Good morning. Welcome to CLEAR's Fiscal Second Quarter 2025 Conference Call. We have with us today Caryn Seidman-Becker, Co-Founder, Chair and Chief Executive Officer; Michael Barkin, President; and Jen Hsu, Chief Financial Officer. As a reminder, before we begin, today's discussion contains forward-looking statements about the company's future business and financial performance. These are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these statements are included in the documents the company has filed and furnished with the SEC, including today's shareholder letter. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. During this call, unless otherwise stated, all comparisons will be against the comparable period of fiscal year 2024. Additionally, the company will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in today's press release and most recently filed quarterly report on Form 10-Q. These items can be found in the Investor Relations section of CLEAR's website. With that, I'll turn the call over to Caryn.

Clear Secure identity platform is the trusted identity layer for travel and enterprise. 2025 continues to be a year of innovation, execution and momentum, as the need for trust, security and frictionless experiences in today's world is paramount. The threat environment continues to evolve, and AI is only accelerating the need for secure identity in CLEAR. Traditional forms of identity, such as the driver's license have become analog, outdated and insufficient. CLEAR Smart Network, which is physical and digital, enables us to secure identity with depth, delivering total identity integrity. CLEAR is making experiences safer and easier for our members and our enterprise partners across travel, workforce, health care and consumer applications. We delivered a strong second quarter, driven by the continued strength of our travel business. Against a broadly flat travel environment, CLEAR Plus had a record travel volume quarter. The member experience continues to elevate. Our face-first EnVe verification Pods are 100% live across our network, enhancing security and accelerating throughput. CLEAR members are through the CLEAR Lane in under 3 minutes on average, and our member experience scores continue to rise. We are delivering the consistent and predictable airport experience that travelers prize. We continue to roll out EnVe enrollment Pods enabling features such as Apple Pay, which creates more intuitive and fully digitized onboarding. We have developed a great and consistent enrollment experience, whether you choose to enroll at the airport or on your phone. Digitally, our ePassport capability has created a one-step enrollment, enabling new members to simply scan their passport directly within the CLEAR app, completely skipping the airport enrollment process. Now travelers can enroll at home or stuck in traffic on their way to the airport and just head straight to our verification lanes. Additionally, it is time for highly vetted international travelers to have access to a better airport experience in the U.S. Starting this week, CLEAR Plus will be available to travelers from the U.K., Canada, Australia and New Zealand. This will unlock an attractive new total addressable market (TAM) and can increase our overall member base. We expect to add additional countries heading into 2026. We believe in public-private partnerships and are actively partnering with the TSA and the aviation community to modernize and enhance the travel experience at no cost to taxpayers. At CLEAR, we're on a mission to help travelers win the day of travel, delivering a true frictionless Home-to-Gate experience. That's why we're introducing CLEAR Concierge, a premium on-demand service that connects members with a dedicated ambassador at the touch of a button from the CLEAR app. Whether you're running late, juggling bags or just want a little extra help, CLEAR Concierge meets you curbside, guides you through the CLEAR Lane and can also stay with you all the way to your gate. It's personal, seamless and powered by the awesome ambassadors who make CLEAR clear. Our innovation and progress in realizing our Home-to-Gate vision has been in service of improving our member experience, growing our total addressable market and yielding greater operating leverage in our business. The REAL ID mandate reflects the importance of a digital identity. CLEAR ID can now be your REAL ID. We are digitizing your passport on your phone. As a certified REAL ID issuer by the Department of Homeland Security, CLEAR can now help travelers meet the federal identification standard required for air travel. U.S. travelers can simply upload their passport via the CLEAR app. This creates a free digital REAL ID that travelers can use at any TSA-enabled checkpoint nationwide. Initially available only to members, we expect that CLEAR ID will be enabled for all U.S. travelers this month, successfully introducing even more travelers to CLEAR services. Over time, this work paves the way for a CLEAR ID to be recognized as a mobile-first identity credential, not only in travel but for our ClearOne platform and beyond. CLEAR's brand and high level of trust and safety is resonating with current and potential ClearOne enterprise partners across workforce, health care and consumer verticals. Global industries are grappling with the challenge of a digitally connected world, which is elevating the risk and the cost of fraud. According to Gartner, by 2028, 1 in 4 job applicants will be fraudulent and over 80% of breaches will start with compromised credentials. ClearOne is solving critical problems for enterprises and their need to secure their employees, customers and assets. Our ClearOne solution for workforce applications is gaining strength and penetration, with notable adoption from partners like Greenhouse, the recruiting software provider, wanting to secure the entire candidate journey from applicant to employee. The health care industry is enhancing security practices to safeguard sensitive health information. This has become an industry imperative. In fact, we were at the White House this past week as a trusted partner in the new centers for Medicare and Medicaid services health tech ecosystem initiative. ClearOne will aid in the CMS initiative to help streamline the patient experience by eliminating the clipboard and enabling secure, seamless access to personal health information. Our Epic toolbox integration, which we plan to have live by the end of the year, will allow Epic's 325 million patients to create and recover accounts to access their electronic health records. This partnership is a great example of ClearOne's opportunity to land and expand our health care partner relationships with both patients and providers. Finally, I'm thrilled to announce that our partnership with Docusign is now live. ClearOne will enhance trust by verifying identities for critical agreements and contracts, setting a new standard for high stakes digital workflows. CLEAR is executing from a position of strength, with a powerful brand, strong balance sheet and a platform purpose-built for scale and trust. Our leadership team is focused on maximizing the moment. We are aligning around technology, efficiency and organizational structure that will deliver the best experience for our members and optimize for members, bookings and free cash flow.

Thank you, Caryn. We delivered strong second quarter financial results with $219.5 million of revenue, representing 17.5% growth; $222.9 million of total bookings, representing 13.1% growth; and $117.9 million of free cash flow. Our focus on product innovation and experience continues to attract new members to the CLEAR Plus service. Active CLEAR Plus members grew to 7.6 million, up 7.5% on a year-over-year basis. Bringing CLEAR Plus to international travelers is further growing our TAM and represents an additional opportunity to expand our member base over time. From a pricing perspective, in Q2, we brought standard pricing from $199 to $209 and family pricing from $119 to $125. Q2 gross dollar retention was 87.3%, up 20 basis points sequentially. As a reminder, gross dollar retention is an output of member retention and pricing actions. Any pricing action that we take influences gross dollar retention over a 24-month time period from the date we implement a pricing change. Our TSA PreCheck business continues to ramp. As of Q2 quarter end, we operated 231 enrollment locations, nearly 2x our location count ending Q1. Our TSA PreCheck presence represents a portfolio across airports, retail partners and flagship locations. We continue to gain outsized market share relative to our location share, a testament to our differentiated go-to-market and convenience, including our pre-enrollment capabilities. In addition, we are successfully bundling TSA PreCheck with CLEAR Plus as two highly complementary service offerings. As Caryn mentioned, CLEAR Concierge is live in 14 airports, with the $99 Express service expediting travelers through security and the $179 gate service, guiding members from the curb to their lounge or gate. Concierge is one example of our continued opportunity to drive increasing revenue per member over time. The risk and security environment is driving meaningful interest towards ClearOne. We ended Q2 with 33.5 million total members, up 38.2% year-over-year and demonstrative of the growth we are seeing on the CLEAR platform. We signed over 25 ClearOne deals in Q2 across workforce, health care and consumer verticals. Both the number of deals signed and the aggregate contract value of these deals were a record quarter for ClearOne. Moving to profitability. We continued our consistent track record of growing both profit dollars and margins. We generated $42.6 million of operating income, representing a 19.4% operating margin and just north of 300 basis points of margin expansion. We generated $60.1 million of adjusted EBITDA, representing a 27.4% adjusted EBITDA margin and approximately 200 basis points of margin expansion. Cost of direct salaries and benefits represented 21.7% of revenue, up 20 basis points year-over-year. 110 basis points was due to changes to our compensation structure, which shifted away from commissions and into base salaries. Direct salaries and benefits demonstrated a 90 basis points year-over-year improvement when factoring in this change. The operating leverage that we have been able to drive has been a result of efficiencies from our EnVe verification Pods, which verify members 5x faster than our legacy pods. We believe there is further cost leverage and ambassador optionality we can drive over time as we further roll out EnVe Pods for new enrollments, deliver product innovation and policy advancements. G&A represented 26.7% of revenue, an improvement of approximately 300 basis points year-over-year, reflecting our continued discipline around corporate resource allocation and expense management. Our leadership team remains highly focused and committed to strategic prioritization, streamlining and driving operational efficiency. In Q2, we generated $123 million of net cash provided by operating activities and $117.9 million of free cash flow, up 7.3% and 7.1% year-over-year, respectively. As a reminder, the majority of CapEx requirements for the EnVe Pod rollout is behind us. And we have higher cash taxes this year after having utilized the majority of our NOL balance in 2024, which impacts year-over-year free cash flow growth. We ended the quarter with $609 million of cash and marketable securities after returning $42.7 million of capital to shareholders, including approximately $24.6 million under our share repurchase program and approximately $18.1 million in dividends and distributions. Turning to guidance for Q3. We expect revenue of $223 million to $226 million and total bookings of $253 million to $258 million, representing 13.1% and 12.3% growth at the midpoint, respectively. As a reminder, because we are an annual biller, the number of members up for renewal has a meaningful impact on net adds within a specific quarter. This dynamic, coupled with seasonal travel demand, drives our expectation for Q3 to be the smallest net adds contributor in 2025. For the full year, we continue to expect expanding adjusted EBITDA margins on a year-over-year basis, and we are reaffirming our free cash flow guidance of at least $310 million.

All right. Great. Nice job on the quarter here. As we're looking at the international opportunity, maybe we can get some more color there in terms of how does the enrollment process going to work for these people? What documents do they need? And do you need to work directly with each country to make the process work? And does that ultimately lead to CLEAR Lanes in some of these individual countries themselves?

Thanks, Josh. Regarding international enrollment, it is now on par with our domestic one-step enrollment. Our ePassport and e-chip capabilities on passports create a significant opportunity for this process. We can start with the countries we've mentioned, as it provides a blanket opportunity across them without needing to tackle each one individually. Travelers can enroll via their phones or at designated Pods. Initially, we'll have the Pods available, with the phone enrollment feature launching slightly later this year. Additionally, they will have access to CLEAR Lanes in the U.S. For marketing, we view significant opportunities to connect with international travelers through various channels, including direct and corporate partners. Currently, our main focus remains on expanding our domestic network, which still serves about 75% of U.S. traffic, indicating there’s room for growth there. Our ClearOne platform is already expanding internationally, but as of now, we're concentrating on CLEAR Plus Lanes within the U.S. We're very enthusiastic about expanding this total addressable market. It’s important to note that international travelers often find the U.S. airport experience to be quite different from what they are accustomed to. As we approach the World Cup, our goal is to ensure that our airports are welcoming and accessible for all vetted travelers.

Got it. That's awesome. And then how are you thinking about the latest round of price increases that took effect July 1? This round has been more coordinated in terms of the different membership categories and family. Had the smallest price increase this time. Any color there in terms of what you expect around retention through this round of price increases?

Josh, thanks. Yes, you're right. I would say these pricing actions were more coordinated, I would say in the past. The decisions we took were really a step function to catch up for, if you will. Some of the years where we had not taken price on CLEAR Plus in an effort to catch up to our value proposition. I would say our overall approach on pricing is really a goal to optimize bookings. And we're obviously only a few weeks into the July 1 price increase, but retention thus far has been as we expected.

And Josh, if I can just add to that, you should expect a more disciplined and consistent pricing strategy out of us. It has clearly been more sporadic, and our focus on continuing to launch new products, of which you saw several this quarter, improve the member experience, add to the value proposition. And have a disciplined and consistent approach on pricing is something that we are focused on.

The overall perspective on pricing is that we believe we have continued runway and that's both through bringing our discounted members closer to standard pricing and then also opportunities like Concierge, which effectively brings the revenue per member up over time.

Caryn, I had one for you and a follow-up for Jen. I wanted to ask the current administration, they've been quite vocal about their desire to improve the airport experience. We've already seen changes such as shoes staying on through screening. Based on your conversations and time in Washington, what is the administration most focused on changing? And what role do you think CLEAR could play in this process?

Great question. I will say D.C. is one of my favorite cities of late. This administration clearly values public-private partnerships and the company's willingness to push innovation at no cost to taxpayers. And so that could not position CLEAR any better. We do not have to take any money from the government. In fact, we share revenues at the federal, state and local level PreCheck through our rev share with the Department of Homeland Security and TSA then at the airport level, well over $100 million this year alone. And so I think that they're focused on a few things, certainly driving security, which our biometrics and our future initiatives do really, really well. They definitely want to delight travelers. They understand that travel is an important part of the economy. 1 out of 10 jobs are associated with travel. Many states and cities are very dependent on tourism and specifically heading into the World Cup, making our airports great. You look around at Singapore, at Tokyo, at London, at Doha where the World Cup was last year. These are highly digital, very personalized seamless experiences. And so partnering with the private sector to drive the innovation to modernize our airports, to strengthen security and delight travelers, I would also say they're very focused on privacy, which is really important, and again, something that we are also focused on. And finally, I'd say they're focused on Made in America companies, which is music to our ears. And so I really think that over the next few years, you will see transformation in the travel experience, the airport experience in a way that we really haven't seen much over the past 20 years, and we are incredibly excited to partner with this administration to do that.

And I think for you, Jen, just gross dollar retention, it increased sequentially for the first time in 2023. Perhaps you could talk a bit about the drivers behind that, any impact REAL ID had on the business in the quarter?

Sure. Maybe I'll start with the latter question, which is that REAL ID did not have a meaningful impact on the business on the quarter or our results. From a GDR perspective, 87.3%, broadly in line with prior quarter. I would say, again, just to reiterate that, that metric is an output of retention and pricing, and pricing impacts that metric on an increasing basis as we annualize a price increase over the first 12 months. So those are the kind of factors that are influencing that metric. I would say relative to last quarter, we had a modest 20 basis points benefit last quarter Q1 versus Q1 of '24. We were in the middle of our next-generation ID upgrades. And so that did have a small impact on retention in Q1 of '24 relative to this quarter.

Just two quick ones. Caryn, I know you're more focused on the domestic market at the moment, but I find the international rollout interesting. And would love to get a little bit more color, if I could, just about the roughly 2 million travelers that you called out, I think, on the last call. I guess what do you expect adoption to be like across those countries? And will pricing be the same as in the U.S. market? Or will it be a bit different? Just any thoughts there would be great.

Yes, we haven't launched yet, so I don't want to speculate too much until we have more evidence. However, I can confirm that pricing will remain the same. Whether travelers are coming from the U.K. and wish to enroll using their passport on the phone through the CLEAR app, the experience and price will be consistent. They can also sign up for multiple Concierges, which is something they are familiar with in other airports. In terms of adoption, partnerships will play a crucial role in this rollout. For instance, we are partnering with Delta and United, who are part of alliances, along with hotels and our strong partnership with Uber. There are many ways to reach travelers, including through their companies, to enhance adoption. While we didn’t introduce anything overly ambitious this year, we see a tremendous opportunity ahead. We will start with these countries and plan to expand to many more in the coming months. We'll keep you updated as we expect an increase in total addressable market. Additionally, with the World Cup approaching, having a universal, frictionless experience represents a significant opportunity for us. We'll have more information on this next quarter.

Okay, perfect. Sticking with the same theme, was the reason you didn't need to go country by country for approvals primarily because the product is aimed at travelers coming to the U.S., focusing more on the TSA and regulatory bodies?

Correct. Yes. They will be using it for outbound traffic through the CLEAR Lanes. This is not related to inbound traffic and CBP, which is a separate matter. Therefore, it will provide the same experience that travelers are having today.

So either travel within the U.S. or folks traveling from the U.S. back to their home countries or other countries.

This is Ronit on for Michael. Just a question on the macro environment overall. A lot of airlines have reported flat to down forecast through the rest of the year. Just wondering how you guys are thinking about the second half in terms of travel demand and what you're kind of expecting on a go-forward basis?

Yes. So as I mentioned this quarter, CLEAR had a record travel volume and that was in a time when travel volumes were pretty flat. So I think that reflects the opportunity for us to continue to penetrate the U.S. travel population. And as we just talked about, we can now add international travelers to that. So as we look at the back half of the year, I do think actually, the industry has become more optimistic about the trajectory for travel. And I've continued to say it before COVID and certainly post COVID, people love traveling, the experienced economy continues to thrive and we continue to see penetration opportunities broadly. And then certainly, we've talked historically about some underpenetrated cities and now we add international. So we continue to be excited about our opportunities, whether travel is up or down 1%.

Just to clarify that, Ronit, I mean, in Q2, the overall traffic volume was down about 0.5 percentage point, and we obviously grew our member base by 7.5%. And to Caryn's point, from a penetration perspective, we still have many airports that are on the lower end of the penetration curve. So ability to kind of grow same-store sales from there.

Great. And just a follow-up on that. And kind of related, is this at all related to your new product cadence? It seems like you're really picking it up with products like Concierge and now you have the REAL ID products rolling out. Is this what's driving the delta between the customer demand and your new member growth in terms of travel?

Yes. I'll take your product rollout question, and then I'll turn it over to Michael. The increased cadence of product innovation and product launches that you see from us, whether it be CLEAR ID, international or Concierge, are things that we had been working on for several years. I think, as I talked about, we were not able to unleash our full product portfolio that we wanted to. And I think this administration has helped as well as our great team. And so we're excited on both fronts about the product innovation and product launches, but that is really not what has driven the growth that you saw in the quarter. Some of those are still in front of us from a product launch perspective.

Yes. And I would just add that I think all of the efforts that we're making relative to product and technology and service are in concert with an overall view of how we can improve the travel experience broadly because we think that's what will ultimately determine our members' loyalty and retention and ultimately drive the business. And so I think when you think about the next-gen ID upgrades, the EnVe's that we've rolled out, now international passports, the ability to have one-step enrollment and then things like Concierge, which are really a premium and differentiated experience in the airports, what we're really trying to do is make the experience frictionless and delightful for our members throughout the travel experience at the airports, and that's what we're really focused on, on that side of the business.

It's great to see the progress, Caryn. As you consider the new programs you've introduced, what are your strategies for member retention? How do you approach pricing in the future? Given your previous mention of sporadic pricing, do you believe it will be annual or biannual? Do these different engagements come with various price points? What's your plan for that? Lastly, are there any advancements in AI that we should be aware of?

So just in terms of retention, let me take it at a high level, and then I'll turn it over to Michael. I'll also talk to AI. It starts with a great member experience, and we are massively focused on that not only today's experience but adding new products that drive that Home-to-Gate experience. I'll let Michael go deeper. What I will say on AI, I think I said in the script, two pieces. AI and synthetic identities and all that you're hearing about that makes true identity and total identity integrity more important than ever. And the fact that we have this physical network has become more valuable than ever, and we are expanding that physical network. I would also say from an internal perspective, we have signs around here that say, AI in every work stream every day, it can advantage our business on every line item. It can drive productivity. It can drive faster product launches. It can certainly drive margins and efficiency, and we are driving that through every area of our business. So I think it creates a huge top line opportunity in C1, and you're seeing that. And then I think it certainly creates business opportunities as we think about how we run our business every day. But I'll turn it over to Michael to talk more about retention and pricing.

Yes. Thanks, Dana. I mean, I think the way we're looking at this is everything from enrollment all the way through the airport experience. And so a lot of that has been how do we make sure that each piece of that, right, that we're always working to optimize and improve that. And I think that that is what gives us confidence in our ability to create that member experience that Caryn talked about. It's what gives us confidence to try and take a methodical and intentional approach to pricing because the value proposition that we intend to offer to our members only improves. And then being able to add on experiences like Concierge, which we're expanding. We have 14 airports where it's active today. We'll continue to expand that so that for folks who need a little extra assistance or want a more premium experience, we can actually offer those kinds of products. And in so doing actually add not just to the price of any one product, but actually the set of products that we can offer to our members and then ultimately be a bigger part of their overall experience and, obviously, benefit from that in terms of being able to sell more products. So I think we're trying to take a holistic look at what that member experience is. It really starts with what are those products that we can offer, what is the service that every one of our ambassadors offers to our members every day, which is a critical part of making the airport experience more pleasant. We're incredibly grateful to all of them. And yes, and then continuing to think about different ways we can make the experience better through new products.

And different travelers want different things, right? And so again, where does AI help is really understanding our data better and being able to personalize. Some people want to be left alone and not talk to anybody, heads down and go through. We all know those travelers. Some people are traveling with three kids or little kids that used to be me and you're trying to get through. And if someone help you, sometimes you just are running late and want to make sure you make your flight. We've all gotten calls here for, 'Can you help me? I'm in traffic on the van wick.' And so it's really just trying to personalize and customize and serve travelers how they want to be served. That could be with PreCheck only, that could be with a PreCheck bundle. That could be with a PreCheck bundle with CLEAR Plus, plus Concierge, like there's just so much and then driving innovation in the lane. We're incredibly excited and think there's so much to do to modernize airports and personalize a frictionless customer experience and strengthen security.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to Caryn for closing remarks.

Thank you for joining our second quarter earnings call. The expanding use cases and growing demand for CLEAR's secure identity platform that we talked about today is incredibly exciting. Thank you.

Please note this morning's introduction referenced a shareholder letter, which was meant to be a reference to the company's press release. Thank you. This does conclude today's teleconference. We thank you for your participation. You may now disconnect at this time.