Leading South African Fintech Lesaka Technologies Completes Turnaround as it Champions Financial Inclusion Across Informal Markets
May 09 2023 - 3:05PM
Business Wire
Lesaka Technologies, Inc. (Nasdaq: LSAK; JSE: LSK) today
released its results for the third quarter ended March 31, 2023
(“Q3 2023”) as the turnaround in the Group’s Consumer Division
gathers momentum and the Merchant Division continues to
outperform.
Performance highlights for Q3 2023:
- Revenue of R2.4 billion, compared to R549.8 million in Q3 2022,
an increase of 337% due to the inclusion and continued
outperformance of the Connect Group and momentum in the successful
turnaround of the Consumer Division.
- Net loss attributable to Lesaka of R104.4 million, compared to
R51.9 million in Q3 2022. Operating income (loss) before PPA
amortization and net interest, a non-GAAP measure and reconciled
below, was income of R34.0 million, compared to a loss R146.8
million in Q3 2022, and excludes amortization of acquired
intangible assets R67.3 million, compared with R0.3 million in Q3
2022.
- Adjusted EBITDA of R137.1 million, a 221% improvement compared
to the Q3 2022 loss of R112.7 million.
- Continued operating improvement demonstrated by further
narrowing the operating loss to R33.2 million, representing an
77%(1) improvement from an operating loss of R147.1 million
reported for Q3 2022.
- Continued outperformance from the Merchant Division, delivering
Adjusted EBITDA of R148.7 million.
- Successful turnaround of the Consumer Division delivering
Adjusted EBITDA of R29.6 million, compared to a loss of R13.5
million in Q3 2022.
- Positive net cash generated by operating activities of R133
million, compared to an outflow of R81.3 million in Q3 2022.
Note 1 – before reorganisation costs of
R91.4 million in Q3 2022
Lesaka Technologies has leveraged disruptive technologies to
build a unique fintech platform which meets the needs of both
merchants and consumers operating in informal and formal markets.
More than 72,000 merchants use the Group’s cash management
solutions, bill payment technologies, value-added services,
business funding and card-acquiring solutions and 1.3 million
consumers access Lesaka’s unsecured credit, transactional banking
and micro-insurance products and services.
Lesaka's strong third quarter results were driven by the
transformational acquisition and outperformance of the Connect
Group in the Merchant Division and the successful turnaround of the
Group’s Consumer Division, despite the persistently challenging
economic environment.
The Merchant Division continues to exceed expectations and grow
across all products. A key highlight of the quarter was the
performance of the informal market business, Kazang, which
delivered the best quarter in the business’ history.
Lincoln Mali CEO Lesaka Southern Africa who has been driving the
turnaround in the consumer business commented: “We work hard to add
value to the lives of grant beneficiaries by understanding their
needs and creating relevant and affordable financial products and
services. We have been largely focused on turning the consumer
business around as quickly as possible and now that we have
achieved EBITDA profitability we can focus all our efforts on
growth.”
Lesaka Group CEO Chris Meyer added “As a result of our improved
trading, cash flow and our ability to deliver against what we have
promised, our funders have, in a show of confidence, extended and
increased our facilities providing us with flexibility and access
to resources to execute on our growth plans. Q3 represents another
quarter of growth and transformation. We are excited by the
Merchant Division’s outperformance and another quarter of continued
improvement and profitability in the Consumer Division where we are
moving strongly on to the front foot.”
The full SENS announcement can be seen here.
Full release and webcast details at
https://ir.lesakatech.com/.
The discussion of our consolidated overall results of operations
is based on amounts as reflected in our unaudited condensed
consolidated financial statements which are prepared in accordance
with U.S. GAAP. We analyze our results of operations both in U.S.
dollars, as presented in the unaudited condensed consolidated
financial statements, and supplementally in ZAR, because ZAR is the
functional currency of the entities which contribute the majority
of our revenue and is the currency in which the majority of our
transactions are initially incurred and measured. Due to the
significant impact of currency fluctuations between the U.S. dollar
and the ZAR on our reported results and because we use the U.S.
dollar as our reporting currency, we believe that the supplemental
presentation of our results of operations in ZAR is useful to
investors to understand the changes in the underlying trends of our
business.
Use of Non-GAAP Measures
U.S. securities laws require that when we publish any non-GAAP
measures, we disclose the reason for using these non-GAAP measures
and provide reconciliations to the most directly comparable GAAP
measures. The presentation of EBITDA, Group Adjusted EBITDA,
Operating income (loss) before PPA amortization and net interest,
fundamental net (loss) income and fundamental (loss) earnings per
share and headline (loss) earnings per share are non-GAAP
measures.
Attached is the reconciliation between our GAAP measure and our
non-GAAP measures.
Q3 - ended 31 March
FY23 Q3
FY22 Q3
FY23 Q3
FY22 Q3
ZAR’000
ZAR’000
$’000
$’000
Average exchange rate for conversion
from ZAR to $
17.93
15.61
17.93
15.61
Net loss attributable to Lesaka
(GAAP)
(104,363
)
(51,940
)
(5,820
)
(3,327
)
Earnings from equity-accounted
investments
(305
)
-
(17
)
-
Income tax (benefit) expense
(15,422
)
7,338
(860
)
470
Net loss before income tax (benefit)
expense
(120,090
)
(44,602
)
(6,697
)
(2,857
)
Interest expense
89,372
10,788
4,984
691
Interest income
(8,410
)
(11,881
)
(469
)
(761
)
PPA amortization (Amortization of acquired
intangible assets)
67,269
256
3,789
15
Other items, comprising:
5,900
(101,384
)
329
(6,494
)
Loss on disposal of equity accounted
investments
5,900
5,402
329
346
Gain on disposal of equity securities
-
(11,241
)
-
(720
)
Gain related to fair value adjustment to
currency options
-
(95,545
)
-
(6,120
)
Operating income (loss) before PPA
amortization and net interest (Non-GAAP)
34,041
(146,823
)
1,936
(9,406
)
PPA amortization (Amortization of acquired
intangible assets)
(67,269
)
(256
)
(3,789
)
(15
)
Operating loss
(33,228
)
(147,079
)
(1,853
)
(9,421
)
Depreciation and amortization
107,143
7,228
5,975
463
Operating loss before depreciation and
amortization (Non-GAAP)
73,915
(139,851
)
4,122
(8,958
)
Adjusted for:
-
-
-
-
Stock-based compensation
29,480
9,586
1,644
614
Lease adjustments
12,481
13,895
696
890
Once-off items
21,231
3,669
1,184
235
Group Adjusted EBITDA
(Non-GAAP)
137,107
(112,701
)
7,646
(7,219
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509006172/en/
Investor Relations Contact: Phillipe Welthagen Email:
phillipe.welthagen@lesakatech.com Mobile: +27 84 512 5393
FNK IR: Rob Fink / Matt Chesler, CFA Email: lsak@fnkir.com
Media Relations Contact: Janine Bester Gertzen Email:
Janine@thenielsennetwork.com
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