Net 1 Reports Second Quarter 2022 Results
Highlights:
- Continued momentum in Easy Pay Everywhere (“EPE”), ending the quarter with just under 1.1 million EPE accounts as of
December 31, 2021 ; - At
December 31, 2021 , unrestricted cash of$182.4 million ; - Revenue of
$31.1 million , a decrease of 4% from Q2 2021; - 38% recovery in operating loss to
$(9.4) million in Q2 2022, reflecting the direct cost reductions in our Consumer business; - GAAP EPS of
$(0.22) and Fundamental EPS of$(0.13) ; and - 42% improvement in adjusted EBITDA loss to
$(7.1) million , underpinned by the turnaround in our Consumer business.
“I am pleased with the progress we made in Q2, towards our strategic goal of returning our consumer financial services business to breakeven and then profitability as soon as possible. During the quarter we continued to grow active accounts, improved average revenue per customer and delivered on our cost savings initiatives. We have seen this positive momentum translate into a marked improvement in the operational performance of our consumer business compared to Q1.” said
Summary Financial Metrics
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2021 |
2020 |
2021 |
Q2 ’22 vs Q2 ’21 |
Q2 ’22 vs Q1 ’22 |
Q2 ’22 vs Q2 ’21 |
Q2 ’22 vs Q1 ’22 |
|||||||||||||||
(All figures in USD ‘000s except per share data) | USD ‘000’s (except per share data) |
% change in USD | % change in ZAR | ||||||||||||||||||
Revenue | 31,114 | 32,305 | 34,504 | (4 | %) | (10 | %) | (4 | %) | (5 | %) | ||||||||||
GAAP operating loss | (9,427 | ) | (15,205 | ) | (11,225 | ) | (38 | %) | (16 | %) | (38 | %) | (12 | %) | |||||||
Adjusted EBITDA (loss)(1) | (7,059 | ) | (12,132 | ) | (10,087 | ) | (42 | %) | (30 | %) | (42 | %) | (26 | %) | |||||||
GAAP (loss) earnings per share ($) | (0.22 | ) | (0.08 | ) | (0.23 | ) | 171 | % | (5 | %) | 170 | % | (0 | %) | |||||||
Fundamental loss per share ($)(1) | (0.13 | ) | (0.23 | ) | (0.22 | ) | (43 | %) | (41 | %) | (44 | %) | (38 | %) | |||||||
Fully-diluted shares outstanding (‘000’s) | 57,204 | 56,641 | 56,809 | 1 | % | 1 | % | nm | nm | ||||||||||||
Average period USD/ ZAR exchange rate | 15.38 | 15.47 | 14.61 | (1 | %) | 5 | % | nm | nm |
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F2022 vs F2021 |
F2022 vs F2021 |
||||||||||
2021 | 2020 | |||||||||||
(All figures in USD ‘000s except per share data) | USD ‘000’s (except per share data) |
% change in USD | % change in ZAR | |||||||||
Revenue | 65,618 | 67,441 | (3 | %) | (9 | %) | ||||||
GAAP operating loss | (20,652 | ) | (25,980 | ) | (21 | %) | (25 | %) | ||||
Adjusted EBITDA (loss)(1) | (17,146 | ) | (21,876 | ) | (22 | %) | (26 | %) | ||||
GAAP loss per share ($) | (0.45 | ) | (0.59 | ) | (24 | %) | (29 | %) | ||||
Fundamental loss per share ($)(1) | (0.35 | ) | (0.45 | ) | (22 | %) | (27 | %) | ||||
Fully-diluted shares outstanding (‘000’s) | 57,093 | 56,880 | 0 | % | nm | |||||||
Average period USD/ ZAR exchange rate | 15.47 | 16.47 | (6 | %) | nm |
(1) Adjusted EBITDA (loss), fundamental loss and fundamental loss per share are non-GAAP measures and are described below under “Use of Non-GAAP Measures—EBITDA and Adjusted 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 Adjusted EBITDA (loss), and GAAP net loss to fundamental net loss and loss per share.
Factors impacting comparability of our Q2 2022 and Q2 2021 results
- Lower revenue: Our revenues decreased 4% in ZAR primarily due to lower hardware sales as a result of the global chip shortage and fewer prepaid airtime sales. The benefit of the increase in active accounts was offset by lower ATM transactions as the number of active ATMs decreased as we go through a relocation process;
- Lower operating losses: Operating losses decreased, delivering an improvement of 38% in ZAR compared with the prior period primarily due to the closure of IPG and the implementation of various cost reduction initiatives in our Consumer business;
- Significant transaction costs: We expensed
$1.5 million of transaction costs related to theConnect Group acquisition; and - Foreign exchange movements: The
U.S. dollar was 1% stronger against the ZAR during Q2 2022, which impacted our reported results.
Results of Operations by Segment and Liquidity
During
Consumer
Segment revenue was
Merchant
Segment revenue was
Other
Other includes the activities of IPG in fiscal 2021 and our other business outside
Segment revenue decreased due to lower revenue following the closure of IPG in fiscal 2021. We recorded an EBITDA contribution during Q2 2022 following the closure of our loss-making activities performed through IPG. Our EBITDA (loss) margin for the Other segment was 31.1% and (494.2%) during Q2 2022 and 2021, respectively.
Corporate/Eliminations
Our corporate expenses generally include acquisition-related intangible asset amortization; expenses incurred related to corporate actions; expenditure 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 decreased compared with fiscal 2021 due to the inclusion of an allowance on doubtful loans receivable from equity-accounted investments of
Cash flow and liquidity
At
Excluding the impact of income taxes, our cash used in operating activities during the first quarter of fiscal 2022 was impacted by the utilization of cash to grow our financial loans receivable book in
Conference Call
Net1 will host a conference call to review these results on
Participants can pre-register for the
Use of 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 an adjustment for to an unrealized loss related to fair value adjustments in respect of currency options.
Fundamental net loss and loss per share for fiscal 2021 also includes adjustments related to changes in the fair value of equity securities, impairment losses related to an equity-accounted investment and the deferred tax liability reversal related to the impairment of the equity-accounted investment, an allowance for doubtful loans to equity-accounted investments and a loss on disposal of an 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 Net1
Net1 is a leading financial technology company that utilizes its proprietary banking and payment technology to deliver on its mission of financial inclusion through the distribution of low-cost financial and value-added services to underserved consumers and small businesses in
Net1 has a primary listing on NASDAQ (NasdaqGS: UEPS) and a secondary listing on the
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
Investor Relations Contact:
Partner – ICR
Email: net1IR@icrinc.com
Media Relations Contact:
Phone: +27-82-610-0650
Email: Bridget.vonholdt@bcw-global.com
Unaudited Condensed Consolidated Statements of Operations | |||||||||||||||||
Unaudited | Unaudited | ||||||||||||||||
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2021 | 2020 | 2021 | 2020 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
REVENUE | $ | 31,114 | $ | 32,305 | $ | 65,618 | $ | 67,441 | |||||||||
EXPENSE | |||||||||||||||||
Cost of goods sold, IT processing, servicing and support | 20,580 | 24,339 | 44,787 | 50,799 | |||||||||||||
Selling, general and administration | 17,746 | 22,097 | 38,188 | 40,625 | |||||||||||||
Depreciation and amortization | 726 | 1,074 | 1,621 | 1,997 | |||||||||||||
Transaction costs related to |
1,489 | - | 1,674 | - | |||||||||||||
OPERATING LOSS | (9,427 | ) | (15,205 | ) | (20,652 | ) | (25,980 | ) | |||||||||
CHANGE IN FAIR VALUE OF EQUITY SECURITIES | - | 15,128 | - | 15,128 | |||||||||||||
UNREALIZED LOSS RELATED TO FAIR VALUE ADJUSTMENT TO CURRENCY OPTIONS | 2,429 | - | 2,429 | - | |||||||||||||
LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT | - | 13 | - | 13 | |||||||||||||
INTEREST INCOME | 313 | 717 | 702 | 1,328 | |||||||||||||
INTEREST EXPENSE | 765 | 677 | 1,581 | 1,424 | |||||||||||||
LOSS BEFORE INCOME TAX EXPENSE | (12,308 | ) | (50 | ) | (23,960 | ) | (10,961 | ) | |||||||||
INCOME TAX EXPENSE | 98 | 3,468 | 284 | 2,378 | |||||||||||||
NET LOSS BEFORE LOSS FROM EQUITY-ACCOUNTED INVESTMENTS | (12,406 | ) | (3,518 | ) | (24,244 | ) | (13,339 | ) | |||||||||
LOSS FROM EQUITY-ACCOUNTED INVESTMENTS | - | (1,016 | ) | (1,156 | ) | (20,153 | ) | ||||||||||
NET LOSS ATTRIBUTABLE TO NET1 | (12,406 | ) | (4,534 | ) | (25,400 | ) | (33,492 | ) | |||||||||
Net loss per share, in |
|||||||||||||||||
Basic loss attributable to Net1 shareholders | $ | (0.22 | ) | $ | (0.08 | ) | $ | (0.45 | ) | $ | (0.59 | ) | |||||
Diluted loss attributable to Net1 shareholders | $ | (0.22 | ) | $ | (0.08 | ) | $ | (0.45 | ) | $ | (0.59 | ) |
Unaudited Consolidated Balance Sheets | ||||||||||||
Unaudited | (A) | |||||||||||
2021 |
2021 |
|||||||||||
(In thousands, except share data) | ||||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS | ||||||||||||
Cash and cash equivalents | $ | 182,356 | $ | 198,572 | ||||||||
Restricted cash | 57,788 | 25,193 | ||||||||||
Accounts receivable, net of allowance of - December: |
20,701 | 26,583 | ||||||||||
Finance loans receivable, net of allowance of - December: |
21,571 | 21,142 | ||||||||||
Inventory | 20,005 | 22,361 | ||||||||||
Total current assets before settlement assets | 302,421 | 293,851 | ||||||||||
Settlement assets | 369 | 466 | ||||||||||
Total current assets | 302,790 | 294,317 | ||||||||||
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - December: |
5,389 | 7,492 | ||||||||||
OPERATING LEASE RIGHT-OF-USE | 3,611 | 4,519 | ||||||||||
EQUITY-ACCOUNTED INVESTMENTS | 7,217 | 10,004 | ||||||||||
26,239 | 29,153 | |||||||||||
INTANGIBLE ASSETS, net of accumulated amortization of - December: |
288 | 357 | ||||||||||
DEFERRED INCOME TAXES | 868 | 622 | ||||||||||
OTHER LONG-TERM ASSETS, including reinsurance assets | 77,821 | 81,866 | ||||||||||
TOTAL ASSETS | 424,223 | 428,330 | ||||||||||
LIABILITIES | ||||||||||||
CURRENT LIABILITIES | ||||||||||||
Short-term credit facilities for ATM funding | 47,960 | 14,245 | ||||||||||
Accounts payable | 3,539 | 7,113 | ||||||||||
Other payables | 30,248 | 27,588 | ||||||||||
Operating lease liability - current | 2,516 | 2,822 | ||||||||||
Income taxes payable | 271 | 256 | ||||||||||
Total current liabilities before settlement obligations | 84,534 | 52,024 | ||||||||||
Settlement obligations | 369 | 466 | ||||||||||
Total current liabilities | 84,903 | 52,490 | ||||||||||
DEFERRED INCOME TAXES | 10,402 | 10,415 | ||||||||||
OPERATING LEASE LIABILITY - LONG TERM | 1,281 | 1,890 | ||||||||||
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities | 2,391 | 2,576 | ||||||||||
TOTAL LIABILITIES | 98,977 | 67,371 | ||||||||||
REDEEMABLE COMMON STOCK | 84,979 | 84,979 | ||||||||||
EQUITY | ||||||||||||
NET1 EQUITY: | ||||||||||||
COMMON STOCK | ||||||||||||
Authorized: 200,000,000 with |
||||||||||||
Issued and outstanding shares, net of treasury: December: |
80 | 80 | ||||||||||
PREFERRED STOCK | ||||||||||||
Authorized shares: 50,000,000 with |
||||||||||||
Issued and outstanding shares, net of treasury: December: -; June: - | - | - | ||||||||||
ADDITIONAL PAID-IN-CAPITAL | 303,804 | 301,959 | ||||||||||
TREASURY SHARES, AT COST: December: |
(286,951 | ) | (286,951 | ) | ||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | (157,879 | ) | (145,721 | ) | ||||||||
RETAINED EARNINGS | 381,213 | 406,613 | ||||||||||
TOTAL NET1 EQUITY | 240,267 | 275,980 | ||||||||||
NON-CONTROLLING INTEREST | - | - | ||||||||||
TOTAL EQUITY | 240,267 | 275,980 | ||||||||||
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY | $ | 424,223 | $ | 428,330 |
(A) Derived from audited consolidated financial statements.
Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||||||||||
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2021 | 2020 | 2021 | 2020 | ||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
Cash flows from operating activities | |||||||||||||||||
Net loss | $ | (12,406 | ) | $ | (4,534 | ) | $ | (25,400 | ) | $ | (33,492 | ) | |||||
Depreciation and amortization | 726 | 1,074 | 1,621 | 1,997 | |||||||||||||
Impairment loss | 85 | - | 225 | - | |||||||||||||
Movement in allowance for doubtful accounts receivable | 740 | 100 | 1,126 | 614 | |||||||||||||
Loss from equity-accounted investments | - | 1,016 | 1,156 | 20,153 | |||||||||||||
Movement in allowance for doubtful loans | - | 661 | - | 739 | |||||||||||||
Change in fair value of equity securities | - | (15,128 | ) | - | (15,128 | ) | |||||||||||
Fair value adjustment related to financial liabilities | (234 | ) | 790 | (324 | ) | 1,676 | |||||||||||
Unrealized loss related to fair value adjustment to currency options | 2,429 | - | 2,429 | - | |||||||||||||
Interest payable | (113 | ) | 42 | (102 | ) | (21 | ) | ||||||||||
Loss on disposal of equity-accounted investment | - | 13 | - | 13 | |||||||||||||
Profit on disposal of property, plant and equipment | (1,356 | ) | 752 | (1,521 | ) | 742 | |||||||||||
Stock-based compensation charge | 788 | 232 | 1,097 | 631 | |||||||||||||
Dividends received from equity-accounted investments | - | 68 | 137 | 125 | |||||||||||||
(Increase) Decrease in accounts receivable and finance loans receivable | (3,467 | ) | 6,559 | (2,279 | ) | (1,556 | ) | ||||||||||
(Increase) Decrease in inventory | (1,429 | ) | (145 | ) | 154 | 2,214 | |||||||||||
Increase (Decrease) in accounts payable and other payables | 676 | (3,084 | ) | 245 | (3,499 | ) | |||||||||||
(Decrease) Increase in taxes payable | (245 | ) | (421 | ) | 49 | (15,338 | ) | ||||||||||
Increase (Decrease) in deferred taxes | 21 | 26 | (346 | ) | (1,729 | ) | |||||||||||
Net cash used in operating activities | (13,785 | ) | (11,979 | ) | (21,733 | ) | (41,859 | ) | |||||||||
Cash flows from investing activities | |||||||||||||||||
Capital expenditures | (189 | ) | (3,023 | ) | (887 | ) | (3,298 | ) | |||||||||
Proceeds from disposal of property, plant and equipment | 1,760 | 75 | 1,991 | 91 | |||||||||||||
Proceeds from disposal of equity-accounted investment - |
7,500 | - | 7,500 | - | |||||||||||||
Proceeds from disposal of Net1 |
- | - | - | 20,114 | |||||||||||||
Proceeds from disposal of DNI as equity-accounted investment | - | 5,681 | - | 6,010 | |||||||||||||
Loan to equity-accounted investment | - | (1,160 | ) | - | (1,238 | ) | |||||||||||
Net change in settlement assets | 97 | 1,377 | 97 | 5,445 | |||||||||||||
Net cash (used in) provided by investing activities | 9,168 | 3,084 | 8,701 | 27,258 | |||||||||||||
Cash flows from financing activities | |||||||||||||||||
Proceeds from bank overdraft | 172,445 | 137,333 | 311,350 | 206,479 | |||||||||||||
Repayment of bank overdraft | (172,768 | ) | (88,258 | ) | (271,676 | ) | (165,108 | ) | |||||||||
Proceeds from issue of shares | 739 | 18 | 739 | 18 | |||||||||||||
Proceeds from disgorgement of shareholders' short-swing profits | - | 26 | - | 124 | |||||||||||||
Net change in settlement obligations | (97 | ) | (1,377 | ) | (97 | ) | (5,445 | ) | |||||||||
Net cash provided by (used in) financing activities | 319 | 47,742 | 40,316 | 36,068 | |||||||||||||
Effect of exchange rate changes on cash | (5,979 | ) | 12,296 | (10,905 | ) | 13,102 | |||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (10,277 | ) | 51,143 | 16,379 | 34,569 | ||||||||||||
Cash, cash equivalents and restricted cash – beginning of period | 250,421 | 215,911 | 223,765 | 232,485 | |||||||||||||
Cash, cash equivalents and restricted cash – end of period | $ | 240,144 | $ | 267,054 | $ | 240,144 | $ | 267,054 |
Attachment A
Operating segment revenue, operating (loss) income and operating (loss) margin:
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||||||||||||||||||||||||
Q2 '22 vs Q2 '21 |
Q2 '22 vs Q1 '22 |
Q2 '22 vs Q2 '21 |
Q2 '22 vs Q1 '22 |
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Key segmental data, in ’000, except margins | ||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Consumer | $ | 16,639 | $ | 16,259 | $ | 17,164 | 2 | % | (3 | %) | 2 | % | 2 | % | ||||||||||||
Merchant | 14,102 | 15,206 | 17,072 | (7 | %) | (17 | %) | (8 | %) | (13 | %) | |||||||||||||||
Other | 396 | 878 | 427 | (55 | %) | (7 | %) | (55 | %) | (2 | %) | |||||||||||||||
Subtotal: Operating segments | 31,137 | 32,343 | 34,663 | (4 | %) | (10 | %) | (4 | %) | (5 | %) | |||||||||||||||
Intersegment eliminations | (23 | ) | (38 | ) | (159 | ) | (39 | %) | (86 | %) | (40 | %) | (85 | %) | ||||||||||||
Consolidated revenue | $ | 31,114 | $ | 32,305 | $ | 34,504 | (4 | %) | (10 | %) | (4 | %) | (5 | %) | ||||||||||||
EBITDA: | ||||||||||||||||||||||||||
Consumer | $ | (4,551 | ) | $ | (5,214 | ) | $ | (9,454 | ) | (13 | %) | (52 | %) | (13 | %) | (49 | %) | |||||||||
Merchant | 795 | 1,227 | 1,885 | (35 | %) | (58 | %) | (36 | %) | (56 | %) | |||||||||||||||
Other | 123 | (4,339 | ) | 143 | nm | (14 | %) | nm | (9 | %) | ||||||||||||||||
Subtotal: Operating segments | (3,633 | ) | (8,326 | ) | (7,426 | ) | (56 | %) | (51 | %) | (57 | %) | (49 | %) | ||||||||||||
Corporate/Eliminations | (4,235 | ) | (4,743 | ) | (1,980 | ) | (11 | %) | 114 | % | (11 | %) | 125 | % | ||||||||||||
Segment Adjusted EBITDA | (7,868 | ) | (13,069 | ) | (9,406 | ) | (40 | %) | (16 | %) | nm | nm | ||||||||||||||
Less: Lease adjustments | 833 | 1,062 | 924 | (22 | %) | (10 | %) | nm | nm | |||||||||||||||||
Less: Depreciation and amortization | 726 | 1,074 | 895 | (32 | %) | (19 | %) | nm | nm | |||||||||||||||||
Consolidated operating loss | $ | (9,427 | ) | $ | (15,205 | ) | $ | (11,225 | ) | (38 | %) | (16 | %) | (38 | %) | (12 | %) | |||||||||
EBITDA (loss) margin (%) | ||||||||||||||||||||||||||
Consumer | (27.4 | %) | (32.1 | %) | (55.1 | %) | ||||||||||||||||||||
Merchant | 5.6 | % | 8.1 | % | 11.0 | % | ||||||||||||||||||||
Other | 31.1 | % | (494.2 | %) | 33.5 | % | ||||||||||||||||||||
Consolidated EBITDA (loss) margin | (30.3 | %) | (47.1 | %) | (32.5 | %) |
(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during Q2 2022 also prevailed during Q2 2021 and Q1 2022.
Six months ended
Change - actual | Change – constant exchange rate(1) | ||||||||||||||||||
Six months ended |
F2021 vs F2020 |
F2021 vs F2020 |
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Key segmental data, in ’000, except margins | 2021 | 2020 | |||||||||||||||||
Revenue: | |||||||||||||||||||
Consumer | $ | 33,803 | $ | 31,631 | 7 | % | 0 | % | |||||||||||
Merchant | 31,174 | 33,452 | (7 | %) | (12 | %) | |||||||||||||
Other | 823 | 2,434 | (66 | %) | (68 | %) | |||||||||||||
Subtotal: Operating segments | 65,800 | 67,517 | (3 | %) | (8 | %) | |||||||||||||
Intersegment eliminations | (182 | ) | (76 | ) | 139 | % | 125 | % | |||||||||||
Consolidated revenue | $ | 65,618 | $ | 67,441 | (3 | %) | (9 | %) | |||||||||||
Operating (loss) income: | |||||||||||||||||||
Consumer | $ | (14,005 | ) | $ | (11,785 | ) | 19 | % | 12 | % | |||||||||
Merchant | 2,680 | 4,198 | (36 | %) | (40 | %) | |||||||||||||
Other | 266 | (6,970 | ) | nm | nm | ||||||||||||||
Subtotal: Operating segments | (11,059 | ) | (14,557 | ) | (24 | %) | (29 | %) | |||||||||||
Corporate/Eliminations | (6,215 | ) | (7,539 | ) | (18 | %) | (23 | %) | |||||||||||
Segment Adjusted EBITDA | (17,274 | ) | (22,096 | ) | (22 | %) | nm | ||||||||||||
Less: Lease adjustments | 1,757 | 1,887 | (7 | %) | nm | ||||||||||||||
Less: Depreciation and amortization | 1,621 | 1,997 | (19 | %) | nm | ||||||||||||||
Consolidated operating loss | $ | (20,652 | ) | $ | (25,980 | ) | (21 | %) | (25 | %) | |||||||||
EBITDA (loss) margin (%) | |||||||||||||||||||
Consumer | (41.4 | %) | (37.3 | %) | |||||||||||||||
Merchant | 8.6 | % | 12.5 | % | |||||||||||||||
Other | 32.3 | % | (286.4 | %) | |||||||||||||||
Consolidated EBITDA (loss) margin | (31.5 | %) | (38.5 | %) |
(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during the first half of fiscal 2022 also prevailed during the first half of fiscal 2021.
(Loss) Earnings from equity-accounted investments:
The table below presents the relative loss (earnings) from our equity-accounted investments:
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2021 | 2020 | % change | 2021 | 2020 | % change | |||||||||||||||
- | 498 | nm | - | 979 | nm | |||||||||||||||
Share of net income | - | 498 | nm | - | 979 | nm | ||||||||||||||
Finbond | - | (806 | ) | nm | (1,156 | ) | (20,267 | ) | (94 | %) | ||||||||||
Share of net loss | - | - | nm | (1,156 | ) | (2,617 | ) | (56 | %) | |||||||||||
Impairment | - | (806 | ) | nm | - | (17,650 | ) | nm | ||||||||||||
Other | - | (708 | ) | nm | - | (865 | ) | nm | ||||||||||||
Share of net loss | - | (160 | ) | nm | - | (317 | ) | nm | ||||||||||||
Impairment | - | (548 | ) | nm | - | (548 | ) | nm | ||||||||||||
Loss from equity-accounted investments | $ | - | $ | (1,016 | ) | nm | $ | (1,156 | ) | $ | (20,153 | ) | (94 | %) |
Attachment B
Reconciliation of GAAP operating loss to EBITDA loss and adjusted EBITDA loss:
Three and six months ended
Three months ended |
Six months ended |
||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Operating loss - GAAP | (9,427 | ) | (15,205 | ) | (20,652 | ) | (25,980 | ) | |||||||
Depreciation and amortization | 726 | 1,074 | 1,621 | 1,997 | |||||||||||
Operating loss before depreciation and amortization | (8,701 | ) | (14,131 | ) | (19,031 | ) | (23,983 | ) | |||||||
Transaction costs | 1,642 | 1,339 | 1,885 | 1,368 | |||||||||||
Adjusted EBITDA loss | (7,059 | ) | (12,131 | ) | (17,146 | ) | (21,876 | ) |
Reconciliation of GAAP net loss and loss per share, basic, to fundamental net loss and loss per share, basic:
Three months ended
Net (loss) income (USD '000) |
(L)PS, basic (USD) |
Net (loss) income (ZAR '000) |
(L)PS, basic (ZAR) |
||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
GAAP | (12,406 | ) | (4,534 | ) | (0.22 | ) | (0.08 | ) | (190,804 | ) | (70,120 | ) | (3.34 | ) | (1.23 | ) | |||||||
Unrealized loss related to fair value adjustment to currency options | 2,429 | - | 37,358 | - | |||||||||||||||||||
Transaction costs | 1,642 | 1,339 | 25,254 | 20,708 | |||||||||||||||||||
Stock-based compensation charge | 788 | 232 | 12,119 | 3,588 | |||||||||||||||||||
Intangible asset amortization, net | 12 | 64 | 184 | 990 | |||||||||||||||||||
Change in fair value of equity securities, net | - | (11,951 | ) | - | (184,828 | ) | |||||||||||||||||
Impairment of equity method investment | - | 1,354 | - | 19,850 | |||||||||||||||||||
Allowance for doubtful EMI loans receivable | - | 661 | - | 10,223 | |||||||||||||||||||
Loss on disposal of equity-accounted investment | - | 13 | - | 201 | |||||||||||||||||||
Fundamental | (7,535 | ) | (12,822 | ) | (0.13 | ) | (0.23 | ) | (115,889 | ) | (199,388 | ) | (2.03 | ) | (3.52 | ) |
Six months ended
Net (loss) income (USD '000) |
(L) EPS, basic (USD) |
Net (loss) income (ZAR '000) |
(L)EPS, basic (ZAR) |
||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
GAAP | (25,400 | ) | (33,492 | ) | (0.44 | ) | (0.59 | ) | (380,361 | ) | (551,529 | ) | (6.66 | ) | (9.70 | ) | |||||||
Unrealized loss related to fair value adjustment to currency options | 2,429 | - | 36,374 | - | |||||||||||||||||||
Transaction costs | 1,885 | 1,369 | 28,228 | 22,544 | |||||||||||||||||||
Stock-based compensation charge | 1,097 | 631 | 16,427 | 10,391 | |||||||||||||||||||
Intangible asset amortization, net | 25 | 121 | 367 | 1,980 | |||||||||||||||||||
Impairment of equity method investments | - | 18,198 | - | 301,579 | |||||||||||||||||||
Change in fair value of equity securities, net | - | (11,951 | ) | - | (196,805 | ) | |||||||||||||||||
Reversal of deferred taxes related to impairment of equity method investment | - | (1,353 | ) | - | (22,633 | ) | |||||||||||||||||
Allowance for doubtful EMI loans receivable | - | 739 | - | 12,169 | |||||||||||||||||||
Loss on disposal of equity-accounted investment | - | 13 | - | 214 | |||||||||||||||||||
Fundamental | (19,964 | ) | (25,725 | ) | (0.35 | ) | (0.45 | ) | (298,965 | ) | (422,090 | ) | (5.24 | ) | (7.42 | ) |
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
2021 | 2020 | ||||||
Net loss (USD’000) | (12,406 | ) | (4,534 | ) | |||
Adjustments: | |||||||
Impairment of equity method investments | - | 1,354 | |||||
Impairment loss | 85 | - | |||||
(Profit) Loss on sale of property, plant and equipment | (1,356 | ) | 752 | ||||
Tax effects on above | 380 | (211 | ) | ||||
Net loss used to calculate headline loss (USD’000) | (13,297 | ) | (2,626 | ) | |||
Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss (‘000) | 57,204 | 56,641 | |||||
Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss (‘000) | 57,204 | 56,641 | |||||
Headline loss per share: | |||||||
Basic, in USD | (0.23 | ) | (0.05 | ) | |||
Diluted, in USD | (0.23 | ) | (0.05 | ) |
Six months ended
2021 | 2020 | ||||||
Net loss (USD’000) | (25,400 | ) | (33,492 | ) | |||
Adjustments: | |||||||
Impairment of equity method investments | - | 18,198 | |||||
Impairment loss | 225 | - | |||||
(Profit) Loss on sale of property, plant and equipment | (1,356 | ) | 742 | ||||
Tax effects on above | 380 | (1,561 | ) | ||||
Net loss used to calculate headline loss (USD’000) | (26,151 | ) | (16,100 | ) | |||
Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss (‘000) | 57,093 | 56,880 | |||||
Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss (‘000) | 57,093 | 56,880 | |||||
Headline loss per share: | |||||||
Basic, in USD | (0.46 | ) | (0.28 | ) | |||
Diluted, in USD | (0.46 | ) | (0.28 | ) |
Calculation of the denominator for headline diluted loss per share
Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP | 57,204 | 56,641 | 57,093 | 56,880 | ||||||||
Denominator for headline diluted loss per share | 57,204 | 56,641 | 57,093 | 56,880 |
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.

Source: Net 1 UEPS Technologies, Inc.