YOU - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the Clear Second Quarter 2022 Earnings Conference Call.

We have with us here -- with us today, 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 those filings. factors to actual recent find materially differ projections can could company's cause results SEC You in our

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

Caryn Seidman-Becker

a future significant exceeded deserve very amongst and termed, call. This expecting combined already collaboration Hello other environment travelers Needless to We we global which facing travel, quarter our all industry stakeholders expectations. to 'travel the for in the demand the enjoy high settings. secular us'. rightfully had summer earnings XXXX busy innovation our they had have welcome second lose frictionless to Clear experience season, ensure say with and for travel has were challenges many at travel so have and imperative highlighted to the

the to transforming just the is of it journey from stepping Clear the too door the each with safer deeply mean side we your laser-focused experiences. travel products new envisioning we expansion, network obsessed hard and partnerships navigate home are journey destination; on final accelerating Clear, our out creating is travel to say committed around We help from at spend better. it, gate, traveler We increasingly and of difficult reaching innovation travelers environment. making and an your global easier to to day today. When and and front

evidence in by network of letter. fueled our effect to are we continue results our power strong about be the network shareholder spoke the Our of and

to bookings of proposition add nodes, As strong XX%. second the exponentially. increases quarter, we've over growth we experienced value In the continued new

yielding efficient fastest our a earliest manner, opened our in a a were the growing mouth fuel capital to Some highly the decade growth only obsession strong effect, the high ago amongst network of our customer word able over in but both reflecting of experience We NPS. not are markets network. with and

will and the total network New continued products addressable our increase our market. and innovation in expansion further

We just in code available mobile verification app physical creates both or solution a and native for This experiences web by powered applications. SDK new clear mobile digital launched for integration enabling experiences partners, for have customers their our low environment. single frictionless our

our Since and We and are Clear our to our new welcome excited to pleased existing IPO, Clear the our at experience, free continued with obsession our and growth for partners. product adoption our am the and What and cash growth network, performance partners generation. XX ensuring leadership creating members the is nodes member team million our we I rapid culture and our new for solid strong to has of have built. flow innovation of will over financial improvement introductions propelled continue network, new fuel us

consumer for part Peddy PayPal JPMorgan, Payments joins Just we community engineering Chief was welcome recently that, this from to Nick cultures and and of new are Amazon. Nick Officer. One, Technology banking Capital before he CTO and the Nick as us strong at was where month, our Uber, excited most of

has market are about plenty of over business comment the is evidence in there a recession, any to Clear a it on economic days or travel slowdown. not our These turn I Ken, at of Before while a experienced quick climate. early and discussion economic still the

frictionless holistically We to never speaking more appropriately us important lead. of we experiences and as an identity aggressive front and plan positioned have are have been in well

during by the almost financial travel various performance environments economic evidenced Clear through also XXX%. declined We are well-equipped when to pandemic, manage as by

us, of turn free excited I'm call XX% I by and in about balance free in and that, declined environment. about while will cash expanded. margins front well With us flow cash positions this the sheet, which strong to incredibly bookings our over the flow our Our opportunities Ken.

Ken Cornick

Thanks Karen. Good everyone. morning,

Our with as XX% up was driven bookings in well financial XX%, growth Clear up platform Plus than and performance revenue by better and we as in deals expected QX new renewals.

to, of about As growth significant just is travel Caryn to not the alluded a Clear, growth post reflection opportunity. this COVID. It's level return of

with level is this versus CAGR bookings growth. roughly Our accounting bookings pre-COVID XX% same-store XXXX approximately of XX% for

bookings members, flow. free cash on generated cash months last discussed free $XX and flow we We million cash calls, this remains our flow on last to flow quarter, to the two focus As and million year-to-date $XX earnings XX cash free growing of million. free bringing $XXX

approximately the Express of first related million this to partnership. successful we XXXX. platinum expect generate to remit to year cash our half second of the the to expect quarter very free flow with payable positive in American We in Even $XX third the outflow,

Excluding free cash benefit approximately last times year LTM is four the of million. over capital the $XX.X working million we $XX of from which flow, over amount Express XX generated American up the prior months,

anniversary Since Next We're scrapping have be free speaking scale we about expense methodical embody been also inception, about flow. and quarter, we once LTM at more on we we'll focused growth to American Express, the a cash culture. payable operating leverage.

to in XX%, letter, less progress basis. earnings quarter, our total revenue expense than third As is growth positive a EBITDA expansion. driving we operating on XXXX. roughly our year-over-year QX growth year-to-date the positive as and through a continue turned rate, significant now Adjusted previewed moderate in QX In margin grew OpEx 'XX will

income which some than additional the slightly long-term on detail eighties. expectations letter, the in our of In our and of the net expectations In our included drivers we positive addition, adjusted underlying above remains We member upper metrics. higher reported quarterly net net quarter. our quarter, XX.X% in retention turned was retention

members we curves, that grown to shifted now retention for retention We continue which tailwind, has our utilization settle as into of This above Specifically, have to with right. levels. network, provide improve. should a expect levels healthy see the newer in which cohorts up our pre-COVID

million. of $XXX was as and June XX equivalents Our cash balance

we flow As free additional cash half. back generate expect mentioned, in the to

Our $XXX contribution of million making to our million of $XXX progress expect GAAP do launch. any $XXX we from timeline, $XXX revenue We're a to million guidance go QX Q&A. TSA million We'll good PreCheck. excluding on QX launch and expects bookings to now and total

Operator

the first [Operator line Dana with Telsey comes question instructions] Group. question. Our from of with Telsey proceed Advisor Please

Dana Telsey

Any Pelusa the thoughts Good upon the on congratulations certainly quarter year's Thank Caryn, year-one the and qualitative and forward nice word, other the can it American thinking on just Travel about because morning, like how on you're very fourth into you the I and everyone and the their Pelusa cohorts like your third Travel any results. and on potentially seeing expand other or retention there? you. going you're on -- retention membership and of seems TSA nicely. updates And membership PreCheck, Express then is retention? going other lastly, what

Caryn Seidman-Becker

Dana. Hi

then the over Ken it take I'll PreCheck and to Pelusa on and I'll Travel timing turn So and Amex. concept retention

As expect in said to I these see we Clear them continue my to strong words days. because trends beginning, the and continue are for very travel early at still

settings We it's to utilization. is and do a expect more any to airports launching drives experience travel are how has We're right, important, have and travelers. see enrolment think really experience on turn valuable travel in really the or in other happen and we're drives streaming and retention that's online in new or been they to frictionless to opening TV how the predictable challenged what never I new you focused products experience which station in people on. All new general is have and airports,

traveler whether whether it it new about of to written they their deeply to the it home the gate, leave whether testing their with the the be they be that that's their and been obsessed market what, So with be I from time that really have experience valuable. it or some whether on Uber, announced reserve time board partnership the our products products, think we're our side in plane and house be

So great opportunities the in continue and to front we us. see strength of in Clear

Ken Cornick

with launch that. and nicely. still launch start support ops up we're is, timeline we're a gearing marketing PreCheck. the on PreCheck I'll QX to and progressing very We expect So

you and the and Typically, LTV/CAC opposite, time are the KPI in Amex alluded older better most and We really partnership of this some On are quality opportunity partnership. retention $XX cash additional utilization. year-one letter. that performance and adding be continued as the area the for the the other with number, flow the that degradation how We'll really don't we the performing our LTV out Amex very million cohorts lot you progressing. a the we're that's the attributable, pleased to are question, over are younger, the I called cohorts And not we, give in on report, behind piece, drivers a we on some joins. we than we wanted younger as actually Amex would member of see free and a to in the of we the within companies net commentary, card the only family. we sort think think but, growth, the detail we pleased if the of there's potentially Retention; with very and of to look, see had specific portfolios network in remitting of cohorts effect on side, focused the platinum know but see the

Operator

Thank you.

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

Paul Chung

Hi for my thanks questions. taking

And thinking strength, could you kind programs new the there? or over kind I expand have pricing are be I on and did then we next seeing, any XX comments regions? on you about airline booking So are up. card uplifts follow of where some of one any and partnerships months just particular booking, know should there momentum, increases price or six on any you enrolment

Ken Cornick

Sure.

it booking the but the members we really From as It's pricing you successfully broad We of that It's existing a geography and that grandfathered growth, terms certainly based the a is in contributor so, through new in existing. it. to fairly in echo it raised small based. and perspective. of broad bookings went we all contributor growth, broad I QX well. not only, prices the is and for not So is a based to but took members comment. recall, strength, really if would fairly

Caryn Seidman-Becker

was only between see there. coastal The on in are strength that's the the strength you to business that, starting Paul, travel earlier are would on and year I commented you and coasts that something international had you weakness to we starting and will, to travel if thing is see so add

both So which then to travel about to I on the as as side, important back, side, but obviously slow international and have think leisure very been business the rebound. think well comes that's as

Paul Chung

$XX excellent. on XQ, year bookings as of the mostly kind comments XQ And flow does spread do it's outflow anything million XXXX to in that we we… then going you. It's my as kind free you occur and we already exceeding cash? follow out Just there XQ, free well? the point more in growth, it about Got as You And of want in how or look cash smaller but every of out has up, out all is there? beyond but mentioned of think been of normalized magnitude kind any pace else cash

Ken Cornick

QX With be outflow, that'll be the -- for platinum. to cash respect in that'll every year

terms discrepancy In flow is bookings. between things quarter, the point sort of a free as couple profiles, to the of is one and repeated out. company, cash every we GAAP Number a there

GAAP GAAP, the we business. cash as bookings and So grow lags behind

point metrics. the flow on But And financial that efficient and, that the efficiency free of capital a we the I just to are to out, cash to a hyper contributor is focused is capital continue. main very business It's business. generation feature expect we so GAAP also a would relative

Caryn Seidman-Becker

and we I think also of our culture it's who are. a feature

have around free at IPO that embedded culture up. that talked how it. you you the So cash and scrapping that's can talked now are grown members believe It's look how built and when we we the Ken flow the team world. wrote, we've through about about a we've X,XXX we scale letter Its at business growth over

the well into as what and leaders years are business this, on have we appropriately economic very in and efficiency, And that's so done now XX business investing from I great as focused strong a we've it's the think beginning. who

Operator

you. Thank

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

Michael Turrin

modelling, we it looks for …where continued it as baseline. growth calls like were a XX%

or you're add the you think rebound about in think travel just normalized mentioned Anything the about around should growth seeing. to You can how how we for business. summer

there drivers a settle bigger ebbs periods, where the as point some of seen And over maybe bit flows reach the and and of a spikes the we we've start some here. prior to

Ken Cornick

think I to out, question, but highlight your but first we business rates, the of got it, we which growth gist of to guiding rate the time did the We we're since I over not part of long the term missed think and, is the the it, we wanted growth of CAGR gist normalized point XXXX.

show you, out secular just the get travel is give -- the grower long this companies about we're guidance not Just rebound. to growth and want environment. the This are this CAGR you we as term not many a point rate, is but doing on XXXX to specifically to going in since did strong,

Michael Turrin

No, relation Sure. in for between the investors us trajectory play the the bigger CAGR between to settling be is free XX% in Clearly one thinking free if those through the flow just margin of more model some metrics the Anything trying us two I this through, relation mindful cash just on just remind just for maybe spike and just you helpful quarter. and of to could Ken, impacts the there? flow cash could think that saw EBITDA. we between to

Ken Cornick

Sure.

So subscription business, we're receipt. as with have GAAP lags reminder, so a since our an biller, cash a behind revenue, which annual we

GAAP deferred over booking if today, subscription. of that $XXX. The XX-month period gets So or that's pays member is implication the us it of a amortized of $XXX a the

of most see you and of why that's while -- same. not in a so our costs, of metric are the And metrics. itself basically GAAP EBITDA GAAP exceed cash and GAAP cash free and GAAP revenue, off based the all is flow Adjusted

catches and the cash than those therefore that's higher excess. lag in is would free adjusted our of, efficient is metrics. are the GAAP the are there cash growing CapEx, And the all again, to costs based EBITDA in and is why is while off So fairly GAAP as since over revenues capital business free of but bookings, cash we're, today, we that deferred GAAP and and recognize converge, up so -- time flow we revenue flows upfront that GAAP and terms

Operator

Thank you.

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

Brian Essex

the question. or that morning and a on across enrolment a give in robust sense what of business taking the good the volume. Caryn, Maybe, -- Hi, for company, how of of can kind the enrolment the thank us rates that's of given and sense conversion growth growth you might kind the get we've platform, for you can seen be driving the non-airline we seeing Ken we're

conference you're a rates getting trajectory? something to and downloading that going trajectory information, how go those the participants forward enrolments of app see and you if you're So, and on that, are or paying the based conversion how do you

Ken Cornick

Yeah, so growth, there. very those referring mentioned Clear specifically that getting think strong a to market we And last a to but haven't There opportunity. there's organic rates the yet. think contributor And for bid folks, lot Plus, a the upgrade us. lot to done exciting of contributor but we're the major is is a an we I area to we you're and to from platform rate call, not

Brian Essex

perspective. very it. just then And TAM Got from maybe a helpful. That's

of in about aggregate something this As about Clear that's how international ways think potential away? horizon that platform, together, is a should on kind and Plus, the the of business platform both that or we we opportunities, think is potentially

Caryn Seidman-Becker

and product so was It in a are away. it not in those to that well. ways the it's international would markets is when on bringing WiLine, is Latin had we opportunities bought and markets, but platform not that to we revenues expanding business as I America horizon, a the today also only that reserve say other

in really on on that the America. the future it areas is are distant horizon so and specifically not we're the near And focused and today

in down Europe. Europe, Canada Western through well as from America, as some going places South So

Brian Essex

And for side kind is that's that super that platform is Is -- business well? primarily of on or the helpful? airline that as

Caryn Seidman-Becker

So sooner platform you aviation Plus but is than is and it should business, is the side the think reserve about platform the the that It Clear on reserve as side. on focus.

Brian Essex

Got it. very helpful. much. you Thank Super

Operator

of line Please Capital from with comes question question. next Our instructions] your Baruah [Operator with Loop the proceed Ananda Markets.

Ananda Baruah

anything good of start for just in Good could, network horizon. Congrats questions. of maybe I guys. I the not of sort your least or, on us there products yeah, ongoing remarks, some if sort And I you you follow us new higher the ways Caryn, the on expansion of thanks and guess, new things at morning. prepared have few it thanks features ups. specific, couple share some results you're at the a stuff, have getting there can thinking about mentioned Yeah, with level -- of give this taking Is a top here. you and some of the consistent

Caryn Seidman-Becker

Sure.

about Clear the in user Clears SDK for powered we code flow. who that partners by their the low embed talked Technology new So integration

So you think of as business reserve. would Plus the a two of travel business, partner the I app about and operated the parts see announcements side is see you travel And owned the what about over is Clear should which The platform, think side, you of you'll are think what single then platform solution. time right? and at lanes

clear So in partner's that's verification apps. be can and enrollment embedded the experience

And on side powerful for very the platform a product significant a really our introduction so company. that's and milestone

to gate. ambassador physical create app assets. ask reserve or where our truly experience, curb airports help frictionless to come about and the the and on so to case, to people our us our like you partners So expect, to come thing frictionless And go number that experience one. services, you Clear in that have for In that it's premium customers app Orlando pilot different can you huge furthering for technology go that's on then other is unlock testing our meet right, the this bring assets, could you this us; digital our going an that services, so is with in might and their and have connecting a a ambassadors read to

those So products. premium are

We assets different be we have it us in partners. for can that or put our whether different together ways, for

are those -- examples. that two So just

Ananda Baruah

and interesting really helpful. That's Yeah.

on pilot and is So going Orlando, So you? an live you that's in actually investor, would pilot? do the for have that that in Orlando a could

Caryn Seidman-Becker

a live are It is that pilot testing. we

Ananda Baruah

Interesting.

Ken, helpful. XX% the And sales That's in you CAGR. cool. Okay, XX%, there's said XX% booking same-store growth embedded

talked you about continue in those that past, in the you've that, talent. do have about, things think the talked you of to past, done, upgrade you've some things the guys to have that I --

want stronger been general some could XX to anything sort that you talked this of to so anything more to don't to it there's wondering say the if I last doing -- be to doing with the over continue to Is you're sales Are that of, of set the you've the days country or guys think incremental doing, just I lend to same-store around you consistent the about managers going I'm what is replicate there same? catalyze moving wondering help I'm you're of continue sort performance. if but I'm -- that volume? growth?

Ken Cornick

We're our their hands hiring refine have, app, We're refine continuing in we're in track ambassadors Yeah, to to the to refine practices. technology to continuing their performance. our continuing that our training.

and we're philosophy we continuous to hire resources -- yeah, continue resources as the continuing a business. So management improvement additional and grow we training

it's continuing of So to improve. refine more and but think I same, the

Ananda Baruah

across board. Yeah. Improving it the

Are guys of Pre, we then the thinking thanks me, last than any process? Okay. relatively as one were you generally similar? IPO helpful. Or think from doing Super TSA should Pre it the TSA And contribution you the differently about being for for update.

Ken Cornick

our in enrolments change we've think what with consistent very We as as new the no is and, to renewals there's drive think PreCheck well to opportunity process. past. thought very I large for a communicated Yeah,

Caryn Seidman-Becker

those thing people think add historically, think harder days. entry and these appointments is, to to enrolled I by through global I come that are only even would I many that The have

even it for enrolment. total so a bigger PreCheck might addressable And create market

Ananda Baruah

helpful. Cool. Awesome. Thanks That's Appreciate it. guys.

Operator

floor gentlemen, the You, question-and-answer that ladies concludes session. and Caryn back any our to for I'll comments. turn final

Caryn Seidman-Becker

Thank Thank everybody you. us today. for joining

Operator

Thank you. conference. This concludes today's

lines disconnect your you your time. may Thank this You for participation. at

Clear Secure (YOU) 15 Aug 222022 Q2 Earnings call transcript