C L E A R ° Hello, FILAVIRTUAL Southern California SAN, PSP, ONT Summer Forecast? CLEAR Lanes Ahead Shareholder Letter Q1 2022 Shareholder Letter Q1 2022 First Quarter 2022 Financial Highlights (all figures are for First Quarter 2022 and percentage change is expressed as year-over-year, unless otherwise specified)* Revenue of $90.5 million was up 79.1% while Total Bookings of $107.8 million were up 73.5% Net cash provided by operating activities of $24.9 million; Free Cash Flow of $19.4 million Total Cumula ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-40568 65 East 55th Street, 17th Floor, New York, NY 10022 (Address of Principal Executive Offices); (Zip Code) ...

Clear Secure, Inc. (NYSE:YOU) Q1 2022 Earnings Conference Call May 16, 2022 8:00 AM ET Company Participants Caryn Seidman-Becker - Chairman & Chief Executive Officer Ken Cornick - President & Chief Financial Officer Conference Call Participants Paul Chung - JPMorgan Dana Telsey - Telsey Group Michael Berg - Wells Fargo Brian Essex - Goldman Sachs Ananda Baruah - Loop Capital Operator Good morning and welcome to the Clear First Quarter 2022 Earnings Conference Call. We have with us here, Ms. Caryn Seidman-Be ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-40568 CLEAR SECURE, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or orga ...

C L E A R ° YOUR ORDER CLEAR $15.00 $5.00 $32.00 $3.00 $35.00 PY NEE AG Hello, Columbus HELLO, PALM BEACH Shareholder Letter Q4 2021 Shareholder Letter Q4 2021 Fourth Quarter 2021 Financial Highlights (all figures are for Fourth Quarter 2021 and percentage change is expressed as year over year, unless otherwise specified)* Revenue of $80.7 million was up 52% while Total Bookings of $109.6 million were up 99% Net cash provided by operating activities $31.7 million; Free Cash Flow $25.6 million; Adjusted EBIT ...

Financial Data and Key Metrics Changes - The company generated significant free cash flow of $26 million in Q4 and $42 million for the full year, marking the fourth consecutive year of positive free cash flow [10][13] - GAAP metrics were noted to lag behind the underlying strength of the business, with positive free cash flow exceeding negative adjusted EBITDA [9][10] - Cash and equivalents balance at year-end was $644 million, reflecting strong cash generation despite acquisitions [13] Business Line Data and Key Metrics Changes - The CLEAR Plus business saw a strong finish to the year, with record enrollment and usage numbers during the holiday travel season [4][9] - Direct salaries grew 140% in Q4 compared to a depressed 2020, but significant operating leverage was realized when compared to pre-COVID levels [11] Market Data and Key Metrics Changes - The World Travel and Tourism Council projects the travel sector will outpace pre-pandemic levels in 2022, increasing by more than 6% since 2019 [4] - The 33 airports open for the entire fourth quarter of 2019 experienced over 50% growth in same-store bookings in Q4 2021 compared to Q4 2019 [11] Company Strategy and Development Direction - The company is focused on expanding its product offerings, including the Home to Gate feature and new reserve lanes, to enhance traveler experiences [5][6] - International expansion is a key focus, with the acquisition of WiLine facilitating entry into Latin America [49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the travel recovery, noting that inflation and rising gas prices have not tempered enthusiasm for travel [19] - The company expects Q1 2022 to be the lowest revenue quarter of the fiscal year, with expectations for margin expansion and meaningful free cash flow generation throughout the year [14] Other Important Information - The company has not changed its standard pricing since its launch in 2010, but sees opportunities for pricing adjustments in the future [21] - The partnership with American Express is performing well, with a favorable lifetime value for AmEx customers [22] Q&A Session Summary Question: Impact of rising gasoline prices on travel and reactivation of existing members - Management remains bullish on travel demand and sees no slowdown due to rising gas prices, with many former members returning to the platform [19] Question: Expectations for net retention and driving high levels - Management indicated that net retention is expected to normalize in the high 80s, driven by strong brand affinity and product market fit [28] Question: Strategies for driving further adoption on the platform - The company is focused on evolving the Health Pass product and expanding partnerships to enhance user experience and drive adoption [30] Question: Insights on free cash flow strength in the second half - Management emphasized that GAAP metrics understate the business's strength, with free cash flow being a better indicator of performance [34] Question: Cumulative enrollments and booking seasonality - Management does not break out B2B versus B2C contributions but confirmed that Q1 is expected to be the lowest revenue quarter of the year [40][41] Question: Milestones for TSA partnership - The system is operationally ready, with a review process expected to kick off the launch timeline in the coming months [44][45] Question: Key drivers for 2022 and international growth - Management highlighted structural travel growth, new airport expansions, and product innovations as key drivers for 2022, with excitement about international opportunities [48][49]

[Company Information](index=1&type=section&id=Company%20Information) [Registrant Details](index=1&type=section&id=Registrant%20Details) CLEAR SECURE, INC., a Delaware corporation, filed its 10-Q quarterly report as a non-accelerated filer and emerging growth company as of September 30, 2021, with Class A common stock listed on the NYSE and four classes of common stock outstanding as of November 11, 2021 - CLEAR SECURE, INC. is a Delaware corporation that filed its 10-Q quarterly report as of September 30, 2021[1](index=1&type=chunk) - The company is classified as a non-accelerated filer and an emerging growth company[3](index=3&type=chunk) Shares Outstanding as of November 11, 2021 | Stock Class | Quantity | | :--- | :--- | | Class A common stock | 74,268,466 | | Class B common stock | 1,042,234 | | Class C common stock | 44,598,167 | | Class D common stock | 26,709,821 | [PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income/(loss), changes in redeemable capital units and stockholders' equity, cash flows, and detailed notes covering business description, reorganization, accounting policies, revenue, assets, liabilities, equity, and incentive plans [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Key Condensed Consolidated Balance Sheet Data ($ thousand) | Metric | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $337,791 | $116,226 | | Marketable debt securities | $335,457 | $37,813 | | Total current assets | $700,555 | $171,636 | | Total assets | $773,226 | $232,268 | | Deferred revenue | $159,589 | $101,542 | | Total current liabilities | $214,817 | $146,104 | | Total liabilities | $218,245 | $149,913 | | Total stockholders' equity attributable to Clear Secure, Inc. | $286,284 | $0 | | Non-controlling interests | $268,697 | $0 | | Total stockholders' equity | $554,981 | $(486,896) | - As of September 30, 2021, cash and cash equivalents and marketable debt securities significantly increased, with total assets rising from **$232,268 thousand** on December 31, 2020, to **$773,226 thousand**, and total stockholders' equity turning positive due to the IPO and reorganization[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Key Condensed Consolidated Statements of Operations Data ($ thousand) | Metric | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $67,558 | $56,375 | $173,294 | $177,641 | | Operating income (loss) | $(32,596) | $10,682 | $(83,393) | $(18,884) | | Net income (loss) | $(32,787) | $11,143 | $(84,014) | $(17,764) | | Net loss attributable to Clear Secure, Inc. | $(16,915) | $0 | $(18,919) | $0 | | Basic and diluted net loss per share of Class A and Class B common stock | $(0.23) | $0 | $(0.26) | $0 | - The company reported net losses for both the third quarter and the first nine months of 2021, with operating and net income shifting from profit to loss compared to the same periods in 2020, primarily due to a significant increase in operating expenses[12](index=12&type=chunk) [Condensed Consolidated Statements of Comprehensive Income/(Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%2F(Loss)) Key Condensed Consolidated Statements of Comprehensive Income/(Loss) Data ($ thousand) | Metric | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $(32,787) | $11,143 | $(84,014) | $(17,764) | | Total other comprehensive income (loss) | $(93) | $(32) | $(62) | $32 | | Comprehensive income (loss) | $(32,880) | $11,111 | $(84,076) | $(17,732) | | Comprehensive loss attributable to Clear Secure, Inc. | $(16,963) | $0 | $(18,967) | $0 | - Comprehensive loss significantly increased in the third quarter and first nine months of 2021, reflecting expanded net losses and the impact of unrealized gains and losses on marketable debt securities[16](index=16&type=chunk) [Condensed Consolidated Statements of Changes in Redeemable Capital Units and Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Redeemable%20Capital%20Units%20and%20Stockholders'%20Equity) - In the first nine months of 2021, the company's stockholders' equity significantly increased due to **$436,968 thousand** in net IPO proceeds and reorganization, resulting in zero redeemable capital units and the introduction of four classes of common stock (Class A, B, C, D)[19](index=19&type=chunk) - As of September 30, 2021, stockholders' equity attributable to Clear Secure, Inc. was **$286,284 thousand**, with non-controlling interests at **$268,697 thousand**[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Cash%20Flows) Key Condensed Consolidated Statements of Cash Flows Data ($ thousand) | Metric | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $37,977 | $(28,471) | | Net cash used in investing activities | $(320,478) | $(14,207) | | Net cash provided by (used in) financing activities | $504,045 | $(97,018) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $221,544 | $(139,696) | | Cash, cash equivalents, and restricted cash at end of period | $360,626 | $96,355 | - In the first nine months of 2021, cash flow from operating activities turned positive, and cash flow from financing activities significantly increased due to **$437,494 thousand** in net IPO proceeds, leading to a substantial rise in cash, cash equivalents, and restricted cash at period-end[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Description of Business and Recent Accounting Developments](index=10&type=section&id=1.%20Description%20of%20Business%20and%20Recent%20Accounting%20Developments) The company operates the CLEAR secure identity platform through its subsidiary Alclear Holdings, LLC, offering CLEAR Plus airport subscription services, CLEAR App, and CLEAR Pass, and completed an internal reorganization and IPO on June 29, 2021, raising approximately $446 million in net proceeds, while electing to defer new accounting standards as an emerging growth company - Clear Secure, Inc. is a holding company operating the CLEAR secure identity platform through Alclear Holdings, LLC, offering CLEAR Plus airport subscription services, CLEAR App, and CLEAR Pass products[29](index=29&type=chunk)[30](index=30&type=chunk) - On June 29, 2021, the company completed an internal reorganization, making Clear Secure, Inc. the sole managing member of Alclear and authorizing four classes of common stock[31](index=31&type=chunk) - On July 2, 2021, the company completed its IPO, selling 15,180,000 shares of Class A common stock and receiving approximately **$445,875 thousand** in net proceeds[39](index=39&type=chunk) - As an emerging growth company, the company elected to defer the adoption of new or revised accounting standards to align with private company effective dates[40](index=40&type=chunk) [2. Basis of Presentation and Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the basis of presentation and significant accounting policies for the company's financial statements, including the preparation of condensed consolidated financial statements under SEC rules, consolidation policies for entities with controlling financial interests, and the two-class method for basic and diluted earnings per share for Class A and B common stock, clarifying that Class C and D common stock do not participate in earnings - The company's financial statements are prepared in accordance with SEC rules for interim financial reporting and U.S. Generally Accepted Accounting Principles (U.S. GAAP)[47](index=47&type=chunk) - The company consolidates entities where it holds a controlling financial interest, and as the sole managing member of Alclear, it consolidates Alclear's financial results and reports non-controlling interests[51](index=51&type=chunk) - The company uses the two-class method to calculate earnings per share for Class A and Class B common stock, while Class C and Class D common stock do not participate in the company's earnings and are therefore excluded from weighted-average shares outstanding[54](index=54&type=chunk)[55](index=55&type=chunk) [3. Revenue](index=13&type=section&id=3.%20Revenue) The vast majority of the company's revenue is derived from CLEAR Plus consumer airport subscription services, all generated within the United States, with deferred revenue increasing to $159,589 thousand as of September 30, 2021, reflecting growth in prepaid subscription fees - The vast majority of the company's revenue is derived from CLEAR Plus consumer airport subscription services, and all revenue is generated within the United States[56](index=56&type=chunk)[59](index=59&type=chunk) Changes in Deferred Revenue ($ thousand) | Metric | September 30, 2021 | September 30, 2020 | | :--- | :--- | :--- | | Balance at January 1 | $101,542 | $121,339 | | Revenue deferred | $230,458 | $155,992 | | Deferred revenue recognized | $(172,411) | $(177,645) | | Balance at September 30 | $159,589 | $99,686 | [4. Prepaid Expenses and Other Current Assets](index=14&type=section&id=4.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) Total prepaid expenses and other current assets amounted to $14,465 thousand as of September 30, 2021, an increase from December 31, 2020, primarily driven by higher prepaid insurance expenses Composition of Prepaid Expenses and Other Current Assets ($ thousand) | Item | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Prepaid software licenses | $5,701 | $5,504 | | CARES Act retention credits | $2,036 | $2,036 | | Prepaid insurance expenses | $3,970 | $772 | | Other current assets | $2,758 | $2,898 | | Total | $14,465 | $11,210 | [5. Fair Value Measurements](index=14&type=section&id=5.%20Fair%20Value%20Measurements) The company values marketable debt securities and certain liabilities using fair value hierarchy levels (Level 1, Level 2, Level 3), with total marketable debt securities at $335,457 thousand as of September 30, 2021, primarily comprising commercial paper, U.S. Treasury securities, and corporate bonds, while warrant liabilities were zero as of September 30, 2021, down from $17,740 thousand on December 31, 2020 - The company values assets and liabilities using fair value hierarchy levels (Level 1, Level 2, Level 3), with warrant liabilities valued using Level 3 unobservable inputs[62](index=62&type=chunk)[63](index=63&type=chunk)[65](index=65&type=chunk)[69](index=69&type=chunk) Fair Value of Marketable Debt Securities ($ thousand) | Item | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Commercial paper | $131,466 | $11,932 | | U.S. Treasury securities | $77,804 | $5,380 | | Corporate bonds | $109,972 | $20,444 | | Money market funds (measured at NAV) | $16,215 | $57 | | Total investment fair value | $335,457 | $37,813 | Changes in Level 3 Warrant Liabilities Fair Value ($ thousand) | Metric | Nine Months Ended 2021 | Nine Months Ended 2020 | | :--- | :--- | :--- | | Balance at January 1 | $(17,740) | $(16,853) | | Warrants issued | $(289) | $0 | | Exercise of certain warrants for equity | $30,206 | $0 | | Settlement of certain warrants for equity | $619 | $0 | | Fair value adjustment | $(12,796) | $(444) | | Balance at September 30 | $0 | $(17,297) | [6. Property and Equipment, net](index=16&type=section&id=6.%20Property%20and%20Equipment%2C%20net) As of September 30, 2021, the company's net property and equipment amounted to $45,875 thousand, an increase from $35,241 thousand on December 31, 2020, primarily due to increased investments in internally developed software and equipment Composition of Property and Equipment, Net ($ thousand) | Item | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Internally developed software | $36,746 | $23,545 | | Equipment | $20,821 | $18,210 | | Construction in progress | $10,754 | $7,255 | | Total cost of property and equipment | $85,101 | $65,277 | | Less: Accumulated depreciation | $(39,226) | $(30,036) | | Property and equipment, net | $45,875 | $35,241 | - In the first nine months of 2021, capitalized internally developed software amounted to **$13,199 thousand**, and depreciation and amortization expense was **$9,190 thousand**[77](index=77&type=chunk) [7. Intangible Assets, net](index=17&type=section&id=7.%20Intangible%20Assets%2C%20net) As of September 30, 2021, the company's net intangible assets totaled $2,267 thousand, primarily consisting of patents and other indefinite-lived intangible assets, showing an increase from December 31, 2020 Composition of Intangible Assets, Net ($ thousand) | Item | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Patents | $2,007 | $1,293 | | Other indefinite-lived intangible assets | $310 | $310 | | Total cost of intangible assets | $2,317 | $1,603 | | Less: Accumulated amortization | $(50) | $(39) | | Intangible assets, net | $2,267 | $1,564 | [8. Restricted Cash](index=17&type=section&id=8.%20Restricted%20Cash) As of September 30, 2021, the company's total restricted cash was $22,835 thousand, primarily held as collateral for airport revenue share agreements and as a reserve for potential refunds and chargebacks from credit card companies - As of September 30, 2021, the company held **$6,835 thousand** in bank deposits as collateral for airport letters of credit and **$16,000 thousand** in a restricted cash account as a reserve for potential refunds and chargebacks from credit card companies[79](index=79&type=chunk)[80](index=80&type=chunk) [9. Other Assets](index=17&type=section&id=9.%20Other%20Assets) As of September 30, 2021, the company's total other assets were $1,694 thousand, an increase from December 31, 2020, primarily due to growth in loan costs and other long-term assets Composition of Other Assets ($ thousand) | Item | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Deposits | $242 | $171 | | Loan costs | $550 | $279 | | Certificates of deposit | $459 | $459 | | Other long-term assets | $443 | $62 | | Total | $1,694 | $971 | [10. Accrued Liabilities](index=18&type=section&id=10.%20Accrued%20Liabilities) As of September 30, 2021, the company's total accrued liabilities significantly increased to $45,194 thousand from $18,304 thousand on December 31, 2020, primarily due to new accrued partnership liabilities and growth in accrued compensation and benefits Composition of Accrued Liabilities ($ thousand) | Item | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Accrued compensation and benefits | $13,729 | $9,626 | | Accrued partnership liabilities | $17,933 | $0 | | Other accrued liabilities | $13,532 | $8,678 | | Total | $45,194 | $18,304 | [11. Warrants](index=18&type=section&id=11.%20Warrants) The company historically issued warrants, which were exercised and converted prior to the reorganization, after which remaining Alclear warrants were converted into Clear Secure, Inc. warrants representing rights to Class A common stock with identical terms and fair value, resulting in a zero warrant liability as of September 30, 2021, and a $12,796 thousand fair value adjustment expense in the first nine months of 2021 - Prior to the reorganization, Alclear issued equity and liability warrants, with some partially exercised[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[90](index=90&type=chunk) - Post-reorganization, remaining Alclear warrants were converted into Clear Secure, Inc. warrants, convertible into Class A common stock or Alclear units, retaining identical terms and fair value[90](index=90&type=chunk)[91](index=91&type=chunk) Warrant Expenses ($ thousand) | Expense Type | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Liability warrants | $0 | $444 | $12,796 | $444 | | Equity warrants | $1,509 | $1,698 | $3,431 | $1,698 | | Total | $1,509 | $2,142 | $16,227 | $2,142 | [12. Redeemable Capital Units](index=19&type=section&id=12.%20Redeemable%20Capital%20Units) Before the reorganization and IPO, Alclear's redeemable capital units included Class A and Class B units, which were subsequently converted into Alclear units and exchanged for Class A or Class B common stock, resulting in a zero balance for redeemable capital units as of September 30, 2021 - Prior to the reorganization, Alclear's Class A and Class B redeemable capital units were classified as temporary equity due to their redemption features[93](index=93&type=chunk) Redeemable Capital Units Balance ($ thousand) | Category | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Class A redeemable capital units | $0 | $2,620 | | Class B redeemable capital units | $0 | $566,631 | | Total | $0 | $569,251 | - Post-reorganization, all Class A and Class B redeemable capital units were converted into Alclear units and further exchanged for Class A or Class B common stock, resulting in a zero balance as of September 30, 2021[98](index=98&type=chunk) [13. Stockholders' Equity](index=20&type=section&id=13.%20Stockholders'%20Equity) The company's stockholders' equity structure significantly changed post-reorganization, introducing four classes of common stock (A, B, C, D), with non-controlling interests representing Alclear founders' and members' economic interests, which decreased to 48.41% as of September 30, 2021, from 54.21% on June 30, primarily due to the IPO issuance of Class A shares - Post-reorganization, the company issued **59,240,306** shares of Class A common stock and **1,042,234** shares of Class B common stock, along with **44,598,167** shares of Class C common stock and **26,709,821** shares of Class D common stock[106](index=106&type=chunk) - Following the IPO, the company additionally issued **15,180,000** shares of Class A common stock[107](index=107&type=chunk) Alclear Common Unit Ownership (as of September 30, 2021) | Holder | Alclear Units | Ownership Percentage | | :--- | :--- | :--- | | Alclear Holdings Units held by Reorganization Members | 44,407,609 | 31.08 % | | Alclear Holdings Units held by Alclear Investments, LLC and Alclear Investments II, LLC | 24,756,018 | 17.33 % | | Total | 69,163,627 | 48.41 % | - The non-controlling interest ownership percentage decreased from **54.21%** on June 30, 2021, to **48.41%** on September 30, 2021, primarily due to the IPO issuance of Class A shares[110](index=110&type=chunk) [14. Incentive Plans](index=21&type=section&id=14.%20Incentive%20Plans) The company established the 2021 Omnibus Incentive Plan, authorizing Class A common stock for equity awards, and post-reorganization, Alclear's profit units and RSUs were replaced with the company's restricted stock awards (RSA) and restricted stock units (RSU), introducing Founder Performance Stock Units (Founder PSUs), with total unrecognized RSA, RSU, and Founder PSU expense amounting to approximately $124,369 thousand as of September 30, 2021 - The 2021 Omnibus Incentive Plan became effective on June 29, 2021, authorizing the issuance of up to **20,000,000** shares of Class A common stock for equity awards[112](index=112&type=chunk)[113](index=113&type=chunk) - Post-reorganization, Alclear's profit units and RSUs were replaced with the company's RSA and RSU, and Founder Performance Stock Units (Founder PSUs) were introduced[116](index=116&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[124](index=124&type=chunk)[129](index=129&type=chunk) Total Incentive Plan Compensation Expense ($ thousand) | Expense Type | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | RSA | $315 | $385 | $995 | $1,062 | | RSU | $5,685 | $0 | $9,446 | $0 | | Founder PSUs | $6,629 | $0 | $6,768 | $0 | | Total | $12,629 | $385 | $17,209 | $1,062 | - As of September 30, 2021, unrecognized expenses for RSA, RSU, and Founder PSUs were **$826 thousand**, **$61,498 thousand**, and **$62,845 thousand**, respectively[123](index=123&type=chunk)[128](index=128&type=chunk)[131](index=131&type=chunk) [15. Earnings (Loss) per Share](index=25&type=section&id=15.%20Earnings%20(Loss)%20per%20Share) The company uses the two-class method to calculate basic and diluted loss per share for Class A and B common stock, with all potentially dilutive securities (warrants, exchangeable Alclear units, RSA, and RSU) deemed anti-dilutive due to net losses during the reporting period - The company uses the two-class method to calculate basic and diluted earnings (loss) per share for Class A and Class B common stock, while Class C and Class D common stock do not participate in earnings or losses[134](index=134&type=chunk)[137](index=137&type=chunk) Basic and Diluted Net Loss per Share of Class A and Class B Common Stock ($ thousand, except per share data) | Metric | Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2021 | | :--- | :--- | :--- | | Net loss attributable to Clear Secure, Inc. (Class A) | $(16,675) | $(18,650) | | Net loss attributable to Clear Secure, Inc. (Class B) | $(240) | $(269) | | Basic and diluted net loss per share (Class A) | $(0.23) | $(0.26) | | Basic and diluted net loss per share (Class B) | $(0.23) | $(0.26) | - Due to net losses during the reporting period, potentially dilutive warrants, exchangeable Alclear units, RSA, and RSU were all deemed anti-dilutive[141](index=141&type=chunk) [16. Income Taxes](index=26&type=section&id=16.%20Income%20Taxes) Post-reorganization and IPO, the company is subject to U.S. federal, state, and local income taxes on its share of Alclear's taxable income, with a tax expense of $277 thousand and an effective tax rate of (0.33)% for the first nine months of 2021, primarily influenced by Alclear's partnership tax allocation, valuation allowance changes, and state and foreign taxes, and has entered into a tax receivable agreement (TRA) to realize cash savings from tax basis increases - Post-reorganization and IPO, the company is subject to U.S. federal, state, and local income taxes on its share of Alclear's taxable income[142](index=142&type=chunk) Income Tax Expense and Effective Tax Rate | Metric | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Tax expense | $60 | $4 | $277 | $14 | | Loss (income) before taxes | $(32,727) | $11,147 | $(83,737) | $(17,750) | | Effective tax rate | (0.18)% | 0.04% | (0.33)% | (0.09)% | - The company entered into a Tax Receivable Agreement (TRA), which stipulates payments to TRA holders of **85%** of the net cash savings realized from increases in the tax basis of Alclear's assets[147](index=147&type=chunk) [17. Commitments and Contingencies](index=27&type=section&id=17.%20Commitments%20and%20Contingencies) The company faces various legal proceedings and administrative actions but currently anticipates no material adverse impact on its financial statements, while also leasing its NYC headquarters and airport locations, with future minimum lease and airport agreement payments totaling $77,998 thousand as of September 30, 2021 - The company currently does not believe that legal proceedings or administrative actions will have a material adverse effect on its business or condensed consolidated financial statements[149](index=149&type=chunk) - The company leases its New York City headquarters and airport locations, with lease terms extending to **2030** and **2026**, respectively[152](index=152&type=chunk) Future Minimum Lease and Airport Agreement Payments ($ thousand) | Year | Amount | | :--- | :--- | | 2021 | $4,093 | | 2022 | $16,104 | | 2023 | $14,941 | | 2024 | $11,284 | | 2025 | $9,773 | | Thereafter | $21,803 | | Total | $77,998 | - As of September 30, 2021, the company's future marketing expenditure commitments for stadium venues totaled **$5,517 thousand**[154](index=154&type=chunk)[250](index=250&type=chunk) [18. Related-Party Transactions](index=28&type=section&id=18.%20Related-Party%20Transactions) As of September 30, 2021, the company had $1,839 thousand in payables to certain related parties, and incurred $5,428 thousand in revenue share expenses related to these parties during the first nine months of 2021 - As of September 30, 2021, the company had **$1,839 thousand** in payables to certain related parties[156](index=156&type=chunk) - In the first nine months of 2021, revenue share expenses related to associated parties amounted to **$5,428 thousand**[157](index=157&type=chunk) [19. Employee Benefit Plan](index=28&type=section&id=19.%20Employee%20Benefit%20Plan) The company maintains a 401(k) savings and investment plan, to which it made $828 thousand in discretionary employer contributions during the first nine months of 2021 - The company maintains a 401(k) savings and investment plan, contributing **$828 thousand** in discretionary employer contributions during the first nine months of 2021, an increase from **$311 thousand** in the same period of 2020[159](index=159&type=chunk) [20. Debt](index=28&type=section&id=20.%20Debt) The company entered into a $50,000 thousand revolving credit facility in March 2020, increased to $100,000 thousand in April 2021, and had not drawn on this facility as of September 30, 2021, while remaining in compliance with all covenants - The company entered into a **$50,000 thousand** revolving credit facility in March 2020, which was increased to **$100,000 thousand** in April 2021, with a maturity date of April 2024[160](index=160&type=chunk) - As of September 30, 2021, the company had not drawn on this revolving credit facility and was in compliance with all financial and non-financial covenants[164](index=164&type=chunk)[241](index=241&type=chunk)[243](index=243&type=chunk) [21. Subsequent Events](index=29&type=section&id=21.%20Subsequent%20Events) On November 4, 2021, the company signed a new 15-year lease agreement for approximately 120,000 square feet of office space in New York City to serve as its corporate headquarters, with renewal options - On November 4, 2021, the company signed a new lease agreement for approximately **120,000 square feet** of office space in New York City to serve as its corporate headquarters[165](index=165&type=chunk) - The lease agreement has a **15-year** term with one option to renew for either **5 or 10 years**[165](index=165&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition and operating results as of September 30, 2021, covering business overview, key performance indicators, factors affecting performance, reorganization impact, taxation and expenses, comparative operating results, and liquidity and capital resources, noting operating losses in Q3 and the first nine months of 2021 despite strong growth in total bookings and member metrics [Overview](index=30&type=section&id=Overview) The company operates the CLEAR secure identity platform, offering CLEAR Plus airport subscription services and other digital products, with management using non-GAAP financial measures like Adjusted EBITDA and Free Cash Flow to assess business performance, reporting negative Adjusted EBITDA of $14,470 thousand and Free Cash Flow of $28,061 thousand for Q3 2021 - The company operates the CLEAR secure identity platform, offering CLEAR Plus airport subscription services, CLEAR App, and CLEAR Pass products[171](index=171&type=chunk) - Management uses Adjusted EBITDA and Free Cash Flow as non-GAAP financial measures to evaluate performance[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) Adjusted EBITDA and Free Cash Flow ($ thousand) | Metric | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $(14,470) | $14,045 | $(40,053) | $41,759 | | Free Cash Flow | $28,061 | $14,132 | $16,647 | $12,813 | [Key Performance Indicators](index=31&type=section&id=Key%20Performance%20Indicators) The company assesses business performance using key indicators such as total bookings, cumulative total enrollments, cumulative total platform uses, and CLEAR Plus annual net member retention rate, with Q3 2021 showing an 89% increase in total bookings, 58% in cumulative total enrollments, 27% in cumulative total platform uses, and an 87.4% CLEAR Plus annual net member retention rate, exceeding pre-pandemic levels - Total bookings, cumulative total enrollments, cumulative total platform uses, and CLEAR Plus annual net member retention rate are key metrics for evaluating the company's performance[178](index=178&type=chunk) Key Performance Indicators ($ million / thousand people / percent) | Metric | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Change (3 Months) | As of September 30, 2021 | As of September 30, 2020 | Change (Annual) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Bookings | $99.3 | $52.5 | 89% | $231.4 (9 Months) | $156.1 (9 Months) | 48% (9 Months) | | Cumulative Total Enrollments | N/A | N/A | N/A | 8,076 (thousand people) | 5,118 (thousand people) | 58% | | Cumulative Total Platform Uses | N/A | N/A | N/A | 72,184 (thousand people) | 56,681 (thousand people) | 27% | | Annual CLEAR Plus Net Member Retention Rate | N/A | N/A | N/A | 87.4% | 81.2% | 6.2% | - Total bookings growth was primarily driven by a rebound in air travel and new credit card partnerships, leading to increased new member enrollments and improved member retention[181](index=181&type=chunk) - The annual CLEAR Plus net member retention rate reached **87.4%**, exceeding pre-pandemic levels, indicating strong renewal and recall performance[188](index=188&type=chunk) [Key Factors Affecting Performance](index=33&type=section&id=Key%20Factors%20Affecting%20Performance) The company's financial growth depends on increasing cumulative total enrollments, maintaining CLEAR Plus member retention, expanding new partnerships and revenue streams, the timing of new product and location launches, expense timing and discretionary investments, maintaining strong unit economics, and macroeconomic changes such as the impact of the COVID-19 pandemic - The company's growth depends on its ability to attract new members (both paid and platform members) and convert them into paying subscribers[190](index=190&type=chunk)[192](index=192&type=chunk) - Maintaining the retention rate of existing CLEAR Plus members is crucial, with usage frequency and recent usage being key indicators of retention[193](index=193&type=chunk) - Expanding new partnerships, maintaining existing relationships, and creating new revenue streams (e.g., per member or per use fees) are critical growth strategies[194](index=194&type=chunk) - Macroeconomic events such as reduced travel, terrorism, the COVID-19 pandemic, and changes in consumer discretionary spending may impact the company's performance[198](index=198&type=chunk) - As the impact of the COVID-19 pandemic subsides, the company anticipates increased operating expenses, potentially leading to long-term net losses and negative Adjusted EBITDA[199](index=199&type=chunk) [The Reorganization Transactions](index=35&type=section&id=The%20Reorganization%20Transactions) Prior to its IPO, the company underwent reorganization transactions, establishing Clear Secure, Inc. as a holding company controlling the business of Alclear Holdings, LLC, with the reorganization accounted for as a transaction between entities under common control, where Clear Secure, Inc. consolidates Alclear Holdings, LLC's financial statements and records non-controlling interests - Prior to the IPO, the company underwent reorganization transactions, making Clear Secure, Inc. a holding company whose primary asset is a controlling equity interest in Alclear Holdings, LLC[201](index=201&type=chunk) - The reorganization transactions are accounted for as a reorganization between entities under common control, with Clear Secure, Inc. consolidating Alclear Holdings, LLC's financial statements and recording non-controlling interests[202](index=202&type=chunk) [Taxation and Expenses](index=35&type=section&id=Taxation%20and%20Expenses) Post-IPO, the company is subject to U.S. federal, state, and local income taxes on its share of Alclear's taxable income and expects to incur significant expenses related to operations, tax receivable agreement (TRA) payments, and public company status, including equity awards and administrative costs - Post-IPO, the company is subject to U.S. federal, state, and local income taxes on its share of Alclear's taxable income[203](index=203&type=chunk) - The company expects to incur significant expenses related to operations, Tax Receivable Agreement (TRA) payments, and its status as a public company, including equity awards and administrative costs[204](index=204&type=chunk)[205](index=205&type=chunk) - The Tax Receivable Agreement (TRA) stipulates that the company pays Alclear members **85%** of the cash savings realized from increases in the tax basis of Alclear's assets[206](index=206&type=chunk) [Components of Results of Operations](index=36&type=section&id=Components%20of%20Results%20of%20Operations) The company's revenue primarily stems from CLEAR Plus subscription services, supplemented by minor stadium and Health Pass-related income, while operating expenses encompass revenue share fees, direct compensation and benefits, research and development, sales and marketing, general and administrative expenses, and depreciation and amortization, with income taxes becoming applicable post-IPO - The vast majority of the company's revenue is derived from CLEAR Plus consumer airport subscription services, with other revenue from stadium venues and Health Pass[209](index=209&type=chunk)[210](index=210&type=chunk) - Operating expenses include revenue share fees, direct compensation and benefits, research and development, sales and marketing, general and administrative expenses, and depreciation and amortization[211](index=211&type=chunk) - Following the IPO and reorganization, the company is subject to U.S. federal, state, and local income taxes on its share of Alclear's taxable income[219](index=219&type=chunk) [Comparison of the three and nine months ended September 30, 2021 and 2020](index=38&type=section&id=Comparison%20of%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202021%20and%202020) In Q3 2021, the company's revenue grew by 20% year-over-year, but a significant increase in operating expenses, particularly direct compensation and benefits, R&D, sales and marketing, and general and administrative costs, led to operating and net losses, while for the first nine months of 2021, revenue decreased by 2% year-over-year, and operating losses expanded significantly due to increased expenses Comparison of Operating Results ($ million) | Metric | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Change (3 Months) | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | Change (9 Months) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $67.6 | $56.4 | 20% | $173.3 | $177.6 | (2)% | | Operating income (loss) | $(32.6) | $10.7 | (405)% | $(83.4) | $(18.9) | 341% | | Net income (loss) | $(32.8) | $11.2 | (393)% | $(84.0) | $(17.7) | 375% | | Direct compensation and benefits costs | $18.1 | $7.8 | 132% | $46.1 | $31.5 | 46% | | Research and development expenses | $13.3 | $6.3 | 111% | $33.3 | $23.4 | 42% | | Sales and marketing expenses | $10.0 | $3.3 | 203% | $25.8 | $11.5 | 124% | | General and administrative expenses | $44.8 | $17.7 | 153% | $116.3 | $97.5 | 19% | - Revenue growth of **20%** in Q3 2021 was primarily driven by a **20.4%** increase in average monthly CLEAR Plus members[222](index=222&type=chunk) - Operating expenses significantly increased, particularly direct compensation and benefits (due to increased personnel needs from higher travel volume), R&D (due to increased compensation and professional services), sales and marketing (due to increased ambassador commissions and marketing activities), and general and administrative expenses (due to equity-based compensation and professional services)[227](index=227&type=chunk)[229](index=229&type=chunk)[231](index=231&type=chunk)[233](index=233&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2021, the company held $338 million in cash and cash equivalents and $335 million in marketable securities, believing its existing cash, operating cash flow, marketable securities portfolio, and revolving credit facility are sufficient to meet working capital and capital expenditure needs for the next 12 months, with operating cash flow turning into a net inflow of $38.0 million and financing cash flow significantly increasing to $504.0 million due to IPO net proceeds in the first nine months of 2021 - As of September 30, 2021, the company held **$338 million** in cash and cash equivalents and **$335 million** in marketable securities[239](index=239&type=chunk) - The company believes its existing liquidity is sufficient to meet working capital and capital expenditure needs for the next **12 months**[240](index=240&type=chunk) Summary of Cash Flows ($ million) | Metric | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $38.0 | $(28.5) | (233)% | | Net cash used in investing activities | $(320.5) | $(14.2) | 2157% | | Net cash provided by (used in) financing activities | $504.0 | $(97.0) | (620)% | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $221.5 | $(139.7) | (259)% | - Cash flow from financing activities significantly increased by **$601.0 million**, primarily driven by **$437.5 million** in net IPO proceeds[247](index=247&type=chunk) [Commitments and Contingencies](index=42&type=section&id=Commitments%20and%20Contingencies) As of September 30, 2021, the company's future minimum operating lease payments totaled $78.0 million, in addition to $5.5 million in marketing expenditure commitments for stadium venues Future Minimum Operating Lease Payments ($ million) | Year | Amount | | :--- | :--- | | 2021 | $4.1 | | 2022 | $16.1 | | 2023 | $14.9 | | 2024 | $11.3 | | 2025 | $9.8 | | Thereafter | $21.8 | | Total | $78.0 | - As of September 30, 2021, the company's future marketing expenditure commitments for stadium venues totaled **$5.5 million**[250](index=250&type=chunk) [Off Balance Sheet Arrangements](index=43&type=section&id=Off%20Balance%20Sheet%20Arrangements) The company currently has no off-balance sheet arrangements - The company currently has no off-balance sheet arrangements[251](index=251&type=chunk) [Critical Accounting Policies and Estimates](index=43&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) There have been no significant changes to the critical accounting policies or their underlying assumptions and estimates reported in the company's prospectus as of December 31, 2020, other than those described in Note 2 to the financial statements - There have been no significant changes to the critical accounting policies or their underlying assumptions and estimates reported in the company's prospectus as of December 31, 2020, other than those described in Note 2 to the financial statements[252](index=252&type=chunk) [Recent Accounting Pronouncements](index=43&type=section&id=Recent%20Accounting%20Pronouncements) For detailed information regarding recently issued accounting pronouncements and their expected impact on the company's condensed consolidated financial statements, refer to Note 1 to the financial statements - For detailed information regarding recently issued accounting pronouncements and their expected impact on the company's condensed consolidated financial statements, refer to Note 1 to the financial statements[253](index=253&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk from its floating-rate revolving credit facility, which remained undrawn as of September 30, 2021, while the COVID-19 pandemic significantly impacted global and domestic travel, prompting the company to cut marketing and operating expenses, though the duration and ultimate impact of the pandemic remain uncertain - The company faces interest rate risk from its revolving credit facility, which has floating interest rates, but the facility remained undrawn as of September 30, 2021[255](index=255&type=chunk) - The COVID-19 pandemic had a significant adverse impact on global and domestic travel, leading to an approximate **60%** decline in U.S. domestic air passenger volume in 2020[256](index=256&type=chunk) - The company responded to the pandemic by reducing marketing and operating expenses, but the duration and ultimate impact of the pandemic remain uncertain[257](index=257&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) As of the end of the quarter, the company's management assessed and determined its disclosure controls and procedures to be effective, providing reasonable assurance that information is timely recorded, processed, summarized, and reported, with no significant changes in internal control over financial reporting during the quarter, though management acknowledges inherent limitations in any control system - As of the end of the quarter, the company's Chief Executive Officer and Chief Financial Officer assessed and determined its disclosure controls and procedures to be effective[259](index=259&type=chunk) - There were no significant changes in internal control over financial reporting during the quarter[260](index=260&type=chunk) - Management acknowledges that any control and procedure, no matter how well designed and operated, can only provide reasonable assurance and is subject to resource limitations[261](index=261&type=chunk) [PART II - OTHER INFORMATION](index=45&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Matters](index=45&type=section&id=Item%201.%20Legal%20Matters) The company is involved in commercial litigation claims, administrative, and regulatory proceedings but currently believes these matters will not have a material adverse effect on its condensed consolidated financial statements - The company is involved in commercial litigation claims, administrative, and regulatory proceedings but currently believes these matters will not have a material adverse effect on its condensed consolidated financial statements[264](index=264&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) The company has disclosed risk factors in its Form S-1 registration statement and prospectus that could materially affect its business, financial condition, or results of operations, and these risk factors have not significantly changed - The company has disclosed risk factors in its Form S-1 registration statement and prospectus, and these risk factors have not significantly changed[265](index=265&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not conduct any unregistered sales of equity securities during Q3 2021, and completed its IPO on July 2, 2021, raising approximately $445.9 million in net proceeds primarily for offering expenses and general corporate purposes, with no material changes to the planned use of proceeds - The company did not conduct any unregistered sales of equity securities during the third quarter of 2021[266](index=266&type=chunk) - The company completed its IPO on July 2, 2021, raising approximately **$445.9 million** in net proceeds, which were used to pay offering expenses and for general corporate purposes[269](index=269&type=chunk) - There have been no material changes to the planned use of IPO net proceeds[269](index=269&type=chunk) [Item 3. Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company has not experienced any defaults upon senior securities - The company has not experienced any defaults upon senior securities[271](index=271&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Mine safety disclosures are not applicable[272](index=272&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) No other information - No other information[272](index=272&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) The exhibits listed in this quarterly report are incorporated by reference or filed herewith, including Sarbanes-Oxley Act certifications from the CEO and CFO, and Inline XBRL documents - The exhibits listed in this quarterly report are incorporated by reference or filed herewith, including Sarbanes-Oxley Act certifications from the Chief Executive Officer and Chief Financial Officer, and Inline XBRL documents[273](index=273&type=chunk)[275](index=275&type=chunk) [Signatures](index=48&type=section&id=Signatures) This report was signed by Caryn Seidman-Becker, Chief Executive Officer, and Kenneth Cornick, President and Chief Financial Officer, on November 15, 2021 - This report was signed by Chief Executive Officer Caryn Seidman-Becker and President and Chief Financial Officer Kenneth Cornick on November 15, 2021[277](index=277&type=chunk)

Clear Secure, Inc. (NYSE:YOU) Q3 2021 Earnings Conference Call November 15, 2021 8:00 AM ET Company Participants Caryn Seidman-Becker - Co-Founder, Chairman & Chief Executive Officer Ken Cornick - Co-Founder, President & Chief Financial Officer Conference Call Participants Paul Chung - JPMorgan Dana Telsey - Telsey Advisory Group Brian Essex - Goldman Sachs Ananda Baruah - Loop Capital Operator Good morning and welcome to the Clear Q3 2021 Earnings Conference Call. We have with us here, Ms. Caryn Seidman-Be ...

Financial Data and Key Metrics Changes - The company reported record enrollments, reaching seven million members, which reflects a 26% growth in the quarter [14][18] - Third quarter bookings guidance is projected to be between $90 million to $95 million, indicating a record quarter for the company [4] Business Line Data and Key Metrics Changes - The B2C subscription-based travel business and the B2B enterprise platform business are both experiencing strong growth, with significant traction noted in the ClearPlus subscription service [4][6] - The Health Pass product has been utilized over two million times, showcasing its rapid adoption and recognition in the market [5] Market Data and Key Metrics Changes - The company is seeing strong uptake in its solutions, particularly in partnership with the State of Hawaii, where approximately 700,000 monthly passengers are eligible to use Clear [6] - The travel sector is rebounding, with 2.2 million travelers passing through airports, although this is still below the 2.7 million peak from 2019 [30] Company Strategy and Development Direction - The company aims to penetrate its total addressable market further, focusing on providing touchless and frictionless experiences to travelers [8][19] - Partnerships with various enterprises and venues are being leveraged to enhance the Health Pass product and expand its user base [5][34] Management's Comments on Operating Environment and Future Outlook - Management is closely monitoring the impact of the Delta variant on travel trends but has not observed any negative effects on their travel business to date [7][60] - The company emphasizes the importance of being a secure identity platform, especially as travelers seek predictable and safe experiences [19][58] Other Important Information - The company is in the early stages of market penetration and is witnessing increased demand from businesses and institutions for safe operational solutions [8] - The partnership with American Express has launched strongly, contributing to membership growth [23] Q&A Session Summary Question: Market for vaccine apps and competition with healthcare IT vendors - Management believes that access to healthcare information is a global trend and that their Health Pass solution is gaining interest from partners looking for secure and scalable options [11][12] Question: Contribution of Health Pass to revenue - Specific revenue breakdowns were not provided, but significant traction in the Health Pass line of business was noted [13] Question: Enrollment growth expectations - Management indicated an acceleration in enrollment growth and strong conversion rates, although specific guidance was not provided [18][22] Question: Travel rebound observations - The company noted a strong rebound in travel, primarily driven by leisure travelers, and emphasized the importance of their staff in enhancing customer experience [30][32] Question: Health Pass customer base expansion - There is widespread demand for Health Pass solutions from various sectors, including small and large enterprises [34] Question: ClearPlus performance and future signposts - ClearPlus showed strong performance with broad-based growth, and management noted potential for future acceleration as lagging markets recover [44][45] Question: TSA Pre-check launch timeline - The TSA Pre-check program is still on track for a Q4 launch, with no specific delays reported [65]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-40568 CLEAR SECURE, INC. (Exact name of registrant as specified in its charter) Delaware 86-2643981 (I.R.S. Employer Identification No.) incorporation or organization) 65 East 55th Street, 17th Floor, New York, NY 10022 (Address of Principal Executive Offices); (Zip Code) (Mark ...