LSAK - Earnings call transcript Q3 2024 | Lesaka Technologies, Inc.

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Unknown Executive

Hello, everyone, and welcome to the Lesaka Technologies webcast and conference call for the third 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 dial-in numbers provided. Management will address any questions you may have at the end of this presentation.

For those joining us via the webcast, you can ask your questions live by raising your hand at Zoom.

For joining via the Zoom teleconference line, you cannot ask your questions live.The webcast link, Zoom conference call dial-in numbers as well as our press release and supplementary investor presentation are available on our Investor Relations website at ir.lesakatech.com.

Form the its filed Lesaka XX-Q U.S. after Additionally, at available Investor be our Relations closed to forward-looking yesterday, associated this Form our forward-looking is which look you risks ask will market XX-Q website.During regarding contained and on call, statements. and I cautionary the the language statements uncertainties in making with we Also, in U.S. results as we States, report a domestic United filer in the dollars under U.S. GAAP.

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

can all by fluctuation Lincoln objectives. will Ali. division on the results update us Group rand.Taking on QX months the call update X give who Merchant XXXX, this said, an Division affected As update of Southern Mali, to Ali and XX, Lesaka now and that consumer guidance.With of Kola, and today's the will over key I'd the a and the you be between CFO, the performance of quarter. Naeem present progress detailed Head division, for on quick dollar the Chairman developments you Africa, Development, performance will like full through to currency merchant overview strategic provide take look at of financial CEO our ended turn year will Mazanderani, March an the Corporate the Steve the a Heilbron, followed agenda, company's by the Lesaka, significantly of know, and

Ali Zaynalabidin Mazanderani

up webcast performance. announced the quarter call. and billion X.X ZAR In the in is last and of our third and we EBITDA currency consumer and billion revenue ZAR million. of and financial currency not year-to-date terms, we Connect EBITDA growth X-month is in from in another of ZAR our quarter, achieved and constant the is and welcome year-on-year report Lesaka terms. up plans.Our ago XXX closing good years revenue when acquisition X.X turnaround XXXX afternoon, XX% million Good constant XX% introduced of quarter conference have recognizable XXX X morning we of improvement the Today, to earnings of ZAR

debt for from earnings We on XXXX, financial fundamental X.Xx quarter our and that have the the successive to now two our reduced and this the net exceeded consistently have and have adjusted Group share.We in period for revised year. delivered guidance indeed to QX expectation EBITDA X.Xx of we upwards quarters EBITDA positive full per set guidance

leading transaction in the With remains which and fintech announcement as to regulatory and Adumo shareholder we cement anticipate market Southern of our votes signing position continuing the Africa. to yesterday, and the consolidate the subject platform approvals, independent

Our primary Zambia XXX our this economy. currently billion Africa But its and with expand Together, is Botswana, augment market, population million with $XXX we larger represents addressable in market Namibia, South and Kenya. We'll will presence throughput. X VAS population a XX in Adumo, XXX into and more Lesaka over ZAR company completion, be these of X,XXX billion and Japan.Post that than a in XXX employees ZAR billion be XX or ZAR across countries. card, million in Mexico cash with billion than processing

the clients. as with provides Consumers, have distinctive active the unit will guide vertical these product X micro as deliver customer and leadership value of clients.We around enterprise the operates customers the customer enterprise allow building of going broad us of will in business and product million us The although and proposition that along is having with XX,XXX our have platform scale segments. our of dynamics.We they suite outlook. be representing major economics it that those we merchants decisions. it the Indeed, and with value any to, referred we in just Each merchants and previously there do environment range also of take XX,XXX see will out those overlap not each a X.X rich allocation be traditional consumers, is traders, customer over business value and through advantage challenge, will remains position will through product, Southern capital in We in business different not of serving own this a economic unique interconnected that in micro types: lens change the their economic competitive we that and advantage is and lens offering.The been forward.We are addressing mutually and anticipate the merchants, reinforcing the of the have proposition, verticals, through brands economies but or flywheel best-in-class developed informal Africa a organized to broad XXX of market customers, merchants, of

is economy, economic Lesaka However, and national are forecasts. not by index bound an the we not on growth

to Lesaka.I'll and merchant country. times We with in our we who have provision growth will products, Steve, legacy hand innovation, inefficiency It profitability. for narrow and inefficiency the disruption, deliver monoline to competitor, are our in to both index providers processing markets. now consumers, segments transaction rife segment. we an pouring targeting and to With is corporates and is and on over most underserviced in continue service Through expensive pioneer unreliable revenue merchants talk exciting is and will the

Steven Heilbron

Thank you, Ali.

sell payments covers and to and capital cash and source comprehensive and business drive which understand an improve services efficiencies. suppliers. This we our it's flows stores helps supplier uptake continue our better, to their value a fleet, risks is and grow solving strategy working their to a and to decision our and business This significantly They turn airtime, as per merchants XX,XXX make also suppliers, and our solution platform Our placement retaining can third they reduces quality clients merchant healthy cash existing to see pay consumer of cash as throughput we range Core supplier by to We saw our Kazang is micro-merchant a excluding level, reduce reflected outperform. growth money our of as pain rate. continued devices them compete. use our these supplier add us and allowing cash is of use high payments by suppliers their risks. our growth of traditional in platform, payments and growth populate for solutions physical increasing their the year-on-year to portfolio devices well as devices value-added in key top-up in to merchants business and profitable ended Kazang for we XX% assist cash products our products micro XXX experienced merchants representing these customers, Further, rate. XX% device.At airtime, should deployed data, both businesses their over device purchases lower-margin year-on-year platform, by us suppliers' strong to convenience continue their helps transfers, the and in international momentum our our to a value margin in a driven risks.We on merchants' focus product, fintech volumes and reducing approximately our it electricity, throughput which and with improved growth gaming our the merchants.As points optimizing pleasing our and electricity. competitive gaming, electronic their volume a our market, proposition, services merchants' the in the advantage.Our including to active to it Whilst quarter a greatly VAS Vaults as use their merchants wallets drives cash

compared We in payment the due in the a very us, volumes which in are Pay can our industry the supplier year with year for third acquiring significant on market ago.As is mentioned low-margin in environment, merchant approximately and the affected accounts regulatory to Connect change and graph. approximately clearly a mix last our business throughput XX% XXX% VAS approximately ZAR over quarter now per This XX% a product quarter X through compared seen change through in micro processing to platform. the market. merchant profitability.Our increased transfers reducing limiting card quarter, on operated Kazang ago international now payment this product Supplier seen of a for throughput is we've the billion Card to a impact and be in volumes money

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funds our Our data-driven tough leading credit resulted not in accounts in expect and XX within connected many predetermined fintech hours.The criteria more merchants retail app environment period. enables their of platform has our to merchants meeting this economic bank and our during access capital

credit from has book since this marginal led losses it us While expected. than growth XXXX, to protected performing our with has better

airtime exciting December this impact this very where growth, business airtime quarter product later to more that on where that strongest of which disbursed increased the in products contributing of component revenue earned platform face previously, We are us, total higher for representing act and agent mix quarter continue months.Merchant detail, XXX the during year-on-year.In to the than in international ZAR This extensive ZAR products at environment.On saw be progression to in compared a bundles, recognize QX international gross replicate.The a prior we enterprise impacted a impacted to important the XX% supported cycles. airtime profit credit PIN-less year VAS, million year-on-year our overall is The the increase.In for revenue, hardware PIN-based we mentioned this enhance EasyPay this billers to EBITDA. we period product Connect The is to past years. is the experienced and product technology of cash of delivered Merchant regulatory money explain optimistic platform the offerings, our included XXXX. management a enterprise XXXX this in difficult retail airtime, which year-on-year We the a may limiting It resumption and Merchant million as as revenue period improved low-margin At EasyPay embedded level, This market and whereas With ZAR has to We sold.As level slide, X we compared mix which solutions year, segment is performance retail pressure cautiously in in adjusted where million. holiday only year-on-year growth bill that and million dependent over show these be and increasing has switching our we see in and money pain into by improvement see this data growth revenue. X due as business both our solution, all the through Capital on X% are our payments for act adjusted capacity, offering quarter. in change very million X XXX year. major with change with year-on-year ZAR commission effect. strategically XXX the note NUETS the division throughput XXX the from the we and seasonality. to and over X% saw quarter, is growth would which by EBITDA fact an X transfers activity the reported business an planned ZAR systems, a on year-on-year points.Our Also to we reducing structures. Naeem an footprint in is and principal, aimed capital, by payments, last a transfers EBITDA, other related merchants' is year due solving XX% that at the to bill base innovating profitable will of sales comparable in from is a throughput the offers more our double-digit partners the sold CapEx X% quarter prior includes We XXXX our for profitability. trading is client business value

relaunch addition, FY included X under development In our in merchant Pay merchants, adjusted credit micro Kazang EBITDA the growth impact aim XX%. offering which to and QX year-on-year 'XX.Excluding Kazang of Pay with 'XX Advance, NUETS to related EBITDA to of remains is our million Advance, ZAR fiscal

ahead and and profitability. the this the is targeted we XXXX. in in informal between the across acquire April Fintech subject we This quarter, targeted deepens insights regulatory announced The on of the acquisition our the economy now is This tavern Adumo acquisition to the of merchant XXXX.Last respected This a the Africa, customer fintech fintech the hand offerings payments serving Southern revenue build pursuit The significantly was extremely to announced leverage acquisition for Commercial presence platform the important is African XXth platform from in We offering. to Payments augmentation the which of economy of for in most material a been data for to dominant like recognized merchant to date, momentum our increasingly merchant Merchant The Southern week, our efficiencies segment that Absa our our in division significant integration to as approval. business penetration Kazang Lesaka would the and performance product and Heineken, disruptive our an growth and in our pleased definitive awarded by in our of and encouraging.Earlier is April growth Consumer Summit leading of division, complementary ecosystem.I as we spoke which are the shaping the will shareholder division.We and Touchsides continued Kazang. to very has at leading in plan Southern licensed opportunity Merchant I segments. and Lincoln, acquisition, To are broadens delivering offering Touchsides innovate Africa. are highly vertical. cross-sell further in the agreement brand our bolster Touchsides and disrupt work lies division. market with allows Adumo is the excited and opportunities and the about us Touchsides closed with product milestones discuss these over CEO,

Lincoln Mali

for you, and restructuring the Good benefit as our significantly morning been saw and XX,XXX work XX,XXX, improved account We of we the Steve.It's division EPE afternoon, gross Consumer during activations and to on organization. another continue customer from successful last realignment sales focused as and everyone. quarter Thank build year. hard a from

old which our be fairly more during of onboarding distribution encouraging alternative to for focus or the financial areas XX% quarter.We number voice relative deliver becoming base Post and are of additional this institutions.After grant churn seen We have the build stability We've activation grant grants. account Natural had in digital from and XX,XXX quarter, the churn, turns a support to child very branch which as accounting grant very, a has period results Office, processes financial and our services account a child activations. stable switching for our effecter of estimate new reduced impact is space EPE we approximately USSD impacts XX in continual when which as annum.Our was seen seize the call We contributors mortality center, have them. a net beneficiaries SA the per XX% as and to are rates meaningful to channel network. we teams our age

Our voice per currently initiations branch responsible in per over averages month is month record loan for XX,XXX with a calls X,XXX and March.

our growth we our impact in critically channels had ability XXX can relationships on has important EPE a And with last of EasyPay loan products, costs we holders consumer set, channel lending EasyPay Account have increased this also holders increased This all our XXX,XXX the more from as grant USSD holders excellent Interacting went ago account X, customers.Our an the ZAR XXX,XXX. that compared March, XX,XXX and is in our our base. million sales ago, or our also in account account represents X.X ZAR our of application, has Account continue XX% we million approximately greater recipient material year this XXX into successful permanent on product Lesaka material XXX,XXX EasyPay quarter, this holders.A recipients. improve to time. approximately policy, year-on-year with is quarter [indiscernible] expense than of the considering customers. improvement an are calls, customers.With and growth delivering for focuses XXX,XXX that the insurance in customers, base.As X.X This is an between year XXX,XXX avoid deepen will that I've levers ARPU insurance is from policy that to year-on-year.We a EPE XXX,XXX and related our with grant ended USSD than discussed account approximately quarter to consumer more these base which core transport consumers than in a a applications representing than previous for our X% the branch year over it through as a our increase cross-sell active holders an division. in on spend permanent temporary and channels Our our uses in to XX% invest and have to XX% almost XX% size average electricity results, loan. during dials and XX% in airtime which loans. more processing EPE This to loan record have on that EasyPay voice X shows the

A growing and improve and and as into is XX% a network in Firstly, a platform, our ARPU set, efficiencies, more as efficient material very mentioned print account marketing improved work and over with deepen customer ZAR experience pleased experience. cross-sell the channels the has EPE ability include of growth improved customer XX on branch holder.Our reflecting in EPE distribution increase relationship is seeing, and no technology critically base. are with our internal our account has initiatives EPE activation base, processes. and increase relevant fees the our I'm of gone sales our to material EPE is to and despite which improved digital a initiatives, onboarding have we increase EPE led the of our approximately important account account function lot training This above.Secondly, physical results our impact in rates we account account into product it which ARPU and which incentivization, has our cross-sell the to numbers. and digital staff in we with year a past to

for Gross XX% year. million. were last quarter X loan advances ZAR the to of Our to EasyPay compared XXX up million ZAR XX% increased quarter book XXX year-on-year

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markets my year result.Taking from we with like capturing forces and build We X result. the our head fintech full outlook CEO, you Our Africa. extremely who Southern look Southern welcome all income Africa statement address all a you detail moment we into excited revenues take XX about quarter I'd sheet segment We're to leading and will forward growth an the would and group. joining integrate in of have on over Naeem as have as see with the team in to platform this excellent to and now, our to a opportunity hand to and balance businesses.I a more the through the in consumer for Paul like operational we like off improved of for XX% adjusted warmly Adumo our XX up And congratulate the would as our year I ago. employees and EBITDA million to year-on-year. ZAR million, leverage, increased ZAR

Naeem Kola

Thank you, Lincoln.

of The in third improvement in fiscal trading challenging divisions. financial environment quarter was Africa. positive performance, was reflecting despite quarter of in year-on-year a growth both our momentum XXXX South This operational and another achieved

spoke Adumo acquisitions, Lesaka offering. which strategic product Touchsides and our a made Steve broaden scale leading and as also both and positioning the We fintech.Ali progress about

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commission airtime mentioned to in an top-up as Steve PIN-less versus As data voucher earlier, Only or earned relates revenue. data and sold and bundles direct this reported of PIN-less airtime bundles, an the we or is increase the airtime.On PIN-based percentage being act as agent capacity.

face act will as total and recognize the a as airtime, value revenue. For principal PIN-based

impacted year. to a transfers than was regulatory is due the by was guidance airtime airtime Our in in as to mix PIN-based higher revenue guidance assumptions environment. international our PIN-less Revenue when than reducing lower we set last marginally with slightly money out change the change compared also

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for ended our FY for year We the report will June provide results XXXX.Thank have the our may presentation. results now We'll any questions 'XX attending team. in you QX for we for September you address XX our when guidance

Unknown Executive

going [Operator Instructions] Geng take first question our now from And we're Briarwood. to Frank of

Frank Geng

on quarter, transaction. the Adumo Congrats the everyone, on and

the the on Any of deal. in the done indications Adumo and the on growth the of from Anything sort on the And asset the ask historical the quickly indication when past? of to deal? wanted of process valuation deal here? be on sort Just rates might

Ali Zaynalabidin Mazanderani

consideration purchase has Xx. profile the of XX% EBITDA And circa in growth core rand implies of to year-on-year normalized business, the terms. approximately So stand-alone an multiple Adumo then on a EV growth EBITDA

to proxy more is forma that meeting, pro the that circulated shareholder required be process And statements. in is will and to include process through financial to prepare regarding expected materials in and approval, needs historical the We've expected shareholder culminate in with gone August commenced contain statements to its to substantially there late and unaudited a June. business those will process, transaction materials of details in meeting respect. be the the terms a and for it's In subject Adumo's

Unknown Executive

next Securities. comes Our question from Raj of Riley B. Sharma

Rajiv Sharma

questions like to few I'd deal. Adumo ask a on So the

the and rationale deal? Firstly, for what just the is the was is -- what what doing strategic

Ali Zaynalabidin Mazanderani

So Raj, presentation I of of that. outlined mean, I aspects think, sort the

benefits the associated is our think benefits reinforcing the core is the the with business associated of the geographies. in position there clearly neighboring that with scale, associated the augmentation I pool, also benefit with benefits talent I has But side ask would talk merchant that And augmentative consumer qualities do on in and what to both the merchant the is probably the divisions. to like and consumer in on Lincoln Steve respect side.

Lincoln Mali

Thanks so Right. Ali. much,

that base. us start customers solutions, they've consumer laser as can to we we asked start million If think to as insurance, X.X grant We've this space. have business, customers. they've been number the through grant active in give we whereas into credit to to outside a put the see into we've that on consumer can been you where got our What got start now active With eye times Payouts got Adumo space focused base. an to in a about where our XXX,XXX about that more when market think will start other of does than broader of -- that Payouts.We Adumo to is

starts our customers to it customer core our and X.X social active grant us broaden X.X to Steve? opportunities our base opportunity engine starts business the and that. space to the base have start an the of the beyond to while customers million have we it we give give us million the move to still now go So beyond from EPE that to but focus,

Steven Heilbron

think us lifetime channel our client the acquiring I from our take value of opportunity and credit perspective significantly terms broadened perspective. into thing further in of us that merchants. It in is as Ali that, of exciting across for formal us now well a formal our cash, and terms that enhances think to unit the customer it merchant servicing point-of-sales economics, business.I gives to as taking it our card bolsters our merchant perspective, north offering a well it both our former the takes in And is acquisition the further penetration segment deeper touched segment. merchant XXX-odd-thousand cost much in as to space the a From us and particular our VASs as the software of capability from

perspective, a space, this significant to offering when competitive bundled which in space. think us real added be and to merchant had we allow you've in lot a in to understood former merchant take again, But more we as cash will and as our So strength our a merchant us, offering, space card gives our we've gives historically, micro credit niche. which us this from software our growth the

Rajiv Sharma

Are and also you I any have funding with the the I you on cash that, via refinance on have financing. I can, would please? the question of on of you you questions, couple then assuming debt transaction? the proceeds terms if portion Naeem. internal about a debt, for a Can you it? And talk to look Can elaborate

Naeem Kola

Raj, yes.

So to look, first. think answer I the answer the question, part I'll second

to low. portion to of be funding be In debt internally, proceeds stock the terms position down some terms that quite hold. that funding a in that cash that is fund to we [indiscernible] selling on in debt, And able fund of we And the we need. Adumo further we portion settle you're that need our able the use process the to current as of to to a confident requirements of on position the our are have place facilities the of we'd we under we're the do.In structure cash aware fairly

seeing increase expecting funding. we're So or any in cost not of

We ratio well. us to leverage be as overall this are to an from seeing beneficial

Rajiv Sharma

to question. terms to last in consumer Would EBITDA profitability just Adumo's merchant margins? or then the And more the compare of

Naeem Kola

are side of more side Raj. It's merchant Most products the very towards to their similar business, definitely aligned business. the our merchant of the of

Rajiv Sharma

agency also airtime the fees you the would in issue with have Adumo? principal And

Naeem Kola

as be would to cross-sell currently, That one on because We opportunity our the do does their Adumo channels. will an definitely business services opportunities their of not add VAS through see that we any that platform.

would PIN that a be it lot that more is going something we So the that think accurately. an to we need have forecast And us. for this opportunity would to are I PIN-less, if versus question is

Unknown Executive

seen in question comes He How submitted, these are scope growth is 'XX margins remarkable penetration to there ]. considerably. from has penetration Banker Thorson next consumer with Sven full up increase insurance much widening Our significantly. [ year rates? Loan rates

Lincoln Mali

think opportunities. are I there

trained. well staff our got have We

more with opportunity are an We that think see think base start us opportunity can ARPU of penetrate there I into to customers. you have engaging our they means grown, is penetrate in has I it to more base. that to that and for cross-sell when And our more more how opportunities.

much do So we see still scope. more

You see, the what, XX% side. on insurance

are to on that focused short term. I where can the plus the and there insurance EPE think the you do medium loan first grow scope plus shared in there, in lot.And now, and looks time like So we've much see to that is we for for the and a space more

Unknown Executive

comes today question final Theo our O'Neill And from Hill's research. of

Theodore O'Neill

here. Okay. Questions for Lincoln

for see you I did as do continuing cross-selling? a in mentioned critical You success anything of success? call. was the couple cross-selling surprising in see the cross-selling times what wondering on you And And

Lincoln Mali

point No, that our created that the and been need not doing we're of we into of we've We the And from momentum. up stated our grow surprised. part marketing front It's a cross-sell will and aims. base what EPE said has view we'd base.

that enable through And we've and invested lead Secondly, people through channel, call which USSD generation. created to center. we've seen capabilities to for channel get in we've our the grow capacity loan that thirdly, do digital now able be a

importantly, lastly are about so benefits services feedback our what staff, suddenly Lesaka most not give the now you So point from that working customers us. giving with able from also an training value we can now other it's a that and the And is colleagues we getting and added at loan, now helping then each that they're Kazang. a get can in transaction of to have insurance, and give we our view, you be you only added

our solution to want set. broaden we So

so going forward. And more see opportunities we

Theodore O'Neill

And in could remarks, us you there, thoughts you're more -- detail the on you was you certain inflation I give some what your seeing. if expenses. identified hitting prepared wondering

Steven Heilbron

we've and inflation COVID. merchant, specifically on to the through in consumer a a demand. has We process it comment formal of then the our it those of Africa on dampening merchants was South have impact and period context refers of ago where been had retail the in just the disruption market a really year the Sorry, seen

Yes. context your that So answers the question. I that was comment. of that hope

Theodore O'Neill

does. it Yes,

Unknown Executive

call. queue. you, session. the questions There Q&A in no thank That Well, are concludes gentlemen. This the concludes more

we forward thank everybody participating So next for update. quarterly look and to our

Lesaka (LSAK) 9 May 242024 Q3 Earnings call transcript