Clear Secure Inc

Overview

Clear Secure, Inc. (the “Company” or “CLEAR”) is an identity company making experiences safer and easier digitally and physically. We make everyday experiences frictionless by connecting your identity to all the things that make you, YOU - transforming the way you live, work, and travel. CLEAR has been delivering secure, friction-free experiences in airports for over 14 years, achieving exceptional user delight and trust with CLEAR Plus, our consumer aviation subscription service. CLEAR Plus enables access to predictable and fast experiences through dedicated entry lanes in airport security checkpoints nationwide. As we continue to innovate on the travel experience, we are proud to offer TSA PreCheck® Enrollment Provided by CLEAR–offering consumers increased choice in how and where to sign up for this popular trusted traveler program. Our free flagship CLEAR app offers consumer products like Home-to-Gate, which includes RESERVE Powered by CLEAR, our virtual queuing technology that enables customers to prebook a spot in the airport security line so they don’t have to wait. CLEAR Verified, our business to business ("B2B") offering, enables our partners to leverage our digital identity technology and reusable member network to facilitate secure and frictionless experiences digitally and physically via our software development kits ("SDKs") and application programming interfaces ("APIs").

Our Business

Since 2010 we have been expanding our network, investing in our technology platform, strengthening our operations and developing our team members to consistently deliver increased value to Members and partners, resulting in the growth and trust of the CLEAR brand.

We have built an extensive physical footprint with a nationwide network of airports, stadiums and partners to offer Members frictionless, trusted experiences as they move and transact throughout the day in both physical and digital environments. As of December 31, 2023, our expansive network of partners and use cases provide our Members with access to 147 CLEAR Plus Lanes across 56 airports nationwide, 19 sports and entertainment partners with priority Lanes, 20 airports globally with RESERVE Powered by CLEAR virtual queuing Lanes and a growing list of B2B CLEAR Verified partners. The continued expansion of our capabilities enable our partners to integrate CLEAR Verified solutions and give our Members new places and new ways to use CLEAR.

Today, our owned and operated business CLEAR Plus (our consumer aviation subscription service) is the largest user of our platform, followed by our CLEAR Verified partners. We have enabled approximately 181 million Total Cumulative Platform Uses across our network of airport, sports and CLEAR Verified partners as of December 31, 2023. Our approximately 3,700 hospitality and security focused part-time and full-time Ambassadors and field managers on the ground bring our technology to life in airports and work to deliver exceptional Member experiences every day.

At CLEAR, we are obsessed with the Member experience. Our network, technology platform, operational expertise and Ambassadors have helped us build a trusted brand and a passionate Member base. Our Members know when they see the CLEAR brand to expect a frictionless, predictable and trusted experience. Similarly, our partners trust CLEAR to enable them to deliver the same frictionless and secure experiences to their own customers.

Our business model is powered by network effects and characterized by efficient Member acquisition and high Member retention rates. Our largest CLEAR Plus Member acquisition channel is in-airport (representing 65%, 66% and 58% of Member acquisitions for the years ended December 31, 2023, 2022 and 2021, respectively), where our prominent branding and expansive physical footprint allow prospective Members to engage with CLEAR’s brand, Ambassadors and technology firsthand. Our passionate Member base further drives word-of-mouth marketing and high annual Member retention rates. As we add partners, products and locations, our platform becomes more valuable to our Members. In turn, as we grow Membership, our platform is more valuable to our existing and prospective partners. This is evidenced by our approximately 16 times Lifetime Value relative to our Customer Acquisition Cost for CLEAR Plus Members who joined during 2023. For our definitions of “Lifetime Value” and “Customer Acquisition Cost” and information about how we calculate these metrics, see “—Our Member Acquisition and Retention Strategy.” In addition, while we continue to invest in the platform we also are committed to returning capital to shareholders. In 2023, we returned approximately $209 million to shareholders through share repurchases, regular and special dividends.

Our Reach

The CLEAR Network

We have built an extensive physical footprint with an expansive network of use cases including airports, stadiums and partners to offer Members frictionless, trusted experiences as they move and transact throughout the day in physical environments. As of December 31, 2023, Members can access our nationwide network of 56 airports covering 147 Lanes, 19 sports and entertainment partners with priority Lanes, and 20 global airports with RESERVE Powered by CLEAR virtual queuing lanes. In CLEAR airport or arena locations, we have designated entry Lanes for CLEAR Members with owned or leased hardware. These locations are staffed by our team of approximately 3,700 part-time and full-time hospitality and security focused Ambassadors and field managers. Our Ambassadors deliver the frictionless CLEAR experience every day to our partners and Members. Our Ambassadors facilitate a predictable and smooth CLEAR experience for existing Members, enroll new Members, and help bring our platform to life.

Our Members can also use CLEAR nationwide across our CLEAR Verified footprint. These use cases include a growing list of B2B partners across travel, financial services, and healthcare locations. CLEAR Members can use our CLEAR Verified digital solution for a more frictionless experience at physical partner locations such as doctors’ offices, car rentals or hotels. Members can also use CLEAR to confirm their identity or credentials in digital marketplaces – such as by verifying their account on LinkedIn – or in financial services – by using our KYC solution.

Powerful Network Effects

Our platform is multi-faceted and a powerful network of networks. We started in airports and witnessed accelerating Member growth in both new markets and existing markets as our network expanded. Our largest CLEAR Plus Member acquisition channel continues to be our in-airport channel. As we launched new use cases in existing markets, we saw accelerated growth and improved retention. The ability to use CLEAR in more locations and in more ways increases our utility to our Members. The larger our Member base becomes, the more valuable our platform becomes to our current and prospective partners who utilize our platform to better realize their business objectives. As a result, our growth strategy is focused on simultaneously growing our CLEAR Members while continuing to add valuable partners to our network and expanding the functionality and availability of our platform.

Our Member base includes paying Members and platform Members. Paying Members subscribe to our CLEAR Plus consumer aviation subscription service, which enables access to predictable and fast experiences through dedicated entry Lanes in airport security checkpoints across the nation as well as access to our broader network. Our business model is powered by network effects and characterized by efficient Member acquisition and high retention rates. Our passionate Member base further drives viral, word-of-mouth marketing and high annual retention rates.

Platform Members include Members who enrolled through our mobile app, our partners’ customers who have enrolled through our CLEAR Verified solutions, and formerly paying CLEAR Plus Members. Platform Members can use CLEAR anywhere in our network outside of our CLEAR Plus service. Platform Members use CLEAR for free while our partners pay to use our technology solutions. Typically, new platform Members are driven to enroll by one of our partners who integrate with CLEAR to enable frictionless experiences for their customers. Platform Members also may enroll directly with CLEAR to access our expanding portfolio of use cases, including Home to Gate (end-to-end frictionless travel journeys), venue access and RESERVE Powered by CLEAR (virtual queuing).

While contract structure may vary by use case, CLEAR Verified partnerships are typically multi-year, recurring contracts that drive revenue primarily through transaction fees charged either per use or per user over a predefined time period, which sometimes includes tiered pricing. In addition, they may also include one-time implementation fees, licensing fees or incremental transaction fees. Revenues from our partners, and the percentage of our total revenue from these partners, have historically been immaterial. Although platform Members may not contribute directly to our revenues, they are valuable to our platform as they indirectly contribute revenues and drive new partners to CLEAR.

We believe there is a significant opportunity to expand our reach. We expect to expand CLEAR Plus through airport network expansion, increased market penetration in existing markets, partnerships, and new products and services in the aviation space. Additionally, we have a robust pipeline of new CLEAR Verified partners who increasingly recognize the need to deliver a fast, easy and secure experience to their customers—a true frictionless journey. Our secure identity platform can power a wide range of use cases such as customer check-in, digital identity, account opening/KYC, virtual queuing, licensing and professional credential verification, and age verification. These use cases can be applied across verticals such as aviation and travel, hospitality, live sports and entertainment, healthcare, financial services and e-commerce, among others.

Our Offerings

Secure Identity Platform

Our secure identity platform is a multi-layered infrastructure consisting of both our front-end (including enrollment, verification and linking) and our robust, secure and scalable back-end. To interact with our platform, first time users go through our fast, secure, and easy enrollment process. Once a Member is enrolled, each subsequent use of the platform to verify their identity is only a few simple steps. Our enroll once, verify everywhere approach benefits the entire CLEAR ecosystem by removing friction for Members and increasing conversion for partners.

CLEAR confirms identity on an opt-in basis using document authentication (e.g., driver’s license, passport), best-of-breed biometric capture technology, liveness detection for anti-spoofing, biometric matching, backend identity proofing and other proprietary technologies to link an individual’s identity with their biometrics (e.g., eyes, face and fingerprints). Members can enroll in CLEAR in the manner which is most convenient for them: in-person enrollment Pods in airports, or their own personal mobile device. Our platform is versatile, can be used across different verticals and can be customized for specific applications or use cases. Our architecture is designed to be scalable without compromising Member experience or information security.

We have a deep organizational commitment to preserving our Members’ privacy and ensuring Members have control of their personal information. This commitment has been core to our Member pledge since our founding over 14 years ago. We have a comprehensive information security program and a robust cybersecurity posture that uses industry best practices with administrative, technical and physical safeguards to protect against anticipated threats or hazards to the security, confidentiality or integrity of our platform’s systems and information. Our information security core tenets include the application of encryption at rest and in transit, firewalls, multi-factor authentication, specific role-based access control, physical and personnel security (including training), intrusion detection and data loss prevention. We have a commitment to Members being in control of their own information and never sell member data.

We have been certified at the highest level of security by our government regulators. The Department of Homeland Security (“DHS”) has certified our information security program under their purview at a FISMA High Rating (the highest designation according to the Federal Information Security Modernization Act).

CLEAR Plus

CLEAR Plus is our consumer aviation subscription service, which enables access to predictable and fast experiences through dedicated entry Lanes in airport security checkpoints across the nation as well as access to our broader network. With CLEAR Plus, Members use our touchless biometric verification technology to validate their identity and travel credentials. Our team of hospitality and security focused Ambassadors help bring our technology to life by delivering a frictionless journey alongside excellent service. CLEAR Plus currently retails for $189 per year per Member and is billed upfront. We offer free trials in-airport and online and promotional pricing to select partners including Delta Air Lines, United Airlines and Alaska Airlines frequent fliers, as well as a family plan for up to three household members at an additional $99 per year per family member. Through our partnership with American Express, eligible cardmembers receive statement credits for all or a portion of their CLEAR Plus membership. We also offer discounted military and government pricing, and children under 18 can use CLEAR Plus for free with an adult Member.

In 2023 we introduced our NextGen Identity+ standard. We have been collaborating with the Department of Homeland Security on these identity standards since 2020. Building on our multi-factor authentication CLEAR Plus enrollment process, we now source corroborate data directly from the issuing source. This high fidelity identity level was our first step in unlocking CLEAR’s Lane of the Future, which we will begin rolling out to our airports in 2024, switching to face as the primary biometric and promising an even faster, more secure airport experience.

TSA PreCheck® Enrollment Provided by CLEAR

In January 2020, we were selected by TSA as an awardee in the TSA Biometric PreCheck® Expansion Services and Vetting Program. As part of our agreement with TSA, we will leverage our marketing expertise, operational footprint and Ambassador network to handle subscription renewal processing and new enrollments for the TSA PreCheck® program, as well as offer a CLEAR/TSA PreCheck® bundled subscription for customers who are new to both CLEAR Plus and to TSA PreCheck®. We currently offer TSA PreCheck® membership renewals online and complete new enrollments in-person through our physical network.

On February 21, 2024, we launched TSA PreCheck® Enrollment Provided by CLEAR to the public at Newark Liberty International Airport. CLEAR is also currently providing online renewal services, and expects to scale its in-person offering to additional locations in its network of airports on a rolling basis, subject to TSA approval. The TSA PreCheck® Enrollment Provided by CLEAR program represents a new source of revenue and Members. We believe that there is a significant opportunity for us to process TSA PreCheck® membership renewals and that we can add a large number of new TSA PreCheck® subscribers on behalf of TSA. After a new TSA PreCheck® customer is enrolled or renewed, we offer the customer an opportunity to enroll in CLEAR Plus on an opt-in basis. We believe CLEAR Plus and TSA PreCheck® are highly complementary services and this channel is relevant to showcase not only the TSA PreCheck® value proposition, but also the power of the combined products and the extension of a holistic travel journey. The partnership does not extend to performing physical security screening, which continues to be operated by the TSA.

RESERVE Powered by CLEAR

RESERVE Powered by CLEAR is a virtual queuing technology that provides users with the ability to book a dedicated time slot to go through security at the airport, introducing new travelers to the CLEAR brand and extending our aviation footprint nationally and internationally in cities such as Toronto, Berlin, London, and Amsterdam. Typically, our airport partners pay us for the use of our RESERVE technology, which can be accessed through the CLEAR app or web, enabling them to more efficiently operate their lanes and delight their travelers. In 2023 we piloted an additional benefit to our CLEAR Plus Members by offering them access to an international RESERVE lane without a reservation, and we believe there is continued opportunity to deliver value for our paying Members through increased access to international airports.

CLEAR Verified

CLEAR Verified is our B2B offering that extends our secure identity platform to partners to create friction-free experiences fortheir customers. We have built SDK and API capabilities to enable our partners to quickly and seamlessly integrate directly with our platform. This structure allows us to facilitate safer, faster and more frictionless experiences for our partners’ customers, while enabling our partners to continue to control and manage the direct relationship with their customer under their own brand.

Our CLEAR Verified partners are primarily from verticals where identity is critical such as healthcare, financial services, travel, and digital marketplaces. Our secure identity platform can power a wide range of use cases such as customer check-in, identity verification, account opening/KYC, licensing and professional credential verification, and age verification. As we continue to grow our partners and use cases, we see the increasing need for secure identity verification for partners to achieve business goals and create a more frictionless experience for their customers.

Mobile App

We also engage with our Members via the flagship CLEAR mobile app. It's used to enroll new Members and improve the experience for existing Members. The app has several features, including:

•Enroll in CLEAR and manage your membership—enrolling as a CLEAR Member is a quick and easy process that can be handled directly through the CLEAR app via facial biometric recognition technology and validating a government-issued identification. This one-time enrollment can be completed in minutes and gives Members access to our platform offerings and an easy upgrade path to CLEAR Plus at our airport locations.

•Home to Gate—Members can have a predictable day-of-travel experience by inputting their flight number to access helpful information to assist their journey from the time they leave their home until they board the plane. Home to Gate integrates flight departure times, traffic data, security screening, gate number and terminal walking times to their exact gate. Our integration with Uber allows customers to book a car to depart at the right time for a seamless travel journey. Additional services can be easily integrated into this platform.

•Credentials—Members can access unique experiences by verifying their identity and health attributes.

•Touchless Access—Members enjoy touchless access to select partner services and venues, such as stadiums and arenas.

Our Value Proposition to Members and Partners

For our Members, we have built a consumer-centric user experience that helps create frictionless experiences. We started with their travel journey and are expanding into their daily interactions in the physical and digital worlds. For our partners, we believe our growing Membership base and strong brand help increase adoption and our platform helps increase efficiencies, reduce fraud, and deliver a better experience to their customers and employees.

Why Our Members Love Us

We are obsessed with our Members’ experience and seek to continually enhance the value we deliver to them through our platform as reflected by our strong Member growth. We provide the following key benefits to our Members:

•We are committed to making our Members’ lives safer and easier: We transform manual experiences into seamless end-to-end journeys. Our platform, dedicated team of Ambassadors, and user focused technology helps transform inconvenient and often stressful consumer experiences into effortless journeys. Our goal is for CLEAR to instill a feeling of being cared for, of being seen, and of feeling safe with predictable, secure and seamless experiences.

•We expand how and where our Members can use CLEAR: As of December 31, 2023, Members can access our nationwide network of 56 airports covering 147 Lanes, 19 sports and entertainment partners with priority Lanes, and 20 global airports with RESERVE Powered by CLEAR virtual queuing Lanes. We continue to expand our existing partnerships and seek to establish new partners to enable Members to use our platform in new places and in new ways. Members can use CLEAR in the airport, at venues, on our app, and across verticals such as digital marketplaces, healthcare, financial services, and travel & hospitality.

•We invest in innovation: We are focused on innovating both our product and our platform to improve our Members’ experience, enhance safety and security, and introduce new use cases. For example, to complement our CLEAR Plus airport security checkpoint offering, we developed Home to Gate and RESERVE Powered by CLEAR, and provide TSA PreCheck® Enrollment Provided by CLEAR. We also continue to improve the CLEAR Plus experience and in 2023 began upgrading our CLEAR Plus Members to NextGen Identity+, one of the highest fidelity digital identities which builds on our multi-layered enrollment process with data corroborated directly from the issuing source. This upgrade will facilitate the CLEAR Lane of the Future which will allow Members to verify with their face for an even faster, more seamless airport experience. With CLEAR Verified, we have continued to add new partners and use cases to enhance the CLEAR network, providing more places and ways for Members to use CLEAR. We continue to improve our mobile enrollment experience and have upgraded our APIs and enrollment capacity to support our growth. We intend to accelerate our pace of innovation to add more features and use cases, to ultimately deliver greater value to our Members.

•Our Ambassadors bring CLEAR to life for our Members: Our passionate team of approximately 3,700 part-time and full-time nationwide CLEAR Ambassadors and field managers enhance our Members’ experience and bring our technology to life. They provide on-location high-touch hospitality, sales and marketing support which enables new Members to enroll and existing Members to use our platform with comfort and ease. They also educate our Members about our technology, and our commitment to security and privacy.

•Security and privacy are the foundation of CLEAR: We have been certified at the highest level of security by our government regulators. The DHS has certified our information security program under their purview at a FISMA High Rating (the highest designation according to the Federal Information Security Modernization Act). Our Members provide us with their personal information on an opt-in basis with the understanding that their information is secure and will never be sold.

Why Our Partners Love Us

Our platform is designed to enable our partners to further their business objectives, better serve their customers’ needs and elevate their customers’ experiences. By transforming the end-to-end consumer journey, we believe CLEAR enables our partners to deliver a better experience for their customers, helps to drive adoption, and reduce operational overhead. We benefit our partners in a variety of ways, including:

•We are a committed partner for innovation: Our easily integrated solutions help our CLEAR Verified partners deliver safer, faster and easier experiences to their customers, who have increasingly high expectations for seamless end-to-end journeys. We provide flexibility for them to do so within their own branded solutions through our SDK and API integrations or directly with CLEAR.

•We have a large, highly engaged and growing CLEAR Member base: We have over 20 million CLEAR Members, many of whom are frequent travelers and active consumers. Many of our Members are also core customers of our partners. Other Members can opt-in to a relationship with our partners. As our embedded base of Members grows, our partners will benefit from our reach by accelerated adoption rates and economies of scale.

•Our brand is trusted: We have built a trusted consumer brand with passionate Members. We believe our recognized and trusted brand, which is known for exceptional Member experiences, security, and innovation, gives our partners confidence that we will enhance and elevate their own customers’ experience.

•Security is paramount: Security is our core competency. We have a deep organizational commitment to securing data and protecting Member privacy and a robust cyber-security posture. Data protection, privacy, and identity are complex and our partners rely on us to fulfill this requirement on their behalf. Many of our partners are subject to complex regulatory requirements, and they rely on CLEAR to help them fulfill those requirements in the most seamless way for their customers. Our NextGen Identity+ standard is just one example of our continuing commitment to leading in secure identity.

•We significantly benefit the airport communities in which we operate: CLEAR becomes ingrained in the fabric of the local communities where we operate through the engagement of our Members, and we believe we make a significant positive economic contribution. CLEAR is a force-multiplier for our airport partners, enhancing customer service for all passengers through assistance in wayfinding, greeting passengers and assisting in the event of emergency situations. CLEAR creates job opportunities where we invest in the learning and development of our local employees and seek to develop partnerships which are mutually beneficial for us, our partners and the community.

•We operate our own direct-to-consumer offering, creating strong alignment with our aviation partners: We have over 14 years of experience operating CLEAR Plus, our owned and operated consumer subscription service. As we invest in our platform to enhance the CLEAR Plus Member experience, our aviation partners benefit from these enhancements, such as NextGen Identity+. We believe this creates natural alignment with our aviation partners and makes us a trusted and forward-thinking partner to them.

Our Member Acquisition and Retention Strategy

We have focused our Member acquisition strategy around delivering exceptional experiences to build brand trust as well as driving network effects by adding new partners, products, uses and locations to increase our value proposition.

Our largest CLEAR Plus Member acquisition channel is our highly efficient in-airport channel, where our prominent branding and expansive physical footprint allows prospective Members to engage with CLEAR’s brand, Ambassadors and technology firsthand. Our passionate Member base drives viral, word-of-mouth marketing and high levels of retention. To ensure best-in-class Member service we monitor real-time Member feedback and quickly take action on information-driven insights. As we add new airport and non-airport locations (such as live sports and entertainment venues) and functionality, the power of network effects makes CLEAR Plus more valuable to our Members, further driving new Member acquisition and higher Member retention. We also entered into strategic distribution partnerships with partners such as Delta Air Lines, United Airlines, Alaska Airlines and American Express that promote our services to their customers on a discounted or subsidized basis which allows us to efficiently scale membership in CLEAR Plus.

CLEAR also offers services that are free to Members, both directly and under agreements with our partners who typically pay us based on the number of Members or transaction volume. New platform Members are largely driven to our platform by one of our partners who integrate with CLEAR to enable frictionless experiences for their customers. These partnerships allow us to scale our use cases and membership, which enhances the value of our network, and earn revenue from platform Members.

Our expanding portfolio of use cases attracts new platform Members directly to our platform and creates enhanced value for our CLEAR Plus Members. As a result, we expect our platform Member acquisition costs to remain low and certain platform Members may wish to upgrade to CLEAR Plus, further driving our revenues.

Over time, as we continue to grow platform Members, potentially at faster rates than paying Members, we expect to see growth in Total Cumulative Enrollments and Total Cumulative Platform Uses per Total Cumulative Enrollments as well as a decrease in revenue per Total Cumulative Enrollments accompanied by a commensurate decline in the cost to acquire an incremental Total Cumulative Enrollment. We believe this dynamic will grow the long-term economic value of our platform by increasing total engagement, expanding our margins and maximizing our revenue.

We measure our CLEAR Plus member Lifetime Value and Customer Acquisition Cost in an effort to measure the efficiency of our Member acquisition and retention strategy. Lifetime Value is calculated by estimating the cumulative dollar contribution over the estimated lifetime of a CLEAR Plus Member. To estimate retention rates we use CLEAR Plus Member Retention across annual cohorts in 2023. We estimate the dollar contribution as the annual revenue per Member less estimated direct costs to service that Member including revenue share, credit card fees, and Member service expense to process that Member in a CLEAR lane. Customer Acquisition Cost is calculated by dividing total 2023 airport-related marketing spend, inclusive of commissions, by total new paying CLEAR Plus Members who joined during 2023. On this basis, we achieved a Lifetime Value to Customer Acquisition Cost ratio of approximately 16 times for Members who joined during 2023.

Our Competitive Advantages

Trusted and Extensible Brand with Passionate Member Base

From our founding, we have been obsessed with the CLEAR Member experience. We have been expanding our network, investing in our technology platform, strengthening our operations and developing our people to consistently deliver increased value to Members and partners, resulting in our trusted and valued brand. Our passionate Member base drives viral, word-of-mouth marketing and high annual retention rates. Our strong brand has enabled our expansion into new markets such as live sports and entertainment venues as well as healthcare, financial services, digital marketplaces, and travel & hospitality.

Operational Expertise at Scale

Today, our owned and operated business CLEAR Plus (our consumer aviation subscription service) is the largest user of our platform. Operating and scaling our own consumer-facing service, CLEAR Plus, over the past 14 years has given us experience and capabilities that are hard to replicate, and an environment for innovation that benefits all of our partners. We have significant expertise implementing and seamlessly operating our platform’s combination of Pod hardware, biometric technology and physical human interactions across 75 regulated or complex environments, such as airports and live sporting events. We also manage a growing Ambassador and field manager part-time and full-time workforce of approximately 3,700 who are deployed across our expansive network of locations to implement our platform and continue to build our brand reputation. We combine our on-the-ground operational expertise with strong customer acquisition and retention, digital marketing, software and mobile application development and security capabilities.

Platform Originated in High Security Aviation Environment

We started in aviation security, a highly regulated environment requiring a robust physical and information security posture. By building our platform in this context, we invested in, and were held accountable for, industry leading security, scalability and reliability. Our comprehensive information security program uses industry best practices with administrative, technical and physical safeguards to protect against anticipated threats or hazards to the security, confidentiality or integrity of CLEAR systems and information. We are certified as Qualified Anti-Terrorism Technology under the Support Anti-Terrorism by Fostering Effective Technologies Act of 2002 (“SAFETY Act”) and FISMA High Rating compliant which governs requirements for protecting sensitive data by the DHS. We continue to operate in aviation security today, and we use the same foundational platform across all our use cases, which is then customized for our owned and operated businesses, such as CLEAR Plus, and for the CLEAR Verified experiences offered by our partners. As such, we bring our high standards of security, scalability, and reliability to every environment in which Members engage with CLEAR.

Innovative and Scalable Platform

We believe that the significant investments we have made in our technology platform are a key differentiator for our business. Our approximately 275 person technology team leads platform innovation inside CLEAR. We have spent more than 14 years to create our scalable and secure back-end and our easy-to-use consumer front-end. The scalability of our platform is demonstrated by our ability to quickly launch new features. We built a web experience that can be embedded into a partner's native ecosystem so the partner can leverage our verification and enrollment technology. This web experience allows partners to use CLEAR's technology to verify their customers identities and provide friction-free experiences like account creation, login, and age verification. In 2023 we accelerated the reach of the platform by acquiring Sora ID. The acquisition allowed us to leverage these capabilities as well as provide reusable Know Your Customer (“KYC”) competencies for the financial services industry.

Powerful Network Effects

The power of network effects on our business became evident as we added additional locations and our membership growth accelerated. Given the lengthy airport sales cycle and scarcity of airport real estate, it took us seven years to build a critical mass of airports to attract the first million Members. Once we achieved scale, the power of national network effects began to take hold. As the likelihood that a domestic traveler would have access to a CLEAR Plus Lane increased, the value proposition of our CLEAR Plus offering increased substantially. In 2015, we embarked on a strategy to add additional local CLEAR Lanes at stadiums and live entertainment venues. This strategy created a second local network effect, increasing the value proposition of CLEAR Plus within a given city and meaningfully improving our Member retention. The combination of these two powerful network effects drives both Member growth and retention which we believe ultimately fuels our revenue growth. More recently, our strategy expanded as our platform’s capabilities have evolved with CLEAR Verified. Members can now use CLEAR more frequently in their daily lives whether that be at the doctor’s office, renting a car, or transacting online. Our investment in our platform and products and the expanding scale of our membership have accelerated the addition of new partners that are further accelerating our membership growth and increasing verifications.

Led by Experienced, Visionary Team

CLEAR was founded in 2010 by Caryn Seidman Becker, our Chair and Chief Executive Officer, and Kenneth Cornick, our President and Chief Financial Officer. CLEAR is still executing on the original vision today, with Ms. Seidman Becker and Mr. Cornick continuing to lead the business 14 years later. They are substantial owners of CLEAR and operate the business with the goal of long-term value creation. Ms. Seidman Becker’s and Mr. Cornick’s prior investment experience informs their efficient capital allocation strategy, and they have attracted a deeply experienced team to accelerate CLEAR’s next phase of growth.

Our Growth Strategies

We have a significant track record of Member growth within our domestic aviation vertical, and our platform has numerous adjacencies for further expansion.

Key elements of our growth strategy include:

•Grow CLEAR Plus Members: We see growth opportunities in our CLEAR Plus Member base. We believe we can continue to open CLEAR Lanes in new airports and new CLEAR Lanes in our existing airports. As of December 31, 2023, our airport coverage is approximately 68% of 2023 TSA checkpoint volume. 6% and 5% of all TSA checkpoint volume went through a CLEAR lane in 2023 and 2022, respectively. We also believe there are opportunities to continue to develop new features such as bag drop and concierge services to improve the member and partner experience.

•Scale TSA PreCheck® enrollment program: We believe our TSA PreCheck® enrollment award will drive significant growth for TSA’s program and an incremental revenue opportunity to CLEAR as we manage renewal processing and new enrollments for TSA PreCheck® subscriptions. Our TSA PreCheck® award also offers a significant top-of-funnel opportunity to acquire new CLEAR Plus Members as we intend to offer a CLEAR/TSA PreCheck® bundled product for customers who are new to both CLEAR and to TSA PreCheck®.

•Expand our partnerships and distribution channels: We intend to continue to pursue commercial partners as a means to broaden our distribution channel reach and accelerate Member growth. These partnerships and channels are likely to include new airlines, credit card partners, professional sports leagues and teams, digital marketplaces, retail enterprises and various CLEAR Verified partners in target verticals.

•Expand into new verticals and products: We anticipate adding new products within the Travel vertical so that we have offerings to support all travelers - whether a customer travels twice per year or twice per month. We have already made significant progress expanding from aviation into select new verticals with CLEAR Verified, including digital marketplaces, travel & hospitality, healthcare and financial services. We plan to continue investing in each of these verticals to increase the growth of our platform, Member base and our network locations where our Members can use and our partners can integrate with CLEAR. We believe we have a proven platform business with numerous natural adjacencies and as our Member base and product portfolio grows, we believe we will have the opportunity to grow into new verticals.

•Acquisitions and corporate development opportunities: We may opportunistically pursue selective acquisitions and other corporate development opportunities to complement our existing platform capabilities and further accelerate our growth and platform adoption. Over the years, we have completed various strategic acquisitions, such as Whyline, Inc., a provider of virtual queuing and appointment technology, in 2021, Atlas Certified, an automated solution to verify professional licenses and certification data across industries, in 2021, and Sora ID, a reusable KYC provider, in 2023.

•International expansion: Our platform is highly scalable and can be rapidly deployed in new markets. We believe that there is likely to be global demand for our secure identity platform. While in the near-term the North American market remains our highest priority, through our RESERVE Powered by CLEAR product, we provide services to partners across international markets. Additionally, in 2023, we started providing identity verification solutions for LinkedIn in Mexico and Canada.

Competition

We compete for both our Members and our partners. The market in which we operate is highly fragmented and characterized by high growth, shifting user preferences, and introductions of new services and offerings. Our primary competitors are offline alternatives, including manual security checks and screening processes. These alternatives tend to be costly and involve significant manpower, time and resources. See “Risk Factors—Risks Related to Our Business, Brand and Operations—We operate in a highly competitive market, and we may be unable to compete successfully against existing and future competitors.”

Intellectual Property and Other Proprietary Rights

Our intellectual property rights are valuable and important to our business. To establish and protect our proprietary rights, we rely on a combination of patents, trademarks, copyrights, trade secrets, know-how, confidentiality provisions, non-disclosure agreements, assignment agreements, and other legal and contractual rights with employees, contractors, and other third parties to establish and protect our proprietary technology and intellectual property rights.

As of December 31, 2023, we have 75 issued United States patents (with five additional patents allowed) and 59 patent applications pending in the United States relating to certain aspects of our technology. We also have a limited number of patents issued and patent applications filed in other countries. Our issued patents expire between 2032 and 2041. As of December 31, 2023, we have eight U.S. registered trademarks, and four trademark applications pending in the United States. These include registrations for the CLEAR name and other brand indicia. We also have registered the domain name www.clearme.com, and similar variations.

We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost effective. Despite our efforts to protect our intellectual property rights, they may not be respected in the future or may be invalidated, circumvented, deemed unenforceable or otherwise challenged. Further, even if we are successful in legal proceedings, unauthorized third parties may still copy or otherwise obtain and use our technology or infringe our copyrights and trademark rights. In addition, should we expand, the laws of various foreign countries where we may expand may not protect our intellectual property rights to the same extent as laws in the United States.

Companies engaged in related businesses or even unrelated businesses may have patents, copyrights, trademarks, trade secrets and other intellectual property rights which such companies may assert are infringed by our technology or business activities. From time to time, we face, and we expect to face in the future, allegations that we have infringed the patents, copyrights, trademarks, trade secrets and other intellectual property rights of third parties, including our competitors and non-practicing entities. Should our business continue to grow, we will likely face more claims of infringement by third parties. We may become party to patent infringement claims and other intellectual property litigation and legal proceedings, all of which can be expensive and time consuming, and if resolved adverse to the Company, could have a significant impact on our business. See “—Legal Proceedings” and “Risk Factors—Risks Related to Information Technology and Intellectual Property.”

Employees

Our organization’s core values are:

•Embrace Change: Our growth requires that we embrace change. We pivot to overcome roadblocks and we are transparent on why decisions are made.

•Own It: CLEAR is an organization of doers. We own it by solving problems even if they “aren’t ours to solve” and commit to seeing them all the way through.

•Our Great People: From our Ambassadors in the field, to our corporate team members, people are at the heart of all that we do.

•Obsessed with Member Experience: We are obsessed with our Member experience. We love hearing from our Members so that we can continuously improve and come back better for them every day.

•Speak Up: We believe in challenging fearlessly and embracing the brutal truth. We speak up by displaying honesty to our Members, our team members, and ourselves.

•Indefatigable: We tirelessly pursue our goals with passion and sometimes “no” simply means “not yet.”

•Bias for Action: We encourage our team members to have a bias for action, using data to make calculated decisions. We have confidence in our decisions and learn from our mistakes.

As of December 31, 2023, we had 3,698 full-time employees with our largest workforces in New York, Los Angeles and Orlando. We compete to attract and retain diverse and highly talented individuals, particularly people with expertise in engineering, product development and marketing. Our ability to recruit talent benefits from our unique workplace culture and brand. None of our employees are covered by collective bargaining agreements, and we consider our employee relations to be good.

Government Regulation

Data and Privacy

Our business is subject to U.S. federal, state and local laws and regulations. These laws and regulations pertain to matters including but not limited to, the collection and use of biometric or health information, data privacy and information protection, labor and employment, intellectual property, consumer contracting and others, and are often complex and subject to varying interpretations. As a result, their application in practice may change or develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory and governing bodies, such as federal, state and local administrative agencies. For example, California has passed a comprehensive data privacy law, the California Consumer Privacy Act of 2018 (“CCPA”), and other states including Virginia and Colorado have also passed similar laws. Additionally, the California Privacy Rights Act (“CPRA”) took effect on January 1, 2023. CPRA imposes additional data protection obligations on covered businesses, including additional consumer rights procedures and obligations, limitations on data uses and new audit requirements. Further, there are several legislative proposals in the United States, at both the federal and state level, that could impose new privacy and security obligations. Certain states have laws that specifically regulate the collection and use of biometric information, such as Illinois’s Biometric Information Privacy Act (“BIPA”), and numerous states and municipalities are considering similar legislation. See “Risk Factors—Risks Related to Regulation and Litigation—Any actual or perceived failure to comply with applicable laws relating to privacy and data protection may result in significant liability, negative publicity and erosion of trust, and increased regulation could materially adversely affect our business, results of operations and financial condition” and “—The laws and regulations that we are subject to or may become subject to are constantly evolving.”

In addition, the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their respective implementing regulations (collectively, “HIPAA”) impose specific requirements relating to the privacy, security and transmission of sensitive patient health information. Among other things, HITECH makes HIPAA’s security standards directly applicable to “business associates.” See “Risk Factors—Risks Related to Regulation and Litigation—We function as a HIPAA “business associate” for certain of our health care partners and, as such, are subject to strict privacy and data security requirements. If we fail to comply with any of these requirements, we could be subject to significant liability, which can adversely affect our business as well as our ability to attract and retain new Members and their utilization of our platform.”

International Operations

As we expand internationally we become subject to the regulatory regimes in other countries in which we operate, which may be equally or more complex. For example, we have expanded our aviation footprint internationally through our RESERVE Powered by CLEAR product, which operates in countries such asthe United Kingdom, Argentina, Spain, Canada, Germany, Italy, and the Netherlands, and are subject to the regulatory regimes in these countries.

In addition, as we expand in Europe we are subject to the General Data Protection Regulation (“GDPR”). GDPR took effect in May 2018 and includes operational requirements for companies that are established in the European Economic Area (“EEA”) or process personal data of individuals located in the EEA. These requirements govern the processing of personal data and include significant penalties for non-compliance. Additionally, the United Kingdom has transposed GDPR into domestic law with a United Kingdom version of GDPR (combining GDPR and the Data Protection Act of 2018) that took effect in January 2021, which exposes us to two parallel regimes, each of which authorizes similar fines and other potentially divergent enforcement actions for certain violations. In October 2022, an Executive Order was signed that, together with regulations issued by the U.S. Department of Justice, implements a new data privacy framework for cross border transfers of EU personal data to the United States (the “EU-U.S. DPF”). The Company has voluntarily self-certified to the EU-U.S. DPF framework, entitling it to certain benefits under the program, as well as subjecting it to enforcement of its compliance with the EU-U.S. DPF principles under U.S. law.

Aviation

Our airport operations are subject to standards promulgated by the federal government related to aviation security. These standards pertain to items such as checkpoint operations, enrollment and verification processes, employee hiring and training and information technology. We operate through the Registered Traveler Program (“RT Program”) according to guidelines set forth by the federal government which in some cases are overseen directly by the federal government and in some cases are overseen indirectly through our airport or airline partners. As we have grown, our regulatory frameworks have evolved as well. For example, we are subject to various reporting requirements, audits, reviews and evaluations overseen by the TSA, a sub-agency of the DHS. The DHS has certified our information security program under their purview at a FISMA High Rating (the highest designation according to the Federal Information Security Modernization Act). In addition, the system we use for the RT Program and similar programs has been certified by the DHS as a Qualified

Anti-Terrorism Technology under the SAFETY Act. The SAFETY Act provides important legal liability protections for providers of qualified anti-terrorism products and services. Under the SAFETY Act, technology providers may apply to the DHS for coverage of the products and services. If granted coverage, such providers receive certain legal protections against product liability, professional liability and certain other claims that could arise following an act of terrorism. See “Risk Factors—Risks Related to Regulation and Litigation—We must continue to meet the standards set for our airport operations by governmental stakeholders” and “—Liability protections provided by the SAFETY Act may be limited.”

The foregoing description does not include an exhaustive list of the laws and regulations governing or impacting our business. See the discussion contained in the “Risk Factors” section of this annual report for the fiscal year ended December 31, 2023 (“Annual Report on Form 10-K”) for information regarding how actions by governmental stakeholders and regulatory authorities or changes in legislation and regulation in the jurisdictions in which we operate may have a material adverse effect on our business.

Corporate History

The Company (together with its consolidated subsidiaries, ”CLEAR,” “we,” “us,” “our”) is a holding company and its principal asset is the controlling equity interest in Alclear Holdings, LLC (“Alclear”) and its wholly owned subsidiaries. The Company, which was formed in connection with our initial public offering (“IPO”), was incorporated as a Delaware corporation on March 2, 2021, and Alclear was formed as a Delaware limited liability company on January 21, 2010. Pursuant to the terms of the Second Amended and Restated Operating Agreement dated June 7, 2023 (the “Operating Agreement”), as the sole managing member of Alclear, the Company operates and controls all of the business and affairs of Alclear, and through Alclear and its subsidiaries, conducts the Company’s business.

Available Information

Our internet address is www.clearme.com and the investor relations section of our web site is located at www.ir.clearme.com. We make available free of charge, on or through the investor relations section of our web site, this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to the SEC. Also posted on our web site are our by-laws, our Certificate of Incorporation, and the charters for the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee of our board of directors (the “Board”). In addition, our web site includes information concerning purchases and sales of our equity securities by our executive officers and directors, as well as disclosure relating to certain non-GAAP financial measures (as defined in Regulation G) promulgated under the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that we may make public orally, telephonically, by webcast, by broadcast or by similar means from time to time. Information contained on our website is not incorporated by reference unless specifically referenced herein. We are subject to the informational requirements of the Exchange Act and therefore file periodic reports, proxy statements and other information with the SEC. In addition, the SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically. To the extent required by the SEC's rules and regulations, we intend to post amendments to or waivers from, if any, provisions of our Code of Conduct and Ethics (to the extent applicable to our directors, principal executive officer, principal financial officer and principal accounting officer) at this location on our website. Our stockholders may also obtain these documents in paper format free of charge upon request made to our Investor Relations Department.

Our Investor Relations Department can be contacted at Clear Secure, Inc., 85 10th Avenue, New York, NY 10011, Attn: Investor Relations, e-mail: ir@clearme.com.