(Bloomberg) -- Clear Secure Inc. shares dropped the most ever after the company reported a slowdown in new users of its annual membership service, raising questions over growth potential at the airport security specialist.
There were 7.15 million active Clear Plus members in the third quarter, according to a shareholder letter released Thursday. That was up just 0.8% from the prior three-month period, marking the smallest quarterly gain in at least two years.
User retention and growth is critical for Clear, which offers a subscription service that speeds travelers through security lines at many of the largest US airports. The company is trying to convince flyers that its offering is superior to TSA PreCheck, a similar-but-cheaper service run by the Transportation Security Administration.
Clear’s shares tumbled as much as 24% after the markets opened in New York, the biggest intraday decline since the stock began trading in 2021.
The company on Thursday also reported adjusted profit of 30 cents a share in the last quarter, short of the 32-cent average of analyst estimates compiled by Bloomberg. Revenue of $198.4 million topped expectations.
Annual Clear Plus net member retention percentage fell to 81.5%, continuing a sequential slide stretching back at least to last year.
It’s typical for third-quarter net additions to decline from the second quarter, Clear President Kenneth Cornick said on a conference call with analysts. An August price increase had a “modest impact” on family gross additions and family member retention, while increasing dollar retention rates, he said. Clear expects net additions this quarter to increase from the prior period.
Revenue this quarter will be $202 million to $204 million, the company said, topping current analyst estimates for $200.1 million. Projected bookings of $224 million to $226 million largely matched Wall Street’s expectations for $225.7 million.
Clear expects to expand to more than 75 locations by year end where it can enroll members in TSA PreCheck, up from 62 airport and Staples store locations now.
(Updates with additional results, company comment beginning in sixth paragraph.)
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