Wrap Text
Lesaka delivers improved profitability as it exceeds FY24 Q2 guidance
Lesaka Technologies, Inc.
Registered in the state of Florida, USA
(IRS Employer Identification No. 98-0171860)
Nasdaq share code: LSAK
JSE share code: LSK
LEI: 529900J4IZMWV4RDEB07
ISIN: US64107N2062
("Lesaka," or the "Company")
Lesaka delivers improved profitability as it exceeds FY24 Q2 guidance
JOHANNESBURG, February 7, 2024 – Lesaka (Nasdaq: LSAK; JSE: LSK) today released results for the second quarter ended
December 31, 2023 ("Q2 2024").
Performance Highlights for Q2 2024:
• Revenue of $143.9 million (ZAR 2.7 billion)1 in Q2 2024, compared to $136.1 million (ZAR 2.4 billion)1 for the second quarter
ended December 31, 2022 ("Q2 2023"). In South African Rand ("ZAR"), revenue grew 13%.
• Operating income of $2.3 million (ZAR 42.5 million) for the quarter, compares to an operating loss of $2.2 million (ZAR 38.4
million) in Q2 2023, driven by successful execution against our strategy and growth in the Consumer and Merchant Divisions.
Operating income for Q2 2024, includes a $1.0 million (ZAR 17.6 million) non-cash gain related to the release of a foreign
currency translation reserve upon liquidation of a dormant subsidiary.
• Net loss continued to narrow, at $2.7 million (ZAR 50.8 million) 1. This compares to a net loss of $6.6 million (ZAR 116.5
million)1 in Q2 2023 and represents a 56% improvement in ZAR.
• Group Adjusted EBITDA, of $9.6 million (ZAR 180.5 million)1 exceeded the upper end of Q2 2024 guidance, representing an
improvement of 38% in ZAR compared to the Q2 2023 Group Adjusted EBITDA of $7.4 million (ZAR 130.4 million) 1. See
Attachment B included in the full announcement for a reconciliation of this non-GAAP measure.
• The Merchant Division reported revenue $127.9 million (R2.4 billion), an increase of 13% in ZAR, compared to $120.6 million
(ZAR 2.1 billion). Segment Adjusted EBITDA increased to $8.7 million (ZAR 162.9 million) for the quarter, a 2% increase in
ZAR compared to Q2 2023. Year-on-year comparatives for revenue and Segment Adjusted EBITDA are impacted by a very
strong comparative quarter in Q2 2023, primarily due to performance in our NUETS business, which is influenced by client
capex cycles.
• The Consumer Division reported Segment Adjusted EBITDA of $2.9 million (ZAR 55.2 million)1 in Q2 2024, a 445% increase
in ZAR, compared to $0.6 million (ZAR 10.1 million) in Q2 2023. Strategic initiatives to grow the Consumer Division are
yielding positive results with revenue increasing 16% year-on-year in ZAR to $16.7 million (ZAR 313 million), off a reduced
cost base.
• The Net debt to Group Adjusted EBITDA2 ratio improved to 2.7 times, compared to 3.6 times in Q2 2023, driven by debt
reduction and growth in Group Adjusted EBITDA.
• Guidance for fiscal 2024 re-affirmed.
Outgoing Lesaka Group CEO Chris Meyer said, "I am pleased to announce that we have once again achieved excellent results this
quarter. Our Consumer team's hard work over the past two years is paying off, resulting in substantial customer and profit growth. Our
Merchant division has also performed well, and our anticipated acquisition of Touchsides has given us new technology and expertise
in the tavern vertical, allowing us to continue innovating in this competitive market.
The progress Lesaka has made in the last two years has been remarkable, and I am proud of our achievements. I am confident that the
exceptional leadership team and motivated colleagues will continue Lesaka's journey towards becoming the leading fintech platform
in Southern Africa. The appointment of Ali Mazanderani as Executive Chairman is very exciting for Lesaka. He is an exceptional
fintech entrepreneur and leader, with deep experience and a proven track-record in the fintech sector and in emerging markets,
including South Africa."
(1) Average exchange rates applicable for the quarter: ZAR 18.71 to $1 for Q2 2024, ZAR 18.71 to $1 for Q1 2024, ZAR 17.52
to $1 for Q2 2023. The ZAR weakened 6.8% against the U.S. dollar during Q2 2024 when compared to Q2 2023 and 0.01%
when compared to the prior sequential quarter (Q1 2024).
(2) Non-GAAP measure. Net Debt to EBITDA ratio is calculated as net debt at specific date
divided by Annualized Group Adjusted EBITDA.
Summary Financial Metrics
Three months ended
Three months ended
Dec 31, Dec 31, Sep 30, Q2 '24 vs Q2 '24 vs Q2 '24 vs Q2 '24 vs
2023 2022 2023 Q2 '23 Q1 '24 Q2 '23 Q1 '24
(All figures in USD '000s except per USD '000's
share data) (except per share data) % change in USD % change in ZAR
Revenue 143,893 136,068 136,089 6% 6% 13% 6%
GAAP operating income (loss) 2,273 (2,192) 228 nm 897% nm 897%
Net loss attributable to Lesaka (2,707) (6,649) (5,651) (59%) (52%) (57%) (52%)
GAAP loss per share ($) (0.04) (0.11) (0.09) (60%) (52%) (57%) (52%)
(1)
Group Adjusted EBITDA 9,630 7,442 8,719 29% 10% 38% 10%
Fundamental earnings (loss) per share
($)(1) 0.01 (0.01) - nm nm nm nm
Fully-diluted weighted average shares
('000's) 63,805 62,763 63,805 2% - n/a n/a
Average period USD / ZAR exchange
rate 18.71 17.52 18.71 7% 0% n/a n/a
Six months ended
Six months ended
Dec 31, Dec 31, F2024 vs F2024 vs
2023 2022 F2023 F2023
USD '000's % change % change
(All figures in USD '000s except per share data) (except per share data) in USD in ZAR
Revenue 279,982 260,854 7% 16%
GAAP operating income (loss) 2,501 (6,863) nm nm
Net loss attributable to Lesaka (8,358) (17,345) (52%) (48%)
GAAP loss per share ($) (0.13) (0.28) (52%) (48%)
Group Adjusted EBITDA(1) 18,349 11,641 58% 71%
Fundamental earnings (loss) per share ($)(1) 0.01 (0.09) nm nm
Fully-diluted weighted average shares ('000's) 63,134 62,498 1% n/a
Average period USD / ZAR exchange rate 18.71 17.25 8% n/a
(1) Group Adjusted EBITDA, fundamental earnings (loss) and fundamental earnings (loss) per share are non-GAAP measures and are
described below under "Use of Non-GAAP Measures—Group Adjusted EBITDA, and —Fundamental net earnings (loss) and
fundamental earnings (loss) per share." See Attachment B included in the full announcement for a reconciliation of GAAP net loss
attributable to Lesaka to Group Adjusted EBITDA, and GAAP net loss to fundamental net earnings (loss) and earnings (loss) per share.
Factors Impacting Comparability of Q2 2024 and Q2 2023 Results
• Higher revenue: Our revenues increased 13% in ZAR, primarily due to an increase in low margin prepaid airtime sales and
other value-added services, as well as higher transaction, insurance and lending revenues, which was partially offset by lower
hardware sales revenue in our POS hardware distribution business given the lumpy nature of bulk sales;
• Operating income generated: Operating profitability was achieved following years of operating losses as a result of the various
cost reduction initiatives in Consumer implemented in prior periods as well as the contribution from Connect;
• Higher net interest charge: The net interest charge increased to $4.4 million (ZAR 81.2 million) from $4.0 million (ZAR 70.0
million) primarily due to higher interest rates; and
• Foreign exchange movements: The U.S. dollar was 7% stronger against the ZAR during Q2 2024 compared to the prior period,
which adversely impacted our U.S. dollar reported results.
Results of Operations by Segment and Liquidity
Our chief operating decision maker is our Group Chief Executive Officer and he evaluates segment performance based on segment
earnings before interest, tax, depreciation and amortization ("EBITDA"), adjusted for items mentioned in the next sentence ("Segment
Adjusted EBITDA"). We do not allocate once-off items, stock-based compensation charges, certain lease charges, depreciation and
amortization, impairment of goodwill or other intangible assets, other items (including gains or losses on disposal of investments, fair
value adjustments to equity securities, fair value adjustments to currency options), interest income, interest expense, income tax expense
or loss from equity-accounted investments to our reportable segments. See Attachment B included in the full announcement for a
reconciliation of GAAP net income before tax to Group Adjusted EBITDA.
Merchant
Merchant Division revenue was $127.9 million in Q2 2024, up 13% compared to Q2 2023 in ZAR. Segment revenue increased due to
the increase in low margin prepaid airtime sales and other value-added services, which was partially offset by lower hardware sales
revenue given the lumpy nature of bulk sales as well as lower revenue from certain valued-added services transactions (such as
international money transfers). In ZAR, the increase in Segment Adjusted EBITDA is primarily due to the higher sales activity, which
was partially offset by lower hardware sales. Connect records a significant proportion of its airtime sales in revenue and cost of sales,
while only earning a relatively small margin. This significantly depresses the Segment Adjusted EBITDA margins shown by the
business. Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for Q2 2024 and Q2
2023 was 6.8% and 7.6%, respectively.
Consumer
Consumer Division revenue was $16.7 million in Q2 2024, 16% higher in ZAR compared to Q2 2023. Segment revenue increased
primarily due to more transaction fees generated from the higher EPE ("EasyPay Everywhere") account holders base, higher insurance
revenues, and an increase in lending revenue as a result of an increase in loan originations. This increase in revenue, together with the
cost reduction initiatives initiated in fiscal 2022 and through fiscal 2023, have translated into a turnaround in the Consumer Division
and the realization of sustained positive Segment Adjusted EBITDA. Our Segment Adjusted EBITDA margin for Q2 2024 and 2023
was 17.6% and 3.7%, respectively.
Group costs
Our group costs primarily include employee related costs in relation to employees specifically hired for group roles and costs related
directly to managing the US-listed entity; expenditures related to compliance with the Sarbanes-Oxley Act of 2002; non-employee
directors' fees; legal fees; group and US-listed related audit fees; and directors' and officers' insurance premiums. Our group costs for
fiscal 2024 decreased compared with the prior period due to lower external audit, legal and consulting fees and lower provision for
executive bonuses, which was partially offset by higher employee costs.
Cash flow and liquidity
As of December 31, 2023, our cash and cash equivalents were $44.3 million and comprised of U.S. dollar-denominated balances of $4.5
million, ZAR-denominated balances of ZAR 688.5 million ($37.6 million), and other currency deposits, primarily Botswana pula, of
$2.2 million, all amounts translated at exchange rates applicable as of December 31, 2023. The increase in our unrestricted cash balances
from June 30, 2023, was primarily due to a positive contribution from our Merchant and Consumer operations and utilization of our
borrowings facilities to fund certain components of our operations, which was partially offset by the utilization of cash reserves to fund
certain scheduled and other repayments of our borrowings, purchase ATMs and vaults, and to make an investment in working capital.
Outlook for the Third Quarter 2024 ("Q3 2024") and Full Fiscal Year 2024 ("FY 2024")
While we report our financial results in USD, we measure our operating performance in ZAR, and as such we provide our guidance
accordingly.
For Q3 2024, the quarter ending March 31, 2024, we expect:
• Revenue between ZAR 2.7 billion and ZAR 2.8 billion.
• Group Adjusted EBITDA between ZAR 170 million and ZAR 190 million.
We re-affirm our outlook for FY 2024, the year ending June 30, 2024. We expect:
• Revenue between ZAR 10.7 billion and ZAR 11.7 billion.
• Group Adjusted EBITDA between ZAR 680 million and ZAR 740 million.
Our outlook provided does not include the impact of the acquisition of Touchsides or any mergers and acquisitions that we conclude.
Management has provided its outlook regarding Group Adjusted EBITDA, which is a non-GAAP financial measure and excludes certain
charges. Management has not reconciled this non-GAAP financial measure to the corresponding GAAP financial measure because
guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because
they cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably
predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP
financial measure is not available without unreasonable effort.
Earnings Presentation for Q2 2024 Results
Our earnings presentation for Q2 2024 will be posted to the Investor Relations page of our website prior to our earnings call.
Webcast and Conference Call
Lesaka will host a webcast and conference call to review results on February 7, 2024, at 8:00 a.m. Eastern Time which is 3:00 p.m.
South Africa Standard Time ("SAST"). A replay of the results presentation webcast will be available on the Lesaka investor relations
website following the conclusion of the live event.
Webcast Details
• Link to access the results webcast: https://bit.ly/3NNYu2I
• Webcast ID: 986 4107 6448
Participants using the webcast will be able to ask questions by raising their hand and then asking the question "live."
Conference Call Dial-in:
• US Toll-Free: +1 346 248 7799
• South Africa Toll-Free: + 27 21 426 8190
Participants using the conference call dial-in will be unable to ask questions.
Headline earnings (loss) per share ("HEPS")
The inclusion of H(L)EPS in this results announcement is a requirement of our listing on the JSE. H(L)EPS basic and diluted is calculated
using net (loss) income which has been determined based on GAAP. Accordingly, this may differ to the headline (loss) earnings per
share calculation of other companies listed on the JSE as these companies may report their financial results under a different financial
reporting framework, including but not limited to, International Financial Reporting Standards.
The table below presents our HEPS for Q2 2024 and 2023:
Q2 Q2
2024 2023
Net loss used to calculate headline earnings (USD'000) .................................................... (5,770) (6,618)
Headline (loss) earnings per share: ....................................................................................
Basic, in USD ............................................................................................................. (0.09) (0.11)
Diluted, in USD .......................................................................................................... (0.09) (0.11)
The table below presents our HEPS for fiscal 2024 and 2023:
2024 2023
Net loss used to calculate headline earnings (USD'000) .................................................... (7,336) (16,602)
Headline (loss) earnings per share: ....................................................................................
Basic, in USD ............................................................................................................. (0.12) (0.27)
Diluted, in USD .......................................................................................................... (0.12) (0.27)
Results announcement released in the US and unaudited condensed consolidated financial statements
The full results announcement released in the U.S. and our unaudited condensed consolidated financial statements are available at
https://senspdf.jse.co.za/documents/2024/JSE/ISSE/LSKE/Q2Res2024.pdf and have been published on Lesaka's website at
www.lesakatech.com. Any investment decision by investors and/or shareholders should be based on consideration of the U.S. results
announcement and its recently published unaudited condensed consolidated financial statements. The U.S. results announcement and
our unaudited condensed consolidated financial statements are available upon request through enquiries directed to either Lesaka's
investor relations contact at phillipe.welthagen@lesakatech.com or Lesaka's media relations contact at Janine@thenielsennetwork.com.
About Lesaka (www.lesakatech.com)
Lesaka Technologies, (Lesaka™) is a South African Fintech company that utilizes its proprietary banking and payment technologies to
deliver superior financial services solutions to merchants (B2B) and consumers (B2C) in Southern Africa. Lesaka's mission is to drive
true financial inclusion for both merchant and consumer markets through offering affordable financial services to previously underserved
sectors of the economy. Lesaka offers cash management solutions, growth capital, card acquiring, bill payment technologies and value-
added services to formal and informal retail merchants as well as banking, lending, and insurance solutions to consumers across Southern
Africa. The Lesaka journey originally began as "Net1" in 1997 and later rebranded to Lesaka (2022), with the acquisition of Connect.
As Lesaka, the business continues to grow its systems and capabilities to deliver meaningful fintech-enabled, innovative solutions for
South Africa's merchant and consumer markets.
Lesaka has a primary listing on NASDAQ (NasdaqGS: LSAK) and a secondary listing on the Johannesburg Stock Exchange (JSE:
LSK). Visit www.lesakatech.com for additional information about Lesaka Technologies (Lesaka ™).
Forward-Looking Statements
This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are
subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such
statements may be identified by their use of terms or phrases such as "expects," "estimates," "projects," "believes," "anticipates,"
"plans," "could," "would," "may," "will," "intends," "outlook," "focus," "seek," "potential," "mission," "continue," "goal," "target,"
"objective," derivations thereof, and similar terms and phrases. Forward-looking statements are based upon the current beliefs and
expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified,
which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-
looking statements. In this press release, statements relating to future financial results and future financing and business opportunities
are forward-looking statements. Additional information concerning factors that could cause actual events or results to differ materially
from those in any forward-looking statement is contained in our Form 10-K for the fiscal year ended June 30, 2023, as filed with the
SEC, as well as other documents we have filed or will file with the SEC. We assume no obligation to update the information in this
press release, to revise any forward-looking statements or to update the reasons actual results could differ materially from those
anticipated in forward-looking statements.
Investor Relations Contact:
Phillipe Welthagen
Email: phillipe.welthagen@lesakatech.com
Mobile: +27 84 512 5393
FNK IR:
Rob Fink / Matt Chesler, CFA
Email: lsak@fnkir.com
Media Relations Contact:
Janine Bester Gertzen
Email: Janine@thenielsennetwork.com
Johannesburg
February 7, 2024
Sponsor:
Rand Merchant Bank, a division of FirstRand Bank Limited
Date: 07-02-2024 07:05:00
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