Trainline PLC (LSE:TRN) shares fell more than 7% in early trading on Wednesday before recovering some ground, as investors focused on softer forward guidance despite solid full-year results.
The rail ticketing app operator reported 7% growth in net ticket sales to £6.3 billion for the year to 28 February, while revenue increased 2% to £453 million.
International net ticket sales rose 3% to £1.1 billion, driven by strong growth in France and Spain, though gains were offset by slower momentum elsewhere and disruption in Spain, with an impact on demand from a series of rail accidents.
Adjusted EBITDA climbed 11% to £177 million, operating profit jumped 43% to £122 million and earnings per share leaped 48% to 19.4p.
The FTSE 250 company pointed to cost discipline and operating leverage as drivers of profit growth, despite the impact of a previously flagged commission rate reduction.
Trainline guided to revenue of £440 million to £455 million for the 2027 financial year, which was slightly below market expectations, while net ticket sales are expected at £6.2 billion to £6.45 billion.
The company said it expects adjusted EBITDA margins of about 2.9%, with its international consumer division set to reach breakeven.
Broker Peel Hunt said: "The outlook flagged headwinds, but with management prioritising margins to offset slower growth, we downgrade FY27E revenue and upgrade EBITDA.
"This update reinforces a business increasingly defined by discipline and strategic clarity, with profitability proving resilient as growth moderates.
"However, with new headwinds appearing (including the war in the Middle East) and a market favouring growth, it might not be taken that way. Nevertheless, the stock continues to trade on a punitive 14% FCF yield."
Analysts at Panmure Liberum said top-line guidance was "circa 2-3% below consensus", but EBITDA guidance is "circa 2-3% ahead of consensus, with company guiding to lower than expected marketing costs in Spain as it pivots to profitability".
International is expected to hit breakeven, while in the UK, the analysts said the company is "pointing to ongoing impact from LNER's 1-click delay-repay offering, which they are not allowed to offer despite having a solution ready to go, and this is likely to drive negative revisions to consensus UK net ticket sales growth".
Finally, Panmure flagged that the European Mobility package "we are told may force European [train operating companies] to sell each other's tickets for cross-border travel once implemented, [which] could reduce the need for an aggregator in these markets, albeit the devil will be in the detail and this remains a hypothetical at this stage".
The analysts said they feel the share, trading for 11 times earnings, is "still cheap for the growth opportunity, and we expect consensus earnings to move higher today, but the narrative will be unhelpful, particularly on Europe".