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Egypt-born and Dubai-headquartered mobility startup SWVL is planning to lay off 32% of its workforce it said in a statement today.

The company’s LinkedIn profile shows it has over 1,330 employees. Letting go of over 30% of its workforce means that around 400 people will lose their jobs at the mobility company.

Tech companies, private and public, have faced a reckoning in the past few months with their valuations taking a beating. The effect of an economic downturn has also affected their finances leading them to cut costs; the top of the list is letting go of employees.

This downsizing from the Dubai-based startup adds to the long list of global cross-stage layoffs in what has been a rough month for tech employees. Over 15,000 tech workers have lost their jobs in the U.S. alone according to reports. Companies such as Klarna, Getir, Gorillas and Bolt (the payments company) have dismissed portions of their workforce while the likes of Snap, Twitter and Instacart have slowed down hiring entirely.

It’s been a very busy 18 months for SWVL leading up to this news. This March, the company went public via a SPAC merger with U.S. women-led blank check company Queen’s Gambit Growth Capital. It listed at $10 per share and targeted a $1.5 billion valuation but has traded between $4 and $8 for the most part. Its current valuation hovers around $500-$600 million.

The layoffs are coming just a month after SWVL acquired U.K.-based mass transit group Zeelo for $100 million according to sources. It’s one of five acquisitions SWVL has made within the past year; others include Germany’s door2door, Turkey’s Voltlines (for ~$40 million), Spain’s Shotl and Argentina’s Viapool.

SWVL said that though these acquisitions have contributed to its overall growth, it will need to make reductions on roles automated by investments in its engineering and product and support functions teams.

“The planned layoffs will impact teams responsible for functions that have been automated following investment in engineering, product and support functions,” SWVL said in a statement.

SWVL said it plans to attain profitability next year. Dismissing hundreds of employees is one way to get there. Others include developing its proprietary technology stack and growing its three models — where it makes $5 million in MRR — across existing and new markets, it said in a statement.

SWVL is present in 13 markets globally: 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 Dubai and Pakistan offices.

Whether SWVL will continue its expansion into new markets such as Colombia, Mexico and South Africa, and the U.S. — announced during its SPAC merger — is uncertain.

“Swvl plans to provide monetary, non-monetary and job placement support to help transition certain of its employees to new roles,” the company said in a statement on how it plans to support affected employees.

“As a result of the portfolio optimization program, Swvl’s management currently expects that the company will be cash-flow positive in 2023.”

CEO Mostafa Kandil sent out a letter to his employees addressing the layoffs. Here’s a part of it:

Become Free Cash Flow Profitable in 2023

– Swvl is implementing a portfolio optimization program to focus on its highest profitability operations, enhance efficiency and reduce central costs

– Capitalizes on the highest profitability operations TaaS and SaaS which currently have > 500 contracts in > 10 countries generating > $5m revenue per month

– B2C business is also expected to be contribution margin positive before the end of 2022

– Builds on recent acquisitions of TaaS and SaaS businesses Viapool, Volt Lines, Shotl and pending acquisition of door2door which improve profitability margins

– Benefits from a world class engineering and product team and technology stack which allows for scalability and sustainable growth

Resources

No matter how big, resources are not infinite; cash is meant to be responsibly utilized. We need to be as disciplined as ever, which is why today, May 30, 2022, we announced that our portfolio optimization program to turn cash flow positive in 2023.

As part of that program, we have considered various scenarios that will allow us to demonstrate how much we value our workforce. We believe that Swvl has reached such a level of success only because of the team, and we are also sure that Swvl will continue to get stronger.

What we did:

– Voluntary salary deductions from the top management team

– Reduction of current office spaces

– Freezing our current hiring program

– Freezing travel and accommodation expenses

– Tying expenditures to essential business requirements

People

Effective today, May 30, 2022, we are optimizing our operations in some of our markets while reducing our workforce. The reduction follows an extensive evaluation of team redundancy and how this complements our strategy. We have arranged for one-to-one communications with all of the impacted teammates. Each member of the reduced workforce will receive an invitation to have a conversation with a relevant senior leader to receive clarity on the next steps based on each market’s local laws, severance rules, and best practices.

To those who will leave, I would like to say I am sorry. And more importantly, this is not your fault. You will forever be part of Swvl, and our door will always be open to you in the future. We are incredibly lucky and grateful to have worked with such remarkable talent that many companies would be fortunate to have. Besides your work, what will stay with us is knowing that we genuinely did hire people better than us. I am sure you will continue to have a significant impact wherever you go, as you have done day in and day out at Swvl.

Easing the transition for impacted employees:

– Severance: All impacted employees to receive severance based on gross salary and complete cash payout

– Provident Fund, Gratuity & Leave encashment other legal payments

– All RSU to be considered vested

– Expense claims/OPD claims to be cleared

– All Final Settlements to be taxed as per local requirement

– Payout Transfer to be complete in the next 21 days

Medical Insurance: to be extended for all entitled employees

Stock Options: all unvested stocks for impacted employees to continue to vest as per schedule

Alumni Directory: an alumni network directory to support our impacted workforce

No interview policy for Rejoiners

Laptops to be retained by employees subject to data security requirements

Update: In an email to TC, CFO Youssef Salem said Swvl is not shutting down operations in any country whether from its existing footprint or planned expansions but rather optimizing its network and headcount in each country.