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Trainline returns to profit

The ticketing platform is increasingly popular – particularly overseas
November 3, 2022
  • Revenue comfortably above pre-Covid levels
  • Net debt down by £100mn

Ticketing platform Trainline (TRN) navigated a summer of rail strikes and travel disruption with enviable ease. After a difficult couple of years, sales across its three divisions surpassed pre-pandemic levels and the group returned to profit. 

Trainline has three main segments: UK consumer, international consumer, and Trainline solutions. International consumer is growing the fastest, with revenue up 118 per cent in the half against pre-pandemic levels. This followed heavy investment in brand campaigns, but the quality of the Trainline app is likely to keep customers coming back. 

In the more mature UK consumer market, revenue outstripped pre-pandemic levels by 30 per cent, and management noted “a significant step up in eticket penetration” to 43 per cent from 21 per cent three years ago. Cleverly, the group has also enhanced its SplitSave offer – allowing customers to divide their booking into mulyiple smaller journeys to get a better deal – and scaled up digital railcards. This should help Trainline weather the cost of living crisis, and make its booking fees more palatable for consumers. 

Last but not least, revenue from Trainline solutions – which provides technology to external clients – was up by 6 per cent on pre-Covid levels. Growth in this division has been sluggish of late, but management reported a number of contract wins in both the UK and Europe. 

Meanwhile, net debt fell to £70mn from £169mn last year, reflecting strong operating free cash flow. 

Trainline may be back on track, but concerns about its future have yet to be fully quashed. According to plans announced last year, the government wants to replace the confusing mass of train operating company websites with a single ‘Great British Railways’ app and website. Details remain scarce, however, and no formal procurement exercise has started. Trainline’s fortunes are therefore still tied up with a very slow government project. 

The rating is also expensive, with a consensus forward price/earnings ratio of 39, according to FactSet. Arguably, the group has a wealth of intangible assets which this valuation doesn’t recognise. For now, however, we advise caution. Hold. 

Last IC View: Hold, 297p, 5 May 2022 

TRAINLINE (TRN)   
ORD PRICE:334pMARKET VALUE:£1.61bn
TOUCH:332-335p12-MONTH HIGH:417pLOW: 147p
DIVIDEND YIELD:nilPE RATIO:180
NET ASSET VALUE:56p*NET DEBT:25%
Half-year to 31 AugTurnover (£mn)Pre-tax profit (£mn)Earnings per share (p)Dividend per share (p)
202177.7-10.3-1.76nil
202216513.62.60nil
% change+112---
Ex-div:-   
Payment:-   
*Includes intangible assets of £486mn, or 101p a share