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Lesaka Q3 2024 Results: Lesaka continues to deliver improved profitability
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 Q3 2024 Results: Lesaka continues to deliver improved profitability
JOHANNESBURG, May 9, 2024 – Lesaka (Nasdaq: LSAK; JSE: LSK) today released results for the third quarter ended March 31,
2024 ("Q3 2024").
Performance Highlights for Q3 2024:
• Revenue of $138.2 million (ZAR 2.6 billion)(1) in Q3 2024, compared to $134.0 million (ZAR 2.4 billion)(1) for the third quarter
ended March 31, 2023 ("Q3 2023"), an increase of 9% in South African Rand ("ZAR").
• Operating income of $0.8 million (ZAR 15.0 million) for the quarter, compared to an operating loss of $1.9 million (ZAR 33.2
million) in Q3 2023.
• Net loss reduced to $4.0 million (ZAR 76.4 million)(1) compared to a $5.8 million (ZAR 104.4 million)(1) in Q3 2023, representing
a 27% improvement in ZAR. GAAP loss per share improved 30% to $0.06 (ZAR R1.19) (1).
• Group Adjusted EBITDA2 (a non-GAAP measure) increased to $9.7 million (ZAR 183.3 million) (1) for the quarter, up 47% in
ZAR compared to $7.0 million (ZAR 124.6 million)(1) and exceeded the upper end of Q3 2024 guidance.
• Fundamental earnings per share (a non-GAAP measure), positive for a second successive quarter, increased to $0.02 (ZAR
0.45)(1) compared to a fundamental loss per share of $0.02 (ZAR 0.35)(1) in Q3 2023.
• The Merchant Division reported revenue $121.0 million (R2.3 billion), an increase of 8% in ZAR, compared to $118.1 million
(ZAR 2.1 billion). Segment Adjusted EBITDA increased to $8.4 million (ZAR 158.5 million) for the quarter, a 7% increase in
ZAR compared to Q3 2023.
• The Consumer Division reported revenue of $17.9 million (ZAR 338.2 million), an increase of 19% year-on-year in ZAR.
Segment Adjusted EBITDA of $4.4 million (ZAR 82.3 million)(1) in Q3 2024, a 178% increase in ZAR, compared to $1.6
million (ZAR 29.6 million) in Q3 2023.
• The Net debt to Group Adjusted EBITDA(2) ratio improved to 2.6 times compared to 2.9 times last quarter (Q2 2024) and 4.2
times in Q3 2023.
• Revenue guidance for fiscal 2024 is re-affirmed and Group Adjusted EBITDA guidance for fiscal 2024 has been raised(3) to
between ZAR 685 million and ZAR 705 million.
Lesaka Group Chairman Ali Mazanderani said, "I am pleased to report a continuation of our strong and consistent performance.
Adjusted EBITDA for the quarter increased to R183 million, 47% growth year-on-year, and Operating Income improved from a loss of
R33 million in Q3 2023 to a profit R15 million this quarter. Our net debt to Adjusted EBITDA has reduced to 2.6 times from 4.2 times
a year ago. We are excited about the anticipated completion of the Adumo acquisition, we believe it will facilitate an acceleration of our
organic growth story and cement Lesaka's position as Southern Africa's leading Fintech."
(1) Average exchange rates applicable for the quarter: ZAR 18.88 to $1 for Q3 2024, ZAR 18.71 to $1 for Q2 2024, ZAR 17.93 to
$1 for Q3 2023. The ZAR weakened 5.3% against the U.S. dollar during Q3 2024 when compared to Q3 2023 and 0.9% when
compared to the prior sequential quarter (Q2 2024).
(2) Non-GAAP measure. Lease expenses which were previously excluded from the calculation of Group Adjusted EBITDA have
now been included in the calculation. This change is in response to comments received from the staff of the SEC in March 2024
regarding our non-GAAP financial reporting. Comparative information has been adjusted to conform with the updated
presentation. Net Debt to EBITDA ratio is calculated as net debt at specific date divided by Annualized Group Adjusted
EBITDA.
(3) Lease expenses, anticipated to be approximately ZAR 55 million, were previously excluded from the calculation of Group
Adjusted EBITDA and the guidance included in our Q2 2024 press release. On a comparable basis, the Group Adjusted
EBITDA guidance in our Q2 2024 press release would have been between ZAR 625 million to ZAR 685 million after deducting
ZAR 55 million of lease expenses.
Summary Financial Metrics
Three months ended
Three months ended
Mar 31, Mar 31, Dec 31, Q3 '24 vs Q3 '24 vs Q3 '24 vs Q3 '24 vs
2024 2023 2023 Q3 '23 Q2 '24 Q3 '23 Q2 '24
(All figures in USD '000s except per USD '000's
share data) (except per share data) % change in USD % change in ZAR
Revenue 138,194 133,968 143,893 3% (4%) 9% (3%)
GAAP operating income (loss) 794 (1,853) 2,273 nm (65%) nm (65%)
Net loss attributable to Lesaka (4,047) (5,820) (2,707) (30%) 50% (27%) 51%
GAAP loss per share ($) (0.06) (0.09) (0.04) (30%) 49% (27%) 51%
Group Adjusted EBITDA (1) 9,703 6,950 8,952 40% 8% 47% 9%
Fundamental earnings (loss) per share
($)(1) 0.02 (0.02) 0.01 nm 100% nm 102%
Fully-diluted weighted average shares
('000's) 63,805 63,854 63,805 (0%) - n/a n/a
Average period USD / ZAR exchange
rate 18.88 17.93 18.71 5% 1% n/a n/a
Nine months ended
Nine months ended
Mar 31, Mar 31, F2024 vs F2024 vs
2024 2023 F2023 F2023
USD '000's % change % change
(All figures in USD '000s except per share data) (except per share data) in USD in ZAR
Revenue 418,176 394,822 6% 14%
GAAP operating income (loss) 3,295 (8,716) nm nm
Net loss attributable to Lesaka (12,405) (23,165) (46%) (42%)
GAAP loss per share ($) (0.20) (0.37) (47%) (42%)
Group Adjusted EBITDA(1) 26,678 17,032 57% 69%
Fundamental earnings (loss) per share ($)(1) 0.03 (0.11) nm nm
Fully-diluted weighted average shares ('000's) 63,134 62,913 0% n/a
Average period USD / ZAR exchange rate 18.76 17.40 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 Q3 2024 and Q3 2023 Results
• Higher revenue: Our revenues increased 9% 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 continues to improve as a result of the increase in the trading activity as
noted above off of a stable selling, general and administration base;
• Lower net interest charge: The net interest charge decreased to $4.0 million (ZAR 74.6 million) from $4.5 million (ZAR 81.0
million) primarily due to higher interest rates; and
• Foreign exchange movements: The U.S. dollar was 5% stronger against the ZAR during Q3 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 was our Group Chief Executive Officer through to February 29, 2024 and our Executive Chairman
from March 1, 2024, and each of them evaluated 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 expenses, 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 for a reconciliation of GAAP net income before tax to Group Adjusted EBITDA.
Merchant
Merchant Division revenue was $121.0 million in Q3 2024, up 8% compared to Q3 2023 in ZAR. Segment revenue increased due to
the increase in prepaid airtime vouchers sold and other value-added services provided, which was partially offset by a lower number of
hardware sales in our POS hardware distribution business given the lumpy nature of bulk sales as well as lower revenue generated from
a decrease in certain valued-added services transaction volumes processed (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 (see further below) 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 Q3 2024 and Q3 2023 was 6.9% and 7.0%, respectively.
Consumer
Consumer Division revenue was $17.9 million in Q3 2024, 19% higher in ZAR compared to Q3 2023. Segment revenue increased
primarily due to higher transaction fees generated from the higher EPE account holders base, insurance premiums collected and lending
revenues following an increase in loan originations. This increase in revenue has translated into improved profitability, which was
partially offset by higher insurance-related claims and higher employee-related expenses and the year-over-year impact of inflationary
increases on certain expenses. Our Segment Adjusted EBITDA margin for Q3 2024 and 2023 was 24.3% and 10.4%, 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 modestly compared with the prior period due to lower external audit, legal fees and lower provision for executive
bonuses, which was partially offset by higher employee (base salary) costs, consulting fees and travel expenses.
Cash flow and liquidity
As of March 31, 2024, our cash and cash equivalents were $55.2 million and comprised of U.S. dollar-denominated balances of $3.4
million, ZAR-denominated balances of ZAR 942.2 million ($49.9 million), and other currency deposits, primarily Botswana pula, of
$2.0 million, all amounts translated at exchange rates applicable as of March 31, 2024. 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 Fourth Quarter 2024 ("Q4 2024") and Full Fiscal Year 2024 ("FY 2024")
Lease expenses which were previously excluded from the calculation of Group Adjusted EBITDA have now been included in the
calculation. This change is in response to comments received from the staff of the SEC in March 2024 regarding our non-GAAP financial
reporting. Comparative information has been adjusted to conform with the updated presentation.
While we report our financial results in USD, we measure our operating performance in ZAR, and as such we provide our guidance
accordingly.
We re-affirm our revenue outlook for FY 2024. We expect:
• Revenue between ZAR 10.7 billion and ZAR 11.7 billion.
We raise* our Group Adjusted EBITDA outlook for FY 2024. We expect:
• Group Adjusted EBITDA between ZAR 685 million and ZAR 705 million.
Our outlook provided does not include the impact of the acquisition of Touchsides or any mergers and acquisitions that we conclude.
*Lease expenses, which are anticipated to be approximately ZAR 55 million and which were previously excluded from the
calculation of Group Adjusted EBITDA, have been included in our raised Group Adjusted EBITDA guidance. On a comparable
basis, the Group Adjusted EBITDA guidance included in our Q2 2024 press release would have been between ZAR 625 million to
ZAR 685 million after deducting the ZAR 55 million of lease expenses.
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 Q3 2024 Results
Our earnings presentation for Q3 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 May 9, 2024, at 8:00 a.m. Eastern Time which is 2:00 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/3TSfxUD
• Webcast ID: 998 0150 9829
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: +1 309 205 3325 or +1 312 626 6799
• South Africa Toll-Free: + 27 87 551 7702 or +27 21 426 8190
• Passcode: 998 0150 9829#
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 Q3 2024 and 2023:
Q3 Q3
2024 2023
Net loss used to calculate headline earnings (USD'000) .................................................... (4,112) (5,595)
Headline (loss) earnings per share: ....................................................................................
Basic, in USD ............................................................................................................. (0.06) (0.09)
Diluted, in USD .......................................................................................................... (0.06) (0.09)
The table below presents our HEPS for fiscal 2024 and 2023:
2024 2023
Net loss used to calculate headline earnings (USD'000) .................................................... (11,448) (22,198)
Headline (loss) earnings per share: ....................................................................................
Basic, in USD ............................................................................................................. (0.18) (0.35)
Diluted, in USD .......................................................................................................... (0.18) (0.35)
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/Q3Res2024.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 retail merchants as well as banking, lending, and insurance solutions to consumers across Southern Africa.
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
May 9, 2024
Sponsor:
Rand Merchant Bank, a division of FirstRand Bank Limited
Date: 09-05-2024 07:05:00
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