Good morning, and welcome to the Clear Second Quarter 2021 Earnings Conference Call. We have with us here Ms. Karen Seidman Becker, Co Founder, Chairman and Chief Executive Officer Ken Kornick, Co Founder, President and Chief Financial Officer. Please be advised that today's conference is being recorded. I would also like to remind you that today's discussion will contain forward looking statements relating to future events and expectations.
You can find factors that could cause company's actual results could differ materially from these projections in our most recent SEC filings. In addition, we've included some non GAAP financial measures in our discussion. Reconciliations to the most directly comparable GAAP financial measures can be found in today's 8 ks. With that, I'll turn it over to Karen Seidman Becker, Co Founder, Chairman and Chief Executive Officer of Clear. Karen?
Thank you. Good morning, everyone. Thank you for joining us today for CLEAR's first earnings call as a public company. This morning, we released a shareholder letter along with our earnings on our website. I hope you've all had a chance to review them.
This was a quarter of 1st, including record enrollments and a record number of members engaging with the CLEAR mobile app for frictionless with our sports entertainment and HealthPath products. The dual growth engines that we talked about on our roadshow, our B2C subscription based travel business and our B2B Enterprise Platform business are both seeing strong growth. Travel is reaccelerating as seen in our subscription and Clear plus business and there is significant traction on the platform side. We are pleased with our Q2 and the strength we are seeing into the Q3. That strength is reflected in our Q3 bookings guidance of $90,000,000 to $95,000,000 which represents a record quarter for Clear.
Our HealthPath product has quickly become a leading solution in the testing vaccination space with over 2,000,000 uses. We were recently recognized by The Washington Post as the most flexible and useful app, a testament to our obsession with safe and frictionless experiences. We are seeing a number of new partnerships around vaccination validation from both enterprises as well as venues. I want to highlight our partnership with the state of Hawaii where travelers from all airlines are eligible to use the CLEAR solution and we are seeing strong uptake. CLEAR is a Trusted Brands bringing a vertically integrated solution to our partners.
Our growing member base and acceptance network built on our secure identity platform is bringing frictionless all in one It is why on Friday, the City of San Francisco announced their trusting CLEAR solution to validate vaccination status for local businesses and residents. San Francisco joins New York City and New York State and others in leveraging CLEAR. While one can't predict the ebbs and flows of the virus, we are closely monitoring the delta variant and its potential impact on travel trends. We are aware and I will now turn the call over to Karen Seidman Becker. I would also point out that we are in the very early days and our penetration of our total addressable market.
Additionally, what we have seen over the past few months is that more and more businesses and institutions are focused on Open in a safe and efficient way and are looking to Clear for solutions, while travelers are more dependent than ever on Clear's touchless frictionless experience. With that, let's turn it over to Q and A.
Thank you. From participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Thank you. Our first question is from the line of Brian Essex with Goldman Sachs. Please proceed with your question.
Hi. This is Charlotte Beadek on for Brian. Thanks for taking the question. So I was wondering, how do you envision the market for the vaccine apps to unfold? Do you think The healthcare IT vendors like Athenahealth and Epic may be better positioned for to offer Federated app or As you've seen or are you guys also in consideration of that?
So, thank you and hi. Look, we believe that people having access to and control of their healthcare information is a global secular trend and it is I've seen status today, but does go far beyond that and that partners are looking for trusted partners and a secure turnkey solution. And so what we're seeing is that HealthPath, which is proven, ready, scalable, is seeing a lot of new partner interest and that businesses are focused on coming back better. Building a nationwide interoperable solution for private industry and state and local government is crucial and doing it in an all in one way. So this isn't just Your vaccine status, but going into your office, you are you, you are an employee, you are your building access card and your vaccine status.
So this is about, Again, the power of the secure identity platform and creating all in one solutions. I think there's a lot of different apps out there and our focus Is creating trusted, scalable, all in one solutions that drive the customer experience and the partner experience.
Great. And I guess as
a follow-up, could you help us better understand how much Health Pass basically account for this quarter?
So we're not breaking out specific lines of business within revenue, but as noted, we are gaining significant traction on that line of business.
I would also just point out that what you saw today as we announced 7,000,000 members that we crossed that number yesterday. And so obviously the accelerated member growth is being driven from both the travel side as well as the platform side.
Great. Thank you so much. I will reenter the queue.
Our next question is from the line of Michael Turrin with Wells Fargo Securities. Please proceed with your questions.
Hey there. Thanks. Good morning. Congrats on the first earnings report here. You mentioned enrollments growth improved 26% in the quarter.
You reached $7,000,000 Looks like just yesterday. Can you just add more commentary around how you'd expect that enrollment growth trend? Are you finding conversion rates or maybe higher just given more sensitivity around travel experience of late?
Yes. So in general, we're not going to give specific guidance on the members. We gave top line guidance as you saw in the release, but we have seen an acceleration throughout Q2 and into Q3 and are seeing fairly widespread Strength in all of the metrics, including conversion.
Just to add to that, and hi, glad to There has never been a more we said it in the note, but it is with intent. It has never been a more important time to be a secure identity platform. What you're seeing in travel on both the growth ad side, conversion, retention, win back is that people want touchless and frictionless experiences and are looking to clear for that and predictable, right? It is harder to travel than ever and so wanting that predictable Experience is really important. And on the platform side of the business, more partners bring on more members and more places for our members To use it, right?
It really does drive that flywheel.
Helpful. And then maybe, Ken, just on the Q3 guidance that you're providing, is there anything you can provide just to help level set in terms of just the degree of visibility you have into the model, What's assumed from a macro perspective and just any additional color you can add just around the overall guidance philosophy, I think is useful given your first touch point here with investors. Thank you.
Sure. Yes, so in general, it's a continuation of the trends that we're seeing today. It's Our best estimate based on what's visible today. And as you know, we have a backlog for retention. So we have good visibility into renewals from prior year backlog as well as we have quite a number of Free trials that convert into paid.
So we do have the visibility of the people that have already joined that are expected to Convergent to paying customers this quarter. So I would say we have fairly good visibility. I would also point out that The American Express partnership which launched on July 1, it launched quite strong and continues to have a nice tail of membership growth as well. And so we expect that to continue as well.
That's great. Thank you.
Our next question is from the line of Dana Telsey with Telsey Advisory Group. Please proceed with your question.
Good morning and congratulations on the nice results and rebound. Can you talk a little bit about I meant rebound, the travel rebound. Can you talk a little bit about what you're seeing there? I've been in airports lately and the service has been terrific Yes, on all different areas. What are you seeing in the rebound?
Any way to see leisure versus business travel? And what you just mentioned on American Express, Ken, any of the other partnerships, anything to note, particularly regarding HealthPath And potentially new business sign ups for it given its essential need. Thank you.
So Dana, I'll start and then I'll turn it over to Ken. From what we're seeing in the airport, really important that and we talked about In the release, right, are great people. And so really being well staffed with ambassadors who care deeply about bringing that frictionless experience Has been massively important in both enrollments and the verification experience, right? So driving a great NPS For our members as well as being available to share the Clear capabilities, whether it be the Home2gate app or the ClearLane Or other assets with potential travelers or potential members. And so it really does start with our people and the brand.
We are seeing you've seen numbers, they've come back a little bit of late, up to 2,200,000 travelers coming through airports this summer. I think that's off the peak of 2 point $7,000,000 from 2019. That is a hefty rebound, which I think in the near term is driven by leisure, although We don't really know the difference between a business traveler and a leisure traveler. We just know that they're a traveler. And so we We can't really break that down, but from looking at what you're seeing, I think it's disproportionately leisure right now.
But we are seeing a deeper appreciation for touchless, frictionless, predictable. And so we have been gaining share in the airports and that has Continued every month from a clear volume perspective. And also through the past The technology has gotten better. The offering has become more robust and that's really meaningful to Travelers. So we are seeing a very Strong rebound and a bigger need for what CLEAR is offering and a great team Out there from the Clear Ambassadors perspective, bringing the technology and the experience to life.
Yes. And just a little qualitative color. I mean, we definitely are tapping into a more diverse from an age perspective, from an airline perspective, from a geographic perspective, customer base or new member base than we have before. So it is not the traditional hardcore business traveler necessarily only. We are Definitely seeing more diverse membership base today than we did in 2019.
And then Dana, you asked something On the HealthPath piece, would you mind just repeating that? Sorry.
Sure. On HealthPath, how are you seeing the customer base for that expand? Any different traction in terms of what you expect for HealthPath from what you from when you start to clear? How do you see that developing and evolving?
We're really seeing a fairly widespread demand coming in, in terms of needing our solution in order to get Back to work safely in order to open venues, in order to open restaurants. And so it really is fairly diverse from small to large enterprises 2 businesses, 2 venues, and so we're seeing a fairly strong incoming demand for our solution.
And I would just add to that. I think, 2 pieces relative to what we started from an expectation. Having great partners and being able to help Those partners reopen safely is really important. The ability to upload your and digitize your vaccine card It's separate and apart from partners. So I think it's become more of a 2 sided business, hence the acceleration in enrollment because you may not be using it tonight at the We partnered with the Brooklyn Nets or the Yankees or the Mets, but you might just want to have your vaccine card available for whenever you do need it going back Having access to and control of your healthcare information.
So you're seeing both individuals driving towards it as well as Enterprise and Partners and our ability to create these seamless integration through APIs is also really important. And so I
do think that is a positive guidance. The direct to consumer organic upload of your vaccine card is it the clear app is not something I think that we
The
The next question is from the line of Ananda Bora with Loop Capital. Please proceed with your questions.
Hi, good morning guys. Yes, thanks for taking the question. Congrats On the very solid execution out of the gate. Yes, I guess a couple for me. The first is on Clear plus Did you guys see any surprises as you move through the quarter, either positive or negative or otherwise?
And what might be for Clear Plus some The key initiations or action signpost for the remainder of the year and then I have a follow-up. Thanks.
I think in general, CLEAR Plus was very, very strong and it was really broad based. And so everything from the American Express Partnership launching extremely strong and continuing to drive nice growth. Geographically fairly diverse representation with a number of markets that were actually up versus 2019. And so we achieved these results with some markets that are up versus 2019, but many that were actually still down versus 2019. And so To the extent that the geographies that are still lagging start to catch up To the other markets, there's potential for future acceleration from here.
I would add to that sort of the tale of 2 cities
are, I'd call Two regions, right? There's parts of
the country that were quite strong and then parts that were still down more coastal than 2019. And so I think that It was probably a little surprising, although maybe shouldn't be when you see what's going on. I also think win backs. So you hope that anybody who left in 2019 or 2020 would miss you and want to come back, but in fact, they did. They did Online, they did it in the airport.
And so I really think that talks to the strength of the brand and the experience that People love CLEAR and those who left last year have been coming back.
That's really helpful. And then Just on platform bookings, really nice pickup in what you guys sort of called platform uses in the shareholder Letter, you're the biggest in a while. And I guess the question is, how broad based was that? I don't think HealthPath is doing really well. Are you seeing that also nicely occur beyond Health Pass?
And I guess just any context that you could give there would be helpful. Thanks.
Sure. On the platform utilization, it is fairly broad based. What I would say though is, From a travel perspective, many of our existing members clearly are traveling less frequently than they did in the peak in 2019. So, although it is up and it has been trending positively, really sequentially every quarter for the past Several quarters into this recovery, there's still a long ways to go from a utilization perspective from existing members. We also saw An acceleration in CLEAR plus throughout the quarter and so many new members came on towards the end of the quarter.
And therefore, they didn't have An opportunity to use Clear more than a handful of times just given the timing in the quarter. And then on the platform side, It's a range of use cases. If you're loading your vaccine card up into the CLEAR app, it may be that you don't use it at all in the quarter, but you've enrolled. And then there's many use cases that are more recurring. So going back into the office, you might do that every day.
And then there's some one time events that we did Like the UBB conference sorry, concert, for example, where it's a one time use, and so you're enrolling and using it once. And then that's obviously part of our strategy, which is bring on events, bring on new members, which drive new partners, which drive new use cases, which is that Flywheel that Karen talked about earlier.
I do think it goes back to what we talked about in the roadshow, which is really wanting to become part of your daily habit and go from 12 times a year, which is what people We're using it on average in airports to 12 times a day. And if you're going and using it to get into your office, that is in fact a daily habit. If you're going to a sporting event through Clearlane, obviously that started coming back. So that was a driver that obviously wasn't happening over the past year. But the power of partnership, We launched a lot of partnerships, both one time partnership like the Ooby Dooby or Ooby Dooby, not sure which, and Walmart, right?
So the Power of Broad Based Partnerships Hawaii, safe travels both with United and Delta and then with the State of Hawaii. So these are Obviously, enormous partnerships with big opportunities that you have a lot of big drivers as well as little drivers.
That's really helpful context. I appreciate it. Thanks.
Thank you.
Thank you. The next question is from Paul Chung with JPMorgan. Please proceed with your question.
Hi. Thanks for taking my questions and welcome to the public markets. So first up, Pretty strong acceleration in subs in 2Q and bookings guide kind of points Very nice pace, particularly in travel. So how should we think about that pace if delta continues to linger? I I know that's tough to quantify.
And then separately, as we hit fiscal year 'twenty two comps get tougher from kind of the nice pace today in 2Q and 3Q, how are you guys thinking About sub ad pace in 2022 and factoring possibly some pent up demand here in the summer?
And I have a follow-up.
Yes. I'll start and then turn it over to Ken, which is bigger network, more products, More partners are the big drivers for the Clear Plus business over the next year and change. And so I think that on top of still big opportunity to penetrate the total addressable market, these are still early days in travel. And so We map all of those out as we look at the rest of 2021 2022
in terms of
Yes. And right now, we're giving guidance for Q3, which you saw. And we also made the comment that we are not Seeing any impact from the Delta variant today, but we're thoughtful of it and we've seen Southwest in particular had bookings commentary last week. And so we are thoughtful and looking at it, but we are not seeing anything today.
Got you. Thanks for that. And then on the airport side, are you still on pace to hit 44 by the end of the year? Given the IPO and some nice Media coverage here on the Health Pass are those discussions with other airports accelerating? Thank you.
Yes.
So we're not giving guidance on specific numbers of what we're going to hit this year versus next. We do have a pipeline of airports and our Practice will be to announce those airports after we sign the contracts.
Thank you.
Our next question is from the line of Brian Essex with Goldman Sachs. Please proceed with your question.
Hi. Again, this is Charlotte Biedik on for Brian Essex. Quick question on TSA PreCheck. I know during the road show, you mentioned that it was The launch in the second half of twenty twenty one and now you announced that it's expected to launch in Q4. Have you experienced any delays, any hiccups?
So just can you give us any color around the anticipated rollout?
No specific delays. It's a process And that we were we said back half because we didn't really honestly didn't know the exact date it's going to launch. It's still on track. We're working hard and we're partnering with TSA to get the program launched as quickly as possible.
Great. Thank you.
Thank you. There are no more questions on the line. I'll turn the call back to Karen Seidman Becker for closing remarks.
Thank you. And thank you everybody for joining us today. We appreciate the welcome to the public markets and we're excited to be here. We are pleased with our Q2 results and excited about our future. Today, the clear vision of delivering touchless safe and frictionless experiences is more important than ever.
And the demand for these experiences, as we talked about today, is
Thank you for joining us today. This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation.