Clear Secure Inc.

05/06/2026 | Press release | Distributed by Public on 05/06/2026 06:37

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help readers understand our results of operations, financial condition and cash flows and should be read in conjunction with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 ("Annual Report on Form 10-K"). This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below.
For purposes of this MD&A, the term "we" and other forms thereof refer to Clear Secure, Inc. and its subsidiaries (collectively, the "Company"), which includes Alclear Holdings, LLC ("Alclear").
Forward-Looking Statements
This quarterly report includes certain forward-looking statements within the meaning of the federal securities laws regarding, among other things, our or management's intentions, plans, beliefs, expectations or predictions of future events, which are considered forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements often include words such as "may," "will," "should," "believe," "expect," "anticipate," "intend," "plan," "estimate," or similar expressions. These statements are based upon assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. As you read this quarterly report, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions, including those described under the heading "Risk Factors" in our Annual Report on Form 10-K. Although we believe that these forward-looking statements are based upon reasonable assumptions, you should be aware that many factors, including those described under the heading "Risk Factors" in our Annual Report on Form 10-K, could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.
Our forward-looking statements made herein are made only as of the date of this quarterly report. We expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this quarterly report.
Overview
Clear Secure, Inc. (the "Company" or "CLEAR") is a secure identity company making experiences safer and easier - both 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, frictionless experiences in airports for over 15 years, achieving exceptional user delight and trust with CLEAR+, our consumer travel subscription service. CLEAR+ enables access to predictable and fast experiences through dedicated entry lanes in airport security checkpoints nationwide. Additionally, our CLEAR Travel portfolio includes TSA PreCheck® Enrollment Provided by CLEAR, premium services such as CLEAR Concierge, other travel benefits such as expedited passport services, our free CLEAR app which helps travelers plan their trip Home to Gate, and other mobile-first identity solutions such as CLEAR ID. Our CLEAR Travel portfolio extends CLEAR's value proposition beyond the airport lane and supports our strategy to expand use cases, increase engagement and address new customer segments such as international travelers. CLEAR1 is our business to business ("B2B") multi-layered identity verification solution. We combine biometric, document and device signals with verified data sources to ensure users are who they claim to be. Our B2B partners can select which verification layers to deploy, based on their specific security requirements, risk tolerance and user experience goals. We partner with a breadth of organizations, with a particular focus on Healthcare, Workforce and Governmental organizations where high fidelity identity security is paramount to their operational success. Our scaled Member base and comprehensive secure identity platform underpin our CLEAR Travel and CLEAR1 businesses, maximizing security and minimizing friction for consumers and our enterprise partners.
Key Factors Affecting Performance
We believe that our current and future financial growth are dependent upon many factors, including the key factors affecting performance described below.
Ability to Grow Total CLEAR Members
We are focused on growing Total CLEAR Members and the number of Members that engage with our platform. Our operating results and growth opportunities depend, in part, on our ability to attract new Members, including paying Members (CLEAR+ Members) as well as new platform Members. We rely on multiple channels to attract new CLEAR+ Members, including in-airport (our largest channel) which in turn is dependent on the ongoing ability of our Ambassadors to successfully engage with the traveling public. We also rely on numerous digital channels such as our website, mobile app and paid search. We also entered into strategic distribution partnerships with partners such as Delta Air Lines, United Airlines, Alaska Airlines, Hawaiian Airlines and American Express that promote our services to their customers on a discounted or subsidized basis which helps us to efficiently scale membership in CLEAR+. Through our partnership with American Express, eligible card members receive statement credits for all or a portion of their CLEAR Plus membership. We initially entered into our partnership with American Express in 2019. In February 2026, we executed a multi-year renewal of the partnership with American Express. In many cases, we offer limited time trials to new Members who may convert to paying Members upon the completion of their trial. Our future success is dependent on those channels continuing to drive new Members and our ability to convert trial Members into paying Members.
Ability to retain CLEAR+ Members
Our ability to execute on our growth strategy is focused, in part, on our ability to retain our existing CLEAR+ Members. Frequency and recency of usage are the leading indicators of retention, and we must continue to provide frictionless and predictable experiences that our Members will use in their daily lives. We are subject to various factors which may be out of our control and may impact our Member experience, such as checkpoint staffing generally, checkpoint queue configurations and Registered Traveler policies adopted by TSA. For example, the TSA employs varied randomization as part of their normal security processes. If the TSA materially increases randomized reverification rates for CLEAR+ Members at the checkpoint or makes other adjustments to checkpoint processes, it may negatively impact the Lane experience and therefore may impact our ability to retain CLEAR+ Members.
The value of the CLEAR platform to our Members increases as we add more use cases and partnerships, which in turn drives more frequent usage and strong retention. We cannot be sure that we will be successful in retaining our Members due to any number of factors such as our inability to successfully implement a new product, adoption of our technology, harm to our brand or other factors. If our efforts to develop and offer more benefits are not valued by our current and future CLEAR+ Members, our ability to attract and retain CLEAR+ Members, or increase pricing, may be negatively impacted.
Ability to add new partners, retain existing partners and generate new revenue streams
Our partners include local airport authorities, airlines and other businesses. Our future success depends on maintaining those relationships, adding new relationships and maintaining favorable business terms. In addition, our growth strategy relies on creating new revenue streams such as per partner, per Member or per use transaction fees. Although we believe our service provides significant value to our partners, our success depends on creating mutually beneficial partnership agreements. We are focused on innovating both our product and our platform to improve our Members' experience, improve safety and security and introduce new use cases. We intend to accelerate our pace of innovation to add more features and use cases, to ultimately deliver greater value to our Members and partners. In the near term, we believe that growing our Member base facilitates our ability to add new partnerships and provide additional offerings, which we expect will lead to revenue generation opportunities in the long term.
Timing of new partner, product and location launches
Our financial performance is dependent in part on new partner, product and location launches. In many cases, we cannot predict the exact timing of those launches. Delays, resulting either from internal or external factors, may have a material effect on our financial results.
Timing of expenses; Discretionary investments
Although many of our expenses occur in a predictable fashion, certain expenses may fluctuate from period to period due to timing.
In addition, management may make discretionary investments when it sees an opportunity to accelerate growth, add a new partner or acquire talent, among other reasons. This may lead to volatility or unpredictability in our expense base and in our profitability.
Maintaining strong unit economics
Our business model is powered by network effects and has historically been characterized by efficient Member acquisition and high Member retention rates. While we believe our unit economics will remain attractive, this is dependent on our ability to add new Members efficiently and maintain our historically strong retention rates. As we grow our market penetration, the cost to acquire new Members could increase and the experience we deliver to Members could degrade, causing lower retention rates.
Changes to the macro and regulatory environment
Our business is dependent on macroeconomic and other events outside of our control, such as decreased levels of travel or attendance at events, changes in government policy and regulation, terrorism, civil unrest, political instability, union and other transit related strikes and other general economic conditions. We are also subject to changes in discretionary consumer spending.
Taxation and Expenses
We are subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of Alclear and will be taxed at the prevailing corporate tax rates. Alclear is treated as a flow-through entity for U.S. federal income tax purposes, and as such, has generally not been subject to U.S. federal income tax at the entity level.
In addition to tax expense, we incur expenses related to our operations, plus payments under the tax receivable agreement ("TRA") described below, which we expect to be significant. We intend to cause Alclear to make distributions in an amount sufficient to allow us to pay our tax obligations and operating expenses, including distributions to fund any ordinary course payments under the TRA.
We have and we expect to continue to incur increased amounts of compensation expense, including related to equity awards granted under the 2021 Omnibus Incentive Plan to both existing employees and newly-hired employees, and grants in connection with new hires could be significant.
The Company maintains a TRA with the Alclear Members that provides for the payment by us to the Alclear Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize (computed using simplifying assumptions to address the impact of state and local taxes) as a result of (i) any increase in tax basis in Alclear's assets resulting from (a) exchanges by the Alclear Members (or their transferees or other assignees) of Alclear Units (along with the corresponding shares of our Class C Common Stock or Class D Common Stock, as applicable) for shares of our Class A common stock, $0.00001 par value per share ("Class A Common Stock") or Class B common stock, $0.00001 par value per share ("Class B Common Stock") as applicable, and purchases of Alclear Units and corresponding shares of Class C common stock, par value $0.00001 per share ("Class C Common Stock") or Class D common stock, $0.00001 par value per share ("Class D Common Stock" and, together with the Class A Common Stock, Class B Common Stock and Class C Common Stock, collectively, "Common Stock"), as the case may be, from Alclear Members (or their transferees or other assignees) or (b) payments under the TRA, and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the TRA.
The actual increase in tax basis, as well as the amount and timing of any payments under these agreements, varies depending upon a number of factors, including the timing of exchanges by or purchases from the Alclear Members, the price of our Class A Common Stock at the time of the exchange, the extent to which such exchanges are taxable, the amount and timing of the taxable income we generate in the future and the tax rate then applicable and the portion of our payments under the TRA constituting imputed interest.
Key Performance Indicators
To evaluate performance of the business, we utilize a variety of other non-GAAP financial reporting and performance measures. These key measures include Total Bookings, Total CLEAR Members, and Active CLEAR+ Members.
Total Bookings
Total Bookings represent our total revenue plus the change in deferred revenue during the period. Total Bookings in any particular period reflect sales to new and renewing CLEAR+ subscribers plus any accrued billings to partners. Management believes that Total Bookings is an important measure of the current health and growth of the business and views it as a leading indicator.
Three months ended March 31,
2026 2025 $ Change % Change
Total Bookings (in millions) $ 291.7 $ 207.2 $ 84.5 41 %
Total Bookings increased by $84.5 million, or 41%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily driven by growth in Active CLEAR+ Members as well as price increases.
Total CLEAR Members
We define Total CLEAR Members as the cumulative number of Members that have registered for the CLEAR platform since inception as of the end of the period. This includes Members who have enrolled through CLEAR+, trials, single-use product purchases, other non-paid uses of the CLEAR platform, and associated family accounts. Total CLEAR Members exclude members who are solely marketing opt-ins and purged accounts, and are adjusted to remove identified duplicate non-paid accounts. Management views this metric as an important tool to analyze the efficacy of our growth and marketing initiatives as new Members are potentially a current and leading indicator of revenues.
As of March 31,
2026 2025 Change % Change
Total CLEAR Members (in thousands) 40,986 31,215 9,771 31%
Total CLEAR Members were 40,986 as of March 31, 2026 and 31,215 as of March 31, 2025, which represented a 31% increase. The year-over-year increase was driven by CLEAR1 and CLEAR+ Member enrollments.
Active CLEAR+ Members
We define Active CLEAR+ Members as the number of members with an active CLEAR+ subscription as of the end of the period. This includes CLEAR+ members who have an activated payment method, plus associated family accounts and is inclusive of Members who are in a trial or in a billing grace period. Management views this as an important tool to measure the growth of its CLEAR+ product.
Prior period Active CLEAR+ Members have been recast to reflect the removal of certain lapsed accounts identified in connection with a billing system transformation project undertaken during 2025. This recast had no impact on our consolidated financial statements or non-GAAP financial measures. There has been no other change in the calculation of Active CLEAR+ Members.
As of March 31,
2026 2025 % Change
Active CLEAR+ Members (in thousands) 8,167 7,229 13%
Active CLEAR+ Members were 8,167 as of March 31, 2026 and 7,229 as of March 31, 2025, which represented a 13% increase, driven by new Members added through new and existing airports as well as partner and organic channels.
Non-GAAP Financial Measures
In addition to our results as determined in accordance with GAAP, we disclose Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow as non-GAAP financial measures that management believes provide useful information to investors. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income, net income margin, net cash provided by (used in) operating activities or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Our Non-GAAP financial measures are expressed in thousands.
We periodically reassess the components of our Non-GAAP adjustments for changes in how we evaluate our performance and changes in how we make financial and operational decisions to ensure the adjustments remain relevant and meaningful.
Adjusted EBITDA and Adjusted EBITDA Margin
We define Adjusted EBITDA as net income adjusted for income taxes, interest (income), net, depreciation and amortization, impairment and losses on asset disposals, equity-based compensation expense, net other (income) expense excluding sublease rental income, acquisition-related costs and changes in fair value of contingent consideration. We define Adjusted EBITDA Margin as Adjusted EBITDA expressed as percentage of revenue. Adjusted EBITDA and Adjusted EBITDA Margin are important financial measures used by management and our board of directors ("Board") to evaluate business performance. We believe Adjusted EBITDA and Adjusted EBITDA Margin assist investors in evaluating the performance of the Company's core operations by excluding certain items that impact the comparability of results from period to period.
Free Cash Flow
We define Free Cash Flow as net cash (used in) provided by operating activities adjusted for purchases of property. We believe Free Cash Flow provides useful information to management and investors about the Company's liquidity and cash flow trends. With regards to our CLEAR+ subscription service, we generally collect cash from our Members upfront for annual subscriptions. As a result, when the business is growing Free Cash Flow can be a real time indicator of the current trajectory of the business.
See below for reconciliations of these non-GAAP financial measures to their most comparable GAAP measures.
Reconciliation of Net Income to Adjusted EBITDA and Net Income Margin to Adjusted EBITDA Margin:
Three months ended March 31,
(In thousands) 2026 2025
Net income $ 56,384 $ 38,583
Income tax expense 14,361 5,422
Interest (income), net (6,761) (6,153)
Other (income), net (1,538) (4)
Depreciation and amortization 6,830 6,532
Equity-based compensation expense 11,311 7,798
Adjusted EBITDA $ 80,587 $ 52,178
Revenue $ 253,003 $ 211,368
Net income Margin 22 % 18 %
Adjusted EBITDA Margin 32 % 25 %
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow:
Three months ended March 31,
(In thousands) 2026 2025
Net cash provided by operating activities $ 190,356 $ 98,347
Purchases of property and equipment (4,873) (7,084)
Free Cash Flow $ 185,483 $ 91,263
Components of Results of Operations
Revenue
The Company derives substantially all of its revenue from subscriptions to its consumer aviation service, CLEAR+. The Company offers certain limited-time trials, family pricing, and other beneficial pricing through several channels, including airline and credit card partnerships. Membership subscription revenue is presented net of taxes, refunds, and credit card chargebacks. Membership subscription revenue is also reduced by the Company's funded portion of credit card benefits issued to certain Members through a partnership with a credit card company. The Company's funded portion varies based on total number of Members for the contract year.
The Company generates additional revenue from TSA PreCheck® Enrollment Provided by CLEAR. The Company offers both online and in person enrollments and renewals across multiple locations, and plans to continue to launch additional locations on a rolling basis, subject to TSA approval. The Company recognizes the revenue from these services net of fees remitted to TSA and the Federal Bureau of Investigation within the Company's condensed statements of operations. The Company recognizes these revenues on a per transaction basis upon completion of each enrollment or renewal.
The Company also generates revenue in relation to CLEAR1. While contract structure may vary by use case, these deals are typically multi-year agreements that drive revenue through transaction fees (charged per use or per user) in addition to an annual platform fee. 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.
Operating Expenses
Cost of revenue share fee
The Company operates as a concessionaire in airports and shares a portion of the gross receipts generated both from the Company's Members and from TSA PreCheck® Enrollment Provided by CLEAR with the host airports, retail locations, and/or airlines ("Revenue Share"). The Revenue Share fee from CLEAR+ Members is generally prepaid to the host airport in the period collected from the Member. The Revenue Share fee is generally capitalized and subsequently amortized to operating expense over each Member's subscription period. Such prepayments are recorded in "Prepaid revenue share fee" in the Company's condensed consolidated balance sheets. Cost of revenue share fee also includes a fixed fee component which is expensed in the period incurred and certain overhead related expenses paid to the airports in relation to our Revenue Share arrangements.
Cost of direct salaries and benefits
Cost of direct salaries and benefits includes employee-related expenses and allocated overhead associated with our field Ambassadors, field managers directly assisting Members, their corresponding travel related costs, and costs incurred in Member support. Employee-related costs recorded in direct salaries and benefits consist of salaries, taxes, benefits and equity-based compensation and expenses under arrangements related to the use of certain space at airports.
Research and development
Research and development expenses consist primarily of employee related expenses, allocated overhead costs and costs for contractors related to the Company's development of new products and services and improving existing products and services. Research and development costs are generally expensed as incurred, except for costs incurred in connection with the development of internal-use software that qualify for capitalization as described in our internal-use software policy. Employee related compensation costs consist of salaries, taxes, benefits and equity-based compensation.
Sales and marketing
Sales and marketing expenses consist primarily of costs of general marketing and promotional activities, advertising fees used to drive subscriber acquisition, commissions, the production costs to create our advertisements, expenses related to employees who manage our sales and marketing efforts, as well as brand and allocated overhead costs.
General and administrative
General and administrative expenses consist primarily of employee-related expenses for the executive, finance, accounting, legal, and human resources functions. Employee-related expenses consist of salaries, taxes, benefits and equity-based compensation. In addition, general and administrative expenses include non-personnel costs, such as legal, accounting and other professional fees, variable credit card fees, variable mobile enrollment costs, and all other supporting corporate expenses not allocated to other departments including overhead and acquisition-related costs.
Interest income, net
Interest income, net primarily consists of interest income from our investment holdings and discount accretion on our marketable securities partially offset by issuance costs on our revolving credit facility.
Other income (expense), net
Other income (expense), net consists of certain non-recurring non-operating items, and subsequent revaluations of the tax receivable agreement liability.
Provision for income taxes
The Company is the sole managing member of Alclear, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Alclear is not subject to U.S. federal and most state and local income taxes. Any taxable income or loss generated by Alclear is passed through to and included in the taxable income or loss of its members, including the Company, based on ownership interest. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of Alclear, as well as any stand-alone income or loss generated by the Company. The Company is also subject to income taxes in Israel, Argentina, and Mexico.
Comparison of the three months ended March 31, 2026 and 2025 (in millions)1:
Three months ended March 31,
2026 2025 $ Change % Change
Revenue $ 253.0 $ 211.4 $ 41.6 20 %
Operating expenses:
Cost of revenue share fee 36.9 29.6 7.3 25 %
Cost of direct salaries and benefits 48.3 50.7 (2.4) (5) %
Research and development 19.5 19.0 0.5 2 %
Sales and marketing 16.0 13.4 2.6 19 %
General and administrative 63.6 54.7 8.9 16 %
Depreciation and amortization 6.8 6.5 0.3 5 %
Operating income 62.0 37.4 24.6 66 %
Other income (expense)
Interest income, net 6.8 6.2 0.6 10 %
Other income, net 2.0 0.4 1.5 343 %
Income before tax 70.7 44.0 26.7 61 %
Income tax expense (14.4) (5.4) (8.9) 165 %
Net income $ 56.4 $ 38.6 $ 17.8 46 %
1Note certain numbers in this table and accompanying discussion do not foot due to rounding differences
Information about our operating results for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 is set forth below:
Revenue
Three months ended March 31,
2026 2025 $ Change % Change
Revenue $ 253.0 $ 211.4 $ 41.6 20 %
Revenue increased by $41.6 million, or 20%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.The change was primarily due to a 13% increase in the number of Active CLEAR+ Members as of March 31, 2026 compared to March 31, 2025 and increases to the price of a CLEAR+ membership compared to the price as of March 31, 2025. Approximately 26% and 27% of paying CLEAR+ members were on a family plan as of March 31, 2026 and 2025, respectively.
Cost of revenue share fee
Three months ended March 31,
2026 2025 $ Change % Change
Cost of revenue share fee $ 36.9 $ 29.6 $ 7.3 25 %
Cost of revenue share fee increased by $7.3 million, or 25%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The change was driven primarily by an increase of $1.0 million, or an 11% increase, in fixed airport fees and $6.3 million, or a 31% increase, in per Member fees.
Cost of direct salaries and benefits
Three months ended March 31,
2026 2025 $ Change % Change
Cost of direct salaries and benefits $ 48.3 $ 50.7 $ (2.4) (5) %
Cost of direct salaries and benefits expenses decreased by $2.4 million, or 5%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The change was primarily due to a decrease in employee compensation costs of $4.1 million caused by lower average employee count, partially offset by a $2.0 million increase for overhead costs.
Research and development
Three months ended March 31,
2026 2025 $ Change % Change
Research and development $ 19.5 $ 19.0 $ 0.5 2 %
Research and development expenses increased by $0.5 million, or 2%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The change was primarily due to a $1.1 million increase in technology costs, partially offset by a $0.4 million decrease in professional fees and a $0.3 million decrease in employee compensation costs.
Sales and marketing
Three months ended March 31,
2026 2025 $ Change % Change
Sales and marketing $ 16.0 $ 13.4 $ 2.6 19 %
Sales and marketing expenses increased by $2.6 million, or 19%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The change was driven primarily by $1.9 million of higher commission expense primarily related to our B2B offering, CLEAR1, and $1.2 million of higher marketing expense.
General and administrative
Three months ended March 31,
2026 2025 $ Change % Change
General and administrative $ 63.6 $ 54.7 $ 8.9 16 %
General and administrative expenses increased by $8.9 million, or 16%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The change was driven by a $5.6 million increase in employee compensation costs primarily related to performance-based equity compensation costs, and a $3.2 million increase in credit card fees due to higher bookings.
Other income (expense)
Three months ended March 31,
2026 2025 $ Change % Change
Interest income, net $ 6.8 $ 6.2 $ 0.6 10 %
Interest income, net increased by $0.6 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This increase is primarily driven by higher average cash balances relative to the comparative period, partially offset by lower interest rates.
Three months ended March 31,
2026 2025 $ Change % Change
Other income, net $ 2.0 $ 0.4 $ 1.5 343 %
Other income, net increased $1.5 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The change was driven primarily driven by the revaluation of the TRA liability at a lower income tax rate for the three months ended March 31, 2026.
Income tax expense
Three months ended March 31,
2026 2025 $ Change % Change
Income tax expense $ (14.4) $ (5.4) $ (8.9) 165 %
Income tax expense increased by $8.9 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The change was primarily due to higher pre-tax earnings, and a higher effective tax rate driven by an increase in Clear Secure, Inc.'s ownership percentage.
Liquidity and Capital Resources
Our operations have been financed primarily through cash flows from operating activities. As of March 31, 2026, we had cash and cash equivalents of $170.7 million and marketable securities of $629.4 million.
Historically, our principal uses of cash and cash equivalents have included funding our operations, capital expenditures, repurchases of members' equity and more recently, business combinations and investments that enhance our strategic positioning. We may also use our cash and cash equivalents to repurchase our Class A Common Stock, pay cash dividends and distribute to members for tax payments. We plan to finance our operations, future stock repurchases, cash dividends and capital expenditures largely through cash generated from operations. We believe our existing cash and cash equivalents, marketable securities, cash provided by operations and the availability of additional funds under our Credit Agreement (as defined below) will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months, including payment of dividends, potential stock repurchases, and known commitments and contingencies as discussed below. We expect that future capital expenditure will generally relate to building enhancements to the functionality of our current platform, equipment, leasehold improvements and furniture and fixtures related to office expansion and relocation, and general corporate infrastructure.
Share Repurchases
On May 13, 2022, the Company's Board authorized a share repurchase program pursuant to which the Company may purchase up to $100 million of its Class A Common Stock, with subsequent increases to the repurchase program authorized by the Board in November 2023, March 2024, August 2024, February 2025, and February 2026. Under the repurchase program, the Company may purchase shares of its Class A Common Stock on a discretionary basis from time to time through open market repurchases, privately negotiated transactions, or other means, including through Rule 10b5-1 trading plans. The timing and actual number of shares repurchased will be determined by management depending on a variety of factors, including stock price, trading volume, market conditions, and other general business considerations. The repurchase program has no expiration date and may be modified, suspended, or terminated at any time. During the three months ended March 31, 2026, the Company repurchased 39,901 shares for $1.3 million. The repurchased shares were retired. As of March 31, 2026, $250.3 million remains available under the repurchase authorization.
Dividends
Below is a summary of the Company's quarterly and special dividends declared and paid to holders of record of Class A Common Stock and Class B Common Stock during the three months ended March 31, 2026 and 2025:
Dividend Type Dividend Declaration Date Record Date Payment Date Dividend per Share
Quarterly February 21, 2025 March 10, 2025 March 18, 2025 $ 0.125
Quarterly February 25, 2026 March 10, 2026 March 24, 2026 $ 0.150
Special February 21, 2025 March 10, 2025 March 18, 2025 $ 0.270
Special February 25, 2026 March 10, 2026 March 24, 2026 $ 0.200
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.
Refer to our risks and uncertainties discussed under the heading "Forward-Looking Statements" and in Part II. Item 1A. "Risk Factors."
Credit Agreement
On March 31, 2020, we entered into a credit agreement (as amended, restated or otherwise modified, the "Credit Agreement") for a three-year $50 million revolving credit facility with a maturity date of March 31, 2023 (which has since been amended to extend the maturity date to June 28, 2026). Borrowings under the Credit Agreement generally bear interest between 1.5% and 2.5% per year and also include interest based on the greater of the prime rate, London Interbank Offered Rate ("LIBOR") or New York Federal Reserve Bank ("NYFRB") rate, plus an applicable margin for specific interest periods. In April 2021, the Company increased the size of the revolving credit facility to $100 million, which matures three years from the date of the increase. The revolving credit facility includes a letter of credit sub-facility, in the amount of $50 million. In June 2023, the Company entered into a second amendment to the Credit Agreement to transition from LIBOR to the Secured Overnight Financing Rate ("SOFR") as our benchmark interest rate and to extend the maturity date to June 28, 2026. In November 2024, the Company entered into Amendment No. 3 to the Credit Agreement to increase the letter of credit sublimit from $35 million to $50 million.
We have the option to repay any borrowings under the Credit Agreement without premium or penalty prior to maturity. In addition, the Credit Agreement contains certain other covenants (none of which relate to financial condition), events of default and other customary provisions. The Credit Agreement contains customary affirmative covenants, such as financial statement reporting requirements and delivery of borrowing base certificates, as well as customary covenants that restrict our ability to, among other things, incur additional indebtedness, sell certain assets, guarantee obligations of third parties, declare dividends or make certain distributions, and undergo a merger or consolidation or certain other transactions..
As of March 31, 2026, the Company had a remaining borrowing capacity of $67.7 million, net of standby letters of credit, and had no outstanding debt obligations. As of March 31, 2026, the Company was in compliance with all of the financial and non-financial covenants of the Credit Agreement. Refer to Note 18 within the condensed consolidated financial statements for further details.
Cash Flow
The following summarizes our cash flows for the three months ended March 31, 2026 and 2025 (in millions):
Three months ended March 31,
2026 2025 $ Change
Net cash provided by operating activities $ 190.4 $ 98.3 $ 92.0
Net cash (used in) provided by investing activities (21.4) 93.3 (114.7)
Net cash used in financing activities (83.9) (171.3) 87.4
Net increase in cash, cash equivalents, and restricted cash 85.0 20.3 64.7
Cash, cash equivalents, and restricted cash, beginning of year 88.5 70.3 18.2
Net exchange differences on cash, cash equivalents, and restricted cash - - -
Cash, cash equivalents, and restricted cash, end of period $ 173.5 $ 90.7 $ 82.8
Cash flows from operating activities
For the three months ended March 31, 2026, net cash provided by operating activities was $190.4 million compared to net cash provided by operating activities of $98.3 million for the three months ended March 31, 2025, an increase of $92.0 million primarily due to higher net income, an increase in non-cash adjustments to net income of $11.7 million, and year-over-year favorable changes in working capital of $62.5 million driven primarily by higher partnership liabilities offset and higher deferred revenues.
Cash flows from investing activities
For the three months ended March 31, 2026 net cash used in investing activities was $21.4 compared to net cash provided by investing activities of $93.3 million for the three months ended March 31, 2025, a decrease of $114.7 million. The change was primarily due to an increase in net purchases of marketable securities of $116.9 million and an increase in capital expenditures of $2.2 million.
Cash flows from financing activities
For the three months ended March 31, 2026, net cash used in financing activities was $83.9 million compared to net cash used in financing activities of $171.3 million for the three months ended March 31, 2025, a decrease of $87.4 million. The change was primarily due to a decrease in the amounts used to repurchase Class A Common Stock of $100.5 million and lower dividends and distributions of $11.4 million offset partially by higher payments of taxes on net settled stock-based awards and TRA payments of $10.6 million and $13.9 million, respectively.
Commitments and Contingencies
We have non-cancelable operating lease arrangements for office space. As of March 31, 2026, we had future minimum payments of $170.9 million, with $14.0 million due within twelve months.
We have and continue to enter into agreements with airports for access to floor and office space. As of March 31, 2026, we had future minimum payments of $64.0 million.
We have commitments for future marketing expenditures to sports stadiums of $5.4 million as of March 31, 2026.
We are subject to certain minimum spend commitments of approximately $0.3 million over the next two years under service arrangements.
Critical Accounting Policies and Estimates
The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. The Securities and Exchange Commission ("SEC") has defined a company's critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and results of operations, and which require a company to make its most difficult and subjective judgments. The Company's critical accounting policies and estimates are described under the heading "Management's Discussion and Analysis of Financial Condition and results of Operations" in our Annual Report on Form 10-K. Refer to Note 2 within the condensed consolidated financial statements for further information.
Recent Accounting Pronouncements
Refer to Note 2 within the condensed consolidated financial statements, for recently issued accounting pronouncements and their expected impact.
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