Trainline Plc

Good morning, everyone. Thank you for joining us here today for our full year results presentation. It's good to see you all again. I'm Jody Ford, CEO of Trainline, and it's great to be joined by Pete Wood, who in December became our new CFO, having performed the role on an interim basis since September. Let's first go through the disclaimer and onto the agenda for today. I'll intro with the key highlights for the year, as well as recent political and regulatory developments in the UK. Pete will talk you through our financial performance, and then I'll update you on progress against our strategic priorities before deep diving into the international business. After that, we'll open to the floor for questions. As you know, our purpose at TrainLine is to empower greener travel choices. as Europe's leading independent rail platform, were well placed to fulfill that purpose, with over 270 carrier connections, a 4.9 star app downloaded 55 million times, and a platform processing over 6 terabytes of data per day. Likewise, we have strong tailwinds for growth. We operate across a 60 billion euro rail market, giving a significant headroom. In the UK, e-tickets will soon be available on over 90% of journeys. In Europe, markets are liberalizing at speed with six of the top 10 routes having two or more carriers. And consumers, governments, and businesses are increasingly focused on the environmental benefits of rail travel. With trains emitting at least 70% less CO2 than cars and planes, sustainability is the rail industry's superpower for generating long-term growth. This year, the group delivered a record operating performance. Net ticket sales were up 16% and revenue up 25% versus fiscal year 2020, the pre-pandemic year. Growth was led by international consumer, which became a 1 billion euro business. In the UK, we drove continued growth in digital tickets, particularly for commuters, where we doubled our segment share. In international, we further positioned ourselves as the aggregator on high-speed routes. In Italy, net ticket sales were three times higher than pre-COVID levels, while in Spain, they were four times higher. And as tourists returned to Europe, we almost doubled foreign travel sales with particularly strong demand from the US. In the UK, we're seeing encouraging political and regulatory developments. In February, the new Secretary of State for Transport, Mark Harper, spoke at the annual Bradshaw address. He gave more direction on the creation of Great British Rail, placing far greater emphasis on the role of the private sector, whilst committing to a competitive retail market to drive innovation and value for customers. And earlier this week, we announced that we had concluded our collaborative phase of engagement with RDG, confirming our commercial terms. Finally, I came by train is gaining recognition shortlisted for two sustainability awards and is becoming a galvanizing force within UK rail with new partnerships forming across government industry and train line to champion rail as a greener way to travel. And with that, I'll hand over to Pete to talk through our financial performance.

Thanks, Jodie, and good morning, everyone. I'm Pete Wood and I'm delighted to join you today as the new CFO of Trainline. Having stepped up into the role, I'm both excited by the growth opportunity ahead and pleased with the momentum we are building. Before I get into the financial performance for the year, I'd like to discuss the strengthening trading conditions in the UK. As you know, COVID had a significant impact on passenger volumes and the industry has recovered over the course of the last 12 months. from less than 70% of pre-COVID levels last year to over 90% this year. Strike action has weighed on the recovery, however, with strikes every month from June through to March. As we said in our trading statement, the gross ticket sales impact for TrainLine was around five to six million per strike day. While of course a challenge for the whole industry, I was pleased with the way we were able to help customers navigate the disruption. with features like alerts and self-serve refunds. There's been progress in the resolution of the industrial dispute, with two pay offers now settled. Two remain outstanding, and strikes have been called this month and next. However, I'm encouraged by how quickly passenger demand can return. For example, there were no strikes called since early March, and passenger volumes quickly recovered to above 90%. With cost of living pressures, customers are taking advantage of booking in advance, with our value-focused brand campaigns highlighting savings of up to 35%. And the softness in longer distance travel that we flagged in March has now receded. The group achieved a record operating performance this year, driven by strong growth in our UK and international markets. With COVID impacting prior year numbers, I'd instead talk to year-on-three-year growth rates. Net ticket sales were up 16% to 4.3 billion. Within that, UK consumer was up 37% to 2.8 billion, reflecting the market recovery and a significant increase in e-ticket penetration. International consumer was up 95% to 915 million, supported by our aggregation of new entrant carriers on key European routes. Trainline Solutions remained at half its pre-COVID size at 597 million, due to a slower recovery in business travel. However, it almost doubled versus the prior year, and we continue to see longer-term tailwinds as corporates move towards greener travel choices. Revenue was up 25% to 327 million, which I'll step into on the next slide, and gross profit was up 29% to 252 million. Group revenue has grown ahead of net ticket sales when compared with pre-COVID results, driving an increase in the group's take rate from 7% to 7.6%. This was driven by a mixed effect in the group portfolio with the UK and international consumer businesses, both with relatively higher take rates, growing faster than train line solutions, as well as by an accelerated growth in foreign travel, which also generates a higher take rate, in part because carriers pay more in commissions for non-domestic sales. The business delivered a material increase in EBITDA, even while we increased investment to drive international growth, and despite a headwind from industrial action. We reported an adjusted EBITDA of 86 million, up 47 million year on year, and up 1 million versus fiscal year 2020. In international, we ramped up marketing investment to 43 million, We are already seeing the benefits of this investment as it drives growth in new customer acquisition and net ticket sales. Alongside this, we scaled the platform to manage the significant step up in transactions as reflected in the other admin cost bar. We hired additional people and I'm pleased with the acceleration in feature development and localization of our platform for European markets and the critical contribution this makes in driving growth. Jody will expand more on this later. Staying with international consumer, we expect EBITDA to approach breakeven on a pre-internal transaction fee basis in fiscal year 2024. As we have said before, our number one priority in international is to drive growth in net ticket sales and revenue. But as the business grows, it benefits from operating leverage on marketing and people costs. The chart on the right hand side shows the international's financial profile prior to the payment of the internal transaction fee to Trainline Solutions. As you can see, the business is achieving operating leverage as it scales with revenue up 131% versus the cost base increase of 87%. This reflects our disciplined approach as we prove our way into new markets, closely managing lifetime value and the cost of acquisition for new customer cohorts. It also reflects the benefits of our existing customer base growing in size, particularly app customers who are stickier and transact more frequently. Finally, as I look ahead, we are well positioned for further growth and have made a strong start to the year. Demand is healthy across our key markets. And as you will shortly hear from Jody, our team is delivering against the clear strategy. Group expectations for fiscal year 2024 are net ticket sales growth of between 13 and 22%, revenue growth of between 13 and 22%, and adjusted EBITDA as a percentage of net ticket sales of between 2.15 and 2.25%. Thank you. And I'll now hand back to Jodie.

Thank you, Pete. Let's now talk about the progress we're making against our strategy, starting with our UK consumer business. Our first key priority in the UK is to provide customers with an excellent user experience, removing friction when searching for trains and booking tickets while offering them unrivaled value. This is helping shift more people to digital ticketing, with e-tickets a core part of our mobile app proposition. We're achieving an accelerated delivery of new products and features, and I'd like to touch on some highlights. Historically, commuters have been underserved with digital ticket options. We've therefore primed our mobile app to better serve such journeys. And we've already had good traction with Trainline doubling its commuter segment chair in three years. An example includes our favorites feature, which allows commuters to personalize their journeys in the app, giving them live departure boards and notifications of delays and disruptions. It's proven popular with 4 million customer setups to date. And last month, we launched our new Quick Buy feature, which leverages our data to let customers purchase the same ticket again in just three clicks. We continue to reduce friction from the travel experience, recently launching Next Best Actions to help customers manage delays and disruptions. We've always done a good job notifying customers. Next Best Actions goes a step further, helping customers understand what they can do. We're starting by allowing customers to check what other trains their ticket is valid on, with plans to go way beyond this. At the same time, we're unlocking further savings for customers with innovative tools like SplitSafe. We ran a data-led optimization process to make the product even better, expanding the number of journeys in which split tickets are offered. This helped grow availability of SplitSafe tickets to 80% of all UK journeys, up from 64% at launch. Moving on to our second priority in the UK, building demand. We are running a brand campaign telling customers how they can save 35% on average when booking a journey through Trainline, highly relevant as the cost of living pressures bite. These campaigns point to the environmental benefits of rail travel too, reflecting our core purpose to encourage career travel choices. This is helping more people to make better travel choices every day, showing them that great journeys really do start with Trainline. It forms part of a broader marketing strategy in the UK that has delivered significant customer acquisition. In fact, over the past three years, we've increased active customers by 58%. At the same time, we have deepened our customer relationships, significantly increasing customer transaction frequency. Customers that transact two or more times a month have grown from 49% of monthly customers to 49% of monthly customers, up from 42% three years ago. With the simultaneous increase in active customers, it means a substantial jump in sales transactions. Turning to our fourth priority, growing train line solutions, leveraging Platform One, our single global tech platform, to power online retailing for our travel partners. We further strengthened Platform One this year. We added to the significant breadth and depth of our carrier connections, integrating new entrants at speed as they came to market. We developed and released an extensive list of customer-focused products and features, and we increasingly use machine learning to surface relevant products and features to each specific customer. While in the background, we continue to optimize the platform's reliability and enhance its scalability. In fact, platform one is now regularly processing over a thousand transactions a minute at peak times. While enhancing the platform, we leveraged its strength to better serve our travel partners and position the business for future growth. For our carrier partners, we made big strides in improving their core functionality and customer features. This includes enabling digital seasons and digital payment methods like Apple Pay and Google Pay. And we extended our contracts with Cross Country and ScotRail and signed a new contract with TrainHugger, a sustainability-focused third-party retailer. At the same time, more travel businesses went live on our global API platform. As a reminder, our global API gives B2B partners the ability to offer European rail options to their customers through one simple seamless connection, rather than tackle the complexity of connecting to 13 different carrier APIs. And in recent months, CWT and Havas Voyage both went live on the platform. Now, let's turn to the international consumer business. 18 months ago, I stood here outlining our plans to accelerate the growth of our international business. Since then, we've increased the pace at which we launch innovation into our core European markets, while filling any product gaps that existed, rapidly integrated four new entrants onto our platform, and expanded our marketing activity to grow brand awareness and increase customer acquisition. As a result, International consumer net ticket sales has doubled versus fiscal 2020, reaching the milestone of 1 billion euros of net ticket sales. We're increasingly prioritizing the rail markets where we have the strongest proposition. These are domestic markets which enjoy widespread carrier competition, primarily Spain and Italy. And foreign travel representing global inbound and intra-EU cross-border travel. These markets contribute about two thirds of international consumer revenues, and we expect strong growth ahead. Beyond these markets, significant further headroom remains, most notably in France, which I'll come on to shortly. Let's first look at domestic market liberalization. As you know, Italy, Spain, and France have opened to competition. Six out of the top 10 high-speed routes in Europe now have carrier competition. And as you can see on the map, there's an increasing number of key routes that have more than two different carriers. By giving customers more choice, carrier competition is creating the opportunity for Trainline to position itself as the market aggregator. But not all markets are at the same level of maturity when it comes to liberalization. So we are tailoring our approach based on the respective level of maturity. For phase one countries like France, which has yet to see carrier competition beyond Paris-Lyon, we continue to focus on providing a great user experience with all key journeys and prices. As widespread carrier competition arrives on a market's high-speed rail network, as is happening in Spain, we'll move to phase two, making aggregation a key differentiator for Trayline. This includes ramping up marketing spend to grow brand awareness and acquire new customers. As we establish ourselves as the number one aggregator, it gives us an opportunity to move to phase three, deepening customer relationships, as we're now doing in Italy. As customers engage more habitually with Trainline, particularly through the app, it increases our relevance for more of their travel needs. This sees them transact more often, including for shorter distance regional trips. Let's first look at France, a large market, but one where market liberalization remains nascent. Without a widespread aggregation opportunity, France offers a slower growth of profile than the other more liberalized markets. And the effect of strikes this year is likely to slow growth further. We will continue to invest in the user experience and performance marketing in order to serve and grow our French customer base. How we'll manage our brand investment to coincide with the future arrival of widespread carrier competition. Moving on to Spain, a rail market worth 2 billion euros, The Spanish government have embraced liberalization, seeing the benefits it brings in reducing fares, improving service quality and driving greater ridership. Four carrier brands now compete in Spain, and as they expand services, we estimate these liberalized routes will represent a 1.3 billion euro aggregation opportunity. It's amazing to think this time two years ago, there was just one rail brand in Spain, the incumbent Renfe. Since then, SNCF has launched their low-cost operator, Wego, followed by Renfe's low-cost brand, Avlo. This competition has brought value-focused pricing to the market. The way it's stimulating demand and disrupting rail is akin to how Ryanair and EasyJet disrupted the airline industry 20 or so years ago. Last year, train Italia-backed Irio entered the market. In contrast, they are offering a differentiated premium proposition, directly competing with Renfe's traditional brand. Three or more of the brands will compete on five key high-speed rail routes by the end of next month. Their new service is expanding capacity by 84%. Let's look specifically at Madrid-Barcelona, where there are clear signs carrier competition is driving modal shift. Prior to COVID, this was Europe's busiest domestic air route. However, last year, air traffic fell 28%. During the same period, railfares fell 55% and passenger volumes grew 35%. By positioning TrainLine as the aggregator on this route, we've significantly increased our market share. Tickets sold on this route doubled year on year and were nine times higher than three years ago prior to COVID and the arrival of competition. At the same time, we're proving vital for new entrants as they seek to attract new customers as quickly as possible. In Eereo's first quarter of trading, we sold 20% of their tickets. As carrier competition grows in Spain, we are embedding our position as the leading aggregator. We're improving the way we surface the most relevant travel options, including intuitive search filters, plus search results that allow customers to identify where it's better to combine different carriers for their journey. Finally, we're going the extra mile to delight customers, including an a la carte food selection within the booking flow for IRIO trains. Let's now discuss Italy, a rail market worth 4 billion euros, where two carriers, Trenitalia and Italo, have competed for the last decade. Here we have a strong aggregator proposition with all the carriers, routes, and journey options, as well as a seamless app experience. We continue to build brand awareness and drive new customer acquisition. We launched our first major nationwide brand campaign last year. This focused on train stations in key cities with aggregated routes, as well as a national TV campaign. I'm delighted to say that we are the number one rail app in Italy, with 13% more downloads than incumbent Trenitalia. And this is translating into net ticket sales, which were three times higher than pre-COVID. At the same time, we are deepening our relationship with Italian customers. We grew our relevance with more of their travel needs, with a fourfold increase in ticket sales on regional railways, driving total tickets sold to 10 million. This was despite there being no carrier competition on those regional routes. Moving on to foreign travel. As a reminder, this represents global inbound customers from the US, UK and rest of world, as well as some intra-EU cross-border travel. It's an addressable market worth €4 billion, with journeys weighted more to the summer months. It generates double-digit take rates, partly due to higher commissions payable by carriers for non-domestic customers. This year, foreign travel almost doubled versus pre-COVID, with sales to US inbound customers particularly strong. As we position ourselves as the one stop shop for rail travel in Europe, we see opportunity for growth to continue, particularly as we begin to leverage our marketing leadership. To bring that to life, let's look at U.S. inbound customers as an example. The typical U.S. inbound customer visits Europe in a group, often as part of an expensive family holiday or to celebrate their graduation. They book most journeys in advance and increasingly want to explore multiple countries in Europe, with 42% of sales coming from customers that book journeys on two or more carriers. However, they're not used to traveling by train, particularly in a foreign country, so feeling reassured is a top priority. In that light, Trainline already meets many of their needs, offering easy booking in advance or on the day. all the key routes, carriers, and fares, and a standardized travel experience in their native language, helping them get from A to B successfully. We plan to build on our early success to attract more U.S. inbound customers. We are currently running a campaign to find Trainline's chief conductor, hosted by the one and only David Hasselhoff, with the contest winner experiencing rail adventures across Europe. And we have launched journey guides to help customers feel reassured when traveling by train across Europe. Before we open the floor to questions, let me recap on some key takeaways. We've delivered record operating performance this year, and we expect the momentum to continue, guiding to strong growth in the year ahead. In the UK, our consumer business is growing strongly as we shift more customers towards digital ticketing, particularly commuters. In international, we are prioritizing the markets where we have the strongest proposition today. This means harnessing the aggregation opportunity to accelerate sales growth in Spain and Italy and driving growth in foreign travel, which provide higher margins for train line. Looking forward, I remain hugely excited by the opportunity ahead, our long-term growth tailwinds, and the progress we continue to make in delivering to our customers in the UK and across Europe. So thank you very much for listening. We'll now open to the floor for questions. If asking, please can you give your name and institution?

Great, Gareth.

Hi, morning. Gareth Davis from Numis. Maybe start with sort of two and a half from me. One, the first one really on take rate. Pre-pandemic, you talked a lot about kind of value-add services and driving take rate. Firstly, on the UK, can you just sort of, is that sort of on hold while you take advantage of volume coming back? And we should think of that as a driver over the next couple of years, or how should we think about that take rate? And then in Europe, as Spain matures, is there the ability to start pushing out those value-add services into Spain and Italy? And again, same question really, how should we think about take rate on a forward-looking basis? And then from a marketing spend perspective, when we look into next year in international, Are you expecting to grow marketing spend? I know Jody kind of called out an emphasis on Spain. So does that mean you sort of pull France down a little bit and it switches into Spain and Italy? Or just if you can give us a little bit more shape around marketing spend in international?

Sure. Do you want to take? Yeah, let me tell you this. So starting with the UK take rate. So the opportunity in the UK still is to grow net ticket sales. We've got e-ticket penetration has taken a really good step forwards, but there's still big headroom. You heard today about the progress we're making in commute. And so most of our effort is continued on ticket sales. We are running various tests all the time on revenue optimization, trying out new levers and the like. So that that does continue in the background. And as you know, as we get larger still and growth begins to slow on NTS, then we'll put more effort into or more resource onto the onto the revenue side. So it's not it's something that will come a bit further down, down the down the road. And then, yes, in terms of Spain and indeed other international domestic markets, the UK is the mature business that we're targeting. And right now, we're not really focused so much on optimizing revenue. It's more about driving for scale and growth and growth. There are certain things that we could do today, but putting more friction in the way of acquiring new customers, which might drive monetization, is just not our focus at the moment. Instead, we're targeting gaining share, growing the base of the business, and then again, we'll turn our attention to generating more revenue off the back of that over time. And then from a marketing spend perspective, yes, we've got a portfolio, and you've heard today that it will absolutely be doubling down in Spain and in Italy. From a domestic perspective, those are really interesting and exciting markets, particularly with the liberalisation. France, we're taking a more measured approach, and as liberalisation grows over time in that country, we'll then push harder on the marketing there. But there will be more focus on Spain and Italy in the meantime.

That's great. I think the only thing to add here is the component we called out around foreign travel having just to underline that point, significantly higher commission rates, which blends through on an international business and provides kind of upward momentum there. Thanks for the question.

Great. Marcus?

Hi, I have three questions. Peter, if you can maybe talk a bit about the group guidance. It's obviously a wide range. I assume there's obviously a question on strikes and how it impacts the business going forward. But if you can tell us a bit more what level of impact you see, at least as of now, in terms of strikes back into the guidance. Jory, if you could talk about the GBR tender, if there's any sort of date that we should be waiting for. You made it very clear in the release what your view is. But if you can just update us maybe in terms of any date, that would be helpful. And then on international, thanks for the information. It's very helpful. Cleveland, a big focus also on inbound customers, as you highlighted, U.S. tourists traveling Europe. Could you maybe share with us what the share of just inbound customers is versus domestic customers, if that's possible, at least if you give us a certain idea. That was in the past heartland of Omeo, your biggest competitor, but it seems that you get a lot of market share also with the inbound customers. That would be great. Thank you.

Great. Thanks for the questions, and there's a few to work through here, so we'll tag team as we go through. Why don't, just on guidance, I'll pick up strikes and then maybe come to you around... and then work through the rest So look, just on Strikes, because it's a relevant question that will come up. Look, we, of course, remain focused on supporting the customers. And I think the one thing I will call out is just the amount of innovation we've put into the market to support customers, helping them with refunds, helping them find the next best train. Actually, this week, we've got a new feature called Strike Safe Going Live, which actually provides reassurance and confidence to book when there is no strike, because sometimes it's sort of the shoulders of the strike that people don't book. So we're We're really leaning into this because it's an area we know customers need support for. Pete will speak to the guidance point. But what I would say is over the last sort of six weeks, we've actually had a clear run without any strikes. And we've seen the market grow. um really come back strongly getting back into the mid 90s in terms of ridership and that gives me real confidence that ultimately as we get through the strikes we will see it return and this was kind of some doomsayers maybe a few couple of months ago um writing columns and stuff but actually we've seen really strong performance which is um encouraging and look the way i think about this is that without getting into all the details there's essentially four different agreements that have to be struck between kind of various luna vines and various parts of the railway Two of those have been agreed, two of them are live, and I can't predict when that will happen, but that gives you a sense of kind of where we stand on that. Pete, do you want to speak just a bit to how that factors into guidance?

Yes, so guidance is there to cover a range of moderate scenarios, I would say, when it comes to strikes. We've provided some information about the average strike impact last year, and hopefully that's useful to you. If we have many more strikes, we'll be at the lower end. If there are relatively fewer strikes, then we will be towards the upper end of the range. And I would add, on top of that, we also have strikes in France, so they also wash through the the pension reforms that are unfolding in France is that you know any charged situation in March, when the government triggered article 49 three it was. We had a particularly bad set of strikes, I would say. In April, they actually softened a bit and our business picked up again. So, yeah, the guidance is in place to cover that. And then, of course, there's a macroeconomic impact that might wash through our business as well through the year, you know, as it hardens. That might impact demand a bit. And we've taken that into account in our guidance as well.

If I pick up on the GBR tender point, I mean, just to go back up one level to GBR sort of in its entirety before we talk about a tender for an app there. Look, I think it's been encouraging. New Secretary of State Mark Harper, as I talked about briefly in the speech, but the tone of the Bradshaw address, I think his line was private sector's strongest role yet within the sort of rail system, which I just think tonally is helpful for a number of organizations, not just train line. And then look on the actual GBR app. There's no new news. I mean, we kind of sat here a year ago saying it could be imminent, and I can't really narrow that range of options at GBR. We will wait and see where they ultimately get to on that. I think it's worth noting that the GTR, which is the Govia Thameslink, which is the largest UK TOC, have come to tender or are in the process right now Gareth J. of looking for a white label provider for their APP they currently use on track with a Sep tember 24 delivery date and I just give you that as a sort of data point and and context. Gareth J. Then, if we go into international and you should sort of chip in as we go through like. Gareth J. In terms of inbound customers, I think the one way I can talk about this is that the total market we think of as a sort of. for maybe 5 billion in terms of the total foreign travel market. We don't disclose how that breaks out, but it's significant enough that we're talking about it in the context of the overall blended tape rate. I guess that's probably a bit of a clue in there. And then with regard to competition, look at, I think, Rail Europe, Omeo are the other two players that go here with Rail Europe being the more scaled of those three and one we look at. And then just I came through here, but this is an area we've not done a huge amount. We've kind of taken our vanilla proposition and it already works pretty well for a family arriving from New York. And actually we think now we look kind of harder. We've got an accelerated set of things to go out here. And if you think over the next 12, 18 months, there's quite a lot around kind of passes around Asian travel, things that we've not really even begun to innovate around, which encourage me on the future growth points. I don't know if you'd add anything to that.

No, I think you've covered it.

Thanks.

Great, great. Next question. Kieran.

Well, thanks. Yeah, it's Kieran Donnelly from Librem. A few questions from me. Just to push you on one point on the retail review and the net impact of 25 basis points on the commission rate. Do you think you'll be able to offset that through other means by April 2025? Secondly, just on marketing spend, could you give us a sense of the split between brand and performance marketing, particularly in the international business? And then three, just on digital penetration in the UK, where is that now versus where it was last year? And finally, just on Uber in the UK, any impact you've seen from the launch of their trial? Thanks.

Sure. Thank you for the questions. We'll step through those, but I think between both of us on a number of them. So look, retail review, 25 basis points. I think just to kind of voice over this, to confirms what we were talking about sitting here a year ago. And look, we've known about this. I feel confident that we will be able to lean in and find ways to support that. And it won't be a challenge for us. So I think, Pete, yeah, that's good. That's the right answer. Marketing spend. Pete, do you want to take that one in terms of where we're going on that?

Yeah, so... roughly speaking, it's more like 50-50 than any other security between performance marketing and brand. And the two, you know, they interplay together. So you have, you know, on one extreme, you've got Google PPC marketing, but as you begin to bleed across into more display advertising and the like, it kind of blends into brand. And then you have kind of out of home and in the station. So there's kind of a continuum here And part of the marketing team's efforts are to optimize the right mix. There are certain points in time where you want to push harder on one particular channel versus another. So the 50-50 probably gives you some sense of where that is. But that is something that we continue to work through and optimize over time.

Do you want to take the digital penetration and explain?

Yeah, so if you think about e-ticket penetration as a good proxy for this, we've taken a huge step forwards over the last three years. So back pre-COVID, it was at around 21%. the most recent quarter was 44%. And actually, that 44% really doesn't quite give a true sense of the momentum that we continue to see because the introduction of the Elizabeth line means that it's suppressing that number a little bit. If you kind of back that out and you look at it on a light for light basis, you're looking more like 47, 48%. So, you know, year on year, that's continued to push forwards. And look, if you look ahead, there's We've got the supply side pretty much fully enabled apart from London, but that's above 90% now. And if you look to other comparators like the airlines, where it's what, 80, 90% or so digital tickets now, that really gives you a sense of the sort of headroom that there still is to go here.

So that's really, really exciting for us. And let me take that final question around Uber. Yeah, so I mean, Uber have been in the market for over a year. I'm sure you're aware they've they've been offering fairly significant kind of kickbacks into their rideshare sort of platform. And look, overall, as ever, we welcome competition. I think a year ago I was talking about how that would potentially be a way that it would track new customers into rail and that we would then back ourselves, given our 500 engineers and a really deep rail expertise to bring those new customers onto our platform. Right now, just speaking to kind of data points, we don't see any evidence of them taking any share whatsoever as it stands. So we'll wait and see how their proposition evolves over the coming months.

Thank you for your questions. James. At the front, Jules. Sorry. We'll get to you in a minute, Simon.

Thank you. It's James Lockyer from Peel Hunt. Three from me, please. Throughout the presentation, you've dropped in, this feature's coming, we've just launched that feature, and there's lots in there to drive up usage and loyalty. But how should we think about your dev recruitment needs in order to fulfill those over the next few years? And if you could talk about how your Barcelona hub is doing there. Yep. Secondly, you've obviously talked about active customers going up frequency, loyalty continuing, customers becoming stickier, but you are technically still more of a repeat business than a recurring business. Do you see a time when, you know, You could flip some of these things into a recurring subscription type perspective or their industry barriers that prevent that such as. Can you create your own rail card or do you require that to be an industry rail card for you to do that there and then and then just to follow up on the on the guidance point you've given the range, but just wanted to check around and. If we're at the top end of revenue, does that necessarily mean we're at the bottom end of the EBITDA guidance because you've pushed through marketing to drive up that revenue growth? Or actually, should we sort of think if you're at the top end, the operational leverage will see you at the top end of EBITDA guidance as well? Thank you.

Great. Thanks, James, for the questions. Take the first one. In terms of recruitment, I'd say we've had very strong recruitment year over, and that's got actually easier over the last sort of now six, seven, eight months, just because of the macro, as you'd expect. And so we're pretty much now at full recruitment, which is great. So all of those engineers we talked about hiring a year ago, 18 months ago, Gareth J. are now in place and it just to kind of bring a little bit more context to that, particularly around data we've been talking about building out. Gareth J. Our data capability and it's been we've got some we hide Mike chief data officer, we announced that a while ago now, but sort of the next levels below we bought into outstanding talent and being able to fill out those positions. Gareth J. And then, as you mentioned Barcelona has been a fantastic. hub for us. It's opened up a whole new market, which is really interesting, not least because we're obviously now operating in Spain and just gives us more context and more connection to the market, but also access to really good engineering competence and people who are fully engaged in the brand. So I feel probably as bullish as I felt in the time I've been CEO about the ability to hire the talent that we need. I think the market has moved in our favor. and the broader work we've done on our purpose and connection there really really strongly resonates and it can sound a bit artificial in a this sort of forum but really resonates with with people and their desire to want to come and work with us to support that the purpose um In terms of active customers and the recurring business, and Pete, you should come in on this one, we definitely explored that space as it stands. And I think it kind of speaks to Pete's answer to the very first question. We are very focused on the growth and taking our model and driving that engagement, the kind of maturity model we work through. I mean, maybe one day there'll be a fourth step and we'll get to something that looks like a subscription of some form. And I don't think that's crazy to consider that, but it's just not in, when I sort of look at the, out in the product roadmap over the next two years, it's not something that's on there that we're actively pursuing right now, but there may come a time that it feels appropriate to do that. And then maybe Pete, do you want to take the guidance and the connection with either of our marketing?

yes so so so i guess the the short answer is yes there's a clearly a linkage if we got strong sales and with the top end of guidance that will generate more revenue and and should drop through three but does so so the starting point is is yes um of course there will be uh some puts and takes as we go along and i think most importantly for us as a management team is where we see really good opportunities to increase investment or where something's really working we want the flexibility to to double down like our Our goal is to grow fast, right? As fast as we can. So we will take some of those options as they emerge, but the core of your hypothesis is right. Thanks. Great, Simon, thanks.

Yeah, morning, Simon Davis from Deutsche Bank. Three from me, please. Firstly, Labour government is now predicted, according to the bookies, as our favourite for the next election. What do you think that means for train line? And what do you see as the key risks? Secondly, we're now talking about break even for the international business. Perhaps you can talk a bit about what a mature EBITDA margin might look like for that division. And lastly, artificial intelligence is the hot topic du jour. Is that a threat or an opportunity for train line?

Gareth J. Great and let's let's work through those so i'm laid up potential government so look we're kind of at that point in the cycle. Gareth J. Where it's all about headlines and there's not a huge amount of policy, specifically when it comes to rail I just a couple of thoughts here, even during the Corbyn days when they were sort of proposing. their rail thoughts, they never talked about anything happening within a retail. And that was definitely not on the agenda. It was more about the trains and the tracks in terms of where that goes. And I'd say, you know, as a government thinks about this, there's really a huge amount that the train line and the retail sector more broadly brings. I mean, we have the 86% of customers trust us around rail, which is significantly above the industry average. We are deploying this, as we've talked about a lot, this kind of UX that just makes it really easy to book tickets and drives incremental people onto Rails. And then the partnership around innovation, either because of the capital intensity of that, or the tech talent that is needed to build and deploy that, or the scale that's needed, that's where we as Trainline, or more broadly the private sector within Rail, can offer a lot to any form of government. And so, look, as you'd expect, we are engaged with Labour as we are with the Conservative Party, and we'll look to see what they would propose if they got a new term as well. I think the sort of tonality coming out of Starmer more broadly around technologies want to move from lagging to leading in technology. We are one of the sort of top 10 public tech stocks based in the UK. So I'd imagine they would want to work well with us on that. And then look, just a broader reflection. We've been in this space, as you know, engaged on a number of different areas and conversations through the retail review. And I think very helpfully, there's a set of kind of principles we've established with the industry around level playing fields, around the kind of competitive points of view, which will serve us well, whatever government is in. And those are things kind of enshrined in law and kind of practice that will last kind of decades, not years, which I think are incredibly helpful. Um, break even international, um, kind of EBITDA margin. What would that look like? I will give a sort of high level thought on this. Then people that that's kind of pass over just to say, look, there's a huge amount going on there with kind of a mixed effects of actually quite a few different businesses that we're growing. And so Think about us focusing on those individual markets and those customer opportunities, rather than focusing on the outcome of any given sort of break even moment or future margin. And where I kind of reference the foreign travel has is really lucrative and fantastic. Whereas on some of those other markets, we are going to need to invest in and there's a moment in time, like there is right now, clearly in Spain and in Italy, and over time, there will be in France. So that's just a high level for kind of how we position ourselves. Pete, you want to speak to any specifics?

yeah so so echo all of that um the the the the top line growth remains our goal um the fact that we're now talking about operating leverage i think shows the progress that we're making in these targeted uh this targeted tam that jody outlined earlier on um and then in terms of where this could get to that the uk is a really good benchmark for for for us as a well, for anyone, for a mature rail market. And so in the much longer term, that's what we're aiming at. And I say that even thinking and believing that there's more to go in the UK, right? We've taken a really good step forwards, but you've heard today we're still focused on top line growth. So I think there's more opportunity for leverage. But in the first instance, targeting the UK is where we want to get to with the domestic markets in international.

And then your final question around AI. absolutely an opportunity for us. I think it could potentially be a very significant opportunity. And just sort of the way I break this one down is into sort of three boxes. First of all is around how we're currently using machine learning. Then talk a bit about the chat GPTs of this world and future AI models, both for customers and then... internally within the organization. So look, we, as a just reference, have been building out our data organization and are kind of really building out this capability to deploy machine learning models to improve the product for our customers. And so just to kind of bring that to life, I talked about getting to 80%. of journeys where we can offer splits, which we know is a huge feature, but if you think about the real-time capability for a given search to be able to decide whether or not we can split that journey, that's a set of machine learning models working at scale, which is very powerful and gives us the advantage of the investments that we've made there. There's other models we've got which will look at a particular customer and go, which is the route we should be talking to them about that might be their next route, having looked at the behavior of all of our other customers and decided this is the route to go. And then more broadly, the sorts of things around personalization and our marketing require ultimately kind of machine learning models behind them at scale. And there's a series of things and pipelines of stuff that we're working on this month, next month, and you'll expect us to continue to iterate that. So I think that's really good, and I'm really pleased with what we're leveraging, getting value from our investment in data. Second point is this broader point on the likes of ChatGPT and other AI models. I think this is really exciting for us. And where do I think the big opportunity here is around potential inspiration for customers when they are planning. It's kind of at that level in the funnel as we go. And why will we benefit and be well positioned on this? I think when you look at the data sets we have, both in terms of activity of a very large customer, we sold 200 million tickets last year. We know a lot about what's happening in terms of customers throughout Europe. No one else has that diversity. Everyone else is very narrow within a given market type. So I think that's interesting. But beyond that, we've got these commercial agreements and these APIs with many, many different train operating businesses, train operating companies throughout Europe. And those are complex to maintain. But fundamentally, that's how you provide a ticket, how you do fulfillment and then how you do customer support. So leveraging those vertical capabilities. And being able to help customers at the top of the funnel is something I'm pretty interested in. We had a kind of hackathon with our tech team. A week or two ago, someone's stringing together these things and beginning to show the opportunity. And I think that comes from within. And so we will look to lead there. And I think a huge opportunity. And then, look, the answer to the third question is probably what every CEO is standing at the front. Of course, we're going to look at new tools that make our teams more effective. that our engineers more productive or our lawyers move quicker through things or customer support, be able to support more agents. Those things I think will naturally happen in coming months and years and we'll get into them. But look, net-net, I think it's a big opportunity for us. Thanks for the question.

Great. Just down here, sorry.

Maybe if you start on contactless ticketing, I mean, you have a big market share and longer distance travel, but relatively short or small market share and shorter travel in the UK. In the past, you've talked about not standing still when it comes with competing with a contactless. I mean, what are you looking at there and how can you try and grow your market share? Secondly, you mentioned a more business travel or modal shift from business customers. What do you see as a potential market opportunity and growth in the market from increased business travelers? and linked to that maybe within Europe, how would you see the market evolving? What's the increase in the total addressable market from journeys that can be converted from air to rail? And maybe finally, Germany is a market that no one really talks about anymore for obvious reasons. But is there any developments there as to why Germany might be any market that you might be able to gain market sharing in the future?

Sure. Great. Good set of questions. I'll jump in on the first one. can work through them. So look, long distance travel versus shorter distance travel. I think the first thing to call out is this point around regional travel and what just to underline that point in Italy, which is the same trend we've seen in the UK, which is a significant take up of customers who start by using us to book their long distance 35 plus percent off and use us as a value play maybe once, twice a year. And that's the sort of typical way in, find us on the web. And then they download the app because they want the barcode ticket. And then what's happening is customers are increasingly using this for more of the regional travel, which could be the trip to... a short trip to see friends or or shopping experience or begin to use that in their commute and we've seen a significant acceleration in italy that was up forex uh versus uh pre-covered so in a number of our markets we see that working out very well and we're going to be wiring on um circaneus which is the the regional and urban travel within spain in the coming months but which will bolster further the Spanish market. And then to come to the specific question as part of that around contact lesson pay as you go. And just as a sort of reminder, we talked six months ago about how we said there was essentially 150 million at risk here in terms of how we think about that market. And I'd say this, this is a great product for people in this room to move in and out of the city of London. It works well and you just tap and it's effortless. But it really doesn't work that well for anyone travelling. I'm sure you've tried. Travelling with a family, it really doesn't work. If you've got a railcard senior, a young person's railcard, it doesn't work. And it gives you a very low sense of control of your spend. And so with the expansion that's going on to the oval expansion in London, out to sort of Bedford, Cambridge, Farnborough, down to Brighton, there are some really expensive tickets going to be sort of like 50 pounds return. And that's a hell of a thing, frankly, to be tapping in and it taking 50 pounds out. So we believe ultimately in London and then as we think outside, there's opportunities for an app to be involved, to give you that sense of control, to be able to upload your rail card, buy your kid tickets. The so that's interesting and I characterize our step here, having gone from kind of research to development, but I still think this is something that is a number of years away. A because the technology has to be developed, but be because of in terms of the aims of government and where that was it's very high on their list of something they want to do to take it out into the regions. There's quite a lot that has to be worked through because often it's devolved regional powers that are involved here. There's the partnership with the private sector and there's work going on in terms of like gates and stuff to do there. So look, overall, I characterize that as a really, as I said before, a really interesting opportunity that we are innovating in, but various things have to align before it happens. And I don't expect it to kind of go beyond that oval. I don't know, probably three, four, maybe five years out is how I characterize that one. Modal shift for the business market and the market opportunity. I think if I just speak to the highest level modal shift, a lot of these markets seem to break down if they're sort of characterized by external data. Madrid-Barcelona is a good example here. It was a third rail, a third air, a third road. And you can kind of imagine the value conscious in the roads and the business travel in air. And you see that number very quickly accelerate towards rail. As you get the quick service and the high quality kind of rail providers like Irio and the prices come down just a little bit and the high speed route built, the air comes to rail. And then as the low cost entrants come in, like Wego and Avlo, you see that change and the coach trips and the buses, sorry, and the cars begin to move towards rail. You know, we're seeing nine euro price points between Madrid and Barcelona on what used to be maybe 80, 90 euros. So there's real opportunity in both directions. So ultimately, if you look at what happened in Italy, you are seeing the cancellations of air services essentially between Rome and Milan. They only really exist, I think, for connecting flights at this point, nevermind any legislation that may come through. So I think there's significant opportunity for substitution, particularly on business. And then we obviously, and I won't go through all of it now, but we've got a series of different relationships and increasingly connecting up to all of the different business players who are getting interested in this idea of alternate brands, where historically they've just gone for the incumbent. I think, and then Germany, and then Pete, you should tell me if I've missed anything as we've gone through this. And he develops in Germany. So look, that is, of course, a really interesting market. For us, it's similar scale to France and the UK. It's, you know, as we've said before, right, and we're on record, Deutsche Bahn have been anti-competitive in their behavior for a number of reasons. We don't have a commission rate that we can yet speak to. This has been picked up by the regulatory environment in Germany, the BKTAR. And I would say that we are still a few months away from really understanding the conclusions of that. I think the conversation and the intensity of those has gone up a level. These things take years and then they sort of move into months, and then it gets to weeks. And I think we're in the month stage now. And look, we're just going to have to see where that lands. And look, if it lands in a favorable position, I think that opens up Germany for the beginning of our playbook. But we've talked through what the phases have to look like before we can really invest in the kind of top level, specific product innovation or brand. But that's how we think about Germany. Definitely, as you look over the next five to 10 years, I see it as a very exciting marketplace. Thanks for the questions.

Great I think we've got time for one last question if it's if there's one out there, or we'll done.

Andrew hi yeah we've got a question from Andrew Ross at Barclays who couldn't be here today, unfortunately. He asked of the 4 billion rail market in Italy, the 2 billion rail market in Spain, what do you think could be taken by aggregators such as train line over say the next five years, and then he says the same question for the 4 billion foreign travel market.

sure so look i don't think we'll guide the specifics other than to say we've got a uk um uh kind of model here right and you you can appreciate the the way that we've worked through that so i don't think it's crazy to be thinking about where we were pre-covered um in the uk in the coming years um in the next few years in those domestic markets and look it will depend on a few different things particularly in italy there's um uh we have we go sncf we go have a stated intention to come into 2026 and depending on the scale and the timing of that that could imagine us accelerating um our penetration within the italian markets those factors will weigh and then look on foreign travel i think that market could expand over a period of time and we talked about some of the other players there and the fact that we haven't really rolled out what will be a kind of new playbook in terms of innovation to support not just US but also Asian travel. So I'm relatively bullish on the opportunity. So look, thank you very much for a great set of questions. Let me kind of close things out. And thanks for joining us again today. As Pete and I have said, we've delivered strong financial performance this year. Pleased to provide guidance for the year ahead. We have clear strategic priorities and are making significant progress, both in the UK and international. And we remain as positive ever about the opportunities that lie ahead. So thank you very much.