Train and bus ticket seller Trainline (TRN) has continued to please the market after a positive first trading update since listing.
Its shares have nudged 1% higher in trading on Tuersday to 431p, marking a continuation of the stock's steady ascent since the company joined the stock market on 21 June at 350p.
BIG GROWTH FROM MOBILE SHIFT
Today's update, covering the period running from 1 March to 31 May, saw Trainline report an overall 20% year-on-year jump in ticket sales. International sales in particular stand out, rising 51% thanks to strong performance from its mobile app.
UK consumer ticket sales were up 27% thanks to the Trainline app as well as more adoption of etickets by travellers.
Trainline’s chief executive Clare Gilmartin said the performance of the UK consumer business ‘further demonstrates that the rollout of eTickets supported by a great app experience is shifting customers online and to mobile’, adding that more people using its app is also driving international growth.
She added, ‘With the majority of rail and coach tickets currently still sold offline in the UK and globally, there is a huge opportunity ahead of us to continue to grow and innovate for the benefit of all our stakeholders.’
However, while Trainline appears to be on an upward growth trajectory there are warning signs of tougher times to come.
Sales are clearly growing and losses are narrowing, but the firm made a £13.7m pre-tax loss in the year to 28 February 2019, on sales of £209.5m.
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It would appear investors are placing their faith in significant growth in public transport demand, which seems ambitious.
LOW BARRIERS TO ENTRY
In addition, the company operates in a sector with weak barriers to entry.
Trainline said in its IPO (initial public offering) prospectus that National Rail Enquiries, a journey planning and information service owned and operated by the UK rail carriers, could capture a material share of the market should it decide to start selling rail tickets directly.
It also flags the risk of Google, Apple, Amazon or Facebook being a major competitive threat should they decide to enter the market, given the strength of their brands and customer reach.
While in London, Uber now includes tube and bus times on its app. Given Uber’s scale, it could quite easily become a one-stop-shop for transport needs in big cities, something which would be another headache for Trainline.
