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 layer AI on top of that, and 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…

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 onetime 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…

[Operator Instructions] 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 eGgates, 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 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. And then on the -- maybe what are some of the moving parts investors should be considering in terms of the -- it was a small sequential decline in gross dollar retention. But offsetting that is you just implemented a price increase, obviously, at the beginning of the quarter, which should be a tailwind to that metric. How should we kind of be thinking about what happened in the quarter there and maybe the trajectory of that metric going forward?

Sure. So on gross dollar retention, so as a reminder, we took about $60 and $40 of price increase to our general airline and family pricing plans back in 2023. So from a gross dollar perspective, those pricing changes impact that metric over a 24-month period and sort of an accordion fashion. So think about the fourth and fifth quarter having the greatest positive contribution to GDR. So this quarter, our GDR of 86.9% was anticipated. It was in line with the impact of that 2023 pricing decisions, which are moderating in the metric. I think the second piece of this, which you alluded to is kind of the impact of retention and if there's anything that we're seeing from our July 1 pricing increases this year. And I would say we're not having -- we're not seeing a material impact on retention. In fact, while it's early, but we're actually encouraged by the retention patterns we're seeing in recent months, which we believe are a results of the customer experience improvements that we're driving.

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 were 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 the 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. And for the follow-up, Caryn, just curious to hear how you're thinking about -- you have a big upcoming credit card renewal next year. Not expecting you to comment one way or the other on if you'll do it or not, but just kind of how you're thinking -- CLEAR has changed a lot in the 5 years since you initially signed it. So how are you thinking about the key considerations as you weigh your options there?

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 the 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 it's 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 are 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.

Yes, I'll start and then maybe Jen and Michael want to chime in. As I said on the call, what we're hearing from our members is the word magical. And so today, we're at 10 airports. We expect to be in at least 30 airports by the end of the year, starting in the PreCheck lanes and then adding other lanes. We expect to be nationwide in 2026. And something that I want to -- so you are seeing a significant improvement in member experience scores in NPS. We talked about the speed, less than 1 minute through the lane, less than 5 seconds for verification. And I think what's really important and part of the magic is the predictability, right? So when you have it on either end of your trip, you know exactly what you're getting. And it is the same every time. I think there's a saying when we started, and it's still there today, you've seen one airport -- you've seen one airport, every airport, every lane, every terminal, every security checkpoint is different. And so having this predictable, consistent universal experience is so important for both domestic travelers, but I would also add now for 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 it on 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 of kind of 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 partnership, credit card partnerships like you have it 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?

Yes. Thanks for the question. I think we're -- yes, we're very, very excited about the introduction of our ability to enroll international travelers from 42 countries in the CLEAR+ product. As you know, this is still relatively early innings for us, but we're really pleased with what Jen has shared in terms of the early enrollment with relatively limited marketing -- our plans are to certainly do our own marketing efforts, but then as we've done with our domestic business here in the U.S., find really meaningful strategic partnerships that help us drive both awareness and enrollment from -- across these countries where folks are -- have heavy travel patterns within the U.S. And we're certainly excited about trying to find ways to help folks, in particular, who are coming for the World Cup next summer, be able to use the benefits of the CLEAR+ lane when they're traveling to and from the World Cup and within the country as we know that travel will be busy around that important event that's coming up.

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, 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 and Doha and 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, is that happening faster than you expected at this point? Or is the rollout generally as expected as eGates has 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?

Thanks for your question. I think to Jen's point that some of the CapEx was not calculated at the beginning of the year. Certainly, we've been pushing on eGates for quite a while. It has taken us longer to get them out. And then once this administration was ready to move, it is moving faster, and we couldn't be more thrilled that they are moving at the speed of business. So while some were thought of this year, not only have we rolled out, but we're buying forward for the ones that we're rolling out this year and then more for next year. So I would say it is happening faster, and we are thrilled by that. And then, yes, certainly, eGates frees up our ambassadors to be used for their highest and best use, which is hospitality and service. And again, this is about the entire home to gate experience, and that's so important. So I think that's just a really big opportunity for us to rollout new revenue streams with no or low incremental costs. And I think that when you think about the second derivative impacts, gross adds, trial conversion, retention, family ads, things of that nature, it all just connects. And so it's just -- it's a really exciting moment. eGates are a great unlock for us to drive this home to gate journey and for us to launch and build new products around it as well.

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-on-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 gives 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.

And I just want to add to that, the question that came earlier, I think our opportunity set going forward is awareness and communication. We -- if you look at us 2 years ago, we had one product, right? And now we have -- you can really customize your product for your needs, for your journey and driving that awareness as well as the ease of enrollment, and that's where mobile is so important. So yes, we have one-step mobile enrollment. Now you can add concierge to that. There's a lot more that we're doing to drive digital enrollment so that you just can come to the airport, show up and it all happens magically.

Great. And then could you maybe provide an update on your largest channels for adding CLEAR+ Members during the quarter? And how is the TSA PreCheck bundling channel sort of developing as you continue to scale that deployment?

Yes. I mean, by and large, we think about member acquisition really at the highest level between airports and then our digital marketing efforts. So I'd break it out between those 2. And from a bundling perspective, we are still seeing significant success there. We haven't shared a specific kind of cross-sell percentage, but we're happy with the percentage of TSA PreCheck customers that we're able to cross into CLEAR+.

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.