LSAK

Image source: The Motley Fool. Thursday, Sept. 10, 2026 at 8:00 a.m. ET Investor Relations - Philippe Welthagen Executive Chairman - Ali Mazanderani Executive - Dan Smith Executive - Lincoln C. Mali Executive - Steven J. Heilbron Philippe Welthagen: Welcome to Lesaka Technologies results webcast for the fourth quarter and full year of fiscal 2026. As a reminder, this webcast is being recorded. Management will address any questions you have at the end of the presentation. To ask a question live, participants are requested to join the Chorus Call line by registering by the link provided. Alternatively, please enter your questions into the question tab of this webcast. Our press release and investor presentation are available on our investor relations website at ir.lesakatech.com. During this call, we will be making forward-looking statements. I ask you to look at the cautionary language contained in our press release, presentation, and Form 10-K, available on our website. As a domestic filer in the U.S., we report results in U.S. dollars under U.S. GAAP. However, it is important to note that our operational currency is South African rand. As such, we analyze our performance in South African rand, which is non-GAAP. This assists investors in understanding the underlying trends in our business. I will now turn the webcast over to Ali. Ali Mazanderani: Good morning, good afternoon, and thank you for joining us for Lesaka's results for the fourth quarter and full year of fiscal 2026. FY 2026 was another excellent year for Lesaka, delivering on all our guidance measures, which we will come to shortly. Before reviewing the year, I want to briefly reflect on Lesaka's evolution. Lesaka was launched in May 2022 following the merger with the Connect Group. We had set out on a journey through organic and inorganic growth to build the leading independent fintech platform in Southern Africa. As I sit here today, I am extremely proud to reflect on what we have built: the platform, the people, and the performance. Challenges set and challenges met, fostering a culture of accomplishment and belief. A team whose depth, breadth, diversity, resilience, and ability are fitting representatives of the extraordinary country in which they live. Yet until a few months ago, that team was spread across a disparate office network operating under multiple brands. The name Lesaka was barely heard or known by our most important stakeholders, our customers. While the financial milestones we will turn to later are significant achievements, one of the biggest reasons for celebration this year is in the coming together of One Lesaka. The coming together in our wonderful new Johannesburg office in July 2026, which will be followed in the coming couple of months with our new offices in Cape Town and Durban, creates the environment to foster the cross-pollination between teams that will be one of our core competitive advantages. We are Lesaka. We are a kraal. It is very difficult to be so when not together. This change from where we work has been accompanied by the change in the brand unveiled in Q2 FY 2026, and a month ago, the public launch of that brand. Today, I am delighted to say that our customers now say our name, and I am delighted that they are embracing our brand as enthusiastically as our circa 4,000 employees. It is difficult to convey the palpable energy and enthusiasm that has come with the brand launch, the street parades, the music, the crystallization of an identity. This is a new commitment we make. A commitment to show up where our customers are, whether they be mothers or pensioners, spaza shop owners or companies, whether they be in the city centers of the Highveld or the rural villages of the interior, the mountains of the Drakensberg, or by the beaches and valleys of the Cape. Where you are, we are. A pledge to be present with empathy, with commitment, to serve with dignity, with humility, and with authenticity. Those are the silent, subtle tones now ringing loudly across our country with a voice that is gathering momentum every week, proclaiming, "Lesaka: where you are." To where we are as of June 2026. For the year, net revenue grew 20% to ZAR 6.33 billion. Group adjusted EBITDA grew 41% to ZAR 1.27 billion, and adjusted earnings per share grew 210% to ZAR 6.51. It is a performance that reflects delivery on our promises. On the right are the guidance measures we gave for FY 2026 across net revenue, group adjusted EBITDA, adjusted EPS, and positive GAAP net income. I am pleased to say we delivered across all four measures, including turning GAAP net income positive for the full year for the first time since 2022. In addition, our net debt to group adjusted EBITDA fell to 1.9 times, below the 2 times we had set as our goal. Underneath the group numbers, our three divisions had different years, reflecting their different stages of evolution, and I want to spend a few minutes on the revenue drivers of each. Merchant had a challenging year as various businesses were brought together. It grew net revenue by 3% to ZAR 3.1 billion, and core net revenue, which strips out hardware sales and residual products, by 6% to ZAR 2.8 billion. Significantly, no single one of the five products that constitute the core of the business dominates contribution. Over the course of FY 2026, acquiring grew by 21% to ZAR 777 million, and software grew by 34% to ZAR 391 million, while ADP, cash, and lending each declined by single-digit percentages. At the primary level of revenue drivers, we grew our average active merchant base by 12% to 132,000, while our weighted average ARPU declined by 5%. Across our three largest products, we saw volume growth. Acquiring TPV grew 27% to ZAR 44 billion, ADP TPV grew 31% to ZAR 55 billion, and cash TPV grew 4% to ZAR 119 billion. Merchants are transacting more with us, but on individual products, there has been a decline in take rate. ADP take rates declined 25%, mainly due to the reset in commissions for airtime set by the mobile networks over the year. We also experienced a mix effect, where our fastest-growing volumes are in lower margin supplier payments. A combination of mix effect and competitive pressure also led to the cash and acquiring take rate decline. In lending, where we feel we have a great opportunity, we under-indexed on our expectations during the year with a 3% decline in core net revenue. The demand from our merchants is there, and they are overwhelmingly underserved, but we are still evolving the offering, which will allow us to scale the product with the appropriate capability, risk appetite, and controls. Consumer has had an outstanding year. Net revenue grew by 38% to ZAR 2.4 billion, with all three products growing well. Transactional accounts grew by 24% to ZAR 855 million on strong customer acquisition. Lending grew 49% and insurance grew 42%, both driven by cross-selling into our account base. Our blended transactional fees rose by just 3%, so growth came primarily from customer acquisition, not pricing. In a largely flat market with many competitors, we grew our customer base by 19%, more than any competitor. This demonstrates a best-in-class proposition built to serve customers with technology and humanity where they are. Enterprise had a strong year as well, growing net revenue to ZAR 913 million, with core net revenue growing 45%. Pleasingly, the growth was across both volumes and take rates for both the two main products, ADP and utilities. A year ago, we told you FY 2025 was a year of build for Enterprise, and that it would become a meaningful contributor in FY 2026. It has done exactly that. We now have three meaningful divisions on which to build our future, combining into a unique South African fintech platform. Dan will now take you through the broader financial performance, focusing on the quarter. Dan Smith: Thank you, Ali. Good morning and good afternoon to everyone joining us today. Ali has described the platform we have built and the performance drivers of each division. I will explain what that progress means financially before taking you through the fourth quarter's results. FY 2026 was a year of financial inflection for Lesaka. We delivered group adjusted EBITDA within our latest guidance, exceeded the top end of our adjusted earnings per share range, and achieved positive full-year GAAP profitability of approximately ZAR 40 million. We are clearly seeing the improvement in our financial performance translate into stronger cash generation, with net cash from operating activities at ZAR 864 million for the year. After capital expenditure of ZAR 421 million, this leaves ZAR 443 million of positive cash generation. This is a significant improvement over the prior year and reflects the growing cash-generating capacity of our business. Our balance sheet has also strengthened. As a reminder, our medium-term leverage target has been two times or lower. We closed the year at 1.9 times, compared with 2.9 times a year ago, and reduced gross debt by approximately ZAR 200 million. We have achieved this ahead of the Bank Zero acquisition. Pleasingly, we have seen a significant reduction in our non-operational and once-off charges. As shown on the slide, non-operational charges reduced from approximately ZAR 1.7 billion to ZAR 35 million. During the course of FY 2026, we made good progress in exiting our remaining non-core investments and businesses, the overall financial impact of which was quite limited compared to the previous year. In addition, once-off charges reduced from ZAR 322 million to ZAR 91 million. Taken together, these milestones reflect improved cash generation and quality of earnings as we continue to scale our platform. A significant amount of the noise and complexity has been eliminated in our numbers going forward. Turning to the fourth quarter's performance, net revenue increased 8% to ZAR 1.62 billion, with group adjusted EBITDA increasing 22% to ZAR 367 million, demonstrating increased operating leverage. Our adjusted earnings, which we regard as a key measure of our underlying performance, increased to ZAR 199 million. On a per share basis, adjusting earnings increased from ZAR 0.90 to ZAR 2.40. Our leverage ratio closed at 1.9 times. Our consumer division delivered another strong quarter, with net revenue increasing 31% to ZAR 669 million. This reflects growth in our active customer base and the continued success of our cross-sell initiatives. Enterprise net revenue increased 34% to ZAR 255 million, reflecting the contribution from Recharger and growth across ADP and Utilities. We are pleased to see the division making a growing contribution as its platforms scale. Merchant net revenue declined 10% to ZAR 729 million. As Ali outlined, the division faces pressure on revenue compression despite growth in transaction volumes. It is a key area of focus for us. Lincoln will take you through the operational drivers. At a group level, adjusted EBITDA of ZAR 367 million was an all-time quarterly high for Lesaka, representing growth of 22%. Our margin increased to nearly 23%, compared with 20% a year ago. Consumer segment adjusted EBITDA increased 56% to ZAR 253 million, while Enterprise delivered ZAR 54 million, an increase of 255%. These are positive contributions and reflect the growing scale of both divisions. Merchant segment adjusted EBITDA declined 33% to ZAR 122 million. This reflects the soft operational performance and the ongoing integration and rationalization of the division. Group costs were ZAR 63 million for the quarter and ZAR 238 million for the year. The quarterly figure is broadly in line with the run rate discussed at our third quarter results. Looking ahead, as we prepare to bring Bank Zero into our platform and further scale operations, we expect a reset in our annual group cost run rate to approximately ZAR 350 million in FY 2027. This increase represents an investment in group enabling functions, including data and information systems, people, and risk and compliance capabilities. We remain focused on ensuring that it supports growth and improves efficiencies across the business and expect the spend to stabilize at this level in the medium term, with positive operating leverage emerging. Turning to cash flow and our balance sheet, cash generated from business operations was ZAR 384 million for the quarter, compared with ZAR 379 million a year ago. As a reminder, this measure is before working capital movements, loan book funding, bulk ADP purchases, tax, and interest. After these movements, net cash generated from operating activities was ZAR 279 million, compared to cash utilization of ZAR 113 million a year ago. For the full year, net operating cash flow was ZAR 864 million. Working capital releases contributed to this result. We also continue to reinvest cash in growing our lending books with the funding requirement varying through the year, particularly around the December festive season. Our earnings growth and cash generation have supported the reduction in our net debt to group-adjusted EBITDA ratio to 1.9 times. This reflects both higher EBITDA and a reduction in gross debt from approximately ZAR 4 billion to ZAR 3.8 billion. We have also experienced the benefit of reduced leverage with a decrease in effective borrowing rates from our lenders. As mentioned earlier, we have achieved our leverage target before the acquisition of Bank Zero. Subject to completion and the planned migration of lending book funding, we anticipate further benefits to our funding costs and external debt requirements. Steve will unpack the timing and assumptions in more detail. Capital expenditure was ZAR 171 million in the fourth quarter, above our recent run rate, taking our full-year spend to ZAR 421 million. This is above the ZAR 400 million annual guidance previously communicated and partially due to timing of operational investment and fit-out costs relating to our One Lesaka office consolidation program. In the fourth quarter, approximately 42%, or ZAR 72 million, relates to point-of-sale devices and cash vaults, supporting the growth of our merchant base. A further 30% related to non-operational CapEx for the fit-out of our new offices. Looking ahead to FY 2027, we expect total operational CapEx to be around ZAR 450 million as we invest in the growth of our business, particularly Merchant. We also expect non-recurring leasehold improvement CapEx of approximately ZAR 100 million as we consolidate our offices in Cape Town and Durban. We remain focused on capital discipline and the returns on investment. In recent quarters, the benefits of the platform we are building have become increasingly evident. Our group adjusted EBITDA margin increased to 22.6% this quarter, compared with 20.1% a year ago, reflecting improved operational leverage at a group level. On the last 12 months basis, CapEx as a percentage of group adjusted EBITDA reduced from 42% to 33%. Given the investment plan for FY 2027, the near-term ratio will be elevated by trend down to below 30% in the medium term. Combined with an improved quality of earnings, these trends highlight the strengthening financial fundamentals of Lesaka. We remain focused on improving merchant performance and generating improved returns as we continue to evolve and scale our platform. Thank you. I will now hand over to Lincoln to take you through our divisional performance. Lincoln C. Mali: Thank you, Dan. Good morning and good afternoon. Four years ago, we set out to build a single platform that could serve a merchant of any size, from a spaza shop through a national franchise. Financial year 2026 has been a year of building that machine rather than running it. Turning to our quarterly results, our active merchants grew 3% to 132,000. Within that, community merchants grew 6% to 107,000, and corporate merchants declined 7% to 25,000. On our community channel, we are seeing positive traction in multi-product bundling. As we digitize cash, merchants are enabled to transact digitally through our complementary ADP and acquiring products. The corporate channel has been more challenging. Attrition in the base is a combination of expected patterns and market dynamics. Firstly, we exited the ATM business in the second half of financial year 2026 and have been sunsetting a legacy non-core acquiring product, representing the decline we expected. What matters is the evolving mix of merchants we can build a full relationship with as we are demonstrating within community. Within corporate, we are deliberately focusing on integrated acquiring with software rather than standalone. Blended merchant ARPU declined 8% to ZAR 1,750, largely a mixed effect of gaining more community than corporate merchants. Corporate standalone ARPU was flat at just under ZAR 6,000, confirming the merchants we reduced were non-core. Community standalone ARPU came down 8%, from ZAR 824 to ZAR 755 due to declining take rates in ADP. Community merchants represent more than 80% of our active base and are growing the fastest. A stable corporate ARPU coupled with a softer community ARPU produces a downward blended figure, and that will remain true for as long as community grows faster than corporate. On product penetration, merchants using three or more products came down from around 10% to around 7%. That is largely arithmetic, as community is where the base is growing and the new merchants often come on in a single product. We also tightened community lending criteria during the year. Acquiring TPV grew 6% to ZAR 10.6 billion in the quarter, with active acquiring merchants up from 70,300 to 73,700. That growth came from community. In corporate, our large merchants have generally stayed with us. Cash TPV grew 5% to ZAR 29.8 billion across 4,900 vaults. Corporate cash continues its structural decline, down around 2%, while community cash grew by roughly ZAR 3 billion. That aligns with the expectation. Formal economy cash acceptance is declining, while township and rural cash is not. Cash taken into our vaults flow into ADP. ADP TPV grew 34% to ZAR 14.6 billion. Prepaid solutions grew 6% to ZAR 5.7 billion, a return to growth. Supplier-enabled payments grew 62%, from ZAR 5.5 billion to ZAR 8.9 billion. Supplier payments tie a merchant into our ecosystem by taking cash handling risk out of their business and creating cross-sell opportunities. We have more than doubled that network in two years and are still adding on suppliers. We are pursuing various monetization strategies given the increasing TPV, particularly within ADP. Merchant lending originations improved sequentially throughout the year, with the fourth quarter up 20% to ZAR 249 million and the book closing 15% higher at ZAR 463 million. This has been supported by disciplined lending back into merchants we already know and whose transaction data we can see. Software sites were flat for the year. The development that matters is Unity, our cloud-native hospitality platform that enables acquiring at scale and is central to our long-term merchant strategy. 16% of our software base has now migrated to Unity, up from 10% a year ago, and our nearest term opportunity lies within the sites we already manage. On the left is our base, split by how many products each merchant uses. Merchant using a single product grew from 69,000 to 71,000. Two products grew from 46,000 to 52,000. Three or more products fell from 12,000 to 9,000 for the reasons I gave. On the right is what layering is worth. In corporate, a second product lifts ARPU by nearly 60%. In community, a third doubles it. The economics of layering is not theory. It is visible in our base today. More than 5,000 additional merchants took a second product from us this year. As we focus on integrating the business within merchant, our expectation is to drive that multi-product growth. I will now move to consumer. Financial year 2026 has been another record year for consumer across every metric we track. Active consumers grew 11% to 2.1 million. Our share of the grant beneficiary market rose from 13.6% to 14.9%, and from 10.8% two years ago. I want to put that in context, because on its own, the numbers understate what our teams achieved. In the six months to June, the grant beneficiary market contracted as SASSA reviewed its register and removed recipients who no longer qualified. We grew our base in a shrinking market, and we added more customers in absolute terms than anyone else in this segment. That is the clearest evidence of the strength of our proposition and distribution. On economics, consumer ARPU grew 15% to ZAR 98 per month, from ZAR 85 last year and ZAR 76 two years ago. A compounding effect of cross-sell. Our product penetration continued to improve. 51% of active consumers now hold two or more products. The first time we've been above half of our base, and 20% now hold all three, up from 16% last year and 14% two years ago. We are showing the composition of consumer ARPU for the first time and intend to show it annually. Our transactional account products has remained relatively stable over the last two years in ARPU contribution, while lending and insurance creating the ramp. We have been routinely challenged on whether competition will erode our core transactional relationship. The evidence is that it has not. It has held while our base grew by more than half a million, and that stability is the foundation of cross-sell. Effectively, all our ARPU expansion has come from lending and increasingly insurance layered onto a transactional relationship that holds. On the right is the core reason that strategy works. Our distribution. We've grown our brand footprint with an emphasis on rural communities where our customers live and our competitors are not. Our model is a deliberate hybrid. We acquire customers face-to-face through people who live in the communities that they serve and transact with them digitally. The two are intertwined. Our lending business had another very strong year. Fourth quarter originations were ZAR 937 million, up 20% year-on-year, with the outstanding portfolio growing 40% to ZAR 1.4 billion. The product mix shows how the book is evolving. Our nine-month product, introduced in financial year 2025, now accounts for 63% of our portfolio. Our shorter six-month product represents 35% of the portfolio, with the balance attributed to tenures under three months. The quality of the book remains strong. We only lend to consumers who are actively SARS customers, with most originations going to repeat borrowers. We are growing by deepening relationships with consumers we understand well, not by taking an unfamiliar risk. We have recently introduced a ZAR 5,000 loan on the same nine months term, priced for the slightly higher risk of a larger advance, a direct response to customer demand. Insurance continues to scale well. Gross written premiums grew 36% to ZAR 155 million for the quarter, and in-force policies grew 34% to 753,000. Our collection ratio moved from 96% to 94%. As flagged in recent quarters, we expect this to moderate towards 90% over time as the book broadens beyond customers we onboard at account opening. This year's movement also reflect the SASSA register review. Policyholders whose grants are terminated often do not pay the next premium. At 94%, this remains an exceptionally high collection rate for this end of the market. Financial year 2026 has been a phenomenal year for consumer. I will now move to enterprise. ADP TPV grew 18% to ZAR 12.2 billion for the quarter, with bill payments up 12% to ZAR 9.3 billion. We now settle on behalf of consumers and businesses with more than 650 billers, including municipalities, telcos, and retailers. For bill payments, we earn a fixed fee per transaction. For prepaid, we earn a commission on value. We have not raised prices. What has changed is the mix, as prepaid grows faster and a larger share of revenue is earned at Valora. Our channel relationships span banking, retail, fintech, and telcos, whose end consumers access ADP through the enterprise engine through one seamless integration. Utilities TPV grew 16% to ZAR 502 million for the quarter, and our active meter base grew 11% to 382,000 meters. This is a different model from ADP. Lower volumes, higher margins, largely annuity based. We sell a meter once through retailers such as Builders Warehouse and Buco, and they earn on every recharge for as long as that meter is in use. TPV growth reflects both organic volume and the pass-through of electricity price increases. As Ali said, this was the year where the enterprise division began to make a significant financial and operational impact on the group. That concludes the operational review. I will now hand over to Steve. Steven J. Heilbron: Thank you, Lincoln. I'd like to spend the next few minutes providing an update on our acquisition of Bank Zero, which we announced late June 2025. To date, we have said very little while the regulatory process has been running. This is a key strategic milestone for us, and today we will provide some clarity as to why and what this acquisition does for the Lesaka Group. Lesaka is a fintech, and we intend to remain true to this domain. We acquired Bank Zero because a banking license is a key enabler to our fintech strategy and our core activities. There are things we want to do for our merchants and consumers that we can do much better with a licensed bank in the group. It should also be said that this was a natural fit in that we have an alignment on vision and ambition and have a tremendous amount of respect for what your team, Michael, and the team have built. There is a strong international precedent for fintechs going down this path. Acquiring a bank takes time, substantial capital, and requires a high regulatory watermark. That difficulty is exactly what makes it valuable, and after completion, we will be on the right side of that equation. As the owner of a licensed bank, we have a seat at the industry table. We become a member of all key payment streams and have our own clearing capability. This gives us representation in our own right, less reliance on sponsors, and more freedom to execute our strategy. This slide sets out the current status of the transaction. We announced the transaction in June 2025 when Bank Zero held a deposit base of approximately ZAR 400 million. We received unconditional approval from the Competition Tribunal in November 2025, and in April 2026, Bank Zero onboarded its first alliance banking partner, Paymentology. The two conditions that remain outstanding before this transaction becomes unconditional are approval from the Prudential Authority and Exchange Control. We anticipate, given the good progress and feedback received to date, that the transaction will close before the end of the calendar year. An observation to be made on timing. We signed in June 2025, and as you will appreciate, a change in control of a South African bank routinely takes up to 18 months or longer. This slide points to the progress made by Bank Zero during the interim period. At the time the SPA was signed in June 2025, Bank Zero was in a loss-making position of just over ZAR 3 million per month, with just under ZAR 400 million of deposits and around 40,000 customers. It was an extremely well-engineered neo bank but lacked scale. Since then, it has built its alliance banking unit. Deposits have passed ZAR 700 million by April, and we expect a deposit base in excess of ZAR 1 billion by December 2026. We told the market at the time of announcing the deal that we expected the bank to be at or near break even by completion. On our current forecast, Bank Zero is budgeted to achieve break even on a standalone basis by December 2026 before any contribution from Lesaka. This slide sets out the compelling rationale of acquiring Bank Zero and highlights four primary benefits for Lesaka. The first is product. We will be able to offer a more complete set of banking services to the consumers and merchants that we already serve and move into select product arenas, expanding our customer offering, an example of which is foreign exchange and cross-border payments. Bank Zero is a key enabler. It enhances our product offering, makes us more complete, and earns a larger share of our customer wallet. The second is the deposit-taking license itself. Our consumer float does not sit on our balance sheet today. Bank Zero will enable this and allow us to earn interest on deposits and fund our lending activities. The third is infrastructure and what Bank Zero does in reducing our cost to serve. We depend on third parties for parts of our proposition today. A dependency of that kind carries a cost and a strategic exposure. Owning a modern and well-engineered banking platform reduces both our strategic and economic leakage. The economic leakage is what we pay others to do that which we can do ourselves. Strategic leakage results from being in a position where things that matter most to our customers are run by competitors and/or third parties. The fourth is funding, and it is the one with the most significant financial benefit attached to it. Our lending books today are funded with bank debt. Once these books sit inside the bank, they can be funded with customer deposits. This materially reduces our cost of funding and group leverage. We will show you the effect of this shortly. A banking license also widens what we are able to do in each of our three divisions. In consumer, we are positioned today around the roughly 12 million South Africans who receive a social grant. Owning a bank gives us the ability to serve a materially broader market, including the further 14 million or so South Africans who earn a taxable income from which we will choose the segments where we believe we can compete. In merchant, the bank allows us to add business banking, business savings, and remittances alongside the payments, software, and lending that we already provide. It enables us to give a merchant more reason to consolidate their financial activities on our platform, which is at the heart of our merchant strategy. In enterprise, the bank opens a vertical that was previously closed to us, alliance banking, which provides account hosting, card programs, and compliance support to fintechs, marketplaces, and retailers. This is a business we could not have entered without a banking license, and it is where Bank Zero has grown substantially over the past year. It is important to address the expected deposit base evolution. There are three sources. The first is the initiation of alliance banking. Following the onboarding of Paymentology as the first alliance banking partner in April, we have seen a material increase in deposits. The second is our consumer accounts. We anticipate these deposits migrating in Q1 FY 2028. The third is organic growth of Bank Zero's deposits into the South African retail market. Combined and subject to completion, we expect a deposit base in excess of ZAR 1 billion by December 2026, growing to above ZAR 4 billion by June 2029, representing a compound growth rate of roughly 60%. At 30 June 2026, our gross debt stood at ZAR 3.8 billion, and our net debt to group adjusted EBITDA was 1.9 times. Close to half of that debt is not funding the operating business, it is funding our lending books. Once Bank Zero is part of Lesaka, we will migrate these books into the bank and fund them with customer deposits. We are targeting the transfer of the consumer book first, followed by the merchant book, with both being transferred to the bank by the end of the fourth quarter financial year ended 2027. On the assumption that this is achieved, gross debt falls to approximately ZAR 2.3 billion, and we estimate our leverage ratio to be less than one times by the year ended June 2027. This does two critical things. One, it significantly reduces the interest cost to the group. Two, it provides us with greater flexibility with respect to capital allocation. We can reduce bank debt, buy back shares, or pursue acquisitions that enhance our growth prospects. We will make these choices on the merits at the time. Assuming our choice were to be debt reduction, given our forecasted free cash flow generation, we would anticipate close to zero gross debt by our financial year ended June 2028. Dan spoke earlier about reaching our medium-term leverage target of 2 times during this year. This slide shows the balance sheet story travels well. I will hand back to Ali, who will take you through our guidance and medium-term ambitions. Thank you. Ali Mazanderani: Thank you, Steve. Turning to guidance, for the first quarter of FY 2027, we are guiding to net revenue of ZAR 1.58 billion to ZAR 1.66 billion, group adjusted EBITDA of ZAR 200 million to ZAR 240 million, and adjusted EPS of ZAR 0.40 to ZAR 0.60. Q1 reflects both seasonality and expected once-off and restructuring costs in the merchant business. For the full year FY 2027, we are guiding to net revenue of ZAR 7 billion to ZAR 7.7 billion, group adjusted EBITDA of ZAR 1.45 billion to ZAR 1.6 billion, and adjusted EPS of ZAR 7.50 to ZAR 8.50. This is inclusive of Bank Zero, which, as Steve said, we expect to complete by December of this year. We do not expect this to have a meaningful impact on net revenue and group-adjusted EBITDA in FY 2027, as the company is close to breakeven and most of the synergy benefits are expected to accrue during FY 2028. Partly as a consequence of this, we expect our net revenue, group-adjusted EBITDA, and adjusted EPS to accelerate their growth in FY 2028 relative to FY 2027. This is represented in our medium-term ambition, where we are looking 3 years ahead. These are management's operational and financial ambitions to FY 2029, inclusive of Bank Zero, but excluding any future unannounced acquisitions. We regard them as a floor, the level we are setting ourselves to deliver better than. They are ambitions rather than guidance. They can, of course, change as the business and the environment evolve, but they represent the direction and the shape we are building towards and we believe is achievable. Operationally, by June 2029, in consumer, we intend to reach 3 million active consumers with a meaningful contribution from non-grant recipients. In merchant, 200,000 active merchants, with growth driven by the community segment, both in South Africa and neighboring countries. In enterprise, a total TPV of ZAR 80 billion. We expect the ARPU in consumer to marginally increase, in merchant to decline slightly due to the mix effect of community growing faster than corporate and having a lower ARPU, but for the ARPU in each segment to be maintained through product cross-sell. In enterprise, we are expecting a modest increase in take rate, again, largely reflective of product mix. The consequence of achieving this would be net revenue growth of more than 20% CAGR to circa ZAR 11 billion for the year ending June 2029. As we continue to experience operational leverage, we expect to have a group adjusted EBITDA CAGR of more than 30%, resulting in a group adjusted EBITDA margin of more than 25%. This should translate into an adjusted EPS CAGR of more than 40%, resulting in adjusted EPS of greater than ZAR 18. At current exchange rates, this implies more than $1 in adjusted EPS for the year ending June 2029. We are grateful from where we have come and excited about where we are going. Thank you for your time, and we will now take questions. Philippe Welthagen: Thank you. Operator, can you open the questions to the first person on the line? Operator: Thank you. The first question we have is from Ross Krige of Investec. Please go ahead. Ross Krige: Good afternoon, everyone. Thanks very much for the call. I have quite a few questions. I am going to break it up, so I can give other people a chance. Just first set of questions is on merchant. The first two parts would be firstly on the Q4 performance. Relative to your expectations in May, it looks like a bit worse than you expected. Just wondering what has deteriorated beyond that expectation. In Q1, the restructuring that you referred to in merchant for Q1, just wondering what specifically will this entail, and how confident are you that this will not continue beyond Q1? Ali Mazanderani: Okay. Thanks, Ross. The line was a bit weak, but just to repeat what I understood, you were talking about the Q4 performance of merchant and how that linked to our expectations. The second one was around the restructuring in Q1 of next year and how confident we are that it's a once-off. I'd say a few things. The first thing around the Q4 performance, and it's not just the Q4 performance, I think it's across FY 2026. As we said in the presentation, it is weaker than we had expected. The process of putting the businesses together requires quite a lot of energy and effort and focus, but I think we're making good headway against that. I think that the issues are more issues of timing, relative to anything else. There was some softness as a consequence of the margins, especially in the ADP business, which we also alluded to in the presentation. The Q1 to Q evolution is not really, though, an evolution that's underpinned by a change in the core net revenue. It is a cost issue. Whether that cost issue will have consequences into the beginning part of Q2 or not, I can't be sure. What I would say is that we certainly don't expect it to go beyond that, and our guidance for the year reflects that as well. I don't know, Ross- Ross Krige: Thanks, Andy. That's really helpful. If I can just follow up with Hello? Ali Mazanderani: Yep. Go for it, Ross. Ross Krige: Thanks, Andy. Just follow up on that. That's helpful. Thanks. Just on terms of the, I guess, the One Lesaka rebranding and some of the timing issues that you referred to. I mean, if I look at the operational ambitions to FY 2029, again, in merchant, clearly a very strong acceleration in run rates of active merchant growth relative to the 3% at Q4 year-on-year. Just wondering, at what point would you expect that acceleration to really take hold? Ali Mazanderani: I think that acceleration, candidly, is already beginning. I think that when you are looking at the Q2 numbers of next year, you will see that acceleration within our merchant count. So obviously, Q1 is July, August, and September. It's really over the course of September that we've started to implement that strategy. Ross Krige: Understood. Thanks, Andy. I'll hand over for now. Philippe Welthagen: Thank you very much. We'll now take a question from the webcast. We have a question from James Slabbert from Standard Bank Securities. We have a couple of questions. The first, congratulations on a great quarter and year. Appreciating that you can't give too much detail around Bank Zero, are you able to give an indication of how you intend to grow Bank Zero's deposit base, excluding the EasyPay deposits? Ali Mazanderani: Steven? Steven J. Heilbron: Sure. As we pointed out in the presentation, there are three sources of deposits within Bank Zero. The first is the alliance banking source, the second is our own consumer deposits, and the third is an organic retail treasury strategy which we will embrace within the bank. As we pointed out, we expect that deposit base to be in excess of ZAR 1 billion by December 2026. When we first signed the SPA, we had ZAR 400 million, or just under ZAR 400 million of deposits, and significant progress has been made in that regard. In April of this year, we were already at ZAR 700 million, and you can see that we're forecasting to June 2029, ZAR 4 billion. As I said, three pools. The alliance banking, which is scaling substantially, the organic strategy within Bank Zero, and we will be moving our consumer business. The sponsorship will be moving from African Bank to Bank Zero over time, and all of those customer deposits will sit on our own balance sheet. I think we'll actually surprise on the upside in relation to the deposit base, and we've seen very good evolution to date. Philippe Welthagen: Great. Thanks, Steve. One more follow-on from James as well from Standard Bank, probably related to you, Steve. Given that the group currently has numerous fintech verticals in the stable, is there the intention to continue with M&A, and if so, which areas do you think you currently are lacking and therefore seek to acquire in the space? Steven J. Heilbron: Thanks, James. Yes, there is an intention to carry on. I think we have our eye on two or three specific transactions which could be quite transformative for us. I'm not at liberty to disclose what those would be, but I think I would want to point out that we are committed to doing acquisitions that are accretive. I guess we would argue that we're substantially undervalued at this point. If you look at the presentation, dilution is not something that we're prepared to do on a non-accretive basis. But if you look at the presentation that we put forward, you will see that by June 2027, our leverage ratio comes down under one. So we will have, again, an ability to use debt substantially and given that we expect our share price to rerate, we think we will be in a position to focus on some of these transformative opportunities. Separately to that, as we speak today, we are doing smaller bolt-on transactions with a key focus on the SADC region in some of the jurisdictions outside of South Africa where we are deepening our customer set and augmenting our products, and those transactions will be announced in due course. Philippe Welthagen: Thank you, Steve. Operator, could we open the line to the next person in queue? Operator: We have a question from Theodore O'Neill of Litchfield Hills Research. Please go ahead. Theodore O'Neill: Oh, thanks very much. Question for Lincoln. Discussing the merchant business, I just want to clarify, exiting the ATM business had some marginal negative impact on the merchant business. Is that what you were saying? Lincoln C. Mali: This is a business that we've highlighted before, that it was not part of the core strategy going forward. We made a decision to exit that business, there was a small impact in our numbers that relates to that. Those costs are not costs that will recur in the future. We've been able to exit that business responsibly. Theodore O'Neill: Yeah. Do you expect there will be some rebound after the acquisition is completed of the bank? Lincoln C. Mali: I think Ali has alluded to the transformation and changes that need to take place in the merchant business, that we want to see that growth coming through in the second half of the financial year. It's not really linked to the Bank Zero acquisition, there are benefits when the Bank Zero acquisition comes through. There are prospects that are good on the standalone basis of the merchant business because of the actions that we're going to take. There's an added layer that comes from what Steve has outlined about the benefits of Bank Zero for all the different divisions of the group. Theodore O'Neill: Okay. My last question, following up on the bank acquisition is it too early to say how you expect to promote the new business to your existing customers and the new customers? Will it result in any kind of meaningfully higher OpEx in 2027? Steven J. Heilbron: I think we spoke about in the presentation the fact that we will have a strong foray into the alliance banking space, which we think from a societal perspective is pivotal to financial inclusion, which is part of our core strategy. Separately to that, the bank is a key enabler. It is going to enable us to do a lot more for our merchants in the form of business banking, business savings, Forex, and we will broaden that product arena to satisfy the needs of our merchants. The important thing is that this allows our merchants to consolidate their financial activities onto our platform and gives us a much bigger share of wallet. Likewise, from a consumer perspective, owning a banking business broadens the opportunity within the consumer space, and we spoke about the fact that we will step outside of the grant niche, and we will choose areas where we can compete in both technology and product. Then in our enterprise business, under which the alliance banking business fits, this gives us an opportunity to substantially develop that business. I think the market was looking for a new entrant, and we are very happy with the progress that has been made to date. Ali Mazanderani: At a broader level, I think what the bank does is it allows us to, from an economic perspective, it creates a lot of value, and from a strategic perspective, it enables our offering to broaden across all the segments that we play in. Philippe Welthagen: Thank you. Operator: The next question we have is from Rayna Kumar of Oppenheimer & Co.. Please go ahead. Guru Sidaarth: Hi. This is Guru on for Rayna, and thanks a lot for taking our question. Just more broadly, given incumbent banks' larger size and scale, like with Capitec entering into the merchant market and with some localized fintechs starting to gain some momentum, just curious as to how these dynamics play out for Lesaka, and what are some potential implications we should be thinking about in this regard? Thank you. Ali Mazanderani: Thanks very much for the question. I believe that we have three fundamental, I suppose, strategic benefits to the incumbents. Those are centered around the first being technology, the capacity to build technology in the modern environment for a specific purpose rather than the legacy that a number of incumbents are constrained by. I think that advantage, if anything, is more pointed today with the evolution of AI than it was five years ago. So we definitely see that technological opportunity, and I think that's partly reflected in our cost to serve. It's also reflected, obviously, in the fact that Bank Zero's relative cost to serve is very low. So we need to be the most efficient provider. The second structural opportunity we have is the disruption of distribution, and that's embedded in that where you are tagline. An enormous proportion of our business is in frontline, in sales and support that go to our customers, that go to their villages, that go to their shops and serve them where they are, rather than relying on them coming to a bank branch or a retail outlet that may cost a material amount for them to get to. That is technology enabled, but human distribution strategy. We think that it is what separates us and creates a material competitive moat vis-a-vis others. You can see the consequences of that cleanly in the consumer business' performance. The third one, I would say, is that we can iterate our business on the basis of what the future should look like, because we are not held captive by an existing profit pool based on legacy structures. It is very challenging when you have a big profit pool, and you are not free to evolve solutions necessarily based on what is best for the society or best for the customer because of the danger of cannibalization. We are largely free from those challenges. When we build solutions, we always build them with the efficiency at the forefront. We can candidly disrupt a banking market that we do not currently generate enormous profit from. I think that feature set of three things is common for all fintech insurgents, not just in South Africa, but really across the world. It is why, over the long run, they tend to win against the traditional incumbents. Guru Sidaarth: Very helpful. Thanks a lot. Philippe Welthagen: Thank you, operator. We will take a couple of questions from the webcast. Two questions in a row from James Freedman at Susquehanna International Group. Thanks for doing the call. Within Merchant, what would you say are the KPIs investors should watch to measure the trajectory within this segment? Tagging along, can you talk more about the distribution within Merchant? Is it direct, or do you utilize indirect channels in the region? Ali Mazanderani: Good questions. Thank you. I think the key things to watch are the two primary drivers that we are communicating on a quarterly basis of the number of merchants and the ARPU per merchant. Those are the drivers of what we are calling our core net revenue, and ultimately, I think they are obviously very relevant for the underlying health of the business. On a second-degree level, obviously, we are providing now annually the product drivers, where the main components are the TPV and the take rate associated with our biggest products, which are acquiring ADP and cash. The third thing, I think, which is obviously linked to the ARPU and the product take rates, is the number of products that our customers are engaging with. Our capacity to cross-sell within that segment. I think that's what I would primarily focus on as drivers for the sustainable health of the business. In terms of the distribution model, it is today primarily direct. We do have a material sales and service operation. However, it's not exclusively so. We would engage with third-party agents and create strategic alignment as well. But the dominant acquisition channel is direct. Philippe Welthagen: Thank you. We have a question again from James Slabbert at Standard Bank Securities. How do you think about your debt picture? Of course, there are contractual obligations, but do you have the ability to retire these early from cash generation? Ali Mazanderani: I think, Dan? Dan Smith: Yes. Thanks, James. We do have significant flexibility with our lenders. They've been longstanding supporters of our business and continue to be. Within that overall construct, they're an important enabler in us moving our lending books out of our existing business into Bank Zero. Philippe Welthagen: Thank you. Operator, could we open the line for any questions that are still in queue? Operator: Thank you. We have a follow-up question from Ross Krige of Investec. Please go ahead. Ross Krige: Thank you. Okay, just moving to the other segments of the very strong performances in consumer and enterprise. Just firstly on consumer, I guess the intention here is just to understand the medium to longer term margin outlook. I can see on your ambitions that it looks like revenue CAGR is aimed to be at around 20% beyond 2026 in consumer. I am just wondering what sort of OpEx growth, and therefore operating leverage, might we see in that segment. Then on enterprise, very strong sequential and year-on-year performance, and I guess substantially above the EBITDA level you talked to a few quarters ago. I am just wondering again around the sustainability of that. Sounds like from your commentary that momentum is still very positive. It sounds like if anything, there is opportunity for higher margins there. Is that a fair conclusion? Ali Mazanderani: I will take the enterprise question, and I will let Lincoln and if Dan you want to add anything on the consumer side. Yes, Ross, I think people are materially underestimating the growth potential of what we are building in the enterprise business. I do expect that of our three segments, it will be the fastest growing segment over the course of this year, albeit for a lower base. I do believe that growth rate is sustainable for a reasonable period of time at least, and there will be the opportunity for a margin increase associated with that. I think it is telling that across both of the core products, we were able to increase volumes while we were also able to increase take rates, which is, I think, representative of the product market fit there and representative, I guess, of the dynamic which we achieved in the consumer business. For me, two years ago, the consumer business's evolution was clear. I think this is the year where the enterprise business's evolution is clear, and I am hoping that the same is true for merchant over the subsequent year. On consumer, and the margin evolution, I do not know if Dan Smith: For the last quarter, our consumer margin ended up being 38%, a little bit elevated compared to previous quarters. We have consistently guided the market on average 35%, there or thereabouts. We do see significant operational leverage within the consumer business, particularly as we scale it with more customers and grow our lending and our insurance businesses. I would expect in time our consumer margin to trend upwards from the 35%. Do just note it will not be sequential quarter on quarter given obviously some of the seasonality in that business, particularly our lending business. But we do see opportunity for margin growth in the medium term in our consumer business. Ali Mazanderani: Okay. Ross Krige: Great. Thanks, Dan. If I may, I have two other questions. If I can go ahead. Ali Mazanderani: Go for it. Ross Krige: Thanks. Just on working capital, I am just wondering any guidance at all you can give on, I guess, general working capital and then the loan flows over time for FY 2027 and whether there is anything to call out that should occur, how we should think about that evolving over the course of the year. Then on Bank Zero, I understand you might not be in a position to talk about this yet, but I was wondering if you are able to comment on capital requirements at Bank Zero at this point. Ali Mazanderani: I think Dan on the loan capital and maybe Steve on the Bank Zero. Dan Smith: Yeah, Ross, easiest way to think about overall cash generation is our EBITDA is largely cash. It translates on a quarterly basis very much into cash. Our broader working capital and loan book growth is cyclical, and there is some real seasonality in there, particularly around quarters 2 and quarter 3. I would guide you towards looking at it on an annual basis rather than a specific quarterly basis because of that cyclicality. Working capital guidance, best guidance I can give is between 1% and 2% of net revenue on an annual basis. Growth in loan books, we do have an ambition, certainly on the consumer side in the short term, to continue to growing that book. It is really performing well. Our growth in the last year and in the short term on our merchant lending book has been fairly constrained. That has been intentional. Over the course of the next 12 months, we would expect some significant growth coming through in our consumer lending book. Until we do Bank Zero, that will be funded through free cash flow. Obviously then the dynamic changes significantly in our funding model once the Bank Zero transaction and funding model has been implemented. Steven J. Heilbron: Ross, as you mentioned, and I am sure you can understand, it is difficult for us to talk at this point. We are waiting still for the licensing panel and for the guidance from the regulator in relation to our capital adequacy ratios. What I will say that in all of our models, we have been probably excessively conservative. In our forecast, we have probably provided more capital than we believe is ultimately justified. Clearly, as we travel with the bank over time, we would be looking to justify a CAR ratio that over time diminishes. Ross Krige: Great. Thanks, Steve and Dan. Philippe Welthagen: Thank you, everyone. That now concludes our webcast. Before you buy stock in Lesaka Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lesaka Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $410,024!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,372,815!* Now, it’s worth noting Stock Advisor’s total average return is 950% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of September 10, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Lesaka (LSAK) Q4 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. FY 2026 marked a transition to 'One Lesaka,' consolidating disparate brands and offices to foster cross-pollination and a unified market identity. Consumer division performance was driven by a 19% customer base expansion in a shrinking market, achieved through a hybrid high-touch human distribution and digital transaction model. Merchant segment faced a challenging year due to integration efforts and revenue compression, specifically a 25% decline in ADP take rates following mobile network commission resets. Enterprise growth was fueled by scaling ADP and utility platforms, successfully transitioning from a 'build' phase to a meaningful financial contributor. Group profitability was supported by a significant reduction in non-operational charges from ZAR 1.7 billion to ZAR 35 million as the company exited non-core investments. Strategic positioning focuses on serving underserved rural and township markets where traditional banking incumbents lack a physical presence. Operational leverage improved as group adjusted EBITDA margins expanded to 23%, driven by cross-selling high-margin lending and insurance products into the stable transactional base. Management expects a reset in group cost run rate to ZAR 350 million in FY 2027 to invest in data, risk, and compliance infrastructure for the Bank Zero integration. The Bank Zero acquisition is expected to close by December 2026, with primary synergy benefits and earnings acceleration projected for FY 2028. Strategic migration of lending books to the bank's balance sheet is targeted for completion by Q4 FY 2027, which is expected to reduce group leverage to less than 1.0x. Medium-term ambitions through FY 2029 target a 30% EBITDA CAGR and adjusted EPS exceeding ZAR 18, assuming successful product cross-selling and community merchant growth. Operational CapEx is projected at ZAR 450 million for FY 2027, with an additional ZAR 100 million for non-recurring office consolidations in Cape Town and Durban. The company completed its exit from the non-core ATM business in H2 FY 2026 to focus on integrated software and acquiring solutions. Insurance collection ratios moderated from 96% to 94% due to a SASSA register review that terminated grants for some policyholders. Merchant ARPU is expected to face continued downward pressure due to a mix effect as the lower-ARPU community segment grows faster than the corporate segment. The transition to Bank Zero involves significant regulatory dependency, with final approvals still outstanding from the Prudential Authority and Exchange Control. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that Q4 merchant weakness was a timing and cost issue rather than a decline in core net revenue. Restructuring costs in Q1 FY 2027 are expected to be largely one-time, with an acceleration in merchant acquisition expected to be visible in Q2 FY 2027 results. Management is evaluating two to three transformative transactions but emphasized they will only pursue accretive deals given current perceived undervaluation. Post-bank integration, the company will have flexibility to use cash for debt reduction, share buybacks, or bolt-on acquisitions in the SADC region. Lesaka cites three moats: purpose-built modern technology without legacy constraints, a unique 'where you are' distribution model in rural areas, and the freedom to disrupt without cannibalizing existing profit pools. Deposits are projected to grow from ZAR 700 million to over ZAR 1 billion by December 2026 via alliance banking, organic retail growth, and migrating the consumer float. The alliance banking vertical opens a new revenue stream by providing infrastructure to other fintechs and retailers, a sector previously closed to Lesaka.

Interested in Lesaka Technologies, Inc.? Here are five stocks we like better. Lesaka delivered a strong fiscal 2026: Revenue increased 20% to ZAR 6.33 billion, adjusted EBITDA rose 41% to ZAR 1.27 billion, and the company reported its first GAAP net income since 2022. Net leverage improved to 1.9 times, meeting its medium-term target. Consumer and Enterprise drove growth, while Merchant lagged. Consumer revenue rose 38% for the year and Enterprise core revenue increased 45%, but Merchant faced lower take rates and a 33% quarterly EBITDA decline as the company integrated businesses and exited non-core operations. Management expects further growth in fiscal 2027 with revenue guidance of ZAR 7.0 billion to ZAR 7.7 billion and adjusted EBITDA of ZAR 1.45 billion to ZAR 1.6 billion. The Bank Zero acquisition is expected to close before the end of calendar 2026, with most financial synergies anticipated in fiscal 2028. Lesaka Technologies (NASDAQ:LSAK) said fiscal 2026 revenue, profitability and cash generation improved, while the company met its guidance targets and reported positive GAAP net income for the first time since 2022. For the year ended June 2026, net revenue increased 20% to ZAR 6.33 billion, group adjusted EBITDA rose 41% to ZAR 1.27 billion, and adjusted earnings per share increased 210% to ZAR 6.51. The company recorded approximately ZAR 40 million of GAAP net income, Executive Chairman Ali Mazanderani said. → Morgan Stanley Eyes Good Things Ahead for Meta After $18 Billion Legal Settlement Lesaka also reduced its net-debt-to-adjusted-EBITDA ratio to 1.9 times from 2.9 times a year earlier, meeting its medium-term target of two times or less. Group CFO Dan Smith said gross debt declined by about ZAR 200 million to approximately ZAR 3.8 billion. Operating cash flow totaled ZAR 864 million for the year. After ZAR 421 million in capital expenditures, the company generated ZAR 443 million of cash, Smith said. Capital spending exceeded the company’s previous ZAR 400 million guidance, partly due to office-consolidation costs and the timing of operating investments. → Tesla’s Robotaxi Launch Wasn’t the Moment Investors Expected In the fourth quarter, Lesaka’s net revenue rose 8% to ZAR 1.62 billion, while adjusted EBITDA increased 22% to a quarterly record of ZAR 367 million. Adjusted earnings were ZAR 199 million, or ZAR 2.40 per share, compared with ZAR 0.90 per share a year earlier. The group adjusted EBITDA margin reached 22.6% in the quarter, up from 20.1% in the prior-year period. Smith attributed the improvement to operating leverage across the group, though performance varied by division. Consumer net revenue increased 31% in the quarter to ZAR 669 million, and segment adjusted EBITDA climbed 56% to ZAR 253 million. Enterprise net revenue rose 34% to ZAR 255 million, while segment adjusted EBITDA increased 255% to ZAR 54 million. Merchant net revenue declined 10% to ZAR 729 million, and segment adjusted EBITDA fell 33% to ZAR 122 million. → Despite Post-Earnings Drop, Wall Street Analysts Eye New Highs for Broadcom Stock Smith said Lesaka expects its annual group-cost run rate to reset to about ZAR 350 million in fiscal 2027 from ZAR 238 million in fiscal 2026. The increase will support data and information systems, personnel, risk and compliance functions as the company prepares to integrate Bank Zero and scale operations. Consumer was Lesaka’s strongest segment during fiscal 2026. Annual net revenue grew 38% to ZAR 2.4 billion, driven by customer acquisition and cross-selling of lending and insurance products into the company’s transactional-account base. Active consumers increased 11% to 2.1 million, while consumer average revenue per user rose 15% to ZAR 98 per month. Lincoln C. Mali, Lesaka’s CEO of Southern Africa, said 51% of active consumers held two or more products, while 20% held all three of the company’s principal consumer products. Fourth-quarter consumer lending originations rose 20% year over year to ZAR 937 million, and the outstanding lending portfolio grew 40% to ZAR 1.4 billion. Insurance gross written premiums increased 36% to ZAR 155 million, while in-force policies rose 34% to 753,000. Enterprise annual net revenue reached ZAR 913 million, with core net revenue increasing 45%. During the fourth quarter, enterprise alternative digital payments total payment volume grew 18% to ZAR 12.2 billion, while utilities payment volume increased 16% to ZAR 502 million. Mazanderani said Enterprise is expected to be Lesaka’s fastest-growing division in fiscal 2027, albeit from a smaller base, and said there is potential for margin expansion as the platform scales. Merchant annual net revenue rose 3% to ZAR 3.1 billion, while core net revenue increased 6% to ZAR 2.8 billion. The segment faced declining take rates in several products, including alternative digital payments, cash and acquiring, despite higher transaction volumes. The average active merchant base grew 12% to 132,000 for the year, while weighted average revenue per merchant declined 5%. Mali said the company’s community merchant base grew faster than its corporate merchant base, contributing to a lower blended average revenue figure because community merchants generally produce lower revenue per user. Lesaka exited its non-core ATM business during the second half of fiscal 2026 and has been winding down a legacy acquiring product. Management said those actions affected merchant results but are not expected to create recurring costs. In response to an analyst question, Mazanderani said merchant performance was weaker than expected during fiscal 2026 as the company integrated businesses and addressed margin pressure. He said the company expects merchant customer-growth acceleration to become more visible during the second quarter of fiscal 2027, while restructuring costs are expected primarily in the first quarter and potentially the beginning of the second quarter. Lesaka said its acquisition of Bank Zero remains subject to approval from the Prudential Authority and Exchange Control, after receiving unconditional Competition Tribunal approval in November 2025. Head of Corporate Development Steven J. Heilbron said the company anticipates closing the transaction before the end of calendar 2026. Bank Zero had deposits of just under ZAR 400 million when the transaction was announced in June 2025. Heilbron said deposits had surpassed ZAR 700 million by April 2026 and are expected to exceed ZAR 1 billion by December 2026. Bank Zero is budgeted to reach standalone breakeven by December, before any Lesaka contribution, he said. Management expects to migrate Lesaka’s consumer lending book to Bank Zero first, followed by its merchant lending book, with both transfers targeted by the end of fiscal 2027. If completed as planned, Lesaka estimates gross debt would fall to approximately ZAR 2.3 billion and its leverage ratio would be below one time by June 2027. For fiscal 2027, Lesaka guided for net revenue of ZAR 7 billion to ZAR 7.7 billion, adjusted EBITDA of ZAR 1.45 billion to ZAR 1.6 billion, and adjusted EPS of ZAR 7.50 to ZAR 8.50. Management said the outlook includes Bank Zero but assumes limited financial contribution from the acquisition during fiscal 2027, with most synergies expected in fiscal 2028. Lesaka Technologies, Inc operates as a Fintech company that utilizes its proprietary banking and payment technologies to deliver financial services solutions to merchants (B2B) and consumers (B2C) in Southern Africa. It offers cash management solutions, growth capital, card acquiring, bill payment technologies, and value-added services to formal and informal retail merchants, as well as banking, lending, and insurance solutions to consumers across Southern Africa. The company also engages in the sale of POS devices, SIM cards, and other consumables; and license of rights to use certain technology developed by the company, as well as offers related technology services. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Lesaka Technologies Q4 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for September 2026.

This article first appeared on GuruFocus. Net Revenue: FY26 net revenue grew 20% to ZAR6.33 billion; Q4 net revenue rose 8% to ZAR1.62 billion. Group Adjusted EBITDA: FY26 grew 41% to ZAR1.27 billion; Q4 rose 22% to ZAR367 million (all-time quarterly high). Adjusted EPS: FY26 grew 210% to ZAR6.51; Q4 adjusted EPS rose from ZAR0.90 to ZAR2.40. GAAP Net Income: Positive full-year GAAP profitability of approximately ZAR40 million, first time since 2022. Group Adjusted EBITDA Margin: Q4 margin increased to 22.6% from 20.1% a year ago. Operating Cash Flow: FY26 net cash from operating activities ZAR864 million; Q4 net operating cash flow ZAR279 million vs. ZAR113 million utilization a year ago. Free Cash Generation: ZAR443 million positive cash generation after ZAR421 million capital expenditure. Capital Expenditure: FY26 spend ZAR421 million (above ZAR400 million guidance); Q4 ZAR171 million. Net Debt / Leverage: Net debt to group adjusted EBITDA fell to 1.9x from 2.9x; gross debt reduced to ZAR3.8 billion from ~ZAR4 billion. Non-Operational Charges: Reduced from ~ZAR1.7 billion to ZAR35 million; once-off charges fell from ZAR322 million to ZAR91 million. Group Costs: ZAR63 million for Q4 and ZAR238 million for the year; FY27 run rate expected to reset to ~ZAR350 million. Merchant Net Revenue: FY26 grew 3% to ZAR3.1 billion (core net revenue up 6% to ZAR2.8 billion); Q4 declined 10% to ZAR729 million. Merchant Adjusted EBITDA: Q4 declined 33% to ZAR122 million. Merchant Active Base: Active merchants grew 3% to 132,000; community merchants up 6% to 107,000, corporate down 7% to 25,000. Merchant ARPU: Blended ARPU declined 8% to ZAR1,750; corporate standalone flat at just under ZAR6,000; community down 8% to ZAR755. Merchant Product Revenue: Acquiring grew 21% to ZAR777 million; software grew 34% to ZAR391 million; ADP, cash, and lending each declined single digits. Merchant TPV: Acquiring TPV up 27% to ZAR44 billion; ADP TPV up 31% to ZAR55 billion; cash TPV up 4% to ZAR119 billion. Merchant Lending: Q4 originations up 20% to ZAR249 million; book closed 15% higher at ZAR463 million. Consumer Net Revenue: FY26 grew 38% to ZAR2.4 billion; Q4 rose 31% to ZAR669 million. Consumer Adjusted EBITDA: Q4 increased 56% to ZAR253 million. Consumer Product Revenue: Transactional accounts grew 24% to ZAR855 million; lending grew 49%; insurance grew 42%. Consumer Active Base: Active consumers grew 11% to 2.1 million; grant beneficiary market share rose to 14.9% from 13.6%. Consumer ARPU: Grew 15% to ZAR98 per month from ZAR85. Consumer Lending: Q4 originations up 20% to ZAR937 million; outstanding portfolio grew 40% to ZAR1.4 billion. Consumer Insurance: Gross written premiums grew 36% to ZAR155 million; in-force policies up 34% to 753,000; collection ratio moved from 96% to 94%. Enterprise Net Revenue: FY26 grew to ZAR913 million (core net revenue up 45%); Q4 rose 34% to ZAR255 million. Enterprise Adjusted EBITDA: Q4 delivered ZAR54 million, up 255%. Enterprise TPV: ADP TPV up 18% to ZAR12.2 billion; bill payments up 12% to ZAR9.3 billion; utilities TPV up 16% to ZAR502 million. Enterprise Meter Base: Active meters grew 11% to 382,000. Bank Zero Deposits: Passed ZAR700 million by April; expected to exceed ZAR1 billion by December 2026 and above ZAR4 billion by June 2029. FY27 Q1 Guidance: Net revenue ZAR1.581.66 billion; group adjusted EBITDA ZAR200240 million; adjusted EPS ZAR0.400.60. FY27 Full-Year Guidance: Net revenue ZAR77.7 billion; group adjusted EBITDA ZAR1.451.6 billion; adjusted EPS ZAR7.508.50. Medium-Term Ambition (FY29): Net revenue ~ZAR11 billion (>20% CAGR); group adjusted EBITDA margin >25% (>30% CAGR); adjusted EPS >ZAR18 (>40% CAGR). Warning! GuruFocus has detected 7 Warning Signs with LSAK. Is LSAK fairly valued? Test your thesis with our free DCF calculator. Release Date: September 10, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Lesaka Technologies Inc (NASDAQ:LSAK) delivered on all four FY26 guidance measures, including achieving positive full-year GAAP net income for the first time since 2022. Group net revenue grew 20% to ZAR6.33 billion, group adjusted EBITDA grew 41% to ZAR1.27 billion, and adjusted EPS grew 210% to ZAR6.51. The consumer division had an outstanding year with net revenue up 38% to ZAR2.4 billion, growing its customer base by 19% in a largely flat market. The enterprise division delivered strong growth with core net revenue up 45%, driven by increases in both volumes and take rates for its main products. The company reduced its net debt to group adjusted EBITDA ratio to 1.9x, achieving its medium-term leverage target ahead of the Bank Zero acquisition. The merchant division had a challenging year, with net revenue growing only 3% and Q4 net revenue declining 10% due to revenue compression and integration issues. Merchant segment adjusted EBITDA declined 33% in Q4, reflecting soft operational performance and ongoing integration and rationalization efforts. The company experienced take rate declines across key merchant products, including a 25% drop in ADP take rates due to commission resets and a mix shift to lower-margin products. Lesaka Technologies Inc (NASDAQ:LSAK) under-indexed on its lending expectations in the merchant division, with a 3% decline in core net revenue. The company expects a reset in its annual group cost run rate to approximately ZAR350 million in FY 2027, an increase that will impact near-term profitability. Q: Ross Krige from Investec asked about the merchant division's Q4 performance being worse than expected and the Q1 restructuring costs, questioning confidence that these costs won't continue beyond Q1. A: Executive Chairman Ali Mazanderani acknowledged the FY26 merchant performance was weaker than expected, attributing it to timing issues and margin softness, especially in the ADP business. He clarified that the Q1 issue is cost-related, not core net revenue, and while he couldn't be certain about spillover into early Q2, the full-year guidance reflects confidence that it won't extend beyond that period. Q: James Slabbert from Standard Bank Securities asked how Lesaka intends to grow Bank Zero's deposit base, excluding EasyPay deposits. A: Head of Corporate Development Steven Heilbron outlined three deposit sources: alliance banking (scaling substantially after Paymentology onboarding), Lesaka's own consumer deposits migrating to Bank Zero, and an organic retail treasury strategy. He noted deposits grew from under ZAR400 million at signing to ZAR700 million by April 2026, with expectations exceeding ZAR1 billion by December 2026 and ZAR4 billion by June 2029, adding he believes they will "surprise on the upside." Q: James Slabbert from Standard Bank Securities asked whether Lesaka intends to continue M&A and which areas it might target. A: Steven Heilbron confirmed continued M&A interest, noting two or three potentially transformative transactions under consideration. He emphasized a commitment to accretive deals only, citing the leverage ratio dropping below 1x by June 2027 as providing flexibility. He also mentioned smaller bolt-on transactions focused on the SADC region, to be announced in due course. Q: Guru Sidaarth from Oppenheimer asked how Lesaka competes against larger incumbent banks like Capitec entering the merchant market and emerging localized fintechs. A: Ali Mazanderani cited three structural advantages: modern purpose-built technology (increasingly relevant with AI), disruptive human-led distribution embedded in the "where you are" strategy, and freedom from legacy profit pools that constrain incumbents from cannibalizing existing revenue. He argued these traits are common to fintech insurgents globally and are why they tend to win over the long run. Q: Ross Krige from Investec asked about the medium-to-long-term margin outlook for the consumer segment and the sustainability of enterprise's strong performance. A: CFO Daniel Smith noted consumer margin ended Q4 at 38%, above the ~35% guided average, and expects it to trend upward over time with operational leverage, though not sequentially due to seasonality. Ali Mazanderani said enterprise will likely be the fastest-growing segment this year, with sustainable growth and margin expansion, citing simultaneous volume and take-rate increases across both core products as evidence of strong product-market fit. Q: Theodore O'Neill from Litchfield Hills Research asked whether exiting the ATM business had a marginal negative impact on the merchant business and whether a rebound is expected after the Bank Zero acquisition. A: CEO Southern Africa Lincoln Mali confirmed the ATM exit had a small, non-recurring impact as it was outside core strategy. He said merchant growth is expected in the second half of the financial year from standalone actions, with Bank Zero providing an added layer of benefits across all divisions rather than being the primary driver of the rebound. Q: James Friedman from Susquehanna asked which KPIs investors should watch to measure merchant trajectory and whether distribution is direct or indirect. A: Ali Mazanderani identified the number of merchants and ARPU per merchant as the primary drivers of core net revenue, with second-level metrics being TPV and take rates for acquiring, ADP, and cash, plus cross-sell product penetration. He noted distribution is primarily direct through a material sales and service operation, supplemented by third-party agents and strategic partnerships. Q: Ross Krige from Investec asked about working capital and loan flow guidance for FY2027, and Bank Zero's capital requirements. A: CFO Daniel Smith said EBITDA largely converts to cash quarterly, with working capital and loan book growth being cyclical (especially Q2 and Q3), advising an annual view. He guided working capital at 1%-2% of net revenue annually, with significant consumer lending book growth expected, funded by free cash flow until Bank Zero. Steven Heilbron said capital adequacy guidance is pending from the regulator, but models are "excessively conservative" with more capital provided than ultimately justified. Q: Ross Krige from Investec asked at what point the acceleration in active merchant growth toward the FY2029 ambition would take hold. A: Ali Mazanderani said the acceleration is already beginning, with the strategy implementation starting in September. He indicated that by Q2 of FY2027, the acceleration in merchant count will be visible in reported numbers. Q: Theodore O'Neill from Litchfield Hills Research asked whether it's too early to say how the bank business will be promoted to existing and new customers, and whether it will result in meaningfully higher OpEx in 2027. A: Steven Heilbron said the bank enables a strong foray into alliance banking for financial inclusion, plus business banking, savings, and ForEx for merchants to consolidate financial activities. For consumers, it broadens opportunity beyond the grant niche. Ali Mazanderani added the bank creates economic value and strategically broadens the offering across all segments. Q: James Slabbert from Standard Bank Securities asked about the debt picture and whether Lesaka can retire contractual obligations early from cash generation. A: CFO Daniel Smith said Lesaka has significant flexibility with its lenders, who have been longstanding supporters and are important enablers in migrating lending books into Bank Zero. He did not specify early retirement plans but emphasized the constructive lender relationships. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

JOHANNESBURG, South Africa, Sept. 09, 2026 (GLOBE NEWSWIRE) -- Lesaka Technologies, Inc. (Nasdaq: LSAK; JSE: LSK) today released results for the fourth quarter (“Q4 2026”) and full year of fiscal 2026 (“FY2026”). FY2026 performance1:All growth rates are year-on-year between FY2026 and fiscal year 2025 (“FY2025”). (1)   Average exchange rates for FY2026 and for FY2025 were ZAR 16.91 to $1 and ZAR 17.90 to $1, respectively.(2)   Non-GAAP measure. Refer to Attachment A of press release for full reconciliation of non-GAAP measures.(3)   Revised FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026. Also refer to Immaterial revision of prior period information section below. Q4 2026 performance1:All growth rates are calculated on a year-on-year basis between Q4 2026 and the fourth quarter of FY2025 (“Q4 2025”). (1)   Average exchange rates for Q4 2026 and for Q4 2025 were ZAR 16.49 to $1 and ZAR 17.87 to $1, respectively.(2)   Non-GAAP measure. Refer to Attachment A of press release for full reconciliation of non-GAAP measures.(3)   Revised Q4 FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026. Also refer to Immaterial revision of prior period information section below. Commenting on the results, Lesaka Executive Chairman Ali Mazanderani said, “I am delighted that Lesaka delivered on all of its FY2026 guidance metrics, exceeded the top end of our Adjusted EPS guidance range and achieved full-year GAAP profitability for the first time since Lesaka was effectively created in 2022. FY2026 was a milestone year for Lesaka, and we enter FY2027 with real momentum and a platform built for strong, sustainable growth. Looking ahead, I am pleased to share our medium-term ambitions, which includes Adjusted EPS CAGR in excess of 40% over the next three years.” Outlook: First Quarter 2027 (“Q1 2027”) and Full Fiscal Year 2027 (“FY 2027”) guidance While we report our financial results in USD, we measure our operating performance in ZAR, and as such we provide our guidance accordingly. For FY2027, the year ending June 30, 2027, we expect: Net Revenue between ZAR 7.0 billion and ZAR 7.7 billion Group Adjusted EBITDA between ZAR 1.45 billion and ZAR 1.60 billion Adjusted earnings per share between ZAR 7.50 and ZAR 8.50 For Q1 FY2027, the quarter ending September 30, 2026, we expect: Net Revenue between ZAR 1.58 billion and ZAR 1.66 billion Group Adjusted EBITDA between ZAR 200 million and ZAR 240 million Adjusted earnings per share between ZAR 0.40 and ZAR 0.60 Q1 FY2027 guidance reflects both seasonality and expected once-off restructuring costs in the merchant business. FY2027 guidance includes the impact of the pending Bank Zero acquisition (subject to regulatory approval by the Financial Surveillance Department of the South African Reserve Bank and other customary closing conditions) and excludes any unannounced mergers and acquisitions that we may conclude. We have provided outlook regarding Net Revenue, Group Adjusted EBITDA and Adjusted earnings per share, which are non-GAAP financial measures and exclude certain revenue and charges. We have not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items is not provided. We are unable to provide guidance for these reconciling items because we cannot determine their probable significance, as certain items are outside of the control of Lesaka and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort. Earnings Presentation for Q4 FY2026 Results Our earnings presentation will be posted to the Investor Relations page of our website prior to our earnings call. Webcast Registration Link to access the results webcast: https://www.corpcam.com/Lesaka10092026 Participants using the webcast will be able to submit questions during the live Question and Answer session. Link to conference call dial-in registration via Chorus Call: https://services.choruscall.it/DiamondPassRegistration/register?confirmationNumber=7689509&linkSecurityString=174b56677f Dial in details and individual pin to be provided on registration. Participants using the conference call dial-in will be able to ask their questions during the live Question and Answer session. Following the presentation, an archived version of the webcast will be provided on Lesaka’s Investor Relations website. Immaterial revision of prior period information While preparing our Annual Report on Form 10-K for the year ended June 30, 2026, we determined that certain intercompany transactions processed in previous periods were incorrectly recorded, and which resulted in the incorrect amount of deferred income taxes recorded in our consolidated balance sheet, consolidated statements of operations, consolidated statement of comprehensive loss, consolidated statement of changes in equity, consolidated statement of cash flows and related notes to the consolidated financial statements included in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q since June 30, 2025, and these filings were incorrect. We also determined that the presentation of the number of shares and amounts used for common stock and treasury shares and the amount of additional paid-in capital in our consolidated balance sheets and consolidated statement of changes in equity and related notes to the consolidated financial statements included in previously filed Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q since June 30, 2006, were incorrect. In these previous filings, shares of our common stock repurchased by us were incorrectly presented as treasury shares. Under the Florida Business Corporation Act, shares acquired directly by the issuing corporation are restored by operation of Florida law to the status of authorized but unissued shares. However, shares repurchased by a company are presented as treasury shares if (i) there is a provision in a corporation’s articles of incorporation designating the repurchase of a corporation’s shares as treasury shares, or (ii) in the case of a corporation whose shares are registered on a national securities exchange, the repurchased shares that have been designated as treasury shares in the corporation’s bylaws or in resolutions of its board of directors. Shares repurchased by us were not designated as treasury shares under (i) or (ii) as described in the preceding sentence. We assessed the materiality of these errors and changes in presentation on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99“Materiality” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements”. Based on this assessment, we concluded that previously issued financial statements were not materially misstated based upon overall considerations of both quantitative and qualitative factors. For additional information refer to Note 1 to our Form 10-K for the year ended June 30, 2026, as filed with the SEC. 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 Group Adjusted EBITDA, Net Revenue, Adjusted Earnings, Adjusted Earnings per Share, and headline (loss) earnings per share are non-GAAP measures. Refer to Attachment A for a reconciliation of these non-GAAP measures. Non-GAAP Measures Group Adjusted EBITDA Group Adjusted EBITDA is net income (loss) before interest, taxes, depreciation and amortization, adjusted for non-operational transactions (including loss on impairment/disposal of equity-accounted investments), impairment loss, earnings (loss) from equity-accounted investments, stock-based compensation charges and once-off items. Once-off items represent non-recurring expense items, including costs related to acquisitions and transactions consummated or ultimately not pursued. Net Revenue Net revenue is a non-GAAP financial measure. Revenue is the financial measure calculated in accordance with GAAP that is most directly comparable to net revenue. We generate revenue from the provision of transaction-processing services through our various platforms and service offerings. We use these platforms to (a) sell prepaid airtime vouchers (“Pinned Airtime”) which is held as inventory, and (b) distribute pre-paid solutions including prepaid airtime vouchers (which we do not hold as inventory) (“Pinless Airtime”), prepaid electricity, gaming vouchers, and other products, to users of our platforms. We act as a principal when we sell Pinned Airtime held as inventory and record revenue and cost of sales on a gross basis when sold. We act as an agent in a transaction when we provide pre-paid solutions through our various platforms and services offerings because we do not control the good or service to be provided and we recognize revenue based on the amount that we are contractually entitled to receive for performing the distribution service on behalf of our customers using our platform. Our revenue under GAAP can fluctuate materially due to changes in the revenue mix between these revenue categories. Net Revenue is a non-GAAP measure and is calculated as revenue presented under GAAP less (i) the cost of Pinned Airtime sold by us, and (ii) commissions paid to third parties selling all other agency-based pre-paid solutions (including Pinless Airtime, electricity and other products) provided through our distribution channels. We believe that the use of Net Revenue is meaningful to users of financial information because it seeks to eliminate the impact of the change in the revenue mix from the revenue categories over the periods presented. Adjusted earnings and Adjusted earnings per share Adjusted earnings and Adjusted earnings per share is GAAP net income (loss) and income (loss) per share adjusted for the amortization of acquisition-related intangible assets (net of deferred taxes), stock-based compensation charges, and unusual non-recurring items, including costs related to acquisitions and transactions consummated or ultimately not pursued. Adjusted earnings and Adjusted earnings per share for fiscal 2026 also includes adjustments related to the loss on impairment of equity-accounted investments, impairment loss, ATM exit expenses and impairments, reversal of allowance for doubtful loans receivable, Lesaka rebrand refresh expenses (net of tax), income recognized related to closure of legacy businesses (net of tax), changes in the fair value of equity securities (net of deferred tax), loss on disposal of equity securities, other income and intangible asset amortization, net related to non-controlling interests. Adjusted earnings and Adjusted earnings per share for fiscal 2025 also includes adjustments related to changes in the fair value of equity securities (net of deferred tax), impairment loss related to goodwill and intangible assets, an adjustment for deferred tax adjustments to the valuation allowance for a subsidiary which released its valuation allowance related to net operating losses in full during Q4 2025, loss on disposal of equity-accounted investments and intangible asset amortization, net related to non-controlling interests. Management believes that the Group Adjusted EBITDA, Adjusted earnings and Adjusted earnings per share metrics enhance its own evaluation, as well as an investor’s understanding of our financial performance. Attachment A presents the reconciliation between GAAP net income (loss) attributable to Lesaka and these non-GAAP measures and the reconciliation between the basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP and the denominator used for Adjusted earnings per share. Headline earnings (loss) per share (“HEPS”) The inclusion of HEPS in this press release is a requirement of our listing on the JSE. HEPS basic and diluted is calculated using net income (loss) which has been determined based on GAAP. Accordingly, this may differ to the headline (loss) earnings per share calculation of other companies listed on the JSE as these companies may report their financial results under a different financial reporting framework, including, but not limited to, International Financial Reporting Standards. HEPS basic and diluted is calculated as GAAP net income (loss) adjusted for the loss on sale of equity-accounted investments, impairment losses related to our equity-accounted investments, impairment losses and (profit) loss on sale of property, plant and equipment. Attachment C presents the reconciliation between our net income (loss) used to calculate earnings (loss) per share basic and diluted and HEPS basic and diluted and the calculation of the denominator for headline diluted earnings (loss) per share. About Lesaka Technologies, Inc. (www.lesaka.tech) Lesaka operates a South African fintech company driven by a purpose to provide financial services, software and other business services to Southern Africa's underserviced consumers and merchants. We offer an integrated and holistic multiproduct platform that provides transactional accounts, lending, insurance, merchant acquiring, cash management, software and Alternative Digital Products (“ADP”). We provide targeted solutions and integrations to facilitate payments between consumers, merchants, and enterprises. By providing a full-service fintech platform in our connected ecosystem, we facilitate the digitization of commerce in our markets. Lesaka has a primary listing on NASDAQ (NASDAQ:LSAK) and a secondary listing on the Johannesburg Stock Exchange (JSE: LSK). Visit www.lesaka.tech for additional information about Lesaka. Forward-Looking Statements This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as “expects,” “estimates,” “projects,” “believes,” “anticipates,” “plans,” “could,” “would,” “may,” “will,” “intends,” “outlook,” “focus,” “seek,” “potential,” “mission,” “continue,” “goal,” “target,” “objective,” derivations thereof, and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. In this press release, statements relating to future financial results and future financing and business opportunities are forward-looking statements. Additional information concerning factors that could cause actual events or results to differ materially from those in any forward-looking statement is contained in our Form 10-K for the fiscal year ended June 30, 2026, as filed with the SEC, as well as other documents we have filed or will file with the SEC. We assume no obligation to update the information in this press release, to revise any forward-looking statements or to update the reasons actual results could differ materially from those anticipated in forward-looking statements. Information included in press release All information is unaudited unless otherwise noted or accompanied by an audit opinion and is subject to the more comprehensive information contained in our SEC reports and filings. All information speaks as of the last fiscal quarter or year for which we have filed a Form 10-K or Form 10-Q, or for historical information the date or period expressly indicated in or with such information. Investor Relations and Media Relations Contacts:Idris DungarwallaEmail: [email protected] Media Relations Contact:Ian HarrisonEmail: [email protected] Technologies, Inc. Attachment A Reconciliation of GAAP income (loss) attributable to Lesaka to Group Adjusted EBITDA: Three months and year ended June 30, 2026 and 2025, and three months ended March 31, 2026 (A)   Revised FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026.(1)   Impairments excludes an amount of $0.7 million which is included in the caption exit of ATM business in the table below. Once-off items are non-recurring in nature, however, certain items may be reported in multiple quarters. For instance, transaction costs include costs incurred related to acquisitions and transactions consummated or ultimately not pursued. Rebrand relates to costs incurred related to Lesaka’s new brand launched in November 2025, we expect that it will take the remainder of the 2026 calendar year to roll out the refreshed brand throughout the organization. These are non-recurring costs incurred as a necessary step in a set of strategic initiatives designed to create a “One Lesaka” identity for our customers and our employees. Exit of ATM business includes expenses incurred to exit our ATM business and the impairment of ATMs recorded in property, plant and equipment. Income recognized related to closure of legacy businesses represents (i) gains recognized related to the release of the foreign currency translation reserve on deconsolidation of a subsidiary and (ii) costs incurred related to subsidiaries which we are in the process of deregistering/ liquidating and therefore we consider these costs non-operational and ad hoc in nature. Indirect tax provision release relates to the reversal of a non-recurring indirect tax provision created in fiscal 2023 which was resolved in fiscal 2025 following settlement of the matter with the tax authority. Reconciliation of Revenue under GAAP to Net Revenue: Three months and year ended June 30, 2026 and 2025, and three months ended March 31, 2026 Reconciliation of GAAP net income (loss) and earnings (loss) per share, basic, to Adjusted earnings and earnings per share, basic: Three months ended June 30, 2026 and 2025 (A)   Revised FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026. Year ended June 30, 2026 and 2025 (A)   Revised FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026.(1)   Impairments excludes an amount of $0.7 million which is included in the caption ATM exit expenses and impairments. Calculation of the denominator for Adjusted earnings per share Weighted average number of shares used to calculate Adjusted earnings per share represents basic weighted-average common shares outstanding and unvested restricted shares expected to vest plus the effect of stock options that are in the money at the reporting date and shares to be issued related to acquisitions. Attachment B Unaudited Condensed Consolidated Financial Statements (A)   Revised FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026. (A)   Revised FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026. Note 1: In October 2025, the Company identified that it had understated its June 30, 2025, cost and accumulated depreciation by $6.5 million. The carrying value of property, plant and equipment reported as of June 30, 2025 was not impacted by the misstatement. Accumulated depreciation has been recast to increase the amount from $48,636 to $55,086. (A)   Revised FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026. Our unaudited condensed consolidated Statements of Operations for the three months and year ended June 30, 2026 and 2025 in ZAR are presented below. We have translated the results of operations information for the three months and year ended June 30, 2026 and 2025, provided in the tables below using the actual average exchange rates per month between the USD and ZAR. (A)   Revised FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026. Our unaudited condensed consolidated Statements of Cash Flows for the three months and year ended June 30, 2026 and 2025 in ZAR are presented below. We have translated the cash flow information for the three months and year ended June 30, 2026 and 2025, provided in the tables below using the actual average exchange rates per month between the USD and ZAR. (A)   Revised FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026. Our unaudited condensed consolidated balance sheets as of June 30, 2026 and 2025 in ZAR are presented below. Amounts included in these balance sheets have been calculated using the $ amounts per our balance sheets presented in U.S. dollars and converted to ZAR using the exchange rates noted below. Note 1: In October 2025, the Company identified that it had understated its June 30, 2025, cost and accumulated depreciation by ZAR 114.5 million. The carrying value of property, plant and equipment reported as of June 30, 2025 was not impacted by the misstatement. Accumulated depreciation has been recast to increase the amount from ZAR 863,552 to ZAR 978,074. (A)   Revised FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026. Lesaka Technologies, Inc. Attachment C Reconciliation of net income (loss) used to calculate loss per share basic and diluted and headline earnings (loss) per share basic and diluted: Three months ended June 30, 2026 and 2025 (A)   Revised FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026. Year ended June 30, 2026 and 2025 (A)   Revised FY2025 amounts to correct the errors discussed in Note 1 of our Form 10-K for the year ended June 30, 2026. Calculation of the denominator for headline diluted earnings (loss) per share Weighted average number of shares used to calculate headline diluted earnings (loss) per share represents the denominator for basic weighted-average common shares outstanding and unvested restricted shares expected to vest plus the effect of dilutive securities under GAAP. We use this number of fully diluted shares outstanding to calculate headline diluted earnings (loss) per share because we do not use the two-class method to calculate headline diluted earnings (loss) per share.

Interested in Lesaka Technologies, Inc.? Here are five stocks we like better. Q3 results showed strong profitability: net revenue rose 16% to ZAR 1.58bn (slightly below prior outlook) while group adjusted EBITDA jumped 45% to ZAR 337m at the top end of guidance, and management tightened FY2026 guidance to ZAR 6.2–6.5bn revenue, ZAR 1.25–1.35bn adjusted EBITDA and raised adjusted EPS to ZAR 5.50–6.00, expecting to be net-income profitable for FY2026. Consumer and Enterprise drove growth while Merchant lags but margins improve: Consumer revenue climbed 41% to ZAR 627m with adjusted EBITDA up 81% and active consumers +19% to >2m, Enterprise revenue grew 51%, whereas Merchant revenue fell 4% to ZAR 751m even as segment EBITDA rose 3% and margin moved above 20% with a medium‑term target >30%. Portfolio cleanup, cash generation and capital outlook: management executed one‑off exits (ATM, SwitchPay) and rebrand/impairment actions while generating ZAR 608m operating cash flow in the quarter, reporting Q3 CapEx of ZAR 76m and reiterating annual CapEx guidance below ZAR 400m; the anticipated Bank Zero acquisition is expected to close in the coming months and factor into FY2027 plans. Lesaka Technologies (NASDAQ:LSAK) reported third-quarter fiscal 2026 results that management described as strong on a largely like-for-like basis, with year-over-year gains in net revenue, profitability, and cash generation. While group net revenue came in below the company’s prior outlook due to softer-than-expected performance in Merchant, Lesaka said adjusted EBITDA landed at the top end of guidance and operating leverage continued to improve. On the call, Ali (operator/presenter) said net revenue increased 16% year over year to ZAR 1.58 billion, below the company’s guidance of ZAR 1.65 billion due to the Merchant division “focus[ing] on the integration of the business units and closures of non-core business lines.” Even so, Ali said the company remains confident in the Merchant division’s “profile and trajectory.” → Insider Sales: Top AST SpaceMobile Insider Cuts Postion Over 30% Group adjusted EBITDA was ZAR 337 million, which Ali said was at the top end of guidance and up 45% year over year. Adjusted earnings rose to ZAR 148 million from ZAR 43 million, and adjusted EPS increased to ZAR 1.80 from ZAR 0.52. Net debt to group adjusted EBITDA improved to 2.1x, which management said is close to its 2x target. Group CFO Daniel Smith said the quarter included several non-recurring items tied to portfolio cleanup and the company’s push to build “One Lesaka.” In Merchant, Lesaka decided to exit its ATM business, which Smith called “structurally loss-making and immaterial in scale.” The wind-down drove an impairment charge of about ZAR 27 million split between impairments and once-off items. → Light Speed Returns: Corning Cashes In on NVIDIA Growth Smith also said SwitchPay, a legacy buy-now-pay-later product, was sunset during the quarter, resulting in a ZAR 6.5 million impairment charge. At the group level, Lesaka reversed a ZAR 25 million receivables allowance tied to collection of monies owed from a legacy investment, and deregistered a legacy offshore entity (Masterpayment), producing a ZAR 14 million gain. Rebrand-related costs totaled ZAR 16 million in the quarter, with Smith reiterating the company’s expected rebrand costs of ZAR 50 million to ZAR 75 million. Lesaka also recorded a ZAR 26 million impairment charge on lease premises due to lower utilization as it consolidates offices. Smith added that purchase price amortization of intangible assets was ZAR 98 million, which he said reflects a more normalized run rate as accelerated write-downs relating to legacy brands have tapered off. → Years in the Making, AMD’s Upside Movement Has Just Begun Smith said the Consumer division delivered “another record performance,” with net revenue up 41% to ZAR 627 million, an all-time quarterly high. Enterprise net revenue grew 51% to ZAR 220 million, which included three months of contribution from Recharger versus one month in the prior period, and also reflected what Smith called “meaningful organic growth” as the unit’s strategy refresh gains traction. Merchant net revenue declined 4% to ZAR 751 million. Smith said Lesaka expects Merchant net revenue to be flat next quarter, even as profitability improves. On adjusted EBITDA, Merchant segment adjusted EBITDA increased 3% to ZAR 151 million, and Smith said the margin rose above 20% as efficiencies implemented over the past six months started to come through. Management reiterated medium-term expectations that Merchant margin can rise above 30%. Consumer segment adjusted EBITDA increased 81% to a record ZAR 213 million. Smith said last quarter’s origination volumes in lending began to flow through to results, driving operating leverage. Enterprise delivered ZAR 35 million of segment adjusted EBITDA as it scales. Group costs were ZAR 62 million, which Smith said was slightly elevated due to investment in finance, risk and compliance frameworks and strategic head office hires; he characterized this as a more accurate run-rate going forward. Smith said cash generated from business operations was ZAR 365 million, “closely tracking” adjusted EBITDA. Lesaka required only ZAR 10 million of additional funding for its lending books, which Smith attributed to the short duration of the credit cycle and seasonality effects. The company paid ZAR 98 million in cash interest and also benefited from a ZAR 320 million release of seasonal working capital versus the prior quarter, resulting in ZAR 608 million of operating cash flow. CapEx was ZAR 76 million, split relatively evenly between cash vaults, POS devices, and software and platform development. Smith reiterated guidance that annual CapEx should remain below ZAR 400 million. In Q&A, he noted some quarterly variability tied to timing of POS device deliveries and capitalized software development, but said the annual level is the appropriate way to view investment needs. Ali added that mix also plays a role, as faster-growing product lines generally have lower CapEx requirements, and said management expects the CapEx-to-revenue percentage to decline over time, although not necessarily in a straight line each quarter. CEO Southern Africa Lincoln Mali said Lesaka is integrating five historical merchant components into a unified backbone, centralizing data, and using AI to improve risk capabilities, reduce fraud, and reduce customer friction. He also highlighted plans for AI-enabled WhatsApp support and targeted cross-sell engines to improve customer experience and lift ARPU over time. In Merchant, Mali said active merchants increased 6% year over year, with community merchants up 8% and corporate merchants down 4% due primarily to increased competition in more aligned products such as acquiring. Merchant ARPU was 7% lower year over year, which he attributed mainly to mix shift toward community merchants, who generate lower ARPU than corporate merchants. Mali also discussed performance across key volume indicators: Card total processed volume (TPV) increased 7% to ZAR 10.6 billion, with active acquiring merchants up 9% to 74,000. Cash volume grew 2%, with vaults slightly higher at 4,900. Alternative digital products (ADP) TPV increased 30%, which Mali said was supported by growth of the cash offering in community merchants. Merchant lending originations were 22% lower year over year at ZAR 227 million, which Mali said was due to an unusually high comparative period driven by a prior fuel-related lending push. He said March was “very strong,” driven by demand in the fuel sector ahead of anticipated price increases. The merchant lending portfolio ended up 4% at ZAR 427 million, and Mali said the company was deliberately conservative while refining its merchant lending offering. In Consumer, Mali said active consumers increased 19% year over year to over 2 million, including 1.7 million permanent grant recipients representing 14.6% market share. He said Lesaka’s medium- to long-term expectation is it could reach 25% share “based on our current growth trajectory and distribution plans.” Mali said net additions in Q3 were almost 26,000, and he pointed to continued distribution expansion, including expectations to add 30 community sites and 15 new branches by June. Consumer ARPU increased 19% to ZAR 99 per month, which Mali tied to engagement and cross-sell success. He said 50% of the active consumer base has two or more products and 20% is using the full product suite, up from 17% last year. Mali said Consumer lending originations were approximately ZAR 856 million, up 33% year over year, and the outstanding book grew 73% to around ZAR 1.4 billion. He said the nine-month loan product now represents nearly 50% of new originations, and the company is evaluating modest increases to maximum loan values and repayment terms while maintaining disciplined risk controls. Mali also said the loan portfolio is performing within normal parameters and that provision levels of 6.5% remain above observed risk experience, with any refinements to be communicated at year-end. In insurance, Mali said gross premiums written grew 38% to ZAR 146 million and in-force policies rose 34% to 704,000. He said Lesaka has begun rolling out policy sales to non-Lesaka consumers in the SASSA ecosystem, which he framed as a significant strategic opportunity, though “not yet financially material.” Mali said the company expects insurance collection rates to moderate toward about 90% over time as attachment rates and standalone sales increase, but still expects net positive growth in gross written premiums. In Enterprise, Mali said ADP TPV increased 19% year over year, bill payments rose 12.5% to ZAR 9 billion, and prepaid solutions grew more than 50% to ZAR 2.8 billion. He said ADP take rate improved 22% to 1.3%. In utilities, TPV rose 18% to ZAR 477 million on a like-for-like basis and active meters increased to 368,000. Mali said Lesaka plans to launch an electricity advance product in Q4 that will allow utilities customers to load electricity when short of funds via an interest-free facility, with Lesaka charging a flat fee and recovering the advance from future purchases. Ali also outlined three strategic themes: exploring blockchain-based payment rails (including use cases around a ZAR-denominated stablecoin through ZARU), expanding short-term credit advances against utility products, and embedding AI tools across engineering, product launches, fraud management and operational efficiencies. He said additional details will be shared at the end-of-year investor presentation. Lesaka tightened its fiscal 2026 net revenue guidance to ZAR 6.2 billion to ZAR 6.5 billion, with the midpoint implying 20% year-over-year growth. Ali said the company remains on track to deliver adjusted EBITDA guidance for the year, while tightening the range to ZAR 1.25 billion to ZAR 1.35 billion and expecting results at the bottom end of the previous range; the midpoint implies 43% year-over-year growth. Lesaka raised adjusted EPS guidance from “at least ZAR 4.60” to a range of ZAR 5.50 to ZAR 6.00, with the midpoint implying growth of greater than 150% year over year. Ali said the company expects to be profitable on a net income basis (without exclusions) for FY2026, which he said would be the first profitable year “since the creation of Lesaka four years ago in May 2022.” Management said it expects to provide FY2027 and medium-term guidance at its September end-of-year presentation, and anticipates that guidance will include Bank Zero given expectations the acquisition will be completed “in the coming months.” In response to a question about Bank Zero’s relevance to Merchant cross-sell, Ali said the deal should enable Lesaka to offer a banking product through its existing merchant salesforce and relationships, potentially increasing ARPU, including benefits from float and other sources. Lesaka Technologies, Inc operates as a Fintech company that utilizes its proprietary banking and payment technologies to deliver financial services solutions to merchants (B2B) and consumers (B2C) in Southern Africa. It offers cash management solutions, growth capital, card acquiring, bill payment technologies, and value-added services to formal and informal retail merchants, as well as banking, lending, and insurance solutions to consumers across Southern Africa. The company also engages in the sale of POS devices, SIM cards, and other consumables; and license of rights to use certain technology developed by the company, as well as offers related technology services. The article "Lesaka Technologies Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.

Image source: The Motley Fool. Thursday, May 7, 2026 at 8 a.m. ET Chairman — Ali Zaynalabidin Mazanderani Chief Executive Officer, Southern Africa — Lincoln Mali Chief Financial Officer — Daniel Smith Ali Zaynalabidin Mazanderani: Good morning and good afternoon. Thank you for joining us for Lesaka's Q3 results presentation. I'm pleased to report Lesaka has delivered a strong set of results for Q3 FY 2026. It's also worth noting that this is substantially on a like-for-like basis. Net revenue was up 16% to ZAR 1.58 billion, short of our guidance of ZAR 1.65 billion due to slightly softer-than-expected performance in Merchant, as the division focused on the integration of the business units and closures of noncore business lines. We remain confident in the profile and trajectory of the Merchant division, as Lincoln will talk you through in more detail shortly. From a profitability perspective, group adjusted EBITDA came in at ZAR 337 million, at the top end of our guidance and a 45% increase over last year. Adjusted earnings was up 246% from ZAR 43 million to ZAR 148 million. Similarly, adjusted earnings per share increased from ZAR 0.52 to ZAR 1.80 for the quarter. Net debt to group adjusted EBITDA of 2.1x is a significant improvement over last year and is close to our target of 2x. Dan will unpack the divisional numbers in more detail shortly. From the last quarter, we have simplified how we present our business, emphasizing its core structural revenue drivers. We present a single total view for active consumers and active merchants and aggregated ARPU for each. Consumer ARPU is a function of our transactional bank account and the penetration of our lending and insurance products within our account base, while Merchant ARPU is a function of our 5 products: acquiring, Alternative Digital Products (ADP), lending, software and cash. Over time, we may continue to further refine our definitions of ARPU to better reflect the business strategy. We have 750 Enterprise clients. So rather than representing the drivers in Enterprise on an ARPU basis, we do so on a take rate and total process volume for ADP and utilities. These 6 variables across the group together explain more than 90% of our net revenue. We will use this framework as the key drivers of the net revenue of our businesses each quarter to thread the operational performance of each division, along with the financial results. In full year results, we will provide more granular information on the underlying drivers of each of our core products by division. For now, I will hand you over to Dan to take you through our financial performance in more detail. Daniel Smith: Thank you, Ali. Good morning and good afternoon to everyone joining us today. Before turning to our operating and financial performance and the components of our business, I would like to focus on the excellent progress we've made this quarter in addressing some of our legacy and noncore activities, as well as creating One Lesaka. These initiatives have resulted in a few nonrecurring items that have had a mixed impact on our results this quarter. In our Merchant division, we made the decision to exit the ATM business, reflecting our disciplined focus on profitability and capital allocation. The business was structurally loss-making and immaterial in scale. Its wind down removes an ongoing group adjusted EBITDA drag and allows us to redeploy capital towards higher-return, digitally-led growth opportunities as part of our broader portfolio optimization. This resulted in a total impairment charge of approximately ZAR 27 million, split between our impairment entries and once-off items. Also within the Merchant division, Switchpay, a legacy buy now, pay later product, has been sunset, resulting in an impairment charge of ZAR 6.5 million recognized in the quarter. At a group level, we focused on the collection of monies owed to us from a legacy investment and reversed the receivables allowance of ZAR 25 million. Similarly, we also deregistered a legacy offshore entity, being Masterpayment, resulting in a gain of ZAR 14 million. As highlighted last quarter, we are progressing with our major rebrand to One Lesaka. The rebrand has been launched with an activation campaign, with the external customer rollout planned over the coming months. Rebrand-related costs of ZAR 16 million were incurred during the quarter, and we maintain our guided total rebrand costs in the range of ZAR 50 million to ZAR 75 million. Given our transformation as One Lesaka and our office consolidation, we also recognized an impairment charge of ZAR 26 million on lease premises due to lower utilization rates. Finally, the accelerated write-down of our intangible assets relating to our legacy brands has tapered off with the purchase price amortization of intangible assets now at ZAR 98 million, which reflects a more normalized run rate. Looking at our divisional performance, Lesaka delivered nearly ZAR 1.6 billion net revenue, a growth of 16% for the quarter. Merchant net revenue declined 4% to ZAR 751 million, as previously explained by Ali. We expect Merchant net revenue to be flat next quarter. However, as you will see on the next slide, segment adjusted EBITDA for Merchant increased this quarter. In contrast, the Consumer division delivered another record performance with net revenue increasing 41% to ZAR 627 million, an all-time quarterly high. The Enterprise division also performed strongly, delivering net revenue growth of 51% to ZAR 220 million. This growth includes 3 months of contribution from Recharger compared to 1 month in the prior period. However, it also reflects meaningful organic growth, as the division's refreshed strategy and operating structure continue to gain traction in the channels they serve. At a group level, adjusted EBITDA of ZAR 337 million was an all-time quarterly high for Lesaka and represents a 45% year-on-year increase. The Merchant division recorded a 3% increase to ZAR 151 million. We are pleased to see evidence of the efficiencies implemented over the past 6 months, translating to an increased margin to above 20%. Our medium-term expectations remain that the Merchant margin will continue to increase to above 30%. Consumer segment adjusted EBITDA increased by 81% to a record ZAR 213 million, reflecting strong operating leverage and disciplined execution. Last quarter, we saw over ZAR 1 billion of origination volume for our lending products, and we are starting to see the positive impact flow through to our financial performance. The Enterprise division delivered a segment adjusted EBITDA contribution of ZAR 35 million as the business scales. Group costs were ZAR 62 million, slightly elevated due to an investment made in improving finance, risk and compliance frameworks and strategic hires at a head office level. This is a more accurate reflection of our group costs run rate going forward. Adjusted earnings per share continued its strong upward trajectory, increasing 247% to ZAR 1.80 per share, underscoring our ability to effectively integrate and extract synergies from our inorganic growth activity and our ability to scale organically once the integration and transformation phases are complete. Our strong cash generation continued this quarter with cash generated from business operations of ZAR 365 million, closely tracking our group adjusted EBITDA. Given the short duration of our credit cycle and seasonality effects, we only required an additional ZAR 10 million of funding for our lending books, reflecting the efficiency and scale of our operations. We paid ZAR 98 million in cash interest. And while not presented on the slide but reflected in the annexes to this presentation is a release of ZAR 320 million of seasonal working capital compared to the prior quarter. In aggregate, the group generated a pleasing ZAR 608 million in operating cash flow. We continue to manage our CapEx carefully with ZAR 76 million of investment this quarter. Our CapEx was relatively evenly split between cash vaults, POS devices, and software and platform development. The strong earnings growth and cash generation, combined with prudent capital allocation, resulted in our net debt to group adjusted EBITDA improving to 2.1x this quarter and bringing us closer to our medium-term target of 2x. In recent quarters, the benefits of the platform we are building have become increasingly evident. Continued growth across our distribution footprint, combined with ongoing product innovation, has further improved operating leverage with operating margin rising from 17.2% a year ago to 21.4% this quarter. As the transformation of our Merchant division progresses and following the completion of the Bank Zero acquisition, we continue to expect operating margins to trend towards over 30% over the medium term at a group level. A similar positive trajectory is evident in our capital investment profile. Consistent with prior guidance, we expect CapEx to remain below ZAR 400 million per annum. On the last 12 months basis, CapEx as a percentage of EBITDA has reduced from approximately 46% a year ago to 29% this quarter. Together, these trends highlight the strengthening fundamentals of the business as we continue to evolve and scale our platform. Thank you. I will now hand over to Lincoln to take you through our divisional performance. Lincoln Mali: Thank you, Dan. Good morning and afternoon, everyone. As Dan has alluded to, we're in the middle of building an integrated merchant business from 5 historical components. We are modernizing our core systems into a unified backbone, enabling our servicing staff to provide a more efficient and effective customer service. We are centralizing data, creating a 360-degree view of each merchant, and implementing AI to strengthen our risk capabilities and reduce customer friction. This enables better credit decisions and reduce fraud. Furthermore, we are leveraging these assets to drive smarter customer engagement. For an example, AI-enabled WhatsApp support and targeted cross-sell engines will simultaneously enhance the client experience, and we believe will drive higher ARPU. At an overall level, active merchants increased by 6% year-on-year. Looking at the mix of our active merchants, our community merchants grew 8% year-on-year. Last year, we restructured our community merchant sales force to allow for a more targeted distribution strategy, and we are pleased to see our community merchant portfolio increase. The number of active corporate merchants fell 4% year-on-year, primarily due to increased competition in monoline products, for an example, merchant acquiring. At the aggregate, Merchant ARPU was 7% lower than last year and driven primarily by an increase in the number of community merchants as a percentage of the total. Community merchants are growing faster than corporate merchants, and this has a predictable impact on blended economics as they generate materially lower ARPU than corporate merchants, as shown in the slide. As the community segment becomes a larger proportion of the overall base, aggregate Merchant ARPU naturally decreases even while engagement levels, transaction volumes and profitability increase. Secondly, as mentioned last quarter, the community ARPU reduction was impacted by a network-driven reduction in airtime commission rates. Since that reset, ARPU has been relatively stable quarter-on-quarter. Within the corporate space, we saw flat performance in ARPU. Our current aggregation of ARPU includes network fees that is [ interchange ] and from our corporate segment, but excludes network fees from our community ARPU. We expect to review the definition of corporate ARPU in the new fiscal year to align the treatment of network fees to community ARPU. Product penetration in Merchant was flat at 46% for 2 or more products. The merchants with 3 or more products reduced to 7%. The primary driver for this decline is due to the increase in our community merchant base who typically engage with ADP and acquiring. The total number of merchants with 3 or more products declined as we refined our lending criteria to the community merchant base. While penetration rates for multiproduct accounts have shifted over the period, we are in the early stages of our ecosystem journey. Our current performance is intentionally driven by a land and expand strategy. As seen on the left-hand chart, we have a broad base of merchants through hero products and a set of highly valued ancillary products that tie merchants into the Lesaka ecosystem. The core of our thesis remains unchanged. As product density increases, so does the value of the merchant. Within our community merchants, we can see that moving from a stand-alone solution to a [ C+ ] product proposition drives a 94% uplift in ARPU. Increasing our product penetration in community relies on Merchant's strategy to expand lending and cash to our existing community base. In the corporate segment, Lesaka experienced a 60% uplift in ARPU when our customers shift from 1 product to 2 product. We currently have no corporate clients with 3 or more products. Our industry-specific strategy in Merchant is focused on increasing our product penetration in Merchant. For example, in the restaurant and hospitality segment, we're adapting our product and sales force to be able to serve our clients with a combination of software, acquiring, lending and cash. In the fuel industry, we're developing our acquiring and software capabilities to augment our current cash and lending offerings. We believe this ecosystem product approach, coupled by a single distribution and servicing capability, will grow percentage of corporate merchants with 3 or more products in the medium term. Looking at our Merchant volumes for the quarter. Card TPV increased by 7% to ZAR 10.6 billion, with active acquiring merchants up 9% to 74,000. On the cash side, volume grew 2% with a slight increase in wallet for the quarter of 4,900. Within the base, as with previous quarters, we have seen net reduction in the corporate merchant base and good growth in the community base. The growth of our cash offering in the community merchant space has supported the strong growth in the TPV of our Alternative Digital Products, or ADP for short. As community merchants immediately digitize their cash taking in their own wallets or in the nearby merchants, they have more value in their wallets to use for airtime, electricity and voucher purchases for resale and supplier payments. ADP TPV is up 30%, reflecting traction for our offering. Following the margin compression seen within our prepaid solutions in financial year 2025, particularly airtime, we are pleased to see a normalization and return to growth in these volumes with 11% increase in prepaid solution products and a 47% increase in supplier-enabled payments. Turning to Merchant lending. Originations in quarter 3 were 22% lower year-on-year at ZAR 227 million. The comparative period in quarter 3 of financial year 2025 included unusually high spike in originations from our corporate channel, driven by fuel-related lending push and the rollout of preapproved lending offers late in the year 2024, which then originated in the quarter 3 financial year 2025. While January and February were muted, we did experience a very strong March, much of which was driven by demand in the fuel sector ahead of anticipated price increases. Our lending portfolio closed 4% up at ZAR 427 million. We are comfortable with this lending activity, and it reflects a deliberate decision to be conservative in merchant credit, whilst we refine our Merchant lending offering as part of our broader Merchant ecosystem. This is not about a lack of opportunity. It's about exercising capital discipline and protecting the long-term quality of the book. Software, particularly through our Unity platform in the hospitality space, is central to our long-term Merchant strategy. Unity is not about site growth alone. It is a cloud-native platform that enables the Merchant ecosystem and sets the platform for multiproduct penetration at scale. Approximately 50% of all Unity clients are fully integrated into our acquiring proposition with 80% of all new software clients on board utilizing Unity. In conclusion, we are laying the foundation for a stronger, scalable business through platform consolidation, data and AI investment, and integrated product strategy. Consumer had another excellent quarter with an 81% increase in segment adjusted EBITDA. As expected, our KPIs have all shown impressive increases with active consumers up 19%, ARPU also up 19% and cross-sell success continuing its upward trend. Active consumers now stand at over 2 million with a permanent grant recipients of 1.7 million, representing a 14.6% market share. Looking forward, our medium- to long-term expectation is that we could reach a 25% market share, based on our current growth trajectory and distribution plan. Encouragingly, in quarter 3, only 3 players showed growth during the quarter, of which Lesaka grew the largest. Net additions in quarter 3 were almost 26,000, more than double our nearest competitor, demonstrating the strong brand and product fit we have developed in this segment. Importantly, growth is not dependent on competitor dislocation alone. There are approximately 150,000 new grant entrants every month, and our expanding distribution footprint positions us strongly to capture a disproportionate share of these new customers. By June, we expect to have increased our footprint to a further 30 community sites and a further 15 new branches. This expansion materially strengthens our access to both urban and rural grant recipients and support sustainable organic growth. Our ARPU has increased by 19% year-on-year to ZAR 99 per month, driven by continued engagement and cross-sell success. At the end of quarter 3, 20% of our active consumer base was utilizing our full product suite, up from 17% last year, with 50% of our base having 2 or more products. This consistent increase in our product penetration rate is a clear demonstration of the power of our value proposition and superior distribution capabilities within the segment and is a clear indication of our ability to continue to grow. Our lending product has been the key driver of our Consumer division's financial performance. In the third quarter, we originated approximately ZAR 856 million, representing a 33% year-on-year increase, with the outstanding book growing 73% to around ZAR 1.4 billion. This momentum reflects the successful rollout of our 9 months loan product, which now represents nearly 50% of all new lending originations. We expect this to continue increasing, supporting growth in both book size and average tenure. We are also evaluating a modest increase in maximum loan values and repayment terms to meet customer demand, while maintaining our disciplined risk framework. We have a deep understanding of our lending base with a high proportion of originations to repeat and long tenured customers. This supports effective credit scoring, provisioning and product development. The portfolio continues to perform within normal parameters, and our 6.5% provision level remains above the observed risk experience with any refinement to be communicated transparently at the end of the year. Turning to our funeral and pension plan insurance business. We delivered another very strong quarter. Gross premiums written grew by 38% to ZAR 146 million, while in-force policies increased by 34% to 704,000. We have recently started rolling out insurance policy sales to non-Lesaka consumers within Lesaka ecosystem. This represents a significant opportunity with an estimated 3 million grant recipients currently uninsured. We are leveraging our existing distribution network and sales force to access this market efficiently. While the initiative is not yet financially material, it is strategically important and directly aligned with our purpose of extending affordable financial protection to underserved communities. Our insurance product is a key driver for compounding our product penetration in the short to medium term. As we increase our attachment rates of insurance at the time of client onboarding and we increase our stand-alone insurance sales, we do expect the collection rate to moderate to circa 90% over time. Importantly, we believe this will still result in a net positive gross written premiums for Lesaka. We believe the overall quality of our insurance book will continue to remain high and compare favorably against the wider insurance market. The Consumer division continues to demonstrate strong momentum with resilient growth drivers, effective last-mile distribution and clear product relevance. By leveraging our technology and distribution network in tandem, we are confident that Consumer will remain a core engine of value creation for Lesaka, delivering both financial performance and meaningful impact for the communities we serve. I will now move on to the performance of our Enterprise division. The Enterprise division continued to make solid progress this quarter, contributing ZAR 35 million or about 10% to group adjusted EBITDA. Strategic progress is evident in ADP TPV for the quarter, which increased 19% year-on-year. Bill payments were up 12.5% to ZAR 9 billion. And prepaid solutions grew by more than 50% to ZAR 2.8 billion as we continue to expand our collector and receiver ecosystem. As highlighted in previous quarters, we've also partnered with several key players, increasing our distribution and collection footprint. We are now seeing the growth from our channel partners, driven by targeted marketing campaigns. Our ADP take rate improved by 22% to 1.3%. As a reminder, we earn a fixed fee per bill payment transaction. However, we earn a commission on TPV for facilitating buying and selling of prepaid solutions. As the business scales the prepaid solution offering, we will see a product blend leaning towards an ad valorem revenue model. In Utilities, TPV increased 18% to ZAR 477 million on a like-for-like basis with active meters rising to 368,000. Excitingly, in quarter 4, we will launch an electricity advance product to our utilities customers. This product will allow Lesaka utilities customers with active meters to load electricity when they are short of funds by an interest-free facility. The business model is simple as we will charge a flat fee for the service and recover the advance from future purchases. We look forward to sharing more information as the product rolls out through the base. Thank you. That concludes our operational review. I will hand back to Ali now for the outlook. Ali Zaynalabidin Mazanderani: Thank you, Lincoln. Innovation is at the heart of who we are. We don't just want to win the game. We want to change the game. So we thought to provide examples of 3 strategic initiatives that demonstrate that across our businesses and which set the foundation for our continued competitive advantage. Firstly, we believe payment rails globally will increasingly move to blockchain as a superior underpin from a resilience, availability and cost of settlement perspective. We also believe that in the South African context, a ZAR-denominated stablecoin will form the foundation of this. As a founding partner of ZARU, we intend to pioneer use cases across our ecosystem to allow consumers and merchants to settle securely and at low cost, eliminating the friction of traditional banking hours and fees. We will provide more updates on what we are doing and what this should mean at our end-of-year investor presentation. Secondly, the scarcity of credit, provided in a frictionless, fair and sustainable manner across the continent is a major opportunity for us. We choose to focus on making that credit available to underserviced consumers and merchants where traditional banks don't have the capability, competency or desire to compete. One focus for us in this respect is in short-term credit advances against utility products like airtime, data and electricity. You will see increased activity from us in this space, leveraging either touch points to our existing banking customers through an app or USSD channels or utility customers in homes where we provide the electricity meter. In both instances, we would expect to have an advantage in repayments vis-a-vis others. Thirdly, the explosion in AI tools offers a wonderful opportunity for a pioneering technology company with digital enablement and efficiency of operations at the heart of our values and competitive advantage to further this advantage relative to traditional incumbents with legacy platforms. We are actively embedding AI tools across our group from engineering teams' code development to new product launches, to fraud management and operational efficiencies that allow us to better provide services more securely and more sustainably, complementing our human engagements. Again, we will be providing in due course more details on some specific initiatives and the impact thereof. Turning to guidance. We are tightening our guidance forecasts for the rest of this financial year. We are updating our net revenue guidance to ZAR 6.2 billion to ZAR 6.5 billion for FY '26, the midpoint of which implies 20% year-on-year growth. We are on track to deliver our group adjusted EBITDA guidance for the year as we did for this quarter, but also tightening the guidance range to ZAR 1.25 billion to ZAR 1.35 billion, implying we expect to come in at the bottom end of the previous range. The midpoint of our updated group adjusted EBITDA guidance implies 43% year-on-year growth for FY '26. We are also updating our adjusted earnings per share guidance for the year. We previously provided guidance of at least ZAR 4.60 per share, and we are now raising this to a range of ZAR 5.50 to ZAR 6.00 per share, the midpoint of which implies a growth greater than 150% on a year-on-year basis. We will increasingly reference our adjusted EPS as the primary measure of our profitability. We are also reaffirming from a net income perspective, without exclusions, we expect to be profitable for FY '26, the first year this will be the case since the creation of Lesaka 4 years ago in May 2022. In our end-of-year presentation in September, we will be providing our guidance for FY '27 and also our medium-term outlook for the next 3 years. Given that we expect the Bank Zero acquisition to be completed in the coming months, that being so, we will be providing guidance for FY '27 and the medium-term outlook inclusive of Bank Zero. Thank you for attending our earnings presentation. We will now address any questions you have for the team. Operator: Chorus Call, please, can you open the line for Ross Krige from Investec? Ross Krige: Three questions for me. Just firstly, on the Consumer, just with regard to the very strong margin accretion that we're seeing consistently over time and the jump up in Q3, if I look ahead at some of the opportunities there, so you're talking about the volume growth prospects, the size of the market that you're addressing there, and you've talked about the cross-selling prospects and you've executed on that. And then, you've alluded to that comment on risk performance being better than what your provisioning suggests, which you'll give more detail on. But if I put all of that together and think about operating leverage ahead, am I correct in saying that, that points to significantly higher EBITDA margins even off this base? That's the first question. I can carry on, if you like. Ali Zaynalabidin Mazanderani: We can address that one, if it's helpful, Ross, first. I mean, the short answer is, we do see the ability to continue to expand those margins. I mean, year-on-year, those margins have gone from 26% to 34% in the Consumer business. And yes, we do believe there's more room for growth as we scale that platform. Ross Krige: Great. Okay. Moving on to Merchants. So just 2 parts to this question. One on the ARPU dynamics. So Lincoln explained a lot of this. But maybe just in terms of the outlook, if I look at active merchants by type, so across corporate and community, should we expect to see stable ARPU going forward or some pressure as the mix changes within each of those segments? Or -- yes, just any comment on the next 6 to 12 months? And then, on profitability, clearly, the margin improved there as well, as you talked about. I'm just trying to understand what the sort of runway if we look at the next, I guess, 6 months, 12 months, whether or not some of the, I guess, cost-saving activities that you've embarked on will still come through and how long that runway is. Ali Zaynalabidin Mazanderani: So the -- I mean, I think I'm not sure, Ross, it was you at the last call or somebody else who asked the question around how we see the evolution of the margin. And our perspective is that we see a continuation of the evolution in the next quarter. However, from FY '27, we do expect to see a different trajectory there. And giving you a little bit more granularity around that. Obviously, we have a smaller ARPU in the community space than in the corporate space, but the community space is growing faster. However, within community ARPU, we expect in the coming year to see an increase, both because of the scale and quality of customers that we onboard, as well as because we expect to have an increase in the product penetration within that base in a similar way as we experienced that in the Consumer business. What I would also say is that the ARPU, while the number of merchants and the ARPU is a good representation of the net revenue, and that's why we're focusing the net revenue drivers on that, it doesn't obviously speak to margin, and that margin is both the gross margin and the EBITDA margin. And we believe that we have room in both capacities. From an EBITDA margin perspective in the Merchant business, this quarter last year, we had an 18.7% margin. And obviously, in this quarter, it's north of 20%, and that's despite the fact that, obviously, the revenue performance was not where we expect it to be going forward. We do see that margin having substantive room for growth. I think we have previously communicated that we think the Merchant business should be targeting EBITDA margins of closer to 30% and execution will define how quickly we get there. But like the Consumer business is evolving EBITDA margin, the Merchant business should follow a similar trajectory. I just -- from a Lesaka perspective as a whole, I think it's probably also worth observing that we see operational leverage there as well. While we have made some investments in group costs, we don't expect that to be growing at the same rate as our EBITDA margin. So group EBITDA margins, which have gone from 17% to 21%, we expect to also be increasing substantively. The question on the sort of the margins within the businesses, you always have to look at a few different components on the ARPU -- from the ARPU perspective. So the first one is the mix between corporate and community, where there are differential components. The second one is the cross-sell, how effective we are in basically layering the product because obviously, you make much more ARPU around them. The third is, there is, because ARPU is just a revenue number, some aspects of seasonality associated with it. So if you were to have looked, say, for example, back to last quarter because it was during the festive season, you would expect that to be larger volumes or throughput. So you'd expect that to be larger ARPU as well. And the final thing to consider in that respect is, obviously, the margins per product. And you will get, going forward, better understanding of those underlying drivers because we will be providing, at the end-of-year presentation, some of the second derivatives of that. But in essence, the focus in the Merchant business over this year has been about trying to improve the quality, trying to improve the unit economics as we signposted because we want to be scaling into something that has an excellent return profile around it. And we are still in the process of doing that. I think that the strategic intent is ahead of the operational reality there, whereas in the Consumer business, I think we are fully in the slipstream of where we wanted to be. One thing I would just emphasize within that Consumer business is, there remains, within our core product offering for the SASSA grant recipients, material room, but that is not where we are circumscribing our aspiration. Clearly, we have an aspiration, obviously, to extend that as well. So there's sort of the existing market share within the existing segment. And then, there's the opportunity to move into adjacent segments. Ross Krige: On Enterprise and utilities, just wondering if -- on Enterprise and utilities, just wondering if you could guide on what the net financial impact could be from migrating the other [indiscernible] of ADP volumes to Merchant? Ali Zaynalabidin Mazanderani: Sorry, Ross, I don't think I heard that properly. Ross Krige: Sorry, I'll repeat. So, on Enterprise, specifically within utilities, I think there was a comment on migrating some of the subproducts of ADP volumes, the prepaid volume to Merchant, I think specifically. And then, on the -- I think there was a comment that they'll be migrating the rest of those products, the rest of the subproducts of ADP volume from [indiscernible] to Enterprise. Ali Zaynalabidin Mazanderani: I understand. I understand. So basically, think of the Enterprise division in addition to having external customers, 750 corporate clients, it's also servicing ourselves. And there is operational efficiencies that can be released as a consequence of that, which should speak again to margin improvement across the group, part of which would be represented in the segment that it services. Both consumer and merchant would ultimately be consumers of Enterprise services, but would also then be represented in the Enterprise business' margin. So it would be distributed. Exactly the quantity of it, it's, I'd say, probably less about the scale of the operational cost saving and more about the control and the quality that we can provide as a consequence of bringing it in-house and not having third-party dependencies on our ecosystem that affects our product delivery. And that ultimately will speak to our promise to our customers. There is also -- there is some economies of scale, however, in being able to aggregate our purchasing capacity, right? We will clearly be a very material player as a consequence of that aggregation. So we do expect to see margin improvement on what we can buy as a consequence. Operator: I'm going to move now to Frank Geng from Briarwood Capital. Unknown Analyst: Just had 2 quick ones on Consumer. One is, I guess, what's driving the greater ARPU numbers year-over-year and sequentially? Is that mostly kind of the loan and the insurance book or any other initiatives? And then, secondly, on the margin, yes, it seemed a bit higher versus the past and especially kind of on an incremental basis. So curious what's driving that. Is that mostly kind of lending, or there's a provisioning kind of step-down? Just any color on that? Ali Zaynalabidin Mazanderani: Lincoln, do you want to have a go? Lincoln Mali: Yes. So thanks, Frank. I think, as we've highlighted before, our ability to cross-sell is a key, key part of our success. The distribution model that we have enables us to be where the customer is and cross-sell the loan and cross-sell the insurance. And I think that you're starting to see that growth, and that momentum will continue. The other things that Ali is mentioning will be adding to that. But for now, there's still room within that consumer base to be able to cross-sell the loans and be able to cross-sell the insurance. Already when you look at some of the numbers, you're starting to see that over 50% of our clients have got 2 or more products with us and that more than 20% of our clients have got 2 products with us. So you're starting to see that we've got that ability to cross-sell even more into that base, and that will improve the business substantially. Yes. I think the overall outlook on our provision has been very conservative. We have tried to remain in line with the risk that we see, but we have signaled that there are opportunities to make some changes. And when we do make those changes, we'll be transparent about what those changes are looking like. But for now, even all the new changes that we've made in the loan product, both in terms of the duration of the loan and the size of the loan, has not seen any material change in the quality of the book. The quality of the book remains very, very good. Operator: We are going to move to questions from the webcast now. And we have a few questions from [ James Labbert from SBG Securities ]. Question one, since the start of the Middle East conflict, are there any particular developments you have observed in Consumer and Merchant? Talk about collectability of premiums and loan repayments, but also credit quality. Any commentary on the resilience of clients would be appreciated. Ali Zaynalabidin Mazanderani: I mean, I think the -- in substantial terms, the answer is, not really in terms of issues relating to credit quality or -- there's obviously a consequence of the Middle Eastern events in terms of the cost of fuel, and so disposable income from the market as a whole. But I would just emphasize that we are really not a proxy on the market. Our opportunity is in effectively growing substantively our share in the market by having a superior proposition. And so, our expected growth rates are more around our capacity to either take market share or alternatively by growing a market that is currently not digitized. I don't know, Lincoln, if you have anything specific you want to add to that? Lincoln Mali: Yes, I would say the same thing to -- that Ali said. In the actual core business, we have not seen any material changes that are there. Of course, there are long-term impacts that are there in the broader society. But in our business, there is no material impact that we see, either in our ability to collect or in the credit quality or in any of the performances of the underlying business. Ali Zaynalabidin Mazanderani: And then, Dan, if you have anything? Daniel Smith: The only thing I'd add to that is, when there's dislocation in the market, it creates an opportunity for us to respond to our customers' and our clients' needs as well. We successfully did that in our Merchant business in March, which was, let's call it, the starting point in the Middle East conflict with fuel prices increasing, gave us an opportunity to support our fuel merchants. And in our Consumer business, should this lead to elevated inflation, it might create an opportunity there for us to support our clients, of course, within appropriate credit measures. Ali Zaynalabidin Mazanderani: I think, in general, as a business, we do have pretty good resilience, but there will always be specific areas or specific things. I think what we're trying to message is, it's not anything that is very material in terms of the P&L performance. But I could also point out that clearly, as a business, we also roll out point of sales. Those point of sales, overwhelmingly they are -- they come from Asia. And so, you do have to be cognizant of not just the availability, but also the exchange rate. And if the exchange rate improves vis-a-vis, then we will have a benefit. And if it declines, it will have a cost. Operator: Question number two. The revenue increasing at a group level -- with revenue increasing at a group level, how do we square the decrease in cost of sales? Is there some favorable pricing from suppliers or any other dynamic at play that has allowed you to manage cost of sales as well? Ali Zaynalabidin Mazanderani: There is a lot of dynamics in that. So the first one is, we are consciously exiting business lines that are not core, that have lower margin, and so you have a mix effect around that. We are growing, in revenue terms, higher-margin businesses faster. And we are also benefiting from scale and operational efficiencies across the business. So it's not one single thing. It's a number of things coming together. And the rather pleasing thing is, I don't think we are nearly through that journey. We have quite a lot of operational efficiencies that we can extract in the business over time to continue to improve that. And there are tools that are also being made available to us increasingly as a consequence of AI innovation that will allow us to do more -- even more than we might have thought was possible before. Operator: Question number three. How should we think about our working capital cycle in terms of collecting receivables, extending debtors and selling inventory? Are there periods in the year that are typically more favorable than others? Ali Zaynalabidin Mazanderani: Dan? Daniel Smith: There is a cyclicality in our working capital cycle. So quarter 2, let's call it, the December period, is peak volumes for us. So therefore, our inventory naturally spikes in that period of time. Quarter 3 compared to quarter 2 is a -- results in a de-gearing in our inventory. And you would have seen in this period, inventory clawed back about ZAR 120 million quarter-on-quarter. So, that drove a large portion of the cash inflow, working capital cash inflow. Similarly, our receivables also has a similar cyclicality. Our payables are roughly flat, so that unwinds a little bit less. So comparing things quarter-on-quarter, quarter 3 sees an unwind, quarter 4 normalization and slight increase, and in quarter 1 of the next financial year similarly. Operator: And the last question from James. To what extent does Bank Zero integration enable you to up those 3-plus cross-sell metrics in Merchants, particularly in the corporate space? Ali Zaynalabidin Mazanderani: So I think that Bank Zero transaction has multiple benefits for the business. But specifically, in the merchant space, clearly, Bank Zero has had a historical focus on SMEs as being a digital bank provider for them. The consequence of the transaction should allow us to effectively be able to offer a banking product through our existing sales force, our existing relationships, which should be accretive -- augmentative in terms of the ARPU that we would be able to generate, especially because we should be able to also generate benefit from float, as well as from other sources. Operator: The next question is from Jamie Friedman from Susquehanna International Group. CapEx as a percentage of revenue seems to be declining and helping free cash flow, in Page 11. Is that a function of mix? How should we think about it? Ali Zaynalabidin Mazanderani: Dan, go ahead. Daniel Smith: On an aggregate basis, we have guided the market, on an annual basis, roughly ZAR 400 million of CapEx is the right quantum of CapEx to support the group, both from the maintenance and from our growth ambitions. There's a little bit of seasonality around that in terms of timing of delivery of POS devices, for example, similarly, timing of when we bring on board capitalized software development costs at the appropriate stage. So quarter-on-quarter, some variability. But I'd look at it in the whole, on an annual basis, our CapEx shouldn't exceed ZAR 400 million. So, of course, therefore, as our EBITDA is growing, we get the benefit of that capital efficiency in our group. Ali Zaynalabidin Mazanderani: There is -- I mean, just to augment, Dan, there is obviously an element of mix effect associated with that in that the product lines that are growing faster are typically ones that have lower CapEx requirements. And I think that, that general trend, as you move towards greater digitization, should continue because if you think about where, as Dan said, the CapEx is spent, a nontrivial part will be on cash vaults and on point of sale. And even in the context of that being on point of sale, there are -- there is evolution in customer uses of feature form that we would expect going forward. So I'm quite confident around the long-run resilience of the cash conversion of the business and expect to see a continued expansion of that capability, albeit there will be -- it's not necessarily going to be a straight line every quarter. There's going to be instances in which investments will be needed to be made, but substantively, expect a declining percentage. Operator: The next question is from Charles Boles from Titanium Capital. Buy now, pay later seems to very much be involved in SA. You have exited Switchpay. Does this suggest you have a negative view of the BNPL market? Or was the exit due to factors specific to Switchpay? Ali Zaynalabidin Mazanderani: I think it was more specific. I don't have a specifically negative view of the buy now, pay later market. I think that as a business in the merchant space, I think we are at a build moment within our credit proposition, as Lincoln was alluding to within the conversation. And it doesn't represent our lack of willingness to participate in that market. It was a legacy product that was not fit for purpose in terms of the scalability that we needed to achieve and the unit economics and [ hygiene ] we wanted. Operator: The next question is from Tim Olls from Laurium Capital. Within the Merchant segment, please, could you share some color on the competitive dynamics resulting in the decline in the corporate merchant numbers? And what more can be done to defend this? And are you able to share current 2 and 3 product penetration rates for community and corporate customers separately? Ali Zaynalabidin Mazanderani: On the product penetration rates, do we not -- I mean, I think we can share. I think that, as I said before, going forward, in the next investor presentation, we are going to provide greater granularity. So you can expect that clarity there. In terms of what's going on in that -- in the corporate space, so there are -- where we have a strong resilience of our offering is where we have multiple products and specifically 2 products in the corporate space. So if you have a point of sale software with attached acquiring like in the hospitality space with Unity, you will have lower churn. If you have stand-alone point of sale single product, you should expect there to be less defensibility. And I think the reduction in the customer base is a combination of some legacy that we inherited that we didn't feel was sort of core to where we were going. But I don't have an expectation that, that trajectory is going to continue. I do have an expectation that we will be -- in the coming year, be investing in growth in our merchant count, as well as -- in the corporate space as well as in the community space, albeit the growth within the corporate space, I expect to be lower than the community space. But it's not representative to us of the medium-term growth path. Operator: The next question is from Jarred from All Weather. Please provide more color on the level of provisions for the loan book and how that changes under the current macro environment. Ali Zaynalabidin Mazanderani: I don't know if you want to go at that, Dan. Daniel Smith: Jarred, I'd split it between different types of provisioning in the Merchant loan book and in the Consumer loan book. So in the Consumer loan book, we provided 6.5% at the moment. We run obviously a variety of different models. Our experience indicates something more favorable than 6.5%. And as I signaled in the previous quarter results, we are revisiting the appropriate levels of provisioning. We think that at year-end would be the right time to either confirm our current levels of provisioning or change them, based on obviously what the models and our experience is at that point in time. But they are well within our overall risk appetite. And as I said, our experience there is better than 6.5%. On our Merchant loan book, which is far smaller, but obviously, the average value of loans is significantly higher, there we provide according to the typical expected credit loss models. Our experience there, previous quarter, you would have noted, we did have some specific impairments, which affected our overall level of Merchant earnings, specifically on the lending side. That has normalized, those handful of specific instances, and there was nothing unusual or out of the ordinary course in terms of our credit experience in this quarter. Operator: The next question is from Christos from Avior. Will the ZARU settlement on the merchant side be in ZAR or ZARU? Ali Zaynalabidin Mazanderani: I'm not sure I understand the question, to be honest. So ultimately, there's a difference between whether the settlement is in fiat currency, ZAR or ZARU versus what is the infrastructure through which that is converted. So the question as to whether a merchant wishes to accept a stablecoin as opposed to ZAR would ultimately, I think, be the prerogative of that merchant. The thing that I think is more relevant is what rails is that settlement occurring through. And just to reiterate, the fundamental difference is blockchain is 24/7. You don't have to wait for banking hours. Speed of settlement is a core differentiator, and the cost associated with utilizing that blockchain ecosystem should be far favorable than legacy banking rails. So it's not a -- the utilization of blockchain as plumbing for merchant accounts is separate to whether the merchant has actually been settled in the fiat currency or in a stablecoin. Operator: We are going to move back into the Chorus Call now for our last call questions from Theodore O'Neill from Litchfield Hills Research. Theodore O'Neill: Congratulations for beating the estimates in the quarter. My first question is, are you seeing any impact from the conflict in the Middle East? Ali Zaynalabidin Mazanderani: So there, I mean, not really and not especially, as we mentioned earlier, some residual impact. There's a consequence in terms of, obviously, the cost of fuel, but that's not really translating into negative impact. In some ways, we've had a beneficial consequence in that it created an opportunity for us to do advances to [ fuel ] companies ahead of price changes. There is obviously some other consequences in terms of consumer disposable income and things. But fundamentally, we're not really an index on the economy, and we don't view it as being a critical factor in our performance, at least for the moment. Theodore O'Neill: Okay. And exiting the exiting the ATM network, was there a buyer for that? And by exiting it, was part of that -- thought behind that, that it would align better with Bank Zero? Ali Zaynalabidin Mazanderani: So, I mean, there wasn't -- we didn't feel that there would be a benefit in selling it. It was going to be more costly, I think, than potentially winding it down. Otherwise, that would have been what we would have done. In terms of strategically, it was purely based on the fact that we want to be a business that delivers exceptional results. It was not a core part of the offering. It was not a business line that is indexed to digitization or one that we consider to be necessary to support the ecosystem, and it was providing a negative drag on earnings. And we would rather spend our time on things like the digitization of the society and blockchain enablement and AI enablement than on a legacy piece of infrastructure. Theodore O'Neill: Right. Finally, can you give us an update on the status of the move-in to the new headquarters? Ali Zaynalabidin Mazanderani: Yes. I think the time that we are doing this investor presentation in the next quarter, we should be doing so from our new headquarters, and we are very excited. And it's not just about having a nice refreshed office environment. It's also -- I think it will have a profound impact on the way we work and then the efficiency of the business because currently, as we are trying to coordinate across different aspects, sitting in the same office with all the components, I think, will be hugely beneficial. So we are expecting to see good positive ways of work develop as a consequence of that. And it also will dovetail nicely with the more visible launch of our brand. So it's actually a very exciting season coming up for us in that respect. Lincoln Mali: Yes. I mean, if I could just add that what it also coincides with is us launching our values and bringing our teams together across all the different provinces, getting people to really fully understand what One Lesaka means because there's going to now be one brand, and both consumers and merchants and enterprise customers will relate to one brand, so getting our staff across the country to understand what this is about. So it's not only the new offices. It's also those offices that will start to build in the months to come in the different provinces, but also people starting to work across the divisions and across the functional areas in head office, as Ali was saying, is the way we want the new culture to emerge from this. And that, again, drives this thinking about cross-selling, doing more for our customers and giving them more solutions. The more people get to know about those solutions, the better it will be for them to be able to sell those solutions to customers, be they merchants or consumers or enterprise clients. Ali Zaynalabidin Mazanderani: [ Also Theo, just to add, it's not just Johannesburg. We're moving into one office in Cape Town as well in a few months. Subsequently, we expect to be doing the same in Durban. And across our footprint in the provinces, there is a rationalization process associated with that. So our office footprint will shrink across the country. And it is a very powerful thing for the business. Operator: Thank you, Ali, Dan and Lincoln, and thank you, everyone, for joining the Chorus Call and through the chat and for engaging today. We are going to wrap it up here. As a reminder, there will be a replay of the webcast on the Lesaka investor website. Thank you, everyone, for your participation. 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