Lesaka Technologies, Inc. · NASDAQ:LSAK
Lesaka Technologies — Net1 UEPS Technologies — Investor Presentation (June 2015)
68 slides from Lesaka Technologies's investor presentation, June 2015
Slide 1: Net1 UEPS Technologies, Inc. – Zazoo
pC ‘snk NET 1 UEPS TECHNOLOGIES, INC. ZOZCO seyrav
Slide 2: Forward-looking statements safe harbor
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 cause actual results to di
Slide 3: Net1 Group: Key Components
Net1 Group : Key Components P/E = 8x MC= $860M EPS = $2.38 4 t t t t EasyPay ! FinsonD ! @s|@ cf Kener] ! omen OneCredit FIHRST — (§) save % smarilife
Slide 4: A re-rating of our P/E ratio will impact share price
A re-rating of our P/E ratio in line with industry average will have a significant impact on our share price if we sustain our consistent double digit growth: 4
Slide 5: Fundamental Net Income Constant Currency
Fundamental Net Income Constant Currency Fundamental net income (USD) Fundamental net income (ZAR) 100 000 1 200 80 000 1 000 800 60 000 600 40 000 400 20 000 200 - - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Fundamental net income Linear (Fu
Slide 6: South Africa, International and Mobile, Korea
South Africa International • Financial Inclusion / EPE • UEPS/EMV • Financial Services • Advance Airtime • Mobile Payments • Mobile Virtual Card • Mobile-enabled VAS • MasterCard Partnership Mobile Korea • Secure Mobile Payments • Penetrate SME merchants • Loyalty • Expand product offerings • Money
Slide 7: Leveraging investments to be end-to-end transaction processor in South Africa
We aim to leverage our investments to establish an end-to-end leading transaction processor in South Africa Mobile ATMs NPS Rural POS EasyPay (National Payment Mobile Pay Points System) National Distribution Platform Financial Welfare Unbanked Banked Payments ID Services 7
Slide 8: SASSA Infrastructure Pre 2012
SASSA Infrastructure Pre 2012
Slide 9: Infrastructure Post 2012
Infrastructure Post 2012
Slide 10: Service features across payment channels
• Airtime • Balance Enquiries • Cash • Loans • Balance Enquiries • Multiple Card Programs • Electricity • Mini Statements • Mini Statements • Short Term Insurance • Sales • Dynamic Fee • Water • EFT Debits • Money Transfers • Life Insurance • Cash Back • Debit/ Credit • Information • Stop Orders • L
Slide 11: Slide 11
Slide 12: What is Zazoo? Five core technologies
What is ? Delivering Alternate, Patented Payment Solutions We leverage 5 core technologies MOBILE CRYPTOGRAPHY MNO SMARTCARD ENTERPRISE PAYMENT
Slide 13: Our expertise: Mobile Payments Technology
Our expertise speaks volumes… MOBILE PAYMENTS CRYPTOGRAPHY MNO SMART CARD ENTERPRISE Mobile Payments Technology Over 25 years of group experience in financial services Multiple patents registered across more than 200 countries Winner of the MTN app of the year 2014
Slide 14: Our expertise: Cryptographic Technology
Our expertise speak volumes… MOBILE PAYMENTS CRYPTOGRAPHY MNO SMART CARD ENTERPRISE Cryptographic Technology First business in Africa to achieve FIPS140-2 certification Our technology trusted for over 10 years Implemented in more than 80 countries Installed at over 1300 bank branches.
Slide 15: Our expertise: MNO Technology
Our expertise speak volumes… MOBILE PAYMENTS CRYPTOGRAPHY MNO SMART CARD ENTERPRISE MNO Technology Operations in over 20 countries TT100 winner Platforms processing more than 1.4 billion transactions a year
Slide 16: Our expertise: Smart Card Technology
Our expertise speak volumes… MOBILE PAYMENTS CRYPTOGRAPHY MNO SMART CARD ENTERPRISE Smart Card Technology 15 years experience in smart card technology Winner of SPII award for innovation SMART MONEY in the Philippines
Slide 17: Our expertise: Enterprise Technology
Our expertise speak volumes… MOBILE PAYMENTS CRYPTOGRAPHY MNO SMART CARD ENTERPRISE Enterprise Technology Providing enterprise payment solutions since 1998 Handling over $563 million across 1,900 businesses monthly.
Slide 18: How do we take our offerings to market?
How do we take our offerings to market? 2012 2015 • Sell to businesses • Sell to people B2C B2B • Sell to people through • Strategic businesses acquisitions B2B2C
Slide 19: Driving Growth: contribution to revenue growth
Driving Growth Contribution To Revenue Growth 2012 2015 Forecast 2020 Forecast B2B2C 22% 9% 10% B2C 0% 68% 65% B2B 78% 23% 25% Net Revenue Growth 100% 100% 100%
Slide 20: Why B2B2C?
Why B2B2C? TO ONBOARD CUSTOMERS AND CONVERT
Slide 21: How do we make money?
How do we make money? REVENUE DIRECT BILLING METHOD INDIRECT MODEL Annual license fees + Per transaction fee / B2B2C Forex user fee per month + Interchange Lending % on Top-up + Breakage Interchange B2C + Data Per transaction fee / user fee per month Interest B2B Interchange
Slide 22: Keep it simple
Keep it simple E-Commerce just became safe Welcome screen Login Create a card Transaction done
Slide 23: Our offering provides specific value propositions
Our offering provides specific Value Propositions ACCESSIBILITY CONVENIENCE SECURITY CONTROL & TARGET INCENTIVES
Slide 24: Accessibility: more handsets than toothbrushes in Africa
Accessibility MORE HANDSETS IN CIRCULATION IN AFRICA THAN TOOTHBRUSHES
Slide 25: Accessibility Use Cases
Accessibility Use Cases Those who couldn’t, now can Closed becomes open Inaccessible becomes accessible Through our technology, people who didn’t have the ability to spend now can. Who can this benefit?: STUDENTS WITH PEOPLE WHO DON’T TEENS LOOKING BANK ACCOUNT BUT HAVE A BANK TO SPEND ONLINE NO CRE
Slide 26: Teen spending
Teen spending 3% I own neither I own both Nearly all of them own at least one mobile device 5% I own a tablet I own a smartphone
Slide 27: Teen spending
Teen spending Nearly all of them own at least one mobile device Teens want to spend online
Slide 28: Teen spending
Teen spending Nearly all of them own at least one mobile device Teens want to spend online Our solution solves the problem B2C
Slide 29: Teen spending
Teen spending Nearly all of them own at least one mobile device Teens want to spend online Our solution solves the problem B2C B2B2C with partners like Funifi
Slide 30: Students spending
Students spending May be banked but can’t spend online In-App purchases and digital content Our solution solves the problem B2C
Slide 31: Accessibility Use Cases
Accessibility Use Cases Those who couldn’t, now can Closed becomes open Inaccessible becomes accessible CLOSED AND SEMI-CLOSED Platforms can now provide their users the opportunity to spend agnostically anywhere.
Slide 32: Loyalty point aggregation
Loyalty point aggregation Average amount of 33% points that remain unredeemed No more “brand only” purchased Rise of loyalty aggregation and swapping services People want cash B2C or B2B2C
Slide 33: Remittance
Remittance $600 Billion market today By 2017, digital remittance will be 30% India $70 billion China $60 billion Philippines $25 billion Mexico $22 billion Nigeria $21 billion Ref: World Bank
Slide 34: Accessibility use cases
Accessibility use cases Those who couldn’t, now can Closed becomes open Inaccessible becomes accessible CONVENIENCE OF MOBILE SERVICES PROVIDED 24/7 When locality of product is a problem Rather than when brick and mortar locations are staffed and open
Slide 35: Services delivered to you via mobile
Services delivered to you via mobile Airtime NOW 3.5 MILLION people Adding value to peoples lives Pasavute - Malawi More sales than top 3 Banks in 1 month
Slide 36: Services delivered via mobile, now add some great tech
Services delivered to you via mobile, now add some great tech! Voice biometrics Location, location, location GPS or triangulation The power of our technology
Slide 37: Security: CNP fraud will double by 2018
Security CNP FRAUD WILL DOUBLE BY 2018 WILL BE 4X THAT OF POS FRAUD Source: ECB 2015
Slide 38: Security Use Cases
Security Use Cases E-Commerce just became safe Over the Phone Privacy OUR TECHNOLOGY FOCUSES ON SECURITY Those who are security conscious can now transact with peace of mind. Consumers and business alike.
Slide 39: E-Commerce security
E-Commerce security There is value in security Convenience or security? Businesses – 65% exposed to fraud – AFPS 2014 B2C and B2B Convenience and control
Slide 40: E-Commerce security: VCpay Business
E-Commerce security VCpay Business 67% of corporate online spend on travel and lodging - AFP Custom control Business travel to hit $1 Trn in 2015 - GBTA
Slide 41: Security Use Cases
Security Use Cases E-Commerce just became safe Over the Phone Privacy OUR TECHNOLOGY FOCUSES ON SECURITY People can now securely transact over the phone.
Slide 42: Over the phone security
Over the phone security 1 in every 8 transactions Over 60% of people are uncomfortable – Javelin statistics One-time Virtual Cards Wearables will be supported B2C meets B2B Just say “PAY”
Slide 43: Security Use Cases
Security Use Cases E-Commerce just became safe Over the Phone Privacy SPEND ONLINE ANONYMOUSLY People sometimes don’t want their bank or statement to reflect what they are doing.
Slide 44: As anonymous as cash
As anonymous as CASH Major backend breaches Virtual Card is a token Secrecy
Slide 45: Convenience
Convenience PEOPLE VALUE CONVENIENCE
Slide 46: Convenience use cases
Convenience use cases Cash back Gifting Shared payments PEOPLE VALUE INCENTIVES CAN BE WE CAN PROVIDE CONVENIENCE OFFERED FURTHER VALUE Over 34% of people To consumers and through “deal” store credit card details corporates through marketing through on their mobile device CASH back initiatives. targ
Slide 47: Cash back and deal convenience
Cash back and deal convenience Americans switch 61% brands due to price (Nielsen) SAMSUMG IPHONE 6 16GB Handsets a good example GALAXY S5 AVERAGE PRICE AVERAGE PRICE $570 $649 Businesses Consumers
Slide 48: Convenience use cases
Convenience use cases Cash back Gifting Shared payments PEOPLE LOOKING TO GIFT SENDER CAN SEND VIRTUAL CARDS SEND GIFT CARDS CONTROL THE SPEND AS INCENTIVES to others can now do this The gift sender can also Corporates can now quickly and easily and the control the spend on send virtual cards as rec
Slide 49: Gifting
Gifting OVER $100 BILLION SPENT ON GIFT CARDS ANNUALLY Fraud follows any growing market Consumers have issues with gifting Breakage, agnostic spend We have the solution
Slide 50: Convenience Use Cases
Convenience Use Cases Cash back Gifting Shared payments SPLIT PAYMENTS SHARE THE TOTAL WE CAN INTRODUCE PAYMENT LENDERS is picking up huge momentum in numerous Now, a user can invite into this model to help markets but very few if others to share a total users pay for items any of them are dealing p
Slide 51: Shared payments
Shared payments 45% OF MILLENNIALS IN THE US & UK WOULD LIKE TO USE THEIR MOBILES TO SPLIT PAYMENTS WITH FRIENDS (JWT, October 2014) Post transaction offerings In-line transaction sharing Business could see value in this too Integrated loans big opportunity
Slide 52: Accelerated growth through acquisitions and strategic investments
Accelerated growth through acquisitions and strategic investments Compliance Customer acquisition is expensive Fraud Customer trust
Slide 53: Global e-commerce sales forecast to $2.9 trillion by 2020
Global E-Commerce sales to reach $1.6 trillion this year and $2.9 trillion forecast by 2020 IDATE: World Internet Markets 2014 Source: eMarketer
Slide 54: What will take us forward?
What will take us forward? Experience Intellectual Property Innovation • 25 years in the provision of financial services, in over 15 countries and 3 • Variable PIN • Voice biometrics continents • 3rd Party • First electronic purse world wide • Delivery of over $1.4 Billion a year in VAS transactions
Slide 55: Current and future user base growth
Current and future User Base growth User Base Model 2012 2015 Forecast 2020 Forecast B2B2C 17 997 851 22 797 172 41 215 238 Africa 17 997 851 22 797 172 31 260 311 India - - 9 286 661 Europe - - 364 228 Asia - - 182 423 USA - - 121 615 B2C - 3 775 302 11 567 711 Africa - 3 775 302 6 977 850 India -
Slide 56: Financial Overview
Financial Overview
Slide 57: Fundamental EPS
Fundamental EPS $2.00 $1.75 $1.73 $1.42 $1.50 $1.00 $0.76 $0.50 $0.00 FY12 FY13 FY14 9M15 Notes: 1) FY14 figures exclude a one-time payment of $27 million received from SASSA; 2) FY12 and FY13 include approximately $70 million implementation costs related to our current national SASSA contract; 3) A
Slide 58: Our revenue base is recurring and diversifying
Our revenue base is recurring, growing at double-digits, and sources of revenue are diversifying OUR THREE REPORTING SEGMENTS South African International Financial Inclusion & Transaction Transaction Applied Technologies Processing Processing 9M15 Rev: $177m (+10%) 9M15 Rev: $122m (+19%) 9M15 Rev: $
Slide 59: Sustainable Organic Earnings Growth
Sustainable Organic Earnings Growth Net1 intends to drive sustainable top and bottom line growth, while reducing customer, country and currency concentration risks Key drivers of long-term earnings growth target: Consistent double-digit earnings growth (constant currency) Organic growth in our cor
Slide 60: South African Business Plan Transition
South African Business Plan Transition
Slide 61: Bridging the SASSA Divide
Bridging the SASSA Divide SASSA contribution is unlikely to change in FY2016, and should SASSA appoint a new service provider in Oct 2015, may steadily decline over a 12-month period as we phase-out thereafter. This gives us time to execute our strategy. SASSA Today EATM Roll-Out EasyPay Everywher
Slide 62: EasyPay Everywhere Relative EBIT Contribution
EasyPay Everywhere Relative EBIT Contribution EasyPay Everywhere relative EBIT contribution per account expected to be significantly higher than what we get from SASSA today EBIT Contribution per Cardholder – EPE vs. SASSA 64
Slide 63: EasyPay Everywhere – Offsetting SASSA
EasyPay Everywhere – Offsetting SASSA In FY2016, we expect to scale EasyPay Everywhere in order to offset any potential loss of SASSA in FY2017 65
Slide 64: KSNET has a leading position in a market with strong secular trends
KSNET has a leading position in a market with strong secular trends Amongst top 3 processors in Korea Business Overview Card Processing represents >90% of revenues Calendar 2014 revenue and EBITDA margin of $138 million and 25% respectively Over 220,000 merchants and over 400,000 POS devices
Slide 65: ZAZOO: Providing an exponential growth catalyst
ZAZOO : Providing an exponential growth catalyst ZAZOO’S VCPay by itself has the potential to grow Net1’s earnings exponentially Subscription or transaction-based revenue model Target average blended revenue of USD 1/user/month, though economics may vary by country Higher margin transactions;
Slide 66: Cash, tax and share count
Cash, tax and share count We are in a net cash positive position and expect the cash balance to grow in line with fundamental net income. Uses of cash : Expansion of loan book, CAPEX for ATM roll-out, strategic acquisitions, debt repayment Our tax rate can fluctuate significantly as a result of i
Slide 67: Recurring revenue, solid financial base, strong momentum
Recurring revenue Solid Financial Base Net Debt-free balance sheet Strong cash flow generation Multiple growth opportunities Strong Business Established, proven solution Momentum Joint Venture / partnership opportunities Significant Operating Established cardholder base Leverage High
Slide 68: Thank You – Q&A
Thank You – Q&A 70
Net1 UEPS Technologies — Investor Presentation (June 2015) on 6ix