Cairo-born and Dubai-based mass transit and shared mobility services provider SWVL has carried out its second round of layoffs affecting 50% of its remaining headcount, according to a statement shared by the company.
The news is coming six months after SWVL laid off 32% of its workforce in a “portfolio optimization program” effort geared toward achieving positive cash flow next year. More than 400 employees were affected at the time, leaving more than 900 behind at the mobility company, based on data from its LinkedIn profile. But with this second round of layoffs, the number of employees at SWVL would have been reduced to a little over 450.
Reports about a second round of layoffs at SWVL had been circulating for over two weeks as axed employees took to LinkedIn to share that they were open to new job opportunities. Local media said the layoffs affected teams across multiple departments, including tech and HR in Dubai and Pakistan. Another report has it that SWVL completely shuttered its Pakistan operations entirely two weeks ago.
Although SWVL, in its statement, didn’t confirm these reports, it did note that it was evaluating a “potential sale, scale back or discontinuation of operations” of its smaller markets. It’s unclear which markets the Dubai-based mobility company is referring to, but several sources have referred to Pakistan as one of its larger markets. As of June, SWVL, in its financial statement to investors, said it was present in 20 markets across four continents: the UAE, Egypt, Kenya, Germany, Spain, Italy, Switzerland, Turkey, Japan, Argentina, Saudi Arabia, Mexico, Jordan, Kuwait, Pakistan, Chile, France, the U.K., Portugal and Brazil.
SWVL went into some of these markets via acquisitions: Germany’s door2door, Turkey’s Voltlines, Mexico’s Urbvan, Spain’s Shotl and Argentina’s Viapool (its planned acquisition of U.K.-based Zeelo was called off in July). When SWVL conducted its first round of layoffs, it said that though the acquisitions contributed to its overall growth, it needed to make reductions on roles automated by investments in its engineering, product and support functions teams. However, the second round of layoffs reveals a different story: the current economic downturn has exposed that SWVL scaled too fast and didn’t have the necessary systems in place to make the acquisitions work.
SWVL’s sloppy operations — despite claiming that it turned EBITDA-positive or break-even in half of its markets as of August — are also evident in its stock market performance so far. In March, the mobility company went public via a SPAC merger with U.S. women-led blank check company Queen’s Gambit Growth Capital. It listed at $9.95 per share on Nasdaq and targeted a $1.5 billion valuation. Several months later, SWVL has seen its valuation tank to $53 million and its share price drop by over 90% to $0.40 (price before the market opening). As a result, SWVL received a letter from Nasdaq this month saying it was not in compliance with a listing rule (its shares traded below $1 for 30 consecutive business days) and it had until May 1, 2023 (180 days) to regain compliance and avoid delisting (it must get its shares above $1).
Cutting costs is one way SWVL believes will, in some way, affect its share price. The Dubai-based company stated it is taking these measures amid the continuing uncertainty in the global economic environment as the volatility in capital markets “potentially impact SWVL’s ability to generate sufficient cash from operating activities and external financings to fund working capital and service its commitments.” The company, in the statement, said it is also reducing operating expenses including discretionary spending such as marketing expenses and other third-party services. Going forward, SWVL’s broader optimization plan is to sharpen its focus on its largest markets which contribute the most to its revenues, including Egypt and Mexico.
For the first half of the year, SWVL made $40.7 million in revenue, a 3.2x growth from H1 2021; however, its losses (including operating loss and recapitalization costs) during this same time amounted to over $161.6 million.