Half Year 2026 Optasia Ltd Earnings Call
Speaker #1: Interim results for Optasia, first half of 2026 that we have released this morning. I am Salvador Anglada, I am the Group Chief Executive Officer, and with me I have Abi Lazro, the Phinergy CEO, and also Mariusz Dabrowski, he's the Group Chief Financial Officer.
Speaker #1: In between the three of us, we're going to run this presentation today, we're going to go through the highlights of the first half of the year, also go deeper on the financials and I want also to deep dive on the last acquisition we did, Phinergy, that was completed in the first half of 2026.
Speaker #1: For the people that maybe they are joining us, for the first time, just to say that Optasia is the leading platform enabling our partners to scale the financial inclusion, scale the credit across the different geographies.
Speaker #1: We are the intelligence layer, we are the ones that are able to understand the patterns, the behaviors, the unstructured data that exists in the market, and with this we are able to understand the affordability of people in order to get a loan.
Speaker #1: It's not about if they are affordable, they are eligible, it's about how much in order not to default, and that's why we are able also to underwrite the risk.
Speaker #1: We are doing that at scale, and that means 35 countries, and that means providing service to more than 100 million unique customers per month, and also to distribute this first half of the year 3.5 billion dollars.
Speaker #1: We like to say that our purpose is turning our potential into financial progress. And our vision is a world where financial progress we reaches everyone.
Speaker #1: Having said that, as a form of introduction, let me jump into the numbers for the first half of the year. Impressive growth all across the different dimensions.
Speaker #1: We have pushed our top line up to 50%, more than 185 million. Our adjusted EBITDA is close to 80 million, and that means 45% growth year over year.
Speaker #1: And our normalized net income also grew 40%, close to 39 million dollars. This growth comes with a strong cash generation. If you compare with one year before, our free cash flow reached close to 33 million, which means 150% more than one year before, and the free cash flow conversion reached 42%.
Speaker #1: On the back of this growth, what we have is our MFS business that continues to grow significantly, only this first half of the year the growth was 84%, and that means that the mix is shifting.
Speaker #1: As you know very well from ACS to become an MFS company, microfinance solutions company, and the mix now is 72%, coming from 62% one year ago.
Speaker #1: Also, just to highlight how we continue managing the growth and managing the credit performance and the risk. Our default rate is on the level of 1.3%, blended with all the services and the cover ratio, which is the ratio in between the revenue and the default rate is above for times.
Speaker #1: To highlight that not only the performance is on the financial side, but also we are progressing in all our strategic objectives. We continue growing our deployments, we are launching new deployments, we are expanding the catalog of products, and we will talk about that, and also we are expanding the distribution rails, very important for our third vertical, Phinergy, that will come start contributing in revenues in 2027, but also banking as a rail, and I will talk about that also as part of this presentation.
Speaker #1: When we compare our numbers with a full year targets, we can see that we are well ahead in most of the parameters, and especially on the top line growth.
Speaker #1: What I can say as well, is that we are in a very good trajectory to deliver this full year targets, and also to highlight that we have updated these targets and we will comment on that at the end of this presentation.
Speaker #1: But also, I want to alert everybody that we should not just compare the growth and translate the growth of the first half of the year to the second half, because there were some specific developments elements that will shape tune a bit a very interesting second half of the year, with high growth as well, but maybe lower than the one that we have had in the first half of the year.
Speaker #1: And some of these factors are well known, and I will talk about that, definitely one of them is the suspension of the service in Nigeria that happened in the second quarter of the year.
Speaker #1: As everybody knows, the service has been resumed but the speed of recovery and the structure of the market has changed, and I would like to comment briefly in the next slide.
Speaker #1: Also, to highlight that we have the transition of one service overdraft service from one of our partners to be delivered in-house, and this will have some impact in three markets.
Speaker #1: Two of them already completed, which is Uganda and Ghana, and the third one, which is Cameroon, should happen anytime in the second half of the year.
Speaker #1: It's important to highlight that because it will have some impact on our revenue growth profile, but definitely much less impact on the profits of the service because it was a low margin service with high volumes.
Speaker #1: The one that has been transitioned to be delivered in-house. Last but not least, the currency has impacted us positively. In the first half of the year, the strength of some of the currencies against dollar has held the top line, but it's not expected that this will be will continue in the second half of the year, so I think it's important just also to discount the effect of the currency in our figures.
Speaker #1: If I jump into Nigeria specifically, just to say that the service has been resumed for the ones that are not aware, they were regulatory situation issue in between two regulatory bodies.
Speaker #1: To which one has the authority to regulate it, I think the situation, first of all, is much more clear now in between these two entities.
Speaker #1: Second, also we have a whole all the relevant authorization coming in this case by the competition and consumer protection commission to operate the service.
Speaker #1: The service were resumed by all the operators in the market and of June. Maybe the difference now on the way that this service is going to be recovered are two.
Speaker #1: First of all, the path of recovery. The service is now running a significant less volume than it used to be, and in my opinion, it will take six to nine months to recover the full speed that we used to be in the past, but second, also very important, the structure now of the market has been equalized across all different players and we are in any of the cases we are not providing the service standalone.
Speaker #1: We are going to provide the service in a marketplace and the customer allocation will be based on performance. So we will see how much we are going to be able to recover in terms of share of wallet, although I have to say that we are optimistic of course take into account our trajectory and the way that we perform the services.
Speaker #1: When we try to summarize this effect, and I think it's important this slide is important because I want to create the right expectation also moving forward, I mean there are impacts that are transitory, impacts, and this is the case of the Nigeria ACS run rate, that will recover, but we need to understand what is the pace the pace of that recovery, the speed of that recovery.
Speaker #1: Only for everybody to know, we try to be conservative in our outlook, and also to get upside as much as the recovery is faster.
Speaker #1: There are aspects that are more permanent. This is the case of the transition of the overdraft service from one single partner that will not contribute to our revenues in the second half of the year, and definitely the FX effect we don't know, but we believe that the effect the positive effect that we've seen in the first half of the year should not be repeated or at least it will be much lower than the one that we've seen it in the first half of the year.
Speaker #1: That gives a very good illustrative base for H2. We build the bridge in between H1 and H2, and from here of course the growth is going to be significant underpin by our organic growth, underpin by our underlying growth, and also we believe the contribution of Nigeria moving forward in the next six months.
Speaker #1: Going towards our strategy and how we are we continue evolving our propositions and our markets, we are quite satisfied in the way that we opening up new sources of revenue.
Speaker #1: First of all, because I mean our existing deployments are performing very well, and I will give some details in the coming slide, but also because our pipeline is rich and our developments in delivery are also high, and I will give also details, but we can expect this year to have at least 11 if not 12 new deployments up and running on the overall year.
Speaker #1: The propositions also are being expanded we have the opportunity to launch a new lending service for merchants that it will be very important for us in the future, and I will commented also about that, but even more important we are expanding our distribution rails we believe that banking is going to be very important rail for us in the future.
Speaker #1: You will see some examples later on, and of course Penergy the utility market the opportunity to provide advance in the utility market is a green field for us.
Speaker #1: It will be we believe it's going to be a big contributor of our revenues in the future. Talking about our existing deployments and our new deployment, it's been a very fruitful first half of the year in most of our deployments, both in Asia and in Africa.
Speaker #1: I have just highlighted some of them. Pakistan is doing very well. We are expanding the customer base and the eligibility and also the nomination of the different customers.
Speaker #1: We continue going up in terms of the value of our loans. Congo B has been very nice opening in 2025 that it is scaling very well across the first half of the year, and of course we have Ghana that is doing working very well.
Speaker #1: It's a multi-partner multi-proposition jurisdiction also in this case held by the strength of the CD, and also Indonesia continue performing at high speed. In terms of the new deployments, we have as the closing of the first half of the year three we talk today we are talking about five life and two in staff pilot, which means ready to go, but the ones that we can report now because this is first half of the year information are two new countries which is Gabon and South Sudan and a new proposition in an existing country which is Ghana.
Speaker #1: As I said before, we are deploying 12 new or we are evolving in 12 new deployments that all of them are in a delivery phase and as I said the minimum we're going to get this year will be 11.
Speaker #1: Hopefully will be more if you compare with the seven that we did last year I mean clearly accelerating in our capacity to deploy across a geographies and markets.
Speaker #1: Three markets continues being under development. Very important for us. Ethiopia Mozambique and Kenya we are progressing quite nicely, but I'm not sure I'm not sure some of these will be the ones that are going to be live in 2026 definitely I would say all of them with services up and running on MFS in 2027.
Speaker #1: When we talk about our propositions as I said always one way of expanding our business is to launch additional proposition that complement existing ones that allow that to segmented better the market that allowed us to increase the eligibility of our customers.
Speaker #1: Proposition that can be launched in existing deployments. Proposition also that can be launched in new deployments. Maybe to highlight highlight the importance of the merchant lending proposition that was live in Ghana in the first half of the year and now is live also in Uganda.
Speaker #1: Very very important because it comes with a need that exist in the market. I would say we have a rich pipeline of merchant lending proposition across the different jurisdictions because there is no clear differential proposition in the market looking at how to help financing the working capital providing flexibility in terms of the loans also the repayment the possibility to include installments all those are the functions and the future that were included as part of the proposition that as I said it will be expanded across the different geographies.
Speaker #1: Very important the evolution of our partnership with FMV with first rank everybody knows that increase the shareholder the shareholder position in Optasia. In this first half of the year reaching 26.9, but here more than that what it's important is the evolution of the partnership the opportunities that we see when we put I mean both companies together and the capabilities of both companies together in the different markets.
Speaker #1: Maybe the good news is not only that we have a rich pipeline. The good news is that we have been able to launch in record time the first two propositions working together.
Speaker #1: The first time the first one is our time advance. We are supporting FMV connect our time services in South Africa. So we are embedded our capacity to create the score their customers and to provide airtime advances to them.
Speaker #1: It's live only two weeks ago. Ramping up the importance in the market, but I mean very satisfied with the approach the collaboration and definitely the speed of the deployment.
Speaker #1: Even more important the first MFS proposition launch in between both companies a cash advance proposition that is going to be embedded in the FMV wallet ecosystem in South Africa.
Speaker #1: It was live last week. It's live now and we will see also how it's going to progress, but it's a very good example of how we can collaborate with FMV.
Speaker #1: We can collaborate and we can use banking as a rail and also the opportunity specifically with FMV to expand our services in other geographies where we have presence and they have also presence.
Speaker #1: Let me just finalize and just I'm going to hand over to Abi to continue with the utility, but maybe to give a some snapshot some information how we continue progressing investing in our platform in our models it's a lot of activity allowing us to be better to automate process to allow is to go faster, but also to enhance the profitability.
Speaker #1: The new models that we are start to expand in some of our deployments. The reinforcement learning decisioning methodology that it's also been under deployment is helping us to enhance and improve our profitability with the same customer level and with the same activities.
Speaker #1: More about how precise we can be also improving and enhancing our models. And also to say that I mean other functionalities has been added to our platform.
Speaker #1: We can talk extensively about that, but I would like to highlight at least one that for me is absolutely critical is what we call dynamic pricing that allowed us to personalize offer to the customers.
Speaker #1: Until today we have the same type of proposition for the different customers. Of course not the same limits, but DSDC the same type of proposition with this new functionality that we have developed we will be able to personalize depending on the affordability and also the credit worthy of the different people allowing us in our opinion to enhance and improve the eligibility and the penetration within the market.
Speaker #1: With this first introduction let me hand over to Abi. Abi is the CEO of Phinergy. He joined at the time of acquisition and he's doing a fantastic job and I would like him to go deeper and give you a lot of color on what we're doing in Phinergy.
Speaker #1: Abi please.
Speaker #2: No thank you. Salva and good morning everybody. So I'm going to take 10 minutes talking about Phinergy. Phinergy is Optasia's third vertical lending vertical.
Speaker #2: As you know you all know extra time which is for the advancing of airtime extra cash for the advancing of money mobile money and now we have extra power which is essentially the advancing of electricity and with extra power it's underpinned by a similar sort of critical decisioning engine and recovery mostly the meter.
Speaker #2: But what's really important is extra power points that an essential need which is to help consumers get electricity when they run out. So what's driving this market very important is the acceleration of the rollout of prepaid meters and this rollout of prepaid meters ultimately solves the the debt problem that municipalities and utility companies have.
Speaker #2: At the same time what it does is it creates a consumer problem and creates the problem for the consumer. So many of our targets consumers that we serve actually have small irregular incomes and we're not always you know pay for the prepaid electricity and that's what's actually power actually solves.
Speaker #2: It gives that ability as needed when needed. And it's very important to say that the market is actually being driven by the the the the need for acceleration of electrification through programs such as Mission 300.
Speaker #2: Mission 300 is supported and and and advanced by the World Bank and Asset Development Bank and ultimately have signed energy compacts with 17 priority countries in total approximately 30 plus countries on the continent.
Speaker #2: And this is really important because there's a policy incentive to actually roll out these prepaid meters of which Phinergy has approximately 53% of patent protection in these Mission 300 300 countries.
Speaker #2: Just to say from a Optasia perspective it's very exciting because it provides a new rail a potential future rail for recovery of and of course a new distribution rail as well and what we see potentially of course subject to regulation data protection laws in various countries we operate is that it might be possible for example for some of this data to be used to enhance the Optasia data to get better eligibility and and so on.
Speaker #2: And of course differentiated IP because what into the utilities billing system which means from a recovery perspective we can read the central debt ledger and work out how much is outstanding before maintaining that recovery position.
Speaker #2: A very high level how the service works consumers have a need as I said when electricity runs out what do they do typically they can either be eligible for a service that might exist on an existing platform or if they're not eligible what they're able to do is potentially go to a point of sale service at a at a market or at a street for example to get the electricity.
Speaker #2: But if they can't get there it's the middle of the night. What we're able to do very quickly through the meter is provide a credit score and ultimately advance electricity at time of need.
Speaker #2: Very important for the utility company electricity generated and not used is lost. So what we actually do is we provide efficiency to the utility company because they're able to essentially sell more electricity at a time of need.
Speaker #2: And very very briefly you know we access or consumers access this through the regular channels that we know USSD SMS WhatsApp etc. There we go.
Speaker #2: Thank you. So if you if you look at our process towards commercialization I'm very excited to say looking at the map I'm very excited to say that we now have a pilots live in three countries Namibia Uganda and Lesotho in half two we expecting to have pilots up and running in Zambia Guinea Conakry and later later on of course in the pipeline we have Ghana South Africa Zimbabwe Botswana and Ethiopia future pipeline of course is Indonesia Egypt Benin Kenya Rwanda and Cameroon.
Speaker #2: What you see on the right is you see a funnel and you can see that Phinergy in almost all cases goal is to connect into the utilities switching platform which is their billing system their central debt ledger and that's really where we are able to throughout the ecosystem obtain the recovery.
Speaker #2: So consumers would normally take an electricity advance through a regular channel it could be a retailer it could be a POS a vendor it could be an M&O but ultimately what we seek to do through integrating with the utility is obtain that recovery anywhere else they go into the market which is very important.
Speaker #2: And within our go-to-market strategy we have discovery commercial utility and utility our goal is to get to the utility as the primary objective for us as the Phinergy business.
Speaker #2: Inside this POCs that we do and you can see we are actually validating various elements of the commercial model so for example you can see demand we validated the advance that's been taken across the pilot projects recovery across the full life cycle of the product itself and of course now we are testing the final unit economics at scale as well as the distribution at scale of the product across the ecosystem.
Speaker #2: Thank you. Over to Marius.
Speaker #1: Thank you Arvi. Thank you so much. Good morning everybody. In the next couple of slides I will have a pleasure to present the financial performance of the business.
Speaker #1: Very strong performance very strong financial performance of the business. But I will show you is also how the growth is translated to profitability how we create the values by increasing the the cash conversion and how the headlines EPS develop over the period of time.
Speaker #1: At the end of my presentation I will also present how we see the funding and how we see the strategy about the capital allocation.
Speaker #1: So let me jump to the numbers. I will not spend a lot of times on these numbers because Salve already present you a lot of the details but I would want to kind of show you is that first of all to highlight few points.
Speaker #1: The growth of our business of the of the distribution value when we kind of the help our partners to to provide the financial services to the end customers increased by the 46%.
Speaker #1: Our revenue increased even with the higher speed of the 58%. Of course we are not only the growth company we also the company who deliver the profit.
Speaker #1: So you can see that our profitability increased the same speed that delivering 77.9 million dollars of the EBITDA with the same time having the normalized net income growing by the 40% close to the 40 million in the first half of 2026.
Speaker #1: What is important to mention and highlighted is the is the tremendous and the strong growth of the cash flow generation which I'm very proud of.
Speaker #1: You can see that the cash flow generation free cash flow increase over the period of time within the one year time by 150%. We do it because our cash conversion increased to the 42% from the adjusted EBITDA.
Speaker #1: We do it the same time keeping the risk in the in the same level what I mean by this our cover ratio is four times.
Speaker #1: You remember during IPO we guide the markets that we want to keep our cover ratio in the in this range and we just exactly in the range of the four times.
Speaker #1: Our getting stays very healthy the getting being below the 1% that was our guidelines actually is 0.2%. Yeah. So let me jump to the growth and how the growth is generated and what is the driver.
Speaker #1: So as I mentioned before we we have a significant growth of the distribution value of the 46% but what is more important is a shift between the the products.
Speaker #1: What what I'm trying to say is that let's say the growth of the MFS is even more we double the distribution of MFS. So financial product increase more than 100%.
Speaker #1: That drives of course the change of the shift of the mix. We increasing the MFS business from the 62% to the 72% within one year time.
Speaker #1: That enable us of course due to the fact that the MFS have a higher take rate to grow our revenue faster than the distribution value.
Speaker #1: Therefore this is the reason why our revenue is growing by the 58% comparing to the 46% on the distribution value. And as I mentioned before the adjusted EBITDA follows increasing over the period of time.
Speaker #1: The same speed. Of course is also interesting to understand how the dynamics of the revenue and the default company works and why is driving by the change of the mix.
Speaker #1: I think the biggest the biggest driver of this change is of course the fact that our distribution value of MFS increase as I mentioned before to the 1.9 billion.
Speaker #1: So doubling comparing to the previous year. That drives two things. First of all our take rate increase from the 4.9% to the 5.3% in this period of time and slight increase of the default from 1.1 to the 1.3%.
Speaker #1: There's I always keep repeating and I will be just repeating over and over again what is more important is relation between the revenue and the default.
Speaker #1: As you can see this relation is defined as a cover ratio and this we just keep it constant four times and that we should expect it from us as a business that we keep the risk unpacked.
Speaker #1: We actually controlling the risk and with the control of the risk we are able to drive the growth of the business more than 100% year over year.
Speaker #1: The revenue of course drive another metrics which is quite good for us. What I'm trying to say is we kind of the get economic of scales.
Speaker #1: If you can see on the slides where we presenting to you parameters our operating operating cost is compared to the revenue how this metrics develop over the period of time and how the capital expenditures develop over the period of time.
Speaker #1: The absolute value growth of course but the economic of scale enable us this parameters to be the better. What I'm trying to say is operating expenses as a percentage of revenue drops from the 13.2% to 11.6% and our capital expenditures is below our target level 6% being the 4.5%.
Speaker #1: All of these elements is quite favorable for us. Of course the drive later on the the cost contribution. To understand the cash conversion you have to also understand the working capital intensity.
Speaker #1: What I'm trying to say is for us the working capital is the investment. So in other words whenever we start the new deployments whenever we would like to kind of increase our platform capability we have to invest in the working capital.
Speaker #1: So in absolute value our kind of the working net working capital increase over a period of time by the 43%. But we have to read these numbers in the context.
Speaker #1: And you have two numbers. Which I already kind of the mention in my presentation. One being distributed value. The distributed value kind of the increase at the same period of time by the 46% and the revenue which is actually the main drivers of the networking capital intensity drive by the 58%.
Speaker #1: So the point I'm trying to kind of the bring home is that our effectiveness of the networking capital increase over the period of time.
Speaker #1: So in other words then work networking capital drive increase slower than the growth of the business. The same time the parameters which is defined as a change of the networking capital as a percentage of the last 12 months revenue also decreased.
Speaker #1: You also remember during our kind of the investors meeting and the different presentation I was guiding you that the increase of this parameters is temporary because we invest in the business and this parameters will be dropping.
Speaker #1: And you can see there's a proof points that we dropping this parameters to 12% and we expecting this numbers to kind of the go farther down to the high single digits over the next period of times.
Speaker #1: Of course that better performance of the networking capital let's say the development drives the adjusted free cash flow conversion. So you can see that we increase our cash conversion so that absolute cash generation by 150% within the one year time.
Speaker #1: That also kind of the enable us to increase the adjusted free cash flow percentage to the 42%. That element you can expect it to kind of the continue.
Speaker #1: We are the business which is not only generating the profit but also of course the cash flow. And that of course I will elaborate about this elements during my capital allocation strategies in the few slides.
Speaker #1: What is important of course for you as a shareholders is the way how we how we kind of the perform in the different matrix related with the earnings.
Speaker #1: So on the slides you can see the three parameters which is pick up for this presentation. All of them is growing kind of the more than let's say you can expect it from the market.
Speaker #1: So like we growing the normalized and income by the 40%. The profit after tax which is with all of the one of adjustments growing even higher by the 50 58%.
Speaker #1: And the headlines EPS is growing by the 50%. So all of them is very strong performance. And I'm quite pleased to kind of the announce it that that's of course driven by our diversification because of the strength of the growth change of the strategy.
Speaker #1: Everything is drive these numbers up. And you can ask about the funding. So what happened of the funding and why kind of the getting this efficiency.
Speaker #1: So I give you the few numbers in the perspective. So of course we talk about these numbers in the few slides before. The revenue is growing the 58%.
Speaker #1: Adjusted EBITDA growing kind of the by the 45%. But look at what happened with the other parameters which is driver of the growth in the futures.
Speaker #1: We kind of the get efficiency and I was always telling you that the more we go the better efficient we can be. And this is the one of the representation of this element.
Speaker #1: You can see that our cash collateral is increasing at the same time below the 10% and the bond guarantee increasing only by the less than 4% points.
Speaker #1: And the debt actually stay stable no increase. The reason is of course the more we go the more experience we have the better performance we have and the less collateral and then less investment you can put it to the business.
Speaker #1: Still driving the the growth. And this is one of the effect of the efficiency which you can expect it from us in the futures as well.
Speaker #1: Capital allocation. I think this is more about the framework is and this is more about the strategy. So it's kind of the like reminder I will not be talking anything which is surprising to the market.
Speaker #1: You always expect the business like us growing quite fast with the high return from the equity to invest in the organic growth. So investing in the capex investing in the platform and all of these elements as we guided to you will be investing 6% of our revenue in our organic growth.
Speaker #1: And that will stays. The next element which you can consider as a healthy business of course to looking for the M&A. But we'll be looking the opportunistic.
Speaker #1: This is the selective approach to M&A. Only if something happen and only if this opportunistic possibilities drive the growth for the our shareholders. And the last and the but not the least quite important as we are generating the cash when we have a client quite high cash conversion will be of course sharing this benefit of the high conversion to our shareholders.
Speaker #1: We can share it into two forms. One being the share buyback and second one the dividends. You ask me the question which one is the most important for us is depends on the share price.
Speaker #1: Yeah. So of course you can calculate it the the model. And depending on the share price we use one of these two depending on the situation.
Speaker #1: Yeah. So just before I hand over to Salva summarizing very strong growth translated profitability the same time we generating very strong growth of the cash free cash flow reported.
Speaker #1: Yeah. Salva hand over to you.
Speaker #2: Very good. Thank you. Thank you Marius. Then let's finalize and so let's open the the room for your questions. Let me maybe give you a view for the end of the year and our targets.
Speaker #2: The one that we want to achieve. We are confident we're going to be able to deliver on our targets and we are confident enough to upgrade those targets and expand those targets as we speak.
Speaker #2: We are foreseeing growth and revenue and adjusted EBITDA in between 30 to 40% in the global year end. And we are also upgrading our guidance from 25 to 35 growth in normalized net income back to 30 to 40% keeping the capital expenditure at the same level 6% over revenue.
Speaker #2: This of course as I mentioned before is a supported by the extraordinary growth on our most of our deployments and our diversification strategy but also and I want to say includes a very conservative view of Nigeria and the recovery that we believe is going to be honestly better than the one that we have included here but we want to be conservative in that front and at the same time also we have a stable view of the currencies of the different currencies against the dollar in the next months.
Speaker #2: Those are elements that have been included in those specific numbers. But for us of course it's not only about delivering on the 26 as everybody knows we are working also for the future.
Speaker #2: We are investing in new railways. We are pushing across our deployment the new deployments the new products and the new distribution rails very very important for us to deliver on our new deployments as I said at least 11 need to be live at least this year if not more and this is the number that I can also share with all of you.
Speaker #2: We continue scaling our proposition now that we have merchants live we want to have additional deployments in the pipeline and this is what is happening but also we want to complete some other services that I have not talked about but are in the process to be completed.
Speaker #2: Very important the line of credit. This is a new proposition. This is a revolving proposition that allowed to provide amounts to the customer that they can draw and they can pay and withdraw again in a given period of time.
Speaker #2: It works like a credit card. It's like a virtual credit card embedded on the wallets also this proposition is on the way and there is a first customer coming of course taking it and we believe it's going to be expanded across the geography.
Speaker #2: The same as Telco Buy Now Pay Later which is a way to provide installments to telcos and to convert prepaid proposition to postpaid without taking the risk.
Speaker #2: Last but not least of course the diversification. Finergy is one old what we are doing with FNB but also to say that we are opening up the pipeline of additional opportunities on the banking side.
Speaker #2: Not just banking being in the being the lender on record but banking of course being the distribution channel to provide services to our customers.
Speaker #2: We are focused on execution and we believe all this will not only fit. I mean what we are doing in H2 but definitely 2027 and onwards.
Speaker #2: And with this I believe it's time to open up for question for everybody. Thank you very much for your attention.
Speaker #1: Thank you Salva Marius and Avi. Good morning to everyone who's joined the call. We will now start taking your questions. As a reminder you can submit these via the LUMI portal or via email to ir@optasia.com.
Speaker #1: Our first question is from Nadeem at SBG. This is to you Salva Ghana merchant loaning Ghana merchant lending scaled impressively. Does the product work in the same way as MFS which relies on telco and financial partners?
Speaker #2: Yes. Well the answer is yes. I mean we are creating the same ecosystem. We have financial partners as usual because we need to provide loans.
Speaker #2: And we need to have the lender on record and the and the coverage on the regulatory side. On the distribution yes it could work with telcos but also it could work with banking wallets.
Speaker #2: In this case is first with the telco but in the future I would say you will see more and more also on the banking side.
Speaker #2: The the product what it does is provide loans to the merchants helping them to finance the working capital allowing them to have flexibility in the way that they manage their liquidity.
Speaker #2: And what we see is that this is only the beginning of the journey because there is not real good products in the market. We are doing a big effort to try to understand the insights and to come with a very interesting pipeline of a functionalities that we will add to the products in the future.
Speaker #2: As I said Ghana is the first one. Uganda is coming second and and and you will see hopefully in the future a very rich pipeline of opportunities across the different geographies.
Speaker #1: Thanks very much. And the second question. Please could you expand on the FNB wallet cash advance opportunity? Do you see it as a substantial market opportunity and how does it differ from other cash loans in the market?
Speaker #2: Well of course I mean we are the we are enabling FNB and they are the ones of course they need to run the their their channel and to acquire customers being held by us.
Speaker #2: But the answer is yes I believe it's going to be a very interesting product South Africa is a different market. It's very bank from one side but also you have a lot of people that either don't use or nearly don't use their bank account and they do cash out very often.
Speaker #2: I believe that the opportunities in the low end of the pyramid the opportunity will allow us to provide loans to this market that is not necessary will serve across other players and and I believe we are have to be honest high expectations both FNB and us.
Speaker #2: We are working together and the whole idea is to expand. I mean the number of users in the wallet is something that need to be unveiled by FNB but I have to say that it's substantial.
Speaker #1: Thank you. And for this partner we're overdrafts are transitioning in-house. Do you expect the overdraft proposition to move in-house in other countries? How do you expect this to do you expect the partner to take other products in-house over time?
Speaker #2: Well the answer is no. At all. I mean this is something that is very specific unique from one single partner. First second it's something that has been planned for the last two years they wanted to have this capabilities in-house and I have to say that we have worked and helped on this transition.
Speaker #2: No all the overdraft proposition need are going to be internalized at all even more and you can see that we are launching new overdraft proposition.
Speaker #2: What it is true is that is a service that is a checkout proposition low value in terms of the loans very quick recovery very low default and also very low margin or lower margin than other services on us.
Speaker #2: So my answer is no. It's a very specific they want to do it. We are helping to do that. For me we will continue progressing with all our propositions and we have a very interesting pipeline of overdraft services across different geographies and different partners.
Speaker #1: Thank you. Question from James SBG. How do you think about managing default rates particularly with new products being planned for the future?
Speaker #3: Yep. So I think it's a as I as we always keep saying this we controlling the default. So the default is is always in our hand because of our capability.
Speaker #3: So I'm not expecting the default to be changed and you could always look at the default in the relation to our company take rate.
Speaker #3: So we are not changing we're not expecting to change any kind of the default trajectory. And to to still keep the default in the range of the four times cover ratio.
Speaker #1: Thank you. And do you expect heightened defaults as you build experience in these new products?
Speaker #3: Well it's like the the defaults of course the more what do you expecting and we also showing to to the investors in our our kind of the road show that whatever we just launch the product initially we have the kind of the baby city period over a period of time the the more we can have the good experience we have a more customers which is repeating customers of course repeating customers have a lower default so that overall we know more about the customers and that drives default lower.
Speaker #3: Yeah. So you have a blended kind of the effect of kind of the getting more experience with the lower default rate but as we expanding and we see the quite ambitious plan of expanding we have also the new new deployments coming.
Speaker #3: So if you look at the individual deployments you expecting the improvement of the default but if you look at the blended portfolio it will kept constant.
Speaker #1: Thank you. And we've got a question from Antonia Investec. Please could you provide more color on the impact of the fogon overdraft business on take rate and adjusted EBITDA margin?
Speaker #1: Given your comment that this is a lower margin business.
Speaker #2: I think well as you can see I mean we do not expect impact on the take rate take rates in the future also take into account the volumes but also the difference in between one service on the others.
Speaker #2: On the margin side what I can tell you or I can say to the market that these three deployments the contribution the net margin contribution last year was below 4%.
Speaker #2: So the the the the impact is not important is not material and we are able to absorb we are absorbing the impact on the on the on the profitability side.
Speaker #1: Perfect. We've got a question from Asander at Marzi. Are there any other countries where you anticipate challenges similar to those experienced with ACS in Nigeria?
Speaker #2: Well the answer is no but also the answer is that everybody need to understand that we operate in 35 countries. 35 jurisdictions each of them absolutely different with a different regulation.
Speaker #2: Also what we need to be alert all the time for any development any change on the regulation one of the things that we have done during the last nine months is to invest heavily on our compliance and regulatory team that we have expanded across of Asia and the whole idea is to learn and to anticipate whatever situation we can find.
Speaker #2: I believe the situation of Nigeria is quite quite specific. It's not going to be replicable in a single place but I need to say that we are all the time trying to understand what changes are happening in the regulation anticipating what it could be and I think creating a huge expertise also at the time that we continue expanding on our geographies.
Speaker #1: Thank you. And a second question from Asander. On the energy rail do you pay the utility upfront?
Speaker #3: So a good question. It depends on which country you're in. So for example in two countries one of them being Zambia the other one being Zimbabwe we've been actually awarded super vendor contract.
Speaker #3: So in that case as part of our go-to-market strategy we're going to buy electricity upfront then we would pay that to the utility company upfront.
Speaker #3: But again it depends on each market specifically.
Speaker #1: Thank you. And a question from Harold. Is the business primarily cash based or do you also extend credit to debtors given the significant trade receivables balance?
Speaker #3: No. It's like well it's the trade receivables also linked because we have to understand that we are B2B2C business. So the the trade receivables which you kind of the having in our balance sheet is linked with the invoices which we are charging our partners being the bank or the telco.
Speaker #3: And of course our product which we helping our partner to distribute is not presented in our balance sheet.
Speaker #1: Thank you. We've got another question from Nadim. Please could you disclose Phinergy's annualized revenue and profit slash losses? How do you expect this to scale over the next two to three years?
Speaker #2: I think we are not reporting yet the figures stand alone but we will we will at the time that are material first second the expectation is to have a revenues growing up in 2027 and to be a bit neutral in 2028.
Speaker #2: Those are the internal targets that we have and last but not least by 29 or 30 we believe that this business will be longer and larger than our current ACS business.
Speaker #2: These are elements that we're handling and of course it could vary depending on the speed of the deployments but we are very positive on the contribution moving forward.
Speaker #1: Thank you. We've got a question from Vanessa at 91. What portion of the 1.9 billion of MFS distributed value comes from the MFS overdraft product?
Speaker #2: I don't have that figure in mind but we can suspect that out of the 1.9 well first of all I mean one we are not disclosing overdraft and MFS services.
Speaker #2: That's something that we can do it in the future. I don't think there is a problem. Definitely when we consider the amount that we are talking about the one that is going to be internalized we are not talking more than 10% of this figure I could say but I need to confirm that.
Speaker #2: Okay.
Speaker #1: Thank you. We've got another question from James at SBG. You've provided capex guidance for full year 2026. Beyond 2026 can you give an indication of how much additional capex you expect?
Speaker #3: Well we just we keep consistence in the way how we perceiving the capex as I mentioned the capex for us we investing in the new deployments and we investing in the kind of our platforms.
Speaker #3: On both of them this is the futures of grow growth of the business. So we keep our consistency. So we investing up to the 6% of our revenue.
Speaker #3: No change.
Speaker #1: Thank you. And on that expansion capex how should investors think about the interaction between that and returning capital to shareholders?
Speaker #3: Well it's a it's a kind of the waterfall as a kind of the told you. So if you think about it let's say that our business the return from the equity from our business is is quite high.
Speaker #3: So of course from the shareholders value generation first of all you want to invested in the in the return capability and then later on expecting the opportunity.
Speaker #3: So when there is a big cash flow available for the shareholders as I mentioned my presentation we are willing to share it in the two forms either the being the share buyback or the dividends depending on the price of the shares.
Speaker #1: Thank you. And final question on the capex. When do you expect the business to reach sufficient scale across countries and products for expansion capex to take a backseat capital returns?
Speaker #3: Well if you think about the kind of the capex and the the deployments it's like we as a company we are the company who is always developing.
Speaker #3: Yeah. We just look for the opportunities. We kind of the trying to grow the business. So I'm not expecting the foreseeable future that we'll be not we stop investing in the capex or or our platform.
Speaker #3: I think this is the one of the reason we are we are kind of the bet the the first in class in the markets.
Speaker #3: That's the reason we have the strong performance because of this investment.
Speaker #1: Thank you. And a question from Catherine Child. Please could you explain the difference between ACS and MFS and why MFS is now 72% of Octavius revenue?
Speaker #3: I want to to go through that. Why is this one why is explain the difference between ACS and MFS products? Yeah. Yeah. Well it's like of course the difference between them ACS MFS the kind of the ACS you for the ACS service we simply kind of the selling the the commodity which is our call it like the airtime and the and the data in the case of the MFS we say the commodity of of in the form of the of the cash in the money which is disbursed in the in the wallet.
Speaker #3: In both of the cases we are enabler. Yeah. So we're enabling our partners in the case of ACS enabling telco to sell the product to the end customers.
Speaker #3: In the case of the MFS we're enabling the banks to distribute the value to the end end customers. The reason why the MFS is growing so fast is the dynamic of the market.
Speaker #3: So first of all you have a kind of the higher growth of the wallet within the ecosystem you have the higher ticket size and you have also the higher take rate.
Speaker #3: So the combination of the three elements drive amazing ecosystem which can of the enable us to grow faster of the MFS comparing to the ACS.
Speaker #2: Maybe to add that in the ACS side we add as an agent for the telco. And that means we recognize only the revenue related to our part while in the case of MFS I mean we are leading the whole product.
Speaker #2: We recognize the whole tick rate and we distribute the different payments to the different stores in the ecosystem. And that's why of course I mean the unit economics are different and also the profitability of the service also is different.
Speaker #1: Perfect. Thank you. And a question from enthusiast Benguela. Does the full year 2026 guidance assume neutrality on foreign exchange or have you embedded further US dollar weakness or strength scenarios?
Speaker #3: No. What what what we assume we assume the kind of the normal gradual deterioration of of of the emerging currency. But we are we are not assuming any strengths and the kind of the major movements.
Speaker #3: So in other words what you can expect it in the second half of the year that the currencies will stay the same levels as they were kind of the year year before.
Speaker #3: So in other words we're not expecting at the headwinds on the tailwinds coming from the effects.
Speaker #2: So it's going to be a neutral effect that's what he wants to say here.
Speaker #1: Great. Thank you very much. I think that's all the questions we've got time for today. So thank you very much to everybody for joining and have a great rest of the day.
Speaker #1: Thank you.
