Clear Secure, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. CLEAR operates a secure identity platform, with substantially all revenue from CLEAR Plus aviation subscriptions. Amounts below are in U.S. dollars; financial statement figures are in millions unless noted.
Financial performance and position
| Metric | Q2 2022 | Q2 2021 | First half 2022 | First half 2021 |
|---|---|---|---|---|
| Revenue | $102.7 | $55.2 | $193.3 | $105.7 |
| Operating loss | $(13.1) | $(37.7) | $(31.4) | $(50.8) |
| Net loss | $(12.3) | $(38.1) | $(31.1) | $(51.2) |
| Net loss attributable to Clear Secure, Inc. | $(7.2) | $(2.0) | $(17.5) | $(2.0) |
| Adjusted EBITDA (non-GAAP) | $3.5 | $(18.3) | $2.8 | $(25.6) |
| Operating cash flow | $50.9 | $3.4 | $75.9 | $3.1 |
| Free cash flow (non-GAAP) | $41.2 | $(3.0) | $60.6 | $(11.4) |
- Q2 revenue grew 86%; first-half revenue grew 83%. Management attributed growth primarily to more average CLEAR Plus members and improved retention, alongside recovering air travel.
- Operating loss was about 12.8% of Q2 revenue, compared with about 68.4% in Q2 2021. The filing does not present a conventional gross margin measure.
- As of June 30, cash and cash equivalents were $339.7, marketable securities $333.9, and restricted cash $29.3. Total current assets were $702.6 and current liabilities $332.0. Deferred revenue was $226.0, up from $188.6 at year-end 2021.
- Total liabilities were $362.3. No borrowings were outstanding on the $100.0 revolving credit facility; the company reported compliance with its covenants.
- First-half operating cash flow benefited from working-capital changes, including deferred revenue and accrued liabilities. Capital expenditures were $15.2 for the period.
Material changes versus prior period
- Q2 revenue increased $47.5 (86%) and first-half revenue increased $87.6 (83%). Total Bookings, a company-defined non-GAAP operating metric, rose 76% in Q2 and 75% in the first half.
- Total Cumulative Enrollments reached 13.1 million, up 107% year over year; Total Cumulative Platform Uses reached 106.6 million, up 63%. Annual CLEAR Plus Net Member Retention improved to 94.3% from 80.6%.
- Operating expenses increased with business activity and investment. First-half direct salaries and benefits rose 73%; research and development 50%; and general and administrative 32%. Equity-based compensation was $25.4 for the first half versus $7.2 a year earlier.
- Consolidated net loss narrowed, but loss attributable to Clear Secure, Inc. increased to $7.2 in Q2 and $17.5 in the first half, compared with $2.0 in each corresponding 2021 period. The prior-year periods included substantial losses attributable to non-controlling interests.
Outlook, commentary, risks and unusual items
- The filing gives no specific revenue, earnings or other numerical guidance. Management said existing cash, marketable securities, operating cash flow and facility availability should cover working capital and capital expenditures for at least the next 12 months.
- Management expects expenses to rise as travel demand and service volumes recover; it cautioned that the company may incur net losses and negative Adjusted EBITDA over the long term while investing for growth. Subscription revenue recognition may lag Total Bookings.
- A new headquarters lease is expected to commence in late 2022, with approximately $177.4 of undiscounted minimum payments over the lease term. The lease was not yet recognized on the balance sheet at June 30. Other disclosed commitments include $36.8 of airport minimum payments, $11.7 of minimum service spending over two years, and $2.1 of sports-stadium marketing commitments.
- The board authorized up to $100.0 of Class A share repurchases in May 2022; no shares had been repurchased through the period covered by the report.
- Other notable items include a $0.5 non-recurring customer settlement benefit in Q2, $0.3 of first-half long-lived-asset impairment, and adoption of lease accounting that added $25.3 of right-of-use assets and $29.1 of lease liabilities at adoption. The company recorded no Tax Receivable Agreement liability at June 30.
- Key risks discussed include dependence on air travel and consumer spending, member acquisition and retention, partner relationships and launch timing, execution of new products and use cases, cost volatility, and uncertainty around COVID-19 impacts. The filing reported no material changes to previously disclosed risk factors and no legal matters expected to have a material adverse effect.
Important facts for investors to verify
- Whether enrollment, renewal and retention trends continue to support revenue and bookings growth as travel conditions change.
- How much of reported operating cash flow and free cash flow is sustained versus attributable to upfront subscriptions and working-capital movements.
- The trajectory of operating expenses and equity-based compensation, and progress toward durable GAAP profitability.
- Funding and timing for the headquarters build-out and lease, airport minimum commitments, and any future share repurchases.
- Potential dilution from equity awards, warrants and exchanges of Alclear units; non-controlling holders owned 45.02% of Alclear at June 30, 2022.
- Whether tax benefits from exchanges become realizable and trigger payments under the agreement entitling specified holders to 85% of qualifying tax savings.