YOU - Earnings call transcript Q3 2024

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Operator

Good morning, and welcome to CLEAR's Fiscal Year Third Quarter 2024 Conference Call.

We have with us today, Caryn Seidman-Becker, Co-Founder, Chair 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 documents the company has filed and furnished 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 And during this GAAP and call, the company financial will measures. non-GAAP discuss both today's financial A annual filed Form is to of on and non-GAAP reconciliation provided most GAAP report in shareholder XX-Q. recently letter the measures section items These Relations be website. on found CLEAR's can Investor the of that, I'll turn With the Caryn. call over to Caryn?

Caryn Seidman-Becker

bank Whether joining account, you're and now thank X and have member CLEAR, scaling At TSA the morning, logging trusted us. into expect experience, focused improving you or people PreCheck for and your on Verified. frictionless, secure getting more CLEAR is This Good a than on plane foundational. year, scaling areas: identity experiences core ever. we

I We laying are am this partnerships groundwork the the making and quarter, announced foundational strong for progress opportunities. and future board, excited growth for across the

offers starts travelers from out Improving Our ambassadors. products begun travel significantly in home expanding with stands hardware which enrollment we lane gate the Verification for travel the and have to more members nationwide back again. NV, face-first verification our of early the with day experience of for and Xx future, network steps new helping the member faster and less results. is with strong and win rolling

brings Moving our to lane member first. privacy face in all us of across the standardization always the platforms and experience, improves

today. rise, predictable XXXX. now with to anticipate X crowding launching and another continue is Ambassador volumes we table travelers experiences. Assist X is live Innovation by travel stakes, airports rightfully every frictionless As day Orlando million travelers in and airports expect

airports scaling, quarter with XX now we Today, are and in is provided TSA second CLEAR ambassador vacation. a from first-time X that XX travelers CLEAR We a perks enrollment XX is busy airports strong airport and of one beloved doesn't who for staples locations. family As want most live introduced the since by new locations. on popular PreCheck help engagement. navigating CLEAR the early

travelers convenient think where meeting just the or at PreCheck a month, are we value they is no-brainer. the airport TSA At location. a We retail of whether are, $X.XX a

million PreCheck. X there XX million on people customers have employees. enterprise TSA appointments, are seamless to Today, the for and For the travel a CLEAR products at XX secure no their we CLEAR are times their both hassle, no access members partners over relying platform year, that just and more identity least on

Our member embedded is Instanton for driving and our adoption base conversion partners.

increased lines just and information free of innovation digital global digital on and takeovers everything The remain identity identity account is growth, identities. is and of our interactions fraud, person CLEAR the critical. as prevent X/X such Some experience members, and day blur. LinkedIn integrations from like Direct with fraud, partners build coming is identities. maximize credentialing members. It's trust companies synthetic and We're are verifications do high-stakes continue driving as physical efficiency. are we also to existing Home is verified companies Depot Okta, between world. expanding for foundation flow. focused partnerships, X channel to times, paramount consumer that rise, CLEAR risk implement the easy bookings and and exciting and securing and end-to-end deploy. is securing Authenticating With to as we These secure With networks, factor threats offer and a a solution. identity crucial checkmark. full Okta, are solutions turnkey biometric we as a cybersecurity employee Sensitive identity on and across the transiting and there access in authentication A isn't integrate eager cash

Now over to Ken.

Kenneth Cornick

Caryn. Thanks,

now increased XX%. significant bookings million, and as XX% EBITDA over incremental in income quarter growth of incremental enrollments margins up ClearVerifi. improvements in retention with by accelerated, as demonstrated leverage PreCheck of contribution are We pricing, $X.X the margins the Third driven operating channel, and strong quarter. XX operating airport from million Total well cumulative

we with growth We we the year end members. around CLEAR quarter. And partners, new add to as XX,XXX grew this into million continued Plus next in members expect XX by expect year. Active

As down we and net members sequentially through pricing increasing ARPU adds on The up dollar QX. an were family basis continue sequentially points in driver, versus dollar QX, to is while a year-over-year. modest positively retention retention up be additions increase was to important optimize dollar price had gross QX, net grow opportunity family gross typical we expect In various see from XXX initiatives. We is as rates, Retention member QX. CLEAR focus adds for impact to rates. retention XX%, retention and QX impacting on August Plus continued and

We are experience. better than our price increased expected our improving we has recent expanded encouraged value been as our by adds are the the reflects such Perks delivering member which increases, network, and through and performance value of

and PreCheck CLEAR profit businesses, are bookings Verified emerging Our our dollar growth. and contributing to gross

PreCheck further footprint, ramp provide and airport, will the year, driving online tailwinds. in locations coming out-of-airport enrollments, the We growth Over with incremental out-of-airport which expect margins. strong to see expanding we market

make We be our the of choice, employer a member CLEAR in experience attracting and want and the quality huge and the to tenured ambassadors difference ambassadors talent. retaining Our especially highest our metrics.

shift new the will base salaries commissions, marketing and So reducing structure out recently implemented new which over sales compensation we quarters. wages a increases few ambassador dollars of direct The next into structure. while

sales fairly with neutral to hour. encouraging expect employee but increased and dollar improved We outcome Early accretive. be per is labor retention this data

card XX% cash at of flow of partner. payment XXXX year-over-year, annual million expect $XXX this We up least including our for the outflow quarter's million, $XXX free to credit

long-term remain quarterly flow respect XX% regular to and with strong million to to of total our million. maximizing We Q&A. position In $XXX profile, opportunistic value. allocation With we that, expect of let's $XXX go Given capital $XXX million goal bookings shareholder the our we to of $X.XXX. by $XXX with dividend have increased and million cash QX, to free cash revenue

Operator

of line from Joshua question the comes Reilly Needham [Operator Instructions]. with And your first

Joshua Reilly

net effect impact price that metrics impact rolling retention family How member price the numbers the and net and like the about August the do the we adds to going already think that of was X quarter? to took increase of increases the in key impact

Kenneth Cornick

take that discounting me of our really base gap I'll one. pricing. been to member has performance been free higher. the significant or reduce strategy by Josh, across let There's our historical ARPU start pleased discounted ARPU And due saying the with the a we're pricing. deeply drive to and Look,

And retention, around is prior which very was that year bookings. Look, and focused accretive to like really feel We've overall, really pricing up to this seen I our the that very XXX points highly $XXX. the members, we've think our we're where retention dollar continued basis value impact, -- is network. $XX has XX% little year-over-year. up but So price, centered strengthen. year-over-year expanded it's and family on $XX was to Obviously, we proposition

an Caryn We implied I'm last the and value about talk those I experience, where terms of And have of value $XXX a CLEAR sure. call, and in a is perks we than will that benefits larger year, improved did the over the network today on member. perks like to

the CLEAR membership So pays itself for today. really,

sequentially QX terms And of pricing the down typically is adds, impact. QX. from that's in net So

while those it with ads attach on to up specifically break was from from drives From you gross adds. the perspective, on than sequentially post-enrollment here. We think family We add a And expect definitely And be the which recover we QX we pricing, have retention, as adds it net a modest the think can family, retention initiatives. and impact modest rate. to into net had marketing gross on I better expected, impact well.

it's continued see growth we entire the network, we at member top penetration, So MSA member of look opportunities. than X markets. less penetration, half across our If

So that we time. drive a think there over of net lot there's to opportunity adds

Joshua Reilly

increase add the discuss, obviously Verified is relationship Uber side. the Uber logo riders kind impressive partnership? a cumulative as of total awareness And enrollments to associated how The with broader a on there CLEAR just Can Got pretty could gain it. much the app? of commercial partnership, that's you this

Caryn Seidman-Becker

being now. is trust and foundational many Uber to identity being so and think I example great paramount a safety of right

by partnership. We've mind. enormous trust with obviously parts started of to in their So on we many there of Uber potential amount business. verifying an of think peace drivers our is has that enhancing give Obviously, Uber their riders platform

it's think experiences. matters to safety parts we It so early know to drivers. matters many is it are And members on and because days trust riders, exciting different we CLEAR matters having that really so, And great who partnership what are of a the business. verifying

going so, outside And and secure together. lot CLEAR is use And can CLEAR from to identity the multiple you go times year of It's are where to multiple utilization all the today a utilization, there's ability the being airport. stakeholders, to that signals times back network. a day can a airport. power very the a isn't about we again, just And about positive do for

is I great So it think members. for

great for and Uber, term. it's is great I it long for think over think the I growth

Operator

from comes Ben question of next your the Sachs. Goldman And Miller line with

Benjamin Miller

I in have what versus price, where guess where noticeable cadence a Should in might there will a per close Or tactical any on expect Any continue regular gap? increases be value point uses terms you've shift be insights of here. member tier in-airport as annual one pricing then second, just the more, seen basis still channel from I way investors you few crossover the of they finds years? And side churn? taken year the more would guess, a helpful. it over next that is price to to on

Caryn Seidman-Becker

we're be So and of and now TAM expansion the there, that sort utilization to Ken throughout and thoughts and started and in seeing when we're of about of let we then strategies by plane. start we the plane because used the front me take the pricing talking the will

seeing So TAM travel grow you're enormously. the

long we our started think and And was product when in the it at years we what level XX think, at saying, pricing, actually years the of then family was priced of price airports. terms very started with I and And out, old finger I we kind unscientific. very for kind said should we what of nice airport at pricing $XXX, was In and have It air a at sticking that one ago. and ago several time. $XX that had this, XX

network. And added so, We've we've added value.

that and a experience Assist, with that that helping win Scout. seeing travelers of the are lot really seeing with gate with again. you're the perspective home And to an lane from the Perks, day and from travel We you're seeing you're future adding through back of

help both current members such a of extensive opportunity So there amount an enormous serve really day of more way is to the to them win in travel.

You'll next lot out over year. the of mobile coming a the app see

think for stratify to years think and that and price are we so that there that. there different next value create you can that I few the also opportunities And is to over tiers.

experience member and So pricing of lane. home strategy. But in part ongoing to seeing space Francisco. first again our launched it unbelievable gate starts definitely you're in the San at NV with And today, an from first, we is our creating JFK back

airports, can we So out country. as if in in test phase see those them. across They're you're roll the you them

is will pay when value are This transforming exciting We an for it. absolutely time. they for you travel. create customers, And your incredibly

Kenneth Cornick

below well But would network incremental of value are we're and it's those Yes. frequency see that a correlated, which things We're higher, very and on our utilization QR And Uber potentially like in above any today. drive past. if definitely the mobile obviously lanes the retention. well. volume lanes, said, where really most that in being that about terms mean, Those as nature of look, clear level utilization impact the that and perks a of I the we've in types as frequency the verification then low are there's volumes. to frequency step breakpoint. is will, well but It's also We deliver therefore, see utilization function retention important verification users on driver code-based breakpoint, we retention. such to at drive or sports, and things to drive the you of retention. And and transactions looking increase lower average talked

So looking holistically. at it we're

Operator

Cory Carpenter of JPMorgan. line the from comes with Question

Danny

is on Danny Cory. for This

maybe for expansion you could about increasing outside the talk the locations? about out-of-airport of as PreCheck look geography think you footprint what For your TSA can like first the and Staples question, priorities expansion,

Caryn Seidman-Becker

Then have a follow-up. I Absolutely.

average of and So continues more number than doubled doubled pre-enrollment quarter-over-quarter to Metrics That's pipeline PreCheck gain momentum. sequentially. doubled revenue quarter-over-quarter. locations,

airports Staples we're So said in today, XX XX and we locations. as

to continue scale of see will You locations. us airport out

going to New York, travelers in we're the quarter, they this Oculus meeting So again, where launch are.

City of or York enroll area, at So downtown if that can New in you're Oculus to PreCheck the go America. be in or happen you Mall

that As TSA we've price if TAM a credit X the the year. reimburse to million of and travelers you a for more that times PreCheck, said, continue or given point travel believe cards we XX is numerous $X.XX month over

to and continue expand next locations year throughout this We year. our Staples will

year this total XX end to expect We locations. over with

a So you channel will grow, strong that's to start. continue and to see off that

airports. in We every be will one of our

So should at year XX. today, that XX. We the around end is

So we'll those not other well. in but in airports, as then airports only we be will be

when PreCheck see is you you there. look the again, So have at stratification, Mobile, but code, a lower-cost CLEAR and also QR we will lane, that

So PreCheck, we airport with locations footprint TSA will Staples. we looking will be our other expanding at be beyond

You'll see that whether corporate enrollments, done travelers or meeting X are. also start and to it conferences year, they be where this to companies. so events going We've

The are. here. the asset. there that. is anyone structured to again, But so are move or to And Sachs easily meeting where are very be universities, they JPMorgan, a selling and else on Goldman pods portable opportunities, and happy always come enormous be very to This call enroll, people

And So could in better. important. even airports so be huge everybody If is PreCheck, we would just opportunities. our this be have

Kenneth Cornick

adding add, footprint airports security our as One to well. thing to we're post locations in increase also within locations our concentration existing of the really

Caryn Seidman-Becker

also but not holistically, over we for rate. is PreCheck a only add great marketing -- today, travelers, the opt-in just have XX% I to And beauty of that, to it

you look flywheel So powerful here. that's when the really at whole

Danny

it Got line it quarter. new bunch customer a about more be Verified, or XXXX be this to when And That's to seems of material business been in helpful. on how maybe time could there's material? could of announcements CLEAR past Is P&L way this any the there think you. then

Caryn Seidman-Becker

first the contributing profit So I growth are is come dollar fair is the we've a and being question. today. then think to that And said that come PreCheck said, All really members gross ClEAR what revenues. Verified and

to expect customers XXXX. it so you'll going integration for materially that and like And seamless having means see we a channel more ability multipoint With continue to channel point and to to partners faster, on in goes the Okta partnerships. lot turn scale

already few things Home we that have Not a integrations. becoming customers. to foundational like world selling cases been only the in year. live partners have our Also faster higher able LinkedIn. cycle, new but stakes, higher with digital and only But had happened obviously finding are a Channel, use new on integration we signed -- has we this lot because within So the material with being turn we identity with we customers not are the it's Depot,

things is And market is speeding gross accelerating and with significant we to accelerating, growth rates are but so, of those expect And close to up. not XXXX. are to growing, be so the -- the in with contributor ability also close both show fit product current it a dollar only pipeline that rates profit customers, the the

Operator

Telsey next with the Our of from question Dana comes Group. Telsey line

Sarang Vora

especially New stop, TSA seems handheld Salt those My photo, through Dana. Sarang typically like such it Airport transfer Vora for the We Lake were the a airport and able York, to go to no was experience ID is data seamless. in very and we recently, no no were than question on at experience. better City devices

out is, how roll roll you your busy over you terms on question to and across can of rolling are where plan you of airports? out Like at hardware next fast it right the update XX So or experience fast airports quarters? this few now you how it can some in do your us the

Caryn Seidman-Becker

thanks been February. Thanks And have for steady a asking improvement Obviously, seen for noticing. member priority. experience and the Yes. remains key and that, has we improving since

And you're are fewer existing than members which put today about to identity combining today, experiences, rolling numbers starting XX% XX% the about, to steps are the our we're that we for talking you some NVs and through right, handhelds, Xx are what So the just ambassadors. faster out integration. on digital

close We to closer expect this XX%. to year

So be through. we'll the majority way

of the of and think has team December last the out how next-gen starting integrated that that we So first you done identity since over phase identity this rolled quarter the then with work through November, digital great and and year. XXXX on

see to rolling this of NVs be this the significantly then the of through year, year and the end you'll next should out you're we So and year. end by beginning what referring the of

I we're really say public-private by I that we're and partnership just the -- we're think seeing we've And think about excited of great of year. And partnerships. this morning in TSA, also what our believed excited this to the it's with So member the important power experience. really which also has power been in long

we're safer doing with experiences with in not vision enormous only TSA, our airport but And what with the alignment easier of administration and so, incoming and today and beyond. there's

and really it's competitive airports. exciting customer the travel what the it airports throughout make in think I other with a and you're world drive in seeing time experience So to in

So so is what far the from you've to here. seen it's going accelerate and just beginning,

Sarang Vora

on had a one That's tiered I thoughtful great. membership. the more question

you used membership. think I the word tiered

a can like including thought of adding -- there a gate thought price Assist membership, the lot is than of Is so keep to door a the a the and You take the from from to the of rather benefits gate you membership on. those tiered time? to Ambassador over like increases, there that

Kenneth Cornick

a I potentially perks, delivering thought something experience. our point, of we've to value The in that's just as But We're tier We paid the At we That Assist Perk platform. we're CLEAR Perk certainly, part that that you today. focused airports. pricing, opportunities in Orlando just is about. seen. as launched be enhancing taking would on there the X as offerings certainly, to, that. Ambassador you've referred mean, currently through incremental more member robust, this make that's

a a a transactional higher on sure. be You member, if where basis, that's for a but you that get tier are can Plus into could certainly there's that paid world and only bundled CLEAR

Caryn Seidman-Becker

and the The have it's which have think add, is want Just of we've the than one on before, other I power we said experience point had. I better data that should I to ever data. customer

on is to ability lane-by-lane, really our changes hour-by-hour powerful. so, material basis And a make

And so, the the past data few starting pay for investments that years are we've to made off. really in

today less great measure, day, powerful what over a see our made than So so, of yielding we've that every really verifications data are with can that and that is minutes, optimize you is our can is And improve, we returns. XX% investment X right? we

Operator

Our the Kelley of line Stifel. from Mark next question comes with

Mark Kelley

structure, like you of as second, give remind the I bit X can commercial your is, can And structure That's on you you agreements Express? American little an ambassador quick the just someone your first pricing had one. please more with One ones. change that us, pieces your change impacts pay? as please you OpEx the moving maybe how color us then a

Kenneth Cornick

Sure. Yes.

next think I'll the are be we base be commissions we'll happen it say way quarters. sales So it be small shift started one of of -- I will past quarter, a We and will couple next by this really QX would in QX really year the in will the It it second marketing, and that see will million your of bulk year. from of few this over and first. which into complete dollar take wage, QX. a the and

the parent pricing Some it should but QX, the bleed an of pricing. perspective, Express impact -- core the done From largely in might impact QX. American into doesn't it be

of is contract extent member, contract. that the get a to we So the benefit you would have But the the pricing. family

Operator

Wells of from the Michael Turrin line Fargo. next comes with question Your

Michael Turrin

Plus just could versus year, on be contribution those series you about announcements maybe potential some framework over us. helpful time of to of on there's we've for growth some would for growth areas if product framework time a a incremental throughout those spend from think line more the potential and newer and CLEAR core from the Just how time of seen just ranking the partner

Kenneth Cornick

say some the they contribute. talking on deals the you stack about When rank, side of we've announced Verified you're how and

Michael Turrin

to call. is Yes. sequencing And time helpful. contribution on But be which to know there you line a the really a from prioritize a if it's hard of perspective, expect, I could biggest might that's kind

Caryn Seidman-Becker

year. this contributing been they've Well,

Those whether that partnerships whether that whether year. the that Surescripts, Community all whether been Depot, Health, So announced, be this I have be LinkedIn, can that contributors that Home keep be going. we've be

the the said, for that this just very as was Delta that's it not we And distribution, that one so, our with And when in year next excited for I been partnerships, say materially not in integration airport but distribution new changed year customer announced and this channel business, just be contributors -- the airports, contributors because us year. we we're it's things that we've which experience. are integration. And it channel XXXX, it's have saw of but integration that partnerships them we about our yet not always partnered will was

this we're partnerships so, channel year. that we've about And announced those really excited

and So Verado health care. in partnership partnership Intersystems channel care channel health is a a is in

perspective. And so, from is Okta a workforce

contributed partnerships direct next this year. year. have Channel some partnerships contribute So will

workforce. challenging grow this and Our current many And it's different cases, because new things we the just and direct but not will of one year partnerships so found use big safety finding we're trust in businesses. customers, are year next is identity of it's parts

workforce. when password customer on So was side and find workforce. recovery then start we we with for this or would thought company, new with doing might us and a to might year. reset we're we then customer start always We account for customer move the That or start

customers really are current our expansion then we TAM with finding So partners. and significant channel

Verified. in So year next those are of terms contributors the CLEAR

Kenneth Cornick

to Plus in. we Yes. on the and a planted X think obviously Plus that, And really see CLEAR the we've within starting going continued lot travel, think to years, pricing We of Look those seeds opportunities grow members. side. adding benefit at then are we past kick to we're over look, have CLEAR to

So there. we pricing and have volume growth

to We basis. have PreCheck a on continuing year-over-year contribution increase

travel. products new so and within We have Perks Ambassador Assist,

of over there's streamlined that's all a and XXXX, look we cost structure. as a to So contributors number

obviously expansion to see and revenue as margin opportunities continue see and we well. So bookings to then grow

Caryn Seidman-Becker

change. this team year if add this, and just think XXXX I the And CLEAR was to a out huge I enormous to of can is a shout

I would innovation about say products you integration partnerships. and as think and it it talked I about well. was as

you and beyond in is and what airport and to drives before, see drive new ARPU, to to adds, the this over million that close experience be to in XX And powerful exciting experience retention you're members lane drives the services have a the the That's so, the flywheel, customer Uber continuing lane gross not space. we incredibly really an members, and to as innovation and the can travel Home drives question end automation serve for able with transaction-based. in in mention year And an or instant-on then then expand Depot. those

And so, that a forward from flywheel, year, benefits a of in took I think, this lot it really XXXX. see step you'll and

Michael Turrin

super to helpful. the That's it the early majority? increase. as season price is Is just to think helpful. and on seasonality, and impact stack last how still you're any those follow-on X expecting way split us about holiday this there, X? were like travel And year sounded view between versus retention the metrics, on all a any seasonality the Is Maybe pieces active for member there there it up

Kenneth Cornick

retention always use business. annual I'm to seasonality Yes. cautious have we because an

you we QX. coming had certainly, than from true, have And for up slower people is more typically retention QX. perspective, versus QX more But sorry, that QX seasonally, renewal -- so growth -- in a for is backlog or

strong -- I had renewal. as No, a coming think breakdown. had the We from fairly for We We a member QX sequentially net impact mean, question in small a we adds. family. travel really perspective, of see adds I about on the bit from from more see the family, retention focused would really So people it modest supportive an up up gross the a terms of on QX impact environment. little

Operator

session. closing I turn That call will now our Okay. remarks. back Caryn? concludes Caryn question-and-answer for the to

Caryn Seidman-Becker

across of am our a much how great we PreCheck areas I scale improve day. experience, CLEAR Have for scale focus to us today. is TSA continue so executing you member Thank as joining proud team Verified. the and our

Operator

today's for concludes call. you joining. all That Thank

disconnect. You may now

Clear Secure (YOU) 7 Nov 242024 Q3 Earnings call transcript