Lesaka Technologies, Inc. ((LSAK)) has held its Q2 earnings call. Read on for the main highlights of the call.
Maximize Your Portfolio with Data Driven Insights:
- Leverage the power of TipRanks' Smart Score, a data-driven tool to help you uncover top performing stocks and make informed investment decisions.
- Monitor your stock picks and compare them to top Wall Street Analysts' recommendations with Your Smart Portfolio
The recent earnings call of Lesaka Technologies, Inc. revealed a largely positive outlook for the company, highlighting a robust growth trajectory fueled by strategic acquisitions and expansion efforts. Despite facing challenges such as the MobiKwik investment write-down and losses in the enterprise division, the company expressed confidence in its FY2026 growth prospects.
Strong Market Position and Growth Potential
Lesaka Technologies, Inc. is projecting a significant increase in its addressable market in South Africa, estimated to rise from over $4 billion to more than $12 billion within five years. With an expected market growth rate of 10% to 15%, the company aims to capture more than 10% of the market share in the medium term.
Record-High Quarterly Financial Performance
The company reported a 42% year-on-year increase in group net revenue, driven primarily by the merchant segment’s 68% revenue growth due to the acquisition of Adumo. The group adjusted EBITDA also rose by 26% to 212 million Rand, surpassing the upper end of the guidance range.
Consumer Division Growth
The consumer division exhibited strong performance with a 31% increase in revenue year-on-year and a 61% growth in segment adjusted EBITDA. The active EPE customer base expanded by 11% to 1.6 million, with records set in loan originations and insurance policy sales.
Positive Outlook with Robust EBITDA Guidance
Lesaka Technologies, Inc. has provided optimistic guidance for FY2026, forecasting group adjusted EBITDA to range between 1.25 billion Rand to 1.45 billion Rand, indicating a 42% year-on-year growth.
MobiKwik Investment Write-Down
A notable challenge for the company was the pre-tax write-down of 615 million Rand on its MobiKwik investment, resulting in a net loss attributable to shareholders of 584 million Rand for the period.
Enterprise Division Losses
The enterprise division reported a loss of 0.5 million Rand compared to a 17 million Rand profit last year, primarily due to investments in technology and the discontinuation of unprofitable contracts.
High Interest Expense and Debt Levels
The company experienced an increase in net interest expense to 98 million Rand due to elevated borrowing levels from the Adumo acquisition, with gross debt reaching 3.8 billion Rand at the quarter’s end.
Forward-Looking Guidance
Lesaka Technologies anticipates continued growth and strategic market positioning, with an addressable market revenue pool projected to expand significantly over the next five years. For FY2025, the company reaffirmed its revenue guidance of 10 to 11 billion Rand and group adjusted EBITDA of 900 million to 1 billion Rand. The FY2026 outlook is promising with expected group adjusted EBITDA growth of 42% year-on-year. The company plans to capitalize on regulatory changes and digitization trends to strengthen its market position and financial performance.
In conclusion, the earnings call for Lesaka Technologies, Inc. presented a picture of a company on a strong growth path, despite facing certain financial headwinds. The overall sentiment was one of confidence and optimism, particularly regarding future financial performance and market expansion. Key takeaways include record financial performance, significant consumer division growth, and a forward-looking strategy poised to leverage market opportunities.
