8-K: Lesaka Technologies Delivers on Profitability Guidance, Restates Past Financials

Lesaka Technologies, Inc. announced preliminary FY2025 results, achieving profitability guidance, while also disclosing a restatement of prior interim financial statements with no impact on net loss or cash flow.

Summary

• Lesaka Technologies, Inc. released preliminary unaudited financial results for the fourth quarter and full fiscal year ended June 30, 2025.
• The company's unaudited condensed consolidated financial statements for the quarters ended September 30, 2024, December 31, 2024, and March 31, 2025, will be restated.
• The restatement is due to a re-evaluation of revenue classification (agent vs. principal) and related cost of goods sold.
• The restatement is anticipated to have no impact on reported operating income (loss), net loss, loss per share, net cash flows, or liquidity.
• The restatement is expected to increase revenue, offset by a corresponding increase in cost of goods sold, IT processing, servicing, and support.
• For FY2025, Net Revenue was $328.7 million (ZAR 5.3 billion), up 38% year-on-year in ZAR.
• Group Adjusted EBITDA for FY2025 was $50.7 million (ZAR 922.2 million), up 33% in ZAR, achieving guidance.
• Net Loss for FY2025 was $87.5 million (ZAR 1.6 billion), up 386% in ZAR, largely due to non-operating, non-cash charges and once-off transaction costs.
• Adjusted earnings per share for FY2025 was $0.13 (ZAR 2.29), up 187% in ZAR.
• The company provided FY2026 guidance, expecting Net Revenue between ZAR 6.4 billion and ZAR 6.9 billion, Group Adjusted EBITDA between ZAR 1.25 billion and ZAR 1.45 billion, and Adjusted earnings per share of at least ZAR 4.60 (over 100% growth).
• Net Income Attributable to Lesaka is expected to be positive for FY2026.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the achievement of adjusted profitability guidance, strong revenue growth, and robust future outlook for adjusted EBITDA and EPS. The restatement, while a negative event, is stated to have no impact on net loss or cash flow, mitigating its severity. The significant GAAP net loss is attributed to non-recurring, non-cash items.

Positives

• Achieved FY2025 Group Adjusted EBITDA guidance of $50.7 million (ZAR 922.2 million), representing a 33% year-on-year increase in ZAR.
• Reported strong year-on-year Net Revenue growth of 38% in ZAR for FY2025, reaching $328.7 million (ZAR 5.3 billion).
• Adjusted earnings for FY2025 increased by 263% in ZAR to $10.4 million (ZAR 186.2 million).
• Adjusted earnings per share for FY2025 grew by 187% in ZAR to $0.13 (ZAR 2.29).
• Provided robust FY2026 guidance, including Group Adjusted EBITDA growth of at least 35% (ZAR 1.25 billion to ZAR 1.45 billion).
• Projected FY2026 Adjusted earnings per share to more than double to at least ZAR 4.60, implying over 100% year-on-year growth.
• Anticipates positive Net Income Attributable to Lesaka for FY2026.
• The restatement of prior interim financial statements will have no impact on reported operating income (loss), net loss, loss per share, net cash flows, or liquidity.

Negatives

• Reported a significant Net Loss of $87.5 million (ZAR 1.6 billion) for FY2025, a 386% increase in ZAR year-on-year.
• The Net Loss was largely driven by a tax-adjusted $49.3 million (ZAR 897.6 million) non-operating, non-cash charge related to a change in fair value and sale of MobiKwik.
• Included a tax-adjusted non-cash charge from impairment losses of $18.4 million (ZAR 326.2 million) in FY2025.
• Incurred once-off transaction costs of $17.8 million (ZAR 321.9 million) in FY2025.
• Unaudited condensed consolidated financial statements for three prior quarters (Q1, Q2, Q3 FY2025) require restatement and should no longer be relied upon.
• Previously provided FY2026 revenue guidance has been withdrawn due to the restatement.

Risks

• Unaudited preliminary results may differ materially from actual audited results.
• Timely completion of the restatement and the filing of restated financial statements with the SEC.
• Additional information or subsequent events may require further adjustments to financial statements.
• Re-evaluation of accounting on an agency versus principal basis for other agreements may result in further restatements of revenue and costs.
• Uncertainties regarding the effectiveness of internal control over financial reporting and disclosure controls and procedures.
• Potential legal or regulatory action related to the restatement.
• Potential impact on the company's business and market reaction to announcements regarding the restatement or related issues.

Future Outlook

For Q1 FY2026, Lesaka expects Net Revenue between ZAR 1.50 billion and ZAR 1.65 billion, and Group Adjusted EBITDA between ZAR 260 million and ZAR 300 million. For the full FY2026, the company anticipates Net Revenue between ZAR 6.4 billion and ZAR 6.9 billion, Group Adjusted EBITDA between ZAR 1.25 billion and ZAR 1.45 billion (at least 35% growth), positive Net Income Attributable to Lesaka, and Adjusted earnings per share of at least ZAR 4.60, implying over 100% year-on-year growth. This guidance excludes the impact of the Bank Zero acquisition and any unannounced mergers and acquisitions.

Management Comments

• Chairman Ali Mazanderani stated: "FY2025 was a strong year for the Group, delivering on our profitability guidance and advancing key strategic priorities."
• Chairman Ali Mazanderani stated: "We expect to maintain this momentum into FY2026, and are guiding for adjusted EBITDA growth of at least 35%."
• Chairman Ali Mazanderani stated: "We have also introduced an adjusted earnings per share guidance, expecting this to more than double in FY2026 to at least ZAR 4.60, from ZAR 2.29 per share this year."

Industry Context

Lesaka Technologies operates as a South African fintech company focused on providing financial services, software, and business services to underserviced consumers and merchants in Southern Africa. The company's integrated multi-product platform aims to facilitate the digitization of commerce in its markets. The strong growth in Net Revenue and Adjusted EBITDA suggests continued expansion and adoption of its fintech solutions within this specific regional market, aligning with broader global trends of digital financial inclusion, particularly in emerging economies.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to assess against global industry benchmarks.

Corporate Governance

Legal Proceedings

• Potential legal or regulatory action related to the restatement is identified as a risk.

Stakeholder Impact

• Shareholders: Impacted by the restatement of prior financial statements, preliminary results, and future guidance. The restatement could affect investor confidence, but the lack of impact on net loss and cash flow, combined with positive adjusted profitability outlook, may mitigate concerns.
• Investors: Provided with updated preliminary financial performance and forward-looking guidance, which will inform investment decisions.
• Regulatory Authorities (SEC): The restatement and subsequent filings will be subject to their review and oversight, with potential for legal or regulatory action if issues are found.
• Management and Employees: Responsible for completing the restatement and ensuring robust internal controls, with potential for increased scrutiny.

Next Steps

• Completion of the restatement analysis and financial close and reporting process.
• Audit and review of financial statements by independent registered public accounting firm (KPMG Inc).
• Filing of audited consolidated financial statements for the fiscal year ended June 30, 2025, on Form 10-K.
• Earnings presentation for Q4 2025 results to be posted on the Investor Relations page of the company's website.
• Webcast and conference call for Q4 2025 results.

Key Dates

Recommendation

Despite the restatement of prior interim financials and a significant GAAP net loss, the company achieved its FY2025 Adjusted EBITDA guidance and provided strong FY2026 guidance for both Adjusted EBITDA (at least 35% growth) and Adjusted EPS (more than 100% growth). The restatement is an accounting reclassification with no impact on net loss, loss per share, or cash flows, which is a critical distinction. The large net loss is primarily due to non-operating, non-cash charges. The underlying operational performance, as reflected in adjusted metrics and future outlook, appears robust, suggesting a positive trajectory for the business.

Keywords

Fintech, Financial Results, Earnings, EBITDA, Restatement, SEC Filing, Lesaka Technologies, LSAK, LSK, South Africa, Preliminary Results, Guidance, MobiKwik, Corporate Governance