Lesaka Technologies, Inc. · NASDAQ:LSAK
Lesaka Technologies — Net1 UEPS Technologies — Q1 2020 Earnings Presentation
32 slides from Lesaka Technologies's earnings presentation, November 2019
Slide 1: Q1 2020 Investor Presentation
Q1 2020 Investor Presentation www.net1.com
Slide 2: Safe Harbor Statement
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 caus
Slide 3: Defined Terms
Defined Terms Unless specifically noted otherwise within this presentation, the following terms are hereby defined as follows: Constant Currency: We analyze our results of operations both in U.S. dollars, as presented in the consolidated financial statements, and supplementally in ZAR, because ZAR i
Slide 4: Performance Summary
Performance Summary Q1 2020 Company highlights include: Q1 2020 Investment portfolio update: • Group returned to positive Adj. EBITDA in Q1 2020 • Cell C made progress towards its expanded MTN agreement, following which it expects to conclude • Revenue improved sequentially from Q4 2019, its recapit
Slide 5: Strategic Summary
STRATEGIC SUMMARY Q1 2020
Slide 6: Return to our roots: Financial Inclusion
Return to our roots: Financial Inclusion Providing Innovative and Cost-Effective Solutions FINANCIAL TECHNOLOGY Affordability Accessibility Offline/security Micro-loans Distribution Micro-insurance Unbanked and Under-banked Omni-channel Working Capital VAS Easy-to-use 6
Slide 7: Global Market Opportunity
Q1 2020 | Global Market Opportunity Net1 is a global fintech player focused on the unbanked GLOBAL REACH TECHNOLOGY 19 office or service locations globally • Core UEPS/EMV platform • Tokenization – virtual card • Mobile banking/payments (QR) • Crypto-asset storage • Card processing gateways • ACH pr
Slide 8: FY 2020 Targets
Q1 2020 | FY 2020 Targets 1) Accelerate transition from B2B to B2C model in South Africa Metrics: • Grow active account base by at least 10% from Q4 2019 levels; • Expand financial and value-added services businesses at least 10% from Q4 2019 levels 2) Introduce and scale up payments and blockchain
Slide 9: Long-term Growth Strategy
Q1 2020 | Long-term Growth Strategy Focus on four key pillars to drive long term growth and profitability SOUTH AFRICA AFRICA EU/ASIA (IPG) KOREA Financial Inclusion Mobile Payments, Digital Issuing, Acquiring, Improve growth and (Individuals) Financial services, UEPS Processing (SMEs) profitability
Slide 10: Strategic Investments
STRATEGIC INVESTMENTS Q1 2020
Slide 11: BANK Investments
BANK Investments FINBOND (South Africa) Ownership: 29% Carrying Value: $33 Mn South African mutual bank and lender with 400+ branches. Traded on JSE (Ticker: FGL) PROJECT 2020: Launch new UEPS/EMV products Leverage combined branch, ATM and POS infrastructure DEVELOPMENTS: Reported revenue of ZAR 1.3
Slide 12: Mobile Payment Investments
MOBILE PAYMENT Investments MOBIKWIK (India) Ownership: 13% Carrying Value: $27 Mn Leading digital fintech and payments company in India with 80+ million customers PROJECT 2020: Expand financial services offerings – loans, insurance, wealth Scale virtual card and introduce new Net1 offerings DEVELOPM
Slide 13: Mobile Payment Investments (Cont'd)
MOBILE PAYMENT Investments (Cont’d) V2 Limited Ownership: 50% Carrying Value: $3 Mn Startup Africa-focused mobile payments company leveraging QR-code technology PROJECT 2020: Commercially scale operations in Ghana Enter at least one additional African market DEVELOPMENTS: Started operations in Octob
Slide 14: Telecom Investments
TELECOM Investments Cell C (South Africa) Ownership: 15% Carrying Value: $0 Mn Third-largest mobile operator in South Africa PROJECT 2020: Conclude recapitalization Implement MTN network sharing agreement and build sustainability DEVELOPMENTS: Made further progress with conclusion of MTN agreement P
Slide 15: Financial Highlights
FINANCIAL HIGHLIGHTS Q1 2020
Slide 16: Q1 2020 Financial Highlights
Q1 2020 Financial Report Q1 2020 Financial Highlights – (DNI included in Q1 2019 only) Q1 2020 Q1 2019 Q4 2019(1) ($ Millions) Revenue 81 107 71 % change USD (36%) 13% % change Const. FX (36%) 17% Adjusted EBITDA 3 13 (1) % change USD (79%) nm EBITDA Margin (%) (79%) nm Fundamental Net Income* (1) 1
Slide 17: Business Segment Results – Q1 2020
Q1 2020 Financial Report Business Segment Results – Q1 2020 Q1 constant currency SATP Revenue • SATP constant currency revenue grew 6% vs. Q4 2019 • Expiration of SASSA contract and impact of auto- R 876 migration of EPE customers 1,000 800 R 561 • ITP constant currency revenue declined 3% vs Q4 201
Slide 18: Business Segment Results (excludes DNI)
Q1 2020 Financial Report Business Segment Results – Q1 2020 – (excludes DNI) USD (Millions) Revenue Operating Income Operating Margin 1Q 2020 1Q 2019 1Q 2020 1Q 2019 1Q 2020 1Q 2019 SATP $19 $38 $(3) $(4) (17%) (9%) % Change* (49%) (4%) ITP 34 39 4 3 11% 7% % Change* (14%) 36% FIAT 30 34 2 3 (17%) (
Slide 19: Balance Sheet Overview
Q1 2020 Financial Report Balance Sheet Overview USD (Millions) Sep 30, 2019 Jun 30, 2019 Net Unrestricted Cash $ 42 $ 46 Investments and Equity Accounted Investments(1) $ 147 $ 178 Total Assets $ 671 $ 673 Total Equity and Redeemable Common Stock $ 408 $ 427 Total Debt(2) $ 25 $ 10 Book Value / Shar
Slide 20: Key Investments
Q1 2020 Financial Report Key Investments % held Balance Sheet Value (Sep 2019) Equity Accounted: Bank Frick 35% $46 million >$46 million (1) Finbond (JSE listed) 29% $33 million $59 million (2) Carbon 25% $8 million $25 million (3) DNI 30% $57 million $57 million (4) Investments: Cell C 15% $0 milli
Slide 21: Business Overview: South African Transaction Processing
BUSINESS OVERVIEW SOUTH AFRICAN TRANSACTION PROCESSING Q1 2020
Slide 22: SATP Segment Highlights
Q1 2020 | SATP Segment Highlights Financial Highlights • Revenue - $19 million • 49% decrease from $38 million in Q1 2019 • 6% constant currency increase compared to Q4 2019 • Lower transaction revenue from fewer EPE accounts and SASSA Grindrod accounts • Partially offset by higher transaction volum
Slide 23: Business Overview: International Transaction Processing
BUSINESS OVERVIEW INTERNATIONAL TRANSACTION PROCESSING Q1 2020
Slide 24: ITP Segment Highlights
Q1 2020 | ITP Segment Highlights Financial Highlights • Revenue - $34 million • 14% decrease compared to Q1 2019 • 4% constant currency decrease compared to Q4 2019 • Exit of certain unprofitable merchant/agent contracts in South Korea • Contraction in IPG processing activities particularly China pr
Slide 25: ITP Segment Highlights (Cont'd)
Q1 2020 | ITP Segment Highlights (Cont’d) Key Trends • South Korea and Rest of the World (ROW) Growth • South Korea revenue down 4% in KRW compared to Q1 2019 • ROW revenue impacted by contraction in IPG processing activities Revenue KRW Billions Revenue ROW (excl Korea) - USD Millions 50 9 8 40 7 6
Slide 26: Business Overview: Financial Inclusion & Applied Technologies
BUSINESS OVERVIEW FINANCIAL INCLUSION & APPLIED TECHNOLOGIES Q1 2020
Slide 27: FIAT Segment Highlights
Q1 2020 | FIAT Segment Highlights Financial Highlights • Revenue - $30 million • 43% decrease from $53 million in Q1 2019 • 77% constant currency increase compared to Q4 2019 • Benefit from adhoc technology and telecom product sales in Q1 2020 • Operating Profit - $1.5 million • 87% decrease from $1
Slide 28: FIAT Segment Highlights (Cont'd)
Q1 2020 | FIAT Segment Highlights (Cont’d) Key Trends Average Active EPE accounts Value of Loans Outstanding 1,400 Millions 1,200 2.0 1,000 Millions 1.5 800 600 1.0 400 0.5 200 0 0.0 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 As of quarter ended Outstanding Capital Deferred Servi
Slide 29: Appendix A
Appendix A
Slide 30: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures Q1 2020 – Fundamental Net (Loss) Income and EBITDA Three months ended Sep-19 Sep-18 $ '000 EPS, basic $ '000 EPS, basic Fundamental net (loss) income (Non-GAAP) (1,176) (0.02) 774 0.01 Amortisation of intangible assets, net of tax (1,413) (4,481) Transaction costs
Slide 31: Appendix B
Appendix B
Slide 32: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures Q1 2019 – Adjusted EBITDA (continuing and discontinued operations) Three months ended September 30, 2018: Continuing Discontinued Total Operating (loss) income (GAAP) (4,286) 5,182 896 Depreciation and amortization 7,858 2,936 10,794 EBITDA (Non-GAAP) 3,572 8,118
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