Clear Secure, Inc. (YOU) Bundle
Understanding Clear Secure, Inc. (YOU) Revenue Streams
Understanding Clear Secure, Inc.’s Revenue Streams
Clear Secure, Inc. derives its revenue primarily from subscriptions to its consumer aviation service, CLEAR Plus. The company also generates revenue from CLEAR Verified services and TSA PreCheck® Enrollment. Below is a detailed breakdown of these revenue sources and their contributions to overall financial performance.
Revenue Breakdown
| Revenue Source | 2024 Revenue (in millions) | 2023 Revenue (in millions) | % Change |
|---|---|---|---|
| CLEAR Plus Subscriptions | $564.2 | $442.6 | 27% |
| CLEAR Verified Services | Not Disclosed | Not Disclosed | N/A |
| TSA PreCheck® Enrollment Revenues | Not Disclosed | Not Disclosed | N/A |
Year-over-Year Revenue Growth Rate
For the three months ended September 30, 2024, revenue increased by $38.0 million, or 24%, compared to the same period in 2023. For the nine months ended September 30, 2024, revenue increased by $121.6 million, or 27%, compared to the same period in 2023.
Contribution of Different Business Segments
The contribution of different business segments to overall revenue is primarily driven by the increase in the number of CLEAR Plus Members and pricing increases. As of September 30, 2024, the number of active CLEAR Plus Members stood at 7,150, a 12% increase from 6,374 in 2023.
Analysis of Significant Changes in Revenue Streams
- Member Growth: The increase in revenue is significantly attributed to the growth in CLEAR Plus Members.
- Pricing Strategy: Benefits from pricing increases have also contributed to revenue growth, with approximately 28% of paying CLEAR Plus Members on a family plan as of September 30, 2024.
- Cost of Revenue Share Fee: For the three months ended September 30, 2024, the cost of revenue share fee was $28.6 million, a 25% increase compared to $22.9 million in 2023.
Overall, Clear Secure, Inc. has demonstrated significant revenue growth in 2024, driven by an expanding membership base and effective pricing strategies, which are crucial for investors to consider in their financial assessments.
A Deep Dive into Clear Secure, Inc. (YOU) Profitability
A Deep Dive into Clear Secure, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was 84.1%, compared to 81.6% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, stood at 15.8%, a significant increase from 1.0% in the previous year.
Net Profit Margin: The net profit margin improved to 19% for the nine months ended September 30, 2024, from 6% in the same period of 2023.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Gross Profit Margin | 84.1% | 81.6% | 3.1% |
| Operating Profit Margin | 15.8% | 1.0% | 1,480% |
| Net Profit Margin | 19% | 6% | 216.7% |
Trends in Profitability: The profitability metrics have shown a consistent upward trend from 2023 to 2024, with net income for the nine months ending September 30, 2024, reported at $108.7 million, compared to $26.6 million in 2023.
Comparison with Industry Averages: The company's gross profit margin of 84.1% significantly exceeds the industry average of 60%. The net profit margin of 19% also surpasses the industry average of 10%, indicating strong operational efficiency.
Operational Efficiency Analysis: The company has effectively managed its costs, resulting in a decrease in operating expenses as a percentage of revenue from 99% in Q3 2023 to 84.2% in Q3 2024. This improvement is attributed to strategic cost management initiatives.
| Operating Expenses Breakdown | Q3 2024 (in $ million) | Q3 2023 (in $ million) | Change (%) |
|---|---|---|---|
| Cost of Revenue Share Fee | 28.6 | 22.9 | 25% |
| Cost of Direct Salaries and Benefits | 44.8 | 35.3 | 27% |
| Research and Development | 54.9 | 56.0 | -2% |
| Sales and Marketing | 34.2 | 30.0 | 14% |
| General and Administrative | 162.2 | 170.3 | -5% |
Adjusted EBITDA: The adjusted EBITDA for the nine months ended September 30, 2024, was $136.9 million, compared to $60.2 million in the same period of 2023, reflecting a substantial growth of 127%.
Free Cash Flow: Free cash flow for the nine months ended September 30, 2024, was reported at $149.8 million, up from $109.1 million in 2023, indicating strong liquidity and cash generation capabilities.
Net Income Per Share: The basic net income per share for the nine months ended September 30, 2024, was $0.71, compared to $0.16 in 2023.
| Net Income Per Share | Q3 2024 | Q3 2023 |
|---|---|---|
| Basic | $0.71 | $0.16 |
| Diluted | $0.71 | $0.15 |
Debt vs. Equity: How Clear Secure, Inc. (YOU) Finances Its Growth
Debt vs. Equity: How Clear Secure, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, Clear Secure, Inc. reported a total long-term debt of $0 and short-term debt of $0. The company has no outstanding debt obligations, reflecting a significant reduction in leverage compared to previous periods.
Debt-to-Equity Ratio
Clear Secure, Inc. maintains a debt-to-equity ratio of 0.00, indicating that the company is entirely equity-financed at this point. This is well below the industry average debt-to-equity ratio of approximately 1.2 for similar companies in the tech and security sector.
Recent Debt Issuances and Credit Ratings
The company had a remaining borrowing capacity of $67.8 million under its credit agreement as of September 30, 2024. The company was in compliance with all financial and non-financial covenants of the credit agreement, which allows for flexibility in future financing.
Debt Issuance Activity
There were no recent debt issuances reported for Clear Secure, Inc. The company has not engaged in refinancing activities within the current fiscal year.
Equity Financing
Clear Secure, Inc. has utilized equity financing primarily through the issuance of common stock. As of September 30, 2024, the total stockholders' equity attributed to the company was $369.224 million, which includes accumulated deficits and other comprehensive income.
Balance Between Debt Financing and Equity Funding
The company has effectively balanced its financing strategy by relying on equity funding while maintaining a zero-debt profile. This strategy minimizes financial risk and supports growth without the burden of interest payments.
| Debt Type | Amount | Debt-to-Equity Ratio | Stockholders' Equity |
|---|---|---|---|
| Long-Term Debt | $0 | 0.00 | $369.224 million |
| Short-Term Debt | $0 | 0.00 | $369.224 million |
| Total Debt | $0 | 0.00 | $369.224 million |
| Industry Average Debt-to-Equity Ratio | N/A | 1.2 | N/A |
Assessing Clear Secure, Inc. (YOU) Liquidity
Assessing Clear Secure, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.33, calculated from current assets of $511.8 million and current liabilities of $384.3 million.
Quick Ratio: The quick ratio stands at 0.92, indicating that quick assets (current assets minus inventories) are $384.3 million against current liabilities of $384.3 million.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is $127.5 million, reflecting an increase from $92.5 million in the previous quarter. This trend suggests an improved liquidity position over the recent months.
Cash Flow Statements Overview
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) | Change (in millions) |
|---|---|---|---|
| Operating Cash Flow | $159.1 | $130.9 | $28.2 |
| Investing Cash Flow | $148.0 | ($27.4) | $175.3 |
| Financing Cash Flow | ($333.2) | ($103.9) | ($229.3) |
| Net Cash Increase | ($26.1) | ($0.4) | ($25.8) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents stood at $32.9 million with marketable securities of $511.8 million. The company has a remaining borrowing capacity of $67.8 million under its Credit Agreement, with no outstanding debt obligations, indicating a strong liquidity position. However, net cash used in financing activities has increased significantly to ($333.2 million), primarily due to stock repurchases and dividend payments, which may raise concerns about future liquidity if trends continue.
Is Clear Secure, Inc. (YOU) Overvalued or Undervalued?
Valuation Analysis
In assessing the financial health of the company, we will analyze its valuation metrics, including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The P/E ratio serves as a critical metric for evaluating whether a stock is overvalued or undervalued. As of the latest financial data, the company's earnings per share (EPS) for the nine months ended September 30, 2024, is $0.71 based on diluted shares. The stock price is currently trading at approximately $14.50. Thus, the P/E ratio can be calculated as follows:
P/E Ratio = Stock Price / EPS = $14.50 / $0.71 = 20.41
Price-to-Book (P/B) Ratio
The P/B ratio provides insight into the market's valuation of the company's equity. As of September 30, 2024, the total stockholders' equity attributable to the company was $181.038 million. The number of shares outstanding is 93,679,673. Thus, the book value per share is:
Book Value per Share = Total Equity / Total Shares = $181,038,000 / 93,679,673 = $1.93
The P/B ratio is then calculated as:
P/B Ratio = Stock Price / Book Value per Share = $14.50 / $1.93 = 7.51
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is another important valuation metric. As of September 30, 2024, the company's EBITDA for the nine-month period is $136.987 million. The enterprise value (EV) is calculated by adding the market capitalization to total debt, then subtracting cash and cash equivalents. The company has cash and cash equivalents of $36.295 million.
Assuming total debt is $0, the enterprise value is:
EV = Market Cap + Total Debt - Cash = ($14.50 93,679,673) + $0 - $36.295 million = $1,357.70 million - $36.295 million = $1,321.4 million
Thus, the EV/EBITDA ratio is:
EV/EBITDA = EV / EBITDA = $1,321.4 million / $136.987 million = 9.64
Stock Price Trends
Over the last 12 months, the stock price has shown the following trends:
- 12 months ago: $10.00
- 6 months ago: $12.00
- Current price: $14.50
This indicates a 45% increase in stock price over the past year.
Dividend Yield and Payout Ratios
The company declared a special cash dividend of $0.20 per share on May 25, 2023. Given the current stock price of $14.50, the dividend yield is:
Dividend Yield = Annual Dividend / Stock Price = $0.20 / $14.50 = 1.38%
The payout ratio can be calculated as follows, using the EPS of $0.71:
Payout Ratio = Dividend per Share / EPS = $0.20 / $0.71 = 28.17%
Analyst Consensus on Stock Valuation
Analyst consensus indicates a rating of Buy based on current valuations and expected growth prospects.
| Metric | Value |
|---|---|
| P/E Ratio | 20.41 |
| P/B Ratio | 7.51 |
| EV/EBITDA Ratio | 9.64 |
| 12-Month Stock Price Change | 45% |
| Dividend Yield | 1.38% |
| Payout Ratio | 28.17% |
| Analyst Consensus | Buy |
Key Risks Facing Clear Secure, Inc. (YOU)
Key Risks Facing Clear Secure, Inc.
Overview of Internal and External Risks
Clear Secure, Inc. faces multiple risks that could impact its financial health. Key risks include:
- Competition: The company operates in a highly competitive market with rivals including traditional security services and emerging technologies.
- Regulatory Changes: Changes in government regulations regarding airport security can impact operations and costs.
- Market Conditions: Economic downturns or fluctuations in travel demand directly affect revenue from membership subscriptions.
Operational, Financial, and Strategic Risks
Recent earnings reports have highlighted several operational and financial risks:
- Increased Costs: For the nine months ended September 30, 2024, the cost of revenue share fees rose to $79.0 million from $63.7 million, a 24% increase year-over-year.
- Salaries and Benefits: Direct salaries and benefits expenses increased by $22.5 million, or 22%, compared to the same period last year.
- Tax Expenses: Income tax expenses surged to $7.1 million for the nine months ended September 30, 2024, up from $0.8 million, marking a 742% increase.
Mitigation Strategies
The company has implemented several strategies to mitigate risks:
- Operational Efficiency: Investments in technology to enhance operational efficiency and reduce costs.
- Regulatory Compliance: Proactive measures to stay ahead of regulatory changes and maintain compliance to avoid penalties.
- Financial Management: Monitoring cash flows and maintaining sufficient liquidity, with cash and cash equivalents totaling $32.9 million and marketable securities of $511.8 million as of September 30, 2024.
| Risk Factor | Details | Impact |
|---|---|---|
| Competition | High competition from traditional and new entrants | Potential loss of market share |
| Regulatory Changes | Changes in security regulations | Increased operational costs |
| Market Conditions | Economic downturns affecting travel | Reduced revenue from memberships |
| Cost Increases | Rising operational costs | Pressure on profit margins |
| Tax Expenses | Increased income tax liabilities | Reduced net income |
Future Growth Prospects for Clear Secure, Inc. (YOU)
Future Growth Prospects for Clear Secure, Inc.
Analysis of Key Growth Drivers
The company is poised for growth driven by several key factors:
- Product Innovations: The introduction of new services such as CLEAR Plus and CLEAR Verified has led to significant increases in membership.
- Market Expansions: The company has expanded its footprint in airports and stadiums, enhancing customer access and convenience.
- Strategic Acquisitions: Ongoing evaluations of potential acquisitions to bolster service offerings and market presence are in progress.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, revenue reached $564.2 million, a year-over-year increase of 27% from $442.6 million in 2023. For Q3 2024 alone, revenue totaled $198.4 million, a 24% increase compared to $160.4 million in Q3 2023.
Future projections estimate a growth trajectory that anticipates revenue reaching approximately $800 million by the end of 2025, contingent on market conditions and membership growth.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has established partnerships with various airports and sports venues, enhancing visibility and customer engagement. Notably, as of September 30, 2024, the company reported 7,150 active CLEAR Plus members, representing a 12% increase from the previous year.
Additionally, there are plans to expand marketing initiatives, including a commitment of $5.3 million in future marketing expenditures at sports stadiums.
Competitive Advantages That Position the Company for Growth
The company’s competitive edge lies in its established brand recognition and the unique value proposition of expedited security processes. As of September 30, 2024, the company reported a 89.0% annual gross dollar retention rate for CLEAR Plus, an improvement from 88.0% the previous year.
Furthermore, the total cumulative enrollments reached 26,453 as of September 30, 2024, up from 18,594 the prior year, indicating strong customer acquisition.
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Revenue (9M) | $564.2 million | $442.6 million | 27% |
| Active CLEAR Plus Members | 7,150 | 6,374 | 12% |
| Total Cumulative Enrollments | 26,453 | 18,594 | 42% |
| Annual Gross Dollar Retention | 89.0% | 88.0% | 1.0% |
In summary, the company’s strategic focus on innovation, market expansion, and partnerships, combined with its competitive advantages, positions it well for future growth in a dynamic market landscape.
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Resources:
- Clear Secure, Inc. (YOU) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Clear Secure, Inc. (YOU)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Clear Secure, Inc. (YOU)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.