TNLIY (TNLIY) Q2 2027 Earnings Report, Transcript and Summary

Hello, everyone, and thank you for joining the Trainline H1 FY 2027 Results Presentation. My name is Lucy, and I'll be coordinating your call today. [Operator Instructions] It is now my pleasure to hand over to Ian Brown, CEO, to begin. Please go ahead when you're ready.

Good morning, everyone, and thank you for joining us this morning for Trainline's H1 FY 2027 Results Presentation. I'm Ian Brown, CEO of Trainline. I'm joined today by Peter Wood, our CFO. This is my first set of results since joining Trainline, and I'm delighted to be here today. Before we begin, I just want to say how deeply saddened we all are by last week's tragic rail accident near Toledo in Spain. Our thoughts and prayers are with everyone affected. Now, let me take you through today's agenda. I'll start with my early impressions of the business and then provide an update on GBR. Peter and I will then cover our financial performance and provide a strategic update, including how AI is improving our products and the way we work. Then after the presentation, Peter and I will be happy to take your questions. For those of you I haven't yet met, by way of background, I spent the CEO part of my career scaling and transforming consumer and technology businesses. Most recently, I was CEO of Flutter U.K. and Ireland, where I led a collection of brands operating in highly regulated markets. Before that, I was CEO of A&S Group. I spent 6 years at Booking.com, including the CEO of its Trips Business Unit and the CEO of Rentalcars.com. So I know international online travel marketplaces very well. I also created and built out the insurance business of Booking.com. My track record of these businesses has been underpinned by product and commercial innovation. I therefore have a good understanding of what it takes to deliver innovation-led growth and scale as well as to lead businesses through periods of change. I joined just under 2 months ago, so it's still early days. Nonetheless, I've enjoyed spending time with many colleagues across our London, Edinburgh and Paris offices so far, talking with customers and progressively working my way around our business. As you might expect, I've also been busy meeting with industry partners and carriers as well as meeting key stakeholders and government. I look forward to meeting shareholders on our upcoming roadshow, and I plan to engage broadly with our stakeholders in the coming months. What I've seen so far in my first 2 months has reconfirmed why I joined Trainline, and I'm genuinely excited about what's ahead. First, our fundamentals are strong and genuinely hard to replicate. We have real scale. We're Europe's most downloaded rail app serving 27 million customers. Our customers' behavior is habitual. Almost 2 million customers use our app every day to plan, book and manage their rail travel. We have deep loyalty and trust. Our app is rated 4.9 stars, and we're the most trusted brand in U.K. rail. We're a leading technology platform built on years of deep rail expertise and investment in technology. The Trainline app or API connects our customers to hundreds of rail and coach carriers across Europe, many of them operating aging legacy systems. That's hard to build and hard to copy. Our platform sits on an exceptional scaled data asset. AI is increasingly ingrained in our products and across our business processes, making it smarter and faster in how we deliver for our customers and partners. We have an outstanding team. It's innovative and driven with a strong track record of delivery and execution. The opportunity ahead is very real across the U.K., International and our Trainline Solutions business with lot of Trainline well positioned to continue to scale each of them. So Trainline is exactly the kind of business that energizes me. It has some complex challenges to solve in a period of material change, forgive me, but many opportunities ahead. The underlying strengths I just mentioned, showed in the first half, with the business delivering a robust performance despite multiple headwinds. In the U.K., we improved our proposition and continue to build trust and loyalty. We now have over 3 million digital railcard holders in our app, up 26% year-on-year. In Europe, in a year without major aggregation moments, we rebalanced growth and profitability. International is now profitable for the first time. Our B2B distribution business also continues to scale, led by strong growth from international customers. With broadly flat net ticket sales alongside strong cost management, we delivered 7% growth in adjusted EBITDA and 10% growth in adjusted EPS. The announcement of a new GBP 100 million buyback in September also reflects both the strength of the underlying cash generation of our business and confidence in our outlook. Now as you know, on the 9th of October, the ORR published its draft Retail Code of Practice for consultation. We see it as an important step forward. For the first time, there will be a regulatory framework governing how GBR interacts with all retail market participants. The overall future rail framework is, of course, wider than just the code. It also includes the GBR business plan, the public service contract and GBR's own operating license. The draft confirms fair, transparent and nondiscriminatory access to fares, products, systems and the data for third-party retailers in line with the level playing field that the Rail Minister Lord Hendy last week committed to. This reflects our progress to date with government engagement, for example, Delay Repay, where we secured future equivalents earlier this year. The government's fact sheet published alongside the draft code on 9th of October also says GBR must act in a way that does not exclude competitors, distort the online retail market or use a dominant position. And for the first time, an independent regulator, the ORR, will have a statutory responsibility to enforce compliance. These are all positive steps. However, we believe the framework needs strengthening. In particular, we're seeking stronger mechanisms and oversight to ensure equivalents of treatment with GBR online retail. In other sectors where state-backed entities operate in the market, such as the BBC or BT, there's a clear precedent for strong safeguards on economic equivalents and economic transparency. We're not yet seeing the same here. The government has, however, been clear on the continuing role independent retailers will play and on the need for safeguards. The government's fact sheet is clear that GBR should compete alongside other retailers in a fair and open online retail market. Indeed, as Lord Hendy told the laws on the 8th of September when asked about the cross subsidy, he said likewise, "GBR will not be overcompensated to deliver retail functions in a way that distort the market." So our focus is on seeing these very clearly stated principles translate into the strongest possible market framework. We continue to engage actively in the consultation process. And more broadly, we maintain our assertive stance. And with that, I'll hand over to Peter before joining for Q&A at the end of the presentation.

Thank you, Ian, and good morning, everyone. Before I share the group results, let me start by unpacking the performance of each of our business units, starting first with U.K. Consumer. Net ticket sales were up GBP 2.1 billion -- were GBP 2.1 billion, up 0.4%. This reflected both strong underlying rail demand as well as fewer refunds as a result of a change to the industry refund policy in April 2026, which narrowed the window in which refunds could be claimed. As a reminder, there was no contribution to NTS from inflation in the half given the regulated fare freeze. We continued to face headwinds from train operating companies self-preferencing their own retail channels as well as the expansion of Project Oval. There were also additional headwinds from the very hot weather in the summer months alongside other disruptions to the rail network. Turning next to International. Net ticket sales were GBP 579 million, down 4% year-on-year. Performance was affected by a number of external factors, including softer foreign travel, reflecting ongoing geopolitical tensions in the Middle East, weaker consumer sentiment in Spain following the tragic rail accidents earlier this year and heat and strike-related disruption in the summer, which affected many parts of the European network. Performance also reflected our more disciplined approach to marketing as we balance growth and profitability in the half ahead of future aggregation moments. Meanwhile, in Southeast France, net ticket sales grew by double digits, sustaining growth a year off from Trenitalia's expansion into the market. This demonstrates our position as the aggregator of choice ahead of the next wave of carrier competition across Italy and France. Turning next to Trainline Solutions, our B2B business. Net ticket sales grew 3% to GBP 548 million. Within this B2B distribution, which helps large travel management companies sell train tickets, led the way up 22%, with International B2B continuing to grow very strongly, up 45%, driven by new client wins across Europe. We are on track for International B2B sales to overtake U.K. sales by the end of the calendar year. As expected, this growth was partially offset by the roll-off of 2 white label contracts, including ScotRail, which we stopped providing services to in the half, and the drag from CrossCountry, which ended last November. Bringing this together, group net ticket sales were GBP 3.3 billion and revenue was GBP 233 million, down 1%. This largely reflected a lower U.K. revenue take rate, which was the result of changes in the industry refund policy. This led to fewer refund transactions and therefore, lower refund fee revenue. Despite lower revenue, gross profit increased 1% to GBP 195 million, driven by an improvement in the settlement rate we paid to payment processes. This was achieved through renegotiated fee rates with our main payment providers. Cost of sales savings also came from lower customer service costs due to WhatsApp and Voice AI handling more contacts. Turning to costs, where we delivered strong discipline across the business. Total OpEx and CapEx were down 5% year-on-year. In addition to lower cost of sales, we drove marketing costs down, reflecting efficiencies in both the U.K. and International and a more disciplined approach to marketing in International. CapEx was broadly flat, reflecting ongoing investments in our product and tech platform. We continue to invest in AI and in our products, but we do it in an efficient way. Together, these savings offset an increase in other administrative costs. That increase was driven by inflation, investment in AI and ongoing higher legal and public affairs costs. As a result of this cost discipline and on a slightly lower revenue base, adjusted EBITDA grew 7% to GBP 100 million. This was driven by the improvement in International, which moved from an EBITDA loss of GBP 8 million last year to a profit of GBP 6 million. That is on a post-transaction fee basis, which means covering the cost of the platform serving these transactions. Furthermore, all of our markets in Internationalwere profitable, another milestone for us. Adjusted EPS grew a little faster at 10% to 13.8p, supported by continued accretion from our share buyback. Turning to cash. Adjusted free cash flow was GBP 45 million, with the year-on-year movement reflecting the timing of working capital as well as tax payments and leverage at the end of the half was 1.2x. Our capital allocation framework remains consistent to invest in the business at appropriate returns, maintain a strong balance sheet and return surplus cash to shareholders. And in September, we announced a new GBP 100 million share repurchase program. Over the last 3 years, we have returned GBP 356 million to shareholders, equivalent to 28% of our share capital. This highlights both the cash-generative nature of our business and the continued confidence in our outlook. Before turning to guidance, an update on the CMA's investigation and our booking fees are presented. We operate across multiple regulatory frameworks, each with its own requirements of how rail fares and fees are presented. At the same time, rail tickets are complex in themselves with booking fees varying depending on the choices customers make. We have always engaged actively with the ORR on our fee presentations. Since the CMA letter in November and following the announcement of an investigation in August, we have continued to engage proactively with both the CMA and the ORR and are seeking a swift resolution. To conclude, I'm pleased with our financial performance. We delivered what we planned and grew earnings despite multiple headwinds. Looking ahead to the full year, we are reiterating our guidance. We continue to expect net ticket sales of between GBP 6.2 billion and GBP 6.45 billion, underlying revenue of between GBP 440 million and GBP 455 million and EBITDA of around 2.9% of net ticket sales, with International Consumer expected to be above breakeven for the full year. And with that, I'll move on to our strategic progress, starting with the U.K. consumer. Trainline is the U.K.'s #1 travel app and customers rely on it for the best value, the most accurate information and peace of mind on their rail journey. That position is the result of investing over a number of years to build our technology platform and the best capability in rail. We make U.K. rail simple. Every ticket type, journey combination and fare is searchable in one place quickly and easily. We also offer products that help customers save money, including SplitSave, railcards and Season Tickets. In the first half, we invested in our U.K. proposition and railcards were a particular highlight. We have made it even easier for customers to buy or renew a railcard with relevant prompts, timely reminders and simpler eligibility checks. We have also grown railcard adoption through partnerships, including Monzo, which offers a free digital railcard to its Monzo Perks subscribers. And railcards give customers real savings, an average saving of GBP 175 per year. The results of these improvements are clear. We now have over 3 million customers with a digital railcard in our app, up 26% year-on-year. We hold over 1/3 of the railcard market, and we grew the number of railcards at over 3 times the rates of the rest of the market. We're also growing in key categories. In 16 to 30 railcards, shown in light blue in the middle chart, we have 47% of the market. Another example is Network Railcards shown in dark blue, which offer savings across the Southeast. As we have made it easier to discover, buy and use railcards, more people in this part of the network are adopting them and unlocking the benefits. Holding the railcard also builds loyalty. Digital railcard holders transact more than 4 times as often as nonholders and spend more than 3 times more, a competitive advantage that is hard to replicate. Railcards give customers a reason to join us. Our product gives them a reason to stay. Our travel and disruption features help customers along their journey and are unique to Trainline, powered by our data and our technology. On the left, the live traffic. Maps are now available to all users so you can see your position, your spot and any disruption on your route. In the middle, travel forecast. We predict your arrival time using our own journey data, providing us with a more accurate forecast than the one you would see at the station or in the train. And on the right, when a delay happens, the app knows, eligible customers are redirected to claim Delay Repay from the app and more than half now do, nearly double since January. These features build have it. Today, 91% of eligible travelers see our disruption features, double the level since the start of the half and customers come back month after month. We will continue to iterate and improve this feature set to give customers more -- even more reasons to stay. In the half, we also added products that give customers more value, flexibility and convenience. Trainline Flex is a new ticket type that combines an advanced ticket with insurance so customers can cancel for any reason. We are also using our scale to build advertising and partnership revenue with relevant discounts and promotions, such as through PayPal, available to customers in the app. Together, insurance advertising helped grow U.K. ancillary revenue by 22%. That diversifies our revenue and gives us new ways to earn more from our large customer base. Trainline remains the most trusted brand in U.K. rail. In a recent survey, 51% of U.K. respondents said that they -- that we were the brand they would most likely consider for a ticket, well ahead of the competition. Our campaigns in the half widened our reach, particularly among families and new audiences. We launched a podcast series for families traveling with young children on trains, alongside a number of social media campaigns and a sponsorship opportunity of Arthur Fery's team at Wimbledon. Moving on to International. While there are no major aggregation moments this year, international remains an aggregation story, and Trainline is ready for when each market further opens. Our business has 3 parts, each at a different stage of aggregation maturity. First, Spain and Southeast France, which are 21% of international net ticket sales. Here, the aggregation story is proven. Southeast France continues to grow at double digits and Spain shows how we can invest to scale the market and then turn profitable. Second, the rest of France and Italy, around 2/3 of international net ticket sales. With no near-term competition, we are balancing spend carefully here, while being ready to invest more ahead of aggregation moments. And third, Germany and the rest of Europe, the remaining 15%. These are longer term growth opportunities. For now, most of our customers there are traveling cross-border or away from home. We are building a more profitable base in Europe by applying the U.K. playbook. French railcards are growing strongly through upsell and prompts. Railcard sales rose over 70% year-on-year in the half. And that is building a base of loyal French customers who are more likely to travel with Trainline. Ancillary revenue also grew strongly, led by insurance and hotels. It contributed to a more than 30 basis points increase in the international take rate and makes our revenue in the region more diversified. Carrier competition remains the catalyst for the next phase of growth in Europe. In Spain, the market has gone from one high-speed carrier brand to 4 competing across the 5 largest routes. In Italy, Trenitalia and Italia already compete on the high-speed network. SNCF is now expected to launch from mid-2028, a year later than we had originally anticipated. In France, Velvet is on track for a summer 2028 launch, having obtained its railway operating license in September. Alongside other entrants, we expect 4 competing carrier brands from mid-2028. On the Channel Tunnel, there has been recent progress with Trenitalia ordering trains and Virgin Trains recently receiving its license to operate. Together, these markets represent GRB 12 billion TAM by 2030, providing us with significant headroom for growth. Foreign travel is a further overlapping opportunity. We estimate the inbound market from the EU and the rest of world at around GRB 5 billion. This is a high margin and our proposition is built for this customer. So international is a large market with clear catalysts. Until further aggregation moments arrive, we will keep deepening customer loyalty, driving engagement and managing profitability. Now to Trainline Solutions, a business with over GBP 1 billion annualized net ticket sales. Our focus is growing business travel through B2B distribution and branded B2B. European rail is fragmented, leaving travel management companies with a challenge of connecting to more APIs, including aging legacy systems. Our global API aggregates this supply into a single connection. Demand is building on both sides. Corporates want more rail and carriers want more B2B because business customers spend more per transaction and drive more first-class demand, which helps carriers manage yield. Sustainability targets, more capacity and more competition are also making rail a genuine alternative to air, both cross-border and domestic. B2B distribution is a large and sticky segment. Our average customer has been with us for 7 years and switching costs are high, which gives us recurring growth. It remains a success story for Trainline. In H1, we won 18 new customers, with 4 of them large travel management companies. And finally, turning to AI, an area that remains a big opportunity for Trainline and where we continue to make good progress against our 3 pillars. First, AI-powered products, solutions tailored to each customer need. Over 1 million customers used travel assistant and voice AI in the first half, up 20%. They are ROI positive per conversation. We build efficiently, keep the cost to serve low and customers resolve simple issues like refunds themselves. Second, new AI distribution channels. We are working alongside leading AI companies so customers can reach us wherever they start. We lead in Google AI rail citations in every market except France, and we are live in the ChatGPT app. And while AI referrals remain under 1% of sales today, we are building now and are ready if and as that grows. And third, using AI to move basket. Lead and cycle times are down 10% and defects are down 18% across the tech team. Where we use AI more heavily, the gains are much bigger, and we expect more to come. Our agent platform is live in our data business, competing workflows, and we are rolling it out across the organization. Taking a closer look at the next -- at the impact of AI in distribution. Today, over 90% of customers come direct to our app, mostly for everyday repeat purchases where speed matters. However, customers have more options on how to plan their journeys than ever before. They might start in Google, ask ChatGPT or Claude or use an agent such as Meta News. We have strong SEO and are well connected into these tools through our ChatGPT app and our MCP infrastructure. So whether the buyer is a person or an agent, we can surface the journey options and complete the purchase. But the journey doesn't end when the ticket is sold. 60% of customers fear travel disruption. So after purchase, they need live updates and help when things go wrong. They may need to change a ticket, get a refund or claim Delay Repay. That is where our proprietary data and tools sit and it is the data we own. Rail is different from most things people plan with AI. It is live as stakes are high when things go wrong and customers need to trust what they are told. Our app is built for rail and nothing else. We make it visual. You check the map, you check the platform and act on it all, all in one place and fast. These are the features that bring customers back. As we face an ever-changing market, whether it's through AI or GBR, our structural advantages matter more. There are 4 and they reinforce each other. It starts with the foundation. We hold a retail license and direct integrations with every carrier plus the contracts, accreditations and bonding facilities. That position gives us data, every search, booking, journey and aftersales interaction sits in, one place on a leading technology platform built over many years with AI increasingly integrated. Better data builds better, more innovative product because we can see what travelers actually need and build for it and better product builds habit and loyalty, so customers will choose us. We are the #1 travel app in the U.K. and the #1 rail aggregator in Europe. Active customers in the U.K. transact frequently with us, and it takes just 23 seconds from search to purchase from familiar routes. And that in turn gives us trust and scale. AI strengthens each of these advantages, so the position grows with every journey. In summary, this was a resilient first half. Net ticket sales were robust, margins improved, and we've continued to return cash to shareholders. In the U.K., we have a stronger proposition with a better travel experience, clearer value for money and more flexibility for customers. In Europe, in a year without major aggregation moments, we rebalanced growth and profitability with International now profitable, and we are building strong foundations for growth. In AI, we are executing faster and building a deeper competitive moat. Our balance sheet is strong, so we can keep returning cash, while we navigate change and shifting markets, and we are confident in the outlook. Ian and I are now happy to take your questions. So I'll hand back to the operator.

[Operator Instructions]. The first question today coming from Alastair Reid of Investec.

A couple from me. Firstly, can you expand more on the opportunity you formed the tender to build the GBR app? Is there any scope for the sort of commercial terms of that to impact the government's decisions around the funding mechanisms for GBR, for example? And then secondly, on the topic of pricing more broadly, can you perhaps expand a little bit on the strategy for Trainline Flex and whether you're looking to differentiate pricing more versus train operators? And could you have some bookings be more explicitly linked to whether you have a SplitSave ticket? And I guess the last thing sort of linked to that, do you think the GBR ticketing operations would have the incentive to do SplitSave as well given the lower revenues it would generate for its parent?

Thanks, Alastair. Yes, let me work through those. So first, you asked about the tender opportunity. This we expected earlier in this year. I think it's a complex set of attributes that the government is trying to pull together here, and that's why there's been some delay. There's a chance this will emerge pre-Christmas, although it may also appear earlier in the New Year as well. In terms of whether the options that Trainline could offer something and how that might fit into the funding, no, I don't really see that as an opportunity here. I think the government has got an idea about what it's seeking to acquire. It's refining those proposals at the moment, we understand. And as I say, they -- we're expecting that to appear imminently. The mechanism for funding, GBR more generally is somewhat separate to that. Of course, there is some look across and they need to ensure that it fits the right envelope. But I don't think there's a role for Trainline to play here. There's quite a clear set of rules around procurement, and I'm not sure that there's any option that you're pointing to here. And then next, you asked about the Trainline Flex and pricing more broadly. Well, I think we've made really good progress with ancillary products. To start with, it was a question of layering in insurance and hotels often post sales, if you like, as options for the customers to buy. And over time, we found better ways to surface this, targeting the right customer at the right time and have managed to scale this. And now we're into the second era, which I think is really interesting. Obviously, if you blend these products together, you can create unique inventory, a ticket with different terms and conditions or a package for rail and hotels are things that we are now exploring. And as ever -- and as we have always done, we will test and learn our way into this and see where there is opportunity and where we can exploit things that work for customers, that's really what we'll figure out as we work through that. But we're pleased with the progress we've made so far on that. And then you asked about SplitSave as well. I don't think that there's a chance that GBR -- well, there's a chance that they'll offer SplitSave. But I'm not sure that's really the approach they want to take. And I think really, this is one of those things that exist because there is yield management in the platform, and they're trying to make sure that they get the loading on trains, the popular ones that are perhaps early in the morning versus the ones later in the day, and that's what really what creates this whole system. So yes, our working assumption is that they won't offer SplitSave. They may find ways to remove certain splits. But I think overall, and with yield management still a requirement in the system, I don't think there'll be major changes here. Essentially, what they're doing here is keeping the subsidy under control by charging people who are traveling first thing on a Monday morning between Manchester and London, who are able and willing to pay more, and that's able then to subsidize tickets on empty trains or for families traveling at the weekend or such. And I think there's not really the appetite to increase that subsidy. In fact, the government has stated that they want to reduce this subsidy over time. And I don't think you end up removing some of these things by normalizing prices up either. That's certainly counter to the direction of the travel for the government who really sees train ticket as already quite expensive, and it wouldn't be a popular decision either. So yes, I don't think they'll offer it. I'm sure they'll continue to innovate and reform fares, but I think it will be there for Trainline and others to use in the long run.

The next question comes from Gareth Davis of Deutsche Numis.

Just a couple from me. Firstly, a very useful update on the French liberalization. When Velvet enters and the other players come in, in calendar year '28, do we have any feel yet for kind of regional targets or kind of how extensive their ambitions are in that early phase? Or should we really think of this as a Trainline opportunity in 2029, '30? The second one was really following up just quickly on the SplitSave question. You've been trialing SplitSave fees on the app. Just wondered if there's any sort of feedback in terms of are you seeing that impacting customer purchasing? Or is -- what are the learnings from putting that SplitSave fee in rather than charging a booking fee? And then finally, just on the travel management business, clearly, 4 large international wins is great in the first half, 18 new customers. Are you kind of there in terms of the opportunity for big international customers? Or can you see further opportunities looking forward? And sort of what is the scale of opportunity across that International Trainline Solutions business? Are there white label opportunities starting to emerge as well?

Great. Thanks, Gareth. Yes, let's go first to liberalization. Yes, I think 2028 looks like it could be an exciting year and kind of a restart, both in Italy with SNCF and then Velvet in France. The routes, I think there are 5 key routes that SNCF is looking to run. It's relatively extensive. And I think the important and exciting thing for us is that the rail traveling public who got used to some degree of juggling 2 apps will have a third to deal with as well on some of these routes. And that does represent an interesting opportunity for us. I think -- again, Velvet is launching in a part of France out to the west of Paris which is not served by any other carriers at the moment. Obviously, down to Lyon and down to Marseille, you've already got some aggregation. So this is going to be the first time that those customers traveling out that way are faced with more than just the incumbent carrier. And so both of these offer similar, but slightly different options for us. As we get clearer on the launch plans, we'll begin to refine our planning. But typically, what we do, the tickets go on sale ahead of the launch of the services and there's a moment at that point for us to invest in brand and to capture early sales. And then really, you get more momentum as the service launches and as it starts scaling, when people start seeing a different branded train at the station, then it's part of the marketing, if you like, or even awareness of the fact the new service is somewhat visual, if you like. And that's where we'll further lean in and seek opportunity to build. And I think what we've seen in Southeast France with Marseille is, obviously, there's a good first year for us to get after in acquiring new customers and building sales. But actually, it persists over time and builds momentum. So to your point around '29 and '30, yes, I think we expect that to kind of continue into those years from a good start. We really want to build momentum over time, if you like. Then you asked about SplitSave fees. Yes. I think we are very mindful of how the world is evolving and ahead of GBR being stood up, we've still got a window to explore. I think we've got a long history of operating -- offering a differentiated service and features that customers love. If you went back, I don't know, what, 5 years or so, you had lifetimes and platform information in the app. And of course, you got the saving by booking in advance and people were willing to pay a fee for that. And we're now layering in quite a lot of new features with travel disruption and make the labor pay notifications and things like this. I think that kind of -- those features are things that customers are going to continue to love based on the feedback we see now. And we may evolve the fee mechanism over time with that. The SplitSave test is one of those, and there could be other things over time as we look to evolve that model more broadly. But the learnings are good. I think customers understand the proposition. They understand why the value being tied close in really makes sense. So positive signals from that. And yes, we'll continue to iterate overall. And then finally, yes, it's really great to see momentum, particularly into Europe with the travel management companies. And we're talking to customers who perhaps a few years ago felt that they didn't need Trainline, but eventually came back around because the work and the efforts going to actually integrating these things directly on what are often legacy systems and require nurturing and maintenance. They aren't kind of, "Hey, we connect once and that's done for 5 years." These things are evolving, organizing, if you like. So yes, great to get momentum there. I think you then talked about white label and whether there was more opportunity. I think it's in the back of our minds, but it's not something that is kind of most obvious and we're actively pursuing right now. It's more that B2B cohort rather than trying to serve new operators with white label businesses. But look, the world is continuing to change. I think as AI washes through and as we embrace that, that might mean that it is a more attractive proposition in years to come. So I'm not shutting it down, just giving some kind of realism in the near term.

The next question is from Andrew Ross of Barclays.

I've got 3, if that's okay. First one is for you, Ian. So welcome, and thanks for the opening remarks as to what attracted you to Trainline. I appreciate you've only been in the business for a relatively short period of time. Wondering if I could ask if you have any early thoughts on if anything needs to change from a strategic perspective, EG levels of investment, the product, the geographic exposure, et cetera? Any additional comments would be very helpful. That's the first one. But the second one is to ask about the U.K. ticket price into next year. Obviously, there wasn't a regulated increase this year. How are you guys thinking about the likelihood of there being one next year or indeed any other year in this labor government? And then the third question is the UP on the accounting of the CMA study. There's a small exceptional that you've booked. If you could explain what that is? And then you're still referring to underlying revenue. So I guess there's still some uncertainty as to how that may or may not change, but it would be helpful just to get all the context as to how you're thinking of accounting for the potential risks about the study over time?

I'll take the first one then, Pete. Andrew, thanks for the questions. I mean, look, as you said, it's early days. Not that I'm striking them off on the wall or anything, but I think this is day 3 and week 6 in the CEO seat. So as you'd expect, I'm working my way around the business, a broad set of stakeholders, listening to customers and absorbing a lot of stuff and asking a lot of questions. It's too early, obviously, to sort of say we'll be having a change in the strategy. What I will say is I've been struck by how strong the foundations of the business are. I touched on them earlier, fantastic product, great brand. And the other thing I'd call out is just the strength of the team and the culture here, which I've been very impressed by and I'm proud to be part of. So look, my focus right now is really 3 areas. One is external engagement, as you'd expect, particularly with the government around GBR. The second is ensuring we continue to execute on the plan well across U.K., International B2B and of course, technology. And then the third, as you'd expect, as I'm sort of working my way around the business and our stakeholders and listening to a lot of people, I'm starting to -- it's early stages, but sort of starting to think with senior team and the Board, what is that next growth card for the business, which will answer your question. So forgive me, I can't give you a direct answer today. But as that takes shape, we'll update you in due course.

Thanks, Ian. And yes, let me take the second question around ticket prices in the U.K. Look, I think the budget didn't provide any clarity, if you like, or didn't announce that there would be a fare freeze or not. I still think that it's a possibility. The last time it was announced further towards Christmas. But if you take a step back and look at the mood music more broadly, I think the government under Burnham are seeking in many ways to try to relieve pressure from the public and their finances in many ways. And we know that Burnham is close to transport. He's shared a few hypotheses and thoughts around, is there a railcard that could fit between the young persons and the senior. And I think generally, this idea that rail is expensive and they want to make it more affordable against the backdrop of a challenge in the treasury is one that they continue to explore. I think net-net, there will be pressure on fares into next year. That's kind of our planning assumption, if you like. Whether that's through a headline fare freeze or whether that is through other reforms or mechanisms, I think that, that's most likely to persist for the next year. And then you asked about the CMA accounting and the exceptional charge that we pushed through. So yes, probably worth just clarifying. Obviously, this is an ongoing investigation, and it's about whether we -- how we present fees, not whether we can charge them or not, just to be very clear. This charge is really a kind of accounting interpretation. The application of those standards to the situation we're in, required us to make some judgments. And this was ultimately what the accounting standards led us to, if you like. And it covers the total cost, if you like, the legal aspects, potential fines and things like that. But if you then go deeper into reading through Note 10, there are still a wide range of outcomes. And please, I don't want you to think that this is the answer or where this number will land. It could be 0. It could be a different number, and we'll have to find out in due course exactly how that plays out. And likewise, to your point around underlying revenue, again, this is really the point that based on how the business is performing today, we've reconfirmed guidance. If there are some indications from the CMA that impact revenue, then those will come on top, but I wanted to provide some visibility about how the underlying business is performing in the meantime.

The next question is from Ed Young of Morgan Stanley.

Two for me, please. First of all, there's been quite a few mentions during the presentation around balancing investment and efficiency. And I know you need only to get drawn on the strategy bit large, but I do wonder if you could between -- you maybe provide some color on how you address that challenge? You've obviously managed to drive EBITDA growth despite flattish top line. So it's clear what you've done this year. Are there more levers to pull next year? And how do you sort of look at that when you've got the prospect of some more opportunities in the business over the next couple of years? And then second of all, on the CMA, you said the next update you expect is January. You said you want to resolve this as quick as possible. Is it possible that is the answer? Or is that just an initial update and we should be expecting a much longer process to get some certainty on the CMA?

Yes. Thanks, Ed. Good question. So just on the first one, I think as we look into next year, and obviously, it's very early days for Ian, who's learning the business very fast. But we've got a process ongoing internally, both on bringing in up to speed and in the loop and also to define what next year and beyond looks like. I think about it in 2 halves, if you like. There are some pressures that we have in the business from kind of rail-specific pressures, if you like, that I think will persist. We just spoke about the fares in the U.K. and the pressure, I think, will persist into next year there. Of course, we have the tragic accident in Spain, which will undoubtedly result in some longer term headwinds there. We've got a delay in Italy with SNCF launching now in '28 rather than '27, which we had expected. And more broadly with geopolitics and fuel prices, I'm not sure that inbound is set to recover either. So if I look over the next 12 or so months, I think there is a bit of pressure at the top overall. On the other hand, we look further out, and there is really interesting opportunities for us to chase after. AI, we're already finding -- unlock some real potential, particularly in travel experience at the moment. And that's, I think, an exciting area for us to differentiate. We're obviously starting in the U.K., but over time, that would be something that could be interesting in Europe as well. Obviously, there is more liberalization on the horizon and high-speed rail tailwinds continue to persist. We just spoke about Trainline Solutions and the great momentum we've got there. And that's before we even get beyond Europe because we really want to keep dreaming, if you like. And then finally, ancillary revenues, again, we've spoken about this, and I think there's opportunity there as well. So then it comes to, well, how do you balance and judge the near-term factors that we need to consider with the longer term opportunity. And in essence, that is exactly what we're doing alongside Ian. And I don't know, Ian, if you have a few things you want to add to that thinking?

Yes, just very briefly, I mean, firstly, I can echo everything Pete just said, but maybe from my perspective, as I look at the business, and you'd expect quite a bit of homework on the business as I went through the processes before saying yes. I'll just say this, so we've got a bunch of things to navigate in terms of uncertainty and external factors and Peter makes that really well. Just from my perspective, as I sit here, I'll say one thing, which is, I'm even more excited about the business today than I was on day 1. And I'd say the medium-term opportunities for the business are much greater than I anticipated as I did my homework from the outside. So I think we both sit here genuinely bullish about the medium to long-term, but recognizing we've got quite a few things we need to navigate in the sort of short-term.

And then to address your question on the CMA. When the announcement of the investigation started, the timeline was that by January, this investigation would be concluded, and that's really what underpins this timeline. I think as we've got into this, we recognize that there is a certain rhythm to how these investigations unfold. We're working hard and fast to hit the deadlines and make sure that we do everything on our side. But there is a certain rhythm. And as far as I'm concerned, the CMA will still hit the January deadline, maybe we'll hit before. But as I say, it's a live situation, and we'll have to see how it unfolds.

The next question comes from Peter McNally of Stifel.

You mentioned just moments ago that any CMA ruling would come on top of any current guidance. But I guess my question is, when you actually start displaying the booking fee, do you have any expectation on how that might impact bookings? And does your reconfirmed guidance reflect any sort of changes to the presentation of the booking fee given that it's supposed to be coming imminently? And then second question is, you mentioned the phased rollout of single leg pricing in the statement with an impact on lower average transaction value. Just wondering how big of an impact that is? And just a quick third one. Spain and France are 21% of International. Can we carve out Spain specifically of that, please?

That's Peter. So yes, starting with the CMA and the display of fee. So I would say that the funnel that people go through to purchase is clearly -- it's a critical part of our real estate, and we spent years refining and optimizing that. And so, yes, changes to that can have some impact, but we have a skilled team that kind of worked through those changes and maximize the conversion rate, if you like, over time. That all said, people do know that Trainline has a booking fee. It's kind of -- we have a very high repeat rate. A lot of people are returning customers who love the service we provide and so to some extent, changing the visibility or the presentation in some way, I'm not expecting to have a particularly big effect. We'll need to work through it, any changes that we do make and there will be probably opportunities to refine it over time because with all these things, you never get them perfect the first time out, and we are always running A/B tests on our experience. So yes, I'm not expecting a significant impact, but there might be something, and we'll have to work through it. And then you asked around single leg pricing. Yes, I think the government has explored various different things, and they have slightly different dynamics on the East Coast mainline, they explored this idea of there being a sort of semi-flex ticket that could move, you could catch the train before or afterward, at least there was a window. And that kind of created different complexities in a way. So sometimes in seeking simplification, they actually introduced more complexity. And that's, I think, one challenge that they face in trying to not create too many losers with the changes they make. Governments typically don't like the kind of winner or loser trade-offs. They're just creating winners overall. The single leg pricing is another interesting one. What we've really seen here is that transaction count has gone up a bit and average transaction value has gone down a bit. And overall, it kind of washes out. It's relatively neutrally for us, like people are as ever very efficient to trying to find the best form of ticket that's available to them. And net-net, it's kind of priced in a relatively similar way overall, even if the presentation is a bit clearer and ostensibly a bit fair, if you like. And that sometimes drives certain other mechanisms like the transaction fee that we have in our accounting. Actually, you're seeing more revenue portions out to Trainline solutions than before because we've got a higher transaction count. So the sort of second order effects that we need to keep an eye on. But overall for customers, I don't think a material shift and it's not driving much change at the NTS level for us. And then finally, yes, you asked about Spain and Southeast France. Yes, 21% for those 2 combined. We don't split Spain out overall, and we're not about to do that now. I think that if you -- it is the smallest of the 3 markets. And of course, it's been -- we hope to create a path of profitability growth in this market over time. We're really going to have to see what unfolds in the coming weeks and months. Obviously, we've only got a few days of data at the moment on the impact here. We'll share more once we have a better understanding. I think if you make assumptions around some reasonable proportion of that being Spain, you won't be too far off. But it's not the majority nor the minority in a sort of 80-20 way. It's probably more balanced than that, I would say, if you want to do some calculations.

The next question comes from Sean Kealy of Panmure Liberum.

Two for me, if I can. First of all, you've taken quite a lot of spend out of marketing in International, which makes sense in the context of delays to carrier competition in Europe. When do you think you're going to get to sort of the minimum level of marketing that you're willing to put in without potentially compromising the brand in markets and then having to spend a bit more later on? Do you think that sort of where we are now is, you wouldn't want to go below that? Or do you think there could be some more you could take out for next year given further delays? Just interested on the trade-off on that point. And then second of all, on inbound foreign travel, I think it's fair to expect that it's been pretty weak or slightly weaker, at least given hot summer, civil unrest in France and so on. What are you seeing at the moment? And could there be some upside to International numbers next year if the Iran war ends and so on and various other bits wash out?

Thanks, Sean. So I think the marketing -- the shift we've taken is definitely the bigger of the moves that we might make. And at this point, we're now into more marginal trimming, which could be up or down as we look ahead. And really, there might be ways to see further efficiencies on the one hand. On the other, the backdrop continues to evolve. You've got Google and the search results page continues to change. You've got the -- more people spending a bit more time with other tools such as ChatGPT and a bit of fragmentation in that space. And so I think it's -- we're solving against an evolving backdrop, and we'll have to continue to test and learn, which frankly is how we've always operated. You're kind of putting campaigns live in areas that are new, you're trying to hone them and you're trying to balance the overall equation. You've kind of got this seed capital to test and learn and then you put the bulk wherever you're getting the best return overall. So yes, I think we're more or less at the right level. It could go up or down a little bit at this point, but I'm not expecting a more significant shift like the one we've taken so far to unfold. And then, yes, thank you for your question on inbound. I mean, 2 minds on this one. I think that, yes, if there is a swift resolution to things in the Middle East, then that is undoubtedly going to be supportive next year in terms of travelers. That said, I think there's quite a lot of stress already in the system with regards to fuel prices and futures and things like that. So I don't think this suddenly unwinds. Very difficult to read the kind of broader civil unrest backdrop. I think particularly Americans don't like the idea of there being unrest in Europe and that can put them off planning their travel. We saw that previously when France had some heat in it. And that may also be built into that planning horizon over Christmas, New Year, but that may also impact some of the travel plans that they're making as well. So yes, it's a mixed bag, I would say. But at the moment, I'm probably a bit more cautious looking into next year based on my read of where we are.

The next question comes from Chris Lux of Bank of America.

Just 2 for me, if I can. You just mentioned the balance sheet is strong enough to cash while you never get the change. Could you -- how you're thinking about the pace of the new GBP 100 million buyback program? Execution so far seems fairly measured with the CMA, expected to complete by January, should we expect the pace to pick up if there's more clarity? And then just the second one that was on the CMA timetable. Maybe Ian, turning to the GBR. You mentioned BBC and BT as examples of strong safeguards, which mechanisms would matter most to you in the final retail code? For example, separate accounts for GBR's retail are more protected, access to the full retail -- full range of fares, including splits? And when do you kind of expect the code to be finalized?

The line was really bad for us. I don't know if others on the call heard it. I think I got the first question, which I can answer. I'm not sure I got the second one, but let me start with the first, and we'll go back around. I think the question was around the pace and the execution of the GBP 100 million tonnes buyback that we put out. Look, I think there are a couple of factors that determine pace. Obviously, the availability of cash is one, and there's no issue on that over the last few months. One other is when we go to close periods, we take a more prudent start. So if you look back over the last month, we've had a slower rate running here, and that's because we can't touch the order once we've submitted it through a close period. And you should expect that to be readjusted, I guess, in the coming days or so. And then working capital fluctuations is another factor in all of this. We announced it back in September. Nothing has materially changed, and I'm expecting to complete this program over the course of the month through into next September. And then did anyone in the room catch the... Should I send the GBR one? I think it was around access -- a little bit access to full range of fares and where particularly we needed, what we'll be calling framework to be strengthened. So if that's right, Chris, I'll have a quick crack at that.

Yes, that's correct.

Okay. [indiscernible].

No, that's great. That's perfect.

Okay. So look, on access to sort of products and fares, the Minister Lord Hendy has been sort of very clear in his words on this one. The draft code requires GBR to ensure access to products, providing services and data on fare, transparent and nondiscriminatory terms quite. This is an area we see most of the coming government's words and commitments and assurances reflected in the draft code. Albeit this, we might have a few nitpicks around the old word like sort of products that form a core part of the online customer offer. So that's an example of kind of where we'll be engaging sort of constructively through the consultation process that kind of runs to December 11. To your sort of second question, why are we're calling for it to be strengthened? Look, I'm going to go back and make 2 points first. The first is GBR formation is an enormously complex thing that it's going to take the government time to get right. And it's really important for all of us as sort of citizens and taxpayers and passengers that the government do get this right, and we're playing an active and constructive part in that, which codes the first part, the draft code. We're going to see the passenger service contract, GBR's own business plan, GBR's own kind of license, all come into view over the coming months. So it's only when we sort of see all of that together, that sort of GBR is kind of fully formed. But nonetheless, the code is an important part of it. So where are we calling for strengthening are 2 very specific areas. One is around economics and transparency, right? And again, I go back to the government's stated intent and what Lord Hendy said. He says specifically "GBR will not be overcompensated to deliver retail functions in a way that distorts the market." The government's own fact sheets referred to the Great British rail retail market as among the most competitive in Europe. And so they're very clear on that. The gap -- basically, we see a meaningful gap between the government's words and what is currently in the draft code. So what we specifically want to see here are the mechanisms that ensure equivalent of treatments between GBR online retail and independent online retail. And I'm going to reference BBC and BT as other examples where you've got large state-backed entities that participate in well-functioning competitive contested markets. And they have very clear precedents established over many years for transparency and safeguards for the parts of those entities that compete in competitive markets. So we very much want to see the gap close between the government's repeated and ongoing assurances on the record here versus what we currently see given effect in the draft code. And then the second piece very briefly is around oversight and the powers of the regulator, kind of the ORR. So we want the ORR to have clear upfront visibility of how GBR's online retail activity is funded. And we want the regulator to be able to hear [indiscernible] and merit-based appeals. So in other words, before a harm occurs, we want the regulator to have the powers to hear those appeals and to be able to bind GBR to outcomes. So in other words, regulators to be able to act swiftly and with confidence where there's an imminent possibility of something that, again, goes against the monster's words and risks distorting the market. So I'll just close by saying, look, it's a big complex thing in multiple parts. We've seen really positive step forward with the publication of the draft code. We're engaging constructively, proactively. We maintain our assertive stance. And maybe the final point I'd just observe is the government makes clear throughout and it's kind of made clear on the code, the competition law continues to apply, and that's a backstop here.

The next question comes from Giles Thorne of Jefferies.

First question was on competition in Europe and how you see competitive dynamics changing or not at all as a result of the merger of Omio with Europe? And then the second question is a bit more philosophical, but I wanted to test or hear how fragile you think the medium and longer term outlook is in Spain? We've obviously had the event of the crash. But even prior to that, the travel times between Madrid and Barcelona have been extended. Adif or ADIF, however you call it, had been reluctant to give any price cuts to reflect those longer train times. We've seen the low-cost carrier Vueling relaunched service between the 2 cities. So the most recent data points are a fairly negative direction of travel for rail services -- passenger rail services in Spain. And your thoughts there would be useful.

Thank you. So first of all, the kind of merger or the acquisition of Rail Europe by Omio. I think Omio is an entity that they go beyond rail, and so we're somewhat different to them. They offer flights as well, for example. And their focus really is on the foreign inbound market. It's an attractive market in so much that the margins are higher. It's also not nearly as big. Majority of rail journeys taken by people domestically in their home market. So I think it's a natural fit. I'm sure there's a lot of work to be done integrating the 2 together. And -- but I think we also have a strong proposition in this space. We will continue to compete well -- here as well. I don't think it materially changes the backdrop from our perspective. And then, yes, with your question on Spain, I think the government over the last couple of decades have put a huge amount of investment into the high-speed network. I think it's fairly clear that there are some questions that need asking and certain aspects of that network need to be reconsidered and perhaps adjusted and changed. And there needs to be the work done to restore consumer confidence, and this will take some time, of course. We've not had any indication that there's an issue from the fact that it's a private operator that's been involved in this. And I think the way the network is run, the same safety standards, the same protocols are applied to all who are operating on the network. So it's an issue whoever's train is running on it overall. So yes, I don't think there's a huge amount more to say at this point. It's obviously very early days from this most recent incident, we'll have to see what unfolds. But I still see a future for rail and the high-speed network in France given the backdrop, notwithstanding some changes that might need to be made.

Is it realistic to think that there could be negative NTS growth in Spain over the next 3 to 5 years?

Well, we're in a significant negative growth right now on the back of the incident and actually through the year, we have been negative on the back of the accidents further earlier in the year. I think, yes, it will remain to be seen how that kind of laps through. And then once you've got a year out from the most recent incident, what kind of confidence there is and how that builds thereafter. So yes, I think for the near term, some negative growth. But in the longer run, I don't think that it's negative forever.

The next question is from Lara Simpson of JPMorgan.

I think most of my questions have actually been covered. But maybe just coming back to U.K. Consumer and the outlook there. Can you remind us where we are on Project Oval? I know we've spoken in the past around GBP 150 million net ticket sales at risk. It feels like that phasing has probably taken a little bit longer. But how much of that have we now cycled and what should be incremental over the next 2 years? And then I guess, with U.K. Consumer, it sounds like we're a bit more downbeat on pricing, still risk around Project Oval. Do you think we can return to a period of growth in FY '28? Or could there be some downside risk expectations there on the U.K. Consumer top line? And then just on International, it feels like you're quite comfortable with the level of marketing there. You've obviously swung profitability in the first half and are guided to be profitable in H2. Do you think you can hold profitability now on a midterm view even if we look to sort of '29, '30 where carrier competition is expected to intensify and sort of build of profit now? Or is there a risk that you could go back to negative territory as you go after that long-term growth opportunity? And then sorry, just a last question from me on C&A. It feels like that GBP 3.7 billion provision looks quite low relative to the sale of your booking fee revenue potentially at stake. So I just wanted to check that, that assumption does factor in, I suppose, a probability weighted view on both redress and fines because there are 2 running themes there. If you can just confirm that? And maybe also remind us what your booking fee revenue exposure is? I know it's not something you carve out, but just to try and gauge what the downside scenario could be, if you can give us any context on the exposure, that would be helpful.

Thanks, Lara. So yes, I'll start first with Oval. Look, I think the backdrop here is back in February '25, we had the first 50 or so stations. December '25, we had another 30 or so and then another 20 in March, I think, this year. So particularly those last 2 drops, we're still cycling through some of the impacts. Now I think that has -- we've got a good handle on it. And typically, what happens is on day 1, there's not a huge impact. And then it builds over a period of time as people begin to notice the ability to tap in and then it starts to level out again. And as we've seen, the further out from London that you go, the less dramatic the impact is, but it is still there, if you like. So the final, what, 130 stations, I think, are slated to go early next year. TDC exactly if they stay on track time-wise. But they are further out. And so I think the remaining part of that GBP 150 million is still the best estimate that I can provide to you. But you're right, it has taken longer than we originally anticipated as this has slipped out to the right overall. So yes, still a bit of a headwind there. And then more broadly to your question around the outlook into next year, obviously, not providing formal guidance for next year at this point. I think the way we're running at the moment net the good work that we're doing on railcards and other things, for example, less the impact of some of these factors, the self-preferencing overall. And then we talked extensively about the kind of price backdrop. I can see it kind of continuing to run at this kind of level into next year. But that's not guidance. That is just joining the dots on what I'm seeing at the moment, and we'll provide more color as we get into next year with guidance. And then thanks for the question on international marketing. I think we've been clear for a long time that when aggregation comes, that is the moment to invest more. I think we've developed and refined the playbook over time. And really, it depends what exactly gets launched and when as to exactly how much we invest. If these things all come at the same moment, and we think there's good long-term opportunity, then we won't set a floor at the 0 line. We will invest with a view to creating longer term value and building our position out from those moments. That said, it doesn't mean that we will drop below, right? There is a way in which these things are spaced appropriately. We've got underlying momentum and therefore, it's not necessary either. But it's hard to say exactly right now without seeing more clarity on the plans. And then finally, yes, just to confirm, the provision considers the potential fine, a potential redress and some legal costs as well. So it does cover all those bases. You're not wrong, you don't split out the booking fee. If you look at the overall U.K. take rate, you can remove the commission and blends to roughly the 4.5% that the headline is. And you're left with the residual part. A material part of that is booking fees. We've not split it out. But just to give you some altitude, it is a material part of that residual take rate, if you like. And -- but yes, as I said already, the -- this is an accounting judgment on the situation as it is today. And there's still a variety of outcomes that could unfold. It could be 0 or it could be a different number. So don't please think of this as being the answer. Great. I think that's all we have time for today. Thank you, operator. And I thank you all for your questions and for joining us. Just to recap, this was a robust first half. We are executing well and remain confident in the outlook, and I look forward to speaking with you all again soon. Thank you.