Lesaka Technologies (NasdaqGS:LSAK) Q2 2026 Earnings call February 05, 2026 08:00 AM ET Company ParticipantsAli Mazanderani - Executive ChairmanDan Smith - CFOLincoln Mali - CEOTheodore O'Neill - Chief Executive OfficerNone - Video NarratorConference Call ParticipantsRoss Krige - Equity Research AnalystOperatorWelcome to Lesaka Technologies' Results Webcast for the second quarter of fiscal 2026. As a reminder, this webcast is being recorded. Management will address any questions you have at the end of the p ...

Lesaka Technologies (NasdaqGS:LSAK) Q2 2026 Earnings call February 05, 2026 08:00 AM ET Speaker3Welcome to Lesaka Technologies' Results Webcast for the second quarter of fiscal 2026. As a reminder, this webcast is being recorded. Management will address any questions you have at the end of the presentation. To ask a question, live participants are requested to join the chorus call line by registering via the link provided. Alternatively, please enter your questions into the Questions tab of this webcast. Ou ...

Financial Data and Key Metrics Changes - Service revenues net of interconnection reached $145.9 billion, up 1% year on year, driven by steady demand across fiber, data, and ICT [4][6] - Cash operating expenses, subsidies, and provisions decreased by 2%, reflecting the company's focus on spending control [4][16] - EBITDA rose 3% to $82.8 billion with margins steady at 52% amidst higher revenues and lower operating expenses [4][17] - Telco core income was $5.3 billion, down 5% mainly due to higher depreciation and financing costs from network and IT investments [5][18] - Core income remained stable at $25.8 billion, supported by Maya's sustained profitability [5][19] Business Line Data and Key Metrics Changes - Fiber revenues grew 7%, reflecting solid demand for reliable connectivity [6][10] - Mobile data and fixed wireless revenues were up 1%, with fixed wireless showing strong momentum with an 18% year-on-year increase [6][15] - Corporate Data and ICT revenues grew 2%, with ICT services alone growing 27% year on year [7][13] - Home revenues grew 4% year on year, driven mainly by continued fiber demand [10][12] Market Data and Key Metrics Changes - The enterprise segment returned to growth in the third quarter, with corporate data and ICT up 5% year on year [9][13] - Government and public sector projects began to ramp up after election-related delays, contributing to the growth in enterprise revenues [7][13] - The number of 5G devices increased by 39% year on year, driving higher data usage and improved customer experience [15] Company Strategy and Development Direction - The company continues to invest in new cell sites, LTE and 5G upgrades, home fiber ports, data center development, and submarine cables to strengthen network quality and support growth [20] - PLDT launched Filipinas AI, the country's first sovereign AI platform, to enable enterprises to build and deploy AI models locally [14][89] - The company is focused on asset monetization programs, including a potential REIT listing for its data center [71] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining positive free cash flow into 2026, supported by lower CapEx and asset monetization [22][70] - The government is expected to continue investing in digital connectivity, which is seen as a priority for future growth [46] - Management highlighted the importance of maintaining profitability amidst a competitive environment, with a focus on disciplined growth [17][18] Other Important Information - Maya's net income for the third quarter was $532 million, with significant growth in deposits and loans [24][25] - The company recorded a $1.1 billion in proceeds from tower sales and completed a $20.5 billion final dividend payment for 2024 [22] Q&A Session Summary Question: What were the main drivers for the drop in Maya's net income for the period? - The drop was attributed to the removal of gaming links and the launch of new credit products, which will have some provision impact in the near term [33][34] Question: How do you see the KPA and IRRs impacting profitability and investment profile? - The law aims for cheaper internet and wider coverage, but lacks obligations for new entrants to build infrastructure, raising concerns about its effectiveness [36][54] Question: What is driving the difference in performance in the mobile segment? - Smart Wireless Group achieved flattish growth year to date, with improved ARPU due to targeted customer acquisition strategies [39][40] Question: Are you seeing sustained uptick in government projects into the fourth quarter? - Continued demand from government agencies is expected, with investments in digital connectivity prioritized [42][46] Question: What is the status of the asset monetization programs? - The company is in talks for a 49% stake sale in its data center and exploring a REIT listing [71][92]

Financial Data and Key Metrics Changes - The company reported revenue of ZAR 2.5 billion, net revenue of ZAR 1.36 billion, and group adjusted EBITDA of ZAR 237 million, achieving guidance across all metrics for the quarter [10][11] - Fundamental earnings grew 98% year on year to ZAR 58 million, translating to ZAR 0.72 per share, an increase of 60% [10][13] - Net revenue increased 42% year on year, primarily driven by the inclusion of Adumo and a 32% increase in the consumer segment [12][11] Business Line Data and Key Metrics Changes - The Consumer division had a standout quarter with record transactional account enrollments, lending, and insurance originations, resulting in a revenue growth of 32% year on year to ZAR 446 million [5][39] - The Merchant division's net revenue was up 58% to ZAR 782 million, with segment adjusted EBITDA increasing 7% to ZAR 150 million [27] - The Enterprise division reported an EBITDA of ZAR 2 million, down from ZAR 14 million last year, due to restructuring costs and exiting certain hardware businesses [42][45] Market Data and Key Metrics Changes - The company serves 1.9 million consumers monthly, with a market share of 13% among permanent SASSA grant recipients [30][32] - The merchant acquiring offering now has over 81,000 points of presence, with throughput on devices growing to CAD 9.9 billion for the quarter [22] - The prepaid solutions throughput increased 4% year on year to ZAR 5.3 billion, while supplier enabled payments grew 57% year on year [25][26] Company Strategy and Development Direction - The company is focused on building a multiproduct fintech platform organized around customer needs, with M&A being a key part of the strategy [6][5] - The integration of Recharger is expected to significantly contribute to the Enterprise division and enhance the electricity vending business [44][48] - The company aims to optimize capital allocation towards areas with significant growth potential while downscaling less attractive market opportunities [7][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued momentum of the Consumer division into FY 2026, with expectations of sustained growth in both customer base and ARPU [53][60] - The company anticipates a revenue guidance of ZAR 10 billion to ZAR 11 billion for FY 2025, with a net revenue increase of 42% year on year [51][52] - The Enterprise division is expected to become a material contributor to EBITDA in the coming years, with significant investments being made [42][70] Other Important Information - The company launched an employee share ownership plan, aligning employee interests with the company's success [10] - A net loss of ZAR 311 million was recorded from the noncore investment in MobiKwik, impacting overall financial results [9] Q&A Session Summary Question: Comment on your market share gains in this business. Has this continued into April and May? - Management noted significant investments have led to a 70% year-on-year growth in the customer base, with record sales in recent months indicating continued market share gains [59] Question: How deep could the endpoint for penetration end up? - Management believes there is potential to grow insurance penetration rates into the 40s and expand beyond the current customer base [62] Question: Insights on the merchant market growth and current slower growth in key contributors? - Management clarified that net revenue is growing at market rates, with confidence in restoring growth rates in the prepaid space back to mid-teen levels [64][66] Question: Contribution of the Enterprise division to group adjusted EBITDA? - Management indicated that FY 2025 was a year of rebuild for the Enterprise division, with expectations for a meaningful contribution to EBITDA in FY 2026 [68][70] Question: Thoughts on capital allocation regarding cash vaults? - Management emphasized that cash vaults are part of a holistic offering to merchants, facilitating a transition to more profitable services [71][73] Question: Margin evolution within the group per division? - Management expects the Consumer division's margin to exceed 30% over time, with similar expectations for the Merchant division, aiming for a group margin of around 30% in the medium term [74][76]

Financial Data and Key Metrics Changes - The company reported revenue of ZAR 2.5 billion, net revenue of ZAR 1.36 billion, and group adjusted EBITDA of ZAR 237 million, achieving guidance across all metrics for the quarter [9][10] - Fundamental earnings grew 98% year on year to ZAR 58 million, translating to ZAR 0.72 per share, an increase of 60% [11][12] - Net revenue increased 42% year on year, primarily driven by the inclusion of Adumo and a 32% increase in the consumer segment [11][12] Business Line Data and Key Metrics Changes - The Consumer division had record transactional account enrollments, lending, and insurance originations, contributing to a 32% revenue growth year on year to ZAR 446 million [38] - The Merchant division's net revenue was up 58% to CAD 782 million, with segment adjusted EBITDA increasing 7% to CAD 150 million [28][29] - The Enterprise division reported an EBITDA of ZAR 2 million, down from ZAR 14 million last year, due to restructuring costs and exiting certain hardware businesses [41][66] Market Data and Key Metrics Changes - The company serves 1.9 million consumers monthly, with a market share of 13% among permanent SASSA grant recipients [32] - The merchant acquiring offering now has over 81,000 points of presence, with throughput on devices growing to CAD 9.9 billion for the quarter [22] - The prepaid solutions throughput increased 4% year on year to ZAR 5.3 billion, while supplier enabled payments grew 57% year on year [25][26] Company Strategy and Development Direction - The company is focused on building a multiproduct fintech platform and has made acquisitions like Recharger to enhance its offerings [6][8] - The strategy includes optimizing capital allocation towards high-growth areas while downscaling less attractive market opportunities [7] - The company aims to achieve a net debt to group adjusted EBITDA ratio of 2x in the medium term, indicating a focus on financial stability [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued momentum of the Consumer division and expects strong growth in FY 2026 [51] - The company anticipates a revenue guidance of ZAR 10 billion to ZAR 11 billion for FY 2025, with a net revenue increase of 42% year on year [49] - The Enterprise division is expected to become a material contributor to EBITDA, with significant investments being made in technology and new products [42][66] Other Important Information - The company launched an employee share ownership plan, aligning employee interests with company success [9] - The acquisition of MobiKwik resulted in a net loss of ZAR 311 million, impacting overall financial results for the quarter [8] - The company completed a debt refinance, reducing the weighted average cost of debt from approximately 12% to 10.7% per annum [16] Q&A Session Summary Question: Comment on your market share gains in this business. Has this continued into April and May? - Management noted a significant increase in customer base and market share, with record sales in recent months indicating continued growth [57] Question: How deep could the endpoint for penetration end up? - Management believes there is potential to grow insurance product penetration into the 40s and expand beyond the current customer base [59] Question: Can you give insight on why card acquiring and ADP appear to be growing slower than the market? - Management clarified that net revenue is growing at market rates and expects to restore growth in the prepaid space back to mid-teen levels [61][64] Question: What has caused the deterioration of the Enterprise division's contribution to revenue and EBITDA? - The Enterprise division faced challenges due to the closure of legacy businesses but is expected to contribute positively in FY 2026 [66] Question: How do you think about capital allocation in the context of cash vaults? - Management emphasized that cash vaults are part of a holistic offering to merchants, facilitating a transition to more profitable services [68][71] Question: How should we think about margin evolution within your group per division? - Management expects the Consumer division's margin to exceed 30% over time, with similar expectations for the Merchant division [72][74]