Lesaka(LSAK) - 2025 Q2 - Quarterly Report

Financial Performance - Lesaka's Merchant Division reported a total throughput of ZAR 11.3 billion for Q2 2025, a significant increase from ZAR 4.1 billion in Q2 2024, representing a year-on-year growth of 175%[242]. - Total throughput for Alternative Digital Payments (ADP) in Q2 2025 was ZAR 11.1 billion, a 32% increase from ZAR 8.4 billion in Q2 2024, driven by a 63% increase in supplier enabled payments[253]. - Total throughput for bill payments in Q2 2025 was ZAR 8.3 billion, representing a 13% increase compared to ZAR 7.3 billion in Q2 2024[264]. - Total throughput for utility payments decreased by 16% to ZAR 1.6 billion in Q2 2025 from ZAR 2.0 billion in Q2 2024[264]. - Revenue in ZAR decreased by 2% in Q2 2025, primarily due to fewer low-margin prepaid airtime sales and a lower contribution from the Enterprise division[283]. - Revenue for the three months ended December 31, 2024, was $146.8 million, a 2$143.9 million in 2023[284]. - Merchant segment revenue decreased by 1% to $115.8 million, while Consumer segment revenue increased by 37$22.9 million[296]. - Revenue for the first half of fiscal 2025 was flat, with a 0.2% increase in ZAR, primarily due to the inclusion of Adumo and increased value-added services, offset by fewer Pinned Airtime sales[309][311]. - Total consolidated revenue for the six months ended December 31, 2024, was ZAR 5,244,890, a slight increase of 0% compared to ZAR 5,232,165 in 2023[325]. Consumer Division Performance - The Consumer Division's total active EasyPay Everywhere (EPE) transactional account base grew to 1.6 million, an increase of 11% from 1.4 million in Q2 2024[255]. - Lending solutions in the Consumer Division saw approximately 336,000 loans originated during Q2 2025, a 21% increase compared to 278,000 loans in Q2 2024, with gross advances rising to ZAR 617 million, up 38% year-on-year[255]. - The Consumer Division's insurance policies written increased to approximately 50,000 in Q2 2025, a 19% rise from 42,000 in Q2 2024, contributing to a total of 496,488 active policies[258]. - The Consumer Division's total active insurance policies grew by 29% year-on-year, from 384,338 in Q2 2024 to 496,488 in Q2 2025[258]. - The number of active card holders reached approximately 200,000 at the end of Q2 2025, with a load value of approximately ZAR 170 million for the quarter ended December 31, 2024[262]. Merchant Division Performance - The number of devices deployed in the Merchant Division reached 80,178, up from 48,199 in Q2 2024, marking a 66% increase[242]. - The total net loan book size in the Merchant Division grew to ZAR 343 million by the end of Q2 2025, compared to ZAR 253 million at the end of Q2 2024, reflecting a 36% increase[248]. - The number of GAAP sites in the Merchant Division reached 9,705 as of December 31, 2024, with an approximate ARPU per site of ZAR 3,300[244]. Costs and Expenses - Operating income decreased due to higher costs and increased amortization of acquisition-related intangible assets from the acquisition of Adumo[283]. - Selling, general and administration expenses rose by $15.0 million (70$36.5 million, driven by the inclusion of Adumo and higher employee-related costs[287]. - Group costs increased due to higher employee-related expenses, travel, audit, consulting, and legal fees, resulting in a 51% increase in group costs compared to the prior period[308][324]. - Selling, general and administration expenses increased by 44% to $63.2 million, driven by the inclusion of Adumo and higher employee-related expenses[311][314]. Profitability and Loss - Net loss attributable to the company was$32.1 million, a significant increase of 1,087% compared to a loss of $2.7 million in the previous year[284]. - Operating income margin decreased to 0.5$11.8 million, a 32% increase from $9.0 million in Q2 2024[296]. - Group Adjusted EBITDA increased by 25$21.2 million, with significant contributions from the Merchant and Consumer segments[324]. Tax and Interest - The effective tax expense for fiscal 2025 was $(6.4) million, compared to$0.7 million in fiscal 2024, influenced by deferred tax impacts and ongoing losses in certain operations[292]. - Interest income increased by 49% to $0.7 million, while interest expense rose by 28$6.2 million due to higher borrowings[290][291]. - Net interest charges increased to $5.5 million (ZAR 97.7 million) in Q2 2025 from$4.3 million (ZAR 81.2 million) in the prior period[283]. Cash Flow and Financing - Cash and cash equivalents as of December 31, 2024, totaled $60.6 million, with a decrease attributed to cash reserves utilized for repayments and investments[344]. - Net cash used in operating activities during the second quarter of fiscal 2025 was$9.2 million (ZAR 163.6 million), compared to net cash provided of $0.6 million (ZAR 10.9 million) in the same quarter of fiscal 2024[354]. - Cash flows from operating activities during the first half of fiscal 2025 showed a net usage of$13.3 million (ZAR 236.7 million) compared to a net cash provided of $4.0 million (ZAR 74.0 million) in the first half of fiscal 2024[357]. - The company has a revolving credit facility of ZAR 300 million utilized to fund a portion of merchant finance loans receivable[349]. - The company has entered into an arrangement with African Bank to fund ATMs, where cash in ATMs is considered African Bank's property[353]. Acquisitions and Investments - The acquisition of Recharger (Pty) Ltd was announced on November 20, 2024, with a purchase consideration of ZAR 507 million, to be paid in two tranches[265][266]. - A non-cash fair value loss of$33.7 million was recorded during Q2 2025 related to the investment in MobiKwik[283]. - A non-cash fair value loss of $33.7 million was recorded related to the investment in MobiKwik during the first half of fiscal 2025[309][316]. Market Conditions - The U.S. dollar was 5$42,566,000, with a hypothetical 10% increase raising it to $46,823,000 and a decrease lowering it to$38,309,000[376].