications to its clients. The maximum potential amount of future payments represents the notional amounts that could become payable under the guarantees and indemnifications if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or other methods. These notional amounts may bear no relationship to the future payments that may be made, if any, for these guarantees and indemnifications.

To date, the Company has not been required to make any payment under any client arrangement as described above. The Company has assessed the current status of performance risk related to the client arrangements with performance guarantees and believes that any potential payments would be immaterial to the Condensed Consolidated Financial Statements.

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Purchase Obligations

The Company’s expected cash outflow for non-cancellable purchase obligations related to purchases of information technology assets and services is $17 million, $27 million, $9 million, $4 million, and $3 million, for the remainder of 2023 and the years ended 2024, 2025, 2026, 2027 and thereafter, respectively.

Service Obligations

On September 1, 2018, the Company executed an agreement to form a strategic partnership with Wipro, a leading global information technology, consulting and business process services company.

The Company’s expected cash outflow for non-cancellable service obligations related to our strategic partnership with Wipro is $111 million, $154 million, $162 million, $170 million and $332 million f or the remainder of 2023 and the years ended 2024, 2025, 2026, 2027 and thereafter, respectively.

The Company may terminate its arrangement with Wipro for cause or for the Company’s convenience. In the case of a termination for convenience, the Company would be required to pay a termination fee, including certain of Wipro’s unamortized costs, plus 25% of any remaining portion of the minimum level of services the Company agreed to purchase from Wipro over the course of 10 years.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements which are included in the Company's Annual Report. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from those discussed in "Item 1A. Risk Factors" in our Annual Report and in this and in this Quarterly Report on Form 10-Q, particularly under the caption "Forward-Looking Statements."

BUSINESS

Overview

Alight is defining the future of employee wellbeing through the power of our integrated health, wealth, wellbeing and payroll solutions powered by Alight Worklife®. Alight Worklife® is a high-tech employee engagement platform with a human touch – that brings together our mission-critical wellbeing solutions to our clients to drive better outcomes for organizations and individuals.

Against the current macro environment, both employers and employees face considerable challenges that impact their ability to succeed and thrive now and in the future. Employees are shouldering more and more responsibility for healthcare costs, while struggling with short-and-long-term financial needs in an inflationary environment, among other daily challenges. These trends have driven the need for integrated, personalized tools to help employees make more informed decisions around all aspects of their health, finances and wellbeing. For their part, employers are facing increasing cost pressures, ever-changing workforce regulations and evolving dynamics across the employer/employee relationship, driving the need for flexibility, engagement and effective solutions for compliance. We believe Alight is uniquely positioned between the employer and employee to address these factors and drive better outcomes for both.

We aim to be the pre-eminent employee experience partner by providing personalized experiences that help employees make the best decisions for themselves and their families about their health, wealth and wellbeing. At the same time, we help employers tackle their biggest people and business challenges by helping them understand prevalence, trends and risks to generate better outcomes for the future and realize a return on their people investment. Our data, analytics and Artificial Intelligence ("AI") allow us to deliver actionable insights that drive measurable outcomes for companies and their people. We provide solutions to manage health and retirement benefits, tools for payroll and HR management, as well as solutions to manage the workforce from the cloud.

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 March 31, 2023, Alight owned 92% 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 approximately 8% as of March 31, 2023.

As a result of the Business Combination, for accounting purposes, the Company is the acquirer and Alight Holdings is the acquiree and accounting predecessor. Within this Quarterly Report on Form 10-Q, there are some instances where we reference activity that relates to this Predecessor period or accounting as a result of the Business Combination.

Segment Reporting

Effective January 1, 2023, the Company's former Hosted business revenues and gross margin are reported in Other as the business is no longer core to the Company’s operations. There is no change in composition among the Employer Solutions and Professional Services segments.

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EXECUTIVE SUMMARY OF FINANCIAL RESULTS

The following table sets forth our historical results of operations for the periods indicated below:

|  | Three Months Ended |  | Three Months Ended |
|  | March 31, |  | March 31, |
(in millions) |  | 2023 |  | 2022 |
Revenue |  | $ |  | 831 |  | $ |  | 725 |
Cost of services, exclusive of depreciation and amortization |  |  |  | 555 |  |  |  | 491 |
Depreciation and amortization |  |  |  | 19 |  |  |  | 11 |
Gross Profit |  |  |  | 257 |  |  |  | 223 |
Operating Expenses |  |  |  |  |  |  |
Selling, general and administrative |  |  |  | 185 |  |  |  | 140 |
Depreciation and intangible amortization |  |  |  | 85 |  |  |  | 85 |
Total Operating expenses |  |  |  | 270 |  |  |  | 225 |
Operating Income (Loss) |  |  |  | (13 | ) |  |  | (2 | )
Other (Income) Expense |  |  |  |  |  |  |
(Gain) Loss from change in fair value of financial instruments |  |  |  | 25 |  |  |  | (13 | )
(Gain) Loss from change in fair value of tax receivable agreement |  |  |  | 8 |  |  |  | (5 | )
Interest expense |  |  |  | 33 |  |  |  | 29 |
Other (income) expense, net |  |  |  | 3 |  |  |  | (1 | )
Total Other (income) expense, net |  |  |  | 69 |  |  |  | 10 |
Income (Loss) Before Taxes |  |  |  | (82 | ) |  |  | (12 | )
Income tax expense (benefit) |  |  |  | (8 | ) |  |  | 1 |
Net Income (Loss) |  |  |  | (74 | ) |  |  | (13 | )
Net income (loss) attributable to noncontrolling interests |  |  |  | (6 | ) |  |  | (2 | )
Net Income (Loss) Attributable to Alight, Inc. |  | $ |  | (68 | ) | $ |  | (11 | )

REVIEW OF RESULTS

Key Components of Our Operations

Revenue

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.

Cost of Services, exclusive of Depreciation and Amortization

Cost of services, exclusive of depreciation and amortization includes compensation-related and vendor costs directly attributable to client-related services and costs related to application development and client-related infrastructure.

Depreciation and Amortization

Depreciation and amortization expenses include the depreciation and amortization related to our hardware, software and application development. Depreciation and amortization may increase or decrease in absolute dollars in future periods depending on the future level of capital investments in hardware, software and application development.

Selling, General and Administrative

Selling, general and administrative expenses include compensation-related costs for administrative and management employees, system and facilities expenses, and costs for external professional and consulting services.

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Depreciation and Intangible Amortization

Depreciation and intangible amortization expenses consist of charges relating to the depreciation of the property and equipment used in our business and the amortization of acquired customer-related and contract based intangible assets and technology related intangible assets. Depreciation and intangible amortization may increase or decrease in absolute dollars in future periods depending on the future level of capital investments in hardware and other equipment as well as amortization expense associated with future acquisitions.

(Gain) Loss from Change in Fair Value of Financial Instruments

(Gain) loss from change in fair value of financial instruments includes the impact of the revaluation to fair value at the end of each reporting period for the Seller Earnouts contingent consideration.

(Gain) Loss from Change in Fair Value of Tax Receivable Agreement

(Gain) loss from charge in fair value of Tax Receivable Agreement ("TRA") includes the impact of the revaluation to fair value at the end of each reporting period.

Interest Expense

Interest expense primarily includes interest expense related to our outstanding debt.

Other (Income) Expense, net

Other (income) expense, net includes non-operating expenses and income, including realized (gains) and losses from remeasurement of foreign currency transactions.

Results of Operations for the Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Revenue

Revenues were $831 million for the three months ended March 31, 2023 as compared to $725 million for the prior year period. The increase of $106 million reflects growth of 16.1% in our Employer Solutions segment and 8.9% in our Professional Services segment. We measure revenue growth as it relates to the cloud-based products and solutions that are central to our Alight Worklife® platform and our next generation product suite, BPaaS Solutions. For the three months ended March 31, 2023, we recorded BPaaS revenue of $171 million, which represents growth of 50% compared to the prior year period.

In addition, we also consider BPaaS bookings, defined as total contract value for BPaaS customer agreements executed in the period, to be a key indicator of future revenue growth and is used as a metric of commercial activity by management and investors. For the three months ended March 31, 2023, BPaaS bookings of $75 million represents a decline of 38.5% compared to the prior year period.

Recurring revenues increased by $100 million, or 16.3%, from $612 million to $712 million and are related to growth in both the Employer Solutions and Professional Services segments. Growth in Employer Solutions is a result of higher revenues related to increased volumes, Net Commercial Activity and our 2022 acquisition. Growth in Professional Services is primarily a result of higher project revenues.

Cost of Services, exclusive of Depreciation and Amortization

Cost of services, exclusive of depreciation and amortization, increased $64 million, or 13.0%, for the three months ended March 31, 2023 as compared to the prior year period. The increase was primarily driven by growth in revenues, including investments in key resources and the recent acquisition.

Selling, General and Administrative

Selling, general and administrative expenses increased $45 million, or 32.1%, for the three months ended March 31, 2023 as compared to the prior year period. The increase was primarily driven by costs incurred from our previously announced restructuring program as well as the inclusion of expenses from our 2022 acquisition.

Depreciation and Amortization

Depreciation and intangible amortization expenses increased $8 million, or 8.3%, for the three months ended March 31, 2023 as compared to the prior year period. The increase was primarily driven by amortization related to identifiable intangible assets acquired from the 2022 acquisition.

Change in Fair Value of Financial Instruments

The change in the fair value of financial instruments was a loss of $25 million for the three months ended March 31, 2023, a decrease of $38 million compared to a gain of $13 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

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period the change occurred. The change in the fair value was due to changes in the underlying assumptions, including the decrease in the risk free interest rate, volatility, and the closing stock price for the period ended March 31, 2023. See Note 14 "Financial Instruments" for additional information.

Change in Fair Value of Tax Receivable Agreement

The change in the fair value of the tax receivable agreement was a loss of $8 million for the three months ended March 31, 2023, a decrease of $13 million compared to a gain of $5 million for the prior year period. This revaluation loss is due to changes in the discount rate and changes in the Company's assumptions related to the timing of the utilization of tax attributes during the term of the TRA, which we are required to revalue at the end of each reporting period.

Interest Expense

Interest expense increased $4 million for the three months ended March 31, 2023 as compared to the prior year period. The increase was primarily due to higher interest expense on our Term Loan due to movement in market interest rates. See Note 8 “Debt” for additional information.

Income (Loss) Before Income Taxes

Loss before income taxes was $82 million for the three months ended March 31, 2023. Loss before income taxes was $12 million for the three months ended March 31, 2022. The decrease in Loss before income taxes was primarily due to the fair value remeasurements associated with certain liabilities and other drivers as identified above.

Income Tax Expense (Benefit)

Income tax benefit was $8 million for the three months ended March 31, 2023, as compared to tax expense of $1 million for the prior year period. The effective tax rate of 10% for the three months ended March 31, 2023 is lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s inability to fully benefit from certain anticipated tax attributes in the US, as well as losses in certain non-U.S. jurisdictions for which tax benefits have not been recorded. The effective tax rate of (12)% for the three months ended March 31, 2022 is lower than the 21% U.S. statutory corporate income tax rate primarily due to the Company’s inability to benefit from certain tax attributes in the U.S., as well as losses in certain non-U.S. jurisdictions for which a tax benefit has not been recorded. See Note 7 “Income Taxes” for additional information.

Non-GAAP Financial Measures

The presentation of non-GAAP financial measures is used to enhance our management and stakeholders understanding of certain aspects of our financial performance. This discussion is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP. Management also uses supplemental non-GAAP financial measures to manage and evaluate the business, make planning decisions, allocate resources and as performance measures for Company-wide bonus plans. These key financial measures provide an additional view of our operational performance over the long-term and provide useful information that we use in order to maintain and grow our business.

The measures referred to as “adjusted”, have limitations as analytical tools, and such measures should not be considered either in isolation or as a substitute for net income or other methods of analyzing our results as reported under U.S. GAAP. Some of the limitations are:

•
Measure does not reflect changes in, or cash requirements for, our working capital needs or contractual commitments;
•
Measure does not reflect our interest expense or the cash requirements to service interest or principal payments on our indebtedness;
•
Measure does not reflect our tax expense or the cash requirements to pay our taxes, including payments related to the Tax Receivable Agreement;
•
Measure does not reflect the impact on earnings or changes resulting from matters that we consider not to be indicative of our future operations;
•
Although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often need to be replaced in the future, and the adjusted measure does not reflect any cash requirements for such replacements; and
•
Other companies may calculate adjusted measures differently, limiting its usefulness as a comparative measure.

Adjusted Net Income and Adjusted Diluted Earnings Per Share

Adjusted Net Income, which is defined as net income (loss) attributable to Alight, Inc. adjusted for intangible amortization and the impact of certain non-cash items 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.

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Adjusted Diluted Earnings Per Share is defined as Adjusted Net Income divided by the adjusted weighted-average number of shares of common stock, diluted. The adjusted weighted shares calculation assumes the full exchange of the non-controlling interest units, the total amount of warrants that were exercised, and non-vested time-based restricted units that were determined to be antidilutive and therefore excluded from the U.S. GAAP diluted earnings per share. Adjusted Diluted Earnings Per Share, including the adjusted weighted-average number of shares, is used by us and our investors to evaluate our core operating performance and to benchmark our operating performance against our competitors.

A reconciliation of Adjusted Net Income to Net Loss Attributable to Alight, Inc. and the computation of Adjusted Diluted Earnings Per Share is as follows:

|  | Three Months Ended |  |  | Three Months Ended |
|  | March 31, |  |  | March 31, |
(in millions, except share and per share amounts) |  | 2023 |  |  | 2022 |
Numerator: |  |  |  |  |  |  |  |
Net (Loss) Income Attributable to Alight, Inc. |  | $ |  | (68 | ) |  | $ |  | (11 | )
Conversion of noncontrolling interest |  |  |  | (6 | ) |  |  |  | (2 | )
Intangible amortization |  |  |  | 80 |  |  |  |  | 79 |
Share-based compensation |  |  |  | 37 |  |  |  |  | 33 |
Transaction and integration expenses |  |  |  | 2 |  |  |  |  | 6 |
Restructuring |  |  |  | 26 |  |  |  |  | 6 |
(Gain) Loss from change in fair value of financial instruments |  |  |  | 25 |  |  |  |  | (13 | )
(Gain) Loss from change in fair value of tax receivable agreement |  |  |  | 8 |  |  |  |  | (5 | )
Other |  |  |  | 1 |  |  |  |  | 2 |
Tax effect of adjustments (1) |  |  |  | (33 | ) |  |  |  | (28 | )
Adjusted Net Income |  | $ |  | 72 |  |  | $ |  | 67 |
Denominator: |  |  |  |  |  |  |  |
Weighted average shares outstanding - basic |  |  |  | 476,145,761 |  |  |  |  | 456,838,216 |
Exchange of noncontrolling interest units(2) |  |  |  | 57,966,505 |  |  |  |  | 76,220,431 |
Impact of unvested RSUs(3) |  |  |  | 10,412,840 |  |  |  |  | 11,137,394 |
Adjusted shares of Class A Common Stock outstanding - diluted(4) |  |  |  | 544,525,106 |  |  |  |  | 544,196,041 |
Basic (Net Loss) Earnings Per Share |  | $ |  | (0.14 | ) |  | $ |  | (0.02 | )
Adjusted Diluted Earnings Per Share(4) (5) |  | $ |  | 0.13 |  |  | $ |  | 0.12 |

(1)
Income tax effects have been calculated based on statutory tax rates for both U.S. and foreign jurisdictions based on the Company's mix of income and adjusted for significant changes in fair value measurement.
(2)
Assumes the full exchange of the units held by noncontrolling interests for shares of Class A Common Stock of Alight, Inc. pursuant to the exchange agreement.
(3)
Includes non-vested time-based restricted stock units that were determined to be antidilutive for U.S. GAAP diluted earnings per share purposes.
(4)
Excludes two tranches of contingently issuable seller earnout shares: (i) 7.5 million shares will be issued if the volume-weighted average price ("VWAP") of the Company's Class A Common Stock is >$12.50 for 20 consecutive trading days; and (ii) 7.5 million shares will be issued if the VWAP of the Company's Class A Common Stock is >$15.00 for 20 consecutive trading days. Both tranches have a seven-year duration.
(5)
Excludes 31,079,227 and 35,501,399 performance-based units, which represents the gross number of shares expected to vest based on achievement of the respective performance conditions as of March 31, 2023 and March 31, 2022, respectively.

35

Adjusted EBITDA

Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and intangible amortization adjusted for the impact of certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance, is a non-GAAP financial measure used by management and our stakeholders to provide useful supplemental information that enables a better comparison of our performance across periods. Adjusted EBITDA is used by management and stakeholders to evaluate our core operating performance. A reconciliation of Adjusted EBITDA to Net Loss is as follows:

|  | Three Months Ended |  |  | Three Months Ended |
|  | March 31, |  |  | March 31, |
(in millions) |  | 2023 |  |  | 2022 |
Net Loss |  | $ |  | (74 | ) |  | $ |  | (13 | )
Interest expense |  |  |  | 33 |  |  |  |  | 29 |
Income tax expense (benefit) |  |  |  | (8 | ) |  |  |  | 1 |
Depreciation |  |  |  | 24 |  |  |  |  | 17 |
Intangible amortization |  |  |  | 80 |  |  |  |  | 79 |
EBITDA |  |  |  | 55 |  |  |  |  | 113 |
Share-based compensation |  |  |  | 37 |  |  |  |  | 33 |
Transaction and integration expenses (1) |  |  |  | 2 |  |  |  |  | 6 |
Restructuring |  |  |  | 26 |  |  |  |  | 6 |
(Gain) Loss from change in fair value of financial instruments |  |  |  | 25 |  |  |  |  | (13 | )
(Gain) Loss from change in fair value of tax receivable agreement |  |  |  | 8 |  |  |  |  | (5 | )
Other(2) |  |  |  | 1 |  |  |  |  | 2 |
Adjusted EBITDA |  | $ |  | 154 |  |  | $ |  | 142 |
Revenue |  | $ |  | 831 |  |  | $ |  | 725 |
Adjusted EBITDA Margin(3) |  |  |  | 18.5 | % |  |  |  | 19.6 | %

(1) Transaction and integration expenses primarily relate to acquisition activity.

(2) Other primarily includes expenses related to debt financing.

(3) Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of revenue.

Segment Revenue and Adjusted Gross Profit

Adjusted gross profit is defined as revenue less cost of services adjusted for depreciation, amortization and share-based compensation. Adjusted gross profit margin percent is defined as adjusted gross profit divided by revenue. Management uses adjusted gross profit and adjusted gross profit margin percent as key measures in making financial, operating and planning decisions and in evaluating our performance. We believe that presenting adjusted gross profit and adjusted gross profit margin percent is useful to investors as it eliminates the impact of certain non-cash expenses and allows a direct comparison between periods.

Employer Solutions Results

|  | Three Months Ended |  |  | Three Months Ended |
|  | March 31, |  |  | March 31, |
($ in millions) |  | 2023 |  |  | 2022 |
Employer Solutions Revenue |  |  |  |  |  |  |  |
Recurring |  | $ |  | 669 |  |  | $ |  | 570 |
Project |  |  |  | 54 |  |  |  |  | 53 |
Total Employer Solutions Revenue |  | $ |  | 723 |  |  | $ |  | 623 |
Employer Solutions Gross Profit |  | $ |  | 238 |  |  | $ |  | 204 |
Employer Solutions Gross Profit Margin |  |  |  | 32.9 | % |  |  |  | 32.7 | %
Employer Solutions Adjusted Gross Profit |  | $ |  | 264 |  |  | $ |  | 221 |
Employer Solutions Adjusted Gross Profit Margin |  |  |  | 36.5 | % |  |  |  | 35.5 | %

Employer Solutions Segment Results of Operations for the Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Employer Solutions Revenue

Employer Solutions revenue was $723 million for the three months ended March 31, 2023 as compared to $623 million for the prior year period. The overall increase of $100 million was driven by recurring revenues of $99 million as a result of Net Commercial Activity, project revenue, and volumes as well as the impact from our 2022 acquisition.

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Employer Solutions Gross Profit and Adjusted Gross Profit

Employer Solutions gross profit was $238 million for the three months ended March 31, 2023 compared to $204 million for the prior year period. The increase of $34 million was driven by revenue growth and lower expenses related to productivity initiatives, partially offset by employee compensation costs and increases in costs associated with growth of current and future revenues. Employer Solutions adjusted gross profit for the three months ended March 31, 2023 increased $43 million to $264 million from $221 million in the prior year period primarily due to productivity initiatives, partially offset by employee compensation and increases in costs associated with growth.

Professional Services Results

|  | Three Months Ended |  |  | Three Months Ended |
|  | March 31, |  |  | March 31, |
($ in millions) |  | 2023 |  |  | 2022 |
Professional Services Revenue |  |  |  |  |  |  |  |
Recurring |  | $ |  | 33 |  |  | $ |  | 30 |
Project |  |  |  | 65 |  |  |  |  | 60 |
Total Professional Services Revenue |  | $ |  | 98 |  |  | $ |  | 90 |
Professional Services Gross Profit |  | $ |  | 19 |  |  | $ |  | 19 |
Professional Services Gross Profit Margin |  |  |  | 19.4 | % |  |  |  | 21.1 | %
Professional Services Adjusted Gross Profit |  | $ |  | 20 |  |  | $ |  | 19 |
Professional Services Adjusted Gross Profit Margin |  |  |  | 20.4 | % |  |  |  | 21.1 | %

Professional Services Segment Results of Operations for the Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Professional Services Revenue

Professional Services revenue was $98 million for the three months ended March 31, 2023 as compared to $90 million for the prior year period. The increase of $8 million was due to an increase in recurring revenue and project revenue of $3 million and $5 million, respectively.

Professional Services Gross Profit and Adjusted Gross Profit

Professional Services gross profit remained flat at $19 million for both periods. Adjusted gross profit increased $1 million to $20 million for the three months ended March 31, 2023.

Gross Profit to Adjusted Gross Profit Reconciliation by Segment

|  | Three Months Ended March 31, 2023 |
($ in millions) |  | Employer Solutions |  | Professional Services |  | Other |  | Total |
Gross Profit |  | $ | 238 |  | $ | 19 |  | $ | - |  | $ | 257 |
Add: stock-based compensation |  |  | 8 |  |  | 1 |  |  | - |  |  | 9 |
Add: depreciation and amortization |  |  | 18 |  |  | - |  |  | 1 |  |  | 19 |
Adjusted Gross Profit |  | $ | 264 |  | $ | 20 |  | $ | 1 |  | $ | 285 |
Gross Profit Margin |  |  | 32.9 | % |  | 19.4 | % |  | 0.0 | % |  | 30.9 | %
Adjusted Gross Profit Margin |  |  | 36.5 | % |  | 20.4 | % |  | 10.0 | % |  | 34.3 | %
|  | Three Months Ended March 31, 2022 |
($ in millions) |  | Employer Solutions |  | Professional Services |  | Other |  | Total |
Gross Profit |  | $ | 204 |  | $ | 19 |  | $ | - |  | $ | 223 |
Add: stock-based compensation |  |  | 7 |  |  | - |  |  | - |  |  | 7 |
Add: depreciation and amortization |  |  | 10 |  |  | - |  |  | 1 |  |  | 11 |
Adjusted Gross Profit |  | $ | 221 |  | $ | 19 |  | $ | 1 |  | $ | 241 |
Gross Profit Margin |  |  | 32.7 | % |  | 21.1 | % |  | 0.0 | % |  | 30.8 | %
Adjusted Gross Profit Margin |  |  | 35.5 | % |  | 21.1 | % |  | 8.3 | % |  | 33.2 | %

37

LIQUIDITY AND FINANCIAL CONDITION

Liquidity

Executive Summary

Our primary sources of liquidity include our existing cash and cash equivalents, cash flows from operations and availability under our revolving credit facility. Our primary uses of liquidity are operating expenses, funding of our debt requirements and capital expenditures.

We believe that our available cash and cash equivalents, cash flows from operations and availability under our revolving credit facility will be sufficient to meet our liquidity needs, including principal and interest payments on debt obligations, capital expenditures, payments on our Tax Receivable Agreement and anticipated working capital requirements for the foreseeable future. We believe our liquidity position at March 31, 2023 remains strong. We will continue to closely monitor and proactively manage our liquidity position in light of changing economic conditions and the volatility of interest rates.

In August 2022, we established a repurchase program allowing for up to $100 million in authorized share repurchases. As of March 31, 2023, approximately $78 million remained available for share repurchases under our share repurchase program.

Cash on our balance sheet includes funds available for general corporate purposes. Funds held on behalf of clients in a fiduciary capacity are segregated and shown in Fiduciary assets on the Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, with a corresponding amount in Fiduciary liabilities. Fiduciary funds are not used for general corporate purposes and are not a source of liquidity for us.

The following table provides a summary of cash flows from operating, investing, and financing activities for the periods presented.

|  | Three Months Ended |  | Three Months Ended |
|  | March 31, |  | March 31, |
(in millions) |  | 2023 |  | 2022 |
Cash provided by operating activities |  | $ |  | 72 |  | $ |  | 19 |
Cash used in investing activities |  |  |  | (45 | ) |  |  | (41 | )
Cash provided by (used in) financing activities |  |  |  | (160 | ) |  |  | 305 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |  |  |  | — |  |  |  | (2 | )
Net increase (decrease) in cash, cash equivalents and restricted cash |  |  |  | (133 | ) |  |  | 281 |
Cash, cash equivalents, and restricted cash at end of period |  | $ |  | 1,626 |  | $ |  | 1,933 |

Operating Activities

Net cash provided by operating activities was $72 million for the three months ended March 31, 2023 compared to $19 million for the three months ended March 31, 2022. The increase in cash provided by operating activities was primarily due to a decrease in our net working capital requirements.

Investing Activities

Cash used for investing activities increased $4 million to $45 million for the three months ended March 31, 2023 from $41 million for the prior year period, driven by capital expenditures.

Financing Activities

Cash used for financing activities for the three months ended March 31, 2023 was $160 million as compared to cash provided by financing activities of $305 million in the prior year. The primary drivers of cash used for financing activities were due to a $121 million net decrease in fiduciary liabilities, $10 million of share repurchases, $7 million of finance lease payments, $7 million of tax receivable agreement payments, $6 million of debt repayments, $6 million of shares/units withheld in lieu of taxes and $3 million of deferred consideration payments. The decrease in fiduciary cash is primarily due to timing of client funding and subsequent disbursement of payments.

Cash, Cash Equivalents and Fiduciary Assets

At March 31, 2023, our cash and cash equivalents were $239 million, a decrease of $11 million from December 31, 2022. Of the total balances of cash and cash equivalents as of March 31, 2023 and December 31, 2022, none of the balances were restricted as to use.

Some of our client agreements require us to hold funds on behalf of clients to pay obligations on their behalf. The levels of Fiduciary assets and liabilities can fluctuate significantly, depending on when we collect the amounts from clients and make payments on their behalf. Such funds are not available to service our debt or for other corporate purposes. There is typically a short period of time between when the Company receives funds and when it pays obligations on behalf of clients. We are entitled to retain investment income earned on fiduciary funds, when investment strategies are deployed, in accordance with industry custom and practice, which has

38

historically been immaterial. In our Consolidated Balance Sheets, the amount we report for Fiduciary assets and Fiduciary liabilities are equal. Our Fiduciary assets included cash of $1,387 million and $1,509 million at March 31, 2023 and December 31, 2022, respectively.

Other Liquidity Matters

Our cash flows from operations, borrowing availability and overall liquidity are subject to risks and uncertainties. For further information, see the “Risk Factors” section within Item 1A of our Annual Report.

We do not have any material business, operations or assets in Russia, Belarus or Ukraine and we have not been materially impacted by the actions of the Russian government. Our total revenues from these three countries are de minimis for all periods presented.

Tax Receivable Agreement

In connection with the Business Combination, we entered into the TRA with certain of our pre-Business Combination owners that provides for the payment by Alight to such owners of 85% of the benefits that Alight is deemed to realize as a result of the Company’s share of existing tax basis acquired in the Business Combination and other tax benefits related to entering into the Tax Receivable Agreement.

Actual tax benefits realized by Alight may differ from tax benefits calculated under the TRA as a result of the use of certain assumptions in the TRA, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits. 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 TRA, will vary depending upon a number of factors, we expect that the payments that Alight may make under the TRA will be substantial. For the three months ended March 31, 2023, we paid $7 million related to the TRA and no further payments are expected to be made during the remainder of 2023. As of March 31, 2023, we expect to make payments of approximately $50 million in 2024.

Contractual Obligations and Commitments

There have been no material changes to our obligations and commitments during the three months ended March 31, 2023.

Our material contractual obligations include debt, non-cancellable contractual service and purchase obligations and lease obligations. For additional information regarding debt and non-cancellable contractual service and purchases obligations, see the Condensed Consolidated Financial Statements within Item 1 of this Quarterly Report on Form 10-Q, Note 8 “Debt”, and Note 19 “Commitments and Contingencies”.

OFF BALANCE SHEET ARRANGEMENTS

We do not have any off balance sheet arrangements.

Critical Accounting Estimates

There were no material changes from the Critical Accounting Estimates disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022. Please refer to "Critical Accounting Estimates" described in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our Annual Report.

Item 3. Quantitative and Qualitati ve Disclosures About Market Risk.

For quantitative and qualitative disclosures about market risk, see Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" of our Annual Report. Our exposures to market risk have not changed materially since the filing of the Annual Report.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. Based on the aforementioned evaluation, our principal executive officer and principal financial officer concluded that, due to the material weaknesses in our internal control over financial reporting related to our income tax accounting as further described below, our disclosure controls and procedures were not effective as of March 31, 2023.

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Notwithstanding, the conclusion by management that our disclosure controls and procedures as of March 31, 2023 were not effective, and notwithstanding the material weaknesses in our internal control over financial reporting described below, management believes that the condensed consolidated financial statements and related financial information included in this Quarterly Report on Form 10-Q fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with U.S. GAAP.

Remediation of Material Weakness in Internal Control Over Financial Reporting

In connection with the preparation and audit of the consolidated financial statements as of and for the year ended December 31, 2022, a material weakness over financial reporting was identified. This material weakness related to internal controls over the accounting for the income tax provision in accordance with GAAP.

Specifically, the Company did not have the appropriate complement of resources within its tax department commensurate with the nature and complexity associated with the Company’s income tax provision process. As a result, the design and operation of our internal controls associated with the accounting for the Company’s income tax provision was not designed to operate at a level of precision necessary to provide reasonable assurance that a material misstatement of the Company’s annual or interim financial statements would be detected or prevented.

Management does not believe that these control deficiencies materially affected the results and accuracy of any of its annual or interim financial statements. Further, management believes and has concluded that the consolidated financial statements for the prior periods and included in this report fairly present, in all material respects, the Company’s financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

We are committed to maintaining a strong internal control environment. As of March, 31, 2023, we have implemented, or are in the process of implementing, a remediation plan for the material weakness in internal control over financial reporting described above, with appropriate oversight from the Audit Committee. The remediation actions are multi-phased and ongoing and include the following:
(i) conducting a complete assessment of the organizational structure of the Company’s tax team to identify any gaps or weaknesses, including necessary subject matter expertise, and make necessary changes to the personnel;
(ii) engaging and working with an independent, third-party review team to conduct a review of tax department processes and procedures with a particular emphasis on roles, responsibilities and accountabilities;
(iii) enhancing the level of precision in management’s review controls related to the review of significant tax balances to ensure transactions are recorded accurately and completely in accordance with GAAP, and
(iv) strengthening our income tax internal controls with enhanced documentation, technical oversight and training.

Management has completed its initial assessment working with an independent third party to conduct a review of the tax department. However, until all the remediation activities are fully implemented, and the operational effectiveness of related internal controls is validated through testing, the material weakness described above will continue to exist. Management believes the remediation measures underway will strengthen the Company’s internal control over financial reporting when fully implemented and remediate the material weakness.

Changes in Internal Control over Financial Reporting

Except as noted above, there have been no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

40

PART II—OTHE R INFORMATION

Item 1. Legal Proceedings.

We are a party to a variety of legal proceedings that arise in the normal course of our business. While the results of these legal proceedings cannot be predicted with certainty, we believe that the final outcome of these proceedings will not have a material adverse effect, individually or in the aggregate, on our results of operations or financial condition.

Item 1A. Ri sk Factors.

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 March 1, 2023. 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.

Item 2. Unregistered Sales of Equi ty Securities and Use of Proceeds.

The following table provides information regarding purchases of our Class A Common Stock that were made by us during the three months ended March 31, 2023.

|  |  |  |  |  |  |  |  | Total number of |  |  | Approximate dollar |
|  |  |  |  |  |  |  |  | shares purchased as |  |  | value of shares that may |
|  |  |  |  |  |  |  |  | part of publicly |  |  | yet be purchased under |
|  | Total number of |  |  | Average price |  |  | announced plans |  |  | the plans or programs |
|  | shares purchased |  |  | paid per share(1) |  |  | or programs |  |  | (in millions) (2) |
January 1, 2023 through January 31, 2023 |  |  | — |  |  | $ |  | — |  |  |  | — |  |  | $ |  | 88 |
February 1, 2023 through February 28, 2023 |  |  | — |  |  |  |  | — |  |  |  | — |  |  |  |  | 88 |
March 1, 2022 through March 31, 2023 |  |  | 1,148,435 |  |  |  |  | 8.71 |  |  |  | 1,148,435 |  |  |  |  | 78 |
Balance as of March 31, 2023 |  |  | 1,148,435 |  |  | $ |  | 8.71 |  |  |  | 1,148,435 |  |  | $ |  | 78 |

(1)
Average price paid per share for open market purchases includes broker commissions.
(2)
On August 1, 2022, we announced a share repurchase program, under which we may repurchase up to $100 million of issued and outstanding shares of Class A Common Stock, par value $0.0001 per share, from time to time, depending on market conditions and alternate uses of capital, which has no expiration date and may be suspended or discontinued at any time. In the first quarter of 2023, we repurchased approximately 1.1 million shares for $10 million, or approximately $8.71 per share, under this share repurchase program. For additional information, see Note 9 in "Part I. Financial Information - Item 1. Financial Statements" in this report.

Item 3. Defaults Upo n Senior Securities.

None.

Item 4. Mine Safe ty Disclosures.

Not applicable.

Item 5. Other Information.

Section 13(r) Disclosure

Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) of the Exchange Act, we hereby incorporate by reference herein Exhibit 99.1 of this report, which includes disclosures regarding activities at Mundys S.p.A. (formerly, Atlantia S.p.A.), which may be, or may have been at the time considered to be, an affiliate of Blackstone and, therefore, our affiliate.

41

Item 6. E xhibits.

Exhibit Number |  | Description
3.1 |  | Amended and Restated Certificate of Incorporation of Alight, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 12, 2021).
3.2 |  | Amended and Restated Bylaws of Alight, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on July 12, 2021).
10.1+ |  | Consulting Agreement, dated as of February 1, 2023, by and between Alight Solutions LLC and Cathinka Wahlstrom (incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 1, 2023).
10.2+ |  | Release Agreement, dated as of February 1, 2023, by and between Alight Solutions LLC and Cathinka Wahlstrom (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 1, 2023).
10.3 |  | First Amendment to the Investor Rights Agreement, dated as of February 2, 2023, by and among Alight, Inc., the Existing Investors and the Sponsor Investors as of the date thereof, and each of the other persons that from time to time become party thereto (incorporated by reference to Exhibit 10.22 to the Company’s Current Report on Form 8-K, filed with the SEC on February 2, 2023).
10.4 |  | Amendment No. 8 to the Credit Agreement, dated as of March 14, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 14, 2023).
31.1* |  | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* |  | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1** |  | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2** |  | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1* |  | Section 13(r) Disclosure.
101.INS* |  | Inline XBRL Instance Document
101.SCH* |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL* |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* |  | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104* |  | Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

** Furnished herewith.

+ Indicates a management or compensatory plan.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

42

SIGNA TURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | Alight, Inc.

(Registrant)

Date: May 9, 2023 |  | By: | /s/ Katie Rooney
|  |  | Katie Rooney
|  |  | Chief Financial Officer
|  |  | (Principal Financial Officer, Principal Accounting Officer and Authorized Signatory)

43