Clear Secure (YOU) 1 Mar 232022 Q4 Earnings call transcript

Good morning and welcome to CLEAR's Fiscal Fourth Quarter and Full Year 2022 Conference Call.

We have with us today Ms. 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.

letter. actual in differ file the SEC today's cause statements from with could including included are company's shareholder that results materially to these the Factors reports on any The forward-looking during company call. obligation disclaims to this statements may be any that discussed update

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

that, to With the turn I'll call Caryn. over

last Hello. quarter surpassed bullish most our earnings Thank fourth even of to a expectations. Fourth off travel call. year strong earnings People's year you capped CLEAR. welcome growth our quarter and at XXXX to desire

to volumes the in getting were infrastructure to safer a the solution Travel is XX% and time, hard travel make part travel platform, could products of imagined. harder. be mission, up more checkpoint have XXXX. far and same and easier. Domestic At CLEAR's fragile critical anyone than are proved

were top important these CLEAR's great staffed reputation to a ready career travelers as to we serve they sky return as was It place a build and talent help to to attracts the and travelers.

basis, nationwide member sequential base. added as a enhance we Ambassador and airports our our grow On we X.X% to Workforce across to service saw opportunities

why we to some bring our can XX be P.M. the airport CLEAR's ahead you technology busy time. your members our welcome morning CLEAR great team stressful or a eye. bright our letter of the a know As what a in travel are That's in on Ambassador in waiting who red shared life. ready spot stories They X:XX at to about and is day

airports The been launches nationwide. CLEAR the preparing network team new we of busy to as continue expand for has

rolling to review pre-check it by we look operate received enrollment a to rigorous CLEAR forward XXXX. We the in American and December public late TSA after authority early provided out also to our in

during XXXX. and The pace strength of materially accelerated launches our

strong efficiently grow into and We muscle built team to a the have operations new geographies. quickly and

launched including City eight In Plus internationally airport alone the new in our and and we markets week. CLEAR XXst both Reserves XX domestically Kansas past for this months have

last Strong our challenges travel work that. for industry before innovation Thanksgiving. demand an to Every coupled American for There behalf we travel is have of the collaboration now urgency in day a of prepare saying further with as on new year's traveler. sense to and is the travel, And together Wednesday

with record game. big local the NPS our worked Phoenix. example to passengers members' over Bowl outstanding the XX% passengers of our seamlessly and process the Phoenix delight. these of Phoenix in CLEAR XX,XXX collaboration Super lanes The weekend use Airport, Monday of XX following on team terrific An TSA, shows a score and together CLEAR the

on to bringing we we When we of travel with we our multiyear are travel friction-free to innovation. new the scale think power January, our airline United Airlines securely exemplifying focused renewed United In collaborative experiences, with partnership about our about are partners. travelers. will friction-free alignment how Together, we experiences enable technology excited

industries have see You you life that and coming that many and travel identity so beyond across us is foundational heard in say many to times today.

to For the access of becoming example, Act control of the the Cures consumerization data. implementation healthcare quickly with is reality their a healthcare and people empowering

patients Instant-on and for and to integrated both million vertically our looking their more enable identity partners XX members over friction-free With employees. are to platform CLEAR experiences healthcare

an regulated built in have which us to important well positions at-scale in network role We environment, an nationwide play a healthcare.

what the CLEAR. first opportunity we WellStar two examples be UHealth with to and for a partnership Our believe just of new are large

has who work want I members, remain free on CLEAR reality. we the to a focused bookings and flow. team continuing cash to in incredible always, thank done vision CLEAR XXXX make growing As the

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

Caryn. Thanks,

better driven quarter and Of Plus bookings XXXX XX% XX% expected and from quarter growth XX% Our of bookings this same-store. were fourth rates fourth by new represents two-thirds and than revenue renewal a we Overall is CLEAR pre-COVID CAGR joins. including levels. approximately trends

XXs We're we're identity by for network there expands remains remains CLEAR platform. above addressable and slightly strong traction XX% continue of a the as Retention although value large business is networked to our powered expectations our retention the seeing long-term also member-centric and encouraged of in market by grows. believe our proposition our upper down our

cash XXX% overall over by flow Free economics in million Full is flow year-over-year. QX $XXX of unit CLEAR million quarter remain and Plus. cash fourth $XX up year XXXX. We the the was of XXX% encouraged up is free

our really When evaluating new opportunities, return me know we comp comp analysis. holistic investment call think owner-operators to a important in including it's we at do. out I comp for as as real stock view non-cash on our as expense look shareholders we

years. new flow million issued representing cash than for the million $XX employee X% The was In shares stock considering beginning RSUs of comp XXXX, net over founder to X.XX after vest XXXX. RSUs we three Free of majority employees outstanding. common less full vast year and

stock we XXXX, to free before and comp. cash after grow In employee flow founder expect and

capital laser and on We are focused allocation. efficient growth

strong structure vogue have highlight our cost to now always and While to margins. rightsizing talk we in about been methodical headcount, CLEAR incremental want about it is

QX, of other excluding In rate. United unusual growth XX% OpEx warrant our year-over-year XX% revenue items and roughly grew expense

revenue year fiscal our For XX% growth half grew less rate. than and the

partnership unlocked in warrants our SEC XXX,XXX common in filings. have and and The A which reflected XXXX. been Class issued These warrants United in XXXX renewal converted vested to were stock

in recognized total over to related carried $XX.X we tranche $X.X warrant and million million a expense million this non-cash QX. of $XX.X of from quarter This which

$X expense We expect million the QX. to final recognize in warrant of

a quarterly RSUs be of employees $X.X expense. been probable have filings. performance In includes XXX,XXX will IPO, to to catch-up amount million. XXXX. QX, our $X.X ongoing issued recognized in These reflected The QX SEC historical non-cash XXXX equity to also our in related now million approximately expense we RSUs also prior The to deemed vest amount

million the $X.X settled $XX dividend million Total December cash million December, of RSUs. was net as in reflect special and as for XX used well equivalents paid and as $XXX

look we cash positioned leverage grow flow to revenue, XXXX, As delivering are and to bookings operating growth. and members, while free well we

year, bookings our implies bookings decline on renewal the to Like a Plus sequential entering pre-pandemic last are guidance backlog with annually, CLEAR from year. quarterly QX the dependent Because patterns. our consistent QX, builds trends

annual of As fell the renewal QX. in XX% than less backlog XX/XX of

go We'll Q&A. now to

question. the you. Telsey with question-and-answer session. be of Dana a [Operator comes First time, Thank Advisory with this we’ll question At Please proceed from your line Telsey conducting Instructions] Group.

and this in, the and When metrics results. at compelling. look nice all in the the think the XX% to metrics, be up Good progress how you you enrollments congratulations in the enrollments drive $XX.X are came enrollments I we When mindful believe, is fiscal there thinking that year? you on forward? about which to about morning expenses of going are any should impressive million, upcoming And additional

-- Thank like into of the see margin margin whether do to I the cost, healthcare market, you. in you entry then market How penetrating progress healthcare. it's time, and And the compared opportunity? sales the as travel

Thanks, Dana. there. few A questions

and then Ken as few a will take I'll well. in So chime

significantly experience And strong, I enrollment, same-store CLEAR about think of but stores. outpaced In in see and It being continue. reflection new will was the travel both right? not you well talked those think, that it's of growth only our as XX% trends XXXX terms up Ken a as I growth and that

think year. airports still of we last went of the lot we relatively life, launched A their we airports new XX I out, end are at coming If at eight -- in since COVID airports June right? And XXXX. our early or you public, public look went at since

XX% So in a growth network. that's the

time, we've new quite been airports airport talked about airports that So then growth long growth as you'll and as in historically, a see in well. new have opened growth

so, continue. we trends expect to And those

growth and But coming you'll of think out I that platform the also side members. seeing be

to to have airport an to come enroll platform you side. on the So

do can is or app our in CLEAR either partners' in apps. You it you're what a seeing

you'll so of see think, both continue XXXX. those And trends I in

little then I'll I'll about total talk a about health terms the associated In Ken talk let addressable that, of that, with costs bit and market. care

Sure.

of economics terms today, see later we year-over-year that basis. In business, unit in the the unit a you'll the of on actually, file economics improved our when K,

effect talk economics. and 'XX partly we going really both has have down And year-over-year. that, Caryn actually on 'XX, unit and side, improved we function network, added see LTV about versus the in that you'll as of as side the acquisition drives on to mentioned, platform network So cost CAC, a the our airport to of

And so, of dynamics the would specifically horizon anything that we don't change in business. the the see

systems terms leading both in health and WellStar In care, their of our Uhealth, health region. Dana,

of TAM that the that leading in over And X,XXX And at similarly taking been Florida systems systems So health seeing we UHealth marketplace that, when system. you many like of long is Georgia health care, there system. a which the US. look the a consumerization has South you're hold. is health just I is signals is talked situated leading about, think in think WellStar health the

to Cures but is only patients. to now, you acceptable passed ago, the identity make when being at information And years look was which Act, implemented health foundational several order in

both eliminating clipboard And proverbial and for really patients that providers. so,

at days total US. UHealth we at are over out the there. you addressable Wellstar, think enormous So in and just that market there's early if it an sized very these look and just X,XXX We

you. Thank

Needham with Company. Our the proceed from & question. with of Reilly Please Joshua next question your comes line

guys. right. here. Congrats Thanks on the impressive results All very

boarded first in So exceed XXXX year of likely passengers. XXXX terms is to the

guys demand ported impacted? to were demand as As the do progresses, you year-over-year overall about would think you how adjustments correlation spend marketing passengers? to growth any comps become boarded difficult make the or more be if passengers And in year increase

and airport So, of comes our in very capital which largest includes opportunistic we to efficient spend. channel, allocation, when channel it channel. -- is in the We are marketing investment, is terms a that

quarter. economics our of is, we opportunistic any it to way the so, base we We think about as member function like around in a were grow past comps. to tough opportunity necessarily see And the dramatic our be unit this changes don't we'll

But first bundled standard our think XXXX, of power question an The which floor, basis, included expect and historical the marketers, introduce a wrote right? there's guidance incredible on happening we the itself shown of we So, quarter as to XXXX to marketing both about, what XX airport a different years never in there's ambassadors and I a to opportunity people and is answer things think a has the in of of past we've there. opportunities network ways which of over people think also we stand-alone spend. your effect on form PreCheck, been are and security and the lot more to different specifically, was launch experience exciting not in

who see people have partners As the to we with members rental places success on and adds BXC. add to we more like CLEAR to when platform, platform an space. joined over it or what BXB we upgrade And as Avis in more you right in with opportunity from the Healthpath doing partnered the that car we're there's right saw Hawaii in to

“historical” get your many our really there's to excited so And team marketing on-ramps economically creatively And and way. not growth spend, it's our an opportunities which about. in flex to that we platform efficient drive gives

to net you seeing about first follow-up retention. you Got you back moderating what was even net months would trajectory talk the here, the year? the to think for on still about What it. upper of And on of member upper are the the then that I do And the stronger XX% of how XXs? retention than movement just here range. in QX couple have a expected It member

nodes mean, the Yeah. and that have would other And airports power we expected. the think what's that's use including network that as think I better the definitely of than it's than gross increases retention. we happening speaks driving to the more add slower expected utility. I I cases And

it the but in And we slower than absolutely happening is we have settles it would so think anticipated. upper XXs,

for rate you of where maybe expense remind what I'll on just can that versus is. opportunity long-term well-above in G&A should here And model seems one line the are the about like long-term just we current is And year? Great. one think more it this Thanks in your the leverage in still expenses item? sneak G&A guys. run How included model, us

Sure.

things typical items, expect leverageable G&A think fees, credit revenue than fee stable cost exception we operating get -- variable. the certainly more across that really remain board item. of the and the should but as such So to most the I line would other with is leverage going overhead the say line share the of G&A being rent regular that beyond there in we're would you are which And there are card

obviously business. fees to card as of the becomes Now platform a larger BXB apply mix, percentage credit the don't

also -- costs And enrollment cost. mobile mobile variable enrollment are then and in their so

are look a on line of out just variable, things had G&A are that type of QX it's basis basis largely you things. this few to more there the last of this points you just if strip So quarter the clean operating unusuals, but on if you X,XXX in probably QX leverage some year And year overhead around a item.

we there. So opportunity of a lot see

I Thanks That’s expected. guys. Great. what

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

Hi. Thanks taking my very year, for finish quarter nice question. cash to Very flow. the strong

up the now the at long-term still are key airports lane a mid-XXs You we opens airport is a goal there Plus expand year? view? up lanes firms And what's the as average in revised international follow-up. on or airports and And progress meaningfully which So CLEAR higher, XX offering, see the first in I a cross-selling reserve any per Also of opportunities which expand? today overseas pipeline Can this your have nice well? channel. to mentioned

Paul. Thanks

we yes close launch at we I us So -- same I do open slightly it's the XXX than this XX year. to the yesterday today or are of Kansas those more airports expect XX and with airports. airports lanes think City to last did year with

three two for first the months XXXX. We are of already airports in

that look of different I do we bringing enrollment high XX-ish be reserve I where airports of if think, products is that we think there's But at PreCheck also you you in information think there when in the and it's look so, applicability public airports. the also And could XXX at range top the those and -- products. sort US,

about broadly, lanes. So we're Plus think case of we now CLEAR but this airports more CLEAR specifically talking in

reserve we that is about and think success it's that dialogue internationally, the the to seeing we're there. then then product leading And with opening experience be and relationships, very exciting the other the products. And do conversations building

But this it's getting surge and harder, we soon the when a too so is year, look global tell. to And think challenges the whether phenomenon a or at hard and travel that not you hit US it do phenomenon. on just not but travel

completely the unit it lanes. on the airports, the the for speaking, number economics of stand-alone economics terms small lanes, of depends on of of because work they airport the have Generally fewer And in Just smaller airports basis a a airport. on network. unit will the to smaller configuration the and add

to, able year a get those to on basically under we're breakeven well airports. So

kind Great. platinum of lap Are for of as rates penetration well? AmEx sense is year? then just rates that. Thanks what should your And AmEx, this on think bookings how as enrollments, helpful. we'll Taxi we the partner you. the card Thank pace could initial overall platinum, vendors about expand successful at renewal noticed target of growth on we other they of be how of travel And channels with. have those engaging you're would companies, you on higher kind credit channels airlines I've other occurred. if the key side also for and being sign-ups at kind

Starting questions high above AmEx rates is for would off which the renewal in expect, our are with the renewal there. quite Lots easy. XX%. rate, as Platinum of Yes, you

have terms success have not benefit from of the but member if they growing platinum, denominator. continuing don't obviously, net we are In million you announced Those the base. at added. of are $X they the all new And again AmEx to penetration cards fourth we look platinum quarter, their that. But

continuing So them. grow to we're with

a about but that that will the us, curb, that specifically we growing material is that's other The are for it's just is on which grow. not think you successful channel It's for -- us. I channel have as marketing faster. growing one asked channels

avenue other are for partnerships, questions of your it's our channel we and and for terms talking think the new We additional us. in terms avenue to of in successful efficient airlines. then very growth, our partner growth do And is best for been most

more so, And on that. to come

Great. Thank you.

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

This Michael Great. Hi. Turrin. David on is for Engel

me, questions my have Just of been one for asked. much bunch

So up XX% traffic in being you've about talked XXXX. volumes

XQ thus traffic the to far bigger you're in? then just the talk we picture that And As can And how what two pre-pandemic historical about volumes like look in you to XXXX seeing longer-term traffic? annual with in? look compares process, planning what months

traveling little record down people about there the wanting days which out experiences But I'll from in a slows you seeing two say they January continued and as a is little we're what bit but months, basis. talk always versus strength better see December first sequential strength. I would bit, just and travel. a that,

been So there has slowdown. no

thoughtful the earnings. started we of quarter think, in I third about environment our economic probably being talking

see can I say, you and And across industry. this will the

thing. People business coming and travel, travel has one know travel, You love people back. to want been

so the strength. just would new the probably say past see over few I And that, addition you is but continued months, that

we far implies versus excludes our XXXX around as XX% QX, as levels. XX% about CAGR And pre-check pre-COVID Yeah. from a talked trends levels a I for pre-COVID CAGR guidance think which

So look midpoint. the you at if

see mentioned. continued Karen we strength So as

Great. Thank you.

from proceed next Baruah the our Please your question line of Loop Ananda comes Capital. And with question. with

wise guys. sense? guess Hey, US, optimal penetration what think new you're that lanes to the way relative thanks been make what where describe guys Does Caryn would you've you you to back anecdotal. going it. like of I adding conversation useful us the if to question. guess morning, for there taking you've Is I you and in good consider can heat even added. airports that you any are the to the map be that about in, Appreciate sort the the And

areas what in by wise mean when are heat MSAs live the map or they're where people US. where that? do new exactly, or you you say me mean Tell and you hot Not what going

Yes, like thought have the you process. Exactly. that, of of exactly. All that, all

enplanements. at mean, we Yeah. look I

the that you top We said, when it. again, at also deep top XX, in the of being right and ultimate in that airports And see we're like CLEAR, decrease look of strong. smaller piece XXX of great All because that's smaller the right? for you are look the And but airports, enplanements. that not – for airports accretive us, after those the only have so the been economics a network

bring consumer not on their free products the are travelers, with CLEAR passenger So travelers week you and a It's with innovation We're building experience. reserve science. CLEAR to all for once who for whether partners it's a Plus. the focused who want exact year an travel or once to

build products between. in And we're so to trying more and --

And so to Kansas don't City build an we a yesterday. to and new And a have except I innovation exact experiences terminal their travelers. airport strong and answer passenger great partnerships. new say, to they bring wanted opened

And sure. appealing of we I'm an lot a That's have very so answer, a runway. and exact

bags, the that's But so the and opportunities car piece to is just to the to strong many the there truth. from way on back and parking security, are the so travel to passenger and other transform the It's experience then, all concessions rental side.

are very So early days. these

airports, I lot of a include, in very meaningful helpful. of No those, very yesterday of got airports in? perspective that new does be lot these XXX sort that And A new already add some -- opportunity of as City as Kansas it. say, lanes runway well actually may helpful. like kind is to it's airports top a say

That accurate. Yes. is

We footprint that more then, a to today. have we great lanes footprint. And add

airports with we're work. as on And other that with saw You new that well. focused

really great. helpful Its Thanks. guys. Okay. I it. color, That's appreciate

question-and-answer for of will the session. And end I Seidman-Becker reached to the now Caryn remarks. And over the we call closing turn Operator: have

call. quarter Thank joining fourth XXXX our you earnings for

Network, XXst Kansas I in CLEAR yesterday. launched growth which We are City, in just CLEAR the excited network, the robust welcome Airport and Plus said by

travelers powered just opportunity absolutely remain the and BXB by we new continue growth. is and industry on continued by surge UHealth announcements. of to we first CLEAR Avis the expect On XXXX. significant for are the in be U.S. a what WellStar believe another airports estimate of the partner side, to one bullish in million growth travel We

passenger again I they we're look once year in the for XXXX. together CLEAR, and friction-free all that on once At did for thank experience a week. want focused work travel you to whether the a ensure XXXX. to or forward And scalable all travelers, great team CLEAR innovation to a we'll in accomplish

may today's concludes lines for at you your conference. And time. And disconnect your you this participation. Thank this