Trainline Plc

Hello everyone and welcome to the TrainLine HY2026 results. My name is Emily and I'll be coordinating your call today. After the presentation you will have the opportunity to ask any questions which you can do so by pressing start followed by the number one on your telephone keypad. I will now hand over to CEO Jody Ford to begin. Please go ahead.

Good morning everyone. Thank you for joining us today for our half-year results presentation. I'm Jody Ford, CEO of Trainline, and I'm joined by Pete Wood, our CFO. Let's first go through the disclaimer. Onto the agenda for today. I'll give an introduction, briefly discussing the progress we've made in the first half. I'll recap on the opportunity ahead and update on the regulatory backdrop in the UK. Pete will talk you through our financial performance. I'll then update you on how we're progressing against our strategic priorities and finish with an overview of our digital pay-as-you-go trial, which recently launched in the UK. After that, we'll hand back to the operator for questions. As a reminder, we are Europe's number one rail app, delivering a market-leading user experience for our customers. We aggregate all major carriers and fares, offering a comprehensive range of value-saving products and features. We focus on making the booking experience as seamless as possible. And we use machine learning and AI to supercharge the experience to get customers from A to B. It's our combination of value, convenience and innovation that sets us apart. And that is evident in our scale today with far more app downloads than any of our peers. The strength of our customer proposition is reflected across the group with all three of our business units leaders in their respective markets. In UK Consumer, we have the number one travel app in the UK. In International Consumer, we are the largest rail aggregator in Europe. And in Trainline Solutions, we have the leading B2B rail platform across the UK and Europe, which now generates over a billion pounds of annualized net ticket sales. Looking ahead, we see significant headroom to scale all three business units. In UK Consumer, we will deepen our competitive mode while increasing the lifetime value of our 18 million strong customer base. In international consumer, we'll deploy our proven aggregation playbook across France, Italy, and Spain. By 2030, these markets together should represent a town of around 23 billion euros, including 12 billion generated on aggregated high-speed routes. And in train line solutions, we will scale into the 6 billion euro business travel opportunity across Wales. Our performance in the first half demonstrates the progress we are making against this headroom opportunity. In the UK, we delivered robust growth, reflecting continued strength in leisure travel alongside the ongoing digitization of rail ticketing. In international, we delivered positive early momentum on the French Southeast high-speed network, with sales up 34% following Trinitalia's expansion of services over the summer. And in train and solutions, B2B sales grew strongly, particularly in Europe with international B2B distribution up 55%. Operating leverage amplified our top-line growth, as did the benefits of our cost optimization exercise last year, driving a 14% increase in EBITDA. As a result, we have to date increased our profitability guidance for the year, as Pete will discuss shortly. This follows our announcement in September of an enhanced share buyback program, underpinned by our strong cash generation. The enhanced buyback implies we will have repurchased 350 million of shares over three years. That's around a third of our market cap. Before I hand over to Pete, let me update you on the regulatory backdrop in the UK. This morning, the government published the outcome of its consultation on the railways bill, with primary legislation to follow later today. This will allow for the establishment of GBR as an organisation, as well as the appointment of its key leaders. Since our four-year presentation in May, we've maintained an assertive stance with government, pushing them to deliver on the commitment to an open, fair and competitive future retail market. While in parallel, we've sought to resolve existing examples where train operating companies self-preference today. Self-preferencing is where talks offer features within the apps, but we are prevented from offering and market them in ways that we are not allowed to do. This undermines fair and open competition. We've consistently put forward the case that these practices be rectified. We're making progress. As you can see on the left-hand side of this slide, previously, train line was prevented from offering some temporary fares that could be found on operator websites. And we were blocked from advertising in almost all stations and trains. Following our sustained engagement, the government confirmed earlier this year, on both fronts, independent retailers should not be discriminated against. This is a clear step forward. However, we still face blockers and obstacles when it comes to advertising at the station. Furthermore, notable examples of self-preferencing continue to persist. We are prevented from offering train operator loyalty schemes within our app, and we are unable to provide automated delay repay, a major pain point for our customers. We continue to engage with government stakeholders and the wider industry to remove these restrictions and, in turn, level the playing field. At the same time, we are innovating to extend our market-leading user experience and cement the loyalty and engagement of our customers. With that, I'll hand over to Pete to talk through our financial performance.

Thanks, Jody, and good morning, everyone. Before I step into the financial performance for the group, let's briefly unpack the performance of each of our business units. Starting first with UK consumer, net ticket sales grew 8% to 2.1 billion, reflecting continued strength in leisure travel and ongoing digitisation of rail ticketing. Growth was supported by further market recovery, increased industry rail fares and lapping strikes the year before. As anticipated, growth was partly offset by the first phase of Transport for London's Project Oval expansion, which launched in February and will expand further in H2. Turning next to international, where net ticket sales grew 2% year-on-year to 594 million. Growth was led by domestic customers, particularly on newly aggregated routes such as the high-speed network in southeast France. This was offset by a 2% decline in foreign travel sales, primarily given changes to Google's search results page and a leveling off of inbound demand from the US for European rail travel. I'll now step through the underlying drivers in more detail. This slide breaks down the different market segments across our international business, with each segment including domestic and foreign travel sales. You can see that the growth rates vary, reflecting how we are actively managing marketing investment and prioritizing routes with carrier competition. Turning first to Spain and Southeast France, we grew 11% across both markets as we positioned ourselves as the aggregator of choice, partly offset by downward pressures on Spanish railfares. These markets now represent 22% of international net ticket sales. Elsewhere in France and in Italy, growth was more modest at 3%. Within these markets, which account for two thirds of international net ticket sales, we continue to manage marketing spend as we await further carrier competition. In Italy, that's expected to happen from early 2027, with SNCF granted slots to run high speed rail services last month. And in the rest of France, were down 16%. While these markets represent longer-term growth opportunities for Trainline, we are actively prioritizing the markets that have liberalized or are set to liberalize. While changes to Google's search results page remained a drag on growth in H1, we are seeing encouraging early signs of traffic building from generative engines. We are the number one-cited rail app in chat GPT across almost all our core markets. and we are leading in citations from Google's AI overview module, significantly ahead of our other rail aggregators. As a result, sales from generative engines have grown exponentially, increasing 13-fold since Q3 last year, albeit from a low base. Let's move next to Trainline Solutions. Net ticket sales grew 18% in the half to 529 million. Growth was led by B2B distribution sub-segment up 36%. This reflected growing demand from corporates shifting to rail travel, as well as our enabling travel management companies to scale their ticket sales in Europe, including the likes of Navan and SAP Concur. Jodie will talk shortly in more detail about the strong momentum this business is generating. Bringing this together, top-line growth for the group was towards the upper end of our full year expectations. Group net ticket sales grew 8% to 3.2 billion. Revenue grew 2% to 235 million, with growth slower than net ticket sales given the previously announced reduction in the UK commission rate. Gross profit was up 6% to 193 million, with growth outpacing revenue given a lower cost of sales. Turning to costs, we delivered a reduction of £11 million across cost of sales and other admin expenses, more than offsetting the impact of the commission rate cut in the UK. Cost of sales were down £6 million, reflecting a reduction in the industry costs in the UK. Other admin costs reduced by £5 million, given the successful execution of our cost optimisation plan in H2 last year. These savings enabled train lines to deploy more marketing to Southeast France as carrier competition expanded. Our profit grew strongly, outpacing net ticket sales, with adjusted EBITDA up 14% to 93 million. This tracked above our previously stated guidance range for the year of between 6% and 9%, and it translated into strong earnings growth, with adjusted earnings per share up 27% to 12.6%. Underlying free cash flow generation in the half was 79 million. The strength of our cash generation underpins our enhanced share buyback program of up to 150 million, which we announced in September. This is our fourth consecutive program. Over the last two years, we have bought back 250 million pounds worth of shares, equivalent to 15% of shares issued at IPO. With the addition of our enhanced program, it would equate to 350 million of capital return to our shareholders over a three-year period, reflecting our confidence in our outlook and the strength of our business. Altogether, I am pleased with our performance in the first half, particularly our strong earnings growth and cash generation. Looking ahead to the full year, we continue to expect net ticket sales growth of 6-9% and revenue growth of 0-3%. Given our profitability performance in the first half, we now expect adjusted EBITDA to grow between 10% and 13% for the full year, above our originally stated guidance of 6% to 9%. Thank you, and I'll now hand back to Jody.