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Swvl fears the impact of inflation on business
The record increase in energy prices has been disastrous for many companies in various fields. However, in addition to producers and suppliers of raw materials, the crisis on the market also played into the hands of other businesses. Among the lucky ones was the Dubai-based company Swvl, which provides innovative solutions for the transport sector.
Thanks to rising energy prices, the startup was able to attract a large number of new customers. What happened: Due to the high cost of fuel, consumers in Egypt and Pakistan have abandoned their private cars and switched to public transport. As a result, the number of bookings increased by 40% in the last quarter. It should be noted that these markets are large and promising, and the Swvl product has already established itself there. The startup provides a platform focused on private buses, its business model is similar to that of Uber, but is designed for large transport. Swvl offers more convenient routes and schedules, which are used for public transportation. The platform is suitable for individuals as well as for the purpose of organizing the logistics of companies and educational institutions.
Despite the growth of clients and the demand for services, the startup announced cost optimization. The main reason for reviewing processes was inflation, which affects the activities of all market representatives without exception, regardless of the sphere and scale of business.
According to the financial director of Swvl, the company has put a number of projects related to business expansion on hold. For example, it has suspended its entry into Mexico and Colombia for the time being. This is how the startup wants to insure itself against possible losses associated with inflation and rising interest rates. In this case, the company intends to show good profitability figures as early as next year, thus providing investors with a guarantee of the reliability of its activities.
In spring, Swvl laid off more than 30 percent of its staff. About 400 people lost their jobs out of 1,300 that were on the company’s payroll. In addition, the tariffs for the platform’s services rose by 10-20%.
Swvl operates in 13 countries, including the Middle East, Europe, and Asia. In April of this year, the company went public through a merger with SPAC. At that time, the valuation of the Dubai startup was $1.2 billion, but since then, the value of the shares has fallen by about 75%. This trend is related to the global trend of declining interest in technology companies and cryptocurrency.
However, Swvl continues to evolve, and a few months ago it acquired the British startup Zeelo. The deal amounted to $100 million. In addition to this purchase, the Dubai-based company last year included projects from Turkey, Spain, Germany, and Argentina.