CLEAR Secure Q1 2025 Earnings Report

CLEAR Secure EPS Results

• Actual EPS: $0.26
• Consensus EPS: $0.30
• Beat/Miss: Missed by -$0.04
• One Year Ago EPS: $0.28

CLEAR Secure Revenue Results

• Actual Revenue: $211.40 million
• Expected Revenue: $208.02 million
• Beat/Miss: Beat by +$3.38 million
• YoY Revenue Growth: +18.10%

CLEAR Secure Announcement Details

• Quarter: Q1 2025
• Date: 5/8/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 8:00AM ET

CLEAR Secure (NYSE:YOU) operates a biometric identity platform designed to expedite identity verification for air travelers and venue guests. The company’s core offering is the CLEAR membership service, which uses fingerprint and iris scans to confirm a member’s identity and provide access to dedicated security lanes at participating airports. Members link government-issued IDs and personal biometric data via the CLEAR app, enabling faster processing through Transportation Security Administration (TSA) checkpoints and select event entrances.

Founded in 2010 by Caryn Seidman‐Becker and Ken Cornick, CLEAR is headquartered in New York City. The company first launched its service at LaGuardia Airport and has since expanded to more than 50 airports across the United States. CLEAR has also partnered with major sports leagues and entertainment venues, including National Football League stadiums and professional baseball parks, to offer accelerated entry for ticket holders. Beyond travel and events, the CLEAR identity platform has been adapted for health‐screening initiatives and corporate access control.

Under the leadership of CEO and co‐founder Caryn Seidman‐Becker, CLEAR has focused on enhancing its technology and broadening its service footprint. The company continues to invest in biometric advancements, mobile integration, and strategic partnerships with government and private entities. CLEAR’s platform underscores the growing demand for seamless, secure digital identity solutions in travel, live events, and beyond.

CLEAR Secure Q1 2025 Earnings Call Transcript

Key Takeaways

• Clear reported 31.2 million members (up 42% YoY), bookings of $207 million, and free cash flow of $91 million (up 17.6%), alongside 7.4 million active Clear Plus members (up 9.1%).
• The rollout of eSuite products—including NV enrollment verification pods (Red Dot Award), one-step at-home ePassport enrollment, and pilot eGates—is enhancing member experience and driving operational efficiencies.
• ClearOne is gaining enterprise traction with over 31 million embedded members and a strategic partnership with DocuSign to embed secure digital identity in high-trust agreements across industries.
• Gross dollar retention dipped to 87.1%, down 140 basis points sequentially, due to prior “step function” price increases that will normalize over the next 12–24 months.
• Q2 guidance targets revenue of $214–216 million and bookings of $215–220 million (approx. 15% growth), with reaffirmed full-year free cash flow guidance of at least $310 million amid macro uncertainty.

Presentation

[Operator]

Good morning and welcome to CLEAR's Fiscal First Quarter 2025 Conference Call. We have with us today Caryn Seidman-Becker, Co-founder, Chair and Chief Executive Officer; Michael Barkin, President; and Jen Hsu, 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. The company disclaims any obligations to update any forward-looking statements that may be discussed during this call. During this call, unless otherwise stated, all comparisons will be against the comparable period of fiscal year 2024. Additionally, the company will discuss both GAAP and non-GAAP financial measures.

[Operator]

The reconciliation of GAAP to non-GAAP financial measures is provided in today's shareholder letter and the most recently filed quarterly report form 10-Q. These items can be found on the investor relations section of CLEAR's website. With that, I'll turn the call over to Caryn. The floor is yours.

[Caryn Seidman-Becker, CEO at Clear Secure]

Good morning and thank you for joining our First Quarter 2025 Earnings Call. I want to welcome our new President, Michael Barkin, and our new CFO, Jen Hsu, to their first CLEAR earnings call. I am absolutely thrilled to have them as partners and an integral part of CLEAR's leadership team. CLEAR is building the leading secure identity platform, making it safer and easier for people to move through the world. In the first quarter, we saw momentum across our travel footprint, continued scaling of our TSA PreCheck enrollment program, and exciting traction with CLEAR1. We have introduced important new products to improve the member experience, enrollment process, and our technology platform. With the Real ID deadline here and our ePassport product fully rolled out, CLEAR is helping to ensure Americans across the country are Real ID ready.

[Caryn Seidman-Becker, CEO at Clear Secure]

CLEAR's travel business saw continued strong growth in the first quarter, a reflection of our opportunity to continue to grow the top and bottom line through focus on the member experience, network, and product expansion. CLEAR is active in 59 CLEAR Plus airports and four domestic CLEAR Mobile airports, with 167 lanes reaching 74% of U.S. airline passengers. In the first quarter of 2025, U.S. air travel demand continued upward. TSA checkpoint volumes grew almost 1%, normalizing for leap day. For CLEAR, we care about the absolute volume of travelers at our airports and their demand for frictionless, predictable experiences, akin to their experiences elsewhere in the consumer economy. A recent survey conducted by the U.S. Travel Association highlighted the primary challenges faced by American air travelers.

[Caryn Seidman-Becker, CEO at Clear Secure]

The biggest pain point for 64% of respondents was long lines at airport security, with over half of travelers waiting over 20 minutes in security lines. Importantly, the survey suggested that biometrics are crucial to create a travel environment where safety and security are assured without sacrificing efficiency or privacy, something we have long believed. This data reflects the need for a universal, predictable, and frictionless experience. CLEAR is building the solution with the Lane of the Future. At the core of this transformation is what we call our e-suite products: EnVe, ePassport, and eGates, designed to lead the future of secure, seamless travel experiences. EnVe, our new enrollment verification pods, have now been deployed across our network. Our EnVe pods are driving material benefits to the member experience through facial recognition and faster verification. EnVes are also enabling labor productivity enhancements, proving the value of automation in high-volume environments.

[Caryn Seidman-Becker, CEO at Clear Secure]

Finally, we are proud that our EnVes just received the Red Dot Design Award, given for great innovation in design. ePassport is a breakthrough in identity verification. It has unlocked true one-step enrollment. For the first time ever, members can now fully enroll at home, digitizing their passport in less than two minutes by scanning their passport chip directly within the CLEAR app. No more stopping at the airport to enroll; travelers can arrive at the airport and zip straight to the CLEAR Lane. Today, this is available to U.S. travelers, and we will be bringing this to international travelers in the near future, which will expand our total addressable market. eGates represent the next leap forward: software-driven, intelligent hardware built for faster and more secure experiences. They are vertically integrated, automated, and built for scale.

[Caryn Seidman-Becker, CEO at Clear Secure]

Pilots are underway at select airports, and we believe they should be a cornerstone of next-generation travel. Major global events like the World Cup in 2026 and the Olympics in 2028 are on the horizon and will put U.S. airports in the global spotlight. CLEAR is ready to meet the moment, offering end-to-end automated lanes at no cost to the government or taxpayers. We are proud to be delivering TSA PreCheck enrollment to more Americans than ever, with 165 locations now live, including airports, city centers, and transit hubs. CLEAR is creating more ways for people to enroll at the airport. We recently rolled out our passport lookup feature, which means as long as travelers have a passport, they do not need to have it physically with them to enroll. We believe this will be an important accelerant to TSA PreCheck enrollment.

[Caryn Seidman-Becker, CEO at Clear Secure]

With the federal Real ID enforcement date here, the stakes are high. Millions of Americans risk showing up at the airport unprepared. CLEAR is built to solve this. Members can now upload and digitize their passport directly in the CLEAR app and be travel ready. Our Envy rollout and ePassport solutions are great examples of CLEAR solving big problems with thoughtful member-first technology. CLEAR1 is the one vertically integrated identity platform that helps enterprises prevent fraud, reduce insider risk, and build trust. CLEAR1's embedded base of over 31 million members today and smart network maximizes security and minimizes friction. CLEAR1 continues to gain traction as we bring digital identity to life across new categories. Our recent partnership with DocuSign is a game changer.

[Caryn Seidman-Becker, CEO at Clear Secure]

Customers count on DocuSign for critical agreements and contracts, and we believe there is no greater way to build trust in those documents than total identity integrity provided by CLEAR. Our solution will allow users to verify their identity instantly and securely when signing high-trust agreements, streamlining processes in real estate, finance, and legal industries. Together, we are setting a new standard for secure, digital-first workflows, and it sets the foundation for expanded enterprise adoption of CLEAR. Overall, CLEAR1 continues to make great progress across the consumer, healthcare, and finance industries. Identity is becoming more foundational to trust and access across sectors, and CLEAR is uniquely positioned to lead. With that, I will turn it over to Jen.

[Jennifer Hsu, CFO at Clear Secure]

Thank you, Caryn, and thanks to the entire CLEAR team for such a warm welcome. There is a tremendous amount of opportunity for the business as we look ahead, and I'm thrilled to be joining CLEAR at such an exciting time. Let me now turn to our first quarter financial results. We continue to execute against our broader strategy, which is to grow members, bookings, and free cash flow. We ended the quarter with 31.2 million total members on the CLEAR network, up 42.3% year over year, underscoring the continued growth and traction of CLEAR1. We delivered $207 million of total bookings and $91 million of free cash flow, representing 14.8% and 17.6% growth, respectively. Active CLEAR+ members grew to 7.4 million, representing 9.1% growth. Our continued innovation, including the Lane of the Future, is elevating member experience and fueling member acquisition.

[Jennifer Hsu, CFO at Clear Secure]

Q1 gross dollar retention was 87.1%, down 140 basis points sequentially, driven by comping large step function price increases from 2023 and 2024. As an annual subscription biller, any pricing action that we take affects gross dollar retention over a 24-month time period from the date we implement the pricing change. The pricing impact builds over the first 12 months and then tails off over the subsequent 12 months. Since 2023, general airline pricing increased 59% from $119 to $189, and family pricing doubled from $60 to $119. These price increases had the greatest impact on gross dollar retention throughout 2024 and are now beginning to normalize. We have demonstrated our ability to consistently grow both active CLEAR+ members and average price over time. We continue to see meaningful price opportunities across our member base as we continue to enhance our value proposition.

[Jennifer Hsu, CFO at Clear Secure]

Shifting gears, we are making strong progress on TSA PreCheck, and while we currently operate approximately 15% of total PreCheck enrollment locations, we are gaining outsized market share and volume. We are rapidly ramping our footprint with 165 total locations today across airports, flagships, and our retail partners. Furthermore, we are encouraged by our ability to upsell TSA PreCheck new enrollments into CLEAR+ as a bundled product. Moving on to profitability, we generated $37 million of operating income, representing a 17.7% operating margin, and $52 million of adjusted EBITDA, representing a 24.7% adjusted EBITDA margin. Cost of direct salaries and benefits represented 24% of revenue, up 150 basis points year over year. This increase reflects the first full quarter under our new ambassador compensation structure, which shifted to higher base salaries and lower commission. This change was designed to improve retention across our ambassador team and is showing success.

[Jennifer Hsu, CFO at Clear Secure]

Direct salaries and benefits in Q1 also included the impact of new TSA PreCheck flagship locations. Excluding these impacts, cost of direct salaries and benefits demonstrated year-over-year operating leverage. Additionally, we continue to drive efficiencies in G&A, which represented 25.9% of revenue and improvement of 360 basis points year over year, reflecting our disciplined corporate expense management. In Q1, we generated $91 million of free cash flow, up 17.6% year over year as a result of continued operating leverage and the capital efficiency of our business model. We ended the quarter with $533 million of cash and marketable securities after returning $168 million of capital to shareholders, including approximately $102 million under our share purchase program and approximately $67 million in dividends and distributions.

[Jennifer Hsu, CFO at Clear Secure]

Turning to guidance for Q2 and in consideration of the external environment, we expect revenue of $214-$216 million and total bookings of $215-$220 million, representing 15.1% and 10.4% growth at the midpoint, respectively. For the full year 2025, we are reaffirming our free cash flow guidance of at least $310 million, and finally, we continue to expect full year 2025 GAAP tax rates to range between 17%-20%. With that, I'm looking forward to working with many of you, and we'll turn it back to Caryn for some closing remarks.

[Caryn Seidman-Becker, CEO at Clear Secure]

Thanks, Jen.

[Jennifer Hsu, CFO at Clear Secure]

Thank you for joining.

[Caryn Seidman-Becker, CEO at Clear Secure]

The past two years have been a challenging environment from an operating and regulatory perspective, which impacted member experience and member retention. Importantly, we are thrilled with our engagement with the current administration and their alignment with private sector partnership and innovation. We are emerging from this period with an improving member experience, a growing network, new technology, and continued pricing opportunities, leading to growth in our member base, bookings, and free cash flow. I want to close by thanking all of our great CLEAR ambassadors and team members across the country for their dedication in serving our members with excellence every day. With that, we'll open the call for Q&A.

[Operator]

Thank you. The floor is now open for questions. If you do have a question, please press star one on your telephone keypad at this time. We ask that you ask one question and one follow-up question to give everyone a chance to ask questions in queue. Our first question comes from Joshua Reilly from Needham. Go ahead, Josh. Your line is live.

[Joshua Reilly, Senior Analyst at Needham]

All right. Thanks for taking my questions, and welcome to the team here, Jen and Michael. As we're thinking about the bookings guidance for Q2, can you just discuss the macro factors you're considering, including any potential disruption from the Real ID implementation? Can you just speak more broadly? What are you seeing in real time at the airports with regards to Real ID, and is that impacting bookings or your business at all?

[Caryn Seidman-Becker, CEO at Clear Secure]

Thanks, Josh. In terms of the macro, to date, both growth ads and conversion rates from trial-to-paid memberships remain healthy. We are not seeing softness in our business as a result of any broader macro sentiment. Certainly, there is a lot of noise right now from both the economic backdrop and, and you look at Newark, for example, and it is in the news every day. I think what is really important is that we are a subscription-based business that is oriented to how many travelers are coming through airports versus airfares. Just as an example, the first quarter, I think we talked about on the call, growing 1%, and April has pretty much been flat. I think, and yesterday started Real ID. Wednesday can be a pretty quiet day.

[Caryn Seidman-Becker, CEO at Clear Secure]

I think net-net yesterday, I'm really proud of how our team executed, and it was pretty much business as usual, but certainly every airport is handling it differently, and I think you have to be thoughtful of just how it could work its way through the system. There is a lot of gratitude that CLEAR members, and we've really been focused on CLEAR members being Real ID ready, and that the CLEAR lane is the calm in the chaos. We didn't see it yesterday. It is day one. We are partnering closely at both the federal and the local level, and I think that really is a great reflection of the strength with this administration in the public-private partnership. We're excited about that. We're really pleased that we have ePassport rolled out before that.

[Caryn Seidman-Becker, CEO at Clear Secure]

I think that guidance is just a reflection of the noise in the world and being thoughtful of it with a new management team and making sure that we execute with strength going forward.

[Jennifer Hsu, CFO at Clear Secure]

Josh, I would just add to that.

[Joshua Reilly, Senior Analyst at Needham]

Got it.

[Jennifer Hsu, CFO at Clear Secure]

As Caryn shared, we are not seeing any softness in the business today as a result of macro. Having said that, the market is obviously volatile, and Real ID is just one example of that. It is an area where we think we can drive a lot of positive impact, but it also just creates some degrees of variability and unknown. We felt it was appropriate to widen bookings by one percentage point just to give ourselves a bit of room for a wider range of outcomes. I'd also add we did reiterate the free cash flow guidance. I think that's a testament to the visibility we have in the business and the levers that we have as well going forward.

[Joshua Reilly, Senior Analyst at Needham]

Got it. That's helpful. As we look at retention, the dollar retention obviously ticked down sequentially, but wanted to get some color on what's happening more broadly with family members. Family members, now that you've lapsed the larger price increases for these customers relative to what you're seeing for individual members, are you seeing the family churn normalized now that we've lapsed those big price increases? Thanks, guys.

[Jennifer Hsu, CFO at Clear Secure]

Yeah. I would just say overall on member retention, those trends remain consistent, and you can see that in the net ads additions that we added this quarter. $100,000 net ads sequentially Q4 to Q1, which is an improvement relative to Q1 of prior year where we added $78,000 quarter on quarter.

[Operator]

Thank you. The next question comes from Ben Miller from Goldman Sachs. Ben, your line is live.

[Ben Miller, VP of Global Investment Research at Goldman Sachs]

Great. Thanks for taking the questions. Given the uncertain macro backdrop, I'm curious how the team might express flexibility around long-term investments and/or capital returns in a downturn. As you think about the ranges of outcomes in the macro, curious what's contemplated in the reiteration of the free cash flow guide.

[Caryn Seidman-Becker, CEO at Clear Secure]

I'd like to take the macro, Ben, because I think it's really important when you think about both the investments that we've made and the automation that we're focused on driving. That is our biggest opportunity set, which is not only does the next-gen identity create operating leverage, and you've seen that through the improvement of what you're seeing in the lane. The EnVe pods create operating efficiencies, and eGates create enormous operating efficiencies. In addition to that, ePassport or One Step Enrollment is a big opportunity for us as it both expands our enrollment capacity and our TAM. 40% of people today who enroll come and complete at the airport. Those folks can go straight to the lane. On that side of the business, we're really focused on automation to improve the member experience, predictability, and security.

[Caryn Seidman-Becker, CEO at Clear Secure]

I think that's where you see the operating leverage there. From a CLEAR1 perspective and a PreCheck perspective, what we've been saying is that we've put the expenses forward over the past year or two, and now we're leveraging that with revenue. You see that in the PreCheck growth. I think we had 90-something locations last quarter, and now we're talking about 165 today. You're seeing that ramp. Certainly, there is a small labor component with that if it's our own flagship location versus one of our partner locations where we don't have labor, but there's a really good ROI to that. I would just say we're seeing the operating leverage, and we're driving automation on the more labor-intensive side of our business.

[Jennifer Hsu, CFO at Clear Secure]

That's right. I would just add on the investment side, as Caryn shared, much of the fixed cost investment is behind us, as we've talked about in the past. You can see the CLEAR+ business continuing to drive overall operating leverage. As Caryn mentioned, PreCheck, most of those costs are embedded, and that business is very much still scaling, and we're rapidly growing our market share and volumes in PreCheck. On your capital allocation, capital return question, I would say we ended the quarter with north of $500 million in cash. We still have about just under $150 million remaining in our share purchase authorization. I think couple that with our free cash flow generation, we have a lot of flexibility to access a range of capital allocation alternatives, and we'll continue to do that going forward.

[Caryn Seidman-Becker, CEO at Clear Secure]

I would just add one more thing to what Jen said, which is we've been focused on bringing AI to every workstream of our business to drive productivity and outcomes. You're seeing that across the board here at CLEAR, and that's something that we'll continue to focus on.

[Ben Miller, VP of Global Investment Research at Goldman Sachs]

Great. Thanks for that. Just as a follow-up, I'm curious how you think about pricing as a lever from here, and has the current uncertain economic environment changed maybe how you think about the price versus user growth algorithm in the business over the near to medium term? Thanks so much.

[Michael Barkin, President at Clear Secure]

Yeah. On pricing, I think the company has been really strategic about pricing, and I think there's definitely a continued opportunity to refine our strategy, particularly using a data-driven approach. I think it's important in a consumer subscription business like CLEAR. I think pricing is a key lever to drive bookings and revenue. I think overall, we've been relatively conservative over time with our top line price, which today is $199, which is only $20 more than the original price from 15 years ago. I think a lot of it is about maintaining the strong value proposition of our product. I do think we have an opportunity over time to focus on lifetime value of our members.

[Michael Barkin, President at Clear Secure]

I think that one of the key pieces of that is to continue to look at the top line price, the areas where we've been able to acquire members with discounted prices, and our opportunity to continue to close the gap, which I think the company has done a great job of over time and will continue to focus on that.

[Operator]

Thank you. Our next question comes from Mark Kelly from Stifel. Go ahead, Mark.

[Mark Kelley, Managing Director and Senior Equity Research Analyst at Stifel]

Great. Thanks very much. Good morning, everyone. Two quick ones, if I could. First, just on the ePassport product rolling out internationally, I guess when you look across the whole product portfolio, are there other opportunities to maybe be more ingrained and grow your business outside of the U.S.? That's the first one. The second question, on the last call, you expressed the desire, Caryn, to close that wholesale to retail price gap. Obviously, we saw your announcement that you renewed with American Express again. Just can you walk through the dynamics a bit there and just maybe help us think through the free cash flow component, particularly in Q3 with your credit card partners? Thank you.

[Caryn Seidman-Becker, CEO at Clear Secure]

Sure. I'll talk about ePassport, and then I'll turn it over to Michael to talk about credit cards. Just in terms of ePassport, the opportunity to upload your passport and digitize it is really powerful. Today, international travelers do not have a way to get through U.S. airport security in a differentiated, expedited, innovative, and secure way. When you look at the total addressable market there in just the four countries that we'll be starting with, which is the U.K., Canada, Australia, and New Zealand, we think there's about 2 million travelers there from a total addressable market. After that, we'll be expanding to other countries. First things first, we're going to continue to expand our network in the U.S., and we want to make that network available to international travelers.

[Caryn Seidman-Becker, CEO at Clear Secure]

I think that's a win-win when we look at both strengthening security and delighting customers. From there, I'm not sure if you mean, will we expand our business operationally internationally? As of now, that is not our focus. It's expanding the TAM and serving international members. I will say on CLEAR1, we are expanding internationally and serving our domestic partners with international businesses, which is something that we couldn't do with strength before. We're really focused on that opportunity set. When you look at the DocuSigns or the LinkedIns, etc., they have global businesses. Following our customers around the world is our first objective. Quite frankly, it's also, from an economic perspective, quite efficient for us. It's a win-win. With that, Michael.

[Michael Barkin, President at Clear Secure]

Thanks, Caryn. To the earlier question on pricing, I think one of the things that we're very focused on is ensuring that our price remains both affordable and one that really is something that the broad population of travelers can access, but also one that reflects the value proposition that our product and services offer. Certainly, we look at that in terms of pricing overall, and we definitely look at that as it relates to all of our products, some of which through various partners are at lower prices. As it relates to our credit card partnership, we deeply value the partnership that we've created with American Express. I think that the partnership underscores our customer and brand alignment, which is mutually beneficial and has definitely supported our growth and engagement among our respective member bases throughout the partnership.

[Michael Barkin, President at Clear Secure]

I think it's important to realize that these partnerships are so important because it's actually estimated that travel spend represents over 20% of total spending on premium credit cards, which really highlights the alignment and value of our shared interests in this. For us, the credit card partnership serves as an important acquisition channel, and it definitely delivers members with attractive demographics and ultimately strong lifetime value, which is why it makes sense for us to engage in this with a lower effective net price. As our business has scaled and our network has grown and we've invested significantly, as Caryn walked through, the value proposition of our product has improved, and we expect that we'll continue to look for ways to ensure that our most important partnerships, including on the credit card side, reflect that shared value that we each bring.

[Michael Barkin, President at Clear Secure]

Hopefully, we can increase our member-level LTV and growth in our bookings and free cash flow through partnerships like this.

[Mark Kelley, Managing Director and Senior Equity Research Analyst at Stifel]

All right. Thank you, Michael. Thank you, Caryn. Very helpful.

[Operator]

Thank you. Our next question comes from Joe Feldman from Tesly Advisory. Go ahead, Joe.

[Joe Feldman, Senior Managing Director at Telsey Advisory Group]

Yeah. Thanks for taking the question on behalf of Dana Telsey. I want to ask about the B2B business, and maybe if you could talk more about the progress you're seeing across healthcare and financial and social. I know you mentioned it briefly in the prepared remarks, but maybe you could dive in a little bit more about some of the trends you're seeing.

[Caryn Seidman-Becker, CEO at Clear Secure]

Absolutely. I think there are two important trends that we are seeing. One is in healthcare, and the other is in workforce. Workforce is both in healthcare and beyond. I will start with healthcare, and I think there have been several announcements over the past quarter on partnerships that we have with different healthcare providers. Whether that be SureScripts and IAL2, which is really important, or hospital systems. Those hospital systems can be for both workforce or for patients. It is across various products. I think one of the things that is really important for healthcare is not single-point solutions, but the power of the platform.

[Caryn Seidman-Becker, CEO at Clear Secure]

One implementation and our integration with Epic is really important as we go forward to be part of their toolbox to make integration simple for our healthcare partners, again, for both of the—I would actually say not just for their workforce and their patients, but also for their visitors. We are seeing industry demand on account recovery. That could be, again, for either workforce or for the patients. That is a pretty painful customer experience. It is an expensive experience in a HIPAA-compliant world, of which we are. It also can create security vulnerabilities if not done well. In addition to that, account creation, account check-in, the ability to verify your insurance information as a patient is really important.

[Caryn Seidman-Becker, CEO at Clear Secure]

We continue to grow our product suite in healthcare, and that's helping us not only sign new partners, but also serve our current partners in a bigger way. From a workforce perspective, what you're seeing across critical infrastructure is really important. The threat of North Koreans, the threat of foreign adversaries having access to critical infrastructure and data is a huge problem. It's a compliance problem. It's a trust and a brand problem. The costs there are much greater than you would even think at the beginning. Helping secure workforce is really important, both through our own direct products and integrations, but then again, DocuSign is workforce. Our Okta integration is workforce. I think that's a really important segment for us across multiple sectors.

[Joe Feldman, Senior Managing Director at Telsey Advisory Group]

That's great. Thank you. Maybe for Michael and Jen, I'm just curious, now that you guys have been here a little while, short while.

[Caryn Seidman-Becker, CEO at Clear Secure]

Over five years.

[Joe Feldman, Senior Managing Director at Telsey Advisory Group]

Just curious, kind of what you guys have seen so far and where you are spending more of your time these days, maybe anything you've learned in the last few months where you see some opportunities. Thanks.

[Michael Barkin, President at Clear Secure]

Sure. Thanks. Yeah. I mean, I've had the privilege of being on the board for five years and seeing the great work that Caryn and the team did to build the business to where it is today and a somewhat unique perspective in joining. Yeah, I think for me, it's the opportunity and this kind of moment for the company. I think a real potential for an inflection point as identity and security really move to the forefront of both the physical and the digital world. Yeah, I think in the travel business, with everything that's happening, the way that we can extend our products, the value proposition in a world that is getting increasingly more difficult to navigate offers us a lot of opportunity.

[Michael Barkin, President at Clear Secure]

I think the product and technology investments that we have made in CLEAR1 really position us to be on the cutting edge of digital identity and integration at a moment when trust and security, I think, have never been more important. For me, the opportunity to get to have a seat at the table for what I think is a really exciting time and a really exciting ecosystem with a great team and a lot of investment and a really, yeah, a really incredible member base and team both on the ground and working towards the future of the company makes me really excited.

[Michael Barkin, President at Clear Secure]

I think my background is as an investor and a former CFO, and so certainly the financial profile of the business gives me a lot of comfort around how we can both invest and ultimately grow free cash flow and deliver shareholder value here. I'm really excited to be a part of it, certainly learning a lot as we go every day and looking forward to what's ahead.

[Jennifer Hsu, CFO at Clear Secure]

I would say I think the first month here has been thesis validating for me personally. Caryn, Ken, and the team have obviously built a fantastic business, but I think also a culture of financial discipline. That really comes through, I think, in the operating leverage that you've seen in the business and the expanding free cash flow generation. By the way, that margin expansion in free cash flow has come at a time when the business has navigated some pretty challenging operating environments. I think looking ahead, I see a lot of opportunity. I think on the CLEAR+ side, we have a lot of growth ahead of us, both on the member and pricing side of the growth equation.

[Jennifer Hsu, CFO at Clear Secure]

On top of that, we feel like we're early, early innings in expanding the broader CLEAR network and building a really large and sticky B2B business. I'd also say, I think organizationally, I'm optimistic about the team, and I think we have a really healthy balance between fresh thinking and operators that have been at the company for a long-standing time to really continue scaling and maturing the company effectively. On the feedback side, I guess what I would say is I do think we have an opportunity to bring more clarity in our communication to the market. That is something that we are constantly reviewing, and the goal is really to provide simplification and consistency when we speak to you all and the market.

[Joe Feldman, Senior Managing Director at Telsey Advisory Group]

That's great.

[Operator]

Thank you. Our next question comes from Michael Turrin from Wells Fargo. Your line is now live.

[Michael Turrin, Managing Director and Senior Software Equity Research Analyst at Wells Fargo]

Hey. Great. Thanks. On booking seasonality, the backdrop sounds stable. Could you maybe expand on what you're seeing year to date on bookings thus far and how you're thinking through or planning for any potential variability in summer travel? If there are offsets, you'd note if volumes do start to slow, whether it's price or just some of the other new product areas you're highlighting, which of those you'd maybe focus us in on? Thank you.

[Jennifer Hsu, CFO at Clear Secure]

Yeah. I would say we're not seeing anything surprising from a macro perspective as we've articulated on this call. Perhaps on seasonality, I'd just come back to what we have shared in the past, and we do expect a disappointment. We've talked about it from a Net Ads perspective, but that translates to bookings, obviously. We expect kind of Q2 and Q4 to be our larger share of Net Ads, and that's relative to kind of lower base on Q1 and Q3.

[Michael Turrin, Managing Director and Senior Software Equity Research Analyst at Wells Fargo]

Okay. On the gross dollar retention metrics, the commentary, and then I think the comment on the materials sounds like you're expecting that to stabilize after some of the price impacts. Can you walk us through just what you're seeing that's driving the confidence there and whether this is sort of the right zip code for us to think about just in evaluating that metric as we roll through the course of the year?

[Jennifer Hsu, CFO at Clear Secure]

Sure. I would say what we described in our earlier remarks is really it's a technical factor that is affecting that metric. Whenever we have made pricing changes in the past, those pricing actions have an impact on the metric for a 24-month period. Because we made large price increases in step functions as opposed to kind of gradual price increases over time, there is a mathematical impact to gross dollar retention. I would come back to say, I think our overall objective, and you've heard us share this on this call, is the goal is to bring discounted members in line with our growing value proposition. I think we've done that successfully, and we've consistently been able to grow our CLEAR+ members and our average price over time, which has translated into bookings growth.

[Jennifer Hsu, CFO at Clear Secure]

I think the price increases that we took were the right thing to do, and you see that in our output of members' bookings and ultimately free cash flow.

[Caryn Seidman-Becker, CEO at Clear Secure]

If I can just add to that, our focus is on driving the member experience and making sure that we are creating value for our customers. As we've talked about in the past few quarters, there are too many customers who are not. Right? The price does not match the value. Number one, continue to drive the value, and then price follows.

[Michael Turrin, Managing Director and Senior Software Equity Research Analyst at Wells Fargo]

Thank you.

[Operator]

At this time, I would like to turn it back to Caryn for any closing remarks.

[Caryn Seidman-Becker, CEO at Clear Secure]

Thank you for joining our call. I'm proud of how our team is executing and extremely excited for the opportunities in front of us. Thank you.

[Operator]

Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful day.

Participants

Analysts

• Joshua Reilly, Senior Analyst at Needham
• Ben Miller, VP of Global Investment Research at Goldman Sachs
• Joe Feldman, Senior Managing Director at Telsey Advisory Group
• Caryn Seidman-Becker, CEO at Clear Secure
• Mark Kelley, Managing Director and Senior Equity Research Analyst at Stifel
• Michael Barkin, President at Clear Secure
• Michael Turrin, Managing Director and Senior Software Equity Research Analyst at Wells Fargo
• Jennifer Hsu, CFO at Clear Secure