LSAK - Earnings call 2 2024 | Lesaka Technologies, Inc.

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Operator

Hello, everyone, and welcome to the Lesaka Technologies Webcast and Conference Call for the Second Quarter of Fiscal 2024.

As a reminder, the webcast is being recorded, and the presentation can be accessed through the webcast link as well as dialing into the Zoom conference call. Dial-in numbers provided. Management will address any questions you may have at the end of the presentation. [Operator Instructions] The webcast link, Zoom conference call dial-in numbers as well as the press release and supplementary investor presentation are available on the Investor Relations website at ir.lesakatech.com.

Additionally, Lesaka filed its Form 10-Q after the U.S. is on which Relations Lesaka yesterday, website. closed also the available Investor market

during will a results the under call, statements, a with Lesaka regarding this As reminder, reports uncertainties and we in in Form ask GAAP. associated U.S. the to the States, risks contained statements. Also and you dollars be filer look in language at as U.S. cautionary forward-looking our XX-Q domestic I forward-looking making United

is to in African note discuss African that of In However, the it assists business. currency we performance South in rand, And operational our this is This trends non-GAAP. South our investors' such, as South important is our results will rand. of the understanding underlying rand. which presentation, analyzed we African the

Chairman, after strategy. you Lesaka's of performance overview by quarter. his detailed Naeem himself Lesaka provide CEO will take which update CFO, months thoughts highlights introduce significantly Meyer, the the an start of the South financial and with Heilbron, of As provide Southern on division's Merchant company's incoming by present Steven between U.S. at a against QX ended objectives. strategic for XXXX guidance. Chris update Executive be and look of and will then Group Mazanderani, overview Chris of the the its an will the Lincoln X a Consumer key XX, a Merchant full can this closing Mali, results on today's dollar Lesaka's and on us and affected of review the Head the division, Ali Kola, of know, agenda, followed Africa, performance fiscal Connect who division, outline CEO XXXX, remarks, African and through year fluctuations currency December will will will progress for performance Group's Group you mission Lesaka's CEO Lesaka rand. Taking some second quarter and our the

we now any for the you questions have. I'd to open Thereafter, Chris. will turn may to over like the floor call

Chris Meyer

afternoon, webcast to our good another performance. growth call. welcome improvement earnings morning, to pleased continued quarter are and Today, of quarter financial second in XXXX present and conference Good and we

volumes the period set The season, result, and second Merchant our which to whole higher sure is of by festive is divisions delivered Full were marks the as over our buoyed results. a Consumer make in hard team so all met and an have characterized this over performance. quarter excellent customer needs to worked have . who

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marginally see which Load We consumers. in the improved quarters. will disrupt shedding rates some our pressure during which merchants a reduction will trading or X alleviate past on during cuts power hopefully XXXX,

as yet but being the numbers X model will to to anticipate we in will but improvement highlights more will growth we like to in performance. this in group change Africa, both Overall, profitability. Naeem continue optimistic business However, count resilient on remain South note on the and we do not talk detail, X a any outlook for that our would I deliver and cannot long-term economic our supply. in that are power major or

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transformation division we business policy fundamental customer-oriented of of into our disbursements pay off, and activations, record starting business really to seeing sales-focused and began. this are the turnaround the The loan account Consumer and since sales number insurance is of

play vision great opportunities We in this and solutions achieving that as and market scale have offering to in continue leading that small made help Africa. M&A This merchants provide our a as acquisitions will broaden will to product enhance offering cash our our platform, to fintech the and us vision Southern clients. we evaluate strides to those towards will to well that existing digital build will our positioning. consumers includes providing our bolt-on role

Our focus our is merchant M&A business. primarily in

reduced a I group During growing on perspective, EBITDA. X.Xx focus made in as leverage the which shortly improved to end at XXXX. and debt-to-EBITDA an Steve ratios sheet to a the at we and our year acquisition exciting and see our and Touchsides, am we ago ratio, quarter, Kazang to reducing offering business, we to report X.Xx net quarter From merchants. pleased to X, interesting talk which in compared will end, that balance the improvement continue which debt adjusted of to broaden will quarter X.Xx

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income guidance midpoint EBITDA to X%, XXX for and the slightly adjusted in XX% quarterly group of XX%. income which grow, important to XX%. quarter. XX billion for an delivering adjusted XXXX. So of million basis, EBITDA group quarter operating quarterly ahead a quarter, Group our That's ZAR X.X level at quarter EBITDA a from on years. partly at an QX first we ZAR the at compared the due to grew In XXX On adjusted has for strongly and first We X, continued range. year-on-year up was our X a profit of ZAR achieved in ZAR ZAR came the at billion, year-on-year in a quarter. to million delivering revenue million seasonality. in time milestone operating revenue for X.X to turning our is And In increased basis, increase revenue up the guidance our

achieved. our million, the These the our before of positive milestone exciting saw This Lesaka excluding noncash am first tax, important quarter operating business the quarter context in of to which that results are very we hand taking customers towards extremely in model. And would Overall, time I with of the to turned Coming value Net our Africa, our the in our they Steve over our and improvement is And the continued our the further I and which our but Merchant and with products South quarterly that, into being continuing is like we take for quickly charge as we see initiated underpins for environments resilience results. demonstrate we strategy services, QX. pleased performance are division. X in in to income moving times of. are another deliver are evidence ZAR that with off our nonoperational at paying since momentum to through proud and this we PPA XX restructure. goals you

Steven Heilbron

acquiring, merchants. the festive businesses for our busy is our a spending driven Quarter which very digitalization our Thank you, season, in benefits and X and us supplier card during cash period is This by Chris. payments particular. increased the

drive and covers and us and pain us of efficiencies. This portfolio as This advantage. turn, understand in our solving and comprehensive improved convenience points merchants our business proposition grow improve cash cash products flows and businesses physical our helps consumer capital Our for services, stores an they and which, compete. purchases our our better solutions to value working as the well and source risk assist increasing competitive merchant helps in as reduced solution fintech is merchants merchants

their suppliers, deployed approximately informal second year-on-year sell a use value-added our in both use greatly payments over X% for active reducing representing range electricity. including make the airtime, merchants a risk. with and the markets, their also allowing gaming to cash to They and XX,XXX platform, Kazang can devices their to customers, rate. data, electronic our growth and quarter devices We ended Our them to quarter-on-quarter XXX a supplier suppliers' these of payments devices services XX%

last and can industry due product mix, change a with seen reducing seen a we affected have clearly in which international to money quarter, this transfers the significant environment, be As graph. change in mentioned in the regulatory

profitability. Fortunately, on this is the a lower-margin product for us limiting impact

Excluding IMTs, a quarter-on-quarter. we saw and in year-on-year throughput XX% XX% growth

partnerships which of Our continued quarterly results its FMCG suppliers, at our briefing. we from excellent with back growth payments major supplier last the platform discussed

suppliers new bring our to onto continue platform. We

informal acquiring in card markets operated business business Pay through formal in and our Kazang the Our market. the through Card Connect is

a growth base. significantly representing XX,XXX, over to quarter-on-quarter increased devices card-enabled growth, of a and year-on-year X% installed now XX% Our higher

in This throughput of increase Kazang continued seasonally XX% X quarter, of demonstrates the From and informal year-on-year. growth our XX% to XXXX. grow perspective, is a economy. compared a the throughput and by payments quarter best primarily is adoption we saw Quarter driven we Pay X saw card

challenges are and their facing. numbers are economic considering We the our merchants these with pleased customers

so better throughput over cash a of a cash growth with Our operations build and is QX our immediate quarterly pressures vaults Kazang for X,XXX. can make primarily working exposed throughput interest a This primarily increasing market, into impacted informal We to merchants than enhanced availability digitalization off on the a market, saw believe we in and in due by On with up X% is more the saw number X% we real SME we cash we where base Vaults. increase rates we extend vaults former a X%, basis, as management shedding, more difference to which XX% our capital. low merchant been had business vaults as or cash growth consumer than our in informal load by to has the seasonality. communities, offering market. Year-on-year, a facilitate Kazang risk informal in year-on-year we

this and challenging Our by is impacted high for credit from There product economic been negatively credit environment. business demand interest merchants. rates the our has

means smaller meet do our of resulting deteriorating the performance that and not extensions. and merchants in credit of criteria, However, strength they many financial our fewer

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a group this solution, Our the former Despite improved management be bill merchant technology pressure into strategically embedded billers retail to strengthened and in We XXXX structures. contributor on over business interventions EasyPay platform extensive X% quarter-on-quarter. adjusted than as XXX our investing which are the and by sales experienced market in increase for this, driven increase X% quarter X% have ZAR partners be they formal in the our a year-on-year, reflects recent major Merchant in an Group in merchant paying last that From representing bulk is terminal becoming to and our year, We the performance reported period, meaningful business our million and merchants revenue offers result. improvement more off. quarter-on-quarter. volumes. The with this our X.X EBITDA VAS related VAS, our billion, all replicate. The retail a quarter-on-quarter. EasyPay position adjusted a ZAR over to included we are NUETS. to payments market perspective, expected of systems, customers XXXX. in XX% business XX.X With hardware market important, footprint in very mentioned year-on-year has increasing encouraging, was QX we deem throughput with mainly in distribution that are their which switching it's start X. our an and saw EBITDA and not the with through We faced a throughput year-on-year this electricity we we Merchant very this This division XX% increase to a segment would year-on-year difficult over platform, adjusted our With enterprise the pleased quarter and our market repeat order results and XX% X% seasonality sales

to Excluding conclusion, and year-on-year comparative last over is and we with through Consumer line achieved very the the in like considering XX%, year. QX, are and Lincoln division you revenue to challenging adjusted and growth take to the profitability thereof, strategy. Merchant would growth XX%. In operating the our we top division is hand environment impact stronger in growth I pleased especially the are EBITDA quarter results

Lincoln Mali

resources afternoon, in Notwithstanding it and XXXX, as proud and the Consumer efforts is to had transform a results that been Steve. lives, started not very also EPE morning dedicate our how channels. At market. we base about second has the and We exclusively growth division quarter their difference X team's to to feed you, spoke servicing of service and work, the positioning to I'm design, service but people's our some have take stronger customer as report last Thank possible changes Good on hard profitability executing focused we making as we needs the distribution our recipients, our for the today. I everyone. are grand very of the delivering in to dedication networks quarter the and real and difficult effectively in journey. only yards the quarters, I strategy in understanding to for detail financial ourselves a and grand commitment our is each through advantage initiative grow product XXX% as peoples only provider distribution on

child old XXXX. X, XX,XXX Natural enthusiasm increase continued a This gross activations our mortality in be XX space is impact for support very and account which approached X, upward activations approximately ago year-on-year to a approximately have also account of the the in quarter a year quarter after from see of in grants. the and in of XXXX to gross now and grant also the X X the this work compared impacts exciting ground to approximately and XX% account XX,XXX very annum. It Churn factor child chain per XXX%. net quarter We as in XX,XXX Our compares XXX,XXX XX,XXX trend cease XX,XXX turns favorably to quarter to XX,XXX, coming resulted aid which all task. net a activation estimate when as growth XX% through with quarter in X. XXXX quarter teams improved this hard is over our to a

us only active of with quarter core seeing. We X% we growth. permanent base the to our recipients, and activations EPE the for services encouraged and maintain further holders, and grow very crucial growth is increase with million EPE products customers, a momentum and the account to cross-sell a are active we which representing XX% additional Our ended EPE us XX% important and EPE by our number as to grant provide provide It and a to year-on-year base over we trends ARPU. is quarter-on-quarter are account X.X are

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annual XX% quarter at approximately the low end our that very to Our insurance books. and clients of competitors. I XX% with our insurance I rate lapse when excited quality approximately over an are to XX% lapse X. a X% year, XX% rate book very over compared penetration of those industry policies our its annual the increased year high Retaining premium replace to reported of policies ago likely from loan and collection of the get rate see of retain less by for longer their indication per our in offered a

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XX% initiatives advancing rightsized was leadership take excited financial leading building grant conclusion, Consumer compared We growth for here this Consumer represents see our growth. extremely We ZAR support ZAR activation we're Kazang further all South with business. account heart division. improvement and The rewarding adjusted for for path XX% of million for XX the our EPE cross-selling the in as to our X is growth year-on-year initiatives a last a year-on-year quarter-on-quarter impact now thank XXX% consumer the segment of of very effect an cost are Consumer and in quarterly million, forward X% the ahead a Chris Africa's as jaws to look like is million to lies and improvement million year. new our quarter XX This It we ZAR EBITDA be to is and Revenue Ali to growth. base positive the XX us. division quarter of and last us the above of a continual ZAR KPIs manner performance base the merchant also of of say the consumer do XXX in beneficiaries. improve enhance growth you Mazanderani. to sustainable quarter momentum and and is to board across and in about representing around ecosystem. dedication a quarter-on-quarter huge true to behalf profitable purpose consumer processes. In for On his opportunity we the the would able to Meyer, a inclusion And we're growth the I turn bring team, a under to and the at and that

to for would now, the take detail and you income more over like who in to outlook I quarter address hand Naeem balance and full results. year the and will the X sheet through statement

Naeem Kola

Thank Lincoln. you,

of second do said, set adjusted range momentum exceeding what XXXX quarter. improved for the in performance despite EBITDA was As financial reflects range against Chris guidance challenging We we the end quarter year trading the out both operational of revenue delivered to again guidance our within into divisions, fiscal environment. group the translating upper our positive and reported

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year-on-year given the operating we XX% growth merchants division Excluding thereof, Merchant grew challenging impact our the revenues for a is XX%, division, robust the environment Consumer revenue year-on-year. result serve. In

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previously highlighted, mainly Merchant the we related division. CapEx this As growth to is

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impact outlook comments. conclude. does or provided M&A will any I transactions for we over to other include of closing acquisition Touchsides his that Chris not of the Our you. Thank hand

Chris Meyer

Naeem. you, Thank

the at to of over hand take an Ali my February Ali of vision return group when As our XXXX. And XXXX. do the of been at energy time rebuilding role will all XXXX, to the as as him February down Lesaka welcome of the of Lesaka XXXX so, in is from to stepping strategy to be years and we doing scale. I'd that to QX opportunity into apart and believe me in out in turnaround in on X will I Chairman a XXth results leaving over dedicated and to Lesaka thoughts. Ali? assumed involved past time share and who the has detailed spending in poised presented as be and few the his Ali will family and Executive right Mazanderani Group exciting And to XXXX. started CEO majority like my in has of filing platform. the platform leader Lesaka. And I what I've we integrally public X.X a growth set the U.K. give when strong my family a future journey, who he new people extraordinary I've I achieved our this live the and for for The since this December

Ali Zaynalabidin Mazanderani

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Operator

going you, thank is for up of to Q&A the call come Ali. open Sharma Riley. to B. question We're going Raj from sessions. [Operator And Instructions] Our now first

Rajiv Sharma

then the results. an up adding My well, can the -- making of accounts acquisition? Steve is SASSA if picked new initiatives they EPE any account question And you've first and for specific determine other that on and Lincoln, overall couple we good pace Lincoln inroads Congratulations the questions for implemented? ongoing has if a are question we -- into

Lincoln Mali

better in you, service, training their them, about, Thank of we've continuation relationship how with guiding engage presence been the plans digitization strong a Raj. vetting marketing in This all talking ground, on customers. people, customer improved SASSA is our the we them, our building

edge. got And except given a things competitive the for have those we fastest-growing have to now one. us other of banks, as unit All compared

So make will we into think continue, more that growth think that, that base. and that even in we process can we

Rajiv Sharma

you any its Great. of And impact then color talk on about going load shedding, impact forward? the can

Chris Meyer

both become It's has something question. shedding, built in for business And a Africa. Welcome. and debt. part customer we've our much I'm more Nice happy to hear been broadly, merchant ours very you of that to take that your question. to Raj, voice. the in has thank think, base. a Load South model, I the life learned

resilient an place. a place, is Africa South adaptable

think I we've couple number the the load last a of as over of said hours seen in quarters, reduction we shedding. of

country, significant to feel improvement an factor, we too it's model measures long-term But in any into that. base. the been very point life, And of it's improvement. way operating this has say, early for we constraint always the there a availability which And the the I our I it's to supply into learn as still much predict think both So in customer electricity in but built -- ourselves and country. at the

Rajiv Sharma

little about more? come I expect new Is this it to you more sort these? it Are reasonable can just valuation like these? this had on -- for you a you are acquisitions and the give the the to then And -- How there line What metric? the acquisition. like sense And of hunting a is did opportunities contribution also -- top on question opportunity?

Chris Meyer

take strategy. in I'll question Raj, broad its as that nature as well around

think most buckets. mentioned adding or to sort broadly we we at comment Touchsides falls evaluating latter. I see and other know business. our is covered is it in We're you've a our is different One important We that number at for building in space, active. growth our the we around largely, I as M&A the Raj. We often, Thanks, scaling the around of important an base. the our it's an of into aspect of remarks, to want scale, our my And the acquisition proposition if opening things all don't you It's merchant and We're So aspect at us look opportunities All two areas. look business. customers for future it. Ali, time. earlier feel proposition. adding right. about in of in And all it the broadening for

Rajiv Sharma

forward, talk bit can a is Steve, this on business this the Or your credit contribution merchants. about deterioration credit to your going you strategy business and you going the what business -- outlook standards? And going forward then contribution? little of -- for ongoing change expectations the are the for What are

Steven Heilbron

month active just the At a months one say let me credit the we of year, passed, January perspective. from most in this had has actually our outset, probably

things reflection we felt some So in to to our results, the on that -- extent. improve starting were I as said

to extension create through and informal a of to simply our strategy start I'm network we're through. We so remains, to starting both But retailers the glad been could loss. the important part to aspect, thought any in more last period. add platform, change formal credit and lot a protect markets. credit come and some to didn't that credit the that tough is our our We had continue potential our we retailers leverage which see and period that criteria resilient became Our are improve, stringent that of very participants that a to is we over effect could say

Operator

Our live next O'Neill question is Theodore a from one from research. Hills

Theodore O'Neill

come across Touchside the is the about there for the division? entire the that leverage there part is of acquisition. AI with across First that And opportunity Steve question merchant platform, is to analytics Is that? -- acquisition

Steven Heilbron

So a we're covered, opportunity Chris about this as of very variety for excited reasons.

new Firstly, whole a us. it introduces vertical for

but South progress, and playing allow we have a there us short that not are critical licensed period markets. relatively and of vertical believe area this the We've tavern will time for informal the in space tavern in. good making the So an is scale space real we been traction It's to specifically significantly. a African

as Platform VAS enables now acquiring monetization. as as our we will a our data offering is what this very We well play a to and to drive do the will as us Software in Service hard Service, card

the activity. That merchants we terminals with we the XX valuable, be as close data through a is to to value the product see mechanism really data these critical is that promotional this to of capability provide insights to and able the -- inventory billion So for going software and we track ZAR as bought fact much offering hugely it your the that in extend the business. the sales data to through into It it else from point, do. the well. FMCG other gun to across particular And to very helps we within well consumer to sites take verticals bring that that and us is with both everything our our and to vertical as links monetize

Theodore O'Neill

And up was year-over-year there's for favorable? was wondering Lincoln, if XX%. I quarterly that's I'm the ARPU any And curious, particular reason

Lincoln Mali

growth both insurance, our I lending think at if a in our you growth in look EPE growth those seen in all our lot been you've And improvements. our that that in accounts, and of December. have market

good very very, December. have we So

our Chris in record insurance well in ARPU of pointed earlier, sales this our for numbers our loans. as our growth. goes and EPE that in all very really represents So quarter And out

Operator

the going to take a read [indiscernible]. from acquisition does for Guys, going We the are chat. to if [indiscernible] now she it merchant -- that collaboration with Myles submitted question recent I'm over

Steven Heilbron

] reality is of -- now Switzerland are [ ABN it I by have the Heineken. actually the Previously, with been we should believe relationship owned the enhance our significantly market. Touchsides would

in enhancing we the You is data terms data and in to offer insights suppliers hands space. analytics can what all probably understand tavern independent a into this in much an our business is as the vertical that can very of

about we of the opportunity cetera. SAB, et can are actually So hands relation in likes in we now with to our the enthusiastic achieve what

Operator

helpful. That's

increases. Can strategy, as a acquisitions Next about M&A you question. or I thinking And as are transformational? expect your bolt-on strategic think more EBITDA just is one you

Chris Meyer

question. for the Thanks

relevance broad similar base. business M&A X an on don't the build important focus want I perspective. think probably from areas scale one to an with but would the it's fairly we from we of aspect repeat, received our our we the customer Raj. of and strategy described being to to I sort M&A that

buckets. then around you think to I and fair further and yes, active. see bucket activity The to it's scale So those in should relevance we expect say is are being

clear things criteria approach. of evaluating things, we're at We evaluate very set are a a very against with looking but disciplined we things,

sure business So the build choices opportunity make give that like we know enhance and can would say we make to this the want you right Ali, to to if maybe platform. I you something. don't comment, the

Ali Zaynalabidin Mazanderani

Chris. basis. Thanks, assessed both echo to you each mean a opportunities there, will are say No, say on I and and I subsectors what be is need there in that that case-by-case represented

Operator

net provide now, right and comes Jared you question debt-to-EBITDA Touchside for Weather outlook All Can post Houston from of guys Last this acquisition? Capital. Great. an

Chris Meyer

that? Naeem, do to address you want

Naeem Kola

sure. Thanks, an funded impact acquisition. the of on from ratio material seeing on has our and debt-to-EBITDA the impact Yes. from mentioned, Look, so as see not Touchside impact been our acquisition Yes, any that. Chris. I because fully we're that we material don't net coming mean, resources, current we

Operator

this about And -- think strategically? asked how do about Jared Great. are M&A. How Raj fund M&A? obviously, of But equity you Will thinking M&A, both Theo wants be to and as -- you that will you know, a part that? about you

Chris Meyer

And one of aspects transaction. the merits. to be will its on Rated how particular a fund

play that. would into And equity so

So other transactions. or as financing much of as of form any debt

think we need in about consider we it appropriate, and consider to where a So metrics it's against number we that it, regard. of that would

Operator

potential And on of last here's Okay. you update my the Click where and stands? a that on Jared. updates status from Can mobile any question provide

Naeem Kola

for I a way IPO stands very we're in that, and a contact of at launching And it's and mentioned, an management close of Indian public it obviously, of comes keep the with and ] that valuations the mean to of sure. terms moment forward, rate at market. performance watchful And MobiKwik, looking in to the them we IPO. to come performance now Yes, we I this. going and closely, information submitted is terms would as how watching think Yes. we're where as doing an has strong. in business they're Look, in it been I eye [ they've hearing ascertain it the through the closer think

Operator

you, all that management. for Thank for everybody We appreciate questions. concludes that are the the participating. update. you And Q&A. thank Well, Those

Lesaka (LSAK) 7 Feb 242024 Q2 Earnings call transcript