Clear Secure Stock

Good morning, welcome to CLEAR's Fiscal First Quarter 2026 conference call. We have with us today Caryn Seidman-Becker, 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 can 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 2025. Additionally, the company will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures are provided in today's press release in the most recently filed 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.

We founded CLEAR with a profound conviction that proving you are you securely, privately, and instantly would one day sit at the center of how Americans live, work, and travel. For a long time, it was a vision. Now it is our reality. CLEAR is the trusted secure identity company, and after 16 years of building our identity platform, CLEAR Travel and CLEAR1, we have never been stronger or better positioned. It feels like day one around CLEAR because it is. Today, identity is critical infrastructure. It is security, the foundation of the connected, frictionless digital world being built around us. We ended this quarter with almost 44 million total CLEAR members, driving bookings of $296 million and free cash flow of $189 million. We delivered 33% bookings growth, and free cash flow is up 60% year-over-year.

This quarter's results reflect years of disciplined execution, building the technology, expanding the networks, and earning the trust of tens of millions of members and partners. We are growing rapidly, generating significant cash, and investing aggressively in the products and experiences that will define the next era of secure identity and frictionless experiences. This is the five-year anniversary of our IPO, and at that time, we targeted 35% adjusted EBITDA margins. For the first time this quarter, we surpassed that goal with a 36.4% adjusted EBITDA margin, reflecting the investments we made for the future and the power of our growth and our business model. I had high expectations five years ago for what it meant to be the trusted secure identity company, from Homeland Security to cybersecurity, but the opportunities far surpass what I imagined, from transforming the travel experience to fighting fraud and agentic identity.

Today, we'll talk about these opportunities and how we're executing in both CLEAR Travel and CLEAR1. In travel, it's about Home to Gate. The travel economy continues to boom, and travelers expect the same seamless, personalized experiences at the airport that they have everywhere else in their lives, and CLEAR delivers it. We have always said we're obsessed with the member experience, and this quarter that helped deliver our highest customer experience scores due to our robust product suite enabling the much sought-after frictionless and predictable travel day. The mobile app unifies the travel journey. With calendar sync, personalized travel guidance, airport wayfinding, and live updates, travelers know exactly when to leave and where to go, regardless of the airport or terminal. Our mobile business is growing rapidly and is averaging 1 million monthly users.

Users are engaging with the app, whether it be Home to Gate, Concierge, or the identity vault. We see significant opportunities to simplify the rest of the journey, from your bag to concessions. In fact, we've launched our first concessions partnership at Newark, and we're building on that momentum with a new pilot with Starbucks beginning at LaGuardia. Members can order coffee in advance and have it waiting at exactly the right spot as they head to their gate. eGates now cover more than 70% of our network and remain magical for CLEAR members. There used to be a saying in travel, if you've seen one airport, you've seen one airport, let alone one terminal. With CLEAR, if you've experienced one eGate, you know what to expect at every eGate: a seamless verification in under five seconds.

This is the modern travel experience, driving retention, gross adds, and conversion, and winning back customers who have not yet experienced the CLEAR we have built today. The identity layer matters more today than ever, as adversaries now manufacture identity at scale, with AI making deep fakes and synthetic identities cheap and convincing. Yesterday's defenses are no match for today's threats. Getting identity right is the foundation of a secure enterprise, and CLEAR1 is built for this moment. CLEAR is raising the bar, and this quarter, we didn't just elevate industry standards, we levitated them to deliver total identity integrity to our partners and our members. We launched CLEAR's identity framework with three proprietary products built for today's world: Vertex, Apex, and Helix. Vertex establishes a stronger foundation of identity for our partners, moving beyond the industry standard of document-only verification.

Apex builds on that foundation with a multilayer validation for higher-risk use cases such as Medicare. Helix represents our highest level of identity confidence, rooted in witness verification and designed for the most sensitive, high-stakes environments. We hold ourselves to the highest standards because strengthening security, fighting fraud, and protecting privacy demands nothing less in a world where identity is security. We are building a GovTech vertical as the fraud we are fighting at CMS is endemic through other federal agencies. Getting true identity right is crucial to protect program integrity and fight fraud, waste, and abuse in our country. We have been working in government technology and federal partnerships for a long time, as reflected in our work with the Department of Homeland Security.

The administration's executive order to fight fraud makes the mandate clear: strengthen eligibility verification, put controls in place before taxpayer dollars go out the door, and stop fraud before it happens. This administration prioritizes fighting fraud while enhancing experiences. We see that commitment in the executive order and initiatives like [indiscernible] accounts, which is a customer-centric and modern digital experience. We are well-positioned and working with leaders across agencies to deliver secure and customer-centric experiences. Identity is security. Security is now everything, and CLEAR is the company built to deliver it. We are moving with urgency to create seamless, secure experiences for our members and all Americans. With that, I'll turn it over to Jen.

Thank you, Caryn. Since our IPO five years ago, we have built CLEAR into the leading secure identity platform. Over that time, our CLEAR Travel network expanded from 38 to 62 airports, and our member base grew nearly three and a half times from approximately $2.4 million to $8.3 million active CLEAR+ members. While we only increased the standard price of our membership by an average of 4% on an annualized basis. We accomplished this while investing prudently in our business and growing annual free cash flow from just slightly above breakeven to approaching half a billion dollars today. Within CLEAR Travel, we are continuing to expand our network, grow members and ARPU by delivering a compelling customer experience through product and services innovation, and ultimately driving strong member retention.

On top of this, the investments we have made in our identity platform position us as a leader in security and identity infrastructure, with CLEAR1 scaling rapidly and further strengthening our growth profile. Our second quarter results showcased the demand for our differentiated industry-leading secure identity offerings with compelling top-line growth, meaningful margin expansion, and strong free cash flow generation. We delivered 33% bookings growth, 36% adjusted EBITDA margins, and $189 million of free cash flow, up 60% year-over-year. Notably, our adjusted EBITDA margin exceeded 35% target set at the time of our IPO, and our quarterly free cash flow reached a record high. Our Home to Gate strategy enabled another quarter of strong growth. Revenue grew 26.6% year-over-year to $277.8 million, and total bookings increased 32.8% to $295.9 million.

We continue to meaningfully improve our member experience through eGates, our relaunched mobile app, and our expanding Concierge offering, which is reflected in record NPS scores, strong member retention, and active CLEAR+ member growth of 15.2% to $8.3 million. This momentum is carrying through into Q3. We expanded our network with Indianapolis and Bentonville representing the two newest CLEAR+ airports, and Concierge expanding to seven additional locations now available in 39 airports. Concierge remains in its early innings with an opportunity to grow through footprint expansion, member awareness, and adoption. ARPU is growing, and effective July 1st, we increased standard pricing by $10 from $209 to $219, with corresponding changes across many airline pricing tiers. Family member pricing remained unchanged at $125.

Our early retention rates have remained healthy following these price increases, and we believe we have a range of additional pricing opportunities that could meaningfully contribute to the long-term growth of our business. CLEAR1 momentum continues to build. The growing demand for our B2B offerings drove 30% year-over-year growth in total CLEAR members, reaching 43.5 million in the second quarter. We are seeing strength across every stage of the CLEAR1 lifecycle, from pipeline generation and new partner signings to expansion within our existing customer base and net revenue retention. Our pipeline reflects channel partnerships and expanding opportunity within government and growth in our healthcare workforce and consumer verticals.

This quarter, we signed a significant number of new partners with average deal size continuing to increase. Our focus on customer success is expanding relationships with existing partners through additional use cases, which is driving strong net revenue retention. These trends support our meaningful bookings growth and reinforce the large and significant long-term opportunity for CLEAR1. We have maintained strong operational and cost discipline, and in the second quarter, we delivered approximately 70% adjusted EBITDA flow-through and meaningfully expanded free cash flow year-over-year.

We generated $83 million of operating income and $101.1 million of adjusted EBITDA, representing a 36.4% adjusted EBITDA margin and approximately 900 basis points of margin expansion year-over-year. Labor has been a meaningful lever in our profitability story. eGates have driven significant labor efficiency, with Q2 direct salaries and benefits representing 17.3% of revenue, an improvement of approximately 450 basis points year-over-year, while also strengthening security and the member experience.

That efficiency has turned what was once a pure cost center into a driver of top-line growth, enabling us to redeploy our ambassadors from lane operations towards hospitality and sales-generating initiatives such as Concierge. For the full year, we continue to expect meaningful year-over-year adjusted EBITDA margin expansion, reflecting the leverage in our business model coupled with our team's operating discipline. Q2 net cash provided by operating activities was $201.2 million, and free cash flow was $189 million, representing 60.3% year-over-year growth. As a reminder, consistent with prior years, we will settle the accrued partnership liability with our credit card partner in the third quarter, resulting in negative Q3 free cash flow. This payout is reflected in our full-year free cash flow guidance. We ended the quarter with $959 million in over $7 per share of cash and marketable securities on our balance sheet.

Quarter to date in Q3, we have repurchased approximately $22 million of shares at an average price of $52.73. Our liquidity position provides us strategic flexibility while simultaneously allowing us to invest behind the strong demand in operating fundamentals of our business. Turning to guidance. For Q3, we expect revenue of $284 million-$287 million and total bookings of $311 million-$316 million, representing 24.6% and 20.5% year-over-year growth at the midpoint respectively. We are also increasing our 2026 full year free cash flow guidance from at least $465 million to at least $480 million, which would represent an increase of at least 40% year-over-year. We will now open the call for Q&A.

Thank you. The floor is now open for questions. [Operator Instructions] Today's first question is coming from Eric Sheridan of Goldman Sachs. Please go ahead.

Thanks so much for taking the question. I wanted to go a little bit deeper in some of the comments during the prepared remarks about the evolution of the Home to Gate strategy and how to think about Concierge membership broadly over the medium to long term, both in terms of what you've learned about the scope for adoption as well as the scope for monetization and how that might build in the years ahead. Thanks so much.

Thanks, Eric. Home to Gate has always been the vision, right? That we want to help travelers win the day of travel and not just one point. When you look at the travel day, and we're all travelers, it's broken up into six different pieces. There's mobility, whether you're reserving a car or a parking spot or drop off. There's wayfinding, there's the line for bag drop, there's the wait for when your bags come off the plane. I always find it funny that smart people watch bags go around a carousel for a half-hour. There's the security experience and the unpredictability of it, whether it be no line or a half-hour line, you sort of have to solve for the worst part of it. Then there's the concessions. I'm a coffee drinker. It's 6:00 a.m. I want my coffee ready.

I don't want to wait for another line and then be locked on a plane for a few hours. So the Home to Gate experience, which really starts with mobile and the ability to calendar sync, which gives us much more visibility into a traveler's day than just waiting for them to show up at the CLEAR lane, allows us to unlock all of these experiences and tie them together in a seamless way for members. So that is really important and that is what we are executing on. What you see now, and we talked about million monthly average users, is really just the beginning. We see a higher NPS when you use the mobile app on your day of travel. From a Concierge perspective, I would say that these are early days. Three important points.

We're still not in cities like New York and L.A., which are really important cities to the network. We're working really hard to launch all of these cities so that we can have a much more holistic network and meet travelers where they are. In addition to that, I would say early days in marketing and awareness. Part of this is partnership and partners making travelers aware of this, hence our announcement with Expedia, and you should see more behind that. Corporate, which is a channel that historically we haven't driven on, right? It's really been B2C. The ability to open up those channels with not just single purchases but multi-pack purchases. Then it is driving awareness through our own channels, both digital marketing and with so many millions of members on the platform. That's another way to drive awareness.

I think one of the things we think about when spending money on the marketing front is you really want to get a more complete network before you start putting a lot of dollars behind it. That is the plan for Home to Gate, and it starts with partners. You saw us announce concessions, partnerships, and pilots, and so the mobile app and the driving of it is really the glue that brings it all together. Then the eGates are just magical, and as we talked about, we're still only a little over two-thirds through that rollout, so a lot of growth there yet to come.

Great. Thank you.

Thank you. The next question is coming from Joshua Reilly of Needham & Co. Please go ahead.

Great. Thanks for taking my questions. As we attended the Identity Summit in June in New York, it was pretty clear that there is significant momentum in growing corporate budgets for products and platforms like CLEAR1. How do you maintain your first-mover advantage? You clearly have a differentiated platform in the space and manage to go to market effectively and further develop use cases for corporate customers there.

Thanks, Josh, and thanks for coming. It was a really special day and the first of many. It is great to be a convener, hundreds of -- I think well over 100 people in the industry came because everybody is seeing identity as critical infrastructure and identity as security. To bring people together from both the public and the private sectors to talk about the problem statement and how CLEAR is a great solution, but also just broader industry trends. Look, in terms of market leadership, and I think the Identity Summit started to show that, market leadership is about innovation and always raising the bar, and the launch of products this quarter reflect that. The Vertex, Apex, and Helix really reflects our leadership from the front and raising the bar on industry standards because what people are using today really reflects yesterday, does not fight -- or really reflect yesterday, does not fight the problems of today and tomorrow with synthetic identities, with deep fakes, with injection attacks.

So, really our products reflecting multi-factor authentication at every level, and the higher risk level you go to, the more that we can do. Whether that be in workforce, where we have a lot of very strong relationships and a very well-known brand, with workforce, agentic is multiplying the number of employees, and there is an increasing need to get that foundational employee right, which is what we are known for, and who they are and what they should have access to. This critical connection between the human and the agent to authorize the agent to act on our behalf. CLEAR is in a unique position to provide human insurance to facilitate agentic authorization.

We are known for that. We have done that hundreds of millions of times over 16 years, and the bigger -- going back to leadership, the bigger our embedded network of identities is, the more powerful the customer experience is. That really feeds on itself or what you are seeing in government where, look, we have been partners with the Department of Homeland Security for 16 years. We are a qualified anti-terrorism technology. We are FISMA high. We surpass the NIST standards. There is a significant opportunity in government, hence really our focus on GovTech to fight fraud, waste, and abuse across federal and state programs.

I think the more evidence, the more white papers, the more outcomes you have of driving efficiency for our partners, driving an unbelievable customer experience, being able to tie together the physical and the digital, and a large embedded network with a trusted brand and a team here that is so partner-centric and solution-centric, that all of this just keeps the momentum building at CLEAR1. The best form of competition is innovation, and we are innovating the living daylights out of identity and security.

Josh, I would only add that we shared some context around the performance of CLEAR1 earlier on the call. We continue to scale the business very nicely and momentum is strong. We increased the number of our net new customer signings in Q2 by over 50% sequentially, Q1 into Q2, and we also grew our pipeline by over 50% quarter-on-quarter. That sets us up quite nicely for CLEAR1 performance in the back half of the year.

Awesome. In terms of the Amex partnership, we're now entering the first quarter of the new agreement. Is there anything we should be considering in terms of the accrual structure for the fiscal year-end of the contract over the next 12 months, and any changes to the statement credits or repaying Amex that we should be considering as we model that part of the business going forward? Thank you, guys.

Sure. You saw in our filing, we have about a $315 million accrued partnership liability that will get paid out next quarter in Q3. There are no other implications to this year from a free cash flow perspective, and we can share more at the appropriate time.

Thank you. The next question is coming from Dana Telsey of Telsey Advisory Group. Please go ahead.

Hi. Good morning. Nice to see the progress, everyone. Congratulations on exceeding the adjusted EBITDA margin target of 35%, coming in at 36.4%. How do you think about that going forward? Beyond travel, any updates on the other sectors and segments that you've been partnering with as you look forward to the next stage of growth? Thank you.

Sure. Dana, maybe I'll start and Caryn will take the second question. We are not introducing a specific new target today, but we do see, I would say, meaningful upside opportunity to our margin levels relative to where we are today. You have seen us grow top line quite significantly above the growth of our cost base, even as we've been investing in scaling several newer businesses and also making just general important investments into our identity platform. I think we've been very intentional about where we can extract leverage, eGates is a great example of that.

Overall, we have made quite a bit of investment across our identity infrastructure, inclusive of travel and CLEAR1. We have a strong business model to support that, both recurring and subscription in nature on the B2C and the B2B side.

Dana, I'll take the second part because I think that there's opportunities on both the travel side and CLEAR1. Again, when you look at CLEAR Travel, a little over 75% network growth. We have network growth opportunity, so I think of that as stores. We still only cover 75% of the U.S., and we are not in other countries yet. I see subscriber growth. I see win-back opportunities, which adds to subscriber growth because I think we can all acknowledge, as I've said, that the customer experience degraded in '23 and '24, and there's many a CLEAR member who left. We still had good growth through that period. I see the opportunity to reintroduce CLEAR. We see the opportunity to reintroduce CLEAR to those people as a lot of fuel to the fire in CLEAR Travel as we drive this Home to Gate experience.

And there's ARPU growth, both because, as Jen talked about, we've raised prices 4% on average since we IPO'd five years ago, and the customer experience and the network has been transformed since then. I believe that when you offer consumers compelling value, they will pay for it. We are seeing that. We're really thoughtful about ARPU and making sure that we deliver the customer experience first and foremost. As you both improve the customer experience, add to the network, and add new services, that drives ARPU. I think there's a lot of levers in that model, but it starts with the customer experience and the network growth and the partners. On CLEAR1, we talked a little bit about workforce, and you're continuing to see every day in the newspaper, there's a different call center challenge, there's different breaches, there's different exfiltration of data.

Workforce, securing the workforce, securing the employees, making sure they are who they say they are, from interviewing to onboarding to network access management to agentic, is more important today than ever. In addition to that, when you do right by the workforce, we're seeing cross-sell and upsell opportunities to consumers, and so that's really exciting.

In healthcare, there's two pieces to healthcare. Data interoperability is massively important, and we've talked about that before, but you're seeing that be a two-sided market, which is whether it be hospital systems or whether it be pharmacies. You want data interoperability or whether it be digital health. You want data interoperability flowing between all of those [sites]. The key to that data interoperability is identity. And then you see healthcare and fraud, waste and abuse from a Medicare and a Medicaid opportunity.

That's a federal, state, and local opportunity on the GovTech side. Workforce, healthcare, GovTech, obviously there's consumer and online opportunities because fraud is more prevalent than ever. At the end of the day, fraud is rooted in identity.

Thank you.

Thank you. The next question is coming from Michael Turrin of Wells Fargo. Please go ahead.

Hey, good morning. Thanks for taking the question. Just on bookings, growth rate strong above 30% this quarter. You're guiding for low twenties next quarter. Maybe speak to the drivers of bookings upside this quarter as well as how you're thinking about normalized bookings growth rates over a longer period of time and some of the drivers you'd expect. If there's any way to help us just ballpark size the CLEAR1 contribution you're seeing at this stage, that's also helpful. Thanks very much.

Sure. I'll take that. I guess I would say overall, our fundamental business drivers are quite positive at the moment. The Q3 rate of growth that's implied by our guidance is significantly higher than the approximately 14% growth that we delivered in Q3 of 2025. We also increased our full-year free cash flow guidance for the second time this year. You heard us talk about CLEAR Travel. We are seeing strong customer acquisition trends. We are seeing positive retention trends. Both of those metrics have maintained and the momentum is continuing into Q3. Caryn has talked a lot about the ways by which we believe we can continue growing both our member base and our pricing opportunities. On the member base side, I would say that includes growth of our existing markets. We look at that on a market-by-market basis.

We think we have significant opportunity there. Network expansion, which we've talked about, that's airports. That could include additional lanes, growing new products and services like eGates and Concierge. Then we have international opportunities and partnerships on top of that. Overall, we believe we have significant room to run on the member side. From a pricing perspective, we just increased price, as you saw, July 1st. We did not see any impact to retention. We think we can take measured price increases over time on a relative annual basis. We believe we have additional opportunities to adjust our discounted price points for certain member segments, and we also think that there are new pricing structures and packages, particularly as we grow our product and services innovation broadly. Concierge is a great example of that.

Thank you.

Thank you. The next question is coming from Wyatt Swanson of D.A. Davidson. Please go ahead.

Yeah. Thanks for the question. I appreciate it. I kind of want to follow up to that last question, hopefully get some more color as to the 3Q bookings guide and some of the moving pieces, sort of as it relates to adding CLEAR+ members, CLEAR1 contribution, and whether we should be modeling any meaningful changes in average bookings per member in the back half. Thanks.

Sure. I guess I would reiterate a bit of what I just shared, which is that we continue to see strength in our customer acquisition and our retention trends remain healthy. So, I think together that supports a growing active CLEAR+ member base in Q3 and the balance of the year. From a bookings to member metric, effectively kind of a back into on ARPU, there are various ways to look into that. Given the price increases and our new credit card partnership, I think you can expect us to continue growing ARPU as we have kind of over the years.

Got it. Okay, that's helpful. And then a follow-up. I believe you guys mentioned that you're not international yet, that sort of indicates that perhaps you're thinking about that expansion. Could you maybe just give some color on where you could potentially see international expansion and what that timeline might look like, over the medium to long term? Thanks.

Yeah, this is Caryn. I think, first of all, you look at North America, you look at Canada and Mexico. Specifically North. I think that there's a lot of opportunities there, that's something that we're very interested in. I'm not going to give a timeline, to say that that's something we're very interested in. Those are the most obvious to us, you look at Western Europe and South America. Those are the places that we are most interested in, I think there's different ways to go after those markets. I think if I look back over the past few years, I would've hoped we were further along on the domestic market network. We are getting there, that's very exciting to us.

We didn't think it was appropriate to go and be half coverage in the U.S. and then offer you other markets. We're very focused on having a holistic customer experience, and I think we're excited about our network growth. Indianapolis has been a great add this quarter. Again, there is plenty of markets where CLEAR is not currently at, and those customers are clamoring for CLEAR. People see the experience. You go through an eGate, a triple at Newark or a double at JFK. You're flying through. It is the experience that you have in so many other parts of your life, you want it there. I think our airport partners or potential partners are hearing that, are seeing how we've delivered over the last few years on innovation and the customer experience, that's incredibly important.

We see continued growth in the U.S., I would specifically point you to North American markets, in the near term. If I can just make one point on CLEAR1… Sure.

Just one additional thing on international is, in partnership with TSA last year, we got approval, as we've talked about, to enroll international members from the 42 visa waiver countries. We are seeing actually good pickup in organic growth from international members using our product across our U.S. network. That's certainly an encouraging start to the international expansion.

If I can just wrap up with your question on CLEAR1. As Jen mentioned, the contract sizes are growing. We're focused on growing them aggressively, which could add to chunkiness, right, and timing. We understand that, and we're excited for these opportunities, but that could add to chunkiness of timing to your question. We will go after these huge contracts all day long.

Great. Thank you, guys. Appreciate it.

Thank you. At this time, I would like to turn the floor back over to Caryn for closing comments.

Thanks for joining our second quarter earnings call. Identity is security, and I want to thank the CLEAR team for working tirelessly to help strengthen security for all of our CLEAR members and partners. Thanks.

Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, enjoy the rest of your day.

Good morning, and welcome to CLEAR's Fiscal First Quarter 2026 Conference Call. We have with us today, Caryn Seidman-Becker, 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 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 2025. Additionally, the company will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures are provided in today's press release and the most recently filed 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.

The first quarter was a definitive stress test for the global identity landscape. As the physical and digital worlds collided with unprecedented speed, CLEAR met the moment. The seeds we planted to build the world's most trusted secure identity platform are maturing at exactly the right time. We are operating in an environment of structural instability where the national travel system is strained and AI-driven fraud is escalating at an exponential rate. In this world, identity is not a feature. It is the foundational infrastructure of a functioning economy. If you get identity wrong, nothing else matters. We ended this quarter with 41 million total CLEAR members, driving bookings of $292 million and free cash flow of $185 million. These record results are the direct output of our forever obsession with frictionless experiences and a fortress approach to security. We are meeting this moment by raising identity standards with the speed and urgency this environment demands.

As I often say, and we're all now seeing firsthand, travel is hard and getting harder. March underscored the immense strain on our national travel system and highlighted the importance of public-private partnerships. We entered 2026 with incredible momentum in our customer experience and innovation across our travel business, which continued in the first quarter. Our home to gate strategy is transforming a fragmented series of travel hurdles into a singular seamless experience. eGates now cover over 50% of our network, and we plan to exceed 80% by the end of the second quarter. The data is irrefutable. One-step 5-second biometric entry is delighting members. Average wait time for CLEAR Plus members is now under 1 minute. NPS has reached a 3-year high, and it's not surprising that travelers who use an eGate have significantly higher NPS than non-eGate users. This is contributing to strong member adds and improved retention. Our reimagined app, which recently reached #4 in the Travel App Store, is becoming the go-to app for our travelers. By creating certainty and transparency around the day of travel, syncing calendars, travel documents, wayfinding and partner integrations, mobile app adoption has doubled for travelers. The app is becoming the control center for the day of travel, proactively organizing trips, surfacing gate and security details and unlocking CLEAR services with just one tap.

Demand for CLEAR Concierge continued to increase dramatically during the quarter, and the challenges of the shutdown highlighted the value proposition of our premium product. This is a high-margin, high-touch service, and we are aggressively scaling it to major cities nationwide. Concierge turns a stressful travel day into a seamless, delightful experience with an ambassador guiding you every step of the way.

I want to thank the TSA officers who worked tirelessly without pay through the shutdown. We stood with our partners supporting them and their families and over 3,500 CLEAR ambassadors worked hand in glove with the TSA to keep travelers moving pre and post security. The combination of CLEAR ambassadors, our approach to hospitality and the benefit of our eGate served as a stabilizing force. This is the power of public-private partnerships, private sector speed and innovation meeting public sector scale.

Identity is trusted infrastructure. It is being woven into the fabric of securing physical, digital and agentic experiences. CLEAR is the trusted brand building the smart network of human identities. The definition of secure has been permanently altered and identity is becoming harder to solve. As AI accelerates, traditional credentials like drivers' licenses have become obsolete vulnerabilities.

When identities and credentials can be simulated, the fundamental question becomes, are you who you say you are and what should you have access to? CLEAR1 is our answer. We are raising the bar for identity standards through a multilayered approach using biometrics, government-issued identification, source corroboration and device signals to confirm that you are you.

This quarter, we achieved significant year-over-year growth driven by almost 2x the amount of signed deals and a record number of large multiyear enterprise contracts. Organizations now realize that identity integrity is a key protective layer. We are committed to securing the nation's digital frontline by establishing total identity integrity across high-stakes environments. Our FedRAMP milestone is the first step towards unlocking our GovTech vertical. It builds on our mission with CMS to eliminate the systemic fraud highlighted in the December GAO report, where as many as 125 insurance policies were connected to a single identity. Our work directly supports the White House's executive order on fighting fraud, waste and abuse. We are aggressively replacing vulnerable legacy systems with a high integrity layer that proactively thwarts bad actors. By ensuring taxpayer dollars and sensitive records remain shielded, CLEAR is delivering the nonnegotiable foundation for a secure functioning digital economy.

This is a transformative era. With the World Cup, America 250 and record summer travel on the horizon, our mission has never been more critical. We are starting this year from a position of immense strength in innovation, and execution and in financial performance. We will continue to drive members, bookings and free cash flow with relentless intensity. I want to thank our extraordinary ambassadors and the entire CLEAR team for their unwavering commitment to our members and our partners. With that, I'll turn it over to Jen.

Thank you, Caryn. Our first quarter results reflect step change growth, continued margin expansion and accelerating free cash flow generation. CLEAR Travel and CLEAR1 growth is compounding. In Q1, we delivered over 40% bookings growth and approximately 32% adjusted EBITDA margins while also doubling our absolute free cash flow year-over-year to $185 million. These results build on our strong momentum entering the year. And importantly, Q1 heading into the DHS shutdown was trending to exceed the 25% bookings growth that we reported in Q4 of last year. The shutdown further enhanced a strong quarter, highlighting how well positioned CLEAR is to improve the travel experience, deliver greater hospitality and drive the highest levels of security. The consistency and predictability of the CLEAR+ value proposition was evident during the shutdown, boosting member acquisition in the quarter. Revenue grew 19.7% year-over-year to $253 million. Total bookings increased 40.8% to $291.7 million and active CLEAR+ members grew to 8.2 million, up 13% year-over-year. Importantly, the investments we are making in member experience are driving improvements in retention on our growing base of CLEAR Plus members, translating the strong customer acquisition in the quarter into a durable benefit for our business. The shutdown also accelerated awareness and adoption of our Concierge offering. Starting at $99, CLEAR+ members can book an ambassador to greet you at the airport and expedite you through security for an even faster stress-free journey. We are now offering Concierge service in 32 airports and remain in the early innings of scaling Concierge across our network, driving member awareness and adoption. The products we are building around our home to gate CLEAR travel experience, whether it be our mobile app, eGates or services such as Concierge position us to drive greater member growth, strong retention and increasing levels of ARPU. CLEAR1 is an infrastructure layer for identity, akin to how digital wallets transformed the payments industry. The growing demand for CLEAR1 is reflected in our results. Total CLEAR members grew 31.3% to $41 million, and CLEAR1 bookings were approximately 5x those of Q1 last year, representing another record quarter.

CLEAR1 is an enterprise business. We typically enter into multiyear contracts with partners that include minimum annual commitments, providing revenue visibility and predictability. We are prioritizing a focused set of verticals, including health care, workforce, consumer and an early but significant opportunity in government and federal relationships. The platform economies of scale in our business model have become increasingly evident. We are driving meaningful operating leverage as we scale with close to 70% adjusted EBITDA flow-through and highly attractive levels of free cash flow conversion.

In Q1, we generated $62 million of operating income and $80.6 million of adjusted EBITDA, representing a 31.9% adjusted EBITDA margin and 7.2 percentage points of margin expansion year-over-year. Q1 net cash provided by operating activities was $190.4 million and free cash flow was $185.5 million, representing 103.2% year-over-year growth. Our strong performance and operating rigor position us positively as secure identity becomes increasingly complex and foundational. We are accelerating our product road map across CLEAR Travel and CLEAR1 and are leaning into marketing to drive greater brand awareness for CLEAR as the leading secure identity company. We are doing this while delivering expected adjusted EBITDA margin expansion in 2026 relative to 2025 and simultaneously increasing our free cash flow guidance for the year.

We ended the quarter with $800 million of cash and marketable securities on our balance sheet, which provides us strategic flexibility while capitalizing on macro tailwinds and operating strength. Turning to guidance. For Q2, we expect revenue of $268 million to $271 million and total bookings of $280 million to $285 million, representing 22.8% and 26.7% growth at the midpoint, respectively. In light of our Q1 outperformance and confidence in our ability to sustain the momentum, we are increasing our 2026 full year free cash flow guidance from at least $440 million to at least $465 million, which would represent an increase of approximately $120 million year-over-year and at least 36% year-over-year growth. With that, we will open the call for Q&A.

[Operator Instructions] Our first questions come from the line of Joshua Reilly with Needham.

All right. Congrats on an extremely impressive quarter here. So just maybe to hit on the bookings for CLEAR1 to start with. Maybe you could just explain why now after working on this for a number of years, are you seeing such impressive momentum in the CLEAR1 bookings with both not only enterprise but government use cases? And what is it that's differentiated about your platform that's helping you win this business versus competitors?

Thanks, Josh. I think that there's a few key points. For a long time, I would tell you that we were a solution looking for a problem. We said that identity is security. We said that identity is infrastructure. And then you saw the world turn over the last few years. You saw it on the cyber front. You saw it on the fraud front. You saw it on the interoperability of health care front. And so identity has become ever more important in the digital world, and there's now problems looking for our solutions. And with a trusted brand with over 41 million members on the platform, CLEAR is the company that people call to help them solve their problems. I also think that AI is accelerating the need for trusted identity, physical, digital and agentic worlds. And so I think that is another accelerant. I think identity is absolutely becoming more complex. And so verifying that you are you and connecting you to all the things that make you you has never been more important.

So you think about what makes CLEAR special. First of all, a trusted brand. Second of all, a network of identities who know that they have enrolled in CLEAR, who have opted in and look for CLEAR in more places. And then total identity integrity. A driver's license is no longer true identity. So when you look at what we've done in the airport as a qualified anti-terrorism technology with next-gen identity with source corroboration with a digital footprint, ensuring true identity, think about the agentic world. It's not just knowing who you are, that's the foundational piece. Then what about the 100 agents that are connected to you and what they should have access to. Look at the physical world in security. There are events at this point on a weekly basis. You have to know who you are letting in and what they should have access to. Look at workforce with North Koreans infiltrating critical infrastructure. Look at the administration with an executive order trying to reduce fraud. While we've started in Medicare, there's Social Security, there's IRS right? There are so many places where you need to bring program integrity. And so it is the time, and we are here to meet the moment. I think we've been very public in airports for 16 years, right? Millions of people go through that every day. There was no better place to build our brand and our capabilities. And so it is a very natural transition to these other areas that have a sense of urgency right now and that we are building strong long-term partnerships with.

And Josh, I might just add, I think the business momentum that Caryn just described is really translating across the board in our financial and operating metrics for that business. We're seeing our pipeline grow. We have a very healthy number of new partner wins, 7-figure contract deals are up, and we have very strong net retention -- net revenue retention. So overall, I think all positive signals for that business.

Awesome. And then just one follow-up. As you look at the 8.2 million active CLEAR+ members, obviously, that's a significant acceleration by any way of looking at it. Can you just help us understand what was the mix maybe of trial customers that were added in the March quarter there with the TSA shutdown versus full paying members? And any early read on how you're going to be able to keep this cohort that you added with the TSA troubles now that things have normalized?

Sure. I guess, Josh, I would say I think we would have -- we expected to sustain and build upon our momentum heading out of Q4 and entering this year. And so I think we would have expected sustained growth from an Active CLEAR+ metric relative to Q4 of '25. From a trial perspective, I think we feel pretty good about our ability to convert those trial members from the sort of few weeks of shutdown into healthy paying customers and bookings. And you see that reflected both -- I think, both in our Q1 results, but also in our Q2 guidance. And probably most importantly, the members that we acquired during the shutdown, I think, signed up at a period of time when our value proposition was particularly evident. And so I think we feel very good about our ability to retain those members for the long term.

Our next questions come from the line of Cory Carpenter with JPMorgan.

I had to -- maybe, Caryn, for you I'd be curious, just I think there's some debate in there around the broader health of the travel environment. So curious what you're seeing there in recent weeks given some of the higher oil prices and geopolitical issues. And then secondly, just, Jen, the commentary on the demand before the TSA turmoil was helpful. Curious how has demand looked kind of since the TSA wait times have normalized? Do you worry at all that there could be a bit of an air pocket after perhaps a bit of a pull forward?

So I'll go first. I think I'm going to repeat what we've always said, which is consumers love to travel and yet day of travel is really hard. I would look to the other travel companies, whether it be the airlines talking about very strong top line growth. Certainly, some of that is revenues, but it's also volume going through airports. Airport traffic has remained, I would say, steady. And I think the most important thing for us is the value proposition. So I would say it's a backdrop of fine, strong travel growth. I haven't seen a big impact yet from oil. You are seeing corporate travel strengthen. So I think that, that's really important also when you look at the type of customer there. But for us, it's really about controlling our own destiny and driving the member experience. And so we're halfway through our eGate rollout. That has just such a massive impact on the customer experience, which drives retention, gross adds, conversions, the whole thing. And so continuing to drive that over the next quarter, rolling out our concierge business, which while we're excited to be in over 30 airports today, we are still missing our biggest cities like New York and L.A. and San Francisco. So bringing those on this year will continue to drive it and continuing to have an accelerated product release cadence on our app so we can really build the home to gate experience, not to mention partnerships. So we see a lot of opportunity to continue to drive the customer experience both on our own and with partners against, I would say, a reasonable travel backdrop. So we're all watching oil. But thus far, if you look at the other travel companies, demand has remained strong.

And Cory, to your question around sustainability of growth, I think that's reflected in our Q2 outlook, which implies 27% year-on-year growth at the midpoint and continues to accelerate relative to where we were entering the year. I also think it's important to emphasize that the strong underlying demands in our business are not masked by what was really kind of a 3-week benefit from the shutdown. Our NPS scores have been consistently at a multiyear high, and I think is representative of the work and the investments that we've made over the past few years as travel has gotten harder and become more challenging for consumers. And so overall, I think we continue to enhance our value proposition. And by the way, we think we still have a lot more to do there. We are continuing to roll out our eGates across the network. We are very early in driving brand awareness for Concierge as just a few examples.

Our next questions come from the line of Eric Sheridan with Goldman Sachs.

Maybe just one big picture question, just tying into some of the comments you've made so far, Caryn. Just in terms of when you get this type of signal from the end market in terms of product adoption, is there any reordering of priorities, things that you maybe would have had on your long-term strategic or investment road map that make you want to pull those more forward? So just understanding a little bit about reordering of priorities, if any, and what implications that might mean for emphasis on growth relative to incremental margins in the business, not just in 2026, but maybe over the medium term?

Yes. Great question. So I would say the free cash flow that you saw and that we projected for the year is inclusive of accelerating investments in product, engineering, brand, marketing and security. And so we are making those investments, and those are in the numbers that we've shared today. So absolutely, we've seen the signals. We are accelerating our investment in product, in marketing, in brand awareness, right? It's very important that CLEAR is known as the trusted secure identity platform that can solve your problems for your workforce and for your consumers that we can make experiences safer and easier physically and digitally, right? And so we need to be known for that. We are telling people about that. You will see more of that. I talk a lot about product release cadence. I think becoming more AI native. The expectation is that we are releasing more products for both CLEAR1 and CLEAR Travel with higher velocity and better releases in terms of quality and customer launches. We are investing in sales. We're investing in customer success. And so -- but again, all of that is inclusive of the numbers that we have put forth. And so we're really excited to be able to lean in on these fronts and still generate very strong free cash flow. And quite frankly, have a very strong balance sheet, which creates optionality for us to continue to invest in different ways.

Our next questions come from the line of Mark Kelley with Stifel.

This is Brennan on for Mark. I guess, first on CLEAR1, I think last quarter, you guys had called out that the business was doubling year-over-year, and now it's growing at 5x that rate. So it's a pretty nice acceleration there. You had a handful of announcements over the last quarter, new partners and inclusion on the FedRAMP marketplace. I was wondering if you'd be able to walk us through kind of what the typical ramp process and timing looks like for a new partner add in the CLEAR1 business. Is it just as simple as like kind of flipping on a switch to get CLEAR1 turned on? Or is there more of an integration and ramp to get CLEAR1 working across the partner's whole network?

So, I would say that it depends. We can come back to you with an average day, but it depends if we're going through a partner, at which point our partnerships with people that we've previously announced like an Okta can be very, very fast, being in the Epic identity toolbox, right? Those sorts of things are extremely fast, sometimes as quick as a few days. If it's not with a partner, it can be a little bit longer. And we continue to reduce that launch time as well. So it does depend on how they come in. I think one of the important things that we've honed that I'm proud of over the past year is less bespoke customization and more off the shelf. And I think that's been really important from a discipline perspective as well as an acceleration. We understand what our partners want and need. We've built it. We've learned from the launches that we've had so that we can not just launch faster, but sign faster, right? And I think that all of those things are accelerating, and we're measuring them closely and trying to do better every single day. But the lack of customization has been really important for the business. I think the other piece, and this goes back to an earlier question, is CLEAR has raised the bar on identity. And having total identity integrity, not just a picture of a driver's license is massively important. And so partners want to work with us. They want to get this on. They want to improve their customer experience. They want to reduce fraud. And so again, when you have a coalition of the willing, things go faster.

Great. And a quick follow-up. You guys called out the World Cup as a travel-heavy event this year. I was wondering if any of these kind of big events where a lot of people are booking travel have any impact on your marketing strategy or cadence. Are you kind of looking to reach people at the time of booking or maybe closer to the time of travel? Just wondering if you could touch on that.

So something that's been quite magical for us to communicate is the calendar sync, right? So now that we know when somebody is traveling, and we would encourage everybody to sync their calendars with the CLEAR app, we can better serve potential customers and talk to them for things like Concierge. I think there's 2 things that we think will benefit from the World Cup. One is international. So I know we've talked previously, 42 Visa waiver countries can enroll in CLEAR with their passport. They don't even have to be in person at the airport. Those international travelers have no other options in U.S. airports for an improved customer experience. So that's important, but also being able to -- and we're also, again, improving products and awareness for calendar sync, but also beyond to let people know when we're launching Concierge in their market and to talk to them ahead of their travel or after they've gone through the lane, right? We know where you're going. So we could certainly talk to you through e-mail and other ways of communication. So we're starting to take advantage of all of those. But the app really is the great unlock to communicate seamlessly with travelers about whether it be update your credit card, update your driver's license, you're not REAL ID ready, do you want a Concierge, you can add family members, the ability to personalize and customize and communicate with people in ways that they want to be communicated with. We were way too constrained to e-mail for far too long.

Our next questions come from the line of Dana Telsey with Telsey Advisory Group.

Congratulations on the terrific results. As you think about your network outside of travel, like Medicare, any updates on that and what you're seeing in the progress there? And then you speak about marketing, how do you think about marketing spend going forward? And also just overall on pricing and any new demographics that you're getting coming into the network?

Okay. Dana, that's not one question. That's like five. So we'll start with CMS. CMS was originally part of reducing fraud in Medicare. But I think what you're seeing in CMS is the focus there is extending, as I talked about, to other areas. Social Security and Medicare are closely connected. But you look at the rural health dollars, I think the administration has budgeted $50 billion for rural health. That's Medicaid. So taking that same concept of what we can do for Medicare to Medicaid and other places in the government. Now there's an executive order to reduce fraud. So I do think it's gone from CMS to other agencies. And that is why you've heard us talk this morning about GovTech, right? CMS is health care, but GovTech is a broader opportunity for CLEAR. And obviously, it's where we started in partnership with the Department of Homeland Security. So we feel acutely capable of this opportunity to be really good partners and continue to build public-private partnership with the administration. In terms of demographics, I think you bring up a really interesting point, and I think this ties a little bit to the marketing spend that we talked about before Jen talks about like net member growth and performance and digital marketing. I think one of the learnings is we need to be talking to Medicare patients who may not be travelers, right? And so letting them know who we are and what we do. And even if you do know us, you think, oh, well, that's a subscription in the airport that I need to buy. But in fact, it's free for you. It's a simple enrollment and CLEAR is a trusted brand that will protect your privacy and secure your data. And so that's a new messaging opportunity for us that we are investing in is really important for us. And that does expand our demographics, right? And so you are seeing demographic expansion through CLEAR1 with partners like CMS. But with partners like Home Depot, typically, and we've talked about this, typically, when we launch a new partner in CLEAR1, we might have 25% overlap with a CLEAR Traveler and then it builds over time. And that really is the power of the network. So our network is growing, our use cases are growing and our demographics are expanding.

And Dana, I think you had a market -- just a broader marketing point. Caryn alluded to this, but that is an area that we intend to lean in given the momentum. And we expect to pursue a brand marketing campaign to really emphasize I think, CLEAR's umbrella position as the leading secure identity company across our CLEAR Travel and our CLEAR1 portfolios. So we do expect marketing to increase modestly. But obviously, we will do that in a disciplined manner in the way we've always done and while we continue to expand overall margins simultaneously. I think the other question you had was around pricing. I would start by saying, I think our first focus is always around delivering value for our members, which starts with member experience, and we've made a lot of progress there. And when we do that, we believe the opportunity to adjust pricing comes alongside that. You've heard us say in the past that we anticipate taking a more measured approach to price increases, which would be consistent with our pricing actions in 2025. And I think our philosophy there remains consistent.

Yes, the one other thing that I would just add on the marketing side is that there's certainly the dollars that we invest, but then it's also how we think about how we market to our customers through the whole customer journey. And when we think about the experience that we're providing in the airport, which we think both drives the marketing that we have there as well as the experience that drives retention. And then we think about how we can use performance marketing in a very efficient way to reach our members. And increasingly, with the broader network, we have more people who we can reach through that. And so it's both what we invest directly, but then it's also how we use performance marketing and our experience to drive that for both new members and retention.

Our next questions come from the line of Wyatt Swanson with D.A. Davidson.

Could you maybe detail how you think continued strong top line growth like this is sustainable beyond the second quarter and into the second half of 2026 and 2027? And maybe talk to how average revenue per CLEAR+ member may change over the coming quarters given some changes that you've made with different partners?

Yes. Well, I would come back to member experience. We've made a lot of progress, which has been the outcome of, I think, investments again over a multiyear period, and that is starting to show up in our flywheel, if you will, of stronger NPS scores, which drives greater member acquisition and then ultimately, member retention, which started to improve and increase in the back half of last year. And so I think again, I would point to Q2 guidance, which is a reflection of our ability to sustain the growth. I think we have confidence in the balance and the back half of the year. And we have broader levers, I think, beyond that, both from a member growth perspective, a pricing perspective and then the momentum in CLEAR1 to sustain our growth in future and outer years.

I think if I can just add to that and with a little bit more granularity, we still only cover 75% of the U.S. from a travel perspective. We think that there's network growth. So think of that as stores. And I think, again, no different than CLEAR1, a solution looking for a problem versus a problem looking for a solution. I think what you saw in March was the structural challenges and instability of the travel industry and ecosystem and CLEAR can play a massively important part, and we did. We drove efficiency. We drove throughput. We drove customer experience. And so I think more airports want that in the U.S. and then tangentially outside the U.S. And so there's opportunities for network growth. The better the customer experience, the stronger the retention. I will say that we've built a strong data analytics and business intelligence capability that not only goes to the performance marketing that Michael and Jen were talking about before, but also talks about how we serve our current members. And so there are so many opportunities, not to mention products. And so you do see ARPU opportunities based on our partnerships, but you also see it importantly based on take rates of new products, whether that be driving the family attach rate because you have a great experience, whether that be Concierge and then PreCheck and more. And so continuing to drive that creates opportunities in the travel business. It's still early days in PreCheck growth. We're really only 2 years into that program, let alone Concierge when we're at day one. And then on the CLEAR1 business, we're just getting started. And we also think that there's more products in the airport side. Again, I think identity is massively important across the airport ecosystem, not just for travelers, but for workforce. And so this is really about prioritization here, improved products, product release, brand awareness and marketing, and we're investing into that this year, and you already see that in the numbers. They're included in the numbers that we've put forth that will not only continue to fuel this year's growth, but out years growth.

Got it. That's really helpful. And then I guess one quick follow-up. How do you think about your ability to maybe support a broader travel member network, given like the eGate rollout, maybe the ability to just support more travelers without increased wait times and maybe balancing that versus price increases for members?

Look, I think you're seeing the throughput from eGates. -- we've talked about significantly higher NPS scores from eGates versus non-eGate. We've talked about average wait times of under a minute. We've talked about verification in less than 5 seconds. That is throughput. You're seeing in some markets, if you live in New York, hopefully, in LaGuardia Terminal C, you'll see a single eGate going into a double eGate. And so, right, continuing to drive that is so important. And so we think that there's a lot of opportunities. And quite frankly, you saw low wait times even in really challenged periods in March. And so I think the efficiencies that this drives, not just for us, but for all travelers and for our partners at TSA is already evident.

Thank you. We have reached the end of our question and answer session. I would now like to hand the call back over to Caryn Seidman-Becker for any closing comments.

Thank you for joining our first quarter earnings call. This quarter underscored the importance of being a trusted secure identity platform as the world needs greater security and more frictionless experiences physically and digitally. Thank you.

Thank you, ladies and gentlemen. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Good morning, and welcome to CLEAR's Fiscal Fourth Quarter and Full Year 2025 Conference Call.

We have with us today Caryn Seidman-Becker, 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 annual report on Form 10-K. These items can be found on the Investor Relations section of CLEAR's website. With that, I'll turn the call over to Caryn.

2025 was a defining year for CLEAR. Becoming the trusted secure identity company is no longer a goal, it is our reality. CLEAR is incredibly well positioned, sitting at the intersection of security and the experience economy. In an era where identity has never been more critical, CLEAR is the trusted standard. We are an essential layer connecting and securing the physical and digital world.

Over the past 15 years, CLEAR has built deep expertise as a secure identity company. We operate in both physical identity and digital identity, across regulated consumer and enterprise environments and have built a trusted brand that stands for high fidelity, secure identity, privacy and a frictionless member experience for our nearly 40 million CLEAR members. We are operating with greater urgency than ever because identity is at an important inflection point. Identity is under constant siege and it is the tip of the spear for getting security right as threat actors create greater risk.

As agenetic identity evolves and identities are multiplying exponentially, knowing that you are you and connecting you to all the things that make you, you, is crucial to manage and secure access. CLEAR has become the trusted standard and operating system for identity across both the physical and digital world. This is creating significant opportunities in both our B2C CLEAR Travel business and our B2B CLEAR1 enterprise business.

I wanted to share 2 of CLEAR's core pillars this year: enabling identity to transform and secure physical experiences from Home to Gate and travel, and aggressively scaling CLEAR1 to secure the enterprise for both the workforce and their consumers or patients in health care.

In CLEAR Travel, helping travelers win the day of travel with a frictionless Home to Gate experience is our North Star. Consumers don't want process, they want outcomes. They want to leave their front door and be at their gate with as little hassle as possible. To achieve this, we have doubled down on innovation with our relaunched mobile app, scaling the CLEAR Concierge program and our eGate rollout with more to come.

Our new mobile app reflects our obsession with the frictionless member experience. Just one tap and you are in, seamlessly connecting traffic, the speedy clear lane and the walk to your gate, you can know exactly when to leave to get to your gate perfectly on time. You can also personalize it as we all know people who like to arrive at their gate as the doors are closing, or my mom, who prefers to arrive 2 hours early, no matter what I tell her.

You can now easily add a concierge at almost 30 airports. A beloved CLEAR ambassador can meet you at the curb and take you straight through security to your lounge or your gate. Live activities will help guide you step-by-step through your journey. This is a total reimagining of how an app can transform and connect your travel experience to help win the day of travel from Home to Gate and back again.

The rapid expansion of our Home to Gate experience reflects our focus on the member experience and future-facing innovative culture. This drives higher NPS, strengthens our brand and increases long-term retention. When you provide a premium magical experience, customers don't just stay, they become evangelist. Strategic partners also appreciate the importance of a member obsessed frictionless travel experience.

I am pleased that we are lengthening and strengthening our partnership with American Express. This has been a great partnership for the past 5 years, and we look forward to continuing to build it from here. Accelerating progress building robust public private partnerships at the federal, state and local level is also creating more opportunities.

We continue to work with the administration and TSA to modernize travel at no cost to taxpayers. When you align private sector speed with public sector scale, the results for the American traveler are powerful.

I love to talk about the and, CLEAR is a travel powerhouse, and we are becoming a force in enterprise. CLEAR1 delivered a record-breaking quarter. This is validation that our principled multilayered approach to identity is winning. Working to reduce fraud, waste and abuse and Medicare by building an identity interoperability layer is a testament to our opportunity and our strategy.

As the largest health care payer in the U.S. CMS is integrating CLEAR1 to modernize account creation and fraud prevention for millions of beneficiaries. We are helping CMS move toward a patient center future by providing a secure, one-and-done identity layer, in one of the world's most regulated environments.

Beyond health care, we are also seeing a pull from the Fortune 100 to secure their workforce, critical infrastructure and their assets. Many have experienced breaches, data exfiltration and insider risk. This is a here and now problem that is multiplying, from telecom giants to critical banking infrastructure, the world's most sophisticated companies are choosing CLEAR1 to secure their workforce life cycle.

The beauty of CLEAR1 is its network depth and seamless integration into existing workflows. We don't ask companies to change how they work, we plug into the systems they already use. We verified the human behind the device. We are delivering total identity integrity in a world of Deepfakes and AI-driven fraud knowing, who is who, and, you are you, is the only thing that matters.

As we said 5 years ago in our S-1, at CLEAR, we believe in the [ and ]. We can deliver both growth and profitability. We have done that. The flow-through of the business from revenue to free cash flow speaks to the power of the CLEAR model. I am proud of our discipline to accelerate growth and be highly profitable. We have created the foundation and leverage for significant growth ahead. At CLEAR, we are building the infrastructure for a world where you are always you.

We enter 2026 from a position of strength. Our fourth quarter acceleration is a direct result of the investments we have made over the past few years and the seeds that we planted that are now growing into forest. We have the cash, the talent and the momentum to continue scaling.

With that, I will turn it over to Michael.

Thanks, Caryn. A key focus for us over the past year has been improving the member experience, and we have made significant progress. Our strengthening member experience is a rising tide that improves member acquisition, conversion, retention and our brand for CLEAR1 and our travel partners. Additionally, we have network expansion opportunities, both domestically and internationally, and our strong partnership with the TSA allows us to work together to improve the travel experience in the U.S. TSA pre-check, Concierge and CLEAR1 are businesses that remain in their early innings and are increasingly important contributors to our overall growth.

Partnerships remain a strategic part of our business, and an attractive member acquisition channel. We're pleased that we have renewed our partnership with American Express, offering CLEAR+ as an embedded benefit on the American Express consumer, corporate and small business Platinum cards and select other American Express card products. This multiyear renewal reflects the value of CLEAR+ for American Express cardholders and the strong partnership that CLEAR and American Express have established over the last 6 years. We look forward to continuing to provide great experiences for our American Express members.

The need for secure, multilayered identity infrastructure has been amplified, and we are entering this chapter from a position of strength. Our balance sheet is robust and growing, providing us meaningful flexibility. In a rapidly evolving identity landscape, we believe we have attractive opportunities to develop more partnerships and make disciplined investments that will deepen our Home to Gate, CLEAR Travel membership experience, increased penetration of CLEAR1 and shape the future of the identity industry.

I'll now turn it over to Jen.

Thank you, Michael. 2025 was a year of disciplined execution and structural improvement. In Q4, bookings accelerated to north of 25% year-over-year growth, the highest level since Q4 2023. And adjusted EBITDA margins reached well over 30%. In 2025, we generated over $340 million of free cash flow and returned over $240 million of capital to shareholders, all while investing to position us favorably as a leader in secure identity.

Our Q4 results reflected our 2025 initiatives, and we ended the year in a significantly stronger position than we began. We improved the member experience, completed a billing system migration and made meaningful progress against our product and technology road maps. Our fourth quarter performance gives us confidence in the step change growth that we expect in 2026 as we continue to expand margins and generate materially higher levels of free cash flow.

In the fourth quarter, revenue grew 16.7% year-over-year to $240.8 million. Total bookings increased 25.4% to $287.1 million. For fiscal year 2025, revenue was $900.8 million, up 16.9% and total bookings were $977.2 million, up 17.2% year-over-year. There are multiple structural drivers that will underpin durable and increasingly profitable growth in 2026 and beyond, including the growing size of our member base, improvements in member experience and policy, resulting in strong retention trends, attractive partnership economics, a disciplined approach to pricing, ARPU growth through product expansion and new businesses as well as the continued scaling of CLEAR1.

Following a comprehensive review to simplify our reporting, I'd like to provide an update on our KPIs. Beginning in the first quarter of 2026, we will discontinue 3 metrics: total cumulative platform uses, annual CLEAR+ gross dollar retention, and annual CLEAR+ Member usage. Effective as of Q4 2025, we are renaming total cumulative enrollments to Total CLEAR Members with no changes to the calculation of this metric. Starting in Q1 2026, the KPIs we will report are total bookings, Total CLEAR Members and active CLEAR+ Members.

Q4 active CLEAR+ Members grew to 7.6 million, up 6% year-over-year and reflect a onetime cleanup of lapsed accounts as part of a billing system transformation project undertaken during 2025. This had no impact on revenue, cash flow or any other financial measures.

Q4 Total CLEAR Members grew to 38 million, up 31.5%, demonstrating the sustained momentum in CLEAR1. We are the largest bookings quarter for CLEAR1, more than doubling year-over-year. Q4 also marked another record quarter for the largest number of enterprise customers signed. Q4 and full year 2025 represented record profitability for CLEAR. Our results reflect our ability to drive growth and deliver strong flow-through to the bottom line. The structural improvements we put in place throughout 2025 delivered over 33% adjusted EBITDA margins in Q4 an increase of 870 basis points from Q4 2024 and position us to continue expanding profitability.

In Q4, cost of direct salaries and benefits represented 19.3% of revenue, an improvement of approximately 390 basis points year-over-year. We delivered sequential expense leverage in every quarter of 2025, and we expect to realize additional efficiency benefits over time.

Our G&A trajectory illustrates the operating leverage we can drive while also investing in strategic priorities. Full year G&A grew at less than half the pace of revenue and over the last 2 years, G&A as a percentage of revenue has improved by more than 10 percentage points.

In Q4, we generated $53.9 million of operating income and $79.9 million of adjusted EBITDA representing a 33.2% adjusted EBITDA margin and 8.7 percentage points of margin expansion year-over-year. For the full year 2025, we generated $186.5 million of operating income and $262.2 million of adjusted EBITDA, representing a 29.1% adjusted EBITDA margin, 4.8 percentage points of margin expansion year-over-year and over 50% flow-through.

We continue to deliver strong free cash flow. For the full year 2025, we generated $372.5 million of net cash provided by operating activities and prudently invested $29.3 million of capital expenditures resulting in free cash flow of $343.1 million, significantly ahead of guidance.

We have managed dilution consistently and rigorously with stock-based compensation expense as a percentage of revenue decreasing meaningfully since our IPO to 4.3% in 2025. Coupled with our capital return strategy, our total shares outstanding have decreased over time by 14 million shares or 9% since our IPO in 2021.

We ended 2025 with $703 million of cash and marketable securities, and we expect to exit 2026 with over $1 billion in cash on our balance sheet and no debt prior to any capital returned to shareholders.

Our Board of Directors approved a 20% increase to our regular quarterly dividend from $0.125 to $0.15 per share. In 2025, we repurchased 5.3 million shares for $126.3 million at an average price of $23.86 reducing total shares outstanding by 3% to 133.2 million shares. Our Board has also authorized a $125 million increase to our share repurchase program bringing the total capacity under the repurchase authorization to approximately $250 million.

We will continue to take a disciplined approach to reinvesting in the business while returning capital to shareholders.

In 2026, we expect accelerating top line growth and margin expansion, which will translate to significant free cash flow growth. We expect 2026 full year free cash flow of at least $440 million, which would represent an increase of approximately $100 million and at least 28% year-over-year growth.

Based on prevailing tax rates and our corporate structure, we expect full year 2026 GAAP P&L taxes to range between 18% and 20%. For Q1, we expect revenue of $242 million to $245 million and total bookings of $248 million to $253 million, representing 15.2% and 20.9% growth at the midpoint, respectively.

We will now open the call for Q&A.

[Operator Instructions] Our first question comes from Eric Sheridan with Goldman Sachs.

Caryn, I wanted to put a finer point on some of your messaging this morning and better understand how you see your strategic priorities laying out over the next 12 to 18 months that can either maintain or build on the momentum you have on the member side and the subscription side in terms of building both investments in the business on the tech side as well as further connectivity around brand and go-to-market strategy.

All right. That was like 8 questions in one. I respect that, Eric. So we'll talk about the 2 core pillars that I talked about because those really are key drivers for the business this year. When you think about our B2C CLEAR Travel business, building this Home to Gate experience, right? People don't just want to get through the security lane, which we're certainly doing that better than ever with higher NPS scores than we've had because of the eGate, but driving a predictable, consistent nationwide network and member-centric experience drives retention and you're seeing that come through the fourth quarter numbers, that's a financial driver to 2026.

It drives gross adds, it drives conversion and with evangelism comes family attach rate and other ways to sell and to partner. And so the innovation that we've put forth with the app, with the eGate and more to come are a key driver to financial returns to member growth and also the operating leverage and the flow-through that you see because of the automation when you can enroll on your phone with your passport, when we expand our TAM to now 42 Visa waiver countries, and by the way, we only cover 75% of the U.S., so network growth as well. Those are big growth drivers on the travel side.

And certainly, what we talked about on identity and being the tip of the spear for security and the opportunities that AI is presenting for CLEAR, both to drive our own productivity but certainly to drive our CLEAR1 business. We've invested in that business. So you are seeing the results of that investment, both from a top line growth, contracts signed, really focused on workforce, health care and GovTech and we are uniquely positioned for that. And so signing more contracts, net revenue retention in that business. So going in with a bigger book of business this year and being able to cross-sell, up-sell, grow that business, have those customers turn into evangelists and sign more new customers at larger sizes because quite frankly, the crisis in identity is growing are major drivers this year.

Some of that are certainly the seeds we planted for the past few years, and then we're planting new seeds this year. And you're seeing that incorporated in our free cash flow guidance, right, which is why I love talking about the and because we have been investing, we are investing, and we are generating stronger free cash flow.

Our next question comes from Cory Carpenter with JPMorgan.

I wanted to ask about the government shutdowns, maybe, Caryn, just how did that impact you guys during the last shutdown. And I think there's a lot of concern that the TSA may shut down any day now. So if that were to happen, could you just discuss how that would, would or would not impact your service? And then I had a follow-up for Jen after.

Yes. I think the power of a public-private partnership, and we were very clear in our communications this weekend, which is CLEAR is open. And we're here to serve our airport partners, our travelers and certainly, our airline and government partners. With a winter full of weather, so that not only is there the government shutdown disruption, but certainly with the winter full of weather, and other travel disruptions, I think what you're seeing is a renewed appreciation for the consistency and the reliability of CLEAR by our members and our partners.

Travel continues to be strong. You've certainly heard that from the travel industry with a continued focus on premiumization. And so quite frankly, I think the power of the public private partnership and our ability to serve members, our ability to staff up and our ability to serve our partners is more appreciated and more important today than ever before.

And Jen, the free cash flow guide, it implies a pretty significant acceleration this year. Could you just maybe unpack some of the drivers of that? And then in your prepared remarks, you had mentioned, I think, top line accelerating. Is that specific -- do you expect bookings to accelerate this year?

Sure. Cory, maybe I'll start with top line. I think I come back to the member experience, and I think the improvements we've made there is really a propellant to really all our key metrics. That includes higher retention, better member acquisitions, stronger NPS. All of that ultimately just drives a more durable top line growth profile for our CLEAR Travel business. And as you heard Caryn just say, CLEAR1 is really we think reaching escape velocity. We had another record bookings quarter. We again signed our largest number of new CLEAR1 partners. So we feel incredibly well positioned to capitalize during a time when identity security is top of mind across enterprises.

On the free cash flow side, as you said, our guidance implies continued leverage on a business model that is already demonstrating a highly strong profitability. I think importantly, the bigger picture is that we are operating subscription-based businesses with strong recurring revenue in both our B2C CLEAR Travel business as well as our B2B CLEAR1 enterprise business.

So when our member experience is improving, that is driving higher levels of retention again, both for our members in CLEAR Travel as well as the net revenue retention for -- from our enterprise partners. So all of that is really reinforcing flywheel, and we believe we'll drive better and better economics in our business and ultimately, higher levels of profitability and flow-through.

[Operator Instructions]

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

Nice to see the solid results. Can you talk a little bit about, you mentioned the American Express partnership was extended. What's different now about the partnership than before? How long is it extended for?

And then on the B2B enterprise side of the business, it was good to see the Mount Sinai affiliation yesterday. What else are you looking for as we look through this year? Is it more expansion into health care than anything else? And how do the margins compare on those businesses?

Thanks, Dana. Yes, the agreement with American Express extends into a multiyear agreement. We're not disclosing specific terms, but we are really excited to continue to provide our American Express card members with the CLEAR Plus embedded benefit which we really think aligns, right, the American Express experience with our travel experience.

And we also think the structure of the renewed agreement reflects the value that we each bring to the partnership, which, of course, has been an incredibly valuable one for us over the last 6 years, and we expect that to continue over the coming years. So we're really excited to be able to announce that today. And again, not disclosing any specific terms of that, but moving forward with that in a great way.

And in terms of CLEAR1, Dana, Mount Sinai is certainly an exciting partner. And I think it really does talk to ecosystems that we're building. We have a strong network here in New York in terms of the travel business, in terms of the sports capabilities, and now adding health care networks on that are a natural growth for CLEAR. And again, as we turn into a daily habit for members, it's a really powerful use case.

When we think about health care, I think it's important to talk about CMS, which is an anchor health care contract. It's multiyear in nature. And as we talked about last quarter, that contract connects to the pledge. I think last time we talked about 60 companies that have signed the pledge, I believe that number is like up tenfold, closer to 600. And so that's creating a network which is driving a pipeline for us in health care. So being part of Epic in the identity toolbox, being part of CMS as the identity interoperability layer, makes it easier to sign health care partners like Mount Sinai because it's much easier to connect you're already embedded in it. So we are signing more health care partners across the country.

And then the other thing is for the health care partners that we have, perhaps we started with workforce but then add patient or perhaps we started with patients and then are adding workforce. So it really is this very exciting flywheel. And obviously, killing the clipboard is something we've been passionate about for many years. If you come to our offices, we actually have a sculpture made of old clipboards that we made many years ago. But now having the administration also aggressively lean into that, it means that there's a lot of motivation at the federal level, moving on to the state level where there's a whole rural health care initiative that is mirroring what's happening at the federal level.

So it is a very exciting moment for CLEAR in health care and quite frankly, for patients and for doctors and nurses who work in it.

Our next question comes from Michael Turrin with Wells Fargo.

This is Ronit on for Michael. I just wanted to pick apart the kind of drivers of bookings. Maybe if you could talk through CLEAR1 versus the kind of core CLEAR+ and how it impacted bookings? And then how your bookings pipeline looks for '26?

Yes, I would say for Q4, our performance was really strong across the board. We said we had the highest year-on-year bookings growth for CLEAR+ since 2023. And again, CLEAR1 had its strongest bookings quarter by quite a distance. And so the performance you saw in the beat relative to guidance was really strength across all our businesses.

Got it. And just a follow-up. I just had a question on like the recent kind of TSA impacts. Has that shown in your business? And do you expect it to be a forward tailwind, especially on like the value prop of CLEAR?

I think as I talked about a little bit earlier, you're seeing a renewed appreciation of the predictability and the consistency that CLEAR brings. I think that's been improved by the eGates. And I certainly think, and you've seen this throughout the 15 years that there's moments of enormous instability in the travel sector. And people have come to rely on CLEAR in its moments like that when I think the appreciation grows, but it's our job to continue to grow the customer experience in a consistent way. I think that is the greatest driver of our long-term sustainable growth.

And I think I'd just add that one of the benefits that we have from the member experience, improvements that we've had over the last year and implementing the eGates is that our ambassadors, right, 3,500 strong across our 60 airports can increasingly focus on hospitality and the customer experience in the airports. And so while there's disruptions in travel, whether that's weather or otherwise. We really believe that part of our member experience is that ambassador hospitality. And with the innovations and technology and improvements that we've made, our ambassadors are increasingly able to focus on that, which becomes really important in building out this Home to Gate experience and membership.

We've always believed that it's technology and hospitality. And so when we talk about sitting at the intersection of security and the experience economy, that is massively important in the travel experience, which is highly fragmented, very challenged. And as we head into the World Cup and America 250, it is hard and getting harder. The volumes keep growing, and so you need innovation to drive this experience. That is what we're known for.

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

Could you talk about how CLEAR+ Member adds in 4Q looked at airports that have eGates versus airports that don't yet have eGates? And whether you expect those trends to continue?

Yes. I think we're seeing strong adds across the network. What I can comment on is that we're seeing really, really strong experience scores, where the eGates have been implemented. And obviously, we just started putting eGates in, in the second half of last year. So the impact of the eGates is still actually relatively new. And many of the airports that got eGates came actually in the later half of the fourth quarter.

And so as we continue to season those, have more people experience that, what we're seeing is an immediate impact on our NPS and lane experience scores. And we think what will happen because of that as those experience pieces tie into retention that we're starting to see the early benefits of that.

And so in the guidance that Jen shared, we certainly are expecting improvements in retention, which we're already seeing. And we do see that as part of the holistic member experience. And so we're really encouraged by the early results that we're seeing from the eGates and we think that will only continue to grow as more and more of our members experience those and as we get the coverage across our network in the coming quarters.

If I can just add to that, eGates are an unlock to the Home to Gate experience. And so we think holistically, as we look at both the numbers in the fourth quarter, which I think showed early signs of impact on the good work that we've been doing. But when you look at the mobile app, when you look at Concierge, when you look at eGates, when you look at the hospitality and then you look at our ability to grow our partnership because of a differentiated premium member experience, the whole thing drives retention, drives gross adds, drives conversion, drives the willingness to take on new products from CLEAR. So it's just a really powerful flywheel.

Got it. That's really helpful. And then on the CMS partnership, can you talk about like why CLEAR is suited particularly well to serve CMS relative to other companies out there? And then perhaps some details as to what the contract structure looks like? I believe you mentioned multiyear, but anything else would be helpful.

Right. So multiyear is what I can say. It is an important contract for CLEAR. And I love that question of why we're uniquely positioned. We started as a -- in a regulated industry. So understanding the importance of privacy, of security, of compliance, of working in a regulated industry, with a trusted consumer brand, with an embedded base, as we talked about today of almost 40 million consumers or patients, those people are both patients as well as employees in the health care sector. It makes it a natural fit. I don't want to say that going into an airport feels a lot like going into a hospital, but I would say that they're both challenged experiences with multiple stakeholders. And so putting patients or travelers at the center, wrapped in compliance and regulation and privacy is what we are known for.

And so I really think that this was a natural fit and one that also allows us to continue to drive innovation with other partners as we continue to drive this interoperability layer. And so I just think it was hand in glove, and it's a really exciting and aligned moment. We led a big conference from pledge to progress in December, bringing together over 100 health care leaders around the country as well as government. And we are a convener to drive secure frictionless experiences, which is exactly what this initiative is.

We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Caryn for closing comments.

Thank you for joining our fourth quarter earnings call. As always, I am deeply grateful for our CLEAR team and the CLEAR ambassadors that are delivering our Home to Gate experience every day. We have built the foundation, and we are well positioned to execute against meaningful opportunities in the evolving and emerging identity landscape.

Thank you.

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

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 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 new 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 bring 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 health care 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 health care 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 life cycle 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 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 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.

With that, we will open the call for Q&A.

[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.