Summary of Lesaka Technologies Q4 2026 Earnings Call

1Key Financial Results and Metrics

Full Year FY 2026::

Net Revenue: ZAR 6.33 billion (up 20% YoY)

Group Adjusted EBITDA: ZAR 1.27 billion (up 41% YoY)

Adjusted EPS: ZAR 6.51 (up 210% YoY)

GAAP Net Income: Positive for the first time since 2022, approximately ZAR 40 million.

Net Debt to Group Adjusted EBITDA: 1.9 times, down from 2.9 times a year ago.

Q4 Performance::

Net Revenue: ZAR 1.62 billion (up 8% YoY)

Group Adjusted EBITDA: ZAR 367 million (up 22% YoY)

Adjusted EPS: ZAR 2.40 (up from ZAR 0.90 YoY)

2Strategic Updates and Business Highlights

Lesaka has successfully integrated its operations post-merger with the Connect Group, emphasizing a unified brand identity with the launch of "One Lesaka."

The company has consolidated its offices in Johannesburg, Cape Town, and Durban to enhance collaboration.

The Consumer division showed strong growth, with net revenue up 38% to ZAR 2.4 billion, driven by increased customer acquisition and cross-selling.

The Enterprise division also performed well, with net revenue growing 45% to ZAR 913 million, reflecting strong growth in ADP and utilities.

The Merchant division faced challenges, with net revenue growth of only 3% to ZAR 3.1 billion, impacted by declining take rates and integration issues.

Lesaka is in the process of acquiring Bank Zero, which is expected to enhance its product offerings and reduce funding costs.

3Forward Guidance and Outlook

Q1 FY 2027 Guidance::

Net Revenue: ZAR 1.58 billion to ZAR 1.66 billion

Group Adjusted EBITDA: ZAR 200 million to ZAR 240 million

Adjusted EPS: ZAR 0.40 to ZAR 0.60

Full Year FY 2027 Guidance::

Net Revenue: ZAR 7 billion to ZAR 7.7 billion

Group Adjusted EBITDA: ZAR 1.45 billion to ZAR 1.6 billion

Adjusted EPS: ZAR 7.50 to ZAR 8.50

The company anticipates accelerated growth in FY 2028, particularly post-acquisition of Bank Zero, which is expected to close by December 2026.

4Bad News, Challenges, or Points of Concern

The Merchant division's performance has been disappointing, with a 10% decline in Q4 revenue and ongoing integration challenges leading to cost pressures.

Declining take rates in key products, particularly in ADP and cash, have impacted revenue growth.

The company is cautious about the restructuring costs in Q1 FY 2027 and their potential impact on future performance.

Competitive pressures from larger banks and fintechs are a concern, particularly in the merchant space.

5Notable Q&A Insights

Management acknowledged the weaker-than-expected performance in the Merchant division and emphasized that integration challenges are primarily timing issues.

There is confidence that restructuring efforts will stabilize performance beyond Q1 FY 2027.

The acquisition of Bank Zero is seen as a strategic move to enhance product offerings and reduce funding costs, with expectations for significant growth in its deposit base.

Management indicated a commitment to further M&A activities, focusing on transformative opportunities that are accretive to the business.

The company is optimistic about the long-term growth potential in both the Consumer and Enterprise divisions, with expectations for improved margins and operational leverage. Overall, while Lesaka Technologies has shown strong financial performance and strategic growth, challenges in the Merchant division and competitive pressures remain focal points for management as they navigate the upcoming fiscal year.