Swvl, the mobility startup that once operated on four continents, has posted a net profit for the first time, according to its financial report for the first half of 2023. The company achieved profitability by selling off its subsidiaries in over a dozen countries and narrowing its focus to three markets: Egypt, Saudi Arabia, and the UAE. Swvl also laid off staff and effectively transitioned into a B2B company in the first half of 2023.
While Swvl lost $161.6 million in the first half of 2022, it posted a net profit of $2.1 million for the same period in 2023 despite a 49% decline in revenue year-on-year. Swvl also posted an operating profit of $13.4 million, compared to an operating loss of $56.0 million in H1 2022.
Most of the company’s revenue (73.7%) comes 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.
Egypt is Swvl’s largest market, bringing in 93% of its revenue, while Saudi Arabia brought in 7%. The UAE did not contribute to its revenue. The cost of sales also dropped by 61% to $9.3 million compared to the first half of 2022.
“I believe that Swvl is now creating significant value for its shareholders and is positioned for profitable growth and enhanced expansions in high revenue markets,” said Mostafa Kandil, the company’s CEO.
Swvl is also generating cash, as inflow into the business was $2.2 million in the first half of 2023, compared to operating outflows of $76.8 million in the first half of 2022. The company’s total assets stand at $34.65 million, a 63.67% reduction year-on-year, while its total liabilities stand at $29.62 million, a 75.3% reduction from year-on-year.
Investors reacted positively to Swvl’s improved performance, with its share price rising by more than 100% since the release of the financial report. The company’s share price is $2.29 at the time of this report.
Swvl’s reversal of fortune from struggling to profitable business is notable, as the company has faced recent struggles such as currency devaluation in Egypt, its biggest market, and reduced appetite from investors to back startups, resulting in its woes on the public market.
The company’s debut on the NASDAQ in March 2022 at a share price of $10 represents a distant past, as the company’s shares have since February 2023 hovered around $1, earning multiple threats of delisting from the NASDAQ.
Swvl tried several options to reverse the slump, such as a reverse stock split in January 2022 that granted each shareholder 25 shares for each share held. That move offered brief relief as its share price jumped to $4 per share, but initial optimism faded as its share price quickly fell again.
Under pressure to arrest the slump, the company also laid off more than 400 staff and dissolved subsidiaries in many countries, such as Argentina, Chile, Mexico, Germany and Pakistan, by either shutting down or selling its stake in those subsidiaries. Swvl also reduced the compensation it paid its senior management and company directors from $13.4 million in the first half of 2022 to $344,355 in 2023. These decisions have allowed Swvl to reduce its expenses from $53 million in 2022 to $5 million in 2023. However, the company is reversing these decisions as it has rehired some former employees amid plans to expand into more markets.
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