Good afternoon, everyone. I'm Jeremy Cohen, Vice President of Investor Relations, welcome to Alight's 2023 Investor Day. To those of you in the room and those joining online, we're thrilled that you're here with us. Our team's excited to showcase our platform transformation and our path forward. Before we begin, I'm sure one of the reasons many of you are here today is to hear me do the safe harbor statement. Today we'll be using 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 that are discussed in more detail in the company's filings with the SEC, including the company's most recent Form 10-K and updated from time to time. We do not undertake any obligation to update forward-looking statements.
There's a full disclaimer on the screen behind me and at the beginning of the presentation that will be posted on our investor relations website, and I urge you to read it in its entirety. Additionally, we'll be discussing non-GAAP metrics and reconciliations of historical non-GAAP metrics to their GAAP counterparts. Those are available in the appendix. In the room today are many Alight executives, and you'll hear from four taking the stage. Stephan Scholl, CEO, Katie Rooney, CFO, Greg Goff, Chief Technology and Delivery Officer, and Alison Borland, Chief Wellbeing Officer. In addition, you'll get to see a live demo, and Alison will be leading a conversation with three of Alight's clients, including AutoZone, the NFL, and Siemens Energy. Our leadership team is diverse in experience and background, and that diversity permeates throughout Alight as a key cultural differentiator.
It is our diverse group of more than 18,000 colleagues who enable us to drive our transformation forward while making the lives better for our 36 million client participants and dependents. As you can see, we have a packed agenda today as our leaders take you deep into our platform strategy, how wellbeing comes to life through our solutions and our financial performance and outlook. We'll end the day with Q&A, and we'll have mic runners coming around for those in the room. With that, I'm pleased to welcome to the stage CEO Stephan Scholl.
Good afternoon, everybody. Good to see everybody in a room together for the first time. We have our customers, we have employees, we have analysts. We got our board members in the room, it's super exciting for all of you to be with us here today. The buzz in the room during lunchtime was exciting. You know, I'll tell you, this is so much better than Zoom, isn't it? I'm super happy to have you all here to continue the conversation we've been having for the last three years, which is the mission of Alight around helping employees stay healthy and financially secure. We've been very consistent in the last three years around that's our theme, that's our mission, that's our goal.
In talking to all of you over the last few years and so many familiar faces, we've all talked about the agenda of the employee being real, that we really are in this moment in the era of the employee. Last week alone, another testament, Harvard professor sent out an article that talked about how CEOs are still in a crisis of trust with their employees. We've been hard at work in the last three years of bringing together our platform strategy, which you're going to hear a lot today, leveraging over 40 years of our history of being the systems of record and content for millions of Americans and hundreds of millions of transactions, and bringing that together into our employee experience platform. That's what you're going to hear for the next few hours a lot about.
We're going to show some product. You're going to hear voice of client. I can't tell you how excited I am that we're not doing this over Zoom, we're doing it here together with all of you. I'll tell you, this transformative journey will put Alight in a very exciting path to long-term shareholder value. Why do I believe that? You don't have to look very far. Next one. You don't have to look very far to see the continued theme of how employees continue to need help. Mental illness, anxiety, depression, making the wrong decisions on financial well-being are still real today, as they were three years ago when the pandemic kind of highlighted the challenges employees are faced with.
We continue to see this theme throughout, you know, the last few months alone, a lot of conversation around it. I'll just tell you personally, I think we all agree that at the end of the day, we as employees, we're all employees in major companies in some cases, and we're only as happy as our unhappiest child or unhappiest family member. Just a few weeks ago, we launched Worklife to have access to participants, so the family members of our employees as well that we serve. It's the first of its kind. We can't find anybody else at the platform level that allows the participants to allow their family to participate in the work life scenario, because I do firmly believe we are all a unit as individuals across our family.
I think what's maybe different and what's unique here today is that two-thirds of employees want their employer to play a bigger role in their success around staying healthy and financially secure. I've met a lot of CEOs in the last 1.5-2 years, and that's a very nervous conversation for CEOs of companies because they were always told, "You can't go there. It's too personal. It's too much important data. You can't touch that. That's the employee's own world, and you can't go there." Yet what we're seeing is employees are now asking for that, asking for employers to play a bigger role in helping them save better, make better decisions, and CEOs have to cross the line in stepping into that bigger role. Very interesting dynamic that we have in front of us.
When you think about the money that's being spent today, it's not that there's no lack of investment that's being made today. Employers are spending trillions of dollars to try and bring together a complex web of solutions for their clients and for their employees. When you think about what it takes for them in terms of activities to do the most basic remedial tasks around staying healthy, that's what creates complexity for them. It's not only about the employers, it's also about the employees. When you think about 30-40 different systems needed to navigate through this world of making better decisions, that's pretty complicated. If you think about the math, right? We're all here talking about shareholder value and what's in it for the clients and employers.
There's over $25,000 of savings per employee if you do this right around productivity and higher healthcare spend. That's our recipe here to really help drive more consistency and predictability. This represents hundreds of millions of dollars for Fortune 100 companies. Here's the other interesting dynamic. We don't talk enough about the employees themselves. Employees get a pay cut in key moments that matter. Here's an example, and you'll hear a lot more about this. I'll just touch on the surface level. Think about a woman getting pregnant and starting a family. What has to happen for that new expectant mother to go through in terms of most companies? They have to get a pediatrician, they have to enroll in a medical plan, they have to understand, do they have an HSA?
If they have an HSA, what's applicable in terms of spend? If they don't have an HSA, you go to a 401K, a 529 plan. You got to register for leaves management, childcare. What does the company cover? You think about all those pieces of ingredients. I just talked about seven or eight different systems. There's more there. Think about each one of those being completely separate and isolated in terms of engagement and in terms of data. Is that how companies should be treating their employees? Yet this is still today for the largest companies in the world, the complexity expectant mothers have to go through. Still today, for the biggest, most important companies in the world, this is what they have to do. Does anybody know, because of that, where expectant mothers go?
Where's the first place most of them go to to find information? Anybody know? Take a guess. Nobody knows. Google. Thank you. Thank you. From the front of the table. Perfect. Thank you. 1 billion health-related searches a day. 1 billion. We all know. We all are pretty smart. We know how Google makes money. Is that the right place for somebody to go to have this kind of a conversation to find out where to go? I don't think so. Very inefficient out of network tax inefficiencies, out of network complexity. That's what she's dealing with when in a moment that matters. We've been hard at work tackling this opportunity. The last three years, you've heard me and Katie and the rest of us talk a lot about the platform opportunity.
Taking the rich content that we built over the last 40 years, these systems of record, and replicating them into one place, one front door for the employee, adding the content. The third layer is global service delivery. When you think about platform and you think about content that we get through systems of record, our own, plus we also, as you know, manage Workday and SAP. We have the richest complement of data around the employee. The third piece is service delivery. You take those three pieces, that is our business process as a service offering, BPaaS. That term you've heard me say a lot. That's what constitutes the entire complexity and the offering and ability to bring all this together. It starts with. You need all three pieces.
It starts with the front door, knowing who that person is, knowing her background. Does she live in a rural area as a family? No kids, multiple kids, young. Is she going to retire in five years? All those pieces need to be part of the intelligence of having the platform. That's where our focus has been a lot in the last few years. You'll see Greg and Alison really bring it to light through our products and our demonstrations what platform means. I really want to emphasize, you can't do platform, you can't be a dynamic, actionable platform, meaning actionable, you make decisions in there, it actually impacts the systems of record because you need the systems of record.
This is what sets us apart and kind of makes us unique in the industry, because you're either a system of record or you're a platform or you're a delivery organization. We have all three components as part of our BPaaS offering that makes us unique and somewhat complex to understand. That's why you're going to see a lot today around this topic. This is what we're excited about. We've wrapped these moments that matter, so that one example I just articulated, into a whole bunch of packaged services. Obviously, through hire to retire, there's a tremendous amount of moments that matter that we've worked hard on to build these packaged services to drive better outcomes. You're going to hear more about these today.
The intent, again, is to really drive an integrated end-to-end experience across those three components to drive a better outcome for employees and their employers. You're going to hear AutoZone today, who's in the room. You're going to hear it from the NFL. You're going to hear from Siemens Energy. You heard me on the earnings call talk about GE, one of the landmark deals we did in Q4 of last year that is really relying on us to take all those three components of what I just talked about to have a GE employee log in through one platform door so that we know who that person is. If you do this right, take that example I just articulated early. Now she logs into WorkLife. We know who she is. We know whether she has an HSA or a 401 or both. We know her economic capability.
We know what's in-network. I mean, it is amazing to see through our centers of delivery how many millions of phone calls we get all every year around people calling us and saying, "I didn't know I was out-of-network. I didn't know I was being tax inefficient. I didn't know the decision I was making was gonna impact my pocketbook." Employers are standing up screaming and saying, "I didn't know. How do we drive better engagement?
How come my employees are only using 5% of this component and that component and this component? It's not aggregated into a decision framework that allows us, when that person logs in, we know already a lot about that person so that we can navigate that individual through all the different pieces of setting up a 529 plan, getting all the claims data that's needed through the insurance company all in one place. This is the experience you'll hear more about today, and that's the advantage of all those components coming together into one experience. You need size and scale to do this, right? We took on this aggressive task, you know, three years ago. This is why I joined Alight. What I found here was an incredible company with the strongest relationships and the biggest companies in the world.
It had the trust and confidence of the most important clients, millions of employees already on the footprint, relying on Alight for moments that matter. It was now just taking that and building out that capability of a well-rounded employee engagement experience. $1.1 trillion would put us into top 20 GDP of assets under management when you think about it. That's pretty sizable scale that we have in terms of visibility. We all here are talking a lot about analytics and data. Greg will talk a lot about it. You will see the troves of data that we have on behalf of our clients is the most important data set in the landscape of employees in terms of hire to retire.
When you think of the cost base being 70% for most companies spend their money on labor and people, I think it's pretty important to know exactly how we can help them do better with these kind of expenses and moments that matter. This has been a journey we've been on for some time. We're well on our way. You'll see today proof points and validation. Of course, everything I just said, it takes a long time to get there, so we're still early in our journey, but we've done a lot in a few years. When you think, one of the moments that matter for us was last May when we launched, finally, after years of development work, our WorkLife platform, and that took all our client base from custom to standard.
That's the foundation that we've built now with our clients. Everybody, our largest clients are all on or 99.9%, right, Greg, are all on the WorkLife platform as a foundation. When you think of those package services and those offerings, it allows us to go in and talk about moments that matter and how do we implement and drive a different program for our clients. Number two moment that mattered last year, I have to keep on articulating it, is we launched and deployed the largest campaign of human capital management in the history of the United States with the federal government. 6.6 million participants.
If I would have asked any of you in the room, who has the style and scale and capability to implement the largest client in the world, you probably wouldn't have said Alight at the point in time. Live, up and running, successful, and a great program for this company. The fact that we now have moved from custom and to standard, we have scale and delivery and capability to implement a lot of these clients, I'm super excited about the journey we're on. You know, I've been here before. You know, this is probably my third chapter in my career. You know, people discounted back when I was doing the cloud transformation journey back in 2013, 2014, 2015. Nobody thought companies like Ferrari, who I built the whole infrastructure for to move to the cloud, was gonna do that.
Taking supply chain, taking complex systems, factory floor processes, and moving them to the cloud. People didn't think they were gonna do that. Best of Breed to Enterprise 20 years ago, being part of that journey, nobody believed Enterprise would win, and we know who did, right? Enterprise won with SAP and Oracle taking a dominant position. Being part of those two chapters gives me the confidence and excitement and energy that the journey we're here in on around employees is one of the biggest opportunities in the market for us all. It's like a window into the last 20 years. When you think of 30, 40 systems, as I said many times, if you treat your employees like your clients, it'd be a different day. If you treat your customers like you treat your employees, you'd be out of business.
You can't do this to your customers, so why do this to your employees? That's what we're bringing to the table is an opportunity to drive a tremendous amount of transformation in our install base. Our install base are the crown jewels of Alight. We see 2x AR uplift opportunity in taking those systems of record and transaction engines and driving them to a new outcomes-based platform approach. 2x ARR in our install base, our pipelines are the strongest we've ever seen in that regard. When you think of the moment that we're in right now around everybody looking to consolidate and cut cost and getting ready for this potential recession that may happen at some point, they're all looking at ways to cut cost. That's where we come in and say, "Why do you have 30, 40 systems?
Why do you spend all this money? 1% engagement rate, 5% engagement rate." We stitch all that together, here's the interesting thing about getting to that 2x ARR in our install base. We actually don't have to ask for a lot of extra money because we come in and look at their spend at what they do and show them the wasted spend already in place. We're just reallocating funds more towards us to help drive a better experience. We also highlight to the employers the plight of the employee, right? We can't have employees have pay cuts. They deserve better. They need to be able to have these moments that matter, that build trust and loyalty to the clients. If you get that loyalty with clients, what happens? Less attrition, happier, more productive employees. Sounds pretty simple. Net new.
First 30 days of arrival at Alight, I built out and pulled out the net new sales team, built a whole new structure, hired from the best software companies in the world, you can see already the success we have in a huge addressable market, a TAM of over $73 billion. 700 new logos alone since 2021 that we've added. You've heard me highlight some of the big wins, but, you know, the dozen or so or 20-plus names I've highlighted pale in comparison to the total of 700.
Just in terms of partnership, you know, when you think about who we are at scale and size, we've been largely on our own to get here, which was also a marvel to me because we all in this room know the recipe to success of a great technology company is a big ecosystem of the Accentures and the Deloittes and so on. We built that out. Thrift, Accenture partnership. You've seen our Workday partnership. It's the first of its kind at Workday. They've never done a product partnership like this before. We are their go-to-market product for global payroll in European countries. That gives us a significant advantage. Why did Anil and Carl believe in that strategy?
They see the same thing that I do, which is people are moving away from best-of-breed 30, 40 operational systems in HR and looking to consolidate and simplify under more one experience. These systems of record that they have and that we have together are a competitive advantage over everybody else in the market. Another validation point that what we're doing is super exciting. We're just early in the days of net new and also in our partnerships with great organizations like Accenture and Workday. That's a quick summary of a lot of things that are going on at Alight, and over the next little while, you're gonna hear a lot from Greg and Alison and Katie and Matt, who are really gonna demonstrate all the products.
I thought what would be great is for me to exit the stage, is for you to hear from some of the participants themselves about how we are already impacting people's lives in moments that matter. Thank you.
I was sitting in my living room and stretched in the chair and found a sizable lump in my right breast.
I was having some pain in my knee, and I needed to have an MRI. I was referred to the hospital to have the MRI, and I was given a quote of what my cost was going to be, and it was quite high.
My husband had a kidney transplant, we had quite substantial bills, and we have ongoing care for him. In the last year, my son has been having some struggles at school. When I reached out to his counselor, she said, "Honestly, this sounds like executive functioning, which is an ADHD." The counselor said, "You need to go to the pediatrician." The pediatrician left me with a list of about 35 phone numbers to call to find someone who could do this testing. There was no location. There was no whether they took insurance, nothing.
I knew I could probably shop around, make calls, but I'm challenged to find time to spend to do things like that.
Medical challenges inside a family can be emotional draining to start with. When you tack on being that caregiver to somebody in your family, it can really make your mental state just like you, where you feel like you wanna give up. Honestly, I was frustrated but also overwhelmed by this daunting task of just trying to figure out where to go for help and nobody to talk to about what the best way to navigate it was. When I called into the Alight Health Navigation team, they connected me with an oncology nurse. Her name was Lauren, who was so sweet. She explained the information that I would be receiving, a list of elite physicians, and she would also be providing me with customized information on my very specific diagnosis.
I went in through the Alight Worklife portal, and all my information was right there in front of me. I could access it on my home laptop, but I could also access it on my phone at the physician's office. My health ally, Caress, she was fantastic. She was like, "I'm licensed in psychological services," like, "I'm gonna help you through this." Within a day, she had narrowed it down to three healthcare professionals within 10 miles of my home who also took my insurance.
The cost I ended up paying for using the the provider that Alight had located for me turned out to be a few hundred dollars as compared to over $1,500 from the from the hospital provider.
It just was a huge burden taken off that allowed me to focus on my regular day and my mom day. When I received that diagnosis, I thought I wasn't going to live. Once the process kicked off with Alight Healthcare Navigation services, I was able to feel I was calm. I wasn't scared. I knew I was gonna get through it. That energy is what got me through this. Thank you.
Hi, good afternoon. It's always impactful to see the work that we do every day and how it affects real people and real lives. I'm Greg Goff. I have responsibility for technology, product, and delivery, large part of the services that we provide. I wanna talk to you today a lot about the journey that we've been on and the journey that's ahead of us and where we're at in that transformation. We've been very hard at work over the last few years and over the last decades, bringing that all together.
I want to first start with talking a little bit about market dynamics in this space. Stephan talked a lot about fragmentation and fracturing of the ecosystem. I wanted to frame that a little bit for you and how we think about that as we then talk about our technology and products. You can think of this sort of broad ecosystem playing with a few big parties that sit categories of parties that work together. Ecosystem suppliers. Historically, these have been things like plan providers, carriers, insurance brokers, et cetera. The employers themselves in the United States, often the provider of benefits. Globally, they serve different roles within that ecosystem. Then the employees themselves and really the family unit. We think of that kind of broad extended family unit as the recipient of the work that we do and the employers do.
On the ecosystem supplier side, we've seen tremendous fracturing of this. Historically, as most benefits looking backwards have been handfuls of different benefits, medical, dental, vision, a few other types of insurance products. With all the money that's left on the tables that Stephan mentioned, just even looking through the family planning start, it's common for Fortune 500 companies to have upwards of 50, 60, 70 different programs and providers of that. They exist because the money that's left on the table demands specialty in the way that that works from an MSK provider all the way through child or elder care, et cetera. As a result of that happening, the suppliers don't have utilization. People don't know about these programs. They don't get taken advantage of.
On the employer side, the employees are paying money for all of these programs for very low utilization. From an employee perspective, that creates confusion. What should I do? How do I make the best decision? I'm in a moment right now where I actually need to orchestrate, as you heard on the phone, dozens of different phone numbers and different providers of what to do. Alight is the fabric that connects this ecosystem. That's what our platform does. When you have an ecosystem that works like this, it demands the need for a platform type approach to really broker interactions between those.
By virtue of doing that, we can also help inform the all three parties to make optimal decisions along the way, how to provide the best outcome at the point in time needed for that employee or their family, but also the best ROI to the employers who are spending a lot of money and not getting a whole lot for it. We do this through our platforms that are a combination of the experience, intelligence that sit behind that experience, the transaction systems, and the care model that we believe is also critically important. Technology alone is not enough to solve this problem. Let's look a little bit more about how we solve this. I want to start with the foundation as a business. Stephan mentioned this. We've been in this business for 40-plus years on this foundation of administration and services.
This is important because it provides the opportunity for us to get into these higher value services. How does that work? We engage with over 36 million participants a year. Participants being a user, an employee, and by extension, many more of their family. We process hundreds of millions of transactions for them. Everything from what benefit do you have to payroll transactions to loans against your 401K and the record keeping of 401K. In order to do that, we are hardwired into the systems at every one of our clients and these providers, the HR systems, payroll systems, the financial systems, all these systems in order to broker these transactions. That's critically important. It's very sticky. With the duration of our business, these connections persist over many years and provide this big web of an ecosystem for us.
The other byproduct of that is we have huge longitudinal data sets of all of these types of data, HR data, health and benefit data, wealth, financial data, payroll data. That ecosystem provides us an opportunity to then do the top two layers, which is capability we've added. How do we drive engagement? How do we engage in a better way by offering new solutions? I'll talk about those in a minute. Finally bringing that together through an experience platform. You'll see it demoed, Alison will talk about it in more detail. This is really what brings together that entire experience, the intelligence behind the transactions, behind the optimal decision-making into a singular view that says, "Right now for you, this is the best thing that you can do." That's how we think about sort of the stack together.
As we look at this transformation, it's also required that we change the way we work as Alight. We have a solid foundation of this. Stephan referenced it a little bit earlier. Over the last few years, we have upgraded every client in our book to a common experience that's now released and upgraded on a consistent basis. The SaaS software model for that. As part of doing that, we've retired a lot of customizations out of that technology, and it's created the ability for us to launch more standardized packages and products on a constant rhythm and basis. Katie will talk about that when we talk about growth. Part of getting there is getting the wiring of the organization more like a product type business, like a software type business.
Going forward, that allows us to really structure innovation, standard releases, new products and packages, and get predictability and product currency. We've been in this rhythm now for over a year, and we will continue to add to this as we go, but we have a really solid foundation to start on. Let me talk about those four elements a little bit deeper, the four elements of our technology. On the platform side, our design thesis here is pretty simple. We want to provide a world-class user experience that surfaces intelligence. Directly at the moment when you need it. We've been investing heavily in AI. I'll talk about that more in just a minute. As Stephan referenced, there's part of building a platform is building an ecosystem.
Things like APIs and integration centers we've launched over the last year in value-based analytics. How does an employer know that the dollar that they're spending is the right dollar to service their employee base the best? We'll continue to build on these. Really this matters because a differentiated employee experience matters, and it really matters because we can increase engagement. In this space, engagement is everything. If you can drive engagement, every opportunity is a time to influence a decision, help drive a better outcome. Let me talk about our AI a little bit. I get a lot of questions about AI and the use of AI in our technology, and opportunity for us. I wanna highlight a few things. Recommendation and personalization.
We like to talk about this recommendation engine of one, this very personal, like what is best for Greg right now. That may be different than what is best for Katie. This is about the recommendations and personalization, about optimizing the decision, but the decision doesn't matter if I don't get someone to take action. These two things work together, right? How do I come up with the optimal decision across this complex web of offerings and then deliver it to you in a way that's specific, that's through the channel that's most likely to influence you, that's at the moment where you're most likely to take action? There's lots of other use cases, and we see examples of this for clients where we launched this with last year. We see huge engagement.
Engagement on our recommendations at over 50% when we offer those. That's a crazy high engagement rate for this, again, across a captive audience of 36+ million participants and their families. We see the number of engagements go up. Where we have this turned on for the dozens of clients we have enabled, we see our engagements, our interactions three year at 22. That's up from about 12 without this. Again, engagement matters in this space. It also drives value through the ecosystem, the more we can get partners to engage. There are a lot of other areas I'll touch on in a minute around assistance and natural language processing to help ourselves, but also provide better experience to our users. Automation is a huge area for us, which I'll touch on in just a minute.
All of this is predicated upon a data foundation. Again, we have huge datasets over decades through our transaction systems that are what fuel this. AI models are only as good as the way you train them and how you inform them on what the best decisions are. We think we have unique advantage in this by virtue of having those underlying administration systems which create that data on an ongoing basis. People have to come to us to do that, and that's what creates that. It's that combination of the platform, the administration systems, and the engagement layers that create the unique BPaaS offerings for us. It's not just AI. We also had to evolve our tooling and our architecture.
Over the last couple of years, we've been moving our systems to cloud, and we're now moving the back-end systems to that. Common data platforms, again, to fuel our AI. Tooling matters. When you're building an ecosystem as part of platform, you've gotta have great tooling. We've launched tooling, we've launched developer tooling, self-service tooling. This benefits us, but also lets us create an ecosystem around our platform. That becomes a critical piece for faster innovation, but also for creating distribution. We're gonna be a distribution platform in this space, which we are. We are today the largest distribution platform in this space. We'll capitalize on that and get even better at it. Engagement. This is all about how do we create solutions that drive engagement, value, and ROI.
A few recent things that we've launched that are GA now at this place, Alight Well. That's all about bringing wellbeing content into our platform. Everything from challenges, biometrics, incentive models to help people target being healthier. For early clients that we've done this with, we've seen over 500% engagement increases. Again, that's traffic coming to us, creating a better outcome for that person that's wellbeing oriented that also then gives us data that we can turn back into insights to make it even better. We launched Alight Marketplace. This is where consumer products and offering flexibility to employees through their employers to spend money in the way they feel is best, right? For their personal situation. We've talked some about program optimization and Stephan mentioned spouse access.
This is critical from our perspective, as we think often the employee is not the decision-maker in this space, and so we have to optimize across that. Administration, I've touched on these. We view these as really, really critical. These are our proprietary transactions engines across health, wealth, payroll, and leaves. They're systems of record that create engagement in their own right. We've been investing in these. As Stephan mentioned, the Workday partnership and our extending our payroll engines globally. Same thing with modernizing and changing our administration engines to make them Alight Worklife ready, basically feeding the data up into the platform levels to fuel better insights. This matters really because this is often the point where the decision is made. I'm going to change a selection or change a benefit or change a contribution level.
They're recorded here, driven by insights that we provide to them through that experience. Finally, services. You know, if we've learned anything, I think, over the years of technology, different platforms, especially in the healthcare space, technology alone does not solve this problem. Just listen to the participants that you saw there, the employees of recipients. Sometimes a touch is needed, a little moment, just a vulnerable time where I just got diagnosed with something and I want someone to talk to who's objective, who's looking out for me. We look at care really in two big areas. Sorry, services really in two big areas. Care. This is everything from basic, you know, I don't know if this is covered or my...
what my deductible is or, you know, all the way through certified financial planners, certified nurses, clinicians, et cetera, to help people through those decisions. It's a broad spectrum. The other piece of professional services we look at is how do we optimize, implement, and optimize the software that we use, whether that's our software or whether that's Workday, Oracle, SAP, et cetera. That's a critical piece as well because what we find a lot of clients, they don't know how to use what they have. We help them through that, whether they're our tools or just connecting into our ecosystems. With that, I've talked a lot about what we do. I wanna turn it to my friend Matt, and he's gonna demo some of this so you can get a sense firsthand of how this shows up for users.
Thank you, Greg. Yes, there's nowhere else on the planet I'd rather be than showing off all of the really cool things that Greg has created over the last three years. Ultimately really highlight some of the things that I would say we synthesize from as far as trends from both Greg and Stephan, and that's a... If you wanna have a platform, it has to be integrated, and it has to be intuitive. It has to surface better data to make better decisions and create better insights, and then ultimately it has to be personalized. To set the stage and move past the 1,000 words section that I'm sure you're all thinking and move to the pictures worth section, I think we have to talk about a little bit what Stephan highlighted as where platforms have come.
Link Farms is where all of us grew up, or many of us grew up that are, that are of the a little bit longer in the tooth. Where a platform has to get to to have value is it has to be able to provide information directly, either from HR departments or the platform itself through personalizations. It has to really highlight that engagement layer that Greg talked about through things like well-being challenges, and at the same time put and create value without having to click anywhere from all of our systems of record. On top of that, we have to create that same value for systems of record that are not ours, and we have to provide instant value, where am I at against my benefit plan, versus future value, where am I at against my retirement plan?
If you really want to make them sticky, as Greg said, you have to wrap them inside a digital assistant that's always there and is always looking to help at any point. We have a challenge. I think all of us would know that e-commerce has changed completely the relationship that employees have with their employers, specifically from a digital perspective. It's no longer good enough for it all to be there, like we've seen historically. It all has to be connected. That's really, as Greg talked about, the fabric. That's the secret sauce that Alight Worklife does. We get to push through a lot of those silos, and we get to either replace or integrate with a lot of those systems that are part of that employee journey.
It also allows us to go beyond kind of traditional employee relationships and instead move into, I would say, a little bit more personalized. I'm gonna walk you through this. This is an everyday opportunity of an employee that's starting with a new organization. As you watch moving through this very personalized onboarding, that's no longer a stack of paper. It's all about decreasing a lot of that stress and starting to build a little bit of that momentum into that first day, which you walked in, you didn't even know where the bathroom was, right? If you're an in-person. On top of that, we start supporting those first decisions. Choosing your benefits may be the first actual decision that a new employee has to make.
After 40 years, as Stephan talked about, we absolutely have a right to help you as a new employee make that decision. We don't just suggest it. We actually tell you why. Based on all of that data Greg highlighted, we can tell you why we think your out-of-pocket costs will be cheaper one plan versus another. We can ask questions like what providers, what specialists are important specifically to you and your family to ensure that they're in network. We can give you a lot more value out of that decision than simply, you know, trying to say, "Well, my cousin says choose Platinum, so that's the one I'm gonna choose," which is something we're going and trying to support every day.
When you look at then how we can help you with your second main decision, which is usually tied to 401 and how much you wanna put in that, we can highlight key things not only for the present, how much of my company match do I wanna take advantage of? Also we can build in strategies for the future that help kind of that longitudinal plan. Do we wanna put in escalations into that to be able to provide a lot of value? Then it gets to the personalized side. We do this in one CHRO I talked to, "You do it in a very non-creepy way, and we like that." We try to do this in a very non-invasive way where we simply ask simple questions like what's of interest to you? What's important to you?
Through getting those responses, which at this point we're trying to create these value circles of asking questions and providing value, we can navigate the 30 to 40 to 70 to 80 programs that Stephan and Greg talked about and surface to you only those programs and journeys that actually have value. You're not navigating through a maternity journey if you're sitting here worried about stress and sleeping. We remove a lot of that from you. So let's go to another example. That was kind of an everyday example. Here's a moment of opportunity. You know, we get a pay raise. We could go all Nashville, Tennessee, my own hometown, and like, I'm gonna buy me a boat with all of this new money.
Instead, at Alight, we're trying to support you in a little bit of a more longitudinal way about how you should spend that money, because your HSA provider is gonna say, "Give me more. Max that out." Your 401 provider is gonna say, "Give me more. Max that out." Ultimately, you guys got one pay raise, so we have to start to again ask some of those very clever personal questions that nowhere in the system is it gonna be captured. Things like, do you have an emergency fund or are you planning for a kid's college? We can take those very clever questions and actually start to build out a smart budget for you. In this case, it was $408.
Recognizing that some of that money you're gonna wanna celebrate your new pay raise and keep for yourself, but some of it we have to build into a strategy for the future because there's a very good likelihood for many new employees especially, that they're leaving money on the table that's not being harvested, either through 401 match opportunities or through pre-tax dollars to an HSA account. The cool thing is, Stephan talked about is because it's an aggregated and integrated system, it's a single click to then make all of that happen. It's not you then transferring this newfound discovery across all of them. I think that's an interesting way of how we're taking those BPaaS solutions and putting them together as a group of products and really driving a lot of value.
I think what you heard from Tina and Greg and Sarah in that opening video was really at the heart of the more high touch side as Greg talked about. The line that gets me every time is: Where do you go when you want to give up? It's a powerful question. Employees are asking that all the time. I think what's interesting is all of them arrived at Worklife as where they go. I think ultimately the question is: How do we do that? That's what I would be asking if I was sitting in your seat. If I think about it, let's talk through a common example. You are on vacation at Disney World with your wife and kids, and you wake up and your child has a fever. What do you do? You don't know the area.
You don't know the caregivers. What do you do? Well, you can ask our digital assistant, Lisa, who's right there, and that assistant can check all of the boxes for you. Who's taking customers? Check. We can catch that. Are they any good? Check. What's it gonna cost you out of pocket? Check. Where are they located? Check. Ultimately, I wanna click and get one-click guidance to wherever that caregiver in a new city is. Check. We can do that too. From a high-tech perspective, we've got you. Tina and Greg and Tara didn't talk about the high tech. They spent a lot more time talking about the high touch. How do we do that?
Well, we both have clinicians and navigators available to all of the employees that are operating inside this set of products on the platform that can answer all of those key questions for you. How do I manage this bill? I don't understand it. Can you help me with an appointment? Can you navigate 30 different referrals that I got? Can you give me more value? Do you got me? Are you gonna be there when I don't know where to go when I want to give up?
The answer is, with Alight Worklife, the answer is always, "Yes, we've got you." Ultimately, we've talked about a lot of how we're impacting employees, but Greg spent a lot of time also talking about how we can actually make a difference to employers, saving them $, identifying wastage, identifying utilization gaps, and trying to understand how we can really create a much better picture for them, because you cannot do this as an employer across 40-70 systems, as Greg talked about. They all have different definitions. At Alight, we can not only look at, you know, who is interacting with the system as an aggregate, not only by, you know, what % are coming through digital, but also what age, you know, what demographic are those folks.
We can also look at what they're interacting with at an aggregated level. Which programs? Alight's programs or some of those 30 or 40 that are required to have a better experience for the employee. Ultimately, we can start talking about what are some of the outcomes that you're getting. This helps in not only from an employee perspective, what's your overall employee sat of your overall experience that you're creating? What are some of the KPIs that we have for those employees around health and wealth indexes? Also from an employer perspective, how much money are you saving because of this aggregated view? Ultimately, how much money is Alight Worklife saving you? As Greg said so perfectly, we can identify the value of a particular program. In this scenario, it's a third-party program.
It's not even one of ours. Because of our closed-loop reporting, we can do that. Because of that optimization layer where Greg and his team are constantly trying to get the right program to the right person at the right time, we can start talking about how we're optimizing and Alight is generating specifically more value to that organization. We can also talk about it and slice and dice that by, you know, a lot of key DE&I measures that likely you're not getting from each of those individual programs, and certainly not in a standardized way. Ultimately, it's in capturing the value of all of that data that gives us our biggest advantage. If I'm in a conversation with a CHRO and I say, "Congratulations, your overall utilization is 104%.
You're doing awesome." She says, "How do I know? What does 104% mean to me?" It means nothing. The power of having all of that data and all of it aggregated across our book of business is we can say, "No. Based on your industry, we'd see only 70% is the normal benchmark for that data, so you're doing really well." We can look at it over time just as easily to be able to interact at very specific moments where we start to see more proactively when things aren't going the direction that somebody would want them. Ultimately, if you remember nothing else from the picture versus the thousand words, I hope that the vibe you got is from this 10 minutes across a vast product set is that it is very integrated and intuitive.
It does surface a lot of really great data that absolutely helps employees make better decisions and employers have better insights. Above all, beyond all that, it is hyper-personalized, both from an employee perspective as well as from a organizational perspective. With that, I invite Greg back up to talk about the actual impact that technology has on all the other things we're working on.
Thanks, Matt. I wanted to... We've talked a lot about platforms and technologies and how that impacts our clients externally in the ecosystem. I wanna turn a little bit and talk about the impact to us in Alight as a business, how we position for margin, how we position for cost, and what we're doing, and the impacts what I talked about earlier has on that. You can think of our cost base, at least the high majority of our cost base really into three broad categories that I'm gonna address. Our technology spend, the services and delivery spend, and care. I'm gonna walk each of those a little bit and sort of shed a little bit of light on what the drivers of those are and how we're affecting those. Let me talk about technology first.
It's a big driver of spend. The big drivers here of cost are a few things. Our infrastructure spend, the customizations, and the uniqueness of individual clients over time, and really just the complexity of our system. On the infrastructure side, to give you an example, our business is quite seasonal in the way that we work. On the benefit side, it tends to be fourth quarter driven. On the payroll and wealth side, it tends to be first quarter driven given year-end processing, et cetera. We see during those peaks, for example, during enrollment seasons, we need 6-8, sometimes even higher, depending on the year, of infrastructure to be able to process all those transactions, all those engagements. Today, we have to keep that on the floor ready. We've now migrated that to cloud.
It's a great elastic use case for us to be able to scale just up and down to accommodate those bursts. We see that being a big advantage for us on the cost side, in addition to being able to take advantage of all the great capabilities those providers have to affect the product side. I mentioned about the customizations to configurations. Again, getting into that environment of single code-based, multi-tenant type structure, SaaS type economics in that areas of our business are really important that we can sort of create that rhythm in simplifying. As part of the back-end restructuring that we're doing now and going forward, we're taking out more than half of our applications. Again, simplifying our ecosystem.
That will result, as you see, as Katie will talk about margin expansion, et cetera, the ability for us to expand that over time. On the services side, there's really two big drivers here. As you can imagine, it's implementation and then the management of the services ongoing, whether that's administration of our technologies or that's administration of third-party technologies. On the implementation side, this is a heavy automation space, so we've been in the process of doing that to be able to take cost out of that equation. We see things, for example, 95% reduction in building new tenants for clients. The more that we transition to common code, common configuration, and version currency, the more it lets us automate this in a much simpler way, and we've seen that happening already.
On the ongoing services piece, there's kind of an endless opportunity, I think, for us in terms of using AI and using RPA, all the different technologies used in the space. You see an example here, and we've talked in the past about status tracking and all that kind of stuff. A stat here. We process and look at more than 1 million documents a month just in a segment of the business. That requires often somebody to look at that. That's again, a case where we can get better and better and better at looking at, kick out fewer and fewer exceptions. We have some technology in place to do this today, but that technology is maturing rapidly. When I think about, all the different types of AI and tooling available in the space, it's changing so rapidly.
Again, I see this as huge opportunity for us to influence. Finally, on the care side, the big driver of care cost for us is really two. It's the volume of calls and then the cost per call. It's pretty simple math at the end of the day. That's how this works. On the call volume reduction side, the more that we enhance the product, the fewer calls we get. We've seen this already, where we see reduction in calls. For example, when we launched, we had a release in February of this year. We made a lot of significant enhancements to our virtual assistants that I mentioned earlier and some of that, the technology that sits behind assisting people digitally. We saw a 26% reduction in channel jumpers.
What that means is a person who started digitally and then called us. They called us because they couldn't get the answer they were looking for digitally, even though they wanted to. Again, that's opportunity for us as we mature the technology that sits within our product to take calls out. We see, you know, big opportunity there. In addition to just call cost management, you'll hear this a little bit from one of our clients, just even process innovation and how to be topical around our calls. If you're calling about a tax form in February and March, we'll route you to tax specialists so you can get your answer faster, not routing you around. It's also more efficient for us.
The good thing about almost all of these from a technology services and care side is they're good for us, but first and foremost, they're also better for our users, for the employees, for the participants service, for the employers. We see huge opportunity across our cost base to address these. I wanted to hopefully get a sense of these, but there's a number of opportunities to do this. With that, I wanna bring up Alison Borland. She's gonna talk you through a little bit more specifically how things show up for our clients.
Hello, everyone. I'm Alison Borland. I am responsible for our point of view and our approach to supporting the well-being needs of our clients and their people. I'd like to provide a bit more color commentary on how our platform approach enables this and why it's important. To reground us in what we've talked about, we've talked about our legacy in benefits administration and working with the systems of record to generate a tremendous amount of data, tremendous amount of traffic, people coming to interact with us, and vision into the transactions that they want to provide. That gives us the right, the luxury to then engage them through our engagement solutions, to provide more well-being content, to assist them with their financial health and improve their financial health.
To provide them access to a marketplace, to provide solutions that they may need in the way that they believe their own well-being should be solved for. We layer all of that with the Alight Worklife platform, which provides the AI and the ability to personalize the experience so that we can deliver the outcomes that we've chosen to work with our clients to deliver. We've talked a lot about these outcomes and what does that really mean? What are the outcomes we're looking to provide? Primarily, we're looking to improve the well-being of our people, our clients' people, and we define that as living their best lives at home and at work. We do that across four pillars: a healthy mind, a healthy body, a healthy wallet, and a healthy life.
We look at the solutions and support within the pillars, but importantly, we also look at solutions across the pillars. You'll see that all these circles are connected. We learned before the pandemic, we learned during the pandemic, and we're still learning after the pandemic that life is lived across these pillars. Tuesday's not financial health day and Wednesday you're worried about your mind, and Thursday you're worried about your body, right? You live across all of these every day, and that's important. That feels good, right? To be able to support the well-being needs across the pillars. Our clients universally are saying, "This is top of mind. This is important in the C-suite to improve well-being." It feels like the right thing to do, and it is the right thing to do. However, it is also really important to the bottom line.
Consistently, research has shown that businesses perform better when strong well-being programs are in place. They're more likely to exceed financial targets and delight customers, and innovate effectively, and retain workers, and recruit talent, and operate with lower healthcare costs. This is what solves for those big gaps in dollars that Stephan started the day talking about. This is how we make that difference and manage that impact. This is sort of the so what around actually doing the right thing for your people. Our clients care about both doing the right thing for their people and contributing to the bottom line. How do we do that? How do we really bring that to life? We saw some examples, we've talked a lot about moments. We look at three categories of moments. First, moments of acute need.
We saw some of those in the participant videos. Hopefully, these don't happen very often, but when they do, they have a big impact on someone's life. We have a large opportunity to make a positive difference in someone's life. Could be an eviction, a diagnosis, et cetera. It matters, and it's important. Low, low frequency, high impact. Second, moments of opportunity. A new hire, someone going through retirement, a life change, getting married, starting a new job. Opportunities when an individual is going through change and they're engaged, and we have an opportunity to step in and help them make decisions that are gonna lead to better impact. Maybe medium prevalence, medium impact, they add up over time, right? Finally, we have everyday moments. These are basic decisions you may make on any given Friday, right? Are you gonna work out?
How are you gonna sleep? Are you gonna think about your budget? Are you gonna prioritize your mental health? All of these work together. If you're taking advantage of your everyday moments, you might do a little bit better when you have a moment of opportunity. If you're making good choices in your moments of opportunity, you may be better prepared when you hit a moment of acute need. I wanna bring this to life a little bit more through, like, a real-life example, and we're gonna talk about Mary. Mary is an entirely normal human being. She's middle-aged, she has two kids. She just relocated for her job. When she was hired, she was defaulted into the 401. Her company had auto-enrollment. Great. She has a decent 401 balance.
She has never been less busy enough to think about emergency savings, and she doesn't know what HSA stands for. When she goes through annual enrollment every year, she just signs up for whatever she had the year before because guess what? It worked. She's totally normal. This doesn't sound broken, right? This sounds like kind of people that we know. Think of a moment of acute need. She's at a soccer game with her kids, and her son twists his knee. What does she do? We're gonna talk about before, and we're gonna talk about after. Before, this is the traditional world. She has a 401 website. She has health benefits through her employer. What does she do? Well, she immediately picks up the phone.
She Googles on her phone, she goes to the nearest emergency room because she's in a panic. Why wouldn't you do that, right? The outcomes of that, it's more expensive, not necessarily the best quality. Some of the services are not in-network. She's left with follow-up around physical therapy that she knows her son needs, she kind of has to resort back to Google 'cause she doesn't know what to do. Because of those high out-of-pocket costs, she has to borrow from her 401K, she's depleting her retirement savings, she puts the rest on high interest rate credit cards, thus creating high interest rate debt, expensive debt. The result of this is that her son has potentially suboptimal care. She's distracted from work. She's not focused. She's stressed about her son, she's damaged her long-term financial success.
This is just one moment in one given day, and it's not destroying her life, but the question is, like, could she do better? Is there a better way to work through that moment? Now let's consider what that moment would look like if she had Alight Work life sort of upgraded and expanded with the engagement solutions, right? What does she do? She still pulls out her phone, but she opens the Alight Workl ife app and immediately finds a close by, in-network urgent care with very high quality. It's at a significantly lower cost. She used the tool that Matt demoed that helped her allocate her savings across 401, HSA, and emergency savings. She's well-balanced. The amount out-of-pocket is much smaller, and she's able to cover it without touching her 401. Her long-term savings is preserved.
The company actually saved some money when she used her HSA because of lower FICA taxes, so that's an added bone-bonus. When she goes to follow up, she's prompted because her company has a subsidized musculoskeletal program that provides care for her son in a high-quality environment and for her, a very low cost. Mary is more focused at work, more productive. She feels better about her son's care, and we have instilled loyalty in her company for delivering benefits to her at a moment of acute need. It only happened because we took advantage of the moments of opportunity and the everyday moments along the way to prepare her for this need.
For the organization, they've saved some money on healthcare claims costs, they've saved a little bit on FICA taxes. They have a worker who's showing up, an employee showing up who's focused and productive as a result. For Alight, we've expanded our relationship with the client to 2x ARR through comprehensive engagement services. Really, it's a big win-win-win for Mary, for her employer, and for us as a business because we're able to provide this care for her. That's an example of how this comes together, how those moments come together and have an impact for Mary. Step back. All right, Mary's just one person.
If you have 2,000, 10,000, 50,000 employees, you start to imagine the breadth of the impact that you can have on any given day through these everyday moments of opportunity, and moments of acute need. Also think about the other dimension, longitudinally over time. We have an opportunity when someone's being recruited, their first day at work, as we saw when Matt showed how they would go through and choose their benefits. Every time they earn a promotion, they go to the doctor, they have a health condition, something happens in their family, all the way up to when they're transitioning to retirement and also through retirement.
You think about the impact both across the population and across a lifetime, a career lifetime in retirement, and that's why clients are buying these solutions, and that's what they're hiring us to do for them, to deliver broadly over time. These accumulated moments add up to cost savings, higher productivity, and other benefits that I will summarize right here. You get the right solutions, the right engagement solutions, delivered through the right platform to drive the right utilization, and you improve employee well-being. Health risk goes down, financial stress goes down, resiliency goes up. For the company, they think about lower turnover, lower healthcare costs, better ability to attract and retain employees, higher productivity, support of their DE&I initiatives. This is the return from delivering the solutions in this way.
While it's probably fun to hear that from us, it may be more impactful to actually hear from organizations who are hiring us to do some of this. What we're gonna do now is watch a short two-minute video followed by a short break, and then we will come back and actually hear from three of our clients who are engaging with us in this way to hear their actual experiences and why they decided to do this. With that, the video.
Our world is changing every second, affecting every part of our lives, especially in the workplace. Employees are faced with more and more uncertainty. Lines are being blurred between life at home and life at work. They're worried about finances and taking care of their loved ones. Companies across the globe are transforming to keep up with new technologies and consumer behaviors. The best companies know that prioritizing employees and their wellbeing must also be a critical component of their transformation. Alight is defining the future of employee wellbeing. What is wellbeing? At Alight, we believe true wellbeing is the connection between a healthy mind, body, wallet, and life, grounded in inclusion so all employees live their best lives at home and at work. At Alight, we're helping employees live their best lives through the power of Alight Worklife, our AI-powered platform with a human touch.
Alight Worklife reimagines what the employee experience can be, from what we traditionally think of as a benefits website to an integrated, guided approach to wellbeing, guiding your people through moments that matter, like budgeting and saving for the future, dealing with an unexpected medical diagnosis, or supporting your mental health every day. We're bringing together what it means to be human on a single platform to better equip people for all the moments that make life challenging, joyful, and unexpected. Meeting your people where they are in key moments creates a happier, healthier, and more productive workforce, and ultimately helps organizations deliver on employee value propositions, improve performance, and better manage their own transformations. This is the future of employee wellbeing, and we're just getting started.
Hello. Thank you for your attention. We're about to begin the client panel, so if you could take your seats, that'd be great.
All right. We are ready to get started. We've talked a little bit about this, at Alight we have the privilege of serving some of the largest organizations in the country and around the world. As we do that, one observation about them is they are incredibly diverse. Many different industries, many different sizes. What we're gonna do today is talk with three representative clients across that book to learn more about their using the Alight Worklife platform, their partnership with Alight, and what they expect to get from it. I am very pleased to introduce three organizations. Here we go. We have Belinda Lerner, who is the Head of NFL Player Benefits and Former Player Programs, obviously from the NFL. We have Doug Petty, who's Head of US Benefits at Siemens Energy.
Siemens Energy has been a client for about two years, was also a long-standing client when a part of Siemens before that. They've had an opportunity to sort of reimagine the way they work with Alight. I should have added, the NFL has been a client for over 30 years, that's our most tenured client. Thank you, Belinda. Finally, we have Matt Harmon from AutoZone. He's the vice president of Benefits, Compensation, and HR systems. AutoZone is the newest client on the panel, having just started working with Alight in the past year. Three large, recognizable brands, with unique challenges and very different industries, very different employee populations, but all with one thing in common, their focus on employees and creating an integrated, high-tech and high-touch experience for their people and for their families.
First of all, let me start by saying a huge thank you to all of you for joining us. This is a unique opportunity, I know, and we are grateful for your input. Matt, I would love to start with you. Given you were just in market, you had a lot of choices, you know, with something as important as your benefit programs for all of your people, can you talk a little bit about why you chose Alight? Why you picked us?
Yeah, Alison, a lot goes into our calculus. Gonna only cover a couple of key reasons. Number one, the cost of benefits administration is only about 1% to 2% of total healthcare costs. If you pick the right provider, you can leverage that to save up to 10% or 15% of that total healthcare spend. What that means to AutoZone and our employees is lower, more affordable and sustainable healthcare premiums and costs for both our people and the company. I think if we would think about this day and age, there's never been a time in modern history where it's been harder to attract and retain talent than right now. When you think about enactment of your culture, employee experience and service, it matters. Why? People have a choice. When people have a choice, you have to differentiate yourselves.
As we think about our employees, we think about them as our customers. When we think about our customers, we think about delivering service. We think about giving them what they need at the time that they need it. As we thought about a customer, thing that could really help our people, it's always only at the right time. As we were thinking about who to choose in the marketplace, we needed somebody who could really deliver for us. When we think about our customers in our stores, we wanna focus on them in a way that makes them feel like they're the only customer.
If we look at what Alight offers, they're best positioned in the market right now to help with that multigenerational workforce that we have 'cause it's a combination of high tech and high touch, and that's what's really necessary to deliver today's workforce and population. As we think about selecting a partner and we think about who's best positioned with the best hire to retire, meaning all the different systems you heard about, how do you have someone as an employee who might be hourly? They don't have time to navigate 16 different systems when they're trying to help a customer. We needed to make sure that that was done for them and make it easy for them to navigate. Finally, when you select a partner, and it really is a partnership, it's like marriage, if you don't select the right partner, you're not gonna be very happy.
One of the things that we needed to make sure we were doing with our partner is it's an extension of our team and our brand. We have an intent to grow and innovate to stay ahead of the competition. In order to do both of those, we needed a company that could both scale and innovate with us, and that was Alight.
Wow. Thank you. Thank you for your trust in us. There are so many things in there that I think are so interesting around, you know, Stephan talked this morning about the money at stake and the money at risk and the fact that the administration costs are so low compared to the potential ROI is really powerful, as well as that experience. Stephan actually talked this morning about treating your employees like customers. Why would you treat them worse than you treat your customers, right? You just actually brought that up, coincidentally as well. Thank you for that insight.
Sure.
Doug, now at Siemens Energy, you've really chosen to use Alight WorkLife as your digital front door. Like all things, right, go there for the things employees need to do their jobs as well as to care for their families. Can you share a little bit of color about, you know, how that's going, why you chose to do that, and then how is that impacting the way your people work and what they're getting from it?
Most of my employees are engineers. We want those engineers doing what we pay them to do. We don't want them having to look all over to get information about how to manage their healthcare. By driving to a digital front door, we can drive the engineers and the rest of the employees as well, obviously, we can drive them towards one place to look for everything that they need. Stephan talked during the earlier presentation about bringing all this data together to personalize it. When you work with a bunch of engineers, they live for data. Giving them that data, right, in an actionable format that's tailored to them allows them to focus on what they do and not have to become sudden healthcare experts. That's what it looks like for us, that front door, and it's yielding results.
Once we have people that use the front door, they use it again. We've extended the front door right up to the candidate process. Now we're catching people early, pretty much the first day they're at work in enrolling and the front door and its attendants helping them to enroll for their benefits. We're able to capture these people, engage them early, and work them all the way through the process. That's what it's looking like for us.
Yeah, I love that 'cause we just talked about the longitudinal-
Mm-hmm.
Right, and starting from the very beginning and then extending it all the way to hire through retire.
Right.
When you think about the return, are you saving any money? Are you seeing any results based on using the front door that way?
Yes, we are. I mean, we are seeing we've seen a real uptick in our engagement, right? We're showing about a 70% engagement rate. In dollars and cents, we're showing about a $700-$750 verified claims savings once people touch the system. Once they're through the front door and they're using it for the referral sources, we're seeing a real verified net benefit to us in claims, in reduced claims cost. Through our partnership with our data warehouse, we're also starting to make sure that those claims cost don't come at the price of bad outcomes. We're also starting to verify that the outcomes are also improving as well.
That's great. $7-$7.50-
Mm-hmm.
Per person touching the system adds up fast, right?
Correct.
With the large population.
Yep.
That's fantastic.
Yep.
Congratulations.
Thank you.
Okay, Belinda, now you have an incredibly unique, set of, I wouldn't call them employees, but players, that you have to service. Doug just talked a lot about high tech and leveraging a digital front door, but your population may need something a little different, maybe perhaps with a bit more of high touch, just given their needs. Can you talk a little bit about how we help you across high tech and high touch and how that's received?
Sure. Even beyond that. Our benefits are all collectively bargained, which means I have several taskmasters I have to address.
Yeah.
One is the ownership, the other is the NFL Players Association, and then the players themselves, both active and former. Each of them have different priorities and needs. We know, again, multigenerationally, we have players who played in the seventies, and we have players on the field now. Some of them are very adept at using technology. Others don't wanna have anything to do with it. We had to make sure, though, we had the underpinnings of strong technology, but that the high touch piece had to be what the players were first interfacing with. Stephan had mentioned something about now employees are looking for more from their employers on the benefits side. Our guys always look to their employers for benefits, right? I mean, they come in the door getting healthcare. Everything was taken care of for them.
That mindset doesn't change when they leave the game all that much, so they need to have that personalized touch. I know what happens is when a player calls in, he's speaking to somebody at Alight live, who's going to be able to answer all his questions, understand the full breadth of benefits that he's entitled to, and give him the respect and regard that he needs. I know that because that's my experience as well. When I have a problem as an employer in a particular area, I pick up that phone, speak to some of those same people, and I feel very confident that they'll be able to resolve whatever issue it might be. Again, it's what that front piece is the high touch, and that's what the players need.
From my standpoint, administering these, I need to make sure that it's effective and technologically so, and that the owners make sure that it's actually effective and it is a good investment for them.
Yeah. Fantastic. Thank you. Matt, I wanna come back to some of the things you said. You have a large retail population, right? We all know right now in this environment, that's very challenging, and turnover can be a bit of a problem. You spoke also about partnering to innovate with Alight. Anything you can share around turnover and how you're thinking about that and innovating to help address it?
Sure. Turnover has a real cost to employers today. A couple of things we did is we actually offered, in partnership with Alight, day one benefits to our part-timers and our full-timers in their waiting periods. What this does, it's pretax, so it provides a tax benefit to both the employee and the company while providing them affordable coverage. Here's the great part, at no incremental cost because these were voluntary benefits. We're able to offer great affordable benefits to a population we couldn't before at no incremental cost. As we were able to do that obviously is going to impact attraction and retention of employees. It also helps them move through that employee life cycle from hire to retire that we talked about.
It's key to understanding the life cycle because turnover is about catching that individual in onboarding and helping them with all the right things so they wanna understand and stay. The other piece that we implemented with Alight is their guidance resources. These are counselors and medical allies that help choose, meaning select the right programs for the AutoZoner and their family, and then use, meaning when they need healthcare, what's the most efficient way to get it? Not only does that increase satisfaction for the employee, not only does that take care of them in a way when moments that really matter that we've heard all day, but it also helps with outcomes over time, which not only saves money, but it increases retention and reduces turnover.
I'm here to tell you, in an hourly workforce, it's like $4,000-$5,000 per hourly turn or more with wages on the rise as they are. If you're talking about a salaried individual, you're talking up to a year's salary that turnover can cost. It is absolutely a clear business imperative for us at AutoZone.
Yeah. Wow, that's powerful. I love the creativity of being able to deliver benefits, value-added additional benefits at no cost, and then really able to impact turnover, which has a very hard dollar ROI to the organization.
Yeah.
Yeah. Nicely done. Okay, so Belinda, back to you. Part of what we've talked about today, and over time is our expansion of services. As you know, we've acquired, different solutions like retiree medical, leave management, different things in healthcare. How do you think about that as an opportunity as a client, and is that something you've taken advantage of?
Yeah. I mean, I can give a very specific example on that. I was at the negotiating table as we were contemplating how to expand benefits for our former players in the area of medical supplement, in the MedSupp area. One of the ideas we had was, you know, expanding it so there'd be an exchange. It had to be easy to use and again, something that's gonna have a very, very accessible and easy call-in system. When we were negotiating this, we didn't know. We thought at the time it was gonna be Aon who was gonna be overseeing this, and it turns out that Aon later then spun it off and became Alight.
That gave us great peace of mind because we had 30 years of history already with Alight, people who knew our population. Your acquisition actually allowed us to grow with you, and that's been something that we've done. I talked about my three taskmasters. One I did not mention, which is the media. I mean, we're very sensitive and always have to keep that in mind because our players can be very vocal when they're disappointed. We know we need to have the quality on all ends of the spectrum because otherwise it can become a public relations nightmare. For this, when we moved into the MedSupp area, again, we had the history with you. We knew we wanted to expand.
You had the expertise, and it was a perfect blend for us, and it's worked out very well, so it was very exciting. The feedback we get is, from individual players, is over the top. You know, "People were very respectful. They gave me my answers." For that constituency to say something so complimentary is, it's not easy. They're not an easy group to appease. We've been very, very satisfied with that extension. We'll always keep our eye to see if there's other opportunities to enhance the benefits and do it and grow with Alight.
Fantastic. I love that. I think when we think about our platform in Alight Worklife, the ability to sort of add pieces and components into the experience that employees are already coming to anyway, it makes it very organic and natural to expand and grow. Thank you for that example, Belinda. One more question. I'd love to... I think we have time that... so you can each answer it. While I know AutoZone is a new client, I will divulge, Matt personally has longer experience with Alight, so he can answer this question too. Similarly, Doug, when you... at Siemens, and of course, Belinda's been a client for a very long time. We've talked a lot around transformation today, and we've talked about a lot of the investments that we've made and what we're building and how we're building it.
Could you speak or think a bit about something or some things that you think have changed at Alight that you've seen over the past couple of years compared to maybe what you saw historically? Doug, I think it's your turn, so I'll put you on the spot to start.
I'll say that I did a lot of mergers and acquisitions. I was always on the receiving side of divestitures, so I went live with an acquisition on April 1st of 2017, and a month later, Alight became Alight.
Mm.
I'm kind of familiar with.
Yeah
Y ou know, from the infancy.
Uh-huh.
I think what we continue to see is the taking of that massive amount of data that you have and being able to move it into actionable items and then deliver that to our employees. That's really where I've seen the biggest growth. I mean, everything else tends to be commentary in terms of product, but it's that continued meshing of all that data and then turning it around and turning it in, again, to an actionable item that an employee can work on. What that means is when they contact Alight, they don't have to tell their story again and again and again. The story's there, and the story continues to evolve.
When you call in, at that point in the story is when you begin your action and what it is you wanna do.
Awesome.
The integration of that data.
I'm sure you're making Greg very proud with the investments in AI that we've made. Thank you for that feedback. Matt, do you mind.
Sure.
Answering the question?
I'm gonna take Doug's engineers who want all the data-
Mm-hmm
compare those to retail hourly workers who just want the data to help make the decision that's right in front of them.
Mm-hmm.
They don't need to know the why. They just need to know what they need to do. That combination of the high touch, high tech is what they're looking for. The second piece with the counselors and the medical allies is really about helping them make those decisions that help them put money that they don't have to spend discretionarily in their pocket. That creates a ton of value, and it's like the old adage, you can give someone a fish, and they have a meal, but if you teach them to fish, you feed them for a lifetime. That's kind of the whole concept around the Alight platform is it's meeting people where they are in a way that helps them take something that's so complicated and so hard and make it easy. Simplicity has definitely changed.
I would say what's changed outside of Alight that makes Alight's tools even more relevant is people want a consumer-grade experience. They wanna be able to go and do something that's easy. Healthcare isn't and has never been easy. We have to go through a lot of trouble to make that happen, and that's where the platform, I think, really shines, is whether it's high-intensity data through AI or it's very acute needs with someone who has a medical condition they need help with right now or it's someone's claims that are gonna cause them to not be able to pay rent that month is the way to solve the employee's problems and make them feel that they are very much taken care of by their company, and that's what lowers turnover, and that's super important to us.
Yeah. Fantastic. I think we might have to borrow your fishing analogy. That works really well. Thank you for that feedback. Belinda, wrap it up with some thoughts from you.
Sure. I think the one word I think is nimbleness. That has really been important for us. Unlike a lot of employers, we really deal with the life cycle of a football player 'cause he's there from the time he's an active player, and we see him, really, we see the entire life cycle, which is unusual for some employment relationships. As a result, we have to satisfy the needs of different generations and try to come up with innovative ways to be able to serve them. It's been wonderful to deal with Alight because as between acquisitions and the expansion, you help us in our thought process. This is what we want to do in terms of designing a program. Can you support what our needs are?
I can say that Alight has been very active in helping us behind the scenes in trying that nimbleness. How can we move from here to there? How can you play that part? I don't wanna have to go to another third party. I wanna be able to work within the same systems. I would say that would probably be the key takeaway for me in terms of what I see now that I hadn't seen previously.
Wonderful. Well, I mean, your examples and your stories around innovation, around expansion of the solution set, around the digital front door, consolidation, the cost savings, the return on investment, the reducing turnover, the hard dollars resulting from that, hopefully, all of these themes resonate and build on everything that we heard about this morning. I would like you to join me in offering a huge thank you to these clients for bringing this case to life. I think we are ready now to move on, and I would love to introduce our CFO, Katie Rooney. Thank you so much. That's fantastic. Thank you. Katie, right here.
Yeah.
Okay.
We're gonna. I've instituted some helpful tips. You don't have to. Hey, we're one Alight. We're one Alight. We all help each other. No, no, no, please. Do you want your water, though? All right. Nice to see everyone in person. Thank you all for being here. Huge thanks, as I said to our clients. Hopefully, that really brought it home for you in terms of the impact we can have for our clients and for their people. I know everyone keeps asking, "Why didn't you put your guidance out first? Why?" We're gonna get there, I promise. We're, like, minutes away. I think, you know, first, if you just take a step back for a second, I think it's really important that when you think about where we are as Alight, we can say we've delivered on the past two years.
We came out the start of 2021 in, obviously, a bold way in terms of what we thought the market opportunity was and how we were uniquely positioned to solve it. Hopefully, you heard that today. We've delivered on it so far. We've delivered top-line growth, bottom-line growth, and free cash flow growth while investing for the future, and I think that's really unique. You also hopefully have all heard what BPaaS is. Again, we don't talk about BPaaS with our clients, right? That is, again, the power, though, for you to understand why we are driving a different growth profile.
That combination you heard from Stephan, from Greg, from Alison, from our clients of having the platform approach with the system of record that provides the data to drive recommendations with the care model around it, that delivers a very different outcome for our clients and their people that drives more value. We had our Q1 earnings last week. I know a lot of you dialed in. Thank you, and asked some great questions. As we said, we continued the momentum coming off of 2022. Strong revenue growth, strong EBITDA growth, strong cash flow growth. There was a question I heard from a number of you: What about BPaaS bookings? I said it was great validation. I love there was so much focus on that because you are seeing the transformation and the opportunity. Let me put it in context for you.
Over the last six months, our BPaaS bookings are up 40%. In January 2021, when we came out, we said our goal was to hit $1.5 billion of BPaaS bookings within three years. We did that nine months early. If I sit where I look today at our incredible team, they've driven a pipeline that's up 30%, higher deal size, what that means is the strategy's working. Think about Q4 of last year. We signed two huge deals, GE and a Fortune 10 client. Think about Q1. We sold really important deals that don't have the same TCV component, right? Total contract value. We look at BPaaS bookings in terms of total contract value. You also have to sell ARR deals, right? That drives in your revenue. You need both, we're doing that.
When I sit here today, we have $3 billion of revenue under contract for 2023. Guess how much we have for 2024? $2.4 billion. I have never, at this time in the year, not even halfway through the year, had $2.4 billion of revenue under contract into the next year. That's the power of those solutions we're driving and the revenue base they drive. We can do it in a tough macro environment. You heard it from our clients. Turnover is important. Talent retention is important. Cost savings are important. We can do that. We have a highly resilient solution business model. We have high recurring revenue. Over 85% of our revenue is recurring. Good visibility, as I said, this year and next year. We have a very strong balance sheet.
We took advantage in the first quarter with some of the dislocation. We increased our hedge position on our debt. We're 84% hedged through 2024, and we're 60% hedged through 2025, and no maturities until 2025. All of that leads to a strong free cash flow profile, which we're going to talk a lot more about. The visibility I sit here today with that recurring revenue base enables me to make decisions today to make sure I drive free cash flow. We saw it through COVID, through the period you can see there on the right in terms of that stability, and you're going to hear more about it from me in a minute. How are we creating shareholder value?
As you'd expect on the top, but that's driven by the bottom, the power of our platform approach, how we're investing in our go-to-market, and how we're continuing to transform the way we deliver our solutions. If you think about how we price some, you know, a contract today or our revenue model today. On average, we have three to five year contracts. Are there some that are longer? Of course. Are there some that are shorter? Of course. On average, they're three to five years. It's one bundled fee. Think about how much we've talked a lot about the investments we're making in our technology, in our go-to-market. Think about the different value proposition to our clients. It's really hard to drive value for that when you have one bundled fee. Also, think about the cash flow dynamics.
What other industry do you know where implementation, services, platform is all together? I don't see $1 of revenue or cash from a client until they go live. Think about the power of what we've talked about from an integrated solution with the complex number of, you know, partner solutions, our solutions that we're bringing together. It can take 6-18 months to implement a client. Think about GE in the fourth quarter. I won't be fully live until 2025. I don't get $1 of cash until that deal goes live because it's one bundled fee. That's not the best model for us. How do you change it? You can't just change a pricing model in the industry. You have to drive a different value proposition.
You have to help the clients want a different solution that they'll pay you for. If you've heard nothing else today, when you think about, we can talk about BPaaS all day long, think about Alison's example with Mary. How many clients do you think want the solution on the left when she showed the from, to, and on the right? Right? You'll pay for that. If you think about where our pricing model needs to go, start at the top. Platform subscription fee. We're investing a lot in the platform. Price goes up. It has to, as you roll out new releases, everything Greg's doing, you're driving a different value proposition for that client. You have the SKUs, the content modules in the middle.
Importantly, everything we're doing around standardizing care and making those, you know, personal to a client, you need to get value for that. Does someone want a high-touch service? You heard from some of our clients. Others don't. We need to be able to segment that differently. What that means is faster revenue and faster cash flow and the ability to collect and drive value to our clients and to us in a different way. We're already starting this. Listen, I get it. This won't be easy. We're not gonna change the industry overnight, we're already doing this, and it's gonna have a real impact. What does that mean in terms of growth? You heard Stephan talk about it. You heard Alison give the example about a 2 x uplift. Why does that matter?
If you think about the incredible client base we have today, there's a massive opportunity to upgrade them into the WorkLife packages you saw earlier. It's a 2x revenue uplift. Those are bigger deals. You're seeing that in the pipeline today. We have new logos. A couple years ago, we didn't have a new logo team. We have a dedicated new logo team. We have incredible value engineers that work with our clients, with our teams to think differently about bringing new logos in. Think about those we've signed. It's pretty powerful. Navistar, GE, PwC, Fortune 10 client. We're gonna name them soon. That has to be powered also by a different strategy around how we think about our partner network. I mean, Cesar here in the room. He has really helped us with the Workday partnership. It's pretty incredible.
If you take a step back and think about their validation of our strategy of best-of-breed enterprise, of that brand and going to market together, that's really powerful. We don't have to do this all on our own. Think about our partner network. 150 partners that we've curated. You saw when Matt went through the demo, we can make it easy for everyone. This ecosystem, Stephan talked about the total addressable market. It's large. That's gonna help us grow. How? Here's the first money slide. Don't worry, I'm gonna give you the full guidance, but I really think it's important when you take a step back and you think about BPaaS and non-BPaaS. Let me actually define what non-BPaaS is, right?
Think of that as the non-recurring, you know, one-time professional services deals or the, again, kind of one-time standalone core administration deals. Think a little bit of Alison's solution on the left, right? When she did her from two. Now think about the incredible power you saw through the demo, through Mary's story about what we can drive to deliver the BPaaS solutions that drive that personalized outcome for the employer and the employee. You can see why there's higher demand. We can do that in our existing install base. We can do that through new logos. We'll see that in the new pricing models, and we'll see it in the product releases that we have to continue to roll out. Listen, it's still really important, right?
That's where a lot of the underlying data comes from, but it's a different growth profile when you think about it on a standalone basis. Combination of both of those gets us to our medium-term revenue guidance of 6%-8%. Look at the pies on the right. Today, BPaaS is about 18% of our revenue. As that continues to shift closer to 30% in the medium term, you'll see that growth algorithm start to shift as well. We've already seen it. I think when you think about credibility in the marketplace and delivering on what we say, this is a slide actually we showed back in 2021. We've hit everything we said we were going to achieve in terms of the BPaaS revenue and bookings. Why is that also important?
Everything you heard from Greg, that also helps drive a different margin profile. 60% incremental gross margin flow through. That's really powerful. I get asked, "Why did you move your segment structure or reporting from adjusted EBITDA to adjusted gross margin?" 'Cause you need to see this, right? It needs to come through. You need to see it, and you're gonna see it. What does that mean for margins? Employer Solutions adjusted gross margin is gonna go up 300-400 basis points, and our adjusted EBITDA margin is gonna go up 400-500 basis points. That's not easy, but that's the opportunity when you think about the different value proposition and solution we can deliver for our customers and their people. Let me give you a little bit more specifics on that.
Where we sit today from an adjusted EBITDA perspective, right about 21%. We talked up front about the WorkLife pricing model and the product release. That's 50 to 100 basis points. You heard Greg talk about delivery, customer care, and our technology infrastructure. Those are those next two buckets. You saw very clearly what those metrics are that will help drive a different experience that makes it better for our clients and their people and for us from a margin perspective. We'll continue to drive operating leverage on that. Listen, we know we've made investments. We've been very clear about that because we see this opportunity, and we need to get it right. There will be operating leverage on top of that. Medium-term margin expansion opportunity, as I said, for adjusted EBITDA is 400 to 500 basis points.
What's really exciting is that think about that. When you think about those dollars of expansion, think about how that translates to cash flow. I get it. It's been noisy, right? We had one-time items tied to our SPAC, tied to some acquisitions, tied to a lot of incredible work we've been doing. We've said, even with all that, even with our investments, we're improving operating cash flow every single year, and you've seen it. We've done it over the last three years. Our guidance this year, 45%-55%. We will already get to the low end of our long-term target next year. Right? 55%-65%. This is operating cash flow conversion. CapEx will come down after this year, closer to 4% of revenue, so that free cash flow conversion goes up as well.
If I think about the medium term, that's potentially $2 billion in additional operating free cash flow. That's pretty exciting when you think about the opportunity we have ahead and how we need to continue to invest in this business. We've said we're gonna be really transparent around we will continue to invest in the business, but we're gonna do it in the right way. First priority is protecting the balance sheet. If you think about just operating leverage that we've talked about, by the end of the year, we'll be under 3.5x levered. Our goal, excluding M&A, is closer to 3 x. With M&A, you're seeing us go up to 4 x leverage. We've put that foundation in place in terms of the strength of our balance sheet. We're gonna reinvest.
We're gonna invest into this business, and we have the opportunity to do so in the right way in terms of the growth algorithm, in terms of what we're seeing from our clients to do that organically and inorganically. That has to deliver a return. We're eyes wide open on that. We also, given the cash flow dynamics, have the opportunity to also return capital. We have $78 million left on our share buyback program. We'll continue to look at that along with, obviously, the first two priorities. Our medium-term guidance. I think about this to the getting us through 2026. BPAS revenue growth, 15+%. That equates to total revenue growth of 6%-8%.
The flow-through on that equates to our adjusted gross margin impact of 300-400 basis points and adjusted EBITDA of 400-500 basis points of expansion with a higher cash flow conversion while we're transforming. Let me wrap it up. I think it's pretty exciting. When you think about the business we have today, when you think about the incredible assets we've built over 40 years that are highly resilient in a macro environment, that have great recurring revenue, great cash flow characteristics, it's pretty exciting. Oh, wait, that's the first piece.
When you think about everything you've heard today, how we bring the power of technology with systems of record wrapped with that incredible care experience, we are in a category of one, and we can deliver that uniquely to our clients and our people at scale, and we're already doing it. We're seeing that. You're seeing that come through, and I think that's really exciting. I'm gonna pause there, and we're gonna open it up for Q&A. I'm gonna have Stephan and Greg and Alison come back onto the stage. We have some mic runners in the room, JC and Vance. Oh, look at you. You're all right. Vance, we already got one.
Hi, team. Scott Schoenhaus from KeyBanc. Thank you for the demonstrations-
Thanks, Scott.
Testimonials and more stats. Very appreciative. I guess first is, you know, if we're heading to a more softer macroeconomic conditions, the focus will be on cost savings, right?
Yep.
You outlined about $26,000 cost savings per year for each employee. On the maternity journey, I think you said $13,000 that would have saved the employee or the employer. When you're having these pricing discussions, is it easier to think of more mature clients, you'd be able to take pricing because you're delivering more results, they're more mature, you have more data, driving more outcomes? Are these conversations where you can adjust prices annually, semiannually? You talked about launching products semiannually. It seems like there's-
Yeah.
More flexibility in the timeframe than people are aware of. I guess that's my first question?
You want me to start?
Sure.
I mean, it's a great point. That's exactly where you go to that different pricing model, because when you think about clients we have with us today who, right, we already have kind of the implementations done, that data integration done, we can continue to add on services more easily and get value for the platform, exactly as you said, semiannually. I think that's really important. When you think about the cost savings at the individual level, we can show that, right? We can track that. I think being able to measure that, look at that dashboard, right? Making it real for that employer is really important. That's been a key area of focus.
The thing I would get in. If I just net it all out, this whole conversation, there's one real North Star, and that is whoever owns that participant relationship, that'll be the kingmaker of opportunity. That's the number one. That's what the word of platform means. If I can convince not only 36 millions, but their families, to look to Worklife as the first entry point for anything to do with wellbeing, the opportunities are limitless for us in terms of taking cost out, simplifying, consolidating. I mean, we haven't even talked about different revenue sources that are in our future. If you start becoming a broker of record on commissions for insurance, if you start thinking about AFA financial advice, the list goes on. Clients are taking us there.
I had a client call just last week with a major healthcare company, huge attrition, losing 75% in the healthcare of their first-year employees, losing 30% attrition to other people. They look at this whole category of what we're doing as a number one way to help drive down those cost issues that they have. You heard today the numbers around that. What's the number one answer they look to us for is, how can I provide when somebody gets an offer letter, there's a QR code, it takes them to Worklife. Before they even start, I have them onboarding with us into a great experience right off the bat before they're even an employee. That's how we're really thinking about this.
Greg, I think, you know, we got to be careful what we say in a public environment, but he's working with some big financial services companies where, you know, a lot of these companies use ServiceNow as kind of a front door for a lot of the general things. ServiceNow is a static doorfront. It's not dynamic, it's not actionable, right? Now there's a lot of conversation-
Mm-hmm.
Which I'll let you jump in there.
Yeah, I mean, I think as I mentioned in the AI side, a lot of what we're doing in that, it's very purpose-built to this problem we're solving, taking money out of the equation. We're unique in the ability to do that versus just an aggregator of, you know, different collections of benefits, et cetera. I would also say to your question, we see increasingly a lot of the solutions are less sensitive to when they have to be turned on or the longevity or the long implementation times, et cetera. That affords us more flexibility as well in how we price, how we roll out, getting everyone onto a common experience. Now I can turn things on underneath that, whether that be Marketplace that I mentioned or wellbeing content, et cetera.
I can enable that now pretty quickly as part of that platform with everyone on being on the same, the same vein. It gives us a lot of more flexibility than what we've had historically.
By the way, just on that attrition example I gave you, the math that that customer agreed with.
Yeah.
Just a 5% reduction is $50 million.
Mm-hmm.
When you get into a PEO model discussion, it becomes almost mute.
Yeah.
If you say, "Can we just impact that attrition the first year?" The ghosting, right? That was kind of the other... I didn't say the word ghosting, but that's what they call it. 13% people don't even show up. If you can solve for that's a 5% solve is $50 million for them in that category. 5%.
My follow-up is for Katie.
Mm-hmm.
How should we be thinking about midterm targets?
I said it. I said it. I said in 2026.
Okay. is it a stairstep How I mean, how do we get?
Yeah.
Is it a stairstep function? Is there a more gradual, or is it back half weighted? How should we think about that ultimate goal?
Yeah, great question. A couple of things. I think first, we've talked about our restructuring program, right? Which goes through next year. You'll see more of that, right, once we're off the dual infrastructures. We've talked about the run rate savings. You'll see incremental progress in 2024, and then it continues to ramp. Each year, you're gonna see progress across our three metrics. I mean, that's the goal. I think once we get through that investment cycle, you know, at the start of 2024, it will ramp faster.
It's Kevin McVeigh from Credit Suisse. Thank you all for doing this. It really crystallized, I think, what you folks have been really hard at work at for a while. On the margins, is there a way to think about if you were to desegregate it, how much is revenue mix versus maybe the retirement systems versus more efficient delivery? Were you able to upsize that based on some of the strides you made with AI, or would that potentially introduce some incremental upside as we work our way through this?
Wanna talk about current, then I'll talk about...
Yeah. I mean, you're right, it's both. I think I mean, part of the good news when you look at that margin walk is so much of what Greg's doing isn't just impacting BPaaS, right? It's impacting the total company, which makes it harder to disaggregate just the BPaaS component. You know, I think if, you know, if you thought about that walk, call it half of it, right, is from the growth we're driving. The other half is around how we're delivering on the care, the technology, and the services models.
I think, you know, I think to your question about opportunity and upsizing, et cetera, you know, look, I would say on the AI front, as I said during the talk, I think there's kind of open-ended opportunity in that to sort of optimize how we work. That's our lens on how we look at it right now, on what our view is. It's still fairly early days in productization of that. I think we'll continue to see opportunities. Obviously, we'll, you know, deal with that in guidance as we go along and sort of how we see that playing out.
I'm very bullish right now on the ability to use AI, not just generative AI, but AI, various AI techniques, to help with a lot of the challenges we have on the cost and margin side and also the engagement side, which then helps on the, on the top line.
This one is from Stephan, because you've articulated this to me really powerfully in the past in terms of wanting to be the operating system of healthcare.
Yeah.
Take that Google default search out of it. How do you change the mindset of the employee to pivot to Alight and help us through that process? Thanks.
Alison's the best one who demonstrated just it's about the experience. I mean, we are all employees, and the frustration level is at an all-time high in most of the experience in moments that matter, whether it's the, you know, I'm in a hotel traveling, and I went for a run and, you know, need to go to the hospital for knee injury. You go to the concierge desk or you go to Google and say, "Where's the best, you know, where's the nearest hospital?" That's the wrong answer, you know? I think, I mean, you're the best at the experience side of things.
Yeah. I mean, I'll give you a very real example. The reason people start coming to Alight Worklife regularly is because they have good experiences. They get something of value. They'll share a little more data. They get more value back. It's iterative, it's habit-forming. I'll give you a personal example. A couple of weeks ago, I happened to bank. I live in California, happened to bank with First Republic Bank, right? I get an outreach that said, "Hey, you might wanna look at your direct deposit. You have until midnight to change it if you wanna change it." This is when I was traveling and busy. I thought, "Okay." I haven't done that in years. Where do I go? Do I go into Workday? Is it through Alight? Like, I don't know the system of record for that.
I went into Alight Worklife, I asked Lisa, and I just said, "Change my direct deposit." She pulled up a link. In three clicks, I was done, and I still don't know which system of record it used, and I don't care. You start to build those habits of saying, "I know when I go, I get the answer that I need, and it's fast, and I rely on it," and then it just becomes a habit. When you find a doctor, you go right there. It's creating that trust. It's creating that, you know, ease of service, and then you get that loyalty to keep coming back. Once you own that, depending on what the employer's goals are and depending what the employee's needs are, right, it transforms and it grows, and it expands over time.
That's that 2x opportunity. We continue to build and add new services, new enhancements, upgrade the platform, and because it's so trusted and because these clients have used us for a period of time, it's just a natural organic extension. Employee, you don't have to change. Management is easier. It's just intuitive. You just log in, and it's there. That's the power of it, of having the platform approach.
That's why you hear us talk a lot about it's not one of the three pieces. It's all three. If you just do the top, it's static. You know, you need to be dynamic, and you need to be actionable. If you can drive an action because you own and have access to the systems of record, that you drive a different decision, and it changes something down here. If you need extra help, and you have specialists that can help you, that closed loop process, where does that exist? Nowhere else. That's the completeness that the employees want, is that actionable outcome to a better scenario for them.
I think it's also interesting just one other add to that. When you think about, we have incredible reach across clients. You think about people moving, right, one employer to the next. Getting that common experience, it becomes trusted over a life and a career that may span multiple different employers as well, and that's an advantage of scale that we have. It builds that longevity and even through retirement, right? There's a lot of opportunity when we think about how to build that and how to stick with it over a long period of time to generate pull demand. Great platforms generate pull demand, right? That may be from employees asking about, "Do you use this?" all the way through, "How do I use it in my own life?
Okay. Thank you. Heather Balsky from Bank of America. Katie, first question's for you. The 6%-8% midterm sales targets, what's baked into that? What gets you the low end versus the high end? Do you have to have a certain number of big wins to get there? The TCV right now, you know, how much visibility do you have to 2026? Thanks.
Yes. Great question, Heather. A couple things. I think first, just hearing where we are on 2024, I think is really powerful. When you think about visibility of the recurring base and the contract structure we have, that's almost a bit of that floor, right? That foundation. I think, you know, when you think about building out the next couple of years, it starts with the pipeline we have today and the opportunity, the client set. We start with the foundation we have with already $2.4 billion of revenue under contract in 2024. We have a number under contract in 2025 and 2026. We look at our bookings in terms of what we anticipate and how those come online to flow that through. I think your challenge on bigger deals is the bigger deals, it's just the lumpiness.
It's just the timing. you know, that could cause us to go above the eight, right? I think it's more when I think about where they sit in the pipeline today, the timing of getting them closed and getting revenue started, which is why we're so focused on the different revenue model, right? That pricing model. that will help us, you know, drive that revenue faster. again, when you think about the opportunity in kind of the BPaaS revenue, if you think about that walk and where we've been over the last two years, it's actually been 25%-50% growth. we've brought that down because obviously it's coming at scale, but we see the pipeline for that coupled with obviously the strong foundation.
As a follow-up, in terms of changing the pricing model and when you receive revenue, you said you're already kind of seeing some traction there, although early days. Can you talk a little about that?
Yeah. I mean, I think it starts with changing the conversation with our clients around the value we can deliver. Our whole go-to-market approach, and you saw some of our clients, some of our key leaders here in the room, have already done a great job changing that discussion with our clients, which enables us to have the discussion on how we price, right? That should just be the fallout of the value we're providing. Those discussions are already starting. My point is, if you think about the cycle of our client base, right? With three to five years, that's going to take time for that to cycle through. Tien-tsin.
Hey, thanks. It's Tien-tsin from JP Morgan. I just want to ask about changes in client priorities and how that might impact pipeline because we're coming off COVID, a lot of focus on wellness, tight employment. It makes sense that you hit a lot of your targets on the booking side, but it seems like we're transitioning more towards cost-cutting. You are helping eliminate a lot of tech debt and moving more towards the enterprise model. I'm curious which environment is better for Alight?
Why don't you start?
Yeah. The resiliency of our business model is pretty unique and pretty impactful when you think about that. So much of our revenue and our business has to do with health and financial security of our people and getting them paid. There's a tremendous amount of our business that just has to get done, right? That's a nice stable foundation. You think about how employers' needs change in these different environments. In a successful environment, a growth environment, right, there's strict attraction and retention challenges, right? Organizations tend to invest more in programs that are gonna drive engagement, that are gonna improve attraction, that are gonna improve retention. In an environment that's tough, like now, there are still segments of the population that are struggling with retention and attraction, right?
There may be layoffs over here, but there's still challenges getting the right people in the door over here, even in a tough environment. We still see some of that pressure. From a cost-cutting perspective, Matt Harmon said it better than I could from AutoZone, where he said, "The administrative costs are, like, 5%, but can impact 10%-15% of healthcare spend." The makeup or the composition of our solutions may shift in the environment, but we have powerful levers to help drive out cost from organizations with some of our newer solutions that change outcomes, as well as solutions that drive engagement and loyalty to employers, which may be more relevant in a growth environment. There's resiliency there.
I'm not the one who can say financially which one is better, we have opportunities to engage and support our clients either way. I don't know.
I mean, I think the other thing, Tien-tsin, is, right, remember we've done this all on our own so far. When you think about the opportunity, you think about the partnership with Workday, you think about how we've partnered with Accenture on deals, you think about the network we've built, it's also opening up new channels. The opportunity's there. Plus, we're continuing to expand the market opportunity in terms of those we can go after.
We're seeing the old playbooks that I talked about earlier. When you think about everybody thought, you know, on-premise systems was cheaper than moving to the cloud in 2013, 2014, 2015. Everybody was wrong, right? We went in, you had to show them, you had to prove it, you had to build value engineering, you had to go do the process mapping. This is that same window. I sit with a lot of CEOs, you ask, "How much are you spending? How much are those costs going up, and what value are you getting?" All three of those are completely out of kilter. The dynamic we're in, CEO calls CFO, CHRO gets the phone call. They have to sit down and say, "Take cost out. What are these 30, 40, 50 systems? Why do we treat employees this way?
Why is it impacting us? Our healthcare costs, pure EBITDA impact, are going up between 6% and 15%. That's a recipe that has to change. Just like the whole digital translation that we saw, the money that came out of digitizing how corporations deal with their clients was $ trillions. It took 20 years, right? We saw who were the benefits of that. That employee landscape, Tien-tsin, it's shocking to me, having done this for 25 years, is a throwback to those two conversations.
Yeah.
No, I like that parallel. It does seem like it's a better environment, which is. We'll see how it plays out.
That's right.
It feels that way, which is why I wanted to ask. The pricing change is my follow-up, thinking about old Hewitt and the customization model.
Mm-hmm.
Price concession at renewal was sort of what we learned to expect in the model or in an Excel sheet, which I know you guys don't care about. I guess my question is, with new logos, outcome-based pricing, get your foot in the door, right, to drive this opportunity to get, you know, more business. Who has the discipline, right, to manage the pricing sort of up front? I mean, is there a structure in place? Does it go up to you, Katie, and Stephan?
Mm-hmm. Those two.
And-
Yeah. Right. Go ahead, Katie.
The discipline you're gonna put in place, right, to.
Of course.
These things to a close, 'cause it feels like that's the pretty big change.
Yeah
From before.
Yeah.
Thanks.
Yeah. It's a great point. I mean, you have to do a little bit of both, right? I mean, when you think about that model, you have to figure out where the drivers of value are for the client, right? You might need to think differently about pricing on one side versus the other, but it still has to come together in terms of the total value. That's. I mean, the governance in place from the whole team, you know, starting with those on the ground all the way up to me is really critical 'cause we're gonna make those trades too, right? There may be some deals that, you know, the platform has completely changed the opportunity for the client. There may be others where they're in a different state, and it's a care model.
Like, we have to get that right.
Yeah. For us, it's the balance of I've always dreamt in my life of being in a technology business for 25 years. Does it serve the client that they pay PMPM models or that they pay, you know, the 36 pages of pricing when I was selling database and middleware? I mean, that doesn't serve the client well. When you come in and talk about what does it cost you, what are you spending, and what value are you getting for it, and our solution and capability is broad enough, and then you finally have solved for the number one issue technology companies have failed is engagement, right? That's why platform companies have become the most powerful companies in the world. Who owns that front door relationship and why?
If you own that, the middleware piece and the content and all of the other components aren't secondary because you need those to earn that right. In that case, if you own that relationship, you can really impact the cost and the engagement. 'Cause here we talk a lot about B2B. We forgot the employee again. Think of the money employees waste every single day because they don't know where to go. There's a whole B2C track here, and I think that's unique to us, and we didn't wanna go too far down that road because you can really go down deep on a B2C track.
'Cause if you own that engagement relationship, there's a lot of money the company has nothing to do with that we could also go and go after moving into retirement and insurance products and all those things, right? That's the landscape that we're seeing on a macro basis, and that all needs help. Not just one of those pieces, but every one of those. It has been.
Yeah.
We've done lots of deals that are out. I mean, I said to you before, our two earnings calls where I said four clients or five clients save $50 million in savings through us. In some of those contracts, we have payments tied to performance. We have a lot of that throughout our company. By the way, we did that in July. When I first got here in March, we did our first ones in July of that year. We've been doing it for three. We've been learning on those. We have dozens of those agreements in place, and we're learning from those as we go on and making them more of the fabric of a balance between making sure we can, you know, get the revenue with an outcomes-based element on top of that.
Hey, Kyle Peterson from Needham. Thanks for taking the questions. You know, wanted to start on the 2x uplift, you know, within the existing base you guys called out. Just wanted to clarify, is that a gross or a net number, assuming there could be a little bit of a cannibalization there. Then I guess just given that you guys already have, you know, the relationships, is there any difference between, you know, getting some of these upsell deals live and contributing to revenue and cash flow compared to, you know, some of these larger new logo wins that, you know, might take a little longer to ramp?
Yeah. Kyle, think of it as a gross number, think of it as a journey, right? When you think about even some of those packages we've talked about, you're not gonna get every client to jump to 2 x on day one. Like that's the brilliance of kind of meeting them where they are in terms of how that comes through. It's a gross number. I just want to be careful, right? You're gonna take a client on the journey in terms of what their needs are to get them to that uplift number. The second one, do you mean more on timing of revenue sake?
Yeah.
Clarify for me.
The time to implementation. Like if you.
Yeah.
A relationship, you're already in there, can you get an upsell up and running faster than-
Yeah.
You know, completely new logo?
I'll address that. If you think about our historic, the foundational products, administration products, the beauty of those is they're incredibly sticky, right? We're wired into all the systems. The difficulty is when you implement them, they're pretty long cycle to get that in place. Payroll deals, then admin, et cetera. Those are long cycle. Once that's in place, though, we found generally incrementally to those solutions, we can turn them on much faster. And the particularly newer solutions that sit in the engagement tiers. Everything from navigation to Alight Well and Marketplace, much shorter cycle to turn on when there's already that foundation of the administration systems in place. And they get value as soon as we turn those on. It's, it's again, it's not long cycle to wait for value to come.
Value is much more, much quicker in those. For sure, it makes a big difference.
Yeah.
That's helpful. Maybe just a follow-up on M&A. You guys have been pretty active acquirers in the past. You know, as you guys stand up on the stage today, are there any capabilities or anything that you would say, you know, "Boy, it'd be great if we had, you know, capability X or product Y," I guess, you know? What would you guys be looking for and kind of a natural fit for, you know, a product extension or something along those lines?
Well, I mean, we're always looking for content or systems of record that drive the North Star of owning that participant relationship. In Q4, that small little leaves capability. I can't tell you in that starting a family dynamic for how important leaves, as small as that is, it's a powerful piece of content that in several deals in the last four months alone, has made the difference in us winning the platform discussion and the end-to-end capability. Leaves, small, not even 5% of the pricing made a difference. That's what you can, you know, you'll see us continually look for content that gives us that edge of advantage end-to-end. The second category would be in the platform. Greg Goff talked a lot about analytics and AI, closed-loop reporting, API capability.
There's a lot in that within platform itself that enhances the experience and continues to help us really be, you know, to your question earlier, how do you get value for the employee? They shouldn't have to call us. We should be able to communicate with them and give them advice. There's some really cool, neat little companies that help with things like that.
Mm-hmm.
All right. Our last question for the day.
Hey, guys. Sam Brandeis with Wedbush Securities. Great job with the presentation today. It was very helpful.
Thank you.
Shifting to more AI. Obviously, AI and ChatGPT are on the forefront right now. With the AI powered products you guys highlight today, what do you see the impact in margins kind of going forward as you continue to integrate this generative AI technology? As it continues to improve, what do you think the upside is in the entire model overall?
Nobody better than Greg, who used to run an AI company to answer that question, so.
Yeah. This is a particular area I'm very passionate about. It's of great interest to me in general. It's a fun time to be in technology, I think, with the explosion of this. You know, I think GPT has gotten certainly a lot of interest in generative AI. I look at it broadly, that category broadly. That's sort of one class of AI. That impacts a lot of our care models. That also impacts a lot of our delivery models as I think about, you know, just across the business, how to do things better and some of the examples I highlighted. I think the, to sitting here today, we some of that is factored into our midterm outlook.
I think, though, you know, to the question earlier, we continue to see upside on that as we continue this journey of transformation, getting our data ready, normalized, et cetera. How do we take advantage of that? I think we'll continue to see significant upside from that in our care models. The other aspect of it, though, is how do we make the experience better for the end participant, right? The employee, the user. Really, that's about top-line growth. Yeah, it's interesting to look at on the cost side, and there's, like, a pretty straight line on how you can take cost out. There's also a pretty straight line from my perspective on how you drive top line in terms of driving engagement.
Engagement, again, moments to impact, better outcomes, value to value-based pricing, that's all a better experience for the user. I think there's huge opportunity in that. I think GPT, certainly for GPT-based models, large language models in general, will play a huge role for that. I also look at other optimization ML technologies that will play a big role for us as well.
I apologize. Thanks for that question because we're out of time. I really appreciate on behalf of the leadership team here, you all taking the time to spend it with us today. I hope it was as exciting for you as it was for us to be in a room together versus over Zoom for all this time. I can't thank enough our clients. I hope you got a good sense of our journey through the voice of client. There's nothing more powerful than that. As we leave this room, we're heading off to ring the bell, the Alight sign. The banner is out front.
Yes.
Hopefully you get a good sense of excitement overall just around the company, almost two years into our public journey, six years now as the brand of Alight, and almost 40 years of history across our population. Again, we thank you for your support, and thank you for being here.
Thank you.