- Shares down 35% year-to-date
- £75 million share buyback announced
- Record net ticket sales of £6 billion
Shares in Trainline (TRN) veered out of control in morning trading, falling by as much as 14% to 268p despite the online ticketing platform reporting a 12% rise in total group revenue to £442 million for the year ending 28 February 2025.
The company reported record net ticket sales of £6 billion and said it was trading in line with previously upgraded guidance.
SHARE BUYBACK PROGRAMME
Trainline also announced a £75 million share buyback programme supported by its strong cash generation.
The programme started on 14 June last year following the completion of the group’s maiden £50 million buyback programme.
As of 7 March, the company has bought back and cancelled £69 million of shares under the new programme (£119 million in aggregate across both programmes, or 8% of issued share capital).
All this positive news failed to impress investors and the markets.
So, what has caused investors to send Trainline shares in a tailspin? It could be the ongoing plans by the Labour government for a state-backed rival.
However, the online ticketing platform reassured investors saying that any single public sector retail website and app would ‘take several years to crystallise, with the precursory establishment of GBR (Great British Railways) as a governing body only expected to happen by 2027 at the earliest.’
Trainline added: ‘The government is engaging with Trainline and other independent retailers to assess various safeguards typically observed in regulated markets. This is to ensure GBR (retail) is not treated favourably versus other retailers, which is in line with competition law principles.’
EUROPEAN JOY
The company’s international consumer revenue continued to improve up 12% to £53 million year-on-year and international consumer net ticket sales were up 4% to £1.1 billion.
Trainline also pointed out that it was growing quickly especially in Spain, France and Italy.
It plans to launch services from Madrid to Malaga and to Seville; in mid-2025 Trenitalia’s new Paris-Marseille service is due to go live, and SNCF is planning to launch in Italy in 2026.
BOTTOM END OF GUIDANCE
Russ Mould, investment director at AJ Bell said: ‘Trainline needed a bumper trading update to help reassure investors worried about the threat posed by the impending arrival of Great British Rail.
‘Instead, like passengers facing the prospect of a rail replacement coach service, they had to swallow growth in ticket sales at the bottom end of guidance. A buyback has done little to assuage market concerns.
‘It is all well and good for the company to point out that the GBR ticketing app won’t appear until 2027 at the earliest and that the government has committed to a ‘fair, open and competitive’ market.
‘However, a big selling point for Trainline is it enables people to navigate what is a complex ticketing set-up in the UK with several different operators.
‘If GBR works as intended, the system should be simplified and it is unlikely that a state-backed platform would charge commission in the same way that Trainline does, leaving the business reliant on its brand recognition.
‘Even if this competitive threat is some way down the track, the fact it is coming at some point means there is a measure of uncertainty about Trainline’s future prospects.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
LEARN MORE ABOUT TRAINLINE
