After three years of operating in Pakistan, mobility company SWVL this week chose to shut up operations in Pakistan completely amid a global slowdown in funding.
Company insiders stated that SWVL decided to shut down its intercity transport vertical in Pakistan on November 17 and lay off personnel. On November 18, the company chose to entirely wind up its activities, closing down the TaaS (transport-as-a-service) vertical.
SWVL had three business verticals in Pakistan. Individual riders could commute on SWVL’s buses for intracity transit under a retail model. SWVL’s retail bus service suffered a big blow first during the epidemic when all transportation took a knock.
Later on, the change in investor attitude in the public markets caused SWVL to cease its retail business in Pakistan in June 2022. Under the other two verticals that have lately been stopped, individual riders could utilise buses for intercity travel under the travel vertical.
Under TaaS concept, SWVL offers tailored services for corporate clients such as enterprises, schools, and other customers that operate their own transportation programmes. Under this approach, company’s offers included access to Swvl’s business platform and technologies, consultancy and reporting services, and use of the vehicles and drivers in its network to conduct such transportation programmes.
While the company did not disclose any reason for the suspension, a source in the industry indicated that the difficult decision of shutting down could be because of the global slowdown in investments. SWVL had been operating a high cash burn model and its financial status had been perilous.
SWVL announced net losses of $161.6 million for the six-month period ended June 30, 2022, which had doubled over the equivalent six-month period of 2021. For the first six months of 2021, SWVL had a net loss of $80.6 million. SWVL’s total accumulated losses as of June 30, 2022, were $375.8 million compared to $216 million as of December 31, 2021.
The corporation was having negative operating cash flows of $76.8 million for the six-month period of 2022. According to the company’s financial filings, it has been funding its activities primarily with proceeds from the issuing of Class A Ordinary Shares. On March 31, SWVL received investments of $53.3 million and $111.5 million from the reverse recapitalization transaction and sale of shares to certain PIPE (private investment in public equity) investors to finance its operations.
It then got another $20 million investment, providing the company enough liquidity to maintain it a going concern for 12 months.
All of this, however, does not explain why SWVL shut Pakistan down totally despite Pakistan being its second-biggest market in terms of revenue. SWVL obtains the bulk of its revenue from Egypt, Pakistan, Kenya, Saudi Arabia, Jordan, Argentina, and Turkey, out of the 20 countries it operates in.
While layoffs have been reported in SWVL, no word of a complete shutdown in other countries has emerged yet.
For the first six months of 2022, revenue from Pakistan was $9.71 million, representing nearly 25% to the overall $40 million in income for the period. The revenue from Pakistan had climbed from $2.4 million in the first six months of 2021. Only Egypt tops with a revenue of $19 million during the first half of 2022.
The corporation, however, did not seem to be able to achieve profitable in Pakistan. Last month, SWVL revealed that operations in only five of its 10 top countries by revenue, namely Egypt, Turkey, Germany, Kenya, and Jordan, achieved adjusted EBITDA positive or breakeven in August 2022. The organisation has been charting the path to profitability and attaining a cash flow-positive stage by 2023.