CLEAR Posts Strong Q4 Financials but Active Member Growth Lags, Testing Platform Narrative

What happened

Clear Secure reported Q4 revenue of $240.8 million, up 16.7% year-over-year, with bookings reaccelerating to 25.4% growth, signaling robust near-term demand. However, active CLEAR+ members grew only 6.0% to 7.6 million, continuing the deceleration highlighted in the DeepValue report and raising questions about core subscription durability despite total members reaching 38.0 million. Margins expanded sharply, with adjusted EBITDA up 870 basis points to 33.2%, and the company guided for 2026 free cash flow growth of at least 28.2%, reflecting operational leverage. Capital allocation remained aggressive, with a 20% dividend increase, a special dividend, and a $125 million boost to share repurchases, underscoring confidence in cash generation. Yet, these results amplify the tension between strong financial execution and the persistent reliance on TSA-dependent CLEAR+ subscriptions, with diversification into CLEAR1 and TSA PreCheck still immaterial as per prior disclosures.

Implication

The acceleration in bookings and margin expansion offers near-term support, but active CLEAR+ member growth of only 6% year-over-year suggests price increases and non-core segments are driving results, which may not sustain if retention erodes. Guidance for strong free cash flow growth in 2026 is positive, yet it depends on stable retention and efficiency gains that face headwinds from past slippage and potential regulatory shifts. Aggressive capital returns signal management's optimism but could constrain flexibility if growth slows or TSA policies tighten, especially given the $217 million TRA liability noted in the report. At ~19x trailing EPS, the valuation embeds expectations for CLEAR1 and TSA PreCheck to become significant revenue contributors by 2027, but disclosures show they remain immaterial, keeping the risk/reward skewed negative. Overall, while financial performance is solid, the core investment thesis of durable growth and successful diversification remains unproven, warranting caution and potential trimming on strength.

Thesis delta

The Q4 results confirm the DeepValue report's concerns about slowing CLEAR+ active member growth, now at 6% year-over-year, reinforcing doubts about subscription durability and price elasticity. However, strong margin expansion and cash flow guidance provide a partial offset but do not materially shift the thesis, as diversification into CLEAR1 and TSA PreCheck remains unquantified and regulatory risks persist.