Cabify, the Spanish ride-hailing company, has no immediate plans to go public, as its business stabilizes in the aftermath of Covid-19 and it invests heavily in delivery.
That is according to chief executive Juan de Antonio who has been steering the transportation company through the tumult of the pandemic the last two years.
“It’s our natural path to do an IPO, we don’t have any pressure on timing given that the company has its own resources and can grow with it. It’s our natural path but I cannot give you a date.”
De Antonio said that Cabify, which operates in Spain and throughout Latin America, is now EBITDA-positive. The company stated in December 2021 that it would end that year with revenues of $516 million but has not disclosed the final number.
It is a stark contrast to the state of Cabify’s business in 2020, during the early days of the pandemic, and for the ride-hailing and mobility industries generally.
“Back in March 2020, our revenues went almost to zero when we were in lockdown. Late 2019, so just a couple of months before, we had reached a huge milestone for us, we were not only EBITDA-positive but also free cash flow positive. We were generating cash for the company, so it was quite a shock.”
Operations in Latin America were pared back with the company leaving the Brazilian market.
“We didn’t feel Brazil was in the category of a market that could be sustainable. The amount of resources that we will have to put into making Brazil a sustainable business greatly overweighed the impact or the value that it could generate, so we decided to step out of the market,” de Antonio said.
“This doesn’t mean we won’t come back if the conditions return to something reasonable. We would come back. These are the type of decisions that you need to make if you want to build a sustainable business with a positive EBITDA. You need to focus your investments where they will produce a return.”
De Antonio said that despite the difficult two years and its exit from South America’s largest economy, Cabify has recovered much of its volume, especially in Latin America, though there is still “some inertia” in the Spanish market.
“We are getting there. Overall the business has recovered and is growing rapidly.”
It was amid this difficult backdrop in 2020 and 2021 that Cabify invested heavily in delivery, diversifying its business proposition. It is a similar line of business that the likes of Uber have relied on during the depths of lockdown to keep revenues flowing but in the Spanish company’s case, its focus is on parcel deliveries rather than food.
It was not an entirely new venture for Cabify either, having recently divested its shares in Spanish on-demand delivery player Glovo.
“We had the option to start the delivery business again so we reassessed the size of the opportunity and where the market was at that moment,” de Antonio explained. “It became clear to us that food delivery was not necessarily the best opportunity and that we could have a bigger impact in the cities where we operate if we were to optimize parcel delivery using today’s technology.”
Online delivery and e-commerce boomed during the pandemic. At the same time, the industry has become fascinated with speed, evidenced by the arrival of 15-minute grocery deliver start-ups but this isn’t a space that the chief executive wants to play in as there is no “big value” for Cabify to seize.
Rather the company is pursuing e-commerce deliveries, typically delivered the same or next day, and is targeting B2B customers.
In Latin America, it has signed up Argentinian e-commerce giant Mercado Libre and is working on an integration with Shopify.
“Most of our delivery is not focused on speed, it’s more focused on reliability and predictability,” de Antonio said.
“What we offer them is the ability to have better visibility over what’s happening and the same thing to the end user.”
To this end, the company is investing in its own warehouses that retailers can use to stock goods for optimal deliveries.
It is a highly competitive market for Cabify to enter, competing against businesses like Glovo or logistic stalwarts like UPS. De Antonio said that since Cabify’s founding, it has amassed troves of data about cities and how people move about that can be applied to its delivery business.
“During the more than 10 years that we’ve been operating, we generated tons of data on how cities behave, and we leverage that data to optimize how vehicles move within a city and which route you should take or who you should assign something.”
While headquartered in Madrid, the lion’s share of Cabify’s business is in Latin America.
Chile, Peru, Argentina and Colombia are the company’s top performing markets, de Antonio said, adding that Cabify has no imminent plans to expand into more countries and is rather focused on bolstering its existing markets.
Though the company has weathered the Covid storm, it continues to contend with the difficult economic conditions of the day, namely the rise in fuel costs that has led to fare price increases.
“The margins in transportation are pretty tight, so what we need to do is adapt pricing and we’ve done it. This is an industry where we have the ability to change prices constantly and for us having the drivers make a decent living is a must.”
Talk of fuel costs often spurs the debate on electrification. Last week Cabify secured a €40 million loan from the European Investment Bank to deploy 1,400 electric vehicles in Spain.
It is implementing a three-year sustainable business strategy. It is targeting a goal of 100% of its journeys in Spain to be in electric vehicles by 2025 with a 2030 target for Latin America. This is coupled with a €40 million commitment to research and development.
De Antonio is tight-lipped on Cabify’s future funding pursuits.
With the company in the black, he said it has many options to explore whether that’s venture funding or a public listing but it is not under any pressure to make that decision yet.
Earlier this year, the company’s chief financial officer Antonio España, an experienced executive in taking companies public, left the company after less than 12 months in the role. Cabify said his exit was due to “personal reasons”. The current CFO is Juan Barbolla.
The question of an IPO is also colored by the recent pounding that tech stocks have taken. “Look at how the markets are behaving,” de Antonio added.
In the short to medium term, Cabify is focused on its three-year plan for electrification in Spain and the investment in delivery.
“We have a plan for the next three years on initiatives that are very relevant to us and we will review if those initiatives are relevant three years from now, just like what we did with the previous plan and see where we put our focus.”