Trainline Plc

Good morning, everyone. Thank you for joining us today for our results presentation. It's great to be here. I'm Jody Ford, CEO of Trainline, and I'm joined by Pete Wood, our CFO. Let's first go through the disclaimer. On to the agenda for today. I'll give an introduction, briefly discussing the progress we've made this year and updating you on the regulatory backdrop in the UK. Pete will talk you through our financial performance, I'll update you on how we're progressing against our strategic priorities, and we'll finish with an overview of our AI strategy, which is becoming a core part of how we compete. After that, we'll open up to the floor for questions. Trainline is Europe's number one rail app, built on a market-leading customer experience. Our core purpose is to empower greener travel choices, and each of these three business units is a leader in its market segment with clear opportunities to scale. In the UK, we are the number one traveler. We are helping to grow the rail market and increasing the value of our 18 million customer base. In international, we are the largest rail aggregator in Europe. We will deploy our proven aggregation playbook across France, Italy, and Spain. Markets expected to be worth 23 billion euros by 2030, including 12 billion on aggregated high-speed routes. And in Trainline Solutions, we have the leading B2B rail platform across the UK and Europe, which now generates over a billion pounds of net ticket sales. We plan to grow further into the 6 billion euro business travel opportunity in European rail. This year, we've made strong progress in each of our business units. In the UK, we've delivered growth while strengthening customer engagement through new rail disruption features and digital railcars. In international, our aggregation playbook drove positive momentum in the southeast France following Trinicalia's expansion. And in train and solutions, B2B sales grew strongly, particularly in Europe. We delivered robust net ticket sales and revenues, as well as double-digit growth in profitability. And we've delivered strong EPS growth, further accelerated by ongoing share buyback. Before I hand over to Pete, let me update you on the UK regulatory and industry backdrop. A key focus for investors is the UK government's intention to launch GBR online retail. It's consolidated app and website, as well as the design of the future retail market. In November, the government published the output of its GBR consultation. This included plans to develop, for the first time, a code of practice, owned and managed by the independent regulator, the ORR. This will codify how GBR should interact with third-party retailers. In December, the government published pre-tender documentation outlining procurement plans for the launch of GBR online retail. It included a stated aim to award a contract by January 2027. However, the tender process is yet to begin. We'll engage positively with both processes and maintain our assertive stance with government to live up on its commitment to a fair, open and competitive retail market. Today, there are instances where operators self-preference their own retail channels. Through our sustained engagement, we are making progress to remove these instances. The government has confirmed our access to all temporary fares and granted our ability to advertise in stations and on trains. Furthermore, in March, they announced that once GBR is established, passengers will be able to train delay repay compensation from wherever they purchase their ticket, including through Trainline. This was a meaningful step forward. However, it will take some time for this change to come into effect, so delay repay remains a pain point for our customers. Similarly, we remain unable to offer customers access to train operator loyalty schemes. It continues to engage government stakeholders and the wider industry to remove examples where we are discriminated against. We're also engaging with the industry to protect and grow the UK rail market. We're trialling our digital pay-as-you-go technology with East Midlands Railway. Our technology is performing strongly and we've received excellent customer feedback. The trial is due to end in the summer and we'll look to update you thereafter. We continue to take steps to protect industry revenue by blocking fraudulent processes and refunds, and we're sharing data with operators to enhance their revenue protection while assisting their forward prevention measures. And with that, I'll hand over to Pete to talk to our financial performance. Thanks, Jody. Good morning, everyone. Before I step into the financial performance for the group, let's briefly unpack the performance of each of our business units. Starting first with UK consumer, net ticket sales grew 6% to 4.1 billion. This reflected market recovery within the commuter segment in the first half, as well as growth in leisure travel sales. Growth slowed in the second half, reflecting the impact of Project Oval, as well as operators self-preferencing their own retail channels with features such as one-click delivery pay. Coming next to international, where we maintained a disciplined focus on our core markets. Net ticket sales grew 3% to 1.1 billion. We saw strong momentum on newly aggregated routes in Southeast France. Growth in Spain moderated, reflecting a more balanced approach to growth and profitability, as well as a series of tragic rail accidents, the impact of which is ongoing. In foreign travel, growth re-accelerated to 5% in the second half as we lapped the headwind from changes to Google's search results page. As a reminder, Google made a series of changes that suppressed organic results while increasing the prominence of paid ads. This disproportionately affected foreign travel sales, which relied more heavily on web acquisition. Growth rates varied across our international markets as we prioritized marketing investments en route with carrier competition. Starting with Spain and Southeast France, which together represent 22% of international net ticket sales, growth was up 9%. Elsewhere in France and in Italy, growth was more modest, up 2%. These markets account for around two-thirds of international net ticket sales and are expected to benefit from the expansion of carrier competition in the coming years. Germany and the rest of Europe declined 6% as we prioritized our core markets with these regions representing longer-term growth opportunities. Overall, our international business is becoming increasingly profitable. It's benefiting from higher margin foreign travel, strong growth in ancillary revenue, and disciplined marketing investments, including in Spain, as we balance growth and profitabilities. Two years ago, our international business broke even on a pre-transaction fee basis. And in the year ahead, we expect international to break even on a headline post-transaction fee basis. Now turning to train line solutions, net ticket sales grew 14% to 1.1 billion. Growth was led by B2B distribution, which grew 36%. This reflected new and expanding travel management company partnerships. It was particularly evident in Europe, where B2B sales through our global API grew 58%. Sales growth was partly offset by the loss of Trainline's white-label contract with UK rail operator Cross Country, and we expect the loss of our ScotRail contract this year, as they seek a different partnership to better align their online and offline sales. In the long run, the rail industry anticipates that operator apps and websites will be replaced by GBR online retail. Bringing this together, group net ticket sales grew 7% to $6.3 billion. Revenue grew 2% to $453 million, given the reduction in the UK commission rate. Gross profit was up 6% to $374 million, outpacing revenue growth. This reflected lower cost of sales, given step reductions in UK industry costs, and group-wide efficiency savings in customer service and payment processing. We continue to drive strong cost discipline across the business. Our cost-to-income ratio reduced four points to 70%. This represents operating leverage, cost optimization in the prior year, and ongoing cost discipline. Importantly, these efficiencies have more than offset the impact of the UK commission rate reduction. As a result, adjusted EBITDA grew 11% to $177. growth and landing within our previously upgraded guidance range. We continue to execute our share buyback program at pace, supported by a strong cash generation. Since September 2023, we have repurchased £294 million of our shares, equivalent to 23% of issued share capital. Upon completion of our current £150 million programme, we will have returned a total of £350 million to shareholders over a three-year period. Together, with strong earnings growth, this has driven a significant increase in earnings per share. EPS has more than quadrupled over the past three years, with a compound annual growth rate of 62%. Altogether, I am pleased with our performance, particularly the strong earnings growth and cash generation. Looking forward, we see opportunities for growth alongside some near-term headwinds. And in the year ahead, we expect net ticket sales of around 6.2 to 6.45 billion, revenue of around 440 to 455 million, and EBITDA of around 2.9% of net ticket sales, which would represent a 10 basis point increase, reflecting the benefits of international consumer breaking even. Thank you, and I'll now hand back to Jodie. Thanks, Pete. Let's now talk about the progress we're making against our strategic priorities. We are the UK's number one travel app. Our app is designed to meet the everyday needs of rail users. Rail is a high-frequency mode of transport, but booking can be complicated, and travelers often face journey disruption. Our app provides end-to-end booking flow and travel companion features that support customers on the go. It has become central to our customer experience and our core customer touchpoint. In fact, the app is used for over 90% of our customer transactions in the UK. Our UK customer flywheel is strengthening the competitive position of our app. It focuses on unlocking value, solving customer needs, building loyalty, and increasing engagement. Let's look at some examples from the year. In terms of solving customer needs, this year we launched AI power disruption features in the app, helping customers navigate the rail network. They include travel forecast, our AI travel assistance, and delay repay notifications. We supported the launch with a targeted brand campaign highlighting a better way to train for our customers. I'll talk more about these features later in the AI section. Trainline has cultivated strong brand affinity with customers over many years. We are the most trusted brand in UK rail retailing, and our brand consideration significantly outperforms all other rail retailers. This has supported Trainline's continued growth in the UK, even in the face of strong competition. And it's becoming increasingly important in an AI-driven search world. We are scaling in-app rail cards as a way to drive customer engagement. We've enhanced upselling within the booking flow, highlighting to customers how much they could save by buying a rail card alongside their ticket. And we've improved the renewals process too. As a result, we now have 2.7 million digital railcard users, up 16%. We're gaining good traction with younger cohorts. Our share of the 16 to 30-year-old railcard segment has now increased to 45%. This is driving greater customer engagement, with railcard users transacting four times more often than non-railcard holders. We increasingly focus on growing our ancillary products and services, This year, we delivered strong double-digit growth in hotel bookings and insurance sales, having enhanced their prominence within the app. This includes visually engaging placements as well as improved benefit-led copy for our insurance products. We'll continue to broaden our ancillary products, testing adjacent services like car hire and investing behind those we see resonating with our customers. We are taking steps to enhance advertisements within the app. We are shifting from traditional ad placements to integrated, targeted, and contextual advertising through the customer journey. This improves relevance for our customers and effectiveness for our partners. Now, turning to international, where we are positioning ourselves as the aggregator of choice ahead of the next wave of liberalization, increasing our focus on foreign travel, and driving improved profitability. starting first with Southeast France, where Trenitalia significantly expanded their services this year. As the region liberalized, we rolled out our aggregation playbook. We leveraged our highly rated mobile app to showcase all the fares from high-speed carriers. We launched Sponsored Search, a paid service that allows carriers to increase their prominence within our search function. And we deployed features to unlock value for customers, like Top Combo, which allow customers to stitch together different carriers for return and multi-leg journeys. We've also resumed brand marketing in Southeast France. Through innovative campaigns and sponsorship deals, we've increased brand awareness to 50% across Paris, Lyon, and Marseille. As a result, we've grown net ticket sales by 26% in the region. Our success in Southeast France builds on the aggregation playbook that we refined in Spain over recent years. As a result of our investment, we significantly scaled net ticket sales. This has given us considerable lead versus other market aggregators. While we continue to see runway for further growth in Spain, this year we evolved our approach to strike more of a balance between growth and profitability. We are normalizing brand investment while placing more emphasis upon customer engagement and monetization. As a result, Spain's EBITDA took a big step towards break-even in the second half of the year prior to recent rail disruptions. Spain and Southeast France represented the first wave of carrier competition in Europe. We're now preparing for the second wave, which will sweep across Italy and the rest of France. This is set to commence from late 27, with FNCS entry into Italy, followed by several new entrants launching in France from 2028 onwards. This includes Velva, the Tram and the Lisbon, who are due to launch domestic services, and Trinitalia and Virgin Trains, who are due to launch services between London and Paris. The second wave of carrier competition in Europe will open a considerably larger market for train line over the coming years. By 2030, the French and Italian rail markets are set to be worth around €20 billion, €10 billion of which will be from aggregated high-speed routes. And the market opportunity for newly aggregated routes may expand further. Newsbow last week suggested that from 2028, Italian operator Italo are planning to launch high-speed services in Germany, one of the largest rail markets in Europe. Foreign travel represents a large and attractive broker opportunity. It comprises global customers from the US, UK, and the rest of the world traveling in Europe by rail alongside intra-EU cross-border travel. The foreign travel market in Europe today is estimated to be around €4 billion, so offers significant headroom of growth. Foreign travel provides favorable economics with a less quite elastic customer base and a greater skew towards long-distance travel. It's also a high-margin business, generating double-digit revenue takeaways, given higher tax rates for ancillary products, and carried willing to pay higher commission rates for inbound customs. As a result, foreign travel is a major contributor towards international profitability. We see signals of generative AI playing an increasing role for foreign travel, given its ability to inspire travel plans and compress research time. Trainline is the early market leader in geo, which currently contributes around 3% of new foreign travel customers. Foreign travel is an area of competitive advantage for Trainline. We can provide combined broad inventory coverage, including recently wiring on Poland and Ireland, alongside helpful travel content to inspire customers' travel plans. And that's delivered through our market-leading user experience, offering a wide range of features tailored to international travelers, such as multi-language support, flexible payment options, and consistent post-sale support. So foreign travelers can plan, vote, and manage their journey seamlessly and with confidence. Moving on to Trainline Solutions, our fastest-growing business unit, which now generates over £1 billion in net ticket sales. Business travel is our main growth opportunity here and represents over 50% of train line solution sales. This is primarily generated through our B2B distribution business and our own branded channels. B2B distribution allows travel management companies and other business travel platforms to offer rail tickets to their respective customers. We increasingly support our partners to sell tickets from multiple European couriers as well, diversifying ourselves into a truly international business. They can do all through one simple seamless connection, our global API, rather than tackle the complexity of connecting to multiple different carriers. As a result, international B2B distribution grew 58%. Trainline-branded business travel also performed well. We invested to improve the experience for users and client companies over the past few years and now serve over 35,000 business customer clients, an increase of 47% year-on-year. Let's now move on to AI, which is rapidly becoming a core capability for Trainline, powering our product, our distribution, and how we operate. Before we start, it's worth spending a minute discussing the barriers that AI sits into mediation. Rail retailing is inherently complex. Customers expect a simple, consistent, and reliable user experience with end-to-end transaction capability from search to purchase to post sales. and that's across multiple carriers with all fares, ticket types, and rail cards available. With no GDF for rail, online retailers must deeply integrate into a wide array of carrier APIs that offer full functionality. Those carrier APIs are non-public, so the retailer needs commercial relationships and accreditations with those carriers supported by bonding obligations. This complexity creates a clear barrier to disintermediation. And that's exacerbated by the relatively low commission rates offered by carrier partners. In that context, we see AI as less of a threat, more of an opportunity. And we've been on the front foot for a number of years, building our foundational investment in data and our broad application of machine learning. Our strategy centers on bringing AI capabilities to rail around three core areas. AI-powered products and features, extending distribution through emerging AI channels, and AI-enabled acceleration across the group. Let's discuss each area in turn. We increasingly use AI together with industry and first-party data to enhance the user experience of our app. This is reflected in our new rail disruption features, which are underpinned by our scalable multi-agent AI systems. To bring our AI disruption features to life, let's take the example of Callum, a train line customer who has booked a 9.30 a.m. LNER train from London to Edinburgh. Unfortunately, there is disruption elsewhere on the rail network. Our travel forecast feature notified Callum that his journey is likely to be affected. Estimating his train will arrive in Edinburgh an hour later than scheduled. This feature is powered by our proprietary algorithms trained on complex datasets. So as a trainline customer, Callum gets more accurate real-time insights. Travel Forecast also provides a map view interface powered by our Signalbox technology so customers can see the location of their train in real-time. Since launch, Travel Forecast has delivered updates to over 3 million users. Given the expensive delay, Callum consults the AI Travel Assistant, our in-app conversational support feature. It provides real-time travel advice, giving Callum options for alternative trains he can take. It offers agentic refund processing, allowing Callum to get his money back at the click of a button. Our AI Assistant has handled over 2 million conversations since launch, reducing workloads for our customer service teams. Callum decides to stick with his original booking. As predicted, his train arrives in Edinburgh an hour late and Callum receives a delay repay notification. Trainline's AI system identifies the delay, calculates he's entitled to compensation of £37, and provides a punch-out for LNER's website to complete the claim. Since launch, we've redirected over a million customers to complete their claims. Moving on to emerging AI channels, which present a new way for Trainline to attract customers and drive incremental demand. We've made a strong start, and we are showing clear leadership in geo. In fact, we're the most cited rail app in Google AI search in all core markets, as well as in ChatGPT across all but one core market. This reflects our strength in SEO and the power of our brand. Building on this progress, we've recently integrated the Trainline app within ChatGPT. Users can now seamlessly search for routes and compare options, all within a conversational interface, before completing their booking with Trainline. While we've made good early progress, GA still represents relatively low levels of sales traffic, making up less than 1% of new customers within international. As mentioned earlier, though, it's playing more of a role in foreign traffic. Moving on to AI-enabled acceleration. driving faster execution, greater agility, and more scalable innovation across the group. Our software development teams increasingly use AI to code, as well as to accelerate auxiliary tasks like updating documentation, generating tests, and reviewing code. Their focus is increasingly shifting towards AI agents, moving from experimentation to scaling agent capabilities. In marketing, AI agents now generate around 20% of our in-house studio content, creating and applying imagery and copywriting that's aligned to train our brand. This enables us to scale the production of performance marketing ads to 19 times our previous output using traditional design methods. And in customer service, we'll soon roll out Voice AI in partnership with 11 labs to progressively automate inquiry handlings. We've also introduced Zendesk, a new CRM system providing AI agent tools and language translation. Taking all of this together, AI is enhancing our product, expanding our distribution, and increasing the velocity at which we execute. Before we open the floor for questions, let me summarize the key takeaways from today's presentation. This year, we have delivered a robust operating performance, double-digit growth in EBITDA, and a significant increase in earnings per share. We've maintained our assertive stance with the UK government to deliver on their commitment to a fair, open, and competitive retail market. And we've made strong progress against our strategic priorities. In UK Consumer, we are strengthening our app proposition while deepening engagement with our 18 million customers. In International Consumer, we are positioning ourselves as the aggregator of choice ahead of the next wave of liberalization, increasing our focus on foreign travel, and driving improved profitability with the business set to break even this year. And in train line solutions, we continue to grow business travel sales within B2B distribution, enabling partners to expand their rail offering across Europe. Finally, we're increasingly leveraging AI to power our products and services, extend our distribution, and accelerate our execution. Thank you very much for listening. I'll now open the floor for questions. Raise your hand if you'd like to ask, or when asking, please state your name and your organization.

Thank you.

Good morning. Thanks. Good morning. It's Tim Ramskill from Bank of America. I'm going to try and tackle three, if that's okay. So just firstly, in terms of the guidance for 2027, and specifically with regards to NTS, there's obviously a lot of moving parts, whether that's overall self-preferencing kind of dynamics. I guess if you think about it long term, you've pretty much always grown ahead of the market. But it's likely that in 2027, that might not be the case. So just your observations around how much of that kind of guidance you think is a reflection of known factors like oval versus kind of that slippage in market share. Secondly, in terms of international, obviously very encouraging to see the guidance around breakeven. What do you think the key drivers of that are going to be to get from the, you know, 11 million of loss to flat? How much of that's likely to be marketing expenses or other cost actions versus growth in revenues? And then thirdly, you obviously referenced the kind of top combo product in international, which I guess is effectively the same as split-save. Just interested to know, are the kind of consumer savings opportunities kind of very similar to what we see here in the UK, or do they differ? Great. Thank you very much for the questions. I think we'll be tackling three of these ones. Pete, do you want to start with the guidance up front, and then I'll take the other two? Yes, certainly. Inevitably, UK consumer is a significant driver in... nearer term headwinds that will affect this year. And we've been talking about them for a while, but they unwind over time. So the expansion of Oval will eventually cease. There's a little bit more to go. We're halfway through also. The rail fares have been frozen this year. Our base case is that that won't extend beyond March 2027. So that will, again, provide some uplift going forward. And then finally, the self-preferencing. I think the delay repay announcement that we had a month ago or so is clearly a good step forward. We don't have that API available today, so we aren't able to wire it in. But the direction of intent is clear, and I do think we will resolve these issues that we've flagged. So let those all unwind. And then, you know, looking beyond that, there will be a moment when we are seeing the – GBR shutting down other websites and apps, and that will present an opportunity for us to acquire customers that are then in the market. And, of course, with digital pay-as-you-go, we've also created a seed here that could flourish as well. So in the longer term, I do see opportunity for further growth, but these headwinds remain with us in the meantime. great thanks pete and just to kind of add there i mean in terms of where the question is going absolutely you see these things um over the next couple of years that they've lapped through and then we're pretty well positioned and going forward vis-a-vis the competition and we're sort of picking that up we don't see particular growth from those third-party players in terms of the market and our sort of primary competition effectively remains the the 14 different top operators where a number of those, as we've discussed, have got this self-preferencing, which will be phased out and then we'll be competing on a kind of level playing field with them. Coming to your second question on international profitability, look, I think the drivers there really have been this very strong growth we have seen over the last three or four years, which is great. As we look forward there, Part of that story is foreign travel, which continues to be a nice growth driver, temporarily impacted by what's going on in the kind of Middle East right now. But that's a relatively small part. But we see the kind of appetite for cross-border travel increasing, and you can see new services launching. And we see the opportunity there, which helps drive profitability going forward as scale does. I mean, we're going on to the marketing point here. I think the way to sort of frame this around Spain is we have a launch period. And as a reminder, we were starting from zero brand awareness in Spain. And that ultimately... meant that we had to come out with a strong kind of above the line campaign supported by the usual below the line to get our brand awareness at the point that we had all operators launching on all routes over a pretty short period of time and having kind of worked through that we're now by a distance the number one third party player and we've moved to this kind of position of optimization of that spend having got our leadership position In France, Italy, we already have that leadership position. We shared strong brand awareness, and we will invest going forward as it makes sense in a kind of hub and spoke way. In France, of course, we'll invest in Paris, but we'll also invest in the cities where the new operators are going, for example, Bordeaux when Velva launches. But that will be much more targeted than it was in Spain where we compared the whole country at once. And so we will kind of keep this thing around that. If really big opportunities arise, we said before, we would lean in behind those as it required. But for now, we've kind of got this transition year where we think we're in pretty good shape. And then to your question, the final question on top combo versus split save in the UK. Yeah, they're slightly different in that SplitSafe is really arbitraging, if you like, the UK rail pricing system. TopCombo is really doing kind of a level above that by taking two different operators and putting those pricing together. But you're right, the spirit is helping the customer find value through the inherent complexity of rail. And the more carriers that launch, the more of those kind of opportunities become available, and the more rail cards we wire on in these markets and the more we're able to kind of support an advanced purchase and help customers understand how to navigate, the more we see value for growth in those markets. So, yes, and we keep finding those new areas to invest behind. And bringing TopCombat to life has been one of the kind of compelling points for customers. Thanks for the questions.

Get the mic turned on again, Mike.

I just want to I recognise you want to kind of keep options open in terms of what comes next, but are you confident that once you get to breakeven, you'll stay above that level? I think our position is in the current setup, we would say that's right. But if a new opportunity comes in France and we see multiple carriers launch and it makes sense in that year to kind of go harder with top-line marketing, then we would go and invest behind those. We're not constrained by that. But the underlying market, which I think is where the underlying business where the question is going, we feel good about where that's headed. Great. Gareth, please.

Thank you. Morning, Gareth. Just following on really from the guidance question again and trying to dig a little more on self-preferencing. If we were to sort of hit the bottom end of the guidance range on revenue, does that assume a meaningful impact kind of pick up in the impact of self-preferencing and just trying to really get a context of how big a headway you're facing from that and what your sort of fear is there. And then secondly, just on white label, the pre-close flag, a couple of white labels sort of rolling off. Can you just talk around any potential timeline for other roll-offs? or possible roll-offs, and in the international white label, what kind of opportunity, if any, are you seeing there at the moment? Pete, do you want to pick up first?

As ever, at the group level, there are a number of factors for the guidance range. Self-preferencing is one moving part, but there are others. If I think about the foreign travel impact that we are seeing, it's unclear at the moment how the macro backdrop will evolve and what impact that might be. I think we've got first-order effects, which are about travel plans and their disruption, particularly from travelers coming from east towards west. But, you know, if there are impacts on jet fuel availability and prices, then that could extend to Western or South American travelers into Europe as well. And then Spain is another moving part here. You know, we had after these accidents a significant dip in demand. That has somewhat recovered and moderated, but it's still year-on-year negative. And so that's exactly how that unfolds and rolls forward. So it's not just the UK that is driving this. There are other factors as well. jurisprudently you want to speak to the white label yeah certainly um that we've had um these two white label contracts each with their individual backdrop uh one uh was around the group owning group wanting to consolidate their supply base uh and then scott rail as i said are looking to consolidate their online and offline and wanting a different partnership for that Our base case on the go-forwards is that these will run until the point at which the government turns off these websites and apps. And at that point, of course, the contract will cease. So, yeah, that's how I am thinking about it. And then internationally... really the same sort of size operators that we have in the UK, which we're uniquely positioned for, so that's a priority. However, I would say we are seeing within solutions business very strong demand, as I outlined in the speech, around our broader distribution business, and that is ramping up very, very nicely with quite a lot stacked back that we can see over the next few years. This is not kind of a one-off coming through as further developments Businesses will integrate and then we grow them once they are integrated. Next question. Great. Ed? Thank you. Thank you, Ed Young from Walker Stanley.

Two questions. First, sorry to labour on NCS growth guidance. On international, you mentioned there the moving part.

But I wonder if you could be specific about the assumptions you've embedded in recovery in Spain and in international travel, given you mentioned that some of those lines just reopened.

The impact has been significant. International is obviously uncertainty in terms of forecasting. So are you expecting this to recover this year fully, within the year? How are you thinking about it within the guidance construct? And then second of all, with digital pay to go, you have probably given the most complex trial area, how is that going? Can you give some colour on it? And how should we think about the next steps following this round of trials ending in the summer?

Great. I'll take the second one first and give some thoughts on the first and pass the feet. Digital Pay As You Go trial is performing very well. We've been really impressed with the technology and kind of proven to ourselves and the industry that we can stand up. And the feedback from customers, from the media, and from the kind of industry slash government has been really encouraging. I think we're putting the government in a place now where they can understand what this technology can do. It's really groundbreaking. And for them to begin to work through how they would want to take it forward, look, I don't think it'd be crazy to expect the trial potentially would continue as the government think through how it might want to expand it. So we're feeling good there. We'll kind of come back post-trial and explain where we've got to on that. And then let me give you the high level on kind of international and recovery impeachments between specific points on guidance. Spain, obviously, those tragic incidents, we saw a very significant jump off in the sort of weeks after that. And we're now seeing that still down, but more kind of contained. And so I would expect, you know, to see a full recovery within, you know, probably by the end of the year. But it's obviously kind of hard to gauge that. Just to speak to the broader point on international travel, we obviously don't know what the inbound piece looks like. There's a number of scenarios, and I think Pete's folks who are coming within the JAWS got to be able to handle those of guidance. But underlying, it's very encouraging. We spoke... kind of a year or so ago about some of the headwinds we have within Google Search. We are seeing those headwinds have effectively stopped and to some degree a little bit of a tailwind there. And then we spoke to what that looks like within the broader LLM platform and we're seeing just a little bit of goodness there coming through and it speaks to our opportunity there if they do indeed grow going forward. Pete, do you want to add anything on the kind of guidance specific? Only really to frame this somewhat as a transitionary year. You heard Jodie talk about, you know, wave one of aggregation has completed. There is a wave two on the horizon, and it will come. The trains are bought and the safety certificates are being processed, if you like. But at the moment, it's adjusting our playbook for the landscape. We find pulling back a little bit, focusing a bit more on profitability, and, of course, there's a balance on growth there too.

Great. Alistair? Thanks. Alistair. A couple for me. Obviously you talked about the expansion of the Auditor's Own with Project Oval. I think there's been some indications that TFL might be looking at introducing some barcodes. Talk about the opportunity potentially for you to get into the Auditor's Own and how you might think about the opportunity that you'd have if that were to happen. And then secondly, you touched on it in a couple of areas, in terms of ancillaries and really strong growth in business clients. How do you think about the future runway for both those areas? Yep, thank you.

Look, I think it's early days to speculate on barcodes in Oval, but we kind of noticed that as well. I think we think the future is ultimately the kind of digital pay-as-you-go scheme, and if those – state lines ultimately allow barcode then that would realize or allow the realization of that vision is probably quite a long way before that will actually happen and even the amount of capex spend on on pfl's part so well especially now but i do think if we look at the future of what this could hold that's a that's an important part of the jigsaw uh to come through so it's good to see that it's being um talked about And then I think on the ancillary products, I'll give quick thoughts and pass the piece. I think the high level what we're seeing is that we have 18 million customers in the UK and they are interested in buying other things and that's what we've proved to ourselves over the last couple of years. Hotels, insurance are the obvious places and we're seeing that we're getting really good kind of endemic ads and the quality of the ad partners that we've got now is really premium top tier. And they are, you know, we need to, as ever, this is a playbook that others have done over the last 10 plus years. We need to develop the placements and the targeting that allow them to be able to realize their campaigns and allows us to push up the value we get from them. And so we're encouraged by where that goes. So that's very encouraging. I know, Pete, you want to speak to any specifics on businesses more broadly? Yeah, the ancillary is certainly an opportunity, even within, say, insurance, like fine-tuning, exploring what other products might work. We are testing out this idea of a train line flex product, which combines the tickets that are available with some flexibility and insurance around it and how we package that up. So I still think there's to do in these areas and further to expand. So, yeah, it's interesting to explore that. And then you also asked about the kind of business customer and how we serve them. I think their challenges are much the same as a consumer traveler, and we continue to explore how we can best solve some of those. At the moment, the API is principally around the transaction and delivering a ticket, but that doesn't mean that Over time, we can't package up other aspects of our proposition in some way or other and to find ways to serve them. And in particular in Europe, you know, the growth is fundamentally driven by the fragmentation of the supply and trying to draw that together. And again, as a traveler, not only to buy your ticket, there are opportunities to explore that. So, yeah, I think that's an interesting customer set to further explore.

Lara in the middle.

Thank you. Morning, it's Larissa from J.P. Morgan. I also just wanted to come back to the guidance and the outlook on profitability. Obviously, we're getting more upgrades, which is driven by international, but it feels like there's a small inherent downgrade in the UK consumer profitability outlook. So could we just talk a bit about incremental costs that you're expecting to see from costs around GDR, public affairs there? Are we likely to see a step up in marketing in the UK as we move to GDR standing? So just moving past that, I think would be helpful. And then maybe one just on capital allocation. I know we still have some way to go on the buyback, 150% share buyback, but maybe on a 12 to 18 month view, how are you thinking about organic investment or business or any inorganic opportunities to start to think about? Otherwise, could we expect to see a reload on the share buyback from the interim perspective?

Thank you. Great. Thanks for the question. Let me sort of talk more broadly about GDR and then we can pick up a specific guidance and capital allocation. In terms of timelines of what GVR, how we expect that to play out, I think from the kind of app point of view or the delivery of that, the procurement process hasn't started yet. So it begins to look ambitious that that would be awarded before spring 27, perhaps, and then for whoever wins it to actually bring the GVR app to life. It's probably... early 28, probably the earliest, and these things have a habit of certain, and then we expect there to be dual running. If there's 14 different TOCATs that need to be consolidated, that's likely to happen through 28. We're obviously, we've got lots of time here. It's very well understood in terms of the opportunity we see and where you're going on the marketing question. At the right moment, yes, if we feel it's appropriate, we potentially will spend up to acquire what we think is quite a potentially uplifting in number of customers, which is pretty interesting to us because the old app will turn off and the new app will come on. So we'll look pretty hard at that and we've got time to prepare for it. Did you want to speak to any specific guidance points in the capital allocation? Yeah, no, I think you've got the right ingredients there. We are certainly taking a step forward in profitability and international. That supports the group overall. Our cost optimization program that we delivered 18 months ago, I guess now, that's washed through. But yes, there are some additional costs. This is a once-in-a-generation shift for GVR, really changing the backdrop of the UK industry. And, you know, it's important that we are appropriately advised as we engage with the government and other stakeholders through this transition. So, you know, those costs, there were some last year, there will be some this year. At some point, it will drop away and there will be a kind of a new landscape that will be there and we'll take the benefit when we reach that point. And then you asked about capital allocation as well. Certainly on the organic side, we will ensure that we're well-funded. We have the cash flow to do this. And as Jodie articulated, there will be moments potentially in the UK, potentially in international where we'll lean further in on the marketing side. From an inorganic perspective, we do the homework. There aren't that many opportunities out there, though, and so not expecting – won't necessarily see that much there, but we will keep that under review. And thereafter, you know, returning capital to shareholders, we've really favored the buyback to date. We like the flexibility it offers. Nothing new to announce right now. I expect this program to run through to September, all other things being equal, and we'll provide more colour then. Hi, Sean at the back.

Morning, everyone.

Sean Keely from Fendi Librem. Thank you for taking questions, Jodie and Pete. I've got just a couple today. First of all, Jodie, you mentioned Ithalo essentially launching in Germany from 2028. I was wondering if you could just remind us of what the landscape currently looks like in Germany. I think you had that legal case in the past with Deutsche Bahn. I'd just appreciate an update on how things stand there. Secondly, I think at the back of or partway through the R&S, you talked about the proposed mobility package in Europe and the This may force talks to sell each other's cross-border tickets, and I appreciate it's all really nebulous at this stage. It's just a proposal from the European Commission. You've got the tripartite, lots of different bodies that get to play in. Can you just maybe give us a bit more colour on how you're expecting that to unfold, timeline and... maybe even if you have any detail on what level of support that currently has for the other bodies as well. And then thirdly, this is probably a small question, I think it's the first time UK Railfares have been frozen in some time. Are you guys, or have you seen so far any level of volume simulation from that price freeze?

I appreciate that. The price just hasn't changed, but would you normally expect a small drop-off or something like that? I'm just interested on that. Thank you.

Sure. Thanks for all of the questions there. So starting with Italo in Germany, I think that's helpful speculation is the way I'd frame it at the moment. Germany is a pretty interesting rail market for us. It's the same scale. It's not slightly larger than the UK and France. As we said, thanks. Italy and France are very much the next three years where we're preparing for. I'd be surprised if Italo are able to actually launch a train in 2028. Great if they can, and we can support that. As a reminder, in the German market, we don't have the brand awareness that we do in France or Italy or now Spain. However, we do have significant inbound traffic, which is our sort of secret sauce, if you like, of working with the operators because we aggregate that from all the other markets in Europe and around the world. And we obviously also have inbound B2B. And these are the sort of pump-priming customers that make our entry into those sorts of markets pretty interesting for the operators and ourselves to start with. And over time, should that happen in Germany, which I absolutely expect it will, at some point we'd be able to deploy our sort of playbook on marketing and so forth. And so I think I take this as the next three years really about the markets identified, but it gives us real, conviction that what we said will happen throughout Europe will and Germany's clearly the next most important market. So it's encouraging to see that speculation. Yeah, then in terms of the broader point around various proposals, whether they be in Brussels or in other national markets in France as well, there's potential for some form of policy that sort of forces or instructs that incumbent operators need to show inventory from the challenger brands. I think our expectation there is that these things take real time. And, you know, who knows quite how it will play out. Some of those proposals actually have, you know, pretty interesting pieces on the commission that we would get paid, like a FRAND proposal, which would be very helpful if that part came through. exactly how they will come through no one really knows yet the best we can point to is what's happening in germany with db where they need to show flicks train um and that means that they they show the train service but they don't show and you can't transaction actually buy the tickets and show the pricing that we think is actually pretty helpful um in terms of bringing visibility to customers that they have choice and then they can come to Trainline to buy the ticket. If it was to go in a direction of actually allowing the purchase, where we get to on that is the complexity inherent in providing multiple other carriers and all of their tickets and all of their rail cards and that's what we do and it's taken a long time and if the incentive structure aligned that they would do it in a way the customers would trust them, I think it's Pretty unlikely we'll get to that point, but we keep an eye on that, and we're very focused on France and how we bring that to light. And then finally, in terms of UK rail fares and volume simulation, it's pretty hard to assess it. this early stage, what that looks like. And it wasn't particularly, you know, the timing of it meant there wasn't a huge amount of marketing. There was a small amount of marketing on that, but I don't think we would yet say we're seeing any kind of volume increase there. Yeah, the only ad I'd put is that many journeys are not discretionary, and so you don't really get signal from those. to see anything on the discretionary journey. Of course, there are more other pressures on household wallets as well, and that's evolving and changing over time as well. But yeah, no clear signal at this point.

If I may have one extra, it feels not been enough to talk about AI, so I'd help. It's great to hear some of your thoughts around the difficulties of distance mediation and the like. Can you perhaps just dig into that a little bit more? I mean, in a world where there's just GBR sort of existing as the train operator, how hard really is it for generically some form of sort of genetic AI to try and get some accreditation to be able to talk to the train operator directly and not go through yourselves or even their sort of ticket retailing app? And so how hard is it really to replicate things like your signal box technology and the like?

So I think the way we think about it, and I outlined it to some degree, that the kind of moats we've got, we've got this sort of two moats here, which I think actually make it quite hard. There's the platform moat, which when you look at the money that's being used, whether it's four plus billion in the U.K., coupled with doing all of the carry integration and the sort of the full stack platform, not just sort of showing the availability of tickets, but actually processing the ticket, issuing the ticket in real time so that people can use it, and then providing customer service. That's a pretty complex set of things that any sort of challenger would need to do, AI or not. And then from a customer point of view, I think – The 18 million customers is a heck of a distribution note to start with in terms of brand and scale and trust that we have there, where we're increasingly layering over a kind of verticalized AI in terms of doing that. But what I really call out, right, we've had Uber competing in this market for four years where they're effectively giving 10% back to Uber One customers and everything. to any other customer, and their market share has remained around 2% or below. So our job and the way we framed it internally is to use AI to drive our competitive advantage because we have scale, because we're not just doing it in the UK, we're learning across all markets. that the customers get benefits from that. And look, we're going to be competing against GBR, and I think we would back ourselves to kind of out-compete GBR, a kind of ultimately government-sponsored rail app where we've got the talent and the scale, and we've got basically, well, we'll end up being a four- or five-year head start on their jump there. So we think AI will ultimately be something very much as part of our advantage in that market. James?

Hi, it's James Lockett from Peelhunt.

One of the points that GBR might play on is potentially being able to offer better pricing if they're somehow able to, say, not charge a booking fee or to do some equivalent of split save. Historically, you focus on your tech being best in class as well as the incumbency, and that's why you hope to continue to win there. But I wonder if you ever thought about your ability to actually be cheaper. to live wholesale be cheaper. For example, if someone books a hotel, to then not charge them a booking fee, for example. Or even given your ability to forecast demand, even taking ticket inventory risk in advance at lower prices and then offering those to customers, say even on the day, at a bigger discount. Sure. Just to speak to the high-level part of the question, we expect GBR to launch without a booking fee. I think we've proven, using the Uber example, why the vast majority of customers in the UK have seen real value in Trainline, helping them find the cheapest ticket for what they want to do, helping them have a UX that supports them, and increasingly disruption features they are prepared to pay for. Expect us to sort of test and experiment around fee structure and what that might look like and where we're adding value, how can we kind of go there and support. So I think that will be an area of innovation going forward, but we're very confident in our premium position of what that will look like. And then in terms of the things that you kind of offer up, there in terms of how we might look at pricing. I think those are very interesting areas, particularly the area around kind of hotels and putting packages together. That's an area where there's lots of innovation in other industries outside of rail, and it would seem very natural for us to do that. I think the kind of buying volume tickets and taking inventory is pretty unlikely, and it's only in the short, medium term. for us. So I think that's how we're kind of approaching it. Any answer you want to make? Yeah, I think train line flex, like using insurance products is probably, and it's not necessarily cheaper per se as a headline price, but that ability to give customers a more expanded choice where the rail ticket is at the heart of it, but there are other flexibility options that we could build in. That could be an interesting vector that we explore further. The thing to that is that I've always been told, and what so to me there's one question one one so it might be a bit of a dull one to finish on um i guess just a couple of numbersy things there was quite a big working capital outflow again just maybe just some senses to my that my that reverse and what's driving that and then also uh you touched on kind of the the the regulatory spend the cost in the uk again just looking h1 h2 admin expenses in the UK were, I think, £8 million greater in the second half, having been pretty flat in the first half. So is that really all to do with that regulatory sort of factors at play, or is there anything else you want to call out? I'll take the second one first. There was a balance sheet clean-up which also fell into H2 mid-single-digit millions, so that's another part of the equation to consider. On working Yeah, it's a good question to end. The year ended on a Saturday, and so the credit card creditors were building. Next year is going to end on a Sunday, so it's going to be compounded again, but it is simply down to the timing effects, yeah. Great. We'll finish there. Thanks. That's all we've got the time for today. Thanks for all the questions and for attending today's presentation. To recap, we've had another strong year. We're making really good progress against our three priorities for growth, and we remain confident for the long-term growth opportunity. I look forward to speaking to you again soon. Thanks, everybody.