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LESAKA TECHNOLOGIES INC (LSAK)·Q3 2025 Earnings Summary

Executive Summary

  • Delivered at-guidance quarter in ZAR: Revenue ZAR 2.5B and Net Revenue ZAR 1.36B; Group Adjusted EBITDA ZAR 236.8M; reaffirmed FY25 and introduced full FY26 guidance including a first-time projection for positive net income .
  • Clear beat vs S&P Global consensus on revenue and Primary EPS: $135.7M vs $130.0M*, and $0.04 vs -$0.03*, while GAAP EPS remained a loss (-$0.27) due to a ZAR 311M non-cash MobiKwik mark-to-market .
  • Consumer division momentum (market share ~13%, ARPU up to ZAR 106) and Adumo-driven scale in Merchant underpinned Net Revenue growth; EBITDA in-line despite ~ZAR 20M reorganization costs .
  • Catalysts: FY26 guidance (Net Revenue +23% y/y, EBITDA +42% at midpoints; positive GAAP net income), debt refinance lowering cost of debt to ~10.7% (saving ~ZAR 52M p.a.), and Recharger integration expanding electricity vending annuity streams .

What Went Well and What Went Wrong

  • What Went Well

    • Consumer acceleration: permanent SASSA customer base +17% y/y to 1.5M; ARPU rose to ZAR 106 (ZAR 94 in Q2; ZAR 90 y/y) with record lending/insurance sales; segment revenue +32% y/y to ZAR 446M; Segment Adj. EBITDA +65% y/y to ZAR 117M .
    • Guidance credibility: 11 consecutive quarters of delivering profitability guidance; reaffirmed FY25 and broadened FY26 guidance to include revenue, net revenue, EBITDA and positive GAAP net income .
    • Balance sheet optimization: refinance reduced weighted average cost of debt from ~12% to ~10.7% (≈ZAR 52M annual savings), added headroom; net debt/Adj. EBITDA at 2.8x with medium-term target of ~2x .

  • What Went Wrong

    • GAAP net loss widened: Q3 GAAP loss/share -$0.27 (vs -$0.06 y/y) primarily from a non-operating, non-cash MobiKwik fair value charge of ZAR 311M; management remains locked up until June 2025 .
    • Reorganization/tactical pullbacks: ~ZAR 20M integration and realignment costs weighed on EBITDA; prepaid (ADP) growth underwhelmed at ~4% due to airtime/data competition, with interventions underway to restore mid-teens growth .
    • Enterprise EBITDA diluted near term: exited legacy hardware lines and invested in switch and electricity vertical; division EBITDA ZAR 2M vs ZAR 14M y/y, expected to exceed 10% of segment EBITDA in FY26 .

Financial Results

Overall results and trajectory (USD unless noted):

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($M)$138.19 $145.55 $146.82 $135.67
Net Revenue ($M)$50.33 $58.81 $77.06 $73.37
GAAP EPS ($)-$0.06 -$0.07 -$0.40 -$0.27
Fundamental EPS ($, non-GAAP)$0.02 $0.04 $0.01 $0.04
Group Adjusted EBITDA ($M, non-GAAP)N/A$9.36 $11.81 $12.80

Consensus vs actual (S&P Global; quarterly):

MetricConsensus (Q3 2025)Actual Q3 2025
Revenue ($M)$130.0*$135.67
Primary EPS ($)-$0.03*$0.04*
EBITDA ($M)$12.48*$10.22*

Values with asterisks (*) retrieved from S&P Global.

Segment performance:

Segment (ZAR)Q2 2025Q3 2025YoY commentary
Merchant Revenue (GAAP)ZAR 2.1B (USD $115.8M) ZAR 1.9B (USD $103.0M) Revenue -10% y/y in ZAR; Net Revenue +58% y/y to ZAR 782.2M
Merchant Net RevenueZAR 854.5M (USD $47.7M) ZAR 782.2M (USD $42.3M) +58% y/y in ZAR
Merchant Segment Adj. EBITDAZAR 185.1M (USD $10.3M) ZAR 149.9M (USD $8.1M) +7% y/y in ZAR
Consumer Revenue/Net RevenueZAR 410.7M (USD $22.9M) ZAR 445.8M (USD $24.1M) +32% y/y in ZAR
Consumer Segment Adj. EBITDAZAR 77.5M (USD $4.3M) ZAR 117.1M (USD $6.3M) +65% y/y in ZAR

Key drivers:

  • GAAP-to-non-GAAP bridge: Q3 includes once-off transaction costs ZAR 42.3M and a non-cash MobiKwik FV change ZAR 310.6M affecting GAAP loss; fundamental earnings rose to ZAR 58.0M (USD $3.3M) .
  • FX: ZAR averaged 18.40/USD in Q3 vs 18.88/USD in Q3 2024 (ZAR +2.5% y/y) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (ZAR)FY202510.0–11.0B 10.0–11.0B Maintained
Net Revenue (ZAR, non-GAAP)FY20255.2–5.6B 5.2–5.6B Maintained
Group Adj. EBITDA (ZAR)FY2025900M–1.0B 900M–1.0B Maintained
Group Adj. EBITDA (ZAR)FY20261.25–1.45B 1.25–1.45B Maintained
Revenue (ZAR)FY2026N/A11.4–12.2B New metric added
Net Revenue (ZAR, non-GAAP)FY2026N/A6.4–6.9B New metric added
GAAP Net IncomeFY2026N/APositive New metric added

Notes: At FY26 midpoints, management implies Net Revenue +23% and Group Adj. EBITDA +42% y/y; Group Adj. EBITDA/Net Revenue margin ~20% .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 FY25)Current Period (Q3 FY25)Trend
Consumer scale and ARPUConsumer revenue +30% y/y; focus on platform scaling . Q2 Consumer rev +31% y/y; Adj. EBITDA +61% .Market share ~13%, ARPU ZAR 106 (ZAR 94 in Q2; ZAR 90 y/y); record lending/insurance sales .Strengthening momentum
Merchant integration & unit economicsAdumo acquisition (Q2 close) expanded Merchant; guidance intact .Net Revenue +58% y/y; reorg costs to improve unit economics; prepaid growth soft at 4% with interventions .Mix optimization; focus on profitability
Enterprise rebuild & electricity verticalAnnounced Recharger acquisition; planned close Q3 [13].Recharger closed Mar 3; Enterprise EBITDA ZAR 2M with investments; aim >10% segment EBITDA in FY26 .Building for FY26 contribution
Debt & liquidityCapital structure evolving; FY26 EBITDA guidance introduced .Refinance lowers cost to ~10.7% (save ~ZAR 52M p.a.); net debt/Adj. EBITDA 2.8x; target ~2x .Lower financing burden
MobiKwik MTMN/A in Q1; Q2 FV charge hurt GAAP EPS .Q3 FV charge ZAR 311M drove GAAP loss; exploring monetization post lock-up (June 2025) .External noise persists, non-cash

Management Commentary

  • “We delivered revenue of ZAR 2.5 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.”
  • “We are reaffirming FY2025 guidance… For FY2026, we anticipate revenue of ZAR 11.4–12.2 billion, net revenue of ZAR 6.4–6.9 billion, Group adjusted EBITDA of ZAR 1.25–1.45 billion, and positive net income.”
  • “Our weighted average cost of debt… will be approximately 10.7% per annum… a saving of approximately ZAR 52 million a year.”
  • “Consumer… market share [is] 13%… ARPU has increased to ZAR 106 compared to ZAR 94 last quarter and ZAR 90 a year ago.”
  • “Merchant division had a segment adjusted EBITDA to net revenue margin of about 19%… Consumer… about 26%… we expect >30% over time.”

Q&A Highlights

  • Consumer share and ARPU: Management highlighted record sales, sustained share gains, and ARPU expansion to ZAR 106; sees continued runway into Q4 and beyond .
  • ADP and acquiring: Supplier payments throughput +57% y/y; prepaid underwhelmed at 4% with actions to restore mid-teens growth; acquiring net revenue growing at market, with confidence to exceed .
  • Enterprise outlook: FY25 a rebuild year; exits from hardware depressed EBITDA; expects Enterprise to exceed 10% of segment-adjusted EBITDA contribution in FY26 .
  • Capex allocation (vaults): Vaults integral to holistic merchant offering enabling digitization/cross-sell; ~ZAR 360M capex over last year with operating leverage expected as earnings grow >40% FY25→FY26 .
  • Margin evolution: Targeting >30% EBITDA margin at Consumer and Merchant over time; group Adj. EBITDA/Net Revenue expected to move from ~18% in FY25 to >20% in FY26 .

KPIs (Q3 FY25)

KPIValue
Consumer permanent SASSA base~1.5M (+17% y/y)
Total grant base (incl. SRD)~1.7M; SRD extended to Mar 2026
Consumer ARPUZAR 106 (ZAR 94 in Q2; ZAR 90 y/y)
Consumer loan bookZAR 808M; loss ratio ~6%
Consumer insurance527k active policies; GPW ZAR 97M; 96% collection rate
EPE penetrationLoans 45%; Insurance 34%
Merchant acquiring>81k points; ZAR 9.9B throughput
ADP devices>89k; prepaid throughput ZAR 5.3B; supplier payments ZAR 5.9B (+57% y/y)
Cash devices (vaults/ATMs)>4,500; ZAR 27.5B throughput
Merchant lendingZAR 332M disbursed; net loan book ZAR 494M

Estimates Context

  • S&P Global (single-covering analyst): Q3 FY25 revenue consensus $130.0M*, Primary EPS -$0.03*; actuals were $135.67M and $0.04 respectively, a clear top-line and EPS beat. Standardized EBITDA was $10.22M* vs $12.48M* consensus, noting definitional differences with company “Group Adjusted EBITDA” of $12.80M that met guidance .
    Values marked with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Narrative shift to earnings power: Despite GAAP noise from MobiKwik MTM, fundamental EPS and Net Revenue growth continue; FY26 guidance adds positive GAAP net income, reinforcing durability .
  • Consumer is the near-term engine: Share gains and ARPU expansion signal sustained growth into Q4; margin pathway to >30% over time supports mix-led multiple expansion .
  • Merchant focus on unit economics: Adumo scale captured; prepaid (ADP) interventions should lift growth; margin target >30% over time provides a credible profitability bridge .
  • Enterprise optionality building: Recharger integration adds high-annuity electricity vending; switch internalization should bolster take-rates and EBITDA in FY26 .
  • Deleveraging capacity improved: Cost of debt trimmed to ~10.7% with ~ZAR 52M annual savings; medium-term net debt/EBITDA target ~2x underpins equity value compounding .
  • Trading setup: Positive estimate revisions likely on EPS/Revenue beat and FY26 breadth of guidance; watch for Q4 follow-through in Consumer KPIs, ADP growth re-acceleration, and clarity on MobiKwik monetization post lock-up .

Additional references:

  • Q3 FY25 8-K and attachments (financials, reconciliations) .
  • Q3 FY25 press release (duplicative headline metrics/guidance) .
  • Prior quarters Q1 FY25 and Q2 FY25 press releases for trend analysis .

Values with asterisks (*) retrieved from S&P Global.