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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| | | | | |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended September 30, 2022 |
OR
| | | | | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from to |
Commission file number 001-40568
CLEAR SECURE, INC.
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | |
Delaware | | | 86-2643981 |
(State or other jurisdiction of incorporation or organization) | | | (I.R.S. Employer Identification No.) |
65 East 55th Street, 17th Floor, New York, NY | | | 10022 |
(Address of Principal Executive Offices) | | | (Zip Code) |
(646) 723-1404
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Class A common stock, par value $0.00001 per share | YOU | New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted and pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”“smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): | | | | | | | | | | | |
Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | x | Smaller reporting company | o |
| | Emerging growth company | x |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The registrant had the following outstanding shares of common stock as of November 9, 2022:
| | | | | |
Class A Common Stock par value $0.00001 per share | 85,622,383 | |
Class B Common Stock par value $0.00001 per share | 942,234 | |
Class C Common Stock par value $0.00001 per share | 39,527,216 | |
Class D Common Stock par value $0.00001 per share | 26,337,514 | |
Table of Contents
CLEAR SECURE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(dollars in thousands, except per share data)
| | | | | | | | | | | |
| September 30, 2022 | | December 31, 2021 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 329,077 | | | $ | 280,107 | |
Accounts receivable | 2,102 | | | 5,331 | |
Marketable securities | 342,310 | | | 335,228 | |
Prepaid revenue share fee | 16,010 | | | 10,272 | |
Prepaid expenses and other current assets | 16,985 | | | 22,140 | |
Total current assets | 706,484 | | | 653,078 | |
| | | |
Property and equipment, net | 56,053 | | | 44,522 | |
Right of use asset, net | 18,006 | | | — | |
Intangible assets, net | 23,048 | | | 22,933 | |
Goodwill | 58,807 | | | 59,792 | |
Restricted cash | 29,333 | | | 29,019 | |
Other assets | 3,060 | | | 3,406 | |
Total assets | $ | 894,791 | | | $ | 812,750 | |
| | | |
Liabilities and stockholders' equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 8,793 | | | $ | 8,808 | |
Accrued liabilities | 76,062 | | | 67,220 | |
Deferred revenue | 255,729 | | | 188,563 | |
Total current liabilities | 340,584 | | | 264,591 | |
Other long term liabilities | 23,887 | | | 8,691 | |
Total liabilities | 364,471 | | | 273,282 | |
| | | |
Commitments and contingencies (Note 19) | | | |
| | | |
Class A common stock, $0.00001 par value - 1,000,000,000 shares authorized; 83,158,756 shares issued and 82,969,381 shares outstanding as of September 30, 2022 | 1 | | | 1 | |
Class B common stock, $0.00001 par value - 100,000,000 shares authorized; 942,234 shares issued and outstanding as of September 30, 2022 | — | | | — | |
Class C common stock, $0.00001 par value - 200,000,000 shares authorized; 39,875,682 shares issued and outstanding as of September 30, 2022 | — | | | — | |
Class D common stock, $0.00001 par value - 100,000,000 shares authorized; 26,337,514 shares issued and outstanding as of September 30, 2022 | — | | | — | |
Accumulated other comprehensive loss | (1,836) | | | (103) | |
Treasury stock at cost, 189,375 shares as of September 30, 2022 | — | | | — | |
Accumulated deficit | (90,471) | | | (36,130) | |
Additional paid-in capital | 383,974 | | | 313,845 | |
Total stockholders’ equity attributable to Clear Secure, Inc. | 291,668 | | | 277,613 | |
Non-controlling interest | 238,652 | | | 261,855 | |
Total stockholders’ equity | 530,320 | | | 539,468 | |
Total liabilities and stockholders’ equity | $ | 894,791 | | | $ | 812,750 | |
See notes to condensed consolidated financial statements
CLEAR SECURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(dollars in thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, 2022 | | September 30, 2021 | | September 30, 2022 | | September 30, 2021 |
| | | | | | | |
Revenue | $ | 115,919 | | | $ | 67,558 | | | $ | 309,181 | | | $ | 173,294 | |
| | | | | | | |
Operating expenses: | | | | | | | |
Cost of revenue share fee | 14,743 | | | 9,926 | | | 39,198 | | | 25,995 | |
Cost of direct salaries and benefits | 26,918 | | | 18,128 | | | 75,211 | | | 46,113 | |
Research and development | 16,508 | | | 13,347 | | | 46,353 | | | 33,293 | |
Sales and marketing | 10,530 | | | 9,949 | | | 29,721 | | | 25,806 | |
General and administrative | 108,389 | | | 44,816 | | | 202,508 | | | 116,290 | |
Depreciation and amortization | 4,531 | | | 3,988 | | | 13,243 | | | 9,190 | |
Operating loss | (65,700) | | | (32,596) | | | (97,053) | | | (83,393) | |
| | | | | | | |
Other income (expense): | | | | | | | |
Interest income (expense), net | 1,636 | | | (120) | | | 1,830 | | | (333) | |
Other income (expense), net | (2,031) | | | (11) | | | (1,834) | | | (11) | |
Loss before tax | (66,095) | | | (32,727) | | | (97,057) | | | (83,737) | |
Income tax benefit (expense) | 536 | | | (60) | | | 381 | | | (277) | |
Net loss | (65,559) | | | (32,787) | | | (96,676) | | | (84,014) | |
Less: net loss attributable to non-controlling interests | (28,795) | | | (15,872) | | | (42,430) | | | (65,095) | |
Net loss attributable to Clear Secure, Inc. | $ | (36,764) | | | $ | (16,915) | | | $ | (54,246) | | | $ | (18,919) | |
| | | | | | | |
Net loss per share of Class A Common Stock and Class B Common Stock (Note 17) | | | | | | | |
Net loss per common share basic and diluted, Class A | $ | (0.44) | | | $ | (0.23) | | | $ | (0.67) | | | $ | (0.26) | |
Net loss per common share basic and diluted, Class B | $ | (0.44) | | | $ | (0.23) | | | $ | (0.67) | | | $ | (0.26) | |
Weighted-average shares of Class A Common Stock outstanding | 82,426,486 | | | 72,285,100 | | | 79,527,484 | | | 72,124,741 | |
Weighted-average shares of Class B Common Stock outstanding | 1,022,669 | | | 1,042,234 | | | 1,035,641 | | | 1,042,234 | |
See notes to condensed consolidated financial statements
CLEAR SECURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended | |
| September 30, 2022 | | September 30, 2021 | | September 30, 2022 | | September 30, 2021 | |
Net loss | $ | (65,559) | | | $ | (32,787) | | | $ | (96,676) | | | $ | (84,014) | | |
Other comprehensive loss | | | | | | | | |
Foreign currency translation | $ | 23 | | | $ | 15 | | | $ | (101) | | | $ | 18 | | |
Unrealized loss on fair value of marketable securities | $ | (1,359) | | | $ | (108) | | | $ | (3,110) | | | $ | (80) | | |
Total other comprehensive loss | $ | (1,336) | | | $ | (93) | | | $ | (3,211) | | | $ | (62) | | |
Comprehensive loss | $ | (66,895) | | | $ | (32,880) | | | $ | (99,887) | | | $ | (84,076) | | |
Less: comprehensive loss attributable to non-controlling interests | $ | (29,390) | | | $ | (15,917) | | | $ | (43,907) | | | $ | (65,109) | | |
Comprehensive loss attributable to Clear Secure, Inc. | $ | (37,505) | | | $ | (16,963) | | | $ | (55,980) | | | $ | (18,967) | | |
See notes to condensed consolidated financial statements
CLEAR SECURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(dollars in thousands, except per share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A | | Class B | | Class C | Class D | | | | Accumulated other comprehensive loss | | Treasury Stock | Accumulated deficit | | Total stockholders’ equity attributable to Clear Secure, Inc. | Non-Controlling Interest | Total stockholders’ equity |
| Number of shares | | Amount | | Number of Shares | | Amount | | Number of Shares | | Amount | | Number of Shares | | Amount | | Additional paid in capital | | | Number of Shares | Amount | |
Balance, January 1, 2022 | 76,393,256 | | | $ | 1 | | | 1,042,234 | | | $ | — | | | 44,598,167 | | | $ | — | | | 26,709,821 | | | $ | — | | | $ | 313,845 | | | $ | (103) | | | 223,069 | | $ | — | | $ | (36,130) | | | $ | 277,613 | | $ | 261,855 | | 539,468 | |
Net loss | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | — | | (10,327) | | | (10,327) | | (8,467) | | (18,794) | |
Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (570) | | | — | | — | | — | | | (570) | | (521) | | (1,091) | |
Equity-based compensation expense, net of forfeitures | (60,349) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 7,365 | | | — | | | 60,349 | | — | | — | | | 7,365 | | 5,694 | | 13,059 | |
Warrant expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 37 | | | — | | | — | | — | | — | | | 37 | | 34 | | 71 | |
Exchange of shares | 1,025,318 | | | — | | | — | | | — | | | (1,020,812) | | | — | | | (4,506) | | | — | | | 2,606 | | | — | | | — | | — | | — | | | 2,606 | | (2,606) | | — | |
Exercise of warrants | 1,207,931 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 3,070 | | | — | | | — | | — | | — | | | 3,070 | | (3,070) | | — | |
IPO expenses | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (156) | | | — | | | — | | — | | — | | | (156) | | (141) | | (297) | |
Balance, March 31, 2022 | 78,566,156 | | | $ | 1 | | | 1,042,234 | | | $ | — | | | 43,577,355 | | | $ | — | | | 26,705,315 | | | $ | — | | | $ | 326,767 | | | $ | (673) | | | 283,418 | | $ | — | | $ | (46,457) | | | $ | 279,638 | | $ | 252,778 | | $ | 532,416 | |
Net loss | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | — | | (7,155) | | | (7,155) | | (5,168) | | (12,323) | |
Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (422) | | | — | | — | | — | | | (422) | | (361) | | (783) | |
Equity-based compensation expense, net of forfeitures | (101,610) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 7,105 | | | — | | | 101,610 | | — | | — | | | 7,105 | | 5,150 | | 12,255 | |
Issuance of restricted stock units | 7,528 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 27 | | | — | | | — | | — | | — | | | 27 | | (27) | | — | |
Tax distribution to members | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | — | | (27) | | | (27) | | (22) | | (49) | |
Warrant expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 28 | | | — | | | — | | — | | — | | | 28 | | 23 | | 51 | |
Exchange of shares | 3,146,673 | | | — | | | — | | | — | | | (3,146,673) | | | — | | | — | | | — | | | 10,995 | | | — | | | — | | — | | — | | | 10,995 | | (10,995) | | — | |
Balance, June 30, 2022 | 81,618,747 | | | $ | 1 | | | 1,042,234 | | | $ | — | | | 40,430,682 | | | $ | — | | | 26,705,315 | | | $ | — | | | $ | 344,922 | | | $ | (1,095) | | | 385,028 | | $ | — | | $ | (53,639) | | | $ | 290,189 | | $ | 241,378 | | $ | 531,567 | |
Net loss | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | — | | (36,764) | | | (36,764) | | (28,795) | | (65,559) | |
Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (741) | | | — | | — | | — | | | (741) | | (595) | | (1,336) | |
Equity-based compensation expense, net of forfeitures | (12,317) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 9,310 | | | — | | | 12,317 | | — | | — | | | 9,310 | | 4,923 | | 14,233 | |
Net share settlements of stock-based awards | 207,970 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (838) | | | — | | | (207,970) | | — | | — | | | (838) | | (1,543) | | (2,381) | |
Tax distribution to members | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | — | | (68) | | | (68) | | (54) | | (122) | |
Warrant expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 32,603 | | | — | | | — | | — | | — | | | 32,603 | | 26,217 | | 58,820 | |
Repurchase and retirement of Class A Common Stock | (213,100) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (5,395) | | | — | | | — | | — | | — | | | (5,395) | | 493 | | (4,902) | |
Exercise of warrants | 534,655 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,237 | | | — | | | — | | — | | — | | | 1,237 | | (1,237) | | — | |
Conversion of shares | 100,000 | | | — | | | (100,000) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | — | | — | | | — | | — | | — | |
Exchange of shares | 922,801 | | | — | | | — | | | — | | | (555,000) | | | — | | | (367,801) | | | — | | | 2,135 | | | — | | | — | | — | | — | | | 2,135 | | (2,135) | | — | |
Balance, September 30, 2022 | 83,158,756 | | | $ | 1 | | | 942,234 | | | $ | — | | | 39,875,682 | | | $ | — | | | 26,337,514 | | | $ | — | | | $ | 383,974 | | | $ | (1,836) | | | 189,375 | | $ | — | | $ | (90,471) | | | $ | 291,668 | | $ | 238,652 | | $ | 530,320 | |
See notes to condensed consolidated financial statements
CLEAR SECURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CAPITAL UNITS AND STOCKHOLDERS’ EQUITY
(UNAUDITED)
(dollars in thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Class A | | Class B | | Class C | Class D | | | | Profit Units | | Accumulated other comprehensive income | | Treasury Stock | | Accumulated deficit | | Total stockholders’ equity attributable to Clear Secure, Inc. | Non-Controlling Interest | Total stockholders’ equity |
| Total redeemable capital units | Number of shares | | Amount | | Number of Shares | | Amount | | Number of Shares | | Amount | | Number of Shares | | Amount | | Additional paid in capital | | Number of Units | | Amount | | | | |
Balance, January 1, 2021 | $ | 569,251 | | — | | | $ | — | | | — | | | $ | — | | | — | | | — | | | — | | | $ | — | | | — | | | 1,868,322 | | | $ | 7,846 | | | $ | 27 | | | $ | — | | | $ | (494,769) | | | $ | (486,896) | | — | | $ | (486,896) | |
Net loss | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (13,128) | | | (13,128) | | — | | (13,128) | |
Other comprehensive loss | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 25 | | | — | | | — | | | 25 | | — | | 25 | |
Issuance of member units, net of costs | 81,567 | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | — | | — | |
Repurchase and retirement of capital units | (439) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (3,005) | | | (3,005) | | — | | (3,005) | |
Repurchase, forfeitures and retirement of profit units | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (71,247) | | | (56) | | | — | | | — | | | (8,246) | | | (8,302) | | — | | (8,302) | |
Warrant expense | 281 | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | — | | — | |
Equity-based compensation expense, net of forfeitures | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 327 | | | — | | | — | | | — | | | 327 | | — | | 327 | |
Balance, March 31, 2021 | $ | 650,660 | | — | | | $ | — | | | — | | | $ | — | | | — | | | $ | — | | | — | | | $ | — | | | $ | — | | | 1,797,075 | | | $ | 8,117 | | | $ | 52 | | | $ | — | | | $ | (519,148) | | | $ | (510,979) | | $ | — | | $ | (510,979) | |
Net loss prior to reorganization transaction | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | | — | | | — | | | — | | | (33,720) | | | (33,720) | | — | | (33,720) | |
Other comprehensive income | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | 6 | | 6 | |
Equity-based compensation expense, net of forfeitures | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,786 | | | (26,925) | | | 353 | | | — | | | — | | | — | | | 2,139 | | 2,114 | | 4,253 | |
Warrant expense | 819 | | — | | | — | | | — | | | — | | |