Clear Secure Poised for ARPU Growth with Pricing Strategy, Analyst Says

Needham analyst Joshua Reilly reiterated Clear Secure Inc YOU with a Buy and a $40 price target.

The analyst highlighted the impact of recent pricing increases for Clear Plus, the company's airport offering. 

Reilly expects the blended ARPU for a Clear Plus member to increase in FY24 due to several factors, including price increases and lower Amex growth. 

The analyst expects the negative ARPU impact of Amex Platinum to dissipate in FY24 as the company has hit the final tier of pricing step-downs. Second, price increases on SkyMiles customers continue to layer in the model. 

Third, Family price changes are highly accretive to bookings. Finally, with several new airports added over the last 12 months, the analyst expects the customer mix to shift toward more full-price members. 

Even if net member adds continue at the current run rate, pricing actions make 15.9% consensus bookings growth in FY24 highly achievable. 

Family pricing action set to drive significant benefit to FY24 bookings growth. Throughout the report below, the analyst highlighted the impact of historical pricing increases by Clear Secure on booking growth. 

Clear Plus ARPU will increase as Amex headwind declines and price actions benefit the model. 

The analyst expects overall ARPU per Clear Plus member, estimated at $102 per member in Q3, including all categories of members, to trend higher over the next several quarters. 

Historically, pricing was not a key mechanism for growth. The company's first price increase, implemented in May 2022 for the individual subscription, was pretty modest at $10/year per member.

The analyst projects Q4 revenue and adjusted EPS of $166.09 million (versus $165.52 million estimate) and $0.17 (versus $0.14 estimate).

Price Action: YOU shares traded higher by 0.35% at $19.91 on the last check Tuesday.

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