Good morning, and thank you for holding. My name is Kate and I will be your conference operator today. Welcome to Alight's Third Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded, and a replay of the call will be available on the Investor Relations section of the company's website. And now I would like to turn the call over to Greg Faje, Head of Investor Relations at Alight to introduce today's speakers.

Good morning. Thank you for joining us. Earlier today, the company issued a press release with third quarter 2022 results. A copy of the release can be found on the Investor Relations section of the company's website at investor.alight.com. Before we get started, please note that some of the company's discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are discussed in more detail in the company's filings with the SEC, including the company's most recent Form 10-K filed with the SEC, as such factors may be updated from time-to-time in the company's periodic filings with the SEC. The company does not undertake any obligation to update forward-looking statements. Also, throughout this call, the company will be presenting non-GAAP financial measures. Reconciliations of the company's historical non-GAAP financial measures to the most directly comparable GAAP financial measures appear in today's earnings press release. On the call from management today are Stephan Scholl, CEO; and Katie Rooney, CFO. After their prepared remarks, we will open up the call for questions. I will now hand the call over to Stephan.

Thanks, Greg, and good morning, everyone. The third quarter marked our 1-year anniversary of going public on the New York Stock Exchange and our fifth public quarter of meeting or exceeding expectations on revenue and adjusted EBITDA. We have also continued to see positive client momentum, securing new wins with United Steel and expanding relationships with BMO and AmRest among others. Given this performance, we are reaffirming our full year revenue growth projection of 6% to 7% and adjusted EBITDA guidance of $650 million to $662 million, putting us on track to achieve year 2 of our 3-year plan. And our Q3 results demonstrate our ability to consistently deliver. In the third quarter, we recorded total revenue growth of 8.7%, driven by 9.9% growth in Employer Solutions and have over 98% of 2022 revenue under contract. We signed $208 million in BPaaS bookings, which puts our first 9 months total at $564 million, more than 80% of the way to our full year goal of $680 million to $700 million. Finally, we recognized $151 million in BPaaS revenue, up 55.7% from last year, with BPaaS now accounting for over 20% of revenue, up from 14% a year earlier. This was achieved while we self-funded $38 million in investments over the first 9 months of 2022 to drive long-term growth. I'm incredibly proud of the way in which our team continues to deliver on our commitments while making meaningful progress on our transformation. While we talk a lot about wins, it is as important to talk about execution and delivering value for our clients through our BPaaS strategy. Our BPaaS solutions are powered by the Alight Worklife platform, which brings together all aspects of physical, mental and financial well-being, positioning Alight to be one of a few enterprise-wide platforms that companies…

Thank you, Stephan, and good morning, everyone. We continue to drive our transformation agenda, and I'm pleased to share our third quarter results, which included revenue at the high end of our outlook and adjusted EBITDA that was ahead of our guidance. As Stephan noted, we continue to deliver and have met or exceeded expectations in our first year as a public company and are on the path to achieving our second year targets outlined in our 3-year road map. On a year-over-year basis, third quarter total revenue increased 8.7% to $750 million, and total revenue, excluding our legacy hosted business, increased 8.8% to $740 million. Recurring revenue, which comprises over 83% of our total revenue, increased 11%. Revenue growth has been driven by a combination of increased volumes, new customer additions, including from our BPaaS bookings, and acquisitions, which further supplemented our content offerings on the Alight Worklife platform. Adjusted EBITDA was $133 million in the quarter, ahead of guidance, even with our strategic investments and previously disclosed seasonal headwinds. This progress is supported by the growth in our BPaaS solutions. On a total contract basis, BPaaS bookings for the third quarter were $208 million, and for the first 9 months of the year totaled $564 million, which is well on track for our $680 million to $700 million target for 2022. BPaaS bookings growth has translated into revenue growth and higher contracted revenue. Our BPaaS revenue growth was 55.7% for the third quarter and now comprises over 20% of revenue. With our strong bookings as of September, we have over 98% of projected 2022 revenue under contract. Next, I'm going to discuss performance for our 2 primary segments. Employer Solutions third quarter revenue grew 9.9%, which reflects a combination of acquisitions, increased volumes and net commercial activity. Recurring…

[Operator Instructions] The first question is from Peter Heckmann of D.A. Davidson.

How are you thinking about inflation on the cost base and any adjustments that you might be looking to do for 2023? Can you remind us how that works?

Yes, sure. Thanks, Pete. A couple of things. I think it's obviously a key area of focus for us in this environment. I think one thing that helps, as you think about kind of the structure of our contracts, is that kind of on an annual basis, we can increase the fees for majority of our contracts based on the ECI provisions. And so if you think about what that was here at the end of September, it was 5.2%. In essence, we passed along the difference between that and the 3% that we cover kind of annually. So we'll pass on that 2% here at the start of the year, which will help offset some of the pressures we're facing on inflation. But -- that being said, obviously, there's still a lot of work we're doing to continue to manage that, obviously, internally. A big focus for us as we've talked about has been also how do we kind of streamline and standardize the way we're delivering so that we can continue to leverage the platform to drive automation through things like, we talked about last quarter, checking the status of tickets. Now that we have everyone on a unified kind of front end of our platform, that's something we'll be working towards as well.

Great. That's helpful. And then any changes in the market for the Aon retirement business that would either be headwinds or tailwinds for the first quarter where that business falls into the organic calculation?

No. I mean as I think about -- obviously, you're right, the fourth quarter is an important quarter for us with that business. But right now, given where we sit today, we're tracking well in terms of our expectations for delivering on that business.

The next question is from Scott Schoenhaus of KeyBanc.

Congrats on the quarter. So you reiterated your fiscal year guidance, implying a nice fourth quarter ramp on the margin side, suggesting the rollout of the large Federal Thrift contract on track and being executed as we stand here in early November. Just provide any more color on how things are going with the rollout there and how we should think about the contribution into next year, as we stand here on November 3.

Scott, thanks very much. Yes, we've been live for now over 3 months or so in the last quarter. And so it's part of the revenue profile today, and it's running and going very well for us. So nothing more to add than that.

Yes. And as you think about it, Scott, into next year -- I mean, again, I think we're kind of tracking to our expectations. We've said, obviously, the revenue comes online immediately, and we've had obviously some key investments to get it to kind of a run rate profitability. But we'll see that -- we'll kind of be in a better place as we head into next year from that perspective.

[Operator Instructions] There are no other questions at this time. This concludes our question-and-answer session. I would like to turn the conference back over to Stephan Scholl for closing remarks.

Thanks, Kate. Thank you, everyone, for joining us today. We're executing on our strategy, expanding relationships with new and current clients and delivering on our commitments. We look forward to meeting with many of you at the upcoming investor conferences in the following weeks. Thanks, everybody.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.