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Lesaka Increases Revenue 9% for the Fourth Quarter, Exceeding the Upper End of its Revenue Guidance
Lesaka Technologies, Inc.
Registered in the state of Florida, USA
(IRS Employer Identification No. 98-0171860)
Nasdaq share code: LSAK
JSE share code: LSK
LEI: 529900J4IZMWV4RDEB07
ISIN: US64107N2062
(“Lesaka,” or the “Company”)
Lesaka Increases Revenue 9% for the Fourth Quarter, Exceeding the Upper End of its Revenue Guidance
Revenue on a Constant Currency Basis up 32%;
Net Loss for the Fourth Quarter Narrows to $11.9 Million, Inclusive of a $7.0 Million Non-Cash Impairment Charge and a $2.6
Million, Net of Deferred Taxes, Non-Cash PPA Amortization Charge
JOHANNESBURG, September 13, 2023 – Lesaka today released results for the fourth quarter (“Q4 2023”) and year ended June 30,
2023.
Performance Highlights for the Quarter Ended 30 June 2023:
- Revenue of $133.1 million (ZAR 2.5 billion)1 in Q4 2023, compared to $121.8 million (ZAR 1.9 billion) 1 for the quarter ended
June 30, 2022 (“Q4 2022”), with the 9% increase attributable to inclusion of the Connect Group for the full period and its
continued outperformance, as well as the successful turnaround of the Consumer Division (“Consumer”). On a constant
currency basis revenue grew 32%.
- The significant financial turnaround is demonstrated by a narrowing of the net loss to $11.9 million (ZAR 223.2 million) 1 in
Q4 2023, despite also including a non-cash, impairment charge related to the pre-existing Merchant Division
(“Merchant”), of $7.0 million (ZAR 131.9 million)1 and a non-cash PPA amortization charge of $3.6 million (ZAR 67.3
million). This compares to a net loss of $15.1 million (ZAR 235.8 million) 1 in Q4 2022 and represents a 21% improvement.
Excluding the impact of the non-cash impairment charge, Lesaka would have reported a net loss of $4.9 million
(ZAR 91.2 million), representing a 68% improvement from the comparable prior year period.
- Operating loss was $6.6 million (ZAR 124.3 million)1 in Q4 2023, inclusive of $7.0 Million (ZAR 131.9 million) Non-Cash
Impairment Charge and $3.6 million (ZAR 67.3 million) non-cash PPA Amortization Charge. This is a significant improvement
compared to the operating loss of $10.1 million (ZAR 157.5 million)1 in Q4 2022, inclusive of a PPA Amortization Charge
$3.7 Million (ZAR 57.6 million).
- Group Adjusted EBITDA, a non-GAAP measure and reconciled in Attachment B, of $8.4million (ZAR 158.3 million)1
represents an improvement of 115% compared to the Q4 2022 Group Adjusted EBITDA of $3.9 million (ZAR 60.6 million)1.
On a constant currency basis Group Adjusted EBITDA increased by 161%.
- Excellent performance from Merchant, delivering Segment Adjusted EBITDA of $8.2 million (ZAR 154.2 million)1 in Q4
2023. Outlook remains positive as Merchant extends its footprint across Southern Africa’s largely untapped informal market.
- The Consumer Division reported a third consecutive quarter of profitability delivering Segment Adjusted EBITDA of $2.5
million (ZAR 46.5 million)1 in Q4 2023, compared to a loss of $1.2 million (ZAR 19.2 million)1 in Q4 2022. With the divisional
turnaround largely complete, targeted interventions taken to grow the Consumer Division are yielding positive results with
revenue increasing 26% on a constant currency basis, off a reduced cost base and in an increasingly difficult operating
environment.
- Continued momentum in achieving positive net cash provided by operating activities of $9.8 million (ZAR 182.9 million) in
Q4 2023, compared to net cash used by operating activities of $6.7 million (ZAR 104.1 million) in Q4 2022.
Lesaka Group CEO Chris Meyer said: “Fiscal 2023 represents a milestone for Lesaka. The successful turnaround in the Consumer
Division, and the seamless integration of the Connect Group, enabled Lesaka to deliver continued growth and improved profitability
despite the particularly challenging macroeconomic and socio-political conditions in South Africa. Simultaneously, our Merchant
Division continues to outperform the acquisition base case, diversifying our business and positioning Lesaka as a true FinTech innovator.
Our Consumer Division reported a third consecutive quarter of increasing profitability, evidencing our transition from turnaround to
growth.”
Mr. Meyer continued, “We continue to innovate and deliver market-leading solutions to our customers with our results demonstrating
the value our customers place on our services and the resilience of our business model in a challenging environment. The continued
digitalization of South Africa’s informal economy serves as a durable catalyst for our business which we expect to continue over the
long term.”
1. Translated at an average exchange rate of ZAR 18.74 to $1 for Q4 2023, ZAR 15.56 to $1 for Q4 2022 and ZAR 17.93 to $1
for Q3 2023. The ZAR weakened 20% against the U.S. dollar during Q4 2023 when compared to Q4 2022 and 5% when
compared to the prior sequential quarter (Q3 2023).
Summary Financial Metrics
Three months ended
Three months ended
Jun 30, Jun 30, Mar 31, Q4 ’23 vs Q4 ’23 vs Q4 ’23 vs Q4 ’23 vs
2023 2022 2023 Q4 ’22 Q3 ’23 Q4 ’22 Q3 ’23
(All figures in USD ‘000s except per USD ‘000’s
share data) (except per share data) % change in USD % change in ZAR
Revenue 133,149 121,789 133,968 9% (1%) 32% 4%
GAAP operating loss (6,631) (10,122) (1,853) (34%) 258% (21%) 274%
Net loss attributable to Lesaka (11,909) (15,149) (5,820) (21%) 105% (5%) 114%
GAAP loss per share ($) (0.19) (0.25) (0.09) (24%) 105% (9%) 114%
(1)
Group Adjusted EBITDA (loss) 8,449 3,896 7,646 117% 11% 161% 15%
Fundamental loss per share ($)(1) (0.04) (0.09) (0.02) (56%) 100% (46%) 109%
Fully-diluted weighted average shares
(‘000’s) 63,805 61,619 63,854 4% (0%) n/a n/a
Average period USD / ZAR exchange
rate 18.74 15.56 17.93 20% 5% n/a n/a
Year ended
Year ended
Jun 30, Jun 30, F2023 vs F2023 vs
2023 2022 F2022 F2022
USD ‘000’s % change % change
(All figures in USD ‘000s except per share data) (except per share data) in USD in ZAR
Revenue 527,971 222,609 137% 180%
GAAP operating loss (15,347) (40,195) (62%) (55%)
Net loss attributable to Lesaka (35,074) (43,876) (20%) (6%)
GAAP loss per share ($) (0.56) (0.75) (26%) (13%)
(1)
Group Adjusted EBITDA (loss) 27,736 (17,615) nm nm
Fundamental loss per share ($)(1) (0.15) (0.49) (69%) (64%)
Fully-diluted weighted average shares (‘000’s) 63,134 58,364 8% n/a
Average period USD / ZAR exchange rate 17.94 15.20 18% n/a
(1) Group Adjusted EBITDA (loss), fundamental loss and fundamental loss per share are non-GAAP measures and described in the full
announcement under “Use of Non-GAAP Measures—Group Adjusted EBITDA, and —Fundamental net loss and fundamental loss per
share.” See Attachment B included in the full announcement for a reconciliation of GAAP net loss attributable to Lesaka to Group
Adjusted EBITDA loss, and GAAP net loss to fundamental net loss and loss per share.
Factors Impacting Comparability of Q4 2023 and Q4 2022 Results
- Higher revenue: Revenues increased 32% in ZAR, primarily due to the contribution from the Connect Group (“Connect”) in
our Merchant for a full fiscal quarter for Q4 2023 compared with two and a half months for Q4 2022, and an increase in account
and transaction fees as well as higher insurance and lending revenues in Consumer, which was partially offset by lower
hardware sales revenue in our POS hardware distribution business given the lumpy nature of bulk sales.
- Lower operating losses: Operating losses decreased, delivering an improvement of 21% in ZAR compared with the Q4 2022
primarily due to the contribution from Connect, an improved operating performance by Consumer (including the positive
impact following implementation of various cost reduction initiatives), which was partially offset by an increase in acquisition
related intangible asset amortization and an impairment loss of $7.0 million.
- Higher net interest charge: The net interest charge increased to $4.6 million (ZAR 85.7 million) from $2.9 million (ZAR 45.6
million) due to the additional borrowings incurred in order to fund the acquisition of Connect, an increase in interest rates, as
well as the debt acquired within the Connect Group itself.
- Foreign exchange movements: The U.S. dollar was 20% stronger against the ZAR during Q4 2023 compared to Q4 2022,
which negatively impacted our U.S. dollar denominated reported results.
Results of Operations by Segment and Liquidity
Our chief operating decision maker is our Group Chief Executive Officer and he evaluates segment performance based on segment
earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted for items mentioned in the next sentence (“Segment
Adjusted EBITDA”). We do not allocate once-off items, stock-based compensation charges, certain lease charges, depreciation and
amortization, impairment of goodwill or other intangible assets, other items (including gains or losses on disposal of investments, fair
value adjustments to equity securities, fair value adjustments to currency options), interest income, interest expense, income tax expense
or loss from equity-accounted investments to our reportable segments. See Attachment B for a reconciliation of GAAP net income
before tax to Group Adjusted EBITDA.
Merchant
Merchant revenue was $115.2 million in Q4 2023, up 31% compared with Q4 2022 on a constant currency basis. Segment revenue
increased due to the contribution from Connect for a full fiscal quarter for Q4 2023 compared with two and a half months for Q4 2022,
which was partially offset by lower hardware sales revenue given the lumpy nature of bulk sales. The increase in Segment Adjusted
EBITDA is primarily due to the inclusion of Connect for the full quarter, which was partially offset by lower hardware sales. Our
Segment Adjusted EBITDA (loss) margin (calculated as Segment Adjusted EBITDA (loss) divided by segment revenue) for Q4 2023
and 2022 was 7% and 7.7%, respectively.
Consumer
Consumer revenue was $16.5 million in Q4 2023, 5% higher compared with Q4 2022 due to currency impacts. On a constant currency
basis segment revenue increased 26% compared to Q4 2022 and 9% compared to Q3 2023. Segment revenue increased primarily due
to higher insurance revenues, higher revenue from account holder fees given the increase in number of accounts and modest lending
revenue growth. The cost reduction initiatives we initiated in fiscal 2022 delivered a significant reduction in the Consumer’s operating
expenses which resulted in a positive Segment Adjusted EBITDA contribution compared with a Segment Adjusted EBITDA loss in Q4
2022 costs. Our Segment Adjusted EBITDA margin for Q4 2023 and 2022 was 15.0% and (7.9%), respectively.
Group costs
Our group costs for fiscal 2023 decreased compared with the prior period due to lower consulting and legal fees. Group costs primarily
include employee related costs in relation to employees specifically hired for group roles and costs related directly to managing the US-
listed entity; expenditures related to compliance with the Sarbanes-Oxley Act of 2002; non-employee directors’ fees; legal fees; group
and US-listed related audit fees; and directors’ and officers’ insurance premiums.
Cash flow and liquidity
At June 30, 2023, our cash and cash equivalents were $35.5 million and comprised of ZAR-denominated balances of ZAR 0.6 million
($29.2 million), U.S. dollar-denominated balances of $4.5 million, and other currency deposits, primarily Botswana pula, of $1.8 million,
all amounts translated at exchange rates applicable as of June 30, 2023. The decrease in our unrestricted cash balances from June 30,
2022, was primarily due to the utilization of cash reserves to fund certain scheduled repayments of our borrowings, fully settle our
revolving credit facility, purchase ATMs and safe assets, and to make an investment in working capital in our Consumer and Merchant
operation, which was partially offset by the utilization of our available borrowings and a positive contribution from Connect and certain
of our Consumer operations.
Outlook for the First Quarter 2024 (“Q1 2024”) and Full Fiscal Year 2024 (“FY 2024”)
While we report our financial results in USD, we measure our operating performance in ZAR, and as such we provide our guidance
accordingly.
For Q1 2024, the quarter ending September 30, 2023 we expect:
- Revenue between ZAR 2.50 billion and ZAR 2.55 billion.
- Group Adjusted EBITDA between ZAR 160 million and ZAR 165 million.
For FY 2024, the year ending June 30, 2024, we expect:
- Revenue between ZAR 10.7 billion and ZAR11.7 billion.
- Group Adjusted EBITDA between ZAR 680 million and ZAR 740 million.
Management has provided its outlook regarding Group Adjusted EBITDA, which is a non-GAAP financial measure and excludes certain
charges. Management has not reconciled this non-GAAP financial measure to the corresponding GAAP financial measure because
guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because
they cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably
predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP
financial measure is not available without unreasonable effort.
Earnings Presentation for Q4 2023 Results
Our earnings presentation for Q4 2023 will be posted to the Investor Relations page of our website prior to our earnings call.
Webcast and Conference Call
Lesaka will host a webcast and conference call to review results on September 13, 2023, at 8:00 a.m. Eastern Time which is 2:00 p.m.
South Africa Standard Time (“SAST”). A replay of the results presentation webcast will be available on the Lesaka investor relations
website following the conclusion of the live event.
Webcast Details
- The results webcast can be accessed by using the following link: http://bit.ly/47sbKSP
- Webcast ID: 993 9047 7865
Participants using the webcast will be able to ask questions by raising their hand and then asking the question “live.”
Conference Call Dial-in:
- US Toll-Free: +1 253 215 8782 or +1 301 715 8592
- South Africa Toll-Free: + 27 87 551 7702 or +27 21 426 8190
Participants using the conference call dial-in will be unable to ask questions.
Headline earnings (loss) per share (“HEPS”)
The inclusion of H(L)EPS in this results announcement is a requirement of our listing on the JSE. H(L)EPS basic and diluted is calculated
using net (loss) income which has been determined based on GAAP. Accordingly, this may differ to the headline (loss) earnings per
share calculation of other companies listed on the JSE as these companies may report their financial results under a different financial
reporting framework, including but not limited to, International Financial Reporting Standards.
The table below presents our HEPS for Q4 2023 and 2022:
Q4 Q4
2023 2022
Net (loss) income used to calculate headline earnings (USD’000)
(4,859) (15,442)
Headline (loss) earnings per share:
Basic, in USD
(0.08) (0.25)
Diluted, in USD
(0.08) (0.25)
The table below presents our HEPS for fiscal 2023 and 2022:
2023 2022
Net loss used to calculate headline earnings (USD’000)
(27,062) (46,271)
Headline loss per share:
Basic, in USD
(0.43) (0.79)
Diluted, in USD
(0.43) (0.79)
Results announcement and audited consolidated financial statements
The results announcement released in the U.S. and our audited consolidated financial statements are available at
https://senspdf.jse.co.za/documents/2023/JSE/ISSE/LSKE/Q4Res2023.pdf and have been published on Lesaka’s website at
www.lesakatech.com. Any investment decision by investors and/or shareholders should be based on consideration of the U.S. results
announcement and audited consolidated financial statements. The U.S. results announcement and our audited consolidated financial
statements are available upon request through enquiries directed to either Lesaka’s investor relations contact at
phillipe.welthagen@lesakatech.com or Lesaka’s media relations contact at Janine@thenielsennetwork.com.
Audit opinion
Deloitte & Touche, in South Africa, have audited our consolidated financial statements for the year ended June 30, 2023, and have
issued an unmodified opinion.
About Lesaka (www.lesakatech.com)
Lesaka Technologies, (Lesaka™) is a South African Fintech company that utilizes its proprietary banking and payment technologies to
deliver superior financial services solutions to merchants (B2B) and consumers (B2C) in Southern Africa. Lesaka’s mission is to drive
true financial inclusion for both merchant and consumer markets through offering affordable financial services to previously underserved
sectors of the economy. Lesaka offers cash management solutions, growth capital, card acquiring, bill payment technologies and value-
added services to formal and informal retail merchants as well as banking, lending, and insurance solutions to consumers across Southern
Africa. The Lesaka journey originally began as “Net1” in 1997 and later rebranded to Lesaka (2022), with the acquisition of Connect.
As Lesaka, the business continues to grow its systems and capabilities to deliver meaningful fintech-enabled, innovative solutions for
South Africa’s merchant and consumer markets.
Lesaka has a primary listing on NASDAQ (NasdaqGS: LSAK) and a secondary listing on the Johannesburg Stock Exchange (JSE:
LSK). Visit www.lesakatech.com for additional information about Lesaka Technologies (Lesaka ™).
Forward-Looking Statements
This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are
subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such
statements may be identified by their use of terms or phrases such as “expects,” “estimates,” “projects,” “believes,” “anticipates,”
“plans,” “could,” “would,” “may,” “will,” “intends,” “outlook,” “focus,” “seek,” “potential,” “mission,” “continue,” “goal,” “target,”
“objective,” derivations thereof, and similar terms and phrases. Forward-looking statements are based upon the current beliefs and
expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified,
which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-
looking statements. In this press release, statements relating to future financial results and future financing and business opportunities
are forward-looking statements. Additional information concerning factors that could cause actual events or results to differ materially
from those in any forward-looking statement is contained in the company's Form 10-K for the fiscal year ended June 30, 2023, as filed
with the SEC, as well as other documents we have filed or will file with the SEC. We assume no obligation to update the information in
this press release, to revise any forward-looking statements or to update the reasons actual results could differ materially from those
anticipated in forward-looking statements.
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
Johannesburg
September 13, 2023
Sponsor:
Rand Merchant Bank, a division of FirstRand Bank Limited
Date: 13-09-2023 07:05:00
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