Alight, Inc. 10-Q Summary: Q2 2026
Business Context and Reporting Period
This Quarterly Report on Form 10-Q covers the period ended June 30, 2026. Alight, Inc. is a technology-enabled services company providing human capital management solutions, primarily through its Employer Solutions segment and the Alight Worklife platform. A significant corporate event occurred during this period: a 1-for-20 reverse stock split became effective on June 30, 2026. All share and per-share data in this filing have been retroactively adjusted to reflect this split. The company also completed the divestiture of its Payroll & HCM Outsourcing business in July 2024, with results reported as discontinued operations.
Key Financial Metrics
| Metric (in millions) | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Revenue | $511 | $528 | $1,045 | $1,076 |
| Gross Profit | $142 | $176 | $298 | $347 |
| Gross Margin | 27.8% | 33.3% | 28.5% | 32.2% |
| Operating Income (Loss) | $(40) | $(1,010) | $(62) | $(1,018) |
| Net Income (Loss) Attributable to Alight | $(10) | $(1,073) | $(29) | $(1,098) |
| Adjusted EBITDA | $92 | $127 | $196 | $245 |
| Free Cash Flow (YTD) | $101 | $102 | - | - |
| Cash and Equivalents | $215 | - | - | - |
| Total Debt (Net) | $1,996 | - | - | - |
Note: Q2 2025 results were significantly impacted by a $983 million non-cash goodwill impairment charge.
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased 3.2% in Q2 and 2.9% YTD compared to the prior year. This was driven by lower Net Commercial Activity (client losses and lower bookings), partially offset by higher project revenue.
- Profitability Improvement: Operating loss narrowed significantly from $(1,010) million in Q2 2025 to $(40) million in Q2 2026. This improvement is primarily due to the absence of the $983 million goodwill impairment recorded in the prior year and a $46 million gain from the change in fair value of the Tax Receivable Agreement (TRA).
- Cost Management: Selling, general, and administrative (SG&A) expenses decreased 16.2% in Q2, driven by lower severance and restructuring costs. However, Cost of Services increased 3.7% due to higher compensation expenses.
- Restructuring: The company extended its Post-Separation Plan (PSP), now expecting total pre-tax restructuring costs of $95 million to $115 million, with completion expected by the end of fiscal 2026.
Guidance, Outlook, and Risks
- Outlook: Management expects the impact of prior year client losses and lower bookings to continue affecting revenue growth for the remainder of fiscal 2026. The company aims to achieve annual savings of up to $90 million upon completion of the PSP.
- Capital Allocation: In February 2026, the company replaced its cash dividend with deleveraging and share repurchases. As of June 30, 2026, no shares were repurchased in the quarter, with $216 million remaining in the repurchase authorization.
- Tax Receivable Agreement (TRA) Dispute: The company is in a dispute regarding the calculation of 2026 TRA payments. While $136 million was paid as the undisputed amount, a resolution could increase payments by up to an additional $40 million plus interest.
- Legal Proceedings: A putative securities class action lawsuit was filed in March 2026 alleging misstatements regarding growth potential and financial stability. The company intends to defend vigorously, but potential losses cannot be estimated at this time.
- Liquidity: The company maintains $215 million in cash and cash equivalents and has a $330 million revolving credit facility with no outstanding borrowings as of June 30, 2026.
Key Investor Verification Points
- Revenue Retention: Verify the specific drivers of "lower Net Commercial Activity" and the timeline for stabilizing client losses.
- TRA Liability Exposure: Monitor the resolution of the TRA dispute, as an additional $40 million payment could impact cash flow and liquidity.
- Restructuring Execution: Track the progress of the Post-Separation Plan (PSP) to ensure the projected $90 million in annual savings is realized.
- Legal Risks: Follow developments in the securities class action lawsuit filed in March 2026.
- Debt Maturity: Note that the $1,996 million term loan matures in August 2028; assess refinancing plans or repayment strategies.