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Clear Secure, Inc. (YOU)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered an across-the-board beat: Revenue grew 18.1% YoY to $211.4M, Operating Income expanded 450 bps YoY to $37.4M (17.7% margin), and Free Cash Flow rose 17.6% YoY to $91.3M; management reaffirmed FY 2025 FCF ≥ $310M and guided Q2 revenue to $214–$216M .
  • Versus Street: Q1 revenue and Primary EPS exceeded S&P Global consensus; Revenue $211.4M vs $208.0M*, and Primary EPS $0.343 vs $0.295*, a clean beat on both top and bottom lines (note: company-reported diluted EPS was $0.26) .
  • CLEAR+ and CLEAR1 growth stayed robust: Active CLEAR+ Members reached 7.4M (+9.1% YoY), enrollments hit 31.2M (+42.3% YoY), and platform uses rose to 248.9M; gross dollar retention moderated to 87.1% (–140 bps QoQ) as pricing changes from 2023–2024 normalized .
  • Stock-relevant narrative: execution on “Lane of the Future” (EnVe, ePassport, eGates), rapid TSA PreCheck scaling (165 locations), and enterprise traction (Docusign partnership) position CLEAR for multi-year bookings and cash flow growth; guidance acknowledges near-term variability from REAL ID rollout while reaffirming full-year FCF .

What Went Well and What Went Wrong

What Went Well

  • CLEAR+ and network scale-up: Active CLEAR+ Members reached 7.4M (+9.1% YoY), enrollments 31.2M (+42.3% YoY), platform uses 248.9M; Q1 Adjusted EBITDA was $52.2M (24.7% margin) .
  • Technology-driven experience and productivity: CEO highlighted rollout of EnVe pods (faster facial recognition verifications), one-step mobile ePassport enrollment, and eGates pilots improving throughput and operating leverage: “EnVes are also enabling labor productivity enhancements... eGates... should be a cornerstone of next-generation travel” .
  • Enterprise momentum: CLEAR1 partnerships expanding across healthcare/finance/consumer; new Docusign identity verification integration to build trust in high-stakes agreements and drive broader enterprise adoption .

What Went Wrong

  • Gross dollar retention dipped sequentially: Q1 gross dollar retention was 87.1%, down 140 bps QoQ, as the cohort-level impact of step-function price increases from 2023–2024 worked through the 24-month normalization period .
  • Higher direct salaries and benefits burden: Costs were $50.7M (up 150 bps as % of revenue YoY) given a shift to higher base wages/lower commission for Ambassadors and new TSA PreCheck flagship locations .
  • Bookings outlook widened for Q2: Management widened bookings guidance to account for variability from REAL ID implementation and broader macro “noise,” though they reiterated FY FCF and noted no current softness in demand .

Financial Results

Key P&L and Cash Metrics: YoY/Sequential Comparison

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$179.049 $206.270 $211.368
Operating Income ($USD Millions)$23.689 $34.078 $37.404
Net Income ($USD Millions)$32.088 $116.571 $38.583
Diluted EPS ($USD)$0.20 $0.83 $0.26
Adjusted EBITDA ($USD Millions)$40.890 $50.523 $52.178
Cash from Operations ($USD Millions)$80.349 $136.612 $98.347
Free Cash Flow ($USD Millions)$77.573 $133.862 $91.263

Notes: Q4 2024 net income/EPS include non-recurring TRA-related benefits disclosed in the shareholder letter .

Q1 2025 Actual vs Street Consensus (S&P Global)

MetricConsensusActual
Revenue ($USD Millions)$208.019*$211.368
Primary EPS ($USD)$0.295*$0.343*

Values marked with * were retrieved from S&P Global.

Margins and Operating Context (Q1 2025)

  • Operating margin: 17.7% .
  • Adjusted EBITDA margin: 24.7% .
  • Net income margin: 18% .

KPIs and Operational Scale

KPIQ3 2024Q4 2024Q1 2025
Active CLEAR+ Members (Millions)7.2 7.3 7.4
Total Cumulative Enrollments (Millions)26.5 28.9 31.2
Total Cumulative Platform Uses (Millions)220.4 234.8 248.9
Annualized CLEAR+ Member Usage (x)7.1 7.1 7.1
Annual CLEAR+ Gross Dollar Retention (%)89.0% 88.5% 87.1%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ1 2025$207–$209M Actual $211.4M Beat vs guide
Total BookingsQ1 2025$202–$204M Actual $207.2M Beat vs guide
RevenueQ2 2025—$214–$216M New guide
Total BookingsQ2 2025—$215–$220M New guide
GAAP Tax RateFY 202517–20% 17–20% (reaffirmed) Maintained
Free Cash FlowFY 2025≥ $310M ≥ $310M (reaffirmed) Maintained
Regular DividendQuarterly$0.125 declared for Q1 timing$0.125 payable 6/17/25 (record 6/10/25) Maintained cadence

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2024)Previous Mentions (Q-1: Q4 2024)Current Period (Q1 2025)Trend
AI/technology initiativesEnVe rollout plan; enterprise integrations (Okta); Uber rider verification Focus on EnVe/eGates network innovation EnVe deployed network-wide; ePassport one-step; eGates pilots; “AI to every workstream” for productivity Accelerating deployment and operating leverage
Travel demand/macroTravel secular strength; bookings growth re-accelerated Strong Q4 revenue/margins; travel network expansion Stable demand; REAL ID begins; widened bookings range for variability; no softness observed Stable demand, prudent guidance width
Pricing strategyPrice actions underpin bookings growth Price/value alignment emphasized Pricing normalization impact on gross dollar retention; opportunity to raise average price; top-line at $199 Continued price optimization
CLEAR+ experienceNetwork improvements; planned EnVe Portland launch; 59 CLEAR+ airports 59 CLEAR+ airports, 4 mobile airports; 167 lanes reaching ~74% of U.S. airline passengers Steady expansion
TSA PreCheck52 airports + 10 Staples locations 91 locations at year-end 165 locations; passport lookup; bundling upsell to CLEAR+ Rapid scaling
Regulatory/legal—TRA accounting one-time items REAL ID enforcement; strong public-private cooperation narrative Regulatory event managed
Healthcare/enterprise (CLEAR1)Okta integration; workforce identity for telecom —Healthcare partnerships (Epic toolbox, Surescripts), Docusign integration; workforce identity emphasis Building pipeline and verticals
R&D/cost disciplineR&D down as % revenue; G&A discipline Margin expansion YoY; cost leverage G&A improved 360 bps; R&D down 220 bps as % revenue; comp structure shift Ongoing leverage

Management Commentary

  • CEO on technology: “EnVe... are driving material benefits... proving the value of automation... ePassport is a breakthrough... one-step enrollment... eGates... built for faster and more secure experiences” .
  • CFO on retention and pricing normalization: “Q1 gross dollar retention was 87.1%, down 140 bps sequentially... price increases... had the greatest impact throughout 2024 and are now beginning to normalize” .
  • CEO on CLEAR1/Docusign: “Our partnership... will allow users to verify their identity instantly and securely when signing high trust agreements... setting a new standard... foundation for expanded enterprise adoption” .
  • CFO on capital returns: “We ended the quarter with $533M of cash and marketable securities... just under $150M remaining in repurchase authorization... flexibility to pursue capital allocation alternatives” .
  • CEO on REAL ID rollout: “We are not seeing softness... partnering closely at federal and local level... ePassport rolled out before [REAL ID]” .

Q&A Highlights

  • Macro/REAL ID impact: Management widened bookings guidance to account for variability but emphasized no observed demand softness and strong execution during REAL ID implementation .
  • Retention dynamics: Sequential gross dollar retention decline tied to cohort math from prior step-function price increases; net adds improved (100k Q4→Q1 vs 78k prior-year Q1) supporting overall health .
  • Pricing strategy: Continued opportunity to optimize lifetime value; top-line retail price ~$199 with focus on aligning discounted channels to the value proposition .
  • Capital allocation and flexibility: With >$500M cash and remaining buyback authorization, management highlighted optionality while investing in automation to drive operating leverage .
  • Seasonality and bookings: Expect larger net adds in Q2 and Q4; bookings seasonality tracks membership additions .

Estimates Context

  • Q1 2025 beat: Revenue $211.4M vs $208.0M* consensus; Primary EPS $0.343 vs $0.295* consensus (company-reported diluted EPS: $0.26) .
  • Q2 2025 context: Guide $214–$216M revenue vs Street at ~$215.0M*; bookings $215–$220M .
  • FY 2025 Street: Revenue ~$895.9M*, Primary EPS ~$1.45*, FCF ~$334.4M*; company reaffirmed FY FCF ≥ $310M .
    Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • CLEAR executed a clean beat on revenue and EPS vs Street; operating and adjusted EBITDA margins held strong despite labor mix shifts, supporting the cash compounding story into FY 2025 .
  • Q2 revenue guide straddles consensus with widened bookings range to absorb REAL ID variability—expect volatility around traffic patterns, but full-year FCF reaffirmation anchors valuation and downside risk .
  • Structural pricing actions are normalizing retention metrics; management sees further average price opportunity and lifetime value optimization—watch for cohort retention stabilization as pricing tails off .
  • TSA PreCheck is scaling rapidly (165 locations) and bundling provides a compelling upsell funnel to CLEAR+; EnVe/ePassport/eGates enhance throughput and productivity, providing multi-quarter operating leverage .
  • Enterprise identity (CLEAR1) is building momentum with Docusign and healthcare integrations (Epic toolbox, Surescripts), expanding TAM beyond airports and diversifying revenue streams .
  • Capital returns remain active (buyback authorization available, quarterly dividend maintained), with $533M cash/marketable securities providing flexibility; monitor repurchase pace vs organic investments .
  • Trading stance: Near-term catalysts include Q2 print vs widened guide, updates on international ePassport enrollment, and incremental enterprise wins; medium-term thesis hinges on bookings growth, network expansion, and sustained FCF compounding .