Swvl, the NASDAQ-listed mobility startup that transitioned into a B2B company last year, posted its first full-year net profit in 2023, continuing its reversal of fortune from struggling to a profitable business.
The Dubai-born company posted a net profit of $3.1 million last year, a turnaround from a net loss of $123.6 million in 2022, according to its latest financial report. Swvl increased its gross profit more than eightfold to $4.1 million from $0.5 million in 2022. It also posted an operating profit of $12.1 million, compared to an operating loss of $80.2 million in 2022.
“Our focus today remains towards improving profitability while resuming our high-paced growth,” said Mostafa Kandil, the company’s CEO.
For Swvl, which has endured a turbulent life as a publicly traded company, profitability is critical to support its planned expansion into “high-revenue markets.” The company will expand its strategic partnerships into more Gulf Cooperation Council (GCC) countries, Kandil said. It currently operates in three countries: Egypt (its biggest market), Saudi Arabia, and the UAE.
Since 2022, Swvl has made financial changes by reversing its previous acquisitions to reverse its fortunes after its share price of $10 dropped 90%, earning multiple threats of delisting from the NASDAQ. A reverse stock split in January 2022 saw the company’s share price jump to $4 per share, but it quickly fell again. Its share price has gained over 90% in the past year up from $1.21 as of May 1, 2023. It stands at $13.70 at the time of this report.
While Swvl achieved profitability off the back of the sale of its subsidiaries and focus on three markets, the mobility company’s revenue took a hit in 2023. Its revenue dropped 48% to $22.8 million, compared to $44.1 million in the previous year. The company’s cost of sales also dropped 57% to $18.7 million compared to the previous year.
Swvl generates most of its revenue from selling technology clients use to plan their routes, operate fleet services, or even manage riders. The rest of its revenue is from operating buses. One big positive in Swvl’s report was that it reduced its losses for the first time in recent years. This is significant if the company wants to remain profitable. Its negative cash flow dropped 83.3% to $9.1 million in 2023, compared to the previous year.
The company has laid off staff and dissolved subsidiaries in many countries including Argentina, Chile, Mexico, Germany, and Pakistan, by either shutting down or selling its stake in those subsidiaries. These decisions have helped the company alleviate its business pressures. The company’s total assets stand at $21.9 million, a 61.8% reduction year-on-year, while its total liabilities dropped 71% to $15.9 million.
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