Clear Secure, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing; it does not provide a standalone Q4 income statement or full Q4 results. Comparisons below are primarily FY2023 versus FY2022.
Business context
CLEAR operates an identity-verification platform, with CLEAR Plus airport subscriptions generating substantially all historical revenue. Other offerings include CLEAR Verified for business partners, the CLEAR app and RESERVE virtual queuing. At year-end, the network covered 56 U.S. airports and 147 CLEAR Plus lanes, plus 19 sports and entertainment partners. CLEAR had 6.72 million active CLEAR Plus Members and approximately 20.19 million cumulative enrollments.
Financial and operating performance
| Metric | FY2023 | FY2022 | Change / context |
|---|---|---|---|
| Revenue | $613.6 million | $437.4 million | Up 40%, primarily from increased CLEAR Plus membership |
| Total Bookings | $711.8 million | $527.0 million | Up 35%; includes revenue plus change in deferred revenue |
| Operating income (loss) | $20.1 million | $(129.1) million | Operating margin about 3.3% |
| Net income (loss), consolidated | $49.9 million | $(115.4) million | Net margin about 8.1%; includes $29.0 million net interest income |
| Net income (loss) attributable to Clear Secure, Inc. | $28.1 million | $(65.6) million | GAAP EPS was $0.31 versus $(0.80) |
| Adjusted EBITDA | $86.1 million | $30.2 million | Adjusted EBITDA margin 14% versus 7% |
| Operating cash flow | $225.0 million | $168.3 million | Up $56.7 million |
| Free cash flow (company-defined) | $199.5 million | $136.9 million | Operating cash flow less property and equipment purchases, adjusted for repurchases over fair value |
Cash and cash equivalents were $57.9 million and marketable securities were $665.2 million at year-end; restricted cash was $4.5 million. Deferred revenue was $376.3 million, up from $283.5 million. The company had no outstanding borrowings and $68.4 million of remaining revolver capacity, net of standby letters of credit. Total liabilities were $675.8 million.
Costs rose in several growth-related areas: revenue-share fees increased 57% to $88.6 million and direct salaries and benefits increased 36% to $142.8 million. General and administrative expense fell 20% to $222.4 million, largely because a $76.8 million United Airlines warrant charge recorded in 2022 did not recur. Equity-based compensation was $37.3 million, compared with $138.5 million in 2022.
Material changes and management commentary
- Active CLEAR Plus Members increased 23% to 6.72 million; cumulative enrollments rose 31% and cumulative platform uses rose 39%.
- Annual CLEAR Plus net member retention declined to 86.3% from 91.9%. Management attributed the decline mainly to normalized winbacks, more Members due for renewal, and NextGen Identity+ upgrades; excluding the estimated impact of those upgrades, management estimated retention at 87.3%.
- Annual CLEAR Plus Member Usage declined 6% to 8.1x. Management identifies usage, retention, partner growth and new product/location launches as important performance drivers.
- CLEAR introduced NextGen Identity+ in 2023 and expected to begin rolling out its “Lane of the Future,” using face as the primary biometric, at airports in 2024. TSA PreCheck Enrollment Provided by CLEAR launched publicly at Newark Liberty International Airport on February 21, 2024; expansion to additional airports is subject to TSA approval.
- The company acquired certain Sora ID assets in September 2023 for stated purchase consideration of $5.25 million, adding reusable KYC capabilities. Acquisition-related revenue and operating results were described as insignificant.
Outlook, risks and unusual items
The filing provides no quantified revenue, earnings or margin guidance. Management said existing cash, marketable securities, operating cash flow and available credit were expected to meet working-capital and capital-expenditure needs for at least the next 12 months. Management intends to invest in airport expansion, technology, new products and partner growth; the pace and profitability of these initiatives remain uncertain.
- Key business risks: dependence on CLEAR Plus and air travel; Member retention and acquisition; partner renewals and airport concession agreements; competition from government, airline and technology-company identity solutions; and the possibility that new products or verticals do not gain adoption.
- Privacy, security and regulation: CLEAR handles biometric, identity, payment and some health information. The filing highlights evolving privacy and biometric laws, including BIPA and GDPR, cybersecurity and third-party technology risks, and ongoing TSA/DHS requirements. No material cybersecurity incident is reported in the supplied filing text.
- Accounting estimate: the auditor identified accrued partnership liability and the related reduction of subscription revenue as a critical audit matter. The year-end liability included an estimated $96.3 million for CLEAR’s portion of credit-card partner benefits; the estimate depends partly on forecast enrollments.
- Capital returns and structure: the company repurchased 3.11 million shares for $69.7 million in 2023 and paid quarterly and special dividends. The Board’s dividend policy is discretionary, and credit-agreement restrictions apply. Founders controlled approximately 81.2% of combined voting power at year-end. The tax receivable agreement entitles eligible former Alclear members to 85% of certain realized tax savings; the company had not recorded the related liability as probable, apart from realized tax-benefit payments.
- Other notable matters: the company reported no current legal proceedings it believed would have a material adverse effect. Its financial statements and internal control over financial reporting received unqualified audit opinions, and management concluded disclosure controls and internal controls were effective. The CISO notified the company of his planned resignation in February 2024; CLEAR said it had begun a search for a successor.
Important facts for investors to verify
- Whether Member growth, renewal retention and usage stabilize or improve, and how the NextGen Identity+ upgrade affects renewals.
- How much of revenue and cash generation continues to depend on CLEAR Plus, and whether CLEAR Verified and TSA PreCheck become material revenue sources.
- The assumptions and subsequent settlement of the $96.3 million accrued partnership liability, including enrollment forecasts and the effect on recognized revenue.
- Whether operating cash flow and free cash flow remain strong after considering deferred-revenue timing, capital investment, share repurchases and dividends.
- Available liquidity and restrictions under the revolver, lease and airport commitments, and future tax receivable agreement payments.
- Execution, TSA approval and economics of the 2024 airport lane rollout and TSA PreCheck expansion, alongside privacy, cybersecurity and regulatory developments.