Lesaka(US:LSAK)2025-11-05 21:11Financial Performance - Total throughput for the Merchant Division reached ZAR 9.2 billion in Q1 2026, a 117% increase from ZAR 4.2 billion in Q1 2025, driven by the inclusion of Adumo[178] - Revenue increased by $17.9 million (ZAR 266.7 million) or 11.6% (in ZAR 9.7%) primarily due to the inclusion of Adumo and Recharger, higher transaction activity, and increased insurance premiums collected[212] - Consolidated revenue for the three months ended September 30, 2025, was $171.4 million, a 12% increase from $153.6 million in 2024[223] - Merchant segment revenue increased by 3% to $126.9 million, while Consumer segment revenue surged by 45% to $30.6 million, and Enterprise segment revenue rose by 25% to $14.9 million[223] - Group Adjusted EBITDA for the three months ended September 30, 2025, was $15.3 million, reflecting a 64% increase from $9.4 million in 2024[223] Lending and Consumer Growth - The lending origination volume for the period was ZAR 201 million, representing a 21% increase compared to ZAR 166 million in Q1 2025[183] - The net loan book outstanding increased by 72% to ZAR 470 million as of Q1 2026, up from ZAR 273 million in Q1 2025[183] - Lending originations for EasyPay Loans increased by 77% to ZAR 820 million in Q1 2026, compared to ZAR 462 million in Q1 2025[190] - The Consumer Division saw a 24% increase in active consumers, reaching 1.9 million in Q1 2026, compared to 1.6 million in Q1 2025[190] - The average revenue per consumer per month increased to ZAR 89 in Q1 2026, up from ZAR 78 in Q1 2025, reflecting a 13% growth[193] Operational Efficiency - Operating income improved to $383,000 compared to a loss of $45,000 in the prior year, driven by strong performance in the Consumer segment and contributions from Adumo and Recharger[211] - The operating income margin improved to 0.2% in the first quarter of fiscal 2026 from (0.0)% in the prior year[218] - The Segment Adjusted EBITDA margin for the Merchant segment improved to 7.2% in fiscal 2026 from 6.1% in fiscal 2025[229] - Consumer segment revenue growth was driven by higher transaction fees and an increase in loan originations, resulting in a Segment Adjusted EBITDA margin of 27.8% for fiscal 2026[231] - Enterprise segment revenue and Adjusted EBITDA increased primarily due to the inclusion of Recharger, with a Segment Adjusted EBITDA margin of 8.54% for fiscal 2026[233] Expenses and Costs - Selling, general and administration expenses rose by $12.9 million (ZAR 219.5 million), or 48.5% (in ZAR 45.8%), mainly due to higher employee-related expenses and the inclusion of Adumo and Recharger[215] - Depreciation and amortization expense increased by $6.6 million (ZAR 114.7 million), or 105.4% (101.8%), attributed to acquisition-related intangible asset amortization from Adumo and Recharger[216] - Cost of goods sold decreased by $0.5 million (ZAR 45.8 million) or 0.4% (in ZAR 2.1%), primarily due to reduced prepaid airtime costs[213] - Group costs increased due to higher employee costs and consulting fees, partially offset by lower bonus expenses[235] Cash Flow and Financing - Cash and cash equivalents as of September 30, 2025, totaled $72.2 million, including ZAR 1.2 billion ($69.2 million) in South African Rand[241] - Net cash provided by operating activities in Q1 fiscal 2026 was $8.9 million (ZAR 157.6 million), compared to a net cash utilized of $4.1 million (ZAR 73.3 million) in Q1 fiscal 2025[252] - Capital expenditures for Q1 fiscal 2026 were $4.0 million (ZAR 70.3 million), primarily for the acquisition of vaults and POS devices[255] - The company has a revolving credit facility of ZAR 400.0 million utilized for merchant finance loans[248] - Long-term borrowings outstanding amount to ZAR 3.6 billion ($208.1 million) as of September 30, 2025, including ZAR 3.1 billion from Lesaka SA for refinancing[248] Acquisitions and Integration - The company closed acquisitions of Adumo and Recharger in fiscal 2025, integrating their businesses into its operations[209] - The company plans to make a cash payment of ZAR 175 million ($10.1 million) in March 2026 related to the acquisition of Recharger[245] Tax and Interest - The effective tax rate for fiscal 2025 was impacted by tax expenses from profitable South African operations and non-deductible expenses, with an income tax benefit of $0.1 million (ZAR 2.6 million) recorded in the first quarter of fiscal 2026[221] - Net interest charge decreased to $4.36 million (ZAR 76.9 million) from $4.45 million (ZAR 79.8 million) due to lower interest rates and changes in borrowing arrangements[211] - Interest expense decreased to $4.9 million (ZAR 86.4 million) from $5.0 million (ZAR 90.3 million), reflecting lower interest rates[220] - Estimated annual expected interest charge on South African borrowings is $22.9 million, with a hypothetical 1% increase raising it to $25.1 million[265] Risks and Challenges - The company is exposed to cash loss risks in ATMs and must repay African Bank for any shortages[251] - Restricted cash of $0.1 million is included in the consolidated statement of cash flows as of September 30, 2025[250]