Lesaka Reports Fourth Quarter 2022 Results

September 9, 2022 at 4:05 PM EDT

JOHANNESBURG, South Africa, Sept. 09, 2022 (GLOBE NEWSWIRE) -- Lesaka Technologies, Inc. (Nasdaq: LSAK; JSE: LSK) today released results for the fourth fiscal quarter and year ended June 30, 2022.

Highlights:

Performance for the quarter ended June 30, 2022 (Q4 2022)

  • Group revenue of $121.8 million in Q4 2022, compared to $34.5 million for the quarter ended June 30, 2021 (Q4 2021), driven by the inclusion of Connect from April 14, 2022 which added $86.2 million to the Group’s revenue and 23% growth in revenue in the existing merchant business. On a constant currency basis, the existing merchant business grew revenue 35% in Q4 2022 to ZAR304 million1.
  • The Group’s operating loss of $10.1 million in Q4 2022 improved from an operating loss of $13.6 million for Q4 2021.
  • Segment Adjusted EBITDA (before corporate/eliminations) for Q4 2022 improved to a profit of $6.1 million compared to a loss of $6.7 million in Q4 2021, demonstrating progress made on the transformative journey to build the leading South African fintech platform, bringing financial inclusion and digitization. Looking forward, the Group is well positioned for growth.
  • The Connect acquisition closed early in Q4 2022 and the Connect business continued to deliver strong growth during the quarter, slightly ahead of expectations. The integration process of the two groups has been very encouraging, with tangible results already achieved.

Performance for the year ended June 30, 2022

  • Successful execution of our strategy outlined last year, demonstrated by the closing of the Connect acquisition and progress on the Consumer segment turnaround.
  • Revenue for the year increased to $222.6 million, from $130.8 million driven by the inclusion of Connect from April 14, 2022 which added $86.2 million to the Group’s revenue and 13% growth in revenue in the existing merchant business.
  • Consumer business revenues were flat in 2022, where our focus was primarily on right-sizing the cost base. It is encouraging that cost savings were achieved whilst growing our active account base and maintaining transaction volumes and revenues in the Consumer business.
  • The Group’s operating loss of $40.2 million for the year reflects a 25% improvement compared to the operating loss of $53.9 million reported for the year ended June 30, 2021.
  • Normalized EBITDA (before corporate/eliminations) after normalizing for $12.4 million of once off adjustments improved 57% to a $18.6 million loss from a $42.9 million loss in the previous year, driven by increased revenue in our existing Merchant segment, continued execution on cost saving initiatives and the contribution of Connect during the final quarter.
  • Cost optimization initiatives and restructuring the operations of the Consumer business in 2022 delivered cost saving in excess of original expectations, with approximately $19.7 million (ZAR300 million1) in costs removed from the Consumer business cost base on an annualized basis, of which $13.7 million (ZAR208 million1) was realized in this year ended June 30, 2022.
  1. Translated at the average exchange rate of ZAR 15.20 to $1 for fiscal 2022 and ZAR15.56 to $ for Q4 2022.

“We are delighted with the Group’s achievements over the past year. The strategy set by our new Board in 2020 and communicated to the market over the past 12 months is being effectively executed. With the Connect acquisition, Lesaka now has a complete product offering to the underserved consumers and merchants in Southern Africa, which advances our vision to build the leading South African full-service fintech platform. What has been most encouraging is the way the Lesaka and Connect teams are working together to explore and execute opportunities to increase revenues, improve performance and deliver better value to our customers through our unique dual-sided ecosystem. Great progress has also been made in the Consumer segment turnaround, which is now very close to breakeven. We will continue to focus on optimizing cost structures as well as account growth and cross-selling opportunities to increase ARPU. After a year of tremendous change and transformation, the Group is well positioned to take advantage of the high growth opportunities our market presents,” said Chris Meyer, Lesaka Group CEO.


Summary Financial Metrics

Three months ended

  Three months ended                
  Jun 30,
2022
  Jun 30,
2021
  Mar 31,
2022
  Q4 ’22 vs
Q4 ’21
  Q4 ’22 vs
Q3 ’22
  Q4 ’22 vs
Q4 ’21
  Q4 ’22 vs
Q3 ’22
(All figures in USD ‘000s except per share data) USD ‘000’s
(except per share data)
  % change in USD   % change in ZAR
Revenue   121,789       34,517       35,202       253 %     246 %     288 %     245 %
                           
GAAP operating loss   (10,122 )     (13,600 )     (9,421 )     (26 %)     7 %     (18 %)     7 %
                               
Adjusted EBITDA (loss)(1)   1,337       (8,208 )     (2,828 )     nm       nm       nm       nm  
                                       
GAAP (loss) income per share ($)   (0.25 )     0.03       (0.06 )     nm       327 %     nm       326 %
                                   
Fundamental loss per share ($)(1)   (0.09 )     (0.18 )     (0.05 )     (50 %)     80 %     (45 %)     79 %
                           
Fully-diluted shares outstanding (‘000’s)   61,619       56,937       57,791       8 %     7 %     n/a       n/a  
                                   
Average period USD / ZAR exchange rate   15.56       14.17       15.61       10 %     (0 %)     n/a       n/a  

 

Year ended

  Year ended                
  June 30,
2022
  June 30
2021
    F2022 vs
F2021
      F2022 vs
F2021
 
(All figures in USD ‘000s except per share data) USD ‘000’s
(except per share data)
% change in USD   % change in ZAR
Revenue   222,609       130,786       70 %     65 %
               
GAAP operating loss   (40,195 )     (53,872 )     (25 %)     (28 %)
               
Adjusted EBITDA loss(1)   (18,637 )     (42,907 )     (57 %)     (58 %)
               
GAAP loss per share ($)   (0.75 )     (0.67 )     12 %     8 %
               
Fundamental loss per share ($)(1)   (0.49 )     (0.87 )     (44 %)     (46 %)
               
Fully-diluted shares outstanding (‘000’s)   58,364       56,898       3 %     n/a  
                   
Average period USD / ZAR exchange rate   15.20       15.72       (3 %)     n/a  

(1) Adjusted EBITDA income (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 adjusted EBITDA, and —Fundamental net loss and fundamental loss per share.” See Attachment B for a reconciliation of GAAP operating loss to EBITDA income (loss) and Adjusted EBITDA (loss), and GAAP net loss to fundamental net loss and loss per share.

 

Factors impacting comparability of our Q4 2022 and Q4 2021 results

  • Higher revenue: Our revenues increased 288% in ZAR, primarily due to the contribution from Connect, which contributed ZAR 1,341 million in Q4 2022 compared to nil in Q4 2021 with the Connect Group acquired on April 14, 2022. On a constant currency basis the existing Merchant business grew revenue 35% in Q4 22 to ZAR304 million. Group revenue drivers in the quarter included an increase in hardware sales, an increase in merchant transaction processing fees, and a moderate increase in lending and insurance revenues;
  • Lower operating losses: Operating losses decreased, delivering an improvement of 18% in ZAR compared with the prior period primarily due to contribution from Connect, the closure of the loss-making IPG operations 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;
  • Significant transaction costs: We expensed $4.2 million of transaction costs related to the Connect acquisition; and
  • Foreign exchange movements: The U.S. dollar was 10% stronger against the ZAR during the fourth quarter of fiscal 2022, which impacted our reported results.

Results of Operations by Segment and Liquidity

Consumer

Segment revenue was $15.7 million in Q4 2022, down 6% compared with Q4 2021, and down 5% compared with Q3 2022, on a constant currency basis. Segment revenue decreased primarily due to lower processing fees, partially offset by higher lending and insurance revenues and higher account holder fees. Our EBITDA loss reduced during Q4 2022 compared with the comparable periods as a result of the cost reduction initiatives, including the Q3 2022 reorganization process, embarked on during fiscal 2022 and a recalibration, in June 2022, of our allowance for doubtful microlending finance loans receivable from 10% of the lending book outstanding to 6.5% of the lending book, which resulted in a release from the allowance in fiscal 2022, which decreases were partially offset by an increase in insurance-related claims experience. Our EBITDA loss margin (calculated as EBITDA loss divided by revenue) for Q4 2022 and 2021 was (9%) and (38%), respectively.

Merchant

Segment revenue was $105.7 million in Q4 2022, up 632% compared with Q4 2021 and up 470% compared to Q3 2022 on a constant currency basis. Segment revenue increased due to the inclusion of Connect for two and a half months and an increase in hardware sales and processing fees. The increase in segment EBITDA is primarily due to the inclusion of Connect, which was partially offset by higher costs related to processing fees and 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 depresses the EBITDA margins shown by the business. Our EBITDA margin for Q4 2022 and 2021 was 7% and 2%, respectively.

Other

Other includes the activities of IPG in fiscal 2021 and our other legacy businesses outside South Africa, principally Botswana.

Segment revenue decreased due to lower revenue following the closure of IPG in fiscal 2021. We recorded an EBITDA contribution during the fourth quarter of fiscal 2022 following the closure of our loss-making activities performed through IPG.

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; certain employee and executive bonuses; stock-based compensation; legal fees; audit fees; directors and officer’s insurance premiums; elimination entries; and from fiscal 2022 our group CEO’s compensation.

Our corporate expenses for fiscal 2022 increased compared with fiscal 2021 primarily due to transaction related expenses of $4.2 million (ZAR 65.9 million) related to the Connect acquisition, legacy adjustments of clearing and settlement accounts of $1.6 million (ZAR 25.7 million) and significantly higher stock-based compensation charges due to the expansion of our senior management team. The legacy processing adjustments represents amounts we identified during the current fiscal quarter related to prior periods.

Cash flow and liquidity

At June 30, 2022, our cash and cash equivalents were $43.9 million and comprised of ZAR-denominated balances of ZAR 0.5 billion ($32.8 million), U.S. dollar-denominated balances of $9.6 million, and other currency deposits, primarily Botswana pula, of $1.5 million, all amounts translated at exchange rates applicable as of June 30, 2022. The decrease in our unrestricted cash balances from June 30, 2021 was primarily due to utilization of cash reserves to fund a portion of the Connect purchase consideration that was payable in cash, and to fund our operations and payment of reorganization costs, which was partially offset by the receipt of $11.4 million related to the sale of Bank Frick in fiscal 2021 and a $3.7 million gain on foreign currency options.

Q1 2023 Outlook

The Company expects the following for the three months ended September 2022:

  • Revenue between $130 million and $133 million; and
  • Total Segment Adjusted EBITDA of between $6.1 million and $6.5 million.

Webcast and Conference Call

Lesaka will host a webcast and conference call to review results on September 12, 2022, at 8:00 a.m. Eastern Time.

The results webcast can be accessed by using the following link: https://tinyurl.com/2hbdpuew

Webcast ID: 890 1764 5390
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: + 309 205 3325
  • South Africa Toll-Free + 27 87 550 3946

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, adjusted 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 adjusted EBITDA

Operating income before depreciation and amortization is GAAP operating (loss) income adjusted for depreciation and amortization. Adjusted 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 2022 also includes adjustments for a gain related to fair value adjustments in respect of currency options, reorganization costs incurred, legacy processing adjustments, a gain on disposal of equity securities and a loss on disposal of equity-accounted investments.

Fundamental net loss and loss per share for fiscal 2021 also includes adjustments related to changes in the fair value of equity securities, loss on disposal of equity-accounted investments, impairment losses related to an equity-accounted investment and the deferred tax liability reversal related to the impairment of the equity-accounted investment.

Management believes that the EBITDA, adjusted 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 adjusted 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 the 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 announcement contains forward-looking statements that involve known and unknown risks and uncertainties. A discussion of various factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed in such forward-looking statements are included in our filings with the Securities and Exchange Commission. We undertake no obligation to revise any of these statements to reflect future events.

Investor Relations Contact:
Partner – 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   (A)
  Three months ended   Year ended
  June 30,   June 30,
    2022       2021       2022       2021  
  (In thousands)   (In thousands)
                       
REVENUE $ 121,789     $ 34,517     $ 222,609     $ 130,786  
                       
EXPENSE                      
                       
Cost of goods sold, IT processing, servicing and support   100,522       22,353       168,317       96,248  
Selling, general and administration   21,663       24,546       74,993       84,063  
Depreciation and amortization   5,491       1,218       7,575       4,347  
Reorganization costs   -       -       5,894       -  
Transaction costs related to Connect Group acquisition   4,235       -       6,025       -  
                       
OPERATING LOSS   (10,122 )     (13,600 )     (40,195 )     (53,872 )
                       
CHANGE IN FAIR VALUE OF EQUITY SECURITIES   -       23,362       -       49,304  
                       
GAIN RELATED TO FAIR VALUE ADJUSTMENT TO CURRENCY OPTIONS   -       -       3,691       -  
                       
LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT   30       -       376       13  
                       
GAIN ON DISPOSAL OF EQUITY SECURITIES   -       -       720       -  
                       
LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT - BANK FRICK   -       -       -       472  
                       
INTEREST INCOME   626       482       2,089       2,416  
                       
INTEREST EXPENSE   3,557       814       5,829       2,982  
                       
(LOSS) INCOME BEFORE INCOME TAX EXPENSE   (13,083 )     9,430       (39,900 )     (5,619 )
                       
INCOME TAX (BENEFIT) EXPENSE   (427 )     3,011       327       7,560  
                       
NET (LOSS) INCOME BEFORE LOSS FROM EQUITY-ACCOUNTED INVESTMENTS   (12,656 )     6,419       (40,227 )     (13,179 )
                       
LOSS FROM EQUITY-ACCOUNTED INVESTMENTS   (2,493 )     (4,780 )     (3,649 )     (24,878 )
                       
NET LOSS ATTRIBUTABLE TO LESAKA   (15,149 )     1,639       (43,876 )     (38,057 )
                       
Net loss per share, in United States dollars:                      
Basic loss attributable to Lesaka shareholders $ (0.25 )   $ 0.03     $ (0.75 )   $ (0.67 )
Diluted loss attributable to Lesaka shareholders $ (0.25 )   $ 0.03     $ (0.75 )   $ (0.67 )

(A) Derived from audited consolidated financial statements.

 

LESAKA TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
  (A)   (A)
  June 30,   June 30,
    2022       2021  
  (In thousands, except share data)
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents $ 43,940     $ 198,572  
Restricted cash   60,860       25,193  
Accounts receivable, net of allowance of - 2022: $509; 2021: $267 and other receivables   28,898       26,583  
Finance loans receivable, net of allowance of - 2022: $1,691; 2021: $2,349   33,892       21,142  
Inventory   34,226       22,361  
Total current assets before settlement assets   201,816       293,851  
Settlement assets   15,916       466  
Total current assets   217,732       294,317  
PROPERTY, PLANT AND EQUIPMENT, net of acc. depr. of - 2022: $35,249; 2021: $38,535   24,599       7,492  
OPERATING LEASE RIGHT-OF-USE   7,146       4,519  
EQUITY-ACCOUNTED INVESTMENTS   5,861       10,004  
GOODWILL   162,657       29,153  
INTANGIBLE ASSETS, net of acc. amort. of - 2022: $16,390; 2021: $16,403   156,702       357  
DEFERRED INCOME TAXES   3,776       622  
OTHER LONG-TERM ASSETS, including reinsurance assets   78,092       81,866  
TOTAL ASSETS   656,565       428,330  
LIABILITIES          
CURRENT LIABILITIES          
Short-term credit facilities for ATM funding   51,338       14,245  
Short-term credit facilities   14,880       -  
Accounts payable   18,572       7,113  
Other payables   34,362       27,588  
Operating lease liability - current   2,498       2,822  
Current portion of long-term borrowings   6,804       -  
Income taxes payable   2,140       256  
Total current liabilities before settlement obligations   130,594       52,024  
Settlement obligations   15,276       466  
Total current liabilities   145,870       52,490  
DEFERRED INCOME TAXES   54,211       10,415  
OPERATING LEASE LIABILITY - LONG TERM   4,827       1,890  
LONG-TERM BORROWINGS   134,842       -  
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities   2,466       2,576  
TOTAL LIABILITIES   342,216       67,371  
REDEEMABLE COMMON STOCK   79,429       84,979  
EQUITY          
LESAKA EQUITY:          
COMMON STOCK          
Authorized: 200,000,000 with $0.001 par value;          
Issued and outstanding shares, net of treasury: 2022: 62,324,321; 2021: 56,716,620   83       80  
PREFERRED STOCK          
Authorized shares: 50,000,000 with $0.001 par value;          
Issued and outstanding shares, net of treasury: 2022: -; 2021: -   -       -  
ADDITIONAL PAID-IN-CAPITAL   327,891       301,959  
TREASURY SHARES, AT COST: 2022: 24,891,292; 2021: 24,891,292   (286,951 )     (286,951 )
ACCUMULATED OTHER COMPREHENSIVE LOSS   (168,840 )     (145,721 )
RETAINED EARNINGS   362,737       406,613  
TOTAL LESAKA EQUITY   234,920       275,980  
NON-CONTROLLING INTEREST   -       -  
TOTAL EQUITY   234,920       275,980  
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY $ 656,565     $ 428,330  

(A) Derived from audited consolidated financial statements.

 

LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
  Unaudited   (A)
  Three months ended   Year ended
  June 30,   June 30,
    2022       2021       2022       2021  
  (In thousands)   (In thousands)
                       
Cash flows from operating activities                      
Net loss $ (15,149 )   $ 1,639     $ (43,876 )   $ (38,057 )
Depreciation and amortization   5,491       1,218       7,575       4,347  
Movement in allowance for doubtful accounts receivable   334       (803 )     1,551       110  
Interest payable   208       45       9       (1 )
Fair value adjustment related to financial liabilities   10       (361 )     (466 )     840  
Gain on disposal of equity securities   -       -       (720 )     -  
Loss on disposal of equity-accounted investment   30       -       376       13  
Loss on disposal of equity-accounted investment - Bank Frick   -       -       -       472  
Loss from equity-accounted investments   2,493       4,780       3,649       24,878  
Movement in allowance for doubtful loans   -       4,000       38       4,739  
Change in fair value of equity securities   -       (23,362 )     -       (49,304 )
(Profit) Loss on disposal of property, plant and equipment   (449 )     (120 )     (2,849 )     480  
Stock-based compensation charge   1,251       (532 )     2,962       344  
Dividends received from equity accounted investments   18       69       155       194  
Decrease (Increase) in accounts receivable and finance loans receivable   12,021       (479 )     9,055       3,751  
(Increase) Decrease in inventory   (4,793 )     (1,363 )     (4,820 )     1,279  
(Decrease) Increase in accounts payable and other payables   (7,183 )     4,058       (8,851 )     (335 )
Increase (Decrease) in taxes payable   643       (1,712 )     1,087       (17,210 )
(Decrease) Increase in deferred taxes   (1,866 )     4,665       (2,324 )     5,089  
Net cash used in operating activities   (6,690 )     (8,258 )     (37,198 )     (58,371 )
Cash flows from investing activities                      
Capital expenditures   (2,837 )     (338 )     (4,558 )     (4,285 )
Proceeds from disposal of property, plant and equipment   688       226       4,217       571  
Acquisition of Connect, net of cash acquired   (202,159 )     -       (202,159 )     -  
Proceeds from disposal of equity securities   -       -       720       -  
Proceeds from disposal of equity-accounted investment   46       -       865       -  
Proceeds from disposal of equity-accounted investment - Bank Frick   3,890       -       11,390       18,568  
Proceeds from disposal of Net1 Korea, net of cash disposed   -       -       -       20,114  
Proceeds from disposal of DNI as equity-accounted investment   -       -       -       6,010  
Loan to equity-accounted investment   -       -       -       (1,238 )
Repayment of loans by equity-accounted investments   -       -       -       134  
Net change in settlement assets   (4,265 )     1,711       (4,163 )     7,901  
Net cash (used in) cash provided by investing activities   (204,637 )     1,599       (193,688 )     47,775  
Cash flows from financing activities                      
Proceeds from bank overdraft   164,464       98,324       570,862       360,083  
Repayment of bank overdraft   (152,951 )     (97,137 )     (525,459 )     (365,440 )
Long-term borrowings utilized   78,851       -       78,851       -  
Repayment of long-term borrowings   (5,581 )     -       (5,581 )     -  
Guarantee fee   (1,307 )     -       (1,307 )     -  
Proceeds from issue of shares   -       -       759       53  
Proceeds from disgorgement of shareholders' short-swing profits   -       -       -       124  
Net change in settlement obligations   4,236       (1,711 )     4,134       (7,901 )
Net cash provided by (used in) financing activities   87,712       (524 )     122,259       (13,081 )
Effect of exchange rate changes on cash   (11,633 )     4,118       (10,338 )     14,957  
Net decrease in cash, cash equivalents and restricted cash   (135,248 )     (3,065 )     (118,965 )     (8,720 )
Cash, cash equivalents and restricted cash – beginning of period   240,048       226,830       223,765       232,485  
Cash, cash equivalents and restricted cash – end of period $ 104,800     $ 223,765     $ 104,800     $ 223,765  

(A) Derived from audited consolidated financial statements.

 

Lesaka Technologies, Inc.

Attachment A

Operating segment revenue, operating (loss) income and operating (loss) margin:

Three months ended June 30, 2022 and 2021 and March 31, 2022

    Three months ended Change - actual Change –
constant
exchange rate
(1)
    Jun 30, 2022   Jun 30, 2021   Mar 31, 2022 Q4 '22
vs
Q4 '21
Q4 '22
vs
Q3 '22
Q4 '22
vs
Q4 '21
Q4 '22
vs
Q3 '22
Key segmental data, in ’000, except margins      
Revenue:                          
Consumer   $ 15,700     $ 18,282     $ 16,429     (14 %)   (4 %)   (6 %)   (5 %)
Merchant     105,714       15,855       18,478     567 %   472 %   632 %   470 %
Other     475       463       397     3 %   20 %   13 %   19 %
Subtotal: Operating segments     121,889       34,600       35,304     252 %   245 %   287 %   244 %
Intersegment eliminations     (100 )     (83 )     (102 )   20 %   (2 %)   32 %   (2 %)
Consolidated revenue   $ 121,789     $ 34,517     $ 35,202     253 %   246 %   288 %   245 %
                           
Segment Adjusted EBITDA                          
Consumer   $ (1,361 )   $ (6,908 )   $ (6,866 )   (80 %)   (80 %)   (78 %)   (80 %)
Merchant     7,354       257       1,271     2,761 %   479 %   3,043 %   477 %
Other     150       (89 )     87     nm     72 %   nm     72 %
Total Segment Adjusted EBITDA     6,143       (6,740 )     (5,508 )   nm     nm     nm     nm  
Corporate/Eliminations     (9,466 )     (4,485 )     (2,560 )   111 %   270 %   132 %   269 %
Subtotal     (3,323 )     (11,225 )     (8,068 )   (70 %)   (59 %)   (67 %)   (59 %)
Less: Lease adjustments     1,308       1,157       890     13 %   47 %   24 %   47 %
Less: Depreciation and amortization     5,491       1,218       463     351 %   1,086 %   395 %   1,082 %
Consolidated operating loss   $ (10,122 )   $ (13,600 )   $ (9,421 )   (26 %)   7 %   (18 %)   7 %
                           
Segment Adjusted EBITDA (loss) margin (%)                          
Consumer     (8.7 %)     (37.8 %)     (41.8 %)        
Merchant     7.0 %     1.6 %     6.9 %        
Other     31.6 %     (19.2 %)     21.9 %        
Consolidated EBITDA (loss) margin     (8.3 %)     (39.4 %)     (26.8 %)        

(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during Q4 2022 also prevailed during Q4 2021 and Q3 2022.

 

Year ended June 30, 2022 and 2021

                Change -
actual
Change –
constant
exchange
rate
(2)
    Year ended
June 30,
  F2022
vs
F2021
F2022
vs
F2021
Key segmental data, in ’000, except margins     2022       2021    
Revenue:                  
Consumer   $ 65,932     $ 66,149       (0 %)   (4 %)
Merchant     155,366       61,478       153 %   144 %
Other     1,695       3,318       (49 %)   (51 %)
Subtotal: Operating segments     222,993       130,945       70 %   65 %
Intersegment eliminations     (384 )     (159 )     142 %   134 %
Consolidated revenue   $ 222,609     $ 130,786       70 %   65 %
                   
Segment Adjusted EBITDA                  
Consumer(1)   $ (22,232 )   $ (26,303 )     (15 %)   (18 %)
Merchant     11,305       4,728       139 %   131 %
Other     503       (10,374 )     nm     nm  
Total Segment Adjusted EBITDA     (10,424 )     (31,949 )     (67 %)   (68 %)
Corporate/Eliminations     (18,241 )     (13,428 )     36 %   31 %
Subtotal     (28,665 )     (45,377 )     (37 %)   (39 %)
Less: Lease adjustments     3,955       4,148       (5 %)   (8 %)
Less: Depreciation and amortization     7,575       4,347       74 %   69 %
Consolidated operating loss   $ (40,195 )   $ (53,872 )     (25 %)   (28 %)
                   
Segment Adjusted EBITDA (loss) margin (%)                  
Consumer     (33.7 %)     (39.8 %)      
Merchant     7.3 %     7.7 %      
Other     29.7 %     (312.7 %)      
Consolidated EBITDA (loss) margin     (18.1 %)     (41.2 %)      

(1) – Consumer Segment Adjusted EBITDA for fiscal 2022, includes reorganization costs of $5.9 million.
(2) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during fiscal 2022 also prevailed during fiscal 2021.

 

(Loss) Earnings from equity-accounted investments:

The table below presents the relative (loss) earnings from our equity-accounted investments:

  Three months ended
June 30,
    Nine months ended
March 31,
    2022       2021     % change     2022       2021     % change
Finbond $ (2,509 )   $ (1,742 )     44 %   $ (3,665 )   $ (22,009 )     (83 %)
Share of net loss   (2,509 )     (1,742 )     44 %     (3,665 )     (4,359 )     (16 %)
Impairment   -       -       nm       -       (17,650 )     nm  
Bank Frick   -       -       nm       -       1,156       nm  
Share of net income   -       -       nm       -       1,156       nm  
Other   16       (3,038 )     nm       16       (4,025 )     nm  
Share of net income (loss)   16       (92 )     nm       16       (531 )     nm  
Impairment   -       (2,946 )     nm       -       (3,494 )     nm  
Loss from equity-accounted investments $ (2,493 )   $ (4,780 )     (48 %)   $ (3,649 )   $ (24,878 )     (85 %)

 

Lesaka Technologies, Inc.

Attachment B

Reconciliation of GAAP operating loss to EBITDA loss and adjusted EBITDA loss:

Three and twelve months ended June 30, 2022 and 2021

  Three months ended
June 30,
  Year ended
June 30,
    2022       2021       2022       2021  
Operating loss - GAAP $ (10,122 )   $ (13,600 )   $ (40,195 )   $ (53,872 )
                       
Depreciation and amortization   5,491       1,218       7,575       4,347  
Operating loss before depreciation and amortization   (4,631 )     (12,382 )     (32,620 )     (49,525 )
Legacy processing adjustments   1,629       -       1,629       -  
Reorganization costs   -       -       5,894       -  
Allowance for doubtful EMI loans receivable   -       -       -       4,739  
Transaction costs   4,339       337       6,460       1,879  
Adjusted EBITDA (loss) $ 1,337     $ (12,045 )   $ (18,637 )   $ (42,907 )

 

Reconciliation of GAAP net loss and loss per share, basic, to fundamental net loss and loss per share, basic:

Three months ended June 30, 2022 and 2021

  Net (loss) income
(USD '000)
  (L)PS, basic
(USD)
  Net (loss) income
(ZAR '000)
  (L)PS, basic
(ZAR)
    2022       2021       2022       2021       2022       2021       2022       2021  
GAAP   (15,149 )     1,639       (0.25 )     0.03       (235,783 )     23,223       (3.83 )     0.40  
                               
Transaction costs   4,339       174               67,533       2,465          
Intangible asset amortization, net   2,664       70               41,462       990          
Stock-based compensation charge   1,251       (532 )             19,471       (7,538 )        
Legacy processing adjustments, net   1,173       -               18,539       -          
Loss on sale of equity-accounted investment   30       -               467       -          
Change in fair value of equity securities, net   -       (18,456 )             -       (261,497 )        
Impairment of equity method investment   -       2,946               -       41,741          
Allowance for doubtful EMI loans receivable   -       4,000               -       56,675          
Fundamental   (5,692 )     (10,159 )     (0.09 )     (0.18 )     (88,311 )     (143,941 )     (1.43 )     (2.54 )

 

Twelve months ended June 30, 2022 and 2021

  Net (loss) income
(USD '000)
  (L) EPS, basic
(USD)
  Net (loss) income
(ZAR '000)
  (L)EPS, basic
(ZAR)
    2022       2021       2022       2021       2022       2021       2022       2021  
GAAP   (43,876 )     (38,057 )     (0.75 )     (0.67 )     (666,818 )     (598,111 )     (11.43 )     (10.54 )
                               
Transaction costs   6,460       1,879               98,178       29,531          
Reorganization costs, net of tax   5,894       -               89,576       -          
Gain related to fair value adjustment to currency options   (3,691 )     -               (56,095 )     -          
Stock-based compensation charge   2,962       344               45,016       5,406          
Intangible asset amortization, net   2,765       253               42,012       3,961          
Legacy processing adjustments, net   1,173       -               18,539       -          
Gain on disposal of equity securities   (720 )     -               (10,942 )     -          
Loss on sale of equity-accounted investment   376       13               5,714       204          
Change in fair value of equity securities, net   -       (38,950 )             -       (612,149 )        
Impairment of equity method investments   -       21,144               -       327,140          
Reversal of deferred taxes related to impairment of equity method investment   -       (1,353 )             -       (22,633 )        
Allowance for doubtful EMI loans receivable   -       4,739               -       74,479          
Loss on disposal of equity-accounted investment - Bank Frick   -       472               -       7,418          
Fundamental   (28,657 )     (49,516 )     (0.49 )     (0.87 )     (434,820 )     (784,754 )     (7.45 )     (13.82 )

 

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 June 30, 2022 and 2021

    2022       2021  
       
Net (loss) income (USD’000)   (15,149 )     1,639  
Adjustments:      
Loss on sale of equity-accounted investment   30       -  
Impairment of equity method investments   -       2,946  
Profit on sale of property, plant and equipment   (449 )     (120 )
Tax effects on above   126       34  
       
Net (loss) income used to calculate headline loss (USD’000)   (15,442 )     4,499  
       
Weighted average number of shares used to calculate net (loss) income per share basic and headline (loss) income per share basic (‘000)   61,619       56,678  
       
Weighted average number of shares used to calculate net (loss) income per share diluted and headline (loss) income per share diluted loss (‘000)   61,619       56,937  
       
Headline (loss) income per share:      
Basic, in USD   (0.25 )     0.08  
Diluted, in USD   (0.25 )     0.08  

 

Twelve months ended June 30, 2022 and 2021

    2022       2021  
       
Net loss (USD’000)   (43,876 )     (38,057 )
Adjustments:      
Gain on disposal of equity securities   (720 )     -  
Loss on sale of equity-accounted investment   376       -  
Impairment of equity method investments   -       21,144  
Loss on disposal of equity-accounted investment - Bank Frick   -       430  
(Profit) Loss on sale of property, plant and equipment   (2,849 )     480  
Tax effects on above   798       (134 )
       
Net loss used to calculate headline loss (USD’000)   (46,271 )     (16,137 )
       
Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss (‘000)   58,364       56,765  
       
Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss (‘000)   58,364       56,898  
       
Headline loss per share:      
Basic, in USD   (0.79 )     (0.28 )
Diluted, in USD   (0.79 )     (0.28 )

 

Calculation of the denominator for headline diluted loss per share

  Three months ended
June 30,
  Year ended
    2022       2021       2022       2021  
                               
Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP   61,619       56,678       58,364       56,765  
Effect of dilutive securities under GAAP   -       259       -       133  
Denominator for headline diluted loss per share   61,619       56,937       58,364       56,898  

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.


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Source: Lesaka Technologies, Inc.