Lesaka on the mend

Lesaka Technologies swung from an operating loss to an operating profit but posted another net loss for its 2024 financial year.

Lesaka released its results for the year through June 2024 on Thursday, which revealed strong results for the company.

The company reported that its revenue increased by 11% to R10.6 billion. Its operating income turned around from a R275 million loss in 2023 to a profit of R67 million in 2024. 

While Lesaka still posted a net loss for the year, its loss improved by 48% to R326 million, compared to a net loss of R629 million in 2023.

Group Adjusted EBITDA increased by 55% to R691 million, up from R445 million in 2023. This marks a significant turnaround from the R328 million Group Adjusted EBITDA loss it posted in 2022.

“We continue to materially improve the profitability of Lesaka,” said Lesaka Chairman Ali Mazanderani.

He said the business has carried this momentum into FY 2025 and provided a guidance range of R900 million to R1 billion for Group Adjusted EBITDA.

“We have established ourselves as the leading independent fintech in Southern Africa with significant room for increased growth and profitability over the coming years,” he said.

The company’s fundamental earnings per share improved by R3.72 per share to R1.06, compared to a fundamental loss per share of R2.66 in 2023.

The company’s merchant division – its largest segment – saw revenue increase by 12% to R9.3 billion, and its segment-adjusted EBITDA increased by 4% to R624 million.

Notably, Lesaka’s consumer division increased revenue by 15% to R1.3 billion, and segment-adjusted EBITDA increased by 361% to R274 million.

The company’s net debt to Group Adjusted EBITDA ratio improved to 2.5 times compared to 4.5 times in 2023.

Lesaka’s Southern Africa CEO, Lincoln Mali, said he is particularly pleased with the consumer division’s performance. 

“Our teams have worked hard to turn it into an important profit and cash flow contributor for the Group, demonstrated by the four-fold increase in Segment Adjusted EBITDA to R274 million,” he said. 

“We are entering an exciting period of growth for Lesaka, integrating the Adumo and Touchsides acquisitions with our existing fintech solutions as we strive to empower Southern African consumers and merchants to fulfil their potential.”

Lesaka expects to close its Adumo acquisition in October 2024 and has restructured its operations into four pillars with a customer-centric focus in anticipation.

Its consumer pillar will remain substantially the same. However, the perimeter will be expanded to include the Adumo Payouts business. 

With the incorporation of Adumo, Lesaka will serve approximately 1.7 million consumers.

Its micro-merchant pillar will focus on sole proprietors, primarily operating in the informal economy, and are addressed through the Kazang and Touchsides brands. 

“We are already one of the leaders in this segment in the country and have over 90,000 micro-merchants generating more than R68 billion of throughput annually,” the company said.

Lesaka’s merchant pillar will comprise the existing Connect operations, as well as the bulk of Adumo, specifically its merchant acquiring and processing business and its GAAP hospitality platform. 

“We will have almost 30,000 merchants with a direct throughput of over R133 billion annually and an indirect throughput that is far larger,” the company said.

The enterprise pillar will focus on large corporates, mobile network operators, banks, governments and municipalities. 

This pillar has over 750 customers and generates more than R70 billion of throughput annually.

As well as serving third-party corporates, it will also service some of the technology needs of Lesaka’s consumer, micro-merchant and merchant businesses.

Lesaka explained that its leadership team has been re-aligned along these pillars. 

In addition, its CFO, Naeem Kola, is transitioning to the role of Group Chief Operating Officer to address an important gap in the leadership structure and support post-acquisition integration.

Dan Smith will take over from Kola as Group CFO. Smith joins the company from Value Capital Partners, Lesaka’s largest shareholder, where he was an Investment Director and played an active role in Lesaka’s development since 2021.