Clear Secure, Inc.

Good morning, and welcome to the CLEAR Q3 2021 Earnings Conference Call. We have with us here Ms. Karen Seidman-Becker, Co-Founder, Chairman, and Chief Executive Officer, Ken Kornick, 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. You can find factors that could cause the company's actual results to differ materially from these projections and our most recent SEC filing. In addition, we've included some non-GAAP financial measures in our discussion. Reconciliations to the most directly comparable GAAP financial measures can be found in today's 8K. With that, I'll turn the call over to Karen Seidman-Becker, co-founder, chairman, and chief executive officer of Clear. Karen?

Good morning, and thank you for joining us. This morning, we released a shareholder letter along with our third quarter earnings on our websites. I hope you have all had the chance to review them. We'll make some brief comments and then we'll get right into Q&A. During this quarter, we've seen the emergence of new and important trends. As businesses and much of the world continue to reopen, consumers have a new set of expectations post-lockdown. They're demanding fast and easier experiences or what we at Clear call frictionless. People are now used to having almost everything available at the push of a button. Whether it is with seamless and safe airport experiences or helping people return to their office with health pass, our products and services help partners not only meet the expectations of the new convenience economy, but provide a better and safer experience for their customers. The clear, secure identity platform has been creating frictionless experiences for over a decade, and we are well-positioned. It is the dawning of a new era in travel. As we've said all year, we are bullish on people's desire to travel. And we saw this manifest just last Monday when our borders reopened to a flood of international travelers. While some are still waiting for the return of business travel, in our view, business travel is undergoing a fundamental evolution, away from the old standard business trip towards something more flexible. Today, we have seen the rise of the digital nomad, people untethered to any specific work location. which is now so common that the term is officially included in Webster's dictionary. While the traditional version of business travel road warriors has not yet fully returned, digital nomads are leveraging their newfound flexibility and taking to the skies. Health Pass and our digital vaccine card have helped empower users with greater access to and control of their health information and help businesses of all sizes keep their doors open and come back better. From packed stadiums at Raiders games to traveling to Hawaii without quarantine to local restaurants with resi and open table, millions of people have used Health Pass to securely and easily connect identity and proof of vaccination. Not only are consumers and partners choosing our trusted brand and products, but cities such as LA, Seattle, San Francisco, and New York have all recognized Clear as an accepted solution for vaccine validations. From digital nomads to the convenience economy and the rapid return to travel, Clear is delivering safer, frictionless, and predictable experiences that people want and need now more than ever. Now, over to Ken.

Thanks, Karen. Good morning, everyone. Our revenue and bookings exceeded our guidance driven by strong growth in Clear Plus and over 100 new B2B partners signed in the quarter. As Karen noted, we're seeing a strong return to travel. Approximately 40% of our markets have verification levels above 2019 levels, and 60% of our markets have higher enrollments compared to 2019. We expect travel to continue ramping as we head into the holiday season, starting this coming week with Thanksgiving. AAA's 2021 Thanksgiving travel forecast noted that 53.4 million people plan to travel this Thanksgiving, up 13% versus 2020, and within 5% of 2019. During the IPO Roadshow, Karen and I highlighted our focus on bookings and cash flow metrics, which is how we've always run the business. In Q3, we generated strong free cash flow of $28.1 million, highlighting that we can show both strong top-line growth and cash flow generation. This was due to our strong bookings performance, high incremental margins, and the successful launch of the American Express Partnership, which has positive cash flow dynamics. As a reminder, when we are growing, our GAAP metrics tend to understate the underlying strength in our business. This quarter is a great example of this. Before we go to Q&A, I want to comment on Q4 guidance. We're seeing continued strength in both Clear Plus and the platform sides of the business. We expect GAAP revenues in the range of $77.5 to $78.5 million and total bookings of $98 to $102 million. This guidance excludes any contribution from TSA PreCheck, which we now believe will launch in the first several months of 2022. We'll now go to Q&A.