LS15

CLEAR sells reusable identity, but airports still own distribution

CLEAR Secure (NYSE: YOU) is the cleanest listed instance of a trust-layer business: it enrolls and vets a person once, then rents that verified identity repeatedly to relying parties. FY2025 revenue was $900.8M with $186.5M operating income; the machine works because members prepay annually ($516.2M deferred revenue) while the two real costs, airport revenue share (14.2% of revenue) and lane labor (21.4% FY2025, down to 17.3% of revenue in Q2 2026 as eGates replaced ambassadors), scale slower than price. The load-bearing question is whether the enterprise arm CLEAR1 is a true trust layer or whether CLEAR remains an airport concession business: 66% of member acquisition still happens inside airports, gross dollar retention has fallen from 88.5% to 86.4%, and CLEAR1 revenue is not separately disclosed.

The numbers

  • $900.8M: Revenue. FY2025, +16.9% YoY, Clear Secure 10-K / Q4 2025 release
  • 20.7%: Operating income margin. FY2025 ($186.5M operating income)
  • 36.4%: Adjusted EBITDA margin. Q2 2026, first quarter above the 35% IPO target
  • $343.1M: Free Cash Flow. FY2025; FY2026 guidance raised to at least $480M
  • $516.2M: Deferred revenue (float). Dec 31 2025 balance sheet; 57% of FY2025 revenue, prepaid by members
  • 8.329M: Active CLEAR+ Members. Q2 2026, +15.2% YoY (7.616M at Dec 31 2025)

How the mechanism moves

  • CLEAR+ member (consumer) → CLEAR: $219/yr annual subscription, prepaid
  • American Express → CLEAR: Partner bookings for CLEAR+ embedded as a Platinum card benefit; settled via an accrued partnership liability paid each Q3
  • American Express → Cardholder: Up to $219/yr statement credit, so the user pays nothing net
  • Airlines and loyalty programs (Delta, United, Atmos) → CLEAR: Discounted-tier memberships and channel distribution
  • CLEAR → Host airports, airlines, retail landlords: Revenue share on gross receipts plus fixed airport fees ($127.8M FY2025), prepaid and amortized
  • PreCheck applicant → CLEAR: $79.95 enrollment / $69.95 online renewal, or $139 bundled with CLEAR+
  • CLEAR → TSA and FBI: Statutory vetting and fingerprint check fees passed through ($70.50 TSA + $14.50 FBI under the established structure)

Unit economics

  • Revenue per Active CLEAR+ Member (FY2025) PROXY: $118.3
  • Bookings per Active CLEAR+ Member (FY2025) PROXY: $128.3
  • Revenue share cost per Active Member (FY2025) PROXY: $16.79
  • Direct lane labor per Active Member (FY2025) PROXY: $25.29
  • Gross profit per Active Member (FY2025) PROXY: $76.2
  • S&M per net new Active Member (FY2025) PROXY: $126.9
  • Revenue per platform use (FY2025) PROXY: $14.75
  • Free cash flow per Active Member (FY2025) PROXY: $45.05

Evidence and analysis

  • The core offer is a once-vetted, many-times-used identity: enroll once, verify in under five seconds, at 166 lanes across 60 airports plus 340 TSA PreCheck retail sites. FY2025 10-K: ‘As of December 31, 2025… 166 CLEAR+ Lanes across 60 airports nationwide, 61 airports and 340 retail locations with TSA PreCheck Enrollment Provided by CLEAR, 9 sports and entertainment venues’; 38.0M Total CLEAR Members, 7.6M Active CLEAR+ Members.
  • Who pays is not always who uses: consumers pay $219/yr for CLEAR+, but Amex Platinum reimburses up to $219 via statement credit, and in CLEAR1 the enterprise pays while end users verify free. Amex: ‘up to $219 in statement credits per calendar year for CLEAR+ Membership when charged to an eligible Card.’ CLEAR1 pricing model: ‘Customers pay CLEAR; end users verify at no charge… annual subscription consisting of a platform fee… plus per-user-per-year licensing that typically includes unlimited verifications.’ CLEAR renewed the multi-year Amex partnership in Q4 2025.
  • The two variable costs are airport rent and lane labor; automation is structurally removing the second one. FY2025: cost of revenue share fee $127.8M (14.2% of $900.8M revenue), cost of direct salaries and benefits $192.6M (21.4%). CFO Jen Hsu, Q2 2026 call: ‘eGates have driven significant labor efficiency, with Q2 direct salaries and benefits representing 17.3% of revenue, an improvement of approximately 450 basis points year-over-year.’ Adjusted EBITDA margin hit 36.4% in Q2 2026, above the 35% IPO target.
  • Cash mechanics beat accounting: members prepay a year in advance, producing float worth 57% of annual revenue and FCF that outruns net income. FY2025 balance sheet: deferred revenue $516.2M vs revenue $900.8M. FY2025 Free Cash Flow $343.1M vs net income $168.1M. Company states: ‘we generally collect cash from our Members upfront for annual subscriptions.’ Note the offsetting drag: revenue share is prepaid to airports and capitalized ($29.7M prepaid revenue share fee asset).
  • Pricing power exists but has been used lightly and is now leaking at the retention line. CFO Q2 2026: member base grew from ~2.4M to 8.3M active since IPO ‘while we only increased the standard price of our membership by an average of 4% on an annualized basis’; price raised $209 to $219 effective July 1, 2026. Counter-signal: Annual CLEAR+ Gross Dollar Retention fell from 88.5% (Q4 2024) to 86.4% (Q4 2025).
  • The moat is a government permission plus airport real estate, not the biometrics themselves. CLEAR operates under the DHS/TSA Registered Traveler Program with ‘annual operational audits at each airport,’ holds SAFETY Act Qualified Anti-Terrorism Technology designation, and operates ‘as a concessionaire in airports,’ sharing gross receipts with host airports and airlines. It became TSA’s third authorized PreCheck enrollment provider only in April 2024, alongside IDEMIA and Telos.
  • Distribution is physically self-generating: two thirds of paying members are recruited inside the very airports CLEAR pays rent to. 10-K: in-airport acquisition represented ‘66%, 64%, and 65% of Member acquisitions for the years ended December 31, 2025, 2024 and 2023.’ FY2025 sales and marketing was only $54.4M, 6.0% of revenue. This is why the airport revenue share is better read as customer acquisition cost than as rent.
  • Penetration is low and the constraint is lane throughput, not addressable demand. 10-K: ‘our airport coverage is approximately 79% of 2025 TSA checkpoint volume. 6% and 5% of all TSA checkpoint volume went through a CLEAR lane in 2025 and 2024, respectively.’ Access is nearly universal; conversion is not. Annual CLEAR+ Member Usage has drifted down to 7.0x from 7.8x in Q1 2024.
  • The trust-layer extension is real in contracts but unproven in disclosed revenue: CLEAR1 has CMS/Medicare.gov, LinkedIn, T-Mobile and health systems, yet CLEAR reports as a single revenue line dominated by CLEAR+. December 9, 2025: CLEAR contracted with CMS so Medicare.gov integrates CLEAR1 for account creation and recovery. But 10-K revenue policy states ‘The majority of the Company’s revenues are derived from its consumer aviation subscription service, CLEAR+,’ and risk factors state ‘We are dependent on CLEAR+ memberships for a significant portion of our revenue.’ No CLEAR1 revenue disaggregation is disclosed.
  • What breaks it: the government can commoditize the front door for free. TSA PreCheck Touchless ID already does face-based identity verification at no extra charge. TSA markets Touchless ID as the ‘Fastest way through security with exclusive lanes using only your face as ID,’ bundled into PreCheck at $76.75-$85 for five years (roughly $17/year) versus CLEAR+ at $219/year. TSA also notes travelers may decline facial capture, so consent friction cuts both ways.
  • Credible alternative explanation, tested: ‘CLEAR is a queue-arbitrage concession, not an identity network.’ Partly supported, not sufficient. For the alternative: 66% in-airport acquisition, 14.2% of revenue paid to airport landlords, only 6% of TSA volume, GDR falling. Against it: the labor line fell 450bps in one year via eGates (a technology effect, not a real-estate effect), and IAL2-grade credentials are being resold to CMS and healthcare where no airport is involved. Verdict: today the P&L is a concession business; the option value is an identity network, and it is not yet visible in segment disclosure.
  • The competing trust-layer model prices per verification rather than per subscription, and shows how large government payer budgets can be. ID.me is B2B2C: ‘Government customers typically pay per successful verification under multi-year contracts, with pricing aligned to NIST 800-63-3 IAL2/AAL2.’ GAO found the IRS ‘obligated $234.7 million for ID.me licenses and support services’ between June 2021 and April 2025. That is one agency paying roughly what CLEAR earns in a quarter, for verification alone.

Sources

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