Biometric security is commanding lots of headlines these days, particularly with the biometric REAL-ID compliant driver’s licenses being one of the ID options to fly domestic U.S. flights starting next year, asserts Mike Cintolo, growth stock specialist and editor of Cabot Top Ten Trader.
This puts the burgeoning biometric identification industry in a powerful position for further expansion, with analysts forecasting 250% global market growth by 2033.
Clear Secure Inc. (YOU) is a leader in this field, billing itself as the premier “universal identity platform powering trusted experiences” through its biometric travel document verification systems at major airports and stadiums.
The New York-based company serves over 25 million members in total, though that includes many who sign up for free (dubbed Clear Verified); of those, about seven million now pay about $200 a year (dubbed Clear Plus) for what amount to an easier ID process that involves using a driver’s license or passport, a facial scan and a fingerprint that will allow the user to be verified across the entire Clear ecosystem.
The firm’s Clear Plus offering allows users to skip the initial ID portion of security checks at airports by using dedicated lanes reserved for members, a service available at nearly 60 airports across the U.S. It’s also a TSA PreCheck enrollment partner, and the combination of those two obviously cuts down on the check-in process.
Additionally, the company also has priority lanes (known as Clear Lanes) for expedited entry at over 50 sporting and entertainment venues across the country. And even in the healthcare arena, Clear Secure is making strides after a recent partnership with Wellstar Health System, one of Georgia’s largest healthcare providers, to streamline the patient check-in process and bypass the usual paperwork.
On the financial front, Q2 revenue of $187 million increased 25% from a year ago and earnings of 34 cents a share topped estimates by 31%. Adjusted EBITDA of $48 million soared 200%, while free cash flow (FCF) jumped 65%.
The latter metric is a big part of the company’s story, with Clear Secure’s cash balance now standing at $700 million and management guiding for full-year FCF growth guidance to at least 40%, to $280 million. It’s a good story.
Technically, YOU came public in June 2021 at $38 and ran up as high as $66 over the next two months before losing its stride and falling out of favor. Shares plunged soon afterward, hitting the $20 mark by early 2022 and grinding even lower over the next several months before establishing support above $16 this past spring.
The turnaround was quick in coming, however, and the last few months have witnessed a major character change as YOU kicked off on earnings in August and, after a huge run, has survived its first dip toward its 10-week line. If you’re game, you can start small on modest weakness.
