LSAK — Lesaka Technologies, Inc.

Lesaka Technologies Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Revenue: ZAR 1.6 billion, up 16% year-on-year.
• Group Adjusted EBITDA: ZAR 304 million, reflecting a 47% increase year-on-year.
• Adjusted Earnings: Grew over sixfold to ZAR 111 million; adjusted earnings per share rose from ZAR 0.21 to ZAR 1.34.
• Leverage Ratio: 2.5x, down from 2.9x at year-end, with a medium-term target of 2x or lower.
• Cash Flow from Operations: ZAR 419 million, with ZAR 385 million reinvested into lending operations.

2. Strategic Updates and Business Highlights

• Bank Zero Acquisition: Received Competition Tribunal approval; expected to enhance funding and balance sheet benefits.
• One Lesaka Initiative: Consolidation of operating brands under a unified brand to enhance market presence and operational efficiency.
• Office Consolidation: Streamlining operations by consolidating offices in Gauteng, Cape Town, and Durban to improve collaboration and reduce costs.
• Consumer Division Growth: Active customer base exceeded 2 million, with significant increases in lending and insurance products.
• Merchant Division Transformation: Focus on integrating businesses and enhancing product offerings, with a shift towards community merchants.

3. Forward Guidance and Outlook

• Q3 Guidance: Net revenue expected between ZAR 1.65 billion and ZAR 1.8 billion (midpoint implies 27% growth); adjusted EBITDA forecasted between ZAR 300 million and ZAR 340 million (midpoint implies 37% growth).
• Full Year Guidance: Reaffirmed net revenue range of ZAR 6.4 billion to ZAR 6.9 billion and adjusted EBITDA of ZAR 1.25 billion to ZAR 1.45 billion.

4. Challenges and Points of Concern

• Merchant Division Performance: Net revenue declined 2% due to refocusing on high-potential clients and pricing pressures; expected flat growth for the remainder of the fiscal year.
• ARPU Decline: Merchant ARPU decreased by 10%, primarily driven by lower airtime volumes and margin compression in the ADP product.
• Competitive Pressures: The consumer lending market is competitive, with Lesaka taking market share from established players like PostBank.

5. Notable Q&A Insights

• Consumer Lending Growth: Driven by increased loan sizes and tenure, with 40% of originations from a new medium-term loan product. The company expects continued growth in this segment.
• Marketing Costs: Estimated rebranding costs for the next two quarters are between ZAR 50 million and ZAR 75 million, which will be excluded from adjusted EBITDA.
• Bank Zero Deposits: While specific deposit amounts post-acquisition were not disclosed, it is expected that gross debt will reduce by over ZAR 1 billion, indicating a substantial increase in the deposit base.

This summary encapsulates the key financial metrics, strategic initiatives, forward guidance, and challenges faced by Lesaka Technologies in Q2 2026, along with insights from the Q&A session.