Lesaka Technologies, Inc. · NASDAQ:LSAK

Lesaka Technologies — Q1 FY2025 Earnings Presentation

54 slides from Lesaka Technologies's earnings presentation, Nov 7, 2024

1. Slide 1: FY25 Q1 Results Presentation

   1 FY25 Q1 Results Presentation November 07, 2024

2. Slide 2: Safe harbor statement

   2 Safe harbor statement The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements so long as such information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could ca

3. Slide 3: Agenda

   3 Agenda Overview Ali Mazanderani – Chairman Merchant Division Steven Heilbron – Head of Corporate Development Consumer Division Lincoln Mali – CEO Southern Africa Financial Performance & Outlook Dan Smith – CFO

4. Slide 4: GAAP Income Statement for the quarter (FY25 Q1, FY24 Q1, FY23 Q1)

   4 GAAP Income Statement for the quarter (FY25 Q1, FY24 Q1, FY23 Q1) ZAR’000 $’000 % Growth % Growth For the quarter FY25 Q1 FY24 Q1 YoY FY23 Q1 FY25 Q1 FY24 Q1 YoY FY23 Q1 Average exchange rate for conversion from ZAR to $ R17.72 R18.71 (5.3%) R14.61 R17.72 R18.71 (5.3%) R14.61 Revenue 2 615 690 2 5

5. Slide 5: Overview

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6. Slide 6: FY25 Q1 | Continuation of our strong & consistent performance

   6 FY25 Q1 | Continuation of our strong & consistent performance Financial period ended 30 September FY25 Q1 FY24 Q1 Growth Revenue R2 615 million R2 538 million  3% Net Revenue1 R1 056 million R909 million  16% Group Adjusted EBITDA¹ R168 million R150 million  12% Decreased Operating (loss) incom

7. Slide 7: Our platform and solutions are positioned to win

   7 Our platform and solutions are positioned to win Servicing the large and expanding FinTech opportunities across Africa for the next 25+ years (B2C) (B2B) Consumers Social grants Businesses South Africa Zambia Botswana Namibia Kenya Payment services 1.7 million+ Consumers 122 800+ businesses Bill p

8. Slide 8: Lesaka platform is strategically positioned to benefit from secular tailwinds

   8 Lesaka platform is strategically positioned to benefit from secular tailwinds 1 2 3 Cash use Market share Significant volumes Will continue to decline Will continue to shift Remain “un-disrupted” and ripe for penetration from banks to non-bank providers Top 5 Merchant acquirers in South Africa³ Sh

9. Slide 9: Merchant Division

   9 Merchant Division

10. Slide 10: South Africa remains underpenetrated with huge addressable opportunities

    10 South Africa remains underpenetrated with huge addressable opportunities Merchant market¹ With real pain points legacy providers are not equipped to address • Limited access to Digital Payments • Poor cash management solutions • Limited access to growth capital • Lack of holistic offering 2.7 mil

11. Slide 11: Uniquely positioned | Holistic offering and innovative solutions to merchants

    11 Uniquely positioned | Holistic offering and innovative solutions to merchants Within one payment ecosystem, enabling merchants to compete and grow For Merchants lution, Fuel management, Data O S s o yP analy s pitalit sis, | H o a n t c r ed it | Advances, SMB cr HS M re M e r ch edit t ok f twa

12. Slide 12: Merchant revenue drivers FY25 Q1 | VAS and supplier payments

    12 Merchant revenue drivers FY25 Q1 | VAS and supplier payments Value-added services and supplier payments | For the quarter 2 year CAGR 30% 38% yoy R9.9bn Devices1 deployed R 1.3bn 89 040+ | ▲ 16% yoy 20% yoy 2-year CAGR 25% R7.2bn R0.3bn R 3.2bn R5.9bn R 2.0bn R 1.6bn 10% yoy R 0.6bn R 5.4bn R 4.9

13. Slide 13: Merchant revenue drivers FY25 Q1 | Card acceptance

    13 Merchant revenue drivers FY25 Q1 | Card acceptance Card acceptance | For the quarter 2 year CAGR 36% 18% yoy R4.2bn Devices1 deployed 56% yoy R3.6bn 53 450+ | ▲ 15% yoy 2-year CAGR 39% R2.3bn FY23 Q1 FY24 Q1 FY25 Q1 Throughput (ZAR) Card acceptance throughput “R” = South African Rands, ZAR. 1. To

14. Slide 14: Merchant revenue drivers FY25 Q1 | Cash management solutions

    14 Merchant revenue drivers FY25 Q1 | Cash management solutions Digitalization of cash | For the quarter 2 year CAGR 2% 4% yoy 0% yoy Devices1 deployed R28.7bn R27.5bn R27.6bn 4 480+ | ▲ 2% yoy 2-year CAGR 3% FY23 Q1 FY24 Q1 FY25 Q1 Throughput (ZAR) Cash settlements (throughput) “R” = South African

15. Slide 15: Merchant revenue drivers FY25 Q1 | Lending

    15 Merchant revenue drivers FY25 Q1 | Lending Lending¹ | For the quarter 2 year CAGR² 4% Capital Connect disbursements up 8% since (3)% yoy² prior quarter (FY24 Q4) With a more positive economic outlook & the start of a 10% yoy² R 285m R5m interest rate down cycle, we are optimistic this R 274m R 27

16. Slide 16: Merchant revenue drivers | Enterprise

    16 Merchant revenue drivers | Enterprise • Advanced technology services to help enterprises engage & transact more efficiently with their customers • Strategically important asset with scale comprising EasyPay and Prism (including PrismPOS) 770+ Enterprises Proprietary security Expansive VAS & Bill

17. Slide 17: Merchant performance Q1 FY25

    17 Merchant performance Q1 FY25 Merchant Segment Merchant Segment Revenue (Rm) Adjusted EBITDA (Rm) 20% yoy 11% yoy 0% yoy (1%) yoy R2 263m R2 252m R144m R142m R140m R1 881m R 130m R141m R123m 14% yoy 1% yoy 10% yoy R635m 9% yoy R692m R 580m R7m R4m R1m FY23 Q1 FY24 Q1 FY25 Q1 FY23 Q1 FY24 Q1 FY25 Q

18. Slide 18: Evolution of our Merchant Division's Group Adjusted EBITDA

    18 Evolution of our Merchant Division’s Group Adjusted EBITDA Scalable platform Merchant Segment Adjusted EBITDA (Rm) Within one payment ecosystem, 3 year CAGR 62% enabling merchants to compete and grow 23% yoy 1 R725m – R745m Micro-Merchant R600m R579m Merchant R175m Enterprise FY22 FY23 FY24 FY25

19. Slide 19: Consumer Division

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20. Slide 20: South Africa remains underpenetrated with huge addressable opportunities

    20 South Africa remains underpenetrated with huge addressable opportunities Consumer market 90% of grant recipients need cash immediately With real pain points legacy providers are not equipped to address • Poor customer experience • Limited access to financial services & formal credit • Excessive c

21. Slide 21: Consumer | Offering straight forward and cost-effective Financial Services

    21 Consumer | Offering straight forward and cost-effective Financial Services KPIs FY25 Q1 For Consumers BANKING PERSONAL LOANS PERSONAL INSURANCE 1.5m+ R564m ~466 000 Active EPE customers Loan book before allowances Active insurance policies ▲14% yoy ▲34% yoy ▲30% yoy Permanent grant customers ▲18%

22. Slide 22: Growth in EPE base | Continued momentum in cross selling & upselling initiatives

    22 Growth in EPE base | Continued momentum in cross selling & upselling initiatives Products and service channels designed to meet our customers’ needs Momentum in driving Optimally located points customer acquisition of presence Continued momentum in deepening our relationship with our customers Fo

23. Slide 23: Repositioned EasyPay Everywhere brand | Digital strategy

    23 Repositioned EasyPay Everywhere brand Digital strategy Transactions and dials Usage Millions J F M A M J J A S O N D J F M A M J J A S 2023 2024 *130*3737# dials Unique contact numbers Thousands J F M A M J J A S O N D J F M A M J J A S 2023 2024 *130*3737# unique contact numbers

24. Slide 24: EPE Growth strategy yielding encouraging results

    24 EPE Growth strategy yielding encouraging results Momentum in delivering growth in client base and ARPU¹ Delivery against Consumer Segment Revenue (Rm) Consumer Segment Adjusted EBITDA 2 (Rm) strategic focus areas 1. Grow 2 year CAGR 21% 2 years | Increased R111m active EPE 30% yoy 99% yoy 2. Incr

25. Slide 25: Looking forward

    25 Looking forward Obsession around our customers’ needs Implementation of Bonngwe to enhance cross sell and upsell Launching new products New front end for EPE Insurance Loans | Market research indicates which will allow sales • Funeral plan, pensioners’ plan larger credit appetite consultants to g

26. Slide 26: Evolution of our Consumer Division's Group Adjusted EBITDA

    26 Evolution of our Consumer Division’s Group Adjusted EBITDA Consumer Segment Adjusted EBITDA (Rm) 3 years | Increased R692m Increased R208m yoy Opportunity to expand 41% yoy R325m – R345m More penetration of existing products & new solutions provided to consumers R238m R30m (R372m) FY22 FY23 FY24

27. Slide 27: Financial Highlights

    27 Financial Highlights

28. Slide 28: Group Revenue & EBITDA for Q1 FY25

    28 Group Revenue & EBITDA for Q1 FY25 Consistent execution Revenue Net Revenue Group Adjusted EBITDA 2 year CAGR 11% 2 year CAGR 12% 2 year CAGR 70% 16% yoy 3% yoy 12% yoy R1 056 m R 168m R2 616m R909 m R150m R142m R2 538m R 837m R2 252m R144m R2 138m R2 263m (1%) R58m yoy R1 881m R130m 0% yoy 99% R

29. Slide 29: GAAP Income Statement for the quarter (FY25 Q1, FY24 Q1, FY23 Q1)

    29 GAAP Income Statement for the quarter (FY25 Q1, FY24 Q1, FY23 Q1) ZAR’000 $’000 % Growth % Growth For the quarter FY25 Q1 FY24 Q1 YoY FY23 Q1 FY25 Q1 FY24 Q1 YoY FY23 Q1 Average exchange rate for conversion from ZAR to $ R17.72 R18.71 (5.3%) R14.61 R17.72 R18.71 (5.3%) R14.61 Revenue 2 615 690 2

30. Slide 30: Segmental EBITDA analysis for the quarter

    30 Segmental EBITDA analysis for the quarter (FY25 Q1, FY24 Q1 and FY23 Q1) ZAR’000 $’000 % Growth % Growth Q1 - ended 30 September FY25 Q1 FY24 Q1 YoY FY23 Q1 FY25 Q1 FY24 Q1 YoY FY23 Q1 Average exchange rate for conversion from ZAR to $ 17.72 18.71 (5%) 14.61 17.72 18.71 (5%) 14.61 Revenue Merchan

31. Slide 31: Operating profit (loss)

    31 Operating profit (loss) Impact of the one-off transaction costs included in operating profit Operating income (loss) ZAR USD1 R4.2m R29.7m $0.2m $1.8m R4.2m $0.2m (R30m) ($1.7m) (R80m) (R0.3m) ($4.7m) ($0.045m) (R80m) ($4.7m) FY23 Q1 FY24 Q1 FY25 Q1 FY23 Q1 FY24 Q1 FY25 Q1 One-off transaction cos

32. Slide 32: Fundamental and Basic earnings per share

    32 Fundamental and Basic earnings per share Fundamental¹ earnings (loss) per share (ZAR) for the quarter Basic (loss) per share (ZAR) for the quarter Improved Improved R0.74 per share R0.40 per share R0.66 (R0.08) (R1.26) (R1.66) (R1.36) (R2.93) FY23 Q1 FY24 Q1 FY25 Q1 FY23 Q1 FY24 Q1 FY25 Q1 “R” =

33. Slide 33: Focus on reducing debt & growing Group Adjusted EBITDA

    33 Focus on reducing debt & growing Group Adjusted EBITDA Generating positive cash flow at an operational level Summary Group cash flow (Rm) FY25 Q1 FY24 Q4 FY24 Q1 Cash (utilized) generated in working capital² Cash generated from business operations¹ 196 211 184 • Net cash of R73m used in operating

34. Slide 34: CAPEX primarily driven by growth

    34 CAPEX primarily driven by growth Capex (Rm) FY23 Q1 FY24 Q1 FY24 Q4 FY25 Q1 Capex (77) (53) (87) (70) Capex R87m R70m R13m | Kazang • Point-of-sales devices on average have a payback R77m of < 4 months and a 36-month useful life R70m • Highly cash generative / short pay-back period R41m R53m Grow

35. Slide 35: Outlook

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36. Slide 36: Forward-looking statements

    36 Forward-looking statements Management has provided its outlook regarding net revenue and Group Adjusted EBITDA, which are non-GAAP financial measures and excludes certain revenue and charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measu

37. Slide 37: Outlook

    37 Outlook Reaffirming our FY25 Revenue and Group Adjusted EBITDA guidance | Net Revenue guidance provided for the first time Our outlook provided • Guidance includes the impact of the Adumo acquisition, which Quarterly Annual closed in October 2024 (FY25 Q2). Implied • Guidance excludes the impact

38. Slide 38: Evolution of our Group Adjusted EBITDA

    38 Evolution of our Group Adjusted EBITDA Indicative breakdown1 Group Adjusted EBITDA (Rm) of Group Adjusted EBITDA R900m – R1bn R900m – R1bn R691m c. 70% EBITDA contribution Merchant Division R445m c. 30% EBITDA contribution Consumer Division c. (20%) EBITDA contribution Group costs (R328m) FY22 FY

39. Slide 39: Questions

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40. Slide 40: Appendix

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41. Slide 41: Disaggregation of revenue (ZAR'000) before intersegment eliminations per quarter

    41 Disaggregation of revenue (ZAR’000) before intersegment eliminations per quarter Total Segment Revenue¹ Merchant Consumer 3% yoy 0% yoy 30% yoy 19% yoy 20% yoy 13% yoy 378 063 2 629 888 2 263 001 2 251 825 9 473 2 553 630 32 362 38 431 290 629 378 063 37 984 56 375 2 137 671 1 880 642 290 629 124

42. Slide 42: Group Revenue & EBITDA for Q1 FY25 (USD)

    42 Group Revenue & EBITDA for Q1 FY25 (USD) Consistent execution Revenue Group Adjusted EBITDA 2 year CAGR 11% 2 year CAGR 70% 3% yoy 12% yoy R 168m $9m R142m $8m R2 616m $146m R150m $8m R2 538m $137m R2 252m $125m R144m (1%) yoy R2 263m $121m $3m R2 138m $125m R58m $8m R1 881m $110m R130m $8m 0% yo

43. Slide 43: Fundamental and Basic earnings per share (USD)

    43 Fundamental and Basic earnings per share (USD) Fundamental¹ earnings (loss) per share for the quarter Basic (loss) per share for the quarter Improved Improved $0.04 per share $0.02 per share R0.66 $0.04 (R0.08) ($0.00) (R1.26) ($0.07) (R1.66) ($0.09) (R1.36) ($0.08) (R2.93) ($0.17) FY23 Q1 FY24 Q

44. Slide 44: Group Revenue (USD)

    44 Group Revenue (USD) Consistent execution | Continue to deliver on both growth and profitability Group Revenue 3% yoy R2 695m $144m R2 610m $138m R2 711m $146m R2 616m $146m R2 538m $136m R2 495m $133m R2 383m$136m R2 402m $134m R2 094m $135m R2 138m $125m R1 895m $122m R2 378m $128m R2 252m $125m

45. Slide 45: Group Adjusted EBITDA (loss) (USD)

    45 Group Adjusted EBITDA (loss) (USD) Consistent execution | Continue to deliver on both growth and profitability Group Adjusted EBITDA (loss) 12% yoy R183m $10m R190m $10m R168m $9m R146m $8m R168m $9m R125m $7m R150m $8m R117m $7m R40m R59m $4m R58m $3m R145m $8m $8m $3m R154m $8m R142m R149m $8m

46. Slide 46: Use of non-GAAP measures

    46 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. We have received requests from investors and analysts to provide ad

47. Slide 47: Reconciliation of non-GAAP measures | Quarterly

    47 Reconciliation of non-GAAP measures | Quarterly FY25 Q1 FY24 Q1 FY25 Q1 FY24 Q1 ZAR’000 ZAR’000 $’000 $’000 Average exchange rate for conversion from ZAR to $ 17.72 18.71 17.72 18.71 Loss attributable to Lesaka – GAAP (81 023) (105 635) (4 542) (5 651) (Earnings) loss from equity accounted invest

48. Slide 48: Reconciliation of non-GAAP measures | Quarterly

    48 Reconciliation of non-GAAP measures | Quarterly FY25 Q1 FY24 Q1 FY25 Q1 FY24 Q1 ZAR’000 EPS, basic ZAR’000 EPS, basic $’000 EPS, basic $’000 EPS, basic Average exchange rate for conversion from ZAR to $ 17.72 18.71 17.72 18.71 Net loss attributable to Lesaka (GAAP) (81 023) (1.26) (105 635) (1.66

49. Slide 49: Once-off items | Quarterly

    49 Once-off items | Quarterly The table below presents the components of once-off items for the periods presented: FY25 Q1 FY24 Q1 FY25 Q1 FY24 Q1 Quarter Quarter ZAR’000 ZAR’000 $’000 $’000 Average exchange rate for conversion from ZAR to $ R17,72 R18,71 R17,72 R18,71 Transaction costs 1 831 1 465

50. Slide 50: Outlook on stock-based compensation charges (SBC) (ZARM)

    50 Outlook on stock-based compensation charges (SBC) (ZARM) Stock-based compensation charges • Current level of SBC reflects higher amounts due to senior executive R171m sign-on that will vest over the next 3-years linked to performance R148m • Higher FY23, FY24 SBC charge related to once-off award

51. Slide 51: Glossary

    51 Glossary MSME Micro small and medium enterprise SMME Small, medium, and micro enterprise Adumo Adumo is South Africa’s largest independent payments processor with over 20 years experience in delivering integrated payment solutions for businesses of all sizes GAAP GAAP is the leading Point-of-Sale

52. Slide 52: Glossary

    52 Glossary Cash vault Kazang offering Partnerships enabling supply chain payments Lesaka ” means “ kraal” in Sesotho and Setswana Spaza shops and superettes at Merchant locations

53. Slide 53: Glossary

    53 Glossary Lesaka "kraal" Lesaka ” means “ kraal” in Sesotho and Setswana. A “kraal” protects the most valuable assets of a community, their livestock LSM Living standards measure EPE EasyPay Everywhere Easy Pay Insurance EasyPay insurance (previously named Smartlife), which holds a long-term insur

54. Slide 54: Lesaka

    LESQKA

Lesaka Technologies — Q1 FY2025 Earnings Presentation on 6ix