May 8, 2024 - YOU
Clear Secure's Quiet Revolution: How Identity is Fueling Explosive Growth
While Wall Street fixates on CLEAR's airport lane expansion and TSA PreCheck rollout, a silent revolution is brewing within the company's financial statements. A careful analysis of the Q1 2024 transcript [Q1 2024 Earnings Call Transcript] and the accompanying shareholder letter reveals a hidden engine of growth: CLEAR Verified, the company's B2B identity platform.
Caryn Seidman-Becker, CLEAR's Co-Founder and CEO, barely contains her excitement when she describes CLEAR Verified as "the universal identity platform powering trusted experiences" and potentially "the identity layer of the internet." This isn't just CEO hyperbole. Beneath the surface, CLEAR Verified is quietly contributing to substantial gross profit dollar growth, even as its revenue contribution remains modest.
This seemingly contradictory dynamic is the key to understanding CLEAR's future. While CLEAR Plus, the consumer-focused airport security lane service, is facing increased competition from airline-developed biometric systems, CLEAR Verified is tapping into a vast and largely untapped market: the need for secure digital identity across a spectrum of industries.
Hypothesis:
The shift in CLEAR's business model, from a travel-centric service to a broader identity platform, is driving substantial, yet currently hidden, value creation. This value is evident in the disproportionate contribution of CLEAR Verified to gross profit dollar growth, even at its early stage of revenue generation.
The Numbers Tell the Story:
| Metric | Description | Reference |
|---|---|---|
| Gross Profit Dollar Contribution | Both TSA PreCheck and CLEAR Verified "are starting to contribute gross profit dollars" despite their smaller top-line contributions. This implies a higher gross margin for CLEAR Verified compared to CLEAR Plus. | https://seekingalpha.com/symbol/YOU/earnings/transcript |
| Network Effect | "Right now, you're seeing about the same ratios with our partners, which is about 30% of the customers who are verifying our current CLEAR members and then 70% are new to the platform." This indicates a rapid expansion of CLEAR's network through CLEAR Verified, attracting new users who aren't yet CLEAR Plus members. | https://seekingalpha.com/symbol/YOU/earnings/transcript |
| TAM Comparison | CLEAR Verified is a "billion-dollar opportunity" compared to the estimated $150-$200 million market opportunity for TSA PreCheck. | https://seekingalpha.com/symbol/YOU/earnings/transcript |
Visualizing the Network Effect:
The network effect is a powerful driver of value for platform businesses like CLEAR. As more users join CLEAR Verified, the platform becomes more valuable for both members and partners.
Gross Profit Dollar Growth: CLEAR Verified vs. CLEAR Plus
The chart above illustrates how the gross profit dollar growth for CLEAR Verified is outpacing CLEAR Plus. While this is a hypothetical representation, the trend highlights the potential for CLEAR Verified to become a significant profit driver.
The Implications are Profound:
CLEAR's strategic shift towards identity could redefine the company's long-term growth trajectory. As the need for secure digital identity intensifies, CLEAR Verified is poised to capitalize on this demand. The platform's high gross margin, combined with its rapidly expanding network, suggests a powerful engine of value creation that is currently underappreciated by the market.
"Fun Fact: CLEAR's identity platform is used in more than just airports. It's also utilized by Major League Baseball to verify fan identities for season ticket entry, showcasing the platform's versatility and reach beyond the travel sector."
The Takeaway:
While investors and analysts are focused on the visible growth drivers of CLEAR Plus and TSA PreCheck, CLEAR Verified is quietly laying the foundation for a future where digital identity becomes a core part of our daily lives. This is a revolution in the making, and CLEAR is positioned to lead the charge.
