3rd May 2024 09:44
(Alliance News) - Trainline PLC reported improved annual results on Friday, and it announced a new share buyback.
Shares in the firm traded 7.6% higher at 323.74 pence each in London on Friday morning.
The rail ticketing platform painted an optimistic picture, though possible rail sector upheaval in the UK hangs over it.
Revenue in the year ended February 29 rose 21% to GBP396.7 million, from GBP327.1 million. Revenue topped the "previous guidance range". Pretax profit jumped to GBP48.1 million from GBP22.1 million.
Net ticket sales were up 22% on-year to GBP5.30 billion, at the top end of its previous guidance range.
Chief Executive Officer Jody Ford commented: "New entrant carrier competition is revolutionising rail in Europe as more customers benefit from greater choice, lower prices and the opportunity to choose greener travel. We are becoming the aggregator of choice in the UK and internationally and are delivering strong growth, particularly in those markets liberalising fastest such as Spain."
For the new financial year, it predicts net ticket sales growth of 8%-12%, and revenue to rise between 7%-11%.
Trainline announced a GBP75.0 million share buyback programme. It recently completed a GBP50.0 million buyback which kicked off in September.
Trainline is sizing up a European expansion, but there are also regulatory developments in the UK that are key to its outlook.
Third Bridge analyst Albie Amankona commented: "Trainline is concentrating on expanding in Europe. Our experts believe that many European countries are conservative, and people still prefer buying tickets at ticket offices or directly from rail carriers, sticking to their old habits.
"Italy and Spain are experiencing significant growth, largely due to market liberalization. However, in markets like France and Germany, more regulatory reforms are needed before Trainline can establish a foothold."
Rail nationalisation in the UK is a "threat" for Trainline, though the firm could weather that storm, Amankona suggested.
"Our experts believe that customer habits are hard to change and do not anticipate it will prompt customers to switch to other platforms," the analyst said.
Amankona continued: "Our experts believe that concerns about the impact of Uber entering the Trainline market are exaggerated due to Trainline's superior UX and brand loyalty. They see Uber's rail ticket sales as primarily an additional service to their taxi offerings. Since Uber depends on its partnership with Omio, profit margins are expected to be very narrow. Every rail strike in the UK results in Trainline losing about GBP5 million to GBP6 million in revenue per day. Our experts emphasize that beyond the financial impact, the potential loss of trust from customers is even more costly."
By Eric Cunha, Alliance News news editor
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