Earnings call transcript Q1 2023

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

Operator

Good morning and welcome to Clear's Fiscal First Quarter 2023 Conference Call.

We have with us today, Caryn Seidman-Becker, Co-Founder, Chairman and Chief Executive Officer; and Ken Cornick, Co-Founder, President and Chief Financial Officer.

As a reminder, before we begin, today's discussion contains forward-looking statements about the company's future business and financial performance. These are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these statements are included in the company's reports and on file with the SEC, including today's shareholder letter. obligation during any this any may statements disclaims discussed be call. company to forward-looking update that The

During this to Investor on call, in Form and website. is non-GAAP XX-Q. the Clear's in Relations the company will measures. provided can annual reconciliation section discuss most A These recently of of report shareholder items the GAAP today's non-GAAP filed measures financial financial letter both on GAAP found be

that, over With would to turn like call the I to Caryn.

Caryn Seidman-Becker

for you earnings thank physically and us we for identity XXXX morning, Good key both quarter first joining customer call. believe our and digitally. experiences, CLEAR, At to is the transforming

norm. oxygen as is anonymity opposite identity. also get trust moved sense of The anonymity has authenticated We digital the to acceleration urgency the world identity new needs and increased the right. the is world The world of to has thrive the an online believe of the digital is

explore CLEAR strengthen LinkedIn and professional could on stronger trust its Microsoft, through to parent shared join we company, When the world's outcomes. together across conversations and democratize network connections, digital to and vision improved scale, safety how a better forces aligned at we and enhance trust largest to came

and safer XXX it partnership, and are launched we CLEAR easier community. using professional recently of identities. identity people profiles our build Through those on profile Verified holistic making understanding users empowering for million find LinkedIn's we to over US their their provide Together, connect users' jobs, verify for are a to free.

about they about digital absolutely We experiences friction-free It's the travelers ecosystem. deserve. the intent expect to expand you. you've This experiences platform CLEAR Travel about about in identity with booming. remain as on the CLEAR, world. things who it's make all Plus furthering you, our just airports rightfully to our by driving about American is to service identity predictable not providing It's isn't powered a the you come trusted, memberships. It's are, partnership connected that bringing

In XX% saw getting our average daily CLEAR airports highest quarter, And harder. over checkpoint verification and of in is a March, our numbers. first hard Travel through we traffic lane. in the came

them As when hear when they they is looking our want more CLEAR say side are traveler. gives members journey control for more stress, members over the hear CLEAR joyful say their now predictability our continue on and they their airports. of and the provide we they We CLEAR always the time American This places. we we to And is expectation. and the experiences. in

Reserve country our CLEAR we XX the Plus world. across expanding XX airports, network are the and With and around

to for TSA Our with strength it expanded new network PreCheck also across and footprint. like is, allows of course, enrollment and us launch members, larger good Reserve our a products

once I on for We CLEAR with or week. I a a be travel uses whether on mention day once an focused remiss building home-to-gate you highly would the new travelers, are travel experience. friction-free driving newly of predictability not revamped app feature call and awesome to recommend all everyone it. products year our

and bookings free flow. their thank work CLEAR for we the cash team quarter. focused members, great remain want always, this growing I As on to continued

I Ken. to that, the With call turn will over

Ken Cornick

Caryn. Thanks,

and a into mouth, up continued XX%. with marketing in-airport quarter. see quarter channels, revenue growth strong the bookings of We of XX% our variety came through sales, first bookings Plus The partners. digital and finished momentum CLEAR up second word

through never XX% airport biometrics. XX% combined. represented represented while We've less using which of I over been American than in-airport No security partner United, The how channel one wakes channels, do marketers. and traditional and Delta up bookings, include Googles Express new get

bookings great our come why percentage drives footprint such in-airport a unique growth. It's efficient XXX lanes our our large channels. is airports, physical and XX of With ambassadors, from and our

airport an through come miss who passengers in million pods, experience given people on day, any action. our our or can't they X.X our the For

will leveraging while incorporating footprint channels. our partner this physical continue We

about an or and/or airline hotel travelers programs, Express a US, million loyalty think have program, car top many to If program you a in the XXX an loyalty the they rental belong to American card. most belong different

These the experience align brand partners to and our with their are customers excited our bring to and products. CLEAR

TAM, to membership Let's at steady win-win anniversary. one-year our two a look we our a CLEAR to members shared customers. similar demographic. NPS for as our and our rates base. Amex second growth CLEAR, This overall It's scores younger is deal at the a Amex indexing partnership, partnership options. true has use with driven expanded for similar Platinum near example, renewal and This three-year with

From perspective, growth XX-month in expense opening markets in expanding items launches to four noncash leverage This period. number release. growth new achieved out We X,XXX largest the operating subsequent leverage revenue total 'XX, the a this quarter, excludes points basis of saw new while of with we and the airports XX our a in nonoperational XX%. margin QX of versus called of XX% operating

As be discussed our newer in airports to dilutive term. the in tend near letter, margin

impacted about new In XXX and points this by launches expansions operating fact, margins basis the quarter.

markets We seen historical we margin follow trends improvement in as dozens XX the operating of business. in have this to expect years last airports these

Gorilla. the platform we powered And driver that of in another scale, newest the on the as several partners, Today, investments add leverage see years. made CLEAR bookings by platform spoke have traction will over is this LinkedIn we Health past significant we I about exciting operating side. platform our and as

Free a view and employee XXX%. was million, XXX%. to $XX real equity-based this comp Free up last in on expense. quarter reiterate want cash stock was I $XX after founder We quarter's flow comment the million, flow as cash up compensation. absolutely

comp. growth free after before in cash flow and to full continue We stock expect year

repurchase marketable Total securities million of $X.X $XX.XX to an and used well RSUs. net million cash average was $XXX as million and March at of as as share approximately XXst invested in settle reflects price $X.X

positioned well scale help landline, screening. we company addition, minority equity securely $X In to a off-airport made million a in investment

taxes dividend we advantageous CLEAR's attributes, result of our return dividend. put over today, of corporate enabling $X.XX the actual capital repurchases, a in utilization is to public. minimized, Through structure went when addition we owners. In to favorable announced place This special a of tax the

bookings approximately of guidance XX% of million contribution PreCheck. any from implies $XXX and excludes to million year-over-year $XXX Our growth

free on We leverage continue year and a full flow to expect growth basis. cash operating

owner are operators, capital organic allocation long-term of As dividends, value. share and cornerstones on strategy, whether optionality it's we are driving or repurchase, acquisitions, our growth focused

go now will Q&A. We to

Operator

question conducting now comes We'll you. [Operator Our Telsey be Dana Thank Please from Instructions] go first Group. session. with Telsey question-and-answer a ahead.

Dana Telsey

to the Nice progress. see morning. Good

you're you build from then update you in anything As the also you think do net wise that? you revenues how that performance seeing trends. marketing canceled in can are adjustments about talking in there? member that win And quarter any you're quarter? on or members just then expect you. mid-XXXX, the on to new added seeing or Thank And back how anything that previously soft of TSA third launch airports second of And the to retention, any being

Ken Cornick

Hi, Dana. Good morning.

in three so got good. there, that's You

Dana Telsey

Thank Yeah. you.

Ken Cornick

with mentioned the our really So launched wants authority more excited launch No in to Look, we we'll December. traveling we to ATO, to And time, one program. this to as than which got the public. last we're is start PreCheck. us operate get it

back we together follow. be airport roll would include following a work airport, renewals revenue to half expect process TSA we a and don't And we We're build progress. it. would would QX with to PreCheck it continue to happen in as teams to out to it any it guidance, Our make There's the faster. from

Caryn Seidman-Becker

and new forget the for member the additions member don't base, there's excited both. would parts one Dana, in There's we're existing So the that more there's and the One about person. then more to happen business. digital two renewal is part and

Your question was next question. retention. The next on

Ken Cornick

So be, strategy. part that from we the win-back than stronger is retention It definitely continues a is perspective, to of retention and anticipated.

have we organic of a lot So back. win

just card charge the maybe up airport who show people their -- So at properly. didn't credit

their through two-thirds That's So would lane, of back when our come swipe they card win credit they back. the about activity. and win just

So that strong. continues

have to than programs continues wind retention term overall, would part regular people, strength say higher win in I general the long a We with our upper is to XXs. where that And we ongoing up in back and expect it business. of that's

airports breakeven And cash as very from new fast year. costs And are airports, talked in about letter. as a new a new bunch within breakeven, our airports usually a far The we perspective increase penetration we in tend the they higher be -- Their time, expand. -- the those over definitely to direct margins airports, as beginning. then in margins are margin cost dilutive. And

We have margins. incremental very high

record. say I the And than a so would ever in months airports XX we is we it's have, what opened more last

in perspective And But letter, X%. our some XX at MSA regular is from of there operating scale the top we so penetration margin margin a we from in or five that. see X% since we expansion a CSA and XXXX, airports we've as mentioned we business impact as And population path the have then penetration. seen the are

we runway there's for long growth. think So a

Caryn Seidman-Becker

Dana, talk been who that all utilization on use one just it have the those are the things. add, new wouldn't airport. show of good have those able retention, from to extra power CLEAR people to network effect, powerful up that And to hundreds a to when right? and so we about But verify, airport, people open in already is a day growth you when add So that, of

XX. you new are XX seeing number so than it's number to faster years the not much right, And because, did they ramp ago airports network,

Dana Telsey

you. Thank Perfect.

Operator

ahead. Next Company. question go comes from Josh & Reilly with Needham Please

Joshua Reilly

and results guidance Thanks questions. this is my guess and bookings but guys. Hey, highlight taking you Congrats here the operate the you airports very QX. -- on getting penetration shareholder the letter, question the low. I strong for the remains still for a lot I'm for in

passenger even impact in to growth How is maintain simply quarters. next over growth term, of the the that to TSA tough trajectory, boarded kind the year-over-year offsetting just the near continues strong due you if this of comps? However, couple passengers of slow slowing do growth TSA

Ken Cornick

So question. thanks for the

So continue think will grow. to we travel

channels, half seen of growth back our capacity that in It from right? have growth, diversified. which comes from XX% said the a number in-airport growth different But growth. our we letter, the airlines. we is is We have of in So we've

We have partner channels.

necessarily think TSA any we volume growth. given and growth so delta the by is ability quarter to And that not on our the impacted

we have think So of we opportunity. lot a

Caryn Seidman-Becker

add I that. to Look, would

X look York, record first is you quarter had travel, data, million. up from first This Port was That pre-pandemic a on New XXXX. specifically If Authority city quarter. New record like XX million in York

capacity up half that be second expected year. have to airlines to said see of you XX% the the is XX% So in still

verifications. March, average saw we highest In our daily

We've This of old. is you to about most than penetration years ways And talked that CLEAR as I still on new is is talk of airports right, our wrote three pretty travelers, -- we concept less owned X/X think there's a -- overall. about we -- right? average, new are lot pretty a X% so of these in our airports, still there when go to

Delta sort airports, And the when you the will, Ken of word talked the on power our American which to CLEAR you United, of also so sort engines of talk talk ambassadors expanded and about an introducing our of to vintage, of about, American partners, want being demographics expanded ground, there. the if Express bit TAM. you Express, the mouth, if little growth Ken a and and can

there nature. of that mention so ways for And to bundles not new CLEAR to grow, things are products, many and

So travel, are to we and these days, early incredibly on it's that bullish I we and hard also just are getting but harder. will continue believe say,

a offering fact looking in days. the penetration, people have that fact the the airport, that the are the there airport, the have and experiences partners, is outside stronger early we And great that fact low and growth, they network so for

Joshua Reilly

offering. going confidence that around than that Got testing on launch there phase a half it. ago? gives in with just time maybe second PreCheck a on Is then frame the TSA you the quarter follow-up two or the And the more for anything

Ken Cornick

Yes.

process continue receiving we the So after a that is December, and process are progress. there making ATO with along in and we

Joshua Reilly

question sneak in final for me. Got it. I'll just And last one

Thanks, from Green the believe, is card type have adoption On far? the trends quarter, Card, you What first the I with guys. thus this that did full seen of in market. -- that Amex you

Ken Cornick

Thanks.

on getting particular a Amex speak So are of won't but questions the to Amex. any lot within family, one I portfolio we

CLEAR insight Platinum overall. the partnership rest what of the to usage continues scores So for our little members base. be NPS and evident. why would I to trends give see don't this bit just value into is with in the of these of great I a members and line a partnership. say We And is The

great and So delivering way from our population perspective, It's introduce it's to the those a a CLEAR to expanded TAM. we're value value members. new to

just We mentioned. is about are of talked markets Caryn three X/X and than still over years our less as the low, old, penetration

to high the a the And given NPV CLEAR our demographic. a member way So old really and revenue is to We newer rates. skew value, average partnership, to point. below of this lifetime with a an this our It right? And CAC, really younger well indexes under per There's XX great demographic, exciting. from There's expanded and platinum. low a It's year introduce younger scale renewal obviously. the overall price is this the retail is TAM.

the incremental our continues the channels, channel the overall including a United XX% bookings the and Delta, and be bookings of more the of for but in-airport to Amex our growth the of but new membership and than new partner to contributing from bookings are partnership less are coming our great letter, right, combined, and to it from us. less to base general. XX% So expansion mentioned in And we as in member is the TAM revenue, coming

Operator

Wells Our next ahead. Please Michael Fargo. with question go Turrin comes from

David Engel

David I have Amex. had Michael bunch Amex, in very don't thanks to at much. Hey, of Turrin. It's we keep for going Engel a but filling

pretty bookings So growth pretty high strong cycle? sustaining the pieces some above is at where most we're actually of of at the that modeling. originally more that rate, strong us moving XQ It's the end about XX% the in guys growth. you guide Can were talk year-on-year suggesting

So any you. mindful of there? seasonality be Thank to

Ken Cornick

We our understand, year I revenues of have would is consistent prior right? or general, business to in just say, fairly bookings. renewal

I've multiple our are this have been that saying channels channels, to We multiple in as growth. contributing call,

We in-airport. have

We have ambassadors.

X.X and presence can't on the physical coming miss million presence. right? We when they through airports us, day have a given a have a There's physical we people

have ambassadors We with them. engaging

drive plus we've of channels bit retention growth So a that taken there's plus to multiple the and little pricing.

Caryn Seidman-Becker

explaining job jump business is a can this of members If passionate are I just in, CLEAR. great we've bad maybe a done about that and

in And the or attach Uber, all hard the that the people XX do join, the food to it the know what looking to house with the leave think down ago travel. there's we ordering mapped expectation. and I XX when are for more to is family outside more -- They're minutes airport that is to home-to-gate to And of harder. experience their was and that airports, experience out. flagging for in to looking airports compared online open, this because gate whether travel And people get rates app or their new it see that that so getting be years get to the consumer you we've

talk looking for -- do look sort and our And When two of friction-free and now synonymous They're airports. of these halt XXXX with now little predictability experiences. bunch brand when there's that our airports. think has become a early than days, screeching I out growth less we in with heading a coming or the expanded then a that. -- added to about new We've we've you of years. in at XX COVID, And

to the that to we're network to So network and growth of show retention, when just then I stadium the partners. the And use be our customer up or of of you new convergence and more adds offering places, confluence the LinkedIn it our seeing think partnership expectations, of a or whether at brands it power and hospital. in it's gross or you sports a events with a at products are

did we COVID, to that and team testament friction-free the experience And and concept of vision is and for it's a with what making brand trust stands think I it in Path to so a happen. this Health the

David Engel

That's awesome. all

appreciate So dividend. obviously, the special I

in love cash guys nice. free boding balance is have lot hear in to the very sheet. a the I'd still flow cash program, You We're don't of and

to Just would bigger love philosophy. capital the management about hear picture,

you. with that Thank us. you If share could

Ken Cornick

Sure.

I believe think in opportunistic. philosophically, being we

maximum to opportunistic, owner-operators. so want we flexibility. And We're we're and maintain

So aligned shareholders with in we're general.

David Engel

Thanks, guys.

Operator

from comes question next with Our ahead. Paul go Chung JPMorgan. Please

Paul Chung

Hi. Thanks question. taking my for

other media thinking that the just of how term? year other to deal of or on kind think that of social about respect platform a we LinkedIn platforms think contribution follow-up. kind about? cases monetization about, should use have be base. the So kind I Essentially, And partnership, million through how in and kind about What about talk how should to $XXX came we longer of sub

Caryn Seidman-Becker

and partnership picture, really absolute digital urgency the to big of excited trust acceleration about the right. sense identity world of the Perfect. We're an matters has LinkedIn because created online get

So many in you're news. things today that the hearing about

strip you of identity. sort back, them you If it's identity realize about -- is foundational. Identity

CLEAR are millions that of So for brand LinkedIn of to came future. and online to a and and their Microsoft safety with together definitely matters, trust their users vision core and hundreds shared their trust

so And was alignment. that it

our form level, best some always happy At members. of CLEAR BD or say we

start people when that experience, places CLEAR. through go use they think realize could other the to you I the

a connections. users having on job badge be are more build a so InMail or have means opened verified considered to profile your their to for And LinkedIn to likely

the have And with of you reasons profile verified millions those future or so then badges. look when badges is, to benefits at have it's what hundreds and of for on to right LinkedIn their members

someone key job powerful online, opposite. the new for And your more the I say, So parts again, is a searches, to connection. open likely online, of, InMain, would anonymity identity age of things networks absolute in and create authenticated this those request

this for business. CLEAR I an this other can So in. platform important networks do Also, not a membership. a role about one as This selling is think that our identity play Plus that online marketplaces morning, as I serves CLEAR and this talked model and about about is earlier as service

world so really is It's focus that for online CLEAR trust and ago and the now has vision see The revenues absolutely a XX we both had over crucial future. core need that the is in And you and equation. that years was us. members this partner in I will on a year important for And scale think right. recognized the

Paul Chung

the feeding you about of in out earnings secondly, stuff. free So flow nicely. talk cool continue the Anything quarter? can that call improve, growth And Very to cash strength accrued there? bookings then

of kind strong and about that and rebound move of seasonality, do quarterly track run in accrued of XQ, year you. we Thank kind And think to of given free in rate payment we right start on pace into builds exceed the we're to it? the to in the about think and through then XQ can that kind flow you XQ. of As levels? year, the think 'XX cash this kind expect out way Is then

Ken Cornick

Yes.

from So business. look, we're generally flow cash a free speaking, asset-light an perspective,

-- generally breakeven a cash they're under airports, We are opening they're but in cash year.

cash to on free expect from we a have full leverage a in leverage, generate year-over-year flow basis. we're year From that which flow on to a we basis perspective, XXXX, bookings XXXX operating growth said free grow and that year said cash we also and full in operating going stems

full As when be year which of bookings have a growing, basis, year. the as that's on business. again, and correct we're you far was there that as will cash in a exceed cadence, we given generally when the we're revenue our works, GAAP business a -- way outflow are last nature QX subscription-based there But GAAP

a the from flows cash line cash flow to it bottom free And up we front. and perspective as collect

flow cash after comp year in a both year and leverage full So XXXX, that's outflow basis before full stock and to and demonstrate reiterate, cash yes, basis operating a grow QX, on correct. free versus on

Paul Chung

kind of in the you. items, overall Great. the and see model? about year trends modeling seasonality, just Thank where OpEx XQ between we we and And pace on line in leverage. think How for leverage of of the investments kind a follow-up do the more can kind the then

Ken Cornick

say share going is investment still the speaking, we you into of leverage. well. we be G&A demonstrate as in be of There guidance, specific where is area operating From stable Sure. should revenue an leverage Without QX. a fairly to area generally saw we although see getting most as expect there to for the us, that quarterly over I would quarterly time. some is operating fee, cost R&D volatility

cost there in new that open when opening growth new with local new we the enroll new in board, to labor And But more in G&A revenue, now some -- we so we're that line, generally, on people should to which individually of a airports, scale expect see opportunities level. be is the and one. hiring less leverage line should finally, number airports, grow members. across with the volume the at most along mostly variable. And and Obviously, operating of then

Paul Chung

you. Great. Thank

Operator

comes ahead. from Baruah question Please go Ananda Loop next with Our Capital.

Ananda Baruah

back Thanks here. of if guys. the three, morning, two questions questions that, to? along I Good in Some taking growth Yes, you I one you refers that kind capacity context mentioned year what Yeah. that in or think, could. And I to for wondering be Ken, something the of of there response the great. was would or those the have lines. half Thanks.

Ken Cornick

you're a growth, referring don't know what actually I capacity. Capacity to from

Ananda Baruah

we around offline. can was It questions And that. it take about a one the of travel. air It's clarification yes, just

Ken Cornick

Yes, the perspective. seen growth talk macro half. a the airlines capacity back about From in we've

Ananda Baruah

I see.

you guess in kind of would Okay. Great. at love context whether for get and Super view to I impact have any least. guys you for sticking helpful. an that the with I return And guys have business there it's just travel to then might just industry, as you do or like terms opinion a of that theme, guys and pacing

Caryn Seidman-Becker

the in rooms. and are the for there's road It's My care last week opinion Chicago in rooms insane. few conference on overflow is conferences, overflow being health L.A., at Milken a for holding is -- HIMSS the conference both that it

to So on side. travel which that out leisure to business see return we I staying travel outlook know and continue a send the way is have continue we really to bullish members, both We very business strong. surveys the on the to it, think and a we side

Ananda Baruah

to opinion like inning inning any normalized have might like might be little you might currently? travel you that's ultimately? what helpful. that any like on travel sense look Maybe on what opinion try drill -- whatever business normalized Do Caryn, -- Do down to super any to have return we a bit. look the or of

Caryn Seidman-Becker

would airports And XX% coming was our getting that on side I XX%. on why of holistically, more right, because of not we and people number going airline say through and the I to talking that's focus the business. do planes I capacity about up holistic, again, Yes. travel on

I these think days. both planes are oversold

very positive for breakdown the volume, feel business. a we of so industry on good and continue to but I don't have for a as you And whole a be

Ananda Baruah

super context. No, helpful that's all

is So -- like another about And way -- would me guess a guess, expansion inside I And for additional that's I appreciate one, what -- you for any it. for that I existing lane guys think be last it lane to one what's opportunity have? good of airports us me. Thanks.

Ken Cornick

Yes.

So that's a in very on we've great additional our We I where be probably which week examples we'll in Dulles, a is actually think of an actually this most question, and expanding market. in or terminal to seen international we're which in lot recently, recent membership. focused PreCheck Two capacity. growth a our before. And was -- last Atlanta, week the summer, constrained lane is the launching it expanded

will And dramatically. members capacity so that increase fairly for our

Caryn Seidman-Becker

last And Newark. terminal added we a think in I quarter,

on an perspective obsession on customer from the technology, experience to focus continue innovation. lanes, with we So on

investment expansion, new expansion innovation both And within our then saw throughput, landline. that and so see you'll an continue to you and airport airports drives in lane current

airports So continue just million today so that because through on there coming by think that are going customer top it's X of transform million think we're excited to the another opportunities X.X travel. be are by that there we to people XXXX, there's not to experience many today. We the

there's innovation lot on. future, a So of when airport of going about we think and the lane

Ananda Baruah

Thanks so guys. context. Great much,

Operator

floor at over this would to the Caryn no Seidman-Becker turn comments. further back for time. like to I are There closing questions

Caryn Seidman-Becker

joining XXXX call. for first our Thank earnings you quarter

us BXB thank for engines. And beyond. all I quarter. always, team you identity growth this think both their I the of work We're BXC CLEAR's Thank say, as is as CLEAR foundational and to in excited strong and want travel heard great dual progress the with of you.

Operator

This today's presentation. conclude

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

Clear Secure (YOU) 9 May 232023 Q1 Earnings call transcript