Lesaka Technologies, Inc. · NASDAQ:LSAK
Lesaka Technologies — Net1 UEPS Technologies — Q2 2018 Earnings Presentation
36 slides from Lesaka Technologies's earnings presentation, February 2018
Slide 1: Q2 2018 Investor Presentation
Q2 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 Second Quarter 2018
Slide 5: Q2 2018 Financial Report: Quarterly Financial Highlights
Q2 2018 Financial Report Quarterly Financial Highlights • Revenue - $148.4 million • 2% decrease from $151.4 million in Q2 2017 • 4% decrease on a constant currency basis • Adjusted EBITDA - $33.0 million • 12% decrease from $37.5 million in Q2 2017 • 22% Adjusted EBITDA Margin compared to 25% in Q2
Slide 6: Q2 2018 Financial Report: Year to date Financial Highlights
Q2 2018 Financial Report Year to date Financial Highlights • Revenue - $301.0 million • 2% decrease from $307.1 million in 2017 • 6% decrease on a constant currency basis • Adjusted EBITDA - $68.4 million • 14% decrease from $80.1 million in 2017 • 23% Adjusted EBITDA Margin compared to 26% in 2017
Slide 7: Business Segment Results – Second quarter
Q2 2018 Financial Report Business Segment Results – Second quarter 2Q const. currency SATP revenue 2Q USD ITP Revenue $44 $44 R 877 $45 R 835 Thousands R900 Millions $44 R850 $43 R 745 $41 R800 $42 R750 $41 R700 12% 5% $40 8% 0% R650 $39 2016 2017 2018 2016 2017 2018 2Q const. currency FIAT revenue
Slide 8: Business Segment Results – Second quarter
Q2 2018 Financial Report Business Segment Results – Second quarter USD Revenue Operating Income Operating Margin (Millions) 2Q 2018 2Q 2017 2Q 2018 2Q 2017 2Q 2018 2Q 2017 SATP $ 64.1 $ 59.9 $ 13.5 $ 15.4 21% 26% % Change* 7% (12%) ITP 44.2 44.0 (5.0) 3.9 (11%) 9% % Change* (7%) (228%) FIAT 54.1 59.
Slide 9: Business Segment Results – Year to date
Q2 2018 Financial Report Business Segment Results – Year to date USD Revenue Operating Income Operating Margin (Millions) YTD 2018 YTD 2017 YTD 2018 YTD 2017 YTD 2018 YTD 2017 SATP $ 130.6 $ 117.4 $ 25.8 $ 28.9 20% 25% % Change* 11% (11%) ITP 90.2 90.2 0.3 9.7 0% 11% % Change* (0%) (97%) FIAT 108.4
Slide 10: Balance Sheet Overview
Q2 2018 Financial Report Balance Sheet Overview USD (Millions) Dec 31, 2017 June 30, 2017 Cash $ 64.9 $ 258.5 Investments and Equity Accounted Investments 345.9 52.0 Total Assets 1,370.0 1,450.8 Total Equity, including temporary equity 778.4 708.0 Total Debt 94.2 16.2 Book Value / Share 13.70 12.51
Slide 11: Key Investments
Q2 2018 Financial Report Key Investments % held Balance Sheet Value (Dec 2017) Equity Accounted: DNI 45% $77 million >$77 million (3) Bank Frick 30% $41 million >$41 million (1) Finbond (JSE listed) 26% $22 million $56 million (1) KZ One 25% $5 million >$5 million (3) Investments: Cell C 15% $162 mi
Slide 12: Business Overview: South African Transaction Processing
BUSINESS OVERVIEW SOUTH AFRICAN TRANSACTION PROCESSING Second Quarter 2018
Slide 13: SATP Segment Highlights
SATP Segment Highlights Q2 2018 Financial Highlights • Revenue - $64.1 million • 7% increase from $59.9 million in Q2 2017 • 5% increase on a constant currency basis • Operating Income - $13.5 million • 12% decrease from $15.4 million in Q2 2017 • 14% decrease on a constant currency basis 13
Slide 14: SATP Segment Highlights (cont.)
SATP Segment Highlights (cont.) Q2 2018 Key Trends • Social Grant Distribution • SASSA continues to evaluate options to in-source distribution of grants per Constitutional Court’s instructions and has asked the Court to extend our services by another six months • CPS has extended its full support to
Slide 15: SATP Segment Highlights
SATP Segment Highlights Q2 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. 15
Slide 16: SATP Segment Highlights: EasyPay
SATP Segment Highlights Q2 2018 Key Trends EasyPay Number of EasyPay Transactions 400000,00,000 350000,00,000 300000,00,000 250000,00,000 200000,00,000 150000,00,000 100000,00,000 50000,00,000 0 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 16
Slide 17: SATP Segment Highlights: ATM Transactions
SATP Segment Highlights Q2 2018 Key Trends continued… Number of ATM Transactions 4.0 3.5 3.0 2.5 Millions 2.0 1.5 1.0 0.5 0.0 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 17
Slide 18: Business Overview: International Transaction Processing
BUSINESS OVERVIEW INTERNATIONAL TRANSACTION PROCESSING Second Quarter 2018
Slide 19: ITP Segment Highlights
ITP Segment Highlights Q2 2018 Financial Highlights • Revenue - $44.2 million • Flat compared to $44 million in Q2 2017 • 2% decrease on a constant currency basis • Operating loss - $5.0 million • 228% decrease from $3.9 million in Q2 2017 • 225% decrease on a constant currency basis • Adjusted oper
Slide 20: ITP Segment Highlights
ITP Segment Highlights Q2 2018 Key Trends • South Korea and Rest of the World (ROW) Growth • South Korea revenue continues to be adversely impacted by pricing impact of interchange regulation • MP revenue improved due to new processing customer (Bitstamp) • ROW initiatives and investment starting to
Slide 21: ITP Segment Highlights
ITP Segment Highlights Q2 2018 Key Trends • South Korea Transaction Growth and Cash Flow • KSNET continues to pick up market share as interchange regulations have put pressure on smaller players • Regulations also now prohibit using POS terminals to incentivize merchants, resulting in lower capex an
Slide 22: Business Overview: Financial Inclusion & Applied Technologies
BUSINESS OVERVIEW FINANCIAL INCLUSION & APPLIED TECHNOLOGIES Second Quarter 2018
Slide 23: FIAT Segment Highlights
FIAT Segment Highlights Q2 2018 Financial Highlights • Revenue - $54.1 million • 9% decrease from $59.3 million in Q2 2017 • 10% decrease on a constant currency basis • Operating Income - $12.7 million • 10% decrease from $14.1 million in Q2 2017 • 11% decrease on a constant currency basis • EPE Acc
Slide 24: FIAT Segment Highlights
FIAT Segment Highlights Q2 2018 Key Trends Expect growth to be driven by new initiatives with Cell C/DNI Number of EPE Accounts Value of Loans Outstanding 1,400 1,200 2.5 1,000 ZAR millions Millions 2.0 800 1.5 600 1.0 400 0.5 200 0.0 0 Outstanding Capital Deferred Service Fees Number of SmartLife P
Slide 25: FIAT Segment Highlights: Electricity
FIAT Segment Highlights Q2 2018 Key Trends • Key Umoya Manje and Power Manje Trends • The introduction of our enhanced security features resulted in a short term reduction in number of prepaid services • The declines are now starting to bottom out sequentially Number of Mobile (Manje) Transactions i
Slide 26: Net1 Opportunities
NET1 OPPORTUNITIES ——— NET1 74
Slide 27: South Africa – Biggest Near Term Opportunity
South Africa – Biggest Near Term Opportunity SOUTH AFRICA IS NET1’S CORE MARKET, ONE IN WHICH WE HAVE MAXIMUM EXPERTISE, INFRASTRUCTURE AND DISTRIBUTION. WE INTEND TO EXPAND OUR CUSTOMER BASE AS WELL AS THE PRODUCTS PROVIDED TO THAT BASE. Q2 2018 PROGRESS UPDATES: EPE Introduction of 500 additional
Slide 28: Blockchain and Cryptocurrencies
Blockchain and Cryptocurrencies Q2 2018 PROGRESS UPDATES: It is a little known or understood fact that the UEPS technology has always ▪ Bank Frick been based on a form of blockchain Establishment of blockchain department to technology. We have always referred pursue and execute opportunities in coll
Slide 29: IPG Consolidation and Expansion
IPG Consolidation and Expansion IPG PLAYS AN INTEGRAL ROLE IN PROVIDING END-TO-END SOLUTIONS FOR ISSUING, ACQUIRING AND PROCESSING GLOBALLY. Q2 2018 PROGRESS UPDATES: Card Processing Volume ($Mil) 120 • Consolidation of various business units largely 100 complete with appropriate management structur
Slide 30: UEPS International
UEPS International OUR NEW JOINT VENTURE FOCUSED ON LARGE SCALE UEPS/EMV OPPORTUNITIES WAS INCORPORATED IN JANUARY 2018. WE SEE AN OPPORTUNITY TO HAVE 50 – 100 MILLION ACTIVE ACCOUNT HOLDERS ACROSS 10-20 COUNTRIES IN THE NEXT 5 YEARS Financial Inclusion JV company established for the rapid commercia
Slide 31: Summary & Outlook
SUMMARY & OUTLOOK Second Quarter 2018
Slide 32: Q2 2018 Summary & Outlook
Q2 2018 Summary & Outlook • Q2 2018 Fundamental EPS of $0.39 • 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. IPG revenue should
Slide 33: Supplemental Information
SUPPLEMENTAL INFORMATION ——— NET1 74
Slide 34: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures Second quarter Three months ended Dec-17 Dec-16 $ '000 EPS, basic $ '000 EPS, basic Fundamental net income (Non-GAAP) 22,405 0.39 22,648 0.43 Non-recurring Mastertrading allowance for doubtful accounts (7,803) - Amortisation of intangible assets, net of tax (2,199
Slide 35: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures Year to date Six months ended Year end Dec-17 Dec-16 Jun-17 $ '000 EPS, basic $ '000 EPS, basic $ '000 EPS, basic Fundamental net income (Non-GAAP) 46,875 0.83 48,392 0.91 94,721 1.74 Non-recurring Mastertrading allowance for doubtful accounts (7,803) - - Amortisa
Slide 36: Thank you!
4 m - — Thank you! www.netl.com
Net1 UEPS Technologies — Q2 2018 Earnings Presentation on 6ix