Lesaka Technologies, Inc. · NASDAQ:LSAK
Lesaka Technologies — Q1 2024 Earnings Presentation
48 slides from Lesaka Technologies's earnings presentation, Nov 8, 2023
Slide 1: Q1 FY24 Results Presentation
FY24 Q1 Results | 1 Q1 FY24 Results Presentation 8 November 2023
Slide 2: Safe harbor statement
FY24 Q1 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 Q1 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 Naeem Kola – Group CFO Outlook Chris Meyer – Group CEO
Slide 4: Overview
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Slide 5: Enabling merchants to compete and grow; improving lives of grant beneficiaries
FY24 Q1 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 Q1 and FY23 Q1)
FY24 Q1 Results | 7 PERFORMANCE HIGHLIGHTS GAAP Income Statement for the quarter (FY24 Q1 and FY23 Q1) ZAR’000 $’000 % Growth % Growth Q1 - ended 30 September FY24 Q1 FY23 Q1 YoY FY24 Q1 FY23 Q1 YoY MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.71 R17.13 9% R18.71 R17.13 9
Slide 8: Positive operational momentum in both divisions
FY24 Q1 Results | 8 PERFORMANCE HIGHLIGHTS Positive operational momentum in both divisions Guidance achieved at Group Revenue and Group Adjusted EBITDA level Group Revenue Group Adjusted EBITDA 2 MERCHANT DIVISION 19% yoy 126% yoy Guidance Guidance {R160m – R165m} R163m {R2.5bn – R2.55bn} CONSUMER R
Slide 9: Positive operational momentum in both divisions
FY24 Q1 Results | 9 PERFORMANCE HIGHLIGHTS Positive operational momentum in both divisions Achieving upper end of revenue guidance • Secular growth trends continue MERCHANT 1 DIVISION • Growth driven by Kazang VAS and supplier payments and card acquiring businesses - Roll out and adoption of Kazang
Slide 10: Merchant Division
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Slide 11: Merchant MSME revenue drivers | VAS, supplier payments and card acquiring
FY24 Q1 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 Q1 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 MERCHANT DIVISION Devices deployed 3 900+ 4 400+ ▲5% (yoy) 1 900+ Throughput (ZAR)
Slide 13: Merchant MSME | EasyPay
FY24 Q1 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) 2% yoy 8% qoq CONSUMER • Strategically important asset w
Slide 14: Merchant Division Revenue and Adjusted EBITDA
FY24 Q1 Results | 14 PERFORMANCE HIGHLIGHTS Merchant Division Revenue and Adjusted EBITDA Delivering financial inclusion to underserved merchants Merchant revenue Connect Group revenue (Rm) Merchant Segment Adjusted EBITDA 1 MERCHANT DIVISION Quarterly seasonality 20% yoy 11% yoy2 5% qoq (3%) qoq 2
Slide 15: Consumer Division
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Slide 16: EasyPay Everywhere Today
FY24 Q1 Results | 16 PERFORMANCE HIGHLIGHTS EasyPay Everywhere Today Fundamentally transformed sales and customer focused business, yielding encouraging results 1 Consumer brand refresh 2 Brand awareness & activations 3 In-market campaigns Momentum in driving MERCHANT DIVISION customer acquisition C
Slide 17: Consumer | Offering straight forward and cost-effective Financial Services
FY24 Q1 Results | 17 PERFORMANCE HIGHLIGHTS Consumer | Offering straight forward and cost-effective Financial Services BANKING SHORT-TERM LOANS PERSONAL INSURANCE MERCHANT DIVISION CONSUMER DIVISION >1.3m R423m ~359 000 Active EPE customers Loan book before allowances Active insurance policies ▲13%
Slide 18: EPE Growth strategy yielding encouraging results
FY24 Q1 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 EBITDA (loss)2 (Rm) Delivery against MERCHANT DIVISION strategic focus areas 13% yoy 294% yoy 1.
Slide 19: Financial Highlights
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Slide 20: Income Statement for the quarter (FY24 Q1 and FY23 Q1)
FY24 Q1 Results | 20 PERFORMANCE HIGHLIGHTS Income Statement for the quarter (FY24 Q1 and FY23 Q1) ZAR’000 $’000 Q1 - ended 30 September FY24 Q1 FY23 Q1 % Growth FY24 Q1 FY23 Q1 % Growth MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.71 R17.13 9% R18.71 R17.13 9% Revenue 2
Slide 21: Income Statement for the quarter (FY24 Q1 and FY23 Q4)
FY24 Q1 Results | 21 PERFORMANCE HIGHLIGHTS Income Statement for the quarter (FY24 Q1 and FY23 Q4) ZAR’000 $’000 Quarter FY24 Q1 FY23 Q4 % Growth FY24 Q1 FY23 Q4 % Growth MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.71 R18.74 0% R18.71 R18.74 0% Revenue 2 537 659 2 495 39
Slide 22: Lesaka returns to operating profitability
FY24 Q1 Results | 22 PERFORMANCE HIGHLIGHTS Lesaka returns to operating profitability Unpacking the non-cash charges included in operating profit Operating income (loss) MERCHANT DIVISION R4m CONSUMER DIVISION (R67m) (R67m) (R67m) PERFORMANCE FINANCIAL (R80m) (R132m) OUTLOOK (R124m) FY23 Q1 FY23 Q4
Slide 23: Segmental EBITDA analysis (FY24 Q1 and FY23 Q1)
FY24 Q1 Results | 23 PERFORMANCE HIGHLIGHTS Segmental EBITDA analysis for the quarter (FY24 Q1 and FY23 Q1) ZAR’000 $’000 Q1 - ended 30 September FY24 Q1 FY23 Q1 % Growth FY24 Q1 FY23 Q1 % Growth Average exchange rate for conversion from ZAR to $ 18.71 17.13 9% 18.71 17.13 9% MERCHANT DIVISION Reven
Slide 24: Segmental EBITDA analysis (FY24 Q1 and FY23 Q4)
FY24 Q1 Results | 24 PERFORMANCE HIGHLIGHTS Segmental EBITDA analysis for the quarter (FY24 Q1 and FY23 Q4) ZAR’000 $’000 Quarter FY24 Q1 FY23 Q4 % Growth FY24 Q1 FY23 Q4 % Growth Average exchange rate for conversion from ZAR to $ 18.71 R18.74 0% 18.71 R18.74 0% MERCHANT DIVISION Revenue Merchant 2
Slide 25: Consistent execution achieving financial turnaround
FY24 Q1 Results | 25 PERFORMANCE HIGHLIGHTS Consistent execution achieving financial turnaround Despite persistently challenging operating environment Group Revenue Group Adjusted EBITDA 1 MERCHANT DIVISION 19% yoy 126% yoy R163m 3 R 2 495m R2 538m R158m R72m CONSUMER R2 138m DIVISION R154m R150m R1
Slide 26: Consistent quarterly improvement in fundamental earnings per share
FY24 Q1 Results | 26 PERFORMANCE HIGHLIGHTS Consistent quarterly improvement in fundamental earnings (loss) per share Now delivering positive cash from business operations at Group level Basic and fundamental 1 loss per share (ZAR) Net Cash provided by (used in) operating activities MERCHANT DIVISIO
Slide 27: Generating positive cash flow at an operational level
FY24 Q1 Results | 27 PERFORMANCE HIGHLIGHTS Generating positive cash flow at an operational level Summary Group cash flow (Rm) FY24 Q1 FY23 Q4 FY23 Q3 FY23 Q2 FY23 Q1 Cash generated from business operations 1 184 197 141 147 73 Ordinary working capital requirements MERCHANT DIVISION are stable Inter
Slide 28: CAPEX primarily driven by growth
FY24 Q1 Results | 28 PERFORMANCE HIGHLIGHTS CAPEX primarily driven by growth Capex (Rm) FY24 Q1 FY23 Q4 FY23 Q1 MERCHANT DIVISION Capex (53) (55) (77) CONSUMER DIVISION R77m R17m | Kazang • Point-of-sales devices on average have a payback of < 4 months and a 36-month useful life R55m R53m • Highly c
Slide 29: Outlook
Outlook
Slide 30: Outlook
FY24 Q1 Results | 30 PERFORMANCE HIGHLIGHTS Outlook FY24 and medium-term financial objectives re-affirmed MERCHANT DIVISION Quarterly Annual FY23 Q2 Actual FY24 Q1 Actual FY24 Q2 Outlook FY23 Actual FY24 Outlook Group Revenue R2.4bn R2.5bn R2.65bn – R2.75bn R9.4bn R10.7bn - R11.7bn CONSUMER DIVISION
Slide 31: Questions
FY24 Q1 Results | 31 Questions
Slide 32: Appendix
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Slide 33: Our platform offers growth and broader reach in an underpenetrated market
FY24 Q1 Results | 33 Our platform offers growth and broader reach in an underpenetrated market Attractive Total Addressable Market (TAM) and Serviceable Addressable Market (SAM) PERFORMANCE HIGHLIGHTS Merchants Consumers LSM1 1 to 6 in South Africa FORMAL INFORMAL MERCHANT DIVISION over TAM TAM 84 5
Slide 34: The Lesaka platform offers growth and broader reach
FY24 Q1 Results | 34 The Lesaka platform offers growth and broader reach PERFORMANCE HIGHLIGHTS B2B | + 84 000 Merchants B2C | + 1.3m Consumers MERCHANT DIVISION Formal market Informal market VAS VAS & Banking Supplier payments CONSUMER VAS and bill payments DIVISION Digitalization of cash Digitaliz
Slide 35: Disaggregation of revenue on a quarterly basis
FY24 Q1 Results | 35 Disaggregation of revenue (ZAR’000) on a quarterly basis PERFORMANCE HIGHLIGHTS Total Segment Revenue1 Segment Revenue Merchant Consumer 19% 20% 13% 2 553 630 308 990 2 467 868 2 263 001 2 158 878 4 161 290 629 16 391 MERCHANT 290 629 DIVISION 21 459 44 711 8 114 308 990 2 137 6
Slide 36: Outlook on stock-based compensation charges
FY24 Q1 Results | 36 Outlook on stock-based compensation charges (SBC) (ZARM) PERFORMANCE HIGHLIGHTS Stock-based compensation charges • Current level of SBC reflects higher amounts due to senior R141m executive sign-on, that will vest over the next 3-years linked R130m to performance MERCHANT DIVISI
Slide 37: Reconciliation of non-GAAP measures | Quarterly
FY23 Q4 Results | 37 Reconciliation of non-GAAP measures | Quarterly PERFORMANCE HIGHLIGHTS FY24 Q1 FY23 Q4 FY23 Q1 FY24 Q1 FY23 Q4 FY23 Q1 For the quarter ZAR’000 ZAR’000 ZAR’000 $’000 $’000 $’000 Average exchange rate for conversion from ZAR to $ 18.71 18.74 17.13 18.71 18.74 17.13 Loss attributab
Slide 38: Once-off items | Quarterly
FY24 Q1 Results | 38 Once-off items | Quarterly PERFORMANCE The table below presents the components of once-off items for the periods presented: HIGHLIGHTS For the quarter FY24 Q1 FY23 Q4 FY23 Q1 FY24 Q1 FY23 Q4 FY23 Q1 ZAR’000 ZAR’000 ZAR’000 $’000 $’000 $’000 Average exchange rate for conversion f
Slide 39: Reconciliation of non-GAAP measures | Quarterly
FY23 Q4 Results | 39 Reconciliation of non-GAAP measures | Quarterly PERFORMANCE HIGHLIGHTS FY24 Q1 FY23 Q4 FY23 Q1 FY24 Q1 FY23 Q4 FY23 Q1 EPS, BASI EPS, EPS, EPS, EPS, EPS, ZAR’000 C ZAR’000 BASIC ZAR’000 BASIC $’000 BASIC $’000 BASIC $’000 BASIC Average exchange rate for conversion from ZAR to $
Slide 40: Use of Non-GAAP measures
FY24 Q1 Results | 40 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 41: Consistent quarterly improvement in fundamental earnings per share
FY24 Q1 Results | 41 Consistent quarterly improvement in fundamental earnings per share carried through Now delivering positive cash from business operations at Group level PERFORMANCE HIGHLIGHTS Basic and fundamental 1 loss per share ($) Net Cash provided by (used by) operating activities ($0.04) $
Slide 42: Group Revenue
FY24 Q1 Results | 42 Group Revenue PERFORMANCE HIGHLIGHTS Group Revenue R2 554m $137m R2 402m $134m R2 468m $132m R2 383m MERCHANT $136m DIVISION R2 138m $125m R2 094m $135m R1 895m $122m CONSUMER DIVISION $121m R2 159m $115m R2 263m R2 113m $121m R2 118m $118m R1 881m $110m R1 651m $106m R1 651m $1
Slide 43: Group Adjusted EBITDA (loss)
FY24 Q1 Results | 43 Group Adjusted EBITDA (loss) PERFORMANCE HIGHLIGHTS Group Adjusted EBITDA (loss) R158m $8m R163m $9m R137m $8m R130m $7m MERCHANT DIVISION R78m $5m R60m R72m $5m $4m R154m $8m R150m R149m $8m $8m R160m $9m R127m R127m R135m $8m $8m $9m CONSUMER DIVISION R31m R30m R46m $2m R46m $
Slide 44: Lesaka returns to operating profitability
FY24 Q1 Results | 44 Lesaka returns to operating profitability Unpacking the non-cash charges included in operating profit PERFORMANCE HIGHLIGHTS Operating income (loss) Operating income 105% yoy MERCHANT DIVISION R4m $0.2m CONSUMER DIVISION (R67m) ($3.6m) (R67m) (R67m) ($3.9m) ($3.6m) PERFORMANCE (
Slide 45: Glossary
FY24 Q1 Results | 45 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 46: Glossary
FY24 Q1 Results | 46 Glossary PERFORMANCE HIGHLIGHTS MERCHANT DIVISION CONSUMER DIVISION Cash vault Kazang offering PERFORMANCE FINANCIAL OUTLOOK APPENDIX Partnerships enabling supply chain payments at Lesaka ” means “ kraal” in Sesotho and Setswana. Spaza shops and superettes Merchant locations
Slide 47: Glossary
FY24 Q1 Results | 47 Glossary 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 Smartlife), which holds
Slide 48: End
FY24 Q1 Results | 48 End