Shares in train and bus ticketing platform Trainline (TRN) have dipped as losses deepened in its first half-year results since listing.
In the six months to 31 August, the firm reported a £89m loss after tax compared to an £11m loss the prior year, which it attributed mostly to the costs of its initial public offering (IPO) in June.
But stripping out such exceptional items, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) doubled to £42m as total revenue rose 29% to £129m on the back of a 19% jump in net ticket sales to £1.8bn.
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While a small part of its overall revenue, Trainline’s international division performed particularly strongly with revenue up 99% to £14m as it looks to diversify from its core UK market.
The firm’s shares dropped 2.6% in morning trading to 410p, but still well up on the 350p the shares were priced at in its IPO.
'SO FAR, SO GOOD' FOR TRAINLINE
The results show it has been ‘so far, so good’ from Trainline, according to Megabuyte head of research Lee Prout, with the firm reconfirming its full year revenue growth guidance, which is expected to be in the low to mid 20% range.
Prout said, ‘The strong cash generative nature of the business, along with IPO proceeds, has also allowed net debt to reduce significantly to a public market friendly 0.5 times EBITDA from 3.5 times a year ago.
‘With the majority of tickets for travel still being bought offline and Trainline the clear digital enabler the future looks very bright for the company.’
However, while Trainline appears to be on an upward growth trajectory, it’s worth highlighting the firm does operate in a sector with weak barriers to entry.
THREAT FROM TECH GIANTS
Trainline said in its IPO (initial public offering) prospectus that National Rail Enquiries, a journey planning and information service owned and operated by the UK rail carriers, could capture a material share of the market should it decide to start selling rail tickets directly.
It also flags the risk of Google, Apple, Amazon or Facebook being a major competitive threat should they decide to enter the market, given the strength of their brands and customer reach.
While in London, Uber now includes tube and bus times on its app. Given Uber’s scale, it could quite easily become a one-stop-shop for transport needs in big cities, something which would be another headache for Trainline.
