Airport security fast-tracker jumps the IPO line

U.S. domestic passenger volumes tanked 60% in 2020 compared to the prior year, according to the company’s draft prospectus

  
Passengers queue at LAX airport before Memorial Day weekend, as the coronavirus (COVID-19) disease continues, in Los Angeles, California, U.S., May 27, 2021.

Passengers queue at LAX airport before Memorial Day weekend, as the coronavirus (COVID-19) disease continues, in Los Angeles, California, U.S., May 27, 2021.

Reuters/Lucy Nicholson

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

NEW YORK - Travel was crushed in 2020. But Clear Secure, the company that uses biometric technology to validate identity and help people to skip the airport security queue, did just fine. Now the New York-based firm run by founder Caryn Seidman-Becker wants to raise $100 million from public investors. It could fly with a roughly $2 billion valuation.

U.S. domestic passenger volumes tanked 60% in 2020 compared to the prior year, according to the company’s draft prospectus. But more people paid for Clear’s touchless, frictionless security clearance app, typically $179 a year. The company increased cumulative enrollments by 12% year-over-year, with more than 5 million people using 106 checkpoints at 38 airports. Revenue jumped a fifth to $231 million.

The outlook for the coming months looks positive. On Wednesday the number of people passing through the Transportation Security Administration’s checkpoints quadrupled compared to the same day in 2020, though levels are still roughly a third lower than in 2019. The rapid return to travel is causing a staff shortage at the TSA, CBS News has reported, suggesting that higher wait times may also encourage travelers to duck under the rope to Clear’s kiosks.

Plus the company recently sewed up an agreement with the TSA to process renewals for the government’s pre-check program and bundle its product, an initiative that will kick off in the second half of this year. Health checks, notably for Covid-19 vaccination, may soon be tied to flying or even entry to sports and other events, and Clear sees an opportunity to capitalize on both.

Investors have to get over a few hang-ups. Seidman-Becker and co-founder Kenneth Cornick will own super-voting shares, giving them control of the publicly traded Clear. The service is also a luxury, and one that business travelers might indulge in. Corporate travel may be slower to return to pre-pandemic levels and those taking leisure flights might not be willing to stump up.

At 8 times 2020 revenue, Clear could be worth roughly $2 billion. It’s hard to find perfect comparisons, but that’s also roughly the enterprise value-to-sales multiple of internet-security firm McAfee, travel site TripAdvisor and high-end workout subscription service Peloton Interactive. If that’s the kind of valuation the company sets, it’s not a bad way for investors to get in on a travel rebound.

CONTEXT NEWS

- Clear Secure filed a draft prospectus for an initial public offering with the U.S. Securities and Exchange Commission on June 7.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS http://bit.ly/BVsubscribe | Editing by Richard Beales and Oliver Taslic) ((Lauren.SilvaLaughlin@thomsonreuters.com))


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