CLEAR raises free cash flow target as identity demand broadens

By Grace Kim

What did fiscal third-quarter results show?

$292.9 million: CLEAR Secure's fiscal third-quarter revenue rose 27.8% year over year, while bookings reached $323.5 million, up 24.4%.

Operating income totaled $82.9 million. Adjusted EBITDA (adjusted earnings before interest, taxes, depreciation and amortization) reached $103.9 million, generating a 35.5% margin nearly five percentage points above a year earlier.

CFO Jen Hsu raised fiscal 2026 free cash flow (cash remaining after operating expenses and capital investment) guidance to at least $490 million from at least $480 million. The new target implies growth of at least 42.8% year over year.

Takeaway: The quarter paired double-digit revenue growth with a higher cash-generation target.

What powered the quarter?

Active CLEAR+ members increased 14.5% year over year to 8.5 million, and total platform membership rose 30.7% to 46.7 million.

Founder, Chair and CEO Caryn Seidman Becker said improvements to the airport experience supported enrollments, average revenue per user and retention. “More than 96% of travelers moved through CLEAR lanes in less than five minutes,” she said.

CLEAR added Tampa Airport to its network during the week of the earnings call. Its app now adapts to a member's trip, offering ride booking, lane information and gate walk times. Coffee ordering is available at 56 storefronts across 13 airports, Seidman Becker said.

Takeaway: Faster airport processing and broader member growth supported the core membership business.

How could pricing support CLEAR+ growth?

Hsu identified three potential pricing levers:

• Measured annual increases to standard prices;
• Adjustments to discounted rates for certain groups; and
• New packages.

Management also is exploring whether CLEAR Concierge, currently sold as a stand-alone service, could be included in premium bundles.

“We are learning our way into different methods of pricing, whether that be a la carte or premium or bundled packages,” Hsu said.

Asked about sustainable CLEAR+ growth after an earlier TSA-related surge, Hsu did not provide a specific long-term growth rate. She said retention and new-member acquisition were strong, and pointed to opportunities in existing markets, network expansion and international growth.

Takeaway: Management has several pricing options in hand but no fixed long-term CLEAR+ growth rate.

How quickly is non-travel demand growing?

Management called the quarter a milestone for CLEAR1, the company's identity-verification business serving organizations outside its core airport membership offering. Hsu said third-quarter CLEAR1 bookings were close to three times the level in the same period a year earlier, though CLEAR did not disclose a dollar amount.

CLEAR's government and healthcare developments included:

• A renewed and expanded multiyear partnership with the Centers for Medicare and Medicaid Services (CMS), building on its sign-on work for medicare.gov;
• A pilot with the Department of Veterans Affairs (VA); and
• Nine health systems added during the quarter.

Hsu described the quarter as CLEAR's largest for partner expansions, measured by incremental annual recurring revenue from existing partners. Seidman Becker said CLEAR is integrated into almost 10% of U.S. healthcare systems and is also integrated into electronic health record platforms.

Seidman Becker said CLEAR has a larger CLEAR1 sales force and sees opportunities to sell additional services to existing customers and sign new ones. She also highlighted CrowdStrike's integration of CLEAR's verified identity in its Falcon platform.

Takeaway: CLEAR1 bookings and partner additions accelerated, although the company has not disclosed their revenue value.

Why did cash flow turn negative?

Despite the higher full-year forecast, CLEAR reported negative third-quarter free cash flow of $103.8 million and $98.6 million of net cash used in operating activities. Hsu attributed the outflows to an approximately $315 million annual settlement of accrued partnership liabilities, primarily tied to merchant credit card benefits.

Under a renewed agreement with its credit card partner, CLEAR expects to begin making quarterly payments on that liability in the first quarter of 2027. Hsu said the change should eliminate the large third-quarter outflow and distribute free cash flow more evenly across quarters.

CLEAR ended the quarter with $633 million in cash and marketable securities. It repurchased 3.7 million shares for $171 million during the quarter, at an average price of $46.19 per share.

Takeaway: The cash-flow forecast depends partly on shifting settlement payments into quarterly installments from early 2027.

What did management forecast for the fourth quarter?

• Revenue: $299 million to $302 million.
• Bookings: $335 million to $340 million.
• Midpoint year-over-year growth: 24.8% for revenue and 17.6% for bookings.

The bookings forecast excludes potential large CLEAR1 contracts because their timing is difficult to predict, Hsu said.

Takeaway: Fourth-quarter growth remains strong at the midpoint, but large CLEAR1 contract timing sits outside the forecast.

What does CLEAR Secure do?

CLEAR Secure, listed on the New York Stock Exchange under ticker YOU, operates a secure identity platform that uses biometric and other identity-verification technologies to help people confirm who they are. Its services simplify access to physical locations and digital services while helping organizations verify identities.

The company is best known for CLEAR Plus, a membership service that lets enrolled travelers use dedicated lanes to verify their identity at participating airport security checkpoints. CLEAR also provides identity-verification services through CLEAR1 and operates at participating sports and entertainment venues.

Its roots date to the early 2010s, when the company relaunched the CLEAR airport identity service.

Takeaway: CLEAR is expanding an airport-membership core into a broader identity platform for healthcare and other organizations.