8-K
LESAKA TECHNOLOGIES INC (LSAK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 ___________________________
FORM 8-K
CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 8, 2022
LESAKA TECHNOLOGIES, INC.(Exact name of registrant as specified in its charter)
| Florida | 000-31203 | 98-0171860 |
|---|---|---|
| (State or other jurisdiction | (Commission | (IRS Employer |
| of incorporation) | File Number) | Identification No.) |
President Place, 4th Floor, Cnr.
Jan Smuts Avenue and Bolton Road
Rosebank, Johannesburg, South Africa
\(Address of principal executive offices\) \(ZIP Code\)
Registrant’s telephone number, including area code: 011-27-11-343-2000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered |
|---|---|---|
| Common Shares | LSAK | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b -2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
The following information is furnished pursuant to Item 2.02, "Results of Operations and Financial Condition".
On November 8, 2022, Lesaka Technologies, Inc., a Florida corporation (the "Company"), issued a press release setting forth its financial results for the first quarter ended September 30, 2022. A copy of the press release is attached as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibits | Description |
|---|---|
| 99.1 | Press Release, dated November 8, 2022, issued by Lesaka Technologies, Inc. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LESAKA TECHNOLOGIES, INC. | ||
|---|---|---|
| Date: November 8, 2022 | By: | /s/ Naeem E. Kola |
| Name: | Naeem E. Kola | |
| Title: | Group Chief Financial Officer |
Lesaka Technologies, Inc.: Exhibit 99.1 - Filed by newsfilecorp.com
Lesaka Reports First Quarter 2023 Results
JOHANNESBURG, November 8, 2022 - Lesaka Technologies, Inc. (Nasdaq: LSAK; JSE: LSK) today released results for the first quarter ended September 30, 2022 ("Q1 2023").
Highlights:
Our revenue for Q1 2023 exceeds the upper end of our Q1 2023 guidance provided (on constant currency basis) and Segment Adjusted EBITDA is at the upper end of our Q1 2023 guidance provided. The Connect acquisition outperformance continues and we remain on track to achieve Consumer break-even.
Performance for Q1 2023
- Revenue of $124.8 million (ZAR 2.1 billion)^1^ in Q1 2023, compared to $34.5 million (ZAR 504 million)^1^ for the quarter ended September 30, 2021 (“Q1 2022”), increase driven by the inclusion of Connect for the full fiscal quarter.
- Segment Adjusted EBITDA for Q1 2023 improved to income of ZAR 111 million ($6.5 million) compared to a loss of ZAR 106 million ($7.3 million) in Q1 2022.
- Our operating loss of $4.7 million (ZAR 80 million)^1^ in Q1 2023 improved significantly from an operating loss of $11.2 million (ZAR 164 million)^1^ for Q1 2022.
- In our Merchant business, we continue to build a leading position in a growing and underserved market. Merchant Segment Adjusted EBITDA for Q1 2023 increased to ZAR 135 million ($7.9 million) compared to ZAR 28 million ($1.9 million) in Q1 2022 predominantly attributable to the inclusion of Connect. The Connect acquisition outperformance continues and the strong underlying fundamentals that underpin this business remain unchanged.
- The good progress in transforming our Consumer business continues, with Consumer Segment Adjusted EBITDA for Q1 2023 improving to a loss of ZAR 24 million ($1.4 million) compared to a ZAR 137 million ($9.4 million) loss in Q1 2022.
- Along with the significant progress in right-sizing our Consumer cost base, the active Consumer account base grew by 13% compared to Q1 2022, while transaction volumes and revenues improved.
- Revenue in our Consumer business increased to ZAR 257 million ($15 million) in Q1 2023 compared to ZAR 244 million ($16 million) in the sequential quarter, or Q4 2022, and ZAR 251 million ($17 million) in Q1 2022.
- Cost optimization initiatives and restructuring the operations of our Consumer business in 2022 translated into actual cost saving of approximately ZAR 112 million ($6.5 million) in Q1 2023. Rightsizing of teams and operational changes related to branch closures to shift from traditional bricks and mortar continues.
- Importantly, we believe that we remain on track to achieve Consumer break-even by quarter end December 31, 2022 (“Q2 2023”), as previously guided.
- We have commenced renegotiation of our lending facilities, to introduce greater flexibility and further increase liquidity for treasury management.
"Our first quarter results demonstrate that Lesaka has progressed well in its journey of transitioning into a leading and profitable Financial Technology company, a plan that commenced in earnest in Q2 of fiscal 2022. The strategic actions previously communicated have translated into strong financial performance for the quarter compared to Q1 2022. Strong revenue growth and improved profitability sets the tone for what is to come, Lesaka is well-positioned for growth. Importantly, in Q4 2022, we were able to provide guidance for the first time since Lesaka's transformation began, and we delivered results at the upper end of our guidance on a constant currency basis in Q1 2023. Our principal focus continues to be growing our significantly expanded Merchant business while also reaching breakeven in the Consumer business by the end of Q2 2023," said Chris Meyer, Lesaka Group CEO.
1. T he ZAR weakened 17% against the U.S. dollar during Q1 2023 if compared to Q1 2022, and 10% compared to the prior quarter being Q4 2022. Translated at the average exchange rate of ZAR 17.13 to $1 for Q1 2023, ZAR14.61 to $1 for Q1 2022 and ZAR 15.56 to $1 for Q4 2022.
Summary Financial Metrics
Three months ended
| Three months ended | **** | **** | **** | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30,2022 | Sep 30,2021 | Jun 30,2022 | Q1 '23 vsQ1 '22 | Q1 '23 vsQ4 '22 | Q1 '23 vsQ1 '22 | Q1 '23 vsQ4 '22 | ||||||
| (All figures in USD '000s except per share data) | '000's(except per share data) | % change in | % change in ZAR | |||||||||
| Revenue | 124,786 | 34,504 | 121,789 | 262% | 2% | 324% | 13% | |||||
| GAAP operating loss | (4,671 | (11,225 | ) | (10,122 | ) | (58% | (54% | ) | (51% | ) | (49% | ) |
| Normalized EBITDA (loss)^(1)^ | 3,387 | (9,778 | ) | 2,588 | nm | 31% | nm | 44% | ||||
| GAAP loss per share ($) | (0.17 | (0.23 | ) | (0.25 | ) | (25% | (30%) | (12% | ) | (23% | ) | |
| Fundamental loss per share ($)^(1)^ | (0.08 | (0.22 | ) | (0.09 | ) | (64% | (11% | ) | (57% | ) | (2% | ) |
| Fully-diluted weighted average shares ('000's) | 62,445 | 56,809 | 61,619 | 10% | 1% | n/a | n/a | |||||
| Average period USD / ZAR exchange rate | 17.13 | 14.61 | 15.56 | 17% | 10% | n/a | n/a |
All values are in US Dollars.
(1) Normalized EBITDA (loss), fundamental loss and fundamental loss per share are non-GAAP measures and are described below under “Use of Non-GAAP Measures—Operating income before depreciation and amortization and Normalized EBITDA, and —Fundamental net (loss) income and fundamental (loss) earnings per share.” See Attachment B for a reconciliation of GAAP operating loss to EBITDA loss and Normalized EBITDA loss, and GAAP net loss to fundamental net loss and loss per share.
Factors impacting comparability of our Q1 2023 and Q1 2022 results
• Higher revenue: Our revenues increased 324% in ZAR, primarily due to the contribution from Connect and a moderate increase in Consumer account fees, lending and insurance revenues, which was partially offset by a decrease in Merchant hardware sales due to shipping delays;
• Lower operating losses: Operating losses decreased, delivering an improvement of 51% in ZAR compared with the prior period primarily due to the contribution from Connect, and the implementation of various cost reduction initiatives in our Consumer business, which was partially offset by an increase in acquisition related intangible asset amortization;
• Higher net interest charge: The net interest charge increased to $3.6 million (ZAR 62.0 million) from $0.4 million (ZAR 6.0 million) due to the additional borrowings incurred in order to fund the acquisition of Connect as well as the debt within the Connect business itself; and
• Foreign exchange movements: The U.S. dollar was 17% stronger against the ZAR during the first quarter of fiscal 2023, which impacted our reported results.
Results of Operations by Segment and Liquidity
Consumer
Segment revenue was $15.0 million in Q1 2023, up 2% compared with Q1 2022, and up 5% compared with Q4 2022 on a constant currency basis. Segment revenue increased primarily due to higher lending and insurance revenues and higher account holder fees, though this was partially offset by lower ATM transaction fees. The cost reduction initiatives we initiated in fiscal 2022 delivered a significant reduction in our Consumer segment’s operating expenses which resulted in a significantly lower EBITDA loss compared with fiscal 2022. Specifically, expenses associated with operating a mobile distribution network were discontinued in early fiscal 2022, and we have streamlined our fixed distribution network through reductions in certain expenses including employee-related costs, security, guarding and premises costs. Our EBITDA loss margin (calculated as EBITDA loss divided by revenue) for Q1 2023 and 2022 was (9.3%) and (54.5%), respectively
Merchant
Segment revenue was $109.4 million in Q1 2023, up 651% compared with Q1 2022 and up 14% compared to Q4 2022 on a constant currency basis. Segment revenue increased sixfold due to the inclusion of Connect which was partially offset by a decrease in hardware sales due to shipping delays. The increase in segment EBITDA is primarily due to the inclusion of Connect, which was partially offset by higher employee-related expenses. Connect records a significant proportion of its airtime sales in revenue and cost of sales, while only earning a relatively small margin. This significantly depresses the EBITDA margins shown by the business. Our EBITDA margin for Q1 2023 and 2022 was 7.2% and 11.3%, respectively.
Other
In ZAR, segment revenue increased modestly primarily due to an increase in hardware sales. EBITDA decreased as a result of an allowance for doubtful debts created as well as inflationary increases in staff and other operating costs, which were at a higher percentage increase than the increase in revenue.
Our EBITDA (loss) margin for the Other segment was 11.0% and 33.5% during Q1 fiscal 2023 and 2022, respectively.
Corporate/Eliminations
Our corporate expenses generally include acquisition-related intangible asset amortization; expenses incurred related to corporate actions; expenditures related to compliance with the Sarbanes-Oxley Act of 2002; non-employee directors' fees; Group CEO and Group CFO compensation costs, certain employee and executive bonuses; legal fees; audit fees; directors and officer's insurance premiums; and elimination entries.
Our corporate expenses for fiscal 2023 increased compared with the prior period due to higher employee costs and an increase in director and officer's insurance premiums.
Cash flow and liquidity
As of September 30, 2022, our cash and cash equivalents were $30.1 million and comprised of U.S. dollar-denominated balances of $9.2 million, ZAR-denominated balances of ZAR 346.8 million ($19.3 million), and other currency deposits, primarily Botswana pula, of $1.7 million, all amounts translated at exchange rates applicable as of September 30, 2022. The decrease in our unrestricted cash balances from June 30, 2022, was primarily due to utilization of cash reserves to fund our Consumer operations and an investment in working capital in our Merchant operations, which was partially offset by the contribution from Connect.
Outlook
While we report our financial results in USD, we measure our operating performance in ZAR, and as such we provide our guidance accordingly.
Q2 2023
We expect the following for Q2 2023:
- Revenue between ZAR 2.0 billion and ZAR 2.3 billion.
- Segment Adjusted EBITDA of between ZAR 157 million and ZAR 164 million.
- Merchant Segment Adjusted EBITDA of between ZAR 145 million and ZAR 150 million.
- Consumer Segment Adjusted EBITDA of between ZAR 12 million and ZAR 14 million.
- Group Costs normalized (previously referred to as Corporate/Eliminations) of approximately ZAR 41 million.
- Adjusted EBITDA of between ZAR 116 million and ZAR 123 million.
FY 2023
For the full year fiscal 2023, we are reaffirming the total Group guidance provided on September 19, 2022, however the segment composition has changed slightly. We expect the following for the year ended June 2023:
- Revenue between ZAR 8.7 billion and ZAR 9.3 billion.
- Segment Adjusted EBITDA of between ZAR 645 million and ZAR 675 million.
- Merchant Segment Adjusted EBITDA of between ZAR 550 million and ZAR 565 million.
- Consumer Segment Adjusted EBITDA of between ZAR 95 million and ZAR 110 million.
- Group Costs normalized expected to be between ZAR 155 million to ZAR 165 million.
- Adjusted EBITDA of between ZAR 480 million and ZAR 525 million.
In providing our fiscal 2023 guidance on September 19, 2022, amounts reported in USD were translated to ZAR using the average rate of exchange, of $1:ZAR 15.50 (as reported in the announcement).
Webcast and Conference Call
Lesaka will host a webcast and conference call to review results on November 9, 2022, at 8:00 a.m. Eastern Time.
The results webcast can be accessed by using the following link: https://url24.top/MeEva
Webcast ID: 838 8768 7101
Participants using the webcast will be able to ask questions by raising their hand and then asking the question "live."
Conference call dial-in:
- US Toll-Free: + 1 312 626 6799 or +1 346 248 7799
- South Africa Toll-Free + 27 87 551 7702
Participants using the conference call dial-in will be unable to ask questions
A replay of the results presentation webcast will be available on the Lesaka investor relations website following the conclusion of the live event.
Use of Non-GAAP Measures
U.S. securities laws require that when we publish any non-GAAP measures, we disclose the reason for using these non-GAAP measures and provide reconciliations to the most directly comparable GAAP measures. The presentation of EBITDA, Normalized EBITDA, fundamental net (loss) income and fundamental (loss) earnings per share and headline (loss) earnings per share are non-GAAP measures.
Operating income before depreciation and amortization and Normalized EBITDA
Operating income before depreciation and amortization is GAAP operating (loss) income adjusted for depreciation and amortization. Normalized EBITDA is earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted for unusual non-recurring items, costs related to acquisitions and transactions consummated or ultimately not pursued.
Fundamental net loss and fundamental loss per share
Fundamental net loss and loss per share is GAAP net loss and loss per share adjusted for the amortization of acquisition-related intangible assets (net of deferred taxes), stock-based compensation charges, and unusual non-recurring items, including costs related to acquisitions and transactions consummated or ultimately not pursued.
Fundamental net loss and loss per share for fiscal 2023 also includes a net gain on disposal of equity-accounted investments.
Management believes that the EBITDA, Normalized EBITDA, fundamental net (loss) income and (loss) earnings per share metrics enhance its own evaluation, as well as an investor’s understanding, of our financial performance. Attachment B presents the reconciliation between GAAP operating income and EBITDA and Normalized EBITDA; and GAAP net (loss) income and (loss) earnings per share and fundamental net (loss) income and (loss) earnings per share.
Headline (loss) earnings per share ("H(L)EPS")
The inclusion of H(L)EPS in this press release is a requirement of our listing on the JSE. H(L)EPS basic and diluted is calculated using net (loss) income which has been determined based on GAAP. Accordingly, this may differ to the headline (loss) earnings per share calculation of other companies listed on the JSE as these companies may report their financial results under a different financial reporting framework, including but not limited to, International Financial Reporting Standards.
H(L)EPS basic and diluted is calculated as GAAP net (loss) income adjusted for the impairment losses related to our equity-accounted investments and (profit) loss on sale of property, plant and equipment. Attachment C presents the reconciliation between our net (loss) income used to calculate (loss) earnings per share basic and diluted and H(L)EPS basic and diluted and the calculation of the denominator for headline diluted (loss) earnings per share.
About Lesaka (www.lesakatech.com)
Lesaka Technologies, (Lesaka™) is a South African Fintech company that utilizes its proprietary banking and payment technologies to deliver superior financial services solutions to merchants (B2B) and consumers (B2C) in Southern Africa. Lesaka's mission is to drive true financial inclusion for both merchant and consumer markets through offering affordable financial services to previously underserved sectors of the economy. Lesaka offers cash management solutions, growth capital, card acquiring, bill payment technologies and value-added services to formal and informal retail merchants as well as banking, lending, and insurance solutions to consumers across Southern Africa. The Lesaka journey originally began as "Net1" in 1997 and later rebranded to Lesaka (2022), with the acquisition of Connect. As Lesaka, the business continues to grow its systems and capabilities to deliver meaningful fintech-enabled, innovative solutions for South Africa's merchant and consumer markets.
Lesaka has a primary listing on NASDAQ (NasdaqGS: LSAK) and a secondary listing on the Johannesburg Stock Exchange (JSE: LSK). Visit www.lesakatech.com for additional information about Lesaka Technologies (Lesaka ™).
Forward-Looking Statements
This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as “expects,” “estimates,” “projects,” “believes,” “anticipates,” “plans,” “could,” “would,” “may,” “will,” “intends,” “outlook,” “focus,” “seek,” “potential,” “mission,” “continue,” “goal,” “target,” “objective,” derivations thereof, and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. In this press release, statements relating to future financial results and future financing and business opportunities are forward-looking statements. Additional information concerning factors that could cause actual events or results to differ materially from those in any forward-looking statement is contained in the company's Form 10-K for the fiscal year ended June 30, 2022, as filed with the SEC, as well as other documents we have filed or will file with the SEC. We assume no obligation to update the information in this press release, to revise any forward-looking statements or to update the reasons actual results could differ materially from those anticipated in forward-looking statements.
**Investor Relations Contact:**Phillipe Welthagen Email : phillipe.welthagen@lesakatech.com Mobile: +27 84 512 5393
ICR
Email: LesakaIR@icrinc.com
Media Relations Contact:
Janine Bester Gertzen
Email: Janine@thenielsennetwork.com
LESAKA TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Operations
| Unaudited | ||||||
|---|---|---|---|---|---|---|
| Three months ended | ||||||
| September 30, | ||||||
| 2022 | 2021 | |||||
| (In thousands) | ||||||
| REVENUE | $ | 124,786 | $ | 34,504 | ||
| EXPENSE | ||||||
| Cost of goods sold, IT processing, servicing and support | 100,528 | 24,207 | ||||
| Selling, general and administration | 22,931 | 20,442 | ||||
| Depreciation and amortization | 5,998 | 895 | ||||
| Transaction costs related to Connect Group acquisition | - | 185 | ||||
| OPERATING LOSS | (4,671 | ) | (11,225 | ) | ||
| NET GAIN ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT | 248 | - | ||||
| INTEREST INCOME | 411 | 389 | ||||
| INTEREST EXPENSE | 4,036 | 816 | ||||
| LOSS BEFORE INCOME TAX EXPENSE | (8,048 | ) | (11,652 | ) | ||
| INCOME TAX EXPENSE | 31 | 186 | ||||
| NET LOSS BEFORE LOSS FROM EQUITY-ACCOUNTED INVESTMENTS | (8,079 | ) | (11,838 | ) | ||
| LOSS FROM EQUITY-ACCOUNTED INVESTMENTS | (2,617 | ) | (1,156 | ) | ||
| NET LOSS ATTRIBUTABLE TO LESAKA | (10,696 | ) | (12,994 | ) | ||
| Net loss per share, in United States dollars: | ||||||
| Basic loss attributable to Lesaka shareholders | $ | (0.17 | ) | $ | (0.23 | ) |
| Diluted loss attributable to Lesaka shareholders | $ | (0.17 | ) | $ | (0.23 | ) |
LESAKA TECHNOLOGIES, INC. Unaudited Condensed Consolidated Balance Sheets
| Unaudited | (A) | ||||
|---|---|---|---|---|---|
| September 30, | June 30, | ||||
| 2022 | 2022 | ||||
| (In thousands, except share data) | |||||
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Cash and cash equivalents | 30,140 | $ | 43,940 | ||
| Restricted cash | 63,231 | 60,860 | |||
| Accounts receivable, net of allowance of - September: 272; June: 509 and other receivables | 29,356 | 28,898 | |||
| Finance loans receivable, net of allowance of - September: 1,780; June: 1,691 | 33,484 | 33,892 | |||
| Inventory | 31,164 | 34,226 | |||
| Total current assets before settlement assets | 187,375 | 201,816 | |||
| Settlement assets | 16,286 | 15,916 | |||
| Total current assets | 203,661 | 217,732 | |||
| PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - September: 32,987; June: 35,249 | 24,385 | 24,599 | |||
| OPERATING LEASE RIGHT-OF-USE | 5,943 | 7,146 | |||
| EQUITY-ACCOUNTED INVESTMENTS | 5,111 | 5,861 | |||
| GOODWILL | 147,167 | 162,657 | |||
| INTANGIBLE ASSETS, net of accumulated amortization of - September: 20,319; June: 16,390 | 137,984 | 156,702 | |||
| DEFERRED INCOME TAXES | 3,685 | 3,776 | |||
| OTHER LONG-TERM ASSETS, including reinsurance assets | 77,834 | 78,092 | |||
| TOTAL ASSETS | 605,770 | 656,565 | |||
| LIABILITIES | |||||
| CURRENT LIABILITIES | |||||
| Short-term credit facilities for ATM funding | 57,951 | 51,338 | |||
| Short-term credit facilities | 11,381 | 14,880 | |||
| Accounts payable | 19,281 | 18,572 | |||
| Other payables | 28,426 | 34,362 | |||
| Operating lease liability - current | 1,772 | 2,498 | |||
| Current portion of long-term borrowings | 6,365 | 6,804 | |||
| Income taxes payable | 2,554 | 2,140 | |||
| Total current liabilities before settlement obligations | 127,730 | 130,594 | |||
| Settlement obligations | 15,811 | 15,276 | |||
| Total current liabilities | 143,541 | 145,870 | |||
| DEFERRED INCOME TAXES | 48,977 | 54,211 | |||
| OPERATING LEASE LIABILITY - LONG TERM | 4,333 | 4,827 | |||
| LONG-TERM BORROWINGS | 121,435 | 134,842 | |||
| OTHER LONG-TERM LIABILITIES, including insurance policy liabilities | 2,192 | 2,466 | |||
| TOTAL LIABILITIES | 320,478 | 342,216 | |||
| REDEEMABLE COMMON STOCK | 79,429 | 79,429 | |||
| EQUITY | |||||
| LESAKA EQUITY: | |||||
| COMMON STOCK | |||||
| Authorized: 200,000,000 with 0.001 par value; | |||||
| Issued and outstanding shares, net of treasury: September: 62,522,384; June: 62,324,321 | 83 | 83 | |||
| PREFERRED STOCK | |||||
| Authorized shares: 50,000,000 with 0.001 par value; | |||||
| Issued and outstanding shares, net of treasury: September: -; June: - | - | - | |||
| ADDITIONAL PAID-IN-CAPITAL | 329,365 | 327,891 | |||
| TREASURY SHARES, AT COST: September: 24,926,752; June: 24,891,292 | (287,136 | ) | (286,951 | ) | |
| ACCUMULATED OTHER COMPREHENSIVE LOSS | (188,490 | ) | (168,840 | ) | |
| RETAINED EARNINGS | 352,041 | 362,737 | |||
| TOTAL LESAKA EQUITY | 205,863 | 234,920 | |||
| NON-CONTROLLING INTEREST | - | - | |||
| TOTAL EQUITY | 205,863 | 234,920 | |||
| TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY | 605,770 | $ | 656,565 |
All values are in US Dollars.
(A) Derived from audited consolidated financial statements.
LESAKA TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Cash Flows
| Unaudited | ||||||
|---|---|---|---|---|---|---|
| Three months ended | ||||||
| September 30, | ||||||
| 2022 | 2021 | |||||
| (In thousands) | ||||||
| Cash flows from operating activities | ||||||
| Net loss | $ | (10,696 | ) | $ | (12,994 | ) |
| Depreciation and amortization | 5,998 | 895 | ||||
| Movement in allowance for doubtful accounts receivable | 1,049 | 386 | ||||
| Interest payable | 26 | 11 | ||||
| Fair value adjustment related to financial liabilities | 63 | (90 | ) | |||
| Gain on disposal of equity-accounted investments | (248 | ) | - | |||
| Loss from equity-accounted investments | 2,617 | 1,156 | ||||
| Profit on disposal of property, plant and equipment | (208 | ) | (25 | ) | ||
| Facility fee amortized | 249 | - | ||||
| Stock-based compensation charge | 1,462 | 309 | ||||
| Dividends received from equity accounted investments | 21 | 137 | ||||
| (Increase) Decrease in accounts receivable and finance loans receivable | (6,524 | ) | 1,188 | |||
| (Increase) Decrease in inventory | (279 | ) | 1,583 | |||
| Decrease in accounts payable and other payables | (438 | ) | (431 | ) | ||
| Increase in taxes payable | 642 | 294 | ||||
| Decrease in deferred taxes | (1,394 | ) | (367 | ) | ||
| Net cash used in operating activities | (7,660 | ) | (7,948 | ) | ||
| Cash flows from investing activities | ||||||
| Capital expenditures | (4,501 | ) | (698 | ) | ||
| Proceeds from disposal of property, plant and equipment | 417 | 231 | ||||
| Proceeds from disposal of equity-accounted investment | 253 | - | ||||
| Proceeds from disposal of equity-accounted investment - Bank Frick | 112 | - | ||||
| Loan to equity-accounted investment | (112 | ) | - | |||
| Net change in settlement assets | (1,884 | ) | - | |||
| Net cash provided by investing activities | (5,715 | ) | (467 | ) | ||
| Cash flows from financing activities | ||||||
| Proceeds from bank overdraft | 146,068 | 138,905 | ||||
| Repayment of bank overdraft | (136,922 | ) | (98,908 | ) | ||
| Long-term borrowings utilized | 1,059 | - | ||||
| Repayment of long-term borrowings | (1,580 | ) | - | |||
| Acquisition of treasury stock | (185 | ) | ||||
| Proceeds from issue of shares | 6 | - | ||||
| Net change in settlement obligations | 1,987 | - | ||||
| Net cash provided by financing activities | 10,433 | 39,997 | ||||
| Effect of exchange rate changes on cash | (8,487 | ) | (4,926 | ) | ||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (11,429 | ) | 26,656 | |||
| Cash, cash equivalents and restricted cash – beginning of period | 104,800 | 223,765 | ||||
| Cash, cash equivalents and restricted cash – end of period | $ | 93,371 | $ | 250,421 |
Lesaka Technologies, Inc.
Attachment A
Operating segment revenue, operating (loss) income and operating (loss) margin:
Three months ended September 30, 2022, and 2021 and June 30, 2022
| Three months ended | Change - actual | Change -constantexchange rate^(1)^ | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Key segmental data, in ’000, except margins | Sep 30, 2022 | Sep 30, 2021 | Jun 30, 2022 | Q1 '23vs Q1'22 | Q1 '23vs Q4'22 | Q1 '23vs Q1'22 | Q1 '23vs Q4'22 | ||||||||||
| Revenue: | |||||||||||||||||
| Consumer | $ | 15,004 | $ | 17,164 | $ | 15,700 | (13% | ) | (4% | ) | 2% | 5% | |||||
| Merchant | 109,437 | 17,072 | 105,714 | 541% | 4% | 651% | 14% | ||||||||||
| Other | 374 | 427 | 475 | (12% | ) | (21% | ) | 3% | (13% | ) | |||||||
| Subtotal: Operating segments | 124,815 | 34,663 | 121,889 | 260% | 2% | 322% | 13% | ||||||||||
| Intersegment eliminations | (29 | ) | (159 | ) | (100 | ) | (82% | ) | (71% | ) | (79% | ) | (68% | ) | |||
| Consolidated revenue | $ | 124,786 | $ | 34,504 | $ | 121,789 | 262% | 2% | 324% | 13% | |||||||
| Segment Adjusted EBITDA | |||||||||||||||||
| Consumer^(1)^ | $ | (1,394 | ) | $ | (9,356 | ) | $ | (1,235 | ) | (85% | ) | 13% | (83% | ) | 24% | ||
| Merchant | 7,852 | 1,932 | 7,990 | 306% | (2% | ) | 376% | 8% | |||||||||
| Other | 41 | 143 | 150 | (71% | ) | (73% | ) | (66% | ) | (70% | ) | ||||||
| Total Segment Adjusted EBITDA | 6,499 | (7,281 | ) | 6,905 | nm | (6% | ) | nm | 4% | ||||||||
| Corporate/Eliminations | (2,898 | ) | (1,816 | ) | (8,977 | ) | 60% | (68% | ) | 87% | (64% | ) | |||||
| Subtotal | 3,601 | (9,097 | ) | (2,072 | ) | nm | nm | nm | nm | ||||||||
| Less: Lease adjustments | 812 | 924 | 1,308 | (12% | ) | (38% | ) | nm | nm | ||||||||
| Less: Stock-based compensation charges | 1,462 | 309 | 1,251 | 373% | 17% | nm | nm | ||||||||||
| Less: Depreciation and amortization | 5,998 | 895 | 5,491 | 570% | 9% | nm | nm | ||||||||||
| Consolidated operating loss | $ | (4,671 | ) | $ | (11,225 | ) | $ | (10,122 | ) | (58% | ) | (54% | ) | (51% | ) | (49% | ) |
| Segment Adjusted EBITDA (loss) margin (%) | |||||||||||||||||
| Consumer | (9.3% | ) | (54.5% | ) | (7.9% | ) | |||||||||||
| Merchant | 7.2% | 11.3% | 7.6% | ||||||||||||||
| Other | 11.0% | 33.5% | 31.6% | ||||||||||||||
| Consolidated EBITDA (loss) margin | **** | (3.7% | ) | **** | (32.5% | ) | **** | (8.3% | ) |
(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during Q1 2023 also prevailed during Q1 2022 and Q4 2022.
Earnings (Loss) from equity-accounted investments:
The table below presents the relative (loss) earnings from our equity-accounted investments:
| Three months ended September 30, | |||||||
|---|---|---|---|---|---|---|---|
| **** | **** | 2022 | **** | 2021 | %change | ||
| Finbond | $ | (2,631 | ) | $ | (1,156 | ) | 128% |
| Share of net loss | (1,521 | ) | (1,156 | ) | 32% | ||
| Impairment | (1,110 | ) | - | nm | |||
| Other | 14 | - | nm | ||||
| Share of net loss | 14 | - | nm | ||||
| Loss from equity-accounted investments | $ | (2,617 | ) | $ | (1,156 | ) | 126% |
Lesaka Technologies, Inc.
Attachment B
Reconciliation of GAAP operating loss to EBITDA loss and Normalized EBITDA loss:
Three months ended September 30, 2022 and 2021
| **** | Three months ended September 30, | |||||
|---|---|---|---|---|---|---|
| **** | 2022 | 2021 | ||||
| Operating loss - GAAP | $ | (4,671 | ) | $ | (11,225 | ) |
| Depreciation and amortization | 5,998 | 895 | ||||
| Operating loss before depreciation and amortization | 1,327 | (10,330 | ) | |||
| Stock-based compensation charges | 1,462 | 309 | ||||
| Non core international - unrealized currency loss | 395 | - | ||||
| Transaction costs | 203 | 243 | ||||
| Normalized EBITDA (loss) | $ | 3,387 | $ | (9,778 | ) |
Reconciliation of GAAP net loss and loss per share, basic, to fundamental net loss and loss per share, basic:
Three months ended September 30, 2022 and 2021
| **** | Net (loss) income( '000) | (L)PS, basic() | Net (loss) income (ZAR '000) | (L)PS, basic (ZAR) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||
| GAAP | (10,696 | (12,994 | ) | (0.17 | (0.23 | ) | (183,231 | ) | (189,880 | ) | (2.93 | ) | (3.33 | ) |
| Intangible asset amortization, net | 2,828 | 68 | **** | 48,432 | 990 | **** | **** | |||||||
| Stock-based compensation charge | 1,462 | 309 | **** | 25,045 | 4,515 | **** | **** | |||||||
| Impairment of equity method investment | 1,110 | - | **** | 19,015 | - | **** | ||||||||
| Non core international - unrealized currency loss | 395 | - | **** | 6,767 | - | **** | ||||||||
| Net gain on sale of equity-accounted investments | (248 | - | **** | (4,248 | ) | - | **** | **** | ||||||
| Transaction costs | 203 | 243 | **** | 3,478 | 3,551 | **** | **** | |||||||
| Fundamental | (4,946 | (12,374 | ) | (0.08 | (0.22 | ) | (84,742 | ) | (180,824 | ) | (1.36 | ) | (3.17 | ) |
All values are in US Dollars.
Lesaka Technologies, Inc.
Attachment C
Reconciliation of net loss used to calculate loss per share basic and diluted and headline loss per share basic and diluted:
Three months ended September 30, 2022 and 2021
| 2022 | 2021 | |||
|---|---|---|---|---|
| Net loss (USD'000) | (10,696 | ) | (12,994 | ) |
| Adjustments: | ||||
| Impairment of equity method investments | 1,110 | - | ||
| Net gain on sale of equity-accounted investments | (248 | ) | - | |
| Profit on sale of property, plant and equipment | (208 | ) | (25 | ) |
| Tax effects on above | 58 | 7 | ||
| Net loss used to calculate headline loss (USD'000) | (9,984 | ) | (13,012 | ) |
| Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss ('000) | 62,445 | 56,678 | ||
| Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss ('000) | 62,445 | 56,809 | ||
| Headline loss per share: | ||||
| Basic, in USD | (0.16 | ) | (0.23 | ) |
| Diluted, in USD | (0.16 | ) | (0.23 | ) |
Calculation of the denominator for headline diluted loss per share
| 2022 | 2021 | |
|---|---|---|
| Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP | 62,445 | 56,678 |
| Effect of dilutive securities under GAAP | - | 131 |
| Denominator for headline diluted loss per share | 62,445 | 56,809 |
Weighted average number of shares used to calculate headline diluted loss per share represents the denominator for basic weighted-average common shares outstanding and unvested restricted shares expected to vest plus the effect of dilutive securities under GAAP. We use this number of fully-diluted shares outstanding to calculate headline diluted loss per share because we do not use the two-class method to calculate headline diluted loss per share.