Financial Data and Key Metrics Changes - Net revenue for Q2 reached ZAR 1.6 billion, a 16% year-on-year increase [12] - Group-adjusted EBITDA grew 47% year-on-year to ZAR 304 million [12][15] - Adjusted earnings per share increased more than sixfold to ZAR 1.34 [14][18] - Leverage ratio stands at 2.5x, down from 2.9x at year-end [14] Business Line Data and Key Metrics Changes - Merchant division net revenue decreased by 2% due to a refocus on high-potential clients and pricing pressure [15] - Consumer division net revenue rose 38% year-on-year to ZAR 567 million [15] - Enterprise division net revenue increased by 67% year-on-year to ZAR 217 million [15] Market Data and Key Metrics Changes - Active merchants increased by 8% year-on-year to over 130,000 [22] - Consumer base exceeded 2 million customers, a 21% increase year-on-year [30] - Total ADP TPV reached ZAR 11.9 billion, representing 18% year-on-year growth [37] Company Strategy and Development Direction - The company aims to build a leading independent fintech in Southern Africa, consolidating brands under "One Lesaka" [3][4] - Focus on expanding financial access through technology with a human touch [7] - Plans to integrate Bank Zero for funding and balance sheet benefits [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth, particularly in the consumer lending segment [32] - The company anticipates a transformative year for the merchant division, expecting growth to return in FY27 [16] - Future guidance for net revenue is set between ZAR 6.4 billion and ZAR 6.9 billion, implying growth rates of 21%-30% [41] Other Important Information - The company exited its Cell C stake, receiving ZAR 50 million, and released ZAR 65 million from a legacy contract [9] - Approximately 60% of employees are under the age of 40, reflecting a young and diverse workforce [8] Q&A Session Summary Question: Increase in transaction fees and growth in insurance and lending revenue - Management confirmed that transaction fees are reviewed annually and that they are gaining market share from competitors, particularly in underserved markets [44][45] Question: Declining ARPU in the merchant segment - Management expects ARPU to stabilize and increase over the next 12 months, driven by cross-selling opportunities [49][51] Question: Drivers behind consumer lending growth - The increase in loan sizes and the introduction of a digital USSD channel have significantly contributed to growth, with 40% of originations coming from the new medium-term loan product [53][55]

Financial Data and Key Metrics Changes - The company reported a net interest margin of 7.43% for the quarter, an increase from 7.26% in the prior year [16] - Adjusted net interest margin was 5.98%, up from 5.76% year-over-year [16] - Noninterest income grew by 11% compared to the previous year, driven by strong performance in Tax Solutions and increased secondary market revenue [17] - The allowance for credit loss was 160 basis points, with an annualized net charge-off rate of 52 basis points for the quarter [19] Business Line Data and Key Metrics Changes - Commercial Finance saw strong originations with solid yields, with the yield on new originations at 9.55%, up from 8.24% in the previous quarter [19] - The company successfully redeployed nearly $1 billion from earlier sales of loans and securities in a shorter timeframe than expected [8] - The acquiring product experienced triple-digit revenue growth year-to-date, indicating strong performance in Partner Solutions [10] Market Data and Key Metrics Changes - Custodial deposits held at partner banks increased to $431 million from $353 million a year ago [19] - The company is targeting quarterly secondary market revenues in the range of $5 million to $7 million, benefiting from its balance sheet optimization strategy [18] Company Strategy and Development Direction - The company aims to be a trusted platform for partners, focusing on balance sheet optimization and offering unique financing structures that traditional banks may not provide [5][6] - Investments in technology are being made to evolve and scale product offerings, with a focus on sustainable fee income growth [9] - The company has contracted for 11 opportunities to expand products with existing or new partners this year, indicating a robust pipeline [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the complexities of the industry and regulatory environment while continuing to invest in risk and compliance [12] - The company expects a preliminary EPS range of $7.5 to $7.8 for fiscal year 2025, with a focus on maintaining strong growth and returns for shareholders [22] Other Important Information - The company was recognized as one of the best companies to work for by U.S. News and World Report for 2025 to 2026 [11] - Liquidity remains strong with nearly $2.7 billion available, higher than the previous year [21] Q&A Session Summary Question: Discussion on accounting change distraction for management - Management indicated that they are in the later stages of addressing the accounting methodology changes and are comfortable with the preliminary numbers provided [26][27] Question: Incremental expenses associated with accounting change - Management noted that the full impact of the accounting changes will be clearer once the restated 10-K is filed, with lower income expected in prior years due to built provisions [29] Question: Credit quality and NPL increases - Management clarified that the increase in non-performing loans (NPLs) was due to three distinct episodic events, not indicative of a broader credit issue [30][31] Question: AI strategy and its impact on P&L - Management is exploring AI for efficiency improvements but does not expect a significant impact on P&L in the near term [33][36] Question: Update on crypto-related products - The company provides access devices for partners offering crypto-related digital wallets and is evaluating potential internal developments in the crypto space [42][45] Question: Credit trends in the commercial finance portfolio - Management reported that borrowers are generally doing well, with the recent NPL increase being episodic and well-managed [46][47] Question: Update on partner pipeline in banking as a service - The partner pipeline remains strong, with significant opportunities in consumer lending marketplace sponsorship and embedded finance [48][49] Question: Expectations for share repurchases - Management confirmed plans to continue share repurchases, having already repurchased approximately 1.9 million shares this year [51]