Jeremy Heaton: And we’re continuing to still see these big deals. And maybe the last piece on this because it’s kind of a long answer, but it’s an important topic, is a lot of our biggest clients looked to Microsoft or ServiceNow as that integration platform. I said this on a few calls before, right? And what’s come back from those departments is they’re good companies, they’re amazing places to integrate on, but they’re static platforms, they’re not dynamic platforms. So they find that when people log into these front doors of ServiceNow, it’s just more informational than it is transactional because we own the sources of data. So remember, our approach is the best of both worlds. We own the most important set of data, over $3 trillion of information across health and wealth comes through our transaction engines, populating that through Worklife and then engaging the employee.
Before they actually make the decision is how you take cost out, is how you take complexity out. And Microsoft, ServiceNow, Oracle, all the ones that have been trying to become these front doors, even Workday on some of the cases, we have more content than some of them do. That’s our secret sauce, is the connection of those two components, and that’s what’s giving us an advantage still today.
Peter Heckmann: Great. Thanks. That’s helpful. And any surprises in terms of the market reaction to the announcement of divestiture, either from current clients prospects or even software partners? Do you think there’ll be any indigestion there as you separate those units?
Katie Rooney: Yes, Pete, it’s Katie. Listen, I actually would say it’s been really positive overall. I mean, even with the vendors, the idea of having that, one, that integration of Professional Services with Payroll, right, and a global platform with focus and investment really resonates. And I think, two, with clients, again, remember, we’re trying to deliver the best of both worlds here. So you’ll have the focus and investment for the Payroll and Professional Services business along with the remaining Alight businesses with that continued integration. And I think that’s really what’s important so that when you think about the experience for the client, it won’t change. The integration behind the scenes will be slightly different. But that partnership, that experience, that interaction model will still be valid, which I think has really resonated with folks.
Stephan Scholl: Listen, Pete, I said this on the last call, people get it that when we – Payroll – processing Payroll and running a Professional Services business around SAP or Workday, those are full-time jobs, right? And those were divisions within Alight. And that’s why I keep saying being in that heavy labor-based or heavy capital-intensive Payroll business, that takes a 100% effort to do right. And we did well with it. Don’t get me wrong. I loved it. It was a great contributor. But now having somebody completely solely focused on that, and then as Katie said, with a strong partnership because they still want to come through Worklife as a platform to drive the engagement processes, that’s kind of the best of both worlds. So we’re pretty excited about it.
Peter Heckmann: Okay, that’s great to hear. I will get back in the queue and continue to monitor.
Stephan Scholl: Thanks, Pete.
Operator: Your next question comes from the line of Peter of Citi. Your line is now open. Please ask your question.
Peter Christiansen: Thank you. Good morning. Thanks for the question. Also, congrats to all and best of luck to Katie.
Katie Rooney: Thank you.
Peter Christiansen: Sorry, multiple calls going on right now. I’m just curious on the bookings front. It sounds like there’s been a little bit of momentum there. Just curious since the divestiture, it’s just a simpler sale. And you think perhaps maybe sale conversion, do you think that improves now with post divestiture? And then I have a quick follow-up.
Jeremy Heaton: Thanks, Pete. So listen, as we talked about the revenue under contract, which I think is important now that we disclosed the 3 years, you could see growth in both – in ‘24, ‘25 and ‘26 as we’re building the book. So we are seeing the results of continued momentum in what we’re doing. I think with that focus, you do – you see more pipeline, you see better conversion. And I don’t – from a deal perspective, it’s maybe harder to say on the simplified view of what the business is going forward and what we’re driving. But that today includes all parts of the business. So again, as I think through the commercial agreement that we have with the business being divested to HIG, the shared success that we will both see from what we’re doing, and we’re building the book of revenue on the contract that’s going to benefit both of the businesses and supports our ramp in growth.
And we’re really excited – again, getting this deal closed for the Alight business and what it means going forward is we’ve got a great track record here of history in growing this business. We can see the ramp in the revenue under contract and it’s profitable growth, right? We are really excited that we come out of getting the deal closed, we get the immediate margin uplift, we’re higher recurring. So we have less of this volatility on the project revenue side. Better cash flow, lower leverage and flexibility for us to operate the business in a simplified way. So I think all of that works, but you’re right, we are seeing the momentum on the commercial side, and it’s important for us to just drive that greater visibility for ourselves, but importantly for you and investors as they see the revenue under contract build.
Stephan Scholl: The only thing I would add to that, Pete, is on the people front, as you know, in the last year, with Greg and George coming on, the new Vice Presidents we’ve hired, the professionalism, the scalability, the capability of driving these larger enterprise deals on one end, yet still going after the smaller best-of-breed deals. We’ve really gotten much better at that. And so I’ve been really pleased with the progress around the hiring and recruiting. And we have top talent from – I mean, we’ve hired probably some of the best reps from most of our competitors that are here, right? So, as I always say, it’s great when clients vote with their wallets, but it’s even better when people vote with their careers. And so we have been able to recruit some incredible talent in commercial.
Peter Christiansen: Thanks. That’s helpful. And then post-divestiture, I would imagine the picture or the potential for Alight to form some solid go-to-market partnerships perhaps with other payroll providers, there is an opportunity there, just curious if you have any comments on that and if you see any windows there to partner with another player? Thank you.
Stephan Scholl: Yes. Listen, absolutely – I mean the topic we don’t talk a lot about is the AI topic. I guess I have just said, trillions of dollars – of not dollars, but trillions of data sets run through our platform on the wealth and health side. And every client is asking us continuously to leverage this consolidated platform to do what, leverage analytics AI to give a recommendation engine down to the individual level. As you know, in the health and the wealth world, everything is based on job codes. It’s never down to the individual level. That’s never been done at the level of specificity that we want to get to. So, our partnerships are with some great AI companies. And maybe, Greg, do you want to jump in?
Greg Goff: Yes. I mean I think to your question, certainly, it opens up more possibilities, but that’s something we pursue even today, right. In terms of – I think we have a very unique asset in terms of the data that we have. We also have unique assets in the AI and intelligence that we provide among and on top of those data sets. And it’s in the domain, as Stephan said earlier, of health, wealth, wellbeing, which is very unique to us as opposed to a more sort of general software players, and so we are additive to those. Any data sets that we can get, whether that be payroll, as you mentioned, that could be financial data set, that can be social data sets, that can be anything health and wealth related, those are all accretive to the outcome that we can provide ultimately on behalf of an employee.
And maybe the last piece, it’s not a secret. I said ServiceNow and Microsoft rather than debating who is a better front door for our topics, we realize there is room for both. What ServiceNow does is amazing on a lot of case management capabilities around Help Desk and providing a lot of skill sets there. But what we provide is really around that central nervous system around employee engagement, we are that better front door. So, it doesn’t have to be either or. Same with Microsoft, they both realize that there is a strong partnership between the two of us rather than competing with each other like we have in some cases, years back. So, I think that’s also exciting realization. That will all help our clients.
Peter Christiansen: Great. Thank you. Good color.
Stephan Scholl: Thanks Peter.
Greg Goff: Thanks Peter.
Operator: Your next question comes from the line of Joseph of Canaccord. Your line is now open. Please ask your question.
Joseph Vafi: Hey everyone. Good morning and congrats on everybody’s new roles. So – and to Katie, best of luck after the close on the deal.
Katie Rooney: Thank you.
Joseph Vafi: Maybe just a lot of questions have already been asked, but maybe we could get a little update on where you see the macro, what clients are saying, how that may be affecting the cadence of discussions on new BPaaS deals? And then I have a quick follow-up.
Greg Goff: Yes. Listen, as I have said kind of earlier, what we see is the continued dynamic of pressure in our installed base, especially who we serve, right. We serve the largest companies in the world. And every single CFO, when I have talked to, CIO and CHRO are collectively trying to figure out how to get employee spend down, how to drive engagement across these disparate systems. So, that theme is as loud as ever. There is no abatement of the activity. So, our investments in value engineering, our investments in driving outcome-based deals versus transaction-based deals, I think is the most exciting chapter ahead because we are the only ones. When you go to our client base and consolidate the data set, we are underwriting to cost takeouts, but by driving better process engineering, and I think that’s the holy grail that so few companies ever achieve, right.
So, most companies get stuck at the transaction level. And as we all know, the most powerful companies in the world truly are platform companies, right. I mean that’s – there is no debate about that. And so that’s been our journey for the last 4.5 years, 5 years. On that path, we have also had to modernize our technology over the last 4 years. So, in 4 years, we are undoing 40 years of history. And as everybody else on the call knows, so few companies at scale tackle that problem, right, most of them are band-aid solutions. So, we have done the heavy lifting. So, at the end of this year, by being out of our data centers will also then allow us to be even more flexible in tooling and capability in being able to configure truly personalized platform for a retail client, that’s going to be very different than a banking client, that’s going to be very different than a manufacturing client.
