More Customers Are Shifting from Cars to Buses

Dubai-based transport startup Swvl has been able to attract new customers who are giving up cars in favour of buses in its big markets like Egypt and Pakistan amid rising oil prices.

Chief Financial Officer Youssef Salem told Reuters that bookings were up 40% in the first quarter compared to the same period last year, as commuters left their cars and boarded Swvl.

Despite this, Nasdaq-listed startup Swvl is actively cutting costs and suspending its expansion plans as it seeks profitability next year to reassure investors amid rising inflation and interest rates.

The company has been forced to cut headcount by almost a third and is cancelling its plans to expand its consumer business in Jordan, Kenya and Argentina. In addition, the company has also raised fares by 10% to 20% in the last four months to keep up with rising commodity prices.

Swvl operates a fare platform for private buses, offering more flexible timetables and routes than public transport, and serving individuals, businesses and schools. It was acquired by Queen's Gambit Growth Capital, which valued Swvl at about $1.2 billion. However, the share price has fallen by more than 75%.

In such a situation, it is extremely difficult to attract investments, but Salem points out that the demands of investors in the current environment are clear, including free cash flow and a shorter time horizon, and they have changed the game for technology companies, which traditionally enjoyed longer time horizons.

CFO Youssef Salem said:

If any market will not be profitable by 2023, we need to shut it down now and re-launch it in 2023 rather than use additional capital from the market.