YOU - Earnings call transcript Q3 2021

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Operator

Good morning and welcome to the Clear Q3 2021 Earnings Conference Call.

We have with us here, Ms. Caryn Seidman-Becker, Co-Founder, Chairman and Chief Executive Officer; Ken Cornick, Co-Founder, President and Chief Financial Officer. Please be advised that today's conference is being recorded. I would also like to remind you that today's discussion will contain forward-looking statements relating to future events and expectations.

that from the most these filings. factors to actual recent find materially differ projections can could company's cause results SEC You in our

addition, turn measures and of can in found in Co-Founder, financial the In Chairman With Chief directly over be some Clear. that, to X-K. Reconciliations Seidman-Becker, I'll most financial Officer discussion. call Caryn? to measures GAAP comparable today's included we've the Executive our non-GAAP Caryn

Caryn Seidman-Becker

released you've we shareholder for on review joining the brief us. with get then some Good third letter, chance comments make morning and our we'll morning, along right thank you our This website. all to a quarter Q&A. earnings into and We'll I them. hope had

important During this quarter, we've seen and trends. the new emergence of

the with products not meet call convenience partners to for It a a Secure continue Clear positioned. is now airport and People expectations been As frictionless era our services help with has button, creating and only safer new reopen, post They're whether a of in decade Health seamless Clear a experiences well new economy over their of office businesses helping it set the is better used travel. the provide are new having The customers. Pass, the but and and the and experiences everything for safe demanding much their at frictionless. people dawning a experience of identity we platform have easier we lockdown. experiences return available of fast expectations and at of almost push are or to to what consumers or world

when bullish we last this saw manifest desire travel to of we've to Monday all reopened people's As on borders flood travelers. year, a are international just said we our and

a Today, work which that have officially towards for standard rise Webster's of seen more return flexible. of so the from evolution travel view, our is business people waiting travel, we untethered is in the something are old location dictionary. business specific now some business trip any is in digital fundamental included nomad, still undergoing term away While the the the to common

version Clear of leveraging digital flexibility empower help businesses Hawaii information of to to traditional digital Pass helped newfound business and warriors sizes control and stadiums access and fully From are the nomad the of come vaccine has and better. is with travel, card need solution returned, their as digital restaurants predictable skies. quarantine yet and rapid than people Raiders greater cities to Pass identity and taking are local not to users Health While at of Health nomad road their only ever. to our with and return doors OpenTable, millions securely their to keep and as but back all safer, San traveling Resi for and travel, games health trusted open delivering that consumers pack and validation. have experiences the without vaccine want Francisco of more brand vaccination. frictionless and economy convenience such our Clear and now used to have products and all Seattle, proof LA, Not York New easily have to choosing partners people an and From accepted connect recognized the

Now, over to Ken.

Ken Cornick

everyone. morning, Good Caryn. Thanks,

XXX quarter. bookings driven and and signed new growth BXB revenue in Plus the strong over Our exceeded CLEAR our partners guidance, by in

to XXXX. Approximately return of levels XX% noted, verification markets Caryn enrollments of compared have our we're have and XXXX levels seeing to a markets higher travel. our As strong above XX%

travel million forecast X% and up plan XXXX. within noted continue that people ramping head travel XXXX into Thanksgiving to expect this this starting season, the to Thanksgiving. as AAA's XXXX we holiday coming XX% with of XX.X Thanksgiving, We week versus travel

which our always we line is focus growth roadshow, QX, that Express cash of and IPO and run highlighting business. the which we generation. due million, generated flow the of strong highlighted flow flow free successful metrics I how strong flow $XX.X both strong the bookings show and we've cash This cash During Caryn on In the can positive cash partnership booking's top launch dynamics. has high performance, American was to incremental margins our and

we our when our reminder, a As understate GAAP are strength to metrics tend underlying business. in growing, the

example quarter This of is great a this.

of to in the Before comment to and both seeing platform strength I business. Q&A, We're want continued we the CLEAR guidance. on Plus QX go sides

PreCheck in believe several total TSA We to of to We'll months of $XX.X $XX.X in any Q&A. XXXX. million we guidance contribution range $XX bookings excludes the revenues launch to now million. of will now million This expect and million first which from go GAAP $XXX the

Operator

today coming first is JPMorgan. Paul Instructions] Our from from Chung question [Operator

now Your live. line is

Paul Chung

Hi, taking business my momentum here. questions. thanks for the in Nice

first expect we you So What penetration? sit you And to on quarter? go term if expand of today where members you term? to contribution? near AmEx us the enrollments Where can of the that of bookings, in longer off, of TAM the on the in and percent kind number remind and could

Ken Cornick

Sure.

ways. in members have the the a AmEx Platinum It exceeded partnership. and One a X we really our expectations July terms of card. new that answer growth had renewals remain is of strong continues in with couple of that I'll strong and So in existing to launch starting

the about in accrual. a million there's Q, You'll $XX see

contract is end cash we for -- year upfront of American the we to XX. join of to what their accrue so the credit, reminder member. to someone as or gets We that would partnership at and Clear owe back a so June Clear our card a Platinum and how would collect statement which is each reimbursed for this pay then it's work with Express the And

accrual best is which a it you'll so And I is answer see the million bookings. $XX way against netted gross our can

Paul Chung

Great.

Caryn Seidman-Becker

ahead. take I'll And -- Sorry, go

Paul Chung

go No, ahead.

Caryn Seidman-Becker

TAM going I of part was the say question. to take the I'll

expanding broad the the sports distribution disproportionate on platform such to are looking going side $XX considering from on who So what people million and a restaurants there's think we from obviously, PreCheck to X-plus the to Plus to for year country. about was CLEAR offices, of network at the stadiums XX amount X-plus, take a travelers a roadshow business, a that's perspective of we talked million who trips then

And Clear platform the look CLEAR members penetration a so still than of quarter you both are end X.X less at had penetrated. and the that's days the we we million think at from members Plus, of and early when that very these perspective, X%

Ken Cornick

XX% penetration specifically, and you're on somewhere the think we AmEx Maybe asking and XX% between Paul, we're penetrated. of

Paul Chung

quantify the about then, of enrollments members? conversions? those kind And Got number as of the actual Health you. kind to we Clear are of using split you you upsell And convert confirm Clear if the be it great. and you the Health and Pass the strategies quarter, of Pass, of what Pass could in Pass think would between kind Can kind

Caryn Seidman-Becker

of going that not I break side the business. platform Clear. out a will model platform business we're So paying BXB as those we to a are SaaS where say look is as do it the at enterprises

naturally You because seeing understand really they're is and some are brand them the they resonating over the the people platform. with migrate and already on experience

Ken Cornick

right upgrade. marketing We're actually pursuing it's not So an strategy. strategies to now, organic

Paul Chung

this how of think question, nice record about just Got very Is on of function more cash. we with move the cash cash a fiscal into cash will the IPO dynamics about think pretty flow, year there? we you. free of should the How over now proceeds and the favorable take kind trends, next what kind exit year we the year? And investments as of flow 'XX? should and free priority quarterly then contract free or start seasonal of And last AmEx

Ken Cornick

Sure, of a lot questions there. in

growth So free from all flow important certainly, and cash strong to the cash think generated the flow and a American partnership perspective, to Express free that cash of flow we contributed it wasn't it. I but note

free would dynamics AmEx of free without even cash the flow still we the cash have generated partnership. So, flow

there's bookings And so more talk -- growth should when a about we in gross we're our seasonality mode. about disconnect it's sometimes and as we about, less

Our GAAP would the metrics business. the strong underlying dynamics of understate

flow quarter we continue. QX so American flow growth year, generate In partnership to a that expect can And would next believe build will a but positive reverse the as free cash go-forward on to basis. dynamics. And mentioned, do continue I free underlying of and will that for the have Express we we cash

Caryn Seidman-Becker

on talked continue to to the mobile there's product. on In And as growth. product, side the inorganic the question the about investments, on on we the terms opportunities there's and investments your accelerate road -- of of organic show,

Paul Chung

Great. Thank you so much.

Operator

you. Thank

Our question is today Telsey Telsey Advisory Group. next coming from from Dana

line is live. Your now

Dana Telsey

Hi, everyone. Congratulations on the progress.

at now and How what regional type, the just mentioned quarter. new translates Which trend runways markets going that occurred there bit a looking What you you is in secondly, You those what forward? on the see for expand are are you XXXX? And that maybe market partnerships then a progress? usage? into, above this those? little airport Can XXX

Ken Cornick

with first. So question I'll start your second

XX% break I'm are enrollment. see we out interestingly the as mentioned, specific markets. have a to on do variability. But So from outperforming about markets enough, now I of But verification above standpoint. regional we're that going not we

are even percentage a a a growth members. those a down well convert So of we to versus specific executing able if Clear perspective, and XXXX travelers market volume from from perspective is are into higher

Caryn Seidman-Becker

of markets Dana, have have I higher yet ones be would fully. assume or that historic that safe to might international those the to travel come percentage business back think it's that travel

see opportunity we that front us. in so of And

broad In partnerships terms across of a Health Pass, industries. you're seeing spectrum of

of of sort thousands, to multi-point, not and hundreds of OpenTable on of There's like partnerships a restaurants if So those right? tens is thousands point platforms. Resi

adoption And tail. so has long the there a

other once and safe. frictionless fans, with look great stay are customer it days you consumers, partners these that ensuring partners. and epidemic very on bring the for long-term those in to so think customers, businesses experiences. go or to And optionality seeing really platform, customers, endemic as on their we really we events stay opportunities at does then these sporting the festivals create platform And music have again, customers customers right? and And long-term open You're from our and in it experience early

domestic. very global obviously So still We issues. these are are days that and think early these

Dana Telsey

for in TSA Got PreCheck, it. just timing? one And then, the shift any reason follow-up.

Ken Cornick

encouraging Clear's working We're in trends to TSA brand a as We're product in to without business. the possible. partnership really even seeing we're QX pre-check soon expecting the as bring Look, TSA PreCheck. with strong actively

involved, And we're internally preparing with I the meantime, launch to in to public. think everyone traveling bring the strength. is motivated to this is

Dana Telsey

Thank you.

Operator

you. Thank

Turrin Our next question from Fargo. Michael is today Wells from coming

now live. is line Your

Unidentified Analyst

for on [ph] is Good Turrin. David Michael morning. This

talk we terms of to Just guys dynamics versus rate one mobile Can that in the you it quarter? as question of me. about for you're efficiency airport metrics this the see member ambassador progress acquisition would for the relates seeing sign-ups

Ken Cornick

Sure.

I and you'll our standpoint. marketing see a you really strong member at customer a efficiency acquisition sales line, from acquisition think or look if some

acquisition member We extremely which think team. a we ambassadors really about our that our standpoint physical So quarter. economic you I our field talk over and footprint performance this are saw of X,XXX efficiency pleased drives with the in from

Caryn Seidman-Becker

a resonating. to To are and brand little footprint our think the people I more granular, get as returning the is airport, expanded

ambassador programs you're seeing channels not strength, bear our the join So also efficiency are and fruit, Clear. either learn put family we've seeing rates year that in the you seeing partner attach you side last more about training place only seeing people channels over through on you're marketing that are or

really so And separate it's to hard all.

but as a system economically efficient I a think it works system. altogether really it's

Unidentified Analyst

Excellent detail. you. Thank

Operator

you. Thank Sachs. Brian next Goldman coming Essex question today Our Instructions] from [Operator from is

line now Your is live.

Brian Essex

and Hi, if the on Caryn, you touch question. business. good platform the Maybe, could taking thank morning for we

I event to do have As all And business management been of AD you the business? integration a kind mix initiatives, management follow-up going historically where to recovery? a enterprise it and then Or I agreements you mix after this to a different event primarily is growth do think across mix was imagine come be? of we and access access? some know there's from that. the Pass, to evolving primary a you Azure access given going are you be enterprise going the view view wondering management the How what then be potential last we new with Just of shift it given all of these the you're to Is and starting platform new Health there's see platforms. obviously drivers greater partnership year would with see how

Caryn Seidman-Becker

I give wish a I specific Yes. you answer. could

right? of if of embedded with foundational, at they members million that and who I ID the be think process, opt identity secure and in a but only trust in, base saw platform not not identity here's my cases. foundational comes very digital is answer which partners' automatically brand what our end easy members an is you to quarter the to our X.X onboarding And our -- right, opted is could choose use but

really which we've of -- seeing functionality. and an talked embedded what cases you're about you're and members so the come is IPO life And the that's use base flywheel seeing and to and

be safer fingerprint, solve and it cloud, both So the to We on identity problems and QR whether the face, partners' identity online easier physical codes. world. the handset eyes, in in make experiences

a And drives is unique moment so for because identity platform or trust. Identity experiences. secure a -- Identity need better identity it has been the greater. trusted never drives

in be become to so too are Azure, out, you happen City is show are. you're the York readers. New pointed such because two foundational. what really are these And OpenTable having hard And seeing, disaggregate days. as to it's it's to like years to to We're who very ago; That so lead. different things here did the and walking into And restaurants right, say these will early early we not

long-term a trend. is secular this that, think I

Brian Essex

it our are the of agreements you the on kind of helpful. that deals that's developing as economics think price agreement around? economics the of model unit partnerships? I'll kind for disclose the you it how seat can and how these about we in price these range Ken, leave terms wrap on it, that, kind up all if kind attendee of as of are you're of were follow Is Maybe and heads what or to many enterprise per and users do open platform? we there an a can or Got understand these kind economics how to of unit of incremental Maybe, per sign unit just

Ken Cornick

there are based like there's mean, anything, upfront of That's based a a a and enrollment it's everywhere. cost an once agreements speaking, range are and From enroll and either platform done, on enrollment on usage. our or members which number these type use variable agreement. volume Generally business. standpoint, one the And and economic cost is upfront unit annual talked we've I is upfront that about. Yes. you you philosophy that on of based

can incremental the platform good is you high so different the member And very anywhere. onto margins it a that once in use are they a then very, And member of onboard lot places. because

that's we platform margin on sitting on think this a that already based unit incremental economics So, built. high

Brian Essex

mentioned, Got I like IPO, CAC. it. you Maybe just real the think maybe we to during XXx a quick; LTV saw

kind that towards a level a mix change increases, As to materially? do model efficiency more you above is of become enterprise you you look focused to like that imagine level that, Or or platform that there would develop maintain that you as the platform?

Ken Cornick

Plus LTV Yes. CLEAR is the really to I mean, CAC that referring to business. BXC

be business will side. really ratio what strong be I think the [ph]. it economics unit on be will on strong I it the a that but based very speak think yet platform being developing will to very I can't

Brian Essex

you Right, fair very enough. Thank much. it. Got

Ken Cornick

Thanks.

Operator

Thank you.

coming from Capital. Loop Our Baruah is question next Ananda from

Your line is now live.

Ananda Baruah

Thanks for question. thanks. Hey, guys. Good morning, taking the

Ken Cornick

Good morning.

Ananda Baruah

a But the to of And could. what quick Offsetting you touched I even if you think of some Yes, do how at a is volume, things that higher of giving ago. are now it then to couple mentioned -- questions guys are are have sort things the couple of have rates? converting levels. few, follow-ups. higher new? just what thanks. that's a the that and you this earlier, are you bit in rates airport a And of are I XXXX back occurring what on And general, Yes, Caryn, may some in you're that convert that allowing -- you to

Caryn Seidman-Becker

question. great So,

what calling their it they've for at expectation a button life look and platform also making American a of think the tacos with whether we're more mouth, had returning Clear and partnerships and more economy, button, at convenience discounts push Express, rates. Delta, travel, really you the their seeing more of, part it's or to the people it valuable. are a familiarity word the I ordering is student ever experience think affordable rest the on places brand our of the push frictionless as that more to at places, of experiences, and that in the I couch be the United sitting in breed and using of than

is I and perspective past platform very now it's that come the So have an that X.X years. from people a transformational think accessible experience to expect experience an over

think a I technology touchless. I we're perspective, that, think also that that's So driver. a big from

XX% about our the so keeps their of And members eyes use first, getting faster, technology platform more the powerful, and better.

So right? gate you experiences get clear lane your me, that, we convert. tells drive your adding so there's leave frictionless plus and to that keep experience. also products; home-to-gate is to where house the on products important, why join which And your the app feature connecting mobile to with massively to gate the walk XX people people is and ultimate and so, to where the really the go traffic minutes predictable the be would So, timing reason driving is to to when

Ananda Baruah

second is, that would Jan place, sort to super that's mandate positive that question up? you a in business would be Yes, philosophically, are show X, way model consider vaccine into to goes helpful. you -- a the of net if And

Caryn Seidman-Becker

I on our people Pass to too compliance. really reopen, what early with, that to things when experiences there's to to stay to a different safer offering ensure very Clear that to been partner comply our partners can't But open important comment say except partners help the that make has and that our and we're tools Health is need important tell.

Ananda Baruah

does sounds not yes, like -- -- on it's TBD. it yes. line, philosophically, TBD. it the But

Caryn Seidman-Becker

Yes.

meant and means thing to after it today. is make mission Our X/XX, experiences easier and something one different safer safety

the And all of for platform is that. leverageable so

Ananda Baruah

track the your to platform? any the all sort able Are want ask. A to quick travel at impact? business then, then, from And bit Cool. track stretch to And nomad I contribution of of impact a guys to way but what, digital just to last one or one. you the

Caryn Seidman-Becker

Well, it's interesting question. an

patterns, busy be We different days busy. now right? seeing slow are are and So that different that to were used are really days really slow

hours the of to travel day, So, seeing numbers the and only I so hours. are strong connect -- up you different but and patterns; seeing different you And right? are days couldn't it holistically, are and thing

Ananda Baruah

interesting. helpful, that's No,

Thanks Okay, cool. lot. floor. the I'll a cede

Operator

of We've for reached comments. closing back I'd session. the end you. the to like over floor Thank question-and-answer any or further turn our

Caryn Seidman-Becker

joining for all you Thank us.

Ken Cornick

Thank you so much.

Caryn Seidman-Becker

see soon. you And

Operator

Thank you. teleconference That today's conclude does webcast. and

day. time wonderful this your disconnect We you today. have a may for participation at line You and your thank

Clear Secure (YOU) 15 Nov 212021 Q3 Earnings call transcript