Good morning, everyone. Thank you for joining us here today for our full year results presentation. It's great to see you all again. I'm Jody Ford, CEO of Trainline, and I'm joined by Shaun McCabe, our CFO. Let's first go through the disclaimer. On to the agenda for today. I'll intro with the key highlights for the year, including our recent MoU agreement with Rail Delivery Group. Shaun will talk you through our financial performance, and then I'll update you on progress against our strategic priorities. After that, we'll open the floor for questions. As a reminder, at Trainline, we are centered around our core purpose to empower greener travel choices.
Our vision is to build the world's leading rail platform, making it seamless for customers to find the right ticket at the right price online and delivering that experience either through our branded channels or through our travel partners. In doing so, we're making rail travel more attractive, encouraging millions of people to take the train rather than driving or flying. We believe this will make a huge difference. For every 1% of air and car journeys we switch to rail in the UK. alone, we'll save 5 million tonnes of CO2 each year. This year we've made significant progress against the priorities I laid out 12 months ago, encouraging people back to rail as COVID restrictions eased. As a result, we supported the rail industry recovery while delivering a strong performance in net ticket sales and a return to positive EBITDA.
In addition, I'm really encouraged by our underlying customer metrics. In the UK, we've helped drive industry e-ticket penetration to 42%, double where it was two years ago. Our customer acquisition has reached record levels, and we have significantly increased the amount of customers who transact with us. Likewise, in International, with domestic rail liberalization becoming a reality, Trainline is in a unique position as the only retailer to aggregate all high-speed rail routes in our target markets. By aggregating this inventory and scaling our brand marketing, we are positioning ourselves for the very significant opportunity ahead. In Trainline Partner Solutions, we've expanded our white label business into Europe with a new white label contract with NTV Italo providing regional Italian travel inventory. You'll have seen our announcement at the end of March that we signed a memorandum of understanding or MoU with Rail Delivery Group.
This agreement means we'll now enter a new phase of discussions around a future retailing framework, which should conclude before the end of the calendar year. The MoU also includes a legally binding backstop should mutually acceptable terms not be reached. The backstop sets a floor of 25 basis point reduction in our net commission rate effective in three years' time. This would be made up of a 50 basis point reduction in the headline commission rate offset by a 25 basis point benefit to Trainline from the removal of shared industry costs. The MoU gives Trainline considerably more certainty around our future economics while we continue to work with RDG on a shared agenda to reform rail retailing. With that, I'll hand over to Shaun to talk through our financial performance.
Thanks, Jody. Good morning, everyone. As Jody discussed, last year was one of strong recovery for Trainline, particularly for our UK consumer and international businesses. Of course, it was not without some bumps along the way, given the periods of COVID disruption. However, as you can see from the graph, with each wave of COVID, the subsequent recovery in combined net ticket sales was much faster. This is particularly evident with the Omicron wave and the U-shaped recovery thereafter. Omicron impacted sales from around mid-December. However, by February, both UK consumer and international had already returned to year-on-year growth. The strong recovery in UK consumer and international has driven a significant recovery in net ticket sales, revenue and gross profit.
The group generated GBP 2.5 billion of net ticket sales up 222% on last year, and this was 68% of the same period two years ago. Revenue increased to GBP 189 million, up 181% year on year and 72% of the same period two years ago. Gross profit increased to GBP 153 million, up 214% on the year and 76% of the same period two years ago. As a result, the business returned to positive EBITDA. Direct and central costs increased to GBP 114 million, up from GBP 74 million last year, but broadly in line with where it was two years ago.
As trading conditions normalized, we scaled our costs back up, particularly in performance marketing, as we seek to generate new rail bookings and to attract new customers. We also made strong progress against our investment plans in international. We've opened a new tech hub in Barcelona to recruit tech talent at a lower cost than London. We've opened a local office and team and launched a team in Milan to focus on that key Italian market. In addition, we stepped up our investment in brand marketing to grow customer awareness in our focus markets in Europe. We reported an adjusted EBITDA of GBP 39 million versus a GBP 25 million loss last year. Net debt has reduced significantly from GBP 241 million a year ago to GBP 90 million at the end of February.
As you can see from the waterfall chart, the biggest driver was of course, the strong working capital inflow of GBP 156 million as net ticket sales recovered together with the EBITDA generated in the year. As the net debt reduction and that net debt reduction was despite a GBP 29 million CapEx reflecting continued investment in our tech and product roadmap. The significant reduction in net debt combined with the improvement in EBITDA means that we are now operating comfortably within our banking covenants for the first time since the onset of COVID. With that greater visibility, we can once again provide full year guidance for the group. Assuming no further significant disruptions to rail travel, we expect to generate strong growth this coming year with net ticket sales in the range of GBP 3.8 billion-GBP 4.2 billion above the pre-COVID year.
Revenue of GBP 280 million-GBP 310 million and adjusted EBITDA of GBP 70 million-GBP 75 million split broadly evenly between H1 and H2. With that, I'll hand back to Jody.
Thanks, Shaun . Let's now talk about our progress against our strategy. As a reminder, here are our four stated strategic priorities. I'm really encouraged by the progress we are making against each of them. Let's first discuss our progress in our UK consumer business before discussing international and finally TPS. Our UK consumer business remains resolutely focused on providing an excellent customer experience. By removing friction for customers while offering them unrivaled value, we have supported rail industry recovery, getting people onto trains and into towns and cities. We've also shifted more people to online and digital ticketing with e-tickets a core part of our mobile app proposition. In the UK, e-ticket penetration has doubled in two years as more people opt to buy their tickets through their mobile phone rather than queue at the station. At 42% there's plenty of runway for future growth.
The continued growth in the availability of rail journeys where e-tickets can be used is removing a key constraint for e-ticket adoption. ScotRail's rollout of a barcode ticket last year took availability to over 80%. Last month, Southeastern, an important rail operator for commuters, began their rollout. Once complete, it will take e-ticket availability above 90%. That broadly solves the supply issue. On the demand side, there's a clear tailwinds for growth, including a step change in customer preference for digital tickets and a long-term industry ambition to shift people away from paper tickets. Likewise, the commuter segment represents a significant growth opportunity for digital ticketing. It's a segment underserved with digital ticket options historically. Pre-COVID, we estimate commuters made up about 40% of the UK rail market, about half of which were season tickets.
Season tickets were almost entirely fulfilled by paper tickets with no digital season ticket available to the mass market. COVID has changed the way we work and travel with more hybrid travel driving a mix shift away from seasons to singles, returns, and more recently, digital flexi tickets. As commuter journeys become more ad hoc, there's a greater need for flexibility on the days people do travel, as well as more on-the-go information. We flagged this opportunity a year ago, and since then, we've primed our mobile app to meet the needs of the new commuter with features such as Save Your Commute, allowing commuters to personalize their commuter journeys and rebook tickets in a couple of clicks, as well as the launch of flexi tickets within our app. We're already seeing positive changes in customer behavior.
Prior to COVID, many commuters used our app, but due to a lack of digital ticket options, only a minority bought their tickets through Trainline. As you can see on the left, we have a large cohort of app users we specifically call time checkers, who serve as a good proxy for commuters. In the last two years, we've converted 27% more of them into ticket purchases. This is a great start. There's clearly still a lot more headroom to go after. We will convert more time checkers into ticket purchases when we have a full suite of commuter ticket types in digital format. This coming year, we're rolling out the digital seasons product following a successful pilot. Moving on to our second priority in the UK, building demand. As COVID restrictions ease this year, we leaned in, scaling our marketing investment to attract new customers.
As you can see on the left, new app customers acquisition has surpassed pre-COVID levels with October our best month ever. As we add new customers, we are increasingly targeting under 30s. Not only are they more tech savvy, they tend to use rail far more frequently. Adults in the UK below 30 are four times more likely than the rest of the population to take the train at least once a week. In the last several months, we've run successful brand-led campaigns, including for flexi tickets and digital Rail cards. Let's move on to our third priority, increasing customer lifetime value in the UK and step into digital Railcards. Rail cards are a key loyalty proposition for the rail industry as they give customers access to discounted tickets, particularly relevant now as people become more cost-conscious.
When we launched our digital version 18 months ago, we estimated there were around 6 million in circulation. Since then, we've made significant progress, selling over 1 million digital Rail cards in the last year alone. Think about that for a moment. More than 1 million Rail cards are now stored in our customer mobile apps, making it far easier to book cheaper tickets and removing the need to carry a physical card. This is helping Trainline attract and lock in younger audiences to rail travel. With over half of the Rail cards sold to under 30-year-olds. It's also improving transaction frequency. With digital rail card customers 58% more likely to transact three or more times a year. Digital Rail cards are a good example of how our enhanced product offering and broader marketing efforts are helping people make better everyday travel choices.
All of this is helping increase our relevance for more of our customer travel needs. In the UK., customers are increasingly booking their regional travel through Trainline, and more recently, their commuter travel too. This has driven a notable increase in repeat usage. In Q3, the number of customers transacting twice or more each month was up 39% versus two years ago. As you'll know, this is a particularly tough metric to shift. While helping drive faster growth, the increased customer lifetime value allows us to invest more in customer acquisition as well. Now let's turn to the progress against our strategic priorities for our international business. I'll start first with enhancing the customer experience as we become the retailer of choice in our priority markets, France and Italy. The European rail market is liberalizing at pace.
This is a map of rail carrier competition in Europe at the end of 2020, prior to the EU's Fourth Railway Package. At the time, Italy was the only country with major competition across its high-speed routes following NTV Italy's market entry several years earlier. Roll forward to today, and competition has now arrived in France and Spain. Ouigo, SNCF's low-cost carrier brand, entered the Spanish market last summer, launching on the Madrid to Barcelona route and soon onwards to Valencia. They'll be joined by Iryo, a Trenitalia JV, who will add a number of Spanish routes this year. In response, incumbent carrier Renfe has launched its own low-cost brand, AVLO. Whilst in France, Trenitalia entered the market in December, launching a service between Paris and Lyon, France's busiest high-speed route. Fast-forward to 2024, and four brands will compete across both the French and Spanish markets.
Fast-forward further into the future, and we see a world where European customers benefit from far greater choice. They will also use rail far more often, with EU targets to double high-speed passenger traffic by 2030 and triple it by 2050. The future of rail liberalization is exciting, but even today, we already have a lot to go after. In fact, carrier competition now exists on six of the top 10 routes in Europe on which all carriers are fully integrated into our platform. This competition pushes down prices and drives up service levels, stimulating incremental rail demand. As competition grows, customers will increasingly need help to find the right ticket at the best value. We will fulfill this role by positioning ourselves as the rail app of choice for European rail travel.
We're aggregating all the carriers, fares, and journey options in one place so customers can compare and select the right option for them. They can also book multi-carrier journeys. For example, on the Paris to Lyon route, around 22% of ticket sales involve a connecting journey. Recently, I traveled on a train service, Trenitalia service in France, and chatting with another passenger, he explained to me for his ticket from Rennes to Lyon that he'd booked through Trainline. We were the only place that he could go to get the combination of regional, Ouigo, and Trenitalia trains. For the rail customer, that means Trainline has a uniquely differentiated customer proposition.
On the other side of the equation, Trainline is rapidly becoming the partner of choice for new entrants, attracted by our ability to rapidly add their inventory into the new domestic market, bring incremental demand in the form of new customers, and offer multi-carrier connections to the broader rail market. The net of which means we're beginning to see the early signs of the virtuous cycle of the marketplace. As we add more inventory, we become more attractive for passengers. As we attract more passengers, we become increasingly relevant for rail operators. Let's take a closer look at two recently liberalized routes, starting first with Madrid to Barcelona, the busiest domestic air route in Europe prior to liberalization. With a journey time by train of two and a half hours, it's a route ripe for modal shift.
Three different rail carriers now run service on this route, and the competition between them is hotting up. As the aggregator, we are benefiting. The number of tickets sold are up more than 5-fold since before COVID, and a quarter of the new customers we're acquiring in Spain are from this route. Second, Paris to Lyon. This is another route ripe for modal shift, particularly given the recent flight ban in France for domestic journeys that can be done by train in under 2 and a half hours. Having entered the market in December, Trenitalia are already competing fiercely with incumbent SNCF, and by June will operate 5 services a day.
As the aggregator, the total number of tickets we've sold on this route has doubled since the launch of the competitor service. We account for more than 1 in 5 of Trenitalia's tickets sold, a considerable step up versus our prevailing market share in France. There's still more work on our part to become the marketplace for rail travel in Europe. In November, we outlined our plans to step up investment in international. This investment will increase the pace at which we optimize and differentiate our product. In France, we recently launched the second iteration of Récup'Retard or Delay Repay. This makes it far easier for customers to submit a claim for a delayed train, and it's not available through the incumbent carrier's website or app. We've built new search capability, a virtual departure board, and a global live tracker, keeping customers up to speed while on the go.
We've also launched airline-style seat maps in France and Italy. We're increasingly positioning Trainline as the marketplace of choice, and we're well-placed to succeed in Europe and significantly grow our share. We're also investing more in marketing to drive up customer demand. This includes expanding our performance marketing capability to acquire more new app customers. Acquisition has since grown to its highest ever levels. However, as you can see on the right, there remains a large opportunity to drive wider app adoption, which remains significantly behind UK levels. Likewise, there's an opportunity to drive up customer awareness, and we're now starting that journey with meaningful investment in brand marketing. We launched our first major brand campaign in Italy in the second half. This includes full station takeovers in Milan and Rome, a nationwide TV campaign, and leveraging influencers on social media to target younger audiences.
As we acquire more customers as the aggregator, we are driving up customer lifetime value by making ourselves increasingly relevant for more of their travel needs. This dynamic was reflected in our regional sales growth in Italy, up 125% versus two years ago, and in France, up 106%, despite there being no carrier competition on those routes. Finally, our fourth priority, growing Trainline Partner Solutions or TPS. Before we step into our progress here, I'd like to briefly talk about Platform One, our single global tech platform. Platform One's functionality includes broad yet deep inventory connections, end-to-end e-commerce solutions, powerful data assets, and core reliability, scalability, and security. Platform One has many tenants. Alongside our own Trainline branded business, we offer B2B customers and carrier partners access to our cutting-edge technology and digital innovation as well.
In doing so, we reduce their cost and complexity, making TPS an obvious choice of partner for their online retailing capabilities. This is being increasingly recognized outside of the UK. Recently, we have taken steps to broaden our white label business into Europe with a multi-year deal with Italian carrier NTV Italo. This will enable them to sell regional train and bus connections alongside their high-speed rail tickets. We continue to position for growth our global distribution business. We're signing up more B to B partners to our global API, including recently Travelport, our first GDS customer. Published a year ago, the Williams-Shapps white paper included proposals for GBR to launch its own retailing app and website. There are still no confirmed plans on how GBR will develop retailing capabilities.
However, RDG has taken preliminary steps to begin a formal tender process to procure platform services for its consolidated online retailing solution or CORS. This potentially may be novated to GBR at some stage in the future. The contract length would be four years, with the opportunity to extend for a further four years. We've engaged with the preliminary stages of the CORS tender process and are ready to engage more fully once the official process begins. Before we open the floor to questions, let me recap on some of the key takeaways. Over the last year, we've continued to support the rail industry recovery, as reflected in our strong performance in net ticket sales and in our outlook for next year, with sales to be above pre-COVID levels.
Our UK consumer business is growing strongly as we shift more customers towards digital ticketing, including in the commuter segment and in digital Rail cards. The MoU with RDG gives much more certainty around our future economics, while we continue to engage on ways to reform the retailing framework in the UK. In Europe, as competition between operators emerges, we have stepped up our investment to become the aggregator for rail. We are already seeing accelerated growth on routes that we have liberalized. In return, these new entrants act as propellants for new customers to Trainline, attracted by the low fares, the aggregator proposition, and the unique inventory. In TPS, we have broadened our white label business into Europe and further expanded our global API partnerships. Over the last six months, I finished building out my executive leadership team, hiring two highly experienced senior leaders.
Mike Hyde, our new Chief Data Officer, previously at Facebook, and Martin Sheehan, our Chief Corporate Affairs Officer, who has years experience at Number Ten. As Shaun referenced, we have opened offices in Barcelona and Milan as we aggressively expand into Europe. Looking forward, I'm as positive as ever about the opportunity and long-term tailwinds for growth and hugely excited about the journey ahead. Thank you for listening. We'll now open the floor for questions. Please, raise your hand, if you have a question, and before you ask your question, please state your name and your organization. Thanks.
Yeah. Hi. Morning, guys. Gareth Davies from Deutsche Numis. Start with a couple. First one is on marketing investment in Europe. You obviously announced the plan in November. The UK is moving a little quicker than probably we hoped at the time, and it feels like good over-delivery in the current year. What's the right level of investment into Europe in the near term? And should we just assume you reinvest any over-delivery into that opportunity and sort of what are the pockets of investment that you'd like to do that you're probably holding back on at the moment? The second one, interesting to see Germany flagged on the European map. We never really talk about it. I think you do reference this in the statement.
Could you just expand on where we are in Germany, what that opportunity is and kind of any developments there? I think leave it at that for now.
Great.
Anything else you think?
Thanks a lot. Why don't I start with Germany and then pick up marketing and then hand over to Shaun on the economics part. Germany remains a really interesting, exciting, large market. Our focus on France and Italy is predicated on a number of different sort of things being in place. In Germany at the present time, there isn't the commission structure, frankly, that allows us to go and do that and invest it fully and strategically as we'd like in France and Italy. That said, as you may have seen, there's a kind of interim decision from the Bundeskartellamt, the competition authority in Germany. Over the coming weeks and potentially months, we'll expect to learn more there.
That, if it goes the right way, will allow us to invest in a far more strategic way in Germany. I think the other thing to keep an eye on is what happens with regard to competition. As we know, FlixTrain offer services in Germany. That's not yet a level that we see in some of the other other markets. But look, long term, I think Germany will absolutely be a priority for us, and we will be engaging there, but we need a certain set of conditions to be in place. In regard to the marketing question, look, we are building up, and I think I've talked about the last couple of times, we are building up, if you like, the marketing muscle.
We are really good at performance marketing, and we can dial that up and back and look at opportunities and cut those markets in various number of ways. That's something we will keep pushing on as hard as we can. In terms of the brand marketing, we've had our first campaign in Italy, which I showed you. We'll launch shortly the French campaign. That's really we've got to build the muscle to be able to effectively deliver those marketing campaigns at scale to drive awareness and consideration and get people to fully understand our differentiated proposition relative to the incumbent carriers. That's kinda how we think about it. We are pushing as aggressively as we can on that.
The more kind of investment dollars we have, the harder and faster we will push. Shaun, do you wanna pick up on the kind of priorities?
Sure. Look, the way we think about the investment, if you look the year we've just closed, we had about a GBP 16 million marketing investment in international. If you look at consensus says that marketing investment for international will be around about GBP 30 million, and we're pretty comfortable with where consensus is at. If you step back from that and think more holistically about how we think about marketing, it's really about identifying pockets of customer acquisition that we can go out, find those customers at the right lifetime value. We're always thinking about that equation of acquisition cost versus lifetime value to get a reasonable payback. Wherever we see sustainable economics and a decent payback, we'll absolutely lean in to that opportunity.
That is most true in our first focus markets, so Italy and France, but it's also true in the other markets as well, right? As Jody says, if we see Germany open up because the conditions change and the economics of Germany improve and that lifetime value, a key component of the lifetime value is the commission that we earn. If the conditions improve, we'll absolutely lean into Germany because, you know, Germany is the biggest rail market in Europe, and we see it as a big opportunity going forward.
Sorry. To be clear, its marketing is the swing factor. There's not an infrastructure investment that needs to go in terms of more people.
Yes. Not over and above what we've already talked about, Gav. If you remember back to the international investment that we talked about, it was twofold. Yes, there was a step-up in marketing, but there was also an investment in people. That was a combination of product and tech folks to build out the product in each market and to make it relevant for local customers in each market. But it was also marketing folks, and it was also government relations folks to help us win these arguments against the carriers where we think they're misbehaving. Look, I think that in that sense, the market is coming our way, and we're excited about it. We look forward to the next few months and what those developments bring.
Hi. Hi, Jody. Hi, Shaun . Navina from Morgan Stanley. Thanks for the presentation and the guidance. Just wanna get a sense on the ranges that you sort of laid out for next year. Can you sort of give us some scenarios on either end, what would have to happen for you to achieve the top end and then the lower end? Just within the UK piece, maybe a boring accounting question, but some of your costs were quite a low percentage of sales and generally have been coming down. Just wondering whether that's sort of a structural thing. Are you doing some sort of measures there? Is that a mix thing? Just lastly, in terms of your market share gains within Europe, you mentioned double-digit shares within, I don't know, three, four years.
Where is that gonna be coming from mainly? Is that France and Italy? What about Spain as well? Sure. Shall I take the last question then? I think hand over the first and second, we'll hand over to Shaun. In terms of market share gains, France and Italy are the priority markets. They are markets where we have awareness at levels that allow us to kind of really invest in the product, and the tech there.
That will be the places that we see it. If you kind of roll back on the, if you like, the Trainline playbook here, we start with leisure, we start with long distance, and those aggregated routes I talked about, those are places where we will see share, you know, significantly ahead of the average of the market, and we are already seeing that. As aggregation kinda gathers pace, that will drive our share. We absolutely see that roll forward across routes that aren't aggregated, where there's not competition into regional. I think you'll see it play out in the way that you've seen it play out in the UK.
Yeah, starting with France and Italy, and then I think Spain's a very interesting market, although a bit smaller than the other two. Shaun, do you wanna pick up on the other?
Let me take the guidance question first of all, Navina. What has to happen to get to the top of the range? I think the most obvious answer to that is speed of recovery. We've baked in an assumption around recovery. We're pleased to see that the recovery post-Omicron was pretty U-shaped. If you looked at the previous periods of disruption and COVID lockdowns, after every one, the speed of recovery has got faster. That was also true of Omicron. In February, we're already back into year-on-year growth, and that strength has continued into March and into April. We feel positive about that. I would say that's the key thing.
The rest is really about, you know, continued good execution, I would say. In international, it's things like the opportunity in Germany could push us faster, and we'll see how quickly or not that opportunity opens up for us. It's just the progress that we make in each of those international markets with our marketing investment and our product and tech investment and how successful we are there. Some of that is just hard to call. It's hard to forecast because, you know, we're somewhat new and we're small. We could grow more rapidly than we've got forecasted. But the COGS question is an easier one, I would say.
We have in the year we've just closed, in FY22, we have a one-time benefit from a rebate around fulfillment fees. That was something that we've been in conversation with RDG and DfT for quite a long time, and that was rebated to us in last year. Don't expect that to continue. What I would say, though, is we're always looking at ways to optimize our cost base. The components of our COGS, which are payment fees, fulfillment fees, and customer service, we're always looking at ways to make those more efficient. Payment fees in particular, you know, look at the mix of things like Apple Pay and Google Pay, which tend to be cheaper forms of payment. We're always looking to push those. It's not because.
It's not only because they're cheaper forms of payment, it's because it's also a better experience. We're really optimizing for that. As a second order impact, it's a lower cost of payment as well. James?
Hi, it's James Lockyer from Peel Hunt. A follow-up question from the ROI question earlier in terms of marketing and investment. You spoke about balancing LTV with customer acquisition. I was wondering if you could talk about or give an idea of what your LTV to CAC ratio is today, how that's improved over time, and whether or not you have a target in the long term. Secondly, on recruitment, obviously we've seen significant wage inflation across different sectors within the dev teams and dev employees. Just wondering if you could talk about your strategy about how you're gonna mitigate that and, you know, how do you ensure that your devs are continuously engaged and enthused to stay at Trainline versus going elsewhere. Then finally, the first international white label deal announced.
Rather than going into, I guess, the deep depths of your pipeline, it'd be good to understand, say, the mix between international and UK pipeline and where your key focus is. Thank you.
Sure. Do you wanna take the first question, Shaun?
Sure.
I'll pick up the second.
The LTV to CAC today versus targets. We do look at LTV to CAC on a market-by-market basis, of course. Where we are today is we're in the kind of three-four-year payback range for international. It varies by market, and it, you know, also varies by time of year. It's moving in the right direction. Our cost of acquisition continues to improve, and our lifetime value continues to increase. It increases through, you know, a number of levers. Obviously, what we earn on each ticket is an important factor to that, but also things like frequency. We're driving improved frequency, for example. We're reducing churn. We're improving conversion with a better product market fit. All of those are factors in driving up the lifetime value.
They continue to improve. In terms of a target, I would say a near-term target, we should be looking to get to a three-year payback, and that's a kind of a this year target. In time, once we've had scale in each of those markets, I would expect us to get to something that is sub two years. If I contrast that to the UK, of course in the UK we have a significant share, and we've been around for quite a long time, and our payback period in the UK is less than six months and fewer than two transactions. It's a really positive model that we've built over a number of years.
Great. Picking up on the recruitment question and wage inflation. I think, look, there's been essentially a kind of war for developer and data science product talent for a number of years. It definitely had a sort of a quieter period during lockdown, and then we saw this spike like all tech businesses did, and people did move and take other jobs. However, we've actually been very successful in hiring engineers. We had a very focused plan on that. As you know, we brought on new senior leadership across both the data science and tech functions. That's been pretty much their top priority. We have taken new space within our building to accommodate that increased talent, and we've really adopted a whole sort of series of flexible working practices that have resonated well.
I think the kind of the joker in our pack, if you like, is that we are purpose-driven business, and that really, really resonates, and I think helps us get the marginal employees who are kind of trying to work out between two competing offers. They really like the fact that we are kind of doing good, and that's very important for the sort of demographic of engineers we're going after. Then something we both Shaun and I reference is opening up the Barcelona Tech Hub. That's another way.
We obviously have a number of partners we work with kind of around the world in India and so forth, but this is a dedicated Trainline tech hub based in Barcelona that which we're scaling up fast, which allows us to tap into another talent pool and helpfully is based in one of our markets, giving us insight there. So feeling good about where we're at and our kind of engagement scores and so forth that we monitor. International white label. Yes, I think the way to think about this is this is a sort of the UK. business, it remains a very interesting white label business. We have renewed contracts. There's actually kind of potential new opportunities arising in that world. Think about the Italy business.
There are a number of sort of pieces in the pipeline that sit behind that, but we are learning our way into this. This is a new world for us, and we're hugely excited to be working with a partner, and we will learn a lot through that, and we'll begin to understand the market a lot better. I think for now, you know, the UK white label business will be the majority of the revenue, but we see really exciting opportunities for growth across Europe. It's that what I talked about when I talked about Platform One. We have this rail platform which is kind of unparalleled within Europe.
We speak with international sort of incumbent players who are very excited about our international content, and we make it very easy for them to sell international tickets or in this case, regional tickets, for a new challenging brand. There's a lot to look at here, but it's early days is the way of positioning it.
Marcus?
Yeah. Hi, I'm Marcus Diebel with JP Morgan. I have some questions. Two on the UK, one on international. You highlighted the e-ticket availability went now from 80% to 90%. Just to understand, what does this 90% actually mean? Is it volume weighted or is it by station, i.e. the frequent journeys obviously take a higher weighting just to understand what it actually means. Then the e-ticket penetration went from 21% to 42%. Going forward, if we draw the line, how should we think about it? And what are the levers to push this as hard as possible? That would be the first question. The second question may be related to this.
Obviously, a lot of focus in international on marketing, but also in the UK. You know, when you highlighted order frequency is going up, customers are very sticky. The GBR app is coming. Why not be as aggressive as possible, collect the highest amount of consumers possible in the next, let's say, two years, which obviously will be then very difficult for others to steal from you rather than, you know, maybe not be so overly aggressive. It would be interesting how you actually think about this also in the UK. Lastly, on international, you highlighted clearly that a lot is happening in terms of competition.
As of now, maybe with the exception of Germany, which as you highlighted, is special, but for the other markets, I mean, in terms of volume, the routes with competition, what is the share in the overall kind of like ticket sales? I mean, I know you don't have the exact number, I guess, but.
Yes.
Just to get a feel for that.
Okay, great set of questions. I think I'll start working through them, and Shaun , you should probably just chip in as we go. The first one, e-ticket availability. So that represents of the tickets sold, which could have been bought by an e-ticket. That's the way to think about it in value terms. That's what that measure means. What that really means is you can kind of see from the picture that by the end of the year, I think with two very small exceptions, Merseyrail and c2c, every TOC, apart from the kind of core TfL London piece, will have that. I was on a train on Southeastern on the weekend, and I'd forgotten how annoying it is to have to print out tickets, right?
We'll bring a large part of Kent online by the end of the year and be able to use digital tickets. That's the first part. In terms of the trend going forward on e-ticket penetration, I do think you can't draw a straight line between 21%, 42% upward. This is a sort of once in a generational shift, right? In terms of everyone over lockdown using Deliveroo, Netflix, kind of, and taking cash out of their pockets. There has been a significant jump to e-tickets from paper seasons, but also just from paper tickets. In terms of where that trend is going forward, we have clearly now solved the supply issue, essentially with the exception of London.
There will be continued move from paper to digital, but I don't expect that to be the, like the last two years were. It will continue to move up, and it will continue to be a substitution. I think it will be interesting to look at, you know, where does sort of the DfT get to on where paper tickets are going to go. I think over time it continues to go up. Lots of headroom, but not at the accelerated rate of the last two years. Johnny, anything you'd add on that?
No, not on e-tickets.
Okay. With regard to the UK, in terms of marketing and how we're thinking about that, obviously we're talking a lot about international, because that's new and we're building that capability. We have been really pretty aggressive if you look at, in terms of, Rail cards and getting to 1 million Rail cards. That's been a big push for us 'cause it's a new capability. As you'd expect, we remain very present in the performance marketing, digital marketing, channels. Actually we are, without kind of giving anything away, we are teeing up for, some big UK campaigns, very much focused around value and trying to connect more with purpose and thinking about rail and helping customers understand, why rail is a great form of transport.
That's the sort of thing we can do in the UK because we've got the scale, clearly to do that. Those are areas to look out for going forward in UK. Certainly, you know, we will continue. We're gonna foot on the gas on all of that stuff. Then in international markets, I think the question was what share is competitive between the operating companies? Or was it what are. And data's tougher to get in the European market, so we're having to do a lot of backing into stuff to try and work that out. I think if you look at Italy, the majority of that is competitive and has been for a number of years between Italo and Trenitalia.
All the long distance routes essentially are competitive. When you then look at France, there is only Paris-Lyon so far. There is sort of faux competition in the fact that Ouigo kind of competes with itself in SNCF on actually the kind of the big principal seven or eight routes. That is the beginning for the customer of like, hang on, there's two services here. True competition where another operator's coming, Paris-Lyon is the route that would be, you know, kind of high single-digit % in terms of share. When you look at Spain, that's really interesting because we anticipate basically Madrid-Barcelona already competitive. We'll expect Iryo to launch later this year.
Then Madrid-Valencia and then Madrid to Seville, all of those routes will be competitive and that is a very large part of the high-speed network of Spain. With four carriers, one of them being a sort of low cost incumbent one, but four carriers across the, really all of the high speed routes. I think Spain's gonna be a very interesting case. Obviously a smaller market, but this has really got traction. I think if we would expect and anticipate more competition in France because they are. Basically the gloves are off between the various French, Spanish and Italian businesses, and they've all got to enter other markets. Do you want to add on that?
Yeah. I'll just come back on the marketing question, the middle question.
Sure.
The thing to remember, Marcus, if you look at the year we just closed, we spent GBP 16 million in marketing in the UK. If you look at consensus would say we're gonna spend GBP 19 million in the year we're in now. We are gonna spend more in marketing dollars, and consensus is about in the right place. And then think about our monthly active users in the UK. Now, we've got 18 million monthly actives, thereabout, and that's unique. That's not traffic, that's unique visits. Think of that as a proportion of the UK traveling public who are already using our product. And then you've got all the people who've got the massive installed base of app downloads that we have. If you look at our customer acquisition in the UK, 80% of our customer acquisition comes through free channels.
Combination of direct to app or through SEO or direct to our site. If you look at that's driven by our very strong awareness in the UK. Like I wanna find the people who don't know who we are in the UK because I think most people do. So our need to spend ever increasing amounts of marketing dollars over time. Marketing is an area we absolutely should get leverage over time. I understand your point about why not spend more marketing dollars now just to really close out before GBR arrives. We are spending more marketing dollars, but we already have a huge installed base and a huge awareness in the UK.
Good.
Hi, Kieran.
Yeah, thanks. It's Kieran Dolling from Liberum. Two questions from me. Just one on the addressable market opportunity in the UK. I don't know if you've done any work to kind of do a comparison vis-à-vis pre-COVID. I think GBP 12 billion with GBP 2 billion being TfL used to be the number quoted. What's the view on that now with the digitization of season tickets and kind of the change to working from home, et cetera? And two, if we could just think about the UK consumer take rate over kind of the medium term. Obviously, the MoUs provided a backstop, but I wonder what your view is on kind of the ancillary part of the consumer take rate. What levers can be pulled there and can it be increased or maintained over time? Thank you.
Sure. I'll start with the first one, hand over to Shaun, and you can probably take the second one as well, I guess. In terms of kind of how does the market return, I guess the way we can broad brush thought about that be exactly to your point, kind of GBP 10 billion, 40% leisure, 40% commuter, and then 10% business, 10% on international. That's the very broad brush. Like leisure is back. And we see that continuing to grow, and I'm very bullish on where that kinda goes at a market level within the UK. Commuter is the big unknown, and we don't have the answer to that question. Clearly, from Trainline's point of view, this is not a market we really played in.
I mean, half of that 40% was pay per season tickets, and we talked about a product that we'll offer there. Is that gonna be half the size it was historically? Maybe. Like, we'll have to see in what direction that goes in the coming months. Then on the singles and returns part, like we just see more adoption coming from people who want to do sort of point to point once or twice a week. We think we're in a really good position to aggregate all of those different products and help people make the right choice within that market. International, we're very encouraged over sort of the last two or three months. We definitely see that coming back strongly, and I think other players are as well.
that market is only going in one direction. I think there's increasing demand for rail travel. Been lots of articles around this. I think people want to travel sustainably. International rail with the combination of the services will continue. Then look, business travel is the final part, and it's an important and profitable part for the railway. That has kinda half returned. We will wait and see how that plays out, and we can all have our own point of view in terms of how it does. I believe in the long run, this will come back and be really important part of the mix. We have got, and we haven't talked about it a huge amount today.
We've got a lot of sort of functionality and interest for that segment of the market because we offer a great solution whether you're a corporate or a TMC or a small business in controlling that and making it really efficient. We think however it comes back, there's real opportunity for growth. It's just the last sort of six, 12 months has not been the focus in the way that leisure has bounced back super quickly. That's kinda my take. I don't know if you wanna add any on that.
Not much on the overall TAM, I would say, Hugh. If you look at the passenger numbers today and the DfT's own data says that passenger stats are back to around 80% of what they were pre-COVID. Jody's identified the gaps, and the gaps are corporate travel. That's definitely still significantly behind where it was pre-COVID, but it is improving. Our own view is this is gonna take time. This is not gonna be a this year thing. It might not even be a next year thing. In the long term, I absolutely agree with Jody. I think it will come back. And there is an impetus there for companies to encourage their people to use rail rather than road or short-haul air as a mode of transport.
I think there's the environmental tailwind that supports that as well. I do think in time that will come back. Inbound travel, honestly, the last few weeks, that has been strong. If you'd asked me this question six weeks ago, I'd have said, "Yeah, inbound travel is not there yet." Actually, inbound travel is there now, and it's already back into growth versus the pre-COVID period, so I feel good about that. Commuter travel is the unknown. It's not that commuters are not back. They are. Of course, they are. I mean, you know, we're all standing on busy trains again. Most people are doing three days a week in the office. That's typically the pattern that we see. It goes Wednesday, Tuesday, Thursday, Monday, Friday. It's pretty quiet sometimes on Friday. We think that's likely to continue.
As Jody said, our share of the commuter market was like single-digit pre-COVID. The product developments that we've done and the changing customer behavior that we've seen, you know, people buying many more singles and returns, buying flexi tickets. The fact that we're developing digital season tickets and that is already in beta on Thameslink. There's lots of reasons to believe we can gain significant share in that commuter sector. I think for us, whilst the market's back at 80%, we're already significantly beyond that and into growth versus the pre-COVID period. Feel good about that. The take rate question. We've had take rate headwinds in the UK for a number of years, and that's because our mix of customers and the tickets we sell has changed over that time.
It's because we're selling many more on the day tickets where we don't charge a booking fee. Those short journeys where we don't charge a booking fee and become a bigger part of the mix, you know, if you think about the take rate on those, it's obviously gonna be lower. This is new sales for us, it's new customers, and it's people like commuters where we're just winning new customers. That's a positive, but it does represent a take rate headwind, albeit an overall revenue opportunity, obviously. You know, as I think about the MoU and how that plays in, it's a net 25 basis point risk for us. It is just a risk at this point, right? It's a backstop.
We'll go into this next phase of negotiations and absolutely pushing to close that remaining gap and more. You know, we've got strong arguments to say there isn't room for any cut in commission. Those are both economic arguments and legal competition arguments and level playing field arguments. We feel good about our position as we go into this next phase of negotiations. The backstop is this 25% , 25 basis point haircut. Then we'll look to, you know, the levers that we can pull to close that gap, you know, if that's what we need to do. We are always looking at how to optimize our other revenue levers, whether that's advertising, insurance, whether it's booking fees. We're constantly A/B testing booking fees and other service fees. That's just part of what we do. That's BAU.
Yeah, I'm not going to give you a forecast on, you know, will we close that gap through ancillary. We're always looking at those things. I feel good about, you know, our guidance on the consensus on where take rate will get to. While there are some headwinds, you know, our job is to close those gaps.
We've probably got time for one more question. Thanks.
Gonna rush in there before anyone else can. It's Andrew Ross here from Barclays. I've got three, if that's okay. Is it okay?
That's okay.
Short ones.
One person asking a question. First one is just to come back on the MOU that you've agreed and the 25 basis point rebate in there on the fulfillment cost. I'm just kind of curious as to how that conversation went and when we think out five, 10 years from now and perhaps more cost comes out of the industry as the world shifts to digital, whether there's actually more flex that you could negotiate as part of your cost of sales on a, say, five to 10-year view and where we kind of end up there. Second question is on kind of flexi season tickets.
I'm wondering if you've learned any more about where that may end up, and I guess I'm thinking in terms of dilution on ticket price as you move from, say, a weekly pass to a per day or week, and any progress you've made on the 2% commission that you guys charge. Then the final question is on international and that helpful map you put out on all the routes that will be liberalized by 2024. Do you kind of have a sense as to what the net ticket sales on those routes are overall to give us a sense as to how to quantify it, the stats you've given on share is helpful, but the kind of overall market size. Thanks.
Great. I'll probably give sort of shortish answers to each of those and then but I'll start with the international one. It's very hard to quantify basically in terms of the scale of the route that will become liberalized. I think in my mind, you know, Spain will be the. Well, we talked about it. Italy will be the largest. Spain is growing rapidly. I think the one to watch is France, and that will be about whether other carriers, particularly Trenitalia, decide to launch other routes. That will really be the flip between is this sort of single digit teens or into the twenties plus.
My expectation over the next five plus years is this is going to proliferate and there will be meaningful part of the high speed network will be competitive. I think they're all learning their way in at the moment to that point. In terms of flexi seasons, your point on the 2% commission, that is absolutely the type of thing that we'll be discussing in the next phase. There's nothing we can talk about at the moment there. In terms of flexi seasons as a product, they are growing off a smaller base, but they are growing, and I think they're an important part of the portfolio of products that we offer commuters as they travel.
Actually, they are right for some people, and actually, they are the best choice and the best value choice. People want, you know, they still haven't really worked their patterns out, and you have to kind of know you're going to travel for X number of times in the month. We're still working into that, but I see a slot for them, especially once we get digital seasons established and beyond that. With regard to the MoU. Look, that's. We can't really talk about how the conversations have gone there. I think it's an industry-wide set of conversations between third-party retailers, which, you know, I think helpfully will include GBR as a third-party retailer in the future. That's our expectation.
There will be, I think, interest to look at how costs can be brought down across the whole industry. I certainly wouldn't be targeting any future gives on cost right now. I don't know if Shaun would want to add to that.
Just a clarification point, Andrew. The cost forgiveness, the 25 basis point cost forgiveness is not fulfillment costs. It's central systems costs, things like the RAS cost or LENNON recharges, and we get allocated those costs back on a per unit basis. But it's not fulfillment. The fulfillment cost, the biggest element of fulfillment cost is the infrastructure to support barcode rollout. Of course, that CapEx will be amortized over time. Once that CapEx is amortized, the barcode fulfillment cost will reduce over time. Our focus now, of course, is we want to put more gates in the ground. Right? That's how we're pushing. That's how mechanically it will work, but it isn't our focus.
We absolutely want more gates in the ground and therefore more, the industry to spend more CapEx on putting those gates in place.
Great. Well, look, we'll close there on questions. Thank you all of you for joining, and thanks for all of those questions. Like, just to sort of paraphrase what we've said, strong sales performance. I think the strategy is clear, and I feel like we've made significant progress against that over the last six and twelve months. Look, we're really excited about the opportunities we've laid out and to take Trainline into Europe and across the UK. Thank you, everybody.