YOU - Earnings call transcript Q4 2021

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Operator

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

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

Caryn Seidman-Becker

some for always make experiences joining XXXX Thank opportunity Earlier morning brief over year then easier. comments you. details had thank you letter, review I been safer our Good released we financials. and with and end website. for shareholder have it on fourth mission us. Clear’s to a I an the you to make has will our and today, some turn Ken and them. all hope financials to along on quarter

trusted powered and a surge the For things is the demand variant, you, Pent-up over normalcy all a you. travel and travel. that a to have decade, leading Omicron make frictionless return in by journeys you the to we the connecting of wake in space to in

XXXX, the lockdown, experiences, to Plus of more on is consumers Tourism Council rebound bullish and seamless for skies secular are outpace We sector any With X% The global recorded and for Travel the return been quarter season our and pre-pandemic eager up make this and have world. We when exploration a Clear Plus frictionless saw since than will holiday enrollment months to obsession travel XXXX. the CLEAR of highest more ever. positioned the more business ever than our ever. well the usage the levels the in numbers passion CLEAR as projects World with travel during COVID experience we to for trend after the than before

to gate predictability, journey consumer prized home control and extend are to products choice traveler enhanced and the New drive Clear. at

expanding feature, are Plus of lanes examples from our the Our should and upcoming services enhancements of enrollment CLEAR the consistent reserve Clear. new lanes, see to great expect mobile Gate Home launch innovation and travelers to pre-check

WiLine helps and our our domestically extends and expansion, to queuing Additionally, their virtual our capabilities adding portfolio enable technology internationally. and both

do done Clear has security member never embedded and It business been model and our protecting always been committed center this are in to of data everything the the has right processes important. privacy their long-term. we from class are Privacy, at and control of as culture, company. owner Together is of wavered and team. our possible that never commitment. have we opt-in are for frictionless always world it’s in demand button, Clear Secure the the Our and Raiders and professional and identity expanded can physical certifications. both at digitally the age whether flywheel. a X, both and This has Day Argentina From daily travel, economy, safer much queuing verification so Clear from at a platform games, convenience in now at settings, experiences into is partners consumers confirming extends and to beyond Clear virtually easier Macro be enabling omnichannel we without information. and of Clear’s building Banco journey more The operators, members be done the licenses of a would turning or new where push habit. this physically accelerating None

strong in I to to we and XXXX this We call turn to a start now would off of are Ken. the have accomplished proud what over year. like

Ken Cornick

everyone. morning, Good Thanks, Caryn.

CLEAR little the than growth the impact better performance by performance expected Plus CLEAR financial driven on in Omicron Our in was Plus our side. platform as on well quarter. we had the as

had despite case the year strong surge. we In a to the fact, very finish

strength year quarter significant underlying free to the and GAAP metrics. generated cash and in have and XXXX consecutive have be $XX our In our revenues of year to communicate, positive far EBITDA fifth. fiscal expect of wide negative our reported fully depressing we are the XXXX, million by behind the as cash marks As while This we adjusted to margin. million flow tend evident fourth the reported on a our be bookings exceeds $XX of metrics GAAP our lagged we lagging XXXX when reaccelerated, for continued business is we cash the basis. the a We flow growing. a free indicator year flow generated full the quarter free positive fourth

as airport in OpEx benefits. towards airport a XXXX Direct that were same-store pre-COVID XX% economic operating depressed markets quarter for single-digits, business. airport grew entire ‘XX, despite largest the open expenses versus down This XXXX XXX% powerful cost we true salaries QX fourth in QX The and is in compared enrollments were Plus while levels. XXXX a model, versus leverage. was have XXXX. staffing up were that in airports XXXX of grew around excess wage XX% bookings realized reflect low The which pre-pandemic Verifications the normalize of not to inflation We period total direct ‘XX significant and the while same does operating operating over in XX%. we of of in masked in leverage component CLEAR XX normalized comparison. those levels, inherent QX When in more salaries grew

will we on the the to in While XXXX, XXXX’s salaries timing in to travel in quarterly we recovery. particularly growth the direct beginning when also affect of half moderate new of expect I back anniversary touch cadence airport G&A. launches want

of to elevated in growth G&A, expect expenses decline Sequentially, comp and enrollment to the In of number had year-over-year a million, including stock strength fees directly half portion or quarter, XXXX. and professional not fees, excluding we which upfront Two which company, basis, in of a in member bookings drivers of either $X.X acquisition-related and expenses, attributable are card the non-variable expenses G&A are grew we the of growth. public growth XX%. elevated the newly G&A cash recur. on back of was this a As credit

levels. XXXX expect QX flat G&A from to down We to sequentially be QX

free XX/XX on includes the $XXX million. on This contribute about them million. basis. cash of at reflects and Atlas and positive was Our the you WiLine Atlas to WiLine cash $XX and bookings approximately platform side generation equivalents breakeven revenue and and think combined should all-cash acquisitions XXXX will flow a cash a for balance roughly as in and

briefly on to we guidance. Q&A, Before will go touch I QX

$XX expect contribution $XXX.X from We total to million of bookings excluding PreCheck. to $XXX.X $XX any of million, revenues and million GAAP million TSA

setting ‘XX. the Consistent next be a for revenue quarter then represent to patterns, with up we in several would expect operationally coming expect in the to which initiate launch historical weeks reviewed months. of the We ready our launch system revenue timeline, fiscal the QX lowest us

the free well discussion expansion a cash we As in generation. as financial expect stated and growth in release, flow rate as moderating expenses meaningful in our in expect margin therefore XXXX

to go will we Now, Q&A.

Operator

you. from your first question [Operator Thank Advisory Instructions] the Our Please Dana proceed of line with comes Telsey Telsey question. Group. with

Dana Telsey

see everyone. the morning, Nice progress. Good to

lastly, and capturing a all Thank back? do the macro they that on existing anticipate anything what prices you that to any where membership you just thoughts How them gasoline pricing basis, on there? back And you. journey are coming of adjustments are this you and rising members, seeing seeing Clear impact that of the fast year? you you there, think Just reactivation are and on are the on travel,

Caryn Seidman-Becker

Dana. Thanks,

question, win macro turn I’ll So Ken. travel I’ll over and take then to the back and pricing

at signs very there. that as on are companies We returning encouraging own the been data out have see well and looking from we’re bullish travel very of our travel as

the seeing leisure summer you’re restaurants, busiest So spikes travel online are hotel travel will predicting XXXX be the in saying demand, they agents, Airlines, season of in ever. companies, travel. recovery operators, XXX% that some supporting approaching booking them

opportunities of seeing prices difficult are left. enormous as so expectations And they environment. percentage are travel for travel and with is they a think we a slowdown more frictionless higher of and due focused of low it’s than kind experiences, have any that are things And post-pandemic nature, on there gas us not in back probably total travel. travel in to still to I think also we coming We so that people share because to

important And so than more think Clear I is ever.

for rising our and not inflation So, do enthusiasm gas temper prices travel.

net the Clear, pandemic, and the backs think for the I win passion brand absolutely and it to back here the do terms lot was happens and continued retention win product airport. to and of market normal backs, than during does left coming include In there fit. the speaks of this more at who People are a

Clear there think for second people we also X.X back our the use pre-pandemic. win still to grow I to ways there is left left experience. only So reasons for back go, is as zero and come to but cases pandemic, not during a that more it’s people network who who our cost, a

to but still clearly, ways And exact we give But good of have that coming you a go, have a an done think back I Clear. job can’t number. so I to people

I expand to and but it’s go our we cases. have network who we pandemic continue in a only think number, in also to the before ways left not as use those

Ken Cornick

Dana. And just quickly on pricing,

we our do launching since pricing changed you two with haven’t As opportunities. We have we know, price think airports standard XXXX. in

family at looking that. July $XX starting starting of from We last last year $XX. take price did always on – We’re to in

announce think do we point. so to this pricing, nothing have at for opportunities And we

Dana Telsey

progress and what support you’re Got How sign-ups it. going? follow-up. of seeing? Express One Any is American on usage the

Caryn Seidman-Becker

our partnership overlap Express. a with on large level, a AmEx So love There American Clear with we absolutely obviously and customers. macro is

better penetration and In who not of a channels, say our question LTV greater is What think I lifetime CAC to, customer terms other that be of equal as if that the favorable. is I may to value can AmEx. comes an through is AmEx numbers, exact to certainly than customer

their own in Express is growth American think I members. seeing

have start base, longer penetration off really you – do growing very to member there then again, growing but a a strong only, not start. So well, a but no

continues It be strong. in. to months X We’re

Dana Telsey

you. Thank

Operator

you. Thank

next the with with your Our question. JPMorgan. Paul question proceed from Chung Please line of comes

Paul Chung

Hi, my question. taking thanks for

is such how there. on now high levels do just which you retention levels, are And execution driving today? above normalize? you to So where retention Very number, kind of expect net pre-COVID nice

Ken Cornick

the it do brand to As Caryn and affinity. think just speaks mentioned, fit we the market product that

we do win excess about there. churn We have the go to from from So COVID. talk ways excess a back

the think the that somewhere net not I we on specific do probably. but XXs, settled number guidance high in the think number, giving in we’re

Paul Chung

platform on the on platform? the of partnerships kind kind And in mentioned which with adoption of and You companies sign-ups about helpful? helpful. strategies of engagement comes think beyond Thank then can you verticals any the further of other we example, to be drive would and large the Raiders enterprises, Pass maybe was Any pipeline a you. card other bit, use credit as pandemic maybe down the Health kind Okay. expand

Caryn Seidman-Becker

new businesses members is it Yes, the well has people and communities experience to our so definitely an has make to come brand Health back right, as platform, to it in they opening and better, so helped love easier, Pass and important introduce, partners, what well. getting been and as important as people’s back safer product

I a think what help trusted us done be really that’s solution to partner. is

capabilities as and see frictionless fuel will Clear you and to Health So products continue add to partners Pass evolve experience. the

going readily but We’re announce we not see can before on they that are think available, products are to spending I you innovation.

and perspective that you Home continuing from to from the Uber And Gate as when beginning travel experience the is a show opposed of house the airport. you so time pull to like leave to your at right, things that integration, up the

Health make connecting you, sports of that and that show to conferences physical in but or were this more the year, events. for, you imagine at you travel a you. see there opportunities Pass line events, other all can entertainment for to digital you and and You’ll you that did how or things things ribbon, different We to cards at lot in that to connect is waiting CES

continue to see you So will that.

growth what’s to I much to ability the important, member in platform, is mobile base. innovate enroll to a a continued and and a that it a really doubling from think faster right, really of broader us base allows the been much

Paul Chung

Great. Thank you.

Operator

you. Thank

Fargo of proceed Securities. from Wells with your the line Please question. Our next Turrin Michael with question comes

Michael Turrin

you on well just is what’s in flow driving what our there half moving Hi, just above on are free of delivering just steady say as strength? with of expenses cash there there. flow the pieces anything QX The near-term. you is state add free capable morning. else estimates. some Anything cash came this second Thanks. kind And can business appreciating margin scale? Good Ken, you can number

Ken Cornick

fundamentals the that and of that the the we’ve Well, strength the the representative quality and the continued I understate business. I think to of true And fact we’re flow the business emphasize think the operating cash certainly the GAAP cash seeing. metrics free more are of flow

So view the That’s free business I and and for think generally speaking, member the growth, we we’re business. flow. judge bookings driving how cash

I flow, to cash but specific low-capital high-quality free flow margin guidance a it give on think conversion, we’re free is with going So not good business cash intensity.

very So, pleased. we are

Caryn Seidman-Becker

think at work, to think I of I add just flywheel cash see I that flow part the that, starting also is the right. would free to

So, both we members add physically have multiple and efficient channels to digitally.

don’t of customer, the have marketing, the companies add spend way that lifetime think might value think I you you to of gross the cash when, driver strong a and again, So, in free a cost per is flow. of other

more ways more and we the to for people the is use on the so platform. are the cases more And there our multiple build brand, enroll. There capabilities

Michael Turrin

just may. And a I follow-up, quick if

on are where is the you that can model? something to add partnership, can business anything side contribute else capture payment there to somewhere or you On there Is the around either eventually the model? anything there able the Raiders

Caryn Seidman-Becker

are believe fees Clear. We an opportunity for do transaction

Michael Turrin

you. Thank

Operator

Thank you.

question with Sachs. Essex question. from line comes with proceed next Please Our Brian of the your Goldman

Brian Essex

rest how a think of as a of very was of the to versus incremental Thank I that question. at any noted a thinking you booking to enrollments? for a for Is could I cumulative taking for also sense are BXC get expectations the BXB well? way Great. trough Just bookings release was much in Is And contribution year. maybe the about QX for there my least enrollments. start you year? QX through number, seasonality your with wondering if that the get trough. the sense I

Ken Cornick

Yes.

can letter, on first the our we a question, from as just example operate business on very customer interwoven. experience and you as much platform. the look, see businesses And the So, the the are

specific not cumulative breaking owner-operators. the within enrollment we drivers And the are So, are look, number. out we

beginning been that mentioned. investments and see years of flow. platform the to in And to for just perpetuate growth, making We bookings are those that investments free discrete the cash Caryn several flywheel member fruits have you in

So, we out. those are not breaking

question? second Your

Brian Essex

through Was a anticipate on QX be seasonality trough to year? the as the seasonality, and bookings will how of well, cadence

Ken Cornick

Yes.

are So, bookings not the specifically we going on to piece. comment

the going are revenue the with revenue being to quarter We leave lowest year. the it of

Brian Essex

what Got any of of you milestones on a that follow-up kind it. level TSA, left in would quick confidence sense Maybe have of materialize the are the that and near-term?

Ken Cornick

operationally Yes, ready. I would system our say is that

launch will kick next will mentioned the we review in few process. the the guidance, As weeks, which in process start, off the

are So, next seeing. months several few months, what we next is

Caryn Seidman-Becker

I the this think is involved involved everyone everyone is motivated very – to bring to traveling public.

actively And TSA. so with we are working

in operational We our lot – a and system have of in our readiness. city confidence our

Brian Essex

lot. it. Got Thanks really That’s helpful. a

Operator

[Operator Instructions] Holdings. Loop Baruah Our line next Ananda question Capital comes with from of the

Ananda Baruah

international guess ones you obvious guys. remarks. about Good than structural, And the you question. one. products, the about actually there. you Hi. It ‘XX are on XXXX, new sounds new customer guys Thanks mentioned acquisition, stronger etcetera. growth talked drivers like Caryn, And your last in travel then seeing guess new you structural anticipated probably morning you key prepared airports, quarter, the I for taking I being just talked for was

– Thanks. of ‘XX. kind just would then now me. international And a how of love should see And entering drivers year on get the those that front? the aware is it sense on Caryn, so be for about we you for And anything there key incremental that’s to

Caryn Seidman-Becker

Yes.

us Argentina the puts side. piece. America So, It and squarely international to entry. the our enterprise WiLine I side accelerates start will the and really with brings or Clear Brazil, on Latin in BXB Mexico

airport side is and side. And opportunities accelerate conversations travel on the it creating to the so also the

to a the of both base platform we granted, on both sides and zero. side this our aviation international off year, business good have on that’s growth the are of So, excited on

So, excited at international. we are

America. about do brands a team on a are and excited very the Not boots team of We so Argentina, engineers only now, have we Latin and great in products. partnerships ground,

very our, are dual to we both of engines. we sides to our So, it excited bring what call growth

lot and about travel see We which do year. but have you of encourage and and you the on through you think see are used is Gate beyond this about hit expansion, airport. will you if of magical, the not only are Home on working In which side. I more new it’s they to haven’t And see live. downloaded products ordered But on I you the we CLEAR network partners, we before not do in it. products, airport, your to year. you it, again, the not App the It will Uber a think this will of travel only terms this announcing year, a is of new – it philosophy It broadly,

been the this investing use that partnerships of that we side you new help will business, cases platform for year. fuel see have and the will On products

So, important and bookings, free on cash be to for again, also metrics ourselves member that partnership that we flow are we think and are then judged on growth, are watch announcements judging announcements. product

Ananda Baruah

are you you that you that across just the do ecosystem key feel track And initiatives mentioned? on for

Caryn Seidman-Becker

enough. do, of We did have whatever yesterday we isn’t also good a philosophy I but

So, we are every But us on we be am exceed track. that to doing I target can have. for think always we better. looking I

Ananda Baruah

Thank Awesome. you.

Operator

This concludes for Q&A We and you. you and our today. your Thank thank our call session concludes interest participation. thus

your may lines. disconnect You now

Clear Secure (YOU) 23 Mar 222021 Q4 Earnings call transcript