Careem doesn’t expect full recovery until 2021, but sees accelerated expansion for its ‘Super App’

A Careem Networks FZ logo sits on the exterior of a driver support center at the ride-hailing company's headquarters in Dubai, United Arab Emirates. 

A Careem Networks FZ logo sits on the exterior of a driver support center at the ride-hailing company’s headquarters in Dubai, United Arab Emirates.

Christopher Pike | Bloomberg | Getty Images

DUBAI, United Arab Emirates — Ride-hailing company Careem has endured a challenging few months as the coronavirus pandemic ravaged demand and froze human movement, keeping the vast majority of its market indoors.

At the worst points of the national lockdowns, the company’s business was down by more than 80%, CEO Mudassir Sheikha told CNBC on Sunday. But while Careem may emerge from the crisis leaner, Sheikha said, it’s still forging ahead with plans to expand its services, and is seeing some of those plans accelerate as demands of the “new normal” create new opportunities.

“This crisis is, if anything, accelerating the growth of digital platforms,” Sheikha told CNBC’s Hadley Gamble via Skype. “A lot of people who would go out in the offline world and do things are now forced to do things digitally. My mom, for example, had never used an app but has been forced to use an app to get basic things delivered to her,” he said. “So, fundamentally we believe that we’re in a very strong place to come out  as a digital platform to come out stronger.”

The Dubai-based company, bought by Uber for $3.1 billion in 2019, is popular across the Middle East, South Asia and parts of Africa. Like countless companies in the transportation space, it has made substantial layoffs due to the pandemic — it announced in early May a workforce reduction of 31%.

Sheikha recognized that, as well as the time it may take for business to rebound. “Unfortunately, the core business of people transport has been impacted significantly, and it is our view that while this business is starting to recover it will probably take until sometime next year for a full recovery to happen, and that business will remain a little bit smaller than what we had built.”

The Super App

Other parts of the business, however, like delivery and payments — part of Careem’s “Super App” mission — are experiencing “rapid growth,” Sheikha says. The firm has been branching out in terms of offerings with the aim of offering multiple services beyond ride-hailing on a single screen.

If you open the Careem app today, ordering a car is just one of multiple options — the others include bike rentals, food ordering, item delivery and ordering goods from local shops and pharmacies. There’s also Careem pay, which enables users to pay for all Careem services from their account within the app and transfer credit to friends and family members.

In those areas, “we’re doubling down,” Sheikha says — particularly now, when so many people are wary of venturing out into public venues and often feel more comfortable using a delivery service to get their products.

“So even before we let go of some of the people that we had to let go, a lot of people in this region moved to work on deliveries, to work on the Super App, to work on (Careem) Pay.”

He described one of the most recent additions, Careem Shops. “The idea is that regardless of what you want from the online world, you can point to a store and look at that store’s catalog and get things delivered to you, at your door in a matter of minutes,” he said. “That’s the focus, and that’s where resources, and more and more people, are being moved towards.”

‘A ton of opportunity’

The CEO, who co-founded Careem in 2012, said he’s seen digital uptake and demand for online service accelerate dramatically in the Middle East and its neighboring emerging markets — markets known for still conducting much of their day-to-day business offline.

“All of a sudden business is growing rapidly from offline to online migration, which we thought would happen in three to four years — it’s probably going to happen in six months to a year,” he said. “If anything, some of the plans that we had for next year or the year after with respect to the Middle East, with respect to the Super App, with respect to payment, we actually believe that it is time to do that now.”

“We have to play some defense in order to make sure that we come out of the crisis in the best way possible,” Sheikha said. “But there is a ton of opportunity that has all of a sudden opened up. And things that were supposed to happen later are starting to happen faster. And we want to make sure that we are there to help people through this transformation and as a result, move this region forward.”

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