Earnings Call Transcript - LSAK Q1 2022

Operator, Operator

Good day, ladies and gentlemen, and welcome to the Net 1 UEPS Technologies Inc. First Quarter 2022 Earnings Call. All participants will be in listen-only mode and there will be an opportunity to ask questions later during the conference. Please also note that this event is being recorded. I would now like to turn the conference over to Ms. Dara Dierks. Please go ahead.

Dara Dierks, Investor Relations

Thank you, operator. Welcome to our first quarter 2022 earnings call. With me today are Chris Meyer, Group CEO; Lincoln Mali, South Africa CEO; and Alex Smith, CFO. Our press release and supplementary investor presentation are available on our Investor Relations website at ir.net1.com. As a reminder, during this call, we will be making forward-looking statements and I ask you to look at the cautionary language contained in our Form 10-Q regarding the risks and uncertainties associated with forward-looking statements. Also, we will discuss our results in South African rand, which is non-GAAP. We analyze our results of operations in our press release in rand and investors' understanding of the underlying trends in our business. As you know, the company's results can be significantly affected by the currency fluctuations between the US dollar and South African rand. Chris will start the call today with an update on strategy, then Lincoln will provide an update on the turnaround of the South African operations. And finally, Alex will go through the results of the first quarter. Following that, we'll have a Q&A session. With that, I would like to turn the call over to Chris.

Chris Meyer, CEO

Thank you, Dara, and good morning, good afternoon, and thank you to all for joining us for our first quarter earnings call today. This earnings call marks my first full quarter. In essence, I suppose my 100 days in the role as Group CEO, and I couldn't be more pleased with the progress and focused execution of the management team and all of the committed Net1 team members in advancing our strategic priorities. As this is my second earnings call as Group CEO, I thought it would be worth repeating what I have stated about the vision and mission of Net1 and our intense focus on repositioning the business for growth. Our vision is to build and operate the leading South African full-service fintech platform, offering payment processing and financial services to underserved merchants and consumers. Aligned with that vision is our core purpose to improve people's lives by bringing financial inclusion to the underserved in South Africa. This is a tremendous growth opportunity in the Southern African market, which is primarily a cash-based economy with approximately 60% of transactions still conducted in cash. We've also previously explained that our mission leads us to a total addressable market of over ZAR150 billion comprising more than 26 million adults in LSMs 1 to 6, as well as approximately 700,000 formal and 1.4 million informal micro small and medium enterprises or MSMEs across South Africa. We plan to address this growth opportunity both organically and through acquisitions such as the transformative acquisition of the Connect Group that was announced last week. The announcement of the Connect Group acquisition marks the start of a transformative opportunity to unlock the next phase of Net1’s growth. And the combined entity provides our stakeholders with the opportunity to be part of building the leading financial technology platform in Southern Africa focused on financial inclusion. I think that it is important to point out that none of this would have been possible without the dedication of our exceptional team members across our group and I wanted to thank them for their commitment to our customers, our communities, and to our growth ambition. As a reminder, the Connect Group transaction is subject to regulatory approvals and other customary closing conditions. And as such, we expect the transaction to close in the quarter ending March 2022 and the focus of this presentation will, therefore, be on our existing Net1 business. While the economy in South Africa remains challenging, I am encouraged by the continued progress being made in the turnaround of our consumer financial services business and in particular, the momentum we are seeing in the rate of new account openings and the ability of our team to take action in improving our financial performance. However, I want to remind everyone that we are still early in our transformative journey and there's still a lot of work to be done. As mentioned on the last earnings call, we have started to address legacy organizational dynamics in an effort to provide the necessary foundation for the company to execute on its growth ambition and vision. We believe that we now have the right team culture and strategic priorities to take the company to the next level, creating a competitively stronger company that can unlock value for all of our stakeholders. A key strategic imperative is to return the consumer financial service business to breakeven, and then into profitability as soon as possible. This is our business comprising EasyPay Everywhere - EPE, Moneyline, and Smart Life. It is a scale business that requires operational leverage where the products and infrastructure were built originally to service a base of over 10 million clients. As you know, the offering now has a million clients and is thus loss-making. Our objective is to achieve a monthly breakeven run rate in this business by June 2022. Our strategy for achieving this has three key levers. Firstly, growth in active EPE account numbers. Secondly, we will drive increased ARPU. Thirdly, cost optimization. In terms of EPE account growth, we have invested in a new sales capability and are in the process of realigning our distribution model to best serve our customers. We have seen good momentum and are now consistently signing up around 50,000 new EPE accounts each month. This has meant that our account opening rate has jumped from around 2% of active accounts in May this year to currently around 5% of active accounts. Account activation rates are a key focus for us. This means receiving a grant payment into the new EPE account, such that these account holders become revenue-earning customers for us. We are seeing cumulative activation rates of 45% to 50% within three months of an account opening, which is broadly in line with the expectations at this time. This means that we expect to see growth in active accounts of 20,000 to 25,000 consistently per month from November 2021. And this is a pleasing trend from the past calendar three years where active accounts were consistently declining. The second lever is to improve our average revenues per customer. To achieve this, we are focused on providing access to our broader suite of products, in particular Smart Life and MoneyLine. Our sales teams are being supported and assisted with training, and we are building a more integrated cross-product approach to customer solutions. The third lever is cost. And this is a lever where we as management have full control, and here I can report significant progress to date. We have managed to reduce the breakeven active EPE account number from approximately 1.65 million accounts in June 2021 to 1.55 million accounts through direct cost actions taken during the quarter. It's important to note that we previously indicated a breakeven level of between 1.4 million and 1.5 million accounts. And I wanted to clarify that this was for the SA business alone and excluded our group costs. The numbers I'm now disclosing will be the breakeven point for Net One UEPS at a group level. In order to achieve these things, we have closed over 3,000 mobile payment points across the country and replaced them with 114 new express and satellite branches, providing similar reach and access for our target client base. This change in our point of presence strategy when combined with other cost actions taken in this quarter will translate into approximately ZAR 185 million of cost savings over the remainder of the fiscal year, which in turn translates into an 18% reduction in fixed costs within the consumer financial services business this year. Ultimately, our aim is to further reduce the breakeven active EPE account numbers to closer to one million accounts through further cost optimization strategies that we are exploring. We will report in more detail on the specifics of these strategies and the implementation thereof at our next quarterly results presentation. Taken together, once completed these three levers mean we are targeting for future growth in our EPE account base to translate into direct contribution to profitability. In summary, I'm pleased with the significant management actions taken this quarter, which will have a positive impact on our financial results going forward, and I'm positive about our long-term prospects, which will be aided by our acquisition of Connect Group, as we move closer to our longer-term vision to be the leading financial technology platform in Southern Africa focused on financial inclusion. As part of this, we are also reviewing our branding and we look to have something new to announce on that front in the coming months. And with that, I'd now like to hand over to my colleague Lincoln Mali for a fuller update on the turnaround of the South African operations.

Lincoln Mali, CEO South Africa

Thank you, Chris. Thank you for your passion. Thank you for your drive and leadership during the last few months. I'd like to go into much more detail on how we plan to address some of the issues that have been highlighted by Chris in his comments. Our plan will focus on three primary objectives: One, building a sales culture; Two, improving our account performance; and Three, launching new products. First, let me begin by the focus on building a sales culture. We have embarked on an ambitious and necessary journey to change the mindset, service orientation, corporate culture, and skill set of our distribution network from cash logistics to a client-focused sales-driven culture. This mindset is largely based on four important pillars: One, create cultural communication, engagement, transparency, and empowerment among our staff to give them pride and dignity about working for Net1; Two, develop a focus on individual customer experience. This is about treating our customers with respect and dignity and ensuring that we have meaningful conversations about their financial needs. Three, building a sense of accountability about individual team and company performance. And lastly, train and ensure that our teams align their daily activities and focus areas with our vision and purpose. We have been humbled by the positive response to this new culture by our teams at all levels of the organization. This is evident in the increased visibility of our staffing communities, as well as the reemergence of our brand in the competitive market. I'm humbled by the feedback from our frontline leaders who are daily driving this change on an ongoing basis. Our training program has already been implemented for over 90% of our team and we believe that these ongoing efforts and better visibility of metrics and performance should assist us in increasing revenue per customer. I now want to get to the issue of our focus on improving our account performance. As Chris has mentioned, to date approximately 45% to 50% of the gross customer additions become active within three months of account opening and commenced transactions on their accounts. This number is in line with historic expectations. However, we are still putting more focus on improving overall activation rates. How are we doing so? One, by regular engagement with SASSA colleagues at provincial and local levels; Two, by encouraging our customers to visit our pro-SASSA offices after accounts are open in order to activate those accounts; Three, by monitoring activation rates on a regular basis and through increased visibility of activation metrics. Finally, engaging SASSA on their plans to digitize the onboarding process long-term beyond the SRD grant. Net1 is committed to creating solutions to the system and process-related challenges as this is imperative for our business about how we onboard grant recipients and ensure that their accounts are active. I want to shift now to the third area of focus, which is the launch of new products. In line with our vision, we are focusing on financial inclusion for the under-banked and unbanked consumers beyond social grant recipients. We've been working hard to understand customer needs and are proud to have launched the EPE Light and Smart One Funeral plan into the market as of the 1st of November 2021. If I start with EPE Light. The EPE Light proposition is competitively placed in the market and responds to the market requirement for a basic transactional account that is affordable, secure, and does not include features that a consumer may not require. This account is aimed at a younger customer base between the ages of 18 and 50. The customer base may include students, young grant recipients, and any other customer who seeks a lower-cost transactional account. Now I want to come to the next account, which is Smart One. In addition to the EPE Light transactional account, we've also successfully launched an enhanced funeral plan called Smart One. Smart One is a standalone funeral plan that can be purchased via the Net1 network and is offered under the Smart Life insurance license. In keeping with the financial inclusion source of Net1, Smart One offers affordable funeral plan cover for the primary beneficiary as well as the extended family with additional support benefits that are required by our customers in their times of need. The target market is customers between the ages of 18 and 79 and can be customized uniquely to include a spouse or up to six children. We are very proud of these new offerings and we believe that they will do well in the market in response to customer needs. To further broaden our reach into our chosen customer base beyond grant recipients, we are also engaging with prospective strategic partners to jointly develop and deliver tailored banking, lending, and insurance solutions. We expect these new propositions in addition to our existing and prospective offerings to answer the needs of our customers and to accelerate the growth of the financial services business. I want to now talk about our ATM business. Another focus area for customer expansion and revenue growth is our ATM channel optimization plan. Transaction volumes in our ATM business were down by 12% on the previous quarter and by 10% on the prior year, but this was largely due to the impact of the social unrest. Volumes have now largely recovered in September 2021. This part of our business was affected by the social unrest with over 10% of our ATMs destroyed. While we now have a smaller ATM fleet, our focus is on improving transaction volumes to compensate for this, with a focus on expanding the presence of our ATMs in various retailers. During the last three months, we have reviewed Net1 branches with multiple ATMs to evaluate the rationale for placement and the machines that are there have been relocated in those environments where those machines are not performing. We are also focusing on placing more machines in retail outlets, where there is high foot traffic for the full duration of the month, ensuring the ATM is accessible to customers seven days a week. We believe that our optimization should not only result in higher transaction volume but should also improve our bottom-line performance over time. At this time, I think it's important for us to give you a sense of how we're rebuilding and establishing relationships with key stakeholders that we work with as part of our growth strategy. We have had several very constructive engagements with SASSA after having challenging relationships over the last few years. Let me share one example of this new, renewed relationship. SASSA has recently issued an RFP to the Banking Association of South Africa PASA members to respond to a tender covering specific social grant payments for a period ending in March 2023. The expectation is for more than one bank to be appointed to administer the payments under this tender. Grindrod Bank will partner with Net1 to make a joint bid on the tender. At Net1, we see this joint submission as a positive step in our continued relationship with Grindrod and confirms the growing strength of our relationship with them. Additionally, we have established Net1 representation as the Banking Association of South Africa through our partnership with Grindrod. Furthermore, we now have a direct membership to the South African Bank Risk Information Center, known as SABRIC to ensure that we are part of all efforts to deal with security, cybercrime, and all other related crime matters. I'm pleased to update you about a longstanding legal matter between Net1 and the National Credit Regulator, NCR that originated in our Moneyline Financial Services business in September 2014. The legal matter has now been settled to the mutual satisfaction of both parties. This now sets a positive tone for the relationship with the National Credit Regulator going forward. Taken together, we believe our approach to key stakeholder management is showing good results and we will continue to grow these relationships moving forward. In summary, the work that has been done in the last six months by the leadership and management and teams, as well as all of our staff in Net1, lays the foundation and moves us in the direction required to transform the Consumer Financial Services business into a full-service, profitable, and leading Fintech company serving South Africa. I'd like to echo the sentiments of my colleague Chris; I thank the Net1 team for their resilience and their performance during these difficult times. We are determined to succeed. I will now hand over to my colleague Alex to talk about our quarterly results.

Alex Smith, CFO

Thank you, Lincoln and good morning, everybody. Now let's turn to the financial metrics for the quarter as well as some brief comments on our Connect Group acquisition. Total revenue for the quarter was $34.5 million, which was a 2% decrease year-over-year in U.S. dollar terms and a 14% decrease in rand terms. This was primarily due to fewer prepaid airtime and hardware sales and lower account revenues. The US dollar was 13% weaker against the rand during the first quarter of 2022 compared to the same period in the prior year, which also impacted our reported results. We reported an adjusted EBITDA loss of $10.1 million, which was 4% worse than the $9.7 million EBITDA loss reported for the first quarter of 2021, though 10% better in constant currency. This was mainly as a result of the closure of IPG, which incurred a loss of $2.8 million in the prior period. The core South African operations saw EBITDA losses for the quarter of $8.6 million compared to the $4.3 million in the prior period, primarily due to the lower revenue levels as well as weaker profitability in the Financial Services segment linked to increased insurance claims related to the COVID pandemic. Otherwise, the cost base remains stable and we have significant available capacity. Transaction volumes through our EasyPay switch were up 11% compared to the prior quarter while transaction values also increased by around 4%. This was in line with expectations as this is a higher volume period from a seasonality perspective. But within this portfolio, there is encouraging sustained growth in bill payment volumes over the previous year. In our Financial Services business, the loan book finished September 30, 2021 at ZAR 346 million versus 384 million on the 30th of September, 2020 and 336 million at 30th of June, 2021. The other significant contributor in this segment is our insurance business, which saw a number of active policies increase to 251,000 from 235,000 a year ago. However, a marked increase in claims, which was 42% higher in quarter one 2022 than in quarter one 2021 due to the pandemic, meant that this was the main driver of the increased loss in Financial Services. During the quarter, we recognized our share of Finbond's losses for the six months ended August 31, 2021, as they report their interim results during this reporting cycle. The losses in the period had reduced from the prior period, which had been adversely affected by the pandemic, but they continue to incur losses due to various challenges. Our share of the losses amounted to $1.2 million, which reduced our effective carrying value of Finbond to $7.6 million, which is substantially lower than the current share price. Turning to our various investments. Firstly, we have Mobikwik. We continue to hold our investment in Mobikwik at $76 million, in line with the valuation achieved in the most recent investor fundraising round. We only adjust our carrying value in the event of observable transactions and there were none occurring during this quarter. We also continue to hold our investment in Cell C at no value. We noted the renewal of the cautionary by Blue Label Telecoms in respect of the recapitalization and are optimistic about their prospects of achieving this. We would again like to highlight that we continue to hold around ZAR 233 million or $15.4 million of Cell C airtime within our inventory balances, which we only expect to recover once the recapitalization is complete. In August 2021, we increased our short-term credit facilities for our fixed ATMs from ZAR 1.2 billion to ZAR 1.4 billion in order to access the necessary cash to stock our ATMs. These facilities are only available for use in respect of our ATMs and we believe are currently sufficient to optimally operate our ATM business. At September 30, 2021, we had unrestricted cash of $188.5 million and effectively no debt. US dollar-denominated balances were $162.5 million out of that total. This represents $3.49 per share in cash and about 58% of our current net asset value. Our operational cash burn for the quarter amounted to $8 million, though this did include a $2 million release from working capital. As Chris highlighted, we announced a definitive agreement to acquire 100% of the Connect Group last week for a consideration of approximately ZAR 3.7 billion. We expect to finance the transaction using cash on hand, our existing credit facility and issuance of Net1 common stock. The acquisition is expected to close in the quarter ended March 31, 2022, as it is subject to regulatory approval and satisfaction of customary closing conditions. Having signed the definitive agreements last week, we will now commence the process in conjunction with Connect Group management of preparing Connect Group accounts under US GAAP, so that we can prepare pro forma results to share with the market after closing and under applicable regulatory requirements. With that, operator, we'd like to turn the call back over to you for the Q&A portion of our call.

Operator, Operator

Thank you very much, sir. Our first question is from Raj Sharma of B. Riley. Please go ahead.

Raj Sharma, Analyst

Hi. Good morning, guys. Thank you for laying out a definitive plan. Could you talk a little bit about the cost base that you are referring to currently and where that goes to by June? I think it was an 18% to 20% reduction. If you could talk a little bit about that. And then, what do you expect in June, the level of account to be in EPE?

Alex Smith, CFO

Sure, Raj. So, just to clarify on cost reductions. So we've identified about 185 million of costs that we will be able to take out this fiscal year. And that's predominantly coming out of the fixed cost base. When we break down and obviously very focused on financial services because that's where we're looking to achieve profitability. So, when we break down our cost base between fixed and variable, we estimate that most of the 185 million is coming out of the fixed cost base and that's about an 18% reduction in the fixed cost base that we'll achieve this year.

Raj Sharma, Analyst

That would suggest approximately 1.5 million EPE accounts by the end of the fiscal year. Is that the correct interpretation?

Alex Smith, CFO

So we're targeting less than that in terms of achieving breakeven at the SASSA level, but we estimate that we need to be at 1.55 million to achieve breakeven at the group level.

Raj Sharma, Analyst

Okay.

Alex Smith, CFO

So I think in the past we've always indicated breakeven at the SASSA group level. We're now trying to give some guidance around including the cost that we hold at the group level. So that's what lifts the breakeven point up to the 1.55 million account level.

Chris Meyer, CEO

If I could add, Raj, it's Chris.

Alex Smith, CFO

Would the consume…

Chris Meyer, CEO

Sorry, go ahead.

Alex Smith, CFO

All right.

Chris Meyer, CEO

You’ve got a piece.

Alex Smith, CFO

Yes. So I think to summarize, the actions taken in this quarter will have moved our breakeven point down by 100,000 accounts. That's what it equates to. And an 18% fall, reduction in the fixed cost base of our financial services business. I think the other point to add is, we have a number of other areas under review. We're working very hard on the cost base within the financial services business, the consumer financial services business. Our aim is to bring that breakeven point down, as close to our existing account base as possible.

Raj Sharma, Analyst

So if I understand it correctly, the 100,000 accounts that is going to be lowered by the end of the fiscal year, it goes from 1.55 to 1.45, is that right? 1.55 to 1.4?

Alex Smith, CFO

1.65 to 1.55.

Raj Sharma, Analyst

Got it. So you’re saying that at the overall group level, you expect to reach breakeven by that time. Will the consumer group also reach breakeven at that level?

Alex Smith, CFO

No. No, we're not saying that. So we're saying, those are identified costs that we've already actioned and have managed to reduce the breakeven point to 1.55. That's the first point. Secondly, our aim, our intention is to get this business to a breakeven point, to a run rate breakeven in June 2022 through further actions within those three levers that I've just described to you.

Raj Sharma, Analyst

Does the ARPU increase significantly change the metric from 250 in account per month in financing and processing? Was the expectation to increase to 3? I'm referring to dollars per account per month. Is this also expected to change because you're introducing lighter products like EPE Light and Smart One? Would that lower your ARPU in the business?

Alex Smith, CFO

Sorry, Raj, could you please repeat that last section?

Raj Sharma, Analyst

The last question was about the introduction of EPE Light and the Smart One. My question is, will the overall ARPU decrease as a result of adding these products, given that you have account growth and increased overall revenue?

Alex Smith, CFO

So the EPE Light might dilute slightly, but it's unlikely to have a significant effect. The Smart One products are more of a rebranding and repositioning, and actually may enhance our ARPU slightly or could enhance it quite significantly actually, because we feel that the penetration of insurance products into the base is quite low. And also, if I can comment, I think the light product, the EPE light is intended to broaden our offering beyond the social grant recipient markets. So the numbers we're talking about, this would be in addition to that in a sense.

Chris Meyer, CEO

Yeah. If I could also add, Raj, if you think about this, Smart One also goes beyond the social grant base. This is again, people who understand a loan who are looking for a funeral policy. And again it breaks the mold that our focus is not only on social grant recipients but any other person who's looking for that product of that nature. So collectively this should be more positive than negative.

Raj Sharma, Analyst

Got it. Thank you. So, on the account growth, you're saying that you're doing about 50,000 new accounts a month? Did I catch that correctly?

Alex Smith, CFO

Yeah. That's our current run rate. We've seen that for the last few months.

Raj Sharma, Analyst

Right. And that's what gets you to the breakeven level of 1.55 million?

Alex Smith, CFO

No, the 1.55 million at the end of the fiscal year.

Chris Meyer, CEO

Sorry again, Raj, so the 1.55 billion is what we would see as a breakeven, based on our cost base and our assumptions on revenues, okay. We are saying that our aim is to get to breakeven by June 2022, run rate breakeven in June 2022 through the combination of three levers, which would be growing our account base as we currently set out; secondly, increasing the revenue per client; thirdly, and probably most materially of the three at this point is the cost levers that we are focused on.

Raj Sharma, Analyst

Got it. Regarding this account growth, I know Lincoln mentioned the initiatives with SASSA and the joint bid. Is there a specific number you are assuming for the growth of SASSA accounts, specifically the grant recipients?

Lincoln Mali, CEO South Africa

No. We have inspected, in the tender, in our projections. The issues, I was talking about was that in our day-to-day interaction. We are seeing more collaboration with SASSA. They are, for example, environments where SASSA has invited us to be in their offices to help capture the accounts. And that should drive activation to be better. We have also been invited by SASSA in some provinces to go with them in their outreach programs so that we can open new accounts in those environments. But for the tender itself, we have not factored that into the numbers, because we want to get a better sense if we are fortunate to be one of the banks that win this. And then obviously, we will be in a better situation to kind of assess what the revenue implications are of that win. But we have not factored that in, in the projections of account growth.

Raj Sharma, Analyst

Well, Lincoln, that's very helpful.

Lincoln Mali, CEO South Africa

Yeah.

Raj Sharma, Analyst

Are there any, sort of expectation of a certain number of accounts that you could gain over the next year or two years, or is that too early to tell?

Chris Meyer, CEO

Yeah. It's too early to tell Raj, because the biggest thing is, all of the work of changing the culture, all of the work of training the staff, all of the work of changing the mindset from a logistics company to a financial services company, all of the work of improving our relationship with SASSA, and all of the work of being in the market competing and launching new products. All of those things are early days to be making definitive projections. What we can see now are these three months where growth of 50,000 accounts—that's the earlier stage of what we can see. We want to know whether, when we speak to you in a quarter's time, is there a much more discernible pattern that's emerging. So it is quite early days to be able to put higher projections, which then do not come to pass, which reinforces again Chris's point that said of the three levers, the one that is so immediately in our control and doesn't depend on a number of other variables is the cost that we see that are outsized versus the opportunity. And those costs are costs that we will look at and do something about while simultaneously doing the other things of improving our ARPU and improving our account growth.

Raj Sharma, Analyst

That's very helpful. And then just the last bit is on – if you can talk about any synergies related to the Connect Group, are you assuming any increase in customer accounts from the acquisition of Connect Group? Any access to consumer accounts through the merchants to those merchants?

Alex Smith, CFO

At this moment, we have not incorporated any potential synergistic advantages into our account growth or revenue growth forecasts. Our analysis has been strictly on a standalone basis. However, we believe there are evident synergies between the two businesses, which we are concentrating on. Once we receive the necessary approvals for the transaction, we will focus on execution. For instance, there is an opportunity for payment switch integration between EasyPay and Kazang. Additionally, we see potential for reducing cash processing costs within the combined entity, as the Connect Group generates cash through its Smart Life business while the Net1 ATM network requires cash. Furthermore, Kazang has access to over 35,000 informal merchants nationwide, presenting an opportunity for Net1 to better reach consumers at these informal sites. Also, we have a strong presence in regions like Eastern Cape and KwaZulu Natal, while Kazang performs better in Western Cape and Gauteng. This gives us a chance to enhance growth in those markets. None of these opportunities are included in our current numbers as we chose to be conservative. It’s important to note, as Lincoln mentioned, that we are still in the early stages. Our new management team aims to provide you with as much clarity and certainty as possible about our direction. Trends in account growth and activation are starting to unfold, but we are still developing our picture. We are trying to balance giving you an early view of our observations while being confident that what we are seeing is achievable. We feel positive about our progress and are excited for the future. We hope we have provided you with more insights than we did three months ago, and we intend to offer even more in another three months.

Raj Sharma, Analyst

Yeah. Absolutely. Thank you so much for the detail and thank you for adding color about Lincoln on the operations as well. I’ll take it offline. Thank you.

Operator, Operator

Next question is from Kumbirai Gundani of Standard Bank. Please go ahead.

Q - Unidentified Analyst, Analyst

Thank you. Thanks, Lincoln and team for the presentation thus far. I know it's quite early but have we seen any impact from the likes of Worldpay on EasyPay and the numbers? And what's your expectation with mobile money providers looking to get into the space? Thank you.

Chris Meyer, CEO

This is an exciting environment. It's a very competitive environment. We are rebuilding a team there. We have hired a very seasoned executive in Andrew Wilmot, who is repositioning our business in order for it to be able to compete. It's been early days to see what Worldpay has been able to do, but we've got a competitively strong position to maintain in that environment. And if you combine what we've got with what is possible with the Connect Group, the talent and the leadership in both teams, I think we will be a formidable competitor ourselves and we'll be able to compete in that space quite adequately. So we're watching that space quite closely. Some of the people that would be competing have certainly worked with, I know they are very smart and committed people. So we are not underestimating what’s out there. But again, our focus is, we want to make a real difference in underserved merchants, particularly in the informal space. That combination of what we've got and what Kazang Pay brings to the party, I think that that's going to be an amazing combination and we look forward to being able to compete on that basis.

Lincoln Mali, CEO South Africa

Does that answer your question, Kumbi?

Q - Unidentified Analyst, Analyst

Yes, it does. Thank you very much.

Operator, Operator

Thank you very much. Ladies and gentlemen, we have no further questions in the queue. And I'd like to hand the conference back to Mr. Meyer for some closing remarks.

Chris Meyer, CEO

Thank you very much, operator. Just to conclude, thank you very much everybody for joining us on the call. Thank you for the questions and thank you for the interest in our business. Hopefully, you've heard the excitement that we feel around our transformation turning around the Consumer Financial Services business through customer acquisition, reducing costs, and our focus on building the leading South African Fintech platform for underserved consumers and merchants. We're all very committed to this and we look forward to sharing more on the journey in future calls. Thank you very much for joining us.

Operator, Operator

Thank you very much, sir. Ladies and gentlemen, that concludes this conference and you may now disconnect.