UEPS - Earnings call transcript Q4 2020 | Lesaka Technologies, Inc.

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Operator

Good day ladies and gentlemen and welcome to Net 1 UEPS Technologies Incorporated, Quarter Four of 2020 Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. Please note that this conference is being recorded. I’d like to hand the conference over to Mr. Chopra. Dhruv sir. proceed Please

Dhruv Chopra

Welcome today fourth Mabuza; is and Ali Alex Judith. call. our XXXX With Smith; Mazanderani. Director, Non-Executive me our our to you, quarter our earnings CFO, Thank Chairman, Jabu

investor supplementary ir.netX.com. website, and release press presentation available Investor on are Relations our Our

referring remarks. We our will the during certain to be in slides presentation prepared

the ask associated in this at the look forward-looking during reminder, be our a to XX-K we will uncertainties making language you contained risks forward-looking statements. As call statements, with Form regarding and and I cautionary

In addition, we measures GAAP call of provided this non-GAAP comparable financial will non-GAAP certain during a be measures to these have directly using the most and we measures. reconciliation

South assist business. We underlying our operations is Rand, our in which measure. investors trends release of results will results a Rand in understanding of discuss press in the to African We our non-GAAP analyze our

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Q&A prepared to session Jabu. We over will following call with have remarks. that, me the our a turn let And

Jabu Mabuza

you, on the been Net time results presentation Chairman and of taking and the quarter Net my in role June X year has This as Welcome the ended Thank for financial first XX, at renewal X. since results last XXXX. to quarter July, the Dhruv. being change a

Kuben Seabrooke, Mazanderani, Pein. and Mr. On Former Chairman, the of the That myself. and Alfred was long Paul Ali and May Board, the serving Edwards, Mockett followed of Ball, appointment four Net X June being Antony welcomes in three the new Chris Alasdair being directors, in by resignation Directors Pillay

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this and renewal, a change business non-Executive on on review Finally ensure the globally. last is have review during and operator was initiated quarter. financial the theme the Director, strategic who in technology we accomplished Ali independence, investor by an led Mazanderani, process To

strategic Ali During this this key from presentation, will insights review. share the

busy been single of have is change of rather But very now Chairman. shareholder journey driven has goal journey over than walk renewal operational undervalued last Alex, for a results. by will over event. through unlocking to you deeply All of excited to the this the be I quarter. taken we to Change part and as this I QX steps initial value am this the a in hand a company. and financial significant

Alex Smith

format you, which strategy and will strategic recently times. to today, follow a was born the operational, Ali where discuss that capital during financial safe Jabu, good topics, everyone. hope after different and will these and then I of unprecedented healthy slightly concluded everyone Thank the our some We’ll I allocation address day and is review.

then to will call We up open Q&A. the

echo thanks Jabu’s Before to to we like Herman. I'd in, dive

contribution significant Net to years. over very are We grateful X the for his

number Net the attained the at significant a platform for leaves with of and growth. company X During he well a solid his capitalized tenure business milestones

a the can in between Europe the therefore June, given mix in of ability global in ongoing impact XXXX; is be for restrictions many U.S., limited South total has quarter million, and the to willingness South and people ability and and them South from C quarter employees loss XX% Since efforts. year-over-year results. to fees to fundamental or volumes. by in highlights was our X during $XX our due the freely. COVID last in weeks. between Rand markets $XX financial compared picked loss positively forgone added time, proud quarter around and quarter. a serve reversal affected the lower This and per am on pandemic the fourth XXXX. quantifiable restrictions, third of up the ago. impact of ad-hoc per lower was the share to loss in reported key drawn operate Net revenue disruptions internationally easing continuing lower of due against adjusted our pandemic $XX.XX revenue operations the the The which compared move XX% South continues low of Africa quarter share pandemic and is total of impacts nature, higher $X.X which would per adversely African million of $X.X the of the these processing and Rand on quarter to million The few Rand though as X a The COVID-XX over thank The during to in COVID-XX of fourth the this in however, of the million XXXX share economy the the as of the be parallels the effect SASSA the million immediately, tireless South XXXX, U.S. the fourth South our an reported unprecedented of the losses write-off. Rand, The their $XX.X to our for $XX.XX the value for relevant quarter to it to to fourth ZARXX EBITDA and on of includes, The We and to our the other South of revenue While impacted $X.XX. Cell was fee sales and $X.XX Africa. the adjusted implementation fundamental XXXX quarter inventory a continue experienced the XXXX of dollar pandemic and international most and impact past year well to financial loss operations, the who the was in fourth I recovered in sales, decrease decrease at current effects material Africa, and of compares are EBITDA like Africa customers trends business technology appreciated Despite $X.XX in Africa on wider was fundamental our excluding African

million. the primarily a the to XXXX, fourth fourth Excluding of down year-over-year reported quarter revenue X% processing of up and adjusted million items, South segment, impact in third during once been contraction of to in was when transaction quarter the of charge fourth $XX.X to quarter revenue volumes. currency net transaction in fees of transaction XXXX, the down EBITDA segment on XX% of but operations have the would fourth million certain continuing in international from for off the lockdown. ongoing $X.X months effects on processing, By African pandemic, XXXX, XX% loss XXXX, in decrease compared but revenue X% the to were constant quarter down an due transaction was the on currency and of The two basis. third and to a versus the unable XXXX the and generated which volumes transaction in fees, largely COVID compared quarter International XXXX of the due $X.X quarter basis it’s including of the of constant

third lockdown and given Lastly, and of delayed in a the compared April was and unwinding technology loan financial severely new down XXXX, which XX% and period continuing revenue million, book compared fourth from down was loan loan quarter commensurate in May, quarter origination the technology inclusion XXXX sales profits. applied and the to of to revenue operations curtailed $XX.X during reduction due segment in the largely to XX% the resulted of

in remains base relatively stable. Africa cost Our South

in million cash the further we acquire of material paid option Bank cancel non-recurring on a interest the loss included to to $XX.X $X XX% CPS. During a million a Other deconsolidation our quarter Frick. fee in items termination

the investments and debt. the prior had to year, VX incurred million U.S. XXXX, to At were equity earnings losses due denominated $XXX dollar of million down generated cash the compared $XXX total. the and after $X.X balances quarter we XXXX of XX, Our accounted of XX% fiscal June million no in unrestricted Carbon. fourth by

Our constant million average relatively $XX.X shares share XXXX. of count at has remained quarter during weighted the fourth

the operational bank of number relatively accounts X million. active on highlights, at some to remained stable Moving

New accounts account originations Finbond were have lockdown, XX, and we also the curtailed new opened during through XXXX. June XX,XXX approximately bank

our XX% about Our April ATM the as were during declined in by lockdown. shut May down branches utilization and network

April were lower year-over-year in mobile in switching XXXX two pre-paid recovery a fixed May, and bonus and the by However, meaningful as X% signing quarter year restrictions new in and up June fourth in were constant our transactions a result bill given as before recovering payments result starting of the of year-over-year, we EasyPay XXXX of increased around electricity ATMs currency in through airtime XXXX. trend lockdown increasing payment EasyPay and sales revenue August have XX% a volumes and electronic towards or near at June highs. and partially the revenue the of in Nonetheless, seen years.

and quarter lending during as lending result. and activity business our of unwound new in XXXX were the as revenue April fiscal expected, to our fourth May originate book decreased we from As a unable

XXX number largely in loan the end channel, of XXXX. border eased have the new has loan the to in deterioration the the conditions The X April in in XX,XXX collection XXXX new quarter of June had book as origination lending result rates challenging XXXX. in XXX,XXX the in of were Despite million around in and third quarter to in in loan book. loans range, our originations indeed a However, the and XXXX fairly we recovered further [ph] finished economy, line not of at the from the loan with mobile any fourth since [ph] the of book excess May increased June restrictions and

the strategic pandemic with Our during all fortunes work and partners. had closely these investments we continue of mixed to

Frick performance due half net delivered francs XXXX into but pandemic late first to half of American XXXX for June, earnings key fourth in our income trading XXXX. that likely ended quarter, XX% operations. on a to more reported the North were Swiss from in August XX, the than income the a issued South and the X.X increased be of solid Finbond statement the year strong both, the benefiting during effects their Some African indicating to of include, million highlights February results trading XX, down and in reported year their quarter, Bank

the continue the business of impact direct work quarter the provision to out new of roll terms as their and a of and of on had of pandemic systems. software closely the Finbond We difficult Carbon in products result with in a directly. Nigeria

lockdown the the managed emerges Indian which every saw at remains performance the they've seen continues business. lending of revenue However, owned in from their therefore undergoing and double pandemic levels, up right quality. sizing the make from business limit growth so, has a while months as their on in resume pandemic. are business stages and over product end EBITDA. protected and zero recapitalization expect management significant quarter especially in over Cell value. is rapid and recovery pre-COVID improving as action revenue the a of slowdown the in The path, the the early revenue They its or the revenue improving is managed a has calendar activity onset pickup India levels C MobiKwik proactively its return the year, steady to of sheet months operating progress an well in mix and couple to our underlying last a the balance even towards impact itself levels exercise. a until placed and benefit given of fintech profile to to then They before the seen and XX and to their critical credit

the However, in recapitalization for achieve remains order sustainability. need a to

capital feature later be allocation. move Let’s Ali on a capital A to call, has and been responsible discussed will allocation. now focus this and on the strategic that key of on appropriate with by undertaken review process

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thoughts like our severe XX, I'd meaningful improvement an metrics effects to over of about lifted physical since We’ve go on Lastly, lockdown XXXX. were in XXXX. the the various seen May

of targets book; an recovered improvement data Ali loses more now number and prudent believe it few a book to and guidance to lows, to and We our on is I’d consistent to sustainable in the we bottom customer; over year, during year monthly would South to Africa loan improvement offer has profitability and progress get return order to to market, from intend for grow. over EBITDA the position from turn line year. see hand a bank growth we bill we to to the to two, we of the more ATM three, go in positive utilization do continued loan full in reduced and the course a in businesses. call South to before achieve strategy. the and one, expect see the in payments international Net its services of Our for mobile we increase will has like full but be profitability do the the on; need continue fixed X and or financial intently top company, the to performance African sequential in a group, improved months Therefore for expect focus while

Ali Mazanderani

Alex. you, Thank

Board the first X, to Net background appointed my Non-Executive time best of addressing of been I’ve provide May to before strategy Director the probably crux to As review. a brief it’s XXXX. as get the shareholders we you to in is a

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operator, up to it Q&A. ahead. to journey forward open happy we're looking that With are to the We

Operator

question very you [Operator first of comes B. Raj from Sharma Instructions] Thank much The sir. Riley.

Raj Sharma

Good few I a Hello! questions. have morning.

Just I of to you or the does Africa core any that of talking Ali’s, we starting make your largely and expect have are off between grow business any access you couple South businesses, technology? in the assets network a need then company others. the to technologies have and about acquisitions of Should all missing

Ali Mazanderani

good guess I morning. yes, answer I So should that.

required and technologies assets the execute X upon of strategy. Net the So to has all largely

augment As it three capabilities I areas that could in. is its said, there

last in areas mile those the distribution of the space. in micro is One merchant

– That there mutual banking settlement The is a you facilitated other the arenas access able by and license. are benefit would be a one pricing if ATM clearing for national accept is acquiring deposits. to

clearly further fresh brand. a this think I and I the is touch on relevant

those, of each do acquisition. not but predominantly that the first two be to acquisition, be by addressed addressed think I can by have

Raj Sharma

more You then about that or would to to bit that Would understand Would sort would going since how the out? if filing little is satisfy a with stake a talk on know there the does license, require the you minority banking you take the investments? the foresee the off divest imply? trying majority the to you SEC. of going Right. for – submit you’re into playing some know that you can you what help – requirements that of were you And a does capital? play your need Could that? How that additional plan proactively that mean Investment a Act, mutual to you of of us just have plan just that

Jabu Mabuza

Well, I’ll comment just on this Ali.

the the Act I the site obviously clear Company works, of think having operating in in Company the classification Act. under more your classification the that of better Investment way control, we a assets terms Investment

calculation it So that asset Act, cash Company then assets, lead operating that of a if we the so into if were moment Obviously Investment that alright? control in cash Investment position Act significantly to a Company is necessary, business on depends of better in the us take regarded you it at would can neutral a a of straightforward controlled under multitude Company terms and push but another for as convert classification. Investment you under example, terms know into of variables, Is it's how not you'll the helps Act.

Raj Sharma

a – classification – in direction? that So, does an it company, tell what strategic about know this you does that us do does you tell imply to foresee Does does that direction? – are become about trying you or investment fairly What that Would need banking if your put and you your strategic understand you your trying you most what’s South want then mutual likely that just direction coming investment possibly license. through business African the in company to category? the specialty I'm to grow the mean

Jabu Mabuza

in Company Investment Act. not that company we’re making us assist the to sure an likely more it’s No, under investment

as its help that is plan in Act So the and Investment would the non-investment you Company we company, moment. fix we have lifting at the investing our value know fair South and business an African ourselves operational regard business to that naturally

Raj Sharma

Right. And for the long the this about how think talk can you timelines – takes, you do Do this this determination? you process? think that

Jabu Mabuza

on clarity can't there’s timelines. unfortunately, – really so the give fixed unfortunately timelines no we about of lot really It's a

after the process fixed As there process submitting we run a that SEC it. timelines it's as because I through any an and said, we're around of aren’t really understand application would I said, the then that in that, and

Raj Sharma

And yield assets, they last review not my what the strategic Ceevo, you. question did Frick, did then If review assume can Carbon thank . Right, I – the you know be MobiKwik in of investors, divested? what Bank non-strategic guess the is, that view what eventually would strategic the terms strategic

Jabu Mabuza

you can do Ali, up you or want to? me that pick

Alex Smith

change operations is do the most it. Ceevo to cash inception that a exit and material flow board I been since on I business doesn’t has Sure. has outside I’m The the losses. happy of important have taken for significantly mean to negative the operational that South think business. the decision Africa

capital of purposes the board the path. is obstacle allocation, the next business the deems For to prudent

at We strategic will in the our months. all look coming investments of

have plans We into specific no to divest those.

will on All operations case-by-case basis. assessed other be a of the

Raj Sharma

same any on investment Is And divest might that in specific the or not-strategic your that to increase you state decide up you some. your token, might asset. fair

Jabu Mabuza

that surely that, any at we will capital opportunities. interests that means mean allocation committee I think fact the So, on that South be the focusing looking that our will is be our strategic it through that and lens which potential are that I Africa priority,

Raj Sharma

so I’ll take Yeah, Thank – I'll you questions this offline. my take much.

Operator

Capital Thank you. next [inaudible] from question Southside comes The David Management.

Unidentified Analyst

Hi! Hope hear you me? can

Jabu Mabuza

and clear. loud Yeah,

Unidentified Analyst

Yup, little the bit questioner. for practically good is the pry Yeah, could Finbond looking I thank maybe to just a that try are call. I from and just SA great. previous mean disclosed the they operations. you very Okay, sell if afternoon to much

in here. African and the mutual is some perhaps you or of South Thank You is Maybe other meant holding these you’re is regulatory forward had that’s question Has has with going spun your for bank rate, you I'm and your investments, thinking. forward? know guess influencing that how is the line company and going burdens, the conversation they’ve this some here your up is, the also what’s had banking which to this this second of regulator, banks. burdens an criteria in could also faltering drawing companies started thinking it has that. you SEC. strategy the capital The Have been know you. this – kind How holding of banks, off license issue extra on the – I into impose come to elaborate holdings I regulator

Jabu Mabuza

reference Having Maybe just, of but is certainly the a license mutual strategies, it’s a banking a benefits, the the license not bit a not – little necessary banking condition. precondition item. additional framing strategic provide changing question just the could not mutual to a

comment path see most which Just be if to the let regulator. that to there’s to that, the make no contextualize a South could of he anything particular pursued, respect specific one has Finbond’s with direction they fairest; Alex say travel. and I’ll in African is

Alex Smith

assessment we any include around think certainly know you would with of any that. the that Yeah, make license I decision the mutual we a regulatory costs part haven’t of the are conversations regulator what had and and our requirements banking associated with

this situation. really talk you early that influence point the about too at know to So it’s how might

group company; African anyway. stranger South entities we of a lot regulated You the have couple do have licenses, know within insurance not have FSP environment anyway; the so regulated the to we a we’re of we a

Unidentified Analyst

not looking so that strategy, follow does sell Okay, going is African impact South to how their operations to kind based you're having of distribution accredit. Finbond that and your not them if and on,

Alex Smith

point some see they're in their terms and cooperation at you but relatively to We – – We collaboration growing arrangements, we them of don't terms small know in see really and business. distribution those originate services financial and base recent of do critical relationships utilize credit this relatively really anyway. our don't as have

Unidentified Analyst

And sorry, my last question.

that, a you, funding what you maybe could more that is? talk benefit you then play then a What benefit am then that reading benefit. to distribution Finbond doesn't about I correctly So – is

Jabu Mabuza

today we about Are Finbond or…? talking

Unidentified Analyst

today. Finbond Yes,

Jabu Mabuza

have At cross we relatively there investment I successive with to have Finbond. there Finbond, small. an into from and – – cross real is the we but point but some it's them. is said, investment just little this word, as so moment bit setting, no We don't We at – a right do collaborate funding a services providing areas certain in and of – the sought IT services Finbond any some what’s we particularly benefits are in

Unidentified Analyst

you much. very thank Okay,

Operator

[ph]. question comes Captain Analysts [ph] [Operator of next from Captain Instructions] Equity The Dennis

Unidentified Analyst

can Hope hear you me? [inaudible]

Jabu Mabuza

soft Dennis. You’re very

Unidentified Analyst

one, for listing? keeping that I appreciate Ali given on really my and NASDAQ Number Alex presentation, South your thanks Two side. questions Okay, it. from you the your would be focusing Africa, regards do hasn’t to two, or most to with opportunity from have of number take billion of Greenfield that you ZARXXX others? the tapped is TAM, And that away been share market

Ali Mazanderani

Maybe I’ll, this Alex. – I is could start with

TAM if it from you like, green today. The that exists is – pie that as start I’ll so represents So would The others. question. represented you be taking second TAM the with the there

market total of digitalization you larger expected the However, the if a the were opportunity would TAM. include as a be to addressable consequence of growth

Net material verticals both operating revenue drive generate then also share customers, as with could opportunity there you X limited is the the competition. a lot is there driving also So to and these taking market, by market. Clearly by under-serviced of is and

Alex to of go. have terms if the, don’t I want a In know first question, you

Alex Smith

Yeah, discussion NASDAQ the for I at is think don’t all. mean I listing up

see change don’t any we think at I position in all. that

Unidentified Analyst

appreciate I the answers. Thanks.

Operator

question next [inaudible]. The from comes

Unidentified Analyst

think questions you my on be recover taking investors know optimistic you wanted evolved restructuring And have us do of value, the have And they some can some C? investment? this I will in call. of any that of are the process and can other time you Cell lines some I are restructuring for you Cell some guide do completed? Thanks to that you when recover investment, on Hi! the Yeah, of how the C. can the of

Alex Smith

I could those on questions Cell C. take

we'll actively we are to driving obviously we a terms involved you've the representation are hopeful Cell XX% be written degree a our down as are to but out side. shareholder to in investments, our of seen that always able from recover not C, that and We that process recapitalization zero. have We're that of original financials, of we’ve but board from investment something

is would out You if know structure get the it. and and business we think valued that a would capital there be realizable of we that right certainly be there

than as I hard it to other complete terms on can’t life as any timelines possible. very quickly afraid In further shed that I’m timelines, of – process and and everyone’s expedite working

Unidentified Analyst

but answer, a your appreciate just I to bit. want back push I

realistic hoping are is everyone Why how hopeful? that to money, You you hope? some know is obviously but recovery

Alex Smith

there and terms and core of structure, then balance business is of strong if there, I where said a through sheet sheet there Cell sized this is C can’t a I some right think, performance deliver balance come you be of that value. can structuring the and underlying reason in is why is more know issue as its no terms in

Unidentified Analyst

the equity mean equity why a a bondholders take thinking I do will I are Am value? misunderstanding have holder, process, think you will we significant holders hit, which would be obviously out. But an the the quite that that as means equity wiped and restructuring

Alex Smith

will terms That recapitalization When doubt there investment down detail in no the when in you that the you is to value that is of of how come announced bring of welcome. all structured. be out know any its would sort zero,

Jabu Mabuza

– The Okay, are you rumors sheets term it? buy Have the have had any you you site any site. that of out. had

Dhruv Chopra

hi! Nick, Dhruv. is – This this Nick

for think rest. we I are the the call clouding up just

either know pointing because you recommend to these C some Blue other Label, questions address we to the you Cell would I of like So areas. to would or

can, publically. what I we has think said Alex

Unidentified Analyst

Yeah, an company, are to, guys you process it’s the of valuation trying important part of the – so I’m just

Dhruv Chopra

zero, so... No, at its valued

Unidentified Analyst

are mean you’ve and are value, or of so and term hopefully just we hopeful are want anything? accountants’ whether I’m it, whether you can to had the any I’m that and valuation site know hopefully. recover valuation. I you just that’s guys no the sheets to No, you, I why asking determine very need other investors

Dhruv Chopra

I Blue teams. a C offline think happy Cell a and call I’m with we have and that you on information. material, of borders can to some conversation you and facilitate with non-public But Label the

Unidentified Analyst

you. thank Okay,

Operator

The final question comes from P.J.

Solit of Potomac Capital Management.

P.J. Solit

time, profitable in plans. plans want successful in of half valued for a over fintech Thanks at strategic you implementing morning. Hi, that becoming a in of and terms company market, these Obviously you're large investments cash if good the be point.

that just there guess thoughts to to on and take can some So sit opportunity when do SEC any any made? urgency and guidance thoughts should be we the advantage more wait? any time advantage buyback to obviously submission and of the that implement a was of any I you share forth or in there more terms on take the or of line dialogue need now. and back Is

Alex Smith

of Hi little there’s timelines. P.J., application unfortunately submitted. has formally not sort clarity give on been can we The very

insights this the actually formally will really in it’s a are long think but how we and But it close, and matter. a of resolution on submitted point. get applied, then then not deal into take at I we have don’t once to great

continue we expedite from difficult very our on it’s do do you any to we’ll So timelines, the to unfortunately to all but guidance side give need to process.

Dhruv Chopra

P.J., its Dhruv.

and clarification is build also – is But that then problem drastically operationally, and trying the control the There ratios, if a the what SEC, other Just so saying, point Alex just is add to from on is, add I to side, which application our that addressed. where one there that to parallel. we're mean in within improve self-cure yeah, the business focus we is that parallel right. that was we the could or there’s Alex and has

P.J. Solit

could calendar the it aggressive. is here that in quarters couple you that self-cure think in is or next XXXX and Okay, realistic to of too

Alex Smith

that’s little. think a probably I

P.J. Solit

even it possible? Is

Alex Smith

aggressive of It’s self-cure. terms probably a a little big in

quarters would third this of fourth it probably think and I into be fiscal.

P.J. Solit

the digital the of XXXX rout? that And in right could through a round cancelled going Calendar into SEC, other resolution be possibility

Alex Smith

possibility the remote I a point. this think is think advice at I

P.J. Solit

Okay. the pathway getting some Is return where as those entirely there the council a if form one of capital before that you fact a scenario in you of there. pathways, actually well have on or could both visibility and start

Alex Smith

the that haven’t discussion yet had We council. with

P.J. Solit

you. Got

you. thank Okay,

Operator

Technologies on the for X Incorporated and was Net us Ladies the gentlemen, that conference final question. you. Thank UEPS call. Thank you joining

disconnect now your You lines. may

Lesaka (LSAK) 11 Sep 202020 Q4 Earnings call transcript