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. 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. 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. In the room today, we have many Alight executives who will take the stage. You'll hear from Dave Guilmette, CEO; Alison Bassione, Chief Delivery Officer; Rob Souris, 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 two panels today, one with third-party evaluators that Dave will emcee, and a client panel with representatives from UPS and Southern Company that Alison will emcee. At the end, we'll have Dave and Jeremy take the stage for Q&A.
As you can see, we have a packed agenda today, rich with content. Without further ado, I'm pleased to welcome to the stage Alight's 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 20th. It's the first day of spring. I looked out the window. Mother Nature did not get the email, obviously. 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. Alight came around and asked me if I would join the board and eventually asked me if I would take on this role.
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 Perrin and Hewitt Associates was in the benefit administration business, and I kept losing to those guys. 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. I had seen this company from a lot of different angles and had tremendous respect for it.
When we divested the payroll and professional services business and came back to our core of being an employee benefit services company, I talked to my wife about the opportunity, Sue, and she said, "How could you not do it?" She's absolutely right. 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, "Wow, 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. In particular, when you look at our opportunity, the long-standing relationships that we've had, the millions, hundreds of millions of transactions that we conduct every year, and the longitudinal time with those relationships, we have 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. That is 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 our solutions look like, what do we have, how are we going to market. We do not really need anything more than what we have. Yes, we will fine-tune and there may be 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 is an opportunity for us to grow and have real commercial success. Finally, we have a very compelling view and line of sight to creating significant shareholder value. You will see Jeremy walk you through the details around what those financials look like, but suffice to say, we are in a great position as we take this business forward to create great shareholder value.
I think it was day two 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." It struck a chord because over the last couple of years, we're talking about ourselves more as a technology company. I'm sure that that was appropriate given the portfolio of assets that we had and the direction that we were heading in. When we came back to who we were, the company that's been in this space for as long as we 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? 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, which 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 were going to be retiring. In earnest, this business has its roots and its build back in the early 1990s where benefit administration first came on the scene. 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 that lead the vessel of the professional services business and the payroll business allows us to focus on our core. 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." 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 planned 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. 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? 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, 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. 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 round tables. We'd have 10 or 15 coming into the stretch, and I just wanted to get to know them. Of course, they would introduce themselves. They would tell me how long they were with the company: 25 years, 30 years, 22 years.
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 is important for us, very important, because we are not just a technology company, right? We have great technology, but when the going gets tough, when things get complicated, you need people who know what they are doing, bringing a level of support to the participants. That is 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. If you have been with a large employer, you will know what this business is all about. You start with a new company, and they are 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. 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. Chances are you're not all students of employee benefits.
Sometimes it can be a little complicated to understand exactly what you have and how these things work. That is what we do. We close that gap. We help make it easy for you. As I said before, we are highly relevant in the enrollment process and a lot more. We help the enterprise clients realize the return on investments. These investments are meaningful. For a Fortune 500 company, you are talking about $1 billion or more a year that they are 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 will talk more about that. As I said earlier, we connect the participants with the extended ecosystems. We do this 200 million times a year. That is 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 Lumen AI, 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 affect 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. 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.
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 have 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 are doing or why they are not doing what they are 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 have got the best leadership team in the industry, bar none. You will 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 were 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 and professional services business. We pivoted. 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. 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. As I said earlier, I joined the company back in August. I've been in this role a little over seven months, and many of you have asked me this question. What have you learned?
What did you see? What do you think needs to change, etc.? I wanted to share with you a few of those observations. Firstly, we have a license to lead in this market. I know that because I spent two months, my first two 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 advisors 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 needed to really understand where were we as a company? What were we doing well? What was misunderstood?
What do we have to do to improve our performance to be able to regain that market leadership position going forward? I learned a lot. 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 did not pull our clients through on that. 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 the servicing anymore? What does that mean for me?
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. I heard this come through loud and clear. We used to have John or Jane or whomever as part of our team, years and years and years of employee benefit experience, and they're not here anymore. 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. That was an important amount of feedback as well.
Making sure that what we promised we were going to deliver, we delivered it with excellence. Our clients and our advisors 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. You got it. How do you do that? 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 do, not only in answering a phone call or implementing a new client, but how we conduct business with ourselves and how we interact with our clients. Real simple things. Excellence through and through. You'll hear that a little bit later from Alison.
We also need to bring our clients along on the journey. I've always thought of three very simple questions that are super powerful: What if? Why not? And the really important one, so what? 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. They're doing that. We're engaging. 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.
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. It's messy. It's complicated. A lot of big companies still do that work in-house. There are competitors in the market that do it on a standalone basis, but the market in general has been okay. We are in a position to change that by combining our leaves capability through the acquisition of the Regroup 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. A number of our clients have challenged us to do that. We're ready to hit that bar. When we hit that bar, they're going to want that work to be done by us.
The opportunity for growth is significant. If you look at a typical client relationship and you add leaves to it, that grows 30%. 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? That's a hard thing to do. We play a critically important role for our client's success. Employee benefits is an enormous component of the overall total rewards commitment and workforce and labor costs. It's not going away, right? It's been around for a long, long time. It's a tax-advantaged component of compensation.
It 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. That's not surprising because you're talking about a large array of employee benefits at the end of the day. 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. What if you bought a critical illness or an accident policy last fall? You probably don't even remember that you bought that because it's a couple of bucks out of your paycheck.
When it comes time to use it and need it, you do not even know it is there. We are 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 a health and well-being standpoint. Last week, we had 25-30 CHROs in our offices upstairs for two or three days doing some training work. We had an opportunity to spend some time with them. 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. Unfortunately, that equation is a little bit upside down today.
People do not understand their benefits, so therefore they do not appreciate them. Unfortunately, the cost of these benefits continues to rise, driven specifically by healthcare, but not exclusively. We have an opportunity to change that equation. You can get at that a couple of different ways. You can take the cost out, lower the denominator. You can increase the appreciation, grow the numerator, or you can do a little bit of both. 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 have seen this through the CFO surveys, they are very concerned about the cost of benefits, and in particular, healthcare benefits. Why? They are going up 9%, 10%, 12%, and there is no abating in sight.
I've been in this business a long, long time, and the healthcare 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. 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 two or three times that. People on average in this country have $500 of savings.
The answer is not, "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." Again, we are 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. 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. Of course, we want to add new services as we go. 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. Rob will talk to you about that program specifically and why that was such an important piece to how we were 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 client's 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 one, all three. This will result in improved participation at the customer level and improved customer satisfaction. We will 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 percentage points last fall with client renewals from the prior year.
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 Alison 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. 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. Fortune 500 companies aren't putting that out to bid in droves every year. 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'll work even better if it's on our integrated platform." We are 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.
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 as 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 and taking cost out. I'm really excited about two value accelerants, and I'd like to take a couple of minutes to touch on each of these briefly. The first is AI. 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. 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 two 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. We're able to cleanse that data and organize that data as we transition to the cloud. 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. It's super exciting.
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. 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 has 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. We have an opportunity to increase that lift. 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. 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. Maybe we should turn that off. 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. You will 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 and the crosswalks.
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. 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 Alison. 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 Souris, Chief Client Officer at Alight, and joining me is Alison Bassiouni, our Chief Delivery Officer. Alison and I have both been with this 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.
Click the slide.
There you go.
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 lows, 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. 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 is Allison's going to spend some time on where we are 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. 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. That is why Allison and I and our teams are very, very, very closely collaborating in order to serve our clients and their employees. 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? 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 advisor 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. That matters to our clients. This allows us to serve some of the largest and most successful companies out there, two 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. 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. 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. 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 have heard about our Renew Every Day program. 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. I am 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. I thought I'd share a little bit more about what does delivery really mean. That is 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 healthcare, retirement, enroll in their benefits, and manage a leave if you need that.
Customer care is our agents that take digital and live tier-one 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. 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 two simple examples. In fall, as Dave mentioned, we have our Super Bowl of the Year for our health solution, which is annual enrollment. After that's over, we have to send millions of records to the health plans to outline what you've chosen for next year. When you get that ID card on January 1st for your healthcare, 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 healthcare 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 email, text, virtual assistant, or chat, whether that's online or live. I'm really excited about some things we're doing to refresh the delivery organization as we have everyone together, and we're focused on three 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 Alight Lumen AI 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 a slide, but pre-transformation, we've had some bumps over the last couple of years with delivery. 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.
Those domain expertise are health, wealth, navigation, leaves, and retiree solutions, which Dave talked about. We have also deployed three centers of excellence so far, which covers our care organization, our global delivery center, and engagement services, which supports communications across those solutions. Over the course of this year, we are pulling together the implementation teams, project management, so we have one focus on implementation. We have created a group around delivery excellence and innovation to really drive reduction of manual processes and improvement and modernization of some of our delivery items. 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 Elite experience regardless of size and complexity. 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. 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. In other parts of our business, we're still using Microsoft Word, which most of you probably know doesn't have those same capabilities. Over time, we'll move to a common modern technology so that that process is faster, drives less defects, and we have more satisfied clients at the end of implementation.
Happy clients refer other clients, and they buy more services. We are really focused on driving efficiency and cost savings, leveraging our scale, and driving innovation and excellence for our client satisfaction. Lastly, but really important, I am 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. I want to make all of this real into what does this actually look like for our clients and for our participants. Over the last two years, we have driven a 2% increase in digital-only interactions. We have done that in a variety of ways. We have gone from disparate call center tools across those solutions, very people-heavy analytics, and client-centric teams within care.
We have 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 are heavily focused on AI in the care experience, and Deepika will elaborate on this a little bit more, but I wanted to give you two examples of how we are doing that this year. One, we are 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-two specialist.
That's coming this fall with enrollment, and 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. We're starting to use generative AI in our testing process. 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, etc. I'm going to give 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. We expect over time, while it's early in the application, a reduction of hours in testing by 30-50%, 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. That self-service education paired with the AI chatbot drove a 25% reduction in live interactions, which saved the client's employees over 200,000 hours by not having to call and ask for support. We did that while increasing customer satisfaction by four points. We are really excited about how technology, coupled with our great services and those 8,000 people, can drive excellent results and value for our clients. We have talked about client management, the fun stuff, delivery, and now Rob's 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. A lot of great stuff going on. We've talked about how we drove an uplift in our renewal rates. This was not coincidental. In order to continue to move that needle, what do we need to do? There are four key focus areas that we need to be in tune to 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 could not be more excited about what 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 roadmap. You are 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. 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. We continue to increase the client lifetime value for Alight. What is this Renew Every Day program that you hear about? Throughout a client's lifecycle journey with us, there are 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 lifecycle as having three phases. In phase one, this is coming out of a new service. 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 client's 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 were not ready to consume at that time. Is it ripe for us to reintroduce those and bring that forward in the relationship? Phase two 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 multi-year. This is where we have the risk of complacency or staleness. This is where people can say, "Yeah, 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 two to make sure that we drive this relationship in the right way. To avoid these pitfalls of staleness, specific actions in phase two 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. How do we have some independent reviews to make sure that that client's truly getting the best of Alight?
Most importantly, in this phase two, we want to make sure that that relationship is reinvigorated. Is this client as excited about Alight as they were on day one? If not, what do we need to do to get them there? Are they getting as much value as they expected? Finally, we move into phase three. Phase three 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 one and making sure those solutions land very well and continuing through phase two and three, returning back to phase one.
Our Renew Every Day program monitors these clients in an enterprise manner. We have amazing colleagues that clients highly value facing off and working with our clients every single day. Our Renew Every Day 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. We are never surprised by clients as they hit the end of a contract term. Let's bring it to life with a real example. To set this example up, this use case involves a global employer. They have about 40,000 employees in the US. 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 grapevine that we were losing work. We deployed our Renew Every Day strategies. We immediately set out to have a reset of the relationship. We did workshops on resetting that relationship. We 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 of 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. 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. Our Renew Every Day 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 and retention, and happy clients and colleagues. At this point, I'm thrilled to invite our CTO to the stage, Deepika Degorala.
Rob and Allison. Hello, everyone, and thank you for being here today. I'm Deepika Degorala, CTO for Alight. 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 four years, we've made investments across technology to transform and completely position ourselves to accelerate innovation and drive client value. I want to start there today. I want to start by talking about our technology transformation and everything we've accomplished on that front. I will talk about how these strategic investments truly set us apart and enable us to lead the market forward. 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. Our multi-year technology modernization journey was completed last year.
Through these efforts, our goals were to transform the participant and client experience, to improve efficiency, and to deliver savings for our company. We did this by tackling both our front-end interactions as well as the back-end foundations of our systems. 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. It drives a better participant experience, but more importantly, it is driving through digital adoption and is our competitive edge, if you will. On the back end, we drove efficiency.
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. 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 upleveled those operations through automation as well as AI-enabled capabilities.
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 Alight Lumen AI, 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. We continue to deliver innovation across our best-in-class solutions at the same time. 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 enhanced self-service features with HealthPro Checker, HealthPro Experience, and Symptom Checker capabilities. We launched new partnerships.
We expanded our APIs, and we put a lot of effort into program optimization to drive utilization. For our colleagues as well, across delivery and technology, we've brought AI and automation tooling to help them deliver with quality and speed. 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. That number is growing. We anticipate it'll be up to 80% by the end of the quarter. 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 six to eight-week period between late October and early December where one in 13 Americans use the Alight WorkLife platform to make their benefit elections for the upcoming year. 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. 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.
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. Really, investments driving real tangible improvements across our systems. When we think about the work we do and we plan for it, we think across three categories: transforming the benefits experience. 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. All of our activities are powered by Alight Lumen AI. I mentioned Lumen AI 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. We do this in a secure and governed way. We are able to create a picture of an individual, if you will.
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. 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. Our AI and our data is the power behind a lot of the work that we do. 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. We have invested in technology to drive quality and efficiency across our technology team, transforming the way we test and bring releases to production. 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. As we drive more adoption towards this, we know we can move towards a more real-time experience there as well.
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. You heard a lot about this, but let me bring a little bit to life here. These are some screenshots from our call center technology. 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 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're 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. 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. 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. 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. That's what we're building into Alight WorkLife.
We definitely have the search results when somebody runs a search. In this case, someone was looking to find out what their FMLA benefits are. We have all the documents that are returned down below, but Alight Lumen AI 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. Likewise, for employers, we're building a state-of-the-art insights and analytics product.
This is actually a screenshot from our leaves insight product that is being adopted this week. It is really exciting to be able to show this here to all of you today. This is providing cross-solution intelligence. It is actually breaking across the data silos of our individual solutions and providing insights that cut across all of these. 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. We operate in petabyte scale. 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. You could listen to a different song every day for 1,900 years with that amount. Pretty compelling. 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. 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? It's still self-serve.
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. 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." 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 leave 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, it also benefits the other stakeholders in our business, our partners to work with employers to identify programs that can drive utilization and ROI. We can exclusively do this because of the data we have across the solutions and across the experiences. 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. With innovation around AI and automation and a product roadmap 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.
Ladies and gentlemen, please take your seats. We'll begin shortly. We'll give folks just 30 seconds more to get settled.
Looks like you're all getting back into your seats. Welcome back. Hopefully, you had a chance to freshen up your coffee and connect up with 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 Herron Palmer, Jamie Curcio with Curcio Webb, Mike Hager with Alterity. These three individuals and the companies that they work for, or in some cases, have a namesake 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?
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. When I think about our relationships with the TPEs, it is pretty darn important that we have good, open relationships with an opportunity to get the feedback that is so essential for us to know how we are doing, but as well for us to be able to share with these TPEs what we are doing. A lot of that you heard this morning, but bring our value proposition forward, make sure they understand what is on our roadmap, make sure they understand the so what, the why not, and the critical questions that I refer to in my opening remarks.
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. Over the last, what, two or three weeks, Jamie, I think we had a whole afternoon session with your leadership team and my leadership team, four or five hours together in the room. Last week, Kathleen, we did the very same thing with Herron Palmer, 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. Mike, I know we're due up, I think it's next week with Alterity. Exactly.
I'm involved in every one of those because it's that important to our organization. We have an opportunity today to hear from these TPEs. We're going to ask them a few questions, and then we'll have a few jump ball questions as we go. 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? With that as our starting comments, I'd like to maybe start with you, Kathleen. Believe it or not, we're going to set AI aside for a minute. We'll get back to it 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.
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. 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. 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 one ring." You know how it goes. One ring to rule them all, one ring to find them, one ring to bring them all, one ring to bind them, right? We thought, "What an ominous and weird analogy," but it was pretty good. At the same time, it's pretty apt, right? Why that analogy and why now? It resonated with the rest of the board. Really, the first layer, 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? A lot of control, right? Everything in one place, but a lot of control over access, accessibility, eligibility, security.
There it is, right? 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 five years since COVID hit, right? Now we're all talking about this. It's been five years. There's been a proliferation, like an exponential proliferation in the number of solutions. You talked about the partner network, right? The number of solutions out there, whether it's condition management tools and programs, right? Like a Livongo, whether it's financial wellness capabilities, which themselves are really evolving, like a BrightSide, 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. At the same time, we cannot avoid talking about AI, right? There's the arms race that is AI.
How does that help? I think in that find and bring layer, right, what employers are looking for is how can I get—and you saw that the drivers are all the same, right? 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.
There is 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 one 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 bind them to the solutions that fit best for their needs at that moment in time, right? Of course, there is that—how do you really bind a client or an employee out of loyalty? There is that layer that Rob and Allison just talked about, right, around 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 to the right place, right? I think that it was interesting to us that that's still a gap, even with all the progress and integration. It's really something to think about how providers can now capitalize based on the data. 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? 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 the single ring.
We're seeing more—I call it more of a participant engagement portal. I think really the key is to not only get that engagement, but to make it be meaningful. 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. I think the frustration with a lot of clients is they have to steer them to lots of different places. I think that there is this movement to, can I get a single place where I'm getting meaningful information? 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 it.
They got something.
Also inviting them, the employees, right, to share data that may be beyond your environment. Exactly. Because that helps that bind, right, to be even tighter, right? 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.
Right.
Maybe let's pick up on this, and I'm going to turn to Jamie and ask you, 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.
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. In my 32 years of doing this, we've only had two clients that have taken administration of their benefits back in-house, and their benefits departments are not happy about it because it was mandated. It is absolutely here to stay. There's been such an evolution in the business because when I started consulting in the business, the benefit professionals within Plan Sponsors were expert at benefits administration, and that is no longer the case. Our clients are depending on organizations like Alight to really help them with dealing with the day-to-day operations of employee benefits.
For the most part, they're not coming back in-house, and it's been challenging. I think the other thing that's been challenging within the industry is about 15 years ago, there was kind of a war on fees. Some of the things I'm going to talk about in a few minutes pertains to that. There's such a fee compression when it comes to benefits administration and what Alight and Alight's competitors are allowed to charge. It really has impacted the industry from a quality perspective. I'm a big fan of fees should go up in the industry, just like everything else in this industry. I don't know what you guys think, but I think it's been a challenge. Just 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 what we're hearing from our clients, we just want our providers to get the blocking and tackling right. That is the main thing. Then we can start to look at expanding. You talked earlier, Dave, about leave administration, and I think that's one area where you said the industry's okay. I think from what we're hearing from our clients, the industry's a little less than okay. As I think for many organizations, they would love to outsource leave administration. 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. It is our job as third-party evaluators to be fiercely independent, but we are absolutely cheering for this industry. We are all cheering for this industry. We think it is not going away. We want the best services for our clients and the best for everyone involved. When I look at Plan Sponsors and people in the benefit department, we have 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 are stuck doing some of the work, like they need to check reports, they need to reconcile some of the data, they are getting complaints, or they are getting escalations that could be handled by their benefit providers.
That is another challenge that Plan Sponsors are faced with that the industry needs to solve. When it comes to employees themselves, we all know there are multi-generations in the workforce and lots of different needs. When it comes to employee engagement, and you started to talk about it, Mike, there are a lot of different needs, and benefit strategies are including lots of different solutions. I think it is really important for those solutions to be served up at the appropriate time and 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 is a cost savings piece to it that is very important to the organization. Benefit administration costs are a drop in the bucket compared to the overall benefit spend.
I think if our clients that are Plan Sponsors can free up their time to focus on that spend, they're going to be much more effective as professionals. Just a little bit back on the participant side, participants are struggling. 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. I think that that kind of counseling is missing a little bit today. 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 four adult children, and I was their benefit advisor in every one of those situations. Once they turned 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. 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 of the rest of it. It was like, "Okay, what do I do here? Am I making the right choice? What about my 401(k)? How do I maximize my match?" All those sorts of things. Great opportunity.
You said something else that really struck a chord 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. That's all 100%. Back in the day when I was deep into this, you'd have a very large benefits team. You might have had six or eight or ten individuals on a big corporate team that were doing the administration and the delivery. You might have one now.
Right. Exactly.
Right. They are not in a position and do not have the capacity to be able to take this work on. If there are things they are doing inside, like leave administration, when they find a really great solution, I think they are going to want to push that out. Definitely.
To spend more time on the big spend, right? Right. To your point about fees, I think clients are willing to talk about investing more if you can demonstrate outcomes, right? Because the outcomes impact that big spend. We have heard even just in numerous finalist meetings, in RFP situations, clients begging for demonstration of outcomes that impact that bigger part of the spend. 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. 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, and how are they evaluating the AI impact the analytics can have on delivering better employee experience?
What concerns might they have around governance? Just let's bring it to life.
Okay. I 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, if somebody started a new company, the auto enrollment for the 401(k) plan, maybe it was set at 6%. And I'm saying to them, "That's not enough." He goes, "Why isn't the company telling me that?" It's 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?
6% is getting them the maximum company match or things like that. There is this different sort of expectation that they have become accommodated to in Amazon and everything else that they're interacting with in their daily life that I think needs to be applied. 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. 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.
I think the concept of I'll talk about AI in three 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. More and more, you'll see situations where it can be pretty overwhelming in terms of what my medical choices are and the best choice to make in that situation. 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." It can give you information about their doctors, whether they're in network, things like that.
That's the kind of information I think that's really useful and helpful for them. On an ongoing basis, particularly most of the firms now are ingesting claims information. 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 this situation, with the client permission, with the employee's 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 was very frustrated.
His boss had 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 guy's like, "Had it for five years. We need to get this thing in place. Had it for three years." Even at that level, the person didn't know they were there. I think 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. 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.
As Kathleen was saying, the key in a lot of these situations is everybody wants 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. I think that's where you're going to see a lot more willingness to invest more fees. 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. If you're actually able to show them that and prove it, and then in the Alight world, they wait till the claim comes in.
It's not just that you suggested an approach, but you actually have evidence that you actually impacted the participant's behavior in a more meaningful way. There's that first part of it, I think, is fairly important. AI, I look as better, faster, cheaper. It's one of the few things where you get all of the above, right? For instance, we talked a little bit about dependent verification. That was a process that used to, a person would enroll. 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, etc., etc. These days, you can now, with the technology, the person can take a 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. 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. 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. It has a whole data bank that it's looking at, 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, etc.
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. 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. 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'll stop some of those phone calls. 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 a case.
A case is something you have to log. It has to be escalated to an expert. I think I saw a study once that a case costs 20 times more than just answering the phone call on the first call. The other part I've seen that's really exciting is the whole being able to mine. It was alluded to earlier, every call that's coming in now using Alight Lumen AI 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.
If there's an issue where a person is stressed or having a broader issue, it can surface that. It can surface it real time. 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?" 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 the sentiments. You can create word clouds. You can be very specific about a particular issue. If 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. My sense of this is the 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. Hopefully it's better, faster, cheaper. The other part is the immediacy. 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. It's always the 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. Something Mike said that really strikes home for me. You might think about this even generationally. I think many employees, many in the workforce want to be guided, right? They recognize they do not understand this, and they have been guided in other parts of their lives. They are willing to share information, in many cases, willing to share personal information that we would not even be gathering to be able to have that experience be even more seamless and more helpful for them. It goes back to coaching someone in what a 401(k) is, right?
Right. Right. Yeah. Exactly. Yeah.
Being able to set up an appointment. That has been a bigger deal, not just that you have to wait in line.
Have the ability, if you have a bigger issue, to know you want to get some guidance and go online and set up the appointment with one of your counselors. That's a wonderful participant experience. Nobody likes waiting on the phone forever, especially me. Collectively, we have over, I'll be modest, 100 years of experience on the stage. I don't know how you feel about this, but as I've thought about technology, this is the first time in my career where the technology actually is outpacing the business demand.
Definitely. Think about that. Sure. Yeah.
In history, you were talking about customization and other kinds of things. I can remember we would want mass customization. We wanted more personalization. It was just not possible because the technology was lagging, right? The business demand kept pushing on technology, and technology was what was holding us back.
The opposite is true.
You have now, it's moving so quickly for employers that I think Alight and other providers, right, would do well to proactively talk about the governance model that you place around AI, right? We talked a little bit about this when we met as a team, but clients are having their external and internal counsel come to finalist meetings to understand the provider model in deploying AI, right? That governance piece is important too.
Even education, right? Yeah. Yeah.
I've just been given the five-minute mark from my dear friend, Stan. I knew this was going to go on. We originally had this for 30, and then I'm like, "That's not enough time. Let's add some more time." We could talk all day. It's really a pleasure to have you guys up here.
I'm going to throw up a couple of jump balls. Anyone who feels like they want to jump in on this, fire away. We've been talking about personalization. How important is personalization of benefits in 2025? What strategies can we and others take really to help offer more tailored benefit solutions for diverse workforces?
I think personalization is very important, especially with all the programs that are available, like we've been talking about.
To be able to use different technologies to get to participants, but to actually be able to communicate on a personal level and for participants to feel good about the information that they're getting and to feel confident that they're getting the right kind of advice, that if they are going, if an employee's having a baby, that they're not getting something about cancer on their text, that it's really information that is useful to them. Right.
The irrelevant stuff is annoying, right? Talking about the digital experience, right, of Gen Z, right, the tendency to volunteer information. There's also the expectation that you know about me, what I've already shared. Absolutely. Yeah.
The other thing is you've only got them, I don't know what the latest number, what, 20 seconds of their attention when they land on the homepage.
You have to make that be a meaningful interaction. The only way to do that is to show that you know something about the person. I think you might be calling because your dependent hasn't been verified. Is that right? Let me help you. Let me steer you to the right way. I think it's really critical to kind of get people engaged to get them to take the kind of action you're looking to get them to take.
Terrific. Let's have a slightly different view. We've been talking a lot about delivery. Let's talk a little bit about the actual composition of the benefit offerings. In your collective experience, where are employers saying they want to emphasize or maybe invest more in their benefits?
An interesting theme that we've heard recently related to financial wellness is the situations that many employees of our clients are in are dire. In some cases, when one hardship comes along, it tilts the whole boat, right, into the water. We're seeing a rise in the need for employee help fund solutions related to not just disaster relief, but also hardships, right? Extending beyond what the 401(k) can do, right, with hardship withdrawals, etc. That's something that has been more of a theme recently. You can see some providers are now innovating in that space, creating almost the same type of navigation that we see on the health side within the financial wellness space. I would say that's been probably the most unique, but growing fairly rapidly.
I think tying the health and welfare and the financial pieces together, where do you spend your next dollar is really, and that's where Alight is very well situated to help employees make those kinds of decisions because you're able to address that through enrollment experiences and through push notifications and things like that, but really to help participants understand how that all fits together.
Anything else you'd like to add, Mike?
Not on that point. I do want to make a different point that I just think is worthwhile. We're seeing a trend. It's almost impossible to be hired as a new company within a Fortune 100 company. The barriers are so high in terms of getting through IT reviews, risk management, etc. Companies that are already in with one service area have a much easier case to make to be able to expand that service thing.
I mean, I can't tell you how many situations I've had recently where people are like, "Well, we already have an existing relationship with these people. I don't want to have to go through that four-month delay and all the heartaches and headaches around that." I think that factors into the broader what you're trying to do on the other side. You're better positioned because you have a broader array of services than many of your competitors.
Let us do the curating, right? Let us do all that vetting. If you want that feature, we just flip the switch on and we can add it to the guide.
You could just say, "Oh, accidentally I turned on navigation. I'm sorry. Look."
As long as you nail the basics.
Exactly.
Got to nail the basics. That's a good way to end it, kind of the way we started.
I've had a blast. We're getting signals. Okay. It's just been so fun to have you all here. I think this is the first time in over a decade that the three of you have actually been together, never mind on the stage. It has been a real honor. Thank you so much for giving us your time. I really enjoyed this session. Appreciate it.
Thank you.
Good morning. I'm Greg George. I'm the commercial leader here at Alight. First thing I'd like to do is thank our investor relations director, Jeremy Cohen, for putting me in the spot between the two great panelists that everyone came to see. Jeremy, wherever you are, we'll talk later. I hope you're wearing comfortable shoes. Okay. Dave stole my joke about the first day of spring. We're not off to a great start here, guys.
I mean, it's a little rough out here. I would like to take you back for a little origin story. Two years ago, and I remember the day because it was St. Patrick's Day, 2023, and I get this phone call. I'm minding my own business. I'm working at another public company in an adjacent space in human capital management. It's a recruiter. I'm like, "Hey, do you know what the calendar says? It's quarter end over here." It's like the first thing going through my head. He says, "Alight, would you be interested in talking to Alight about coming over to work to lead the commercial business?" I said, "I know Alight." I'm like, "Hang on a second." We got to talking. He got me connected with my very good colleague, Michael Rogers.
Michael and I got to talking about the growth opportunity and the desire to build a durable and sustainable annual recurring revenue business. They had me at hello because that is indeed my passion. This is what I want you to know about Alight and the commercial team in 2025. We have a clear path to continue growth in recurring revenue bookings. As you've heard, we've given guidance that we're going to continue to grow double digits in ARR bookings again this year. Our differentiation in the market has never been stronger. You heard about it earlier today from Deepika, the depth and breadth of what we do. There's just no one out there that can match us in our integrated platform. Finally, we have a clear and executable go-to-market. We're focused on our client base.
You've heard that again today, where you want to go out and win net new customers and, of course, work alongside our great partners in support of our clients. It's worth mentioning, and Dave talked about this, but I want to talk about the market opportunity one more time. It never gets old. Just within our client base, and it's still kind of unreal to say this out loud, just within our client base, we've got the opportunity to nearly quadruple the business. Let that sink in for a minute. Just within the client base, we have the opportunity to nearly quadruple the business. That exists in very few places in the universe. Certainly, as you'll hear as we go through the presentation today, we're better positioned than ever to win net new clients as well.
The work that we've done with the commercial team, that's really put us on our front foot in the marketplace where we're out driving demand. In many cases in our past, we are more of what I would call a demand-acknowledged organization in some cases, where a lot of our activity was centered around the RFPs. Trust me, we love our RFPs. It's a big part of the business. We just don't want to be totally dependent upon them. As we go through the presentation today, we'll walk through all the growth levers in the business. Just know this, we can hit or exceed all of our midterm targets just working within our base. We can hit and exceed all of our midterm targets just working within our base. That's just an amazing opportunity for us.
What's different in the last year and a half or so? Clearly, it always all starts with the team. I'm really proud of the progress that we've made here. We have attracted top talent in the enterprise space, and we've paired them with our seasoned industry veterans. We've realigned our field team so that we're in much closer proximity to our clients, our prospective customers, and certainly our partners in their local markets, which is really important. It wasn't something we were great at before. We've also significantly improved the rigor in the business, and we've given the team new tools and technologies to help them drive efficiencies in the business. We're seeing the impact of that work show up in things like deal volume, conversion rates, and deal size. We know we're heading in the right direction.
Most importantly, we've rewired the business so that we're built around that sustainable, durable, annual recurring revenue growth. In addition, we've carefully crafted our coverage model, pairing our enterprise talent with Rob's client management team. Our specialty teams bring deep domain expertise across all of our key competes in the marketplace. You heard it earlier from Dave and several of the other ELT members. I mean, we say with pride that we work with half the Fortune 500, but I have to tell you, in the enterprise space, guess what? There's another half that we don't work with yet. That is what we're doing there in terms of pursuit of net new large market opportunities. When you consider the Fortune 1000, a lot of those drop down into the mid-market space.
That represents almost a wholly net new growth opportunity for us. Just a couple of really big opportunities for us there. Simply stated, we've just never been better positioned in the enterprise and mid-market space with the changes we made to our coverage. We're driving direct engagement out there, and that's showing up in the results. We are the clear market leader, and our portfolio is what sets us apart. In a group of fragmented players, when you look across our platform, it's easy to see here how we differentiate. In many client and prospect situations, they start out and they have a discrete need, and that's great. We love that because it's an opportunity to come in, given the breadth of what we do, and land and expand. Again, that's a fantastic opportunity for us. However, we're in a category of one.
With all of our assets and the way we bring that together under one roof with the Alight WorkLife platform, that is a game that only we can play. It's really important to understand that. We are seeing that approach show up in the results, not only with the team, but also with the value that we're delivering for our clients. Let's get into the growth levers a little more. The first bucket, we hit that earlier. That's working very closely with Rob and his team to expand our share of wallet in the base. Adding net new large market, that's kind of the enterprise conversation we just had. Then the growth opportunity in the middle market. These are the total investable net new opportunities that we have, and they're big ones.
Finally, when you consider the value we bring to the employer with our platform, it's a tremendous advantage to be part of that ecosystem. We're an aggregator. We touch half the Fortune 500. You've heard that consistently today. 35 million participants are all sitting out there on one platform. That's why we're getting these calls every day from companies that want to be part of our network. Let's consider the opportunity of the base a little further and what the opportunity is to expand our share of wallet. Rob talked about this. We deeply understand our customers. We've done that work. That's enabled us to align the right team to the right opportunities at the right time. That's just really important to our success as we go forward.
Just in terms of expanding our existing footprint and the client base, we've got a $1 billion opportunity just with the expansion of things we already do for our clients. Then when you look at the cross-sell, it gets really interesting because we've got a $6 billion opportunity out there in the market to go out and add new solutions within the base. We're obviously very focused on our top 200 clients. That's mission-critical for us. It's also important to understand that half of that opportunity for growth lies outside of that top 200. With the coverage we have, again, we're poised to tap into that opportunity. Let's look at that cross-sell opportunity just a little bit more, especially when you think about leads and navigation. You're talking about significant, significant pipeline growth here. These can be sizable deals.
We're talking about a 30% uptick with leads, double digits again with healthcare navigation. I think my favorite part, we're in a situation where we barely have a 10% penetration rate. These are huge, huge opportunities for us that the teams are driving out there. We talked about the opportunity of the base, and what you're looking at here is all the net new white space that we have. It's a very broad-based opportunity. We're diversified, and there is significant, very significant growth that we'll get across all the entry segments that we serve. We're also seeing a big uplift in the net new pipeline, and those deals are getting larger as well. Just to take a minute to bring this competitive advantage to life for you, I want to share a couple of win stories. I'm really proud of the team.
Just recently, both were net new wins. Net new wins, both are with big brands, household names that you guys would all know. Both are really nice annual recurring revenue deals, and they both had some common themes. In both situations, those companies wanted to modernize the employee experience with AI, but they also wanted to consolidate the number of access points and systems to lower their cost of ownership. In both situations, because of the coverage that we have, we had our antennas up, and we figured out that both companies had multiple evaluations already underway in the market or about to get underway. We were able to pick up on that and drive a conversation with the executive leadership at these companies and, frankly, create criteria that we can only solve for.
When we talk about a game that only we can play and win, those are a couple of great examples. I'm super, super proud of the team with the way they led with value in terms of what we brought to both these organizations. We're talking about a $35 million value expectation that we're going to deliver for them over the next five years in both cases. A key component of our growth strategy, or a good one anyway, is obviously a strong ecosystem that acts as a multiplier effect for the business. You just heard from our great panelists. We work very closely with our community of brokers, consultants, and third-party evaluators. That helps our joint clients execute against their benefit strategies better when we work together, and we're very proud of that.
Our work with the carriers that's focused on improving the employee experience to drive utilization and better benefit outcomes for those 35 million lives. Finally, our Alight partner network. That's where we bring it all together, where we bring well-being solutions that drive engagement and retention for their employees. Let's take a minute and take a closer look there. Dave talked about we've got 30 really strong partners in our network, and we're actively pursuing bringing on several others every week. Those 35 million lives, I think this is really important to understand, that rely on us. Our partners also work with them. When we work together, we just bring them more value for both clients, our clients and our employees, in bringing together not only the benefits experience, but also the buying process.
That's a huge value proposition when we work together that we bring to our clients. We get people connected. We have a lot of people showing up to our platform with great frequency, and we provide our partners access to those 35 million lives. Dave said this earlier, right? The employer wins, the participant wins, our partner wins, and we win. Again, just another really significant growth opportunity for us there. Bringing it all together, I mean, we're starting 2025 with some really great momentum. We feel great about where we are because of what we're seeing again in the pipeline, the expanded coverage that we have, the leading indicators we talked about, deal volume, conversion rates, the size of those deals that we're seeing in the market, all trending in the right direction. In 2024, you saw the results.
We drove 18% annual recurring revenue bookings growth, and we've given guidance again to expect that trend to continue. I'd like to leave you with this. We've got more of the right people doing more of the right things at Alight than we ever have by far in our history. We clearly, clearly understand our opportunity, and we've aligned our considerable resources to maximize it. We are winning in the market. We have the momentum, and we are setting the pace, as you would expect, as the market leader. That's it. Thank you all so much. Really appreciate it.
All right. I have the extreme privilege of introducing two of our largest clients, Dave Carroll from UPS and James Garvey from Southern Company. I'll tell you a little bit more about their roles in a second. I'm super jazzed to be leading the panel. Clients and our people are why I show up to work today. I'm hoping you guys get a lot out of this as well. Thank you. First, I do want to do a little bit more proper introduction. Dave Carroll is the Head of Global Total Rewards for UPS. He oversees all aspects of the UPS total reward strategy, design, and execution globally. His scope of responsibilities includes executive, incentive, and broad-based compensation, global mobility benefits, health and welfare plans, retirement benefits, and HR support of M&A diligence efforts. No small job.
James also has a big job as the SVP of Total Rewards and HR Technology at Southern Company. He leads multiple HR functions, including Total Rewards, workforce intelligence and analytics, the HR technology functions, and HR operations. It also includes strategy development, plan and policy design, management liaison with the compensation committee and board of directors, and ongoing administration of the program. Please welcome Dave and James. All right, Dave, we're going to start with you. We were lucky enough to have UPS implement a suite of new solutions earlier this year: healthcare navigation, well-being, the Alight Financial Path, and various other partner solutions. It's a pretty transformative step for UPS. Why was it important to you guys, and what outcomes are you starting to see from that?
Yeah, so it was important to us. I think the first, when you think about just the overall industry and the healthcare industry and the complexity that, and financial as well, right, the complexity that is there for someone to navigate through, it's really, really difficult for our employees and their family members. Putting aside what we do and the benefits that we provide, just trying to figure out how to work with the providers and how to work with the carriers and how to, it can get really frustrating. That is one part. Then you lap on top of that the complexity that, as an employer, we design within our programs. We do it for good reason. We don't mean to be whatever about it.
We do not mean to create burdens for folks, but we do it because we are trying to appeal to a diverse set of employee needs. When you think about multiple carriers, we have about five different medical carriers that we have. When you think about the multitude, a couple of handfuls of partnerships with Point Solutions, for example, you think about the multitude of resources we have on the financial well-being side. It can be just overbearing for employees. Out of a sheer desire of empathy to try to help our folks navigate through all that, it is important to have solutions like what we implemented with Alight. There is a financial part of it, which I would be remiss if I did not talk about. That is we spend a lot of money on those programs.
We spend, I won't get into the dollar amounts, but it's hundreds of millions of dollars, right? Hundreds of millions of dollars. As an organization that wants to make sure we're seeing that ROI on what we're investing, it's absolutely critical that we have platforms like Alight that can optimize what we deliver and get people to the right places, whether it's about seeking the right care or utilizing the right Point Solutions or taking advantage of other partnership relationships, absolutely critical. It becomes increasingly critical when we're constantly trying to find savings in other parts of the organization. How do we optimize what we provide, appeal to that diverse set of needs, and then, like I said, be empathetic to the fact that this is a complicated world that we're expecting our employees and their families to navigate?
Yeah. Thanks, Dave. James, I know your employees are in a similar situation, and you've been a very long-standing partner of Alight, so thank you. What would you say are the key attributes to the success of our partnership?
I think it's important to kind of step back for a second and think about why would a large employer engage with an Alight, which we've been with for, gosh, 25 or so years. I think the most important aspect of that is to think about, yes, it is a drive to operational efficiency, for sure, right? You're trying to find the efficient frontier. You're trying to take costs out. I think the term earlier was used in mass customization. Absolutely, that's what you're trying to get to. 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. There's things you're going to differentiate in the marketplace around that, right?
As an employee, 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 healthcare." Some companies may think about it differently. 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 there's one or two. 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?'" I think that's critical going forward, but also allow us to execute a value proposition, right? 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." The most important thing in the relationships being the extension off that. 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 Alight." That needs to be seamless because then we end up with a platform that we can execute a 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. I would pivot even back to your business strategy. The CEO of Southern will walk into my office and say, "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. 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 that's buying energy from us? That is where it comes into it. Not every customer is going to look at that. You have this consistency through benefit programs, but then you have this value proposition. I think working through that, you all have done a really good job. I mean, this is not a paid thing.
I came up here to do this because you all have done a good job, and you all are critical for us going forward. You are a critical extension of who we are. You have all done a really nice job merging those two 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 teams watching at their desks supporting both your clients will be exceptionally proud to hear that feedback. Thank you. 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. 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.
Yeah, we've got to keep time, right?
Yeah. 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?
Yeah, we do have quite a complex set of employees. If you think about the union employees, we have the non-union employees. We've been with almost 30 years. I think it goes back almost 30 years. You have experience with both the union side as well as the non-union side. 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 kind of the full suite. We have others like our package handlers, your driver that delivers the wine, where they're getting their benefits through a multi-employer plan, but they're still eligible for our EAP. We have others that are eligible for some of our supplemental benefits. It varies. A lot of that is contractually driven.
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. There's the complexity there. I talked about on your earlier question just the complexity we have with our multi-carrier arrangement. 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? We further complicate it by having multiple plan designs, different levels of deductible, a new option that we, a copay option that we just introduced. There's just a lot there.
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 of single point of contact, 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. That HR rep may not be there anymore. They are kind of on their own to some extent to figure it all out.
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 takes 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. Those partnerships are absolutely critical with you.
Yeah, we appreciate that, Dave. 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?
Yeah, I think it's very much about knowing the culture and knowing some of that compliance piece of it. I think the point I made earlier about being very integrated as a team, I think, is critical there. Knowing and understanding your customer base, I think, is very important. 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. We also have the same commonalities around labor agreements, right? There's a whole bunch of things in there, and the last thing you want is labor disputes around any of those things.
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. You know, it's funny, there was a comment made earlier, I think, about, and maybe it was Kathleen that had made it, about being an arms race on AI and other things like that. 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. 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. 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. It becomes how do you integrate that into that ecosystem? That's really important. I watch way too many companies do it where they go and they say, "Hey," and healthcare companies do this. They go, "We're going to go and buy that in the marketplace." 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. We immediately start to look at those providers around that ecosystem and say, we're going to watch them carefully because we've watched it way too often that the reason we bought them as a startup 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. I think the strategy 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.
Yeah, 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 support you for your future employees that you need?
I'm sorry, yeah. From the technology side and the AI, 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? In fact, let me tell you a quick story. It's a crowded space. When we were working through what partner to select relative to navigation and advocacy, we were going through a lot of those names, right? Clearly, you were stacking up toward the top, right? You're stacking up at the top. We got to the 11th and a half hour, and we were like, "Okay, are we ready to make this decision?" 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. We got you on the phone, and you walked through some of what you could. You shared what your technology innovation roadmap looked like. 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. Those are two 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. 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. What can we do to elevate the employee experience or member experience? 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?
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. 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. I do appreciate that you corrected that we're at the top, not somewhere else.
Yes. We wouldn't have selected you. If you weren't at the top, we wouldn't have selected you.
James, how about you?
You know, 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. One of the things I tell my team all the time around AI is we need to pause on AI for a minute. 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 analysis. We've got so much of that stuff we've been doing for a period of time.
Suddenly there's all this noise around. It's a journey that we've been on. It's a journey around decision making and business process and enhancing that business process. 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?
We try and get away from the noise around it 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? I think there's a lot of great things when we look at better information, better knowledge. What I would say is what employees are really looking for, and this is kind of the Holy Grail, it is better decision. It is handholding through some of that process in a simpler way, but it's just getting the issue fixed, right? That's where we've got to go one step further in. It's not just make it easier. It's get it done, right? It's like, 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? That's where I think, however you want to term it, generalized AI, agenta, however you want to look at it, that's the issue that we're solving for. Do employees want more handholding in selecting the best medical plan? Not really. They just want to be enrolled in it. You get to a point where they're like, "Hey, if you can use all my data to make a decision for me, then just enroll me in that plan." I'll click a box to say I accept all responsibility for it, but just do it. I got too much stuff going on. As an employer, we go, "Great.
I want you focused as an employee on solving energy infrastructure issue or transmission issue or how we're moving from energy transition, whatever it may be that we want our business reliability, resiliency, serving data set. That's our core business. I want employees focused 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. They can't make those decisions. 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 our time today. Thank you very much.
All right. Thank you all so much for being here. It's great to see so many familiar faces. 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. Here are the four 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. With that, the three other areas are 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. 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 four years, creating almost $90 million of earnings to our base during that time period. In 2024 was a really big year. We completed the divestiture of the payroll and professional services business, and we completed our cloud migration and really the four-year journey to modernize the platform and everything you heard about earlier today. There we go. 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 three to five years in nature, and we're delivering mission-critical work on behalf of the largest, most complex companies throughout the world. We've got a healthy balance sheet.
We delivered last year to below three times, 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 a couple of 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. We have a lag effect of some of the items that happened a year and a half ago, and there's still a lag effect as it comes through into 2025. We are 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.
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. There is 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 150-180 basis 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. 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. 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 a 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%. Finally, a billion dollars cumulative cash flow over the next three 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, a billion dollars.
Here are the four 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. 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. 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. 6-8% is the growth model of new recurring revenue coming onto the books. 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. Participant counts matter. It's been a grower for us over the long term of up to 2%. Finally, retention. Retention historically in this business has been 96-98%. You can see there in the growth model, 2-4% would be the historical average of what doesn't get renewed. 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. I'll start with the new wins. The 6-8%.
That means, right, in the math, about $140 million-$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. This year we're guiding to $130 million-$145 million of bookings. 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. 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. There's a real opportunity. You can tell, hopefully you heard today, the increased focus that we've got here in this space.
Twenty-five to fifty million dollars of annual revenue growth we see as an opportunity in this space for us moving forward. Finally, I'll talk a little bit more about retention as well. Rob went through some details with you. Two to four % represents about $50 million-$100 million of losses annually in the target growth model. That's in line with historical performance for us. We are currently impacted by the lag effects of 2023, and that compares to about $150 million in losses that we have this year. 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. We've assumed project revenue to be flat from what is really a low point that we see this year in 2025. 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. The improvement there, you start to see first. Next, you'll see the continued momentum of what bookings and volumes provide. I would say you could expect the partners to be on the outside of that from a timing perspective. 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. That is really how we think about the growth model for this business. I did want to capture here for everybody on project revenue. Again, flat is our view in terms of the outlook. You can see really the last five 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. Call it $185 million. We have not seen a pickup in demand, and we do want to be cautious in terms of the view in terms of the outlook. 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 plan design changes, any M&A activity, and changes in the regulatory environment. It does carry an accretive margin mix when it does return.
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. 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 and 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. Every year we are renewing 20%-25% of our business.
To do that well, we need to be delivering with excellence consistently for those clients, getting the basics right, and it 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. We feel really good in terms of the momentum that we saw in the 2024 cycle and have continued confidence in terms of the progress going forward. 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 in 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 three years. So a couple of things I'd point out here.
First, in 2026, we already have greater than two-thirds of our revenue under contract. 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. If you think about margins, it's really two buckets I'd 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's 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 A1lison 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. Let me give you the bridge for EBITDA. Starting where we finished last year at 25% EBITDA margins, the first bucket here is what we've already guided to for the year.
The cloud transformation benefits, the de-synergies being eliminated, offset with the normalized inflation that we typically get every year is our 2025 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. This is, of course, offset by the annual inflation that we will typically get. In the next two buckets, both delivery operating model and the call center are what, again, Aliison and Deepika talked about today. 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. Those examples, right? GenAI creating 30-50% efficiencies and gains with client implementations.
Alison 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. 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. 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. Confidence within the real examples that underscore everything and the opportunity that's in front of us.
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 four 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. 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 2-3% versus where it was at 3-4%. 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. 2-3% 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 5-6% of our revenue in each of the last two years. Now in this outlook, we expect CapEx spend to be somewhere in the range of 3.5-4.5% of total revenue. 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 three 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. 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. As I said, we divested payroll and professional services last year. We took $740 million, paid down debt, and our leverage is now sitting below three times. We have 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's just needed to operate the business and continue to grow the business. 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. The way to think about it is free cash flow post our TRA is largely going to go towards capital return to our investors. 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. By doing that, our growth inflects and will create more shareholder value through an earnings and free cash flow profile that grows in excess of the top line. With that, I'll have Dave now join me on stage and we'll open it up for Q&A. JC, we'll take the mic. Questions? Where's JC? Oh.
Hey, hey guys. Kyle Peterson from Needham. Thanks for doing this and appreciate you guys taking the questions. 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? Yeah, I appreciate you asking that. I had that question actually a few times last night.
We do, 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. Maybe, 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. To normalize, there's a couple areas that we need to kind of think through.
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. 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 non-recurring item is some of the restructuring we've done for the cloud migration, some of the simplification activity. If you normalize for the TRA sizing as well as think about the non-recurring 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.
Relatively in line with where we've guided to this year, we call it $230 million-$265 million, and you can see our estimated range into 2027. Still on that basis, the $1 billion of free cash flow on an adjusted basis as you think about TRA. The other maybe point I'll make sure that everybody understands, we have a very low cash tax rate. It's really 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. That's how we think about it when you get to an adjusted ETR for the business. I get it?
Yeah, yeah. That's really helpful.
I guess maybe just to follow up on the EBITDA improvement, particularly some of those initiatives with AI and some delivery model stuff. Appreciate the ranges and everything for to get to 2027, I guess, and 2025 guides out there. How should we think about, will those two 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. If the clients are on the journey with us, it's something that happens in that process.
That is really how we think about the timeline of, again, we have seen delivering for the clients and what we need to do. Think about that though. There is progress. There is going to be on some of the productivity initiatives that are underway right now. There is going to be continual benefits this year as well as driving run rate benefits into 2026. I would think about a, call it a more linear view between 2027 and going to where we have targeted.
Sure. Scott Schoenhaus here from KeyBank.
Oh, hi. Hi, Scott. Sorry.
I 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 is clearly a disconnect. You have 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. Thanks.
Sure. Do you want to take that or you want me to start?
Yeah, you start. I did TRA. Yeah, I appreciate you doing the TRA as well. Yeah, 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 priority should be.
Just as you said, given where the stock price has been and given some of the other variables, we wanted 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. We can execute on that when necessary.
Yeah, that's great. I mean, we see that 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. That was an important part of the $200 million increase to the authorization and we'd be prepared. Pete.
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. It looks like you are getting better at solving the retention issue. 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. Are you giving away things for retention's sake? Conversely, how can you improve your TAM conversion within your existing base going forward? Yeah, I'll start, Pete.
Thank you for the question.
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. 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. As it relates to the Renew Every Day, 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. Again, the more we do for the client, the stickier the relationship. We turn that asset, that client relationship and contract into something that is accretive from a revenue growth standpoint. That is what Rob and his team are focused on doing. That is what we're measuring with a great degree of discipline. Pete Heckman with D.A. Davidson had two quick questions. Jeremy, the first on the retention commentary. There was a slide earlier that showed retention by year, which maybe that is a different subset or maybe that is a different calculation, but it does not show that same level of improvement that you talked about, the 800 basis points of improvement. Can you just reconcile those two? Yeah, sure.
The previous one looked like 2025 was going to be the near-term low.
That is our expectation. What you saw in the chart was total company. The bars in the chart was total company revenue retention. The blue bar is tracking each year of the cycle, which again is only 20-25% within that year. 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. You see the lag as those losses come through. Because again, if somebody's moving to a different provider, it's going to take them some time to move away from us to somebody else. Eventually we'll see that revenue go away. That's when you start to see the retention lag is what we're seeing now.
That is why 2025 we are having more impact, but it is actually 2023 was the low point in terms of that cycle. The good news is 2024 is back up. That is the driver as you think about what end of 2025 into 2026 and 2027 looks like, is really the view on total company retention. Okay, that is helpful.
Then secondly, just in terms of that bridge towards resuming 4-6% organic revenue growth and a little bit on Peter's question, how do you contemplate pricing within that? We believe today, and I do not anticipate this is going to change into the future, a very rational pricing environment. 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. The pricing market or the marketplace relative to pricing is rational today. 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. We're in a great position with our analytics capabilities to show that. When that happens, we think we can actually have some pretty solid footing from a pricing standpoint.
Hey guys, this is Brendan Biles from Tigress team at J.P. Morgan. Thank you so much for the presentation today. I really appreciate it.
Thank you.
Just doing some quick mental math on the free cash flow stuff. So it's $1 billion in cumulative free cash flow over three years. I think it's roughly $2 billion of EBITDA over those couple of years. So it's very rough, just scratch math for me in my head. It's like 50% free cash flow conversion on a cumulative basis, obviously. How do you think about free cash flow conversion? To what extent do you care about or manage to that? And where do you think free cash flow conversion goes over time? Thanks.
Sure. Yeah. Great point. 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.
Improving through the working capital efficiencies that we're driving within the business, improving with the capital expenditures and where we're at. I think I want to say it's about 10-12 percentage points of improvement in terms of the conversion on free cash flow. There's going to be continual opportunities. Back to one of the examples I talked about, the GenAI 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. 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 2-3% down even farther.
I mean, we think about this on a kind of, you think about an adjusted net income for the business of driving towards upwards 80-90% of conversion on the free cash flow. That is really the pathway that we are on. A lot of that is going to come through that technology. Because again, it is a benefits industry standard in terms of that upfront deferred implementation cost. That is the biggest piece that the technology is going to allow us to get after. That is awesome. That is great. I totally celebrate that progress. I think investors do too. Good transition. If you do not mind to follow up on the AI stuff, I think it is 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.
Your clients and partners care a lot about AI and sort of the opportunity to do new and exciting things with it. How do you, from an operational standpoint, 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. Yeah, 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. We're seeing the impact it has on the front end and the back end. 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.
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. All of that's underway. The part that gets me really jazzed up is to start to think about how this could be transformative. Then what does that mean in terms of revenue growth? 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. It's a good thing to take share, right?
It is a good thing when we think about how we can unlock value for the partnership network that is largely untapped, right? I cannot sit here today and put a number on that. As we think about the real sort of in-based value that our AI plays exist for, the potential exists for us, I am really excited about that. We will see that play out over the next one to two years, right, as we start to turn that on. I think that is it for questions that we had today.
One thing I wanted to mention before we close out, a huge thank you to the army of people over the last couple of months that helped us put this together. Jeremy Cohen as the quarterback. Rhonda, who is just coming in the door. Anna, Greg, Alex, Hunter, Ashna, I am sure I am forgetting.
Matt, Mariana, thank you all so much. Really appreciate it. Yeah, Rhonda spent her birthday with us yesterday.
That's how much she loves doing what she's doing. Special thanks to you, Rhonda. I would like to just close out the way I began. 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, 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. Love the people I'm working with. Having a blast doing this.
For those who aren't investing, look forward to talking to you as future investors. Thank you.