Lesaka Technologies, Inc. (Nasdaq: LSAK; JSE: LSK) today released its results for the third quarter ended March 31, 2023 (“Q3 2023”) as the turnaround in the Group’s Consumer Division gathers momentum and the Merchant Division continues to outperform.

Performance highlights for Q3 2023:

• Revenue of R2.4 billion, compared to R549.8 million in Q3 2022, an increase of 337% due to the inclusion and continued outperformance of the Connect Group and momentum in the successful turnaround of the Consumer Division.
• Net loss attributable to Lesaka of R104.4 million, compared to R51.9 million in Q3 2022. Operating income (loss) before PPA amortization and net interest, a non-GAAP measure and reconciled below, was income of R34.0 million, compared to a loss R146.8 million in Q3 2022, and excludes amortization of acquired intangible assets R67.3 million, compared with R0.3 million in Q3 2022.
• Adjusted EBITDA of R137.1 million, a 221% improvement compared to the Q3 2022 loss of R112.7 million.
• Continued operating improvement demonstrated by further narrowing the operating loss to R33.2 million, representing an 77%⁽¹⁾ improvement from an operating loss of R147.1 million reported for Q3 2022.
• Continued outperformance from the Merchant Division, delivering Adjusted EBITDA of R148.7 million.
• Successful turnaround of the Consumer Division delivering Adjusted EBITDA of R29.6 million, compared to a loss of R13.5 million in Q3 2022.
• Positive net cash generated by operating activities of R133 million, compared to an outflow of R81.3 million in Q3 2022.

Lesaka Technologies has leveraged disruptive technologies to build a unique fintech platform which meets the needs of both merchants and consumers operating in informal and formal markets. More than 72,000 merchants use the Group’s cash management solutions, bill payment technologies, value-added services, business funding and card-acquiring solutions and 1.3 million consumers access Lesaka’s unsecured credit, transactional banking and micro-insurance products and services.

Lesaka's strong third quarter results were driven by the transformational acquisition and outperformance of the Connect Group in the Merchant Division and the successful turnaround of the Group’s Consumer Division, despite the persistently challenging economic environment.

The Merchant Division continues to exceed expectations and grow across all products. A key highlight of the quarter was the performance of the informal market business, Kazang, which delivered the best quarter in the business’ history.

Lincoln Mali CEO Lesaka Southern Africa who has been driving the turnaround in the consumer business commented: “We work hard to add value to the lives of grant beneficiaries by understanding their needs and creating relevant and affordable financial products and services. We have been largely focused on turning the consumer business around as quickly as possible and now that we have achieved EBITDA profitability we can focus all our efforts on growth.”

Lesaka Group CEO Chris Meyer added “As a result of our improved trading, cash flow and our ability to deliver against what we have promised, our funders have, in a show of confidence, extended and increased our facilities providing us with flexibility and access to resources to execute on our growth plans. Q3 represents another quarter of growth and transformation. We are excited by the Merchant Division’s outperformance and another quarter of continued improvement and profitability in the Consumer Division where we are moving strongly on to the front foot.”

The full SENS announcement can be seen here.

Full release and webcast details at https://ir.lesakatech.com/.

The discussion of our consolidated overall results of operations is based on amounts as reflected in our unaudited condensed consolidated financial statements which are prepared in accordance with U.S. GAAP. We analyze our results of operations both in U.S. dollars, as presented in the unaudited condensed consolidated financial statements, and supplementally in ZAR, because ZAR is the functional currency of the entities which contribute the majority of our revenue and is the currency in which the majority of our transactions are initially incurred and measured. Due to the significant impact of currency fluctuations between the U.S. dollar and the ZAR on our reported results and because we use the U.S. dollar as our reporting currency, we believe that the supplemental presentation of our results of operations in ZAR is useful to investors to understand the changes in the underlying trends of our business.

Use of Non-GAAP Measures

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. The presentation of EBITDA, Group Adjusted EBITDA, Operating income (loss) before PPA amortization and net interest, fundamental net (loss) income and fundamental (loss) earnings per share and headline (loss) earnings per share are non-GAAP measures.

Attached is the reconciliation between our GAAP measure and our non-GAAP measures.

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