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Short-Form Announcement: Lesaka Reports Second Quarter 2023 Results and Outperforms the Upper End of Guidance
Lesaka Technologies, Inc.
Registered in the state of Florida, USA
(IRS Employer Identification No. 98-0171860)
Nasdaq share code: LSAK
JSE share code: LSKE
LEI: 529900J4IZMWV4RDEB07
ISIN: US64107N2062
(“Lesaka,” or the “Company”)
Short-Form Announcement: Lesaka Reports Second Quarter 2023 Results and Outperforms the Upper End of Guidance
JOHANNESBURG, February 8, 2023 – Lesaka (Nasdaq: LSAK; JSE: LSK) today released results for the second quarter ended
December 31, 2022 (“Q2 2023”).
Company Generates Positive Cash from Operations; Re-affirms Guidance for Fiscal 2023
Highlights:
Successful execution against a carefully crafted transformation strategy .
Performance for Q2 2023:
• Revenue of $136.1 million (ZAR 2.4 billion)1 in Q2 2023, compared to $31.1 million (ZAR 478.5 million) 1 for the quarter
ended December 31, 2021 (“Q2 2022”), exceeding the upper end of guidance by 4%, driven predominantly by strong
outperformance in the Merchant Division.
• Significant improvement demonstrated with an operating loss of $2.2 million (ZAR 38.4 million)1 in Q2 2023, representing a
74% improvement from an operating loss of $9.4 million (ZAR 145.0 million)1 reported for Q2 2022.
• Net loss narrowed to $6.6 million, or $0.11 per diluted share, compared to a net loss of $12.4 million or, $0.22 per diluted share
last year.
• Excellent performance from Merchant Division, exceeding guidance and delivering Segment Adjusted EBITDA of $9.1 million
(ZAR 159.7 million)1 in Q2 2023. Growth and momentum expected to continue, driven by secular trends underpinning financial
inclusion, cash management and digitization for MSMEs (“Micro, Small and Medium Enterprises”) in Southern Africa.
• Return to profitability in the Consumer Division, with Segment Adjusted EBITDA of $0.6 million (ZAR 10.1 million)1 in Q2
2023, compared to a loss of $4.4 million (ZAR 67.2 million) 1 in Q2 2022. Turnaround in the Consumer Division largely
complete, with the business on a strong and stable footing, poised for profitable growth.
• Group Adjusted EBITDA of $7.4 million (ZAR 130.4 million)1 exceeds the upper end of guidance of ZAR 123 million in Q2
2023 by 6%. This represents a substantial improvement compared to the prior quarter (Q1 2023: $4.2 million; ZAR 71.9
million) and compared to Q2 2022 when Lesaka reported a Group Adjusted EBITDA loss of $5.4 million (ZAR 83.6 million)1.
• Major milestone in achieving positive net cash provided by operating activities of $3.4 million (ZAR 59.9 million) in Q2 2023,
compared to an outflow of $13.8 million (ZAR 212.0 million) in Q2 2022.
• Lesaka re-affirms previous guidance provided for fiscal 2023.
Lesaka Group CEO Chris Meyer said: “We are proud of our performance in the second quarter of our financial year. We have made
significant progress in our transformation strategy, a process that commenced in earnest at the beginning of fiscal 2022. The Merchant
Division has delivered excellent growth across all products, particularly in our card acquiring and credit businesses, in particular Kazang
Pay and Kazang Advance. This result was achieved despite a challenging operating environment with increased loadshedding impacting
our MSME customer’s ability to operate. The integration of the Connect Group has expanded our Merchant business significantly and
continues to create new opportunities for the growth of our ecosystem in Southern Africa.”
“We are also delighted with the performance of our Consumer Division where we have achieved our goal of returning the business to
profitability at a Segment Adjusted EBITDA level, providing tangible evidence of the turnaround in this segment of our business.”
“We are seeing excellent momentum across our group, driven by clear secular trends underpinning the themes of financial inclusion,
cash management and digitization, which is core to our value proposition to merchants and consumers in Southern Africa.”
Lesaka CEO Southern Africa Lincoln Mali said: “This quarter is a watershed moment for Lesaka. In reflecting on the work of the
last 18 months, where we were very clear on how we planned to return the Consumer business to profitability, we view this set of results
as testament to the successful implementation of a rigorous plan that was based on the complete transformation and optimization of our
branch and distribution footprint, coupled with a clear focus on delivering financial inclusion to our customers across Southern Africa.”
1. Translated at an average exchange rate of ZAR 17.52 to $1 for Q2 2023, ZAR 15.38 to $1 for Q2 2022 and ZAR 17.13 to $1
for Q1 2023. The ZAR weakened 14% against the U.S. dollar during Q2 2023 when compared to Q2 2022 and 2% when
compared to the prior sequential quarter (Q1 2023).
Summary Financial Metrics
Three months ended
Three months ended
Dec 31, Dec 31, Sep 30, Q2 ’23 vs Q2 ’23 vs Q2 ’23 vs Q2 ’23 vs
2022 2021 2022 Q2 ’22 Q1 ’23 Q2 ’22 Q1 ’23
(All figures in USD ‘000s except per USD ‘000’s
share data) (except per share data) % change in USD % change in ZAR
Revenue 136,068 31,114 124,786 337% 9% 398% 11%
GAAP operating loss (2,192) (9,427) (4,671) (77%) (53%) (74%) (52%)
Net loss attributable to Lesaka (6,649) (12,406) (10,696) (46%) (38%) (39%) (36%)
GAAP loss per share ($) (0.11) (0.22) (0.17) (51%) (38%) (44%) (37%)
Group Adjusted EBITDA (loss)(1) 7,442 (5,438) 4,199 nm 77% nm 81%
Fundamental loss per share ($)(1) (0.01) (0.13) (0.08) (92%) (88%) (91%) (87%)
Fully-diluted weighted average shares
(‘000’s) 62,763 57,204 62,445 10% 1% n/a n/a
Average period USD / ZAR exchange
rate 17.52 15.38 17.13 14% 2% n/a n/a
Six months ended
Six months ended
Dec 31, Dec 31, F2023 vs F2023 vs
2022 2021 F2022 F2022
USD ‘000’s % change % change
(All figures in USD ‘000s except per share data) (except per share data) in USD in ZAR
Revenue 260,854 65,618 298% 358%
GAAP operating loss (6,863) (20,652) (67%) (62%)
Net loss attributable to Lesaka (17,345) (25,400) (32%) (21%)
GAAP loss per share ($) (0.28) (0.44) (38%) (28%)
Group Adjusted EBITDA (loss)(1) 11,641 (14,292) nm nm
Fundamental loss per share ($)(1) (0.09) (0.35) (74%) (70%)
Fully-diluted weighted average shares (‘000’s) 62,498 57,093 9% n/a
Average period USD / ZAR exchange rate 17.25 14.97 15% n/a
(1) Group Adjusted EBITDA (loss), fundamental loss and fundamental loss per share are non-GAAP measures and are described below
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 our Q2 2023 and Q2 2022 results
• Higher revenue: Our revenues increased 398% in ZAR, primarily due to the contribution from Connect, higher ad hoc
hardware sales revenue, and an increase in account fees and insurance revenues;
• Lower operating losses: Operating losses decreased, delivering an improvement of 74% in ZAR compared with the prior period
primarily due to the contribution from Connect, the strong hardware sales and the implementation of various cost reduction
initiatives in our Consumer business, which was partially offset by an increase in acquisition related intangible asset
amortization;
• Higher net interest charge: The net interest charge increased to $4.0 million (ZAR 70.0 million) from $0.5 million (ZAR 7.0
million) due to the additional borrowings incurred in order to fund the acquisition of Connect as well as the debt acquired
within the Connect business itself; and
• Foreign exchange movements: The U.S. dollar was 14% stronger against the ZAR during Q2 2023 compared to the prior
period, which impacted our 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 Segment Adjusted EBITDA.
Consumer
Segment revenue was $15.4 million in Q2 2023, up 6% compared with Q2 2022, and up 5% compared with Q1 2023 on a constant
currency basis. Segment revenue increased primarily due to higher insurance revenues and higher account holder fees, though this was
partially offset by lower ATM transaction fees. This revenue growth was achieved notwithstanding the significant downsizing of our
branch network and sales team. The cost reduction initiatives we initiated in fiscal 2022 delivered a significant reduction in our Consumer
segment’s operating expenses which resulted in a positive Segment Adjusted EBITDA result compared with Segment Adjusted EBITDA
loss in fiscal 2022. Specifically, expenses associated with operating a mobile distribution network were discontinued in early fiscal
2022, and we have streamlined our fixed distribution network through reductions in certain expenses including employee-related costs,
security, guarding and premises costs. Our Segment Adjusted EBITDA (loss) margin (calculated as Segment Adjusted EBITDA (loss)
divided by revenue) for Q2 2023 and 2022 was 3.7% and (26.2%), respectively.
Merchant
Segment revenue was $120.6 million in Q2 2023, up 849% compared with Q2 2022 and up 12% compared to Q1 2023 on a constant
currency basis. Segment revenue increased due to the contribution from Connect as well as strong ad hoc hardware sales. The increase
in Segment Adjusted EBITDA is primarily due to the inclusion of Connect, as well as the higher hardware sales, which was partially
offset by higher employee-related expenses. Connect records a significant proportion of its airtime sales in revenue and cost of sales,
while only earning a relatively small margin. This significantly depresses the Segment Adjusted EBITDA margins shown by the
business. Our Segment Adjusted EBITDA margin for Q2 2023 and 2022 was 7.6% and 6.9%, respectively.
Group costs
Our group costs generally include employee related costs in relation to employees specifically hired for group roles and 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; director and officer’s insurance premiums.
Our group costs for Q2 2023 increased compared with the prior period due to higher employee costs and an increase in director and
officer’s insurance premiums, which was partially offset by lower consulting fees.
Cash flow and liquidity
As of December 31, 2022, our cash and cash equivalents were $42.4 million and comprised of U.S. dollar-denominated balances of $7.5
million, ZAR-denominated balances of ZAR 561.6 million ($33.0 million), and other currency deposits, primarily Botswana pula, of
$1.9 million, all amounts translated at exchange rates applicable as of December 31, 2022. The decrease in our unrestricted cash balances
from June 30, 2022, was primarily due to the utilization of cash reserves to fund our Consumer operations, making certain scheduled
repayments of our borrowings, purchasing ATMs and safe assets, and making an investment in working capital in our Consumer and
Merchant divisions, which was partially offset by the utilization of our available borrowings and a positive contribution from Connect.
Outlook
While we report our financial results in USD, we measure our operating performance in ZAR, and as such we provide our guidance
accordingly.
Q3 2023
We expect the following for Q3 2023:
• Revenue between ZAR 2.5 billion and ZAR 2.8 billion.
• Merchant Segment Adjusted EBITDA of between ZAR 140 million and ZAR 145 million.
• Consumer Segment Adjusted EBITDA of between ZAR 40 million and ZAR 45 million.
• Group costs normalized (previously referred to as Corporate/Eliminations) to be between (ZAR 45 million) to (ZAR 40
million).
• Group Adjusted EBITDA of between ZAR 135 million and ZAR 150 million.
FY 2023
For the full fiscal year 2023, we are reaffirming the total Group guidance provided on November 8, 2022 (except as otherwise noted
below); We expect the following for the year ended June 2023:
• Revenue between ZAR 8.7 billion and ZAR 9.3 billion.
• Merchant Segment Adjusted EBITDA of between ZAR 550 million and ZAR 565 million.
• Consumer Segment Adjusted EBITDA of between ZAR 95 million and ZAR 110 million.
• Group costs normalized expected to be between (ZAR 165 million) to (ZAR 150 million) (which was previously disclosed as
• between (ZAR 165 million) to (ZAR 155 million) on November 8, 2022).
• Adjusted EBITDA of between ZAR 480 million and ZAR 525 million.
Management has provided its outlook regarding Merchant Segment Adjusted EBITDA, Consumer Segment Adjusted EBITDA, Group
costs normalized and Group Adjusted EBITDA, each which is a non-GAAP financial measure and excludes certain charges.
Management has not reconciled these non-GAAP financial measures 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
measures is not available without unreasonable effort.
Webcast and Conference Call
Lesaka will host a webcast and conference call to review results on February 8, 2023, at 8:00 a.m. Eastern Time which is 3:00 p.m.
South Africa Standard Time (“SAST”).
The results webcast can be accessed by using the following link: https://bit.ly/3usMFVz
Webcast ID: 864 3511 2604
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: + 1 309 205 3325 or +1 312 626 6799
• South Africa Toll-Free + 27 87 551 7702
Participants using the conference call dial-in will be unable to ask questions.
A replay of the results presentation webcast will be available on the Lesaka investor relations website following the conclusion of the
live event.
Headline earnings (loss) per share (“HEPS”)
The inclusion of H(L)EPS in this press release 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 Q2 2023 and 2022:
Q2 Q2
2023 2022
Net (loss) income used to calculate headline earnings (USD’000)
.................................................................................................................... (6,618) (13,297)
Headline (loss) earnings per share:
....................................................................................................................
Basic, in USD
............................................................................................................... (0.11) (0.23)
Diluted, in USD
............................................................................................................... (0.11) (0.23)
The table below presents our HEPS for fiscal 2023 and 2022:
2023 2022
Net loss used to calculate headline earnings (USD’000)
................................................................................................................... (16,602) (26,316)
Headline loss per share:
...................................................................................................................
Basic, in USD
.............................................................................................................. (0.27) (0.46)
Diluted, in USD
.............................................................................................................. (0.27) (0.46)
Short-form announcement
This short-form announcement is the responsibility of the Lesaka Board of Directors (“Board”) and the contents have been approved by
the Board on February 7, 2023. This short-form announcement released on SENS is a summary of the full announcement which is
available at https://senspdf.jse.co.za/documents/2023/JSE/ISSE/LSKE/Q2Res2023.pdf and has been published on Lesaka’s website at
www.lesakatech.com. This short-form announcement does not contain the complete or full announcement details. Any investment
decision by investors and/or shareholders should be based on consideration of the full announcement. The short-form announcement
has not been audited or reviewed by Lesaka’s external auditors. The full announcement is 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.
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, 2022, 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
February 8, 2023
Sponsor:
Rand Merchant Bank, a division of FirstRand Bank Limited
Date: 08-02-2023 07:05:00
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