Trainline Plc

Good morning, everyone. Thank you for joining us for our full year results presentation. I'm Jody Ford, the new CEO at TrainLine, and I'm joined by Sean McCabe, our CFO. Let's first get through the disclaimer. On the agenda for today, first I'll talk about my initial thoughts and actions as the new CEO, as well as give a recap of the business, our long-term opportunity, and our performance for the year. Good morning, everyone. Thank you for joining us for our full year results presentation. I'm Jody Ford, the new CEO at Trainline, and I'm joined by Sean McCabe, our CFO. Let's first get through the disclaimer. On the agenda for today, first I'll talk about my initial thoughts and actions as the new CEO, as well as give a recap of the business, our long-term opportunity, and our performance for the year. Sean will talk you through our financial performance, after which I'll provide further detail on progress against our strategic priorities for growth and how we're ready to lead the recovery in rail with the continued shift to online and mobile tickets. We'll then hand back to the operator for questions. Having joined Trainline last September, I stepped into the role of CEO at the beginning of March. I'm delighted to be leading such a purpose-driven business, which champions a greener way to travel and which enjoys significant long-term structural tailwinds. As someone who's spent substantial time in tech businesses in the UK and the US, I've been really impressed by the momentum of innovation at Trainline. Its pioneering culture and its laser-like focus on improving the customer experience for rail travelers. This has been put to the test through COVID, but our people responded to the challenge, supporting our customers and carriers and protecting the business while maintaining the pace of our product rollout. I'd like to thank all our colleagues for their hard work and significant contribution over the past year or so. Since joining Tray9, I've prioritized building relationships with key decision makers in government, including ministers and senior civil servants, as well as with leaders within the industry, both in the UK and across Europe. Whilst those conversations have rightly focused on recovery, it's also clear to me that COVID has catalyzed the need for change within the rail industry. And what's very encouraging is that we are viewed as part of the solution, with the opportunity to bring our tech platform, customer insights and data capabilities to support the rail industry to recover and realise its full digital potential. I've taken the opportunity to refresh Trainline's strategy, increasing our focus on new and emerging growth opportunities. These opportunities include, first, driving the recovery in rail travel at lockdown ease by launching innovative new products and leveraging our marketing playbook. Second, serving the needs of the new commuter in the UK as they return to the office. And third, harnessing the growing competition amongst carriers as domestic rail markets liberalize in Europe, adding new entrance supply and meeting the specific product needs of those local markets. Finally, I've refreshed the leadership team, adding senior hires to the strong team I inherited, a team that's committed to our purpose and focused on delivering the long-term growth aspirations of the business. To bring my initial thoughts to life, let's quickly recap on the business. As I mentioned, Trainline is a tech company with a clear purpose, to empower people to make greener travel choices. We aim to do that by making rail and coach travel easier. The value add we provide customers and carrier alike gives us an important position within the rail ecosystem. By making rail and coach travel easier, we provide significant value for customers and for industry partners. For rail users, we combine all carriers into one app to give customers the broadest choice and help them find the best value tickets. On top of that, we've built a simple, consistent, and friction-free experience. This means that customers don't have to handle paper tickets, use ticket machines, nor queue at stations, all of which people have become increasingly reluctant to do in a post-COVID world. And we're using our scaling data to create personalized experience and relevant real-time travel information. And then for carriers, we offer them access to a larger pool of potential customers, helping them generate more revenues at a lower cost to serve, than every alternative route to market. COVID-19 obviously had an unprecedented impact on the rail industry across our markets, with far lower passenger volumes given restrictions on movement. We acted quickly and decisively to mitigate the impact, significantly scaling back our cost base and increasing our liquidity. However, through COVID, we made the conscious decision to maintain our investment in our product and tech roadmap. As a result, we've continued to develop great product experiences for customers, which I'll come on to talk about later, and we're well-placed to lead the continued shift to online and mobile as the rail market recovers. And on that note, as we enter financial year 22, whilst the timing of recovery remains uncertain, we are now seeing positive signs of recovery, which Sean will talk more about. Looking at longer term, we continue to see considerable structural tailwinds for our business, The rail market in Europe is large and expanding, with significant planned investment in capacity growth, particularly high-speed rail, as it becomes an increasingly attractive alternative to short-haul flying. Awareness is growing of the environmental benefits of switching to rail, and governments and regulatory bodies are increasingly responding to this, to highlight just a few recent examples. In France, it's been announced that domestic flights under two and a half hours will be banned, where passengers can instead take the train. And in Germany, the rail and aviation industries have set up a joint action plan to encourage more than 4 million people to switch to trains. There has been an increase to shift to online and digital ticketing through COVID. However, there remains significant runway in our markets for further migration. Finally, liberalization of the European rail markets is becoming a reality, which in turn is creating more fragmentation in supply and greater competition amongst carriers. As a reminder, Trainline provides all options all fairs in a simple, easy-to-use app, so this increased competition creates a greater need for a marketplace like Trainline. These structural tailwinds continue to represent significant and long-term growth opportunities for Trainline. With that, I'll hand over to Sean to talk you through our financial performance.

Thanks, Jody, and good morning, everyone. The lockdowns and restrictions in place during the year obviously had a significant impact on our financial performance. As we reported in our trading statement in March, group net ticket sales reduced to 783 million, 21% of the prior year. Revenue declined to 67 million, 26% of the prior year. And gross profit reduced to 49 million, 24% of the prior year. However, as the graph shows, during the periods when lockdown restrictions were eased, our ticket sales recovered quickly, outperforming the wider market in the UK. This reflected an accelerated shift to online and to mobile. And encouragingly, as we look ahead to financial year 22, we're already seeing positive signs of recovery as lockdowns and restrictions gradually lift. Despite the challenges from COVID, as we exit the year, we find ourselves in a strong position. First, we took quick and decisive action to mitigate the impact of COVID and to protect the business. We significantly scaled back our marketing costs and other discretionary spend. We introduced a pay freeze and the leadership team and the board took voluntary salary reductions. We also furloughed those teams that were most directly impacted by the reduction in demand. However, as visibility has improved, we took the decision to repay the UK government fully for the furlough funding. Around this time last year, we said our monthly cash outflow would be in the range of 8 to 9 million. And a combination of better revenue than expected and the rapid and decisive actions to reduce costs meant that we were able to reduce monthly cash burn down to 5 million per month over the year. While scaling back costs, we also increased our available liquidity to 260 million, issuing 150 million of convertible bonds in January 21. This strong liquidity position gives protection for the business, but it also gives us greater flexibility to invest in future growth as well. Finally, and as Jodie mentioned earlier, we maintained our product investments throughout COVID, despite the impact on trading, and doing so will help drive long-term growth. We'll create value for customers and shareholders and position the business for recovery as the market improves. As a result of our strong operational cost management, we reduced our cost base by more than a third, from £116 million to £74 million, and this helped mitigate the impact of COVID on profitability. We reported an adjusted EBITDA loss of £25 million in the period, compared to a profit of £85 billion last year. Net debt increased from £71 million to £241 million, And this is mainly driven by a 95 million working capital outflow as lockdowns resulted in a sharp drop off in sales and an unprecedented number of refunds. Of course, this will fully reverse when ticket sales recover. And as I mentioned earlier, we invested in our tech and product roadmap with 26 million in capitalized engineering development time. And with that, I'll hand back to Jody.

Thanks, Sean. Let's now talk about our progress against our strategic priorities before we take your questions. As a reminder, our four stated strategic priorities are to enhance the customer experience, continually improving and optimizing app and web, build customer demand, scaling up customer acquisition, and increasing their engagement with us, optimize the revenues we generate from net ticket sales, and grow Trainline Partner Solutions, our new name for Trainline for Business, which serves the B2B and carrier markets. Through the last year, we've continued to make good progress against these long-term priorities, and this positions us well to drive growth as conditions improve. Let's step through some of these priorities. To enhance the customer experience, we continue to champion e-tickets, a core part of our 4.9-star mobile app proposition. Industry penetration of e-tickets has stepped up materially this year, from 21% to 30% of all tickets, supported by greater reluctance to use ticket machines and queue at stations post-COVID. And of those e-ticket sales, Trainline accounted for around 70%. We continue to see significant runway for further penetration, particularly as more routes become e-ticket enabled. Last year, availability of e-tickets increased from 71% to 75% of journeys, and we expect it to increase further in the months ahead. We continue to invest in our product roadmap, launching innovative new features that make rail travel easier and better value for customers. This includes the launch of rail cards in the app, making it far easier for customers to apply a discount when booking and far harder to forget their rail card when traveling. Rail cards are used on more than 40% of all train line transactions in the UK, and the digital version is already proving popular, with more than 70,000 sold since we launched in September. We've taken steps to remove friction points for the customer, too. We've increased speed with app startup times reduced 34%, improved the web booking flow, and delivered a host of self-service capabilities, improving the customer experience and reducing our customer service costs. And we're making our smart travel companion increasingly personalized, including the recent launch of Find My Train. This uses geolocation to identify the train on which a customer is traveling and provide them real-time travel information while on board. This brought consensus that COVID has changed the way we work and travel, accelerating existing trends with more working from home. and with greater variation in our commuting patterns. Of course, this has led to much speculation about how this will affect the commuter travel space. It's worth pointing out here that in the past, mobile ticket penetration has historically been low amongst commuters, as digital options have been largely unavailable. For example, there's not yet an accredited network-wide digital season ticket product, and this is something we're working on with the industry. Looking ahead, as commuters return to the offices, In whatever shape or form, there's an emerging opportunity to better serve their needs, and we're priming our mobile app to do just that. We're adding a feature called Select My Commute, allowing commuters to personalize their journey. This allows much faster and easier repeat bookings, as well as personalized travel information on the go, like platform prediction, live tracking of their train, and delay and disruption notifications. We're also continuing to invest in our secure barcode technologies, This lays a foundation to support the rollout of industry-wide flexi-tickets, reported to be launching in the summer. In Europe, there's a growing opportunity to become the marketplace of choice as rail market liberalization becomes a reality. We've already integrated new entrants, Avlo and Wego, Renfe and SNCF's respective low-cost carrier brands into our supply ahead of their service launch in Spain. and we would expect to add several other major European rail carriers preparing to enter new markets over the next year or so. While adding supply, we continue to leverage our core platform, improving the app and web experience across our international markets. However, we understand there are differences between different domestic markets in Europe, so where necessary, we are adapting our product roadmap to meet specific local market needs. For example, last year, we launched V1 of Recoup Retard, or Delay Repay in France, This notifies customers when they're entitled to compensation as a result of a delayed train, solving for one of the top customer pain points there. We'll launch V2 soon. Likewise, in Italy, we'll soon launch our Seat Maps feature. This allows customers to select their preferred seat when booking, an important feature for our Italian customers. Of course, once we develop a product or feature for one market, we can then leverage our single platform to roll it out elsewhere. As Sean said, we paused marketing for much of the year given the impact on demand from lockdowns and travel restrictions. However, when COVID restrictions were temporarily lifted in the second quarter, we ramped it back up as passenger numbers began to recover. In doing so, we drove a strong rebound in new customers, a leading indicator of recovery momentum. At one point, new app customers in international actually surpassed pre-COVID levels, while in the UK, they reached more than 80%. While lockdowns continue across our European markets, they have been gradually easing in the UK, and demand is returning. As we did in Q2, we are leaning into this customer acquisition opportunity. Once again, a subsequent rebound in new app customers, as you can see from the graph. This investment will also support the wider industry recovery, in part reflecting the efficiency of our marketing engine. In fact, every £1 train line invest in advertising yields approximately £11 of incremental sales for the wider industry, from modal shift to rail. Finally, we continue to make strong progress in shifting customers to our mobile app, our optimal customer experience, with its share of transactions increasing further to 83%. While investing in customer acquisition, we are also using our marketing playbook to drive greater engagement with customers. We recently launched a tickets alert campaign, prompting customers to set alerts for real-time notifications as and when tickets for their selected train becomes available. This campaign was timely given the current level of ambiguity surrounding timetables and booking horizons in the UK. We've also launched new promo code capability and are trialing targeted discounts for key customer cohorts to re-engage with Trainline and with rail more broadly, in turn helping drive recovery. And our brand-led leisure campaigns will soon go live, designed to tap into the expected bump in staycations and other domestic leisure travel this summer. Finally, we're continuing to make good progress in positioning train line partner solutions for future growth. First, our global distribution and business solutions division. This sells B2B travel to corporates, small and medium-sized enterprises directly, as well as distributing rail content to travel management companies and other travel platforms. While business travel remained muted, we continue to build and develop our global API distribution platform. The global API offers B2B clients one-stop shop access to our European rail supply. We've continued to achieve good momentum here with 19 businesses customers now signed up, 16 since the end of last year. And we're in discussions with a strong pipeline of travel platforms and other European carriers. Second, our carrier IT solutions division. Here, we're continuing to build and deliver innovative solutions for our white-label carrier partners, including digital flexi tickets, helping them prepare for industry recovery. And we have a strong ambition to scale the number of carrier partners to whom we offer white-label services, both in the UK and internationally. Before we take questions, let's briefly recap on our key takeaways. Trainline is a purpose-driven business which champions the greener way to travel and which enjoys significant long-term structural tailwinds. In my first few months as CEO, I've met with many key government and industry stakeholders and taken the opportunity to refresh the top team and the strategy, increasing our focus on new and emerging growth opportunities. These opportunities include driving the recovery in rail travel by continuing to launch innovative new products and leveraging our marketing playbook, serving the needs of the new commuter in the UK as they return to the office, and harnessing the growing competition amongst carriers as domestic rail markets liberalize in Europe. Finally, through COVID, we've maintained our investment in our product and tech roadmap. As volumes return, we are well positioned to invest further to capitalize on these opportunities. So in summary, whilst there remains a significant degree of uncertainty of the timing of market recovery, we are uniquely placed to lead the continued shift in ticketing to online and mobile, and our belief in the future opportunity remains undiminished. Thank you very much for listening. We'll now hand over to the operator for questions.

Thank you. As a reminder, to ask a question, you will need to press star and 1 on your telephone. To withdraw your question, press the Hush key. Please stand by while we compile the Q&A roster. And the first question comes from the line of from Morgan Stanley. Please ask your question. Your line is now open. Great.

Good morning, everyone. I have three questions. So the first one is post-June. When you think about the full reopening expected in June, how should we be thinking about the shape of recovery? I've seen some reports that suggest that the industry could see a 20% long-term reduction in passenger demand. So curious to know how you're thinking about that potential risk. Second, on the promotion codes you are trialing. I was under the impression that third-party retailers have to offer the tickets for the same price as train operating companies. So is that an industry-wide initiative to get people back on trains, or is it more train line specific? And then lastly, on the Flexi season tickets coming this summer, it seems like that can really help recovery in net ticket sales given the higher ticket value. So how big of a share do you think can really shift online from that 2% penetration that we've had pre-COVID? and will you be getting that usual 2% season ticket commission on those? Thank you.

Thanks very much for the questions. So I'd say post-June, when we think about the shape of recovery, it's definitely too early to make a call on that. I'll tell you what we've seen and, therefore, how we think about it. I think, as I'd said and as Sean has mentioned, we're encouraged by what we've seen over the last couple of months in the UK and the re-engagement of rail users and in kind of the last couple of weeks if we look in the markets we operate in. So that's overall encouraged but not able yet to understand where the market will ultimately end up or our share of that. What I can say is that, as we talked about six months ago, what we see first, is leisure recovers, and we're bullish on what that means for the summer because there's strong engagement. I think when we look more broadly at the kind of commuter space and then business travel and inbound travel, we're going to have to get more data points and see how this plays out over the coming months before we can make a call on overall recovery. As it relates to promotion codes, they are a mechanism really to drive re-engagement. That's not something we'll be offering any customer long-term. It's to prompt usage and engagement back with rail and to train line if they've been absent for a while. So it's a useful tool in the marketing toolbox is the way to think about that. And then finally on Flexys, where your third question went, look, this is, if we sort of stand back from this and what the customer need here is, we hear clearly from our customers that they're looking In this sense of a new commuter, they want to be in the office two, three, potentially days a week, and they're looking for an alternative to a paper-based season ticket or buying a single or return. And so we think it's really interesting and makes a lot of sense as a proposition there. It's very much under discussion within the industry, and we're very much part of those conversations. So we are very supportive and are engaged around that. We can't say a huge amount more yet about how this will ultimately look in the summer.

Understood.

Thank you.

Thank you.

Thank you. And we will now take our next question. And the next question comes from Marcus Debye from JP Morgan. Please ask your question. Your line is now open.

Yeah, thanks for this. Hi, Jody. Yeah, just to follow up on this, I appreciate you can't really give us too much indication on the outlook and the pace of recovery. Could you maybe talk a little bit about how you see online shares developing? I think clearly also here you can't give much, but for example, what happened during the lockdown in terms of barcode readiness of train carriers? That would be quite interesting. So where are we in terms of the network? How many train carriers are actually barcode ready now? How has that changed before the lockdown? and how you see kind of like the online share in the market developing from what you can see for now in the next few quarters, really, that will be interesting.

Of course, Marcus, thanks for the question. Yeah, I'll break that into those two halves. So with regard to online e-ticket availability, as I said, we've moved from 71% to 75%. If you look at what the sort of residual is to get to ultimately 100%, there are two really networks there, train operating companies, that yet don't offer them. And I think that is Southeastern and that is ScotRail. And so those are the two key networks that would begin to really open the full thing and get us closer to 100%. I think that it will be interesting to watch what they do over the coming months given the customer demand for barcode reading and desire for digital tickets. So we're encouraged by the noises we hear, but we'll wait and see where we get to. But again, we expect that number to continue to rise over the coming months. And then with regard to online sales in the market, I think the way to think about this is sort of what's our competition? And our competition here, the biggest competition has always been the station, right, and station sales and about the ticket machines. And I think what we're hearing from customers when we talk to them and what we're seeing in these early signs of recovery is people don't want to queue up in stations. They don't want to be using ticket machines. And then there's beyond that just a general, I think, from the last year or so, people have started just using their mobile more for food delivery and for a whole variety of other things. And so we're expecting as they come back to rail, as they come back to commuting and to long distance, they will want to be able to get digital tickets. And so we think there's going to be a general demand for that. And I think if you listen to the messaging in the press coming from government, there's a broader desire to push digital tickets as a solution for customers here, and we feel we're uniquely placed to be able to serve that customer need. Thanks for the question.

Okay, thank you.

Thank you. And the next question comes from the line of Mark Erwin Fortescue from Stiefel. Please ask your question. Your line is now open.

Hi, thanks. Good morning. Can I just follow on from that question and try and push you a little bit more on market share? Maybe if you can try and quantify changes in market share through the last year or so. I think when you put up, I think it's slide 10, that UK consumer outperforming the market, and then you're saying around 70% share of all e-tickets. I think last year it was just over 70% of a smaller number. Can you just kind of square those two pieces and maybe try and quantify any potential change in market share over the last year?

Sure. I'll give a similar answer, and I'll give Sean an opportunity as well to speak on this one. Look, overall, we've essentially got a few weeks of data points here, and there's quite an interesting mix going on right now where shorter journeys are kind of prioritized and are coming back stronger at the moment than longer journeys, as you'd expect, as people have stayed local and are prioritizing those journeys around commute versus visiting relatives and so forth, and we'd expect that to change in the coming weeks. And so that means there's quite a significant mix impact on share, which is pretty tough to unpack. So I think any guidance at this stage would be challenged from our point of view.

We remain bullish.

We believe digital tickets will significantly pick up over the coming months as customers have the underlying need for those tickets. And as I said before, we're uniquely well-placed to serve those. And we've sort of called out the percentages historically where we stand. And what we've seen in both of those sort of releases of this lockdown, but also the previous lockdown, has shown that leisure has been the area that has most pronounced in recovery, and that's an area that we play well, so we feel good about that. I don't know, Sean, is there anything you want to add to that?

Hey, Mark. So just in terms of the numbers, so what we have seen is we've seen e-ticket penetration step up significantly, right? So it's now 30% of all tickets are e-tickets. So we are very clearly seeing that acceleration in the migration online. That is clear, we expected it to happen and it is happening. As Jodie said though, of course, like it's pretty hard to call right now because the mix of the industry is very different to pre-COVID. We're seeing many more shorter journeys and fewer longer distance journeys. So what we really need to do is wait for that to normalize before we call any share changes. But I think the lead indicators are clear. We're seeing a step up in online migration. E-ticket penetration has stepped up. And as you know, more than 70% of all e-tickets sold by train line. So as e-ticket penetration steps up, we are the biggest beneficiary of that. But I think in terms of where this all nets out, let's wait and see.

Understood. Thank you.

Thank you. And the next question comes from the line of Owen Shirley from Barenberg. Please ask your question. Your line is now open.

Morning, guys. Thanks for taking the questions. Just two from me, please. The first was, with the liberalization in Europe, my inclination would be that you'd be able to get a better take rate from the new operators. Is that Is that fair, and if so, is it meaningfully different? And then the second question was, would you be able to give us some more color around how the Flexi tickets might work? Now, I know you sort of said it's a bit early, but maybe there's a couple of specific follow-ups. Are these possible to serve in a non-digital format? And then secondly, do the TOCs seem to care about offering these themselves. Now they're on management contracts. Thanks.

Thanks for the questions, Owen. I'll pick up on the number one first. So liberalization in European markets. I think that, broadly speaking, the answer to the question is yes. As you'd expect, the more operators there are, the more we have the opportunity to work with those operators to create incentives to help support their sales. And it's a kind of natural product of a market you place. And I think If you look at Italy over the last few years, that's the obvious signal that gives us kind of confidence around that fact. I would say it's going to take a period of time for that to occur. And when you look at the market share that the incumbent operators have, so I think this is a multi-year position, but the direction of your question I think is fair, and that's what we'd expect over the next sort of three to five years to be the case. but it certainly really helps us in terms of driving engagement with customers and having something just really clear to talk to about customers that we're the aggregator of these multiple different talks within those countries. I think it's quite interesting. If you take Spain, Madrid, Barcelona, one of the busiest routes in European rail, by the summer there's going to be three different train companies operating on that route, and we expect a fourth. within sort of 12, 18 months. So it really gives us a fantastic opportunity, we think, there. And then with regard to providing color on Flexies, it's difficult, really, and it's not my position to talk further about that. We are absolutely engaged around this product. I think if I speak to just a little bit more texture around the customer need here, I think what we're anticipating is some form of products that would be available as a hybrid between a paper-based season ticket and a single in return. And actually, this is going to work really well if there's an ability to have a certain number of days in a month or something that you can use that ticket. but I can't really speak more broadly to what form they are going to take and how exactly they'll arrive, other than to say we are very much in those conversations. And if you look at what Trainline has done historically, we've always aimed to be at the forefront of innovation and as a kind of launch partner for the industry. And then, look, as you speak to the intentions of the talks, look, I've been having a number of conversations, and I think the industry generally is absolutely incentivized to get people back on the rails and are very much want to find any product that works for customers to ensure that that happens. So I think the intent is certainly there, exactly how that manifests itself is something we're gonna have to wait and see over the summer.

Thank you, and could I ask just one quick follow up on the first question was, just so I'm clear, if for example you've got Wego, hopefully I'm saying that right, opening up in Spain, but they're run by SNCF. Is it looking like you're just taking your agreement with SNCF in France and transcribing it to Spain, or are you seen as a more important partner and can you drive a slightly higher take rate with these new approaches?

I would say it's actually quite a different proposition in terms of our relationship and the goals and the objectives will be quite different, even if it's with the sort of mother company. So I think quite bespoke deals could arise in those situations with kind of market entrants who will be incentivized to work with players like ourselves in a wholly new, different way. Brilliant. That's very good.

Thanks, Jodie.

Thank you. And our next question comes from the line of Andrew Ross from Barclays. Please ask your question. Your line is now open.

Great. Thank you, and morning, everyone. My first one is to follow up on those questions on Spain. And just to be clear, are Avlo, Wego, and Renfe going to be advertising each other's inventory, or will it be like Italy, where they don't, and therefore there's a real reason for an aggregator to exist? And I guess the same question in terms of how you see that playing out in France as that opens up in 21, 22. And as a follow-up to that, both in Spain and France, do you have a sense of what percentage of routes actually will have competition on them? You mentioned Barcelona to Madrid, but are we talking a couple of the big high-speed lines, or are we talking something broader than that? That's the first topic. The second one is on competition in Europe. And notice the other day that BlaBlaCar had raised money and are going to launch into rail. So how do you see the competitive situation evolving? And I guess, Jody, how do you see train lines positioned purely as a train booking app as opposed to a broader proposition with lots of different modes of transport on it? Those are the two questions. Thank you.

Thank you. Thanks, Andrew. So with regard to the role of trains, the different carriers and the way that they will offer or not offer each other services. I think that we'll actually have to see market by market. It's not clear yet exactly how that will play out. I think there could be real incentives not to be showing each other's inventory for a number of reasons, but there are decisions that those businesses will take. I think the more important point here is that from a customer point of view, if you think of SNCF, you are only going to think of the brands that they indeed operate. That's our bet. Versus train lines brand is absolutely associated with the aggregation of different train companies. And so it's an important point whether or not they offer them, of course. But I think in terms of our positioning and being able to talk about a wide range of services and bring to light and have particular deals and particular carriers, we really stand out as the aggregator brand. And I'd say more broadly as it relates to kind of competition across Europe. Yeah, we obviously noted BlaBlaCar's investment. You know, generally speaking, we're positive on there being competition here and it not all being about, in France particularly, SNCF as the player here. And the more customers have a choice, the more we think we'll see kind of more thoughtful choices by the customer and ultimately, gives us an opportunity to really get into that market and to drive. So I'm encouraged by the other entrants are choosing to come in and we feel good about that. And I think Trainline overall, given our scale, given what we're able to leverage from the UK point of view, give us a platform for investment in product, in investment in brand, and broader using our marketing engine in a whole new way. Did I get all of your question there? I don't know if I...

Yeah, that's very helpful. The only follow-up was just what percentage of routes you actually expect to open up to competition both in France and Spain in time.

Sure. Sorry, yes. So I think that will be driven, obviously, by the new market entrance and where they see opportunity. I think what's interesting here is that those high-speed routes on the core line, so Paris-Lyon and in France, In Spain, Bidre and Barcelona account for a very significant share and are very lucrative. And so I do expect that to be where the primary focus starts. But then when you look at the other routes that are being – we had a map on that in the presentation – there are entrants across a whole wide range of other high-speed routes. So I think over time we'll see more and more entrants coming into the high-speed space, depending on their success and exactly how it plays out. But I don't think it will just be two or three routes. It will be much broader. And then to beyond high speed, actually the way that that fourth railway package works, it's a year or two from now until full liberalization occurs. And so when you begin to get down to the regional level, actually that package hasn't yet sort of driven the liberalization. And so it could be a couple more years before that actually happens. And I think my kind of meta thought on this is if you look at what's happened in Italy over the last sort of five or six years, like simply put, fares halved, volumes doubled. And so it's going to radically change the way that train services are offered through this role of competition. And you've essentially had these monopolies operating for decades. And this is a really significant change in how customers will engage, how they think about the price point, and then ultimately the volumes. And therefore, they're going to want to understand all the different choices they have right now. So I think it's a super interesting moment for training.

helpful. Maybe just one more follow-up. I mean, it all sounds pretty positive on international. Could you just talk through why you've impaired that business? Thanks.

Sure, and I'll pass that one to Sean to pick up on.

Hey, I'm Drew. So look, yeah, we took a goodwill impairment on our international business. It's obviously an exceptional item. It's a non-cash item. And look, let's just be clear. This doesn't in any way change our view of the long-term viability and opportunity of our international business. And we have to take, when we acquire a business, this is associated with the acquisition we made back in 2016, when we acquire a business, the goodwill associated with that acquisition is then subject to the accounting standard on goodwill. And we have to look at a five-year window. And when you have COVID-19, bite in the first year of that period, then of course it's going to have an impact on the calculation of goodwill impairment. So this is a very technical outcome. It doesn't in any way change our view of the opportunity of our international business, which of course we remain very positive about, as Jodie just articulated.

Very helpful. Thank you.

thank you and our last question comes from the line of simon davis from deutsche bank please ask your question your line is now open yeah hi morning guys um three from me please firstly just on marketing can you talk a bit about the trends that you've been seeing in terms of customer acquisition costs and your estimation of lifetime values over the course of the last year and what's that driving in terms of expected marketing spend this year, and when do you think marketing spend might revert to pre-COVID levels? That's the first question. Second, which is on the Williams review, when are we going to see anything come out from that, and how meaningful do you think it now is, given the delays we've had? And finally, can you give some guidance on likely capex for the current year?

Thanks, Simon. I'll take the first two and then pass over to Sean. So with regard to marketing and customer acquisition costs and lifetime value, I think the way to think about this is there's been an opportunity for us to really lean in here around marketing, because we kind of kept our foot on the accelerator all the way through here, while some of our competition, for a number of reasons, weren't able to do that. And so we've enjoyed some improved sort of CPAs, and as a result, kind of enhanced lifetime values on those customers. As we begin to move out of COVID, I think, you know, we sort of step back and look at that. How to think about that is, you know, a large part of our marketing spend is essentially linked to demand and will automatically rise up as more customers are available or searching, we will be there and we will invest along. So it will kind of follow back up our sales line, if you like. How do I think about the evolution of those CPAs over the sort of Medium term, I think we should break apart UK and Europe. So I think in the UK, what's interesting here is that we continue to improve our products, and there's a number of things I outlined today which we think will actually improve our LTVs because we've got better engagement with customers, we've got a stronger service. We begin continuing to improve our ROAs here. And I think when you look at the train operating companies, they are a new operating model here where there's a certain series of constraints around potentially their marketing spend going forward, which are unclear. And so the potential is an opportunity where we'll find it, we'll find opportunity for us to be able to bid and pick up with slightly lower CPAs, but we'll have to see if that plays out and exactly to what degree the train operating companies can act kind of fully commercially in that space. So that's probably the biggest question in the UK. As it relates to Europe, I don't think that's the same there. I think we expect to see the past, the existing players will re-enter the market and that will kind of go forward like that. I think the interesting dynamic will be exactly this point as competition comes in over the next 12 months in Spain and probably over the 12 to 24 months in France will be the dynamic there. We could see that as new entrants come in, they will be bidding themselves, which could have an impact on prices, but equally, given our aggregation opportunity and what our brand stands for and the fact that our multiple choices, that could really incentivize customers to come to us and actually help our CPAs because our proposition is going to get materially stronger. So that's the kind of most I can say in terms of how we think about that at the moment. If I come on to the Williams review, so yeah, we're all waiting for the Williams review. My understanding and our expectation is that we are weeks away from that versus months, but we've obviously all been in this position before. But that's our current understanding, that we're weeks away. And then to your point of how meaningful it will be, I think for the industry overall it is incredibly meaningful. As it relates to train line, I'm not going to speculate on what's in it, but if we talk about the sort of terms of references and the way we've done before, we essentially saw three components of that, which is around innovation, industry restructure, and then retail and fair simplification. As it relates to innovation, the mood music that we hear is that there's a very strong desire to see innovation continue within the rail industry. And as you know, Keith Williams a number of times called out train line as one of the key innovators within the industry. So that makes us feel good and sort of assured in terms of our role there and the desire to play an active part. With regard to restructuring, kind of as you hinted in your question, kind of a significant portion of this has already happened, and we can see that the direction of travel doesn't have a sort of first-order impact on train line, but there's potentially knock-ons. we'll await to see exactly where that goes and the timelines involved for the train operating companies. And then finally, on this point of sort of retail and affairs implication, look, we're, like everyone, we're really looking forward to see what that offers and what Williams says. My expectation is whatever it says, actually, that will be a kind of government white paper, and it actually will take a fairly significant period of time to work its way all through the systems. But anything... that is good for the customer, that makes rail easier, which I think is the intent of all of this, we think is a great thing and we're obviously going to be incredibly supportive of. And then finally on your CapEx question, let me pass over to Sean.

Hey, Simon. So yes, look, we said at the start of COVID that it was absolutely our intention to maintain our investment in CapEx, in product innovation, new features, and so forth. And we've done exactly that, right? And we're glad we did. Because as we continue to deliver new features and new products for customers throughout that period, as Jodie's talked about today, in total we spent $26 million on CapEx. Remember, our CapEx is capitalized developer time. That essentially is the vast majority of our CapEx. And we expect to spend a similar amount in the current year, probably a bit more, so So consensus at the moment is about $29 million, and it's in the right range.

Great. Can I just clarify one thing, which is the point about TOX and some constraints on their marketing spend? Are you just talking about financial constraints there?

Yeah, well, semi-financial, but also just the operating model at the moment, they are operating in a world with sort of fairly enhanced government engagement is probably the best way to put it. We'll have to see exactly how that plays out over the kind of coming months and years, and we'd look for Williams to give a really clear indication of that, and therefore how commercially they can operate here to drive revenues. And that's definitely an open question at the moment, I think, in the industry.

Great.

Thank you. Thank you for the question.

Thank you. That was our last question. I now hand back to Jody Ford for his closing remarks. Please continue.

Well, thanks, everyone, for joining the call today. Look, as we said, with our markets, we're now entering the recovery mode. As we've laid out, we feel really well-placed to lead this continued shift to online and to mobile. And we believe that we continue to see these considerable structural tailwinds that we've laid out for our business. So thank you for joining, and I'll hand back to the operator.

Thank you. This concludes today's conference call. Thank you for participating. You may now all disconnect.