Trainline plc (LON:TRN) has announced its results for the six months ended 31 August 2024 (H1 FY2025)
Strong growth in H1 from Europe’s most downloaded rail app
H1 FY2025 financial summary:
| £m unless otherwise stated: | H1 FY2025 | H1 FY2024 | % YoY | % YoY CCY4 |
| Net ticket sales1 | 3,001 | 2,649 | +13% | +14% |
| Revenue | 229 | 197 | +16% | +17% |
| Adjusted EBITDA2 | 82 | 57 | +44% | |
| Operating profit | 49 | 23 | +117% | |
| Adjusted basic earnings per share (pence)3 | 9.9p | 5.5p | +80% | |
| Basic earnings per share (pence)3 | 7.5p | 2.9p | +160% | |
| Operating free cash flow | 100 | 77 | +30% |
Financial highlights:
· Group net ticket sales up 14% year on year (YoY) 4 to £3.0 billion, and revenue up 17% YoY 4 to £229 million
· Adjusted EBITDA up 44% to £82 million; operating profit up 117% to £49 million
· Basic earnings per share of 7.5p up 160%, surpassing in H1 the total level achieved in FY2024; adjusted basic earnings per share of 9.9p, up 80%
· Operating free cashflow up 30% to £100 million; leverage ratio5 down to 0.2x adj. EBITDA from 0.4x at H1 FY2024
Strategic highlights:
· Europe’s #1 rail app6, with almost twice as many downloads than SNCF and Deutsche Bahn
· Honing aggregation playbook in Europe:
o Combined net ticket sales growth across Spain and Italy of 23%7
o More than doubled our share across aggregated Spanish routes in past two years
o Creating unique aggregator offering, integrating Cercanias in Spain and Pass Rail in France
· Driving digitisation in UK rail:
o UK’s most popular travel app with 12 million monthly active users8
o Eticket penetration of industry ticket sales increased to 51% from 46% in H1 FY20249
o Supporting commuter market recovery, with segment share increasing to 24%
· Enhanced offering for White Label Carriers driving strong sales growth in Trainline Solutions
Improved Group guidance10 for FY2025 and new margin guidance for FY2026:
· In FY2025:
o Net ticket sales YoY growth of between +12% and +14%
o Revenue YoY growth of between +11% and +13%
o Adjusted EBITDA of c.2.6% of net ticket sales
· In FY2026: adjusted EBITDA of between 2.6% and 2.7% of net ticket sales
Jody Ford, CEO of Trainline said:
“We are proud that our tech focussed investment continues to deliver for customers and the industry across the UK and Europe. In Spain, we have more than doubled our share on routes with carrier competition, including Madrid-Valencia where we account for 1 out of every 6 transactions, as we cement our position as the aggregator of choice. In the UK, as the number one travel app, our focus remains on partnering with industry, encouraging the adoption of rail and digital ticketing and supporting the Government’s commitment to passenger-focussed digital innovation.”
Presentation of results
There will be a live audiocast presentation of the results to analysts and investors at 08:30am GMT today (7 November 2024). Please register to participate: https://webcast.openbriefing.com/trainlinehy25/
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H1 FY2025 PERFORMANCE REVIEW
Group Overview
Group net ticket sales increased to £3.0 billion, 14% higher YoY on a constant currency basis (up 13% on a reported basis), tracking ahead of Trainline’s originally stated guidance range10 for FY2025 of between 8% to 12%. The drivers of net ticket sales growth for each business unit are provided below.
Increased net ticket sales and enhanced monetisation drove Group revenue up 17% on a constant currency basis (up 16% on a reported basis) to £229 million, tracking ahead of Trainline’s originally stated guidance range10 for FY2025 of between 7% to 11%.
Gross profit grew by 20% to £181 million, outpacing revenue growth. This was driven by a reduction in fulfilment fee that Trainline pays to the UK rail industry when a customer is issued a barcode ticket.
H1 FY2025 Segmental performance:
| H1 FY2025 | H1 FY2024 | % YoY | % YoY CCY4 | |
| Net ticket sales (£m) | ||||
| UK Consumer | 1,969 | 1,712 | +15% | +15% |
| International Consumer | 583 | 558 | +4% | +6% |
| Trainline Solutions | 449 | 378 | +19% | +19% |
| Total Group | 3,001 | 2,649 | +13% | +14% |
| Revenue11 (£m) | ||||
| UK Consumer | 106 | 91 | +17% | +17% |
| International Consumer | 33 | 28 | +18% | +21% |
| Trainline Solutions | 90 | 78 | +14% | +15% |
| Total Group | 229 | 197 | +16% | +17% |
| Gross profit11 (£m) | ||||
| UK Consumer | 74 | 60 | +25% | |
| International Consumer | 23 | 18 | +26% | |
| Trainline Solutions | 84 | 73 | +15% | |
| Total Group | 181 | 151 | +20% | |
| H1 FY2025 | H1 FY2024 | YoY | ||
| Adjusted EBITDA11 (£m) | ||||
| UK Consumer | 45 | 31 | 14 | |
| International Consumer | (5) | (11) | 7 | |
| Trainline Solutions | 41 | 38 | 4 | |
| Total Group | 82 | 57 | 25 |
11. A reassessment has been performed of the internal transaction fee rate, payable by UK Consumer and International Consumer businesses to Trainline Solutions in order to access Platform One. This results in an upwards revision to the transaction fee. To aid comparability, prior year figures also reflect this revision to the transaction fee.
Adjusted EBITDA increased £25 million or 44% YoY to £82 million. Marketing costs of £34 million decreased by 9% YoY, primarily reflecting our decision to pause brand spend in France in May last year, which more than offset increased investment in Spain. Other administrative costs increased 15% to £65 million, reflecting higher system costs as we processed more transactions.
UK Consumer
Net ticket sales were £2.0 billion, 15% higher YoY. This reflected more people switching to digital tickets, with industry eticket penetration growing to 51% of ticket sales in H1 FY2025, up from 46% in H1 FY2024. Net ticket sales growth also reflected the continued normalisation of the UK rail market as passenger volumes approached pre-COVID levels, as well as less impact from strike action versus the prior year12.
Revenue grew 17% to £106 million, slightly faster than net ticket sales as the Company increased its focus on non-commission revenue generation, including from ancillary services like travel insurance. This more than offset the impact of faster growth in commuter and on-the-day travel, which generate relatively lower rates of revenue than longer-distance travel.
Gross profit grew 25% to £74 million. Adjusted EBITDA of £45 million was £14 million higher.
International Consumer
Net ticket sales were £583 million, 6% higher YoY4. Spain and Italy grew fastest – rail markets where carrier competition is most widespread – with combined net ticket sales up 23%7 as Trainline continued to position itself as the aggregator of choice. Combined net ticket sales across France and Germany were down 3%7, as expected, reflecting Trainline’s decision last year to pause brand marketing in France until the arrival of more widespread carrier competition, as well as some disruption to the broader travel sector arising from the summer Olympics.
Sales through Trainline’s mobile App continued to grow strongly and in H1 FY2025 represented 67% of transactions in International Consumer, up from 62% in FY2024. However, industry-wide changes to the presentation of Google’s search engine results – as first discussed in Trainline’s Half Year results last year – continued to subdue Web sales, with the impact most pronounced in foreign travel.
Revenue was £33 million, growing 21% YoY4. Revenue growth continued to outpace net ticket sales, driven primarily by higher non-commission revenues, including hotel bookings in partnership with Booking.com.
Gross profit increased 26% to £23 million. Adjusted EBITDA loss reduced to -£5 million (vs -£11 million loss last year). Adjusted EBITDA on a pre-internal transaction fee basis11 was £7 million (vs -£1 million loss last year).
Trainline Solutions
Net ticket sales were £449 million, 19% higher than prior year. There was continued strong performance from White Label Carrier partners, following improvements to their core functionality through Platform One, as well as from our B2B retailing partners through our Global API.
Revenue increased by 15% YoY4 to £90 million, with the majority of revenue generated by the internal transaction fee paid by UK Consumer and International Consumer13.
Gross profit was £84 million, 15% higher YoY. Adjusted EBITDA was £41 million, £4 million higher YoY.
Operating profit
The Group reported operating profit of £49 million, up £27 million or 117%. Operating profit included:
· Depreciation and amortisation charges of £21 million, in line with prior year (H1 FY2024: £21 million)
· Share-based payment charges of £11 million was also in line with the prior year (H1 FY2024: £11 million). This reflects the costs of our all-employee share incentive plan.
Profit after tax
Profit after tax was £34 million, up £20 million or 149% YoY. Profit after tax reflected operating profit of £49 million, net finance charges of £3 million, and a tax charge of £12 million. The effective tax rate of 27% was above the UK corporation tax rate primarily due to losses in overseas entities that are not recognised for deferred tax.
Earnings per share (EPS)
Adjusted basic EPS was 9.9 pence vs 5.5 pence in H1 FY2024. Adjusted basic EPS adjusts for exceptional one-off items in the period, any gains on the repurchase of convertible bonds, amortisation of acquired intangibles, and share-based payment charges, together with the tax impact of these items.
Basic EPS was 7.5 pence vs 2.9 pence in H1 FY2024 and surpassed the total level achieved in FY2024.
Operating free cash flow and net debt
Operating free cash flow was £100 million, up £23 million YoY. Operating free cashflow included adjusted EBITDA of £82 million and a working capital inflow of £39 million, reflecting Trainline’s negative working capital cycle. This was partly offset by capital expenditure of £22 million, reflecting ongoing investment in product and technology.
Net debt was £32 million at the end of August 2024, down from £37 million in August 2023. The Group’s leverage ratio was 0.2x LTM adj. EBITDA (Aug-23: 0.4x). The reduction in net debt primarily reflected the generation of positive operating free cash flow in H1 FY2025, partly offset by £46 million of share repurchases through the buyback programme in the first half.
Capital allocation framework and share buyback programme
Last year, we communicated our capital allocation framework, which is as follows:
· Trainline’s primary use of capital is to invest behind its strategic priorities – including enhancing the customer experience and building demand for rail travel – to drive organic growth and deliver attractive and sustainable rates of return.
· The Group may supplement that with inorganic investment, should it help accelerate delivery of the Group’s strategic growth priorities.
· Trainline will also continue to manage debt leverage, including retaining a prudent and appropriate level of liquidity headroom should unforeseen circumstances arise.
· Any surplus capital thereafter may be returned to shareholders, including through the repurchase of Trainline’s shares.
In line with Trainline’s capital allocation framework, the Company announced in May 2024 the launch of its second share buyback programme of up to £75 million. This programme commenced on 13th June 2024 following the completion of our maiden £50 million buyback programme. As at the end of October 2024, the Company had bought back and cancelled £33 million of shares under the new programme, and £83 million in aggregate across both programmes (6% of issued share capital).
Cost optimisation in H2 FY2025
Given the scale benefits and efficiencies from Platform One, and with Trainline having invested to close the product gap in International over the past few years, we now have scope to optimise our cost base. In H2, we are running a cost optimisation exercise, which includes reducing headcount. We expect the exercise to generate annual cash savings of around £12 million, of which £8 million will benefit the income statement. We expect the costs to deliver these savings to be in the range of £7-9 million, be treated as exceptional items and mostly recognised in H2 FY2025.
Outlook and market guidance
Trainline has delivered strong growth in H1 FY2025 and is increasingly benefiting from operating leverage as it scales. Following a strong start to H2, last week we revised upwards our previously stated guidance range, which was originally set in May 2024 and subsequently improved in September 2024.
In FY202510, we expect Trainline to generate:
· Net ticket sales YoY growth of between +12% and +14%
· Revenue YoY growth of between +11% and +13%
· Adjusted EBITDA of c.2.6% of net ticket sales
With the benefit of increasing operating leverage, together with our disciplined approach in managing costs, we now expect adjusted EBITDA of between 2.6% and 2.7% of net ticket sales in FY2026. This guidance factors in a c.25 basis point reduction in net commissions received in the UK from next year, as per Trainline’s MOU agreement with RDG announced in March 2022.
PROGRESS AGAINST OUR STRATEGIC PRIORITIES IN H1 FY2025
To achieve our mission to make rail and coach travel easier for customers in all our markets, we invest behind five strategic priorities for long-term growth: growing supply, enhancing the user experience, building demand, increasing customer lifetime value, and expanding Trainline Solutions. In H1 FY2025, we continued to make strong progress against these long-term strategic growth priorities.
UK Consumer
The UK rail market continues to grow with industry passenger revenues increasing to £11.2 billion in the 12-months up to the end of August 2024.
Our investment in customer experience is helping shift more people to digital channels. Industry sales through online channels grew to 57%, up from 54% in the prior year. Within that, industry eticket sales increased to 51% in H1 FY2025, up from 46% in H1 FY20249. However, tickets bought offline still represent around £3.1 billion, most of which are estimated to be short-distance and commute journeys bought at the station.
As the most popular travel app in the UK8, we believe we are uniquely placed to further expand the rail market, driving modal shift from more polluting forms of transport, as well as increase the adoption of digital ticketing.
Growing supply and enhancing the user experience
In terms of supply, we provide all the carriers and fares in one place14, as well as a comprehensive range of value-saving products and features, helping customers to unlock value when booking rail travel. This includes Splitsave, the original at-scale split ticket solution, saving customers on average £13 per booking. It also includes Trainline’s digital railcards, saving customers up to a third when booking rail travel. Today we have two million customers using our digital railcards, which is around a third of all users in the UK.
Trainline continues to prime its mobile App to better serve commuters. For customers that purchase tickets on their way to the station, we can use geo-location technology to determine which station the customer is located and leverage machine learning to surface the most relevant route suggestions for that customer at that time of day and from that particular station. The customer can buy a ticket for one of those journeys in a few clicks, with the assurance of our on-the-day Best Price Guarantee. For season ticket users, we are scaling digital seasons tickets on routes where they are enabled (now over 50% of the UK rail network). In Q2 FY2025, our share of season ticket sales reached 21% on routes enabled for a year or more15 (15% in Q2 FY2024).
Building demand
Under our flagship brand campaign ‘Great journeys start with Trainline’, we have continued to tell customers how they can save money by booking with Trainline, including our Best Price Guarantee when buying tickets on-the-day. In addition, we recently partnered with online bank Monzo to offer their customers digital railcards, helpful as digital railcard users are some of our most frequent and sticky customers.
Our campaigns have contributed to our active customers over the last 12 months growing by 12% year on year to 18 million.
Increasing customer lifetime value
As we continue to expand our customer base, we are simultaneously increasing the activity and engagement of customers, increasing their lifetime value. On average, the longer that customers use Trainline, the more often they transact with us. Furthermore, customers that we have acquired since COVID-19 transact more frequently than customers acquired prior to COVID-19, and now represent over half of our sales transactions.
Having significantly scaled net ticket sales, we are now monetising more effectively through value added services that generate additional revenues. This includes offering travel insurance, as well as leveraging commercial partnerships to offer hotels, parking, and taxis.
International Consumer
The c.€44 billion European rail market provides significant headroom for Trainline’s future growth.
Where carrier competition is emerging in Europe, it is significantly increasing value and choice for customers. By positioning Trainline as the aggregator of choice, we are well placed to scale our international business as carrier competition becomes more widespread over the next few years:
· In Spain, SNCF Ouigo are due to launch services from Madrid-Seville and to Madrid-Malaga by the end of 2024.
· In Italy, Renfe-backed Arenaways and SNCF are planning to launch services from 2026.
· In France, Trenitalia – who already run trains between Paris and Lyon – are reportedly due to launch services between Paris and Marseille in 2025. Following that, Renfe are due to launch services on both routes. Thereafter, three new carrier brands are set to launch high speed services across France – Ilisto, Le Train and Proxima. These new challenger brands are already ordering rolling stock and obtaining regulatory clearances in order to operate train services in France.
Growing supply and enhancing the user experience
As we hone our aggregation playbook, we are creating the virtuous cycle of the marketplace: as we add more inventory, we become more attractive for passengers and increasingly relevant for rail operators.
We seek to aggregate all carriers, fares and options into one highly rated mobile App. This brings clear benefits to our customers who can search all the options to find best value, as well as stitch together different carriers for return and multi-leg journeys through TopCombo.
It also brings distinct benefits for new entrant operators too, increasing their passenger volumes and in turn accelerating the payback on their investment. This includes rapidly adding their inventory ahead of the launch of new routes, and through Top Combo increasing the likelihood a customer will include a new carrier in their booking. We are now testing how we can increase the prominence of new entrant brands. For example, within our search function we recently elevated Ouigo as the best priced option between Madrid and Barcelona for a test group of customers, notably increasing their sales versus the control group.
In the first half, we expanded our supply to further enhance our unique proposition for domestic rail customers. We became the first and only aggregator in France to retail Pass Rail, giving younger customers cheaper travel during the summer months, and the only aggregator in Spain to integrate Cercanias urban and suburban rail travel, which operates across 12 cities and carries over 400 million passengers per year. In Italy, we are the only App to auto-apply promo codes where applying discounts for train tickets are available, saving customers on average €20 per high speed booking.
We also continue to enhance our product offering for foreign travellers, where we have recently launched Eurail passes (multi-leg rail passes) as well as a new homepage and clearer station information for inbound customers.
Building demand
Spain has quickly become the most liberalised rail market in Europe and we are finding innovative ways to grow brand awareness, including whole train station takeovers, Trainline branded music festivals, and most recently sponsoring Real Betis, a Seville-based football team. This coincides with SNCF Ouigo’s imminent launch of services from Madrid to Seville. Since we launched our first Spanish brand campaign in summer 2022, prompted brand awareness has tripled from 8% to 25%. In the last 12 months, over 1 million customers in Spain transacted through Trainline.
Increasing customer lifetime value
As we strengthen our position as aggregator of choice in markets with carrier competition, we are deepening our relationship with our customers. A key example is our success in encouraging more customers to download and use our mobile App, given its superior user experience and transaction frequency benefits. In H1 FY2025, 67% of all customer transactions within International Consumer came through our App, up from 62% in FY2024.
In Spain, where liberalisation is most advanced, we are seeing positive signs of customer engagement, with 50% of customers in the first half being repeat customers. Together with continued growth in new customers, this has helped net ticket sales to triple in two years7.
While positioning ourselves as the aggregator of choice, we are placing greater focus on monetisation in International Consumer. This includes foreign travel sales, which generate a double-digit revenue take rate, and introducing ancillary products into the booking flow, including hotels. This helped grow the underlying revenue13 we generate to 7.6% of net ticket sales in H1 FY2025 (6.8% in H1 FY2024).
Expanding Trainline Solutions
We have taken further steps to support our travel partners, leveraging the strength of our platform.
For carrier partners, we continue to enhance our white label App offering, with the addition of new features such as split ticketing and travel companion features. The improved core functionality has helped drive a strong sales performance in the first half. In addition, we are actively engaging in several ongoing tender processes from carriers for online retailing solutions. This follows the UK Government’s cancellation of its plans in December 2023 to create its own centralised retail app and website, originally intended to replace the rail carriers’ online retailing channels.
For B2B travel partners, we recently had several new client wins through our Global API, including SAP Concur and Amadeus Cytric.
For Trainline’s branded B2B channels, we continue to enhance the experience for users and for client companies. In May, we discussed how we had brought together of our business and consumer App, which gives customers the ability to switch between their business and personal travel and keep their bookings separate. Since then, we have enabled client company admins to book train travel on behalf of their employees, plus allowed clients to embed travel policies into the App, giving them greater control over their travel spend.
Platform One, our single global tech platform that underpins all our business units, increasingly leverages AI and advanced machine learning to improve the user experience and to reduce our cost base. This includes data-driven features (e.g. Splitsave and Price Prediction) as well as greater personalisation to help customers unlock value when booking travel. It also includes AI-driven tools and features that reduce friction and remove complexity for customers when travelling. We continue to see Generative AI as additive to what we are already doing in this space and are developing proprietary AI systems within our own domain. By combining these systems with industry data and our own unique customer data sets, we are widening the opportunity to create smarter and more personalised experiences across the whole user journey. In the future we plan to bring this altogether as an end-to-end Personalised Travel Assistant for customers.
LEGAL, REGULATORY & POLICY DEVELOPMENTS
Following their General Election win in July 2024, the new UK Government’s actions with regards to rail have been consistent with their pre-election pledges, which they announced at Trainline’s offices in April. There has been a reset and stabilisation of industrial relations, with agreements reached on pay deals with ASLEF union in September 2024 that put an end to over two years’ worth of disputes. As expected, legislation to nationalise the rail operators is now underway with carriers to be brought into public ownership over the next few years as their contracts lapse. They have launched Shadow Great British Railways in September 2024, bringing together track and train ahead of legislation to create Great British Railways (GBR) as an arm’s length governing body. They also remain supportive of independent retailers and, at the King’s Speech in July 2024, reiterated their intention to roll out key customer innovations. This included digital pay-as-you-go (dPAYG) and in October, RDG launched an Request for Information (RFI) to support future dPAYG pilot schemes in cities outside of London.
The EU continues to prioritise initiatives to enable growth of rail travel in Europe as it aims to triple passenger high speed passenger volume by 2050. Alongside these initiatives, the EU remains committed to carrier competition, having adopted four legislative packages between 2001 and 2016, the last of which became law in 2020 and mandates the opening of domestic rail markets to new entrant competition. In September 2024, the European Commission’s Directorate-General for Mobility & Transport (DG Move) published a report stating that ‘competition in railways seems to trigger an increase in ridership and brings about significant benefits to society’. The same report also cited the value of third-party retailers in promoting carrier competition.
Footnotes:
12. 6 strike days in H1 FY2025 with an estimated gross tickets sales impact per strike day for UK Consumer of c.£3-4 million; 11 strike days in H1 FY2024 with an estimated gross tickets sales impact per strike day for UK Consumer of c.£3-4 million.
13. In September 2022, Trainline announced revisions to its segmentation reporting. This included the introduction of an internal fee per transaction payable by UK Consumer and International Consumer businesses to Trainline Solutions in order to access Platform One. The transaction fee is reflected as contra revenue to UK Consumer and International Consumer within segmental reporting. This charge is eliminated on consolidation of the Group’s results and does not form part of total Group revenues.
14. Excluding Northern Ireland.
15. Excludes routes enabled for digital seasons since Oct 2023.
Statement of Directors’ responsibilities in respect of the results for half year FY2025
The Directors confirm that these condensed consolidated Interim Financial Statements have been prepared in accordance with UK adopted International Accounting Standard 34, ‘Interim Financial Reporting’ and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
· an indication of important events that have occurred during the first six months and their impact on the condensed set of Financial Statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
· material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The Directors of Trainline plc are listed in the Trainline plc Annual Report for 29 February 2024. A list of current directors is maintained on the Trainline plc website: https://www.trainlinegroup.com/
By order of the Board:
Peter Wood
Chief Financial Officer
7 November 2024
