Clear Secure, Inc.

Good morning and welcome to Clear's Fiscal Second Quarter 2024 Conference Call. We have with us today Karen 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 risk 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 obligation to update any forward-looking statements that may be discussed during this call. During this call, the company will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in today's shareholder letter and the most recently filed annual report on Form 10Q. These items can be found on the Investor Relations section of Clear's website. With that, I'll turn the call over to Karen.

Good morning, and thank you for joining our second quarter 2024 earnings call. It's been three years since our IPO, and Clear remains focused on growing members, bookings, and free cash flow. In the second quarter, we added a record 2.3 million members, reflecting growth across both Clear Travel and Clear Verified. In Clear Travel, we continue to build products that help our members win the day of travel from home to gate and back again. The Lane of the Future rollout is well underway, improving the Clear Plus member experience with new technology enhancements that make verifications up to 30% faster, reducing friction for our members and our ambassadors. This quarter, we will begin rolling out the next phase of our Lane of the Future, our face-first technology. Members will verify with their face a seamless experience that will keep them moving. Travel is hard and getting harder. In addition to improvements in the airport, we are furthering the home-to-gate journey with the introduction of Clear Perks, exclusive benefits curated for Clear Plus members. From expedited passports to bag delivery and my favorite, Clear Scout, which is our lost item rescue service. Who hasn't lost something in the airport? To be able to have a Clear Ambassador go find it for you, priceless. Clear perks are designed to increase the predictable end-to-end seamless travel experience and deliver additional value to our members. By 2030, one million more passengers are expected to crowd America's terminals every day, putting even more strain on a system that is already over capacity. Aging infrastructure and technology compound these challenges, especially at screening checkpoints. Since 2010, Clear has partnered with airports, driving innovation to improve the passenger experience while sharing over $325 million of revenue with our local airport partners. Next month, Clear plans to announce a formal airport innovation campaign to accelerate our work around public-private partnerships and help bring the latest technology and infrastructure to American airports. As we said, we are seeing accelerated member growth this year. And our goal is to grow towards 50 million members in 2025. ClearVerified is fueled by this member flywheel. As we add more members, our platform becomes even more attractive to existing and new partners. With our increased scale, the percentage of members who are instant on already enrolled and can verify with one click goes way up. This frictionless experience along with our trusted brand create product magic for our partners. In a recent nationwide brand study of current, former, and non-Clear members, roughly 80% of respondents agree or strongly agree that they trust and feel more secure with companies or brands that partner with Clear. A similar percentage also said they would find it preferable to sign into online accounts using Clear. Identity has never been more important, and Clear is the market leader. I will now turn it over to Ken.

Thanks, Karen. Second quarter results demonstrate our continued focus on profitable growth. Revenues increased 25% and adjusted EBITDA grew 137%. We achieved incremental operating income and EBITDA margins of 80% and 74% respectively. Margin drivers that we have been discussing, including the ramp of recently launched airports, high incremental margins for TSA PreCheck and Verified, as well as continued cost discipline, continue to play out. B&L strength is translating into significant cash generation. Cash flow from operations was $114.6 million, and free cash flow was $110.1 million, up 65% year-over-year. After deducting normalized stock comp, free cash flow grew 90%. Active Clear Plus members grew by 297,000 in the quarter, up from 78,000 in Q1, as the next-gen upgrade process is largely behind us. and the in-airport sales channel improved sequentially. We continue to see member growth opportunities, particularly in our lower penetration markets, where as a percent of MSA population, we are in the low single digits versus high single digits in our more penetrated markets. The experience economy and booming travel market have helped expand CLEAR's addressable market. A broader demographic of travelers are now appreciating the value of being a CLEAR member in our frictionless home-to-gate journey. As of August 1st, standard and airline pricing increased by $10, only the second time we've increased standard pricing in 14 years. Standard is now $199 with airline tiers at $159 and $189. Family pricing increased $20 to $119 per year. We remain focused on driving ARPU through absolute pricing and reducing historical discounting. Last quarter, we introduced ClearPlus gross dollar retention as a new KPI to reflect this focus. We introduced Clear Perks, which add significant value to our membership. Rush My Passport and Bagship have already gotten significant traction. As Karen mentioned, Clear Scout delivers a truly priceless service. If a member forgets anything in the airport, they can call us and we will dispatch one of our ambassadors to try and find it. So far, we've recovered everything from a laptop to a passport to an iPhone to a garment bag full of clothing in a United Lounge. Our airport innovation campaign that we plan to formally announce next month is an opportunity to partner with airports to drive overall customer experience in an ROI-positive way. Our North Star is to identify projects that help our airport partners achieve their goals while also enhancing CLEAR member experience, which can lead to growth in members and increased retention. TSA PreCheck enrollment provided by CLEAR is off to a strong start, and it's live in 46 airports, up from three at the end of Q1. several thousand pre-enrollments daily, and this pipeline will convert to completed enrollments and realized revenues as travelers visit our expanding base of locations. We plan to expand locations inside and outside the airport to grow the market and drive share. We expect PreCheck to contribute incremental gross profit dollars in the near term, while driving revenue and gross profit growth into next year. We repurchased 3.6 million shares in Q2 and an additional 4 million shares from Delta in July, continuing our opportunistic approach to capital allocation. Our partnership with Delta remains a true win-win. They invested in Clear in 2016 and continue to own 4.3 million shares. We look forward to continued innovation together to enhance the passenger experience. On a year-to-date basis, we've retired 8% of our beginning shares outstanding, And since initiating our repurchase program in 2022, we've bought back all 15 million shares issued in our IPO and then some. In Q3, we expect revenue of $193 to $195 million and total bookings of $220 to $222 million, representing 21% and 15% growth respectively. In Q3, we will make our annual repayment to our credit card partner approximately $181 million. As a result, we will have negative free cash flow in Q3 consistent with last year. That said, we are raising our fiscal year free cash flow growth guidance to at least 40% year over year or $280 million. With that, let's go to Q&A.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. The first question comes from Joshua Riley with Needham. Please proceed with your question.

All right. Thanks for taking my questions and a nice execution here in the quarter. So we saw a nice acceleration here in net member ads in Q2. Can you just review your philosophy on pricing and managing that around retention? As I believe, you know, now you just mentioned that you did implement another modest price increase here.

Sure. I'll start with pricing, and then I'll talk a little bit about NetAds. So thanks for the questions. So when we think about pricing, you know, we look at it a few different ways. Look, this is only the second time, keep in mind, this is only the second time we've raised prices on the standard membership in 14 years. So obviously we've taken some incremental pricing on family, but from a standard perspective, this is $10 to $199. We were at $179 all the way back to 2010. You know, in that time we've gone from two airports to 58, from two lanes to over 160 lanes, and we've added new ways to use Clear, such as Clear Mobile and Home2Gate. So in a world where, you know, travel is hard, it's getting harder, people are really valuing experiences, so the experience economy, and particularly within travel, you know, I would say over the past few years, a broader demographic of travelers are now appreciating what Clear has to offer. And certainly we look at, you know, cost per use, that's an important factor, but also what's the value per use of Clear? And we think the value proposition is far outpaced the cost per use. You know, and our experience continues to improve, as Karen mentioned. We're creating value beyond the checkpoint, so clear perks we're really excited about. It's a great example where we think, you know, the value of the benefits exceeds the cost of membership, whether it's a discount on Rush My Passport or we recover your iPhone. You know, the membership literally pays for itself. So we're confident that our members are getting more value than the price they're paying. And so that's sort of how we look at pricing. And from a net add perspective, you didn't ask a specific question, but, yeah, we did see an acceleration. Last quarter we told you that the next-gen process was highly disruptive, you know, both from a focus from our ambassador and our field operation and from a main flow perspective, and that we were, you know, coming out of it, it sort of peaked in, In February, coming out of that, things would improve. We refocus on balanced approach to servicing existing members and adding new members. And that's exactly what we've seen coming out of Q2. And so things have been improving literally since February. But certainly, June was impacted by NextGen. But coming out of June, we did see some nice growth there.

Got it. That's helpful. And then as we're getting past this NextGen ID upgrade process, I know you don't give guidance on net member ads, but can you just help us understand what are the factors that we should be considering in terms of net member ads in the second half of 24 in terms of the family price increases impacting churn and opening new airports and maybe just any other factors we should be considering on the trajectory of net member ads for the second half of the year. Thank you.

Sure, sure. You know, look, we think we have a lot of opportunity to grow members, particularly in our underpenetrated markets. I talked about the expansion of TAM and how we're appealing to a wider audience, so we really do believe that. And, you know, I think as we have come out of NextGen, we've refocused our field. We've launched TSA PreCheck. You know, that's something that's going on inside. It's many of the same ambassadors. So as that continues, you know, certainly the field operations have gotten, you know, stabilized and have improved sequentially and will continue to. And, you know, we are optimistic for the back half. And last quarter we said that our growth rate in the back half would be higher than what was implied in the Q2 guidance, and that still remains true.

And if I can just add to that, there's a lot of points around net ads. There's retention. There's win-backs. and then there's gross ads. And I think on all of those channels, we have a lot of opportunities. For people who left Clear over the past few years, they're coming back to a much larger Clear, a Clear with better technology, a Clear with more value with perks and other partners. So there should be opportunities to bring people back to Clear. And there's a larger population, obviously, as we've grown. From a retention perspective, to your point, the clear member experience is getting better. And again, we're offering more value and more on the way. So we expect that that number should also be getting better. And then there's growth ads. And so I think we have opportunities across the board. And then in addition to that, with pricing, when you look at gross dollar retention, that's also meaningful.

Great. Thanks, guys. Thanks, Tasha.

Thank you. The next question is from Dana Telsey with Telsey Advisory Group. Please go ahead.

Hi, Karen and Ken. Congratulations on the very nice results. A couple things. As you think about the future, it sounds like the airport innovation campaign, which is launching next month, could certainly be a driver of new member acquisition. Can you tell us a little bit about what it entails, a little more details on any of the partnerships with that and how you're engaging that? And then I have a follow-up.

Yeah. Hi, Dana. Thank you. So we're really excited about the innovation campaign because at some level we've been doing it behind closed doors, airport by airport, for over a decade. Because it's not only the technology and the clear lane that drives the customer experience, But it's the holistic experience from the time you walk in the door. So that could be things like wayfinding or how lanes are organized or structured. And so bringing the latest technology and infrastructure to American airports can really make a difference for the customer experience holistically for that airport. And in addition to that, for clear members and travelers. And so when you look at the opportunity to drive retention or growth ads through better customer experience to help our airport partners, when we talk about $325 million of revenue that we've shared with our partners, that's 100% margin to them, right? And that is so massively important as they invest in infrastructure. You think you also see the power of public-private partnerships. So you hear the government talking about infrastructure investments in airports, but sometimes there's things with faster turnaround that airports want that aren't funded that we can help with. So our North Star is to transform that passenger experience from home to gate, right? Not just where you're flying from the airport, but where you're flying through it. And we think that this innovation campaign will really help travelers make it a journey to enjoy. I know that's like a bold statement with traveling, but you shouldn't endure the experience through the airport. You should enjoy it. And so we think it helps our airport partners. We think it helps travelers. We think it helps the clear member experience. And so again, I think on that metric, that's growth ads, that's retention, that's attach rates. And so we'll be working with our partners to identify eligible projects. And then we'll be coming back to you guys with more details on that as they come through over time. But taking it public as opposed to going one off behind closed doors, is an opportunity to make a bigger impact faster. And I think with a nationwide network with over 25 million members on the Clear platform in aggregate with multiple products like Clear Mobile, like Clear Plus, like PreCheck, like Perks. We really have a very strong balance sheet and travel booming. And you see the challenges in airports every single quarter. We could point out tons. And I think you guys read them in the newspaper and at every cocktail party. It's people's favorite conversations. So I think there's a lot we can do. them out, we'll be sharing them with you guys.

Got it. And then anything about the other venues to which you're expanding into and any updates beyond airports? And then Ken mentioned some membership opportunities and other MSAs. What's the game plan to attack those and what's the opportunity and potential?

So Dana, when you say other venues, you mean on the clear verified identity platform side?

Yes, exactly. Yep.

So one that I think you would be particularly excited about is Home Depot. I think as we all know, and you specifically, fraud's a huge problem in retail, right? They call it shrink, but it's really just theft and fraud. So Home Depot is focused on enhancing their customer experience while reducing the shrink. We've partnered with them in their rental tool business to reduce fraud, and we've rolled it out across all their stores that they have rental tools in. That's over a thousand. And they've seen great success in both the customer experience and in reducing fraud. And this concept that we talked about a few years ago that we continue to hammer on, the concept of a connected identity platform, powering trusted experiences, making them safer physically and digitally and easier, right? For, you know, over 25% to 30% of their customer base, it was instant on. They're already on the platform. For, you know, they have repeat customers day after day, week after week. For those folks to just be able to one click and verify and move on is such a win-win. And it's also bringing new people on the platform that could use it at Home Depot, at LinkedIn, at Wellstar, at public.com and more. So I think Home Depot has just been a great partnership and a huge win-win, and it starts to really make you think about the art of the possible. You roll back or you start to peel the onion on what a challenge is, and a lot of it comes back to identity, who you are and something about you. Are you a frequent shopper? You look at Costco, because of their membership-based business, their shrink's a lot lower. So it really does talk to the power of identity.

And then, Dana, on your addressable market question, look, we really look at, you know, MSA penetration by market. And we've talked about this in the past. We have a range of airports that have been open since, you know, 2010 to 2012 where we have higher penetration. And if we apply those penetration rates to the lower penetrated markets, you know, that implies, you know, a significant growth in Clear Plus member base. And so it's really a matter of focus. It can be incremental staffing and enrollments within those airports or targeted marketing. So there's a range of opportunities to reach those travelers.

Thank you.

Thank you. The next question is from Ben Miller with Goldman Sachs. Please go ahead.

Thanks for taking the questions. I guess first, Just any updated learnings from the TSA PreCheck rollout would be helpful and how we should think about that as a contributor to the second half in 2025. And then Karen, I think you mentioned a goal of 50 million members. When should investors expect ClearVerified to start being a meaningful driver of revenue going forward? And what are some of the more exciting ClearVerified offerings that you're excited about as a contributor going forward? Thanks.

Just to clarify, I said as we grow towards 50 million, so it is the target, but as we grow towards it, just to be specific. There's a lot of – well, let me start with PreCheck and then I'll get to ClearVerified. PreCheck, it's been an incredibly exciting quarter as we went from three airport locations to 46. But you shouldn't just think of it as an airport location. In San Francisco, in an LAX, I think we have four or five locations. So when you start to think of the capacity, open from 4 a.m. to 10 or 11 p.m., and if it takes, you know, on average, this is a higher number, but let's just say eight to 10 minutes for, you know, a total enrollment and a lot less for a pre-enrollment, you think about the capacity that we have. And so there's a few learnings. I think one is really the power of pre-enrollment, quite frankly, and the power of digital marketing around that. When someone pre-enrolls, it takes half as much time and they come with their passport, right? And so a passport is a much easier one-step enrollment than a birth certificate and other things. So we want to encourage as frictionless an enrollment as possible. It's a better customer experience and it takes less time and someone comes more prepared with the right documents. So the power of pre-enrollment is something that we've learned a lot about and creates a lot of opportunities. And the more locations we have, the more places you have to finish your enrollment. I think the other thing that we've learned is, and I think it justifies, we once put out a number that said we think the TAM is 90 million. People want to enroll in pre-check. The price point is $1.30 a month, and I think people are not educated enough on the pricing. They think it's $75 or whatever, you know, the different providers have different pricing over, you know, a year. It's over five years. You break it down. It's $1.30 a month. Of course you should enroll. Everybody should enroll, but it's about ease of enrollment, right? And so, I think we feel very excited about the TAM that we put out there and our ability to penetrate that TAM over the next few years as we continue to make enrollment easier, drive capacity, drive education around pricing. It's a really exciting opportunity. In terms of ClearVerified, from a sector perspective, we continue to be very bullish on the healthcare sector. for safer and easier frictionless and trusted experiences in healthcare for both the patient and the provider are massive. And no different than, you know, Home Depot is not something you would have thought of, you know, a few years ago when you think of a connected identity platform. And then you start to understand the opportunities to change the business, improve the retention revenues and margins. The same can be applied to healthcare. There's a lot of steps. It's analog, making it interoperable, and then some of the regulatory things that are going on in healthcare create a sense of urgency for, you know, insurance companies, for hospitals, and for a lot of different companies who are driving the connected backend for, you know, interoperability. So we continue to be very excited on healthcare. You see early results on public.com. You see the conversations that we're having around KYC. You see the fraud happening on the payment side, specifically as you look at peer-to-peer, and you know that we can have a big impact there. We continue to be excited about financial services. And again, financial services is broad. That could be gaming or that could be banking or that could be a trading platform like public.com. So I think financial services is something we continue to be excited about. And post the acquisition of Sora, I guess almost a year ago, The product is really good from a front end and a back end perspective for our partners. On the consumer side, both online and in person, I think you just have to look at Home Depot and LinkedIn to know that there are enormous opportunities to drive safer and easier experiences. You see things like age verification rules coming out or online safety rules coming out of Congress, and you know trust online matters. And so, you know, you see in so many different places you are being asked to verify who you are and something about you over and over. That just happened to me this weekend on X, so would love to work with them. And so there's so many opportunities on the consumer side. And then on the travel side, trust and safety and building that connected platform. You see that we're doing mobile check-in in some hotels. but trust and safety in the shared economy is massively important. And also as you have, you know, there's programs that are one key, one whatever, it's really saying the same person across your multiple brands. So travel, consumer, both physical and digital, healthcare and financial services. And when you look at the scaling and the acceleration of the gross ads on our platform is to know that all these different nodes, if you will, the more people we have on the platform, the more friction-free an experience their customers have with a trusted brand, which when the consumer sees that it's clear, they get really excited to engage. So in that world of a trusted brand that I talked about from our brand studies, that's massively important. So the friction-free experience, we're always innovating around it, adding different capabilities, and safety online has never been more important. So we continue to be really excited about the acceleration of the growth ads Hopefully that answers your question.

Thank you. The next question is from Corey Carpenter with JP Morgan. Please go ahead.

Thanks. Good morning. Ken, could you expand on the drivers of the booking acceleration in 3Q, and are these trends that you expect to continue in the 4Q? And then a second question on TSA PreCheck. As we think about the initial cohort of customers signing up, Any rough breakdown you can provide between existing clear customers at NTSA versus customers entirely new to clear and what the uptake for those customers has been for the bundled option? Thank you.

I'll start with the drivers. Look, it goes back to what we said last quarter. We were impacted by NextGen. That was disruptive to specifically the airport channel traffic. So, if we look at the back half, there's a number of drivers that are tailwinds. Number one, obviously pricing is a tailwind. So, starting August 1st, we have pricing impact, which drives both retention and new. We have an improvement in the airport channel, which we've already seen some in Q2, but that will continue. We have incremental pre-check contribution, and we said last quarter we think they're bookings would be, you know, up in the back half versus the first half. So, you know, I would say, like, numerous drivers of the bookings acceleration versus the Q2 numbers. In terms of the pre-check, I think, look, I think, I don't have the specific breakdown, but we're having success both marketing to existing Clear Plus members to add on pre-check, you know, and completely new people coming to pre-check that are not in Clear Plus. So it's really, you know, spread across both sides. our Clear Plus members are easier to talk to. We know who they are. We can email them. The non-Clear Plus members were, you know, having to reach whether in the airport with signage or with digital marketing.

Hello.

Operator, the next question.

Thank you. The next question is from Mark Kelly with Stiefel. Please go ahead.

Great. Thank you. Good morning, everyone. I kind of want to build on Corey's question there a bit on the TSA PreCheck product. I guess over the long run, do you see that being more of a factor on you know, your revenue and margin profile overall? Or I guess what's more important, like TSA in isolation or TSA as an acquisition channel, you know, for Clear Plus? That's my first one. And the second one is, you know, your footprint within the airports is already, you know, quite large. You know, some airports you don't have access to every terminal. I guess, A, do you – think you need access to every terminal? And B, how do you go about attacking those terminals where you don't have access today? Thank you.

Sure. So I'll start with the TSA. Look, we're really excited about TSA as a standalone business and a standalone revenue line item. As you know, we recognize the revenues on a net basis, so they're less impactful to revenue or bookings. Bookings and revenue for TSA Pre-Trick are one and the same, right? But they are much more impactful to gross profit dollars. you know, what I would say is in the near term, you know, call it 2024, it's going to be incremental gross profit dollars. As we look to 2025, it's going to be meaningful to both revenues, you know, revenue bookings and the gross profit dollar growth. And I would say the same thing for clear verified, right? We have this cost structure already in place, which we've talked about. And as we, you know, enroll more people and get towards that 50 million, the repeat usage drives margin as well. So we're, I would say there are upsell opportunities and there are opportunities to grow ClearPlus as a channel, but on a standalone basis, we are very, very excited about it.

I think there's another point there, which is tiering. So you should think about it like some people might just want pre-check, right? You might want an entry level. They might want pre-check plus certain perks that we might add for that. They might want the bundle, right? So as we continue to innovate, we think there's opportunities to meet different travelers where they are because certainly Everyone wants a more frictionless and predictable travel experience. In terms of the terminals, we know every airline wants to bring pre-check to their customers in a really accessible way. It's just been too hard. And so we know that all airlines and all airports want to bring it to their customers. And I think seeing is believing, to know that no appointment is necessary, to see the customer signing up at the crack of dawn. and excited about it. We know that every airline and every airport want to bring it to their customers, so we expect to be in those terminals because they want to serve their travelers. But also, it's about meeting travelers where they are. So if you enrolled online and you can go to Staples to finish or you can go to another retail location to finish on a Saturday morning because you're not going to the airport for a few weeks, or you could do it in a hotel lobby conveniently located in midtown Manhattan during lunch, So there's or you could do it on your college campus or you could do it at a corporate office. We just did a corporate enrollment, and that was met with great success. It's something that, of course, companies would want to make it easy for their travelers to enroll in PreCheck in the lobby. And so there's all sorts of ways to bring a customer-centric mentality and accessibility to this. So we're really excited to lead that initiative.

In terms of footprint, you know, look, I think there are incremental opportunities in existing airports to expand our footprint. We think about it as a TAM expansion opportunity. Does that terminal expand our TAM or not? Some terminals, some checkpoints feed multiple terminals, and it doesn't expand TAM. And also, you know, we talked a couple quarters ago about Louisville, which is our clear mobile product, and that model allows us to go into smaller airports or pop-ups Or you know seasonal airports along with you know with a clear plus benefit So clear plus members can use those lanes.

It's also a paper per use bottle So incremental revenue and we can offer pre-check in those smaller airports where otherwise it might have been Uneconomic to do so and when you look at some of our smaller airports today early days They're enrolling an impressive number of people in pre-check it's really important to bring this nationwide to all travelers in an easy and accessible way and And so, you know, it's just been great to see the positive response that we have from all the markets.

That's helpful. Thanks very much.

Thank you. Thank you. The next question is from Michael Purin with Wells Fargo. Please go ahead.

Hey, thanks for taking the questions. It's David Ongren from Michael Turin today. You've been increasing the share buyback amount, and you've taken on more ownership off the Delta sale yesterday. Can you talk through from a high level how you think about buyback today, given you have increased confidence in the free cash flow growth that you laid out in the shareholder letter? And that could be viewed as a positive, given that we're in a volatile market. Thank you.

Yeah, look, we talk about capital allocation, that we're going to be opportunistic. And certainly, we've been more aggressive on share purchase this year than we have in past years. And that's a function of where our view of free cash flow is and where it's going. And obviously, we want to drive free cash flow per share, ultimately. And right now, with our guidance of at least $280 million of free cash flow this year, we have about $139 million. and change shares outstanding. So that's two bucks of free cash flow per share. We're going to remain opportunistic and ultimately do what's best for shareholders.

Thank you. And then just one follow-up on retention. I don't know if we've touched upon this in the past, but is there a soft target for the dollar retention you have? And is there a way for us to think about the bridge between the member retention and dollar retention and that trend over time? Thank you.

There's no soft target specifically. I mean, we would like it to be, you know, well over 100%.

More is better. More is better.

And so the bridge really is, you know, what's the year-over-year incremental benefit from pricing? The two metrics that, you know, that we have today, which is the dollar and the net member, we've talked about the net member and how it, you know, doesn't necessarily represent the year-over-year change because it's a lagging indicator. And it is true that our member retention right now is very stable on a year-over-year basis. It's down less than 100 basis points on a year-over-year basis if you remove the impact of win-backs and sort of look at an apples-to-apples cohort. So certainly as the pricing rolls through from August 1st, that's going to benefit our net dollar retention. Remember, that's a 12-month trailing basis, so it's cumulative. But on the other hand, we anniversary the airline pricing in February, so there's always pushes and pulls.

If I can just add to that. We operate in friction-filled worlds, whether it be an airport or a hospital or verifying online for certain use cases. And so bringing frictionless experiences, bringing product magic, that drives everything. And that is what we are focused on, whether it be Lane of the Future, whether it be hospital check-in or hotel check-in, or changing a retailer's experience so that less is behind glass and it's safer. And so that is what we're focused on, and we've invested for that, and we expect that to drive not only customer experience, ads, retention, and partners, but also have it flow through to the bottom line.

Thank you both. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. And I would now like to turn the call back to Karen Seidman-Becker for closing remarks.

Thanks for joining our second quarter 2024 earnings call. I am proud of our team, extremely proud of our team, and how they are executing across our focus areas as we continue to improve the member experience, scale TSA PreCheck, and scale Verified. Thank you.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.