Lesaka Technologies, Inc. · NASDAQ:LSAK
Lesaka Technologies — Net1 UEPS Technologies — Q1 2018 Earnings Presentation
38 slides from Lesaka Technologies's earnings presentation, November 2017
Slide 1: Q1 2018 Investor Presentation
Q1 2018 Investor Presentation www.net1.com
Slide 2: Safe Harbor Statement
Safe Harbor Statement The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements so long as such information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could caus
Slide 3: Defined Terms
Defined Terms Unless specifically noted otherwise within this presentation, the following terms are hereby defined as follows: Constant Currency: We analyze our results of operations both in U.S. dollars, as presented in the consolidated financial statements, and supplementally in ZAR, because ZAR i
Slide 4: Financial Highlights
FINANCIAL HIGHLIGHTS First Quarter 2018
Slide 5: 1Q 2018 Financial Report: Quarterly Financial Highlights
1Q 2018 Financial Report Quarterly Financial Highlights • Revenue - $152.6 million • 2% decrease from $155.6 million in 1Q 2017 • 8% decrease on a constant currency basis • Adjusted EBITDA - $35.5 million • 13% decrease from $40.8 million in 1Q 2017 • 23% Adjusted EBITDA Margin compared to 26% in 1Q
Slide 6: Segment Quarterly Revenue Growth
1Q 2018 Financial Report Segment Quarterly Revenue Growth 1Q const. currency SATP revenue 1Q USD ITP revenue R876 $46 190 $46 022 R812 $48 000 R721 Thousands R1 000 Millions $46 000 R800 $44 000 $41 229 R600 R400 $42 000 R200 13% 8% $40 000 12% (0%) R0 $38 000 2016 2017 2018 2016 2017 2018 1Q const.
Slide 7: Business Segment Results
1Q 2018 Financial Report Business Segment Results USD Revenue Operating Income Operating Margin (Millions) 1Q 2018 1Q 2017 1Q 2018 1Q 2017 1Q 2018 1Q 2017 SATP $ 66.4 $ 57.6 $ 12.3 $ 13.5 19% 24% % Change* 8% (15%) ITP 46.0 46.2 5.3 5.8 12% 13% % Change* (7%) (15%) FIAT 54.3 63.5 13.9 15.2 26% 24% %
Slide 8: Balance Sheet Overview
1Q 2018 Financial Report Balance Sheet Overview USD (Millions) Sept 30, 2017 June 30, 2017 Cash $ 138.4 $ 258.5 Investments and Equity Accounted Investments 269.0 52.0 Total Assets 1,343.3 1,450.8 Total Equity 714.2 708.0 Total Debt 94.2 16.2 Book Value / Share 12.59 12.51 Net Cash / Share $ 0.78 $
Slide 9: Cash and Debt Movement - Sep 30 2017
Cash and Debt Movement - Sep 30 2017 $138m cash $94m debt $16m Oct debt $16m South payment Korea $41m investment $81m in 30% of available Bank Frick $78m South in Oct Africa 9
Slide 10: Key Investments
1Q 2018 Financial Report Key Investments % held Balance Sheet Value (Sep 2017) Equity Accounted: DNI 45% $70 million >$70 million (3) Finbond (JSE listed) 26% $20 million $49 million (1) KZ One 25% $5 million >$5 million (3) At Cost: Cell C 15% $147 million >$147 million (3) MobiKwik 12% $27 million
Slide 11: Business Overview: South African Transaction Processing
BUSINESS OVERVIEW SOUTH AFRICAN TRANSACTION PROCESSING First Quarter 2018
Slide 12: SATP Segment Highlights
SATP Segment Highlights 1Q 2018 Financial Highlights • Revenue - $66.4 million • 15% increase from $57.6 million in 1Q 2017 • 8% increase on a constant currency basis • Operating Income - $12.3 million • 9% decrease from $13.5 million in 1Q 2017 • 15% decrease on a constant currency basis 12
Slide 13: SATP Segment Highlights (cont.)
SATP Segment Highlights (cont.) 1Q 2018 Key Trends • Social Grant Distribution • SASSA continues to evaluate options to in-source distribution of grants per Constitutional Court’s instructions • CPS has extended its full support to government and SA citizens and in the interim continues to deliver u
Slide 14: SATP Segment Highlights
SATP Segment Highlights 1Q 2018 Key Trends CPS has a nationwide distribution footprint and an unmatched distribution network in rural areas. We have the last mile connectivity and presently can reach every South African within a 3-mile radius. 14
Slide 15: SATP Segment Highlights: EasyPay
SATP Segment Highlights 1Q 2018 Key Trends EasyPay Number of EasyPay Transactions 140 000 000 120 000 000 100 000 000 80 000 000 60 000 000 40 000 000 20 000 000 0 Q1FY2016 Q2FY2016 Q3FY2016 Q4FY2016 Q1FY2017 Q2FY2017 Q3FY2017 Q4FY2017 Q1FY2018 15
Slide 16: Business Overview: International Transaction Processing
BUSINESS OVERVIEW INTERNATIONAL TRANSACTION PROCESSING First Quarter 2018
Slide 17: ITP Segment Highlights
ITP Segment Highlights 1Q 2018 Financial Highlights • Revenue - $46 million • Flat compared to $46.2 million in 1Q 2017 • 7% decrease on a constant currency basis • Operating Income - $5.3 million • 9% decrease from $5.8 million in 1Q 2017 • 15% decrease on a constant currency basis 17
Slide 18: ITP Segment Highlights: South Korea and ROW Growth
ITP Segment Highlights 1Q 2018 Key Trends • South Korea and Rest of the World (ROW) Growth • South Korea revenue growth adversely impacted by pricing impact of interchange regulation • ROW initiatives and investments starting to reflect in revenue growth South Korea Revenue Growth ROW* Revenue Growt
Slide 19: ITP Segment Highlights: South Korea Transaction Growth and Cash Flow
ITP Segment Highlights 1Q 2018 Key Trends • South Korea Transaction Growth and Cash Flow • South Korea volume has continued to grow as interchange regulations have put pressure on smaller players • Regulations also now prohibit using POS terminals to incentivize merchants, resulting in lower capex a
Slide 20: Business Overview: Financial Inclusion & Applied Technologies
BUSINESS OVERVIEW FINANCIAL INCLUSION & APPLIED TECHNOLOGIES First Quarter 2018
Slide 21: FIAT Segment Highlights
FIAT Segment Highlights 1Q 2018 Financial Highlights • Revenue - $54.3 million • 15% decrease from $63.5 million in 1Q 2017 • 20% decrease on a constant currency basis • Operating Income - $13.9 million • 8% decrease from $15.2 million in 1Q 2017 • 14% decrease on a constant currency basis • EPE Acc
Slide 22: FIAT Segment Highlights: Key Trends
FIAT Segment Highlights 1Q 2018 Key Trends Expect growth to be driven by new initiatives with Cell C/DNI Number of EPE Accounts Value of Loans Outstanding 2500000 R 1200k 2000000 R 1000k 1500000 R 800k 1000000 R 600k 500000 R 400k 0 R 200k Rk Number of SmartLife Policies Outstanding Capital Deferred
Slide 23: FIAT Segment Highlights: Electricity and Airtime
FIAT Segment Highlights 1Q 2018 Key Trends • Key Umoya Manje and Power Manje Trends • The introduction of our enhanced security features resulted in a short term reduction in number of prepaid services • The declines are now starting to bottom out sequentially Number of Mobile (Manje) Transactions i
Slide 24: Net1 Opportunities
NET1 OPPORTUNITIES ——— NET1 74
Slide 25: South Africa – Biggest Near Term Opportunity
South Africa – Biggest Near Term Opportunity South Africa is Net1’s core market, one in which we have maximum expertise, infrastructure and distribution. We intend to expand our customer base as well as the products provided to that base. #3 Mobile operator in SA – 15m+ subscribers Leading distribut
Slide 26: South Africa – Biggest Near Term Opportunity (cont.)
South Africa – Biggest Near Term Opportunity(cont.) Deal terms and financial profile Acquired 15% for ZAR 2 billion (ZAR 750 million Acquired 45% of ZAR 945 million in cash. Obligated cash and ZAR 1.25 billion debt). 2 Board Seats. to pay up to ZAR 360 million additional on meeting certain performan
Slide 27: South Africa – Biggest Near Term Opportunity
South Africa – Biggest Near Term Opportunity We expect to realize further synergies from our Cell C and DNI transactions through new revenue and profit streams. EXCLUDING the financial impact of the transactions themselves, i.e. equity income, dividends, debt repayment, etc.: By the end of the third
Slide 28: Other International Opportunities
Other International Opportunities Europe/USA – T24/MP/Bank Frick Developing economies – IFC/JV’s India – MobiKwik Nigeria – OneFinance 28
Slide 29: Recently launched initiatives
Recently launched initiatives EASYPAY EVERYWHERE Cell C/DNI VIRTUAL CARD/BANKING 2+ million a/c’s in 2 years Total investments ZAR 2.95Bn 450,000+ users with Oxigen Growing transactions, financial Mildly dilutive in FY 2018 65 million base with MobiKwik and value-added services Exclusivity to provid
Slide 30: Joint Ventures
Joint Ventures New Joint Venture focused on large scale UEPS/EMV opportunities • Financial Inclusion JV company established for the rapid commercialization and internationalization of Net1’s social disbursement payments & identification technology and capabilities. • 50.1% Net1 majority controlling
Slide 31: The Opportunity
The Opportunity “Banking the unbanked is a $380bn opportunity…” 31
Slide 32: The Potential
The Potential We see the potential for 50-100m active account holders in 10-20 markets. Market size & demographics Commitment to Social Benefits, Financial Inclusion& ease of entry Payment 10 – 20 countries efficiency & 50 – 100m people digitize 32
Slide 33: Uniquely Positioned
Uniquely Positioned Net1 is uniquely positioned with proven technology and a track record and a unique set of capabilities and technologies. Robust and scalable technology around Identification and Payment with full feature functionality on core payments platform. • Issuing & acquiring • Closed or o
Slide 34: Summary & Outlook
SUMMARY & OUTLOOK First Quarter 2018
Slide 35: 1Q 2018 Summary & Outlook
1Q 2018 Summary & Outlook • 1Q 2018 Fundamental EPS of $0.43 • SATP – steady growth. Drivers - further ATM network expansion and more transacting consumers including at EasyPay (POS) • ITP – expect Korea to decline mid-single digit % in 2018 and return to positive growth in 2019. ROW revenue should
Slide 36: Supplemental Information
SUPPLEMENTAL INFORMATION ——— NET1 74
Slide 37: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures Three months ended Year end Sep-17 Sep-16 Jun-17 $ '000 EPS, basic $ '000 EPS, basic $ '000 EPS, basic Fundamental net income (Non-GAAP) 24 446 0,43 25 753 0,48 94 721 1,74 Amortisation of intangible assets, net (2 131) (2 167) (10 491) Transaction costs (1 329) (
Slide 38: Thank you!
4 m - — Thank you! www.netl.com
Net1 UEPS Technologies — Q1 2018 Earnings Presentation on 6ix