Good morning, and welcome to CLEAR's Fiscal Third 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 press release. 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 the most recently filed quarterly report on Form 10-Q. These items can be found on the Investor Relations section of CLEAR's website. With that, I'll turn the call over to Caryn.

Identity is the foundation of trust, and CLEAR is the secure identity platform. The digital connected world has been driving a paradigm shift in cybersecurity, and now with AI on top of that, there is an urgent focus on identity. Cyber criminals aren't breaking in; they're logging in. 80% of breaches start with compromised credentials and 84% of security leaders have reported identity-related incidents that have disrupted their business. Identity has never been more important, and secure identity is the foundation to create safer and easier experiences. CLEAR is the future-facing identity infrastructure layer that is transforming how security and customer experience come together. Global events such as the World Cup and the Olympics are on the horizon, and security is paramount. CLEAR is helping America's infrastructure rise to the occasion by combining technology, security, and hospitality to make our airports sparkle. More than 35 million total CLEAR members trust and rely on CLEAR across many use cases. Our customer-centric brand, which is known for privacy and security as well as our physical and digital network, is accelerating our momentum across both CLEAR members and enterprise customers as we close out the year. The premium, frictionless, and predictable end-to-end travel journey we are building for our 7.7 million CLEAR+ Members is the new customer expectation. Our mobile app enhancements are streamlining the enrollment experience and helping members navigate their day of travel with confidence and ease. Our beloved ambassadors enable the merging of hospitality and technology to provide an unparalleled customer-centric and personalized experience that helps members win the day of travel. And our product innovation from EnVe enrollment and verification Pods to eGates is having a meaningful impact on speed and member experience. Our long-awaited eGate rollout has commenced and the feedback from members is unanimous. The experience is magical. CLEAR eGates are vertically integrated, combining our software and hardware across our nationwide network. Members verify in approximately 5 seconds and move directly into physical screening in 30 seconds. We are seeing eGates drive meaningful improvements in throughput, lane experience scores, and NPS. Our nationwide rollout will continue over the next few months, and we expect member experience to continue to improve. As we scale automation across our network, our ambassadors can create an even more elevated member experience with CLEAR Concierge. CLEAR Concierge is a premium personalized on-demand service where a dedicated ambassador meets you curbside and guides you all the way to your gate. Now live at 23 airports, CLEAR Concierge is giving members a truly premium and effortless travel journey. The CLEAR Travel experience and value is growing, and we are expanding our CLEAR+ Member base across all channels. Member acquisition in the airport remains strong, supported by a steady increase in total air travelers, coupled with our improved mobile one-step enrollment. International enrollment is off to a strong start even before we have launched marketing. There is an exciting opportunity to tap this broader pool of potential CLEAR+ Members. Partners continue to be an important channel for us to acquire high-value loyal members. We are pleased that CLEAR+ is a highlighted embedded benefit of the American Express Platinum Card refresh, reflecting the value each of us brings to our partnership. We have long talked about the power of public-private partnerships, and we are grateful that this administration is moving at the speed of business. We are working together on behalf of American travelers, connecting public sector priorities with private sector innovation. Embracing technology and business is improving the everyday security and experience of all Americans. CLEAR1 continues to scale. Modern fraud attacks are occurring with unprecedented speed and sophistication, and this is a critical and growing problem that every organization is facing. CLEAR1 is a comprehensive enterprise identity platform that delivers strength in security with a multilayered approach, the building block of trust. CLEAR1 delivered its strongest quarter yet with a record number of enterprise customers signed. In health care, CLEAR is a partner to the administration and the Center for Medicare and Medicaid Services, Health Tech Ecosystem Initiative as their trusted identity layer. The CMS pledge is a coalition of healthcare technology companies working to improve patient data interoperability and access, killing the clipboard while safeguarding sensitive health information. Over 60 companies have signed the CMS pledge, and to date, we have entered into CLEAR1 contracts with over 20% of the participating companies. Our work with Epic is further embedding us into the healthcare ecosystem. Health providers on Epic can enable a CLEAR1 turnkey solution within MyChart. This partnership creates distribution and seamless integration for CLEAR1 into the millions of patients with Epic electronic health records. In workforce, CLEAR1 is protecting the full workforce identity lifecycle from prehiring activities such as verifying candidate profiles to post-hiring identity verification use cases such as account recovery and privileged access. We are also beginning to expand our use cases with customers cross-selling and upselling our various CLEAR1 workforce solutions. Identity security has become a mandate for all stakeholders. CLEAR1 trusted brand platform approach and elevated security standards are enabling our enterprise customers to protect their employees, customers, and assets with confidence. I am proud of our execution and strong financial performance and want to thank our ambassadors and all of the CLEAR team members for how they serve travelers and customers. With that, I'll turn it over to Jen.

Thank you, Caryn. Third quarter revenue grew 15.5% year-over-year to $229.2 million, and total bookings grew 14.3% year-over-year to $260.1 million, both exceeding the top end of our Q3 guidance range provided last quarter. Active CLEAR+ Members grew to 7.7 million, up 7.5% on a year-over-year basis. Our rapid product innovation and growing suite of services in CLEAR Travel is elevating customer experience and attracting new members. eGates are elevating our home to gate value proposition. We continue to penetrate opportunities such as bundling TSA PreCheck with CLEAR+ and we are growing our total addressable market with international travelers. We are now offering CLEAR+ to over 40 international country passport holders, and we are encouraged by the contribution of international to our CLEAR+ Member base prior to having activated any marketing efforts to this audience. From a pricing perspective, we believe we have multiple levers to drive average revenue per member growth over time. This includes a regular cadence of price increases, closing the pricing gap with discounted members that we have acquired via our partnership channels and services such as CLEAR Concierge, which are add-on transactional opportunities. In aggregate, our member and pricing performance delivered sequential accelerating bookings growth in Q3, and we expect that to continue in Q4 as we close out the year. Q3 gross dollar retention was 86.9%, down 40 basis points sequentially and consistent with our expectations as the impact from the larger general airline and family price increases we took in 2023 continue to normalize. CLEAR1 is scaling and delivered a record quarter of bookings, excluding one-time Health Pass performance in 2022. We ended Q3 with 35.8 million total members, up 35.1% year-over-year and indicative of the momentum that we are seeing in CLEAR1. Our product innovation continues to drive meaningful impact to our value proposition and also our cost structure. Ambassador efficiency and member throughput is significantly improved with our EnVe verification Pods. As we scale eGates across our network in Q4 and into 2026, we have the opportunity to rethink and reposition our ambassadors towards the highest value hospitality driving services for our members. Cost of direct salaries and benefits represented 20.8% of revenue in Q3, an improvement of approximately 180 basis points year-over-year. We continue to drive operating leverage through disciplined resource allocation and corporate cost efficiencies with G&A representing 25.7% of revenue, an improvement of approximately 150 basis points year-over-year. Taken together, we generated $52.6 million of operating income, representing a 23% operating margin and 5.3 percentage points of margin expansion versus Q3 2024, and we generated $70.1 million of adjusted EBITDA, representing a 30.6% adjusted EBITDA margin and 6.1 percentage points of margin expansion year-on-year. We delivered $47.3 million of net cash used in operating activities and negative $53.5 million of free cash flow. Both figures reflect the annual payment to our credit card partner of approximately $229 million. We ended the quarter with $533 million of cash and marketable securities after returning $16.7 million of capital to shareholders through our regular quarterly dividend of $0.125 per share and distributions. Turning to guidance for Q4. We expect revenue of $234 million to $237 million and total bookings of $265 million to $270 million, representing 14.2% and 16.8% growth at the midpoint, respectively. This would reflect another quarter of accelerating growth from a bookings perspective. We continue to expect expanding adjusted EBITDA margins for the full year 2025 versus 2024, and we are increasing our 2025 full-year free cash flow guidance from $310 million to at least $320 million. Our free cash flow guidance reflects both the impact of additional CapEx related to our eGates rollout, which was not originally anticipated at the onset of the year, as well as certain cash tax benefits related to the One Big Beautiful Bill Act, which went into effect in Q3.

Our first question comes from Joshua Reilly with Needham & Co.

Very nice job on the quarter here. How should we be thinking about the strong bookings guidance for Q4, which is above my model? How much of that upside is being driven by CLEAR+ versus maybe some CLEAR1 and B2B deals that are a little bit bigger than maybe what you would have historically had?

Thanks, Josh. Nice to hear from you. So I would say we expect the product and member experience improvements that we're driving really across all dimensions of our business. If you think about mobile one-step enrollment to international to eGates, all of this work is really impacting both member retention as well as member acquisition. And if you couple that with CLEAR1, which continues to gain traction, as we talked about on the call with our enterprise customers, that business is starting to contribute more meaningfully to the top line. We obviously are not breaking out CLEAR+ versus CLEAR1 in our guidance specifically, but we did share that CLEAR1 had its largest bookings quarter if you exclude Health Pass back in 2022, and we expect that momentum to continue into Q4.

Got it. That's helpful. What are some of the factors investors should consider regarding the small sequential decline in gross dollar retention? However, offsetting that is the price increase implemented at the beginning of the quarter, which should positively impact that metric. How should we think about what occurred in the quarter and the future trajectory of that metric?

Sure. On gross dollar retention, we implemented price increases of $60 and $40 to our general airline and family pricing plans in 2023. These pricing changes will affect the metric over a 24-month period, with the most significant impact occurring in the fourth and fifth quarters. This quarter, our gross dollar retention of 86.9% was expected and aligns with the effects of those pricing decisions becoming less pronounced. Regarding the second point on retention and the recent July 1 pricing increases, we are not observing a significant effect on retention. In fact, although it's early, we are encouraged by the recent retention patterns, which we believe stem from the improvements we've made in customer experience.

Our next question comes from Cory Carpenter with JPMorgan.

I have 2, one and a follow-up. So maybe just first, it would be good to hear what you're seeing in recent weeks, just given a lot of the headline noise around TSA staffing issues. How is that impacting you? Or how do you think it could impact CLEAR should the shutdown persist in the coming weeks?

Hi, Cory, it's Caryn. So as someone who just flew Newark to San Francisco, Tuesday, I will say that going through the CLEAR eGates in Newark was magical. And so I think the technology that we are putting out and the new services that we are putting out couldn't be coming at a better time. But I think that there's really 2 parts to the shutdown, traffic and experience. And actually, traffic has been trending upwards despite the government shutdown. It was up almost 4% in October. So even with the FAA announcement yesterday of trimming, we're heading into a very strong holiday travel season. And so I think that traffic continues to be strong on both the leisure and corporate side. But certainly, you are seeing challenges in some places regarding the experience. And I think regarding experience, CLEAR as a private company is there to help all stakeholders improve the experience. And when I say all stakeholders, travelers are at the center of that, but that's airports, that's airlines, that's TSA and the federal government. And so I think our capabilities really shine through in these moments. And the overall airport experience, you're seeing it on the news, remains highly challenging. So we are seeing a lot of excitement and appreciation for our improved member experience.

Great. For the follow-up, Caryn, I'm curious about your thoughts on the upcoming credit card renewal next year. I don't expect you to share your decision, but I would like to know how you're considering the key factors given that CLEAR has changed significantly over the past five years since you first signed it. How are you approaching your options?

Yes. Thanks. Amex and our partnership there, we've had a great partnership with Amex, and we're definitely pleased to be one of the highlighted benefits of the Platinum Card refresh, where CLEAR+ is one of the key travel benefits that Platinum Card members value. And we also saw with Amex's recent announcement of their refresh and the supporting and marketing support for it that the Platinum Card refresh really created good awareness around the embedded CLEAR+ benefit. So as we look to our future partnership, we're going to make sure that the value that we bring to the benefits package is reflected in the terms of an ongoing agreement. And we really value our credit card partnership, and we'll share more information as it becomes available.

Our next question comes from Mark Kelley with Stifel.

I had 2 quick ones. First one is, as you continue to scale and you grow the membership base and you're raising prices and the economics are clearly accruing to you. Does that give you an opportunity to go back to some of the agreements when they come up for renewal with the different airports to maybe get better economics as well? Like are your agreements more tied to an absolute dollar number but expressed as like a rev share percentage? And maybe would that be a positive for your margins over time? And second, just a quick one. I would love to hear how you think about advertising bigger picture. I feel like you continue to add more value to the membership. You have all these great features and products that I think maybe even current members sometimes don't even realize you have. So maybe can you help me think about how to make people more aware of the broader offering versus what may be in people's heads historically?

Sure. And so I agree with you. This is Caryn. I don't think enough people know about all the great things that CLEAR is doing from home to gate, and that's an opportunity. But let me take your first question about airports. We have 60 airport partners today. We have over 160 lanes, and we expect to continue to grow our network. I prize, we prize our airport partnerships and relationships. And I think they just continue to strengthen through the years. We've been at this for 15 years, and we have done what we said we're going to do on an innovation perspective, right? We've gone from smart cards to fingerprint and eyes to face and now with eGates, which is something that we have been working on and talking about for 5 years. And today, we're at 10 airports. We continue to roll them out. And so that innovation is so appreciated by our airport partners. And I think it's a really powerful economic partnership that is success-based, and it's a win-win for us and for our airports. So when I think about margins, what I think about is our opportunity to continue to drive automation and innovation and scale. I think eGates drive enormous efficiency. I think new services like concierge drive enormous opportunities for high-margin new revenue sources. And to your point now about awareness and home to gate, right, we have an app. We are going to be improving our app. We have concierge now live in 23 airports, more coming. We have eGates and there's so much more we can be doing. And so driving this home to gate journey and experience is really important for us to communicate. I do think the best communication comes from happy customers and great word of mouth. And so when we talk about improving customer experience scores, improving NPS scores, improving employee satisfaction scores, improving hospitality scores, all of that is the best advertising we can do because members talk. And we think that there's more that we can do to drive awareness, cheap and cheerful, but you'll find me and us more on Instagram. And so we are definitely leaning into new ways to tell our story. And I think in the world of not just SEO, but how you leverage AI and share the story in so many different digital ways, we are definitely thinking a lot more about that. But it starts with happy customers, and that is what we are most excited about right now. And now you're right, we need to tell that story in bigger ways, both for the member experience and our services, but also CLEAR is a secure identity company, right? So I think you're going to see us lean into both sides of that story.

Our next question comes from Dana Telsey with Telsey Advisory Group.

Great. Sarang Vora for Dana. Congratulations on a great quarter. The question is about eGates. It's an exclusive benefit for CLEAR+ Members. And we feel like it is game-changing to the model because it solidifies your relationship with the CLEAR+ Members. It's great to see launched in the New York area. Just curious to know, can you share some more statistics on like how it has changed the member experience? Any color on operations side, like verification speed or the process of clearance and any capital investment? Any color you can share on eGates would be helpful.

I’ll begin and then Jen and Michael may want to add their thoughts. As I mentioned during the call, our members are describing the experience as magical. Currently, we are operating in 10 airports and anticipate expanding to at least 30 airports by the end of the year, starting with the PreCheck lanes and then incorporating additional lanes. Our goal is to be nationwide by 2026. Importantly, we have observed a noticeable increase in our member experience scores. We discussed the speed of the process, which is under one minute in the lane and less than five seconds for verification. A key aspect of our service is its predictability; travelers know exactly what to expect at both ends of their trip, and this consistency is crucial. In the past, we often heard that each airport is unique, but now we are focused on creating a reliable and uniform experience that benefits both domestic and international travelers. So being able to add 42 different Visa waiver countries and having those travelers be able to enroll when they have not been able to have anything in the U.S. and having those experiences look like Doha, Singapore, Tokyo, and London is such a great step forward. But the other thing that I want to add to that is that eGates are magical. We've been working on them for a long time. That's awesome. Our real thing is the journey, the whole journey, the mobile, the concierge, the home to gate, the family, the PreCheck, like being able to meet travelers where they are and craft a customized journey for them from home to gate and back again. And eGates are certainly a great unlock and it unlocks our team members, our ambassadors to drive the hospitality. So we're really excited about the nationwide rollout, excited about the customer feedback, excited about the scale. And I probably just took all of Jen and Michael's talking points, but I'll turn it over to them.

Yes. I think the only thing I would add is that we have been very, very focused on all those pieces that Caryn just talked about in terms of improving the member experience. And that is what we show up every day doing. That's what our 3,500 ambassadors across our 60 airports wake up and deliver right, every day for travelers in what can be a challenging experience. And I think one of the things that we're most pleased about is seeing the improvements in our lane experience scores, which really measure what's happening in the moment of the experience as well as our NPS scores. And we're seeing that across the network. But then what we're really specifically seeing is the change that we're seeing once eGates go in. And we're very encouraged by that because we believe that delivering that member experience is, yes, critical to our success, and we're pleased to be making good progress there.

And Sarang, I'd just add, I think you had a capital question tied in there, but we are not disclosing the specific CapEx associated with eGates, but that is incremental CapEx spend that we were not anticipating at the onset of the year. It is reflected in our revised and increased full year free cash flow guidance, which we increased. So that gives you some perspective on the scale of CapEx and not material, I think, from an overall business perspective. The last thing I think is important is from an ROI standpoint, if you think about eGates and the labor savings that we can create with the eGates, we have a pretty unique ability to repurpose our investors towards what we believe are the highest hospitality driving services for our members.

That's great. No, very helpful. And the other big initiative is the international. I feel expanding the CLEAR+ to 40 countries, travelers from 40 companies, a big, big opportunity. Question is, how do you market to these people? We are already seeing some gains, as you mentioned before, but how are you marketing to these people? Is it like in the future, like would you have like airlines partnerships, credit card partnerships like you have in the U.S. or it's more like targeted like U.K. or France? Or just curious to know how you are targeting and how meaningful it can be for like next 2 years for you guys?

Thank you for the question. We are very excited about our ability to enroll international travelers from 42 countries in the CLEAR+ product. Although it's still early for us, we are pleased with the initial enrollment results despite limited marketing efforts. We plan to implement our own marketing initiatives and, similar to our approach in the U.S., seek strategic partnerships that can enhance awareness and enrollment, particularly in countries where there is significant travel to the U.S. We are particularly looking for ways to support travelers coming for the World Cup next summer, enabling them to use the CLEAR+ lane for their travel needs as we anticipate high travel activity during that time.

I just want to add to what Michael is saying, and I talked about it on the call, I think we are heading into a travel boom, right? Like look past the government shutdown, the World Cup, the America250, Olympics in 2028, and business travel rebounding. We've been saying for some time that today, there's about 3 million people a day coming through airports. I think by 2030, you're going to have 4 million people a day. Travel is growing here in the U.S. and our infrastructure needs to shine. We need to be better than Tokyo, Doha, Singapore, and Paris was for the Olympics. And I think the power of public-private partnerships and innovation and putting the customer at the center like you do in so many different industries really gives our airports, our travelers a unique opportunity and certainly creates a moment for us, which is why you see us launching more products over the past 6 months than I think we have over the past few years.

Our next question comes from Michael Turrin with Wells Fargo Securities.

Just first, I want to go back to just some of the commentary on eGates and the incremental CapEx relative to what you're expecting at the start of the year. Is it the rollout to 10 happening faster than you expected at this point? Or is the rollout generally as expected as eGates have started to come to market in some of the major airports? And then any incremental commentary you can give us? There's been some hints around the ability to shift the ambassadors, but any other ways for us to think about incremental margin of eGate relative to the traditional CLEAR+ business?

Thank you for your question. To add to Jen's point, some of the capital expenditures were not anticipated at the beginning of the year. We have been working on eGates for some time, and their rollout has taken longer than expected. However, once the current administration decided to proceed, things have progressed quickly, and we are very pleased with that pace. Although some plans were considered for this year, we are not only implementing those but also planning ahead for additional rollouts this year and next. This is happening faster than anticipated, which excites us. Furthermore, eGates allow our ambassadors to focus on their primary responsibilities, which are hospitality and service. The complete experience from home to gate is crucial, and this presents a significant opportunity for us to introduce new revenue streams with minimal additional costs. When we consider the broader impacts such as gross additions, trial conversions, retention, and family additions, everything is interconnected. It's indeed an exciting time for us. eGates serve as a key enabler for enhancing the journey from home to gate and for launching and developing new products.

Maybe just to add on your incremental margins point, you've seen us continue to deliver pretty significant margin expansion on a consistent basis. This quarter, 30.6% of EBITDA margin was over 600 basis points year-over-year and over 300 points sequentially. This quarter, we delivered operating leverage across every line of our P&L, both, again, sequentially and year-over-year. And I think innovations such as eGates really give us the opportunity to either reallocate capital and/or flow it through to the bottom line.

Just a small follow-on. Just on the bookings growth improvement in the second half, are the tailwinds that you previously indicated from pricing or what you're expecting from pricing holding consistent since the July 1 price increase?

Yes. I think the short answer is yes. The pricing increases obviously are improving our ARPU equation and ultimately, our bookings growth in the back half of this year.

Our next question comes from Wyatt Swanson with D.A. Davidson.

First question, I realize it's early, but could you provide some thoughts on how concierge is doing, how usage has maybe looked thus far and how it's tracking relative to your expectations?

Yes. We're really pleased with the rollout of concierge in terms of the experience that we're providing for those members who are taking advantage of it. As Caryn mentioned, we're in 23 airports. We're hoping to launch more airports by the end of the year and continuing to expand the footprint. And I think that one of the key things for us is continuing to drive awareness on concierge. It has just been launched here in a meaningful way over the last few months. And we do think that what we're seeing is that the members who are using it are really appreciating it. We're seeing a lot of repeat usage for those who have tried it. And so our big effort will be in continuing to expand awareness and getting more folks to try it because we think that it offers an incredible service for families, for folks who may need a little more assistance or folks who are worried about getting to their flight on time. And so in this moment when the airport experience is challenged and traffic is up, we really think concierge is an incredible value proposition for our members. And as Caryn has described, we think it's a really important step in helping people understand that the CLEAR+ membership really expands from home to gate, and that will be something that we continue to emphasize and roll out product and innovation around to enhance our members' experience and the value of the CLEAR+ membership.

I want to add to the earlier question that our future opportunities lie in awareness and communication. Two years ago, we had just one product, and now we offer customizable options tailored to individual needs. Driving awareness and simplifying enrollment is crucial, and mobile technology plays a key role in this. We now have one-step mobile enrollment and the option to add concierge services. We're implementing more strategies to facilitate digital enrollment so that customers can arrive at the airport and have everything taken care of seamlessly.

There are no further questions at this time. So I'd now like to turn the floor back over to Caryn Seidman-Becker for closing comments.

Thank you for joining our third quarter earnings call. It is certainly an important time to be a secure identity company, and we are confident and excited as we wrap up the year.

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