Clear Secure, Inc. Q4 FY2024 earnings call

• 2024 was transformational for CLEAR with momentum accelerating for its secure identity platform.
• EnVe's rollout is complete by March, streamlining systems and driving operational efficiencies with 30% fewer pods.
• TSA PreCheck scaled to 91 locations, leveraging public-private partnerships.
• CLEAR Verified rebranded to CLEAR1, a vertically integrated identity platform used in enterprises and healthcare.
• Engagement with the new administration on public-private partnerships for airport infrastructure deployment.
• Leadership changes with Ken Cornick stepping down from operational roles, Michael Barkin as President, and Jen Hsu as new CFO.

In the fourth quarter, CLEAR's Travel segment saw revenue and total bookings grow 21% and 17% respectively. TSA PreCheck scaled to 91 locations. CLEAR's vertically integrated identity platform CLEAR1 is used in enterprises and healthcare, with Community Health Network deploying it across their enterprise. CLEAR Plus covers around 73% of airport volume with 166 lanes nationwide, and EnVe's rollout is improving member experience with 50% of members through CLEAR lanes in less than 2 minutes.

• Q1 2025 revenue guidance: $207 million to $209 million, total bookings: $202 million to $204 million.
• 2025 free cash flow expected to be at least $310 million, including incremental year-over-year cash taxes and EnVe spend.
• GAAP P&L taxes for 2025 expected to range between 17% and 20%.
• Credit card partnership renewal for final year through June 2026 impacts free cash flow guidance.
• Focus on unit economics and compounding total bookings, revenue, EBITDA, and free cash flow in 2025 and beyond.

• Seasonal travel impacts on bookings and net adds.
• Tax receivable agreement triggering a one-time noncash net gain of $75 million in the quarter.
• Amex partnership's impact on depressing bookings and EBITDA while benefiting working capital.
• Operational inefficiencies from past policies affecting direct salaries line.

Q: Review the puts and takes on the guidance for Q1 bookings and factors influencing it.

A: Josh Reilly asked about Q1 bookings guidance. Ken Cornick responded that Q1 bookings imply around 13% year-over-year growth, with January being seasonally slow for travel, PreCheck locations ramping, and Q4 CLEAR1 deals potentially affecting Q1. Also, there's slightly less pricing tailwind in Q1.

Q: Talk about mix in net adds in the quarter.

A: Joshua Reilly asked about mix in net adds. Ken Cornick said trial count as a percent of total Active CLEAR Plus members was down slightly year-over-year, though absolute number was up. This is a contributing factor to Q1.

Q: Update on airport security evolution and investments.

A: Benjamin Miller asked about airport security evolution and investments. Caryn Seidman-Becker said CLEAR has invested in technology and automation to strengthen security and delight travelers at no cost to taxpayers, with incremental margin growth reflecting investments coming to fruition. Also, automation like eGates and end-to-end solutions are key.

Q: Update on air travel trends and independent locations.

A: Dana Telsey asked about air travel trends and independent locations. Caryn Seidman-Becker said they're bullish on travel with record airport volumes expected, and independent locations like Mall of America are scaling aggressively. Pricing focus is on gross dollar retention with value-added services.

Q: Comments on retention rates and core CLEAR Plus business drivers.

A: Michael Turrin asked about retention rates and core CLEAR Plus business drivers. Kenneth Cornick said retention rates stabilized with passenger experience and EnVe's rollout. Growth drivers include CLEAR Plus net member growth, pricing, CLEAR1 and TSA PreCheck ramping.