Lesaka(US:LSAK)2025-11-06 14:00Financial Performance - Net revenue for Q1 FY2026 was ZAR 1.53 billion, a 45% increase year-on-year [4] - Group adjusted EBITDA reached ZAR 271 million, reflecting a 61% year-on-year growth [4] - Adjusted earnings grew by 150% to ZAR 87 million, with adjusted earnings per share doubling from ZAR 0.54 to ZAR 1.07 [4][9] - Net debt to adjusted EBITDA improved from 2.9 times in the previous quarter to 2.5 times [11] Business Line Performance - The Enterprise division generated ZAR 222 million in net revenue, a 19% year-on-year increase [5] - Consumer division net revenue increased by 43% year-on-year [6] - Merchant division net revenue also rose by 43%, primarily due to the acquisition of Adumo [6] - Merchant segment adjusted EBITDA was ZAR 162 million, a 20% increase year-on-year [6] Market Performance - Total Payment Volume (TPV) for card acquiring more than doubled to ZAR 9.2 billion from ZAR 4.2 billion year-on-year [12] - Cash TPV in the micro merchant segment grew 75% year-on-year, now accounting for 18% of all cash volumes [14] - ADP TPV increased by 13% year-on-year to ZAR 11.9 billion [27] Company Strategy and Industry Competition - The company is focused on unifying its merchant brand and product offerings to enhance efficiency and capture growth [7] - The integration of various products aims to build deeper relationships with clients and transition from single product to multi-product solutions [13] - The Bank Zero acquisition is expected to enhance customer offerings and expand the consumer base [31][34] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in achieving continued growth and reaffirmed FY2026 guidance for net revenue and adjusted EBITDA [35] - The company anticipates a transformative year for the merchant segment, with significant growth expected from the integration of Adumo [6][8] - Management highlighted the importance of maintaining discipline and focus in execution for future growth [35] Other Important Information - Cash flows from operations totaled ZAR 341 million for the quarter, with ZAR 122 million reinvested into growing lending books [10] - Capital expenditure for the quarter was ZAR 90 million, with expectations to remain below ZAR 400 million annually [10] Q&A Session Summary Question: What caused the sequential performance decline in the merchant revenue line? - Management noted seasonality and the closure of non-core business lines as contributing factors [39] Question: What is the impact on margins due to recent changes? - Management indicated that non-recurring costs affected margins, and guidance for the next quarter would provide a clearer picture [40] Question: What are the expected cost savings from infrastructure rationalization? - Management expects significant cost savings from reducing office locations and eliminating duplicated functions [46] Question: How is cross-selling progressing within the merchant segment? - Management confirmed that most merchants have multiple products, with plans to provide detailed metrics on cross-sell rates in future reports [44] Question: What is the rationale behind the Cell C potential IPO? - Management supports the IPO as part of simplifying operations and reallocating capital towards core business [49]