Swvl unveils it's portfolio optimization program to become cash flow profitable in 2023

In a letter undersigned by Swvl’s CEO Mostafa Kandil, he addressed partners saying that the company will focus on expanding its B2B and B2G product line to fulfill the urgent market need while optimizing its B2C operations. According to him: "A rising tide lifts all boats, and it's a privilege to be able to help our customers and business partners."

He delineated the company’s strategy as follows:” Businesses around the world are suffering from higher costs and overall uncertainty. Declining stock markets have led to a global crisis with unforeseen consequences. Over the past few weeks, Swvl has been hit like others across the globe with changes to its financial realities. While change is often unexpected, we believe that any attempt to resist it instead of adapting to it will prove futile. Today, with the current global economic downturn, as much as we did everything we could to put people first, we now know that we are not able to keep everyone unimpacted. We know we have to make tough decisions in order to prioritize profitability over growth to ensure that Swvl thrives once we are on the other side of this.”

“Business models are tools that help companies create value before they can capture value. Yet it is often overlooked that there is more than one way for a company to create value with its current resources and expertise. One of our core values is "Customers are the end destination and starting point." Our mission is to provide safe, reliable, and affordable mass transit across the globe. We are committed to re-inventing a mass transit system that has not been revisited for years, and providing a solution where people need it most and where it is most complex—megacities with high density, overpopulation, and broken public transport systems, and infrastructures. We are certain that the world needs efficiency now more than ever, and thus efficiency is the core of our solutions. At times when companies are struggling with their cost, we can help them by providing more efficient, higher-quality transportation.”

He announced that the following steps will be taken for becoming free cash flow profitable in 2023:

- Swvl is implementing a portfolio optimization program to focus on its highest profitability operations, enhance efficiency and reduce central costs

- Capitalizes on the highest profitability operations TaaS and SaaS which currently have 500 contracts in 10 countries generating $5m revenue per month

- B2C business is also expected to be contribution margin positive before the end of 2022

- Builds on recent acquisitions of TaaS and SaaS businesses Viapool, Volt Lines, Shotl and pending acquisition of door2door which improve profitability margins

- Benefits from a world class engineering and product team and technology stack which allows for scalability and sustainable growth

To achieve that goal, he said that the company has already done the following:

- Voluntary salary deductions from the top management team

- Reduction of current office spaces

- Freezing the company’s current hiring program

- Freezing travel and accommodation expenses

- Tying expenditures to essential business requirements

As regards what the company plans to do to become free cash flow profitable in 2023, he said:” Effective today, May 30, 2022, we are optimizing our operations in some of our markets while reducing our workforce. The reduction follows an extensive evaluation of team redundancy and how this complements our strategy. We have arranged for one-to-one communications with all of the impacted teammates. Each member of the reduced workforce will receive an invitation to have a conversation with a relevant senior leader to receive clarity on the next steps based on each market's local laws, severance rules, and best practices.”

Mr. kandil addressed those who will leave, saying “ I would like to say I am sorry. And more importantly, this is not your fault. You will forever be part of Swvl, and our door will always be open to you in the future. We are incredibly lucky and grateful to have worked with such remarkable talent that many companies would be fortunate to have. Besides your work, what will stay with us is knowing that we genuinely did hire people better than us. I am sure you will continue to have a significant impact wherever you go, as you have done day in and day out at Swvl.

With the aim of easing transition for impacted employees, he said that the company will take the following measures:

- Severance: All impacted employees to receive severance based on gross salary and complete cash payout

- Provident Fund, Gratuity & Leave encashment other legal payments

- All RSU to be considered vested

- Expense claims/OPD claims to be cleared

- All Final Settlements to be taxed as per local requirement

- Payout Transfer to be complete in the next 21 days

Medical Insurance: to be extended for all entitled employees

Stock Options: all unvested stocks for impacted employees to continue to vest as per schedule

Alumni Directory: an alumni network directory to support our impacted workforce

No interview policy for Rejoiners

Laptops to be retained by employees subject to data security requirements