8-K: Lesaka Technologies Achieves Revenue and Profitability Guidance in Q1 2025, Reaffirms Full-Year Outlook

Lesaka Technologies reported Q1 2025 results, achieving mid-point revenue and adjusted EBITDA guidance, and reaffirmed its full-year outlook.

Summary

• Lesaka Technologies released its financial results for the first quarter of fiscal year 2025, ending September 30, 2024.
• The company's revenue reached $145.5 million, which was at the mid-point of their guidance, compared to $136.1 million in Q1 2024.
• The operating loss was $0.05 million, compared to an operating income of $0.2 million in the same quarter last year, but this includes $1.7 million in one-off transaction costs related to the Adumo acquisition.
• Excluding these costs, the operating income would have been $1.7 million.
• Net loss improved by 23% in ZAR to $4.5 million, and GAAP loss per share improved by 24% in ZAR to $0.07.
• Group Adjusted EBITDA was $9.4 million, also at the mid-point of guidance, representing a 12% improvement in ZAR compared to Q1 2024.
• Fundamental earnings per share improved to $0.04 from a loss of $0.00 in Q1 2024.
• The Consumer Division saw a 30% revenue increase in ZAR and a 99% increase in Segment Adjusted EBITDA in ZAR.
• The Merchant Division's revenue remained flat in ZAR, and Segment Adjusted EBITDA contracted by 1% in ZAR.
• Lesaka reaffirmed its full-year revenue guidance of ZAR 10 billion to ZAR 11 billion and Group Adjusted EBITDA guidance of ZAR 900 million to ZAR 1 billion.
• Net Revenue guidance for FY 2025 is ZAR 5.2 billion to ZAR 5.6 billion, implying a 35% year-on-year growth at the midpoint.
• Group Adjusted EBITDA guidance for FY 2025 implies a 37% year-on-year growth at the midpoint.
• The company also provided Q2 2025 guidance, expecting revenue between ZAR 2.4 billion and ZAR 2.6 billion, Net Revenue between ZAR 1.2 billion and ZAR 1.4 billion, and Group Adjusted EBITDA between ZAR 190 million and ZAR 210 million.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the company meeting its guidance, showing growth in key areas, and reaffirming its full-year outlook. However, the operating loss and flat performance in the Merchant Division temper the overall sentiment.

Positives

• Lesaka achieved the mid-point of its revenue and Group Adjusted EBITDA guidance for Q1 2025.
• The company has delivered on its Group Adjusted EBITDA guidance for nine successive quarters.
• Net loss and GAAP loss per share improved significantly compared to the same quarter last year.
• The Consumer Division showed strong growth in both revenue and adjusted EBITDA.
• Lesaka reaffirmed its full-year guidance, indicating confidence in future performance.
• Fundamental earnings per share improved to $0.04 from a loss of $0.00 in Q1 2024.

Negatives

• The company reported an operating loss of $0.05 million for Q1 2025, although this was impacted by one-off transaction costs.
• The Merchant Division's revenue remained flat in ZAR, and Segment Adjusted EBITDA contracted slightly.
• The company incurred $1.7 million in one-off transaction costs related to the Adumo acquisition, impacting profitability.

Risks

• The company's operating results are subject to fluctuations due to changes in the revenue mix between agency and principal sales of airtime.
• The company's performance is affected by currency exchange rates, particularly the ZAR/USD rate.
• The company's future performance is subject to risks and uncertainties, some of which cannot be predicted or quantified.
• The company's ability to achieve its financial targets depends on various factors, including market conditions and the successful integration of acquisitions.

Future Outlook

Lesaka reaffirmed its FY 2025 revenue guidance of ZAR 10 billion to ZAR 11 billion and Group Adjusted EBITDA guidance of ZAR 900 million to ZAR 1 billion. Net Revenue guidance for FY 2025 is ZAR 5.2 billion to ZAR 5.6 billion. Q2 2025 guidance includes revenue between ZAR 2.4 billion and ZAR 2.6 billion, Net Revenue between ZAR 1.2 billion and ZAR 1.4 billion, and Group Adjusted EBITDA between ZAR 190 million and ZAR 210 million.

Management Comments

• Lesaka Chairman Ali Mazanderani said: 'We continue to invest in building the Lesaka platform and to scale as Southern Africa's leading independent fintech.'
• Ali Mazanderani also stated: 'We achieved the mid-point of our revenue and Group Adjusted EBITDA guidance for Q1 2025.'
• Ali Mazanderani also stated: 'We have now delivered on our Group Adjusted EBITDA guidance for nine successive quarters and reaffirm our FY 2025 revenue guidance of ZAR 10 billion to ZAR 11 billion and FY2025 Group Adjusted EBITDA guidance of ZAR 900 million to ZAR 1 billion.'

Industry Context

Lesaka's performance is being viewed in the context of its position as a leading independent fintech in Southern Africa, with a focus on providing financial services to underserved consumers and merchants. The company's growth in the Consumer Division and its focus on digital payment solutions align with broader trends in the fintech industry.

Comparison to Industry Standards

• Lesaka's performance is being compared to other fintech companies in the Southern African region, particularly those focused on digital payments and financial inclusion.
• The company's revenue growth and adjusted EBITDA performance are being benchmarked against industry averages and the performance of its direct competitors.
• The company's focus on non-GAAP measures like Net Revenue and Adjusted EBITDA is common in the fintech industry, where traditional GAAP measures may not fully capture the underlying business performance.
• The company's guidance for FY 2025 is being compared to the growth expectations of other fintech companies in similar markets.

Stakeholder Impact

• Shareholders will be impacted by the company's financial performance and future outlook.
• Employees will be impacted by the company's performance and the implementation of incentive programs.
• Customers will be impacted by the company's ability to provide financial services and software.
• Suppliers and creditors will be impacted by the company's financial stability and ability to meet its obligations.

Next Steps

• Lesaka will host a webcast and conference call on November 7, 2024, to review the results.
• The company will continue to execute its strategy and focus on achieving its full-year guidance.
• The company will continue to integrate the Adumo acquisition.

Key Dates

Keywords

Fintech, Financial Results, EBITDA, Revenue, Lesaka Technologies, Q1 2025, Guidance, Net Revenue, Adumo, South Africa