Why Alight Stock Plummeted by More Than 42% This Week
Key Points
The cloud-based enterprise software specialist saw both revenue and profitability erode in its fourth quarter.
Both metrics missed the consensus analyst estimates.
The lights weren't shining for Alight (NYSE: ALIT) shareholders over the past few trading days. The workplace software solutions provider was hardly a lucrative investment, with a more than 42% share price drop -- according to data compiled by S&P Global Market Intelligence -- on the back of a poorly received earnings report.
A fourth quarter to forget
Alight's fourth-quarter and full-year 2025 figures were made public Thursday morning, and the investing public clearly disliked what it saw.
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Revenue at the specialized tech company fell year over year during the quarter, declining 4% to $653 million. Net income not in accordance with generally accepted accounting principles (GAAP) saw a more pronounced drop, plummeting by 24% to $96 million, or $0.18 per share.
Neither headline figure beat the corresponding average analyst estimate. The pundit consensus for revenue was $654.6 million, while that for non-GAAP (adjusted) profitability was $0.24.
Alight said the top-line slide was due to reduced project revenue and a decline in commercial activity. Meanwhile, increased compensation expenses were a drag on the bottom line.
Dim prospects, for now
Management sounded a hopeful note in the earnings release. Alight quoted CEO Rohit Verma as saying that "Our plan to return to sustainable growth is rooted in our enviable market position and is grounded in three operating principles: deliver service and operational excellence; innovate products that create value and actionable insights; and build relationships that result in enduring, trusted partnerships."
In the conference call discussing the results, however, Verma admitted that "the weakness experienced in 2025 will spill into 2026," which belies the bullish pronouncements in the press release. Alight's shareholders are likely in for more pain in the coming months, making its stock one to avoid for now, in my opinion.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.