Trainline plans a £50 million share buyback as sales increase

Trainline shares soared on Tuesday after the group announced a £50 million share buyback following better-than-expected growth in the first half.

The digital rail ticket platform’s net ticket sales rose 23 percent to £2.65 billion for the six months ending August, while revenue rose by almost a fifth to £197 million.

Ticket purchases in the company’s UK consumer division rose to more than £1.7 billion as more customers booked online and on the day of travel.

It further benefited from passenger volumes regularly approaching pre-pandemic levels in the absence of Covid-related restrictions and commuters traveling to the office more frequently.

This is despite workers from the RMT and Aslef unions staging several days of strikes as part of a long-running dispute over wages and conditions, costing the group around £5 million to £6 million in lost sales per day.

Outside Britain, ticket demand rose by around a quarter to £559 million, thanks to solid performances in Spain and Italy.

In recent years, trade in Italy has been buoyed by new advertising campaigns, while the company’s expansion in Spain has been led by the liberalization of the country’s high-speed rail system.

Digital sales slowed abroad, partly due to increased competition in keyword auctions, although demand for the company’s mobile app continued to rise significantly.

Jody Ford, CEO of Trainline, said: “Given our continued growth and the strength and maturity of our business, today we are launching a share repurchase program to begin returning capital to shareholders.”

Trainline maintains its expectations for both net ticket sales and revenue growth of 13 to 22 percent for fiscal 2024.

Meanwhile, adjusted core revenues are expected to be between 2.15 and 2.25 percent of net ticket sales.

After the update is Trainline shares rose 12.4 per cent, or 30.6p, to £2.78 on Thursday morning, making them by far the biggest gainer on the FTSE 250 Index.

However, their value is still down about 24 percent over the past year.

Russ Mould, investment director at AJ Bell, said: ‘There remain limited barriers to entry in this market, but Trainline’s brand is becoming increasingly entrenched, which should give it a degree of protection against potential rivals.

“The company continues to focus on innovative features, such as achieving cost savings by splitting your trip into multiple tickets that total less than one ticket for the entire route.”