Lesaka(US:LSAK)2021-09-14 16:12Financial Data and Key Metrics Changes - Total revenue for Q4 2021 was $34.5 million, representing a 41% increase year-over-year in U.S. dollar terms and a 15% increase in rand terms, primarily due to higher volume-driven transaction fees, improved lending revenue, and hardware sales [31] - Adjusted EBITDA loss was $8.2 million, which was 31% better than the $11.9 million EBITDA loss reported for Q4 2020 [32] - Fundamental loss per share for Q4 2021 was $0.18 compared to $0.21 per share a year ago [33] Business Line Data and Key Metrics Changes - In South Africa, consumer bank accounts under EasyPay Everywhere (EPE) increased by about 43,000 gross accounts and 23,000 net accounts during the quarter, totaling over 1 million active bank accounts [34] - The loan book in the financial services segment increased to ZAR336 million from ZAR307 million a year ago [34] - The insurance business saw an increase in active policies to 246,000 from 233,000 a year ago, but faced increased claims, which were 50% higher in Q4 2021 than in Q4 2020 [35] Market Data and Key Metrics Changes - The U.S. dollar was 18% weaker against the rand during Q4 2021 compared to the prior period, impacting reported results [32] - ATM network utilization showed positive trends, with total transactions up 3.5% compared to the prior quarter and 16% higher than the second quarter in fiscal 2020 [34] Company Strategy and Development Direction - The company aims to build and operate a leading South African full-service Fintech platform, focusing on financial inclusion for underserved consumers and merchants [11][12] - The target addressable market is over 150 billion rands, with a focus on both consumer financial services and merchant financial services [12] - The company is committed to a significant turnaround in its South African operations, emphasizing customer acquisition and service improvement [22][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced due to civil unrest and the need for a cultural shift towards client-focused operations [18][22] - The company is optimistic about the growth trajectory of EPE accounts and is focused on achieving break-even in its financial services business [19][66] - Management highlighted the importance of digital transformation and collaboration with SASSA to improve service delivery and customer engagement [68] Other Important Information - The company reported damages and losses from civil unrest, with 173 ATMs damaged and a total loss of ZAR 34.5 million submitted for insurance claims [29] - The company has a significant net cash position and is evaluating high-return investment opportunities [17] Q&A Session Summary Question: What is the target for account additions for the year? - Management indicated that it is too early to provide specific guidance on account additions but noted positive momentum in EPE account growth [43][46] Question: Will costs increase with the expansion of infrastructure? - Management clarified that the cost base in the financial services business is not expected to increase, focusing instead on reducing costs while investing in sales [48][50] Question: What is the breakeven point for EPE accounts? - Management stated that the previous target of 1.4 million accounts for breakeven remains relevant, but clearer guidance will be provided in the future [65] Question: How has the relationship with SASSA evolved? - Management confirmed that they opted not to participate in a recent tender due to unfavorable commercial terms but are focused on growing the customer base organically [56][58] Question: How much of the recent account growth can be attributed to marketing and digitization? - Management noted that it is early to quantify the contributions from various initiatives but acknowledged that multiple factors, including new leadership and improved relationships with SASSA, are driving growth [71][72]