Clear Secure (YOU) 16 May 222022 Q1 Earnings call transcript

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

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

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

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

earnings for XXXX At Welcome airports. is to discussed our love Thank and Clear, last action. you and travel quarter we good morning. The first strong travel quarter call. we love into pent-up translating demand we

There restrictions larger across the is are and recede to the hit entire spending industry pandemic from share road, to wallet a their airlines car rentals. consumers experiences. a As of hotels resurgence people travel on

Clear XXXX, firsthand international numbers enrollments verifications across We have to numbers do When at warrior full country. seen pre-pandemic take account date. return road majority vast not already or highest the to in business have our the exceeded travelers. of March into These and our levels. of This we traditional the airports traveler airports find the featured compare even this the we

largest of the fastest. ones markets earliest Some Clear's that and the are are growing

XXXX. saw Clear member enrollments quarter by in-airport markets number grow more first base those than has of doubled XXX% Our earliest Plus a versus XXXX and over versus

at record the than evident. rates and network Our plan of ever utilizing are trial power family members The conversion levels more are before. the is

attach joins, and rates. in it new record-high family see conversions You trial

mean the Clear month, new lanes now with at airports have XXX Diego, Plus in moment California Plus product airports, XX and These we meet over have We launches. have Clear to new openings a Springs. growing Palm built the network Ontario San we across three Clear lanes U.S. opened and last In this

retention growth drives expansion a network. continue both it important and lifts existing perspective. market We markets, is expand as in to our add the this efforts from and Network new will gross

by Our experience Clear different predictable Reserve is traveler. type product a providing a powered for of

Reserve in Orlando, are numbers time advance Phoenix, We record by Seattle, cities in slots travelers Clear and book like TSA for powered Calgary. screening L.A., of to Newark seeing using

to them designed free make more exactly their As people come to to Clear's tool lives reserve even travelers tell flight leave easier, to technologies to expect their when utilizing Gate Home and are excited and to an pipelines. successful after Uber business about build We're partnerships and ride very ahead of product sign of a new and our continue side we quarter, time. our partner platform the for fourth

it's still between in digital utilization. With deals timing to identity it experiences important appear As mismatches before, platform domestic with is and new the its physical time days, at bookings versus Clear. enrollments lumpy and and more an than can back trust signed ever and in metrics travel early exciting

flow, cash I'll great to opportunities. puts free the coupled a growth with allocation long-term balance turn Our and capital With cash Ken. position with Clear sheet, that, over significant strong it in on

morning, Thanks, Caryn. Good everyone.

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

to flow. of quarter, We free consecutive free the members, focus generation. and on be last quarter flow cash million bookings fifth our in cash of discussed remains and year flow our we As roughly growing cash free generated this $XX expect

we levels several post as of pandemic, of and Our business are airport staffing as leverage. investments model well roughly is Adjusted EBITDA the breakeven. quarter operating seeing strong normalization this years was following platform

reported on of in in above the XXXX. which moderating net expect XXs. quick A long-term told you we expectations retention, remains quarter our we year-over-year retention As we XX.X% growth word last member quarter, the expense upper

retention brand out how like as execution, and with of centricity network pleased strong are we the and strength reasons coming operational trended there customer for passion, expansion, letter. We pandemic are the discussed structural has really our in

In of churn excess addition, pandemic. saw strength the during relates some the also we to of win-backs the

the of gross calculation sum retention retention is As a plus reminder, the net win-backs.

other words, the the XXs mid-XXs, So of consumer retention above subscription levels gross which is do in We low win-backs. retention the to the to mid-XXs normalize best-in-class metrics. in among and pre-pandemic netting upper is net with to benefit in expect

new Later are for Plus will XXXX. the increase. $XX grandfathered of for price seen by raising members of retail Existing be Some our $XXX planned at have you we subscription the our of history to may news first this in Clear members. price week, in time $XXX

This quarter, around added stock-based some disclosure expense. compensation we

those As owner-operators, ownership $XXX mentality million while announced of lines the we economic of true are encourages we count returns driving have we're a total mindful that thoughtful, strong growth. shareholders a to At time. share we rewards repurchase focused long-term an over Along and we constructed limiting program. cost today, Clear, program dilution believers on share in remain

Clear long-term owners, repurchases. on allocation maximize opportunistic focused As economic capital share including we're to returns,

was we balance our as cash have initiatives, organic both growth Our liquidity to thus, as equivalents X/XX $XXX well inorganic. and at million, repurchases ample and support

Now making time expect of of launch to TSA up in for to from go million, us steady setting go contribution to million now live for months. We'll the We're line, excluding progress guidance. PreCheck. our $XXX million QX, bookings million next we several $XXX GAAP Q&A. and any in revenues $XX In $XXX total

JPMorgan. from line first [Operator Instructions] is the Our with Chung of Paul question

nice Very here. performance

progressed? of some various more you So different seeing grow the separately, seeing verticals, Clear we're pop just brand hospitals kind Health then kind also can others. that you up and in in etcetera? are opportunities conversion member it And on share? curious the the are to to How of Plus. Pass on metrics Clear upsell has Where the effective brand, What seeing

So thanks, Paul.

we that, about have awareness are brand. interested so I people business. think the the in that's incredibly at cost makes also experience, around We're connected it brand driver to much people right? seeing the ways also also from desire our think And just is the people the but initiatives which We're ambassadors it's coming a frictionless new more more out Plus Clear the So multiple easier Interestingly, the that to much for for them I hearing yes, that the verticals. automation it's to we of any pandemic gets exciting that's drives the brand experiences organic. don't which about because excited upgrades partners for and organic expectation experiences. join. from higher and of which kick-started for also efficiencies haven't it airport in And introduces really seeing We internal side really platform the

seeing travel the So in broad-based are we it industry.

they I as rentals, have all them. you're seeing airports, ride return, that about talked So that airlines, of across those car and desire of partnerships between lot a also hotels, shares,

And at experienced so think HSS view To I a in it's Clear New City. York point, maybe holistic there. here you your

a seeing lot are We of...

Yes.

is saw it? that Oh, where you

Yes, see yes. yes. I that did there,

hopefully, you're well, Yes, feeling okay.

We trust. We right, And are as again, certified because, or important. front right? or fourth I experience. both seeing the digital you use really So of physical and interest thing seeing health it, you as interest telehealth, end did the is door, plays and is both cases, for physical buy we side the at Clear side, telemedicine the and say concept care quarter licensed certain call the the then, on would last the well would in on are the this jobs knowing are very from, digital Atlas also Certified of I that digital

builds and as and piece to I there's Clear there. incredibly we would environment The work off-line. important lot So a about lot employees broad-based, hybrid help that's return physical to think digital, obviously, which last a both it's add right I and say of thinking would both opportunities that is online now, of partnerships now and work is employers

Right. a follow-up. And then

kind Is What the On How well? mentioned looking runway as the quarter. with the existing you lanes today of are partners three per nice more your in then today? updates efforts with some the airport airport international key partners? you Any XX add on airports And lanes more pipeline? see count, ahead, progress in there many to today.

both growth airport airport see do and new we the So on pipeline. current

you of so both this year. throughout see And those will coming

before last opportunities, Europe have Clear Canada from to focus Reserve and and quarter, When Reserve, tuned. as better, in this mentioned, our announce focused stay products. our where lane we internationally of see right, Americas, and we enrollment, more partnerships launching so kinds Plus them, we have sign Western terms is, first really that's products multiple PreCheck of coming. international, South have now we're we good, Where be I in we we'll I In about the I the talked Calgary. as think we about And it, different best we I America, don't call would think

served. want different launch products partners to we and more serve they different So be our as really opportunities have in airports to

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

on Congratulations progress. the nice

different TSA you launch, for and leverage quarter, you model you And about go PreCheck the how the think year? And we And that the just had are As through the other that as that expenses be with BXB forward you watching is about buckets? you going cadence expense any how the on mentioned, update on that should lastly, any then this guideposts there? operating the going? thinking

to take expense the I'll well Dana, talk leverage. as let Ken operating and PreCheck I'll then as So BXB and

signed right, it's The be commentary, there my metrics, between business. mismatches deals enrollment in about and bookings talked versus I As an utilization. earlier-stage new can platform

examples Let contributed you a we platform but that. In quarter, deal yet large two to that me bookings give of launch. this signed didn't

season impact from pay Or typically to were as utilization our so it adds quarter. in partnership enroll, new yet or gross you an So partnerships Plus we Clear have didn't NFL we opposed then this successful same as have on when but in business, members the Raiders with and you in doesn't utilization QX, the members that driving our ended, quarter.

some event. the looking guidepost So a be and should throughout a you are partners partners run really some will -- launches partner an and what in be it's product quarter year announcements, both or would for

potential lumpiness And there. so hence, the

for would so products our stay just and partners. And I tuned

motivated Everyone Everyone this piece, base. bring a wants the on larger traveling so good involved making really PreCheck to the Dana, to public. PreCheck look, enrollment we're progress. is

next PreCheck continue several as bring in positioned I'll as it capabilities to possible. look, the so in confident with well work that to partnership to leave soon launch And we enrollment to at the that. so strong months, our the program TSA we're we're And networking

lane engineers or well-positioned our X:XX were ambassadors partners that, of enrollment add If would to of the deeply we're And excited say and ending airport locations launch, whenever also showing off also on starting are excited and our product with just the country, launch ready to it. to and excited ability I of demonstration to area team leverage XX:XX And our recently across incredibly the was I those I really some certain travelers the could we our enrollment and at I for morning to know and our partners ambassadors amazing or who bring incredibly staff the at are that. and closes, a XX -- aligned are in travelers. for

your we what time a question expenses, said moderating rate reiterate we last in is the I'll expect expenses. look, last growth So on which year-over-year

As the had spent we investment our of a of to year, levels the you years couple know, in them levels in staffing year after we've XXXX. cutting normalizing pre-pandemic platform. Last

we're free cash generation. point positioned again, our And well And for leverage. to so operating I'll flow

profitability metrics the true of So our understate the business. GAAP

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

on just have for wanted metrics again. Turrin. a Michael quarter I some you quarter. it Berg touched quantitative if something got on you see on You click might Congrats Michael to last behind double on to great

last year-over-year. sort quarter? quarter, this that around mentioned Any of XX% grew You same-store bookings metrics

help are our opening I very, widespread dynamics growth to the everyone her seeing metric for few base. Yes, you comments for very understand some same-store have on base the don't business as widespread, In But are the we just same-store growth same-store a Caryn growth. a we of true growth made wanted we general, remarks. as in full how basis is. to additional give this well the across a seeing quarter. disclosure strong strong

integration would Whyline? and how your follow-up, of and Atlas the quick you a recent acquisitions characterize And Fantastic. demand initial for

with to very is about excited integration those pleased accelerate our really as can their they we We're do the going growth well help well us two pipeline, growth. acquisitions as and and accelerate remain we will how what

ensure think I automation, businesses that manually hours licenses are individual care confirm understanding high. or and really the online the staggering. for to about required to people about think about talked are and to I is platforms credentials you check When health that required need fully anything compliance caretakers and from and When hours think plumbers, you

And as automation. the right, identity. of integrating appreciation an well appreciation of do there's I verified think think I so And credentials an both, the there's as

with movements the and for I there aha were some -- partners. Clear brand, think So

comes question Sachs. of line next Our Goldman from Instructions] [Operator Brian the from Essex

price wondering was you briefly. could I the those have increases that if I the partners. those highlight on the of Maybe increases if touch on you anticipate will impact could

So discounted membership happens retail what price I airline And relationship? as the Amex well follow-up. that to as if $XX, the you're increasing offer a partners have then

Sure.

-- don't plan Currently, those and to we the at in so actually in we a long term, raised prices. So right look now But near-term past, the past. do it that have that. certainly, will we've done we've

consumer. now American example, for first launched we Express, those it came and as will fully and when $XXX. far in it remain Delta, $XX the $XX paid as are So at to $XXX, And

it. Got

pricing you're particularly a renegotiation economics, the two set part to say that on the it of Amex point what happens regard is that So with to to to decides the the one And that there? is fair parties? that

signed not it's considered. things When renegotiation. deal, a were No, these we all the

super Got to just And during renewals to retention? that's bookings, impact by net any discounted I there number is on from net previously relatively that it, to from, helpful. bookings? pandemic? the still guess, any true-up revenue Is then retention have analogous on member impact the the And been may that pricing maybe

Right.

mean, pandemic have through. the the -- I largely So run discounts

price retention this for prices if we makes the because As see retention not we're in to mentioned, But sense. exceed existing if net of increased, that raise the certainly, increase, you going would price member members dollar were future, year.

Our from of Loop line next with Capital. question the Baruah is Ananda

platform guys another on the if if a guys conversion quarter it. do really me, see of It's quarters? -- an been cool what's can have on strong to the Congrats couple nice to of making results. yet comment you you few the are membership or sense a could. guess, really for from in I Can revenue I last impact experiences you

makes dollar I would say every an impact.

impact, So yet platform do think a indication can as continue is small it's of it been an do we We together. the sew material. significantly not we what that to

to same Caryn. international, the And helpful, international That's as would initiatives point? your this for Caryn, well

yet a Whyline there's small Well, about well. but the reaching of days talking if significant the level there you're acquisition, Early there not as impact materiality. again,

Okay. That's super helpful.

see little experience been all what sort us what context, that are so driving could And strong dynamics you a the you -- that's are possible been like guys sales might give you not seeing. seeing? if guys same-store mentioned if you that additional growth give be just maybe us of the sort have like it's anything, yet, do what guys an Just any context of of you

or sports places. talked mind hard cases of XXXX. XXX the it's HSS Ken making. we lanes in over and is or increases talked one launched use to We point today as you, stadiums This think about first Clear sort years in in I XX thing. $XXX airport Orlando, to our Plus about at price almost And other

airport. think concept it at really trusted time people I asset early now and I team fit more Clear a ago used which most to and giving their and places all brand, who frictionless market a experiences that our were it were Health so ambassadors this visiting had the product the with shows precious that sews up, is few Clear Pass of use saying I that and in think was together. excited is And Seattle our understood people months back

I is things. lot success little a think of

ambassadors. We team incredible have an of

in but stressful is cases than use stress, think tranquility I bastion We is travel travel harder They Clear and not sports before. welcoming only ever of a staffed today. to back. a other more in sea as are are in of well. It fully today travelers and And

over look our you the and side when member it's up so year-over-year XXXX, is than And growth at network. double of I power airport the which more the think then versus XXX% up

I think in it's trust the brand. the

it's think the mouth. I word of

use think the multiple I cases. it's

long time. this for at been we've that it's think a I

you but airport. still the people of just ago today. And so you ambassadors didn't there's greatest years and see part a Incredible, it talk the a and our incredible about familiarity maybe enroll few being

and technology a an that around have think customer letter And bringing It's a that could privacy in. the better. platform experiences opportunity little side were I say the experience. the and touchless, now so why many add world faster, to gotten the the I frictionless life. think to that we Clear. have. And we we would it we early brand country for things is is we iris I trusted the going. opportunities probably it's the again, then the keep but also stronger, has which incredible did up and for The on XXXX live now desire It's we here in both team I wrote and world across And that the

is quick stronger for kind can your last that retention one is? any the just of Ken. And chance there one Ken, target than net settle what in

The net retention, ask? you

exactly. Yes,

Well, expect and pre-pandemic we're seeing in we levels settle it that. do to above

is said above among... pre-pandemic and upper I So that levels and XXs

hard make as Look, we're work possible. going to to as it's really high sure

We always want every KPI. maximize to

of Thank reached and today's also a wonderful question-and-answer for And you end day. We've have our you. conference session. this call. your the will Thank conclude participation

you. Thank

Thank you. Bye.