Alight, Inc. (ALIT) Earnings Call Transcript & Summary

[Presentation] All right. Good morning, everyone. I'm Jeremy Cohen, Vice President and Head of Investor Relations, and welcome to Alight's 2025 Investor Day. To those of you in the room, welcome to Chicago and our headquarters. And to those of you online, we're glad you're here with us today. So I get the honor of running you through the exhilarating safe harbor statement. Today, we'll be making forward-looking statements, which are not guarantees of future performance. Actual results may differ materially from those expressed or implied in these statements due to a variety of factors. And these factors are discussed in more detail in the company's filings with the SEC, including the company's most recent Form 10-K, and such factors may be updated from time to time in the company's other SEC filings. We do not undertake any obligation to update forward-looking statements. And I urge you to read the disclaimer in full detail on the screen or in the presentation, which we'll post online after the conclusion of the event. Additionally, we'll be discussing non-GAAP metrics, and reconciliations of historical non-GAAP metrics to their GAAP counterparts are available in the appendix. So in the room today, we have many Alight executives who will take the stage. You'll hear from Dave Guilmette, CEO; Allison Bassiouni, Chief Delivery Officer; Rob Sturrus, Chief Client Officer; Deepika Duggirala, Chief Technology Officer; Greg George, Chief Commercial Officer; and Chief Financial Officer, Jeremy Heaton. In addition, we'll be hosting 2 panels today, one with third-party evaluators that Dave will emcee and a client panel with representatives from UPS and Southern Company that Allison will emcee. At the end, we'll have Dave and Jeremy take the stage for Q&A. And so as you can see, we have a packed agenda today, rich with content. And so without further ado, I'm pleased to welcome to the stage, Alight CEO, Dave Guilmette.

Thank you, and good morning, everyone. I set my alarm very early this morning because I knew this day was coming. I looked at my calendar, it's March 20. It's the first day of spring. I looked out the window, Mother Nature did not get the e-mail obviously, so -- but this is Chicago. Welcome to Chicago. Welcome to Alight's Investor Day for 2025. I'm Dave Guilmette, CEO of Alight, and really, really excited to be here. I've been looking forward to this day for many months because it really gives us an opportunity to talk with you all, to share why we're so excited about our business and why we think this is going to be a great company to create great shareholder value. I know a lot of you in the room, and I've spent some time with you over the last several months. But for those of you who don't know me, some would consider me and use the term industry veteran, which is a nice way of saying you're an old guy that's been around this business for a long time. I was retired a year ago at this point, and I was looking forward to honing my golf game and doing some odds and ends and trying to stay current with what I've known. And Alight came around and asked me if I would join the Board and eventually asked me if I would take on this role. And I got to tell you, I was not expecting it, but once I heard the opportunity and knew about this company, having competed against it many, many years ago, 25, 30 years ago, when I was at Towers Parrin and Hewitt Associates was in the benefit administration business, and I kept losing to those guys. And then I got a chance to work with Alight when I was at Cigna. I actually had a piece of what we now have in the retiree health services business in my portfolio when I was at Aon. So I had seen this company from a lot of different angles and had tremendous respect for it. And when we divested the Payroll & Professional Services business and came back to our core of being an employee benefit services company, talk to my wife about the opportunity, Sue, and she said, "How could you not do it?" And she's absolutely right. And I'm thrilled to be here and thrilled to be at the helm. It's a real honor for me. You will hear from a number of our ELT members today. We've got a super packed agenda. We're going to share a lot of substance, and I hope you walk away thinking why these guys are the right people to be leading this company forward and delivering on our commitments. There are a number of key takeaways that I hope you grab today. We are the market leader in the employee benefits delivery space. We've done this through our client-centric focus and our opportunity to be able to deliver through an integrated platform. Our capabilities are a differentiator, and you'll hear a lot about what we're looking to do and what we have done with AI. And in particular, when you look at our opportunity, the long-standing relationships that we've had, the millions and millions, hundred of millions of transactions that we conduct every year and the longitudinal length -- time of those relationships, we created the widest and deepest data lake in our industry, which gives us an enormous opportunity to mine that and to create new and different things and bring value to our clients. So that's going to be something that you'll get a chance to spend some more time hearing about. Our current assets and our current capabilities position us for commercial success. One of the first things I did when I came on as CEO was take a hard look at what do our solutions look like, what do we have, how are we going to market. We don't really need anything more than what we have. Yes, we'll fine-tune and maybe some opportunities to maybe tuck some things in here or there. But the core aspects of what we have in Alight today as a services company, delivering employee benefits is best in class, and it's an opportunity for us to grow and have real commercial success. And finally, we have a very compelling view and line of sight to creating significant shareholder value. And you'll see Jeremy walk you through the details around what those financials look like. But suffice to say, we're in a great position as we take this business forward to create great shareholder value. I think it was day 2 when I had an all-colleague meeting and several thousand people were on the video, and I coined the term, we are a technology-enabled services company. And it struck a chord because over the last couple of years, we've -- we're talking about ourselves more as a technology company. And I'm sure that, that was appropriate given the portfolio of assets that we had and the direction that we were heading in. But when we came back to who we were, the company that's been in this space for as long as have been leading the market, we are a services company powered by great technology. We help 35 million people to be healthy and financially secure, which is a mission for us, and our colleagues really react to that positively, right? So we have a purpose, and that purpose is to deliver this great service. We do that through a combination of the integrated high-tech platform that you'll hear more about, great personal touch and colleagues that are focused on helping individuals lead healthier lives and be more financially secure. We have a rich history of leadership. This company goes all the way back to its roots in 1940 with Hewitt Associates. I could picture a number of pension actuaries with a pencil and a pad probably calculating their defined benefit pension for people who are going to be retiring. In earnest, this business has its roots and its built back in the early 1990s where benefit administration first came on the scene. And for those of you who've been around long enough, those were the early days of 401(k)s, the early days of FSA benefits and all of the rest of it. Flex benefits wasn't even around back then. I know because I was doing work in that space back then. We are unarguably the reference standard when it comes to employee benefits delivery. And that's something we've earned over 40 years. Our recent transactions of the professional services business and the payroll business allows us to focus on our core. And a couple of weeks ago, we had 400-or-so folks together for our annual sales kickoff. And one of the folks on my team coined the phrase, back to our roots and forward to our future. And it resonated. And I think it still resonates with us. We're going back to our roots, but we're not going backwards. We're not going back to the day when we used to do it a certain way. We're embracing technology. We're changing the way we're delivering our services. We're going to have a compelling AI story. We're already applying it to so many different things that we do in our business that we are fundamentally a services company delivering employee benefits, but we're doing that in the 21st century. We have significant market share, low churn, a very stable quality revenue stream. We're an aggregator. We serve over 5,000 clients, and we touch over 35 million participants. That makes us super relevant, not only for supporting the large companies and their plan sponsorship responsibilities for delivering their portfolio of employee benefits but for the myriad of players who are part of the ecosystem, insurance companies, point solutions, all the programs that these employers have purchased that are now part of that ecosystem. And we're in a position to be able to connect those up and bring a lot of value to all the key players. Our client foundation is the envy of our competition, and it's a big reason why I was so excited to come here. We serve roughly 70% of the Fortune 100, over half of the Fortune 500. If any of you work for a big company like that, you know how sophisticated these companies are, right? So for us to have captured that kind of market share over time is a testament to the kind of leadership and the kind of strength that this company brings forward. It would take others many, many, many, years of wild success to come even close to the market share that we have. Our client base is one of the significant assets in our organization and a real market differentiator for us. We'll talk more about that. Our Alight colleagues, 9,000 strong, caring about our employer clients. We have a culture of caring, focused on serving our clients. We have accolades, you can see here, one of the best places to work and grow. You'll see more accolades come through over the next week. We're very proud of that. Our employees are long tenured, low turnover and dedicated to our client success. And I've had a chance to spend time with many of them in call centers, such as the one we have in Orlando. I was with a couple of hundred folks back in December, and we'd have some roundtables, have 10 to 15 coming into the stretch, and I just want to get to know them. And of course, they would introduce themselves. They would tell me how long they were with the company, 25 years, 30 years, 22 years. And they would tell me that they were serving Client A, Client B, Client C, in many cases, for that entire time with a smile on their face and pride. That's important for us, very important because we're not just a technology company, right? We've got great technology. But when the going gets tough, when things get complicated, you need people who know what they're doing, bringing a level of support, right, to the participants. And that's who our employees are. Now our business model is not complicated, but the work we do is hard. Many of you in the room probably use us today. And if you've been with a large employer, you'll know what this business is all about. You start with the new company, and they're probably urging you to participate in the 401(k) plan so that you can gain the company match. In the fall, you're given an opportunity to enroll in your benefits, medical plan, dental, vision, voluntary products that are being offered. We're at the heart of all of that. It's our platform. It's our people. We support those transactions. We support the participants with every aspect of what you need to do with employee benefits. And not only do we do that at static points like annual enrollment or when you're first hired, but when it's most important, and that's usually at a moment that matters. Somebody in your family perhaps is sick. You have to find a doctor. You have to decide whether or not a particular procedure makes sense. Maybe you're planning to retire. Maybe you're starting a family. Maybe you just moved. These are all things that happen that involve various transactions, and chances are you're not all students of employee benefits. And sometimes, it can be a little complicated to understand exactly what you have and how these things work. That's what we do. We close that gap. We help make it easy for you. As I said before, we're highly relevant in the enrollment process and a lot more. We help the enterprise clients realize the return on investments. And these investments are meaningful. For a Fortune 500 company, you're talking about $1 billion or more a year that they're investing in the employee benefit portfolio. You want to see a return on that, no doubt. We help employees and families understand and utilize and appreciate the benefits that they have, which is super important as well. We'll talk more about that. And as I said earlier, we connect the participants with the extended ecosystems. We do this 200 million times a year. That's how many transactions we process. All of this is built off of our Alight Worklife platform. You see in the core, right, strong technology underpinned by the infrastructure that we have, our migration to the cloud, Alight LumenAI, which you'll hear more about, surrounded by great expertise. The people that I spoke about, what they do to provide customer care support, how they can help large employers to implement to be able to effect a change like an acquisition or a divestiture, all the things that happen in business every day, you need people to be able to support that, not just the technology. And we have the assets that really allow us to cover the full spectrum of employee benefits: administration, health and wealth, core well-being solutions, a robust navigation solution, a leaves business that's super important for our clients. And we support people not only when they're active, but when they move into retirement, right, with ongoing pension administration, helping them to choose a retiree health plan, things of that nature. The value of integration can be seen through a couple of different lenses. If you look at it through employees and families, it's a better user experience at the end of the day, greater understanding and higher usage of their benefits. For the enterprise clients, it's better value and better results. Higher perceived value or the appreciation is super important, efficient delivery and a single point of accountability. The more clients use our services, the more they know we are looking at the totality of what's happening. We've got the analytics to underlie that, and we can bring them lots of reports and great measures to show why people are doing what they're doing or why they're not doing what they're doing. Why are they calling? What are they asking about? Insights that allow our clients to be able to make design choices and vendor configuration choices to optimize their employee benefit portfolio. We have industry veterans on our team. I think we've got the best leadership team in the industry, bar none. You'll get a chance to speak with and see a lot of them today. It's a combination of folks who've been in this organization working with Alight for over 25 years. Folks like myself, who've been in the industry for even longer than that and some people who have joined our company recently who have a fresh perspective, which is super important for us, particularly in the areas of how we go to market and what we do with our technology. I love our leadership team. I've made some changes recently. You have this team in front of you today, and it's a team I want to go to battle with every day. In addition, we've refreshed our Board recently. And many of our Board members are here with us today, and I so appreciate you all coming in for this. We had a great Board up through late summer and into the fall. We're very fortunate that those Board members were there to guide us through the establishment of Alight when it was spun off of Aon and then the establishment of Alight as a public company up through the divestiture of the Payroll & Professional Services business. And then we pivoted, and as we're pivoting to become a focused employee services provider, it made sense for us to take a look at the composition of the Board. So I'm super excited that we've augmented the Board with diverse industry and functional expertise as well as individuals who have a deep knowledge of our business, the Alight business in our market space. So as I said earlier, I've joined the company back in August. I've been in this role a little over 7 months, and many of you have asked me this question. So what have you learned? What did you see? What do you think needs to change, et cetera? And I wanted to just share with you a few of those observations. So firstly, we have a license to lead in this market. I know that because I spent 2 months -- my first 2 months in the market listening. Listening to you all as investors, listening to the analysts who track our stock, listening to the third-party evaluators who you'll see a little bit later today, listening to advisers who work with our clients and, most importantly, listening to our clients, one-on-ones, dealing with difficult situations, working in renewals, being in new business pitches. I needed to get my hands dirty. I need to really understand, where were we as a company? What were we doing well? What was misunderstood? And what do we have to do to improve our performance to be able to regain that market leadership position going forward? And I learned a lot. And a few things that I think are important to note. One, I think in some respects, we lost the narrative. What do I mean by that? Think about the migration to the cloud, right? That's a big deal. We spent hundreds of millions of dollars to pull that off. But we didn't pull our clients through on that. Well, what does it mean for them? What's the so-what aspect of that? Why is that valuable to me, right? We talked about ourselves as a technology company, and many of our clients were scratching their head. Does that mean you're not going to do servicing anymore? What does that mean for me? So recapturing that narrative was super important and translating the value for our clients, equally important. We also lost some focus on our service quality and our domain expertise. And I heard this come through loud and clear. We used to have John or Jane or whomever is part of our team, years and years and years of employee benefit experience. They're not here more. What's going on? Don't you guys have the domain expertise that you need at the leadership levels and at the account executive level? That's really important to us because we need a trusted partner who understands what our issues are, who sees our challenges and can bring forward capabilities and solutions for us, not just try to sell us something. So that was an important amount of feedback as well and making sure that what we promised we're going to deliver, we delivered it with excellence. Our clients and our advisers want Alight to lead. I've heard this through and through. You didn't get here overnight. You got here over time. You earned it. We know who you are. We know what you can do. Get back to doing it. Like, you got it. How do you do that? I got to focus on the fundamentals. My team has heard that over and over again, nail the basics every day, have an excellence orientation, quality in everything that we knew -- we do, not only in answering a phone call or implementing a new client, but how we conduct business with ourselves and interact with our clients. Real simple things, excellence through and through and you'll hear that a little bit later from Allison. We also need to bring our clients along on the journey. I've always thought of 3 very simple questions that are super powerful: what if; why not; and the really important one, so what. So if we're coming forward with an innovation, if we have an opportunity to change how we're servicing them, whatever the case may be, we want to be able to answer those questions and really make sure our clients understand who we are, what we're doing, where we're going, why we're doing it and what it's going to mean for them at the end of the day and encourage them to push us to be the market leader and to innovate. And they're doing that, and we're engaging, and we're really excited about that. Our colleagues are front and center. They have to be trusted partners with our clients, and they have to be delivering service excellence. And I am very confident that we have the right team to do that. These are folks that have been around for quite some time, know what they're doing and know how to deal with the complexities that these large companies face day in and day out in our space. Our market opportunity is massive. Consider the opportunity to add value to our existing clients. We have about $2.4 billion in revenue today from our installed client base. The white space, the upside opportunity, if we did nothing but sell additional services and expand our relationships with our clients is another approximately $7 billion out of a total addressable market of $50 billion. I illustrated this on our recent earnings call. We're talking about our leaves business, where today, north of 10%, but less than 15% of our clients are using our leaves services. For those of you who don't know what leaves are, it's everything from a family medical leave, to a paternity leave, to short-term disability. And it's messy. It's complicated. And a lot of big companies still do that work in-house. There are competitors in the market that do it on a stand-alone basis, but the market in general has been okay. And we are in a position to change that by combining our leaves capability through the acquisition of the ReedGroup a couple of years ago. With our integrated platform, we are in a position to deliver a very different employee experience and a very different leave experience. And a number of our clients have challenged us to do that. And we're ready to hit that bar. And when we hit that bar, they're going to want that work to be done by us. And the opportunity for growth is significant. If you look at a typical client relationship, and you add leaves to it, that grows 30%. So that alone gives us an enormous opportunity to tap into that white space. We can achieve sustainable, profitable growth by holding and expanding client relationships as well as taking a modest share from the market. Think about that for a minute. Our commitment to growth can be achieved by our current client base. Our competition can't say that they've got to take share, right? And that's a hard thing to do. We play a critically important role for our clients' success. Employee benefits is an enormous component of the overall total rewards commitment and workforce and labor costs. And it's not going away, right? It's been around for a long, long time. It's a tax-advantaged component of compensation and will continue to be, in my view, and it's super important. That said, there are aspects of it that are underperforming today. If you look at some of the statistics that we've shown here, employees don't understand what they have. And that's not surprising because you're talking about a large array of employee benefits at the end of the day, and they're challenged as a result of that. How do I use these benefits? How do I gain access to these benefits? How do I get a claim filed in some cases? Not core medical. People generally know how to do that. But what if you bought a critical illness or an accident policy last fall? You probably remember that you bought that because it's a couple of bucks out of your paycheck. And when it comes time to use it and need it, you don't even know it's there. And we're in a position to be able to close those gaps and bring a lot more value and help with individuals who have an expectation that their employer is going to support them from a financial and health and well-being standpoint. Last week, we had 25, 30 CHROs in our offices upstairs for 2 or 3 days, doing some training work. And we had an opportunity to spend some time with them, and we floated this simple concept by them, and it seemed to resonate. Most employers are facing a serious benefits challenge today. You need the appreciation or the perceived value of the benefits to be greater than the actual cost of the benefits. And unfortunately, that equation is a little bit upside down today. People don't understand their benefits, so therefore, they don't appreciate them. And unfortunately, the cost of these benefits continue to rise, driven specifically by health care, but not exclusively. So we have an opportunity to change that equation. And you can get at that in a couple of different ways. You can take the cost out, right, lower the denominator. You can increase the appreciation, grow the numerator, or you can do a little bit of both. And we are in a great position to be able to do a little bit of both. In addition, when you talk to the CFOs and we've seen this through the CFO surveys, they're very concerned about the cost of benefits and, in particular, health care benefits. Why? They're going up 9%, 10%, 12%, and there's no abating in sight. I've been in this business a long, long time, and the health care cost challenges in this country are more acute now than ever, right? Chronic conditions continue to grow, new technologies, new drugs. There's no shortage of cost drivers, and it's unaffordable at the end of the day. And employers cannot continue to cost shift because most individuals are looking at a deductible that's several thousand dollars and an out-of-pocket maximum that's 2 or 3x that. And people on average in this country have $500 of savings. So the answer isn't I'm going to put more burden on the employee population, and it's not I'm going to take more money out of your paycheck. The answer is I've got to get at the core cost by getting people to engage more in the programs that are available to them that are designed to help manage those chronic conditions and take that cost down. And again, we're in a great position to be able to address that as well. I want to take a minute now and just get you all oriented to what we consider to be our profitable growth model. And I'll just give you a general orientation, and we'll dive into the specifics here. At its core is client management and delivery. We focus on retention. Why? Because we have a significant market share, we want to retain those clients, we want to expand those relationships. And of course, we want to add new services as we go. So let me dive into each one of these a little bit. Firstly, as it relates to retaining our clients, it's about focusing on the fundamentals and nailing the basics, as I've said before. It's about renewing every day, and Rob will talk to you about that program specifically and why that was such an important piece to how we're able to impact retention this past fall, which we talked about on our earnings call a couple of weeks ago. We need to bring deep domain expertise as a trusted partner. Yes, there's a sales process involved in many cases, and procurement may be involved. There could be an RFP. But the selling and the opportunity starts by listening and understanding what the clients' challenges are and bringing our capabilities forward in a way that really is consultative because we're in the best position to be able to help them, given the platform that we have and the relationships and the services that we're already providing. We have to deliver with excellence. People, process and technology, not just 1, all 3. This will result in improved participation at the customer level and improved customer satisfaction. And we'll show you some examples of that, that came through this year's annual enrollment specifically. It will also result in increased retention. We were up 8 points last fall with client renewals from the prior year. And we still see an opportunity for improvement there, which is massive when you think about how much revenue sits with those existing clients. Rob and Allison will talk you through specifically how we're doing this work and why we're so confident that we're going to be able to get back to the level of retention that is essential for our ability to grow. When you look at the expand and add, we need to bring best-in-class solutions across the entire benefits portfolio to solve additional problems, deliver that through the integrated platform to optimize the results. And if you think about the different ways that we can do this, we have a leaves opportunity, we have a navigation opportunity, we have retiree health solutions. There are a number of ways that we can use our current solutions to not only expand an existing relationship but to get into a new logo, right? The core benefit administration is a sticky business, and Fortune 500 companies aren't putting that out to bid in droves every year. So our opportunity to grow isn't by taking massive share of large ben admin clients. It's being able to go in there and help them with leaves and then expand that and say, well, that will work even better if it's on our integrated platform. So we're in a good position to penetrate new logos and, in particular, to be able to expand on the existing relationships. That strategy is bolstered by innovation and expertise, the core technology. The massive lift over the last couple of years to migrate to the cloud and the expenses associated with that are behind us. And now we're in a position to be able to take full advantage of those technologies and the nimbleness that comes with having not only our data but our infrastructure on the cloud as well our AI solutions and how we're applying that to our operations on an everyday basis. Deepika will tell you more about the technology and the platform advantages both front and back end, what happens with users, what the employer sees and also the efficiencies that we've been gaining by using those technologies in how we support our clients every day in taking cost out. I'm really excited about 2 value accelerants, and I'd like to take a couple of minutes to touch on each of these briefly. The first is AI, and what would a meeting be without talking about AI? You can't go to a cocktail party without talking about AI. We're not talking about AI. We're using AI, and we're using AI in dozens of ways today to really impact how we deliver our current services. But that's not what excites me. What really excites me is the potential that AI represents for our company and the competitive advantage we have as a result of 2 things: one, the breadth and the depth of our data lake. That's not something that you can buy. It's something that you get from millions of transactions with Fortune 500 companies over years. That is a massive competitive advantage for us. And we're able to cleanse that data and organize that data as we transition to the cloud so it's usable for us. We're in a position where we can train our AI engines and models to be able to continue to mine that data, and it's super exciting. And I can see an opportunity where in the not-too-distant future, we can start doing some things that can truly transform how we deliver the services and bring value to our clients every day as a result of having that asset and the great competitive advantage that it brings. The other accelerant that I'm super excited about is our partner network. So today, we have, give or take, 30 third-party partner relationships that are highly relevant to our clients. Our clients have used them. Perhaps they've actually contracted directly. They want them to be a part of our ecosystem. Each one of those entities have come to us asking for a deeper relationship because they see the potential with our integrated platform to bring them more individuals, to enroll in their programs, to engage in their programs. That's how they make money. An insurance carrier who has voluntary products makes money when individuals buy those products at annual enrollment or throughout the year. And we have an opportunity to increase that lift. And the same is true for somebody who might be in digital physical therapy or mental health or family planning. These are programs that our employers have put in place, and the utilization has been suboptimal. Those entities make money when people get hooked up with them and they go through those programs. And increasingly, it's becoming an existential question. Big companies are stepping back and saying, we got 25, 30 of these relationships in place, and we're not sure they're actually performing well. In some cases, we know they're not. So maybe we should turn that off. And we're saying, no, no, no, don't turn it off. Let us actually help improve the performance of it. The employer wins, the participant wins, our partners win, and we win. And you'll hear more about that from Greg later. Our growth strategy and execution will deliver high-quality revenue growth, margin expansion and free cash flow. We have a clear line of sight to mid-single-digit revenue growth. We have a defined path to 28% margin in 2026 and even more in 2027. We have double-digit free cash flow growth. We have a cumulative free cash flow number of $1 billion over 2025 through 2027. Think about that, $1 billion of free cash flow accumulation from a company that today is currently valued at $3 billion. We are poised to deliver significant shareholder value. Jeremy will go through the details relative to how we get there in the crosswalks, and I'm sure you'll have some questions, and I'll come back up on stage and take those questions with you and with Jeremy. Looking forward to that. So I hope I've set the stage for what you should be taking away and why I'm so confident that we have the right leadership team, we have the right business, we have the right position in the marketplace to be market leading and to be able to deliver on these numbers and create significant shareholder value. Now I'd like to turn it over to Rob and to Allison. Thank you all for joining us in person. Thank you all on the phone for being with us. Look forward to a productive day.

Great. Thank you very much, Dave. Pleasure to be with you all this morning. My name is Rob Sturrus, Chief Client Officer at Alight Solutions. And joining me is Allison Bassiouni, our Chief Delivery Officer. Allison and I have both been with the organization for 26 years each -- 27 years each. We know this business inside and out, the good, the bad and the ugly. We cannot be more excited to be part of leading Alight going forward into the future. Thank you. Today, we want to talk to you about the powerful integrated team that we have built across client management and delivery. This is a team that is deeply committed to serving our clients and taking care of 35 million participants. A couple of things to take out of our section today. First, I want to talk about those 35 million participants. As Dave said, we are with those participants through the ups and the downs throughout their lifetime. Think about this, the biggest moments of celebration, promotions, a new baby; and the lowest of lowest, a scary medical diagnosis, the loss of a loved one. We are with them to help them navigate their benefits ecosystem, and we do it in an integrated manner in the way an employee lives their life. One of the challenges that employees have when they go through one of these events, Dave said they don't know what they have available to them. They also don't know what they should be thinking about in totality. So we have the ability uniquely as Alight to bring that together for them and guide them through all the steps that they need to do. The second thing you'll hear from us today as Allison is going to spend some time on where we are with -- in our delivery operations of bringing some greater operational efficiency, which is going to continue to drive the stronger margin profile that Dave alluded to a moment ago. And finally, we'll talk about our approach to client management and reinvigorating our retention strategy and our renewal strategy that you've heard about. As Dave said, our business model is not complicated, but the work we do is very hard. We serve some of the most complex organizations out there like nobody else can in this space. To do this, we need a very strong partnership between delivery and between strategic client management. And that is why Allison and I and our teams are very, very, very closely collaborating in order to serve our clients and their employees. So let's bring it to life a little bit. Starting with client management. We have recently repurposed approximately 100 highly experienced account execs and supporting roles to cover our top 200 accounts. These account executives are expected to be intimately familiar with the clients. What are their strategies? What are their goals? What are their objectives? What are their challenges? What are their vacation plans? We expect them to know inside and out intimately with these clients. Similarly, in partnership with our delivery teams, we expect these account execs to know how delivery and technology is going. What is the quality with the client? And more importantly, what is the client's perception of the quality? This is to avoid any surprises and allow us to effectively manage the relationship. The laser focus allows us a constant 360 pulse on our accounts. These account executives that I just talked about that we repurposed have an average of 21 years of experience at Alight. If you look at industry or domain experience, you're getting closer to 30 years. They bring unparalleled domain experience, and they serve as a hub at Alight, connecting the product, technology, commercial and delivery organizations. These account execs serve as the voice of the client to Alight and the voice of Alight out to the clients. Relationships matter in this business, and being considered a trusted adviser requires us to deeply understand and know our clients. Quite bluntly, nobody has the depth or the vastness of a talent pool in this industry like Alight does, and that matters to our clients. This allows us to serve some of the largest and most successful companies out there, 2 of which you'll hear from later today. As you've heard, this is about 70% of the Fortune 100, 50% of the Fortune 500. These are well-known household names, and we are incredibly proud that we're a key engine to driving their employee strategy and optimizing their outcomes. Now we've spoken about the deep expertise that we're bringing to the accounts. We've mentioned that, that really matters to clients. With our cohesive client management group, we're now able to implement a programmatic and consistent approach across all clients. This is more important than ever because the world is so fast moving. And with that, our clients' expectations are fast moving. We need to stay ahead of those expectations, and we need to do it with intentionality and with focus. So for example, our clients, probably not all that dissimilar for many of you, have more and more need for greater insights, faster, deeper insights to understand and assess how their benefit programs are doing, how they're being utilized and whether they're getting an ROI on that. Rather than our individual client teams trying to navigate through these changing and fast-moving requirements, we have deployed enterprise-wide value scorecards with deep data utilization and optimization data in there. We now arm our teams with that. So our teams can focus on the richness of the conversations that they need to have with clients and the value that the clients are getting from Alight. Our clients are also being asked to streamline and simplify regularly. We are meeting that need with a singular voice of accountability via our account executives in the client management group. And finally, and perhaps more importantly, as we look at continuing to renew -- sorry, something with the slides. As we look to continue to renew and grow our business, you've heard about our renew every day program. So I am going to speak to that and give you more details on why we got the results we got in 2024 and why we believe those will continue in 2025. Very excited to talk about the renew every day program. But before I get there, I want to hand the stage over to Allison to give you some updates on what's going on in delivery.

Thanks, Rob. All right. I know why you're all here today. It's not the financial results. It's all about delivery excellence. So I'm very excited to be here and be in this role and represent the 8,000 colleagues that support our clients every day. We're going to talk a little bit more about what that is, but those are the 8,000 people that are really here to make sure we deliver exceptional value to our clients and the results that they are looking for. We work closely with Rob's team, but I thought I'd share a little bit more about what does delivery really mean. And that's the middle section of the graph that Dave shared earlier. We're the benefits experts behind everything that Alight does. First, it's the customer support specialists. They help people navigate health care, retirement, enrolling their benefits and manage a leave if you need that. Customer care is our agents that take digital and live Tier 1 interactions. Client success is our teams that help clients implement our solutions and products and then serve them once that's live to deliver on the outcomes that they're looking for. And finally, and last but not least, is our delivery colleagues. They're the day-to-day operators of everything that we do. What does that mean, Allison? I'll give you 2 simple examples. In fall, as Dave mentioned, we have our Super Bowl of the year for health solution, which is annual enrollment. And after that's over, we have to send millions of records to the health plans to outline what you've chosen for next year. So when you get that ID card in January 1 for your health care, it's accurate, it's right, and it reflects what you elected. Similarly, when you get your paycheck, everyone likes their paycheck to be right. The health care deductions, the 401(k) deductions, our teams make sure that when that goes over to our clients, that it's correct and you get paid accurately. We're also here every day to serve clients and participants in the channel that matters to them at a time that's convenient for them. We do that via the website, via the mobile app, via e-mail, text, virtual assistant or chat, whether that's online or live. And so I'm really excited about some things we're going to refresh the delivery organization as we have everyone together, and we're focused on 3 key things: delivering with excellence, which Dave talked about; up-leveling our customer care, which Deepika will also get into a bit more later; and innovating with AI and automation. We've done a lot with the Alight LumenAI in the participant experience. We're doing more now to actually support our customer care agents and our delivery colleagues to make their lives easier, which also creates efficiencies for our business. We expect the outcomes of this to be operational efficiency, reduction of manual efforts with our teams and an ability to deliver faster, more accurate results. This is quite an eye chart on the slide. The pretransformation, we've had some bumps over the last couple of years with delivery. And with the cloud transformation that Deepika will discuss and our one platform under Alight Worklife, we've set the stage for some things we can do differently within the delivery organization. Essentially, we're moving from a solution central approach to a balance of domain expertise and centers of excellence. And those domain expertise are health, wealth, navigation, leaves and retiree solutions, which Dave talked about. But we've also deployed 3 centers of excellence so far, which covers our care organization, our global delivery center and engagement services, which supports communications across those solutions. And over the course of this year, we're pulling together the implementation teams, project management so we have one focus on implementation. We've created a group around delivery excellence and innovation to really drive reduction of manual processes, an improvement in modernization of some of our delivery items. And then lastly, our client operations team will work closely with Rob's team to make sure that for those 5,000-plus clients, they have a similar Alight experience regardless of size and complexity. So let me give you an example of how this will look and some of the benefits we expect to see. In implementation, we have a process where we gather requirements from our clients. This is the fun stuff. So if you're a retail client, you have usually part-time and full-time employees. Those employees have different benefits. We need to know what those rules and obligations are so that when we set up the solution, things happen correctly. In parts of our business today, we use a cloud-based tool that actually allows us to capture requirements through questions. It tracks changes. It tracks client sign-off. We have version control. And in other parts of our business, we're still using Microsoft Word, which most of you probably know doesn't have those same capabilities. So over time, we'll move to a common modern technology so that process is faster, drives less defects, and we have more satisfied clients at the end of implementation, and happy clients refer other clients, and they buy more services. So we're really focused on driving efficiency and cost savings, leveraging our scale and driving innovation and excellence for our client satisfaction. And lastly, but really important, I'm really excited to share that we have a recent development where we have refreshed our relationship with a very large supplier we use in our delivery and technology ecosystem that will give us more flexibility in how we work with them and drive more accurate results. So I want to make all this real into what does this actually look like for our clients and for our participants. So over the last 2 years, we've driven a 2% increase in digital-only interactions. And we've done that in a variety of ways. We've gone from disparate call center tools across those solutions, very people-heavy analytics and client-centric teams within care. And we've moved to a consistent agent desktop, advanced channel analytics using AI that will help us identify gaps and things we need to improve on. And then specialty centers of excellence where we need that, balanced with client-centric teams. We're heavily focused on AI and the care experience. And Deepika will elaborate on this a little bit more, but I wanted to give you 2 examples of how we're doing that this year. One, we're introducing AI into our training process. We expect this to create a reduction in training days, higher satisfaction from participants because our agents are more effective and more accurate. What this will do is generate actual role play simulators, which everyone loves a role play, where AI can actually coach and teach, and you'll interact with them, and then it will give you back feedback and reporting to the managers. So they know how well the performance of that agent is. In addition, we're introducing agent assist, and this is AI that will be listening to the calls, provide sentiment analysis, but give the agent, hey, here's the answer to the person's question that they're asking, or here's the next best action. You might want to refer this person to a health pro. They have a medical condition. Here's what you need to do to do that so they have additional support from a Tier 2 specialist. And that's coming this fall with enrollment. We're really excited about that creating, again, more accuracy, driving higher participant satisfaction, which ultimately increases our client retention. We're not just automating and using AI in customer care. We're doing that in delivery as well. So we're starting to use Generative AI in our testing process. And as someone who started 26 years ago as a tester, this is very exciting to me. But we're using AI to talk about test plan generation, actually execute tests, et cetera. And I'm going to get a very, very basic example. If you've ever contributed to a health savings account, the federal government every year sets a limit of what the maximum contribution is. In 2024, that was $4,150 for an individual, in 2025 that's $4,300. Previously, we've had to create a test script that had those maximums in it to make sure it was working correctly. You might have had to actually manually execute that test script. Now we can create a generative AI prompt that says, what is that HSA legal maximum and the test plan will be updated with that. The test script will be updated and that will actually happen via automation. That was all done by a person before. So we expect, over time, while it's early in the application, a reduction of hours and testing by 30% to 50%, and obviously, an increase in quality and accuracy, fewer defects as we take more of the human element out of that. Finally, I want to give you a real-life client example. This is just one client case study and so extrapolate this amongst all of our clients. We created a client where we added much more self education to the Alight Worklife platform and had an AI chatbot with great results. So that self-service education paired with the AI chatbot drove a 25% reduction in live interactions, which saved the clients' employees over 200,000 hours by not having to call and ask for support, and we did that while increasing customer satisfaction by 4 points. So really excited about how technology, coupled with our great services and those 8,000 people can drive excellent results and value for our clients. So we talked about client management, the fun stuff delivery. And now Rob is going to talk about how those two things come together to drive client retention and growth.

Great. Thank you so much, Allison. Very exciting stuff, especially if you are a benefits geek like we are and our clients are. So a lot of great stuff going on. We've talked about the -- how we drove an uplift in our renewal rates. This was not coincidental but in order to continue to move that needle, what do we need to do? There's 4 key focus areas that we need to be in tune to continue to drive the renewal rates. First, as Dave said in his opening comments, we need to own the narrative, we need to regularly communicate through our words and our actions that we are a technology-enabled services company. That is what our clients expect and that is what we need to be. We need to be intentional about how we communicate our value both internally and externally. When we're talking to our colleagues, our clients, the broader ecosystem, we need to make sure people understand who we are, what do we do and where are we going. Secondly, we need to nail the basics, and that's a lot of what Allison just spoke to in her section. That is absolutely critical. I cannot be more excited about what Allison team -- Allison and team have done and what they are doing. It will resonate with our clients. Thirdly, we need to have a compelling future innovation road map. You're going to hear a lot about that from Deepika in the next section, a lot of exciting stuff in there to continue to build on. And then finally, by looking at our accounts more holistically, we unlock the potential for strategic expansion through proactive renewals and adding on additional services. That's where my partnership with Greg, who you'll hear from later, comes into play. So we continue to increase the client lifetime value for Alight. So what is this Renew Everyday program that you hear about? Throughout a client's life cycle journey with us, there's different logical points in time where we can drive specific actions to do things like monitor the engagement, keep the relationship fresh, unlock expansion opportunities and drive higher retention rates. We look at the life cycle as having 3 phases. In Phase 1, this is coming out of a new service. So this could be a new logo or it could be an add-on of a service of an existing client. This is a time where we need to be laser-focused on making sure that first impression, that first out of the gate is as strong as possible. This is where we're taking steps to make sure that those first days of service, those first weeks, those first months are meeting Alight's expectations and more importantly, the clients expectations. This is also an opportune time for us to revisit conversations that went on during the sales and implementation process of other things the client might have been interested in but weren't ready to consume at that time. And is it right for us to reintroduce those and bring that forward in the relationship. Now Phase 2 is arguably the most critical phase. This is the middle of the engagement. This is what I call the riskiest phase. This is where -- and remember, our relationships are multiyear. So this is where we have the risk of complacency or staleness. This is where people can say, yes, it seems like things are going well, so on and so forth. We need to be very intentional and focused to bring efforts forth in this Phase 2 to make sure that we drive this relationship in the right way. So to avoid these pitfalls of staleness, specific actions in Phase 2 are things like deep data utilization analysis, optimization analysis, are people using the system? Are they using it as they expect? Is the client getting the return out of it that they expect? We also look at this phase to do some independent reviews of the account. Sometimes, our teams are so close with clients, which is a blessing, but you get too close to a client, and sometimes you don't see the bigger picture. So how do we have some independent reviews to make sure that client is truly getting the best of Alight. And most importantly, in this Phase 2, we want to make sure that, that relationship is reinvigorated. Is this client as excited about Alight as they were on day 1? And if not, what do we need to do to get them there? And are they getting as much value as they expected? Finally, we move into Phase 3. And Phase 3 gets into a little bit more formal strategic expansion of the account ideally coupled with additional services so that we can continue to retain the client and grow it with additional services and solutions. As you can imagine, these phases are not linear. Ideally, we are in a perpetual cycle with clients, constantly adding on some new solutions and bringing them back to Phase 1 and making sure those solutions land very well and continuing through Phase 2 and 3, returning back to Phase 1. Our Renew Everyday program monitors these clients on an enterprise manner. We have amazing colleagues that clients highly value facing off and working with our clients every single day. Our Renew Everyday program, though adds a centralized governance to make sure that we can see across the entire spectrum, and we can compare and contrast our client relationships and give support to our teams when they need it. So we are never surprised by clients as they hit the end of a contract term. Let's bring it life with a real example. So to set this example up, this use case involves a global employer. They have about 40,000 employees in the U.S. They've been with us for about 20 years, and they have multiple lines of service with us. Recently, they conducted a market check, and we were at risk of losing some work. Truthfully, we had heard through the great find that we were losing work. But we deployed our Renew Everyday strategies. We immediately set out to have a reset of the relationship. We did workshops on resetting that relationship. We then moved forward to data utilization workshops. We moved forward to optimization workshops that allowed us to bring data to the client. And we could show both qualitatively and quantitatively the value and the benefit the client and more importantly, their participants were receiving from our services. Ultimately, this changed the trajectory of the client. We not only renewed and retained all the services that we had, but we actually added on additional services. In this account, remember that we were going to lose a portion of the work. We ended up increasing the annual recurring revenue by 30% on a base of $6 million. This is a powerful use case and a great example of how a proactive and structured approach can both retain our clients and grow our clients. I'm sure this is not lost on any of you all, but the impact of retention cannot be understated. Better retention means we start each year with less of a go-get and more certainty. A big part of why we need to consistently nail the basics and own the narrative is to continue to ensure the market knows who we are, what do we do and where are we going? Unfortunately, this was not fully the case in 2023. And because of the long nature of our contracts and just how implementations in the business goes, that impact is still being felt here in 2025 but our Renew Everyday program has driven strong progress. We saw the rebound in 2024 back to historic renewal range, and we expect this to continue in 2025. We actually see some additional improvement potential, which Jeremy will get into a little bit more in his section later in the day. In summary, for our section, Alight is uniquely positioned to integrate the totality of the benefits ecosystem to an employee. Allison and I are so excited to be part of the leadership, driving delivery excellence, operational excellence, strong growth in retention and happy clients and colleagues. At this point, I'm thrilled to invite our CTO to the stage, Deepika Duggirala.

Hello, everyone, and thank you for being here today. I'm Deepika Duggirala, CTO for Alight. And in this role, I'm responsible for our technology organization and driving innovation across AI automation, to serve clients and participants and also accelerate our service delivery excellence. Over the last 4 years, we've made investments across technology to transform and completely position ourselves to accelerate innovation and drive client value. So I want to start there. I want to start by talking about our technology transformation and everything we've accomplished on that front. And then I'll talk about how the strategic investments truly set us apart and enable us to lead the market forward. And then finally, I'll round out with what's next, the incredible work our teams are doing, the initiatives that we have underway to further enhance value. So our multiyear technology modernization journey was completed last year and through these efforts, our goals were to transform the participant and client experience to improve efficiency and to deliver savings for our company. And we did this by tackling both our front-end interactions as well as the back-end foundations of our systems. So for our front end, we introduced the Alight Worklife platform, a common integrated experience that is the ecosystem connector across all of our solutions and is the backbone of all the interactions for our clients and participants. So it drives a better participant experience, but more importantly it's driving through digital adoption and is our competitive edge, if you will. And on the back end, we drove efficiency. So we moved from our physical data centers to the cloud, but we did this alongside eliminating redundancy, streamlining our operations, adopting modern software practices and cloud-native technologies that truly elevated for us, system stability and performance as well as speeding our ability to bring innovation to the market. There are metrics here that talk about the impacts of all of the work we've done, but what I do want you to take away is that this drove about $75 million in annualized savings for our company, so it was very impactful for us. The last Investor Day, we were still in the midst of this transformation. We completed that, but we also had other significant accomplishments that I did want to call out. Allison talked about our call center operations. We up-leveled those operations through automation as well as AI-enabled capabilities. But we also reduced the call center call volumes because of digital adoption, kind of making sure we're addressing the needs of the customers through our other avenues before they ever have to make a call and have the conversation. We introduced LumenAI, our AI engine that's built on the foundation of our unified data lake, the data lake that we brought together as part of our cloud migration. And we continue to deliver innovation across our best-in-class solutions at the same time. And those innovations did help us stay on the cutting edge of HR and benefit trends. We've improved benefit accessibility by making sure Alight Worklife is available in the tools that employees use on a daily basis, for example, with Microsoft Teams. We enhance self-service features with Health Pro checker, Health Pro experience and symptom checker capabilities. We launched new partnerships, we expanded our APIs and we put a lot of effort to program optimization to drive utilization. For our colleagues as well, across delivery and technology, we brought AI and automation tooling to help them deliver with quality and speed. And the results are visible. Our digital participant satisfaction is the highest it's ever been. 62% of our clients today are leveraging AI in our platform. And that number is growing. We anticipated it will be up to 80% by the end of the quarter. And we've improved efficiency through simplified interactions and modernized experiences that do drive time and cost savings for us internally. I talk a lot about numbers and what we did, and I wanted to make it real. Allison referred to our annual enrollment. It is that significant 6-week -- 6- to 8-week period between late fall -- late October and early December, where 1 in 13 Americans use the Alight Worklife platform to make their benefit elections for the upcoming year. And that's a really critical time for them. We cannot afford for the system to have any issues because they need to have the ability to go in and make the selections they want with what's right for themselves and their families. We had minimal disruptions driving the trust and confidence that we needed from our clients and their participants during this experience and the enhanced performance ensured that they had a great experience as they did this navigating through their various options and making the choices that they need to. And the mobile adoption tells us that our efforts to meet our participants where they are in their channel of preference is bringing rewards to our efforts. So really investments driving real tangible improvements across our systems. So when we think about the work we do and we plan for it, we think across 3 categories transforming the benefits experience. So this is making sure we have a world-class experience, simpler, more intuitive interfaces for all of our users, powering smart workforce strategies, this is about ensuring that our clients and plan sponsors are able to design benefit programs that drive engagement for their employees and deliver the return on their investment that they want, and to enable best-in-class service. Service is at the core of what we do, and we want to make sure we provide our colleagues the tools and capabilities they need to have those meaningful interactions with our clients. And all of our activities are powered by Alight LumenAI. And I mentioned LumenAI a couple of times, so maybe I'll take a moment and talk about it. AI has become a bit of a buzzword but for us at Alight, we've been doing this for a while, and it is integrated into our solutions. Our AI models are grounded in the millions of data points that we have over the years and years of experience serving millions of people and we do this in a secure and governed way. So we're able to create a picture of an individual, if you will. And once we have that unified understanding of an individual, it enables us to make sure that we have specific personalized guidance available for that individual based on their own personal story. We have the ability to take the collective intelligence of the employee base and inform our clients about the trends and the needs of their employee base so they can make the right decisions for them. And for our colleagues, as we show up to work with our clients, we're able to provide them the insights that they need to be consultative and to have effective conversations. So our AI and our data is the power behind a lot of the work that we do. And it's not conceptual, as I said, we've got real AI use cases running in production today. We have users using it today in our systems. Our easy enroll predictive enrollment guidance system offers predictive insights based on the individual, as I referenced it. We have generative AI-based document processing that we use for processing dependent verification and spending account claims that are otherwise typically very manually intensive. And we've invested in technology to drive quality and efficiency across our technology team. So transforming the way we test and bring releases to production. And the results for us they speak for themselves, right? The AI-enabled easy enroll, participants that use it were able to enroll 50% faster, so twice as fast as the regular enrollment flow. Our document processing solution has taken what takes multiple days to process those documents down to same day and as we drive more adoption towards this, we know we can move towards a more real-time experience there as well. And with 50% faster testing, it means we're able to test more often, bring more consistency, bring more quality into our solutions as we're able to ensure that coverage across all of our releases. So you heard a lot about this, but let me bring a little bit to life here. These are some screen shots from our call center technology. So as soon as somebody calls, they work with the interactive voice response. Our interactive voice response not only gives a personal welcome to the user. It also authenticates them and it makes sure that it understands what they're looking to -- what they're looking to solve so that they can route them to the right agent. Getting them routed to the right agent right away is extremely important because they're looking for expert information and there's somebody in our staff that can do exactly that for them. Once they are in the call, our AI agent assist steps in. This is where it can start to provide sentiment analysis, but we're providing at their fingertips for the agent summarized information served up to help them assist the customers appropriately. So rather than looking for the documents and looking for the information to refer them to, the information is served up and they're able to be present in the conversation as they do this. And finally, we generate a call summary, and we're building training tools into this. Summaries that we can then use to basically train our agents and drive faster onboarding. We also have AI integrated into Alight Worklife. So at this point, we're all accustomed to our Google searches where we get our search results, but we get a quick summary up top. Well, that's what we're building into Alight Worklife. So we definitely have the search results when somebody runs a search. So in this case, someone was looking to find out what their FMLA benefits are and we have all the documents that are returned down below, but our Alight LumenAI is scanning those documents and generating a concise bite-sized summary so that the user knows the information that they're looking for. This is extremely important because as you think about it, if the answer is not easily available in Alight Worklife, the next step the user would have to do is make the phone call, work with a call center agent to get the answer. The more we can do to serve their needs digitally, the better we retain reduction in call volumes and the ability for the agents to handle the complex interactions. And likewise, for employers, we're building a state-of-the-art insights and analytics product. This is actually a screenshot from our leaves inside product that is being adopted this week. So it's really exciting to be able to show this here to all of you today. And this is providing cross-solution intelligence. So it's actually breaking across the data silos of our individual solutions and providing insights that cut across all of these. And then the other box in there is curated Generative AI prompts that employers can use to dig deeper into the data, to get specific insights that are responsive to their questions and their needs. Generative AI can offer very precise recommendations and it enhances decision-making and efficiency and speeds up the process. All of our AI models, as I said, are powered by our data. And we operate in petabyte scale. So what does that mean? If you listen to music, a petabyte is 200 million songs, which is twice as many songs as there are on Spotify, and you could listen to a different song every day for 1,900 years with that amount. So pretty compelling. And when you've been in business for 40 years and you have the broadest range of solutions and you serve the largest, most complex enterprises in the world, your data reflects that breadth. Our data reflects that breadth and scale of our experience, and it is our differentiator and that is the transformative power of the Alight systems. So looking ahead, we're continuing to deliver these intelligent connected solutions simplified cross-solution planning tools, just providing comprehensive guidance to participants as they navigate across Alight Worklife, right? But it's still self-serve. So what we're working on next, which is really exciting, is a future where Alight Worklife can anticipate the needs, provide intelligent guidance but also activate the workflows and actions that are needed. So similar to our experiences with our favorite ChatGPT type tool, right? An employee is able to go in and say, we're having a baby or I just got a difficult diagnosis, I'm looking to save more for retirement and Alight Worklife can marshal across all of our platform capabilities, the solutions, the workflows, the opportunities. What are the things you need to do with your medical benefits and your wealth savings? Or if you need to get a second opinion with a doctor or start a lead workflow to be able to activate all of these things without having the employee navigate across those. That's a transformed experience for the individual, and that's how we transform the benefits industry. We're also enhancing the tooling and insights that we provide to drive better decision-making and to create a more self-service experience with our tooling. We want to enable employers to really interrogate their data to identify trends, things that their employees truly care about. So that we can generate the actions that are necessary instantly using AI. This benefits the employers as they're looking to identify insights, identify trends, what is it my employees care about? Make the change, but it also benefits the other stakeholders in our business. Our partners to work with employers to identify programs that can drive utilization and ROI. And we can exclusively do this because of the data we have across the solutions and across the experiences. And we'll continue to expand tooling for our colleagues. We really want to bring automation and AI to bear so that we can elevate service delivery across our landscape, right? The collective intelligence of the data that we have means that rather than having individuals have to do the implementations, we will be able to do auto configuration, automatically generate the change requests that are needed, run the test scenarios that need to be run to ensure that we can speed up the process of implementation, not just to make it smarter but -- faster, but to also make it smarter and much more efficient. Those are the capabilities of AI, and those are the capabilities we're working to bring to Alight Worklife and to the experience for our clients, the participants as well as the colleagues across Alight. I'm really excited about the work we've done and everything we've been able to accomplish but I'm even more excited about the opportunity we have right now because the infrastructure is in place, and we can take Alight further and with innovation around AI and automation and a product road map that transforms the experience for all stakeholders, I know that we're in great shape. Thank you all for your time today. We'll take a 10-minute break before we go to a panel with our third-party evaluators. [Break]

We'll give folks just 30 seconds more to get settled. It looks like you're all getting back into your seats. Welcome back. Hopefully, you had a chance to freshen up your coffee, connect up with the colleagues, perhaps some that you haven't seen in a while. I'm really excited about this next session. This is, in many respects, what some would consider a highlight for today because we have special guest stars that have been in this business a long, long time, folks I've known for a long time and folks I have a tremendous amount of respect for. It is absolutely my pleasure to introduce Kathleen Dillon with Herronpalmer; Jamie Curcio with Curcio Webb; Mike Hager with Alterity. These 3 individuals and the companies that they work for or in some cases, have a name sake to are critically important to us and to our clients. Collectively, they probably represent, I'm guessing 70%, 75% of the current revenue that we have on our books. These are the biggest companies in the world who turn to folks on their team for advice. That advice consists of, do we stay with who we have or do we look at somebody else? So more traditional RFP processes. But also how are things working? What could be improved upon? Should something be audited? What are the current capabilities? What are the future capabilities? All of the things that are integral to providing advice in employee benefit services delivery, which is our business. So when I think about our relationships with the TPEs, pretty darn important that we have good open relationships with an opportunity to get the feedback that's so essential for us to know how we're doing but as well for us to be able to share with these TPEs what we're doing. And a lot of that you heard this morning, but bring our value proposition forward, make sure they understand what's on our road map, make sure they understand the so what, the why not and the critical questions that I referred to in my opening remarks. And we do that in a number of different ways. We do that in actual client situations where we're sitting down and we're working through some things. And we do that periodically with our teams coming together. And over the last, what, 2 or 3 weeks, Jamie, I think we had a whole afternoon session with your leadership team and my leadership team, 4 or 5 hours together in the room and then last week, Kathleen, we did the very same thing with Herronpalmer, and it was awesome. It was awesome for us to hear that feedback and it was awesome for us to have an opportunity to talk with these folks about where we're at and where we're headed. And Mike, I know we're do up. I think it's next week with Alterity and I'm involved in every one of those because it's that important to our organization. So we have an opportunity today to hear from these TPEs. I'm going to ask them a few questions, and then we'll have a few jump ball questions as we go. And hopefully, you'll walk away with a better appreciation of what's on our clients' minds and what matters in this business and kind of where it's headed, okay?

So with that as our starting comments, I'd like to maybe start with you, Kathleen. And believe it or not, we're going to set AI aside for a minute. We'll get back to it. What -- if we can, what trends are you seeing in employer expectations for the Benefit Solutions? And what are the biggest gaps in today's benefits market?

All right. Well, first, I just want to say thanks, Dave, on behalf of all of us to you and your leadership team for having us here. I think it's a pleasure to be part of this dialogue. So thank you for asking us to participate. I think with this question, the first thing that I think of is a recent client advisory board meeting that my own organization held in February. And we asked a similar question of the client board. And almost unanimously, we got a somewhat surprising answer for all of the progress that's been made in integration and cross-domain user experience in the last several years. And that was that they're still looking for that kind of almost Holy Grail portal and mobile experience for their employees and participants in Benefit Programs. One of the client advisory Board members actually went full Lord of the Rings on us and said, he's looking for that 1 ring. So you know how it goes, 1 ring to rule them all, 1 ring to find them, 1 ring to bring them all, 1 ring to bind them, right? And we saw what an ominous and weird analogy, but it was pretty good. But at the same time, it's pretty apt, right? So why that analogy and why now? And it resonated with the rest of the Board and really the first layer, right, the ruling layer, everybody's got it to some extent. Alight has it to a great extent, right, Worklife. That integration across multiple domains, very broad, also fairly deep, right? And a lot of control, right, everything in one place, but a lot of control over access, accessibility, eligibility, security. So there it is, right? But I think the reason for the analogy really came from the finding and bringing and binding aspect of this, right? If you think about what's happened in the last 5 years since COVID hit, right? So now we're all talking about this, it's been 5 years. There's been a proliferation, like an exponential proliferation in the number of solutions, and you talked about the partner network, right, the number of solutions out there, whether it's condition management tools and programs, right, like Livongo, whether it's financial wellness capabilities, which themselves are really evolving like a bright side, right? There's a prevalence or a proliferation rather of solutions that are available, that clients want to utilize that they want to bring to their employees and at the same time, we cannot avoid talking about AI, right? There's the arms raised that is AI. And so how does that help? And I think in that find and bring layer, right, what employers are looking for is how can I get? And you saw the drivers are all the same, right? And Dave mentioned, attracting, retaining developing talent, right, the cost drivers that are at play in employee benefits today. The financial instability situations that participants face the health hardships, right? Those are all drivers that are still there. But there's so much now that people need to navigate to really take advantage and even be aware of the solutions available to them, that clients are looking for that layer, where frankly, data and AI live so that providers in the ideal 1 ring situation can literally almost go out and get participants and bring them in and introduce them to those capabilities at the right point in time and buying them to the solutions that fit best for their needs at that moment in time, right? And then, of course, there's that how do you really bind a client or an employee out of loyalty? There's that layer that Rob and Allison just talked about, right, around the nailing the delivery, right, nailing the basics, because inevitably, participants are looking for navigation deep into pathways that are going to help them and they're going to have to be sure that the system calculated their benefits correctly or that the representative on the phone is answering the question correctly, quickly and getting me into the right place, right? But so I think that -- it was interesting to us that's still a gap even with all the progress and integration. And it's really something to think about how providers can now capitalize based on the data. And I know we'll talk later about AI, those capabilities that now enhance the situation.

Kathleen, something you said really resonated with me. Think about your own lives, right, as participants. If you reach out to a service provider, and the initial encounter is one that doesn't make you feel like we know what we're doing or that you trust us, right? Something may have gone wrong in the initial interaction. It's really hard to gain that trust and help them with the navigation, help them to connect up to the other benefits that exist, help them to utilize what's out there, right? So when we say nailing the basics, it's not only nailing the basics at the enterprise level, it's making sure that those first encounters with participants are good ones so that you start to establish a level of trust, and you will then allow that entity to be able to guide you to the next best action.

Dave, just a quick follow-up because I like the analogy with a single ring. We're seeing more, I call it more of a participant engagement portal. So I think really, the key is to not only to get that engagement to make it be meaningful. So if you're able to get the participants, the first time they engage with that to actually offer up some information proactively offer up things because you've had some insights on them, they're going to come back. And I think the frustration with a lot of clients is they have to steer them to lots different places. So I think that there is this movement to can I get a single place where I'm getting meaningful information. So from the employer perspective, surfacing the right messages at the right time; from the employee perspective, they go there because they got something that was worth.

They got something. And also inviting them the employees, right, to share data that may be beyond your environment because that helps that bind right to be even tighter. If you know more about me than you did yesterday when I came in, now you can store that and leverage it to the extent I'm comfortable with it to help me even more precisely down the road.

So maybe let's pick up on this, and I'm going to turn to Jamie and ask as you talk to your clients and you think about the challenges that they're facing, how do they prioritize this whole employee experience? Do they think this is something that they should be investing more in? Or is this sort of a needed to play? Just how would you think about that?

No. I think they absolutely are. But I just wanted to start out kind of by saying that employee benefits outsourcing is absolutely here to stay. We do have some clients we were talking at dinner last night about there's a few organizations that haven't yet outsourced. But in my 32 years of doing this, we've only had 2 clients that have taken administration of their benefits back in-house and their benefits departments are not happy about it because it was mandated. So it is absolutely here to stay. And there's been such an evolution in the business because when I started consulting in the business, the benefit professionals within plant sponsors were expert at benefits administration, and that is no longer the case. And so our clients are depending on organizations like Alight to really help them with dealing with the day-to-day operations of employee benefits. And for the most part, they're not coming back in-house, and that's been challenging. And I think the other thing that's challenging within the industry is about 15 years ago, there was kind of a war on fees. And that -- and some of the things I'm going to talk about in a few minutes pertains to that. And so there's such a fee compression when it comes to benefits administration and what Alight and Alight's competitors are allowed to charge and it really has impacted the industry from a quality perspective, and I'm a big fan of fees to go up in the industry, just like everything else in this industry. So I don't know what you guys think, but I think it's been a challenge. But just when you -- when I'm speaking with plan sponsors, they're struggling today with a lot of things. Some of it has to do with quality of the industry as a whole, the industry as a whole and somewhat because of this fee compression, the quality has gone down over the last 15 years or so, and that's really a challenge. When we're speaking with our clients, a lot of times there's technology, there's the use of AI, but we're hearing from our clients we just want our providers to get the blocking and tackling right. That is the main thing and then we can start to look at expanding. And you talked earlier, Dave, about leave administration, and I think that's one area where you said the industry is okay. I think from what we're hearing from our clients, the industry is a little less than okay. And so as I think for many organizations, they would love to outsource leave administration. So that's just an example. If everyone can get blocking and tackling right for leave and for benefits administration, this industry will grow for sure. And it's our job as third-party evaluators to be fiercely independent, but we're absolutely cheering for this industry -- we're all cheering for this industry. We think it's not going away. We want the best services for our clients and the best for everyone involved. And so when I look at plan sponsors and people in the benefit department, we've had -- we've seen a lot of examples of co-sourcing has become -- co-sourcing, meaning our clients are not truly outsourcing their work to a third-party organization, but they're stuck doing some other work, like they need to check reports. They need to reconcile some of the data. They're getting complaints or they're getting escalations that could be handled by their benefit providers. And so that's another challenge that plan sponsors are faced with that the industry needs to solve. When it comes to employees themselves, we all know there's multi generations in the workforce and lots of different needs. And so when it comes to employee engagement and you started to talk about it, Mike, there's a lot of different needs and benefit strategies are including lots of different solutions. And I think it is really important for those solutions to be served up at the appropriate time in an appropriate way, not only to make sure that usage is maximized, but also for a lot of the programs that are being offered to employees, there's a cost savings piece to it, that's very important to the organization. And benefit administration costs are a drop in the bucket compared to the overall benefit spend. And so I think if our clients, that our plan sponsors can free up their time to focus on that spend, they're going to be much more effective as professionals. But just a little bit back on the participants side. Participants are struggling and I remember when I graduated from college, someone sat me down for an hour and talked me through all my benefits and taught me about 401(k) plans and taught me about the need to save. And I think that, that kind of counseling is missing a little bit today. And so technology is great, but a 22-year-old coming out of school that has student loan debt and maybe credit card debt really needs some help and probably not necessarily through an app even though it may be their preference to use their mobile device to get information, that certain level of counseling, I think, is really, really important.

It's interesting you say that, Jamie. I have 4 adult children and I was their benefit adviser, every one of those situations, once they turn 26, right? Because they were on my medical plan until then, they were smart enough to know that dad's going to carry that burden until it's time for them to truly break out on their own. But you're right. I mean, one of them is a digital native. All she's known is digital applications her whole life. She lives in social networks and all the rest of it, and it was like, okay, what do I do here? Am I making right choice? What about my 401(k)? How do I maximize my match, right? All those sorts of things. So great opportunity. You said something else that really struck a cord with me about outsourcing. Not only are most clients wanting to keep the benefit administration outsourced, but even if they were interested in taking it in, the HR teams have been thinned down so significantly in my experience anyway. If I look at...

100%.

Back in the day, when I was deep into this, you'd have a very large benefits team. You might have had 6 or 8 or 10 individuals on a big corporate team that were doing the administration in the delivery. You might have 1 now.

Right. Exactly.

Right. So they're not in a position and don't have the capacity to be able to take this work on. And if there are things they're doing inside like leaves administration, when they find a really great solution, I think they're going to want to push that out.

Yes, definitely. And then to spend more time on the big spend, right? And to your point about fees, I think clients are willing to talk about investing more if you can demonstrate outcomes, right? So because the outcomes impact that big spend and we've heard even just in numerous finalist meetings, right, in RFP situations, clients begging for demonstration of outcomes that impact that bigger part of the spend. So I think if you can go there, then you have a right to ask for more in terms of fees and driving value.

Absolutely. Mike, now let's turn to technology, and I do want to talk a little bit more about AI. How do you think the HR leaders and your clients are approaching the use of AI in hardly evaluating the AI impact? Analytics can have on delivering better employee experience, what concerns might they have around governance? Just let's bring it to life.

Okay. I'll just want to kind of piggyback on a little bit of I still do the benefit stuff for my kids. And the oldest is 32, right? I'm trying to get them to a certain place. But there was an interesting observation because they are all digital, and they look at what's presented to them. So even on the enrollment side, as somebody started a new company, the auto enrollment for the 401(k) plan, maybe it was at 6%. And I'm saying that's not enough. It goes, why isn't the company telling me that? So just a whole different perspective from a different generation. He's like, "I don't get it. If they're telling me 6%, and that's not the right amount, why aren't they telling me 10% right?" And 6% is getting them the maximum company match or things like that. So there is this different sort of expectation that they have become accommodated to in Amazon and everything else that they're interacting with their daily life that I think needs to be applied, and I'm excited because I think AI gives you the opportunity to apply this in a whole different way to be more proactive. You mentioned, and it's a big asset that you have, the data lake. So it's not just all the interactions that you have with people, but I know you also import behavioral economics and other elements to be able to build profiles for people. So I think the concept of I'll talk about AI in 3 different ways. But on the participant experience side, either prompting them about something that maybe they hadn't thought of at a point of engagement like annual enrollment. So more and more, you'll see situations where it can be pretty overwhelming in terms of what my medical choices are and the best choices to make in that situation. So now particularly if you bring in claims information, which more and more clients are doing, before the person comes on, you could say, hey, based on your experience in the past, it looks like this program that you've been picking is the wrong program for you. You can save $2,500 and here's how we got to that and it can give you information about their doctors, whether they're a network, things like that. That's the kind of information I think that's really useful and helpful for them. If you on an ongoing basis, particularly most of the firms now are ingesting claims information. And if you apply these behavioral categories, you can proactively push out messages to people about, you see all of a sudden, they're visiting a diabetes doctor, you have the ability in the situation, with the client permission, with the employees permission to push out other messaging to them in a different way. You talked a little bit about the ecosystem. I think what's really important is it's harder because you've got all these great point solutions that are out there that are theoretically very effective if you can get people to use them. The key is that I work with one client who's very frustrated, he has possibly gone to a conference and came home and said, "Oh, my gosh, we need to get this particular program in place for pregnancy or starting a family, and the guys like had it for 5 years." We need to get this thing in place, had it for 3 years. So even at that level, the person didn't know they were there. So I think that it's important to be able to have this situation, and you're in a unique position, particularly when you're having an event because in a life event, people care about changing their coverage right away. So they're going to contact you, They want their spouse covered for medical or whatever. At the point in time when that occurs, you can look into this other universe, if there are other services that are being offered by the employer and promote that. And as Kathleen was saying, the key in a lot of these situations is everybody wants to -- the measurement of this and the proof that you've helped the employer take an action or the employee take an action is really critical. And I think that's where you're going to see a lot more willingness to invest more fees. So for instance, with your navigation solution, the ability to sort of look at that because you're making a promise that you can help the person get better coverage with a better rated doctor within the framework of their medical plan for lower cost. And if you're actually able to show them that and prove it and then wait in the Alight world, they wait until the claim comes in. So it's not just that you suggested an approach, but you actually have evidence that you actually impacted the participants' behavior in a more meaningful way. So there's that first part of it, I think, is fairly important. AI, look is better, faster, cheaper. It's one of the few things where you get all of the above, right? So for instance, we talked a little bit about dependent verification, that was a process that used to -- a person would roll. A lot of times, most plan sponsors wouldn't give the person coverage right away until their dependent was verified or if they did, it was complicated if they didn't get a verification, how do you roll that back, et cetera, et cetera. These days, you can now, with the technology, the person can take picture of the birth certificate. The AI -- instead of having some team offshore that's scanning that document and seeing if it's appropriate, the AI can verify that immediately, and the person doesn't have to worry about waiting for coverage or things like that. So something potentially silly like that. The ability to ingest things like SPDs and things like that allows the search bar, the AI agent to really get much more likely to get a response to a person immediately. And I know you're moving, you're switching your call center support people to also use the AI. I think that's really critical. The AI learns as it goes along. So it has a whole data bank that it's looking at certain questions. In the old days, you had a whole separate customer service thing that you had to keep up a different knowledge base, et cetera. If that's linked and it's linked to the participant experience piece of it, you're going to give the person a better answer. The other part that's important is if a person makes a phone call it costs money, and the worst thing that can happen is if the call doesn't get resolved, that's a bad participant experience, right, because the person wants to have that call resolved first time. So your ability to be able to proactively promote the right information to people as they have an event or something digitally is really critical because it will stop some of those long calls. And then when people come in, if you're able to surface up, "Hey, I'm looking at the next best action of what's going on here. So I can take you to this place. " I don't have to write up the case. The case is something they have to log, it has to be escalated to an expert. I think we -- I saw a study once that a case costs 20x more than just answering the phone call on the first call. The other part I think that's really exciting is the whole being able to mine so it was alluded to earlier, every call that's coming in now using AI Lumen is not only recorded, but a transcript is created and a summary of the call is created, that's viewable by the plan sponsor. I think you'll get to the point if there's a follow-up action, it can probably automatically create a case. What's interesting is the plan sponsor can see that, and then you can mine that because it's also measuring sentiment, so if there's an issue where a person is stressed or having a broader issue, it can surface that -- surface that real time, so it can actually send a message to the supervisor like this person looks like they may be needing some support on this particular phone call and be able to do that. Our clients always are asking what are our employees thinking? So now that you've got this whole thing with the transcripts, the recording, I've seen the newer stuff that's coming out with the search engines to be able to look at sentiments, you can create word cloud, you can be very specific about particular issue. And all of a sudden, you see an issue on a particular word, that's a problem. You can actually search on that, the AI will pull out all the calls that are associated with that, give you some insight on that. You can listen to them, you can create a campaign that's targeted to go after them in that way. So my sense of this is that AI is going to let you do your job much better in terms of being more efficient with potentially less people, have a much better participant engagement. So hopefully, it's better, faster, cheaper. And then the other part is the immediacy. So even the stuff you're doing with APIs, a big point if a person had a spouse, the minute they get married, they add them on their system. The spouse is going for a prescription drug in the old days, those files were exchanged weekly. Now you can do it instantaneously. So it's always a situation where that's a bad participant experience. It also seems like a terrible thing. By making it be more immediate and using these interfaces real time, you just create a much better participant experience overall.

There's a bunch of commonality between any large employer, but there's also fundamental differences, especially when you spend a ton of money in benefits. We're north of $1 billion a year. UPS, probably a lot more than that. But there's things you're going to differentiate in the marketplace around that, right? So as an employer, you're going to say, hey, we have a lot of technical, highly skilled workforce. We're going to differentiate. We still have an open pension plan. We still have a huge investment in health care. Some companies may think about it differently. So this notion of how do you get a platform that works for you, because I'd never want to go back to benefits administration internally. I think somebody had mentioned, I think there's 1 or 2. Heck no, I'm out of my job if you ask me to do that, because there's not value in that, right? There's not value. There's value in us saying, "Hey, here's a platform that can run a whole bunch of administrative tasks, but also now give us intelligence with data to say, hey, what's working, what's not working. And I think that's critical going forward, but also allow us to execute a value proposition, right? So we've got a value proposition to employees. We say, come and work for us and you're going to get X, Y and Z. And the most important thing in the relationship has been the extension of that. So I tell my team all the time, look, guys, I don't want an employee to feel the difference between interacting with you or interacting with the like. That needs to be seamless because then we end up with a platform that we can execute our value proposition on, we can drive where we need to, to the lowest common denominator on cost, find the efficient frontier on that front, but also customize where it's needed, because we may want to emphasize something different than a UPS may want to. And then I would pivot even back to your business strategy, where the CEO of Southern will walk into my office and say is, "Hey, we're in the front of energy transition here. I want the employees focused purely on energy transition. I want them focused on reliability and resiliency. I want them focused on serving the energy demands of the future. I don't want them focused on a benefits issue, and I most certainly don't want them focused on an issue where they haven't had the experience that we would want to provide our customers." So our lens -- and this is the customization piece, our lens wants to be through the lens of what do we want to provide our customers, because that's how the executive team and all of Southern will view the interaction that they have around benefits. Is that what we would do for our customer base is buying energy from us? And that's where it comes into. And not every customer is going to look at that. So you have this consistency through benefit programs, but then you have this value proposition. And I think working through that, you all have done a really good job. And I mean, this is not a paid thing. I came up here to do that because you all have done a good job and you all are critical for us going forward, you're a critical extension of who we are. But you've all done a really nice job of merging those 2 and saying, customization push to the lowest cost when needed, but then let's customize to make sure the employee value proposition and experience and business strategy is there.

Thanks, James. I know our team is watching at their desks, supporting both your clients, and will be exceptionally proud to hear that feedback. So thank you. And you're right, you're both in the services industry. I recognize my UPS driver that comes to my house regularly to deliver things like wine. And so I'm sure you don't want him asking me about benefits questions. You really want him moving on and delivering the next package down the street. So with that in mind, UPS has a variety of employees. It's a large complex organization. What are the types of needs that we can support as you manage your business overall?

Yes. We do have a quite complex set of employees. If you think about the union employees, with the nonunion employees, we've been with almost 30 years. I think it goes back almost 30 years. And so you have experience with both the union side as well as the nonunion side. And even on the union side, when you look at the contracts we have, we have some employees, for example, our pilots or mechanics where we'll provide the kind of the full suite. We have others like our package handlers, driver that delivers the wine, where they're getting their benefits through a multiemployer plan, but they're still eligible for EAP. And we have others that are eligible for some of our supplemental benefits. So it varies. And a lot of that is contractually driven. And so the fact that we're talking about labor contracts, you got to get it right. You can't get it wrong. You got to get it right every single time. So there's complexity there. I talked about on your earlier question, just the complexity we have with our multi-carrier arrangement. And that's not easy. That's not easy at all for employees to be able to navigate that. We further complicate it by -- and it's not a bad thing. It's about choice, right? But we further complicate it by having multiple plan designs, different levels of deductible, a new option that we -- a co-pay option that we just introduced. So there's just a lot there. And I think what you all do is kind of you're that anchor for the employee to be able to kind of decipher through all of that and be able to answer the questions, a single point of contact. It's different -- and some of this was mentioned earlier. It's very different than it was 10 years ago, 15 years ago, 20 years ago in terms of how employees get the support. We don't have big benefit teams anymore. But also, we don't have big HR business partner teams out there. Previously or historically, employees would go to a local HR rep that's sitting in a hub, right? That HR rep may not be there anymore. And so they're kind of on their own, to some extent, to figure it all out. And so having Alight as a partner to be able to do that, but also be able to do it in a way that personalizes it for the employee and makes it easy and seamless and take the friction out of it is absolutely critical, because we have to be a lot smarter about how we use the resources that we have. And so those partnerships are absolutely critical with you.

Yes. We appreciate that, Dave. And I think James, you talked a lot about personalization, too, and driving the strategy. As you talked about, you're an energy company, which is a highly regulated environment. Compliance is important. How do we help support that compliance aspect of the work that you do?

Yes. I think it's very much about knowing the culture and knowing some of that compliance piece of it. So I think that the point I made earlier about being very integrated as a team, I think, is critical there and knowing and understanding your customer base, I think, is very important. And knowing the rules and the regulations. We got things around running nuclear power plants that are fitness for duty and other things that are just going to be different. But we also have the same commonalities around labor agreements, right, but there's a whole bunch of things in there. And the last thing you want is labor disputes around any of those things. So they become real understanding those and knowing those and having a team of -- and that's where the people side of it comes in, account management team and other folks that really understand those and can help us navigate through your systems and products to be able to get a really good efficient solution for our employees, I think, is really, really important. It's funny. There was a comment made earlier, I think, about -- maybe it was Kathleen that had made it about being an arms race on AI and other things like that. And I couldn't help but think at that time, and please don't take this term incorrectly, but I couldn't help but think of you all being in the role of being arms traders more than anything else. And here's why I say that, not because you're dealing in illegal stuff, but it's because we think of you as an open source. And I want you to stay that way as an open source platform. I want you to be indifferent in the arms you're trading, because we find best-in-class, as UPS will, best-in-class to help us. Then it becomes how do you integrate that into that ecosystem. And that's really important. I watch way too many companies do it where they go and they say, Hey -- and healthcare companies, just they go, we're going to go and buy that in the marketplace. And as soon as I hear that, I'm like they're going to lose their independence, they're going to lose and be starved for investment. They're going to do stuff. And we immediately start to look at those providers around that ecosystem and say, we're going to watch them carefully, because we watched it way too often, that the reason we bought them as a start-up or the reason we got involved and invested in them, they're going to lose that identity really quickly when they become part of a bigger entity. So I think the strategy, it was refreshing for me to hear back to the roots, and I hadn't heard that piece of the strategy before, but back to the roots, but forward tilting or forward focusing is so critical in kind of how we think about this going forward.

Yes. So speaking of forward thinking, and you talked a little bit about the arms race, the world around us is changing rapidly as the TPE panel talked about what people are looking for from an employee perspective. You've got folks like us that have been around a little bit longer in the industry and those just coming into their career workforce. What do you see as innovation that's needed in the environment that we've got and how can we better for your future employees that you need?

From the technology side and everything I know -- and I get it, right? We want to talk about AI. We do want to talk about AI, but it's absolutely critical, right? And in fact, let me tell you a quick story. It's a crowded space. So when we were working through what partner to select relative to navigation and advocacy, we were going through a lot of those names, right? And clearly, you were stacking up toward the top, right? You were stacking up at the top. And we got to the 11.5 hour and we were like, okay, are we ready to make this decision? But we needed to make sure that we were going to be future-proof. We needed to make sure that the agility, the flexibility, the kind of the innovation, the forethought out there was there relative to how we didn't quite know how we would grow, but how we knew we needed to grow in this particular space. And we got you on the phone and you walked through some of what you could, you shared what your technology innovation road map looked like. And we came out of there not only confident that we were making the right decision based on what you were currently investing in and would be investing in the future, but we also walked out of there with a great sense of enthusiasm. And those are 2 different things. Confidence is one thing, enthusiasm about, "hey, you know what, we're not only sure we're making the right decision, but this is really exciting about how we're going to grow with you in this space in the future". And a lot of it is, again, powered by what you're going to do around AI and how you're going to utilize that in the area of personalization, in the area of speed, in the area of both relevance, right, in terms of the employee, and what can we do to elevate the employee experience or member experience? And how can we make it not only easier? I know I'm a broken record about how do we make it easier, but how do we make it engaging, because if you can't make it engaging, they're not going to utilize what we're spending a lot of money investing in, particularly with regard to the point solutions, right? And that's not only wasted dollars, but that can lead to a loss relative to -- or, I would say, areas that we have to kind of gain somewhere else because we're not fully efficient in some of what we're providing within our health plans, for example. So I think that sense of excitement around AI and the potential that it brings and what it does around personalization and what it does around relevance is what gets us, like I said, enthusiastic about the future and how it's going to make our employees' lives better.

That's great. And I do appreciate that you corrected that we're at the top, not...

Yes. We wouldn't have selected you -- if you weren't at the top, we wouldn't have selected you.

James, how about for you?

So I kind of think it's interesting. One of the things I think Alight does so well is being a business process kind of outsourcer. You're outsourcing a business process. And one of the things I tell my team all the time around AI is we need to pause in AI for a minute. And here's why, not because it's not useful, not because it's making a massive impact, but because all the AI -- and it kind of became this buzzword that we're all kind of swimming around. If you go back in the progress that we've been doing around, whether it be benefit selection or anything like that, in the last 10 years, it's gone from kind of analyzing data to looking at big data to looking at predictive analytics, and we've got so much of that stuff we've been doing for a period of time. And then suddenly, there's all this noise around -- it's a journey that we've been on. And it's a journey around decision-making and business process and enhancing that business process. So we try and get away from the noise around AI and say, how do we improve decision? What is the specific -- as opposed to this blanket AI, what is the actual business process we're trying to improve? What is the outcome we're trying to improve? What is the issue we're trying to solve for? Is it for an employee to make a better -- okay, now how does AI be a tool that enables that? How does big data and analytics, and wherever you go with that, generalized AI, Agentic, all the variations, right? But we're trying to get away from the noise, because it's almost like you're a hammer looking for a nail to hit, and get back to what is the solution that we're trying to solve for. So I think there's a lot of great things when we look at better information, better knowledge. But what I would say is, what employees are really looking for, and this is the kind of the holy grail. It is better decision making, it is handholding through some of that process in a simpler way, but it's just getting the issue fixed, right? And that's where we've got to go one step further and it's not just make it easier, it's get it done, right? So if somebody calls in with an issue or has -- how do you prevent that issue ever happening in the first place? How do you get to what was the root cause of what that issue actually was? And that's where I think, however you want to term it, generalized AI, Agentic, however you want to look at it, that's the issue that we're solving for. Do employees want more handholding and selecting the best medical platform? Not really. They just want to be enrolled in it. So you get to a point where they're like, "hey, if you can use all my data to make a decision for me, just enroll me in that plan. I'll click a box to say I accept all responsibilities for it, but just do it. I got too much stuff going on." As an employer, we go, "great, I want you focus as an employee on solving energy infrastructure issue or transmission issue or the green -- how we're moving from energy transmission, whatever it may be that we want our business, reliability, resiliency, serving data set. That's our core business. Our employees focus on that. I don't want them focused on sitting there trying to figure out and then feeling they're at risk because they chose the wrong plan and their deductible is too high. But they can't make those decisions. So I think at the end of the day, it's make a decision and help them with that.

I think that's a great way to wrap up. Thank you, James. Thank you, Dave. We appreciate your partnership as our clients and very much your investment in time today. So thank you very much.

All right. Thank you all so much for being here. It's great to see so many familiar faces. And just a huge thank you again to our TPEs who came here and our clients to just help everybody here understand a little bit more about the markets that we operate in and the opportunity for Alight as we move forward. So here are the 4 areas I'm going to cover today. If you take nothing else away, I'd like you to understand we're intensely focused on driving long-term shareholder value creation. And with that, the 3 other areas is really going to pull together everything you heard about today that our teams are operating in and the progress that we're making and what to see as we move forward. But first, as a starting point, we've significantly transformed this company over the past few years. At the same time, we've delivered results. You can see here, we've grown revenue and EBITDA over the last 4 years, creating almost $90 million of earnings to our base during that time period. And 2024 was a really big year. We completed the divestiture of the Payroll & Professional Services business, and we completed our cloud migration and really the 4-year journey to modernize the platform and everything you heard about earlier today. I also want to cover the resiliency within this business. It's in the current macro dynamics, it's important to understand we have a predictable growing recurring revenue base. It's tied to long-term contracts, call it, 3 to 5 years in nature, and we're delivering mission-critical work on behalf of the largest, most complex companies throughout the world. And we've got a healthy balance sheet. We delevered last year to below 3x, and we have an improving cash flow profile, which I'll walk you through here today. Moving to the outlook for 2025. This is what we laid out last month at earnings. What you should know here is 2025 is a transition year. What you've heard about today is 2023 wasn't perfect. And so we've got a lag effect of some of the items that happened 1.5 years ago, and there's still a lag effect as it comes through into 2025. But we're operating the business very differently today, and we like the trends that we're seeing. Revenue this year will be flat at the midpoint with recurring revenue up 1%. Within the revenue line, there's a difference as it ramps throughout this year. So the losses that we're seeing this year coming through really starts on January 1, while the new deals that we booked last year, that Greg walked through, begin to go live as we go throughout this year. And so there's going to be an inflection point in our growth into the second half with low to mid-single-digit growth in the second half with continued execution and the momentum that we're seeing today. From a margin perspective, we've done a lot of work already here, and we expect 150 to 180 points of margin expansion and brings us really to about 27% EBITDA margin within this business this year. The last area I'll cover is free cash flow, and I'll spend more time on this as we go through the deck today. But at the midpoint, 20% growth in free cash flow. We're driving more efficiencies and uses of our cash, and we've simplified our business model. So here are the midterm targets that Dave laid out for you earlier today. Organic revenue growth back to mid-single digits based on continued ARR bookings growth, an improving retention profile and a real opportunity now with our platform and distribution to drive greater partnerships and revenue growth. As I said, back 27% EBITDA margins this year, on the path to 30% EBITDA margins, much of which is the work has been done, and I'll walk you through the bridge to get to 30%. And then finally, $1 billion, cumulative cash flow over the next 3 years, again, more efficiencies, and I'll walk you through areas like working capital, capital expenditures, some of the areas that are really going to drive free cash flow for this business, $1 billion. So here are the 4 areas that I'll walk you through today, covering the growth levers, move into really the diversification and the dependable recurring revenue streams that we have, and then into margins and cash flow and capital allocation. But let me start with growth. Here's a page that should be familiar to many of you. This is really how we talk about the growth in the business. And it's important to understand this because this is how I'm going to bridge where we are today and where we're going back within the midterm. First is new wins. 6% to 8% is the growth model of new recurring revenue coming on to the books, and that's based on growing our existing client base and new logos as well as anything we do within the partnership space would come in through the new wins. Volumes is really the participant counts, right? Just as a reminder, our contracts are per employee per month, PEPM-based fees. And so participant counts matter and has been a grower for us over the long term of up to 2%. And finally, retention. Retention historically in this business has been 96% to 98%. So you can see there in the growth model, 2% to 4% would be the historical average of what doesn't get renewed. So I want to unpack that a little bit more of where we're at today and some of the math around what that looks like as we talk through to just help our investors better understand when we talk about the metrics and where we're at and where we're going. So I'll start with the new wins. So the 6% to 8%. That means, right, in the math, about $140 million to $190 million of incremental ARR bookings, again, from existing and new clients to drive the target growth. Greg just talked you through our good momentum we've got. We were up 18% last year to $114 million of incremental bookings. And this year, we're guiding to $130 million to $145 million of bookings. So we start to approach that target range that we need here at this level in terms of the top line. The second area is the partner network and innovation. So this is the products, the distribution, the partnerships. It's really just an untapped area for us today. It represents currently about 1% of the revenues within the company. And so there's a real opportunity. You can tell, and hopefully, you heard today, the increased focus that we've got here in this space. And so $25 million to $50 million of annual revenue growth, we see as an opportunity in this space for us moving forward. And then finally, I'll talk a little bit more about retention as well, and Rob went through some details with you. 2% to 4% represents about $50 million to $100 million of losses annually in the target growth model, and that's in line with historical performance for us. But we are currently impacted by the lag effects of 2023, and that compares to about $150 million in losses that we have this year. And so again, better retention in 2024 with the lag effect creates then the benefits that you start to see at the back half of this year and into 2026. Two other areas within the model that I just wanted to call out. I'll talk about project revenue a little bit more, but we've assumed participant counts about 1% within the outlook, and we've assumed project revenue to be flat from what is really a low point that we see this year in 2025. So here's what it looks like just on the bridge. We're at the minus 1.5% to positive 1.5%, so flat today. What you'll see this is also time scaled. You'll see, first, the impacts of the retention coming back to us. And so the improvement there, you start to see first. Next, you'll see the continued momentum of what bookings and volumes provide. And then I would say you could expect the partners to be on the outside of that from a timing perspective. And I won't need to do the math for this group. You've probably already done it. If you look at the top end of each of these ranges, you can see growth that is outsized of the model. We do expect that there's always going to be mix. The environment can change. There's always going to be a change in timing between the types of deals that we're doing and what we see between wins and losses. But that's really how we think about the growth model for this business. I did want to capture here for everybody on project revenue. So again, flat is our view in terms of the outlook. You can see really the last 5 years, including this year's outlook in project revenue. This is important work that our teams are doing every day with our clients. We hit a peak of $219 million in 2023. It's always been roughly a little bit less than 10% of the revenues in this business. Off of that peak last year in 2024, project revenue was down 10%, and we're calling it to be down about another 6% at the midpoint this year. So call it, $185 million. We have not seen a pickup in demand. And so we do want to be cautious in terms of the view in terms of the outlook. But history tells us this work comes back. As I said, our teams are sitting with our clients. This is work we do in communications to participants. It's project work for planned design changes, any M&A activity and changes in the regulatory environment. And it does carry an accretive margin mix when it does return. So this is work that we will do and continue to work with our clients every day to provide that level of support, and it's an important part of our business. So a little bit more on what Rob talked about earlier. He showed you the chart in terms of where we were in 2023 and the rebound we had in 2024. Let me just say this. Organizationally, having a client management team that is focused in prioritizing our top clients is a game changer for us. We've seen and we've seen this year and last year what the impacts are if we don't get this right. And so every year, we are renewing 20% to 25% of our business. And to do that well, we need to be delivering with excellence consistently for those clients, getting the basics right and gives us the opportunity to drive better retention and ultimately then have an opportunity to grow in the $7 billion of opportunity we have with those same clients. So we feel really good in terms of the momentum that we saw in 2024 cycle and have continued confidence in terms of the progress going forward. So let me talk a little bit about our recurring revenue streams and the diversification. You can see here, this is an industry split in terms of our large clients that's been built up over decades. We have a great spread and diversification. And at a macro level, given this diversity, it insulates us from industry-specific risks. Also at a micro level, on a client basis, you can see here, we don't have a client that has any more than 6% of revenue of the company, and we have over 300 clients with over $1 million of revenue. So very diverse base that we've got built over many, many years. We also have great visibility over the long term in our business. You can see here, we've grown our recurring revenue base by $400 million since 2021. You can see the growth rate on recurring. Just given our focus on the ARR bookings, our recurring revenue base has outgrown the total revenue for the company. Since last year, we've also updated our disclosures, so we report revenue under contract now going out 3 years. So a couple of things I'd point out here. First, in 2026, we already have greater than 2/3 of our revenue under contract. And if you look out to the $1.2 billion in 2027, that longer-term view is up 6% today versus where that same longer-term view was last year based on the momentum that we're seeing in the operations of the company. Let me move now to margins and cash flow. So if you think about margins, it's really 2 buckets I have you think about it in. The top of this page is the work we've already done. Deepika walked you through the $75 million of benefits we get from completing the cloud migration. We've rationalized vendors, functional spend, simplifying the company after the divestiture. That work is largely done, and it's included in the guidance that we gave for 2025. What's at the bottom of the page is much of what you heard from Deepika and Allison in terms of updates to the delivery operating model, the standardization of client management, AI and automation. Let me be clear, this starts first and is grounded in the client experience. Again, we've seen what lower retention looks like for the business and the impact it has. This all starts with a better client experience. But with that and doing it right with technology and the organizational alignment allows us to create more efficiencies on behalf of our clients and a better experience and also for Alight to be more efficient in our operations. So let me give you the bridge for EBITDA. So starting where we finished last year at 25% EBITDA margins. The first bucket here is what we've already guided to for the year. So the cloud transformation benefits, the dyssynergies being eliminated, offset with the normalized inflation that we typically get every year is our '25 outlook that brings us to about 27%. The next bucket is the operating leverage we get on growth. We typically get about 60% incremental gross margin on new revenue coming into the business. And this is, of course, offset by the annual inflation that we will typically get. And the next 2 buckets, both delivery operating model and the call center, are what, again, Allison and Deepika talked about today. So if you think about that, it's the examples that you heard about that underpin our confidence in being able to deliver on the targets that we've laid out to you. So those examples, right? Gen AI, creating 30% to 50% efficiencies and gains with client implementations. Allison showed you an organizational chart that leverages standardizing how we deliver for clients across solutions and having centers of excellence. There was a client case study where we showed call volumes coming down 25% by using self-service education and AI chatbots. So these are the examples that underscore everything that these teams are doing and the progress that we're already making in terms of our margin expansion while, again, driving a better client experience. So again, 500 basis points of expansion opportunity here from where we finished last year. 40% of that sits in work that's already been done and what you're going to see this year and confidence within the real examples that underscore everything and the opportunity that's in front of us. And so to sum it up, at the midpoint of this range, on top of the $90 million that we grew our earnings base, right, through the first part that I showed you, the first 4 years, this is another $150 million of earnings that we can add to the base through the midterm. Not only are we focused on earnings power of the business, it's also free cash flow. And as I said, we're being more efficient with our cash. Two areas here, you can see in the bottom right of the page that are updates to our outlook. First, on working capital, we expect our usage to be 2% to 3% versus where it was at 3% to 4%. And again, this is inclusive of the deferred implementation costs that we bear every time we win a new deal and we implement that work. We love that from an investment standpoint, because with the tenure of our clients and the work that we see there, but it is a usage, but we can still continue to be more efficient. So 2% to 3% on working capital. Next is on CapEx. We've had a higher CapEx spend over the last couple of years, as we were working through the cloud migration. It was somewhere between 5% to 6% of our revenue in each of the last 2 years. Now in this outlook, we expect CapEx spend to be somewhere in the range of 3.5% to 4.5% of total revenue. So it's that efficiency on top of the margin expansion and the opportunity we have that is behind growing free cash flows greater than 25% through the framework here for $1 billion of free cash flow cumulatively over 3 years. To put a finer point on that, that is in 2027, greater than $0.80 of free cash flow per share, which is double where we were last year. So we feel really good about that. Hopefully, you all do as well. Finally, I want to cover capital allocation. If I can get to it. Here we go. So as I said, we divested Payroll & Professional Services last year. We took $740 million, paid down debt, and our leverage is now sitting below 3x. We've got a strong free cash flow generation and liquidity profile that I just walked you through. We are deepening our commitment with partners. We do not have anything that we think about as transformational out there from an M&A or investment perspective, but there may be opportunities to make a strategic investment, and we'll look at that in terms of its creation of long-term value, right? This outlook includes a normalized level of investments that just needed to operate the business and continue to grow the business. And finally, on capital return, we initiated the quarterly dividend in the fourth quarter of last year. And we've got share buyback authorization of $281 million, which we will be opportunistic on for sure. And so the way to think about it is free cash flow post our TRA is largely going to go towards capital return to our investors. So let me close where Dave started. Hopefully, you've gathered today the level of focus and execution that's underway by this team. We're leveraging our market leadership position to drive better outcomes for clients and grow those relationships along with new clients leveraging our platform and our capabilities. And by doing that, our growth inflects and we'll create more shareholder value through an earnings and free cash flow profile that grows in excess of the top line. So with that, I'll have Dave now join me on stage, and we'll open it up for Q&A. J.C. will take the mic.

Kyle Peterson from Needham. So I guess, Jeremy, since you just were speaking about it, I'll be the nerd in the room and ask about the TRA and free cash flow, like how should -- I know it's a complicated structure, but how should we think about what the impact will be on free cash flow and what the kind of drain is moving forward?

Yes. I appreciate you asking that. I had that question actually a few times last night. So for those that don't know, we have a tax receivable agreement, and it can get relatively complicated for some of the questions that we'll get in terms of the cash flow within the business. And this will be in the materials that we have later today. What we did is, we guide to a free cash flow number that's on a GAAP basis. What that doesn't include is because where TRA sits within the investing side of the balance sheet. But to normalize, there's a couple of areas that we need to kind of think through. So we've got an adjusted free cash flow view here on the page as well. Two areas. One is the TRA is elevated this year and next year due to the divestiture of the payroll business. So that gain on sale drives a higher level of TRA payment. The TRA payment typically is going to be about $65 million a year. The other nonrecurring item is some of the restructuring we've done for the cloud migration, some of the simplification activities. So if you normalize for the TRA sizing as well as think about the nonrecurring views, right, if you're trying to get to a sustainable free cash flow view on an adjusted basis, which includes the TRA, it's really the bottom of this page. So relatively in line with where we've guided to this year, call it, $230 million to $265 million. And you can see our estimated range into 2027. So still on that basis, the $1 billion of free cash flow on an adjusted basis as you think about TRA. And the other maybe point I'll make sure that everybody understands, we have a very low cash tax rate. So the TRA is not something that's in addition to paying taxes in full, it's really the cash tax rate plus the TRA payment you should think about on a normalized basis as approximating what a cash payment would be. And that's how we think about it when you get to an adjusted ETR for the business. Did you get it?

Yes, that's really helpful. And then I guess maybe just a follow-up on the EBITDA improvement, particularly some of those initiatives with AI and some delivery model stuff. I appreciate the ranges and everything to get to 2027, I guess, and 2025 guidance out there. But how should we think about will those 2 line items be more 2027 weighted? Or should we expect some benefit in that from those things in '26 as well?

We should benefit in '26 as well. I mean that work is underway, as you can see it. I think the gating item is always going to be for us on EBITDA. That work is in the face of our clients. So if the clients are on the journey with us, it's something that happens in that process. And so that's really how we think about the time line of -- again, we've seen delivering for the clients and what we need to do. And so think about that, though, there is progress, there's going to be on some of the productivity initiatives that are underway right now. There's going to be continual benefits this year as well as driving run rate benefits into 2026. So I would think about, call it, a more linear view between '27 and going to where we've targeted.

Scott Schonhausse here from KeyBanc. So really appreciate the update on the strategy here. As we look at the fundamentals of your business and the inflection over the next several years and we look at your stock price, there's clearly a disconnect. You've recently re-upped your share repurchase program. Help us to think about deploying capital on a very much deeply discounted asset. And then maybe some of the multiple overhangs in your stock, whether it relates to a large shareholder and more news flow today that came out about that particular shareholder.

Sure. Do you want to take that? Or you want me to start?

Yes, you start. I did TRA.

Yes, I appreciate you doing the TRA as well. Yes, look, we've taken a lot of that into consideration. We've engaged with our Board prior to our last earnings call. We started to look out into kind of what the capital allocation priorities should be. And just as you said, given where the stock price has been and given some of the other variables, we want to make sure we had significant capacity to be able to act, optionality to be able to act to buy back our stock and to return our capital, right, to our shareholders. With $281 million of dry powder, we feel like we're in a pretty good position to do that, and we can execute on that when necessary.

No, that's great. I mean, hopefully, from what I just laid out, what Dave laid out, the team laid out, you all see the value opportunity here within the business. We see where we comp. It's a great opportunity for us. And so we will certainly -- that was an important part of the $200 million increase to the authorization, and we'd be prepared.

Thanks, guys. Great show so far. Really pleased with the direction, Dave, that you've enacted in the last couple of months and certainly telling the story of going forward from here. With that, I think one of the big questions investors have is really about TAM conversion. You have this great TAM. Greg talked about an exciting pipeline ahead of you. And it looks like you are getting better at solving the retention issue. But to what degree are we leaking that TAM opportunity to improve retention, meaning vendor consolidation, all these things will give you x more services if you stay with us. Like are you giving away things for retention sake? And then conversely, how can you improve your TAM conversion within your existing base going forward?

Yes. I'll start, Pete. Thank you for the question. So I don't have the statistics at my fingertips, but I know that the more services we provide to an existing client, the stickier that relationship becomes. And we heard from James and we heard from Dave earlier today that our integrated platform gives us an ability to be able to connect up those pieces and simplify what it's like to deliver an employee benefits portfolio at scale for the employer, for the plan sponsor. So as it relates to the Renew Everyday, as it relates to how we want to make sure that we increase our levels of retention, there may be some opportunities along the way where we want to enhance an existing service offering, and we may decide to make an investment in that, right? I'm not giving things away, I'm making investments in those regards. Why? Because that offers an opportunity for us to add something else that we're not doing for that client. And again, the more we do for the client, the stickier the relationship. And we turn that asset, that client relationship and contract into something that is accretive from a revenue growth standpoint. And that's what Rob and his team are focused on doing. That's what we're measuring with a great degree of discipline.

Pete Heckmann with D.A. Davidson. I had 2 quick questions. Jeremy, the first on the retention commentary. There was a slide earlier that showed retention by year, which maybe that's a different subset or maybe that's a different calculation, but it doesn't show that same level of improvement that you talked about, the 800 basis points of improvement. So can you just reconcile those 2? The previous one looked like 2025 was going to be the near-term low.

And that is our expectation. So what you saw in the chart was total company. So the bars in the chart was total company revenue retention. The blue bar is tracking each year of the cycle, which again is only 20% to 25% within that year. And so what you see is, in that year when we actually had a low in that renewal cycle, we actually had high retention for the company. Then you see the lag as those losses come through because, again, if somebody is moving to a different provider, it's going to take them some time to move away from us to somebody else. And so eventually, we'll see that revenue go away, and that's when you start to see the retention lag is what we're seeing now. So that's why 2025, we're having more impact, but it's actually 2023 was the low point in terms of that cycle. So the good news is, 2024 is back up. And so that's the driver as you think about what end of '25 into '26 and '27 looks like is really the view on total company retention.

Okay. That's helpful. And then secondly, just in terms of that bridge towards resuming 4% to 6% organic revenue growth, and a little bit on Peter's question, how do you contemplate pricing within that?

We believe today, and I don't anticipate this is going to change into the future, a very rational pricing environment. And I think you heard the TPEs make reference to it earlier. If we were feeling any significant pressure around compression, it would have been happening leading up to our current kind of renewal cycles and what we're looking at. There's always competition, and we're going to see some puts and takes there. But the pricing market or the marketplace relative to pricing is rational today. And I think we actually see an opportunity for more value to be brought forward. We have to be able to demonstrate that we're giving the return on the investment, we're showing the results, and we're in a great position with our analytics capabilities to show that. But when that happens, we think we can actually have some pretty solid footing from a pricing standpoint.

This is Brendan Biles from Tien-Tsin's team at JPMorgan. Thank you so much for the presentation today, I really appreciate it. Just doing some quick mental math on the free cash flow stuff, like it's $1 billion in cumulative free cash flow over 3 years. I think it's roughly $2 billion of EBITDA over this couple of years. So it's a very rough just scratch math for me in my head, it's like 50-ish percent free cash flow conversion like on a cumulative basis, obviously. So how do you think about free cash flow conversion? To what extent do you like care about or manage to that? And where do you think free cash flow conversion goes over time?

Sure. Yes. So good point. And so that is about right. I think if you think about it from a free cash flow on a basis of -- again, if you're getting to the adjusted free cash flow, I think you get a better sense and you go through what it is. So improving through the working capital efficiencies that we're driving within the business, improving with the capital expenditures and where we're at. So I think I want to say, it's about 10 to 12 points of improvement in terms of the conversion on free cash flow. And there's going to be continual opportunities. Back to one of the examples I talked about, the Gen AI opportunity in terms of test scripts that happen, that sits within that deferred implementation cost, which is the working capital drag in terms of every new deal that we're winning. So if you thought about extrapolating that over every new implementation that we have now and every time we go through annual enrollment, that's a pretty significant decrease in terms of that -- we can bring that 2% to 3% down even farther. So we really -- I mean, we think about this on a -- kind of if you think about an adjusted net income for the business of driving towards upwards 80% to 90% of conversion on the free cash flow. And so that's really the pathway that we're on. A lot of that's going to come through that technology, because again, it's a benefits industry standard in terms of that upfront deferred implementation cost, and that's the biggest piece that the technology is going to allow us to get after.

That's awesome. That's great. I totally celebrate that progress. I think investors do, too. So no, good transition. If you don't mind, a follow-up on the AI stuff. I think it's really cool because especially in the sort of the more midterm, you have an opportunity with AI to take out a lot of costs, as you highlight. But then also your clients and partners care a lot about AI and sort of the opportunity to do new and exciting things with it. So how do you, from an operational standpoint, like manage towards the cost opportunities from AI versus the cool new and exciting stuff opportunities from AI, because to the extent, there's conflict there.

Yes, I'll take a start. First of all, I don't think there's conflict. As Deepika mentioned, and I think I pointed out in some of the opening remarks, we're deploying AI in a lot of ways today, and we're seeing the impact it has on the front end and the back end. And that's thanks to a lot of the hard work that was done to position ourselves to be able to take full advantage of that massive data lake that we're referring to with the cloud migration. So I see that continuing to play out over the next several years. We'll turn things on. We'll test them with our clients. We'll bring different levels of improved experience for the participant, deeper insights for the plan sponsor on what they need to do to make sure they're getting the most out of their investments, right, and helping our own employees to be able to provide great service. So all of that's underway. The part that gets me really jazzed up is to start to think about how this could be transformative, and then what does that mean in terms of revenue growth? Well, if we have transformative solutions that are in the marketplace, and we're leading from an innovation standpoint, that's a good thing to hold on to clients. And it's a good thing to take share, right? And it's a good thing when we think about how we can unlock value for the partnership network that is largely untapped, right? So I can't sit here today and put a number on that. But as we think about the real sort of in-based value that our AI plays, the potential exists for us, I'm really excited about that. And we'll see that play out over the next 1 to 2 years, right, as we start to turn that on.

Okay. Well, I think that's it for questions that we had today. So I think one thing I wanted to do before we close out, a huge thank you to the army of people over the last couple of months that helped us put together. So Jeremy Cohen in quarter back. Rhonda, who's just coming in the door, Anna, Greg, Alex, Hunter, Asha, I'm sure I'm forgetting, Matt, Mariana, thank you all so much. Really appreciate it.

Yes. Rhonda spent her birthday with us yesterday. That's how much she loves doing what she's doing. So special thanks to you, Rhonda. And I'd like to just close out the way I began. I really appreciate you all taking your time coming in to see us in Chicago. For those of you who are dialed in on the streaming, I appreciate the time you set aside for it. We're super excited to have this opportunity to tell you who we are, what we're doing, where we're going, and why we have such confidence that we're going to be able to deliver on the commitments that we've outlined and deliver on a compelling shareholder value creation story that we've laid out. It's a great company, I love the people I'm working with, having a blast doing this. And for those who aren't investing, look forward to talking to you as future investors. Thank you.