Good morning, everyone. Thank you for joining us here today for our Full Year Results presentation. It's good to see you all again. I'm Jody Ford, CEO of Trainline, and it's great to be joined by Pete Wood, who in December became our new CFO, having performed the role on an interim basis since September. Let's first go through the disclaimer and onto the agenda for today. I'll intro with the key highlights for the year, as well as recent political and regulatory developments in the UK. Pete will talk you through our financial performance, and then I'll update you on progress against our strategic priorities before deep diving into the international business. After that, we'll open to the floor for questions. As you know, our purpose at Trainline is to empower greener travel choices. As Europe's leading independent rail platform, we're well-placed to fulfill that purpose.
With over 270 carrier connections, a 4.9 star app downloaded 55 million times, and a platform processing over 6 TB of data per day. Likewise, we have strong tailwinds for growth. We operate across a EUR 60 billion rail market, giving a significant headroom. In the U.K., etickets will soon be available on over 90% of journeys. In Europe, markets are liberalizing at speed, with six of the top 10 routes having two or more carriers. Consumers, governments, and businesses are increasingly focused on the environmental benefits of rail travel. With trains emitting at least 70% less CO2 than cars and planes, sustainability is the rail industry's superpower for generating long-term growth. This year, the group delivered a record operating performance. net ticket sales were up 16% and revenue up 25% versus fiscal year 2020, the pre-pandemic year.
Growth was led by international consumer, which became a EUR 1 billion business. In the UK, we drove continued growth in digital tickets, particularly for commuters, where we doubled our segment share. In international, we further positioned ourselves as the aggregator on high speed routes. In Italy, net ticket sales were 3 x higher than pre-COVID levels, while in Spain, they were 4 x higher. As tourists returned to Europe, we almost doubled foreign travel sales with particularly strong demand from the US. In the UK, we're seeing encouraging political and regulatory developments. In February, the new Secretary of State for Transport, Mark Harper, spoke at the annual Bradshaw Address. He gave more direction on the creation of Great British Rail, placing far greater emphasis on the role of the private sector whilst committing to a competitive retail market to drive innovation and value for customers.
Earlier this week, we announced that we had concluded our collaborative phase of engagement with RDG, confirming our commercial terms. Finally, I Came By Train as gaining recognition, shortlisted for two sustainability awards, and is becoming a galvanizing force within UK Rail, with new partnerships forming across government, industry, and Trainline to champion rail as a greener way to travel. With that, I'll hand over to Pete to talk through our financial performance.
Thanks, Jody, good morning, everyone. I'm Pete Wood, I'm delighted to join you today as the new CFO of Trainline. Having stepped up into the role, I'm both excited by the growth opportunity ahead and pleased with the momentum we are building. Before I get into the financial performance for the year, I'd like to discuss the strengthening trading conditions in the U.K. As you know, COVID had a significant impact on passenger volumes, the industry has recovered over the course of the last 12 months from less than 70% of pre-COVID levels last year to over 90% this year. Strike action has weighed on the recovery, however, with strikes every month from June through to March. As we said in our trading statement, the gross ticket sales impact for Trainline was around GBP 5 million-6 million per strike day.
While, of course, a challenge for the whole industry, I was pleased with the way we were able to help customers navigate the disruption with features like alerts and self-serve refunds. There's been progress in the resolution of the industrial dispute with two pay offers now settled. Two remain outstanding, and strikes have been called this month and next. I'm encouraged by how quickly passenger demand can return. For example, there were no strikes called since early March, and passenger volumes quickly recovered to above 90%. With cost of living pressures, customers are taking advantage of booking in advance with our value focus brand campaigns highlighting savings of up to 35%, and the softness in longer distance travel that we flagged in March has now receded. The group achieved a record operating performance this year, driven by strong growth in our UK and international markets.
With COVID impacting prior year numbers, I'd instead talk to year on three-year growth rates. Net ticket sales were up 16% to GBP 4.3 billion. Within that, UK consumer was up 37% to GBP GBP 2.8 billion, reflecting the market recovery and a significant increase in eticket penetration. International consumer was up 95% to GBP 915 million, supported by our aggregation of new entrant carriers on key European routes. Trainline Solutions remained at half its pre-COVID size at GBP 597 million due to a slower recovery in business travel. It almost doubled versus the prior year, and we continue to see longer term tailwinds as corporates move towards greener travel choices. Revenue was up 25% to GBP 327 million, which I'll step into on the next slide.
Gross profit was up 29% to GBP 252 million. Group revenue has grown ahead of net ticket sales when compared with pre-COVID results, driving an increase in the group's take rate from 7% to 7.6%. This was driven by a mix effect in the group portfolio with the U.K. and international consumer businesses, both with relatively higher take rates growing faster than Trainline Solutions, as well as by an accelerated growth in foreign travel, which also generates a higher take rate, in part because carriers pay more in commissions for non-domestic sales. The business delivered a material increase in EBITDA even while we invest increased investment to drive international growth and despite a headwind from industrial action. We reported an adjusted EBITDA of GBP 86 million, up GBP 47 million year-on-year, and up GBP 1 million versus fiscal year 2020.
In international, we ramped up marketing investment to GBP 43 million. We are already seeing the benefits of this investment as it drives growth in new customer acquisition and net ticket sales. Alongside this, we scaled the platform to manage the significant step up in transactions as reflected in the other admin cost bar. We hired additional people. I'm pleased with the acceleration in feature development and localization of our platform for European markets and the critical contribution this makes in driving growth. Jody will expand more on this later. Staying with international consumer, we expect EBITDA to approach breakeven on a pre-internal transaction fee basis in fiscal year 2024. As we have said before, our number one priority in international is to drive growth in net ticket sales and revenue. As the business grows, it benefits from operating leverage on marketing and people costs.
The chart on the right-hand side shows the international's financial profile prior to the payment of the internal transaction fee to Trainline Solutions. As you can see, the business is achieving operating leverage as it scales, with revenue up 131% versus the cost base increase of 87%. This reflects our disciplined approach as we prove our way into new markets, closely managing lifetime value and the cost of acquisition for new customer cohorts. It also reflects the benefit of our existing customer base growing in size, particularly app customers who are stickier and transact more frequently. Finally, as I look ahead, we are well positioned for further growth and have made a strong start to the year. Demand is healthy across our key markets, and as you will shortly hear from Jody, our team is delivering against a clear strategy.
Group expectations for fiscal year 2024 are net ticket sales growth of between 13% and 22%, revenue growth of between 13% and 22%, and adjusted EBITDA as a percentage of net ticket sales of between 2.15% and 2.25%. Thank you. I'll now hand back to Jody.
Thank you, Pete. Let's now talk about the progress we're making against our strategy, starting with our U.K. consumer business. Our first key priority in the U.K. is to provide customers with an excellent user experience, removing friction when searching for trains and booking tickets while offering them unrivaled value. This is helping shift more people to digital ticketing with etickets a core part of our mobile app proposition. We're achieving an accelerated delivery of new products and features, and I'd like to touch on some highlights. Historically, commuters have been underserved with digital ticket options. We've therefore primed our mobile app to better serve such journeys, and we've already had good traction, with Trainline doubling its commuter segment share in three years. An example includes our Favourites feature, which allows commuters to personalize their journeys in the app, giving them live departure boards and notifications of delays and disruptions.
It's proven popular with 4 million customers set up to date. Last month, we launched our new Quick Buy feature, which leverages our data to let customers purchase the same ticket again in just 3 clicks. We continue to reduce friction from the travel experience recently launching Next Best Actions to help customers manage delays and disruptions. We've always done a good job notifying customers. Next Best Actions goes a step further, helping customers understand what they can do. We're starting by allowing customers to check what other trains their ticket is valid on, with plans to go way beyond this. At the same time, we're unlocking further savings for customers with innovative tools like SplitSave. We ran a data-led optimization process to make the product even better, expanding the number of journeys in which split tickets are offered.
This helped grow availability of SplitSave tickets to 80% of all UK journeys, up from 64% at launch. Moving on to our second priority in the UK, building demand. We are running a brand campaign telling customers how they can save 35% on average when booking a journey through Trainline, highly relevant as the cost of living pressures bite. These campaigns point to the environmental benefits of rail travel too, reflecting our core purpose to encourage greener travel choices. This is helping more people to make better travel choices every day, showing them that great journeys really do start with Trainline. It forms part of a broader marketing strategy in the UK that has delivered significant customer acquisition. In fact, over the past three years, we've increased active customers by 58%. At the same time, we have deepened our customer relationships, significantly increasing customer transaction frequency.
Customers that transact two or more times a month have grown to 49% of monthly customers, up from 42% thr ee years ago. With the simultaneous increase in active customers, it means a substantial jump in sales transactions. Turning to our fourth priority, growing Trainline Solutions, leveraging Platform One, our single global tech platform to power online retailing for our travel partners. We further strengthened Platform One this year. We added to the significant breadth and depth of our carrier connections, integrating new entrants at speed as they came to market. We developed and released an extensive list of customer-focused products and features, and we increasingly used machine learning to surface relevant products and features to each specific customer. While in the background, we continue to optimize the platform's reliability and enhance its scalability.
In fact, Platform One is now regularly processing over 1,000 transactions a minute at peak times. While enhancing the platform, we leveraged its strength to better serve our travel partners and position the business for future growth. For our carrier partners, we made big strides in improving their core functionality and customer features. This includes enabling digital seasons and digital payment methods like Apple Pay and Google Pay. We extended our contracts with CrossCountry and ScotRail and signed a new contract with Trainhugger, a sustainability-focused third-party retailer. At the same time, more travel businesses went live on our Global API platform. As a reminder, our Global API gives B2B partners the ability to offer European rail options to their customers through one simple seamless connection, rather than tackle the complexity of connecting to 13 different carrier APIs.
In recent months, CWT and Havas Voyages both went live on the platform. Let's turn to the international consumer business. 18 months ago, I stood here outlining our plans to accelerate the growth of our international business. We've increased the pace at which we launch innovation into our core European markets while filling any product gaps that existed, rapidly integrated four new entrants onto our platform, and expanded our marketing activity to grow brand awareness and increase customer acquisition. International consumer net ticket sales has doubled versus fiscal 2020, reaching a milestone of EUR 1 billion of net ticket sales. We're increasingly prioritizing the rail markets where we have the strongest proposition. These are domestic markets which enjoy widespread carrier competition, primarily Spain and Italy, and foreign travel representing global inbound and intra-EU cross-border travel.
These markets contribute about two-thirds of international consumer revenues, and we expect strong growth ahead. Beyond these markets, significant further headroom remains, most notably in France, which I'll come onto shortly. Let's first look at domestic market liberalization. As you know, Italy, Spain, and France have opened to competition. Six out of the top 10 high-speed routes in Europe now have carrier competition. Actually, as you can see on the map, there's an increasing number of key routes that have more than two different carriers. By giving customers more choice, carrier competition is creating the opportunity for Trainline to position itself as the market aggregator. Not all markets are at the same level of maturity when it comes to liberalization. We are tailoring our approach based on the respective level of maturity.
For phase one countries like France, which is yet to see carrier competition beyond Paris-Lyon, we continue to focus on providing a great user experience with all key journeys and prices. As widespread carrier competition arrives on a market's high-speed rail network, as is happening in Spain, we'll move to phase two, making aggregation a key differentiator for Trainline. This includes ramping up marketing spend to grow brand awareness and acquire new customers. As we establish ourselves as the number one aggregator, it gives us an opportunity to move to phase three, deepening customer relationships, as we're now doing in Italy. As customers engage more habitually with Trainline, particularly through the app, it increases our relevance for more of their travel needs. This sees them transact more often, including for shorter distance regional trips. Let's first look at France, a large market, but one where market liberalization remains nascent.
Without a widespread aggregation opportunity, France offers a slower growth of profile than the other more liberalized markets, the effect of strikes this year is likely to slow growth further. We will continue to invest in the user experience and performance marketing in order to serve and grow our French customer base. However, manage our brand investment to coincide with the future arrival of widespread carrier competition. Moving on to Spain, a rail market worth EUR 2 billion. The Spanish government have embraced liberalization, seeing the benefits it brings in reducing fares, improving service quality, and driving greater ridership. Four carrier brands now compete in Spain, as they expand services, we estimate these liberalized routes will represent a EUR 1.3 billion aggregation opportunity.
It's amazing to think this time two years ago, there was just one rail brand in Spain, the incumbent, Renfe. Since then, SNCF has launched their low cost operator, Ouigo, followed by Renfe's low cost brand, Avlo. This competition has brought value-focused pricing to the market. The way it's stimulating demand and disrupting rail is akin to how Ryanair and easyJet disrupted the airline industry 20 or so years ago. Last year, Trenitalia-backed iryo entered the market. In contrast, they are offering a differentiated premium proposition directly competing with Renfe's traditional brand. Three or more of the brands will compete on five key high speed rail routes by the end of next month. Their new service is expanding capacity by 84%. Let's look specifically at Madrid-Barcelona, where there's a clear signs carrier competition is driving modal shift. Prior to COVID, this was Europe's busiest domestic air route.
However, last year, air traffic fell 28%. During the same period, rail fares fell 55% and passenger volumes grew 35%. By positioning Trainline as the aggregator on this route, we've significantly increased our market share. Tickets sold on this route doubled year on year and were 9 x higher than three years ago private prior to COVID and the arrival of competition. At the same time, we're proving vital for new entrants as they seek to attract new customers as quickly as possible. In iryo's first quarter of trading, we sold 20% of their tickets. As carrier competition grows in Spain, we are embedding our position as the leading aggregator. We're improving the way we surface the most relevant travel options, including intuitive search filters, plus search results that allow customers to identify where it's better to combine different carriers for their journey.
Finally, we're going the extra mile to delight customers, including an à la carte food selection within the booking flow for Iryo trains. Let's now discuss Italy, a rail market worth EUR 4 billion, where two carriers, Trenitalia and Italo, have competed for the last decade. Here we have a strong aggregator proposition with all the carriers, routes, and journey options, as well as a seamless app experience. We continue to build brand awareness and drive new customer acquisition. We launched our first major nationwide brand campaign last year. This focused on train stations in key cities with aggregated routes, as well as a national TV campaign. I'm delighted to say that we are the number one rail app in Italy, with 13% more down-downloads than incumbent Trenitalia. This is translating into net ticket sales, which were 3 x higher than pre-COVID.
At the same time, we are deepening our relationship with Italian customers. We grew our relevance with more of their travel needs with a four-fold increase in ticket sales on regional railways, driving total tickets sold to 10 million. This was despite there being no car-carrier competition on those regional routes. Moving on to foreign travel. As a reminder, this represents global inbound customers from the U.S., U.K., and rest of world, as well as some intra-EU cross-border travel. It's an addressable market worth EUR 4 billion. With journeys weighted more to the summer months, it generates double-digit take rates, partly due to higher commissions payable by carriers for non-domestic customers. This year, foreign travel almost doubled versus pre-COVID, with sales to U.S. inbound customers particularly strong.
As we position ourselves as the one-stop shop for rail travel in Europe, we see opportunity for growth to continue, particularly as we begin to leverage our marketing leadership. To bring that to life, let's look at U.S. inbound customers as an example. The typical U.S. inbound customer visits Europe in a group, often as part of an expensive family holiday or to celebrate their graduation. They book most journeys in advance and increasingly want to explore multiple countries in Europe, with 42% of sales coming from customers that book journeys on two or more carriers. They're not used to traveling by train, particularly in a foreign country, so feeling reassured is a top priority. In that light, Trainline already meets many of their needs, offering easy booking in advance or on the day.
All the key routes, carriers and fares, and a standardized travel experience in their native language, helping them to get from A to B successfully. We plan to build on our early success to attract more U.S. inbound customers. We are currently running a campaign to find Trainline's chief conductor, hosted by the one and only David Hasselhoff, with the contest winner experiencing rail adventures across Europe. We have launched journey guides to help customers feel reassured when traveling by train across Europe. Before we open the floor to questions, let me recap on some key takeaways. We've delivered a record operating performance this year, and we expect the momentum to continue guiding to strong growth in the year ahead. In the U.K., our consumer business is growing strongly as we shift more customers towards digital ticketing, particularly commuters.
In international, we are prioritizing the markets where we have the strongest proposition today. This means harnessing the aggregation opportunity to accelerate sales growth in Spain and Italy. Driving growth in foreign travel, which provide higher margins for Trainline. Looking forward, I remain hugely excited by the opportunity ahead, our long-term growth tailwinds, and the progress we continue to make in delivering to our customers in the UK and across Europe. Thank you very much for listening. We'll now open to the floor for questions. If asking, please can you give your name and institution?
Great. Gareth.
Hi. Morning. Gareth Davies from Numis. Maybe start with sort of two and a half from me. One, the first one really on take rate. Pre-pandemic, you talked a lot about kind of value-add services and driving take rate. Firstly on the U.K., can you just sort of is that sort of on hold while you take advantage of volume coming back, and we should think of that as a driver over the next two years or how should we think about that take rate? Then in Europe, as Spain matures, is there the ability to start pushing out those value-add services into Spain and Italy? Again, same question really. How should we think about take rate, in, on a forward-looking basis?
From a marketing spend perspective, when we look into next year in international, are you expecting to grow marketing spend? I know Jody kind of called out an emphasis on Spain, so does that mean you sort of pull out of France down a little bit and it switches into Spain and Italy, or just if you can give us a little bit more shape around marketing spend in international?
Sure. Pete, do you wan to take?
Yeah. Let me take these. Starting with UK take rate. The opportunity in the UK still is to grow net ticket sales. We've got eticket penetration has taken a really good step forwards, but there's still big headroom. You heard today about the progress we're making in commute. Most of our effort is continued on ticket sales. We are running various tests all the time on revenue optimization, trying out new levers and the like. That does continue in the background. As, you know, as we get larger still and growth begins to slow on NTS, then we'll put more effort or more resource onto the revenue side. It's not.
It's something that will come a bit further down the road. Then, yes, in terms of Spain and indeed other international domestic markets, the UK is the mature business that we're targeting. Right now we're not really focused so much on optimizing revenue. It's more about driving for scale and growth. You know, there are certain things that we could do today. Putting more friction in the way of acquiring new customers from which might drive monetization is just not our focus at the moment. Instead, we're targeting gaining share, growing the base of the business, and then we'll again turn our attention to generating more revenue off the back of that over time.
Then from a marketing spend perspective, yes, we've got a portfolio, and you've heard today that we'll absolutely be doubling down in Spain and in Italy. From a domestic perspective, those are really interesting and exciting markets, particularly with the liberalization. France, we're taking a more measured approach. You know, as liberalization grows over time in that country, we'll then push harder on the marketing there. There will be more focus on Spain and Italy in the meantime.
That's great. I think the only thing to add here is the component we called out around foreign travel, having, just to underline that point, significantly higher commission rates, which blends through on an international business and provides kind of upward momentum there. Thanks for the questions.
Great. Marcus.
Hi. Marcus Diebel, J.P. Morgan. I have three questions. Pete, if you could maybe talk a bit about the group guidance. It's obviously a wide range. I assume that there's obviously a question on strikes and how it impacts the business going forward. But if you could tell us a bit more, what level of impact you see, at least as of now, in terms of strikes impact into the guidance. Jody, if you could talk about the GBR tender, if there's any sort of date that we should at least waiting for. You made it very clear in the release what your view is. If you can just update us maybe in terms of any date, that would be helpful. On international, thanks for the information.
That's very helpful. Clearly when a big focus also on inbound customers, as you highlighted, U.S. tourists traveling Europe. Could you maybe share with us what the share of just inbound customers is versus domestic customers, if that's possible? At least if you give us a certain idea. That was in the past heartland of Omio, your biggest competitor, but it seems you do get a lot of market share also with the inbound customers. That would be great. Thank you.
Great. Thanks for the questions. There's a few to work through here, so we'll tag team as we go through. Why don't... Just on guidance, I'll pick up strikes and then maybe come to you around guidance, Pete, and then work through the rest. Look, just on strikes because it is, it's a relevant question. I know it'll come up. Look, we of course remain focused on supporting the customers, and I think the one thing that we'll call out is just the amount of innovation we've put into the market to support customers, helping them with refunds, helping them find the next best train.
Actually, this week we've got a new feature called Strike Safe going live, which actually provides reassurance and confidence to book when there is no strike, because sometimes the shoulders of the strike get people don't book. We're really leaning into this 'cause we, you know, it's an area we want, we know customers need support for. Pete will speak to the guidance point, but what I would say is over the last sort of six weeks, we've actually had a clear run without any strikes and we've seen the market really come back strongly, getting back into the mid-nineties in terms of ridership. That gives me real confidence that ultimately, as we get through the strikes, we will see it return.
There was kind of some doomsayers maybe a few, couple of months ago, writing columns and stuff. Actually we've seen really strong performance, which is encouraging. Look, the way I think about this is that, without getting into all of the details, there's essentially four different agreements that have to be struck between kind of various unions and various parts of the railway. Two of those have been agreed, two of them are live, and I can't predict when that will happen. That gives you a sense of kind of where we stand on that. Pete, do you want to speak just a bit to how that factors into guidance?
Yes. Guidance is there to cover a range of moderate scenarios, I would say, when it comes to strikes. We've provided some information about the average strike impact last year, and hopefully that is that's useful to you. If we have many more strikes, we'll be at the lower end. If there are, you know, relatively fewer strikes, we'll be towards the upper end of the range. I would add on top of that, we also have strikes in France. They also wash through the pension reforms that are unfolding in France is a, you know, fairly charged situation. In March when the government triggered Article 49.3, we had a particularly bad set of strikes, I would say.
In April, they actually softened a bit and our business, you know, picked up again. Yeah, we're the guidance is in place to cover that. Of course, there's a macroeconomic impact that might wash through our business as well, through the year, you know, as it hardens, that might impact demand a bit and we've taken that into account in our guidance as well.
If I pick up on the GBR tender point, I mean, just to go back up one level to GBR, sort of in its entirety before we talk about a tender for an app there. Look, I think it's been encouraging new Secretary of State, Mark Harper, as I talked about briefly in the speech, but the tone of the Bradshaw Address, I think his line was private sector's strongest role yet, within the sort of rail system, which I just think tonally is helpful, for a number of organizations, not just Trainline. Look on the actual GBR app. There's no new news.
I mean, we kind of sat here a year ago saying it could be imminent and I can't really narrow that range of options that GBR, we will wait and see where they ultimately get to on that. I think it's worth noting that the GTR, which is the Govia Thameslink Railway, which is the largest UK TOC have come to tender, are in the process right now of looking for a white label provider for their app, they currently use on track with a September 2024 delivery date. I just give you that as a sort of data point and context. If we go on to international, and Pete, you should sort of chip in as we go through.
Like in terms of inbound customers, I think the one way I can talk about this is the total market we think of as a sort of EUR 4, maybe EUR 5 billion in terms of the total foreign travel market. We don't disclose how that breaks out, but it's significant enough that we're talking about it in the context of the overall blended take rate. I guess that's probably a bit of a clue in there. With regard to competition, look, I think Rail Europe, Omio are the other two players that go here with Rail Europe being the more scaled of those three and one we look at. Just, you know, I came through here, but this is an area we've not done a huge amount.
We've kind of taken our vanilla proposition. It already works pretty well for, you know, a family arriving from New York. Actually, we think now we look kind of harder, we've got an accelerated set of things to go at here. If you think over the next 12, 18 months, there's quite a lot around kind of passes around Asian travel, things that we've not really even begun to innovate around, which encourage me on the future growth points. Pete, I do know if you'd add anything to that looking?
No, I think you've covered it. Thanks.
Great.
Great. Next question, Ciarán.
Well, thanks. Yeah, it's Ciarán Donnelly from Liberum. A few questions from me. Just to push you on one point, on the retail review and the net impact of 25 basis points on the commission rate, do you think you'll be able to offset that through other means by April 2025? Secondly, just on marketing spend, could you give us a sense of the split between brand and performance marketing, particularly in the international business? Then three, just on digital penetration in the UK, where is that now versus, where it was last year? Finally, just on Uber in the UK, any impact you've seen from the launch of their trial? Thanks.
Sure. Thank you for the questions. Well, let's, we'll step through those, but I think between both of us on a number of them. Look, re-retail review, 25 basis points, I think just to kind of voice over this to confirms where we, what we were talking about sitting here a year ago, and look, we've known about this. I feel confident that we will be able to lean in and find ways to support that and it won't be a challenge for us. I think, Pete, if you.
Yeah.
Yeah. That's good.
That's right.
That's the right answer. Marketing spend. Pete, do you want to take that one in terms of where we're going on that?
Yeah. Roughly speaking, it's more like 50/50 than on any other SKU between performance marketing and brand. The two, you know, have they interplay together. You have, you know, on one extreme you've got Google PPC marketing, but as you begin to bleed across into more display advertising and the like, it kind of blends into brand, and then you have kind of out-of-home and in the station. Part of our, part of the marketing team's efforts are to optimize the right mix, right? There are certain points in time where you know, you want to push harder on one particular channel versus another.
yeah, the 50/50 is probably the gives you some sense of where that is, but that is something that we continue to work through and optimize over time.
Do you wanna take the?
Yeah, digital penetration.
... digital penetration and explain?
Yeah. If you think about eticket penetration as a good proxy for this, we've taken a huge step forwards over the last three years. Back pre-COVID, it was at around 21%. The most recent quarter was 44%. Actually, that 44% really doesn't quite give a true sense of the momentum that we continue to see because the introduction of the Elizabeth Line means that it's suppressing that number a little bit. If you kind of back that out and you look at it on a like-for-like basis, you're looking more like 47%-48%. You know, year-over-year that's continued to push forwards. Look, if you look ahead, we've got the supply side pretty much fully enabled apart from London.
That's above 90% now. If you look to other comparators like the airlines where it's, what? 80%, 90% or so digital tickets now, that really gives you a sense of the sort of headroom that there still is to go here. That's really, really exciting for us.
Let me take that final question around Uber. I mean, Uber have been in the market for over a year. I'm sure you're aware they've been offering fairly significant kind of kickbacks into their rideshare sort of platform. Look, overall, as ever, we welcome competition. You know, I think a year ago I was talking about how that would potentially be a way that it would attract new customers into rail, and that we would then back ourselves, given our 500 engineers to, and a really deep rail expertise to have a, you know, bring those new customers onto our platform. Right now, just speaking to kind of data points, we don't see any evidence of them taking any share whatsoever as it stands.
we'll wait and see how their proposition evolves over the coming months. Thank you for your questions.
James. At the front, Jules. Oh, sorry. We'll get to you in a minute, Simon.
Hi, yes. Thank you. It's James Lockyer here from Peel Hunt. Three from me, please. Throughout the presentation you've dropped in, you know, this feature's come or we've just launched that feature, and there's lots of, lots in there to drive up usage and loyalty. How should we think about your tech, you know, your dev recruitment needs in order to fulfill those over the next, sort of, you know, few years? You know, if you could talk about how your Barcelona hub is doing?
Yep
there. Secondly, you've obviously talked about active customers going up, frequency, loyalty continuing, and customers becoming stickier. You are technically still more of a repeat business than a recurring business. Do you see a time when, you know, you could flip some of these things into a recurring subscription type perspective? Are there industry barriers that prevent that, such as can you create your own rail card or do you require there to be an industry rail card for you to do that there? Just to follow up on the guidance point.
You've given the range, but just wanted to check around, if we're at the top end of revenue, does that necessarily mean we're at the bottom end of the EBITDA guidance because you've pushed through marketing, to drive up that revenue growth? Actually should we sort of think if you're at the top end, the operational leverage will see you at the top end of EBITDA guidance as well? Thank you.
Great. Thanks, James, for the questions. Let me take the first one. In terms of recruitment, I'd say we've had very strong recruitment year over. That's got actually easier over the last sort of now six, seven, eight months, just because of the macro as you'd expect. We're pretty much now at full recruitment, which is great. So all of those engineers we talked about hiring a year ago, 18 months ago, are now in place. Just to kind of bring a little bit more context to that, particularly around data, we've been talking about building out our data capability, and it's been, we've got some. We hired Mike, Chief Data Officer. We announced that a while ago now.
Sort of the next levels below, we've brought in some outstanding talent and been able to fill out those positions. Then as you mentioned, Barcelona has been a fantastic hub for us. It's opened up a whole new market, which is really interesting, not least because we're obviously now operating in Spain. It just gives us more context and more connection to the market, but also access to really good engineering competence and people who are fully engaged in the brand. I feel probably as bullish as I've felt in the time I've been CEO about the ability to hire the talent that we need. I think the market has moved in our favor. The broader work we've done on our purpose and connection there really strongly resonates.
It can sound a bit artificial in a this sort of forum, but really resonates with people and their desire to want to come and work with us to support the purpose. In terms of active customers and recurring business, and Pete, you should come in on this one, we've definitely explored that space. As it stands, and I think it kind of speaks to, it feeds on to the very first question, we are very focused on the growth and taking our model and driving that engagement, the kind of maturity model we work through. I mean, maybe one day there'll be a fourth step and we'll get to something that looked like a subscription of some form.
I don't think that's crazy to consider that, but it's just not when I sort of look at the out in the product roadmap over the next two years, it's not something that's on there that we're actively pursuing right now. There may come a time it feels appropriate to do that. Then maybe, Pete, do you want to take the guidance and the connection with EBITDA marketing?
Yes. I guess the short answer is yes, there's clearly a linkage. If we got strong sales at the top end of guidance, that would generate more revenue and should drop through to EBITDA. The starting point is yes. Of course, there will be some puts and takes as we go along. I think most importantly for us as a management team is where we see really good opportunities to increase investment or where something's really working, we want the flexibility to double down. Like our goal is to grow fast, right? As fast as we can. We will take some of those options as they emerge, but the core of your hypothesis is right.
Thanks. Great. Simon, thanks.
Yeah, morning. Simon Davies from Deutsche Bank. Three from me, please. Firstly, Labour government is now predicted, according to the bookies, as outer favorite, for the next election. What do you think that means for Trainline, and what do you see as the key risks? Secondly, we're now talking about break-even for the international business. Perhaps you can talk a bit about what a mature EBITDA margin might look like, for that division. Lastly, artificial intelligence is the hot topic du jour. Is that a threat or an opportunity for Trainline?
Great. Let's work through those. Labour, potential government. Look, we're kind of at that point in the cycle, where it's all about headlines, and there's not a huge amount of policy specifically, when it comes to rail. Just a couple of thoughts here. Even during the Corbyn days, when they were sort of proposing their rail thoughts, they never talked about anything happening within retail, and that was definitely not on the agenda. It was more about the trains and the tracks in terms of where that goes. I'd say, you know, as a government thinks about this and there's really a huge amount that Trainline and the retail sector more broadly brings.
I mean, we have the 86% of customers trust us around rail, which is significantly above the industry average. We are deploying this, as we've talked about a lot, this kind of UX that just makes it really easy to book tickets and drives incremental people onto rails. The partnership around innovation, either because of the capital intensity of that or the tech talent that is needed to build and deploy that or the scale that's needed, that's where we as Trainline or more broadly the private sector within rail can offer a lot to any form of government.
Look, as you'd expect, we are engaged, with Labour as we are with the Conservative Party, and we look to see what they would propose if they got a new term as well. I think the sort of tonality coming out of Starmer more broadly around technologies want to move from lagging to leading in technology. We are one of the sort of top 10 public tech stocks in based in the U.K., so I'd imagine they would want to work, well with us on that. Look, just a broader reflection. We've been in this space as you know, engaged on a number of different areas and conversations through the retail review.
I think very helpfully, there's a set of kind of principles we've established with the industry around level playing fields, around the kind of competitive points of view which will serve us well, whatever government is in. Those are things kind of enshrined in law and kind of practice that will last kind of decades, not years, which I think are incredibly helpful. Break-even international, then the mid kind of EBITDA margin, what would that look like? I will give a sort of high-level thought on this then, Pete, that's kind of pass over. Just to say, look, there's a huge amount going on there with kind of the mixed effects of actually quite a few different businesses that we're growing.
Think about us focusing on those individual markets and those customer opportunities rather than focusing on the outcome of any given sort of break-even moment or future margin. Where I kind of referenced the foreign travel is really lucrative and fantastic. Whereas on some of these other markets, we are going to need to invest in, and there's a moment in time like there is right now, clearly in Spain and in Italy and over time there will be in France. That's just a high level thought of kind of how we position ourselves. Pete, do you want to speak to any specifics?
Yeah. Echo all of that. The top-line growth remains our goal. The fact that we're now talking about operating leverage, I think shows the progress that we're making in these targeted this targeted TAM that Jody outlined earlier on. Then in terms of where this could get to, look, the UK is a really good benchmark for us as a, well, for anyone, for a mature rail market. In the much longer term, that's what we're aiming at. I say that even thinking and believing that there's more to go in the UK, right? We've taken a really good step forwards. You've heard today, we're still focused on top-line growth. I think there's more opportunity for leverage.
In the first instance, targeting UK is where we want to get to with the domestic markets in international.
Your final question around AI, absolutely an opportunity for us. I think it could potentially be very significant opportunity. I just sort of the way I break this one down is into sort of three boxes. First of all is around how we're currently using machine learning, then talk a bit about the ChatGPTs of this world and future AI models, both in for customers and then internally within the organization. Look, we, as I've just referenced, have been building out our data organization and are kind of really building out this capability to deploy machine learning models to improve the product for our customers.
Just to kind of bring that to life, I talked about getting to 80% of journeys where we can offer splits, which we know is a huge feature. If you think about the real-time capability for a given search to be able to decide whether or not we can split that journey, that's a set of machine learning models working at scale, which is very powerful and it gives us the advantage of the investments that we've made there. There's other models we've got which will look at a particular customer and go, "Which is the route we should be talking to them about that might be their next route," having looked at the behavior of all of our other customers and decided this is the route to go.
More broadly, the sorts of things around personalization in our marketing require ultimately kind of machine learning models behind them at scale. There's a series of things and pipelines of stuff that we're working on this month, next month, and you'll expect us to continue to iterate that. I think that's really good, and I'm really pleased with that we're leveraging getting value from our investment in data. Second point is this broader point on. The likes of ChatGPT and other AI models, I think this is really exciting for us. Where do I think the big opportunity here, it's around potential inspiration for customers when they are route planning. It's kind of at that level in the funnel as we go.
Why will we benefit and be well positioned on this? I think when you look at the datasets we have, both in terms of activity of a very large customer, you know, we sold 200 million tickets last year, we know a lot about what's happening in terms of customers throughout Europe. No one else has that diversity. You know, everyone else is very narrow within a given market type. I think that's interesting. Beyond that, we've got these commercial agreements and these APIs with many, many different train operating businesses, train operating companies throughout Europe, and those are complex to maintain. Fundamentally, that's how you provide a ticket, how you do fulfillment, and then how you do customer support.
Leveraging those vertical capabilities and being able to help customers at the top of the funnel is something I'm pretty interested in. We had a kind of hackathon with our tech team a week or two ago, and someone's, you know, stringing together these things and beginning to show the opportunity, and I think that comes from within, and so we will look to lead there. I think a huge opportunity. Look, the answer to the third question is probably what every CEO standing at the front, of course, we're going to look at new tools that make our teams more effective, that our engineers more productive or our lawyers move quicker through things or customer support be able to support more agents.
Those things I think will naturally happen in coming months and years, and we'll get into them. Look, net-net, I think it's a big opportunity for us. Thanks for the questions.
Great. Either. Just down here. Sorry.
Maybe if we start on contactless ticketing. I mean, you have a big market share in longer distance travel, but relatively short or small market share in shorter travel in the U.K. In the past, you've talked about not standing still when it comes with competing with a contactless. I mean, what are you looking at there, and how can you try and grow your market share? Secondly, you mentioned more business travel or modal shift from business customers. What do you see as the potential market opportunity and growth in the market from increased business travelers? Linked to that, maybe within Europe, how would you see the market evolving from or what's the increase in the total addressable market from journeys that can be converted from air to rail?
And maybe finally, Germany is a market that no one really talks about anymore for obvious reasons for... Is there any developments there as to why Germany might be a market that you might be able to gain market share in the future?
Sure. Great. A good set of questions. That I'll jump in on the first one and can work through them. Long distance travel versus shorter distance travel, I think the first thing to call out is this point around regional travel. And just to underline that point, Italy, which is the same trend we've seen in the UK, which is a significant take-up of customers who start by using us to book their long distance 30 plus, 35 plus % off and use us as a value play maybe once, twice a year. That's the sort of typical way in, find us on the web. They download the app because they want the barcode ticket.
What's happening is customers are increasingly using us for more of the regional travel, which could be for a short trip to see friends or a shopping experience or begin to use it in their commute. We've seen a significant acceleration in Italy that was up 4x versus pre-COVID. In a number of our markets, we see that working out very well, and we're going live on Cercanías, which is the regional and urban travel within Spain in the coming months, that which will bolster further the Spanish market. To come to the specific question, as part of that around contactless and pay-as-you-go.
Just as a sort of reminder, we talked six months ago about how we said there was essentially GBP 150 million at risk here in terms of how we think about that market. I'd say this, like this is a great product for people in this room to move, you know, in and out of the City of London. It works, it works well, and you just tap and it's effortless. It really doesn't work that well for anyone traveling. I'm sure you've tried. Traveling with a family, it really doesn't work. If you've got a Railcard senior, young person's Railcard, it doesn't work. It gives you a very low sense of control of your spend.
With the expansion that's going on to the Project Oval expansion in London out to sort of Bedford, Cambridge, Farnborough, down to Brighton, there are some really expensive tickets gonna be sort of like GBP 50 return, and that's a hell of a thing, frankly, to be tapping in and it taking GBP 50 out. We believe ultimately in London and then as we think outside, there's opportunities for an app to be involved, to give you that sense of control, to be able to upload your rail card, buy your kid tickets. That's interesting. I'd characterize our step here as having gone from kind of research to development, but I still think this is something that is a number of years away.
A, because the technology has to be developed, but B, because of in terms of the aims of government and where they're at. Whilst it's very high on their list of something they want to do to take it out into the regions, there's quite a lot that has to be worked through because often it's devolved regional powers that are involved here. There's the partnership with the private sector, and there's work going on in terms of like gates and stuff to do there. Look, overall, I characterize that as a really, as I said before, a really interesting opportunity that we are innovating in.
Various things have to align before it happens, and I don't expect it to kind of go beyond that Project Oval, I don't know, probably three, four , maybe five years out is how I characterize that one. Modal shift for the business market and the market opportunity. I think if I just speak to the highest level modal shift, a lot of these markets seem to break down if they're sort of characterized by external data as... You know, Madrid, Barcelona is a good example here. Like, it was 1/3 rail, 1/3 air, 1/3 road. Like, you can kind of imagine the value, the conscious in the roads and the business travel in air. You see that number very quickly accelerate towards rail.
As you get the quick service and the high quality kind of rail providers like iryo, and the prices come down just a little bit and the high speed route built, the air comes to rail, and then as the low-cost entrants come in, like Ouigo and Avlo, you see that change and the, and the coach trips and the buses, sorry, and the, the cars begin to move towards rail. You know, we're seeing, you know, EUR 9 price points between Madrid and Barcelona on what used to be maybe EUR 80, EUR 90. There's real opportunity in both directions. Ultimately, if you look at what happened in Italy, you are seeing the cancellations of air services essentially between Rome and Milan.
They only really exist, I think, as for connecting flights at this point. Never mind any legislation that may come through. I think there's significant opportunity for substitution, particularly on business. Then we obviously, and I won't go through all of it now, but we've got a series of different relationships and increasingly connecting up to all of the different business players who are getting interested in this idea of alternate brands where historically they've just gone for the incumbent. Then Germany, and then, Pete, you should tell me if I've missed anything as we've gone through this. Any develops in Germany. Look, that is of course a really interesting market for us. It's, you know, similar scale to France and the UK. It's, you know, as we've said before, right?
We're on record, Deutsche Bahn have been anti-competitive in their behavior for a number of reasons. We don't have a commission rate that we can yet speak to. This has been picked up by the regulatory environment in Germany, the BKartA. I would say, look, we are still a few months away from really understanding the conclusions of that. I'd say the conversation and the intensity of those has gone up a level. These things take years, and then they sort of move into months, and then it gets to weeks. I think we're in the month stage now. Look, we're just gonna have to see where that lands. Look, if it lands in a favorable position, I think that opens up Germany for the beginning of our playbook.
We've talked through what the phases have to look like before we can really invest in the kinda top-level specific product innovation or brand. That's how we think about Germany. Definitely, as you look over the next five to 10 years, I see it as a very exciting market for us. Thanks for the questions.
Great. I think we've got time for one last question if there's one out there, or are we all done? Andrew?
Hi. Yeah. We've got a question from Andrew Ross at Barclays, who couldn't be here today, unfortunately. He asked, "Of the EUR 4 billion rail market in Italy, the EUR 2 billion rail market in Spain, what do you think could be taken by aggregators such as Trainline over, say, the next five years?" He says the same question for the EUR 4 billion foreign travel market.
Sure. Look, I don't think we'll guide with specifics other than to say we've got a UK kind of model here, right. You can appreciate the way that we've worked through that. I don't think it's crazy to be thinking about where we were pre-COVID in the UK in the coming years in the next few years in those domestic markets. Look, it'll depend on a few different things, particularly in Italy. There's we have Ouigo, SNCF Ouigo have a stated intention to come into 2026. Depending on the scale and the timing of that could imagine us accelerating our penetration within the Italian markets. Those factors will weigh. Then look on foreign travel.
I think that market could expand over a period of time, and we've talked about some of the other players there and the fact that we haven't really rolled out what will be a kind of new playbook in terms of innovation to support not just U.S., but also Asian travel. I'm, you know, I'm relatively bullish on the, on the opportunity there. I don't know, Pete, anything.
No. That's good.
Without that. Look, thank you very much for a great set of questions. Let me kinda close things out and thanks for joining us again today. As Pete and I have said, we've delivered strong financial performance this year. Pleased to provide guidance for the year ahead. We have clear strategic priorities and are making significant progress both in the UK and international. We remain as positive ever about the opportunities that lie ahead. Thank you very much. Cheers.