Lesaka Technologies, Inc. · NASDAQ:LSAK
Lesaka Technologies — Q3 FY2023 Earnings Presentation
36 slides from Lesaka Technologies's earnings presentation, May 10, 2023
Slide 1: Q3 FY23 Results Presentation
FY23 Q3 Results 1 Q3 FY23 Results Presentation 10 May 2023
Slide 2: Agenda
FY23 Q3 Results 2 Agenda 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 3: Enabling small merchants and improving lives of grant beneficiaries
FY23 Q3 Results 3 Enabling small 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 4: Business overview: The Lesaka platform offers growth and broader reach
FY23 Q3 Results 4 Business overview | The Lesaka platform offers growth and broader reach B2B | Merchant B2C | Consumer Formal market Informal market VAS VAS Banking Bill and supplier payments Bill and supplier payments Lending Digitization of cash Digitization of cash Insurance Merchant credit Merc
Slide 5: Performance Highlights
Performance Highlights
Slide 6: Demonstrable Growth – delivering to plan
FY23 Q3 Results 6 Demonstrable Growth – delivering to plan Execution evident: FY23 Q3 guidance achieved • Secular growth trends remain in-tact • Growth driven by transformational acquisition of the Connect Group 1 - Adoption of card payments and demand for credit by MSMEs in the informal sector Merc
Slide 7: Financial highlights for FY23 Q3
FY23 Q3 Results 7 Financial highlights for FY23 Q3 Group Revenue Group Adjusted EBITDA (loss) Guidance Guidance {R2.5bn - R2.8bn} {R135m - R150m} R137m $7.6m R2 383m R2 402m $134.0m R130m R2 138m R72m R148m $8.3m R160m R22m R135m R30m $1.6m R10m (R105m) (R24m) (R40m) (R41m) ($2.3m) (R39m) R550m R1 8
Slide 8: Merchant Division
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Slide 9: Merchant MSME: Offering innovative solutions to formal and informal sectors
FY23 Q3 Results 9 Merchant MSME | Offering innovative solutions to the formal and informal sectors Expanding our comprehensive product set & footprint as we build a leading position in a growing and underserved market ~60% ~90% ~10% of total transactions of transactions in South Africa’s of informal
Slide 10: Expanding Merchant Division performs ahead of expectations
FY23 Q3 Results 10 Expanding Merchant Division performs ahead of expectations Driven by The Connect Group Merchant revenue Connect Group revenue Merchant Segment Adjusted EBITDA¹ Quarterly seasonality <1% 12% R2 113m R2 118m 18% R160m (7%) R148m R1 881m R135m R22m R293m ~15% ~5% ~15% ~15% ~10% (<3%)
Slide 11: Offering innovative solutions to the formal and informal sectors
FY23 Q3 Results 11 Offering innovative solutions to the formal and informal sectors Building a leading position in a growing and underserved market Digitization of cash Value-Added Services Card acquiring Merchant credit ~4 370 ~71 800 ~42 000 R280m cash vaults devices deployed devices deployed Merc
Slide 12: Merchant MSME revenue drivers
FY23 Q3 Results 12 Merchant MSME Revenue drivers Digitization of Cash Value-Added Services Card Acquiring Merchant Credit Settlements Throughput Throughput 2% yoy 28% yoy 93% yoy ~4 200 ~2 900 ~1 900 ~770 40% yoy R25.7bn R27.5bn R29.5bn R26.2bn R5.7bn R5.8bn R6.8bn R7.3bn R 1.7bn R 2.3bn R 3.1bn R3.
Slide 13: Consumer Division
Consumer Division
Slide 14: Successful turnaround continues with second consecutive quarter of profitability
FY23 Q3 Results 14 Successful turnaround continues with second consecutive quarter of profitability¹ Clear strategy for growth Consumer Segment Adjusted EBITDA (Loss) (Rm) Delivery against R30m strategic focus areas R10m (R137m) (R67m) (R14m) (R26m)² (R24m) ($0.8m) 2 1. Optimize costs (R7m)3 2. Incr
Slide 15: Offering straight forward and cost-effective Financial Services
FY23 Q3 Results 15 Offering straight forward and cost-effective Financial Services BANKING SHORT-TERM LOANS PERSONAL INSURANCE ~1.3m R397m ~309 000 Active EPE Customers Loan book Active insurance policies ▲16% YoY ▲11% YoY ▲25% YoY Permanent grant customers ▲3% YoY <4% loss ratio per year ~98% ~85%
Slide 16: Key strategic initiatives – driving growth
FY23 Q3 Results 16 Key strategic initiatives – driving growth The consumer business has been on a journey back to profit and is now focused interventions targeted at growth Short term focus Invest to scale in medium-term 1 2 3 4 Grow EPE Grow Points Operational account base loans of access efficienc
Slide 17: Financial Performance
Financial Performance
Slide 18: Basis for preparation of combined accounts for 3 months to 31 March 2023
FY23 Q3 Results 18 Basis for preparation of combined accounts for 3 months to 31 March 2023 FY22 Q3 FY23 Q1 FY23 Q2 FY23 Q3 31 December 2021 31 March 2022 14 April 2022 1 July 2022 1 October 2022 31 December 2022 31 March 2023 Acquisition of the Connect Group Prior to acquiring Connect Includes Conn
Slide 19: Group financial performance overview FY23 Q3
FY23 Q3 Results 19 Group financial performance overview FY23 Q3 Group Revenue Group Adjusted EBITDA (Loss) Operating income/(loss) before PPA amortization of acquired investments R137m $7.6m R130m R2 383m R2 402m $134.0m R2 138m R72m R29m R34m (R147m) (R13m) R148m (R67m) (R67m) R160m $8.3m R22m R135
Slide 20: Income Statement for the quarter
FY23 Q3 Results 20 Income Statement for the quarter (FY23 Q3, FY23 Q2 and FY22 Q3) ZAR’000 $’000 Q3 - ended 31 March FY23 Q3 FY23 Q2 % Growth¹ FY22 Q3 FY23 Q3 FY23 Q2 % Growth¹ FY22 Q3 Average exchange rate for conversion from ZAR to $ R17.93 R17.52 2% R15.61 R17.93 R17.52 2% R15.61 Revenue 2 402 28
Slide 21: Segmental EBITDA analysis for the quarter
FY23 Q3 Results 21 Segmental EBITDA analysis for the quarter (FY23 Q3, FY23 Q2 and FY22 Q3) ZAR’000 $’000 Q3 - ended 31 March FY23 Q3 FY23 Q2 % Growth¹ FY22 Q3 FY23 Q3 FY23 Q2 % Growth¹ FY22 Q3 Average exchange rate for conversion from ZAR to $ R17.93 R17.52 2% R15.61 R17.93 R17.52 2% R15.61 Revenue
Slide 22: Group financial performance overview FY23 Q3
FY23 Q3 Results 22 Group financial performance overview FY23 Q3 Basic and fundamental loss per share Cash generated from/(utilized in) business operations¹ (R0.9) (R0.84) (R1.86) (R0.22) (R1.64) (R0.35) R147m R141m ($0.01) ($0.02) ($0.05) ($0.06) R73m ($0.09) ($0.11) FY22 Q3 FY23 Q2 FY23 Q3 FY23 Q1
Slide 23: Generating positive cash flow at an operational level
FY23 Q3 Results 23 Generating positive cash flow at an operational level Mar Dec Sep Summary Group cash flow (Rm) 2023 2022 2022 Ordinary working capital requirements stable Cash generated from business operations 1 141 147 73 • The business generates positive working capital before bulk VAS Interes
Slide 24: CAPEX primarily driven by growth
FY23 Q3 Results 24 CAPEX primarily driven by growth Capex (Rm) FY23 Q3 FY23 Q2 Capex (85) (70) R85m R22m | Kazang • Point-of-sales devices on average have a payback of < 4 months and a 36-month useful life R70m • Highly cash generative / short pay-back period R13m | Cash vaults Growth • Large upfron
Slide 25: Outlook
Lesaka Outlook — Os Oe RK «| t
Slide 26: Re-affirming our outlook for FY23
FY23 Q3 Results 26 Re-affirming our outlook for FY23 at a Revenue and Group Adjusted EBITDA level Guidance for FY24 to be provided in September 2023 FY23 Outlook Revenue R8.7bn-R9.3bn Merchant Segment Adjusted EBITDA¹ R580m-R595m Consumer Segment Adjusted EBITDA¹ R65m-R80m Group costs (R165m)-(R150m
Slide 27: Thank you
FY23 Q3 Results 27 Thank you
Slide 28: Appendix
Appendix
Slide 29: Consistent execution of successful turnaround over the past 6 quarters
FY23 Q3 Results 29 Consistent execution of successful turnaround over the past 6 quarters FY23 Q3 vs. FY23 Q2 ▲ 5% FY23 Q3 vs. FY22 Q3 >100% R137.1m $7.6m R130.4m $7.4m R60.6m $3.9m R71.9m $4.2m R8.8m $0.6m R107.5m $6.9m R111.3m $6.5m R169.9m $9.7m R178.2m $9.9m (R51.7m) ($3.4m) (R30.1m) ($1.9m) (R4
Slide 30: Income Statement year-to-date
FY23 Q3 Results 30 Income Statement year-to-date (FY23 Q3 and FY22 Q3) ZAR’000 $’000 Nine months ended 31 March FY23 Q3 FY22 Q3 FY23 Q3 FY22 Q3 Average exchange rate for conversion from ZAR to $ 17.40 14.99 17.40 14.99 Revenue 6 871 364 1 511 040 394 822 100 820 Expense (7 023 054) (1 961 757) (403
Slide 31: Disaggregation of revenue (ZAR'000)
FY23 Q3 Results 31 Disaggregation of revenue (ZAR’000) Group Revenue Group Revenue Merchant Consumer 1% <1% 5% 2 383 367 2 402 288 2 117 602 284 686 2 113 025 270 342 1 399 270 342 284 686 21 457 22 487 2 172 77 501 256 488 137 290 1 514 27 884 25 854 90 591 80 031 87 645 41 215 46 336 1 433 019 1 4
Slide 32: Disaggregation of revenue ($'000)
FY23 Q3 Results 32 Disaggregation of revenue ($’000) Group Revenue Group Revenue Merchant Consumer 136 068 133 968 120 634 118 092 15 876 16 429 1 225 15 434 78 15 434 15 876 1 254 97 7 838 4 322 124 1 476 1 555 5 052 5 614 4 569 2 353 2 584 2 169 81 812 83 420 1 434 1 410 1 419 40 249 298 6 7 35 21
Slide 33: Outlook on stock-based compensation charges
FY23 Q3 Results 33 Outlook on stock-based compensation charges (SBC) (ZARm) Stock-based compensation charges (ZARm) • Current level of SBC reflects higher amounts due to senior executive R137m sign-on, that will vest over the next 3-years linked R132m to performance R13m R110m • Higher FY23, Q2 SBC
Slide 34: Reconciliation of non-GAAP measures
FY23 Q3 Results 34 Reconciliation of non-GAAP measures FY23 Q3 FY22 Q3 FY23 Q3 FY22 Q3 Q3 - ended 31 March ZAR’000 EPS, basic ZAR’000 EPS, basic $’000 EPS, basic $’000 EPS, basic Average exchange rate for conversion from ZAR to $ 17.93 15.61 17.93 15.61 Fundamental net loss (non-GAAP) (22 611) (0.35
Slide 35: Defined terms
FY23 Q3 Results 35 Defined terms Segment We evaluate segment performance based on segment earnings before interest, tax, depreciation and amortization (“EBITDA”), adj usted for items mentioned in the next sentence. We do not allocate once-off items, stock-based compensation charges, certain lease ch
Slide 36: Safe harbor statement
FY23 Q3 Results 36 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
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