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01/11 17:16
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial growth, particularly in net revenue and EBITDA, driven by the Adumo acquisition. Despite a decline in group revenue, optimistic guidance for FY2025 and FY2026, along with strategic investments, suggest positive future prospects. The Q&A section clarifies debt management and highlights sustainable growth in consumer and merchant divisions, although concerns about regulatory impacts remain. The absence of a share buyback or dividend program is a neutral factor. Overall, the company's growth strategy and financial outlook indicate a positive stock movement over the next two weeks.
Group Revenue 2.6 billion Rand, decreased by 2% year-over-year, driven by a 5% decrease in merchant revenue due to changes in airtime sales mix.
Group Net Revenue Increased by 42% year-over-year, driven by a 68% increase in merchant net revenue due to the inclusion of Adumo.
Group Adjusted EBITDA 212 million Rand, grew by 26% year-over-year, exceeding guidance due to strong performance in merchant and consumer divisions.
Merchant Net Revenue Up 68% to 854 million Rand, primarily attributable to the inclusion of Adumo.
Consumer Revenue Increased by 31% to 411 million Rand, driven by a larger EPE account base and higher ARPU.
Enterprise Net Revenue Retracted by 29% as the division focuses on profitable business and rightsizing the cost base.
Merchant Adjusted EBITDA Grew by 52% to 185 million Rand, primarily driven by the inclusion of Adumo, offset by significant cost investments.
Consumer Adjusted EBITDA Increased by 61% to 77 million Rand, including Adumo Payouts, with a notable interest expense charge impacting the results.
Group Net Loss 584 million Rand, primarily due to a 615 million Rand charge related to the change in fair value of equity securities.
Cash Generated from Operations Increased to 263 million Rand, with net cash generated from operations after interest payments at 193 million Rand.
Gross Debt Increased by over 1 billion Rand to 3.8 billion Rand, due to the Adumo acquisition and funding for the consumer loan book.
Cash on Hand Increased from 854 million Rand to 1.1 billion Rand, due to cash brought on from the acquisition of Adumo.
Net Cash Utilized Before Financing Activities 277 million Rand for the quarter, with significant CapEx of 113 million Rand.
Capital Expenditure 213 million Rand, with 56 million Rand related to growth investments.
Net Debt to Group Adjusted EBITDA Ratio 2.4 times, improved from 2.6 times at the end of Q1 FY2025.
Average Revenue Per User (ARPU) in Consumer Division Increased to 94 Rand per month from 85 Rand year-over-year.
Loan Book Growth Increased by 41% to 709 million Rand at quarter-end.
Insurance Premiums Gross premiums increased by 38% year-on-year to 97 million Rand.
New Product Offerings: The consumer division has upgraded its loan product, increasing the maximum loan and repayment term from R2,000 over 6 months to R4,000 over 9 months, responding to customer demand.
Cross-Selling Initiatives: The consumer division is focused on cross-selling initiatives, with loan penetration increasing to 43% and insurance penetration rising to 35%.
Market Expansion: Lesaka Technologies estimates its addressable market in South Africa to be over $4 billion, with potential growth to over $12 billion in five years through organic and inorganic expansion.
Market Share Growth: Lesaka aims to increase its market share in the merchant division from 7% to over 10% in the medium term, targeting fintech growth as market share shifts from traditional banks.
Operational Efficiency: The integration of Adumo into Lesaka's operations is expected to improve product offerings and efficiency, enhancing the value proposition and unit economics.
Cost Management: Lesaka is undertaking a comprehensive refinance of its debt facilities to optimize its capital structure and reduce interest charges.
Strategic Shift: Lesaka is separating its enterprise division as a standalone entity to focus on growth and profitability, with the acquisition of Recharger expected to enhance this division.
Regulatory Engagement: Lesaka is actively engaging with regulators to evolve the regulatory environment in South Africa, positioning itself as a leader in the fintech space.
Currency Fluctuations: The company's operational currency is South African Rand, which can significantly affect results due to fluctuations between the US dollar and the Rand.
Regulatory Environment: The regulatory environment in South Africa has been a core impediment to the speed of fintech evolution, although there are signs of improvement.
Competitive Pressures: Lesaka faces competition from banks and microfinance companies in the consumer market, and from various fintechs in the merchant division, which could impact market share.
Debt Levels: The company has increased its gross debt to 3.8 billion Rand, primarily due to acquisitions, which raises concerns about financial stability and interest expenses.
Investment Risks: The integration of acquisitions like Adumo and Recharger involves risks related to operational efficiency and achieving expected synergies.
Economic Conditions: Challenging macroeconomic conditions have affected the lending business, leading to lower disbursements and credit scores for merchants.
Market Share Growth: While there is potential for market share growth, the company must navigate existing competitive pressures and regulatory challenges to achieve this.
Operational Costs: Increased operational costs due to higher employee expenses and investments in technology could impact profitability.
Investment in Technology: Significant investment in technology and restructuring in the enterprise division may lead to short-term losses.
Addressable Market: Lesaka Technologies estimates its existing products in South Africa represent an addressable market net revenue pool of more than $4 billion, expected to grow to over $12 billion in five years.
Market Share Growth: Lesaka aims to grow its market share in the merchant division from 7% to over 10% in the medium term, targeting faster revenue growth than the market.
Acquisition Strategy: The company completed the acquisition of Adumo, which is expected to significantly enhance its merchant operations and contribute to revenue and EBITDA growth.
Regulatory Advocacy: Lesaka is actively involved in advocating for regulatory changes in South Africa to support fintech growth.
Product Offering Expansion: The company plans to expand its product offerings in the consumer market, moving beyond grant and payout services into underserved niches.
Revenue Guidance FY2025: Lesaka reaffirms revenue guidance of 10 billion Rand to 11 billion Rand for FY2025.
Net Revenue Guidance FY2025: Net revenue guidance for FY2025 is set at 5.2 billion Rand to 5.6 billion Rand.
EBITDA Guidance FY2025: Group adjusted EBITDA guidance for FY2025 is between 900 million Rand and 1 billion Rand.
Quarterly Guidance Q3 FY2025: For Q3 FY2025, revenue is expected to be between 2.4 billion Rand and 2.6 billion Rand.
Long-term EBITDA Guidance FY2026: Group adjusted EBITDA guidance for FY2026 is projected at 1.25 billion Rand to 1.45 billion Rand.
Share Buyback Program: None
Dividend Program: None
The earnings call summary indicates strong financial performance with significant year-over-year increases in revenue and adjusted EBITDA across divisions. The Bank Zero acquisition and strategic focus on core products and brand consolidation are positive catalysts. Despite some concerns about nonrecurring costs and lack of specific data on cost savings, guidance remains strong with expectations of continued EBITDA growth. The market response is likely positive, given the record revenue growth and optimistic outlook, although lack of market cap data limits precision in impact assessment.
The earnings call summary and Q&A session highlight several positive aspects: strategic wins with ADNOC, sustained demand for rentals, and a strong pipeline despite macroeconomic challenges. While management is cautious, they express optimism about future growth, particularly in the Middle East. The company is also focusing on optimizing margins and working capital. Despite some uncertainties, the overall sentiment is positive, suggesting a potential stock price increase of 2% to 8% over the next two weeks.
The earnings call reveals strong year-on-year premium growth and promising growth opportunities in both Consumer and Enterprise divisions. The Q&A section highlights strategic initiatives such as the Bank Zero transaction, which is expected to be close to profitability, and positive regulatory engagements. While there are some risks and uncertainties, the overall sentiment is optimistic with a focus on market expansion and innovation. Despite a goodwill impairment, the company's differentiation and strategic positioning suggest a positive outlook for stock price movement.
The earnings call reveals strong financial growth, particularly in net revenue and EBITDA, driven by the Adumo acquisition. Despite a decline in group revenue, optimistic guidance for FY2025 and FY2026, along with strategic investments, suggest positive future prospects. The Q&A section clarifies debt management and highlights sustainable growth in consumer and merchant divisions, although concerns about regulatory impacts remain. The absence of a share buyback or dividend program is a neutral factor. Overall, the company's growth strategy and financial outlook indicate a positive stock movement over the next two weeks.
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