Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Rob Fink

Hello, everyone, and welcome to Lesaka’s Fiscal Second Quarter 2023 Earnings Webcast and Conference Call. My name is Rob Fink, and I'm part of the newly appointed IR team here in the U.S.

As we get started, I just wanted to remind everyone that this webcast is being recorded and the presentation can be accessed through the webcast link, as well as by dialing into the Zoom conference call dial-in numbers provided. Management will address any questions you may have at the end of the presentation.

To ask a question, you must be logged into the webcast and you can use the raise your hand button on the bottom of your screen to indicate your interest in participating in a Q&A session.

team via live, teleconference you this but out the joined ask you to call. have questions to question have a we IR you the completion line, Zoom cannot reach following If the you of if would encourage press on The earnings Lesaka’s website ir.lesakatech.com. conference Investor as Zoom investor supplementary link dial-in numbers, Relations and webcast well presentation as call the release, are available at

which its Form Tuesday, XX-Q after also market Investor U.S. the yesterday, XXXX, filed the February closed Relations X, Lesaka is on available Additionally, website.

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

in in reports filer States, as GAAP. U.S. a U.S. under the result domestic Lesaka United dollars Also,

will that African trends is Rand African performance as is it to in However, In non-GAAP. the African important Doing Rand. the company's assist this results in operational currency investors analyses underlying so South the we understanding Rand, which such discuss their South in is management business. South and note presentation,

and you South company's know, significantly dollar can affected African currency As fluctuations U.S. the Rand. results by between be the the

quarter. Merchant has an CEO Division performance Mali, which results strategic CFO, objectives. on produced financial update quarter. the South of provide of Steve you set the discussion milestone may Lesaka’s we Africa, at review with look progress an Take Division, the Kola, months a Connect Group Division, will Lesaka, questions, Heilbron, year December stellar this will second provide Naeem key CEO, of conclude welcome against then Q&A, the the of for Consumer will with call has have. key for where Lesaka’s And Group Meyer, performance overview on of then for and will passed will present ended the an CEO just its outlook agenda. a the the Head results XXXX. update & opening XX, quick Lesaka’s any today's begin Chris Lesaka on then highlights call three presentation fiscal today's Merchant which quarter XXXX of Lincoln Chris before this

Chris Meyer

welcome morning, webcast XXXX quarter Good and good conference Rob. second afternoon, and you, to call. our Thank earnings

FY significant in Our represent QX number results for ways. a Lesaka ‘XX a milestone of

quarter Consumer our same Our growth robust delivered the the Connect fundamentals overall division, our evidence its Merchant quarter performance acquisition successful adjusted profitable are in this is outperformance strong EBITDA provides in the Merchant which underpinning the we the to turnaround division. has clear years. first and in in our the testament division of At time, seeing momentum

QX. delivered growth showing quarter, the providing The set our full rapidly in Connect at use customer has our across expand ‘XX by an is of quarter serving and cash forefront of is division The taking we shift Merchant topping the inclusion of towards of ago Merchant This a Africa. while our being through excellent our the offering division Merchant Southern of digital FY XX%, become driven our mission service merchant place. facilitating digital division results been has which Group, guidance of has to cornerstone compared this and the as both, also that base financial the

a We this of are seeing out in play areas. number

merchants terms our to in also, where year ago. double, more acceptance ‘XX we've Pay quarter, million business including our advanced Advance, in example, QX. ago a in Capital Connect this XX%, compared ZARXX where a we've the in our growth than card an offering quarter Kazang of sector, credit the card FY and compared informal seen For payments increase to of to MSMEs, through being And

MSMEs financial performed has and inclusion, firmly clear. are drivers therefore underpinning growth We remain our continued conditions growth digitization trends intact. secular for for The division expectations. the believe and ahead of Merchant cash The management

the performance the to turning division. Consumer of So,

first plan able adjusted Consumer as successful very been EBITDA million to testament of deliver XX-months how for on are The a of the be implementation profitability; the rigorous ZARXX.X of division to positive where to segment we in the return clear Consumer to FY a very pleased set ZARXX.X QX we the to is the we XXXX. view plan have moment results EBITDA customers financial adjusted quarter for optimization delivered in of segment million by And division delivering division a We the that Consumer South loss our last the driven the reflecting to the This distribution was and transformation complete and to on EBITDA Africa. footprint for XXXX, our compared across FY inclusion on based of of adjusted mission years. of branch work business. for and watershed QX a

been strong customer Consumer our and grow stable transformed, division and has fundamentally base have built our we to a foundation product offering. and deepen

want shifting customers We our be, is our points of retailers. to will achieve where Firstly, our presence in of: a through objectives which to growth combination

in proposition Secondly, our the reward detail by enhancing shift these and customer most customer provide loyal our by through presentation. and digitization Lincoln our improving further to we our on streamlining And will recognize base. as value thirdly, areas product our more and journey focus processes. pricing later proposition

highlight would optimize cash have has been and generating in how And, also like improved to so capital I flow performance Lesaka’s positive is business our the the structure. are meant third able we area operating to further

further extend favourable banking on liquidity further lending partners group's capacity adding terms, more providing greater to to the fund growth. facilities and agreed have flexibility, increasing Our

quarter with ended from operations to For FY we QX, ZARXXX the million saw we XXXX ago. cash, cash ZARXX in of a compared million quarter unrestricted ZARXXX million generated and

times to FY will We detail of in on the greater the debt EBITDA the ratio, and X.X our X.X with continue to reducing EBITDA And from growth times reducing address net QX. this in step net focus to in our ‘XX debt business, Naeem ratio later with presentation. in to

our growth for repositioning division provided since we ’XX. are strong the guidance for and the confident we Consumer Merchant foundation the provided in guidance and of transformation for time are Lesaka further which and drivers the our remain intact FY earnings the in began. In momentum will We continue. the given growth first So September reaffirming believe we we momentum XXXX, division, the

Our group billion the range ZARX.X of billion revenue in QX. be guidance to for ZARX was for ‘XX to FY

report division, We ZARX.X Group. billion, our the are stellar of able pleased driven growth the was predominantly by to be the which revenue to the in Connect of end Merchant primarily performance upper guidance. exceeds Revenue

group EBITDA for which for we of a surpassed FY delivered X%. in the represents QX million have This quarter, also range group the EBITDA in to of million million provided to loss ZARXX end in the FY the upper adjusted guidance XXXX. turnaround XXXX. on guided the We QX million And for recorded be ZARXXX of adjusted significant ZARXXX by ZARXXX

Lesaka well performance supported our line. Our in specifically and Consumer digital service costs, serving facilitating group and also a to secular group we taking the consumers fintech the cost currently that shift the are by merchants, controlled and of the platform, were including full division also is place. across needs is

XX,XXX form increasing satellite ecosystem and our increased pay devices, in the and points, of kiosks points retailer more We branches, these by of merchant than across to ATMs, presence our end. quarter are

player scale ecosystem. standing as footprint the our creates a opportunities across and market momentum in growth Building in of raises our our

about in that are foundation for excited have this market solid results set demonstrate Our QX we we and very XXXX growth this. FY a

that, responsibilities Lesaka his at to in Lesaka discuss his and division. continuing extended with as and years, the And we three Head benefit the his very performance has a current next stands continued the hand opportunities group the a involvement. Steve of level. will Division I Merchant Merchant for on role taking with certainly additional contract to as from team, also over to that are And in leadership Steve pleased

Steve, the Merchant you to to take to And performance. you. Thank division's over us

Steven Heilbron

the to across to Chris. the and to that continue Thanks, and we group scope team I'm optimize opportunities the extended with happy the synergies excited very sided within both me of revenue and and dual let ecosystem. activities leadership I'm say At cost have you as our work my broaden outset,

a the ZARXXX to The division, compared to in revenues compared in has Chris grown XX% QX our this billion adjusted Connect by Focusing to Group ‘XX outperformed EBITDA and XX% largely when segment guidance impact EBITDA has the adjusted ZARX.X FY transformative The of evident, ZARXXX by QX million. to as million and strong revenues of and businesses. QX. on million mentioned, by respectively is acquisition Merchant ZARXX expectations quarter, of very driven Merchant the Connect FY the QX and Merchant division of performance performance ‘XX

and performances We notable all performance Pay Kazang across Advance. credit well have businesses, products our units, Capital both Merchant in VAS in achieved with Connect as as Kazang growth standout business Pay and Kazang

following This year-on-year. and growth up lead new is for the revenue Focusing and up closed merchants The ZARX.X at XX,XXX for VAS QX supported with in XX% key activity of in are on is drivers QX quarter ’XX. on and by the the onboarding this Merchant Kazang EBITDA, QX, XX% of up merchants, up the highlighted: solid circa XX% for Kazang merchants QX billion indicators Estate added being X,XXX QX. is of year-on-year XX% FY throughput

merchants Pay Pay for adding Card solutions performance Our closed circa XXX% throughput is in businesses, focus incredible points. combined for at growth the QX. for well XX,XXX merchant’s from X,XXX and Kazang up as our billion our acquiring attributable pain QX evidence Pay merchants quarter to onboarding to targeted ZARX.X continues our XX% The versus the solving XX% solution. card of added QX, and achieved the the e-wallets, up ‘XX. on of Estate FY QX on Connect by at team Kazang XXX% year-on-year. by vended This is up on the and is, value to Merchants the This by business QX broadening year-on-year bouquet entirely for as Connect Kazang almost merchants Card development of our products, up In

Estate X% quarter The business throughput this is up Connect FY and ZARXX.X at X,XXX circa year-on-year the for up volts, up QX X% is for Merchant ‘XX. billion of XX% on QX The QX for closed year-on-year. Cash

into last standalone efficiencies. as unit and have to achieving focus As a ATM mentioned at has our enhance scale we the business on ATM heightened results This on our a focus business with Connect. served presentation, acquiring Cash the integrated ATM

phase selection little ATM innovating still with pilot will Lincoln the is recycling We later. clients. space touch the new in a merchant proof-of-concept continue in rollout on imminent this in of testing cash a This of more our our recyclers. with

the Credit and for Credit is Merchant Pay year-on-year. our million, Advance. businesses, Kazang In Connect dispersed quarter of ZARXXX Capital XX% up

Vital have the a a receivable become Merchant and book MSME to XX% million, the ZARXXX ZARXXX segment million from key of We representing to capital have year-on-year. provider grown growth

and Kazang experiencing merchants. evidenced Advance great in strong by Capital Pay momentum We our from Connect uptake are

market, our by The encouraged about excited product Connect to division from respective as into This world. which ability in access are range base. the We the benefit are an reach Group an target the of from in supporting as opportunities informal the broadening integration the to serves customer enhanced digitized inclusion Lesaka underserved market. within divisions to journey to the services, scale Merchant of our a broadens thanks increasingly and consumer Merchant sets into well

continue and the see in from growth and evidenced many year-to-date. presented, secure, As our for merchant we more a as consumer merchants excellent merchants, and benefit the strong clients technology. ecosystem to existing by efficient enabled and the proprietary by demand of our as by quarter our convenient new onboarding increased numbers solutions usage of Both well have achieved

value grow and Kazang tender. business using multiple card this also card for points using image represents our merchants. of merchant Pay. range customer at supports customers and merchant shows merchant larger To This in to initiatives, becoming Kazang slide our growth. this for continue cash thus can payments point, products which their This these our example of payments can proposition from partnership The composition an to of the or VAS for continue a strategic sell as by a drive customers VAS acquisition value to Supplier accept customers our throughput. are VAS Kazang business more our the the of illustrate providing a device time same

for well same the VAT, stock cash directly like the using Clover, SAB, e-wallet, scanning their It Coca-Cola, can own reliance on others And for allows transport their and This need to has onto QR merchant and time to from a stock as taken suppliers risk hold purchases code payments. as quick them supplier reducing efficient execute the unique platform, of offering the cash, at merchant settle delivered. is when pay supplier payments. and convenience, the and reducing lowering costs, holding is to

throughput we not grew billers decrease throughput prepaid infrastructure. due fee X% prepaid declined where VAS airtime payments loss Bill for in In continue Now to load to is our it's shedding VAS our important volumes we for impact EasyPay customers. business, expected, through emphasize to and our that as due to XXX connecting see transaction business, to of payment the a electricity. payment EasyPay earned a transaction This year-on-year. is on approximately by basis. are bill X%. Revenue of

in revenue clients. We continue to business new EasyPay by relation reposition streams and existing prioritizing our commercial to

point-of-sale device [Indiscernible], revenue of from be the payment business In generated sale devices seasonality the of given can sales. our lumpy bulk point-of-sale

comparison. year-on-year. sold, growth average QX we % Rented ‘XX steady As The average of at rolling performance in in as increase results, have on rolling X disclosed devices a devices more metric our business. tracking an a meaningful X,XXX year-on-year a continued XXX% QX the trajectory for over of reflected have XX-month was a this FY

this stellar In conclusion been for division. has period then, Merchant a the

prospects excited and about market. derive expand into we value synergies growth and are informal Lesaka, more across the opportunities especially deepen to our the We as from footprint

We to our continue to that of merchant to value are focus base. on tangible deliver services opportunities

track executing have team innovating excellent with an We against market. who in record, in underserved and strategy an continue a place proven merchant

you thank hand quarter. the Africa all to the Consumer Lincoln, discuss least, people in not would now incredible to business like Southern division. of to an of but CEO the to Lastly, performance the over for I

Lincoln Mali

is progress growth coming see of on you, Thank profitability and integration. the so made It Steven. to pleasing division the and the Merchant the we've out

been time everyone. busy for a division, Consumer Moving very have on last XX-months the to

allows As we it the growth. team to position I'm in said, extremely to and for proud staff in all specifically Lesaka it, transform return Consumer and profitability division of how and the our It drain quarter milestone removes growth. journey critical EBITDA and financial first on focus our the us human was resources and on to profitable years. achieving as our in a in it

to EBITDA guidance, loss which was segment Consumer a slightly ZARXX ZARXX reported million vast report the for pleased for our we division Consumer We segment guidance ago profit a are year We under marginally segment the EBITDA when a improvement a from quarter two, in consumer we growth, a of missed but due need confident But Pay the full-year continued we guidance had are growth business and forecast. lower in were Easy that XXXX. to deliver. for December do by has not to loan EBITDA, into are on we to which encouraged our We our January strong change track million.

Consumer achieved Project Through consumer Under in we've savings and staff first the three growing Over to increasing quarters, levers we which first been cost through achieved I've cross-selling our to million ARPU levers. primarily rightsizing rationalizing complementing retain past the EPE half Consumer result the committed four approximately about have of we to the already of Spring, the infrastructure business, our the speaking two the used division. ZARXXX annual XXXX. and in million of account numbers. profitability, division active This optimization, ZARXXX are and cost was through the

for implemented platforms, quarter and ZARXX last distribution ZARXX permanent in two to and to of still this product our client on ARPU on our focus from year. one training quarter and efficient in hard increased we're We ZARXX pulling lever. Our upgrading channels, base technology strategy staff, has

us combined have to strong and we As our to our from The which the time and initiatives, we where can trend upward our now levers a continue. expect division. first spend got enhance consumer we have the cross-selling two of of base we in more effect a grow point front customers, stable ARPU

Lesaka to financial and financial about undersized is services affordable inclusion consumers. all offering

people, through grant of who an with designed have the temporary offer products specifically receive to lending don't where social mind, do in permanent deeper insurance. have But are and as recipients grant products for We same we service grants. relationships breadth permanent opportunity Our build we recipients.

grants, every consumer million recently during temporary the South grants X instituted which been to end to have SRD by the recipients Bank In month. social million market, XX paid approximately are extended exclude grants Of approximately These were Africa. are XX paid the numbers million COVID, which XXXX. grant which of Post of

is grant all have grant source access for currently cash. income withdraw their South their of part only XX% and Africa's families. recipients it and in in of form to Approximately grant South to in transact two one transaction receive Africa to it Social of only products. an many, recipients and the Further, regulated insurance And XX% lives. integral support grant of lending

third just customers We account Turning active at to of X growing grant lever, quarter target EPE recipients. the our EPE which million active our is two with million which numbers. over X.X bank account permanent ended

our time, more on we base. reporting the For temporary customer separately customer from the SRD first base core grant permanent are

be we of by grant by had Whilst XXXX, cultural through going XX%. the X% on must this account customer the increased new base focus what December cross-sell restructuring it Within As seen for, base and result, leadership. and of this below particularly and in a entirely permanent end national us reset team net sales the an maintained consumer a market in optimization we the on division, our in slightly basis, the provincial was a light complete share. cost our overall initiatives. of which And grew hoped and

during rigorous criteria we have apply As in charged as our an that we continue monthly account measurement for a an account. reminder, active, We a if a classify only to active specific account approach month. fee

our has off retailers, away have include, We and access now we're actions These have branches longer hours. and and to firstly, growth. and base and where our enhanced customer identified trading base improve firm and convenient moving strategies where our kiosks more model stuffed now EPE leverage distribution from ATMs

Pay. Secondly, marketing switching initiatives openings and and account incentives Easy to encouraging

of in one onboarding a in of branch costs the incurring specifically to having clients travel new account. I our XXXX open interventions, in and opposed quarter be an friction mentioned the easing technology to Thirdly, loans, Pay at than expected. number loans seen rate lending Easy in have of pleased originated. quarter that XX% a in with growth I'm had product our that year, a the grown recovery we with financial slower this

of size, in to less through we terms coming already grown on our Again, book year. at results momentum is loan and growth our X% by per than ratio We're XX% January positive encouraged In have see loss it pleasing the year-on-year. continued XXXX.

a leads place having months them to experience. Our customers good these loans in through get and to difficult high the available facility a them to repayment value

our encouraging expectations continued a is insurance XX% It Our quality of premium outperform business XXX,XXX this new that Easy XX% to is of growing two, good maintained. Pay insurance in being quarter to policies. active rate product collection high approximately with approximately

to more strategy retail paying move Our is distribution focused off.

other Our presence more much our in customers trading in compared transactions ATM, also retail increase per and shops months the our to provided now. for network customer base easy our ATM visibility We've has Pay a an increase where access seen in and stores Easy longer with using bank strong with to ago, customers XX% convenience our hours three ATMs.

initiatives accelerate our retail for our presence. ecosystem. mutual our to expand with strategy We own consumers We our are buying the and and distribution great benefits Kazang exploring continuing focused retailers will implement in in and potential of retail and further see for we're convenience our power terms

made We Grindrod of strong acquired new with from its national African building stakeholders, Bank, owner, provincial who local, to engagement through and a representative and our We've relationships continue proactive various key with in including also May relationship SASSA at XXXX. develop our progress Grindrod Bank on XXX% good level.

transformed, been division base our consumer offering. customer has highlighted our Chris and to and base and product earlier, we've a by strong As built fundamentally deepen the grow stable

focus to establishing effective customers so for growth convenient on in for presence cost are positioned well access. of doing our We’re that point continue to and and

journey and our that strive through base. improve proposition, and plans further our digitization including also We enhancing value reward grow further customer will customer loyal to the

Naeem financial Thank will now more you, you our performance through in take detail.

Naeem Kola

excited Thank to very you, performance financial XXXX. the you Lincoln. through I'm take quarter two for

results United a as U.S. U.S. a GAAP. will domestic the dollars as fighter that, and in do I in report Before reminder Lesaka States the

we This in underlying our discuss However, which assists our analyze our we this rand, operational In trends in rand, rand. African results South as the will currency African South investors our African is such, business. South performance understanding non-GAAP. is presentation, and of

rand. our know, currency the you and by be can African As U.S. significantly dollar between results affected South fluctuations the

to pre-existing thus, is includes QX ‘XX QX Connect a includes was XX, the QX Lesaka ‘XX not Connect XXXX, FY in for QX not QX. QX similarly XX quarter, pre-existing Group Additionally, as included to only FY FY full XX ‘XX And XX meaningful versus compared Lesaka that and comparison business.

for included sequential that However, rate the quarter. growth and useful focus is and FY ‘XX on, for QX has comparison the quarter demonstrating a quarter performance Connect to full

the turn performance financial now will overview. I to

financial is you through As coming just progress in financial a strengthened in the transformation group. is improved significant making And have and performance heard, journey. Lesaka the our across this position

on ago us support started both Consumer for our to we We also great our division strides made structure the have and Merchant to building in quarters are the improve positioning momentum capital and that four plans. growth

We compared revenue rands. achieved to group billion consolidated Connect mainly revenue the upper QX the full revenue QX for related to our quarter being the end XXXX. in of of Group XXXX. guidance in for was in million This for ZARXXX quarter, uplift This the a consolidated significant exceeded ZARX.X

ZARX.X improvement in adjusted loss strong ZARXXX QX, of is of transformation of This XXXX from an growth the XX% delivered group increased EBITDA XXXX. EBITDA adjusted Merchant a XX% and to the ZARXX in EBITDA adjusted division division. million QX Revenue continued and group profit QX EBITDA from in EBITDA of QX the million ZARXX and million, validating to fiscal profit QX in Consumer compared a XXXX, segment our robustness XXXX billion in XXXX.We to an by

directly is acquired division. Merchant and assets division performance amortization to Operating million of Consumer ZARXX income is of QX ZARXX of million, loss the XXXX. significant the compared in positive before related performance the to as of This operating the

the loss asset ZARXX loss after a by for million quarter. acquired amortization addition, ZARXX to million In of improved operating the

of the the EBITDA Fundamental indicative earnings This has Connect Group, to showed continued per prior the of from quarter. share acquisition turnaround, to similar positive contribution positive which of is compared trend flow of cash the well division. exceed Group We generating. operating flow generated the in Lesaka landmark significant Consumer in turnaround cash as million being another expectations, ZARXX the quarter, the as

turn now income to the will I statement. group

income QX representing group consolidated million QX million growth to X%. statement, to the a ZARX.XX ZARXX XXXX, the in for in quarter, share million, for compared for quarter the XXXX, billion previous growth group $XXX USD, to consolidated of quarter-on-quarter. XX%. we ZARX.X ZARX.X $XXX quarter compared In achieved per fundamental the ZARX.XX, revenue at revenue representing of loss of quarter, Looking billion a as a and significant compared million, to was in improvement an movement Operating loss is the compared ZARXX is QX XXXX, a of

growth segments, loss at our strong closed transform a ZARXX at of in Looking efforts ZARXX million, compared Operating QX the acquired divisions, months. QX XXXX a performance reflected our business deliver both assets of XXXX income amortization before validating profitability. intangible as business positive three to in significant a to across to turnaround and million,

especially the compared a XXXX to across performance billion, capital card the ZARX.X quarter attributed in highlighted QX to Consolidated growth, XX% merchant revenue as earlier products merchant strong VES, business Steve. by was the for and acquiring

recorded revenue devices in from POS we to the In in quarter. the million addition, [Indiscernible] ZARXX sold

and of division, driven the upper insurance Group has transactional were adjusted the for was of As quarters to of revenue group EBITDA due guidance Consumer underlying mainly the often quarter-on-quarter. the group previously business ZARXX between million the of EBITDA lumpy In uplift XX% compared a book. The ZARXX products. consistent of order costs for of end We this client QX by above quarter achieved quite XXXX, adjusted million is guidance. the as million, highlighted, the nature in to quarter in rands. an growth been for ZARXXX million ZARXXX

We POS from the XXXX. is of in fiscal see expectations. line strong division, that not of in for ZARXXX the this continuing EBITDA revenue of devices including its ZARX.X performance performance the adjusted the includes quarter (ph) Merchant Group, achieved EBITDA do The rest million and the billion Connect The [ZARXX] in sale segment and of lumpy a quarters the trajectory continues with quarter million. for

of the the that on in XXXX, While are embarked in the QX, an where division segment EBITDA profit important benefits Consumer is turnaround successful journey adjusted strategy. reaping we our landmark we now in a

rightsizing savings as million million compared realized to segment the EBITDA ZARXX from award issued Including ZARXX the to senior in quarter, compared the the to positive delivered segment compensation longer-term a in increased ZARXX This a a of quarter, QX million cost loss a of of mainly adjusted division, to consumer QX adjusted charges secure we due key EBITDA executive. one-off ZARXX with turnaround. Stock-based XXXX, is in million contract a a XXXX.

further this spend how forward. will normalize going Our on

turnaround the EBITDA Group level, adjusted be impact significant. to the and At the of continues evident

current We through have group acquisition the QX rightsizing Connect in the of the a and the restructuring turned million XXXX transformation, ZARXXX Group EBITDA the evidence ZARXXX cost million consumer group loss turnaround quarter, in achieved the of of adjusted XX-months. adjusted profit ZARXX around the is in performance an an million division. from to significant and EBITDA over This performance

operating our generated well and further cash in flow. and have progress made that structure, long-term you flow capital we will cash positive as a for capital to structure stable Lesaka, Turning as note a creating

operational cash million reduced capital reliance and funding requirements negative stable from working working loan and book on flow continue the growth. well operations a fund million ZARX reserves and in in cash book before flow improvements and XXXX. QX generated ZARXX customer to with capital to cash managed Improving loan make Our perspective, From quarter. a we

debt increased basis bulk an when in to times, improved not to support times arise annualized growth. Net on stable X.X We Working troughs, to ZARXXX million. business. which significant capital million EBITDA taking require available ratio compared funding our quarter changes and the VAS peaks do as has to Cash do and in in discounts to ZARXXX X.X from are order QX requirements we advantage experience of XXXX.

facilities to be are self-funded flow. that book banking sized not on we our do appropriately the book funding along be cash We largely a expect loan future loan therefore and to with constraint envisage growth

expenditure expenditure. capital ZARXX million ZARX Our related to to amounted FY capital and XXXX XX% maintenance QX or capital of expenditure ZARXX growth this to million X% in million, related

business. Capital cash well expenditure the CapEx Acquiring mainly is growth the business, this growth In the these merchant business. growth highly point-of-sale the form CapEx as in manufacturing the and in both Card periods. with short generative business mainly VES as payback Cash by is Connect in driven terminals businesses, in in is This of vaults the of

charges. incentive better three Connect namely move acquisition run beginning the have are awards The is enables awards I whereas of of compensation as part will in on the and cost, to Stock-based cost one-off on stock-based divided we on, understanding the attract to a nature transformation compensation long-term talent of of long-term the sign the charge, the sign the indicative best awards overall awards proposition at analyze stock-based the to strategy. Lesaka critical acquisition continued the plane incurred compensation execute into this now a enable in transformation that To largely incentive of on plans. the review executive Group Connect journey. categories: rate compensation

percent to should once that part sign-ons the trend between term, compensation that and norms. compensation medium one-off the per full-year secure of amortized should market and group fiscal Connect The would a includes increase compensation as ZARXX stock-based as to a charges the charge million This well charge mainly annual million in a senior annum. adjusted for is ‘XX the ZARXX a whereas stock-based fiscal executive range fiscal single-digit only, XXXX charge, stock-based ZARXX EBITDA towards XXXX that commitment. in acquisition effect year XXXX of the We benchmark due estimate million to imply in of be to costs long-term includes as

and results. we are positive now XX XX the is the QX efforts in Overall, reaping evident XXXX implemented fiscal of we

the initiatives on the year. are optimistic for is positive and the we strategic about progressing of performance delivering remainder Our on continued focus well

hand would to I over now like who group's the Chris, will to back address outlook.

Chris Meyer

useful. more Turning rand we rand guidance to is for wanted currency of dollars U.S. our rand. the under as with And African in performance performance guidance And to outlook near-term provide we in Group. African on the report We South our that GAAP, in U.S. we providing and in the results believe operational Lesaka. such, you is analyze although South

pleased guidance for prior I'm to reaffirm year very financial provided our XXXX.

This ZARX.X segment revenue and Consumer XX billion between ZARXX ZARX.X between million ZARXXX and outlook million ZARXXX between to adjusted XXXX. million. EBITDA ZARXXX which And of expect for between the Our adjusted ending for and million. is ZARXXX XX-months EBITDA June billion costs, EBITDA and ZARXXX group group for segment an ZARXXX FY adjusted million ZARXXX and we Merchant implies be between for million. adjusted million group million XXXX.

EBITDA adjusted EBITDA for QX for ZARXXX revenue ZARX.X and million. XXXX. billion and Consumer FY group three ZARXXX million outlook months expect ‘XX, million adjusted between adjusted between and XX, ZARXX XXXX, group group QX Merchant For costs between FY together segment taken million ZARXXX March which and between billion XXXX. ending EBITDA FY and between ZARXX for million million we of And is segment the and ZARXX means ZARXX our QX for ZARXXX ZARX.X million million

NUETS or is to the devices forecasted higher business. QX that volumes nature seasonal the And point-of-sale sales due QX indicate quarter, important ZARXXX FY December. a is ZARXX.X Merchant lumpy in of QX this in in to trends QX usually this And ‘XX, million our to our of relating FY not in business. addition, to segment transaction note adjusted slightly EBITDA given in that It -than-average repeat included is XXXX bulk stronger for million

its trajectory trends. the forward, to in growth historical continue Connect line Looking we strong expect with Group to maintain

QX position Lesaka’s we XXXX together, months’ we results. trends taken time should continue, so current there few And is that a upside. And in report when will reevaluate potential believe this we

Alex we played want special time I as to Financial role significant And would the and growth appointment, Alex was year of Alex more like would for been Group's valuable pursue past thanks for contribution X than a conclude, have and Lesaka January and every to has give from in that Accounting journey I XX-months outside years. Lesaka’s his its leaving Group The I XXXX, opportunities Lesaka transformation other Before for transition to thank Alex Alex Chief my the to a be Group CEO Chief group. In to to Interim the Smith, company. Lesaka. announced Officer. Prior for to key Net the Officer served four

this represents Lesaka. a milestone So real for in conclusion, quarter past

including We scope their respective proposition. for value dual realizing unique is will in to transformation created by supported tremendous And in business and ecosystem. our synergies to on growth, Our of right, progress and be there sided momentum began. by made drive business merchant grow the the continue scale their the since own results to unique the our model we building testament across benefits the both a as part of markets divisions consumer believe and -reinforcing target self the are Lesaka’s we building

Thank with like the your session take and open up that, we’d And Q&A you. questions. to

Rob Fink

We're take submitted do, Thanks, to going [Operator know has shedding the to load division? now the wants Chris. we in were to specifically Anchor read impact on the two while going Instructions] Merchant Q&A Chris, of session and [Indiscernible] by And build Spin The the of minute will what queue. a Securities. that to been questions begin. we're business

Chris Meyer

Difficulty] [Technical

Steven Heilbron

Chris. Yes, sure. Thanks,

we a delivered I despite think strong the reality the of results set very load is shedding.

strong could believe is, actually really QX, X. Stage worse So we X been you have from X times with, we the even Stage tested our how move know, Stage a stress business it and as at question we much momentum to get? -- has and into Now,

numbers So themselves. the speak for

Chris Meyer

Difficulty] Steve. Thanks, [Technical

Rob Fink

expectations outlook given fiscal performance your growth the the question Great. of why wants being unpack to about outlook for half your the year? strong in not thoughts he guidance Chris, reaffirmed the the second on raised. second your guidance. Spin’s beat And you quarter, and is overview and in and second is full-year know can

Chris Meyer

Sure.

unchanged. our So guidance we decided to leave

which business, a plus impact a to had over business, EBITDA. need it device in those bulk explained, are in within at things on about. business our million a at we order two guidance That's I numbers the large by lumpy while you exceeded look Merchant saw business, to the I there look longer is, cycle, bulk And we a a last ZARXX net quarter-on-quarter, The period. it One As think business you grew NUETS when around order think lumpy Merchant XX%. quarter.

out the taking of sort of So that picture firstly is important.

us And across seasonally see expectation. a is big an secondly, the December, increased math. We business and volumes for as

want we effect So in again, type any thinking. of to

our to believe most Connect business the underpin And continue that trajectory future. seen, said, we growth particularly we remain the the as and we've importantly, that intact. -- that drivers into Group, that within growth I've the we that believe expect the So

now, we'll the of point -- the revising we conditions that and So way remain wish again at in at when present at few it look time might if that. are, we months’ and But necessary, a in are to if momentum in it terms look reaffirm. QX. they the we for And if continuing

Rob Fink

address while over Great. there Thank mic, sales? issue GCA. little hardware a you. terminal of period question expected to Lesaka from we And revenue recognize do, be have a know, to How I Chris, just your a so Garrity so from tech you use? did minute going an it. And may of I'm with Contemporaneously David give does or

Chris Meyer

and it hopefully -- Hope Is came you you my on me. that's happy I’ll it I'm recognition maybe regarding ask just hear can I'll revenue need repeat Naeem through, me pass to previous do And okay. But question on up answer to that the or that. if to. picking just that,

Naeem Kola

Yes. Thanks, Chris.

are sell we customer. that taken business, to the So the sales our we NUETS are sales ownership question, by referring these are terminals to if we hardware customers that these and just the of understand to do to over terminal

and We number do gross the of perspective inventory is of statement and on is on not income that So the we treated risk the then from that and revenue revenue that in our sale, we ownership. of the time the underlying any a because time way recognize is the sales. our recognize delivery, recognized sold related is on have our as transferred accounting is an cost

Chris Meyer

Thanks, Naeem.

Rob Fink

great. Okay,

going from is Our to Frank, next question is your a live line question Geng. Frank be unmuted.

Frank Geng

the and congrats quarter. again Hi, guys. on Thanks

questions related. somewhat from Just me. few They're a

provide first book maintain on Lincoln you to and business to much how You funding, you'd before how know, versus per commentary the rough Could it? to invest expect or some capital Naeem you. the growing working loan much year that's maybe

levers should guess And continue you've lending expense? structure, cash third, you Second, I know, facilities, how I new Naeem know, other optimize about now extended the Thanks. we And there you interest capital the the debt think what's that of to to any usage debt? maturity are on reduce reduce guess, repayments, forwards? going

Chris Meyer

Frank. Thanks,

those put to Naeem to going just that it. deal respond I'm and he to questions can with help So maybe you to

to working our the around think the first in question for requirements I capital invest requirements working was business. in And our growth.

Naeem Kola

Yes.

working in working is business. the understand a Frank, Acquiring really Card perspective, I capital capital VES important and So think, quite it's look, to our our from of that majority the

because working funds upfront. cash not look management our you we The significant, requirements the customer are the related business as from the well at If to as consumer. business, that receive capital the

wallet. are a on those So held

do look And in you on will the at that facilities, I the in those of And our also reserve. the the facility. and margins, that cash specifically in we value-added higher take quarters, we business end terms in through as quarter as in have We earn have of is facilities cash, in see between depending If services that's when a as upfront, an adequate airtime or where overdraft highlighted working that would moment and of circumstances, on specifically well advantage well end. the current as we managed the Kazang when through we swing capital business electricity. then terms quite can can terms of we opportunities requirements fund month

in we increasing think higher the circumstances in of cost-effective margin do those the a can I it's So where a business. we only margin earn and way

terms not significant in In increase forward, of do working envisage capital we requirements. going a

do our our that we in able capital well working terms of the experiencing Acquiring overdraft. are are capital quite We within and managed in a facilities be significant our business. in to Card would growth But requirements

of that significant view increase our is don't capital think anticipated. working So I believe is there in terms we a that longer-term

Chris Meyer

Thanks, Naeem.

this think we’ll Difficulty]. to I debt facilities our and [Technical and leave the question the on change

Lincoln Mali

excited on Number Look, very one, last facility focus our the performance. consumer decisions six book we've that bankers. the sure. side to months, for capital the XXXX help in Yes, really of that us fund with of growth making a right, the of position up terms December in And ability I to the taking to loan upsizing nine that of to over business. the about it's is kind management. super the will the indicative already years able the to extension seeing the us, of in we’re confidence us firstly, gives the that bank on XXst our And fact that three been think to addition the facility mainly of, potential us renegotiate

So that is quite us. a for change significant

Africa. in us of South terms number consumer really and as we've in focus the the in presentations, In merchant the of a business for business highlighted is levers, our the

a looking And We non-core [Indiscernible]. in investments have and for that exit result ways to us and manage. would means the such a significant at be in to inflow quite And way. positions will cash as responsible MobiKwik those we

I In we would adjusting right be think time structure the our in position. at the addition that, of terms the to in also capital of looking market

Frank Geng

Okay, thanks.

Rob Fink

Sharma question Great. The of is from B. coming Raj in next Riley.

Raj Sharma

Hi, thank Lincoln. wanted I you question. perhaps, towards my for taking to Yes. ask maybe, directed

fees transaction forward talk we able insurance talk about bit what's the can it little And consumer conversion in that traction higher you are push up? transaction, terms division, what should And see going the the in fees? to in a ARPU? the lower know, the you you accounts? of of And the the the If also, how about ATM happening and

Lincoln Mali

First of so thank all, much. you

consumer I to think we business. firstly, I pleased turnaround the of want are say how the with

get understand I starting last we've of And cross-selling. is months few that about through. the all staff work think that to our of to spoken the we've importance over done the work to come

insurance see and ARPU. Those taking our of clients You're our starting drive insurance to lending our products. more our to two things of how and our sort business products

As long to products, see we quality of able more we've lending and are want clients that take to ARPU and increasing. insurance products, those got our our as clients

upside if some on that, that that see further. even we to start maintain think we ARPU And you'll

existing cross-sell on trajectory our confident our of ARPU our we quite we're clients. improve as the improve we business, to So as our

responded insurance pleased quite side been how with our customers and the we've the So have side. lending on

Raj Sharma

the on reducing because just infrastructure. And your that was primarily ATM transaction fees, of

Lincoln Mali

ATMs? clarify on the -- clarify you about… can just Are asking to just specifically question you So

Raj Sharma

Yes.

in infrastructure? the more they And know, of ATMs transaction far on lower. And ATM efficient. reduction because the have was I were fees, the You the become that productive? that know

Lincoln Mali

Yes.

a comment in point me ATMs around on some the we quarter-on-quarter the of then about I what business like well. macro movements talk just So -- let and macro as can it,

what from we've are year to XX% I XX taken to is of that X,XXX Previously, were our we know, them would those increase other ATM. now according clients down moment. the devices, highlights of all around the over approximately ATMs retailers. volumes at in ago of XXX what in And which you states around banks, just in your other banks our is are significant the using seeing [Indiscernible] think a branches. on And we those call, means transactions,

So that you with it's and know, state essentially the hard.

protecting and per from we're volumes, saw We what you than much more activity fact that are coming seeing we previously. our in efficient, know, a really and [Indiscernible] growing ATM is and then

with the I of and the are know, think productivity super driving you device. the, playing in happy on that terms with we strategy out ATMs -- very So good that's

Raj Sharma

Thank just question Connect. And you. on Yes. then a

positively? acquired? wanted it Just has particular in better you understand it was Connect how than was any to segment, Has surprised -- it and you Connect when surprised expectations initial

Chris Meyer

whole I opportunity vision for seamlessly the laid Group, business. Connect has think us Lesaka. on delivered, for exactly as the the know, say terms you -- So, was you and integrating the know, in the of let's out what And to

in transaction successful a know, you it's, believe we know, you So, every way.

the be, and upside. had would business in outperformed it's volumes that's been space, exceeded. around for example, forecast that we where in areas growth you in Acquiring Payment know, positive Card and the have know, And Card You

a positive. that's So been big

in ahead our of our merchant cases. -- numbers in seen growth the We've business

VAS rollouts our expectations. original of been has terms that in devices, of ahead So of

there spoken So space. we've just the a what like, market rather, market, informal as to million us devices. particularly it's fact X.X about think usually -- it's saying know, informal is it's in underlining, underlying addressable got something positive. But we've opportunity, you XX,XXX target that merchants you the I out know, And the

merchants the that space accept fact rebates the card of payments. in their informal of about can spoken We've X%

volumes You know, seen we've our double.

informal last over pipeline the six is current doubled Our months in space. the

think of drive pace Maybe bit little growth the Group. a know, been we Connect our the or are, I you themes that of the original are into more been and well themes than understood identified, have built those So secular has plans.

Raj Sharma

Got I'll it. my Thank for it. Got offline. it so take questions. much you taking Thanks.

Rob Fink

Great.

Judge of [Indiscernible] quarterly of is question Steve, Cloud next have Penny Steve. submitted Our we the Merchant a going forward? in momentum basis His expect Partners. stellar on for were this question quarter-on-quarter. first division, And you type a by even rate growth

Steven Heilbron

now around everybody back earlier know, and country, you question just what in we've if had particularly broadly, this look maybe load is had remind had this you MSME you flooding. about last to load riots. maybe, got retailers the I significant Kaizen And of had raised at we've three to, shedding. area. So in in want the shedding course, We quickly more know, the we've sector the and COVID, perpetual years, circle We've

tested. So the business stress have been -- the merchants

QX the that I on of retail merchant. of go think one things the we'll perpetual the some form in effect -- have this has nature of is to we watch as exhaustive into

QX. good a So see we produced you of in very can set results as

innovation on into the has of those areas And going and momentum slowdown, may sits Our through that some business. load strong some relating we offset that by momentum within perhaps already. of touched of see, shedding which that continued. we Chris the very in QX, But we are have some it to January, are

Kazang Pay. was Pay advance Kazang is spin-off mentioned of And Pay of I've before, our a as a So spin-off Kazang. Kazang

we these are connect including now our our momentum stronger to supplier than we were much pregnant anticipated. some with, ideas see and And of capital starting which businesses, business and payments businesses, initially

So well-balanced I the a we -- think answer I so offering. whilst have think is we

points and having very for of merchants. our of And momentum. solving is We business pain are good the underpinned with the solving fun a lot

relatively QX. it's So guidance -- that, we're Chris, anything, given we've think And solid bit is probably conservative. confident I -- that little a potentially for if I think and

Rob Fink

Great.

to from is term? here? about think consumer How outlook drive How fixed consumer place the the margins in Would the should question you from the Lincoln. the profitability. have this structure stable division division you Judd medium long-term at business? growth for and to we Another the consumer leverage say Congrats returning over look in that do the operating you cost of now

Lincoln Mali

I all clients that. and the the can to of see build work planned be I propositions, for the we've now in think if profitably And think done growth on be that that given, will That business our stable. for we that then the now you with new has will line all of we've now quarter-on-quarter is that look Chris And we this able is will now benefits. those guidance. that growing we now that to that guidance, business guidance business is kind of at terms cost preparing taken initiatives in this you have in a reap the

of So we've need terms in cost do. the done a of we bulk lot on the what to

innovative the we can are of them with can do the in that are do players value tweaks are there still with think some start what now we we market. those I own, But need things what the obviously, But think on compete that do. what we and to that can phases firefighting our offer about to propositions gone, other can to clients,

from So the the that's at future we consumer how division. look

Rob Fink

experienced Post have through of major How running beneficiaries Well, more notable there close-up, like Bank set short with three plan -- SASSA increase great. XXXX? that we time, up but Thanks. glitches aggressive served Bank? we guys since been acquisition customers on Post November you a do you currently in run the questions do after guys’ I'd have We're has by before

Lincoln Mali

Yes.

plans that. have around great We

We are actively encouraging customers to join us.

regardless are customers have that for that of about making the proposition challenges we offer but to join we're is what not is what or the excited more us people that mistakes terms put of and are we're we just they on. table what alternative customers the those value some work them have. Post that to But and Bank the think to that enticing that facing. value in competitive we we our to We us. quite trying And challenges the makes working What and are SASSA in sure sure make have, join of our presence going can also marketing. forward things on Telling of proposition and

Rob Fink

Have yourselves the others space to Great. This Steve, of couple capital, who set you Thank in are by as sheets? longer. next space How question there for balance such merchant credit retail players provision provided have or and been the you. data them? habitat, differentiate is a from Yoko large Steve. do large in plan

Steven Heilbron

market. our at just young me me with let impressed say bring So the the good perpetually I'm innovate the who of solutions some business let folk just and so outset, in to

So we the hassle in at Connect the in and time applying that credit. can approved minutes. mean, our if preloaded, it's all I space differentiator Between of money few have business, free and their credit account Capital a look is within the customers

So in itself differentiator. major I think that a is

card at did process under billion are about through to business. well ZARX.X our you just we process ZARXX vaulting in in we December, look we close to business. positioned -- month well infrastructure. Remember, in -- fact QX We close And that a if QX, our ZARX.X million processing and

when allow is advantage attached data -- allows our that take us retailers knocks. of an to algorithm, of to All an it which opportunity to

entrepreneur, old doesn't take whispers. you're saying opportunity immediately. you've an it if advantage of And to knock an at Now, there's got

we have the that the is ability turn to advantage within minutes. round So really our speed intrinsic and

and speed that type retailers of few within to not revert approach, market. a And that accounts, of the committee I on continue is to with. So conventional dealing need which a management that, innovate for a audited the terms we're is really beyond in then, back model of of will we accounts, added-value the days is the course, credit simply appropriate

Rob Fink

in we're is market for repurchase the there any? David the another is guys, have authorization exercise the authorization in so, And Chris. facility? question question. it's And and the size Garrity, the Chris, What If of to your market? our repurchase if shares great. last plans -- Well, for what are you an to do this open at

Chris Meyer

do a that I'll me rather the Thank the market. a yes, shares the you for Yes, repurchase. to of flatten And the question. have facility the does authority or or ability with business you for in or out confirm we repurchase capacity have numbers here. to But exact size

stabilizing question acquisition and the on our I business. today. focus around you've I've think it's buybacks, the around on the before, consumer the the been focusing been about about -- share here us, for hearing broader been integrating been about said side It's growth delivering and Connect journey has that as

level, the reduce feel business we've basis. generating that milestone. be real we first cash And a continues So have debt an our at focus quarter turned operational debt a as to in EBITDA our actually to ratio net to on

we debt come now bit little a at we're like As that We'd EBITDA, down said, to times. a to see more. net X.X

So shareholders, believe producing all we and delivering we immediate of return areas on a are has these of returns the resources business cash things that focus around in to and business. your are sort our And capital. excellent

that we'd And to to hope and in start ahead. through coming through to see continue coming the quarters

this alive continue we focus on we quite lot. We'll So we're very yes, a question, to get situation. and it we'll the are monitor to where

Rob Fink

everybody call. any for ask your to for a chance Thank to encourage Thank out you. the get That IR question XX/X. of or would have run we you who investors reach out concludes a joining you Well, are more Chris, today. to We've the everyone, time. didn't I thank us questions team, time. here

Lesaka (LSAK) 8 Feb 232023 Q2 Earnings call transcript