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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 June 30, 2024 |
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.) |
85 10th Avenue, 9th Floor, New York, NY | | | 10011 |
(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 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. | | | | | | | | | | | |
Large accelerated filer | x | Accelerated filer | o |
Non-accelerated filer | o | Smaller reporting company | o |
| | Emerging growth company | o |
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 August 1, 2024:
| | | | | |
Class A Common Stock par value $0.00001 per share (the “Class A Common Stock”) | 92,249,918 | |
Class B Common Stock par value $0.00001 per share (the “Class B Common Stock”) | 907,234 | |
Class C Common Stock par value $0.00001 per share (the “Class C Common Stock”) | 20,292,253 | |
Class D Common Stock par value $0.00001 per share (the “Class D Common Stock”) | 25,796,690 | |
Table of Contents
CLEAR SECURE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(dollars in thousands, except share and per share data)
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 39,108 | | | $ | 57,900 | |
Marketable securities | 630,510 | | | 665,197 | |
Accounts receivable | 1,124 | | | 526 | |
Prepaid revenue share fee | 22,591 | | | 24,402 | |
Prepaid expenses and other current assets | 20,433 | | | 22,009 | |
Total current assets | 713,766 | | | 770,034 | |
Property and equipment, net | 59,290 | | | 62,611 | |
Right of use asset, net | 112,655 | | | 115,874 | |
Intangible assets, net | 18,226 | | | 20,825 | |
Goodwill | 62,757 | | | 62,757 | |
Restricted cash | 3,597 | | | 4,501 | |
Other assets | 12,091 | | | 8,407 | |
Total assets | $ | 982,382 | | | $ | 1,045,009 | |
Liabilities and stockholders' equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 8,857 | | | $ | 11,781 | |
Accrued liabilities | 236,422 | | | 164,015 | |
Deferred revenue | 388,021 | | | 376,253 | |
Total current liabilities | 633,300 | | | 552,049 | |
Other long term liabilities | 120,818 | | | 123,736 | |
Total liabilities | 754,118 | | | 675,785 | |
Commitments and contingencies (Note 17) | | | |
Class A Common Stock, $0.00001 par value - 1,000,000,000 shares authorized; 92,216,698 shares issued and outstanding as of June 30, 2024 and 91,786,941 shares issued and outstanding as of December 31, 2023 | 1 | | | 1 | |
Class B Common Stock, $0.00001 par value - 100,000,000 shares authorized; 907,234 shares issued and outstanding as of June 30, 2024 and December 31, 2023 | — | | | — | |
Class C Common Stock, $0.00001 par value - 200,000,000 shares authorized; 24,292,253 shares issued and outstanding as of June 30, 2024 and 32,234,914 shares issued and outstanding as of December 31, 2023 | — | | | — | |
Class D Common Stock, $0.00001 par value - 100,000,000 shares authorized; 25,796,690 shares issued and outstanding as of June 30, 2024 and December 31, 2023 | — | | | — | |
Accumulated other comprehensive loss | (561) | | | 2,050 | |
Treasury stock at cost, 0 shares as of June 30, 2024 and December 31, 2023 | — | | | — | |
Accumulated deficit | (30,789) | | | (73,714) | |
Additional paid-in capital | 184,885 | | | 304,992 | |
Total stockholders’ equity attributable to Clear Secure, Inc. | 153,536 | | | 233,329 | |
Non-controlling interest | 74,728 | | | 135,895 | |
Total stockholders’ equity | 228,264 | | | 369,224 | |
Total liabilities and stockholders’ equity | $ | 982,382 | | | $ | 1,045,009 | |
See notes to condensed consolidated financial statements
CLEAR SECURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(dollars in thousands, except share and per share data)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Revenue | $ | 186,745 | | | $ | 149,871 | | | $ | 365,794 | | | $ | 282,227 | |
| | | | | | | |
Operating expenses: | | | | | | | |
Cost of revenue share fee | 26,093 | | | 21,219 | | | 50,457 | | | 40,789 | |
Cost of direct salaries and benefits | 40,085 | | | 34,204 | | | 80,373 | | | 67,350 | |
Research and development | 17,411 | | | 22,310 | | | 37,515 | | | 44,254 | |
Sales and marketing | 11,007 | | | 10,788 | | | 22,629 | | | 20,297 | |
General and administrative | 55,371 | | | 56,144 | | | 108,261 | | | 114,222 | |
Depreciation and amortization | 6,441 | | | 4,989 | | | 12,533 | | | 10,156 | |
Operating income (loss) | 30,337 | | | 217 | | | 54,026 | | | (14,841) | |
| | | | | | | |
Other income (expense): | | | | | | | |
Interest income, net | 8,247 | | | 7,394 | | | 18,172 | | | 13,786 | |
Other income, net | 416 | | | 634 | | | 855 | | | 908 | |
Income (loss) before tax | 39,000 | | | 8,245 | | | 73,053 | | | (147) | |
Income tax expense | (409) | | | (211) | | | (2,374) | | | (92) | |
Net income (loss) | 38,591 | | | 8,034 | | | 70,679 | | | (239) | |
Less: net income attributable to non-controlling interests | 14,472 | | | 4,023 | | | 27,754 | | | 974 | |
Net income (loss) attributable to Clear Secure, Inc. | $ | 24,119 | | | $ | 4,011 | | | $ | 42,925 | | | $ | (1,213) | |
| | | | | | | |
Net income (loss) per share of Class A Common Stock and Class B Common Stock (Note 15) | | | | | | | |
Net income (loss) per common share basic, Class A | $ | 0.26 | | | $ | 0.04 | | | $ | 0.46 | | | $ | (0.01) | |
Net income (loss) per common share basic, Class B | $ | 0.26 | | | $ | 0.04 | | | $ | 0.46 | | | $ | (0.01) | |
Net income (loss) per common share diluted, Class A | $ | 0.26 | | | $ | 0.04 | | | $ | 0.46 | | | $ | (0.01) | |
Net income (loss) per common share diluted, Class B | $ | 0.26 | | | $ | 0.04 | | | $ | 0.46 | | | $ | (0.01) | |
Weighted-average shares of Class A Common Stock outstanding, basic | 91,984,045 | | | 89,569,933 | | | 91,907,842 | | | 89,318,481 | |
Weighted-average shares of Class B Common Stock outstanding, basic | 907,234 | | | 907,234 | | | 907,234 | | | 907,234 | |
Weighted-average shares of Class A Common Stock outstanding, diluted | 92,605,019 | | | 90,372,444 | | | 92,645,417 | | | 89,318,481 | |
Weighted-average shares of Class B Common Stock outstanding, diluted | 907,234 | | | 907,234 | | | 907,234 | | | 907,234 | |
See notes to condensed consolidated financial statements
CLEAR SECURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Net income (loss) | $ | 38,591 | | | $ | 8,034 | | | $ | 70,679 | | | $ | (239) | |
Other comprehensive income (loss) | | | | | | | |
Currency translation | — | | | — | | | — | | | 8 | |
Unrealized gain (loss) on fair value of marketable securities | (1,227) | | | (1,240) | | | (4,210) | | | 348 | |
Total other comprehensive income (loss) | (1,227) | | | (1,240) | | | (4,210) | | | 356 | |
Comprehensive income (loss) | 37,364 | | | 6,794 | | | 66,469 | | | 117 | |
Less: comprehensive income attributable to non-controlling interests | 14,021 | | | 3,519 | | | 26,155 | | | 1,128 | |
Comprehensive income (loss) attributable to Clear Secure, Inc. | $ | 23,343 | | | $ | 3,275 | | | $ | 40,314 | | | $ | (1,011) | |
See notes to condensed consolidated financial statements
CLEAR SECURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(dollars in thousands, except share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A | Class B | Class C | Class D | Additional paid in capital | 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 | Number of shares | Amount |
Balance, January 1, 2024 | 91,786,941 | | $ | 1 | | 907,234 | | $ | — | | 32,234,914 | | $ | — | | 25,796,690 | | $ | — | | $ | 304,992 | | $ | 2,050 | | — | | $ | — | | $ | (73,714) | | $ | 233,329 | | $ | 135,895 | | $ | 369,224 | |
Net income | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | 18,806 | | 18,806 | | 13,282 | | 32,088 | |
Other comprehensive income | — | | — | | — | | — | | — | | — | | — | | — | | — | | (1,835) | | — | | — | | — | | (1,835) | | (1,148) | | (2,983) | |
Equity-based compensation expense, net of forfeitures | — | | — | | — | | — | | — | | — | | — | | — | | 6,684 | | — | | — | | — | | — | | 6,684 | | 4,185 | | 10,869 | |
Net share settlements of stock-based awards | 183,167 | | — | | — | | — | | — | | — | | — | | — | | (1,298) | | — | | — | | — | | — | | (1,298) | | (812) | | (2,110) | |
Distribution to members | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | (10,564) | | (10,564) | |
Tax distribution to members | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | (4,558) | | (4,558) | |
Exchange of shares | 1,625,803 | | — | | — | | — | | (1,625,803) | | — | | — | | — | | 3 | | — | | — | | — | | — | | 3 | | (3) | | — | |
Dividends | — | | — | | — | | — | | — | | — | | — | | — | | (8,481) | | — | | — | | — | | — | | (8,481) | | — | | (8,481) | |
Special dividend | — | | — | | — | | — | | — | | — | | — | | — | | (28,828) | | — | | — | | — | | — | | (28,828) | | | (28,828) | |
Repurchase and retirement of Class A Common Stock | (4,416,759) | | — | | — | | — | | — | | — | | — | | — | | (52,514) | | — | | — | | — | | — | | (52,514) | | (32,868) | | (85,382) | |
Balance, March 31, 2024 | 89,179,152 | | $ | 1 | | 907,234 | | $ | — | | 30,609,111 | | $ | — | | 25,796,690 | | $ | — | | $ | 220,558 | | $ | 215 | | — | | $ | — | | $ | (54,908) | | $ | 165,866 | | $ | 103,409 | | $ | 269,275 | |
Net income | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | 24,119 | | 24,119 | | 14,472 | | 38,591 | |
Other comprehensive income | — | | — | | — | | — | | — | | — | | — | | — | | — | | (776) | | — | | — | | — | | (776) | | (451) | | (1,227) | |
Equity-based compensation expense, net of forfeitures | — | | — | | — | | — | | — | | — | | — | | — | | 6,624 | | — | | — | | — | | — | | 6,624 | | 3,847 | | 10,471 | |
Net share settlements of stock-based awards | 287,541 | | — | | — | | — | | — | | — | | — | | — | | (685) | | — | | — | | — | | — | | (685) | | (1,819) | | (2,504) | |
Distribution to members | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | (5,018) | | (5,018) | |
Tax distribution to members | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | (7,367) | | (7,367) | |
Exchange of shares | 6,316,858 | | — | | — | | — | | (6,316,858) | | — | | — | | — | | 19,763 | | — | | — | | — | | — | | 19,763 | | (19,763) | | — | |
Dividends | — | | — | | — | | — | | — | | — | | — | | — | | (9,339) | | — | | — | | — | | — | | (9,339) | | — | | (9,339) | |
Repurchase and retirement of Class A Common Stock | (3,566,853) | | — | | — | | — | | | — | | — | | — | | (52,036) | | — | | — | | — | | — | | (52,036) | | (12,582) | | (64,618) | |
Balance, June 30, 2024 | 92,216,698 | | $ | 1 | | 907,234 | | $ | — | | 24,292,253 | | $ | — | | 25,796,690 | | $ | — | | $ | 184,885 | | $ | (561) | | — | | $ | — | | $ | (30,789) | | $ | 153,536 | | $ | 74,728 | | $ | 228,264 | |
See notes to condensed consolidated financial statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A | Class B | Class C | Class D | Additional paid in capital | 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 | Number of shares | Amount |
Balance, January 1, 2023 | 87,760,831 | | $ | 1 | | 907,234 | | $ | — | | 38,290,964 | | $ | — | | 25,796,690 | | $ | — | | $ | 394,390 | | $ | (1,529) | | 80,505 | | $ | — | | $ | (101,797) | | $ | 291,065 | | $ | 219,856 | | $ | 510,921 | |
Net loss | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | (5,224) | | (5,224) | | (3,049) | | (8,273) | |
Other comprehensive income | — | | — | | — | | — | | — | | — | | — | | — | | — | | 938 | | — | | — | | — | | 938 | | 658 | | 1,596 | |
Equity-based compensation expense, net of forfeitures | (3,079) | | — | | — | | — | | — | | — | | — | | — | | 10,151 | | — | | 3,079 | | — | | — | | 10,151 | | 6,257 | | 16,408 | |
Net share settlements of stock-based awards | 155,049 | | — | | — | | — | | — | | — | | — | | — | | (946) | | — | | (83,584) | | — | | — | | (946) | | (1,462) | | (2,408) | |
Warrant expense | — | | — | | — | | — | | — | | — | | — | | — | | 366 | | — | | — | | — | | — | | 366 | | 257 | | 623 | |
Exercise of warrants | 534,655 | | — | | — | | — | | — | | — | | — | | — | | 1,615 | | — | | — | | — | | — | | 1,615 | | (1,615) | | — | |
Tax distribution to members | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | (13,886) | | (13,886) | |
Exchange of shares | 2,048,773 | | — | | — | | — | | (2,048,773) | | — | | — | | — | | 6,189 | | — | | — | | — | | — | | 6,189 | | (6,189) | | — | |
Repurchase and retirement of Class A Common Stock | (281,838) | | — | | — | | — | | — | | — | | — | | — | | (7,380) | | — | | — | | — | | — | | (7,380) | | 911 | | (6,469) | |
Balance, March 31, 2023 | 90,214,391 | | $ | 1 | | 907,234 | | $ | — | | 36,242,191 | | $ | — | | 25,796,690 | | $ | — | | $ | 404,385 | | $ | (591) | | — | | $ | — | | $ | (107,021) | | $ | 296,774 | | $ | 201,738 | | $ | 498,512 | |
Net income | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | 4,011 | | 4,011 | | 4,023 | | 8,034 | |
Other comprehensive loss | — | | — | | — | | — | | — | | — | | — | | — | | — | | (736) | | — | | — | | — | | (736) | | (504) | | (1,240) | |
Equity-based compensation expense, net of forfeitures | — | | — | | — | | — | | — | | — | | — | | — | | 8,415 | | — | | — | | — | | — | | 8,415 | | 6,244 | | 14,659 | |
Net share settlements of stock-based awards | 144,341 | | — | | — | | — | | — | | — | | — | | — | | (655) | | — | | — | | — | | — | | (655) | | (740) | | (1,395) | |
Tax distribution to members | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | (26) | | (26) | | (17) | | (43) | |
Exchange of shares | 150,000 | | — | | — | | — | | (150,000) | | — | | — | | — | | 165 | | — | | — | | — | | — | | 165 | | (165) | | — | |
Special dividend | — | | — | | — | | — | | — | | — | | — | | — | | (18,089) | | — | | — | | — | | — | | (18,089) | | — | | (18,089) | |
Repurchase and retirement of Class A Common Stock | (1,533,357) | | — | | — | | — | | | — | | — | | — | | (22,928) | | — | | — | | — | | — | | (22,928) | | (15,700) | | (38,628) | |
Balance, June 30, 2023 | 88,975,375 | | $ | 1 | | 907,234 | | $ | — | | 36,092,191 | | $ | — | | 25,796,690 | | $ | — | | $ | 371,293 | | $ | (1,327) | | — | | $ | — | | $ | (103,036) | | $ | 266,931 | | $ | 194,879 | | $ | 461,810 | |
See notes to condensed consolidated financial statements
CLEAR SECURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CASH FLOWS
(UNAUDITED)
(dollars in thousands)
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2024 | | 2023 |
Cash flows provided by (used in) operating activities: | | | |
Net income (loss) | $ | 70,679 | | | $ | (239) | |
Adjustments to reconcile net loss to net cash provided from operating activities: | | | |
Depreciation of property and equipment | 10,728 | | | 8,516 | |
Amortization of intangible assets | 1,805 | | | 1,640 | |
Noncash lease expense | 3,180 | | | 3,315 | |
Impairment of assets | — | | | 3,707 | |
Equity-based compensation | 20,895 | | | 30,937 | |
Deferred income tax | 28 | | | 12 | |
Amortization of revolver loan costs | 136 | | | 164 | |
Premium amortization and (discount accretion), net on marketable securities | (4,489) | | | (7,489) | |
Changes in operating assets and liabilities: | | | |
Accounts receivable | (598) | | | 240 | |
Prepaid expenses and other assets | (656) | | | (1,849) | |
Prepaid revenue share fee | 1,811 | | | (1,848) | |
Accounts payable | (2,624) | | | (2,663) | |
Accrued and other long term liabilities | 85,030 | | | 64,196 | |
Deferred revenue | 11,768 | | | 37,177 | |
Operating lease liabilities | (2,760) | | | (54) | |
Net cash provided by operating activities | $ | 194,933 | | | $ | 135,762 | |
| | | |
Cash flows provided by (used in) investing activities: | | | |
Purchases of marketable securities | (356,079) | | | (411,650) | |
Sales of marketable securities | 391,044 | | | 377,528 | |
Purchase of strategic investment | (1,000) | | | (6,000) | |
Purchases of property and equipment | (7,216) | | | (17,790) | |
Purchases of intangible assets | (318) | | | (89) | |
Net cash provided by (used in) investing activities | $ | 26,431 | | | $ | (58,001) | |
| | | |
Cash flows used in financing activities: | | | |
Repurchase of Class A Common Stock | (150,000) | | | (45,097) | |
Payment of dividend | (17,820) | | | — | |
Payment of special dividend | (28,828) | | | (18,129) | |
Distributions to members | (15,582) | | | — | |
Tax distribution to members | (24,100) | | | (13,929) | |
Debt issuance costs | — | | | (396) | |
Payment of taxes on net settled stock-based awards | (4,614) | | | (3,803) | |
Other financing activities | (153) | | | — | |
Net cash used in financing activities | $ | (241,097) | | | $ | (81,354) | |
| | | |
Net (decrease) increase in cash, cash equivalents, and restricted cash | (19,733) | | | (3,593) | |
Cash, cash equivalents, and restricted cash, beginning of period | 62,401 | | | 68,884 | |
Exchange rate effect on cash and cash equivalents, and restricted cash | 37 | | | 51 | |
Cash, cash equivalents, and restricted cash, end of period | $ | 42,705 | | | $ | 65,342 | |
| | | | | | | | | | | |
| June 30, 2024 | | June 30, 2023 |
Cash and cash equivalents | $ | 39,108 | | | $ | 57,248 | |
Restricted cash | 3,597 | | | 8,094 | |
Total cash, cash equivalents, and restricted cash | $ | 42,705 | | | $ | 65,342 | |
See notes to condensed consolidated financial statements
CLEAR SECURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in thousands, except for share and per share data, unless otherwise noted)
1. Description of Business and Recent Accounting Developments
Description and Organization
Clear Secure, Inc. (the “Company” and 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”). In connection with the Company’s reorganization (the “Reorganization”) completed prior to the completion of its initial public offering (“IPO”), Alclear was formed as a Delaware limited liability company on January 21, 2010 and operates under 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.
The Company operates a secure identity platform under the brand name CLEAR primarily in the United States. CLEAR's current offerings include: CLEAR Plus, a consumer aviation subscription service, which enables access to predictable and fast experiences through dedicated entry lanes in airport security checkpoints within our nationwide network of 58 airports (as of the date of this filing); TSA PreCheck® Enrollment Provided by CLEAR at 46 airports (as of the date of this filing), which offers consumers increased choice in how and where to sign up for this popular trusted traveler program; CLEAR Verified, our B2B offering, which 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 and application programming interfaces; and our free flagship CLEAR app, which offers consumer products like Home-to-Gate and includes RESERVE Powered by CLEAR, our virtual queuing technology that enables customers to prebook a spot in airport security line so they don’t have to wait.
2. Basis of Presentation and Summary of Significant Accounting Policies
These condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting only of normal recurring adjustments necessary for a fair presentation have been reflected in these condensed consolidated financial statements. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024.
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the condensed consolidated financial statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates.
These condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Form 10-K”).
The condensed consolidated financial statements are presented in US Dollars, which is the Company’s reporting currency.
Recently Adopted Accounting Pronouncements
The Company adopted all applicable standards effective as of December 31, 2023, within these condensed consolidated financial statements. There was no material impact as a result. There are no newly issued standards since December 31, 2023 that are applicable to the Company.
CLEAR SECURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except for share and per share data, unless otherwise noted)
3. Revenue
The Company derives substantially all of its revenue from subscriptions to its consumer aviation service, CLEAR Plus. For the three and six months ended June 30, 2024 and 2023, no individual airport accounted for more than 10% of membership revenue.
Revenue by Geography
For the three and six months ended June 30, 2024 and 2023, substantially all of the Company’s revenue was generated in the United States.
Contract liabilities and assets
The Company’s deferred revenue balance primarily relates to amounts received from customers for subscriptions paid in advance of the services being provided that will be earned within the next twelve months. The following table presents changes in the deferred revenue balance for the six months ended June 30, 2024.
| | | | | |
| 2024 |
Balance as of January 1 | $ | 376,253 | |
Deferral of revenue | 373,923 | |
Recognition of deferred revenue | (362,155) | |
Balance as of June 30 | $ | 388,021 | |
The Company has obligations for refunds and other similar items of $3,214 as of June 30, 2024 recorded within accrued liabilities.
During the six months ended June 30, 2024 and 2023, the Company recognized $273,062 and $199,740, respectively, of revenue which was included in the opening deferred revenue balances.
4. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets as of June 30, 2024 and December 31, 2023 consist of the following:
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
Prepaid software licenses | $ | 9,464 | | | $ | 10,306 | |
Coronavirus aid, relief, and economic security act retention credit | — | | | 1,002 | |
Prepaid insurance costs | 203 | | | 1,946 | |
Other current assets | 10,766 | | | 8,755 | |
Total | $ | 20,433 | | | $ | 22,009 | |
The Coronavirus Aid, Relief, and Economic Security Act is intended to provide economic relief resulting from the COVID-19 pandemic which includes, but is not limited to, employment related costs. As of March 31, 2024, the Company no longer expects to receive the remainder of the balance in the next twelve months. As such, the Company recorded a reclass of this balance to Other assets. Refer to Note 10 for the reclassed balance. 5. Fair Value Measurements
The Company values its available-for-sale securities and certain liabilities based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In
CLEAR SECURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except for share and per share data, unless otherwise noted)
order to increase consistency and comparability in fair value measurements, a fair value hierarchy that prioritizes observable and unobservable inputs is used to measure fair value into three broad levels, which are described below:
Level 1 – Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in inactive markets or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data.
Level 3 – Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs to the extent possible. In addition, the Company considers counterparty credit risk in its assessment of fair value.
The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
The following is a description of the valuation methodologies used for certain assets and liabilities measured at fair value, which are not considered Level 1 items.
Corporate bonds – Valued at the closing price reported on the active market on which the individual securities, all of which have counterparts with high credit ratings, are traded.
Commercial paper – Value is based on yields currently available on comparable securities of issuers with similar credit ratings.
Money market funds – Valued at the net asset value (“NAV”) of units of a collective fund. The NAV is used as a practical expedient to estimate fair value. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The contractual maturities of investments classified as marketable securities are as follows:
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
Due within 1 year | $ | 452,260 | | | $ | 439,155 | |
Due after 1 year through 2 years | 178,250 | | | 226,042 | |
Total marketable securities | $ | 630,510 | | | $ | 665,197 | |
The following table represents the amortized cost, gross unrealized gains and losses, and fair market value of the Company’s marketable securities by significant investment category in addition to their fair value level at June 30, 2024 and December 31, 2023.
CLEAR SECURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except for share and per share data, unless otherwise noted)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of June 30, 2024 | | |
| Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | | Level |
Commercial paper | $ | 18,273 | | | $ | — | | | $ | (27) | | | $ | 18,246 | | | 2 | |
U.S. Treasuries | 247,766 | | | 12 | | | (439) | | | 247,339 | | | 1 | |
Corporate bonds | 280,383 | | | 104 | | | (824) | | | 279,663 | | | 2 | |
Money market funds measured at NAV (a) | 85,262 | | | — | | | — | | | 85,262 | | | N/A |
Total marketable securities | $ | 631,684 | | | $ | 116 | | | $ | (1,290) | | | $ | 630,510 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of December 31, 2023 | | |
| Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | | Level |
Commercial paper | $ | 42,903 | | | $ | 16 | | | $ | (24) | | | $ | 42,895 | | | 2 | |
U.S. Treasuries | 324,274 | | | 2,896 | | | (257) | | | 326,913 | | | 1 | |
Corporate bonds | 294,540 | | | 969 | | | (564) | | | 294,945 | | | 2 | |
Money market funds measured at NAV (a) | 444 | | | — | | | — | | | 444 | | | N/A |
Total marketable securities | $ | 662,161 | | | $ | 3,881 | | | $ | (845) | | | $ | 665,197 | | | |
(a)Money market funds that were measured at NAV per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the condensed consolidated balance sheets.
Of the total marketable securities held at fair value as of June 30, 2024, $139,444 was in a continuous unrealized loss position for 12 months or longer. The Company had no continuous unrealized loss positions in relation to marketable securities as of June 30, 2024 or December 31, 2023 that were as a result of credit deterioration. For the periods presented the Company does not intend to nor will it be required to sell any securities before recovery of their amortized cost bases.
For certain other financial instruments, including accounts receivable, accounts payable, accrued liabilities, as well as other current liabilities, the carrying amounts approximate the fair value of such instruments due to the short maturity of these balances.
6. Property and Equipment, net
Property and equipment as of June 30, 2024 and December 31, 2023 consist of the following:
| | | | | | | | | | | | | | | | | |
| Depreciation Period in Years | | June 30, 2024 | | December 31, 2023 |
Internally developed software | 3 - 5 | | $ | 65,888 | | | $ | 62,306 | |
Acquired software | 3 | | 6,441 | | | 6,539 | |
Equipment | 5 | | 35,247 | | | 33,624 | |
Leasehold improvements | 1 - 15 | | 9,069 | | | 9,113 | |
Furniture and fixtures | 5 | | 13,680 | | | 12,709 | |
Construction in progress | | | 9,825 | | | 8,672 | |
Total property and equipment, cost | | | 140,150 | | | 132,963 | |
Less: accumulated depreciation | | | (80,860) | | | (70,352) | |
Total property and equipment, net | | | $ | 59,290 | | | $ | 62,611 | |
Depreciation and amortization expense related to property and equipment for the three months ended June 30, 2024 and 2023 was $5,560 and $4,171, respectively, and $10,728 and $8,516 for the six months ended June 30, 2024 and 2023, respectively.
CLEAR SECURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except for share and per share data, unless otherwise noted)
During the three and six months ended June 30, 2024, $1,756 and $3,583, respectively, were capitalized in connection with internally developed software inclusive of $241 and $445 of equity-based compensation, respectively. Amortization expense on internally developed software was $3,254 and $2,401 for the three months ended June 30, 2024 and 2023, respectively, and $6,416 and $4,152 for the six months ended June 30, 2024 and 2023, respectively.
During the three months ended June 30, 2024 and 2023, the Company recognized impairment charges of none and $74, respectively. During the six months ended June 30, 2024 and 2023, the Company recognized impairment charges of none and $2,201, respectively.
Purchases of property and equipment with unpaid costs in accounts payable and accrued liabilities as of June 30, 2024 were $450 and $115, respectively, and $147 and $120 as of June 30, 2023, respectively.
7. Leases
Cash paid for amounts included in the measurement of operating lease liabilities for the three months ended June 30, 2024 and 2023 was $3,740 and $3,758, respectively, and $7,472 and $4,840 for the six months ended June 30, 2024 and June 30, 2023, respectively.
During the six months ended June 30, 2023, the Company entered into a sublease agreement whereby the Company continues to be a lessee under the original operating lease but will act as a sublessor. As a result, during the six months ended June 30, 2023, the Company recorded $1,506 of impairment to its right of use asset within general and administrative in the condensed consolidated statements of operations. Sublease income is recorded within other income (expense), net within the condensed consolidated statements of operations. The Company had $444 and $444 for the three months ended June 30, 2024 and 2023, respectively, and $888 and $679 sublease income for the six months ended June 30, 2024 and 2023, respectively.
8. Intangible Assets, net
See below for Intangible assets, net as of June 30, 2024 and December 31, 2023:
| | | | | | | | | | | | | | | | | |
| Weighted Average Useful Life in Years | | June 30, 2024 | | December 31, 2023 |
Patents | 20.0 | | $ | 2,518 | | | $ | 3,312 | |
Acquired intangibles - technology | 3.0 | | 5,130 | | | 5,130 | |
Acquired intangibles - customer relationships | 10.8 | | 18,370 | | | 18,370 | |
Acquired intangibles - brand names | 5.0 | | 500 | | | 500 | |
Indefinite lived intangible assets | | | 310 | | | 310 | |
Total intangible assets, cost | | | 26,828 | | | 27,622 | |
Less: accumulated amortization | | | (8,602) | | | (6,797) | |
Intangible assets, net | | | $ | 18,226 | | | $ | 20,825 | |
Amortization expense on intangible assets for the three months ended June 30, 2024 and 2023 was $881 and $819, respectively and $1,805 and $1,640 for the six months ended June 30, 2024 and 2023, respectively. The Company did not recognize any impairment charges on intangible assets, net for any periods presented.
9. Restricted Cash
As of June 30, 2024 and December 31, 2023, the Company maintained bank deposits of $3,597 and $4,501, respectively, which were primarily pledged as collateral for long-term letters of credit issued in favor of airports, in connection with the Company’s obligations under revenue share agreements.
10. Other Assets
Other assets consist of the following as of June 30, 2024 and December 31, 2023:
CLEAR SECURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except for share and per share data, unless otherwise noted)
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
Security deposits | $ | 280 | | | $ | 273 | |
Loan fees | 132 | | | 198 | |
Certificates of deposit | 459 | | | 459 | |
Coronavirus aid, relief, and economic security act retention credit | 1,002 | | | — |
Strategic investment | 7,000 | | | 6,000 |
Other long-term assets | 3,218 | | | 1,477 | |
Total | $ | 12,091 | | | $ | 8,407 | |
During the three months ended March 31, 2024, the Company made an incremental strategic investment in equity securities of a privately held company, which the Company previously invested in during three months ended March 31, 2023. As the investment does not have a readily determinable fair value, the Company elected the measurement alternative to record the investment at initial cost less impairments, if any, adjusted for observable changes in fair value for identical or similar investments of the same issuer. Adjustments resulting from these fluctuations are recorded within other income (expense) on the Company’s condensed consolidated statements of operations.
During the three and six months ended June 30, 2024, there were no fair value adjustments recorded by the Company in relation to its strategic investment.
11. Accrued Liabilities and Other Long Term Liabilities
Accrued liabilities consist of the following as of June 30, 2024 and December 31, 2023:
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
Accrued compensation and benefits | $ | 13,362 | | | $ | 18,690 | |
| | | |
Accrued partnership liabilities | 186,947 | | | 96,284 | |
Lease liability | 5,913 | | | 5,727 | |
Other accrued liabilities | 30,200 | | | 43,314 | |
Total | $ | 236,422 | | | $ | 164,015 | |
The Company has estimated accrued partnership liabilities related to a portion of merchant credit card benefits that it expects to settle in the second half of the current year.
Other long term liabilities consist of the following as of June 30, 2024 and December 31, 2023:
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
Deferred tax liability | $ | 1,739 | | | $ | 1,711 | |
Lease liability | 118,709 | | | 121,655 | |
Other long term liabilities | 370 | | | 370 | |
Total | $ | 120,818 | | | $ | 123,736 | |
12. Warrants
In January 2023, the Company recognized $1,038 of the remaining expense related to the 534,655 fully vested United Airlines warrants. These warrants were exercised for Class A Common Stock in a cashless exercise with an intrinsic value of $16,136. The existing warrant agreement with United Airlines expired in the first quarter of 2023.
CLEAR SECURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except for share and per share data, unless otherwise noted)
The following warrants remained outstanding as of June 30, 2024: | | | | | | | | | | | | | | | | | | | | |
| | Number of Warrants | | Weighted-Average Exercise Price | | Weighted average Remaining Contractual Term (years) |
Exercisable for Alclear Units | | 773,934 | | $ | 0.01 | | 0.21 |
All outstanding warrants are subject to certain performance-based vesting criteria which the Company evaluates at each reporting period to determine the likelihood of achievement.
Based on the probability of vesting, the Company recorded none for both the three months ended June 30, 2024 and 2023, respectively, and none and $623 for the six months ended June 30, 2024 and 2023, respectively within general and administrative expense in the condensed consolidated statements of operations.
13. Stockholders’ Equity
Common Stock
The Company has and will issue shares of its common stock as a result of transactions in relation to warrant exercises, exchanges, and vesting of restricted stock units (“RSUs”).
Treasury Stock
Historically, the Company's treasury stock consisted of forfeited Restricted Stock Awards (“RSAs”) that were legally issued shares held by the Company, and recorded at par value, as well as any shares repurchased under the Company’s share repurchase program that are not retired by the Company’s board of directors (the “Board”). As of June 30, 2024, all RSAs have been either vested or forfeited. The Company’s treasury stock can be utilized to settle equity-based compensation awards issued by the Company and is excluded from the calculation of the non-controlling interest ownership percentage.
Share Repurchases
During the six months ended June 30, 2024, the Company repurchased and retired 7,983,612 shares of its Class A Common Stock for $150,000 at an average price of $18.79. As of June 30, 2024, $75,424 remained available under the repurchase authorization.
The Inflation Reduction Act created an excise tax of 1% on the fair market value of net stock repurchases made after December 31, 2022. During the six months ended June 30, 2024, the Company recorded an accrual of none related to this tax within its condensed consolidated financial statements. Refer to Note 16 for further information regarding the Inflation Reduction Act. Special and Quarterly Dividends
On August 2, 2023, the Company announced that its Board adopted a dividend policy (the "Dividend Policy") of paying a quarterly cash dividend to holders of Class A Common Stock and Class B Common Stock. The amount of such quarterly dividends is subject to approval of the actual amount by the Board at the time of such dividend declaration. It is expected that the dividends will be funded by proportionate cash distributions by Alclear to all of its members as of the applicable record date, including holders of non-controlling interests in Alclear and the Company. The declaration of cash dividends in the future is subject to final determination each quarter by the Board based on a number of factors, including the Company’s results of operations, cash flows, financial position and capital requirements, as well as general business conditions, legal, tax and regulatory restrictions and other factors the Board deems relevant at the time it determines to declare such dividends.
CLEAR SECURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except for share and per share data, unless otherwise noted)
On February 15, 2024, the Company announced that its Board declared a quarterly dividend of $0.09 per share, payable on March 5, 2024 to holders of record of Class A Common Stock and Class B Common Stock as of the close of business on February 26, 2024. The Company funded the dividend from proportionate cash distributions by Alclear to all of its members as of February 26, 2024, including holders of non-controlling interests in Alclear and the Company.
On March 21, 2024, the Company announced the declaration of a special cash dividend in the amount of $0.32 per share payable on April 8, 2024 to holders of record of the Class A Common Stock and Class B Common Stock as of the close of business on April 1, 2024. The Company funded the payment of the special cash dividend with cash held by the Company following its receipt of a pro rata cash distribution made by Alclear to all of its members, including the Company, together with cash held by the Company following its receipt of tax distributions made by Alclear.
On May 7, 2024, the Company announced that its Board declared a quarterly dividend of $0.10 per share, payable on June 18, 2024 to holders of record of Class A Common Stock and Class B Common Stock as of the close of business on June 10, 2024. The Company funded the dividend from proportionate cash distributions by Alclear to all of its members as of June 10, 2024, including holders of non-controlling interests in Alclear and the Company.
To the extent the quarterly or special dividends exceed the Company's current and accumulated earnings and profits, a portion of such dividends may be deemed a return of capital gain to the holders of our Class A Common Stock or Class B Common Stock, as applicable.
Non-Controlling Interest
The non-controlling interest balance represents the economic interest in Alclear held by our co-founders, Caryn Seidman Becker and Kenneth Cornick (the “Co-Founders”), and members of Alclear. The following table summarizes the ownership of non-voting common units of Alclear (“Alclear Units”) as of June 30, 2024:
| | | | | | | | | | | |
| Alclear Units | | Ownership Percentage |
Alclear Units held by Alclear post-reorganization members (other than the Co-Founders and Clear Secure, Inc.) | 24,292,253 | | | 16.96 | % |
Alclear Units held by the Co-Founders | 25,796,690 | | | 18.01 | % |
Total | 50,088,943 | | | 34.97 | % |
The non-controlling interest holders have the right to exchange Alclear Units, together with a corresponding number of shares of Class C Common Stock for Class A Common Stock or Class D Common Stock for Class B Common Stock. As such, exchanges by non-controlling interest holders will result in a change in ownership and reduce the amount recorded as non-controlling interest and increase Class A Common Stock or B Common Stock and additional paid-in-capital for the Company. Upon the issuance of shares Class A Common Stock or B Common Stock, the Company issues a proportionate number of Alclear Units in conjunction with the terms of the Reorganization.
During the six months ended June 30, 2024, certain non-controlling interest holders exchanged their Alclear Units and corresponding shares of Class C Common Stock for shares of the Company's Class A Common Stock. As a result, the Company issued 7,942,661 shares of Class A Common Stock.
The non-controlling interest ownership percentage declined from 38.51% as of December 31, 2023 to 34.97% as of June 30, 2024. This decrease was primarily attributable to the issuance of shares of Class A Common Stock, primarily due to exchanges noted above.
CLEAR SECURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except for share and per share data, unless otherwise noted)
14. Incentive Plans
2021 Omnibus Incentive Plan
The Clear Secure, Inc 2021 Omnibus Incentive Plan (“2021 Omnibus Incentive Plan”) became effective on June 29, 2021 to provide grants of equity-based awards to the employees, consultants, and directors of the Company and its affiliates.
The 2021 Omnibus Incentive Plan authorized the issuance of up to 20,000,000 shares of Class A Common Stock as of the date of the Reorganization. The 2021 Omnibus Incentive Plan authorized the issuance of shares pursuant to the grant, settlement or exercise of RSUs, RSAs, stock options and other share-based awards. Beginning with the first business day of each calendar year beginning in 2022 through 2031, the number of shares available will increase in an amount up to 5% of the total number of common shares outstanding (assuming exchange and/or conversion of all classes of common shares into Class A Common Stock) as of the last day of the immediately preceding year or a lesser amount approved by the Board or its compensation committee, so long as the total share reserve available for future awards at the time is not more than 12% of common shares outstanding (assuming exchange and/or conversion of all classes of common shares into Class A Common Stock). For fiscal year 2023, the Compensation Committee of the Board approved no increase in the 2021 Omnibus Incentive Plan, which such increase would have been effective on the first business day of 2023.
Restricted Stock Units
RSUs are subject to both service-based and, in some cases, performance-based vesting conditions. RSUs will vest on a specified date, provided the applicable service (generally three years) and, if applicable, when certain performance conditions are probable of satisfaction. The RSUs with performance-based vesting conditions are subject to long-term revenue and cash-basis earnings performance hurdles. The Company determines the fair value of each RSU based on the grant date and records the expense over the vesting period or requisite service period on a straight-line basis and for performance-based vesting awards, whether they are probable or not.
The following is a summary of activity related to the RSUs associated with compensation arrangements during the six months ended June 30, 2024: | | | | | | | | | | | |
| RSU’s | | Weighted- Average Grant-Date Fair Value |
Unvested balance as of January 1, 2024 | 3,897,957 | | | $ | 24.85 | |
Granted | 1,590,725 | | | 18.19 | |
Vested | (702,938) | | | 30.23 | |
Forfeited | (806,350) | | | 23.24 | |
Unvested balance as of June 30, 2024 | 3,979,394 | | | $ | 21.79 | |
The following is a vesting schedule of the expected vesting period related to the unvested RSUs as of June 30, 2024: | | | | | |
| Unvested RSU’s |
Expected to vest within 1 year | 1,391,812 | |
Expected to vest between 1 to 2 years | 1,500,612 | |
Expected to vest between 2 to 3 years | 1,086,970 | |
Unvested balance as of June 30, 2024 | 3,979,394 | |
Below is the compensation expense recognized related to the RSUs within the condensed consolidated statements of operations:
CLEAR SECURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except for share and per share data, unless otherwise noted)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Cost of direct salaries and benefits | $ | 154 | | | $ | 143 | | | $ | 280 | | | $ | 216 | |
Research and development | 2,411 | | | 5,443 | | | 5,964 | | | 10,393 | |
Sales and marketing | 255 | | | 132 | | | 488 | | | 31 | |
General and administrative | 4,375 | | | 2,010 | | | 8,139 | | | 6,622 | |
Total | $ | 7,195 | | | $ | 7,728 | | | $ | 14,871 | | | $ | 17,262 | |
As of June 30, 2024, estimated unrecognized expense for RSUs that are probable of vesting was $60,123 with such expense to be recognized over a weighted-average period of approximately 2.19 years.
Founder PSUs
During June 2021, the Company established a long-term incentive compensation plan for the Co-Founders, which consists of performance restricted stock-unit awards (the “Founder PSUs”), that will be settled in shares of Class A Common Stock pursuant to the 2021 Omnibus Incentive Plan, subject to the satisfaction of both service and market based vesting conditions.
The grant date fair value for the Founder PSUs was determined by a Monte Carlo simulation and discounted by the risk-free rate on the grant date and an expected volatility of 45%. The Founder PSUs are estimated to vest over a five year period, based on the achievement of specified price hurdles of the Company’s Class A Common Stock. The specified price hurdles of the Company’s Class A Common Stock will be measured on the volume-weighted average price per share for the trailing days during any 180 day period that ends within the applicable measurement period. In June 2021, the Company granted 4,208,617 Founder PSUs at a weighted average grant date fair value of $16.54. The Company records the expense related to these awards within general and administrative in the condensed consolidated statements of operations.
As of June 30, 2024, estimated unrecognized expense for Founder PSUs was $4,076 with such expense to be recognized over a weighted-average period of approximately 0.54 years.
Below is a summary of total compensation expense recorded in relation to the Company’s incentive plans within the condensed consolidated statements of operations:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2024 | | 2023 | | 2024 | | 2023 |
RSAs | | $ | — | | | $ | 3 | | | $ | — | | | $ | 10 | |
RSUs | | 7,195 | | | 7,728 | | | 14,871 | | | 17,262 | |
Founder PSUs | | 3,035 | | | 6,557 | | | 6,024 | | | 13,042 | |
Total | | $ | 10,230 | | | $ | 14,288 | | | $ | 20,895 | | | $ | 30,314 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2024 | | 2023 | | 2024 | | 2023 |
Cost of direct salaries and benefits | | $ | 154 | | | $ | 143 | | | $ | 280 | | | $ | 216 | |
Research and development | | 2,411 | | | 5,445 | | | 5,964 | | | 10,397 | |
Sales and marketing | | 256 | | | 132 | | | 488 | | | 31 | |
General and administrative | | 7,409 | | | 8,568 | | | 14,163 | | | 19,670 | |
Total | | $ | 10,230 | | | $ | 14,288 | | | $ | 20,895 | | | $ | 30,314 | |
CLEAR SECURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except for share and per share data, unless otherwise noted)
15. Net Income (Loss) per Common Share
Below is the calculation of basic and diluted net income (loss) per common share:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2024 | | Three Months Ended June 30, 2023 |
| Class A | | Class B | | Class A | | Class B |
Basic: | | | | | | | |
Net income attributable to Clear Secure, Inc. | $ | 23,884 | | | $ | 236 | | | $ | 3,971 | | | $ | 40 | |
Weighted-average number of shares outstanding, basic | 91,984,045 | | | 907,234 | | | 89,569,933 | | | 907,234 | |
Net income per common share, basic: | $ | |