Lesaka(US:LSAK)2025-11-06 14:02Financial Performance - Net revenue for Q1 was ZAR 1.53 billion, a 45% increase year-on-year [4] - Group adjusted EBITDA was ZAR 271 million, representing 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][8] - Net debt to adjusted EBITDA improved from 2.9x to 2.5x year-on-year [10] Business Line Performance - The Enterprise division reported net revenue of ZAR 222 million, a 19% year-on-year improvement [5] - Consumer division net revenue increased by 43% year-on-year [6] - Merchant division net revenue also rose by 43%, driven by the acquisition of Adumo [6] - Merchant segment adjusted EBITDA was ZAR 162 million, a 20% increase year-on-year [6] Market Performance - The number of devices in the Merchant division grew from 53,500 to almost 88,000 [11] - Total Payment Volume (TPV) for card acquiring more than doubled to ZAR 9.2 billion [11] - Cash TPV in the micro merchant segment grew 75% year-on-year, now accounting for 18% of all cash volumes [13] Company Strategy and Industry Competition - The company is focusing on unifying its merchant brand and product offerings to capture efficiencies [7] - The integration of various products and businesses is aimed at creating a comprehensive go-to-market strategy [7] - The company is simplifying its operations and reducing its lease footprint from over 40 locations to approximately 20 [29] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in achieving guidance for the 13th consecutive quarter [3] - The company anticipates continued improvement in net debt to adjusted EBITDA ratio as adjusted EBITDA increases [10] - Management expects to maintain discipline and focus on execution for FY 2026 [33] Other Important Information - Cash flows from operations totaled ZAR 341 million for the quarter [9] - Capital expenditure for the quarter was ZAR 90 million, with expectations to remain below ZAR 400 million annually [9] - The company is on track to close the Bank Zero acquisition by the end of FY 2026 [29] Q&A Session Summary Question: What is the reason for the sequential performance decline in the merchant segment revenue? - Management indicated that there is seasonality and non-core business lines being closed [37] Question: Can you elaborate on the change in margin for the merchant segment? - Management noted that non-recurring costs impacted margins and provided guidance for the next quarter to better reflect underlying growth [38] Question: What is the expected impact on the cost base from infrastructure rationalization? - Management expects significant cost savings from the rationalization of operations and reduction of duplicated functions [44] Question: How is the cross-sell strategy progressing? - Management plans to provide attachment rates for products in the merchant business, indicating a high attachment rate for customers with multiple products [42] Question: What is the rationale behind the Cell C potential IPO? - Management supports the IPO as it aligns with the strategy to simplify operations and focus on core business [48]