Egypt-born and Dubai-based mobility startup SWVL plans to lay off 32% of its staff, it said in a statement today.
The company’s LinkedIn profile shows that it has more than 1,330 employees. About 400 people lose their jobs at the mobility company due to the layoff of more than 30% of the workforce.
Tech companies, both private and public, have faced settlements in recent months that have taken a beating on their valuations. The effect of an economic downturn has also affected their finances, cutting costs; at the top of the list is employee letting go.
This downsizing of the Dubai-based startup adds to the long list of global layoffs at various stages in what was a rough month for tech workers. More than 15,000 techies have lost their jobs in the US alone according to reports† Companies like Klarna, Getir, Gorillas and Bolt (the payments company) have laid off parts of their workforce, while companies like Snap, Twitter and Instacart have completely slowed down hiring.
It has been a very busy 18 months for SWVL leading up to this news. In March, the company went public through a SPAC merger with American, female-led, blank check company Queen’s Gambit Growth Capital. It was trading at $10 a share and targeting a valuation of $1.5 billion, but for the most part traded between $4 and $8. Its current valuation hovers around $500-$600 million.
The layoffs come just a month after SWVL acquired UK-based mass transit group Zeelo for $100 million, according to sources. It is one of five acquisitions SWVL has made in the past year; others are Germany’s door2door, Turkey’s Voltlines (for ~$40 million), Spain’s Shotl and Argentinean Viapool.
SWVL said that while these acquisitions have contributed to its overall growth, it will need to cut back on roles that have been automated through investments in its engineering and product and support functions teams.
“The planned layoffs will affect teams responsible for functions that have been automated after investments in technical, product and support functions,” SWVL said in a statement.
SWVL said it plans to turn profitable next year. Laying off hundreds of employees is one way to get there. Others include developing its own technology stack and growing its three models — where it earns $5 million in MRR — in existing and new markets, it said in a statement.
SWVL has a global presence in 13 markets: the UAE, Egypt, Kenya, Germany, Spain, Italy, Switzerland, Turkey, Japan, Argentina, Saudi Arabia, Jordan and Pakistan. According to a source, the majority of the layoffs will come from the company’s offices in Dubai and Pakistan.
Whether SWVL will continue its expansion into new markets such as Colombia, Mexico and South Africa and the US – announced during the SPAC merger – is uncertain†
“Swvl plans to provide financial, non-monetary and job placement support to help certain employees transition into new roles,” the company said in a statement about how it plans to support affected employees.
“As a result of the portfolio optimization program, Swvl management currently expects the company to be cash flow positive by 2023.”
CEO Mostafa Kandil sent a letter to its employees to deal with the layoffs. Here’s part of it:
Get Free Cash Flow Profitable in 2023
– Swvl implements a portfolio optimization program to focus on the highest profitability activities, improve efficiency and reduce central costs
– Benefits from the highest profitability of TaaS and SaaS, currently having >500 contracts in >10 countries generating >$5 million in revenue per month
– B2C business is also expected to be contribution margin positive by the end of 2022
– Builds on recent acquisitions of TaaS and SaaS companies Viapool, Volt Lines, Shotl and the ongoing acquisition of door2door that improve profitability margins
– Benefits of a world-class engineering and product team and technology stack that enable scalability and sustainable growth
However great the resources are, they are not infinite; cash is meant to be used responsibly. We must be as disciplined as ever. That’s why we announced today, May 30, 2022, that our portfolio optimization program will make cash flow positive in 2023.
As part of that program, we considered several scenarios to demonstrate how much we value our employees. We believe that it is only thanks to the team that Swvl has achieved such success, and we are also confident that Swvl will continue to grow stronger.
What we did:
– Voluntary deductions from the salary of the top management team
– Reduction of current office space
– Freezing of our current recruiting program
– Freezing travel and accommodation expenses
– Link spending to critical business requirements
As of today, May 30, 2022, we are optimizing our operations in some of our markets and reducing our workforce. The reduction follows a comprehensive review of team redundancy and how it complements our strategy. We have arranged one-on-one communication with all involved teammates. Each member of the reduced workforce will be invited to an interview with a relevant senior leader to clarify next steps based on each market’s local laws, redundancy rules and best practices.
To those who will leave, I’d like to say I’m sorry. And more importantly, this is not your fault. You will remain part of Swvl forever and our door will always be open for you in the future. We are incredibly lucky and grateful to have worked with such a remarkable talent that many companies would be happy to have. What will stay with us beyond your work is the knowledge that we have actually hired people who are better than us. I am sure you will continue to make a big impact wherever you go, as you have done day in and day out at Swvl.
To ease the transition for affected employees:
– Termination Benefit: All affected employees will receive a termination benefit based on gross salary and full cash payment
– Provision fund, tips and leave collection other legal payments
– All RSU are considered acquired
– Expense reports/OPD claims to be settled
– All final settlements must be taxed according to local requirements
– Payout transfer completed in the next 21 days
Health insurance: to be renewed for all entitled employees
Stock Options: All unvested shares for affected employees to vest on schedule
Alumni Directory: An alumni network directory to support our affected workforce
No interview policy for Rejoiners
Laptops to be kept by employees subject to data security requirements
Update: In an email to gotechbusiness.com, CFO Youssef Salem said Swvl is not ceasing operations in any country, be it due to its existing footprint or planned expansions, but rather is optimizing its network and workforce in each country.†