As the travel industry comes up with different ways to maintain security in the post-COVID world, identity verification companies have potential for impressive growth. CLEAR Secure, an identity verification platform, recently went public on the New York Stock Exchange and is now listed under the symbol YOU.
CLEAR Secure, founded in 2010, provides identification based on biometric data. The CLEAR Secure system scans a persons face, examining the eyes and distinguishing facial characteristics. It then converts these biometrics into an encrypted code unique to you.
The touchless ID system of CLEAR Secure eliminates the need for bulky paper identification documents, not to mention the hygienic concerns involved in the transfer of papers from one person to another. In addition to its travel applications, it can provide secure identification and vaccine/health confirmation for businesses and public settings.
TL;DR
- CLEAR Secure, an identity verification platform used primarily in airports and stadiums, went public on June 30.
- The companys IPO priced at $31 per share, up from its earlier estimated range of $27$30 per share.
- The CLEAR Secure IPO offered 13.2 million shares and was expected to raise gross proceeds of $409.2 million, with potential to reach $470.6 million with the underwriters 3-day option.
- Goldman Sachs, J.P. Morgan Securities, Allen & Company, and Wells Fargo Securities served as lead underwriters on the deal.
- Prior to its IPO, CLEAR Secure raised a total of $135 million over 6 fundraising rounds.
- In its first week of trades, CLEAR Secure stock YOU rose from its IPO price of $31 to as high as $48 its third day and closed at $42.32 on July 8.
A brief CLEAR Secure company history
Co-founders Caryn Seidman Becker and Ken founded Cornick CLEAR Secure in 2010 with the goal of developing a “frictionless travel experience while enhancing homeland security.”
Its technology scans an individuals face and eyes for distinctive characteristics, then matches the person to their unique ID code. The process is certified by the U.S. Department of Homeland Security.
Upon its founding, Becker and Cornick actually re-launched the company by buying the assets of its bankrupt predecessor for $6 million. The firm has grown to employ more than 2,000 team members nationwide.
Seidman-Becker serves as CEO and chairman of the company, while Cornick leads as the president, managing the companys finance, insights and analytics, operations, and security organizations.
Currently, the company is in service nationwide:
- It’s found at 38 airports.
- Service covers 106 checkpoints, 26 sports and entertainment partners, and 67 partners and events
- Health Pass is used in more than 110 unique locations.
CLEAR technology has also been implemented in theatres, casinos, and theme parks.
Services and products offered by CLEAR Secure include its CLEAR Pass for CBP Mobile Passport Control. This is a mobile app available to any U.S. citizen or Canadian visitor, helping to streamline the process of entry into the United States at customs and border patrol.
Health Pass is CLEAR Secures solution for security regarding COVID-19 vaccination status. While the original core mission of CLEAR started with airport security, Health Pass is applicable in businesses and any place where people are gathering and want to feel secure that COVID-19 will not be a serious risk.
Users can link their COVID-19 vaccination records to their CLEAR ID to provide quick and easy confirmation that theyve been vaccinated. COVID-19 lab results can also integrate with the CLEAR app. The app includes a health survey, and users can also have their temperature taken at a touchless CLEAR kiosk.
Members currently pay $179 annually for CLEAR access. In airports, it can be used in tandem with a TSA Precheck membership.
Fundraising for CLEAR Secure over the years
CLEAR raised a total of $135 million in its six fundraising rounds prior to the IPO. Heres a glance at the fundraising history for the company.
- Secondary Market: CLEAR Secure raised $20 million in an Oct. 2015 secondary funding round led by T. Rowe Price.
- Corporate Funding Round: Delta Air Lines led the April 2016 Corporate Round.
- Private Equity Round: Again in April of 2017, T. Rowe Price took the lead on a $15 million private equity funding round.
- Private Equity Round: Another private equity round took place in February of 2019. Revolution and T. Rowe Price brought in new funding at this time.
- Corporate Round: United Airlines provided a corporate round of funding in July 2019.
- Private Equity Round: In February of 2021, CLEAR Secure raised another $100 million from 11 investors. These included 32 Equity, Enlightened Hospitality Investments, and the Partnership Fund for New York City.
The path to the CLEAR Secure IPO
CLEAR Secure provided valuable security and identity verification even before the coronavirus pandemic struck. Since the pandemic caused ripples across the globe in every industry, CLEAR is at the forefront of technology that can help get many parts of life “back to normal.”
The companys Health Pass can be used by businesses to help screen employees for symptoms of illness and verify COVID-19 vaccination status. It also has room to grow as the travel industry roars back to life in 2021 and beyond. CLEAR Secure is currently branching into baseball stadiums, theatres, and more.
The company said it took seven years to reach the milestone of one million members, but has grown more rapidly since then, taking less than a year each to reach the two million, three million, four million, and five million marks, respectively.
The company has earned awards like:
- 2018: Named to Fast Companys list of Most Innovative Companies
- 2020 and 2021: Named to the CNBC Disruptor 50 List (#39 in 2020, #19 in 2021)
- 2018: CEO Caryn Seidman Becker was among Fast Companys Most Creative People
CLEAR Secure reported $192 million in revenue for 2019 with a $56 million operating loss. Then in 2020, as the pandemic raged, sales increased by 20% to almost $231 million while operating losses dropped to $19 million.
CLEARs fixed-fee structure was a key benefit during the pandemic as travel screeched to a near halt, allowing continued revenue despite low usage of the services.
CLEAR Secure IPO details
The CLEAR Secure IPO originally had a projected price range of $27$30 per share, but ultimately priced at $31 per share. The company offered 13.2 million shares in the IPO to raise $409.2 million for the firm.
The lead bookrunners of the IPO were Goldman Sachs, J.P. Morgan Securities, Allen & Company, and Wells Fargo Securities. Passive IPO underwriters were LionTree Advisors and Stifel, Nicolaus & Company.
Co-managers Telsey Advisory, Centerview Partners, Loop Capital Markets, and Roberts & Ryan Investments also played a role in the companys IPO. CLEAR Secure began trading on the NYSE on June 30, 2021 and 72.5 million shares were outstanding following the offering. s
So far, YOU stock has performed favorably, rising from its opening price of $31 to close at $40 on June 30 and launching as high as $48 two days later. Though the price has evened out a bit since then, the stock has still closed above $40 each trading day since the IPO.
What investors need to know about CLEAR Secure stock
September 11, 2001 shook the publics confidence in the safety of flying, and the world has moved towards an increasingly paperless functioning since then. As the need for digital security continues to grow, the company can provide identification and health screenings without cumbersome paperwork.
One possible risk of investing in CLEAR Secure is that it will face competition from other biometrics firms that could cut into its share of the market. Potential competitors CLEAR will need to keep up with are Yoti, Daon, Callsign, and IN Groupe.
Privacy of user data could prove to be a challenge as well, so the company will need to closely monitor and protect all customer dataespecially with Lina Khan as FTC Chair and President Biden’s latest executive order regarding data privacy.
Of course, with any technology-based company, the potential for tech malfunctions is a real concern.
On the other hand, CLEAR Secure offers potential benefits for the travel industry and especially for frequent-flyers who need a speedier airport process from start to finish, helping them to avoid missed flights. Plus, the company still has room to expand into other markets and add new partners and outlets to its current roster of ballfields and airlines.
The company offers perks like expedited entry into athletic stadiums and faster beer lines through a rapid legal age confirmation. Its about more than just airport security and identificationCLEAR can help a wide variety of places get back on their feet safely as the coronavirus remains present.
When named to Fast Companys Most Creative People of 2018, CEO Seidman Becker noted that small conveniences like this are only a small part of the firms mission. “Every verticalhospitals, real estate, office buildings, universitiesis thinking about this: How can we ensure security and still have open environments?”
Bottom line
Although its typical for a new IPO stock to have its ups and downs, CLEAR Secure seems to be off and running with a good start on the public market. CLEAR Secures technology can enable more seamless travel experiences with heightened security measures. Plus, the companys applications extend beyond the airline industry, giving it a shot at long-term potential beyond its initial share price increases.
Longevity beyond the pandemic era and pushback from anti-vaccers are potential risks that investors should think about as part of their due diligence for YOU stock.