Q3 2025 Lesaka Technologies Inc Earnings Call
Phillipe Welthagen: Welcome to Lesaka Tech's webcast for Q3 of fiscal 2025. As a reminder, the webcast is being recorded, and the presentation can be accessed through the webcast link provided. Management will address any questions you may have at the end of the presentation. Participants, please enter your questions into the questions section of this webcast. The webcast link, as well as our press release and investor presentation, are available on our investor relations website at ir.lesakatech.com. Lesaka filed its Form 10-Q after the US market closed yesterday, which is also available on our website. During this call, we will be making forward-looking statements. I ask you to look at the cautionary language contained in our Form 10-Q regarding risks and uncertainties associated with forward-looking statements. As a domestic filer in the United States, we report our results in US dollars under US GAAP.
Speaker Change: Welcome to Lesaka Tech's web cross for the third quarter of the school 2025.
Speaker Change: As a reminder, the web cross has been recorded and the presentation can be accessed through the web cross link provided. Management will address any questions you may have at the end of the presentation.
Speaker Change: Lesaka filed its form 10Q after the US market occurs yesterday, which is also available on our website.
Speaker Change: During this call, we will be making forward-looking statements. I ask you to look at the cautionary language contained in our form, thank you, regarding risks and uncertainties associated with forward-looking statements.
Speaker Change: As a domestic filing in the United States, we report our results at US dollars at the US gap. However, it is important to note that our operational currency is South African-Rand and as such, we analyse our performance in RAND, which is non-GAAP .
Phillipe Welthagen: However, it is important to note that our operational currency is South African rand, and as such, we analyze our performance in rand, which is non-GAAP. This assists investors in understanding the underlying trends in our business. As you know, the company's results can be significantly affected by the currency fluctuations between the US dollar and the South African rand. I will now hand over the webcast to Dan.
Speaker Change: This assists investors in understanding the underlying trends in our business. As you know, the company's results can be significantly affected by the currency fluctuations between the US dollar and the South African Rand. I will now hand over the webcast to you,
Dan Smith: Thank you, Phil. Good morning and good afternoon to our respective shareholders in the US, South Africa, Europe, and Asia. I will start the presentation by taking you through the key developments for the quarter, followed by the group's financial performance. Steve will present the Merchant Division, Lincoln the Consumer Division, and Naeem the Enterprise Division. Ali will conclude with the outlook for the rest of our current financial year to June 2025 and will also provide guidance for our 2026 financial year. I characterize the past quarter as one of solid traction in the strategy that we are executing against. Our Consumer Division had a standout quarter with record EPE transactional account enrollments, lending, and insurance originations. It is pleasing to see the impact of the reorganization and rejuvenation of our consumer business that we undertook over the past 3 years really coming to the fore.
Dan: Thank you for. Good morning and good afternoon to our respective shareholders in the US, South Africa, Europe and Asia. I will stop the presentation by taking you through the key developments for the quarter, followed by the group's financial performance.
Dan: Steve will present the Merchant Division, Lincoln the Consumer Division and name the Enterprise Division. Ali will conclude with the artwork for the rest of our current financial year to June 2025 and will also provide guidance for our 2026 financial year.
Dan: I characterize the past quarter as one of solid traction in the strategy that we are executing against.
Dan: Our consumer division had a standout quarter, with a record EPE transsectional account in rollments, lending and insurance originations.
Dan: It is pleasing to see the impact of the reorganisation and rejuvenation of our consumer business that we undertook over the past three years really coming to the fore. This momentum continues into quarter four.
Dan Smith: This momentum continues into Q4. In early March, we concluded the acquisition of Recharger, with one month's performance included in our Q3 results. Recharger augments our alternative payment offering and marks a turning point in the transition of the Enterprise division to contribute to our earnings. In line with the execution of our strategy, we advanced the optimization of our Merchant and Enterprise divisions. We are building a multi-product fintech platform organized around our customers, with M&A being a key part of our strategy. The acquisition of Adumo in Q2 of this financial year has significantly expanded our Merchant division. As we continue to scale, the integration of product and people is core to our success, and we place a great deal of importance on the optimization, integration, and augmentation of our investments.
Dan: In early March, we concluded the acquisition of recharger with one month's performance included in our Q3 results.
Dan: Recharge your augments, alternative payment offering and mocks a turning point in the transition of the Enterprise Division to contribute to our earnings.
Dan: In line with the execution of our strategy, we advance the optimization of our merchant and enterprise divisions.
Dan: We are building a multi-product synthetic platform, organized around our customers, with M&A being a key part of our strategy.
Dan: The acquisition of a duo in quarter two of this financial year has significantly expanded our merchant division.
Dan: As we continue to scale the integration of product and people is core to our success and we place a great deal of importance on the optimization, integration and orientation of our investments.
Dan Smith: This process also includes realigning our capital allocation and efforts towards areas where we see significant growth, but equally being pragmatic in downscaling areas in which our bets have not worked or where we deem the market opportunity not to be attractive. Whilst this comes at a cost, which was approximately ZAR 20 million for this quarter, this is a net positive for the evolution of our business. Specific details focused around the areas of impact will come through in the Merchant and Enterprise sections. In the past quarter, we also completed the strategic reset of our debt facilities. I will provide more on the impact arms of this further on in my section of the presentation. As mentioned in last quarter's presentation, our non-core investment, MobiKwik, listed on the stock exchange of India in December last year.
Dan: This process also includes realigning our capital allocation and efforts towards areas where we see significant growth but equally being pragmatic in downscaling areas in which our bets have not worked or where we deem the market opportunity not to be attractive.
Dan: Whilst this comes at a cost which was approximately 20 million dollars for this quarter, this is a net positive for the evolution of our business.
Dan: Specific details focused around the areas of impact will come through in the merchant and enterprise sections.
Dan: In the past quarter, we also completed the strategic reset of our debt facilities.
Dan: I will provide more the impact on this further on in my section of the presentation.
Dan: As mentioned in last quarter's presentation, a non-co-investment movie quick listed on the Stock Exchange of Indian December last year.
Dan Smith: MobiKwik's share price has been volatile. We marked it to market this quarter with a net loss of ZAR 311 million, which significantly impacted our overall financial results for the quarter. We are locked up until June 2025. We are exploring practical and sensible paths to monetization. The proceeds from this will most likely be used to primarily reduce our gearing, further strengthening our balance sheet. We are also very proud of the launch of our employee share ownership plan during the quarter. Our employees, excluding executives and senior leadership, now own 3% of the issued share capital of Lesaka, more closely aligning their interests with the success of Lesaka. Overall, Q3 has been a continuation of our delivery of a strong and consistent performance.
Dan: Maybe quick share price has been volatile and we marked it to mark up this quarter with a net loss of 311 million rent, which significantly impacted our overall financial
Dan: We are locked up until June 2025 and we are exploring practical and sensible pause to monetization.
Dan: The proceeds from this will most likely be used to primarily reduce our gearing, further strengthening our balance sheet.
Dan: We are also very proud of the launch of our employees' partnership plan during the quarter.
Dan: Our employees, excluding executives and senior leadership, now earn 3% of the issued
More closely aligning their interests with the success of Lesaka.
Dan: Overall, Q3 has been a continuation of our delivery of a strong and consistent performance.
Dan Smith: We delivered revenue of ZAR two and a half billion, net revenue of ZAR 1.36 billion, and group adjusted EBITDA of ZAR 237 million, achieving our guidance across all metrics in this quarter. Our fundamental earnings, which we believe is the most appropriate measure of our overall performance, has grown 98% year on year to ZAR 58 million. Our net debt to group-adjusted EBITDA ended at 2.8 times for the quarter, both well within our bank covenants and our current risk appetite. Our focus is primarily on net revenue, as this more accurately shows the true reflection of our business's top-line performance. As a reminder, the difference between our revenue to net revenue is due to the accounting treatment of selling pinned airtime, which we have to recognize the principal rather than the commission as revenue. It also impacts cost of sales.
Dan: We delivered revenue of 2.5 billion round, a native revenue of 1.36 billion round, and group adjusted EBITO of 237 million round, achieving our guidance across all metrics in the
Dan: Our fundamental earnings, which we believe is the most appropriate measure of our overall performance, has grown 98% year-on-year to 58 million rounds.
Dan: Our net debt to group adjusted EBITDA ended at 2.8 times for the quarter, both well within our bank covenants and our current risk appetite.
Dan: Our focus is primarily on net revenue as this more accurately shows the true reflection of our business's top line performance.
Dan: As a reminder, the difference between our revenue to net revenue is due to the counting treatment of selling print airtime, which we have to recognise the principle rather than the commission as revenue.
Dan Smith: There is no impact of this accounting treatment on the actual profit recognized. Net revenue increased 42% year-on-year, primarily driven by the inclusion of Adumo this year and a 32% increase in Consumer. At a group-adjusted EBITDA level, we recognized a 29% increase year-on-year. This result includes approximately ZAR 20 million of reorganization costs with the integration and strategic realignment processes underway in our Merchant and Enterprise divisions. Outside of these costs, our group-adjusted EBITDA would have come in towards the top end of guidance provided for the quarter. Fundamental earnings, which in management's view is the true reflection of our sustainable operating performance, grew 98% year-on-year to ZAR 58 million for the quarter. At a per-share level, this translates to ZAR 0.72, an increase of 60%.
Dan: It also impacts cost of sales. There is no impact of this accounting treatment on the actual
Dan: Netrivene increased 42% year-on-year, primarily driven by the inclusion of a Dumo this year and a 32% increase in consumer.
Dan: At the Group Adjusted EBTA level, we recognise the 29% increase here on year. This result includes approximately 20 million round of reorganisation costs with the integration and strategic degree alignment processes underway in our merchant and enterprise divisions.
Dan: At side of these costs, a group adjusted eBTA would have come in towards the top end of guidance provided for the quarter.
Dan: Fundamental earnings, which in management's view, is the true reflection of our sustainable operating performance due 98% year on year to 58 million rent for the quarter. At a
Dan Smith: The primary adjustment between fundamental earnings and net income is the change in the fair value of MobiKwik, as mentioned earlier in the presentation. This quarter's performance reflects the highest fundamental earnings since the formation of Lesaka in 2022. Cash generated from business operations increased to ZAR 277 million. Interest paid on bank borrowings decreased to ZAR 52 million, with a ZAR 4.5 billion debt refinance concluding in February 2025. This represents two months of interest paid as we settled facilities ahead of the refinance, whereas typically it would be three months. Cash generated in working capital is ZAR 156 million, impacted by the timing of transaction processing at quarter end in our merchant and enterprise divisions, reduced inventory levels, and an enhanced focus on working capital management.
Dan: The primary adjustment between fundamental earnings and net income is the change in the fee value of Moby Quick, as mentioned earlier in the presentation.
Dan: This Court's performance reflects the highest fundamental earnings since the formation of Lesaka in 2022.
Cash generated from business operations increased to $277 million.
Dan: Interest paid on bankboring decreased to 52 million rand with a 4.5 billion rand debt refinance concluding in February 2025. This represents two months of interest paid, as we settled facilities ahead of the refinance, whereas typically it would be three months.
Dan: Cash generated in working capital is 156 million reigned, impacted by the timing of transaction processing at court end in our merchant and enterprise divisions, reduced inventory levels and an enhanced focus on working capital management.
Dan Smith: Cash generated in working capital was offset by ZAR 217 million outflow in funding the growth in our consumer and merchant loan books. This follows a strong uptake in the enhanced consumer lending proposition and a significant uptick in our merchant lending business this quarter. Bulk airtime purchases made in Q2 unwound this quarter with an inflow of ZAR 41 million. Net cash provided by operating activities increased to a pleasing ZAR 196 million. Following that group debt restructure, which I will explain in more detail shortly, our gross debt position has increased to ZAR 4 billion. This is primarily due to increased funding requirements for the Recharger acquisition, as well as the growth in the consumer and merchant loan books. Cash on hand has increased from ZAR 1.1 billion to ZAR 1.3 billion. Our net debt to group adjusted EBITDA was 2.8x for the quarter.
Dan: Keshe generated in the working capital was offset by 217 million round art flow in funding the growth in our consumer and merchant loan box.
Dan: This follows a strong uptake in the enhanced consumer lending proposition and a significant uptake in a merchant lending business escorter.
Dan: bulk A-tum purchases made in Q2 and wound this quarter with an inflow of 41 million
Dan: Netcash provided by operating activities increased to a pleasing 196 million rent.
Dan: Following that group debt restructure, which I will explain in more detail shortly, a gross debt position has increased to 4 billion rent.
Dan: This is primarily due to increased funding requirements for the recharger acquisition as well as the growth in the consumer and merchant loan books.
Dan: Cash on hand has increased from 1.1 billion rent to 1.3 billion rent.
Dan: Unnet it to group adjusted EBITDA was 2.8 times for the quarter.
Dan Smith: As part of our leverage calculation, we include the market value of our MobiKwik position at the time of reporting. Whilst this cannot be monetized currently due to lockup restrictions, the share price can affect our net debt to group adjusted EBITDA ratio. We have communicated to the market that we're looking to continue bringing our net debt to group adjusted EBITDA ratio down with a medium-term objective of 2 times, which we believe is comfortably serviceable and is the appropriate capital structure for the business. During the quarter, we completed the refinance of our debt facilities. The outcomes can be summarized in 3 net positives. Firstly, the refinance has resulted in a simpler and more cost-effective debt facility structure with more advantageous pricing. Previously, our weighted average cost of debt at current market rates was approximately 12% per annum.
Dan: As part of our leverage calculation, we include the market value of our mobile quick position at the time of reporting. Whilst this cannot be monetized currently due to lock up restrictions, the share price can affect a net-ditch group adjusted EVDA ratio.
Dan: We have communicated to the market that we're looking to continue bringing our net debt to group adjusted EBITI ratio down with a medium term objective of two times, which we believe is comfortably serviceable and is the appropriate capital structure for the business.
Dan: During the quarter, we completed the refinance of our debt facilities. The outcomes can be summarized in three net positives. Firstly, the refinance has resulted in a simpler and more cost effective debt facility structure, with more advantageous pricing.
Dan: Previously, our weighted average cost of debt at current market rates was approximately 12% per annum. Whereas going forward, our cost of debt will be approximately 10.7% per annum.
Dan Smith: Whereas going forward, our cost of debt will be approximately 10.7% per annum. On gross debt of ZAR 4 billion, this equates to a saving of approximately ZAR 52 million a year. Secondly, we have enhanced our financial flexibility as we repay debt and have established sufficient headroom to fund growth in our business. Thirdly, the debt restructure is in partnership with RMB and Investec, two of South Africa's leading commercial and investment banks. Not only has this brought a diversification in our funders, it is encouraging that our banking partners are supportive of Lesaka's growth story and improved risk profile. We spent ZAR 83 million on CapEx this quarter, primarily driven by investment in growing our business. ZAR 22 million of this spend relates to the rollout of our new smart safe product.
Dan: On gross debt of 4 billion rent, this equates to a saving of approximately 52 million
Dan: Secondly, we have enhanced our financial flexibility as we repay debt and have established sufficient headroom to fund growth in our business.
Dan: Thirdly, the dairy structure is in partnership with Auremian Investek, Chief South Africa's leading commercial and investment banks.
Dan: Not only has this brought to our vocification in our funders, it is encouraging that our banking partners are supportive of Lesaka's great story and improved risk profile.
Dan: We spent 83 million rent on Capix's quarter, primarily driven by investment in growing
Dan: 22 million round of the spend relates the rollout of a new smart-safe product. These cash vaults are an important part of a holistic merchant offering and enables the opportunity for a greater cross sell given South Africa's little largely cash-dominated economy.
Dan Smith: These cash vaults are an important part of our holistic merchant offering and enables an opportunity for a greater cross-sell, given South Africa is still largely a cash-dominated economy. Our growth CapEx includes software development costs related to the enhancement of our payment switch in our enterprise division, which Naeem will talk to you later. We also invested ZAR 12 million in POS devices in Kazang and Adumo to support growth in these businesses. I will hand over now to Steve, who will take you through the merchant division KPI performance in greater detail.
Dan: Our growth capics include software development costs related to the enhancement of our payment switch in our enterprise division, which I will talk to you later.
Dan: We also invested 12 million rent in positive assets in Kazan and Ademo to support growth in these businesses.
Dan: I will hand over to Steve, who will take you through the Merchant Division KPR performance in greater detail.
Steve: Thank you, Dan. Good afternoon, and good morning, everyone. Before I discuss the merchant division's Q3 results and KPIs, I would like to briefly recap the key takeaways from our recent investor day. Firstly, Lesaka is a business that has the rare capability to serve merchants of all sizes across both formal and informal markets. This enables us to capture volume across the market spectrum, from micro merchants to large national retailers, which is not common in Africa. Secondly, we are at the epicenter of the digitization trend for the markets that we serve, processing increasingly larger volumes every year, which gives us valuable data and insights into the activities and needs of our merchants. As a result, we can use this unique position to develop and sell a wide range of solutions that help our merchants across their financial life cycles.
Thank you, Dan. Good afternoon and good morning everyone.
Steve: Before I discuss the Merchant Division's third-culture results and KPIs, I would like to briefly recap the key takeaways from our recent investor day.
Steve: Firstly, Lesaka is a business that has the rare capability to serve merchants of all sizes across both formal and informal markets.
Steve: This enables us to capture volume across the market spectrum from micro merchants to large national retailers, which is not coming in Africa.
Steve: Secondly, we are at the epicenter of the digitisation trend for the markets that we serve.
Steve: Processing increasingly larger volumes every year, which gives us valuable data and the impact into the activities and needs of our merchants.
Steve: As a result, we can use this unique position to develop and sell a wide range of solutions that help our merchants across their financial life cycles.
Steve: We use these insights to provide a comprehensive suite of products encompassing software, card acquiring, cash, and access to capital. Thirdly, we have a differentiated go-to-market capability that enables us to reach merchants across the 5 countries in which we operate. We continually invest in and evolve our solutions, teams, infrastructure, and technology to ensure our platform and ecosystem offer holistic solutions that enhance and add value to our merchants' businesses. Looking at our Q3 performance, our merchant acquiring offering now has over 81,000 points of presence, demonstrating the additional scale that Adumo has brought to our merchant customer base. This acquisition enhanced our product set both in terms of hardware and software integrations, bolstering our ability to compete. Throughput on these devices was $9.9 billion for the quarter, compared to $3.9 billion a year ago.
Steve: We use these insights to provide a comprehensive suite of products, encompassing software, called acquiring cash and access to capital.
Steve: Thirdly, we have a differentiated go-to market capability that enables us to reach merchants across the five countries in which we operate.
Steve: We continually invest in and evolve our solutions, teams, infrastructure and technology to ensure a platform and ecosystem of the holistic solutions that enhance and add value to our merchants' businesses.
Looking at our third quarter performance.
Steve: On merchant acquiring offering, now has over 81,000 points of presence demonstrating the additional scale that Ademo has brought to our merchant customer base.
Steve: This acquisition enhanced our product tip both in terms of hardware and software integrations while showing our ability to compete.
[inaudible]
Steve: Through put on these devices was $9.9 billion for the quarter compared to $3.9 billion a year ago. The inclusion of a Dumo for the quarter accounted for the majority of the strong growth and were supported by double digit growth in Kazan pay.
Steve: The inclusion of Adumo for the quarter accounted for the majority of this strong growth and was supported by double-digit growth in Kazang Pay. In our software business this quarter, the most notable being GAAP, we now operate 9,640 sites and generated an ARPU of approximately ZAR 3,360 per month. This business has annual recurring revenues of greater than 70%. We are beginning to see real opportunities and positive traction in the cross-sell of merchant acquiring to the GAAP customer base, which we expect to be a material throughput contribution in coming quarters. Turning to our cash KPIs, which include cash vaults and ATMs. We effectively put the bank in our merchants and micro merchants stores, enabling them to digitize cash immediately as received and reduce their cash holding risk.
Steve: In our software business this quarter, the most notable being God, we now operate 9,640 sites and generators in ARPU are approximately 3,360 per month.
This business has annually occurring revenues of greater than 70%
Steve: We are beginning to see real opportunities and positive traction in the cross-cell of merchants acquiring to the Garp customer base, which we expect to be a material throughput contribution in coming quarters.
Steve: Turning to our cash KPIs, which include cash vaults and ADMs
Steve: We effectively put the bank in our merchants and micro merchants' stores enabling them to digitize cash immediately as received and reduce their cash holding risk.
Steve: Cash will continue to play a large role in the South African economy for the foreseeable future, with our vaults playing an important and differentiated part of our offering. Devices grew 2% to over 4,500, with throughput growing 2% to 27.5 billion for the quarter. An encouraging indicator included in this result is strong growth in our devices state and throughput in the informal sector. This is off a relatively low base but could be indicative of higher future growth. We have seen a significant uptick in our merchant lending business this quarter. This has been driven by interventions in our sales model, including the establishment of a dedicated sales team, access to improved merchant data, and a focus on new client originations as well as repeat borrowers. This has not been affected by any change to our credit criteria or credit policies.
Steve: Cash will continue to play a large role in the South Africa economy for the foreseeable future with our both playing an important and differentiated part of our offering.
Steve: Devices grew 2% to over 4,500 with throughput growing 2% to 27.5 billion for the quarter.
I'm encouraging indicating included in this result.
Steve: is strong growth in our devices state and throughput in the informal sector.
Steve: This is all for relatively low base, but could be indicative of higher future growth.
Steve: We have seen a significant uptake in our merchant landing business this course.
Steve: This has been driven by interventions in our sales model, including the establishment of a dedicated sales team, access to improved merchant data, and a focus on new client to regenerations as well as repeat borrowers.
Steve: This has not been affected by any change to our credit criteria or credit policies.
Steve: Credit dispersed for Q3 increased to ZAR 352 million, compared to ZAR 290 million last year, with a net loan book of ZAR 494 million at 31 March 2025. Alternative digital payments cover prepaid solutions, including electricity, airtime, data, and gaming, supplier-enabled payments, and international money transfers. Our devices in field have grown 16% year-on-year to over 89,000. Prepaid solutions throughput increased 4% year-on-year to ZAR 5.3 billion. We saw good growth in our gaming product and electricity. However, increased competition in airtime and data sales held growth back. With product, hardware, and distribution interventions, we aim to reposition this business back to higher growth levels. Throughput on our supplier-enabled payments platform increased 57% year-on-year to ZAR 5.9 billion. This was driven by throughput on both international money transfers and supplier payments increasing over ZAR 1 billion year-on-year.
Steve: Credit to spurs for Q3 increased to $352 million, compared to $219 million last year with a net loan book of $494 million at the 31st of March 2025.
[inaudible]
Steve: Alternative digital payments cover prepaid solutions, including electricity, airtime, data and gaming, supply by enabled payments and international money transfers.
Steve: Our devices in field have grown 16% year on year to over 89,000.
Free paid solutions throughput increased 4% year-on-year to 5.3 billion.
Steve: We saw good growth in our gaming product and electricity, however increased competition and air time and data sales held growth back.
Steve: With product, hardware, and distribution interventions, we aim to reposition this business back to higher growth levels.
Steve: Thruput on our Supply Enabled Payments Platform increased 57% year on year to 5.9 billion.
Steve: This was driven by throughput on both international money transfers and supply payments, increasing over £1 billion a year on year.
Steve: Supplier payments, similar to international money transfers, attract a lower commission rate than traditional prepaid solutions. This is a key component in the merchant ecosystem into which we continue to invest. This has a positive pull-through effect on our cash and card acquiring offerings, which feed the merchant wallet enabling supplier payments. Our ARPU, calculated on net revenue per device, has grown 8% year-on-year. We are focusing on higher revenue sites, which will improve our ARPU potential. Turning to the financial performance of the merchant division. Net revenue was up 58% to $782 million, with segment-adjusted EBITDA up 7% to $150 million for Q3 2025. As discussed in our Q2 presentation, we have made significant investments in our Kazang business over the past year, which has resulted in an increase in our operating expenditure. In addition, as Dan explained earlier, we innovate, execute, and learn quickly.
Steve: Supplier payments, similar to international money transfers, attract a lower commission rate in traditional prepaid solutions.
Steve: This is a key component in the merchant ecosystem into which we continue to invest. This has a positive pull through effect on our cash and card acquiring offerings which feed the merchant wallet enabling supplier payments.
Steve: Our R-Poot, calculated on net revenue per device, has grown 8% year-on-year. We are focusing on higher revenue sites which will improve our R-Poot potential.
Steve: Turning to the financial performance of the Merchant Division, net revenue was at 58% to 782 million with segment-adjusted EBITDA at 7% to 150 million for Q3 2025.
Steve: As discussed in our Q2 presentation, we have made significant investments in our Kazan business over the past year, which has resulted in an increase in our operating expenditure.
Steve: In addition, as Dan explained earlier, we innovate, execute, and learn quickly. During this quarter, we pulled back on some of these investments, which led to one-off reorganization costs and have impacted profitability, but has positioned us well for coming quarters.
Steve: During this quarter, we pulled back on some of these investments, which led to one-off reorganization costs and have impacted profitability but has positioned us well for coming quarters. We are in exciting and dynamic times in the evolution of our merchant platform. A key component of our strategy is to differentiate ourselves by being customer-led as opposed to product-led. We are evolving our product offering to meet the various needs of our customers, with no single competitor offering the range of merchant solutions and addressing as many subsegments. Thank you. Lincoln will now take you through the consumer performance.
Steve: We are an exciting and dynamic times in the evolution of our merchant capital.
Steve: A key component of our strategy is to differentiate ourselves by being customer-led as opposed to product-led. We are evolving our product offering to meet the various needs of our customers with no single competitor offering the range of merchant solutions and addressing as many sub-segment.
Lincoln: Thank you. Lincoln will now take you through the consumer performance.
Lincoln: Good morning and good afternoon, everyone. I am pleased to report on another extremely successful quarter for the consumer business. Today, I will focus on the Q3 results, but refer you to our recent Investor Day webcast for detailed explanations of our consumer offering, strategy, and business model. Our core value proposition is built around addressing pain points of our primary market, permanent SASSA grant recipients. We currently serve 1.9 million consumers every month on our EasyPay Everywhere and EasyPay Payout platforms. We begin the cycle by helping our consumers receive their money and deposit their funds with us. This includes helping them collect their government grants or employee benefits, which are very critical in our market. We help them manage their money.
Good morning and good afternoon, everyone.
Lincoln: I'm pleased to report on another extremely successful quarter for the consumer business.
Lincoln: Today, I will focus on the Kota 3 results, but refer you to our recent investor-day webcast for detailed explanations of our consumer offering, strategy and business model.
Lincoln: A call value proposition is built around addressing pain points of our primary market.
Permanent Saas Agrande Cipient
Lincoln: We currently save 1.9 million consumers every month on our easy pay everywhere and easy pay pay out platforms.
Lincoln: We begin the cycle by helping our consumers receive their money and develop their funds with us.
Lincoln: This includes helping them collect their government grants or employee benefits which are very critical in our market.
Lincoln: We enable them to make bill payments to hundreds of billers quickly and easily, and provide them with a simple digital banking solution and Mastercard debit card to conduct their daily spending or withdrawals. Once we've gotten to know our customers, we can then help them borrow money. Since we can see their funding and spending activities, we can use this data to underwrite small, short to medium-term loans. For most government grant recipients, we're the only regulated credit provider for this consumer segment in the market. Finally, we can help them protect their assets and families. We sell small amounts of insurance to help their families in case of death. Every aspect of our product suite, value proposition, and distribution model is designed with this customer in mind, and the results have been exceptional.
then we hope the money is their money.
Lincoln: We enable them to make bill payments to hundreds of billers quickly and easily and provide them with a simple digital banking solution and Mastercard debit card to conduct their daily
Lincoln: Once we've gotten to know our customers, we can then help them borrow money.
Lincoln: Since we can see their funding and spending activity, we can use this data to underwrite small, short to medium-term loans.
So, most government-grand recipients.
Lincoln: where the only regulated credit provider for this consumer segment in the market.
Lincoln: And finally, we can help them protect their assets and families.
Lincoln: We sell small amounts of insurance to how their family is in case of death.
Lincoln: Every aspect of our product suite, value proposition and distribution model is designed with this cut-on-mind mind and the laws have been exceptional.
Lincoln: According to the latest SASSA data, we increased our market share this quarter to 13%, which is approximately 1.5 million permanent grant recipients. However, on a revenue basis, our estimated share is just under 7% of the ZAR 25 billion annual revenue opportunity in this market. As we continue to build brand in this segment through focused relevant solutions, we see substantial opportunity to sustain and accelerate our growth trajectory. Turning to our KPIs, our performance has been driven by consumer base expansion and effective cross-selling of our lending and insurance products. Our permanent SASSA grant customer base grew 17% year on year to 1.5 million. Including temporary SRD grants, our total grant customer base reached 1.7 million. Notably, the SRD grant has been extended to March 2026. We have maintained our monthly account fee at R7.50 since 2022 while continuing to improve financial outcomes through scale and product penetration.
Lincoln: According to the latest SASA data, we increased our market share discounted to 13%, which is approximately 1.5 million permanent grant recipients.
Lincoln: However, on a revenue basis, our estimated share is just under 7% of the 25 billion annual revenue opportunity in this market.
Lincoln: As we continue to build brand-in-the-segment through focus-relevant solutions, we see substantial opportunity to sustain and accelerate our growths at that stage.
[inaudible]
Lincoln: Turning to our KPIs, our performance has been driven by consumer-based expansion and effective cross-selling of our landing and insurance products.
Lincoln: Our permanent staff at Grand customer base, Group 17, the same year, to 1.5 million.
Lincoln: Including temporary SRD grants, our total grant customer base reached $1.7 million.
Notably, the SRT grant has been extended to March 2020.
Thanks.
Lincoln: We have maintained our monthly account fee at 750 since 2022, while continuing to improve financial outcomes through scale and product penetration.
Lincoln: Encouragingly, a natural consequence of demand for our offerings means we've had to increase capacity with our sales force now at approximately 800 sales agents, compared to approximately 750 just 3 months ago. Our lending product, tailored for the grant market, has seen remarkable uptake. We launched a new variant in Q2, which has been well-received and is contributing to our success. Our microloans are now capped at ZAR 4,000, as opposed to ZAR 2,000 before, with simple terms and repayment periods up to 9 months, when previously it was up to 6 months. Gross advances rose 54% year-on-year, with the loan book growing 59% to $808 million. Our loan loss ratio has remained stable at approximately 6%, a strong result for this segment and a testament to the product's value to our customers. Our insurance business has also delivered very strong results.
Lincoln: and Karajim Lee, a natural consequence of demand for offering, means we have had to increase capacity with our Salesforce, now it approximately 800 sales agents compared to approximately the 750 just three months ago.
Lincoln: Our landing product, Taylet for the Grand Market, has seen remarkable updates.
Lincoln: We're launching new variant in quarter two, which has been well received and is contributing to our success.
Lincoln: Our microlooms are now kept at 4,000 rents, as opposed to 2,000 rents before, with simple terms and repayment periods up to 9 months, when previously it was up to 6 months.
Lincoln: Growth Advances rose 54% year-on-year, with a loan book growing 59% to 808 million.
Lincoln: Our loan loss ratio has remained stable at approximately 6%, as strong results for the segment in the testament to the product's value to our customers.
Our insurance business has also delivered very strong results.
Lincoln: Active policies grew 27% year on year to 527,000. Gross premiums written for the quarter increased 25% year on year to ZAR 97 million. Premium collection rates remain high at 96%, well above industry norms for this market. Cross-sell momentum remains strong, with EPE account base penetration reaching 45% for loans and 34% for insurance, both up on a significantly higher base. In our EasyPay Payout business, we now serve around 300 corporate clients and over 200,000 cardholders. In Q3, operational challenges at Postbank, particularly around expiring SASSA cards, led many of their customers to seek alternative banking service providers. Our strong brand and extensive distribution network, supported by targeted marketing, enabled us to capture a significant share of this migration, resulting in 89,000 net new account activations. As mentioned earlier, this contributed meaningfully to our market share gains. Our cross-sell strategy continues to drive ARPU growth.
Active policies prove 27% year-on-year to 527,000.
Lincoln: Gross premiums, written for the quarter, increased 25% year-on-year to 97 billion rites.
Lincoln: In premium collection rates remain high at 96 percent, well above industry norms for this market
Lincoln: Cross-al-momentum remains strong, with EPA-Account-based penetration reaching 35% for loans and the 4% for insurance, both up on a significant higher pay.
Lincoln: In our easy pay pay-out business, we now save around 300 couple of clients and over 200,000
Lincoln: In God of Free, Operation Challenge is a post bank, particularly around expiring stanza cards led many of their customers to seek alternative banking service providers.
Lincoln: A strong brand in extensive distribution network, supported by targeted marketing, enabled us to capture a significant share of this migration.
Resulting in 89,000 Net New Account Activation
Lincoln: as mentioned earlier, this contributed meaningfully to our market share gains.
Our class of strategy continues to drive Apple Growth.
Lincoln: With a growing number of EPE account holders using multiple products, ARPU has increased to ZAR 106 compared to ZAR 94 last quarter and ZAR 90 a year ago. March 2025 saw record lending and insurance sales, with April 2025 then outperforming this record. We expect this ARPU growth trend to continue into Q4 and beyond. These KPIs reflect another outstanding quarter for the consumer division and resulted in revenue growth of 32% year-on-year to ZAR 446 million, and the segment adjusted EBITDA increasing 65% to ZAR 117 million. This week marks a personal milestone for me. I joined Lesaka exactly 4 years ago. Reflecting on our journey and presenting these results, considering where we came from, is truly humbling. Across the country, in even the most remote branches, I see the impact of our work.
Lincoln: With a growing number of EP account holders using multiple products, AAPU has increased to 106 compared to 94 runs last quarter and 90 runs a year ago
Lincoln: March 2025 saw record lending and insurance sales. With April 2025 then outperforming this record, we expect this Apple growth send to continue in the quarter four and beyond.
These KPIs reflect another outstanding quota for the consumer division.
and resulted in revenue growth of 32% year-on-year.
Lincoln: to $446 million, and the segment adjusted EBDA, increasing 65% to $117 million rent.
This week marks a personal milestone for me.
I joined Lesaka exactly four years ago.
Lincoln: The flattening on our JNP and presenting these results, considering where we came from, is truly humbling.
Lincoln: Across the country and even the most remote branches, I see the impact of our work.
Lincoln: Beautifully refurbished and rebranded offices, dedicated staff proudly wearing their EasyPay Everywhere uniforms, and many satisfied customers. We are making a meaningful difference in people's lives. As we grow, we remain committed to enhancing the customer experience through better distribution, service, and product innovation. I am so proud of our consumer team, the new faces, and those who've been with us since the beginning. Their dedication and resilience has been instrumental in our success. By building a value proposition centered on our customers' needs, the consumer division has become an invaluable contributor to Lesaka's success. Thank you. With that, I'll hand over to my brother, Naeem, who will take you through the performance of our enterprise division.
Beautifully refurbished and rebranded offices
Dave Decaded Staff proudly wearing their easy pay everywhere uniform.
and many successful customers.
We are making a meaningful difference in people's lives.
Lincoln: As we grow, we remain committed to enhancing the customer experience through better distribution service and product innovation.
I am so so proud of our consumer team.
Lincoln: The new faces and those who have been with us since the beginning.
Their dedication and resilience has been instrumental in our success.
by building a value proposition centered on our customers' needs.
Lincoln: The consumer division has become an invaluable contributor to Lesaka's success.
Lincoln: Thank you and with that I'll hand over to my brother Nain who will take you through the performance of our enterprise division.
Naeem: During Q3 FY25, we continued rebuilding and restructuring the enterprise business. We focused on repositioning the products and services to deliver on the requirements internally within the group and developing a robust external enterprise offering. As noted in previous quarters, during Q3, we exited the point-of-sale hardware business and incurred costs related to this that has been taken into the Q3 results. We look at exiting the payment card hardware business. Although this impacts revenue and costs, we will see the benefits in FY26 as these products contributed negatively to EBITDA. We continue investing in and upgrading our technology, as well as investing in senior executives to roll out strategy in FY26. We have new products that have been launched, and we are excited about the opportunities these products will deliver.
Naeem: During Q3 FY25, we continued rebuilding and restructuring the enterprise business. We focused on repositioning the products and services to deliver on the requirements internally within the group and developing a robust, external enterprise offering.
Naeem: As noted in previous quarters, during Q3, we exited the point of sale hardware business and encode costs related to this that has been taken into the Q3 results.
Naeem: Further, we look at exiting the payment card hardware business, although this impacts revenue and costs. We will see the benefits in FY26 as these products contributed negatively to Ibadar.
Naeem: We continue investing in and upgrading our technology, as well as investing in senior executives
Naeem: We have new products that have been launched and we are excited about the opportunities this products will deliver.
Naeem: We are developing our Enterprise division as a material group adjusted EBITDA contributor in the coming years, which is why we are investing into it. The acquisition of the Recharger business closed in March 2025, and we have commenced integrating this business into the group's Enterprise division. This will be a significant contributor to the Enterprise division and will create an important position for the group in the electricity vending business. I will talk in more detail about the business in the next slide. As mentioned earlier, FY25 is very much a build year for the Enterprise division, with a significant amount of uncapitalized development expenditure and restructuring costs impacting EBITDA this quarter. The result this quarter was an EBITDA of ZAR 2 million, down from ZAR 14 million last year.
Naeem: We are developing our enterprise as a material group of Jarsat Ibadar Contributor in the coming years, which is why we are investing into it.
Naeem: The acquisition of the Recharge of Business Clothes in March 2025, and we have comments in the grading of the business into the Groups Enterprise Division.
Naeem: This will be a significant contributor to the enterprise division and will create an important position for the group in a electricity-wending business. I will talk in more detail about the business in the next slide.
Naeem: As mentioned earlier, FY25 is very much a bold year for the enterprise division, with a significant amount of uncapitalized development expenditure and restructuring costs impacting Ibadada's
Naeem: The result of the squatter was an Ibadau of 2 million rent, down from 14 million rent last year
Naeem: EasyPay, our payment aggregator solution enabling B2B connections for both payment and alternative payment solutions, is embedded in the major retail businesses across Southern Africa, as well as smaller retailers. During Q3 FY25, EasyPay bill payments processed ZAR 8 billion in throughput, which is up 12% on last year. On utility payments, we saw a 9% growth in throughput compared to last year, including approximately ZAR 100 million throughput for one month from the Recharger business. The hardware security modules business operating under the Prism brand sells very specialized high-end data security devices that are used in data centers processing sensitive information. This business generates revenue from sales of units as well as annual maintenance contracts. We continue to see good growth and demand for products and consultancy revenues. As highlighted in last quarter's presentation, we have officially gone live with our Prism Switch.
Naeem: Easy Pay, our payment aggregator solution enabling B2B connections for both payment and alternative payment solutions is embedded in the major retail businesses across southern Africa as well as smaller retailers.
Naeem: During Q3 FY25, Easy Pay, Bell Payments processed 8 billion rent in throughput, which is up 12% on last year.
Naeem: On utility payments, we saw 9% growth in throughput compared to last year, including approximately 100 million rent throughput for one month from the rechargeable business.
Naeem: The hardware security modules business operating under the Prism brand sells very specialized high-end data security devices that are used in data centers processing sensitive information.
Naeem: This business generates revenue from sales of units as well as annual maintenance contracts. We continue to see good growth and demand for products and consultancy revenues.
Naeem: As highlighted in last quarter's presentation, we have officially gone live with our present switch.
Naeem: Our Prism Switch enhances our go-to-market strategy and is strategically important. We see this as a significant opportunity to continue to release synergies across the group and internalize transaction flows. We continue to believe this unique expertise will enable the business to compete much more effectively. In Q3 FY25, we processed over 2 million transactions through the switch. The Recharger acquisition closed in March 2025. Recharger is a South African prepaid electricity sub-metering and payments business with a base of over 500,000 registered prepaid electricity meters. We are excited by this opportunity as it expands our enterprise offerings and enables us to drive a significant strategy in electricity voucher vending through our platforms. The Recharger business provides solutions to property owners and managers to effectively manage electricity utilization through sub-meters that are installed in each unit. We sell these units through leading South African retailers.
Naeem: Alprism Switch enhances our go-to-market strategy and is strategically important.
Naeem: We see this as a significant opportunity to continue to release synergies across the group and interlize transaction flows.
Naeem: We continue to believe this unique expertise will enable the business to compete much more effectively. In Q3 FY25, we processed over 2 million transactions through the switch.
The recharge acquisition closed in March of 2005.
Naeem: Reed Charger is a South African prepaid electricity sub-metering and payments business, a base of over 500,000 registered prepaid electricity meters.
Naeem: We are excited by this opportunity as it expands our enterprise offerings and enables us to drive a significant strategy in a laxicity voucher vending through our platforms.
Naeem: The recharge of business provides solutions to property owners and managers to effectively manage electricity utilization to submeters that are installed in each unit. We sell these units through leading South African retailers.
Naeem: Tenants recharge meters using vouchers that are vended through Recharger using bulk collectors such as EasyPay. The vending creates a significant annuity revenue that is growing through increase in number of meters and inflation in utility price increases. This creates a natural inflation hedge for the business. This creates a strong force multiplier effect as we look at cross-sell opportunities for these tenants. The underlying KPIs of the business continue to show strong growth year on year. Vending throughput grew by 28%, and the number of registered meters grew by 18%. The business has a 95% annuity revenue contribution and generates a free cash flow in excess of 70%. Ali will now take you through the group's outlook.
Naeem: tenants recharge meters using vouchers that are vended through rechargeers using both collectors such as Easy Payne. The vending creates a significant a new or two revenue that is growing through increase in number of meters and inflation in utility pricing increases.
This creates a natural inflation hedge for the business.
Naeem: This creates a strong force multiplier effect as we look at cross sell opportunities for these tenants.
Naeem: The underlying KPIs of the business continue to show strong growth year, Wending throughput grew by 28% and the number of registered meters grew by 18%
Naeem: The business has a 95% annuity revenue contribution and generates a free cash flow in excess of 70%
Ali will now take you through the group's outlook.
Ali: Thank you, Naeem. Good day, everyone. Turning to our guidance for full year FY25. We are reaffirming our revenue guidance of ZAR 10 to 11 billion, net revenue guidance of ZAR 5.2 to 5.6 billion, and group-adjusted EBITDA guidance of ZAR 900 million to 1 billion. At the midpoint of the ranges, this implies a net revenue increase of 42% year-on-year and a group-adjusted EBITDA increase of 37% for FY25, continuing the strong growth trend of the past few years.
Thank you, Naim, good day, everyone.
Turning to our guidance for full year FY25.
Naeem: We are reaffirming our revenue guidance of 10 billion rand to 11 billion rand, net revenue guidance of 5.2 billion rand to 5.6 billion rand and group adjusted EBITDA guidance of 900 million rand to a billion rand.
Naeem: At the midpoint of the ranges, this implies a net revenue increase of 42% year-on-year and a group adjusted EBITDA increase of 37% for FY 25, continuing the strong growth trend of the past few years.
Ali: As mentioned before, we believe net revenue, which eliminates the effective changes in revenue mix between agency and principal sales of airtime, is a more appropriate indicator of top line growth for our business than gross revenue. Looking at FY26, we are now including revenue and net revenue guidance and confirming the group adjusted EBITDA guidance given last quarter. For FY26, we anticipate revenue of ZAR 11.4 billion to 12.2 billion, net revenue of ZAR 6.4 billion to 6.9 billion, and group adjusted EBITDA of ZAR 1.25 billion to 1.45 billion. From the midpoints of FY25 to FY26 guidance, this implies 12% revenue growth, 23% net revenue growth, and 42% growth in group adjusted EBITDA. At the midpoint of the range, this would imply a group adjusted EBITDA to net revenue margin of 20%.
Naeem: As mentioned before, we believe net revenue, which eliminates the effect of changes in revenue mixed between agency and principal sales of our time, is a more appropriate indicator of top-lying growth for our business and gross revenue.
Naeem: Looking at FY26, we are now including revenue and net revenue guidance and confirming the group adjusted EBITDA guidance given last quarter.
Naeem: For FY26, we anticipate revenue of 11.4 billion rand to 12.2 billion rand, net revenue of 6.4 billion rand to 6.9 billion rand, and group adjusted EBITDA of 1.25 billion rand to 1.45 billion rand.
Naeem: From the midpoints of FY25 to FY26 guidance, this implies 12% revenue growth, 23% net revenue growth, and 42% growth in growth by just a debit down.
Naeem: At the mid-points of the range, this would imply a group of adjusted EBIT dots and net revenue margin of 20%.
Ali: We are also adding a new guidance measure for FY26 year-end, positive net income on a US GAAP basis. We expect that our Q4 FY25 and FY26 results will be driven by growth across each of our divisions. Our Consumer division has had an excellent FY25 to date, and we expect the momentum to continue into FY26. We have materially and profitably grown our EPE base over the last couple of years, and there remains significant runway ahead. At the same time as this, we've also increased our ARPU and operating margins. The journey we went on with the consumer business in creating a customer-centric fintech under a single brand that had previously operated as disparate products serving the same customer under multiple brands, is similar to the journey we are undertaking with our Merchant division.
Naeem: We are also adding a new guidance measure for FY 26 year-end positive net income on a US gap basis.
Naeem: We expect that our Q4 FY25 and FY26 results will be driven by growth across each of our divisions.
Naeem: Our Consumer Division has had an excellent FY25 to date and we expect the momentum to continue into FY26
Naeem: We have materially and proftly grown our EPE base over the last couple of years and there are main significant runway ahead.
Naeem: At the same time as this, we've also increased our output and operating margins [inaudible]
Naeem: The journey we went on with the consumer business and creating a customer-centric fintech under a single brand that had previously operated as disparate products serving the same customer under multiple brands is similar to the journey we are undertaking with our
Ali: Accordingly, in the short term in the Merchant Division, the priority is unit economics, cash conversion, and strong EBITDA growth with increasing margins rather than top line growth. We do, however, expect to grow much faster than the market, and from a product perspective, we expect this to be primarily driven by merchant acquiring and software, where we benefit from secular tailwinds. The Enterprise Division, which was constituted in FY25, is now emerging as a material contributor to EBITDA. In FY25, we closed down legacy businesses to focus on building strategic technology products. For example, an enhanced Prism Switch. We also invested in the electricity vertical, both organically and through the Recharger acquisition, as we believe there is an opportunity here to increase not just the volumes we process, but also our take rate.
Naeem: Accordingly, in the short term in the merchant division, the priority is unit economics, cash conversion, and strong evit dog growth with increasing margins rather than top line growth.
Naeem: We do however expect to grow much faster than the market and from a product perspective we expect this to be primarily driven by merchant growing in software where we benefit from a sector in the tailwinds.
Naeem: The Enterprise Division, which was constituted in FY25, is now emerging as a material contributed to EBITDA.
Naeem: and FY25, we close down legacy businesses to focus on building strategic technology products, for example, an enhanced payment switch.
Naeem: We also invested in the electricity vertical, both organically and through the recharge acquisition, as we believe there is an opportunity here to increase not just the volumes we process, but also our take rate.
Ali: It is a pleasure to reflect that we now have three engines of growth as part of the Lesaka platform, all with excellent independent prospects, but which are enhanced by the connectivity between them. I'd like to close the presentation by taking a step back and review the progress we've made in Lesaka. The shape and components of the business today look very different than they did three years ago. From my perspective, Lesaka is effectively a three-year-old business, the catalyst being the 2022 Connect Group acquisition. The consolidated Lesaka business at that time was subscale and deeply loss-making. We were driven by a vision to create a special business out of the constituent parts, not just the leading fintech in Southern Africa, but a global reference. We are well on the way. The plan is working.
Naeem: It is a pleasure to reflect that we now have three engines of growth as part of a Lesaka platform, or with excellent independent prospects, but which are enhanced by the connectivity between them.
Naeem: I'd like to close the presentation by taking a step back and review the progress we've made in Lesaka.
Naeem: The shaping components of the business today looked very different than they did three years ago.
Naeem: From my perspective, Lesaka is effectively a three-year-old business, the catalyst being the 2022 Connect Group acquisition.
Naeem: The consolidated Lesaka business at that time was sub-scale and deeply lost making.
Naeem: We were driven by a vision to create a special business out of the constituent parts, not just the leading FinTech and Southern Africa, but a global reference.
We are well on the way. The plan is working
Ali: Management has consistently pointed to where we are going and achieved the objective set. We have now delivered on 11 consecutive quarters of profitability guidance, and our guidance for FY26 marks a milestone in that we are providing positive net income guidance for the first time. The investor day we had in March of this year clearly sets out the enormous opportunity ahead of us and the competitive advantage we have been building. Our FY26 guidance is indicative of the growing confidence we have in our ability to execute against this opportunity. We are excellently positioned today while confident our best days are ahead of us. Thank you. I will now hand it to Phillipe to open the webcast for questions to be addressed by the management team.
Naeem: Management has consistently pointed to where we are going and achieved the objective set.
Naeem: We have now delivered on 11 consecutive quarters of profitability guidance and our guidance for FY 26 marks a milestone and that we are providing positive income guidance for the first time.
Naeem: The investor today we had in March of this year clearly sets out the enormous opportunity ahead of us and the competitive advantage we have been building.
Naeem: RFI-26 guidance is indicative of the growing confidence we have in our ability to execute against this opportunity.
Naeem: We are absolutely in position today while confident our best days are ahead of us.
Naeem: Thank you. I will now hand it to Phillipe to open the webcast for questions to be addressed by the management team.
Phillipe Welthagen: We will now open for Q&A addressing questions submitted online. Please enter your questions into the questions section of this webcast if you have not already done so. The first question is from Frank Geng at Briarwood Chase Management. Another excellent quarter in consumer. Comment on your market share gains in this business, and has this continued into April and May?
Naeem: We will now open for Q&A addressing questions submitted online. Please enter your questions into the questions section of this webcast if you have not already done so.
Speaker Change: The first question is from Frank Gang at Briarwood Capital, another excellent quarter in consumer comments on your market share gains in this business and has this continued into April and May.
Lincoln: Thanks, Frank. If you just go back to what Ali was saying, we've made significant investments in our people, technology, the value proposition, and the distribution. That investment has paid off in the sense that we've now been able to grow our customer base by 70% year on year to 1.5 million customers. We now have 13% market share in that base. What you've seen over the last two months is that we've had record sales, where we've taken more market share than our natural market share from competitors. That is a vindication of the strategy that we embarked on two or three years ago. We see more growth that's coming. We see more customers coming to us because of the value proposition that we've put there.
Speaker Change: Thanks, Frank. You know, if you just go back to what Ali was saying, we've made significant investments in our people, technology, the zealoproposition and the distribution.
Speaker Change: Those Daniel investment is paid off, in the sense that they would now be able to grow our customer base
Speaker Change: by 70% year-on-year, 2.5 million customers. We now have 13% marketing that pays.
Speaker Change: But what you've seen over the last two months is that we've had record sales, we've taken more market share than our natural market share from competitors.
Speaker Change: and that is the vindication of the strategy that we embarked on two or three years ago.
Speaker Change: So we see more growth that's coming. We see more customers coming to us because of the value proposition that we've put there. But what is also pleasing is that at the very same time that we're growing our customer base, we've seen a growth in our APU. We've seen our APU grow from night to night, a year ago, to 106 land. So going forward, we still see, as Ali was saying, lots of good runway with both our count growth and growth.
Lincoln: What is also pleasing is that at the very same time that we're growing our customer base, we've seen a growth in our ARPU. We've seen our ARPU grow from ZAR 90 a year ago to ZAR 106. Going forward, we still see, as Ali was saying, lots of good runway with both account growth and growth in our ARPU.
in our Apple.
Phillipe Welthagen: Our next question comes from Theo O'Neil at LHR Research. How deep could the endpoint for penetration end up?
Our next question comes from Thio-Neil at LHR Research.
How deep could the end point for penetration end up?
Lincoln: If you think about our penetration in the insurance space, we have invested in this product as well. We've grown it 27% in terms of policies. We are now sitting with over half a million insurance policies in place, and we've got a penetration now that is above 34%. We think that, A, we can start to grow that penetration rate into the 40s. The biggest opportunity is outside the EPE base. We've built a new system that will enable us to be able to go to 26 Reg A with the SASSA base so that we can attract customers that are not EPE customers and be able to sell our product. The next opportunity is as we start to think about customers beyond the grant space, we think that our funeral policy is very competitive and will be attractive in that environment.
If you think about our penetration in the insurance base,
Speaker Change: We have invested in this product overall. We've grown 27% in terms of policies. We are now sitting with over half a million insurance policies in place and we've got a penetration now that is above 24%. We think that A, we can start to grow that penetration rate
But the biggest opportunity is outside the EPE base [inaudible]
Speaker Change: We've built a new system that will enable us to be able to go to 26.8A with the Sasa base so that we can attract customers that are not EP customers and be able to sell our product.
Speaker Change: The next opportunity is as we start to think about customer beyond the ground space, we think that our federal policy is very competitive and will be attractive in that environment. So we still see a lot of room to grow with our insurance product, both within the EPE base, outside the PEP base into the ground space and then outside the ground space.
Lincoln: We still see a lot of room to grow with our insurance product, both within the EPE base, outside the EPE base into the grant space, and then outside the grant space.
Phillipe Welthagen: We have a question from Ross Krige at Investec Securities. In your Investor Day, you highlighted that the merchant market is expected to grow at 10% to 15% compound annual growth rate over the next 5 years. That said, two of your key merchant contributors, card acquiring and ADP, appear to be growing slower than the market. Can you give us any insight on why this is currently the case and what will change going forward for these businesses to grow in line with the market or higher than the market?
Speaker Change: We have a question from Ross Kricker at Investig Securities. In your investor day, you highlighted that the merchant market is expected to grow at 10% to 15% compound annual growth rates over the next five years. That said,
two of your key merchant contributors called acquiring
Speaker Change: and ADP appear to be growing slower than the market. Can you give us any insight on why this is currently the case and what will change going forward for these businesses to grow in line with the market, or higher than the market?
Steve: Thanks, Ross. Our top-line growth metric is net revenue. This is growing at 58% year on year, inclusive of M&A, with our organic growth component of this being at or around the market rates previously indicated. It is important to understand that our net revenue contribution is a function of the net revenue generated from our full product suite. Your question is specific to the net revenue on card acquiring and ADP. To clarify, we do not disclose the net revenue at a product level. Having said that, our card acquiring net revenues are growing at market, and we are confident on a go-forward basis that we can continue with this momentum and exceed the market rates that we have previously discussed. In relation to ADP, it is important to draw a distinction between the prepaid component and our supplier payments business.
Speaker Change: Thanks Ross. Our top line growth metric is net revenue. This is growing at 58% year-on-year, inclusive of Ebene with our organic growth components of this being at or around the market rates previously indicated. It's important to understand that our net revenue contribution is a function of the net revenue generated from our full product suite. Your question is specific to the net revenue on cut acquiring an ADP. To clarify, we do not disclose
Speaker Change: is the net revenue at a product level. But having said that, our card acquiring net revenues are growing at market, and we are confident on a go-forward basis that we can continue with this momentum and exceed the market rates that we previously discussed. In relation to ADP, it's important to draw a distinction between the prepaid component and our supply of payments business. Focusing first on the supply of payments piece, we had stunning growth in the year that just passed the 2017.
Steve: Focusing first on the supplier payments piece, we had stunning growth in the year that just passed at 57%. This is a healthy contributor to net revenues and acts as a strong pull-through product on our cash acquiring and card acquiring services for filling our wallets from which supplier payments are enabled. On the prepaid space, we underwhelmed with growth at 4% with a correlation in net revenue around that level. Having said that, we have now a number of interventions, and we are very confident that we will restore that growth rate back to the mid-teen type levels. The last point that I want to make is that over the last period, we have spent a fair amount of time organically and inorganically building our foundation, broadening out our product suites, deepening our segment penetration and distribution capability.
Speaker Change: This is a healthy contributor to net revenues and acts as a strong pull-through product on our cash acquiring and card acquiring services for filling our wallets from which supplier payments are enabled. On the prepaid space, we underwhelmed with close to 4% with the correlation in net revenue around that level. Having said that, we have now a number of interventions and we are confident that we will restore that growth rate back to the mid-teen type levels. The last
Speaker Change: The first point that I want to make is that over the last period we have spent a fair amount of time organically and inorganically building our foundation, broadening our product suites, deepening our segment penetration and distribution capability.
Steve: In the year ahead, our focus is very much now on bolstering our unit economics, achieving the operational leverages that we have previously communicated, and proving our business model.
Phillipe Welthagen: Thank you, Steve. A reminder to participants to please enter your questions into the webcast question box. I have another question. This one is from Luca at SBG Securities. Team, please elaborate on the enterprise division's contribution to group adjusted EBITDA and what in the division has caused the deterioration of this contribution to both revenue and group adjusted EBITDA.
in the web cross-question box.
Speaker Change: Team, please elaborate on the Enterprise Division's contribution to Group Adjusted EBITDA and what in the division has caused the deterioration of this contribution to both revenue and Group Adjusted EBITDA.
Naeem: Thanks. As mentioned in the presentation, for us, enterprise FY25 was a year of rebuild and restart. We closed legacy businesses, and obviously that has contributed negatively to both revenue and EBITDA. We also invested into new verticals, such as the switch, as Ali mentioned as well.
Thank you.
Speaker Change: As mentioned in the presentation for us Enterprise FY25 was a year of rebuild and restart. We closed legacy businesses and obviously that contributed negatively to both revenue and Ibadar, but we also invested into new verticals such as the switch as Ali mentioned as well into the later.