Lesaka Technologies Inc.
Lesaka Technologies Inc.
09/09/2026 | Press release | Distributed by Public on 09/09/2026 14:40
Annual Report for Fiscal Year Ending 06-30, 2026 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND
RESULTSOF OPERATIONS
The followingdiscussion andanalysis shouldbe readin conjunctionwith Item8-"Financial Statementsand Supplementary
Data." Inadditionto historicalconsolidatedfinancialinformation,the followingdiscussionandanalysis containsforward-looking
statements that involve risks, uncertainties and assumptions. See Item 1A-"Risk Factors" and "Forward Looking Statements."
U.S. securities lawsrequire that whenwe publish anynon-GAAP measures, wedisclose the reasonfor using thesenon-GAAP
measuresandprovidereconciliationstothemostdirectlycomparableGAAPmeasures.Wediscusswhyweconsideritusefulto
present these non-GAAPmeasures and thematerial risks andlimitations of thesemeasures, as wellas a reconciliationof these non-
GAAP measuresto themost directlycomparable GAAPfinancial measurebelow at"-Results of Operations-Use of Non-GAAP
Measures" below.
Overview
Weofferanintegratedandholistic multiproductplatformthatprovidestransactionalaccounts,lending,insurance,merchant
acquiring,cashmanagement,softwareandADP.Targetedsolutionsandintegrationsfacilitatepaymentsbetweenconsumersand
businesses. By providing a full-service fintech platform in our connected ecosystem, we facilitate the digitization of commercein our
markets.
Sources of Revenue
We generate revenue through a diversified portfolio of financial, payment, software, and technology solutions,structured across
three reportable segments: Merchant, Consumer,and Enterprise.
Merchant
Revenues in Merchant are derived from a combination of transaction-basedfees and an ad valorem pricing model.
●
Merchant acquiring:
Weearn revenuefrom merchantacquiring on anad valorem basis,based on apercentage of thetotal
transaction value processed through our network. Wealso earn revenue from transaction fees charged to merchants.
●
Software:
Revenueis generatedfromprovidinglicensingsoftwareandtechnologyservicesandthroughsellinghardware
(such as POS devices) to merchants.
●
Cash:
We earn revenue on an ad valorem basis,based on a percentage ofthe total cash settlementsprocessed through our cash
vaulting network. Wealso earn transaction fees when customers utilize our ATMnetwork.
●
Lending:
We generate interest revenue from qualifying merchant customers who are able to access short-term businessloans.
This revenue stream includes interest charged on outstandingloan balances.
●
ADP:
We alsooffer merchant customers access toplatforms through which we (a) generaterevenue from the sale of prepaid
airtime andgenerate feesfrom distributionof ADP,including prepaidsolutions (airtime,data, electricityand gaming),and
supplierenabledpayments(billpayments,internationalmoneytransfersandsupplierpayments).Thesefeesarelargely
charged on an ad valorem basis.
Consumer
Revenues in Consumer are generated from transactional banking fees, interest income, insurance premiums and card transaction
processing fees.
●
TransactionalFees:
Weearnrevenuebychargingamonthlyfeeandchargefeesonanadvalorembasisforgoodsand
services purchased.Transactionalfees associatedwith ourconsumeraccounts includemonthlyaccount servicefees, ATM
withdrawal fees, and other fees based on usage.
●
Lending:
Revenuefromourlendingproductsisderivedfromacombinationoforiginationfees,monthlyintereston
outstanding loan balances and monthly service fees.
●
Insurance:
Revenue from our insurance offerings is earned monthlyand includes premiums paid by policyholders.
Enterprise
Like Merchant, Enterprise generates revenue from a combination of transaction-basedfees and an ad valorem pricing model.
●
ADP:
Revenue from ourADP offeringfor Enterprise clientsis primarily basedon a fixedfee per transaction.A secondary
pricing model is on an ad valorem basis, depending on the specific digital productbeing sold.
●
Utilities:
Our utilities vertical generates revenue predominantly through an annuity-based model, with fees charged on an ad
valorem basisbased onthe totalvalue ofelectricity vendedthrough ourplatform. Ad-hochardware salesof utilitymeters
also an additional contribution to revenue which are sold on a fixed price basis.
●
Other:
Our payment solutions enablepayment acceptance for usand external enterprises,on which we earna fixed fee per
transaction processed.
Developments during Fiscal 2026
Thisitemdiscussesourfiscal2026resultsacrossourthreereportablesegments:Merchant,Consumer,andEnterprise.
Discussions of ourfiscal 2025 resultscompared to ourfiscal 2024 resultscan be foundwithin our AnnualReport on Form10-K for
the year ended June 30, 2025.
Group Level:
1.
Merchant
Fiscal 2026marks apivotal yearof transformationand consolidationfor Merchant.Following theacquisitions ofthe Adumo
Group in fiscal 2025, the division has been undertaking adeliberate, multi-faceted integration designed to eliminate duplication, unify
ourbrandgo-to-marketapproach,andbuildasingle,multi-productplatformservingmerchantsacrossallsegments.This
transformation alsoincluded bolsteringoperational analytics,which nowaligns theMerchant revenuedrivers toa number ofactive
merchants andARPU (AverageRevenue PerUser) basis,akin toConsumer.New leadershipwas appointedto drivethe integration
executingagainsta clearset ofpriorities:integratingour Communityand CorporateMerchantchannels undera unifiedoperating
model, rationalizing cost and infrastructure and deepening product penetrationacross our merchant base.
2.
One Lesaka: Unification of Group Branding
In November2025, welaunched arefreshed Lesakamaster brand,accelerating therealignment ofall merchant-facingbrands
including Kazang,Adumo, GAAP,Card Connect,and Capital Connectunder asingle "One Lesaka"identity.Weexpect fullbrand
alignment tobe substantiallycomplete bythe end ofcalendar 2026,with certainbrands alreadytransitioned. Thisunification isnot
merely cosmeticbut itreflects theconsolidationof ouroperating infrastructure,sales force,and distributionchannels intoa single
integrated model. Coupledwith the branding change,we have consolidated ourJohannesburg officefootprint into a single hub,with
similar exercises close to completion inboth Cape Town and Durban. As aresult of these unification actions, wehave incurred Lesaka
brand refreshexpenses (treatedas aonce-off item)and increasedintangible assetamortization chargesdue tothe shorteningof the
deemed useful lives of certain brand trademark assets in fiscal 2026,and recorded right-of-use lease impairments.
3.
Deleveraging: Approaching Our Medium-TermCapital Structure Target
Ourcapitalstructurehascontinuedtostrengthenmateriallyoverthecourseoffiscal2026,buildingonthedebtrefinancing
actions in fiscal2025 and 2026.Net debt toGroup Adjusted EBITDAhas reduced progressivelythrough the year,from 2.9 times at
the startof thefiscal yearto 1.9times bythe endof thefiscal year,achieving ourmedium termtarget of2.0 timesor lower.This
deleveraging has been achieved alongside continued investment in growth,including in our lending books, and reflects the combined
benefit of thelower funding costssecured through ourfiscal 2025 and2026 refinancing, thecash generation ofthe underlying business,
anddisciplinedcapitalallocationacrosstheGroup.WeexpecttheproposedBankZerotransaction,oncecompleted,tosupporta
further step-changein our fundingprofile by enablingLesaka to fundlending growthincreasingly throughcustomer deposits rather
thanwholesaledebt,representingfurtherstructuralimprovementtotheGroup'sfundingprofileandanadditional,significant
deleveraging event at the Group level.
4.
Portfolio Rationalization and Exit of Non-CoreActivities
During fiscal 2026,we have continuedto simplify theGroup. Inthe third quarter, wemade thedecision to exitour ATM business,
whichwehadconcludedwasstructurallyloss-makingandimmaterialinscale,recognizinganimpairmentandonce-offcostsof
approximatelyZAR 27millioninconnectionwiththewind-down.In thesame quarter,wesunsetSwitchPayProprietaryLimited
("SwitchPay"),alegacybuy-now-pay-laterproduct,recognizinganimpairmentof$0.4million(ZAR6.5million).Wealso
deregistered Masterpayment GmbH ("Masterpayment"),a legacy offshore entity, recognizing a gain of $0.9 million (ZAR 14 million)
on deregistration, andreversed a $1.5million (ZAR 25 million)receivables allowance followingthe successful collectionof monies
owed inrespect ofa legacyinvestment. Earlierin fiscal2026, wefinalized theliquidation ofCPS, releasingprovisions ofZAR 65
million,anddisposedofour remainingstakeinCell-Cforproceedsof $3.9million(ZAR 50million).Theseactions collectively
representthesubstantialcompletionofthenon-coreportfoliorationalizationthathasbeenundertakensincefiscal2023,allowing
managementtofocuscapitalandattentiononourscalable,digitally-ledgrowthplatformswithabalancesheetrepresentativeof
present-day Lesaka and no material legacy investments.
5.
Proposed Acquisition of Bank Zero: RegulatoryProgress
OurproposedacquisitionofBankZeroMutualBank,announcedonJune26,2025,hasprogressedthroughkeyregulatory
milestonesduringfiscal2026.InNovember2025,theSouthAfricanCompetitionCommissionrecommendedapprovalofthe
transaction,and theCompetition Tribunalsubsequently grantedits approvalin thesecond quarterof fiscal2026, asignificant step
forward in the transaction timeline. We continue to engage withthe Prudential Authority of theSouth African Reserve Bank regarding
its finalapproval,whichremains outstandingalongsideSouthAfricanExchangeControlapproval.As theseremainingregulatory
consents are still being procured, on June 11, 2026 we agreed with the Bank Zerosellers' representatives to extend the long-stop date
for fulfilment or waiver of remaining conditions precedent from August 6, 2026to January 31, 2027. We do not believe this extension
s
ignals any impediment to closing; rather,it reflects the ordinary pace of the outstanding Prudential Authority process.
Once completed, thetransaction is expectedto deliver meaningfulfunding and balancesheet benefits, includinga reduction in
gross debt of more than ZAR 1 billion, whereby Lesaka can fund lending growth through Bank Zero, supporting further deleveraging
and improved cash conversion.
Operating Segment Level:
Merchant
We manage our Merchant operations through two distinctchannels: Community, which focuses on local, high-growth businesses
acquiredthrough direct,face-to-facesales andrapidconversion cycles;andCorporate, whichserves large-scale organizationsand
franchises requiring customized, multi-product solutions througha strategic, long-term sales process.
In the secondquarter of fiscal2026, we introduceda refinedreporting framework forthe Merchant divisionto better represent the
primarydriversofourrevenueandperformance.Developedthroughacomprehensivereviewofouroperationalanalytics,this
frameworkalignsourMerchantmetrics, specificallyactivemerchantcountandblendedARPU withourConsumerdivision
to provide a holistic viewofourecosystem.Wearetreatingthisupdatedapproachasabaselineforfuturecomparisonstoensure
consistent reporting across ourchannels; as such,this transition mayresult in non-material inconsistencieswith certain legacy metrics.
Our definitionof an activemerchant is anymerchant that hasmade a voluntarytransaction (debit and/orcredit) within thelast
90 days. Previously, we reportedon a pointof presence basis,which was morefocused on ourdevice estate. Thisupdated methodology
of an active merchant reflects the revenue generatingengagement of our entire Merchant base and more accuratelytracks our current
and future monetizationstrategy for thedivision. ARPU excludesonce-off and non-recurringrevenue such ashardware and installation
costs as well as revenue from non-South African subsidiaries.
The underlying drivers of ARPU performance are based on cross-sell product penetration and the individual product related Key
Performance Indicators ("KPI's") are shown below.
2026
2025
2026 vs
2025
Merchant
Active Merchants
131,545
127,588
3%
Merchant ARPU
(1)
(ZAR per month)
1,784
1,884
(5%)
Product Penetration Rate: 2 or more products
46%
46%
0%
Product Penetration Rate: 3 or more products
7%
10%
(29%)
Merchant: Acquiring
Active Merchants
73,714
70,294
5%
Total Payment Volume("TPV") (ZAR billions)
43.7
34.5
27%
Merchant: Software
Active Merchants
9,738
9,755
(0%)
Merchant: Cash Management
Active Merchants
4,942
4,837
2%
TPV (ZAR billions)
119.0
114.8
4%
Merchant: Lending
Lending Origination (ZAR millions)
(0%)
Net Lending Portfolio Outstanding (ZAR millions)
15%
Merchant: Alternative Digital Products
Active Merchants
101,659
98,222
3%
TPV (ZAR billions)
54.8
41.7
31%
TPV - Prepaid Solutions (ZAR billions)
23.5
20.9
12%
TPV - Supplier Enabled Payments (ZAR billions)
31.2
20.8
50%
Notes:
(1) ARPU is calculated on a revenue peractive merchant basis based on a 3-month rolling average for thequarter ended June 30,
2026.
Notable developments within Merchant:
Within Merchant Acquiring: Year-on-year comparison of TPV are not meaningfulas fiscal 2025 only included Adumo for nine
months, which isin the Corporatechannel. In theCommunity channel it iscomparable and TPVattributable to the Communitychannel
increased to ZAR 15.7billion representing 15% year-on-yeargrowth. This was drivenprimarily from the continuedstrategy to offer
a multi-product offeringfocused on cash managementsolutions and ADP,particularly Supplier EnabledPayments, to attract greater
merchant acquiring volumes in this segment.
WithinSoftware: Continuedfocus ondeploying Unity,our cloud-basedpoint-of-sale (POS)software offeringto existingand
new merchants. Unity has a lower monthly cost than on-premises solutions, the increase in client numbers was offset by a decrease in
average revenue per user,resulting in core revenueremaining flat. Migration toUnity enables easier integrationof our Software and
Acquiring propositions into one holistic bundle. Approximately 17%of our Software base currently use the Unity offering.
WithinCash: Ourbusiness isexperiencing differingsecular trendsin itstwo distinctmarkets. Atthe Corporatechannel, cash
continuestoexperienceadownwardtrendofgrowthasdigitalpaymentadoptionprogressivelyincreasesinthissector.Atthe
Community channel,we continue tosee growth forour cash managementsolutions, with cashTPV growthtotaling to 55%year-on
year. The Community channelnow accounts for20% of allprocessed cash TPVprocessed. This signalsrapid growth amongmerchants
within this segment aiming to digitize their cash holdings.
WithinLending:Lendingoriginationsremainedflatyear-over-year,primarilyreflectingtheongoingproductrefinementand
distribution strategy forthis specific productwithin the Corporatechannel.Weexperienced a modestincrease in aggregate portfolio
duration over the period.
Within ADP: Core to our device placement strategy is the decisionto focus on quality business and optimizing our existingfleet.
This can beseen through theTPV growth whichis primarily drivenby our SupplierEnabled Payment product,delivering 50% year
on-yeargrowth.ThisenablesCommunityMerchantstodigitizetheirrequiredpaymentstosuppliersatcompetitivepricingand
introducesthem tothe LesakaMerchant ecosystem.Withinthe PrepaidSolutions product,TPV processeddelivered 12%year-on-
year growth. Although wecontinue to see sustained marginpressures from wholesale providersof airtime, we haveseen an offset in
TPV processed for other prepaid products such as electricity and vouchers.
Consumer
Our consumer base includes South African grant beneficiaries and otherLesaka Payouts cardholders.
Our grant beneficiary base includes both permanent andnon-permanent grant beneficiaries. As Consumer has evolved, both sub-
categories of consumers are revenue generating and hence the combined consumer base metrics shown below are most appropriateto
measure the performance of the division financially and operationally.Although historically we have shown these metrics separately,
it is maintained that approximately 89% of the active consumer baseare permanent grant beneficiaries.
Our definition of anactive consumer is anyconsumer that has madea voluntary transaction (debitand/or credit) within thelast
90 days. Consumers who may becharged a monthly banking feebut have not made a voluntary transactionin the last 90 days would
not be considered an active consumer.
The definition ofan active consumerreflects the revenuegenerating engagement ofour entire consumerbase and moreaccurately
tracks our current and future monetization strategy forthe division. We will continue to show the Lesaka Payouts separatelygiven this
follows a different monetization model.
TheunderlyingdriversofARPU performancearebasedoncross-sellproductpenetrationandtheindividualproductrelated
KPI's are shown below.
2026
2025
2026 vs
2025
Consumer
Active Consumers (millions)
2.08
1.88
11%
ARPU
(1)
(ZAR per month)
15%
Product Penetration Rate: 2 or more products
51%
45%
11%
Product Penetration Rate: 3 products
20%
16%
23%
Consumer: Transactional Accounts
Active Consumers (millions)
2.08
1.88
11%
Net Activations (thousands)
(42%)
Consumer: Lending
Number of Loans Originated (thousands)
1,523
1,299
17%
Lending Origination (ZAR millions)
3,769
2,500
51%
Lending Portfolio Outstanding (ZAR millions)
(2)
1,396
40%
Consumer: Insurance
Number of Insurance Policies Written (thousands)
29%
Active Insurance Policies (thousands)
34%
Gross Written Premium (ZAR millions)
41%
Consumer: Lesaka Payouts
Approximate number of active cardholders (thousands)
(18%)
Approximate load value for the period (ZAR millions)
27%
Notes:
(1) ARPU iscalculated ona revenueper active consumerbasis whereby anactive consumercan be botha permanent andnon
permanent grant. ARPU is a monthly figure based on a 3-month rollingaverage for the quarter ended June 30, 2026.
(2) Gross loan book, before provisions.
Notable developments within Consumer:
WithinTransactionalAccounts:Growthinactiveconsumerswasdrivenprimarilybycontinuedproductandtechnology
innovation, including Bonngwe (our proprietary Customer Relationship Management ("CRM") engine). These improvements to sales
consultantandconsumerexperiencehavedrivenhighercross-sellpenetrationforbothourexistingbaseandnewlyonboarded
consumers.Aswegrowourdistributionfootprint,furthergrowthinactiveconsumershascomefromproductaugmentation,an
examplebeingPushaManje,ourUSSD-focused,direct-to-consumerADP platform,whichallowsconsumerstopurchase airtime,
electricity, and otherproducts directly from a mobile phone.
Within Lending: Wehave continued to see strong growth in our lending products, with credit loss ratios tracking below ourrisk
appetite.Reflectingtherealizedlossexperiencethathasconsistentlycomeinbelowprovisioninglevels,andsupportedby
enhancements to assessmentcriteria e.g. affordability, we haveadjusted our provisioningfrom 6.5%to 5.5% ofthe outstanding lending
portfolio. The revised rate reflects management's current best estimate of expected credit losses and remains subject to regular review
as the book evolves.
WithinInsurance: Our insuranceproduct sawcontinued growthin GrossWrittenPremiums writtenwhich hasbeen drivenby
continued adoptionof our Bonngweengine, enablingsales consultantsto cross-sellan insurancepolicy inan efficientmanner. We
have launched our open market insurance offering which allows for consumers outside of the Lesaka base to purchase apolicy, which
represents a key growth vector for the product offering.
Enterprise
Our EnterpriseDivision primarilyconsists ofour ADPoffering(which includesprepaid solutionsand billpayments) andthe
Utilities offering.
The underlying drivers ofperformance are primarily basedon TPV processed. Individualproduct related KPI's are shown below.
2026
2025
2026 vs
2025
Enterprise: ADP
TPV (ZAR billions)
48.0
40.9
17%
Enterprise: Utilities
Active Meters (thousands)
11%
TPV (ZAR millions)
1,934
151%
Notable developments within Enterprise:
Within ADP: Wecontinue to seeincreased TPV forbill payments drivenfrom increased usage fromour existing bankchannel
partners,whichgrewprimarilyfromtargetedmarketingcampaignsaswellasnewlyonboardedchannelpartnersacrossbanking,
fintech and retail. Thelaunch of our "4All" product,a multi-store of value voucherwhich can be redeemed at40+ partners, has seen
continued growth in TPV at higher take ratesthan bill payments, despite still being in earlydevelopment. We have now migrated 95%
of all other subproducts of ADP TPV offered in Merchant viathe Enterprise division, reducing reliance on external partners.
WithinUtilities: Wedelivered resultsconsistent withthe stable,recurring natureof thebusiness, underpinnedby transaction-
basedrevenuecoupledwithcontinuedgrowthinthenumberofconnectedmetersandsustaineddemandforprepaidelectricity
vouchers. Year-over-year comparisons for the vertical are not meaningful, as the business was consolidated into our results only from
the third quarter of fiscal2025 and therefore contributeda partial period in the prioryear against a full twelvemonths in fiscal 2026.
Performanceover theperiod reflectedthe product'score strengthsof predictable,annuity-likerevenue streamsand steadyvolume
growth.
Critical Accounting Policies
Our audited consolidatedfinancial statements havebeen prepared in accordancewith U.S. GAAP,which requires management
tomakeestimatesandassumptionsaboutfutureeventsthataffectthereportedamountofassetsandliabilitiesanddisclosureof
contingent assets and liabilities.As future events andtheir effects cannot bedetermined with absolute certainty,the determination of
estimates requiresmanagement'sjudgment basedon avariety ofassumptions andother determinantssuch ashistorical experience,
currentandexpectedmarketconditionsandcertainscientificevaluationtechniques.Managementbelievesthatthefollowing
accounting policiesare critical dueto the degreeof estimation requiredand the impactof these policieson the understanding of the
results of our operations and financial condition.
Recoverability of Goodwill
A significant componentof our growthstrategy is to acquireand integrate businessesthat complementour existing operations.
The purchaseprice ofan acquiredbusiness isallocated tothe tangibleand intangibleassets acquiredand liabilitiesassumedbased
upon their estimatedfair value at thedate of purchase.The difference betweenthe purchase price andthe fair value ofthe net assets
acquired isrecorded as goodwill.In determiningthe fair valueof assets acquiredand liabilities assumedin a businesscombination,
we use variousrecognized valuation methods, includingpresent value modeling.Further, we make assumptionsusing certain valuation
techniques, including discount rates and timing of future cash flows.
Wereview thecarrying valueof goodwillannually (June30) ormore frequentlyif circumstancesindicating impairmenthave
occurred.For instance, we performed interim impairment testing as of March 31,2026, related to goodwill allocated to our Switchpay
reportingunitwithinourMerchantsegmentastriggeringeventswereidentifiedoutsideoftheannualimpairmenttestdate.In
performing this review,we are required to estimatethe fair value of goodwill thatis implied from a valuation ofthe reporting unit to
which the goodwillhas been allocatedafter deducting thefair values ofall the identifiableassets and liabilitiesthat form partof the
reporting unit. The determination of thefair value of areporting unit requires us tomake significant judgments and estimates.Changes
in these judgements andestimates may impacton the outcomeof the impairment test.For instance, thefair value of theLesaka Payouts
reporting unit included inour Consumer segment exceededthe carrying value of thereporting unit as of June30, 2026, by 15.8%.If
we had useda weighted averagecost of capital("WACC")rate that was2% higher,we would haverecorded an impairmentof $0.4
million, and if the WACCrate was 2% lower, the headroom wouldhave increased from 15.8% to 45.3%.
In determining the fair value ofreporting units for fiscal 2026and fiscal 2025, we consideredkey judgements related to reporting
unit revenue growth rates, the weighted-average cost of capital applicable to peer and industry comparables of the reporting units and
the forecast period to be used. In determining the fair value of reportingunits for fiscal 2024, our key judgements related to reporting
unit revenue growth rates and the weighted-average cost of capital applicable to peer and industry comparables of the reporting units.
We base our estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. In addition, we
make judgmentsand assumptionsin allocatingassets andliabilities toeach ofour reportingunits. Referto Note10 toour audited
consolidated financial statements for a summary of the key judgements used inour impairment testing.
The results of our impairment tests during fiscal 2026 and 2025 indicated that the fair value of our reporting units exceeded their
carrying values, with theexception of the$0.4 million (relatedto the SwitchPayreporting unit) and$17.0 million (relatedto the Lesaka
Cash Management,Lesaka MT,LesakaPayoutsandLesaka AlternativeDigitalProductsProprietaryLimited(formerlyknownas
EasyPay ProprietaryLimited) ("LesakaADP") reportingunits), respectively,of goodwillimpaired duringfiscal 2026and 2025,as
discussed in Note 10 to our audited consolidated financial statements. The results of our impairment tests during fiscal 2024indicated
that the fair value of our reporting units exceeded their carrying values and so did notrequire impairment.
Intangible Assets Acquired Through Acquisitions
Thefair valuesof theidentifiableintangibleassets acquiredthroughacquisitionswere determinedby managementusingthe
purchase methodof accounting.Wecompletedthe acquisitionof AtomOperations ProprietaryLimited ("Atom")and MobileMart
during fiscal 2026where we identified and recognized intangible assets. Wecompleted the acquisition of Adumo and Utilities during
fiscal 2025where we identifiedand recognizedintangible assets. Wedid notidentify anysignificant intangibleassets related tothe
LesakaInsightsProprietaryLimited(formerlyknownas TouchsidesProprietaryLimited)("LesakaInsights")acquisitionin fiscal
2024. Weused therelief fromroyalty methodto valueidentified brandsidentified inthe Adumoacquisition, andthe multi-period
excess earnings method tovalue identified customer relationshipsand the replacement costapproach to value theidentified technology
assetsrelatedtoAtom,MobileMart,AdumoandUtilities.Wehaveusedtherelieffromroyaltymethod,themulti-periodexcess
earnings method, the income approachand the cost approach to value otherhistoric acquisition-related intangible assets. Inso doing,
we made assumptions regarding expected futurerevenues and expenses to develop theunderlying forecasts, applied contributory asset
charges, WACCrates, and useful lives.
The valuations were based on information available at thetime of the acquisition and the expectations andassumptions that were
deemed reasonable by us. No assurance can be given, however,that the underlying assumptions or events associated with such assets
will occur asprojected. For thesereasons, among others,the actual cashflows may varyfrom forecasts offuture cash flows.Tothe
extent actual cash flowsvary, revisionsto the useful lifeor impairment of intangibleassets may be necessary.Management assesses
the useful life ofthe acquired intangible assetsupon initial recognition and revisionsto the usefullife or impairment ofthese intangible
assets may be necessary in the future.
For instance, during earlycalendar 2025, our executiveconsidered the unification ofour merchant segments operationsand the
realignment ofour brandsunder themaster brand"Lesaka".
We
have identifiedthe stepsand timingto realignthe affectedbrands
under the masterbrand and expectto have completealignment by February2027, with certainbrands alreadyaligned by December
2025. The change in brandshas resulted in a changein the useful lives of certainof our brand and trademarkintangible assets which
has resulted in an increase (excluding the impact on "Adumo" and "GAAP" brands) in amortization expense of $6.3 million and $2.6
million duringthe yearsended June 30,2026 and 2025,respectively,compared withthe comparativeperiods assumingthe original
useful lives.Furthermore, werecorded animpairment lossof $1.8million relatedto LesakaMT intangibleassets whichwere fully
impairedduringtheyearendedJune30,2025.RefertoNote10ofourauditedconsolidatedfinancialstatementsforadditional
information.
Revenue recognition - principal versus agent considerations
We generaterevenue from the provision of transaction-processingservices through our various platformsand service offerings.
We use these platforms to (a) sell prepaid airtimevouchers that are held asinventory and (b) distribute ADP, including prepaid airtime
vouchers (which we do not hold as inventory), prepaid electricity, gaming vouchers, and other services, to end consumers through our
platforms. The determination of whether we act as a principalor as an agent when providing these services usingguidance contained
in
AccountingStandardsCodification("ASC")606RevenuefromContractswithCustomers
requiresasignificantamountof
judgement. Whenwe are theprincipal ina transaction,revenue is reportedon a grossbasis. Whenwe are anagent ina transaction,
revenueis recognizedbased onthe amountthatwe arecontractuallyentitled toreceiveforperformingthe distributionservice on
behalf of our customers.
Finance Loans Receivable and Allowance for Credit Losses
Merchant lending
The allowance for credit losses related to Merchant finance loans receivables is calculated by multiplying the expected write-off
rate fordoubtful or legaldebt with thetotal actual receivablesin defaultplus multiplying theexpected lossrate with themonth-end
outstanding lending book. Our risk management procedures include adhering to our proprietary lending criteria which uses an online-
system loan applicationprocess, obtainingnecessary customertransaction-history dataand credit bureauchecks. Weconsider these
procedures tobe appropriatebecause ittakes intoaccount avariety offactors suchas thecustomer's creditcapacity andcustomer-
specific risk factors when originating a loan.
Weuse historical defaultexperience over thelifetime of loansgenerated thusfar in orderto calculatean expected lossrate for
the lending book.In addition,management determines theexpected write-off ratefor doubtfulor legaldebt basedon historicalrecovery
trends fordefaulted receivables.The allowancefor creditlosses related tothese merchantfinance loansreceivables iscalculated by
multiplying the expectedwrite-off rate fordoubtful or legaldebt withthe totalactual receivables indefault plus multiplyingthe lifetime
loss rate with the month-end outstanding lending book. The expected loss rate as of June 30,2026 and June 30, 2025, was 3.21% and
1.14%,respectively.The performing component (that is,outstanding loan payments notin arrears), under-performing component (that
is,outstandingloanpaymentsthatareinarrears)andnon-performingcomponent(thatis,outstandingloansforwhichpayments
appeared to have ceased) ofthe book represents approximately 92%,7% and 1%, respectively,of the outstanding lending bookas of
June30,2026.Theperformingcomponent,under-performingcomponentandnon-performingcomponentofthebookrepresents
approximately 95%, 4% and 1%, respectively,of the outstanding lending book as of June 30, 2025.
Consumer microlending
The allowance for credit losses related to Consumer finance loans receivables is calculated by multiplying the expected loss rate
with the month-end outstanding lending book, excluding upfront initiation fees.Loans to customers havea tenor of upto nine months,
with the majority of loans originated having a tenor of six months. Credit bureauchecks as well as an affordability test are conducted
as part ofthe origination process,both of whichare in line withlocal regulations. Weconsider this policyto be appropriatebecause
the affordability test it performs takes into account a variety of factors such as other debts and total expenditures onnormal household
andlifestyleexpenses.Additionalallowancesmayberequiredshouldtheabilityofitscustomerstomakepaymentswhendue
deteriorate in the future. Whilethe allowance for creditlosses is primarily determined utilizinga provisioning model, there is stillan
element of judgmentrequired to assess theultimate recoverability ofthese finance loan receivables,including ongoing evaluationof
the creditworthiness of each customer.
Wehave operated thislending book formore than fiveyears and usehistorical default experienceover the lifetimeof loans in
order to calculate a expected lossrate for the lending book. We analyze this lending bookas a single portfolio because theloans within
the portfoliohave similar characteristicsand managementuses similar processesto monitorand assess thecredit risk ofthe lending
book. The allowance for credit lossesrelated to these microlending finance loans receivablesis calculated by multiplying the expected
loss rate withthe monthend outstandinglending book, excludingupfront initiationfees. The expectedloss rate asof June 30,2026
and 2025,was 5.50% and6.50%, respectively.The performingcomponent (thatis, outstandingloan payments notin arrears) ofthe
book exceeds more than 99.0% and 98.0% of outstanding lending bookas of June 30, 2026 and 2025, respectively.
Recent Accounting Pronouncements
Recent accounting pronouncements adopted
RefertoNote2 ofouraudited consolidatedfinancialstatements fora fulldescriptionof recentaccountingpronouncements,
including the dates of adoption and effects on financialcondition, results of operations and cash flows.
Recent accounting pronouncements not yet adopted as of June 30,2026
Refer to Note 2of our audited consolidatedfinancial statements for afull description of recentaccounting pronouncements not
yet adopted as of June 30, 2026, including the expected dates of adoptionand effects on financial condition, results of operations and
cash flows.
Currency Exchange Rate Information
Actual exchange rates
The actual exchange rates for and at the end of the periods presented wereas follows:
Table 1
June 30,
2026
2025
2024
ZAR : $ average exchange rate
16.9074
18.1644
18.7070
Highest ZAR : $ rate during period
18.1650
19.6350
19.4568
Lowest ZAR : $ rate during period
15.7392
17.1144
17.6278
Rate at end of period
16.4072
17.7554
18.1808
Translation Exchange Rates
Wehavetranslatedthe resultsof operationsandoperating segmentinformationfor theyearended June30, 2026,2025,and
2024, provided in the tablesbelow using the actual averageexchange rates per month betweenthe USD and ZAR. Thus,the average
rates used to translate thisdata for the yearsended June 30, 2026, 2025and 2024, vary slightlyfrom the averages shown inthe table
above.
Results of operations
The discussionof ourconsolidated overallresults ofoperations isbased onamountsas reflectedin ouraudited consolidated
financial statements which are prepared in accordancewith U.S. GAAP.We analyze ourresults of operations both in U.S. dollars, as
presented in the audited consolidated financial statements, and supplementally in ZAR, because ZAR is the functional currency of the
entities which contribute the majority of our results and is the currency in whichthe majority of our transactions are initially incurred
andmeasured.PresentationofourreportedresultsinZARisanon-GAAPmeasure.Duetothesignificantimpactofcurrency
fluctuations betweenthe U.S. dollarand ZAR onour reportedresults andbecause weuse theU.S. dollar asour reportingcurrency,
we believe thatthe supplemental presentationof our resultsof operations inZAR is usefulto investors tounderstand the changesin
the underlying trends of our business.
Ouroperatingsegmentrevenuepresentedin"-Resultsofoperationsbyoperatingsegment"representstotalrevenueper
operating segment before intercompanyeliminations. A reconciliation betweentotal operating segment revenue andrevenue, as well
as the reconciliation between our segment performance measureand net income (loss) before tax expense(benefit),is presented in our
audited consolidated financialstatements in Note21 tothose statements.Our chief operatingdecision maker isour ExecutiveChairman
and heevaluates segmentperformance basedon segmentearnings beforeinterest, tax,depreciation andamortization ("EBITDA"),
adjusted foritems mentionedin thenext sentence("Segment AdjustedEBITDA") foreach operatingsegment. Wedo notallocate
once-off items(as definedbelow), stock-basedcompensation charges,impairment ofother intangibleassets, otheritems (including
gains or losseson disposalof investments, fairvalue adjustments toequity securities), interestincome, interestexpense, incometax
expenseorearningsfromequity-accountedinvestmentstoourreportablesegments.Wehaveincludedanintercompanyinterest
expense in ourConsumer Segment AdjustedEBITDA for fiscal2025. Once-off itemsrepresent non-recurring expenseitems, including
costs relatedtoacquisitionsandtransactionsconsummatedorultimatelynotpursued.The Stock-basedcompensationadjustments
reflect stock-based compensation expense and are both excludedfrom the calculation of Segment Adjusted EBITDAand are therefore
reported asreconciling itemsto reconcilethe reportablesegments' SegmentAdjusted EBITDAto ourincome (loss)before income
tax expense.
GroupAdjustedEBITDArepresentsSegmentAdjustedEBITDAafterdeductinggroupcosts.Referalso"Resultsof
Operations-Use of Non-GAAP Measures" below.
In fiscal 2026 we closed the acquisitions of Atom andMobileMart and have integrated their businesses into ours from December
2025andFebruary2026,respectively.In fiscal2025 weclosed theacquisitionsofAdumo andUtilities andhaveintegratedtheir
businesses into ours. Our fiscal 2025 financial results include Adumo from October 1, 2024 and Utilities fromMarch 3, 2025, and do
not includeAtom andMobileMart. Referalso toNote 3to theaudited consolidatedfinancial statementsfor additionalinformation
regarding these transactions. Atom, MobileMart, Adumo and Utilities are notincluded in our financial results for fiscal 2024.
Weanalyze ourbusiness andoperationsin termsof threeinter-relatedbut independentoperating segments:(1) Merchant(2)
Consumer and (3) Enterprise.In addition, corporate activitiesthat are impracticable toallocate directly to theoperating segments, as
well as any inter-segment eliminations, are included in Group costs. Inter-segment revenue eliminations are includedin Eliminations.
Fiscal 2026 Compared to Fiscal 2025
The following factors hada significant influence onour results ofoperations during fiscal 2026as compared withthe same period
in the prior year:
●
Higher revenue:
Our revenues increased by 9.4% in U.S. dollar and 1.7% in ZAR, primarily due to the inclusion of Utilities
and MobileMart,as wellas highertransaction, insuranceand lendingrevenues inConsumer,which waspartially offsetby
lower prepaid airtime revenue;
●
Operatingincomeincrease:
OperatingincomeincreasedprimarilyduetostrongperformancebyConsumerandthe
contributionfromUtilitiesinEnterprise,whichwaspartiallyoffsetbyanincreaseinamortizationofacquisition-related
intangible assets;
●
Lower netinterest charge:
Net interestchargedecreased to$15.6 million(ZAR 264.6million) from$19.2 million(ZAR
349.5 million) primarilydue to a lowerinterest expense followinglower interest rates andthe exclusion of interestexpense
incurred under our borrowing arrangementsrelated to our Consumer lendingbook in fiscal 2026 compared with2025. On a
comparable basis theequivalent interest expenserelated to theConsumer lending bookfor fiscal2025 was included ininterest
expense from July 2024 to February 2025; and
●
Foreign exchange movements:
The U.S. dollar was 6.9% weaker against the ZAR during fiscal2026compared to the prior
period, which positively impacted our U.S. dollar reported results.
Consolidated overall results of operations
This discussion is based on the amounts prepared in accordance with U.S. GAAP.
The following tables show the changes in the items comprising our statements of operations,both in U.S. dollars and in ZAR:
Table 2
In U.S. Dollars
Yearended June 30,
2026
2025
$ %
$ '000
$ '000
change
Revenue
721,554
659,701
9%
Cost of goods sold, IT processing, servicing and support
(A)
490,834
487,186
1%
Selling, general and administration
(A)(1)
166,269
131,738
26%
Depreciation and amortization
47,346
33,721
40%
Impairment loss
4,035
18,863
(79%)
Transaction costs related to Adumo, Utilities andBank Zero acquisitions and
certain compensation costs
16,159
(98%)
Operating income (loss)
12,681
(27,966)
nm
Change in fair value of equity securities
2,593
(59,828)
nm
Loss on impairment or disposal of equity-accounted investment
263%
Reversal of allowance for doubtful loan receivable
1,500
-
nm
Loss on disposal of equity securities
-
nm
Other income
3,883
-
nm
Interest income
2,889
2,596
11%
Interest expense
(A)
18,506
21,824
(15%)
Income (Loss) before income tax expense (benefit)
3,726
(107,183)
nm
Income tax expense (benefit)
(A)
1,429
(15,982)
nm
Net income (loss) before earnings from equity-accounted investments
2,297
(91,201)
nm
Earnings from equity-accounted investments
89%
Net income (loss)
2,512
(91,087)
nm
Add net loss attributable to non-controlling interest
89%
Net income (loss) attributable to us
2,758
(90,957)
nm
(A)InordertocorrecttheerrorsdiscussedinNote1totheconsolidatedstatementofoperations,Costofgoodssold,IT
processing, servicingand supportincreased by$0.6 million,Selling, generaland administrationexpense increasedby $0.2million,
Operating incomedecreased by $0.9million, Interest expenseincreased by$0.4 million, incometax expense (benefit)decreased by
$2.2 million,and the subtotalcaptions fromIncome (Loss) beforeearnings (loss) fromequity-accounted investments toNet income
(loss) attributable to Lesaka decreased by $3.4 million for fiscal 2025.
(1) Selling, general and administration includes allowance for credit losses.
Table 3
In South African Rand
Yearended June 30,
2026
2025
ZAR %
ZAR '000
ZAR '000
change
Revenue
12,180,962
11,980,399
2%
Cost of goods sold, IT processing, servicing and support
(A)
8,289,867
8,845,530
(6%)
Selling, general and administration
(A)(1)
2,806,221
2,392,857
17%
Depreciation and amortization
802,598
612,298
31%
Impairment loss
67,116
334,929
(80%)
Transaction costs related to Adumo, Utilities andBank Zero acquisitions and
certain compensation costs
6,664
291,358
(98%)
Operating income (loss)
208,496
(496,573)
nm
Change in fair value of equity securities
43,957
(1,089,871)
nm
Loss on impairment or disposal of equity-accounted investment
10,342
2,886
258%
Reversal of allowance for doubtful loan receivable
25,132
-
nm
Loss on disposal of equity securities
12,286
-
nm
Other income
65,353
-
nm
Interest income
48,621
47,108
3%
Interest expense
(A)
313,258
396,649
(21%)
Income (Loss) before income tax expense (benefit)
55,673
(1,938,871)
nm
Income tax expense (benefit)
(A)
23,583
(289,008)
nm
Net income (loss) before earnings from equity-accounted investments
32,090
(1,649,863)
nm
Earnings from equity-accounted investments
3,593
2,035
77%
Net income (loss)
35,683
(1,647,828)
nm
Add net loss attributable to non-controlling interest
4,155
2,307
80%
Net income (loss) attributable to us
39,838
(1,645,521)
nm
(A) In orderto correct theerror discussed inNote 1 tothe consolidated statement ofoperations, Cost ofgoods sold, ITprocessing,
servicingandsupport increasedbyZAR11.6million,Selling,generalandadministrationexpenseincreasedby ZAR4.1million,
OperatingincomedecreasedbyZAR15.7million,InterestexpenseincreasedbyZAR6.8million,incometaxexpense(benefit)
decreasedbyZAR39.3million,andthesubtotalcaptionsfromIncome(Loss)beforeearnings(loss)fromequity-accounted
investments to Net income (loss) attributable to Lesaka decreased byZAR 61.7 million for fiscal 2025.
(1) Selling, general and administration includes allowance for creditlosses.
Revenue increased by $61.9 million (ZAR 0.2 billion)or 9.4% (in ZAR, 1.7%).The increase was primarily due to the inclusion
of Utilities and MobileMart, the impact of an increase in certain issuing fee base prices year-over-year,and transaction activity in our
issuing business,andan increasein insurancepremiumscollected andlending revenues(includinginterest) followinghigherloan
originations,whichwaspartiallyoffsetbythedecreaseinthevolumeofprepaidairtimesold.Refertodiscussionaboveat"-
Developments during Fiscal 2026" for a description of key trends impacting ourrevenue this fiscal year.
Cost ofgoods sold,IT processing,servicing andsupport increasedby $3.6 million(or0.7%)and inZAR decreasedby ZAR
0.6 billion (or 6.3%). The decrease in ZAR is primarilydue to the decrease in the prepaid airtime costs,which was partially offset by
an increasein lendingrelated expenditures(including interestexpense), higherinsurance-relatedclaims andthird partytransaction
fees and the inclusion of Utilities and MobileMart.
Selling, generaland administration expensesincreased by $34.5million (ZAR 413.4million), or 26.2%(in ZAR, 17.3%).The
increase was primarily due to theinclusion of Adumo and Utilities;higher marketing costs relatedto the Lesaka rebrand, an increase
in the allowancefor credit lossesas a resultof higherlending activities byConsumer and Merchant,higher consultingfees, and the
year over-yearimpact ofinflationary increaseson certainexpenses, whichwas partiallyoffsetby lowerstock-based compensation
charges.
Depreciationandamortizationexpenseincreasedby$13.63million(ZAR190.3million),or40.4%(inZAR,31.1%).The
increase was dueto the change toa shorter useful lifefor certain of ourbrand and trademarkintangible assets (refer toNote 10), the
inclusion of acquisition-related intangible asset amortization related to intangible assetsidentified pursuant to the Adumo and Utilities
acquisitions.
Impairment loss for fiscal 2026 includes an impairment loss of $2.6 million (ZAR43.6 million) related to right-of-use assets and
$1.0million(ZAR16.5million)relatedtoleaseholdimprovementsrecordedinproperty,plantandequipmentforourexisting
operating lease arrangements ascertain of our leasedfacilities will nolonger be utilized asoriginally intended as aresult of theplanned
transitiontoournewcorporateheadoffice,animpairmentlossof$0.7million(ZAR11.5million)relatedtoATMsrecordedin
property,plant and equipment asa result of theexit of the ATMbusiness, and an impairmentloss of $0.4 million(ZAR 6.5 million)
related to goodwill allocated to our SwitchPay reportingunit within the Merchant segment. Refer toNote 8 and Note 10of our audited
consolidated financial statements for additional information regardingthese impairment losses.
Transactioncosts relatedto Adumo,Utilities andBank Zeroacquisitions andcertain compensationcosts includesfees paidto
external serviceproviders associatedwith legaland advisoryservices procuredto closethe Adumotransaction onOctober 1, 2024,
andtheUtilitiestransactioninMarch2025,aswellaspost-combinationcompensationchargesrecognizedrelatedtotheUtilities
acquisitionof$13.6million(ZAR245.7million)anddecreasedprimarilyduetothesepost-combinationcompensationcharges
expensed in fiscal 2025. This caption also includes transaction costs related to the proposed acquisition of Bank Zero. Refer to Note 3
to our audited consolidated financial statements for additional information.
Our operating income (loss) marginin fiscal 2026and 2025 was 1.8% and(4.2%), respectively.
We
discuss the components of
operating loss margin under "-Results of operationsby operating segment."
We
recordedan increasein thefair valueof CellC of$3.0 million(ZAR 50million) duringfiscal 2026(refer toNote 6for
additional information),partially offsetby anon-cash changein fairvalue ofequity securitiesof $0.4million.
We
recorded anon-
cashchangeinfair valueof equitysecuritiesof $59.8millionduringfiscal2025 relatedtoafair valueadjustmentloss relatedto
MobiKwik.
We
recentlyenteredintodiscussionswithVantageAfricaLimited("VantagePay")regardingstepstorecover$1.5million
outstanding from them.
We
believe that there is sufficient evidence tosupport the recoverability of the amount due fromVantagePay
and recorded a reversal ofthe allowance for credit losses of $1.5million previously recognized duringthe year ended June 30, 2026.
Refer to Note 4 for additional information.
We
recordedalossof$0.7million(ZAR12.3million)relatedtothedisposalofHumbleSoftwareProprietaryLimited
("Humble") during the year ended June 30, 2026. Refer to Note 3for additional information.
In December 2025, we determinedthat the liquidation of CPS isat an advanced stageand released an accrual raisedat the time
of deconsolidation of $3.9 million (ZAR 65.4 million) to Other income.
Interest on surplus cash increased to $2.9 million (ZAR 48.6 million) from $2.6 million (ZAR 47.1 million), due to the inclusion
of Adumo and increased cash balances, which was partially offsetby lower interest rates.
Interestexpense decreasedto $18.5million (ZAR313.3 million)from $21.8million (ZAR396.6million). Thedecrease was
primarily due tolower interest rates andthe partial exclusionof interest expenseincurred under ourborrowing arrangements related
to our Consumer lending bookin fiscal 2026 compared withfiscal 2025. On a comparablebasis the equivalent interest expense related
to the Consumer lending book for fiscal 2025 was included in interest expensefrom July 2024 to February 2025.
Fiscal 2026income tax expense was $1.4 million (ZAR 23.6 million) compared to an income tax benefitof $16.0 million (ZAR
289.0 million) in fiscal 2025. Our effectivetax rate for fiscal 2026 was impacted by the tax expenserecorded by our profitable South
African operations,non-taxable income(primarily relatedto thedisposal ofCell C andother income)and non-deductibleexpenses
(includingtransaction-relatedexpendituresandthe goodwillimpairment).The incometax expensewas alsoimpacted bya higher
deferred taxbenefit as aresult ofthe reductionin the usefullives of certainof ourbrand andtrademark intangibleassets which has
resultedinanincreaseinamortizationexpenseduringfiscal2026andthereleaseof$12.3millionrelatedtocertainvaluation
allowancescreatedinprioryearsfollowinganimprovementinprofitabilityofcertainoftheCompany'ssubsidiaries,whichwas
partiallyoffsetby therecognitionof avaluationallowancerelatedto anoperatingloss carryforwardandother deferredtax assets
totalling $9.9 million following a determination by the management, after consideringboth positive and negative evidence, that these
deferred tax assets would not be realized in future years.
Oureffectivetax rateforfiscal2025was impactedbydeferredtaximpactrelatedtothe fairvalueadjustmenttoour equity
securities, the reversal of $12.8million related to certain valuation allowancescreated in prior years following (i)an improvement in
profitability of certain of our subsidiaries and (ii) a change in judgment on the need for a valuation allowance of $11.4 million related
toanentitywhichwebelievehasachievedsustainableprofitability,thetaxexpenserecordedbyourprofitableSouthAfrican
operations, a deferred tax benefit related to acquisition-related intangible asset amortization,non-deductible expenses (in transaction-
related expenses),the on-goinglosses incurredby certainof ourSouth Africanbusinesses andthe associatedvaluation allowances
created related tothe deferred tax assetsrecognized regardingnet operating losses incurredby these entities.Our income tax benefit
for fiscal 2025 also includes a $2.2 million income tax expense related to thecorrection of the error discussed in Note 1.
Results of operations by operating segment and group costs
The composition of revenue and the contributions of our business activities toGroup Adjusted EBITDA are illustrated below:
Table 4
In U.S. Dollars
Yearended June 30,
2026
% of
2025
% of
%
Operating Segment
$ '000
total
$ '000
total
change
Consolidated revenue:
Merchant
509,335
71%
526,600
80%
(3%)
Consumer
142,631
20%
96,008
15%
49%
Enterprise
74,730
10%
42,554
6%
76%
Subtotal: Operating segments
726,696
101%
665,162
101%
9%
Eliminations
(5,142)
(1%)
(5,461)
(1%)
(6%)
Totalconsolidated revenue
721,554
100%
659,701
100%
9%
Group Adjusted EBITDA:
Merchant
(A)(1)
35,533
47%
35,329
70%
1%
Consumer
(1)
46,193
61%
23,949
48%
93%
Enterprise
(1)
8,119
11%
1,287
3%
531%
Group costs
(14,103)
(19%)
(10,743)
(21%)
31%
Group Adjusted EBITDA (non-GAAP)
(2)
75,742
100%
49,822
100%
52%
(A) Inorder tocorrect theerror discussedin Note1 tothe consolidatedstatement ofoperations, MerchantSegment Adjusted
EBITDA and Group Adjusted EBITDA decreased by $0.9 million forfiscal 2025.
(1) SegmentAdjusted EBITDAfor fiscal2026, includesreorganizationand retrenchmentcosts forMerchant of$0.8 million,
Enterprise of$0.1 million,and Consumerof $0.4million. SegmentAdjusted EBITDAfor fiscal2025, includesreorganizationand
retrenchment costs for Merchant of $0.8 million, Enterprise of $0.8 million, andConsumer of $0.1 million.
(2) Group Adjusted EBITDAis a non-GAAP measure, referto reconciliation below at"-Results of Operations-Use ofNon-
GAAP Measures".
Table 5
In South African Rand
Yearended June 30,
2026
% of
2025
% of
%
Operating Segment
ZAR '000
total
ZAR '000
total
change
Consolidated revenue:
Merchant
8,609,898
71%
9,562,360
80%
(10%)
Consumer
2,401,720
20%
1,744,429
15%
38%
Enterprise
1,255,617
10%
773,057
6%
62%
Subtotal: Operating segments
12,267,235
101%
12,079,846
101%
2%
Eliminations
(86,273)
(1%)
(99,447)
(1%)
(13%)
Totalconsolidated revenue
12,180,962
100%
11,980,399
100%
2%
Group Adjusted EBITDA:
Merchant
(A)(1)
601,573
47%
641,509
70%
(6%)
Consumer
(1)
775,027
61%
435,193
48%
78%
Enterprise
(1)
136,164
11%
23,724
3%
474%
Group costs
(238,176)
(19%)
(193,853)
(21%)
23%
Group Adjusted EBITDA (non-GAAP)
(2)
1,274,588
100%
906,573
100%
41%
(A) Inorder tocorrect theerror discussedin Note1 tothe consolidatedstatement ofoperations, MerchantSegment Adjusted
EBITDA and Group Adjusted EBITDA decreased by ZAR 15.7million for fiscal 2025.
(1)SegmentAdjustedEBITDAforfiscal2026,includesreorganizationandretrenchmentcostsforMerchantofZAR14.0
million,EnterpriseofZAR1.1million,andConsumerof ZAR7.1million.SegmentAdjustedEBITDAforfiscal2025,includes
reorganizationand retrenchmentcosts forMerchant ofZAR 15.7million, EnterpriseZAR 13.6million, andConsumer ofZAR 1.5
million.
(2) Group Adjusted EBITDAis a non-GAAP measure, referto reconciliation below at"-Results of Operations-Use ofNon-
GAAP Measures".
Merchant
Segment revenuedecreased dueto fewerprepaid airtimesales whichwas partiallyoffset bythe inclusionof Adumo,a higher
volume of ADPprovided (Pinless Airtime andgaming). In ZAR,the decrease inSegment Adjusted EBITDA isprimarily due to higher
operating expenses incurred,which was partiallyoffset by the inclusionof Adumo forthe entire periodcompared with theprior period.
Our Segment Adjusted EBITDA margin (calculated asSegment Adjusted EBITDA divided by revenue) forfiscal 2026and 2025
was 7.0% and 6.7%, respectively.
Consumer
Segment revenueincreased primarilydue tohigher transactionfees generatedfrom thehigher EPEaccount holdersbase, the
impactofanincreaseincertainissuingfeebasepricesyear-over-year,andtransactionactivityinourissuingbusiness,insurance
premiums collected, lending revenues following anincrease in loan originations. Thisincrease in revenue hastranslated into improved
profitability,which waspartially offsetby a higherallowance forcredit losses followingan increasein loan originationsduring the
year,higher insurance-relatedclaims, interestexpense (ofZAR 88.5million) incurredto fundour lendingbook andthe year-over-
year impact of inflationary increases on certain expenses.
Our Segment Adjusted EBITDA margin for fiscal 2026and 2025 was 32.4% and 24.9%, respectively.
Enterprise
Segment revenueincreased primarily dueto the inclusionof Utilities andMobileMart andorganic revenuegrowth due tonew
ADP customers acquired.In ZAR, the significant increase in Segment Adjusted EBITDA is primarily due tothe inclusion of Utilities.
Our Segment Adjusted EBITDA margin for fiscal 2026and 2025 was 10.9% and 3.0%, respectively.
Group costs
Our groupcosts primarilyinclude employeerelated costsin relationto employeesspecifically hiredfor grouproles andcosts
related directly to managing the US-listed entity; expenditures related to compliance with the Sarbanes; non-employee directors' fees;
legal fees; group and US-listed related audit fees; and directors' and officers'insurance premiums.
Our group costsfor fiscal 2026increased compared withthe prior perioddue to higheremployee related costs,consulting fees
and compliance related expenditure.
Fiscal 2025Compared to Fiscal 2024
The following factors hada significant influence onour results ofoperations during fiscal2025 as compared withthe same period
in the prior year:
●
Higher revenue:
Our revenues increased by16.9% in U.S.dollar and 13.5%in ZAR, primarilydue to theinclusion of Adumo
andUtilities,anincreaseinvalue-addedservicesactivityinMerchant,higherPinnedAirtimesales,aswellashigher
transaction, insurance and lending revenues in Consumer, which was partially offset by a lower contribution from our legacy
Enterprise businesses;
●
Operatingincomeincrease,beforetransactioncosts:
Operatingincome,beforetransactionandrelatedcosts,increased
significantly primarily due to contributions from Adumo fromOctober 1, 2024 and Utilities from March3, 2025, which were
partiallyoffsetbyincreasedcostsandanincreaseinamortizationofacquisition-relatedintangibleassetsrelatedtothe
acquisition of Adumo and Utilities;
●
Non-cash fair value adjustment related to equity securities:
We recorded a non-cash fair value loss of $59.8 million during
fiscal 2025 related to the disposal of our investment in MobiKwik;
●
Higher net interest charge:
The net interest charge increased to$19.2 million (ZAR 349.5 million) from$16.9 million (ZAR
315.6 million) primarilyhigher overall borrowings,which was partially offsetby an increase ininterest received asa result
of the inclusion of Adumo; and
●
Foreign exchange movements:
The U.S. dollar was 4.2% weaker against the ZAR duringfiscal 2025compared to the prior
period, which positively impacted our U.S. dollar reported results.
Consolidated overall results of operations
This discussion is based on the amounts prepared in accordance with U.S. GAAP.
The following tables show the changes in the items comprising our statements ofoperations, both in U.S. dollars and in ZAR:
Table 6
In U.S. Dollars
Yearended June 30,
2025
2024
$ %
$ '000
$ '000
change
Revenue
659,701
564,222
17%
Cost of goods sold, IT processing, servicing and support
(A)
487,186
443,293
10%
Selling, general and administration
(A)
131,738
92,185
43%
Depreciation and amortization
33,721
23,665
42%
Impairment loss
18,863
-
nm
Transaction costs related to Adumo, Utilities andBank Zero acquisitions and
certain compensation costs
16,159
2,325
595%
Operating (loss) income
(27,966)
2,754
nm
Change in fair value of equity securities
(59,828)
-
nm
Reversal of allowance for doubtful loan receivable
-
nm
Loss on disposal of equity-accounted investment
-
nm
Interest income
2,596
2,294
13%
Interest expense
(A)
21,824
19,171
14%
Loss before income tax (benefit) expense
(107,183)
(13,873)
673%
Income tax (benefit) expense
(A)
(15,982)
3,363
nm
Net loss before earnings (loss) from equity-accounted investments
(91,201)
(17,236)
429%
Earnings (loss) from equity-accounted investments
(1,279)
nm
Net loss
(91,087)
(18,515)
392%
Add net loss attributable to non-controlling interest
-
nm
Net loss attributable to us
(90,957)
(18,515)
391%
(A) In orderto correct theerror discussed inNote 1 tothe consolidated statementof operations forfiscal 2025 and2024, Cost
ofgoodssold,ITprocessing,servicingandsupportincreasedby$0.6millionand$0.6 million,respectively,Selling, generaland
administration expense increased by $0.2 million and$0.2 million, respectively,Operating income decreased by $0.9 million and$0.8
million, respectively,Interest expenseincreased by$0.4 millionand $0.2million, respectively,for fiscal2025, incometax expense
(benefit) decreased by $2.2 million, and the subtotalcaptions for fiscal 2025 and 2024 fromIncome (Loss) before earnings (loss) from
equity-accounted investments to Net income (loss) attributable to Lesaka decreasedby $3.4 million and $1.1 million, respectively.
(1) Selling, general and administration includes allowance for credit losses.
Table 7
In South African Rand
(US GAAP)
Yearended June 30,
2025
2024
ZAR %
ZAR '000
ZAR '000
change
Revenue
11,980,399
10,553,233
14%
Cost of goods sold, IT processing, servicing and support
(A)(A)
8,845,530
8,291,826
7%
Selling, general and administration
(A)
2,392,857
1,724,039
39%
Depreciation and amortization
612,298
442,570
38%
Impairment loss
334,929
-
nm
Transaction costs related to Adumo, Utilities andBank Zero acquisitions and
certain compensation costs
291,358
43,154
575%
Operating (loss) income
(496,573)
51,644
nm
Change in fair value of equity securities
(1,089,871)
-
nm
Reversal of allowance for doubtful loan receivable
-
4,741
nm
Loss on disposal of equity-accounted investment
2,886
-
nm
Interest income
47,108
42,896
10%
Interest expense
(A)
396,649
358,510
11%
Net loss before income tax (benefit) expense
(1,938,871)
(259,229)
648%
Income tax (benefit) expense
(A)
(289,008)
62,616
nm
Net loss before earnings (loss) from equity-accounted investments
(1,649,863)
(321,845)
413%
Earnings (loss) from equity-accounted investments
2,035
(24,298)
nm
Net loss
(1,647,828)
(346,143)
376%
Add net loss attributable to non-controlling interest
2,307
-
nm
Net loss attributable to us
(1,645,521)
(346,143)
375%
(A) In order to correct the error discussed in Note 1 to the consolidated statement of operations for fiscal 2025 and 2024, Cost of
goods sold, ITprocessing, servicingand support increasedby ZAR 11.6million and ZAR8.8 million, respectively,Selling, general
and administrationexpense increasedby ZAR4.1 millionand ZAR3.1 million,respectively,Operating incomedecreased byZAR
15.7 millionand ZAR 11.9million, respectively,Interest expense increasedby ZAR 6.8million andZAR 6.8 million,respectively,
for fiscal 2025, income tax expense (benefit) decreased by ZAR 39.3 million, and the subtotal captions for fiscal 2025 and 2024 from
Income (Loss) before earnings(loss) from equity-accounted investmentsto Net income(loss) attributable to Lesakadecreased by ZAR
61.7 million and ZAR 22.4 million, respectively.
(1) Selling, general and administration includes allowance for creditlosses.
Revenue increasedby $95.5 million(ZAR 1.4 billion),or 16.9% (inZAR, 13.5%). Theincrease in ZARwas primarily dueto,
the inclusionof Adumo,an increasein thevolume ofvalue-addedservices provided(Pinless Airtimeandgaming), anincreasein
Pinned Airtime sales, an increase incertain issuing fee base prices andtransaction activity in our issuing business,and an increase in
insurance premiums collected and lending revenues following higher loanoriginations.
Cost of goods sold, IT processing, servicing and support increased by $43.9 million (ZAR0.6 billion), or 9.9% (in ZAR, 6.7%),
primarily dueto theinclusion ofAdumo, highercommissions paidrelated toADP revenuegenerated, andhigher insurance-related
claims and third-party transaction fees, which was partially offsetby the decrease in Pinned Airtime sales.
Selling, generaland administration expensesincreased by $39.6million (ZAR 668.8million), or 42.9%(in ZAR, 38.8%).The
increase was primarilydue to the inclusionof Adumo; higheremployee-related expenses(including annual salaryincreases); higher
stock-based compensationcharges, consultingfees and audit fees;and the year-over-yearimpact of inflationaryincreases on certain
expenses.
Depreciationandamortizationexpenseincreasedby$10.06 million(ZAR169.7million),or42.5%(inZAR,38.4%).The
increase was due to the inclusion of acquisition-related intangible asset amortization relatedto intangible assets identified pursuant to
the Adumo and Utilities acquisitions and an increase in depreciationexpense related to additional POS devices deployed.
During fiscal2025, we recordedan impairmentloss which includesan impairmentof goodwill of$17.0 million relatedto the
impairment of goodwill allocated to each of Merchant, Consumer and Enterprise as well as an impairment of intangible assets of $1.8
million. Refer toNote 10 ofour audited consolidatedfinancial statementsfor additional informationregarding these impairmentlosses.
Transactioncosts relatedto Adumo,Utilities andBank Zeroacquisitions andcertain compensationcosts includesfees paidto
external serviceproviders associatedwith legaland advisoryservices procuredto closethe Adumotransaction onOctober 1,2024,
andtheUtilitiestransactioninMarch2025,aswellaspost-combinationcompensationchargesrecognizedrelatedtotheUtilities
acquisition of $13.6 million(ZAR 245.7 million) andincreased primarily due tothese post-combination compensationcharges. This
caption also includestransaction costs relatedto the proposedacquisition of BankZero. Refer toNote 3 toour audited consolidated
financial statements for additional information.
Our operating (loss) income marginin fiscal 2025and 2024 was(4.2%) and 0.5%, respectively.
We
discuss the components of
operating loss margin under "-Results of operationsby operating segment."
The change in fair value of equity securities of $59.8 million during fiscal 2025 represents a non-cashfair value adjustment loss
related to MobiKwik. Wedid not record any changesin the fair value ofequity interests in MobiKwik duringthe fiscal 2024, orany
fair value adjustments for Cell C during fiscal 2025 or 2024, respectively.We carried our investmentin Cell C at $0 (zero) as of June
30, 2025.
Interest on surplus cash increased to $2.6 million (ZAR 47.1 million) from $2.3 million (ZAR 42.9 million), primarily due to the
inclusion of Adumo and higher overall average cash balances on deposit duringfiscal 2025 compared with 2024.
Interest expense increasedto $21.8 million (ZAR 396.6million) from $19.2 million (ZAR 358.5million). In ZAR, the increase
was primarilyas a resultof higheroverall borrowingsduring fiscal 2025compared withthe comparableperiod in theprior quarter,
which was partially offset by lower overall interest rates.
Fiscal 2025income taxbenefit was$16.0million (ZAR289.0 million)compared toan incometax expenseof $(3.4)million
(ZAR (62.6) million) in fiscal 2024. Our effective tax rate forfiscal 2025 was impacted by deferred tax impact related tothe fair value
adjustment to our equitysecurities, the reversal of$12.8 million related tocertain valuation allowances createdin prior yearsfollowing
(i) an improvementin profitability ofcertain of oursubsidiaries and (ii)a change injudgment on theneed for a valuationallowance
of $11.4 million related to an entitywhich we believe has achievedsustainable profitability, the tax expense recorded by our profitable
South African operations,a deferred taxbenefit related toacquisition-related intangibleasset amortization, non-deductibleexpenses
(in transaction-related expenses), the on-going losses incurred by certain of our South African businesses and the associated valuation
allowances created related tothe deferred tax assets recognizedregarding net operating losses incurredby these entities. Ourincome
tax benefit for fiscal 2025 also includes a $2.2 million income tax expense relatedto the correction of the error discussed in Note 1.
Our effectivetax ratefor fiscal2024 wasimpacted bythe taxexpense recordedby ourprofitable SouthAfrican operations,a
deferred tax benefit related to acquisition-related intangible asset amortization, non-deductible expenses, the on-going losses incurred
by certain of ourSouth African businesses andthe associated valuation allowancescreated related to thedeferred tax assets recognized
regarding net operating losses incurred by these entities.
Results of operations by operating segment and group costs
The composition of revenue and the contributions of our business activities toGroup Adjusted EBITDA are illustrated below:
Table 8
In U.S. Dollars
Yearended June 30,
2025
% of
2024
% of
%
Operating Segment
$ '000
total
$ '000
total
change
Consolidated revenue:
Merchant
526,600
80%
459,790
81%
15%
Consumer
96,008
15%
69,211
12%
39%
Enterprise
42,554
6%
46,897
8%
(9%)
Subtotal: Operating segments
665,162
101%
575,898
101%
15%
Eliminations
(5,461)
(1%)
(11,676)
(1%)
(53%)
Totalconsolidated revenue
659,701
100%
564,222
100%
17%
Group Adjusted EBITDA:
Merchant
(A)(1)
35,329
70%
28,334
78%
25%
Consumer
(1)
23,949
48%
12,679
35%
89%
Enterprise
(1)
1,287
3%
2,931
8%
(56%)
Group costs
(10,743)
(21%)
(7,844)
(21%)
37%
Group Adjusted EBITDA (non-GAAP)
(2)
49,822
100%
36,100
100%
38%
(
A) Inorder tocorrect theerror discussedin Note1 tothe consolidatedstatement ofoperations, MerchantSegment Adjusted
EBITDA and Group Adjusted EBITDA for fiscal 2025 and fiscal 2024decreased by $0.9 million and $0.8 million, respectively.
(1) SegmentAdjusted EBITDAfor fiscal2025, includesreorganizationand retrenchmentcosts forMerchant of$0.8 million,
Enterprise of $0.8 million, and Consumer of $0.1million. Segment Adjusted EBITDA for fiscal 2024, includes retrenchment costsfor
Merchant $0.3 million and Consumer of $0.2 million.
(2) Group Adjusted EBITDAis a non-GAAP measure, referto reconciliation below at"-Results of Operations-Use ofNon-
GAAP Measures".
Table 9
In South African Rand
Yearended June 30,
2025
% of
2024
% of
%
Operating Segment
ZAR '000
total
ZAR '000
total
change
Consolidated revenue:
Merchant
9,562,360
80%
8,599,450
81%
11%
Consumer
1,744,429
15%
1,294,632
12%
35%
Enterprise
773,057
6%
877,317
8%
(12%)
Subtotal: Operating segments
12,079,846
101%
10,771,399
101%
12%
Eliminations
(99,447)
(1%)
(218,166)
(1%)
(54%)
Totalconsolidated revenue
11,980,399
100%
10,553,233
100%
14%
Group Adjusted EBITDA:
Merchant
(A)(1)
641,509
70%
529,861
78%
21%
Consumer
(1)
435,193
48%
237,362
35%
83%
Enterprise
(1)
23,724
3%
54,924
8%
(57%)
Group costs
(193,853)
(21%)
(146,815)
(21%)
32%
Group Adjusted EBITDA (non-GAAP)
(2)
906,573
100%
675,332
100%
34%
(A) Inorder tocorrect theerror discussedin Note1 tothe consolidatedstatement ofoperations, MerchantSegment Adjusted
EBITDAandGroupAdjustedEBITDAforfiscal2025andfiscal2024decreasedbyZAR15.7millionandZAR11.9million,
respectively.
(1)SegmentAdjustedEBITDAforfiscal2025,includesreorganizationandretrenchmentcostsforMerchantofZAR15.7
million,EnterpriseZAR13.6million,andConsumerofZAR1.5million.SegmentAdjustedEBITDAforfiscal2024,includes
retrenchment costs for Merchant of ZAR 4.9 million and Consumer of ZAR 3.5 million.
(2) Group Adjusted EBITDAis a non-GAAP measure, referto reconciliation below at"-Results of Operations-Use ofNon-
GAAP Measures".
Merchant
Segment revenue primarily increased due to the inclusionof Adumo, and a higher volumeof ADP provided (Pinless Airtime and
gaming) andan increasein fewer PinnedAirtime sales.In ZAR,the increasein SegmentAdjusted EBITDAis primarilydue tothe
inclusion of Adumo, which was partially offset by higher operating expenses incurred, including employment-related expenditures, to
expandouroffering,anincreaseintheallowanceforcreditlossesfollowinghigherloanoriginationsandreorganizationand
retrenchment costs incurred during fiscal 2025.
Our Segment Adjusted EBITDA margin (calculated asSegment Adjusted EBITDA divided by revenue) forfiscal 2025 and 2024
was 6.7% and 6.2%, respectively.
Consumer
Segmentrevenueincreasedprimarilydueto highertransactionfeesgeneratedfromthe higherEPEaccount holdersbase,an
increaseincertainissuingfeebasepricesandtransactionactivityinourissuingbusiness,insurancepremiumscollected,lending
revenues following an increase in loan originations and the inclusion ofAdumo. This increase in revenue has translated into improved
profitability, which was partially offsetby a higher allowance for credit losses following an increase in loan originations during fiscal
2025,higher insurance-relatedclaims, interestexpense (ofZAR 61.4million)incurred tofund ourlending book,higher computer
software license costs, and theyear-over-year impact of inflationary increases on certain expenses.We have included an intercompany
interest expense in our Consumer Segment Adjusted EBITDA for fiscal 2025compared with fiscal 2024.
Our Segment Adjusted EBITDA margin for fiscal 2025and 2024was 24.9% and 18.3%, respectively.
Enterprise
Segment revenuedecreased primarilydue tofewer adhoc hardwaresales as wellas lowerrevenue generatedfrom thesale of
prepaid airtime vouchers, whichwas partially offset bythe inclusion of Utilities.In ZAR, the significantdecrease in Segment Adjusted
EBITDA is primarily due to the impact of few sales, which was partially offsetby the inclusion of Utilities.
Our Segment Adjusted EBITDA margin in fiscal 2025and 2024was 3.0% and 6.2%, respectively.
Group costs
Our group costs for fiscal2025 increased compared with the priorperiod due to higher employee costsresulting from an increase
in the number of individuals allocated to group costs and base salary adjustments,higher bonus expense, travel, audit, consulting and
legal fees.
Use of Non-GAAP Measures
U.S. securities lawsrequire that whenwe publish anynon-GAAP measures, wedisclose the reasonfor using thesenon-GAAP
measures and provide reconciliations to the most directly comparable GAAP measures. The presentation of Group Adjusted EBITDA
isanon-GAAPmeasure.Weprovidethisnon-GAAPmeasuretoenhanceourevaluationandunderstandingofourfinancial
performanceandtrends.Webelievethatthismeasureishelpfultousersofourfinancialinformationunderstandkeyoperating
performance andtrendsin our businessbecause itexcludes certainnon-cash expenses(including depreciationand amortizationand
stock-based compensation charges) and incomeand expenses that we consider once-off in nature.
Non-GAAP Measures
GroupAdjustedEBITDAisearningsbeforeinterest,tax,depreciationandamortization("EBITDA"),adjustedfornon-
operationaltransactions(includinglossondisposalofequity-accountedinvestments,changeinfairvalueofequitysecurities),
(earnings)lossfromequity-accountedinvestments,stock-basedcompensationchargesandonce-offitems.Weincludedan
intercompany interest expense inour Consumer Segment Adjusted EBITDAfor eight months to February28, 2025. Wecommenced
utilizing ourFebruary 2025lending facilitiesto funda portionof ourConsumer lendingbook fromMarch 1,2025. Once-offitems
represents non-recurring income andexpense items, includingcosts related toacquisitions and transactions consummatedor ultimately
not pursued.
The table below presents thereconciliation between GAAP net income (loss)attributable to Lesaka to Group AdjustedEBITDA:
Table 10
Yearsended June 30,
2026
2025
2024
$ '000
$ '000
$ '000
Income (Loss) attributable to Lesaka - GAAP
(A)
2,758
(90,957)
(18,515)
Add net loss attributable to non-controlling interest
-
Net income (loss)
2,512
(91,087)
(18,515)
(Earnings) loss from equity accounted investments
(215)
(114)
1,279
Net income (loss) before earnings from equity-accounted investments
2,297
(91,201)
(17,236)
Income tax expense (benefit)
(A)
1,429
(15,982)
3,363
Income (loss) before income tax expense
3,726
(107,183)
(13,873)
Interest expense
(A)
18,506
21,824
19,171
Interest income
(2,889)
(2,596)
(2,294)
Reversal of allowance for doubtful loan receivable
(1,500)
-
(250)
Loss on disposal of equity securities
-
-
Net loss on impairment/ disposal of equity-accounted investment
-
Other income
(3,883)
-
-
Change in fair value of equity securities
(2,593)
59,828
-
Operating income (loss)
12,681
(27,966)
2,754
Impairments
(1)
3,347
18,863
-
PPA amortization(amortization of acquired intangible assets)
30,441
21,384
14,419
Depreciation and amortization
16,905
12,337
9,246
Stock-based compensation charges
6,969
9,550
7,911
Interest adjustment
-
(2,195)
-
Once-off items
(2)
5,452
17,826
1,853
Unrealized (gain) loss FV for currency adjustments
(53)
(83)
Group Adjusted EBITDA - Non-GAAP
(A)
75,742
49,822
36,100
(A)
Loss attributable to Lesaka - GAAPand all subtotal captions to Income (Loss) before earnings(loss) from equity-accounted
investments for fiscal2025 and fiscal2024 have beendecreased by $3.4million and $1.1million, respectively,as a result
of the correction discussedin Note 1.Income tax expense (benefit)for fiscal 2025has been decreased by2.2 million. Interest
expense for fiscal 2025and fiscal 2024 has beenincreased by $0.4million and $0.2 million,respectively,as a result of the
correction discussed in Note1. Operating income andGroup Adjusted EBITDA- Non-GAAP for fiscal2025 and fiscal 2024
have been decreased by $0.9million and $0.8million, respectively, as a resultof the correction discussed in Note 1.
Loss attributable toLesaka - GAAP andall subtotal captionsto Loss beforeincome tax expense forfiscal 2026 have been
decreased by$0.4 million,as aresult ofthe correction,as discussedin Note1. Interestexpense forfiscal 2026has been
increased by $0.1 million as a result of the correction,as discussed in Note 1, to the amount included in the captionInterest
expense for the three months ended September 30, 2025. Operating income and Group Adjusted EBITDA - Non-GAAP for
fiscal 2026 have been decreasedby $0.2 million, as aresult of the correction, asdiscussed in Note 1,to the amountsincluded
in the caption Cost ofgoods sold, IT processing,servicing and support andSelling, general and administrationexpense for
the three months ended September 30, 2025.
(1)
Impairments excludes an amount of $0.7 million which is included in the caption exitof ATM business in the table below.
(2)
The table below presents the components of once-off items forthe periods presented:
Table 11
Yearsended June 30,
2026
2025
2024
$ '000
$ '000
$ '000
Lesaka brand refresh
3,001
-
-
Exit of ATMbusiness
1,599
-
-
Transaction costs
1,103
1,794
Transaction costs related to Adumo, Utilities andBank Zero acquisitions and certain
compensation costs
16,159
2,325
Income recognized related to closure of legacy businesses
(579)
-
(952)
Indirect taxes provision
(61)
(127)
-
Total once-offitems
5,452
17,826
1,853
Once-off items are non-recurring in nature, however, certainitems may be reported inmultiple quarters. For instance, transaction
costs include costs incurred related to acquisitions andtransactions consummated or ultimately not pursued. The transactions can span
multiple quarters, for instance in fiscal 2025 we incurred significant transaction costsrelated to the acquisition of Adumo and Utilities
over a number of quarters, and the transactions are generally non-recurring.
Rebrandrelatestocosts incurredrelatedto Lesaka'snew brandlaunchedinNovember2025,we expectthat itwill takethe
remainder of the 2026 calendaryear to roll outthe refreshed brand throughout theorganization. These are non-recurring costs incurred
as a necessary step in a set of strategic initiatives designed to create a "OneLesaka" identity for our customers and our employees.
Exit of ATMbusiness includes expenses incurred toexit our ATMbusiness and the impairment of ATMsrecorded in property,
plant and equipment (refer to Note 10 to our audited consolidated financialstatements for additional information).
Income recognizedrelated toclosure oflegacy businessesrepresents (i)gains recognizedrelated tothe releaseof theforeign
currency translation reserveon deconsolidation ofa subsidiaryand (ii) costsincurred related tosubsidiaries which weare in theprocess
of deregistering/ liquidation and therefore we consider these costs non-operationaland ad hoc in nature.
Indirect taxprovision releaserelates tothe reversalof anon-recurring indirecttax provisioncreated infiscal 2023which was
resolved in fiscal 2025 following settlement of the matter with the tax authority.
Liquidity and Capital Resources
At June 30,2026, our unrestrictedcash and cashequivalents were $81.4million and comprisedof ZAR-denominatedbalances
of ZAR 1.3 billion($76.9 million), U.S. dollar-denominatedbalances of $2.6 million,and other currency deposits,primarily Botswana
pula,of $2.0million, allamounts translatedat exchangerates applicableas ofJune 30,2026. Theincrease inour unrestrictedcash
balances from June 30,2025, was primarily dueto positive contribution fromour operating segments, andthe utilization of ourgeneral
bankingfacilitiesto partiallyfundthe growthin ourConsumerlending book,whichwas partiallyoffsetbythe applicationof the
proceeds received fromthe disposal of MobiKwikto reduce our generalbanking facilities utilized,the utilization of cashreserves to
fund certain scheduled repaymentsof our borrowings, acquisitionof property,plant and equipment and intangibleassets, to fund the
increase in our Consumer lending book and to settle amounts due to the sellers of Utilities and other entities acquired during the year.
We generallyinvest any surplus cash held by ourSouth African operations in overnightcall accounts that we maintain atSouth
African banking institutions,and any surpluscash held byour non-South Africancompanies inU.S. dollar-denominated money market
accounts.
Historically,we have financedmost of ouroperations, research anddevelopment, working capital,and capital expenditures,as
wellasacquisitionsandstrategicinvestments,throughinternallygeneratedcashandourfinancingfacilities.Whenconsidering
whether to borrow under our financingfacilities, we consider the costof capital, cost of financing, opportunity costof utilizing surplus
cash and availability of taxefficient structures to moderatefinancing costs. Refer to Note 12to our consolidated financial statements
for the year ended June 30, 2026, for additional information related to ourborrowings.
Our ability to make payments on our indebtedness and tofund our operations may be dependent upon the operatingincome and
the distributionof fundsfrom oursubsidiaries. However,as local lawsand regulationsand/or theterms of ourindebtedness restrict
certainofoursubsidiariesfrompayingdividendsandtransferringassetstous,thereis noassurancethatoursubsidiarieswillbe
permitted to provide us with sufficient dividends, distributionsor loans when necessary.
We are required to make a scheduled debt repayment of ZAR 200 million ($12.2 million) inMarch 2027. We expect to pay ZAR
100.0 million ($6.1 million) on closing of the Bank Zero transaction. All amountstranslated at exchange rates as of June 30, 2026.
Available short-termborrowings
Summarized below are our short-term facilities available and utilized as ofJune 30, 2026:
Table 12
RMB GBF
RMB Other
Nedbank
$ '000
ZAR '000
$ '000
ZAR '000
$ '000
ZAR '000
Totalshort-term facilities available, comprising:
Total overdraft
67,702
1,110,808
-
-
-
-
Indirect and derivative facilities
(1)
-
-
5,534
90,793
9,542
156,556
Totalshort-term facilities available
67,702
1,110,808
5,534
90,793
9,542
156,556
Utilized short-term facilities:
Overdraft
20,671
339,156
-
-
-
-
Indirect and derivative facilities
-
-
4,279
70,199
2,114
Totalshort-term facilities available
20,671
339,156
4,279
70,199
2,114
Interest rate, based on South African prime rate
10.00%
N/A
N/A
(1)Otherfacilitiesincludeindirectandderivativefacilitiesmayonlybeusedforguarantees,lettersofcreditandforward
exchange contracts to support guarantees issued by RMB and Nedbankto various third parties on our behalf.
The facilities under theRestated GBF Agreement wereavailable for utilizationfrom March 30, 2026,and are subject to annual
review by RMB.
In terms ofa commitment providedto the lenderunder the CTAentered into onFebruary 27, 2025,we have undertakennot to
utilize more than ZAR 5.0 million ($0.3 million) of the Nedbank Facility.
Long-term borrowings
We haveaggregate long-term borrowingoutstanding of ZAR 3.5 billion($210.7 million translated atexchange rates as ofJune
30, 2026)as described inNote 12. Theseborrowings include outstandinglong-term borrowingsobtained by LesakaSA of ZAR2.8
billion, whichwas usedto refinanceour previouslong-term borrowings.Wehave utilizedall ofthese long-termborrowings. Asof
September 9, 2026, we also have a revolving credit facility,of ZAR 400.0 million which is utilized to fund a portionof our merchant
finance loans receivablebook and an assetbacked facility of ZAR214.5 million whichis utilized to partiallyfund the acquisition of
POS devices and vaults.
Restricted cash
We havealso entered into cession and pledgeagreements with Nedbank related toour Nedbank indirect credit facilitiesand we
have ceded and pledgedcertain bank accounts toNedbank. The funds includedin these bank accountsare restricted as theymay not
be withdrawn without the expresspermission of Nedbank. Our cash,cash equivalents and restrictedcash presented in ourconsolidated
statement of cash flows as of June 30, 2026, includes restricted cash of $0.1 millionthat has been ceded and pledged.
Arrangement with African Bank to fund our ATMs
InSeptember2024,weentered intoanarrangementwith AfricanBank Limited("AfricanBank")andcertaincash-in-transit
serviceproviderstofundourATMs.Underthisarrangement,AfricanBankuseditscashresourcestofundourATMsanditis
specifically recorded that the cash in our ATMs was African Bank'sproperty. Therefore, as we had not utilized a facility to obtain the
cash, and did notown or control thecash for an extendedperiod of time, wedid not record cashor cash equivalents andborrowings
in our consolidated statement of financial position. Cash withdrawn from our ATMs by our EPE customers and other consumers were
settled through the interbank settlement system from the ATMusers bank account to African Bank's bank accounts. Wepaid African
Bank a monthly fee for the service provided whichwas calculated based on the cumulative daily outstandingbalance of cash utilized
multiplied by theSouth African primeinterest rate less 1%.Wewere exposed tothe risk ofcash lost while itwas in ourATMs(i.e.
from theft) and were required to repay African Bank for any shortages. Weintend to cancel this arrangement as part of the process of
winding down our ATMbusiness.
Cash flows from operating activities
Net cash providedby operating activitiesduring fiscal 2026 was$52.4 million (ZAR951.6 million) comparedto net cash used
by operating activitiesof $9.1million (ZAR 163.3million) during fiscal2025. Excluding theimpact of incometaxes, ourcash provided
byoperatingactivitiesduringfiscal2026waspositivelyimpactedbythepositivecontributionfromouroperatingsegmentsand
positive working capital movements, whichwas partially offset by cashutilized for the significantnet growth in ourConsumer finance
loans receivable.
Net cash used in operating activities during fiscal 2025 was $9.1 million (ZAR 163.3 million) compared to net cash provided by
operating activities of $28.8 million(ZAR 537.9 million) duringfiscal 2024. Excluding the impactof income taxes, our cashused in
operating activities during fiscal 2025 includescash utilized for the settlementof working capital movements within ourMerchant and
Enterprise businesses related to quarter-end transaction processing activities and which were settled in the following week (our fourth
quarter of fiscal 2024 closed ona Sunday), and the net growth in ourConsumer and Merchant finance loansreceivable books, which
was partially offset by the positive contribution from ourMerchant and Consumer businesses.
During fiscal 2026,we paid ourfirst provisional SouthAfrican tax paymentsof $4.0 million(ZAR 66.8 million)related to our
2026tax year. During fiscal 2026, wealso made our secondprovisional South African taxpaymentsof $4.8 million (ZAR79.6 million
related to our 2026tax year and receivedtax refunds of $0.06million (ZAR 1.1 million).Wealso paid taxes totaling$1.1 million in
other tax jurisdictions, primarily in Botswana and Namibia.
During fiscal 2025,we paid ourfirst provisional SouthAfrican tax paymentsof $4.2 million(ZAR 76.1 million)related to our
2025tax year. During fiscal 2025, wealso made our secondprovisional South African taxpayments of $2.2 million(ZAR 39.3 million
related to our2025 tax yearand receivedtax refunds of$0.4 million (ZAR7.2 million).Wealso paid taxestotaling $0.3million in
other tax jurisdictions, primarily in the Botswana and Namibia.
During fiscal 2024,we paid ourfirst provisional SouthAfrican tax paymentsof $2.7 million(ZAR 49.5 million)related to our
2024tax year. During fiscal 2024, wealso made our secondprovisional South African taxpaymentsof $2.9 million (ZAR52.7 million
related to our2024 tax yearand receivedtax refunds of$0.0 million (ZAR0.8 million).Wealso paid taxestotaling $0.4million in
other tax jurisdictions, primarily in Botswana.
Taxes paid duringfiscal 2026, 2025 and 2024 were as follows:
Table 13
Yearended June 30,
2026
2025
2024
2026
2025
2024
$
$
$
ZAR
ZAR
ZAR
'000
'000
'000
'000
'000
'000
First provisional payments
3,969
4,182
2,663
66,795
76,118
49,534
Second provisional payments
4,830
2,198
2,861
79,579
39,279
52,721
Taxation paid relatedto prior years
8,818
4,081
12,187
Tax refund received
(64)
(438)
(38)
(1,110)
(7,173)
(768)
Dividend withholding taxes paid
-
-
1,526
-
-
Total South Africantaxes paid
9,332
6,167
6,127
155,608
112,305
113,674
Foreign taxes paid
1,100
18,412
5,738
7,063
Totaltax paid
10,432
6,481
6,506
174,020
118,043
120,737
We expect to make additional provisionalincome tax payments in South Africa related to our 2026 tax year in the first quarter of
fiscal 2027, however, the amount was not quantifiableas of the date of the filing of this Annual Report.
Cash flows from investing activities
Cash usedin investingactivities forfiscal 2026included capitalexpenditures of$20.6 million(ZAR 374.6million), primarily
due to the acquisition of vaults and POS devices.We also incurred capital expendituresof $4.4 million (ZAR 79.9 million), primarily
relatedtothecapitalizationofdevelopmentcosts,duringfiscal2026.Duringfiscal2026,wealsoreceived$3.0millionfromthe
disposal of Cell C. Duringfiscal 2026, we paid$11.1 million relatedto acquisition of certain businesses,including $10.4 millionfor
the finaltranche ofthe Utilitiesacquisition, $0.3million forMobileMart and$0.3 millionfor Atom.Wealso invested$4.6 million
related to the acquisition ofmutual funds by our insurancebusiness in order toobtain a higher yield onfunds invested by thisbusiness.
Cash usedin investingactivities forfiscal 2025included capitalexpenditures of$17.2 million(ZAR 307.9million), primarily
due to the acquisition of vaults and POS devices.We also incurred capital expendituresof $3.9 million (ZAR 69.8 million), primarily
related to the capitalization of development costs, during fiscal 2025. Duringfiscal 2025, we paid $12.9 million related to acquisition
of certain businesses, including Adumo and Utilities. We also received $16.4 million relatedto the sale of ourentire equity investment
in MobiKwik in June 2025.
Cash usedin investingactivities forfiscal 2024included capitalexpenditures of$12.7 million(ZAR 236.6million), primarily
duetotheacquisitionofvaultsandPOSdevices.Duringfiscal2024,wereceivedproceedsof$3.5millionrelatedtothesale of
remaining interest in Finbond and $0.25 million related to the second (and final) tranche from thedisposal of our entire equity interest
in Carbon.
Cash flows from financing activities
During fiscal 2026, weutilized $123.7 million from ourSouth African general banking facilitiesto partially fund thegrowth of
our Consumer lendingbook, and repaid$129.4 million. Weutilized $6.9 millionof our long-termborrowings to fundour Merchant
lendingbookandtofinancetheacquisitionofPOSdevicesandvehicles.Werepaid$13.7millionoflong-termborrowingsin
accordance withour FacilityB repaymentschedule andunder ourasset-based facilitiesrepayment schedule.Wepaid feesof $0.03
million related to the September 2025 refinance of ourfacility to fund the growth of Merchant lending book.We paid $3.5 millionto
purchase Lesaka Hospitality non-controlling interests. We also paid $0.3 million to repurchase shares from employees in order for the
employees to settle taxes due related to the vesting of shares of restrictedstock.
Duringfiscal2025,weutilized$98.6millionfromourSouthAfricanoverdraftfacilitiestofundourATMsandourcash
management business through Merchant as well as to partially fund the acquisition of Utilities and for the February 2025 refinance of
certain ofour facilities.Werepaid $89.2million ofthose facilities,includingtowards ourrefinanced facilities.Weutilized $190.1
million of our borrowingsto settle a portionof the Adumo purchaseconsideration, pay certain transactionexpenses, repay Adumo's
borrowings,repurchasesharesofourcommonstock,fundtheacquisitionofcertaincapitalexpenditures,forworkingcapital
requirementsandfortheFebruary2025refinanceofcertainofourfacilities.Werepaid$131.2millionoflong-termborrowings
towards our refinanced facilities and in accordance with our repayment schedule, paid$7.2 million to settle Adumo's borrowings, and
settled a portionof our revolving creditfacility utilized. We also paid anorigination fee of $1.0million to secureadditional borrowings
as well as paid dividends to the non-controlling interest of $0.4 million.
During fiscal 2024, we utilized approximately $183.0 millionfrom our South African overdraft facilities to fund our ATMsand
repaid$199.6millionofthese facilities.Weutilized$23.7millionofourlong-termborrowingstofundtheacquisitionofcertain
capitalexpendituresandforworkingcapitalrequirements.Werepaid$20.1millionoftheselong-terminaccordancewithour
repayment schedule aswell as to settlea portion ofour revolving creditfacility utilized. Wereceived $0.1 millionfrom the exercise
of stock options. We also paid $1.5 million to repurchase shares from employees in order for the employees to settle taxes due related
to the vesting of shares of restricted stock.
Contractual Obligations
The following table sets forth our contractual obligations as of June 30, 2026:
Table 14
Payments due by Period, as of June 30, 2026 (in $ '000s)
Total
Less than 1
year
2-3 years
3-5 years
Thereafter
Short-term credit facilities
(A)
20,671
20,671
-
-
-
Long-term borrowings
Principal repayments
(A)(B)
210,711
16,114
194,295
-
Interest payments
(A)(B)
29,537
10,750
18,771
-
Operating lease liabilities, including imputed interest
(C)
34,460
6,946
9,106
6,012
12,396
Purchase obligations
5,720
5,720
-
-
-
Capital commitments
-
-
-
Other long-term obligations reflected on our balance
sheet
(D)(E)
3,988
-
-
-
3,988
Total
305,720
60,834
222,172
6,330
16,384
(A) - Refer to Note 12 to our audited consolidated financial statements.
(B) - Long-termborrowings principalrepayments for the3-5 year periodincludes all unamortizedfees as ofJune 30, 2026.
Interest payments based onapplicable interest rates as ofJune 30, 2026, and expectedoutstanding long-term borrowings over
the period. All amounts converted from ZAR to USD using the June 30, 2026,USD/ ZAR exchange rate.
(C) - Refer to Note 8 to our audited consolidated financial statements.
(D) -Includes policyholder liabilities of $3.7 million related to our insurance business. All amounts are translated at exchange
rates applicable as of June 30, 2026.
(E) -Wehave excludedcross-guarantees inthe aggregateamount of$0.1 millionissued asof June30, 2026,to RMBand
Nedbankto secureguarantees ithas issuedto thirdparties onour behalfas theamounts thatwill besettled incash arenot
known and the timing of any payments is uncertain.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Capital Expenditures
Capital expenditures for the years ended June 30, 2026, 2025 and 2024were as follows:
Table 15
2026
2025
2024
2026
2025
2024
$
$
$
ZAR
ZAR
ZAR
'000
'000
'000
'000
'000
'000
Merchant
19,581
18,117
11,202
355,297
324,350
209,302
Consumer
2,890
1,500
1,317
52,439
26,855
24,607
Enterprise
2,578
1,482
46,778
26,532
2,728
Total
25,049
21,099
12,665
454,514
377,737
236,637
Our capital expendituresfor fiscal 2026,2025 and 2024,are discussed under"-Liquidity and CapitalResources-Cash flows
from investing activities."
All of our capital expendituresfor the past three fiscalyears were funded throughinternally-generated funds, exceptfor certain
capital expendituresof POSdevices andvaults, madethrough ourMerchant businesswhich werefunded throughthe utilizationof
asset-backed borrowings.Wehad outstandingcapital commitments asof June 30,2026, of $0.6million. In additionto these capital
expenditures,weexpectthatcapitalspendingforfiscal2027willincludeacquisitionofPOSdevices,vaults,computersoftware,
computer and office equipment, as well as for our ATM infrastructure and branch network in South Africa.Acquisition of these assets
w
ill be funded through the use of internally-generated funds and availablefacilities.
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