ALIT earnings analysis
What we found in ALIT's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Alight's Q2 revenue fell 3.2% year over year to $511 million as recurring revenue declined 4.3% amid weaker Net Commercial Activity, although higher project revenue provided a partial offset. Profitability weakened materially on an underlying basis: gross margin fell to 27.8%, adjusted EBITDA declined to $92 million, and adjusted EBITDA margin contracted to 18.0%. Six-month free cash flow remained stable at $101 million, but a $1.976 billion 2028 term-loan maturity, declining cash, and potential additional TRA payments remain notable liquidity considerations.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue declined 3.2% year over year
- Q2 revenue was $511 million, down $17 million (3.2%) year over year from $528 million and down $23 million (4.3%) sequentially from $534 million in Q1 2026. The decline was driven by lower Net Commercial Activity, partly offset by higher project revenue.
- Gross margin compressed to 27.8%
- Gross profit fell $34 million to $142 million, and gross margin contracted 550 basis points to 27.8% from 33.3% a year ago; it also declined from 29.2% in Q1 2026. Higher compensation expense raised cost of services by $12 million.
- Sequential operating loss widened
- The operating loss was $40 million, equal to a 7.8% operating margin, versus a $22 million loss and a 4.1% loss margin in Q1 2026. Against Q2 2025's $1.01 billion operating loss, the comparison benefits from the absence of a $983 million goodwill impairment.
- GAAP EPS improved, adjusted profit fell
- GAAP diluted EPS was a loss of $0.38, improving from a $0.80 loss in Q1 2026 and a $40.57 loss in Q2 2025. Adjusted diluted EPS was $0.91, down from $2.09 a year ago, while adjusted EBITDA declined to $92 million from $127 million and margin fell to 18.0% from 24.1%.
- Free cash flow held near $101 million
- Six-month operating cash flow was $152 million, down $7 million from $159 million, but free cash flow was broadly stable at $101 million versus $102 million. Capital expenditures declined to $51 million from $57 million, representing 4.9% of six-month revenue.
- Liquidity includes undrawn $330 million revolver
- Cash and cash equivalents were $215 million at June 30, down $58 million from December 31, 2025. The company had no revolver borrowings against its $330 million facility and retained $216 million of share-repurchase authorization.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Client losses and lower bookings persist
- Recurring revenue decreased $21 million (4.3%) to $471 million in Q2, as management cited lower Net Commercial Activity. Management expects prior-year client losses and lower bookings to continue affecting revenue growth through the remainder of fiscal 2026.
- Large 2028 debt maturity and interest burden
- Long-term term-loan principal totaled $1.976 billion as of June 30, 2026 and matures in 2028, while quarterly interest expense increased to $24 million from $22 million. Cash was $215 million, down $58 million since December 31, 2025.
- TRA dispute may require up to $40 million more
- Alight paid $136 million under its Tax Receivable Agreement in the first half of 2026. It estimates that resolution of the current dispute could raise 2026 Tax Benefit Payments by up to an additional $40 million, plus interest.
- Margins weakened despite no risk-factor update
- No material changes were reported to the risk factors disclosed in the February 24, 2026 Form 10-K. However, adjusted EBITDA fell $35 million to $92 million and adjusted EBITDA margin declined 610 basis points to 18.0% in Q2.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $-0.38
- Gross margin
- 27.8%
- Operating margin
- -7.8%
- Segment
- Employer Solutions revenue: $511 million in Q2 2026, down $17 million (3.2%) from $528 million in Q2 2025; recurring revenue was $471 million, down $21 million (4.3%), while project revenue was $40 million, up $4 million (11.1%).
What they said about what is next.
The 10-Q does not provide quantitative revenue, EBITDA, or EPS guidance. Management said prior-year client losses and lower bookings are expected to continue affecting revenue growth during the remainder of fiscal 2026.
The filing reads about the same as the one before it.
What came before.
- 10-Q · May 5, 2026
- Alight, Inc. reported Q1 2026 results with revenues of $534 million, a 2.6% decline from $548 million in Q1 2025. The adjusted diluted EPS was positive at $0.06, exceeding the expected EPS of $0.04. Management projected…
- 10-K · February 24, 2026
- Alight positions itself as a single-segment, technology-enabled employee experience partner centered on its Alight Worklife platform and long-term (3–5 year) per-participant contracts. The company completed a material…
- 10-Q · August 5, 2025
- Alight reported Q2 2025 revenue of $528.0M with a GAAP operating loss driven by a $983.0M goodwill impairment. Gross profit was $176.0M (≈33.3% margin) and GAAP diluted continuing operations EPS was $(2.03). Operating…
- 10-Q · May 8, 2025
- Alight, Inc. reported revenues of $548 million for Q1 2025, a slight decrease from $559 million in Q1 2024, reflecting ongoing challenges in operating margins which now stand at -1.5%. Despite these challenges, the…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
Read the next one first.
We read every filing ALIT makes the day it lands, and put it next to what the options market did about it. Members get both, and an alert when a filing arrives.
Cancel anytime · Month to month · Switch tiers whenever