Lesaka Technologies, Inc. · NASDAQ:LSAK
Lesaka Technologies — Q2 FY2024 Earnings Presentation
52 slides from Lesaka Technologies's earnings presentation, Feb 7, 2024
Slide 1: Q2 FY24 Results Presentation
FY24 Q2 Results | 1 Q2 FY24 Results Presentation 7 February 2024
Slide 2: Safe harbor statement
FY24 Q2 Results | 2 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 fac
Slide 3: Agenda
FY24 Q2 Results | 3 Agenda Overview and Performance Highlights Chris Meyer – Group CEO Merchant Division Steven Heilbron – CEO Connect and Head of Merchant Division Consumer Division Lincoln Mali – CEO Southern Africa Financial Performance & Outlook Naeem Kola – Group CFO Chris Meyer – Group CEO Clo
Slide 4: Lesaka Overview
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Slide 5: Enabling merchants and improving lives of grant beneficiaries
FY24 Q2 Results | 5 Enabling merchants Improving the lives of South Africa’s to compete and grow grant beneficiaries by providing innovative financial technology and value-creating solutions Our Values Entrepreneurial spirit | Integrity | Collective wisdom | Ownership | Bias to action
Slide 6: Performance Highlights
Performance Highlights
Slide 7: GAAP Income Statement for the quarter (FY24 Q2 and FY23 Q2)
FY24 Q2 Results | 7 PERFORMANCE HIGHLIGHTS GAAP Income Statement for the quarter (FY24 Q2 and FY23 Q2) ZAR’000 $’000 % Growth % Growth MERCHANT DIVISION Q2 - ended 31 December FY24 Q2 FY23 Q2 YoY FY24 Q2 FY23 Q2 YoY Average exchange rate for conversion from ZAR to $ R18.71 R17.52 7% R18.71 R17.52 7%
Slide 8: Positive operational momentum in both divisions
FY24 Q2 Results | 8 PERFORMANCE HIGHLIGHTS Positive operational momentum in both divisions Translates into financial performance with revenue and profitability improving in both divisions • Growth driven by Kazang VAS and supplier payments and card acquiring business MERCHANT 1 DIVISION - Roll out a
Slide 9: Achieving revenue guidance and exceeding Adjusted EBITDA guidance
FY24 Q2 Results | 9 PERFORMANCE HIGHLIGHTS Positive operational momentum in both divisions Achieving revenue guidance and exceeding upper end of Group Adjusted EBITDA guidance Group Revenue Group Adjusted EBITDA 2 MERCHANT DIVISION 13% yoy 38% yoy Guidance Guidance {R170m – R180m} R181m {R2.65bn – R
Slide 10: Merchant Division
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Slide 11: Merchant MSME revenue drivers: VAS, supplier payments and card acquiring
FY24 Q2 Results | 11 PERFORMANCE HIGHLIGHTS Merchant MSME revenue drivers | VAS, supplier payments and card acquiring Holistic offering and innovative solutions to the formal and informal sectors Value-Added Services & supplier payments Card Acquiring MERCHANT DIVISION Devices1 deployed Devices1 dep
Slide 12: Merchant MSME revenue drivers: Cash and Merchant Credit
FY24 Q2 Results | 12 PERFORMANCE HIGHLIGHTS Merchant MSME revenue drivers | Cash and Merchant Credit Holistic offering and innovative solutions to the formal and informal sectors Digitalization of Cash Merchant Credit 1 MERCHANT DIVISION Devices deployed 4 450+ ▲4% (yoy) 200+ 180+ 200+ Throughput (Z
Slide 13: Merchant MSME | EasyPay
FY24 Q2 Results | 13 PERFORMANCE HIGHLIGHTS Merchant MSME | EasyPay Encouraging momentum as we execute on upgrading and modernizing our EasyPay enterprise market solution VAS and bill payments MERCHANT DIVISION Throughput for the quarter (ZAR) 9% yoy 14% qoq CONSUMER DIVISION • Strategically importa
Slide 14: Merchant Division Revenue and Adjusted EBITDA
FY24 Q2 Results | 14 PERFORMANCE HIGHLIGHTS Merchant Division Revenue and Adjusted EBITDA Helping merchants compete and grow Merchant revenue Connect Group revenue (Rm) Merchant Segment Adjusted EBITDA 1 MERCHANT DIVISION Quarterly seasonality 13% yoy2 2% yoy2 6% qoq 8% qoq R2 395m2 R2 263m R2 113m2
Slide 15: Consumer Division
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Slide 16: EasyPay Everywhere: Driving customer acquisition
FY24 Q2 Results | 16 PERFORMANCE HIGHLIGHTS EasyPay Everywhere | Driving customer acquisition Fundamentally transformed into a sales and customer focused business, yielding encouraging results Momentum in driving customer acquisition Continued operational momentum MERCHANT DIVISION Higher activation
Slide 17: Consumer: Straightforward and cost-effective Financial Services
FY24 Q2 Results | 17 PERFORMANCE HIGHLIGHTS Consumer | Offering straight forward and cost-effective Financial Services MERCHANT BANKING SHORT-TERM LOANS PERSONAL INSURANCE DIVISION CONSUMER DIVISION ~1.4m R503m ~384 000 Active EPE customers Loan book before allowances Active insurance policies ▲14%
Slide 18: EPE Growth strategy yielding encouraging results
FY24 Q2 Results | 18 PERFORMANCE HIGHLIGHTS EPE Growth strategy yielding encouraging results Momentum in delivering growth in client base and ARPU¹ Consumer Segment Revenue (Rm) Consumer Segment Adjusted EBITDA2 (Rm) Delivery against MERCHANT DIVISION strategic focus areas 16% yoy 450% yoy 1. 8% qoq
Slide 19: Financial Highlights
Financial Highlights
Slide 20: Income Statement for the quarter (FY24 Q2 and FY23 Q2)
FY24 Q2 Results | 20 PERFORMANCE HIGHLIGHTS Income Statement for the quarter (FY24 Q2 and FY23 Q2) ZAR’000 $’000 % Growth % Growth Q2 - ended 31 December FY24 Q2 FY23 Q2 YoY FY24 Q2 FY23 Q2 YoY MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.71 R17.52 7% R18.71 R17.52 7% Rev
Slide 21: Income Statement for the quarter (FY24 Q2 and FY24 Q1)
FY24 Q2 Results | 21 PERFORMANCE HIGHLIGHTS Income Statement for the quarter (FY24 Q2 and FY24 Q1) ZAR’000 $’000 Q2 - ended 31 December FY24 Q2 FY24 Q1 % Growth FY24 Q2 FY24 Q1 % Growth MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.71 R18.71 0% R18.71 R18.71 0% Revenue 2 6
Slide 22: Net loss before tax continued to improve
FY24 Q2 Results | 22 PERFORMANCE HIGHLIGHTS Net loss before tax continued to improve Unpacking the non-cash charges included in net income before tax MERCHANT DIVISION Net income (loss) before tax CONSUMER DIVISION (R67m) (R67m) (R67m) (R74m) (R39m) PERFORMANCE FINANCIAL (R110m) (R0.3m) (R189m) FY22
Slide 23: Segmental EBITDA analysis (FY24 Q2 and FY23 Q2)
FY24 Q2 Results | 23 PERFORMANCE HIGHLIGHTS Segmental EBITDA analysis for the quarter (FY24 Q2 and FY23 Q2) ZAR’000 $’000 Q2 - ended 31 December FY24 Q2 FY23 Q2 % Growth FY24 Q2 FY23 Q2 % Growth MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.71 R17.52 7% R18.71 R17.52 7% Re
Slide 24: Segmental EBITDA analysis (FY24 Q2 and FY24 Q1)
FY24 Q2 Results | 24 PERFORMANCE HIGHLIGHTS Segmental EBITDA analysis for the quarter (FY24 Q2 and FY24 Q1) ZAR’000 $’000 Quarter FY24 Q2 FY24 Q1 % Growth FY24 Q2 FY24 Q1 % Growth MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.71 R18.71 0% R18.71 R18.71 0% Revenue Merchant
Slide 25: Segmental EBITDA analysis for the half-year
FY24 Q2 Results | 25 PERFORMANCE HIGHLIGHTS Segmental EBITDA analysis for the half-year (HY24 and HY23) ZAR’000 $’000 Half-year ended 31 December HY24 HY23 % Growth HY24 HY23 % Growth MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.71 R17.25 8% R18.71 R17.25 8% Revenue Merch
Slide 26: Consistent execution achieving financial turnaround
FY24 Q2 Results | 26 PERFORMANCE HIGHLIGHTS Consistent execution achieving financial turnaround Continue to deliver on both growth and profitability Group Revenue Group Adjusted EBITDA 1 MERCHANT DIVISION 13% yoy 38% yoy R181m R 2 538m R2 695m R163m R2 383m R130m CONSUMER DIVISION R163m R150m R160m
Slide 27: Fundamental earnings per share turns positive
FY24 Q2 Results | 27 PERFORMANCE HIGHLIGHTS Fundamental earnings per share turns positive Delivering positive cash from business operations at Group level Basic and fundamental 1 earnings (loss) per share (ZAR) Net Cash provided by (used in) operating activities MERCHANT DIVISION (R0.79) R0.26 CONSU
Slide 28: Leverage ratio improved; positive cash flow at operational level
FY24 Q2 Results | 28 PERFORMANCE HIGHLIGHTS Leverage ratio improved with focus on reducing debt and growing Adjusted EBITDA Generating positive cash flow at an operational level Summary Group cash flow (Rm) FY24 Q2 FY24 Q1 FY23 Q2 MERCHANT DIVISION Cash generated from business operations 1 207 184 1
Slide 29: CAPEX primarily driven by growth
FY24 Q2 Results | 29 PERFORMANCE HIGHLIGHTS CAPEX primarily driven by growth Capex (Rm) FY24 Q2 FY24 Q1 FY23 Q2 FY23 Q2 MERCHANT DIVISION Capex (41) (53) (70) (3) CONSUMER DIVISION R70m R14m | Kazang R60m • Point-of-sales devices on average have a payback of < 4 months and a 36-month useful life R53
Slide 30: Outlook
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Slide 31: Outlook: FY24 and medium-term objectives re-affirmed
FY24 Q2 Results | 31 PERFORMANCE HIGHLIGHTS Outlook FY24 and medium-term financial objectives re-affirmed MERCHANT DIVISION Quarterly Annual FY24 Q2 FY24 Q2 Guidance FY23 Q3 FY24 Q3 FY23 FY24 Outlook Actual achieved Actual Outlook Actual Outlook CONSUMER DIVISION Group Revenue R2.7bn-R2.8bn R2.7bn R
Slide 32: Closing Remarks & Questions
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Slide 33: Appendix
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Slide 34: Platform offers growth and broader reach in an underpenetrated market
FY24 Q2 Results | 34 Our platform offers growth and broader reach in an underpenetrated market Attractive Total Addressable Market (TAM) and Serviceable Addressable Market (SAM) PERFORMANCE HIGHLIGHTS Merchants M TOUCH Consumers TE P FORMAL INFORMAL YS O IN LSM1 1 to 6 in South Africa S O MERCHANT D
Slide 35: The Lesaka platform offers growth and broader reach
FY24 Q2 Results | 35 The Lesaka platform offers growth and broader reach PERFORMANCE HIGHLIGHTS B2B | + 86 000 Merchants B2C | + 1.4m Consumers MERCHANT DIVISION Formal market Informal market VAS VAS & Banking Supplier payments CONSUMER VAS and bill payments DIVISION Digitalization of cash Digitaliz
Slide 36: Group Revenue
FY24 Q2 Results | 36 Group Revenue PERFORMANCE HIGHLIGHTS Group Revenue 13% yoy R2 695m $144m R2 538m $137m MERCHANT R2 495m $133m DIVISION R2 383m $133m R2 402m $134m R2 138m $124m R2 094m $135m R1 895m $122m CONSUMER DIVISION R2 263m $121m R2 396m $128m R2 159m $115m R2 113m $121m R2 118m $118m R1
Slide 37: Group Adjusted EBITDA (loss)
FY24 Q2 Results | 37 Group Adjusted EBITDA (loss) PERFORMANCE HIGHLIGHTS Group Adjusted EBITDA (loss) 38% yoy R181m $12m MERCHANT DIVISION R158m $8m R163m $9m R137m $8m R130m $7m R78m $5m R72m $5m R60m $4m R163m $9m R154m $8m R150m $8m CONSUMER DIVISION R149m $8m R160m $9m R127m $8m R127m $9m R135m
Slide 38: Income Statement for the half-year (HY24 and HY23)
FY24 Q2 Results | 38 PERFORMANCE HIGHLIGHTS Income Statement for the half-year (HY24 and HY23) ZAR’000 $’000 % Growth % Growth Six months ended 31 December 1H24 1H23 YoY 1H24 1H23 YoY MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.71 R17.25 8% R18.71 R17.25 8% Revenue 5 232
Slide 39: Outlook on stock-based compensation charges
FY24 Q2 Results | 39 Outlook on stock-based compensation charges (SBC) (ZARM) PERFORMANCE HIGHLIGHTS Stock-based compensation charges • Current level of SBC reflects higher amounts due to senior executive sign-on, that will vest over the next 3-years linked R178m to performance MERCHANT R169m DIVISI
Slide 40: Disaggregation of revenue before intersegment eliminations
FY24 Q2 Results | 40 Disaggregation of revenue (ZAR’000) before intersegment eliminations per quarter PERFORMANCE HIGHLIGHTS Total Segment Revenue 1 Segment Revenue 1 Merchant Consumer 14% 13% 16% 2 707 282 2 394 515 312 767 2 263 001 290 629 2 553 630 27 139 9 042 MERCHANT DIVISION 312 767 32 362 5
Slide 41: Reconciliation of non-GAAP measures | Quarterly
FY24 Q2 Results | 41 Reconciliation of non-GAAP measures | Quarterly PERFORMANCE HIGHLIGHTS FY24 Q2 FY24 Q1 FY23 Q2 FY24 Q2 FY24 Q1 FY23 Q2 For the quarter ZAR’000 ZAR’000 ZAR’000 $’000 $’000 $’000 Average exchange rate for conversion from ZAR to $ 18.71 18.71 17.52 18.71 18.71 17.52 Loss attributab
Slide 42: Once-off items | Quarterly
FY24 Q2 Results | 42 Once-off items | Quarterly The table below presents the components of once-off items for the periods presented: PERFORMANCE HIGHLIGHTS For the quarter FY24 Q2 FY24 Q1 FY23 Q2 FY24 Q2 FY24 Q1 FY23 Q2 ZAR’000 ZAR’000 ZAR’000 $’000 $’000 $’000 MERCHANT Average exchange rate for con
Slide 43: Once-off items | Half-year
FY24 Q2 Results | 43 Once-off items | Half-year The table below presents the components of once-off items for the periods presented: PERFORMANCE HIGHLIGHTS For the quarter FY24 Q2 FY23 Q2 FY24 Q2 FY23 Q2 ZAR’000 ZAR’000 $’000 $’000 MERCHANT Average exchange rate for conversion from ZAR to $ 18.71 17
Slide 44: Reconciliation of non-GAAP measures | Quarterly
FY24 Q2 Results | 44 Reconciliation of non-GAAP measures | Quarterly PERFORMANCE HIGHLIGHTS FY24 Q2 FY24 Q1 FY23 Q2 FY24 Q2 FY24 Q1 FY23 Q2 EPS, EPS, EPS, EPS, EPS, EPS, ZAR’000 BASIC ZAR’000 BASIC ZAR’000 BASIC $’000 BASIC $’000 BASIC $’000 BASIC MERCHANT DIVISION Average exchange rate for conversi
Slide 45: Reconciliation of non-GAAP measures | Half-year
FY24 Q2 Results | 45 Reconciliation of non-GAAP measures | Half-year PERFORMANCE HIGHLIGHTS HY24 HY23 HY24 HY23 ZAR’000 EPS, BASIC ZAR’000 EPS, BASIC $’000 EPS, BASIC $’000 EPS, BASIC MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.71 R17.25 R18.71 R17.25 Net loss attributab
Slide 46: Use of Non-GAAP measures
FY24 Q2 Results | 46 Use of Non-GAAP measures PERFORMANCE HIGHLIGHTS 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. We have received requests
Slide 47: Fundamental earnings per share turns positive (US dollars)
FY24 Q2 Results | 47 PERFORMANCE HIGHLIGHTS Fundamental earnings per share turns positive Delivering positive cash from business operations at Group level Basic and fundamental 1 earnings (loss) per share (ZAR) Net Cash provided by (used in) operating activities MERCHANT DIVISION ($0.04) $0.01 CONSU
Slide 48: Net loss before tax continued to improve (US dollars)
FY24 Q2 Results | 48 PERFORMANCE HIGHLIGHTS Net loss before tax continued to improve Unpacking the non-cash charges included in net income before tax MERCHANT DIVISION Net income (loss) before tax CONSUMER DIVISION (R67m) (R67m) $3.6m $3.6m (R67m) $3.8m (R38m) ($2.1m) (R74m) ($4.0m) PERFORMANCE FINA
Slide 49: Glossary
FY24 Q2 Results | 49 Glossary PERFORMANCE HIGHLIGHTS MSME Micro, small and medium enterprise SMME Small, medium, and micro enterprise Kazang VAS offering Kazang is a leader in prepaid value-added services in Southern Africa. We help shop owners, traders and other entrepreneurs to i ncrease sales and
Slide 50: Glossary
FY24 Q2 Results | 50 Glossary PERFORMANCE HIGHLIGHTS MERCHANT DIVISION CONSUMER DIVISION Cash vault Kazang offering PERFORMANCE FINANCIAL OUTLOOK Partnerships enabling supply chain payments Lesaka ” means “ kraal” in Sesotho and Setswana Spaza shops and superettes APPENDIX at Merchant locations
Slide 51: Glossary
FY24 Q2 Results | 51 Glossary PERFORMANCE HIGHLIGHTS Lesaka "kraal" Lesaka ” means “ kraal” in Sesotho and Setswana. A “kraal” protects the most valuable assets of a community, their livestock LSM Living standards measure EPE EasyPay Everywhere Easy Pay Insurance EasyPay insurance (previously named
Slide 52: Lesaka
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Lesaka Technologies — Q2 FY2024 Earnings Presentation on 6ix