Clear Secure, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; comparisons are primarily with FY2021. This is an annual filing, not a standalone fourth-quarter report. Amounts below are U.S. dollars unless noted.
Business context
CLEAR operates an identity verification platform. Its principal business is CLEAR Plus, an annual consumer subscription service providing dedicated airport security lanes; it also offers partner identity services and free app products. At year-end, its network included 48 airports and 132 lanes, plus 16 sports and entertainment partners. CLEAR reported 15.4 million cumulative enrollments and 129.6 million cumulative platform uses.
Financial and operating performance
| Metric | FY2022 | FY2021 | Change / context |
|---|---|---|---|
| Revenue | $437.4 million | $254.0 million | Up 72%; principally driven by 71% growth in average monthly CLEAR Plus members |
| Total Bookings | $527.0 million | $341.0 million | Up 55%; non-GAAP operating metric |
| Operating loss | $129.1 million | $114.9 million | Loss widened despite higher revenue |
| Net loss | $115.4 million | $115.2 million | Nearly unchanged; FY2022 includes substantial equity-based compensation |
| Adjusted EBITDA | $30.2 million | $(51.2) million | Non-GAAP; turned positive |
| Adjusted net income (loss) | $24.6 million | $(33.0) million | Non-GAAP |
| Operating cash flow | $168.3 million | $69.7 million | Up $98.6 million |
| Free cash flow | $136.9 million | $42.3 million | Non-GAAP; operating cash flow less property and equipment purchases |
| Annual CLEAR Plus net member retention | 91.9% | 92.3% | Down 0.4 percentage points |
Operating loss margin was approximately 29.5% negative and net loss margin approximately 26.4% negative, calculated from reported revenue and losses. The filing does not present a clear standalone gross margin. Equity-based compensation expense was $138.5 million, including $77.0 million related to warrants; this noncash expense materially affects GAAP versus adjusted results.
Liquidity, debt and capital allocation
- Year-end cash and cash equivalents were $38.9 million, marketable securities $665.8 million, and restricted cash $29.9 million. Cash plus marketable securities totaled approximately $704.7 million, excluding restricted cash.
- No borrowings were outstanding under the $100 million revolving credit facility; the company reported compliance with its covenants. The filing gives potentially inconsistent maturity descriptions: March 31, 2023 in the MD&A and three years after the April 2021 increase elsewhere.
- Deferred revenue was $283.5 million, up from $188.6 million, reflecting advance subscription receipts. Operating cash flow also benefited from higher deferred revenue and noncash adjustments.
- The company paid a $0.25-per-share special dividend in December 2022; reported cash outflows included approximately $38.2 million for the dividend and related distribution. It repurchased 213,100 Class A shares for $4.9 million, with $95.1 million remaining under its $100 million authorization.
- Operating lease liabilities were $130.1 million; undiscounted future operating lease payments were $220.0 million. The new headquarters lease contributed $107.7 million to right-of-use assets and lease liabilities on commencement.
Changes, outlook and notable items
- Bookings and enrollments grew alongside recovering air travel, eight new airport launches, airline and credit-card partnerships, and increased platform enrollments. CLEAR reported approximately 5 million additional enrollments during 2022.
- Revenue growth materially outpaced growth in operating costs, but operating loss widened. General and administrative expense rose 65% to $278.2 million, including large warrant-related and employee equity compensation costs.
- TSA issued an authority to operate for TSA PreCheck Enrollment Provided by CLEAR in December 2022. Management expected enrollment activity to begin in early 2023; the filing provides no quantified revenue guidance.
- Management said existing cash, marketable securities, operating cash flow and available credit were expected to meet working-capital and capital needs for at least 12 months. Planned capital expenditure for the new office build-out was approximately $9 million over the next 12 months.
- Management highlighted growth opportunities in airport penetration, TSA PreCheck enrollment, partnerships and new verticals, while noting that investment needs and timing of launches may affect expenses and results. No formal revenue or earnings guidance is provided.
- Key risks include dependence on CLEAR Plus and air travel, member retention and partner relationships; competition and adoption of alternative identity technologies; cybersecurity, biometric and health-data privacy compliance; airport and government approvals; and continued operating losses. The filing reported no current legal proceeding believed likely to have a material adverse effect.
- Management and the auditor concluded internal control over financial reporting was effective at December 31, 2022; the auditor issued unqualified opinions on the financial statements and internal controls. The audit identified accrued partnership liability estimation as a critical audit matter: the year-end balance was $71.2 million.
Most important facts for investors to verify
- Reconcile the $138.5 million equity-compensation expense, particularly the United Airlines warrant expense, and assess its potential dilution and recurrence.
- Confirm the credit facility’s actual maturity date and renewal or refinancing status, given the differing dates described in the filing.
- Assess how much of operating cash flow and bookings growth reflects durable member economics versus advance subscription collections and noncash adjustments.
- Track CLEAR Plus paid-member growth, retention, renewal pricing and acquisition costs; the reported LTV-to-CAC ratio of approximately 22x is a company-calculated metric, not independently validated in the filing.
- Monitor TSA PreCheck launch execution, economics and member conversion, as well as progress in monetizing Powered by CLEAR partnerships.
- Review the $71.2 million accrued credit-card partnership liability estimate, the $130.1 million lease liability, and the implications of the 85% tax-benefit sharing arrangement under the Tax Receivable Agreement.