Lesaka Technologies, Inc. · NASDAQ:LSAK
Lesaka Technologies — Q4 FY2023 Earnings Presentation
53 slides from Lesaka Technologies's earnings presentation, Sep 13, 2023
Slide 1: Q4 FY23 Results Presentation
FY23 Q4 Results | 1 Q4 FY23 Results Presentation 13 September 2023
Slide 2: Safe harbor statement
FY23 Q4 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
FY23 Q4 Results | 3 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 4: Enabling merchants to compete and grow; improving lives of grant beneficiaries
FY23 Q4 Results | 4 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 5: Performance Highlights
Performance Highlights
Slide 6: GAAP Income Statement for the quarter (FY23 Q4 and FY22 Q4)
FY23 Q4 Results | 6 PERFORMANCE HIGHLIGHTS GAAP Income Statement for the quarter (FY23 Q4 and FY22 Q4) ZAR’000 $’000 Q4 - ended 30 June FY23 Q4 FY22 Q4 % Growth FY23 Q4 FY22 Q4 % Growth Average exchange rate for conversion from ZAR to $ R18.74 R15.56 20% R18.74 R15.56 20% MERCHANT DIVISION Revenue 2
Slide 7: FY23 has been transformational for Lesaka
FY23 Q4 Results | 7 PERFORMANCE HIGHLIGHTS FY23 has been transformational for Lesaka Execution and financial turnaround evident • Successful integration 1 MERCHANT DIVISION • Secular growth trends remain in-tact • Growth driven by Kazang and Connect businesses - Rapid roll out and adoption of Kazang
Slide 8: Financial transformation in FY23
FY23 Q4 Results | 8 PERFORMANCE HIGHLIGHTS Financial transformation in FY23 Guidance achieved at Group Adjusted EBITDA level and exceeded at Group Revenue level Group Revenue Group Adjusted EBITDA (loss) MERCHANT DIVISION 176% yoy 286% yoy Guidance Guidance R9.4bn {R8.7bn – R9.3bn} {R480m - R525m} R
Slide 9: Merchant Division
Merchant Division
Slide 10: Merchant MSME revenue drivers | VAS, supplier payments and card acquiring
FY23 Q4 Results | 10 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 Devices deployed Devices deplo
Slide 11: Merchant MSME revenue drivers | Cash and Merchant Credit
FY23 Q4 Results | 11 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 ~4 390 ▲8% (yoy) ~13 000 ~2 400 ~1 300 T
Slide 12: Merchant MSME | EasyPay
FY23 Q4 Results | 12 PERFORMANCE HIGHLIGHTS Merchant MSME | EasyPay Investing for growth VAS and bill payments MERCHANT DIVISION Throughput for the quarter (ZAR) 1% yoy • Strategically important asset with scale CONSUMER DIVISION - Servicing >600 billers and continue to sign on new billers • New man
Slide 13: Strong performance in the Merchant Division driven by The Connect Group
FY23 Q4 Results | 13 PERFORMANCE HIGHLIGHTS Strong performance in the Merchant Division driven by The Connect Group Outperforming the acquisition base case Merchant revenue Connect Group revenue (Rm) Merchant Segment Adjusted EBITDA 2 MERCHANT DIVISION 17% yoy 2% qoq Quarterly seasonality 4% qoq R2
Slide 14: Consumer Division
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Slide 15: Successful turnaround completed with third consecutive quarter of profitability
FY23 Q4 Results | 15 PERFORMANCE HIGHLIGHTS Successful turnaround completed with third consecutive quarter of profitability¹ Clear strategy for growth in client base and ARPU2 Consumer Segment Revenue Consumer Segment Adjusted EBITDA (Loss) Delivery against MERCHANT DIVISION (Rm) (Rm) strategic focu
Slide 16: Consumer | Offering straight forward and cost-effective Financial Services
FY23 Q4 Results | 16 PERFORMANCE HIGHLIGHTS Consumer | Offering straight forward and cost-effective Financial Services BANKING SHORT-TERM LOANS PERSONAL INSURANCE MERCHANT DIVISION CONSUMER DIVISION ~1.3m R415m ~335 000 Active EPE customers Loan book Active insurance policies ▲10% YoY ▲19% YoY ▲36%
Slide 17: Financial Highlights
Financial Highlights
Slide 18: Basis for preparation of combined accounts for 3 months to 30 June 2023
FY23 Q4 Results | 18 PERFORMANCE HIGHLIGHTS Basis for preparation of combined accounts for 3 months to 30 June 2023 MERCHANT 14 April 2022 DIVISION Acquisition of the Connect Group FY22 Q4 FY23 Q1 FY23 Q2 FY23 Q3 FY23 Q4 CONSUMER DIVISION 31 March 1 July 1 October 31 December 31 March 30 June 2022 2
Slide 19: Income Statement for the quarter (FY23 Q4 and FY22 Q4)
FY23 Q4 Results | 19 PERFORMANCE HIGHLIGHTS Income Statement for the quarter (FY23 Q4 and FY22 Q4) ZAR’000 $’000 Q4 - ended 30 June FY23 Q4 FY22 Q4 % Growth FY23 Q4 FY22 Q4 % Growth MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.74 R15.56 20% R18.74 R15.56 20% Revenue 2 495
Slide 20: Income Statement for the year (FY23 and FY22)
FY23 Q4 Results | 20 Income Statement for the year (FY23 and FY22) ZAR’000 $’000 PERFORMANCE Twelve months ended 30 June FY23 FY22 % Growth FY23 FY22 % Growth HIGHLIGHTS Average exchange rate for conversion from ZAR to $ 17.94 15.20 18% 17.94 15.20 18% Revenue 9 471 800 3 383 166 >100% 527 971 222 6
Slide 21: Operating loss narrows
FY23 Q4 Results | 21 PERFORMANCE HIGHLIGHTS Operating loss narrows Unpacking components of operating loss Operating income (loss) MERCHANT DIVISION CONSUMER DIVISION (R269m) (R67m) (R67m) PERFORMANCE FINANCIAL (R126m) (R33m) (R58m) (R132m) (R275m) (R58m) (R158m) OUTLOOK (R611m) (R124m) FY22 FY23 FY2
Slide 22: Segmental EBITDA analysis for the quarter (FY23 Q4 and FY22 Q4)
FY23 Q4 Results | 22 PERFORMANCE HIGHLIGHTS Segmental EBITDA analysis for the quarter (FY23 Q4 and FY22 Q4) ZAR’000 $’000 Q4 - ended 30 June FY23 Q4 FY22 Q4 % Growth FY23 Q4 FY22 Q4 % Growth MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.74 R15.56 20% R18.74 R15.56 20% Reve
Slide 23: Segmental EBITDA analysis for the quarter (FY23 Q4 and FY23 Q3)
FY23 Q4 Results | 23 PERFORMANCE HIGHLIGHTS Segmental EBITDA analysis for the quarter (FY23 Q4 and FY23 Q3) ZAR’000 $’000 Q4 - ended 30 June FY23 Q4 FY23 Q3 % Growth FY23 Q4 FY23 Q3 % Growth MERCHANT DIVISION Average exchange rate for conversion from ZAR to $ R18.74 R17.93 5% R18.74 R17.93 5% Revenu
Slide 24: Segmental EBITDA analysis for the year (FY23 and FY22)
FY23 Q4 Results | 24 Segmental EBITDA analysis for the year (FY23 and FY22) ZAR’000 $’000 PERFORMANCE Twelve months ended 30 June FY23 FY22 % Growth FY23 FY22 % Growth HIGHLIGHTS Average exchange rate for conversion from ZAR to $ 17.94 15.20 18% 17.94 15.20 18% Revenue Merchant 8 318 796 2 381 323 >
Slide 25: Consistent execution achieving financial turnaround: Group Revenue
FY23 Q4 Results | 25 PERFORMANCE HIGHLIGHTS Consistent execution achieving financial turnaround Despite persistently challenging operating environment Group Revenue MERCHANT DIVISION >100% 18% R9 445m2 R2 468m CONSUMER DIVISION R2 094m R1 895m R8 319m R2 159m PERFORMANCE FINANCIAL R3 383m R3 582m R1
Slide 26: Consistent execution achieving financial turnaround: Group Adjusted EBITDA
FY23 Q4 Results | 26 PERFORMANCE HIGHLIGHTS Consistent execution achieving financial turnaround Despite persistently challenging operating environment Group Adjusted EBITDA (loss) MERCHANT DIVISION >100% >100% R498m R158m CONSUMER DIVISION R78m R602m R60m R154m R192m R192 PERFORMANCE R59m R127m R127
Slide 27: Consistent quarterly growth carried through FY23
FY23 Q4 Results | 27 PERFORMANCE HIGHLIGHTS Consistent quarterly growth carried through FY23 Execution of successful turnaround over the past 8 quarters Group Revenue Group Adjusted EBITDA (loss) MERCHANT DIVISION R158m R2 468m R137m R2 383m R2 402m R130m R78m R2 138m R60m R72m R2 094m CONSUMER R154
Slide 28: Delivering positive cash from business operations at Group level
FY23 Q4 Results | 28 PERFORMANCE HIGHLIGHTS Consistent quarterly growth carried through FY23 Delivering positive cash from business operations at Group level Basic and fundamental 1 loss per share (ZAR) Cash generated from/(utilized in) business operations 2 MERCHANT DIVISION R7m (R2.66) (R0.76) (R1
Slide 29: Generating positive cash flow at an operational level
FY23 Q4 Results | 29 PERFORMANCE HIGHLIGHTS Generating positive cash flow at an operational level Summary Group cash flow (Rm) FY23 Q4 FY23 Q3 FY23 Q2 MERCHANT DIVISION Cash generated from business operations¹ 197 141 147 Ordinary working capital requirements are stable Interest paid (59) (57) (52)
Slide 30: CAPEX primarily driven by growth
FY23 Q4 Results | 30 PERFORMANCE HIGHLIGHTS CAPEX primarily driven by growth Capex (Rm) FY23 Q4 FY23 Q3 MERCHANT DIVISION Capex (55) (85) R85m R22m | Kazang CONSUMER • Point-of-sales devices on average have a payback of < 4 months and a 36-month useful life DIVISION • Highly cash generative / short
Slide 31: Outlook
Outlook
Slide 32: Outlook: FY24 and medium-term financial objectives
FY23 Q4 Results | 32 PERFORMANCE HIGHLIGHTS Outlook FY24 and medium-term financial objectives MERCHANT DIVISION Quarterly Annual FY23 Q1 Actual FY24 Q1 Outlook FY23 Actual FY24 Outlook Group Revenue R2.1bn R2.50bn - R2.55bn R9.4bn R10.7bn - R11.7bn CONSUMER DIVISION Group Adjusted EBITDA¹ R72m R160m
Slide 33: Questions
FY23 Q4 Results | 33 Questions
Slide 34: Appendix
Lesaka Appendix Section 5
Slide 35: The Lesaka platform offers growth and broader reach
FY23 Q4 Results | 35 The Lesaka platform offers growth and broader reach PERFORMANCE HIGHLIGHTS B2B | + 82 000 Merchants B2C | + 1.3m Consumers MERCHANT DIVISION Formal market Informal market VAS VAS Banking CONSUMER DIVISION VAS and bill payments Supplier payments Lending Digitalization of cash Dig
Slide 36: Disaggregation of revenue (ZAR'000) on a quarterly basis
FY23 Q4 Results | 36 Disaggregation of revenue (ZAR’000) on a quarterly basis PERFORMANCE HIGHLIGHTS Group Revenue Group Revenue Merchant Consumer 2% 9% 3% 308 990 2 467 868 2 158 878 284 686 4 161 2 402 288 2117 602 MERCHANT 1 399 DIVISION 22 487 21 549 308 990 55 474 284 686 77 501 28 562 244 358
Slide 37: Disaggregation of revenue (ZAR'000) for the year
FY23 Q4 Results | 37 Disaggregation of revenue (ZAR’000) for the year PERFORMANCE HIGHLIGHTS Group Revenue Group Revenue Merchant Consumer 179% 249% 8 318 796 9 445 446 12% 87 350 1 126 650 - 341 165 MERCHANT 9 921 DIVISION 1 126 650 103 657 1 002 021 11 125 349 902 327 862 CONSUMER DIVISION 5 790 2
Slide 38: Outlook on stock-based compensation charges (SBC)
FY23 Q4 Results | 38 Outlook on stock-based compensation charges (SBC) (ZAR) PERFORMANCE HIGHLIGHTS Stock-based compensation charges • Current level of SBC reflects higher amounts due to senior R136m executive sign-on, that will vest over the next 3-years linked R130m to performance MERCHANT DIVISIO
Slide 39: Reconciliation of non-GAAP measures | Quarterly
FY23 Q4 Results | 39 Reconciliation of non-GAAP measures | Quarterly PERFORMANCE HIGHLIGHTS FY23 Q4 FY23 Q3 FY22 Q4 FY23 Q4 FY23 Q3 FY22 Q4 ZAR’000 ZAR’000 ZAR’000 $’000 $’000 $’000 Average exchange rate for conversion from ZAR to $ 18.74 17.93 15.56 18.74 17.93 15.56 Loss attributable to Lesaka – G
Slide 40: Once-off items | Quarterly
FY23 Q4 Results | 40 Once-off items | Quarterly PERFORMANCE The table below presents the components of once-off items for the periods presented: HIGHLIGHTS Year ended 30 June ($’000) FY23 Q4 FY23 Q3 FY22 Q4 FY23 Q4 FY23 Q3 FY22 Q4 ZAR’000 ZAR’000 ZAR’000 $’000 $’000 $’000 Average exchange rate for c
Slide 41: Reconciliation of non-GAAP measures | Year to date
FY23 Q4 Results | 41 Reconciliation of non-GAAP measures | Year to date PERFORMANCE HIGHLIGHTS Year ended 30 June FY23 FY22 FY23 FY22 ZAR’000 ZAR’000 $’000 $’000 Average exchange rate for conversion from ZAR to $ 17.94 15.20 17.94 15.20 Loss attributable to Lesaka – GAAP (629 227) (666 818) (35 074)
Slide 42: Once-off items | Year-to-date
FY23 Q4 Results | 42 Once-off items | Year-to-date The table below presents the components of once-off items for the periods presented: PERFORMANCE HIGHLIGHTS Year ended 30 June ($’000) FY23 FY22 FY23 FY22 ZAR’000 ZAR’000 $’000 $’000 Average exchange rate for conversion from ZAR to $ 17.94 15.20 17.
Slide 43: Reconciliation of non-GAAP measures | Quarterly
FY23 Q4 Results | 43 Reconciliation of non-GAAP measures | Quarterly PERFORMANCE HIGHLIGHTS FY23 Q4 FY22 Q4 FY23 Q4 FY22 Q4 ZAR’000 EPS, BASIC ZAR’000 EPS, BASIC $’000 EPS, BASIC $’000 EPS, BASIC Average exchange rate for conversion from ZAR to $ 18.74 15.56 18.74 15.56 Net loss attributable to Lesa
Slide 44: Reconciliation of non-GAAP measures | Year-to-date
FY23 Q4 Results | 44 Reconciliation of non-GAAP measures | Year-to-date PERFORMANCE HIGHLIGHTS Year ended 30 June FY23 FY22 FY23 FY22 ZAR’000 EPS, BASIC ZAR’000 EPS, BASIC $’000 EPS, BASIC $’000 EPS, BASIC Average exchange rate for conversion from ZAR to $ 17.94 15.20 17.94 15.20 Net loss attributab
Slide 45: Use of Non-GAAP measures
FY23 Q4 Results | 45 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 46: Group Revenue quarterly growth (ZAR and USD)
FY23 Q4 Results | 46 PERFORMANCE HIGHLIGHTS Consistent quarterly growth carried through FY23 Execution of successful turnaround over the past 8 quarters Group Revenue MERCHANT DIVISION R2 402m $134m R2 468m $132m R2 383m $136m R2 138m $125m CONSUMER R2 094m $135m DIVISION R1 895m $122m R2 118m R2 15
Slide 47: Group Adjusted EBITDA quarterly (ZAR and USD)
FY23 Q4 Results | 47 PERFORMANCE HIGHLIGHTS Consistent quarterly growth carried through FY23 Execution of successful turnaround over the past 8 quarters Group Adjusted EBITDA (loss) MERCHANT DIVISION R158m $8m R137m $8m R130m $7m R78m $5m R60m R72m $5m $4m CONSUMER R154m $8m DIVISION R149m $8m R160m
Slide 48: Operating loss narrows (ZAR and USD)
FY23 Q4 Results | 48 PERFORMANCE HIGHLIGHTS Operating loss narrows Unpacking components of operating loss Operating income (loss) MERCHANT DIVISION CONSUMER DIVISION (R269m) ($15m) (R67m) (R67m) ($4m) ($4m) PERFORMANCE FINANCIAL (R126m) ($7m) (R33m) ($2m) (R275m) ($15m) (R58m) ($4m) (R132m) ($7m) (R
Slide 49: Loss per share and cash from operations (USD)
FY23 Q4 Results | 49 PERFORMANCE HIGHLIGHTS Consistent quarterly growth carried through FY23 Delivering positive cash from business operations at Group level Basic and fundamental1 loss per share ($) Cash generated from/(utilized in) business operations 2 MERCHANT DIVISION $0m ($0.15) ($0.04) ($0.09
Slide 50: Glossary
FY23 Q4 Results | 50 Glossary 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 profits, and to grow t
Slide 51: Glossary
FY23 Q4 Results | 51 Glossary Cash vault Kazang offering Partnerships enabling supply chain payments at Lesaka ” means “ kraal” in Sesotho and Setswana. Spaza shops and superettes Merchant locations
Slide 52: Glossary
FY23 Q4 Results | 52 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 53: End
FY23 Q4 Results | 53 End
Lesaka Technologies — Q4 FY2023 Earnings Presentation on 6ix