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As of May 5, 2025 (the latest practicable date),
$0.001 per share, net of treasury shares, were outstanding.
1
Form 10-Q
LESAKA TECHNOLOGIES, INC.
Table of Contents
Page No.
PART I. FINANCIAL INFORMATION
Item 6.
Exhibits
80
2
Part I. Financial information
Item 1. Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Balance Sheets
March 31,
June 30,
2025
2024
(A)
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
$
Restricted cash related to ATM funding and credit facilities (Note 9)
Accounts receivable, net and other receivables (Note 3)
Finance loans receivable, net (Note 3)
Inventory (Note 4)
Total current assets before settlement assets
Settlement assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - March: $
$
OPERATING LEASE RIGHT-OF-USE (Note 17)
EQUITY-ACCOUNTED INVESTMENTS (Note 6)
GOODWILL (Note 7)
INTANGIBLE ASSETS, NET (Note 7)
DEFERRED INCOME TAXES
OTHER LONG-TERM ASSETS, including equity securities (Note 6 and 8)
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Short-term credit facilities for ATM funding (Note 9)
Short-term credit facilities (Note 9)
Accounts payable
Other payables (Note 10)
Operating lease liability - current (Note 17)
Current portion of long-term borrowings (Note 9)
Income taxes payable
Total current liabilities before settlement obligations
Settlement obligations
Total current liabilities
DEFERRED INCOME TAXES
OPERATING LEASE LIABILITY - LONG TERM (Note 17)
LONG-TERM BORROWINGS (Note 9)
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 8)
TOTAL LIABILITIES
REDEEMABLE COMMON STOCK
EQUITY
COMMON STOCK (Note 11)
Authorized:
Issued and outstanding shares, net of treasury - March:
PREFERRED STOCK
Authorized shares:
Issued and outstanding shares, net of treasury: March:
-
-
ADDITIONAL PAID-IN-CAPITAL
TREASURY SHARES, AT COST: March:
(297,476 )
(289,733 )
ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 12)
(193,799 )
(188,355 )
RETAINED EARNINGS
TOTAL LESAKA EQUITY
NON-CONTROLLING INTEREST
TOTAL EQUITY
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY
$
$
(A) – The Company reclassified an amount of $
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Operations
3
Three months ended
Nine months ended
March 31,
March 31,
2025
2024
2025
2024
(In thousands, except per share
data)
(In thousands, except per share
data)
REVENUE (Note 16)
$
$
$
$
EXPENSE
Cost of goods sold, IT processing, servicing and support
Selling, general and administration
Depreciation and amortization
Transaction costs related to Adumo and Recharger acquisitions and
certain compensation costs (Note 2)
OPERATING INCOME
CHANGE IN FAIR VALUE OF EQUITY SECURITIES (Note 5 and 6)
(20,421 )
(54,152 )
LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT
(Note 6)
REVERSAL OF ALLOWANCE FOR DOUBTFUL EMI DEBT
RECEIVABLE
INTEREST INCOME
INTEREST EXPENSE
LOSS BEFORE INCOME TAX (BENEFIT) EXPENSE
(24,984 )
(3,159 )
(68,043 )
(9,205 )
INCOME TAX (BENEFIT) EXPENSE (Note 19)
(2,934 )
(9,268 )
NET LOSS BEFORE EARNINGS (LOSS) FROM EQUITY-
ACCOUNTED INVESTMENTS
(22,050 )
(4,090 )
(58,775 )
(11,086 )
EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS
(Note 6)
(1,319 )
NET LOSS
(22,038 )
(4,047 )
(58,686 )
(12,405 )
LESS NET INCOME ATTRIBUTABLE TO NON-CONTROLLING
INTEREST
NET LOSS ATTRIBUTABLE TO LESAKA
$
(22,058 )
$
(4,047 )
$
(58,734 )
$
(12,405 )
Net loss per share, in United States dollars
(Note 14):
Basic loss attributable to Lesaka shareholders
$
(0.27 )
$
(0.06 )
$
(0.81 )
$
(0.20 )
Diluted loss attributable to Lesaka shareholders
$
(0.27 )
$
(0.06 )
$
(0.81 )
$
(0.20 )
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income
4
Three months ended
Nine months ended
March 31,
March 31,
2025
2024
2025
2024
(In thousands)
(In thousands)
Net loss
$
(22,038 )
$
(4,047 )
$
(58,686 )
$
(12,405 )
Other comprehensive income (loss), net of taxes
Movement in foreign currency translation reserve
(5,718 )
(5,860 )
(450 )
Release of foreign currency translation reserve related to
liquidation of subsidiaries (Note 12)
(952 )
Release of foreign currency translation reserve related to
disposal of Finbond equity securities (Note 12)
Movement in foreign currency translation reserve related
to equity-accounted investments
Total other comprehensive income (loss), net of
taxes
(5,718 )
(5,854 )
Comprehensive loss
(15,692 )
(9,765 )
(64,540 )
(11,775 )
Less comprehensive loss attributable to non-
controlling interest
(196 )
Comprehensive loss attributable to Lesaka
$
(15,888 )
$
(9,765 )
$
(64,178 )
$
(11,775 )
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
5
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
For the three months ended March 31, 2024 (dollar amounts in thousands)
Balance – January 1, 2024
$
(25,295,261 )
$
(288,436 )
$
$
$
(189,378 )
$
$
$
$
Shares repurchased (Note 13)
(2,511 )
(9 )
(2,511 )
(9 )
(9 )
Restricted stock granted (Note 13)
Exercise of stock options (Note 13)
Stock-based compensation charge
(Note 13)
Reversal of stock-based compensation
charge (Note 13)
(55,539 )
(55,539 )
(112 )
(112 )
(112 )
Stock-based compensation charge
related to equity-accounted investment
(Note 6)
Net loss
(4,047 )
(4,047 )
(4,047 )
Other comprehensive loss (Note 12)
(5,718 )
(5,718 )
(5,718 )
Balance – March 31, 2024
$
(25,297,772 )
$
(288,445 )
$
$
$
(195,096 )
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
6
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
For the nine months ended March 31, 2024 (dollar amounts in thousands)
Balance – July
1, 2023
$
(25,244,286 )
$
(288,238 )
$
$
$
(195,726 )
$
$
$
$
Shares repurchased (Note 13)
(53,486 )
(207 )
(53,486 )
(207 )
(207 )
Restricted stock granted (Note 13)
Exercise of stock options (Note 13)
Stock-based compensation charge
(Note 13)
Reversal of stock-based compensation
charge (Note 13)
(77,668 )
(77,668 )
(129 )
(129 )
(129 )
Stock-based compensation charge
related to equity-accounted investment
(133 )
(133 )
(133 )
Net loss
(12,405 )
(12,405 )
(12,405 )
Other comprehensive loss (Note 12)
Balance – March 31, 2024
$
(25,297,772 )
$
(288,445 )
$
$
$
(195,096 )
$
$
$
$
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
7
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
For the three months ended March 31, 2025 (dollar amounts in thousands)
Balance – January 1, 2025
$
(28,297,365 )
$
(302,319 )
$
$
$
(199,969 )
$
$
$
$
Shares issued (Note 2 and Note 11)
-
-
(2 )
Shares repurchased (Note 13)
(2,495,662 )
(27 )
(2,495,662 )
(27 )
(27 )
Gain recognized related to issue of
shares included in treasury shares
(Note 2)
-
Restricted stock granted (Note 13)
Exercise of stock options (Note 13)
Stock-based compensation charge
(Note 13)
-
-
Reversal of stock-based compensation
charge (Note 13)
(67,922 )
(67,922 )
(34 )
(34 )
(34 )
Net loss
(22,058 )
(22,058 )
(22,038 )
Dividends paid to non-controlling
interest
(131 )
(131 )
Other comprehensive loss (Note 12)
Balance – March 31, 2025
$
(29,700,666 )
$
(297,476 )
$
$
$
(193,799 )
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
8
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net
of treasury
Addition
al Paid-
In
Capital
Retained
Earnings
Accumulated
other
comprehensiv
e loss
Total
Lesaka
Equity
Non-
controllin
g Interest
Total
Redeemda
ble
common
stock
For the nine months ended March 31, 2025 (dollar amounts in thousands)
Balance – July 1, 2024
$
(25,563,808 )
$
(289,733 )
$
$
$
(188,355 )
$
$
$
$
Shares issued (Note 2 and Note 11)
-
-
Shares repurchased (Note 13)
(5,229,219 )
(12,613 )
(5,229,219 )
(12,613 )
(12,613 )
Gain recognized related to issue of
shares included in treasury shares
(Note 2)
Restricted stock granted
Exercise of stock options (Note 13)
Stock-based compensation charge
(Note 13)
-
-
Reversal of stock-based compensation
charge (Note 13)
(108,243 )
(108,243 )
(45 )
(45 )
(45 )
Adumo non-controlling interest
acquired (Note 2)
-
-
Net loss
(58,734 )
(58,734 )
(58,686 )
Dividends paid to non-controlling
interest
-
-
(432 )
(432 )
Other comprehensive loss (Note 12)
(5,444 )
(5,444 )
(410 )
(5,854 )
Balance – March 31, 2025
$
(29,700,666 )
$
(297,476 )
$
$
$
(193,799 )
$
$
$
$
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
9
Three months ended
Nine months ended
March 31,
March 31,
2025
2024
2025
2024
(In thousands)
(In thousands)
Cash flows from operating activities
Net loss
$
(22,038 )
$
(4,047 )
$
(58,686 )
$
(12,405 )
Depreciation and amortization
Movement in allowance for doubtful accounts receivable
Fair value adjustment related to financial liabilities
(49 )
(159 )
(919 )
Loss on disposal of equity-accounted investments (Note 6)
(Earnings) Loss from equity-accounted investments
(12 )
(43 )
(89 )
Movement in allowance for doubtful loans to equity-accounted investments
(250 )
Change in fair value of equity securities (Note 5 and 6)
Profit on disposal of property, plant and equipment
(12 )
(89 )
(53 )
(288 )
Movement in interest payable
Facility fee amortized
Stock-based compensation charge (Note 13)
Dividends received from equity-accounted investments
Decrease (Increase) in accounts receivable
(9,815 )
Increase in finance loans receivable
(11,819 )
(3,720 )
(21,734 )
(7,097 )
Decrease (Increase) in inventory
(Decrease) Increase in accounts payable and other payables
(9,503 )
(18,545 )
Deferred consideration due to seller of Recharger included in accounts payable
and other payables (Note 2 and Note 10)
Increase in taxes payable
Decrease in deferred taxes
(4,430 )
(810 )
(13,804 )
(2,404 )
Net cash provided by (used in) operating activities
(2,639 )
Cash flows from investing activities
Capital expenditures
(2,817 )
(2,943 )
(13,100 )
(7,950 )
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(1,673 )
(54 )
(2,274 )
(236 )
Acquisitions, net of cash acquired
(8,997 )
(12,954 )
Proceeds from disposal of equity-accounted investment (Note 6)
Repayment of loans by equity-accounted investments
Net change in settlement assets
(3,088 )
(14,368 )
Net cash used in by investing activities
(10,007 )
(5,690 )
(21,219 )
(17,681 )
Cash flows from financing activities
Proceeds from bank overdraft (Note 9)
Repayment of bank overdraft (Note 9)
(50,458 )
(43,380 )
(85,998 )
(172,221 )
Long-term borrowings utilized (Note 9)
Repayment of long-term borrowings (Note 9)
(134,503 )
(7,238 )
(148,297 )
(13,051 )
Acquisition of treasury stock (Note 13)
(27 )
(9 )
(12,613 )
(207 )
Proceeds from exercise of stock options
Guarantee fee
(539 )
(970 )
Dividends paid to non-controlling interest
(131 )
(432 )
Net change in settlement obligations
(3,152 )
(5,591 )
Net cash provided by (used in) financing activities
(19,819 )
(4,141 )
Effect of exchange rate changes on cash and cash equivalents
(1,903 )
(830 )
(341 )
Net increase (decrease) in cash, cash equivalents and restricted cash
(8,232 )
Cash, cash equivalents and restricted cash – beginning of period
Cash, cash equivalents and restricted cash – end of period (Note 15)
$
$
$
$
See Notes to Unaudited Condensed Consolidated Financial Statements
10
LESAKA TECHNOLOGIES, INC
Notes to the Unaudited Condensed Consolidated Financial Statements
for the three and nine months ended March 31, 2025 and 2024
(All amounts in tables stated in thousands or thousands of U.S. dollars, unless otherwise stated)
1. Basis of Presentation and Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The accompanying unaudited condensed consolidated financial statements include all majority-owned subsidiaries over which
the Company exercises control and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”)
and the rules and regulations of the United States Securities and Exchange Commission for Quarterly Reports on Form 10-Q and
include all of the information and disclosures required for interim financial reporting. The results of operations for the three and nine
months ended March 31, 2025 and 2024, are not necessarily indicative of the results for the full year. The Company believes that the
disclosures are adequate to make the information presented not misleading.
These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements,
accounting policies and financial notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June
30, 2024. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all
adjustments (consisting only of normal recurring adjustments), which are necessary for a fair representation of financial results for the
interim periods presented.
References to “Lesaka” are references solely to Lesaka Technologies, Inc. References to the “Company” refer to Lesaka and its
consolidated subsidiaries, collectively, unless the context otherwise requires.
Revision of Previously Issued Financial Statements
In April 2025, the Company identified that it had misclassified certain of its long-term borrowings. The Company’s CCC
Revolving Credit Facility was scheduled to be repaid in full on November 2024, but this has been extended to June 30, 2025. The
Company incorrectly classified amounts due under its CCC Revolving Credit Facility as long-term borrowings instead of as current
portion of long-term borrowings in its audited balance sheet as of June 30, 2024. The table below presents the impact of the revision
of the Company’s financial statements for the year ended June 30, 2024:
Condensed consolidated balance sheet
June 30, 2024
As previously
reported
Correction
Revised
(in thousands)
Current portion of long-term borrowings
$
$
$
Long-term borrowings
$
$
(11,841 )
$
The correction did not impact the Company’s audited consolidated statements of operations, consolidated statements of
comprehensive (loss) income, consolidated statement of changes in equity, or consolidated statements of cash flows for the year ended
June 30, 2024 and, except as noted above, the Company’s audited balance sheet as of June 30, 2024. The misclassification did not
affect compliance with any debt covenants. The Company assessed the materiality of this error and change in presentation on prior
period consolidated financial statements in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99 “Materiality” and SAB
No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial
Statements.” Based on this assessment, the Company has concluded that previously issued financial statements were not materially
misstated based upon overall considerations of both quantitative and qualitative factors.
Recent accounting pronouncements adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance regarding
Segment Reporting (Topic
280)
expenses. In addition, the guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose
multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable
segment, and contains other disclosure requirements. This guidance is effective for the Company beginning July 1, 2024 for its year
ended June 30, 2025, and for interim periods commencing from July 1, 2025 (i.e. for the quarter ended September 30, 2025).
Recent accounting pronouncements not yet adopted as of March 31, 2025
In December 2023, the FASB issued guidance regarding
Income Taxes (Topic 740)
requirements. The guidance requires entities, on an annual basis, to (1) disclose specific categories in the income tax rate reconciliation
and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items
is equal to or greater than five percent of the amount computed by multiplying pre-tax income or loss by the applicable statutory
income tax rate). This guidance is effective for the Company beginning July 1, 2025. The Company is currently assessing the impact
of this guidance on its financial statements and related disclosures.
11
1. Basis of Presentation and Summary of Significant Accounting Policies (continued)
Recent accounting pronouncements not yet adopted as of March 31, 2025 (continued)
In November 2024, the FASB issued guidance regarding
Income Statement—Reporting Comprehensive Income—Expense
Disaggregation Disclosures
(Subtopic 220-40)
business entities. The guidance does not change the expense captions an entity presents on the face of the income statement; rather, it
requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial
statements. This guidance is effective for the Company beginning July 1, 2027. Early adoption is permitted. The Company is currently
assessing the impact of this guidance on its financial statements and related disclosures.
2. Acquisitions
The Company did not make any acquisition during the nine months ended March 31, 2024. The cash paid, net of cash received
related to the Company’s acquisitions during the nine months ended March 31, 2025, is summarized in the table below:
Total
Total cash paid
$
Less: cash acquired
Total cash paid, net of cash received
$
2025 Acquisitions
October 2024 acquisition of Adumo
On May 7, 2024, the Company entered into a Sale and Purchase Agreement (the “Purchase Agreement”) with Lesaka SA, and
Crossfin Apis Transactional Solutions (Pty) Ltd and Adumo ESS (Pty) Ltd (“the Sellers”). Pursuant to the Purchase Agreement and
subject to its terms and conditions, Lesaka, through its subsidiary, Lesaka SA, agreed to acquire, and the Sellers agreed to sell, all of
the outstanding equity interests and certain claims in the Adumo (RF) Proprietary Limited (“Adumo”). The transaction closed on
October 1, 2024.
Adumo is an independent payments and commerce enablement platform in Southern Africa, and at acquisition, it served
approximately
decades, Adumo has facilitated physical and online commerce between retail merchants and end-consumers by offering a unique
combination of payment processing and integrated software solutions, which currently include embedded payments, integrated
payments, reconciliation services, merchant lending, customer engagement tools, card issuing program management and data
analytics.
Adumo operates across three businesses, which provide payment processing and integrated software solutions to different end
markets:
●
The Adumo Payments business offers payment processing, integrated payments and reconciliation solutions to small-and-
medium (“SME”) merchants in South Africa, Namibia and Botswana, and the Adumo Payouts business provides card issuing
program management to corporate clients such as Anglo American and Coca-Cola;
●
The Adumo ISV business, known as GAAP, has operations in South Africa, Botswana and Kenya, and clients in a further 21
countries, and is the leading provider of integrated point-of-sales software and hardware to the hospitality industry in Southern
Africa, serving clients such as KFC, McDonald’s, Pizza Hut, Nando’s and Krispy Kreme; and,
●
The Adumo Ventures business offers online commerce solutions (Adumo Online), cloud-based, multi-channel point-of-sales
solutions (Humble) and an aggregated payment and credit platform for in-store and online commerce (SwitchPay) to SME
merchants and corporate clients in South Africa and Namibia.
The acquisition continues the Company’s consolidation in the Southern African fintech sector. At acquisition, the Company’s
ecosystem served approximately
(cash, card and VAS) per year. The acquisition of Adumo enhances the Company’s strength in both the consumer and merchant
markets in which it operates.
The total purchase consideration was ZAR
Company’s common stock (“Consideration Shares”) with a value of $
cash of $
million ($
closing price on the Johannesburg Stock Exchange on October 1, 2024, was ZAR
exchange rate).
12
2. Acquisitions (continued)
2025 Acquisitions (continued)
October 2024 acquisition of Adumo (continued)
The closing of the transaction was subject to customary closing conditions, including (i) approval from the competition
authorities of South Africa and Namibia; (ii) exchange control approval from the financial surveillance department of the South African
Reserve Bank; (iii) approval from all necessary regulatory bodies and from shareholders to issue the Consideration Shares to the
Sellers; (iv) obtaining certain third-party consents; (v) the Company obtained confirmation from RMB that it has sufficient funds to
settle the cash portion of the purchase consideration; (vi) approval of Adumo shareholders (including preference shareholders) with
respect to entering into and implementation of the Purchase Agreement, and all other agreements and transactions contemplated in the
Purchase Agreement; (vii) obtained the consent of Adumo’s lender regarding Adumo entering into and implementing the Purchase
Agreement, and all other agreements and transactions contemplated in the Purchase Agreement; (viii) the release of certain Seller’s
shares held as security by such bank; (ix) consent of the lender of one of Adumo’s shareholders regarding Adumo entering into the
transaction; (x) the Company signing a written addendum to the Policy Agreement with International Finance Corporation that
provides for the inclusion of the Consideration Shares attributable to certain Seller shareholders in the definition of “Put Shares” under
the Policy Agreement, and related change; and (xi) a Seller (or their nominee), which ultimately was Crossfin, concluding share
purchase agreements to dispose of an amount of Consideration Shares (which ultimately was determined as
Shares).
The Company agreed to file a resale registration statement with the United States Securities and Exchange Commission (“SEC”)
covering the resale of the Consideration Shares by the Sellers. The resale registration statement was declared effective by the SEC on
December 6, 2024.
The Company incurred transaction-related expenditures of $
to the acquisition of Adumo. The Company’s accruals presented in Note 10 of as March 31, 2025, includes an accrual of transaction
related expenditures of $
remainder of the 2025 fiscal year.
March 2025 acquisition of Recharger
On November 19, 2024, the Company, through Lesaka SA, entered into a Sale of Shares Agreement (the “Recharger Purchase
Agreement”) with Imtiaz Dhooma (Recharger’s former chief executive officer) and Ninety Nine Proprietary Limited (“the Seller”).
Pursuant to the Recharger Purchase Agreement and subject to its terms and conditions, Lesaka, through its subsidiary, Lesaka SA,
agreed to acquire, and the Seller agreed to sell, all of the outstanding equity interests in Recharger Proprietary Limited (“Recharger”).
The transaction closed on March 3, 2025.
At the same time, Recharger also entered into independent contractor agreement with Recharger’s former chief executive officer
which has a term of
consultation with Company representatives, facilitate the handover process and assist Recharger in transitioning ownership to Lesaka
SA, avail himself for important customer and vendor meetings, attend scheduled weekly management committee meetings regarding
operational and business activities of the Recharger business, and providing support on an ad-hoc basis to Company representatives
with regard to operational matters and in facilitating the hand over, as and when reasonably required.
This acquisition will be reported as part of the Company’s Enterprise Division and demonstrates positive advancement of the
Company’s strategy in its Enterprise Division. The Company expects the acquisition to act as an entry point for it into the South
African private utilities space while augmenting the Enterprise division’s alternative payment offering.
The transaction consideration per the Recharger Purchase Agreement was ZAR
ZAR
settled in two tranches. The share price applied to determine the number of shares of common stock to be issued for the equity
consideration is based on the volume-weighted average price of the Company’s common shares for the three-month period prior to
the disbursal of each tranche. Lesaka SA extended a ZAR
exclusively used to repay an existing loan due by Recharger to the Seller.
The first tranche, comprising ZAR
with a value of ZAR
the shares issued multiplied by the Company’s closing price on the Johannesburg Stock Exchange on March 3, 2025, of ZAR
,
and translated to U.S. dollars at the exchange rate of $1: ZAR
. Lesaka SA delivered the
common stock from a pool of shares it purchased in October 2024, and the Company recognized a gain in additional paid-in-capital
of $
13
2. Acquisitions (continued)
2025 Acquisitions (continued)
March 2025 acquisition of Recharger (continued)
The total purchase consideration was ZAR
the Company’s common stock with a value of ZAR
ZAR
) million.
The second and final tranche is due on March 3, 2026, and comprises a contractual cash payment of ZAR
million) and the delivery of shares of Lesaka’s common stock with a contractual value of ZAR
to the Recharger Purchase Agreement, payment of the second tranche in March 2026 is contingent on Recharger’s former chief
executive officer ’s ongoing service under the independent contractor agreement until March 3, 2026. If the future services are not
provided, then the second tranche will not be paid, except if failure to provide future services is due to expiry of the contract, mutual
agreement or death of the former chief executive officer. The former chief executive officer is also a director of the Seller, and signed
the Recharger Purchaser Agreement on behalf of himself, Recharger and the Seller. He has also signed an independent contractor
agreement under which he is required to provide post-combination service to Recharger. The Company has determined that as the
payment of the second tranche is contingent on these post-combination services, the value of the second tranche is not treated as
purchase consideration and rather, under U.S. GAAP, represents compensation for post-combination services.
The post-combination services for the three and nine months ended March 31, 2025, of $
of one twelfth of the future cash payment and one twelfth of the value of future shares to be provided. The value of the future shares
to be provided was calculated using the contractual value of ZAR
Company’s common shares for the three-month period prior to March 31, 2025, divided by twelve and at the applicable exchange rate.
The post-combination compensation charge is included in the caption transaction costs related to Adumo and Recharger acquisitions
and certain compensation costs included on the unaudited condensed consolidated statement of operations.
Refer to Note 13 for additional information. The liability for the future payments is included in the caption Other payables in the
unaudited condensed consolidated balance sheet as of March 31, 2025, refer to Note 10.
The Company incurred transaction-related expenditures of $
to the acquisition of Recharger. The Company does not expect to incur any further significant transaction costs over the remainder of
the 2025 fiscal year.
Other acquisitions
Effective November 1, 2024, the Company, through its wholly owned subsidiary Adumo Technologies Proprietary Limited
(“Adumo AT”), acquired the remaining shares (representing
% of the issued and outstanding shares) it did not own in Innervation
Value Added Services Namibia Pty Ltd (“IVAS Nam”) for $
rates). IVAS Nam was accounted for using the equity method prior to the acquisition of a controlling interest in the company. Adumo
paid ZAR
will be paid in
transaction costs related to this acquisition.
The Company, through Lesaka SA, acquired
% of Genisus Risk (Pty) Ltd for a cash consideration of ZAR
million). The Company did not incur any significant transaction costs related to this acquisition.
The Company, through its wholly owned subsidiary Cash Connect Management Solutions Proprietary Limited (“CCMS”),
acquired
% of Master Fuel (Pty) Ltd (“Master Fuel) for a cash consideration of ZAR
not incur any significant transaction costs related to this acquisition.
14
2. Acquisitions (continued)
2025 Acquisitions (continued)
The preliminary purchase price allocation of acquisitions during the nine months ended March 31, 2025, translated at the foreign
exchange rates applicable on the date of acquisition, in provided is the table below:
Acquisitions during fiscal 2025 through March 31, 2025
Adumo
Recharger
Other
Total
Cash and cash equivalents
$
$
$
$
Accounts receivable
Inventory
Property, plant and equipment
Operating lease right of use asset
Equity-accounted investment
Goodwill
Intangible assets
Deferred income taxes assets
Other long-term assets
Current portion of long-term borrowings
(1,178 )
(1,178 )
Accounts payable
(3,266 )
(149 )
(428 )
(3,843 )
Other payables
(28,044 )
(1,439 )
(252 )
(29,735 )
Operating lease liability - current
(1,019 )
(185 )
(1,204 )
Income taxes payable
(150 )
(4 )
(42 )
(196 )
Deferred income taxes liabilities
(6,670 )
(4,638 )
(19 )
(11,327 )
Operating lease liability - long-term
(326 )
(269 )
(595 )
Long-term borrowings
(7,308 )
(7,308 )
Other long-term liabilities
(140 )
(140 )
Settlement assets
Settlement liabilities
(8,530 )
(8,530 )
Fair value of assets and liabilities on acquisition
$
$
$
$
The fair value of the non-controlling interests recorded was $
determined as the non-controlling interests respective portion of the equity value of the entity acquired by the Company, and which
was adjusted for a
% minority discount. The allocation of the purchase price related to the various acquisitions is preliminary and
not yet finalized.
The preliminary allocation of the purchase price is based upon preliminary estimates which used information that was available
to management at the time the unaudited condensed consolidated financial statements were prepared and these estimates and
assumptions are subject to change within the measurement period, up to one year from the acquisition date. Accordingly, the allocation
may change. We continue to refine certain inputs to the calculation of acquired intangible assets and, for Adumo, the valuation of the
non-controlling interest.
15
2. Acquisitions (continued)
2025 Acquisitions (continued)
Intangible assets acquired
assets acquired and the weighted-average amortization period:
Fair value as of
acquisition date
Weighted-average
amortization
period (in years)
Finite-lived intangible asset:
Acquired during the nine months ended March 31, 2025:
Adumo – technology assets
$
Adumo – customer relationships
Adumo – brands
Recharger – technology assets
Recharger – customer relationships
Genisus Risk – technology assets
On acquisition of these businesses, the Company recognized an aggregate deferred tax liability of approximately $
related to the acquisition of intangible assets during the nine months ended March 31, 2025.
Transaction costs and certain compensation costs
The table below presents transaction costs incurred related to the acquisition of Adumo and Recharger, as well as certain post-
combination compensation costs expensed during the three and nine months ended March 31, 2025 and 2024:
Three months ended
March 31,
Nine months ended March
31,
2025
2024
2025
2024
Adumo transaction costs
$
$
$
$
Recharger transaction costs
(1)
Recharger post-combination services expensed
Total
$
$
$
$
(1) Recharger transactions costs for the six months ended March 31, 2025, of $
general and administration to Transaction costs related to Adumo and Recharger and certain compensation costs in the unaudited
condensed consolidated statement operations for the nine months ended March 31, 2025.
16
2. Acquisitions
Pro forma results related to acquisitions
Pro forma results of operations have not been presented for the acquisition of IVAS Nam, Genisus Risk and Master Fuel because
the effect of these acquisitions, individually and in aggregate, are not material to the Company. Since the closing of these acquisitions,
they have contributed revenue and net income of $
March 31, 2025.
The results of the Adumo and Recharger’s operations are reflected in the Company’s financial statements from October 1, 2024,
and March 3, 2025, respectively. The following unaudited pro forma revenue and net income information has been prepared as if the
acquisitions of Adumo and Recharger had occurred on July 1, 2023, using the applicable average foreign exchange rates for the periods
presented:
Three months ended
March 31,
Nine months ended
March 31,
2025
2024
2025
2024
Revenue
$
$
$
$
Net loss
$
(21,810 )
$
(3,292 )
$
(56,292 )
$
(23,846 )
The unaudited pro forma financial information presented above includes the business combination accounting and other effects
from the acquisitions including (1) amortization expense related to acquired intangibles and the related deferred tax; (2) the loss of
interest income, net of taxation, as a result of funding a portion of the purchase price in cash; (3) an adjustment to exclude all applicable
transaction-related costs recognized in the Company’s consolidated statement of operations for three and nine months ended March
31, 2025, and include the applicable transaction-related costs for the year ended June 30, 2024; an adjustment to exclude the post-
combination compensation expenses related to the Recharger acquisition recognized in the Company’s consolidated statement of
operations for three and nine months ended March 31, 2025, and include the expense during the year ended June 30, 2024. The
unaudited pro forma net income presented above does not include any cost savings or other synergies that may result from the
acquisition.
The unaudited pro forma information as presented above is for information purposes only and is not indicative of the results of
operations that would have been achieved if the acquisition had occurred on these dates.
Since the closing of the acquisitions, Adumo and Recharger have contributed aggregate revenue of $
attributable to the Company, including intangible assets amortization related to assets acquired, net of deferred taxes, of $
17
3.
Accounts receivable, net and other receivables and finance loans receivable, net
Accounts receivable, net and other receivables
The Company’s accounts receivable, net, and other receivables as of March 31, 2025, and June 30, 2024, are presented in the
table below:
March 31,
June 30,
2025
2024
Accounts receivable, trade, net
$
$
Accounts receivable, trade, gross
Less: Allowance for doubtful accounts receivable, end of period
Beginning of period
Reversed to statement of operations
(85 )
(511 )
Charged to statement of operations
Utilized
(732 )
(67 )
Foreign currency adjustment
(24 )
Current portion of amount outstanding related to sale of interest in Carbon, net of
allowance: March 2025: $
; June 2024: $
Current portion of total held to maturity investments
Investment in
% of Cedar Cellular Investment 1 (RF) (Pty) Ltd
% notes
Other receivables
Total accounts receivable, net and other receivables
$
$
Trade receivables include amounts due from customers which generally have a very short-term life from date of invoice or service
provided to settlement. The duration is less than a year in all cases and generally less than 30 days in many instances. The short-term
nature of these exposures often results in balances at month-end that are disproportionately small compared to the total invoiced
amounts. The month-end outstanding balance are more volatile than the monthly invoice amounts because they are affected by
operational timing issues and the fact that a balance is outstanding at month-end is not necessarily an indication of increased risk but
rather a matter of operational timing.
Credit risk in respect of trade receivables are generally not significant and the Company has not developed a sophisticated model
for these basic credit exposures. The Company determined to use a lifetime loss rate by expressing write-off experience as a percentage
of corresponding invoice amounts (as opposed to outstanding balances). The allowance for credit losses related to these receivables
has been calculated by multiplying the lifetime loss rate with recent invoice/origination amounts. Management actively monitors
performance of these receivables over short periods of time. Different balances have different rules to identify an account in distress.
Once balances in distress are identified, specific allowances are immediately created. Subsequent recovery from distressed accounts
is not significant.
Current portion of amount outstanding related to sale of interest in Carbon represents an amount due related to the sale of the
loan in Carbon Tech Limited (“Carbon”), with a face value of $
of an allowance for doubtful loans receivable of $
to the sale of the $
Investment in
% of Cedar Cellular Investment 1 (RF) (Pty) Ltd
% notes represents the investment in a note which was
due to mature in August 2022 and forms part of Cell C’s capital structure. The carrying value as of each of March 31, 2025, and June
30, 2024, respectively was $
Other receivables include prepayments, deposits, income taxes receivable and other receivables.
18
3.
Accounts receivable, net and other receivables and finance loans receivable, net (continued)
Finance loans receivable, net
The Company’s finance loans receivable, net, as of March 31, 2025, and June 30, 2024, is presented in the table below:
March 31,
June 30,
2025
2024
Microlending finance loans receivable, net
$
$
Microlending finance loans receivable, gross
Less: Allowance for doubtful finance loans receivable, end of period
Beginning of period
Reversed to statement of operations
(160 )
(210 )
Charged to statement of operations
Utilized
(1,663 )
(1,795 )
Foreign currency adjustment
(34 )
Merchant finance loans receivable, net
Merchant finance loans receivable, gross
Less: Allowance for doubtful finance loans receivable, end of period
Beginning of period
Reversed to statement of operations
(22 )
(359 )
Charged to statement of operations
Utilized
(725 )
(1,672 )
Foreign currency adjustment
(42 )
Total finance loans receivable, net
$
$
Total finance loans receivable, net, comprises microlending finance loans receivable related to the Company’s microlending
operations in South Africa as well as its merchant finance loans receivable related to Connect’s lending activities in South Africa.
Certain merchant finance loans receivable with an aggregate balance of $
security for the Company’s revolving credit facility (refer to Note 9).
Allowance for credit losses
Microlending finance loans receivable
Microlending finance loans receivable is related to the Company’s microlending operations in South Africa whereby it provides
unsecured short-term loans to qualifying customers. Loans to customers have a tenor of up to
, with the majority of loans
originated having a tenor of
. The Company analyses this lending book as a single portfolio because the loans within the
portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk of the lending book.
Refer to Note 5 related to the Company risk management process related to these receivables.
The Company has operated this lending book for more than
loans in order to calculate a lifetime loss rate for the lending book. The allowance for credit losses related to these microlending finance
loans receivables is calculated by multiplying the lifetime loss rate with the month end outstanding lending book. The lifetime loss
rate as of each of June 30, 2024 and March 31, 2025, was
%. The performing component (that is, outstanding loan payments not
in arrears) of the book exceeds more than
%, of the outstanding lending book as of each of June 30, 2024 and March 31, 2025.
Merchant finance loans receivable
Merchant finance loans receivable is related to the Company’s Merchant lending activities in South Africa whereby it provides
unsecured short-term loans to qualifying customers. Loans to customers have a tenor of up to
, with the majority of
loans originated having a tenor of approximately
. The Company analyses this lending book as a single portfolio because
the loans within the portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk
of the lending book. Refer to Note 5 related to the Company risk management process related to these receivables.
19
3.
Accounts receivable, net and other receivables and finance loans receivable, net (continued)
Finance loans receivable, net (continued)
Allowance for credit losses (continued)
Merchant finance loans receivable (continued)
The Company uses historical default experience over the lifetime of loans generated thus far in order to calculate a lifetime loss
rate for the lending book. The allowance for credit losses related to these merchant finance loans receivables is calculated by adding
together actual receivables in default plus multiplying the lifetime loss rate with the month-end outstanding lending book. The lifetime
loss rate as of each of June 30, 2024 and March 31, 2025, was approximately
%. The performing component (that is, outstanding
loan payments not in arrears), under-performing component (that is, outstanding loan payments that are in arrears) and non-performing
component (that is, outstanding loans for which payments appeared to have ceased) of the book represents approximately
%,
%
and
%, respectively, of the outstanding lending book as of June 30, 2024. The performing component, under-performing component
and non-performing component of the book represents approximately
%,
% and
%, respectively, of the outstanding lending
book as of March 31, 2025.
4. Inventory
The Company’s inventory comprised the following categories as of March 31, 2025, and June 30, 2024:
March 31,
June 30,
2025
2024
Raw materials
$
$
Work-in-progress
Finished goods
$
$
Finished goods as of June 30, 2024, includes $
goods subject to sale restrictions. The Company sold all of this inventory during the first two months of the nine months ended March
31, 2025.
5. Fair value of financial instruments
Initial recognition and measurement
Financial instruments are recognized when the Company becomes a party to the transaction. Initial measurements are at cost,
which includes transaction costs.
Risk management
The Company manages its exposure to currency exchange, translation, interest rate, credit, microlending credit and equity price
and liquidity risks as discussed below.
Currency exchange risk
The Company is subject to currency exchange risk because it purchases components for its safe assets, that the Company
assembles, and inventories that it is required to settle in other currencies, primarily the euro, renminbi, and U.S. dollar. The Company
has used forward contracts in order to limit its exposure in these transactions to fluctuations in exchange rates between the South
African rand (“ZAR”), on the one hand, and the U.S. dollar and the euro, on the other hand.
Translation risk
Translation risk relates to the risk that the Company’s results of operations will vary significantly as the U.S. dollar is its reporting
currency, but it earns a significant amount of its revenues and incurs a significant amount of its expenses in ZAR. The U.S. dollar to
the ZAR exchange rate has fluctuated significantly over the past three years. As exchange rates are outside the Company’s control,
there can be no assurance that future fluctuations will not adversely affect the Company’s results of operations and financial condition.
20
5. Fair value of financial instruments (continued)
Risk management (continued)
Interest rate risk
As a result of its normal borrowing activities, the Company’s operating results are exposed to fluctuations in interest rates, which
it manages primarily through regular financing activities. Interest rates in South Africa remained unchanged for the majority of
calendar 2024 however the South African Reserve Bank announced a 25-basis point reduction in the South African repurchase rate in
each of September 2024, November 2024, and January 2025, with further reductions expected thereafter. Therefore, ignoring the
impact of changes to the margin on its borrowings (refer to Note 9) and value of borrowings outstanding, the Company expects its
cost of borrowing to decline moderately in the foreseeable future, however, the Company would expect a higher cost of borrowing if
interest rates were to increase in the future. The Company periodically evaluates the cost and effectiveness of interest rate hedging
strategies to manage this risk. The Company generally maintains surplus cash in cash equivalents and held to maturity investments
and has occasionally invested in marketable securities.
Credit risk
Credit risk relates to the risk of loss that the Company would incur as a result of non-performance by counterparties. The
Company maintains credit risk policies in respect of its counterparties to minimize overall credit risk. These policies include an
evaluation of a potential counterparty’s financial condition, credit rating, and other credit criteria and risk mitigation tools as the
Company’s management deems appropriate. With respect to credit risk on financial instruments, the Company maintains a policy of
entering into such transactions only with South African and European financial institutions that have a credit rating of “B” (or its
equivalent) or better, as determined by credit rating agencies such as Standard & Poor’s, Moody’s and Fitch Ratings.
Consumer microlending credit risk
The Company is exposed to credit risk in its Consumer microlending activities, which provides unsecured short-term loans to
qualifying customers. Credit bureau checks as well as an affordability test are conducted as part of the origination process, both of
which are in line with local regulations. The Company considers this policy to be appropriate because the affordability test it performs
takes into account a variety of factors such as other debts and total expenditures on normal household and lifestyle expenses. Additional
allowances may be required should the ability of its customers to make payments when due deteriorate in the future. Judgment is
required to assess the ultimate recoverability of these finance loan receivables, including ongoing evaluation of the creditworthiness
of each customer.
Merchant lending
The Company maintains an allowance for doubtful finance loans receivable related to its Merchant services segment with respect
to short-term loans to qualifying merchant customers. The Company’s risk management procedures include adhering to its proprietary
lending criteria which uses an online-system loan application process, obtaining necessary customer transaction-history data and credit
bureau checks. The Company considers these procedures to be appropriate because it takes into account a variety of factors such as
the customer’s credit capacity and customer-specific risk factors when originating a loan.
Equity price and liquidity risk
Equity price risk relates to the risk of loss that the Company would incur as a result of the volatility in the exchange-traded price
of equity securities that it holds. The market price of these securities may fluctuate for a variety of reasons and, consequently, the
amount that the Company may obtain in a subsequent sale of these securities may significantly differ from the reported market value.
Equity liquidity risk relates to the risk of loss that the Company would incur as a result of the lack of liquidity on the exchange
on which those securities are listed. The Company may not be able to sell some or all of these securities at one time, or over an
extended period of time without influencing the exchange-traded price, or at all.
21
5. Fair value of financial instruments (continued)
Financial instruments (continued)
The following section describes the valuation methodologies the Company uses to measure its significant financial assets and
liabilities at fair value.
In general, and where applicable, the Company uses quoted prices in active markets for identical assets or liabilities to determine
fair value. This pricing methodology would apply to Level 1 investments. If quoted prices in active markets for identical assets or
liabilities are not available to determine fair value, then the Company uses quoted prices for similar assets and liabilities or inputs
other than the quoted prices that are observable either directly or indirectly. These investments would be included in Level 2
investments. In circumstances in which inputs are generally unobservable, values typically reflect management’s estimates of
assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-
based techniques that include option pricing models, discounted cash flow models, and similar techniques. Investments valued using
such techniques are included in Level 3 investments.
Asset measured at fair value using significant observable inputs – investment in MobiKwik
The Company’s owns
National Stock Exchange of India (“NSE”) on December 18, 2024. Up until its listing MobiKwik did not have a readily determinable
fair value and the Company elected to measure its investment in MobiKwik at cost minus impairment, if any, plus or minus changes
resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer (“cost plus
or minus changes in observable prices equity securities”). From the date of MobiKwik’s listing, the Company has used MobiKwik’s
closing price reported on the NSE on the last trading day related to last day of the Company’s reporting period to determine the fair
value of the equity securities owned by the Company. The Company has determined a fair value per MobiKwik share of $
6 for additional information.
Asset measured at fair value using significant unobservable inputs – investment in Cell C
The Company’s Level 3 asset represents an investment of
provider in South Africa. The Company used a discounted cash flow model developed by the Company to determine the fair value of
its investment in Cell C as of March 31, 2025 and June 30, 2024, respectively, and valued Cell C at $
March 31, 2025, and June 30, 2024, respectively. The Company incorporates the payments under Cell C’s lease liabilities into the
cash flow forecasts and assumes that Cell C’s deferred tax assets would be utilized over the forecast period. The Company has assumed
a marketability discount of
% and a minority discount of
%. The Company utilized the latest business plan provided by Cell C
management for the period ending December 31, 2027, for the March 31, 2025, and June 30, 2024, valuations. Adjustments have been
made to the WACC rate to reflect the Company’s assessment of risk to Cell C achieving its business plan.
The following key valuation inputs were used as of March 31, 2025 and June 30, 2024:
Weighted Average Cost of Capital ("WACC"):
Between
% and
% over the period of the forecast
Long term growth rate:
% (
% as of June 30, 2024)
Marketability discount:
% (
% as of June 30, 2024)
Minority discount:
% (
% as of June 30, 2024)
Net adjusted external debt - March 31, 2025:
(1)
ZAR
Net adjusted external debt - June 30, 2024:
(2)
ZAR
(1) translated from ZAR to U.S. dollars at exchange rates applicable as of March 31, 2025.
(2) translated from ZAR to U.S. dollars at exchange rates applicable as of June 30, 2024.
The following table presents the impact on the carrying value of the Company’s Cell C investment of a
% decrease and
%
increase in the WACC rate and the EBITDA margins respectively used in the Cell C valuation on March 31, 2025, all amounts
translated at exchange rates applicable as of March 31, 2025:
Sensitivity for fair value of Cell C investment
1.0% increase
1.0% decrease
WACC rate
$
$
EBITDA margin
$
$
The aggregate fair value of the MobiKwik and Cell C’s shares as of March 31, 2025, represented
% of the Company’s total
assets, including these shares. The Company expects that there will be short-term equity price volatility with respect to these shares,
and with respect to Cell C specifically, particularly given that Cell C remains in a turnaround process.
22
5. Fair value of financial instruments
The following table presents the Company’s assets measured at fair value on a recurring basis as of March 31, 2025, according
to the fair value hierarchy:
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
$
$
$
Investment in MobiKwik
Related to insurance
business:
Cash, cash equivalents and
restricted cash (included
in other long-term assets)
Fixed maturity
investments (included in
cash and cash equivalents)
Total assets at fair value
$
$
$
$
The following table presents the Company’s assets measured at fair value on a recurring basis as of June 30, 2024, according to
the fair value hierarchy:
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
$
$
$
Related to insurance business
Cash and cash equivalents
(included in other long-term
assets)
Fixed maturity investments
(included in cash and cash
equivalents)
Total assets at fair value
$
$
$
$
There have been
There was
3, during the nine months ended March 31, 2025 and 2024.
Summarized below is the movement in the carrying value of assets and liabilities measured at fair value on a recurring basis, and
categorized within Level 3, during the nine months ended March 31, 2025:
Carrying value
Assets
Balance as of June 30, 2024
$
Foreign currency adjustment
(1)
Balance as of March 31, 2025
$
(1) The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S. dollar on
the carrying value.
23
5. Fair value of financial instruments
Summarized below is the movement in the carrying value of assets and liabilities measured at fair value on a recurring basis, and
categorized within Level 3, during the nine months ended March 31, 2024:
Carrying value
Assets
Balance as of June 30, 2023
$
Foreign currency adjustment
(1)
Balance as of March 31, 2024
$
(1) The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S. dollar
on the carrying value.
Assets measured at fair value on a nonrecurring basis
The Company measures equity investments without readily determinable fair values at fair value on a nonrecurring basis. The
fair values of these investments are determined based on valuation techniques using the best information available and may include
quoted market prices, market comparables, and discounted cash flow projections. An impairment charge is recorded when the cost of
the asset exceeds its fair value and the excess is determined to be other-than-temporary. Refer to Note 6 for impairment charges
recorded during the reporting periods presented herein. The Company has
basis.
6. Equity-accounted investments and other long-term assets
Refer to Note 9 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the
year ended June 30, 2024, for additional information regarding its equity-accounted investments and other long-term assets.
Equity-accounted investments
The Company’s ownership percentage in its equity-accounted investments as of March 31, 2025, and June 30, 2024, was as
follows:
March 31,
June 30,
2025
2024
Sandulela Technology (Pty) Ltd ("Sandulela")
%
%
SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”)
%
%
Sale and impairment of Finbond shares during the nine months ended March 31, 2024
On August 10, 2023, the Company, through its wholly owned subsidiary Net1 Finance Holdings (Pty) Ltd, entered into an
agreement with Finbond to sell its remaining shareholding to Finbond for a cash consideration of ZAR
ZAR
finalized in December 2023. The cash proceeds received of ZAR
under the Company’s borrowing facilities.
As noted above, the Company entered into an agreement to exit its position in Finbond and the Company considered this an
impairment indicator. The Company is required to include any foreign currency translation reserve and other equity account amounts
in its impairment assessment if it considers exiting an equity method investment. The Company performed an impairment assessment
of its holding in Finbond, including the foreign currency translation reserve and other equity account amounts, as of September 30,
2023. The Company recorded an impairment loss of $
difference between the determined fair value of the Company’s interest in Finbond and the Company’s carrying value, including the
foreign currency translation reserve (before the impairment). The Company used the price of ZAR
2023 agreement referred to above to calculate the determined fair value for Finbond.
24
6. Equity-accounted investments and other long-term assets (continued)
Equity-accounted investments (continued)
Sale and impairment of Finbond shares during the nine months ended March 31, 2024 (continued)
The Company sold
Company did
t record a gain or loss on the disposal because the sale proceeds were equivalent to the net carrying value, including
accumulated reserves, of the investment in Finbond as of the disposal date. The following table presents the calculation of the disposal
of Finbond shares during the nine months ended March 31, 2024:
2024
Loss on disposal of Finbond shares:
Consideration received in cash
$
Less: carrying value of Finbond shares sold
(2,112 )
Less: release of foreign currency translation reserve from
accumulated other comprehensive loss
(1,543 )
Add: release of stock-based compensation charge related to
equity-accounted investment
Loss on sale of Finbond shares
$
Carbon
In September 2022, the Company, through its wholly-owned subsidiary, Net1 Applied Technologies Netherlands B.V. (“Net1
BV”), entered into a binding term sheet with the Etobicoke Limited (“Etobicoke”) to sell its entire interest, or
%, in Carbon to
Etobicoke for $
equity interest and the loan had a carrying value of $
shares purchased as security for the amounts outstanding under the binding term sheet. The Company received $
and the outstanding balance due by Etobicoke was expected to be paid as follows: (i) $
was received in October 2023), and (ii) the remaining amount, of $
of March 31, 2025 (refer to Note 3)).
Summarized below is the movement in equity-accounted investments and loans provided to equity-accounted investments during
the nine months ended March 31, 2025:
Total
(1)
Investment in equity
Balance as of June 30, 2024
$
Comprehensive income:
Other comprehensive income
Equity accounted (loss) earnings
Share of net (loss) earnings
Impairment
Dividends received
(65 )
Equity-accounted investment acquired in business combination (Note 2)
Disposal of equity accounted investment (Note 2)
(507 )
Foreign currency adjustment
(2)
(1 )
Balance as of March 31, 2025
$
(1) Includes Sandulela and SmartSwitch Namibia;
(2) The foreign currency adjustment represents the effects of the fluctuations of the ZAR and Namibian dollar, against the U.S.
dollar on the carrying value.
25
6. Equity-accounted investments and other long-term assets (continued)
Other long-term assets
Summarized below is the breakdown of other long-term assets as of March 31, 2025, and June 30, 2024:
March 31,
June 30,
2025
2024
Total equity investments
$
$
Investment in
% of Cell C (June 30, 2024:
%) at fair value (Note 5)
Investment in
% of MobiKwik (June 30, 2024:
%)
(1)
Investment in
% of CPS (June 30, 2024:
%) at fair value
(1)(2)
Policy holder assets under investment contracts (Note 8)
Reinsurance assets under insurance contracts (Note 8)
Other long-term assets
Total other long-term assets
$
$
(1) The Company determined that MobiKwik (up until December 2024) and CPS do not have readily determinable fair values
and therefore elected to record these investments at cost minus impairment, if any, plus or minus changes resulting from observable
price changes in orderly transactions for the identical or a similar investment of the same issuer.
(2) On October 16, 2020, the High Court of South Africa, Gauteng Division, Pretoria ordered that CPS be placed into liquidation.
Refer to Note 5 for additional information regarding the determination of the fair value of Company’s investment in MobiKwik
as of March 31, 2025. The Company used this valuation as the basis for its adjustment to decrease the carrying value of its investment
in MobiKwik by $
value of MobiKwik for the three and nine months ended March 31, 2025, of $
in the caption “Change in fair value of equity securities” in the consolidated statement of operations for the three and nine months
ended March 31, 2025.
Summarized below are the components of the Company’s equity securities without readily determinable fair value and held to
maturity investments as of March 31, 2025:
Cost basis
Unrealized
holding
Unrealized
holding
Carrying
gains
losses
value
Equity securities:
Investment in CPS
$
$
$
$
Held to maturity:
Investment in Cedar Cellular notes (Note 3)
Summarized below are the components of the Company’s equity securities without readily determinable fair value and held to
maturity investments as of June 30, 2024:
Cost basis
Unrealized
holding
Unrealized
holding
Carrying
gains
losses
value
Equity securities:
Investment in MobiKwik
$
$
$
$
Investment in CPS
Held to maturity:
Investment in Cedar Cellular notes
Total
$
$
$
$
26
7. Goodwill and intangible assets, net
Goodwill
Summarized below is the movement in the carrying value of goodwill for the nine months ended March 31, 2025:
Gross value
Accumulated
impairment
Carrying
value
Balance as of June 30, 2024
$
$
(19,348 )
$
Acquisitions (Note 2)
(1)
-
Foreign currency adjustment
(2)
(5,430 )
(5,305 )
Balance as of March 31, 2025
$
$
(19,223 )
$
(1) – Represents goodwill arising from the acquisition of Adumo, Recharger, IVAS Namibia and Master Fuel and translated at
the foreign exchange rates applicable on the date the transactions became effective. This goodwill has been allocated to the Merchant
(a portion Adumo, IVAS Namibia and Master Fuel), Consumer (a portion of Adumo) and Enterprise (Recharger) reportable operating
segments.
(2) – The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S. dollar
on the carrying value.
Goodwill associated with the acquisitions represents the excess of cost over the fair value of acquired net assets. Goodwill arising
from these acquisitions is not deductible for tax purposes. See Note 2 for the allocation of the purchase price to the fair value of
acquired net assets.
Goodwill has been allocated to the Company’s reportable segments as follows:
Merchant
Consumer
Enterprise
Carrying
value
Balance as of June 30, 2024
$
$
$
$
Acquisitions (Note 2)
Foreign currency adjustment
(1)
(4,513 )
(481 )
(311 )
(5,305 )
Balance as of March 31, 2025
$
$
$
$
(1) The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S. dollar
on the carrying value.
Intangible assets, net
Carrying value and amortization of intangible assets
Summarized below is the carrying value and accumulated amortization of intangible assets as of March 31, 2025, and June 30,
2024:
As of March 31, 2025
As of June 30, 2024
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Finite-lived intangible assets:
Customer relationships
(1)
$
$
(16,445 )
$
$
$
(14,030 )
$
Software, integrated
platform and unpatented
technology
(1)
(35,449 )
(25,763 )
FTS patent
(2,088 )
(2,107 )
Brands and trademarks
(1)
(5,391 )
(4,300 )
Total finite-lived intangible
assets
$
$
(59,373 )
$
$
$
(46,200 )
$
(1) March 31, 2025 balances include the intangible assets acquired as part of the Adumo acquisition in October 2024, and the
Recharger and Genisus Risk acquisitions in March 2025.
27
7. Goodwill and intangible assets, net (continued)
Intangible assets, net (continued)
Aggregate amortization expense on the finite-lived intangible assets for the three months ended March 31, 2025 and 2024, was
$
ended March 31, 2025 and 2024, was $
the next five fiscal years and thereafter, assuming exchange rates that prevailed on March 31, 2025, is presented in the table below.
Actual amortization expense in future periods could differ from this estimate as a result of acquisitions, changes in useful lives,
exchange rate fluctuations and other relevant factors.
Fiscal 2025 (excluding nine months ended March 31, 2025)
$
Fiscal 2026
Fiscal 2027
Fiscal 2028
Fiscal 2029
Thereafter
Total future estimated annual amortization expense
$
8. Assets and policyholder liabilities under insurance and investment contracts
Reinsurance assets and policyholder liabilities under insurance contracts
Summarized below is the movement in reinsurance assets and policyholder liabilities under insurance contracts during the nine
months ended March 31, 2025:
Reinsurance
Assets
(1)
Insurance
contracts
(2)
Balance as of June 30, 2024
$
$
(2,241 )
Increase in policy holder benefits under insurance contracts
(7,480 )
Claims and decrease in policyholders’ benefits under insurance contracts
(227 )
Foreign currency adjustment
(3)
(18 )
Balance as of March 31, 2025
$
$
(2,722 )
(1) Included in other long-term assets (refer to Note 6);
(2) Included in other long-term liabilities;
(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.
The Company has agreements with reinsurance companies in order to limit its losses from various insurance contracts, however,
if the reinsurer is unable to meet its obligations, the Company retains the liability. The value of insurance contract liabilities is based
on the best estimate assumptions of future experience plus prescribed margins, as required in the markets in which these products are
offered, namely South Africa. The process of deriving the best estimate assumptions plus prescribed margins includes assumptions
related to claim reporting delays (based on average industry experience).
Assets and policyholder liabilities under investment contracts
Summarized below is the movement in assets and policyholder liabilities under investment contracts during the nine months
ended March 31, 2025:
Assets
(1)
Investment
contracts
(2)
Balance as of June 30, 2024
$
$
(216 )
Increase in policy holder benefits under investment contracts
(11 )
Claims and decrease in policyholders’ benefits under investment contracts
(89 )
Foreign currency adjustment
(3)
(1 )
Balance as of March 31, 2025
$
$
(137 )
(1) Included in other long-term assets (refer to Note 6);
(2) Included in other long-term liabilities;
(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.
The Company does not offer any investment products with guarantees related to capital or returns.
28
9. Borrowings
Refer to Note 12 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for
the year ended June 30, 2024, for additional information regarding its borrowings.
Reference rate reform
After the transition away from certain interbank offered rates in foreign jurisdictions (“IBOR reform ”), the reforms to South
Africa’s reference interest rate are now accelerating rapidly. The Johannesburg Interbank Average Rate (“JIBAR”) will be replaced
by the new South African Overnight Index Average (“ZARONIA”). Certain of the Company’s borrowings reference JIBAR as a base
interest rate. ZARONIA reflects the interest rate at which rand-denominated overnight wholesale funds are obtained by commercial
banks. There is uncertainty surrounding the timing and manner in which the transition would occur and how this would affect our
borrowings. The Company is in regular contact with its lenders and negotiate changes to the existing borrowing agreements once there
is greater clarity on the implementation of ZARONIA.
South Africa
The amounts below have been translated at exchange rates applicable as of the dates specified.
On February 27, 2025, the Company, Lesaka SA and a number of other subsidiaries of Lesaka SA entered into a Common Terms
Agreement (the “CTA”) with FirstRand Bank Limited (acting through its Rand Merchant Bank division) (“RMB”), FirstRand Bank
Limited (acting through its WesBank division) (“WesBank”), FirstRand Bank Limited being a South African corporate and investment
bank, Investec Bank Limited (acting through its Investment Banking division: Corporate Solutions) (“Investec” and together with
RMB and WesBank, the “Lenders”), a South African corporate and investment bank, and Bowwood and Main No 408 (RF) Proprietary
Limited (“Debt Guarantor”), a South African company incorporated for the sole purpose of holding collateral for the benefit of the
Lenders and acting as debt guarantor, and certain other parties.
Lesaka SA has obtained
A”), an amortizing loan of up to ZAR
billion ($
“GBF”, and collectively with Facility A, Facility B and Senior RCF, the “Facilities”), which are described in more detail below.
The Company , Lesaka SA and the majority of Lesaka SA’s directly and indirectly wholly-owned subsidiaries have agreed to
guarantee the obligations of Lesaka SA and of the other borrowers under the Facilities to the Lenders.
The CTA contains customary covenants which includes a requirement for Lesaka SA to maintain specified Net Debt to EBITDA
and Interest Cover Ratios (as defined in the CTA) and restricts the ability of Lesaka SA, and certain of its subsidiaries to make certain
distributions with respect to their capital stock, prepay other debt, encumber their assets, incur additional indebtedness, make
investment above specified levels, engage in certain business combinations and engage in other corporate activities. The CTA provides
that if any subsidiary of the Company receives proceeds from the disposal of shares in/claims against, or assets of MobiKwik, it would
offer to prepay the certain specified loans/facilities and loan outstandings to the Lenders (as contemplated in the CTA).
Lesaka SA paid non-refundable debt structuring fees of ZAR
The JIBAR, an average of 3 month negotiable certificates of deposit (“NCD”) rates, on March 31, 2025, was
%. The prime
rate, the benchmark rate at which private sector banks lend to the public in South Africa, on March 31, 2025, was
%.
Facilities obtained in February 2025
Long-term borrowings – Senior Facility A Agreement
Concurrent with the execution of the CTA, Lesaka SA, the Lenders and RMB (as facility agent) entered into a Senior Term
Facility A Agreement (“Facility A Agreement”) and a Senior RCF Agreement (“RCF Agreement”). Pursuant to the Facility A
Agreement, Lesaka SA may borrow up to an aggregate amount of ZAR
facilities of Lesaka SA and Cash Connect Management Solutions Proprietary Limited’s (“CCMS”) with RMB, funding transaction
costs and for general corporate purposes. Lesaka SA utilized Facility A in full on February 28, 2025, to settle a portion of its existing
facilities with RMB and to settle all of CCMS’ existing facilities with RMB, as well as to pay certain transaction costs.
Facility A is required to be repaid in full on February 28, 2029. Facility A is subject to customary mandatory prepayment terms.
Lesaka SA is permitted to make voluntary prepayments of Facility A, and is permitted to subsequently utilize any voluntary
prepayments made under Facility A under the RCF Agreement. Amount utilized under the RCF Agreement are required to be repaid
in full on February 28, 2029.
29
9. Borrowings (borrowings)
South Africa (continued)
Facilities obtained in February 2025 (continued)
Long-term borrowings – Senior Facility A Agreement (continued)
Interest on Facility A and utilization under the RCF Agreement is payable quarterly in arrears at end of March, June, September
and December, with the first interest payment due on June 30, 2025. Interest on Facility A is based on JIBAR in effect from time to
time plus an initial margin of
% per annum until June 30, 2025. From July 1, 2025, the margin on Facility A will be determined
with reference to the Net Debt to EBITDA Ratio, and the margin will be either (i)
%, if the Net Debt to EBITDA Ratio is greater
than or equal to 2.5 times; or (ii)
%, if the Net Debt to EBITDA Ratio is less than 2.5 times.
Long-term borrowings – Senior Facility B Agreement
Concurrent with the execution of the CTA, Lesaka SA, the Lenders and RMB (as facility agent) entered into a Senior Term
Facility B Agreement (“Facility B Agreement”). Pursuant to the Facility B Agreement, Lesaka SA may borrow up to an aggregate of
ZAR
RMB, and for general corporate purposes. Lesaka SA utilized Facility B in full on February 28, 2025, to repay a portion of its existing
facilities as well as to settle a portion of its existing general banking facility.
Facility B is required to be repaid in
28, 2026; (ii) ZAR
(iv) R
is permitted to make voluntary prepayments of Facility B, however it is unable to subsequently utilize any amounts prepaid.
Interest on Facility B is payable quarterly in arrears at end of March, June, September and December, with the first interest
payment due on June 30, 2025. Interest on Facility B is based on JIBAR in effect from time to time plus an initial margin of
%
per annum until June 30, 2025. From July 1, 2025, the margin on Facility B will be determined with reference to the Net Debt to
EBITDA Ratio, and the margin will be either (i)
%, if the Net Debt to EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
%, if the Net Debt to EBITDA Ratio is less than 2.5 times.
Short-term facility - General Banking Facility
Concurrent with the execution of the CTA, Lesaka SA and RMB entered into a General Banking Facility Agreement (“GBF
Agreement”) which replaced it existing general banking facility maturing on February 28, 2025. Pursuant to the GBF Agreement,
Lesaka SA and certain of its subsidiaries may borrow up to an aggregate of ZAR
(including capital expenditure) and working capital purposes of the Lesaka SA and certain of its subsidiaries. Lesaka SA utilized a
portion of the GBF to refinance its existing general banking facility. As of March 31, 2025, the Company had utilized ZAR
million ($
The GBF is available for utilization from February 28, 2025, and is subject to annual review by RMB.
Interest on the GBF is payable monthly and is based on the South African prime rate in effect from time to time less
%.
The GBF Agreement also provides Lesaka SA and certain of its subsidiaries with other facilities in an aggregate of ZAR
million ($
credit card and settlement facilities. As of March 31, 2025, the aggregate amount of the Company’s short-term South African indirect
credit facility with RMB was ZAR
($
Note 20).
Wesbank Facilities
The Company, through certain of its South African subsidiaries, has an asset-backed facility of ZAR
million)] (of which ZAR
CCC Revolving Credit Facility, comprising long-term borrowings
As of March 31, 2025, the amount of the CCC Revolving Credit Facility was ZAR
has been utilized). The CCC Revolving Credit Facility was scheduled to be repaid in full on November 2024, but this has been extended
to June 30, 2025. The Company is currently renegotiating terms with RMB. The CCC Revolving Credit Facility has been presented
in current portion of long-term borrowings in the unaudited condensed consolidated balance sheet as of March 31, 2025. Interest on
the Revolving Credit Facility is payable on the last business day of each calendar month and is based on the South African prime rate
in effect from time to time plus a margin of
% per annum.
30
9. Borrowings (borrowings)
South Africa (continued)
Nedbank facility, comprising short-term facilities
As of March 31, 2025, the aggregate amount of the Company’s short-term South African credit facility with Nedbank Limited
was ZAR
million), which include guarantees, letters of credit and forward exchange contracts.
As of March 31, 2025 and June 30, 2024, the Company had utilized ZAR
million), respectively, of its indirect and derivative facilities of ZAR
bank to issue guarantees, letters of credit and forward exchange contracts (refer to Note 20).
In terms of a commitment provided to the lender under the CTA entered into on February 27, 2025, the Company has undertaken
not to utilize more than ZAR
RMB Facilities, as amended, comprising a short-term facility (Facility E) and long-term borrowings
Long-term borrowings - Facility G and Facility H – all repaid and cancelled
On February 28, 2025, the Company used its new borrowings to settle Facility G and Facility H in full, including accumulated
interest of ZAR
($
million) (of which ZAR
February 28, 2025, utilizing funding obtained under the CTA and the Facility G and Facility H agreements were cancelled. Amounts
translated at rates prevailing on the repayment date. The interest rate on these facilities was JIBAR plus a margin of
%.
The Company had a short-term South African indirect credit facility with RMB under its cancelled lending facilities of ZAR
2024, the Company had utilized ZAR
credit and forward exchange contracts (refer to Note 20).
Short-term facility - Facility E – cancelled in November 2024
The Company cancelled its Facility E facility agreement in November 2024. The overdraft facility could only be used to fund
ATMs and therefore the overdraft utilized and converted to cash to fund the Company’s ATMs was considered restricted cash. The
interest rate on this facility was equal to the prime rate.
RMB Bridge Facilities, comprising a short-term facility obtained in October 2024 and amended in December 2024
On September 30, 2024, Lesaka SA entered into a Facility Letter (the “F2024 Facility Letter”) with RMB to provided Lesaka
SA a ZAR
of ZAR
Holdings”) ZAR
11); (iii) pay an amount of ZAR
the transaction described in Note 2, and (iv) pay an origination fee of ZAR
with ZAR
On December 10, 2024, Lesaka SA and RMB entered into a First Addendum to the Facility Letter (the “F2024 Addendum
Letter”). The F2024 Addendum Letter provided Lesaka SA with an additional ZAR
GBF Facility”) which could be used for general corporate purposes. The Bridge Facility and 2024 GBF Facility were repaid in full on
February 28, 2025, utilizing funding obtained under the CTA and the agreements cancelled.
Interest on the Bridge Facility and the 2024 GBF Facility was calculated at the prime rate plus
%. The Bridge Facility and
the 2024 GBF Facility were unsecured and were repaid in full on February 28, 2025, the maturity date, pursuant to the refinancing
process.
31
9. Borrowings (borrowings)
South Africa (continued)
Connect Facilities, comprising long-term borrowings and a short-term facility
The Connect Facilities included (i) an overdraft facility (general banking facility) of ZAR
Facility A of ZAR
facilities were repaid in full on February 28, 2025, utilizing funding obtained under the CTA and the agreements cancelled. Amounts
translated at rates prevailing on the repayment date.
On October 29, 2024, the Company, through CCMS, entered into an addendum to a facility letter with RMB, to obtain a ZAR
of prepaid airtime vouchers. This temporary increase was repayable in equal daily instalments which commenced at the end of October
2024 with the final repayment made on February 15, 2025.
Movement in short-term credit facilities
Summarized below are the Company’s short-term facilities as of March 31, 2025, and the movement in the Company’s short-
term facilities from as of June 30, 2024 to as of March 31, 2025:
RMB
RMB
Nedbank
RMB
RMB
RMB
GBF
Other
Facilities
Connect
Bridge
Facility E
Total
Short-term facilities available as of
March 31, 2025
$
$
$
$
$
$
$
Overdraft
Indirect and derivative facilities
Movement in utilized overdraft
facilities:
Restricted as to use for ATM
funding only
No restrictions as to use
Balance as of June 30, 2024
Utilized
Repaid
(14,627 )
(39,205 )
(31,028 )
(84,860 )
Foreign currency
adjustment
(1)
(379 )
(1,945 )
(1,866 )
Balance as of March 31, 2025
No restrictions as to use
$
$
$
$
$
$
$
Interest rate as of March 31, 2025
(%)
(2)
N/A
N/A
N/A
-
N/A
Movement in utilized indirect and
derivative facilities:
Balance as of June 30, 2024
$
$
$
$
$
$
$
Foreign currency adjustment
(1)
(17 )
(1 )
(18 )
Balance as of March 31, 2025
$
$
$
$
$
$
$
(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.
(2) RMB GBF interest is set at prime less
%.
Interest expense incurred under the Company’s South African short-term borrowings and included in the caption interest expense
on the condensed consolidated statement of operations during the three months ended March 31, 2025 and 2024, was $
$
caption interest expense on the condensed consolidated statement of operations during the nine months ended March 31, 2025 and
2024, was $
The Company cancelled Adumo’s overdraft arrangements on October 1, 2024, and settled Adumo’s outstanding overdraft
balance of ZAR
included on the Company’s unaudited condensed consolidated statements of cash flows for the nine months ended March 31, 2025.
32
9. Borrowings (continued)
Movement in long-term borrowings
Summarized below is the movement in the Company’s long-term borrowing from as of as of June 30, 2024 to as of March 31,
2025:
Facilities
Lesaka A
Lesaka B
Connect
Asset
backed
CCC
(6)
Lesaka
G & H
Connect
A&B
Total
Included in current
$
$
$
$
$
$
$
Included in long-term
Opening balance as of June
30, 2024
Facilities utilized
Facilities repaid
(3,299 )
(554 )
(60,245 )
(65,910 )
(130,008 )
Non-refundable fees paid
Non-refundable fees
amortized
Capitalized interest
Capitalized interest repaid
(11,077 )
(11,077 )
Foreign currency
adjustment
(1)
(1,393 )
(106 )
(54 )
(1,000 )
(937 )
(3,108 )
Closing balance as of
March 31, 2025
Included in current
Included in long-term
Unamortized fees
(1,206 )
(1,206 )
Due within 2 years
Due within 3 years
Due within 4 years
Due within 5 years
$
$
$
$
$
$
$
Interest rates as of March 31,
2025 (%):
-
-
Base rate (%)
-
-
Margin (%)
-
-
Footnote number
(2)
(3)
(4)
(5)
(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.
(2) Interest on Facility A and Facility B is based on the JIBAR in effect from time to time plus an initial margin of
% per
annum until June 30, 2025. From July 1, 2025, the margin on Facility A will be determined with reference to the Net Debt to EBITDA
Ratio, and the margin will be either (i)
%, if the Net Debt to EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
%, if
the Net Debt to EBITDA Ratio is less than 2.5 times.
(3) Interest on Facility B is calculated based on JIBAR from time to time plus an initial margin of
% per annum until June
30, 2025. From July 1, 2025, the margin on Facility B will be determined with reference to the Net Debt to EBITDA Ratio, and the
margin will be either (i)
%, if the Net Debt to EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
%, if the Net Debt to
EBITDA Ratio is less than 2.5 times.
(4) Interest is charged at prime plus
% per annum on the utilized balance.
(5) Interest is charged at prime plus
% per annum on the utilized balance.
(6) Amounts presented as of June 30, 2024, have been revised, refer to Note 1 for additional information. The amount as of June
30, 2024, was incorrectly classified as long-term borrowings, instead of as current portion of long-term borrowings.
Interest expense incurred under the Company’s South African long-term borrowings and included in the caption interest expense
on the condensed consolidated statement of operations during the three months ended March 31, 2025 and 2024, was $
$
and 2024, respectively, were $
CCC facilities relates to borrowings utilized to fund a portion of the Company’s merchant finance loans receivable and this interest
expense of $
support on the condensed consolidated statement of operations for the three months ended March 31, 2025 and 2024.
33
9. Borrowings (continued)
Movement in long-term borrowings (continued)
Interest expense incurred under the Company’s South African long-term borrowings and included in the caption interest expense
on the condensed consolidated statement of operations during the nine months ended March 31, 2025 and 2024, was $
and $
2025 and 2024, respectively, were $
facilities relates to borrowings utilized to fund a portion of the Company’s merchant finance loans receivable and this interest expense
of $
the condensed consolidated statement of operations for the nine months ended March 31, 2025 and 2024.
The Company cancelled Adumo’s long-term borrowings arrangements on October 1, 2024, and settled Adumo’s outstanding
balances of ZAR
borrowings included on the Company’s unaudited condensed consolidated statements of cash flows for the nine months ended March
31, 2025.
10. Other payables
Summarized below is the breakdown of other payables as of March 31, 2025, and June 30, 2024:
March 31,
June 30,
2025
2024
Vendor wallet balances
$
$
Accruals
Provisions
Clearing accounts
Income received in advance
Value -added tax payable
Deferred consideration due to seller of Recharger (Note 2)
Interest payable (Note 9)
Payroll-related payables
Participating merchants' settlement obligation
Other
$
$
Income received in advance and interest payable as of June 30, 2024, were previously included in Other and have been reclassified
to separate captions to conform with presentation as of March 31, 2025.
Other includes deferred income, client deposits and other payables.
11. Capital structure
Issue of shares to Connect sellers pursuant to April 2022 transaction
The total purchase consideration pursuant to the Connect acquisition in April 2022 includes
common stock. These shares of common stock will be issued in three equal tranches on each of the first, second and third anniversaries
of the April 14, 2022 closing. The Company legally issued
the Connect sellers in April 2025, and this had no impact on the number of shares, net of treasury, presented in the unaudited condensed
consolidated statement of changes in equity during the nine months ended March 31, 2025 because the
in the number of shares, net of treasury, as of June 30, 2024, and March 31, 2025.
October 2024 repurchase of common stock and issue of shares in Recharger transaction
On October 1, 2024, the Company, through Lesaka SA, and Crossfin Holdings entered into a share purchase agreement under
which Lesaka SA purchased
was settled in early October 2024, and the shares of the Company’s common stock repurchased have been included in the Company’s
treasury shares included in its unaudited condensed consolidated statement of changes in equity for the three and nine months ended
March 31, 2025, respectively. The repurchase was made outside of the Company’s $
The Company, through Lesaka SA, issued
the terms of Recharger Purchase Agreement described in Note 2. The Company recognized a gain of $
which is included in the caption additional paid-in-capital in the unaudited condensed consolidated statement of changes in equity for
the three and nine months ended March 31, 2025, respectively.
34
11. Capital structure (continued)
Redeemable common stock issued pursuant to transaction with the IFC Investors
Put Option
Refer to Note 14 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for
the year ended June 30, 2024, for additional information regarding its redeemable common stock issued pursuant to transaction with
the IFC Investors. Certain IFC Investors were investors in Adumo and the Company issued an aggregate of
of its common stock at a price of $
amended and restated the Policy Agreement (“Amended and Restated Policy Agreement”) to include these additional shares issued to
the IFC Investors to also be covered by the put right included in the Amended and Restated Policy Agreement. The Company accounted
for these
no value and, accordingly, has not recognized the put option in its consolidated financial statements.
Impact of non-vested equity shares on number of shares, net of treasury
The following table presents a reconciliation between the number of shares, net of treasury, presented in the unaudited condensed
consolidated statement of changes in equity during the nine months ended March 31, 2025 and 2024, respectively, and the number of
shares, net of treasury, excluding non-vested equity shares that have not vested as of March 31, 2025 and 2024, respectively:
March 31,
March 31,
2025
2024
Number of shares, net of treasury:
Statement of changes in equity
Less: Non-vested equity shares that have not vested as of end of period
Number of shares, net of treasury, excluding non-vested equity shares that have not
vested
12. Accumulated other comprehensive loss
The table below presents the change in accumulated other comprehensive loss per component during the three months ended
March 31, 2025:
Three months ended
March 31, 2025
Accumulated
foreign
currency
translation
reserve
Total
Balance as of January 1, 2025
$
(199,969 )
$
(199,969 )
Movement in foreign currency translation reserve
Balance as of March 31, 2025
$
(193,799 )
$
(193,799 )
The table below presents the change in accumulated other comprehensive loss per component during the three months ended
March 31, 2024:
Three months ended
March 31, 2024
Accumulated
foreign
currency
translation
reserve
Total
Balance as of January 1, 2024
$
(189,378 )
$
(189,378 )
Movement in foreign currency translation reserve
(5,718 )
(5,718 )
Balance as of March 31, 2024
$
(195,096 )
$
(195,096 )
35
12. Accumulated other comprehensive loss (continued)
The table below presents the change in accumulated other comprehensive loss per component during the nine months ended
March 31, 2025:
Nine months ended
March 31, 2025
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2024
$
(188,355 )
$
(188,355 )
Release of foreign currency translation reserve related to liquidation of subsidiaries
Movement in foreign currency translation reserve
(5,450 )
(5,450 )
Balance as of March 31, 2025
$
(193,799 )
$
(193,799 )
The table below presents the change in accumulated other comprehensive loss per component during the nine months ended
March 31, 2024:
a
Nine months ended
March 31, 2024
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2023
$
(195,726 )
$
(195,726 )
Release of foreign currency translation reserve related to disposal of Finbond equity securities
Movement in foreign currency translation reserve related to equity -accounted investment
Movement in foreign currency translation reserve related to liquidation of subsidiaries
(952 )
(952 )
Movement in foreign currency translation reserve
(450 )
(450 )
Balance as of March 31, 2024
$
(195,096 )
$
(195,096 )
The movement in the foreign currency translation reserve represents the impact of translation of consolidated entities which have
a functional currency (which is primarily ZAR) to the Company’s reporting currency, which is USD.
There were
2025 and 2024. During the nine months ended March 31, 2025, the Company reclassified a loss of $
other comprehensive loss (accumulated foreign currency translation reserve) to net loss related to the liquidation of subsidiaries During
the nine months ended March 31, 2024, the Company reclassified losses of $
(accumulated foreign currency translation reserve) to net loss related to the disposal of shares in Finbond (refer to Note 6). The
Company also reclassified a gain of $
translation reserve) to net loss related to the liquidation of subsidiaries.
36
13. Stock-based compensation
The Company’s Amended and Restated 2022 Stock Incentive Plan (“20 22 Plan”) and the vesting terms of certain stock-based
awards granted are described in Note 17 to the Company’s audited consolidated financial statements included in its Annual Report on
Form 10-K for the year ended June 30, 2024.
Stock option and restricted stock activity
Options
The following table summarizes stock option activity for the nine months ended March 31, 2025 and 2024:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($'000)
Weighted
average
grant date
fair value
($)
Outstanding - June 30, 2024
Granted - December 2024
Granted - December 2024
Granted - January 2025
Granted - January 2025
Granted - January 2025
Exercised
(36,345 )
-
-
Forfeited
(13,333 )
-
-
Outstanding - March 31, 2025
Outstanding - June 30, 2023
Granted – December 2023
Exercised
(23,217 )
-
-
Forfeited
(195,739 )
-
-
Outstanding - March 31, 2024
The Company awarded
prices ranging from $
, and an aggregate of
prices ranging from $
. These stock options, together with the
December 31, 2026, and vesting is subject to the executive officers continued employment with the Company through to the vesting
date. The
Company’s Executive Chairman, during the nine months ended March 31, 2024. These options vested in December 2024, but may
only be sold during a period commencing from January 31, 2028 to January 31, 2029. In March 2025, the Company’s Remuneration
Committee amended the exercise terms of the
31, 2028 to January 31, 2029, to being exercisable from March 2025, however, any stock options exercised may only be sold during
a period commencing from January 31, 2028 to January 31, 2029.
During the three and nine months ended March 31, 2025, the Company received $
of
$
of
forfeited an aggregate of
The fair value of each option is estimated on the date of grant using the Cox Ross Rubinstein binomial model that uses the
assumptions noted in the following table. The estimated expected volatility is calculated based on the Company’s
,
-
day volatility (as applicable). The estimated expected life of the option was determined based on the historical behavior of employees
who were granted options with similar terms.
37
13. Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Options (continued)
The table below presents the range of assumptions used to value stock options granted during the nine months ended March 31,
2025 and 2024:
Nine months ended
March 31,
2025
2024
Expected volatility
%
%
Expected dividends
%
%
Expected life (in years)
Risk-free rate
%
%
The following table presents stock options vested and expected to vest as of March 31, 2025:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Vested and expecting to vest - March 31, 2025
These options have an exercise price range of $
.
The following table presents stock options that are exercisable as of March 31, 2025:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Exercisable - March 31, 2025
During the three months ended March 31, 2025 and 2024, respectively,
During the nine months ended March 31, 2025 and 2024, respectively,
Company issues new shares to satisfy stock option exercises.
38
13. Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Restricted stock
The following table summarizes restricted stock activity for the nine months ended March 31, 2025 and 2024:
Number of
shares of
restricted stock
Weighted
average grant
date fair value
($’000)
Non-vested – June 30, 2024
Total granted
Granted – August 2024
Granted – October 2024
Granted – November 2024, with performance conditions
Granted – January 2025
Total vested
(556,641 )
Vested – July 2024
(78,801 )
Vested – November 2024
(213,687 )
Vested – November 2024, with performance conditions
(103,638 )
Vested – December 2024
(77,306 )
Vested – February 2025
(13,922 )
Vested – March 2025
(69,287 )
Forfeitures
(108,243 )
Non-vested – March 31, 2025
Non-vested – June 30, 2023
Total Granted
Granted – October 2023
Granted – October 2023, with performance awards
Granted – October 2023
Granted – January 2024
Granted – February 2024
Total vested
(339,803 )
Vested – July 2023
(78,800 )
Vested – November 2023
(109,833 )
Vested – December 2023
(67,073 )
Vested – February 2023
(14,811 )
Vested – March 2023
(69,286 )
Forfeitures
(77,668 )
Non-vested – March 31, 2024
Grants
In August 2024, October 2024 and January 2025, respectively, the Company granted
,
restricted stock to employees which have time -based vesting conditions and which are subject to the employees continued employment
with the Company through the applicable vesting dates.
In November 2024, the Company awarded
executive officers and which are subject to a time-based vesting condition and a market condition and vest in full only on the date, if
any, that the following conditions are satisfied: (1) a compounded annual
% appreciation in the Company’s stock price off a base
price of $
employed by the Company on a full-time basis through to September 30, 2027. If either of these conditions is not satisfied, then none
of the shares of restricted stock will vest and they will be forfeited. The Company’s closing price on September 30, 2024, was $
.
The appreciation levels (times and price) and annual target percentages to earn the awards as of each period ended are as follows:
●
Prior to the first anniversary of the grant date:
%;
●
Fiscal 2026, the Company’s 30-day volume weighted-average stock price (“VWAP”) before September 30, 2025 is
approximately
:
%;
●
Fiscal 2027, the Company’s VWAP before September 30, 2026 is
:
%;
●
Fiscal 2028, the Company’s VWAP before September 30, 2027 is
) than $
:
%.
39
13. Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Restricted stock (continued)
Grants (continued)
The fair value of these shares of restricted stock was calculated using a Monte Carlo simulation. In scenarios where the shares
do not vest, the final vested value at maturity is zero. In scenarios where vesting occurs, the final vested value on maturity is the share
price on vesting date. In its calculation of the fair value of the restricted stock, the Company used an equally weighted volatility of
% for the closing price (of $
), a discounting based on U.S. dollar overnight indexed swap rates for the grant date, and no
future dividends. The equally weighted volatility was extracted from the time series for closing prices as the standard deviation of log
prices for the three years preceding the grant date.
In October 2023, the Company awarded
The Company also awarded
except if the executive officer is terminated for cause, in which case the award will be forfeited. In January 2024 and February 2024,
the Company awarded
, respectively, shares of restricted stock with time-based vesting conditions to employees.
In October 2023, the Company awarded
a time-based vesting condition and a market condition and vest in full only on the date, if any, that the following conditions are
satisfied: (1) a compounded annual
% appreciation in the Company’s stock price off a base price of $
period commencing on September 30, 2023 through November 17, 2026, and (2) the recipient is employed by the Company on a full-
time basis when the condition in (1) is met. If either of these conditions is not satisfied, then none of the shares of restricted stock will
vest and they will be forfeited. The Company’s closing price on September 30, 2023, was $
.
The appreciation levels (times and price) and vesting percentages as of each period ended are as follows:
●
Prior to the first anniversary of the grant date:
%;
●
Fiscal 2025, the Company’s 30-day volume weighted-average stock price (“VWAP”) before November 17, 2024 is
approximately
:
%;
●
Fiscal 2026, the Company’s VWAP before November 17, 2025 is
:
%;
●
Fiscal 2027, the Company’s VWAP before November 1, 2026 is
) than $
:
%.
The fair value of these shares of restricted stock was calculated using a Monte Carlo simulation. In scenarios where the shares
do not vest, the final vested value at maturity is zero. In scenarios where vesting occurs, the final vested value on maturity is the share
price on vesting date. In its calculation of the fair value of the restricted stock, the Company used an equally weighted volatility of
% for the closing price (of $
), a discounting based on U.S. dollar overnight indexed swap rates for the grant date, and no
future dividends. The equally weighted volatility was extracted from the time series for closing prices as the standard deviation of log
prices for the three years preceding the grant date.
The Company has agreed to grant an advisor
Company and the advisor have agreed that the Company will issue the shares to the advisor, in arrears, on a quarterly basis. During
the three and nine months ended March 31, 2025, the Company recorded a stock-based compensation charge of $
million, respectively, and included the issuance of
count.
Vesting
In July 2024,
shares of restricted stock with performance conditions (share price targets) vested following the achievement of the agreed performance
condition. In November, December 2024, February 2025 and March 2025, an aggregate of
to employees vested. Certain employees elected for
of their shares. These
In July 2023,
March 2024, an aggregate of
shares to be withheld to satisfy the withholding tax liability on the vesting of their shares. These
the Company’s treasury shares.
40
13. Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Restricted stock (continued)
Forfeitures
During the three and nine months ended March 31, 2025, respectively, employees forfeited
restricted stock following their termination of employment with the Company or the failure to achieved agreed performance conditions
(
ended March 31, 2024, respectively, employees forfeited
employment with the Company.
Stock-based compensation charge and unrecognized compensation cost
The Company recorded a stock-based compensation charge, net, excluding charges related to the post-combination compensation
charges discussed in Note 2, during the three months ended March 31, 2025 and 2024, of $
which comprised:
Total charge
Allocated to cost
of goods sold, IT
processing,
servicing and
support
Allocated to
selling, general
and
administration
Three months ended March 31, 2025
Stock-based compensation charge
$
$
-
$
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(34 )
-
(34 )
Total - three months ended March 31, 2025
$
$
-
$
Three months ended March 31, 2024
Stock-based compensation charge
$
$
-
$
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(112 )
-
(112 )
Total - three months ended March 31, 2024
$
$
-
$
The Company recorded a stock-based compensation charge, net, excluding charges related to the post-combination compensation
charges discussed in Note 2, during the nine months ended March 31, 2025 and 2024, of $
which comprised:
a
Total charge
Allocated to cost
of goods sold, IT
processing,
servicing and
support
Allocated to
selling, general
and
administration
Nine months ended March 31, 2025
Stock-based compensation charge
$
$
-
$
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(45 )
-
(45 )
Total - nine months ended March 31, 2025
$
$
-
$
Nine months ended March 31, 2024
Stock-based compensation charge
$
$
-
$
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(129 )
-
(129 )
Total - nine months ended March 31, 2024
$
$
-
$
41
13. Stock-based compensation (continued)
The stock-based compensation charges have been allocated to selling, general and administration based on the allocation of the
cash compensation paid to the relevant employees. Stock-based compensation charge of $
compensation charges discussed in Note 2 are included in the caption transaction costs related to Adumo and Recharger acquisitions
and certain compensation costs included on the unaudited condensed consolidated statement of operations for the three and nine
months ended March 31, 2025. These stock-based charges are classified as cash settled awards and are in in other payables as of March
31, 2025, refer to Note 10.
As of March 31, 2025, the total unrecognized compensation cost related to stock options was $
expects to recognize over
one and half years
. As of March 31, 2025, the total unrecognized compensation cost related to restricted
stock awards was $
.
During the three months ended March 31, 2025 and 2024, the Company recorded a deferred tax benefit of $
million, respectively, related to the stock-based compensation charge recognized related to employees of Lesaka. During the nine
months ended March 31, 2025 and 2024, the Company recorded a deferred tax benefit of $
related to the stock-based compensation charge recognized related to employees of Lesaka. During these periods the Company
recorded a valuation allowance related to the full deferred tax benefit recognized because it does not believe that the stock-based
compensation deduction would be utilized as it does not anticipate generating sufficient taxable income in the United States. The
Company deducts the difference between the market value on the date of exercise by the option recipient and the exercise price from
income subject to taxation in the United States.
14. (Loss) Earnings per share
The Company has issued redeemable common stock which is redeemable at an amount other than fair value. Redemption of a
class of common stock at other than fair value increases or decreases the carrying amount of the redeemable common stock and is
reflected in basic earnings per share using the two-class method. There were
carrying value of the redeemable common stock during the three and nine months ended March 31, 2025 and 2024. Accordingly, the
two-class method presented below does not include the impact of any redemption. The Company’s redeemable common stock is
described in Note 14 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the
year ended June 30, 2024.
Basic (loss) earnings per share includes shares of restricted stock that meet the definition of a participating security because these
shares are eligible to receive non -forfeitable dividend equivalents at the same rate as common stock. Basic (loss) earnings per share
has been calculated using the two-class method and basic (loss) earnings per share for the three and nine months ended March 31,
2025 and 2024, reflects only undistributed earnings. The computation below of basic (loss) earnings per share excludes the net loss
attributable to shares of unvested restricted stock (participating non-vested restricted stock) from the numerator and excludes the
dilutive impact of these unvested shares of restricted stock from the denominator.
Diluted (loss) earnings per share has been calculated to give effect to the number of shares of additional common stock that
would have been outstanding if the potential dilutive instruments had been issued in each period. Stock options are included in the
calculation of diluted (loss) earnings per share utilizing the treasury stock method and are not considered to be participating securities,
as the stock options do not contain non-forfeitable dividend rights. The Company has excluded employee stock options to purchase
2025 and 2024 because the effect would be antidilutive. The Company has excluded employee stock options to purchase
because the effect would be antidilutive.
The calculation of diluted (loss) earnings per share includes the dilutive effect of a portion of the restricted stock granted to
employees as these shares of restricted stock are considered contingently returnable shares for the purposes of the diluted (loss)
earnings per share calculation and the vesting conditions in respect of a portion of the restricted stock had been satisfied.
42
14. (Loss) Earnings per share (continued)
The vesting conditions for all awards made are discussed in Note 17 to the Company’s audited consolidated financial statements
included in its Annual Report on Form 10-K for the year ended June 30, 2024.
The following table presents net loss attributable to Lesaka and the share data used in the basic and diluted loss per share
computations using the two-class method:
Three months ended
Nine months ended
March 31,
March 31,
2025
2024
2025
2024
(in thousands except
(in thousands except
percent and
percent and
per share data)
per share data)
Numerator:
Net loss attributable to Lesaka
$
(22,058 )
$
(4,047 )
$
(58,734 )
$
(12,405 )
Undistributed loss
(22,058 )
(4,047 )
(58,734 )
(12,405 )
Percent allocated to common shareholders
(Calculation 1)
Numerator for loss per share: basic and diluted
$
(21,262 )
$
(3,868 )
$
(56,616 )
$
(11,816 )
Denominator
Denominator for basic (loss) earnings per share:
weighted-average common shares outstanding
Effect of dilutive securities:
Denominator for diluted (loss) earnings
per share: adjusted weighted average
common shares outstanding and assuming
conversion
Loss per share:
Basic
$
(0.27 )
$
(0.06 )
$
(0.81 )
$
(0.20 )
Diluted
$
(0.27 )
$
(0.06 )
$
(0.81 )
$
(0.20 )
(Calculation 1)
Basic weighted-average common shares
outstanding (A)
Basic weighted-average common shares
outstanding and unvested restricted shares
expected to vest (B)
Percent allocated to common shareholders
Options to purchase
outstanding during the three and nine months ended March 31, 2025, but were not included in the computation of diluted (loss) earnings
per share because the options’ exercise price was greater than the average market price of the Company’s common stock. Options to
purchase
the three and nine months ended March 31, 2024, respectively, but were not included in the computation of diluted (loss) earnings per
share because the options’ exercise price was greater than the average market price of the Company’s common stock. The options,
which expire at various dates through February 3, 2032, were still outstanding as of March 31, 2025.
15. Supplemental cash flow information
The following table presents supplemental cash flow disclosures for the three and nine months ended March 31, 2025 and 2024:
Three months ended
Nine months ended
March 31,
March 31,
2025
2024
2025
2024
Cash received from interest
$
$
$
$
Cash paid for interest
$
$
$
$
Cash paid for income taxes
$
$
$
$
43
15. Supplemental cash flow information (continued)
Disaggregation of cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash included on the Company’s unaudited condensed consolidated statement of cash flows
includes restricted cash related to cash withdrawn from the Company’s debt facilities to fund ATMs. This cash may only be used to
fund ATMs and is considered restricted as to use and therefore is classified as restricted cash. Cash, cash equivalents and restricted
cash also includes cash in certain bank accounts that has been ceded to Nedbank. As this cash has been pledged and ceded it may not
be drawn and is considered restricted as to use and therefore is classified as restricted cash as well. Refer to Note 9 for additional
information regarding the Company’s facilities. The following table presents the disaggregation of cash, cash equivalents and restricted
cash as of March 31, 2025 and 2024, and June 30, 2024:
March 31,
2025
March 31,
2024
June 30, 2024
Cash and cash equivalents
$
$
$
Restricted cash
Cash, cash equivalents and restricted cash
$
$
$
Leases
The following table presents supplemental cash flow disclosure related to leases for the three and nine months ended March 31,
2025 and 2024:
Three months ended
Nine months ended
March 31,
March 31,
2025
2024
2025
2024
Cash paid for amounts included in the measurement of
lease liabilities
Operating cash flows from operating leases
$
$
$
$
Right-of-use assets obtained in exchange for lease
obligations
Operating leases
$
$
$
$
16. Revenue recognition
Disaggregation of revenue
The following table presents the Company’s revenue disaggregated by major revenue streams, including a reconciliation to
reportable segments for the three months ended March 31, 2025:
Merchant
Consumer
Enterprise
Total
Processing fees
$
$
$
$
South Africa
Rest of Africa
Technology products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of Africa
Total revenue, derived from the following geographic
locations
South Africa
Rest of Africa
$
$
$
$
44
16. Revenue recognition (continued)
Disaggregation of revenue (continued)
The following table presents the Company’s revenue disaggregated by major revenue streams, including a reconciliation to
reportable segments for the three months ended March 31, 2024:
Merchant
Consumer
Enterprise
Total
Processing fees
$
$
$
$
South Africa
Rest of Africa
Technology products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of Africa
Total revenue, derived from the following geographic
locations
South Africa
Rest of Africa
$
$
$
$
The following table presents the Company’s revenue disaggregated by major revenue streams, including a reconciliation to
reportable segments for the nine months ended March 31, 2025:
Merchant
Consumer
Enterprise
Total
Processing fees
$
$
$
$
South Africa
Rest of Africa
Technology products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of Africa
Total revenue, derived from the following geographic
locations
South Africa
Rest of Africa
$
$
$
$
45
16. Revenue recognition (continued)
Disaggregation of revenue (continued)
The following table presents the Company’s revenue disaggregated by major revenue streams, including a reconciliation to
reportable segments for the nine months ended March 31, 2024:
Merchant
Consumer
Enterprise
Total
Processing fees
$
$
$
$
South Africa
Rest of Africa
Technology products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of Africa
Total revenue, derived from the following geographic
locations
South Africa
Rest of Africa
$
$
$
$
17. Leases
The Company has entered into leasing arrangements classified as operating leases under accounting guidance. These leasing
arrangements relate primarily to the lease of its corporate head office, administration offices and branch locations through which the
Company operates its consumer business in South Africa. The Company’s operating leases have remaining lease terms of between
one
. The Company also operates parts of its consumer business from locations which it leases for a period of less than
. The Company’s operating lease expense during the three months ended March 31, 2025 and 2024 was $
million and $
The Company has also entered into short-term leasing arrangements, primarily for the lease of branch locations and other
locations, to operate its consumer business in South Africa. The Company’s short-term lease expense during the three months ended
March 31, 2025 and 2024, was $
months ended March 31, 2025 and 2024, was $
The following table presents supplemental balance sheet disclosure related to the Company’s right-of-use assets and its operating
lease liabilities as of March 31, 2025 and June 30, 2024:
March 31,
June 30,
2025
2024
Right of use assets obtained in exchange for lease obligations:
Weighted average remaining lease term (years)
Weighted average discount rate (percent)
46
17. Leases (continued)
The maturities of the Company’s operating lease liabilities as of March 31, 2025, are presented below:
Maturities of operating lease liabilities
Year ended June 30,
2025 (excluding nine months to March 31, 2025)
$
2026
2027
2028
2029
Thereafter
Total undiscounted operating lease liabilities
Less imputed interest
Total operating lease liabilities, included in
Operating lease liability - current
Operating lease liability - long-term
$
18. Operating segments
Operating segments
The Company discloses segment information as reflected in the management information systems reports that its chief operating
decision maker uses in making decisions and to report certain entity-wide disclosures about products and services, and the countries in
which the entity holds material assets or reports material revenues.
Change to internal reporting structure and re cast of previously reported information
The Company’s chief operating decision maker is the Company’s Executive Chairman. During the second quarter of fiscal 2025,
he changed the Company’s operating and internal reporting structures to present a new segment, Enterprise, separately. The chief
operating decision maker has decided to analyze the Company’s operating performance primarily based on three operational lines,
namely,
have higher revenues and have access to multiple service providers. Informal sector merchants, which are often sole proprietors and
usually have lower revenues compared with formal section merchants, operate in rural areas or in informal urban areas and do not
always have access to a full-suite of traditional banking products;
(ii) Consumer, which primarily focuses on individuals who have historically been excluded from traditional financial services
and to whom we offer transactional accounts (banking), insurance, lending (short-term loans), payments solutions (digital wallet) and
various value-added services; and
(iii) Enterprise, which comprises large-scale corporate and government organizations, including but not limited to banks, mobile
network operators (“MNOs”) and municipalities, and, through Recharger, landlords utilizing Recharger’s prepaid electricity metering
solution.
Reallocation of certain activities among operating segments in Q2 2025
The change in our operating segments during the second quarter of fiscal 2025 included the separation of Enterprise out of
Merchant. The Company has also allocated the majority of Adumo’s operations to Merchant, with a smaller part of its operations
focusing on the provision of physical and digital prepaid and secure payout solutions for South African businesses with large individual
end-users being allocated to Consumer. Previously reported information has been recast.
The Merchant segment includes revenue generated from the sale of alternative digital payments (select prepaid solutions, supplier-
enabled payments, international money transfer and other) and card-acquiring services to informal sector merchants. It also includes
activities related to the provision of goods and services provided to corporate and other juristic entities. The Company earns fees from
processing activities performed (including card acquiring and the provision of a payment gateway services) for its customers, and rental
and license fees from the provision of point of sales (“POS”) hardware and software to the hospitality industry. The Company also
provides cash management and payment services to merchant customers through a digital vault which is located at the customer’s
premises and through which the Company is able to provide the services which generate processing fee revenue. From July 1, 2023,
the segment includes fees earned from transactions performed by customers utilizing its ATM infrastructure.
47
18. Operating segments (continued)
Reallocation of certain activities among operating segments (continued)
The Consumer segment includes activities related to the provision of financial services to customers, including a bank account,
loans and insurance products. The Company charges monthly administration fees for all bank accounts. Customers that have a bank
account managed by the Company are issued cards that can be utilized to withdraw funds at an ATM or to transact at a merchant POS.
The Company earns processing fees from transactions processed for these customers. The Company also earns fees on transactions
performed by other banks’ customers utilizing its ATM (until June 30, 2023) or POS. The Company provides short-term loans to
customers in South Africa for which it earns initiation and monthly service fees, and interest revenue from the second quarter of fiscal
2025. The Company writes life insurance contracts, primarily funeral-benefit policies, and policy holders pay the Company a monthly
insurance premium. The Company also earns fees from the provision of physical and digital prepaid and secure payout solutions for
South African businesses.
The Enterprise segment provides its business and government-related customers with transaction processing services that involve
the collection, transmittal and retrieval of all transaction data. Through Recharger, Enterprise offers landlords access to Recharger’s
prepaid electricity metering solution through which Enterprise earns commission revenue from prepaid electricity voucher sales to
tenants recharging prepaid meters. This segment also includes sales of hardware and licenses to customers. Hardware includes the sale
of POS devices, SIM cards and other consumables which can occur on an ad hoc basis. Licenses include the right to use certain
technology developed by the Company.
The reconciliation of the reportable segment’s revenue to revenue from external customers for the three months ended March 31,
2025 and 2024, is as follows:
Revenue
Reportable
Segment
Inter-
segment
From
external
customers
Merchant
$
$
$
Consumer
Enterprise
Total for the three months ended March 31, 2025
$
$
$
Merchant
$
$
$
Consumer
Enterprise
Total for the three months ended March 31, 2024
$
The reconciliation of the reportable segment’s revenue to revenue from external customers for the nine months ended March 31,
2025 and 2024, is as follows:
Revenue
Reportable
Segment
Inter-
segment
From
external
customers
Merchant
$
$
$
Consumer
Enterprise
Total for the nine months ended March 31, 2025
$
$
$
Merchant
$
$
$
Consumer
Enterprise
Total for the nine months ended March 31, 2024
$
$
$
48
18. Operating segments (continued)
The Company evaluates segment performance based on segment earnings before interest, tax, depreciation and amortization
(“EBITDA”), adjusted for items mentioned in the next sentence (“Segment Adjusted EBITDA”), the Company’s reportable segments’
measure of profit or loss. The Company is working on obtaining a separate lending facility to fund a portion of its Consumer lending
during the twelve months ended June 30, 2025. The Company has included an intercompany interest expense in its Consumer Segment
Adjusted EBITDA for the three and nine months ended March 31, 2025. The Company does not allocate once-off items, stock-based
compensation charges, depreciation and amortization, impairment of goodwill or other intangible assets, other items (including gains
or losses on disposal of investments, fair value adjustments to equity securities), interest income, certain interest expense, income tax
expense or loss from equity-accounted investments to its reportable segments. Group costs generally include: employee related costs
in relation to employees specifically hired for group roles and related directly to managing the US-listed entity; expenditures related to
compliance with the Sarbanes-Oxley Act of 2002; non-employee directors’ fees; legal fees; group and US-listed related audit fees; and
directors and officer’s insurance premiums. Once-off items represent non-recurring expense items, including costs related to
acquisitions and transactions consummated or ultimately not pursued. Unrealized loss FV for currency adjustments represents foreign
currency mark-to-market adjustments on certain intercompany accounts. Interest adjustment represents the intercompany interest
expense included in the Consumer Segment Adjusted EBITDA. The Stock-based compensation adjustments reflect stock-based
compensation expense and are excluded from the calculation of Segment Adjusted EBITDA and are therefore reported as reconciling
items to reconcile the reportable segments’ Segment Adjusted EBITDA to the Company’s loss before income tax expense. Effective
from fiscal 2025, all lease charges are allocated to the Company’s operating segments, whereas in fiscal 2024 the Company presented
certain lease charges on a separate line outside of its operating segments. Prior period information has been re-presented to include the
lease charges which were previously reported on a separate line in the Company’s Consumer and Merchant (now Merchant, Enterprise
and Consumer) operating segments.
The reconciliation of the reportable segments’ measure of profit or loss to loss before income taxes for the three and nine months
ended March 31, 2025 and 2024, is as follows:
Three months ended
Nine months ended
March 31,
March 31,
2025
2024
2025
2024
Reportable segments' measure of profit or loss
$
$
$
$
Operating loss: Group costs
(1,772 )
(2,199 )
(7,541 )
(6,032 )
Once-off costs
(2,306 )
(907 )
(4,599 )
(169 )
Interest adjustment
Unrealized Gain (Loss) FV for currency adjustments
(121 )
(102 )
(101 )
Stock-based compensation charge adjustments
(2,497 )
(2,090 )
(7,518 )
(5,653 )
Depreciation and amortization
(8,429 )
(5,791 )
(22,928 )
(17,460 )
Loss on disposal of equity-accounted investments
(161 )
Change in fair value of equity securities
(20,421 )
(54,152 )
Reversal of allowance of EMI doubtful debt
Interest income
Interest expense
(5,777 )
(4,581 )
(16,983 )
(14,312 )
Loss before income tax expense
$
(24,984 )
$
(3,159 )
$
(68,043 )
$
(9,205 )
49
18. Operating segments (continued)
Operating segments (continued)
The following tables summarize supplemental segment information for the three and nine months ended March 31, 2025 and
2024:
Three months ended
Nine months ended
March 31,
March 31,
2025
2024
2025
2024
Revenues
Merchant
$
$
$
$
Consumer
Enterprise
Total reportable segment revenue
Segment Adjusted EBITDA
Merchant
(1)(2)
Consumer
(1)(2)
Enterprise
(2)
Total Segment Adjusted EBITDA
Depreciation and amortization
Merchant
Consumer
Enterprise
Subtotal: Operating segments
Group costs
Total
Expenditures for long-lived assets
Merchant
Consumer
Enterprise
(5 )
Subtotal: Operating segments
Group costs
Total
$
$
$
$
(1) Segment Adjusted EBITDA for the three months ended March 31, 2025, includes retrenchment and reorganization costs for
Merchant of $
Consumer includes retrenchment costs of $
(2) Segment Adjusted EBITDA for the nine months ended March 31, 2025, includes retrenchment and reorganization costs for
Merchant of $
million). Segment Adjusted EBITDA for Merchant includes retrenchment costs of $
includes retrenchment costs of $
The segment information as reviewed by the chief operating decision maker does not include a measure of segment assets per
segment as all of the significant assets are used in the operations of all, rather than any one, of the segments. The Company does not
have dedicated assets assigned to a particular operating segment. Accordingly, it is not meaningful to attempt an arbitrary allocation
and segment asset allocation is therefore not presented.
50
19. Income tax
Income tax in interim periods
For the purposes of interim financial reporting, the Company determines the appropriate income tax provision by first applying
the effective tax rate expected to be applicable for the full fiscal year to ordinary income. This amount is then adjusted for the tax
effect of significant unusual items, for instance, changes in tax law, valuation allowances and non-deductible transaction-related
expenses that are reported separately, and have an impact on the tax charge. The cumulative effect of any change in the enacted tax
rate, if and when applicable, on the opening balance of deferred tax assets and liabilities is also included in the tax charge as a discrete
event in the interim period in which the enactment date occurs.
For the three and nine months ended March 31, 2025, the Company’s effective tax rate was impacted by the tax expense recorded
by the Company’s profitable South African operations, non-deductible expenses (including transaction-related expenditures) , the on-
going losses incurred by certain of the Company’s South African businesses, a valuation allowance created related to the fair value
adjustment to MobiKwik, and the associated valuation allowances created related to the deferred tax assets recognized regarding net
operating losses incurred by these entities.
For the three and nine months ended March 31, 2024, the Company’s effective tax rate was impacted by the tax expense recorded
by the Company’s profitable South African operations, non-deductible expenses, the on-going losses incurred by certain of the
Company’s South African businesses and the associated valuation allowances created related to the deferred tax assets recognized
regarding net operating losses incurred by these entities.
Uncertain tax positions
As of three months ended March 31, 2025 and June 30, 2024, the Company had
files income tax returns mainly in South Africa, Botswana, Namibia and in the U.S. federal jurisdiction. As of March 31, 2025, the
Company’s South African subsidiaries are no longer subject to income tax examination by the South African Revenue Service for
periods before June 30, 2020. The Company is subject to income tax in other jurisdictions outside South Africa, none of which are
individually material to its financial position, statement of cash flows, or results of operations.
20. Commitments and contingencies
Guarantees
The South African Revenue Service and certain of the Company’s customers, suppliers and other business partners have asked
the Company to provide them with guarantees, including standby letters of credit, issued by South African banks. The Company is
required to procure these guarantees for these third parties to operate its business.
RMB has issued guarantees to these third parties amounting to ZAR
applicable as of March 31, 2025) thereby utilizing part of the Company’s short-term facilities. The Company pays commission of
between
% per annum to
% per annum of the face value of these guarantees and does not recover any of the commission from
third parties.
Nedbank has issued guarantees to these third parties amounting to ZAR
applicable as of March 31, 2025) thereby utilizing part of the Company’s short-term facilities. The Company pays commission of
between
% per annum to
% per annum of the face value of these guarantees and does not recover any of the commission from
third parties.
The Company has not recognized any obligation related to these guarantees in its consolidated balance sheet as of March 31,
2025. The maximum potential amount that the Company could pay under these guarantees is ZAR
at exchange rates applicable as of March 31, 2025). As discussed in Note 9, the Company has ceded and pledged certain bank accounts
to Nedbank as security for the guarantees issued by them with an aggregate value of ZAR
exchange rates applicable as of March 31, 2025). The guarantees have reduced the amount available under its indirect and derivative
facilities in the Company’s short-term credit facilities described in Note 9.
Contingencies
The Company is subject to a variety of insignificant claims and suits that arise from time to time in the ordinary course of
business. Management currently believes that the resolution of these other matters, individually or in the aggregate, will not have a
material adverse impact on the Company’s financial position, results of operations or cash flows.
51
21. Subsequent events
Lesaka ESOP Trust
On November 14, 2024, the Company announced that its shareholders voted on and approved the funding and issuance of shares
to the Lesaka ESOP Trust at its annual general meeting. The Lesaka Employee Share Ownership Plan (“ESOP”) is designed to create
alignment with the Company's long-term growth objectives. The Lesaka ESOP Trust is also expected to advance the Company’s
transformation initiatives and plays an important role in improving the company’s Broad-Based Black Economic Empowerment
(“BBBEE”) rating. As of November 2024, when shareholders approved the plan, the Company’s employee base is comprised of
approximately
% designated groups for BBBEE purposes. Through the creation of a broader base of employee ownership, the
Company is helping to promote economic inclusion and contribute to transformation in the broader South African economy. The
Lesaka ESOP Trust is structured as an evergreen trust, ensuring the permanence of the plan and allowing for the inclusion of future
employees as the Company continues to grow.
The Lesaka ESOP Trust was required to have an effective holding of
% of the Company’s issued shares at the date of
implementation, and in February 2025, the Company issued
subscription price payable by the Lesaka ESOP Trust for the shares was vendor funded by the Company through a notional vendor
funding (“NVF”) structure whereby the Company provided a notional loan to the Lesaka ESOP Trust representing the fair value of
the shares, facilitating the acquisition by the Lesaka ESOP Trust of the shares without requiring any upfront payment by the Lesaka
ESOP Trust except for the payment of a nominal value of $
as a traditional loan structure from the Company to the Lesaka ESOP Trust to enable the Lesaka ESOP Trust to subscribe for shares
in the Company, but without any actual flow of funds from the Company to the Trust.
A notional amount on the date of issue was ascribed to each share that the Lesaka ESOP Trust subscribed for, which is equal to
the fair market value of one of the Company shares of common stock (which is the amount the Lesaka ESOP Trust would have paid
for one of the Company’s shares in an ordinary course cash transaction with the Company) less a
% discount. The principal amount
on the NVF loan will accrue interest at a fixed rate of
% per annum. The NVF will have a
five
-year term. The notional amount was
not recognized in the Company’s financial statements because it represents a formula to calculate the number of the Company’s shares
of common stock to be returned by the Lesaka ESOP Trust to the Company after
.
On or about the 5
th
repurchase a portion of the shares held by the Lesaka ESOP Trust at the nominal aggregate amount to settle the total NVF loan
outstanding. The number of shares to be repurchased will be determined by using a formula set out in the transaction documents that
considers the total NVF loan outstanding on the Maturity Date and the market value of one of the Company’s shares held by the Lesaka
ESOP Trust. The purchase consideration that would have been payable for the shares the Company will repurchase (which is the fair
market value the Company would have paid for the shares in an ordinary course cash transaction with the Lesaka ESOP Trust on the
Maturity Date) will be set off against the total NVF loan outstanding. After settlement of the NVF loan,
% of the remaining shares
held by the Lesaka ESOP Trust, if any, will be distributed to eligible employees.
The Lesaka ESOP Trust will hold shares of the Company’s common stock. The Lesaka ESOP Trust will therefore be entitled to
receive its proportionate share of any dividends and other distributions declared by the Company to its shareholders and vote its shares
held on matters requiring shareholder approval.
The Lesaka ESOP Trust is administered by the board of trustees made up of
and the participants in the ESOP. The Company’s Board has the right to nominate
of the trustees,
of trustees may not be members of the Company’s Board or an officer as contemplated in Rule 16a-(f) of the Securities and Exchange
Act of 1934. The nominees of the participants need to meet an election criteria to be eligible for nomination which requires participant
nominees to have been employed by the Group for a continuous and uninterrupted period of at least
. The trustees have the
discretion to determine how the Lesaka ESOP Trust should vote shares of the Company common stock held on matters requiring the
Company’s shareholder s approval. The decisions by the trustees are decided by a majority vote.
The Company is responsible for all reasonable operating expenses incurred by the Lesaka ESOP Trust until such time as the
Lesaka ESOP Trust has sufficient cash resources of its own to settle its operating expenses. The Company controls the Lesaka
ESOP
Trust because the Lesaka ESOP Trust is considered to be a variable interest entity (“VIE”) in which the Company has a controlling
financial interest. Accordingly, the Lesaka ESOP Trust is consolidated by the Company. As the Lesaka ESOP Trust is consolidated
by the Company, the
shares at the nominal amount of $
the Lesaka ESOP Trust will be recognized within equity with no profit or loss being recognized in the statement of operations on such
acquisition or disposal.
52
21. Subsequent events (continued)
Lesaka ESOP Trust (continued)
Qualifying employees were allocated A and B units. An A unit represents an option for the employees to acquire shares of the
Company’s common stock in future. The A unit represents an equity-settled share-based payment, requiring the recognition of a stock-
based compensation charge over a
a Black Scholes valuation model. A B unit represent an employees’ entitlement to cash payments based on dividends paid by the
Company to the Lesaka ESOP Trust, and consequently distributions that the Lesaka ESOP Trust makes to qualifying employees who
are beneficiaries of the Lesaka ESOP Trust. These payments represent an employee benefit, requiring that the Company to recognize
an expense to the value of the payment made when each payment is made.
Initial qualifying employees are required to have a minimum of
determined on December 31, 2024. Initial qualifying employees received invitation and allocation notices on or around April 1, 2025.
As employees complete
’ service to any subsidiary of the Company they will become eligible for consideration as a
beneficiary of the Lesaka ESOP Trust. Qualifying employees include employees of recent acquisitions, including Adumo.
On April 1, 2025, the Lesaka ESOP Trust awarded
closing price on the Nasdaq on April 1, 2025 was $
closing price less a
% discount) and is expected to grow by
% per annum through to April 1, 2030. The Company has not calculated
the grant date fair value of these awards as of the date of filing this Quarterly Report on Form 10-Q on May 7, 2025.
53
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended June 30, 2024,
and the unaudited condensed consolidated financial statements and the accompanying notes included in this Form 10-Q.
U.S. securities laws require that when we publish any non-GAAP measures, we disclose the reason for using these non-GAAP
measures and provide reconciliations to the most directly comparable GAAP measures. We discuss why we consider it useful to
present these non -GAAP measures and the material risks and limitations of these measures, as well as a reconciliation of these non-
GAAP measures to the most directly comparable GAAP financial measure below at “—Results of Operations—Use of Non-GAAP
Measures” below.
Forward-looking statements
Some of the statements in this Form 10-Q constitute forward-looking statements. These statements relate to future events or our
future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s
actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed, implied or inferred by these forward-looking statements. Such factors include, among other
things, those listed under Item 1A.—“Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2024. In some
cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should ”, “could”, “would”, “expects”,
“plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other
comparable terminology.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we do not know whether
we can achieve positive future results, levels of activity, performance, or goals. Actual events or results may differ materially. We
undertake no obligation to update any of the forward-looking statements after the date of this Form 10-Q to conform those statements
to reflect the occurrence of unanticipated events, except as required by applicable law.
You should read this Form 10-Q and the documents that we reference herein and the documents we have filed as exhibits hereto
and thereto and which we have filed with the United States Securities and Exchange Commission (“SEC”) completely and with the
understanding that our actual future results, levels of activity, performance and achievements may be materially different from what
we expect. We qualify all of our forward-looking statements by these cautionary statements.
Recent Developments
We
disclose our financial results across three distinct operating divisions: Merchant, Consumer and Enterprise. Our evolving
integrated multi-product platform is organized around addressing a number of customer needs.
Merchant Division
The Merchant Division (“Merchant”) serves merchants and micro-merchants, combining existing Connect, Kazang and Kazang
Insights (previously known as Touchsides) operations as well as the bulk of Adumo, specifically merchant acquiring and software by
way of its GAAP hospitality platform. Combined, we believe the Lesaka offering is the most comprehensive in the market in meeting
the needs of micro- and medium-size businesses in the region, empowering merchants and micro-merchants to transact efficiently and
fulfill their potential.
Our integrated multi-product range provides merchants with card acquiring, cash management, lending, software and Alternative
Digital Payments (“ADP”). ADP includes our pre-paid solutions and supplier enabled payments (previously referred to as our value-
added services).
Performance in Merchant has been driven by:
Merchant acquiring
Merchant acquiring includes 81,106 devices deployed under the Adumo, Card Connect and Kazang brands.
Q3 2025
Q3 2024
Q3 2023
2025 vs
2024
Number of devices in deployment
81,106
50,211
42,012
62%
Total Throughput for the quarter (ZAR billions)
9.9
3.9
3.2
154%
●
Q3 2025 is inclusive of approximately 27,000 devices deployed under the Adumo brand with the Adumo transaction
closing on October 1, 2024, the impact of which is not included in the prior period comparatives.
●
Throughput increased to ZAR 9.9 billion for the quarter, driven mainly by the inclusion of Adumo in Q3 2025 and lower
than historic year-on-year growth attributable to Kazang Pay.
54
Software
Our software solutions are offered through GAAP. GAAP has operations in South Africa, Botswana, Kenya and clients in a
further 21 countries. It is the leading provider of integrated point-of-sales software and hardware to the hospitality industry in Southern
Africa, serving clients such as KFC, McDonald’s, Pizza Hut, Nando’s and Krispy Kreme.
Q3 2025
Number of GAAP sites
9,640
Approximate ARPU per site (ZAR)
(1)
3,360
(1) ARPU is calculated on a revenue per site basis, as monthly figure based on a three-month rolling average for the quarter
ending March 31, 2025.
●
GAAP was acquired on October 1, 2024. The number of GAAP sites was 9,640 as of March 31, 2025.
●
Monthly ARPU per site, which combines hardware, software and acquiring revenue, was approximately ZAR 3,360,
representing a 7% year-on-year growth.
Cash management
Our cash management and digitalization solutions effectively “puts the bank” in 4,550 merchants’ stores enabling them to deposit
their cash faster and more safely on our proprietary Cash Connect vaults. Our cash business remains a vital product in our merchant
offering and is a key differentiator for us in the digitalization of cash. It is a very apt point of entry for such a cash-heavy market where
many merchants deal with the burdens, costs and risks of handling large amounts of cash. We provide robust cash vaults in the merchant
sector (through Cash Connect) and are building a presence in the micro-merchant sector (through Kazang Vaults) enables our merchant
customer base to mitigate their operational risks pertaining to cash management and security.
Q3 2025
Q3 2024
Q3 2023
2025 vs
2024
Number of devices in deployment
4,550
4,465
4,369
2%
Cash settlements (throughput) for the quarter (ZAR billions)
27.5
27.0
26.2
2%
Lending
Our lending solutions are offered to merchants through Capital Connect and Adumo Capital. Merchant lending is an important
component in enabling the merchants we serve to compete and grow. Merchants can apply online and have access to funds within 24
hours. Adumo Capital is a joint venture with Retail Capital, a division of Tyme Bank, with a 50:50 profit share.
Q3 2025
Q3 2024
Q3 2023
2025 vs
2024
Total credit disbursed (ZAR millions)
(1)
332
219
194
52%
Total net loan book size at period end (ZAR millions)
(1)
494
299
302
65%
(1) Amounts reflected above includes 100% of Adumo Capital’s credit disbursed and net loan book.
●
Q3 2025 is inclusive of credit disbursed under the Adumo brand with the Adumo transaction closing on October 1,
2024, the impact of which is not included in the prior period comparatives.
●
We experienced significant growth in credit disbursed during the third quarter of fiscal 2025, driven by Capital Connect
disbursing ZAR 283 million in Q3 2025, compared with ZAR 139 million last quarter (Q2 2025) and ZAR 219 million
a year ago (Q3 2024).
Alternative Digital Payments
ADP includes our pre-paid solutions and supplier enabled payments (previously referred to as our value-added services).
Pre-paid solutions comprise airtime, electricity and gaming vouchers. Supplier enabled payments predominantly includes
supplier payments, with the balance attributable to international money transfers, bill payments, satellite (digital) television offerings.
55
Q3 2025
Q3 2024
Q3 2023
2025 vs
2024
Number of devices in deployment
92,957
80,291
71,806
16%
Total throughput for the quarter (ZAR billions)
10.6
8.3
7.5
28%
Pre-paid solutions throughput for the quarter (ZAR billions)
4.7
4.5
3.8
3%
Supplier enabled payments throughput for the quarter (ZAR
billions)
5.9
3.8
3.7
57%
●
We had 92,957 devices deployed as of March 31, 2025, representing a 16% year-on-year growth compared to 80,291
devices as of March 31, 2024. Core to our device placement strategy is the decision to focus on quality business and
optimizing our existing fleet, which is reflected in healthy throughput growth.
●
Total throughput increased 28% to ZAR 10.6 billion year-on-year, driven by a 57% increase in supplier enabled
payments.
Consumer Division
The Consumer Division (“Consumer”) offers a transactional account, loans and insurance. Consumer includes our EasyPay
Payouts platform (previously known as Adumo Payouts) where we service consumers who are corporate employees and receive work-
related benefit payments from their employers through us.
We continue to deliver against our strategic focus areas underpinning our growth strategy in Consumer .
Q3 2025
Q3 2024
Q3 2023
2025 vs
2024
Transactional accounts (banking) - EasyPay Everywhere
("EPE")
Total active EPE transactional account base at quarter end
(millions)
1.7
1.5
1.3
16%
Total active EPE transactional account base at quarter end -
Permanent grant recipients (millions)
(1)
1.5
1.3
1.0
19%
Approximate Gross EPE account activations for the quarter -
Permanent grant recipients (number)
124,000
97,000
39,000
28%
Approximate Net EPE account activations for the quarter -
Permanent grant recipients (number)
(1)
89,000
58,000
1,000
53%
Lending - EasyPay Loans
Approximate number of loans originated during the quarter
(number)
320,000
266,000
207,000
20%
Gross advances in the quarter (ZAR millions)
641
416
320
54%
Loan book size, before allowances, at quarter end (ZAR
millions)
(2)
808
509
398
59%
Insurance - EasyPay Insurance
Approximate number of insurance policies written in the quarter
(number)
55,000
46,000
36,000
20%
Total active insurance policies on book at quarter end (number)
527,671
414,243
309,165
27%
Average revenue per customer per month, as of March 31,
(permanent grant beneficiaries) (ZAR)
106
90
78
18%
EasyPay Payouts
Approximate number of active cardholders
230,000
-
-
nm
Approximate load value for the quarter (ZAR millions)
155
-
-
nm
(1) Source: SASSA statistical reports portal (2025) | Permanent grant customers per SASSA’s monthly Social Assistance report
(March 31, 2025).
(2) Gross loan book, before provisions.
56
●
Driving customer acquisition, supported by increased focus on customer service
o
We achieved approximately 124,000 gross account activations in the quarter, compared to approximately 97,000 a
year ago (Q3 2024) and 99,000 last quarter (Q2 2025). This result reflects continued growth at the new levels
achieved for the permanent base since fiscal 2024, and the impact of operational issues experienced at the Post Bank
specific to this quarter.
o
After accounting for churn, net active account growth (
permanent grant customers per SASSA’s monthly Social
Assistance report for March 31, 2025, on the SASSA statistical reports portal)
for the quarter was approximately
89,000 accounts, compared to approximately 58,000 in the third quarter of fiscal 2024, and 65 000 a quarter ago (Q2
2025).
o
Our total active EPE transactional account base stood at approximately 1.7 million at the end of March 2025, of
which approximately 1.5 million (or approximately 90%) are permanent grant recipients (
permanent grant
customers per SASSA’s monthly Social Assistance report for March 31, 2025, on the SASSA statistical reports
portal).
The balance comprises Social Relief of Distress (“SRD”) grant recipients, which was introduced during the
COVID pandemic and extended by another year in February 2025, to continue until March 2026, in its current form.
o
Our priority is to grow our permanent grant recipient customers base, where we can build deeper relationships by
offering products such as insurance and lending. We do not offer the same breadth of service to the SRD grant base
due to the temporary nature of the grant.
●
Progress on cross selling
EasyPay Loans
o
We originated approximately 320,000 loans during the quarter, with our consumer loan book, before allowances
(“gross book”), increasing 59% to ZAR 808 million as of March 31, 2025, compared to ZAR 509 million as of
March 31, 2024.
o
We have not amended our credit scoring or other lending criteria, and the growth is reflective of the demand for our
tailored loan product for this market, growth in EPE bank account customer base and improved cross-selling
capabilities.
o
The loan conversion rate continues to improve following the implementation of a number of targeted Consumer
lending campaigns and encouraging results from our digital channels.
o
The portfolio loss ratio, calculated as the loans written off over the last 12 months as a percentage of the total gross
loan book at the end of the quarter, has remained stable at approximately 6% on an annualized basis, compared to
quarter three fiscal 2024.
EasyPay Insurance
o
Our insurance product sales continue to grow and is a material contributor to the improvement in our overall ARPU.
We have been able to improve customer penetration to approximately 35% of our active permanent grant account
base as of March 31, 2025, compared to 32% as of March 31, 2024. Approximately 55,000 new policies were written
in the quarter, compared to approximately 46,000 in the comparable period in fiscal 2024. The total number of active
policies has grown 27% to approximately 528,000 policies as of March 31, 2025, compared to 414,000 policies as
of March 31, 2024.
ARPU
o
ARPU for our permanent client base has increased to approximately ZAR 106 per month for the third quarter of
fiscal 2025, from approximately ZAR 90 in the third quarter of fiscal 2024.
EasyPay Payouts
o
On 1 October, 2024, the EasyPay Payouts business officially became part of the Consumer Division.
o
The number of active card holders was approximately 230,000 at the end of the third quarter of fiscal 2025, with a
load value of approximately ZAR 155 million for quarter ended March 31, 2025.
Enterprise Division
Our Enterprise Division (“Enterprise”) focuses on large corporates, mobile network operators, banks, governments,
municipalities, and, through Recharger, landlords utilizing Recharger’s prepaid electricity metering solution. Our offering includes
our bill and utility payments platform, a new payment switch, Prism Switch, as well as Hardware Security Modules, a third-party
vending and security business. Enterprise serves third party corporates, and the technology needs of our Consumer and Merchant
Divisions.
57
Q3 2025
Q3 2024
2025 vs
2024
Bill Payments
Total Throughput for the quarter (ZAR billions)
8
7
12%
Utility Payments
Approximate number of registered prepaid electricity meters deployed (number)
502,790
-
nm
Total Throughput for the quarter (ZAR billions)
1.8
1.7
9%
Switching
Approximate number of transactions (million)
(1)
2.2
-
nm
(1) Our new payment switch, Prism Switch has been in production since June 2024 thus prior period comparatives are not
applicable.
●
The Recharger transaction closed on March 3, 2025. Utility payments throughput for Q3 2025 is inclusive of R116
million attributable to Recharger utility payments for the month of March 2025, the impact of which is not included in
the prior period comparatives.
Acquisition of Recharger
On November 20, 2024, we announced the acquisition of Recharger. With closing conditions satisfied, the deal closed on March
3, 2025, demonstrating positive advancement of our strategy in the Enterprise Division. Recharger, allocated to the Enterprise
operating segment, is a South African prepaid electricity submetering and payments business with a base of over 500,000 registered
prepaid electricity meters. We expect the acquisition to act as an entry point for us into the South African private utilities space while
augmenting the Enterprise division’s alternative payment offering.
Debt refinance and new banking partner
At the end of February 2025, we completed the ZAR 4.5 billion refinance of our Group’s debt facilities, including Investec Bank
as a new banking partner alongside our incumbent bank, RMB. The benefits of the debt refinance include: consolidating most of the
Group’s legacy senior debt facilities at the centre, reducing the Group’s overall weighted average borrowing rate by approximately
1.3% per year, reshaping the repayment profile of our senior debt, diversifying our funding sources and increasing debt facility
headroom, thereby creating flexibility and capacity for organic and inorganic growth.
Lesaka Employee Share Trust
We successfully launched Lesaka’s Employee Share Ownership Plan (“ESOP”) in March 2025 reflecting our commitment to our
people. Our ESOP is designed to create alignment with our long-term growth objectives. The Lesaka ESOP Trust will hold an effective
3% of our issued shares at the date of implementation, representing approximately ZAR 220 million at the current market price. This
allocation of shares ensures that employees have a meaningful stake in our future financial success and gives them the opportunity to
share in the value created by us.
The Lesaka ESOP Trust advances our transformation initiatives and plays an important role in improving the company’s Broad-
Based Black Economic Empowerment (“BBBEE”) rating. Our employee base is comprised of 87% designated groups for BBBEE
purposes. Through the creation of a broader base of employee ownership, we are helping to promote economic inclusion and contribute
to transformation in the broader South African economy.
Association of South African Payment Providers (“ASAPP”)
ASAPP, publicly launched (www.asapp.co.za) in January 2025, is now fully established as the main representatives of non-bank
participants in the payments space. The eight original members (Altron Fintech, Hello Group Inc., iKhokha (Pty) Ltd, Lesaka
Technologies (Pty) Ltd, Network International Holdings Plc, Peach Payment Services (Pty) Ltd, Shop2Shop (Pty) Ltd, Yoco
Technologies (Pty) Ltd) have been joined by Flash Group, PayU GPO, Cross Switch Technology Ltd, and Paycorp Group. Key
workstreams include:
●
Greater inclusion of Non-Bank participation in the payment’s ecosystem including services such as settlement of funds
as part of the Bank's Act.
●
Calling to action a review of interchange pricing in South Africa, directly with the South African Reserve Bank
(“SARB”).
●
Working alongside the SARB and other regulatory stakeholders on the strategic direction of the Faster Payment System,
National Treasury Financial Inclusion Forum and the Payments Industry Body Formation.
58
Critical Accounting Policies
Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires
management to make estimates and assumptions about future events that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities. As future events and their effects cannot be determined with absolute certainty, the
determination of estimates requires management’s judgment based on a variety of assumptions and other determinants such as
historical experience, current and expected market conditions and certain scientific evaluation techniques. Critical accounting policies
are those that reflect significant judgments or uncertainties and may potentially result in materially different results under different
assumptions and conditions. We have identified the following critical accounting policies that are described in more detail in our
Annual Report on Form 10-K for the year ended June 30, 2024:
●
Business Combinations and the Recoverability of Goodwill;
●
Intangible Assets Acquired Through Acquisitions;
●
Revenue recognition – principal versus agent considerations;
●
Valuation of investment in Cell C;
●
Recoverability of equity securities and equity-accounted investments;
●
Deferred Taxation;
●
Stock-based Compensation;
●
Accounts Receivable and Allowance for Doubtful Accounts Receivable; and
●
Lending.
Recent accounting pronouncements adopted
Refer to Note 1 to our unaudited condensed consolidated financial statements for a full description of accounting pronouncements
adopted, including the dates of adoption and the effects on our unaudited condensed consolidated financial statements.
Recent accounting pronouncements not yet adopted as of March 31, 2025
Refer to Note 1 to our unaudited condensed consolidated financial statements for a full description of recent accounting
pronouncements not yet adopted as of March 31, 2025, including the expected dates of adoption and effects on our 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 were as follows:
Table 1
Three months ended
Nine months ended
Year ended
March 31,
March 31,
June 30,
2025
2024
2025
2024
2024
ZAR : $ average exchange rate
18.5066
18.7313
18.1212
18.7536
18.7070
Highest ZAR : $ rate during period
19.1171
19.4568
19.1171
19.4568
19.4568
Lowest ZAR : $ rate during period
18.0985
18.2076
17.1144
17.6278
17.6278
Rate at end of period
18.3508
18.8760
18.3508
18.8760
18.1808
59
Translation exchange rates for financial reporting purposes
We are required to translate our results of operations from ZAR to U.S. dollars on a monthly basis. Thus, the average rates used
to translate this data for the three and nine months ended March 31, 2025 and 2024, vary slightly from the averages shown in the table
above. Except as described below, the translation rates we use in presenting our results of operations are the rates shown in the
following table:
Three months ended
Nine months ended
Year ended
Table 2
March 31,
March 31,
June 30,
2025
2024
2025
2024
2024
Income and expense items: $1 = ZAR
18.4021
18.8780
18.0393
18.7571
18.6844
Balance sheet items: $1 = ZAR
18.3508
18.8760
18.3508
18.8760
18.1808
We have translated the results of operations and operating segment information for the three and nine months ended March 31,
2025 and 2024, provided in the tables below using the actual average exchange rates per month (i.e. for each of January 2025, February
2025, and March 2025 for the third quarter of fiscal 2025) between the USD and ZAR in order to reduce the reconciliation of
information presented to our chief operating decision maker. The impact of using this method compared with the average rate for the
quarter and year to date is not significant, however, it does result in minor differences. We believe that presentation using the average
exchange rates per month compared with the average exchange rate per quarter and year to date improves the accuracy of the
information presented in our external financial reporting and leads to fewer differences between our external reporting measures which
are supplementally presented in ZAR, and our internal management information, which is also presented in ZAR.
Results of Operations
The discussion of our consolidated overall results of operations is based on amounts as reflected in our unaudited condensed
consolidated financial statements which are prepared in accordance with U.S. GAAP. We analyze our results of operations both in
U.S. dollars, as presented in the unaudited condensed 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 which the majority of our
transactions are initially incurred and measured. Presentation of our reported results in ZAR is a non-GAAP measure. Due to the
significant impact of currency fluctuations between the U.S. dollar and ZAR on our reported results and because we use the U.S. dollar
as our reporting currency, we believe that the supplemental presentation of our results of operations in ZAR is useful to investors to
understand the changes in the underlying trends of our business.
60
Our operating segment revenue presented in “—Results of operations by operating segment” represents total revenue per
operating segment before intercompany eliminations. A reconciliation between total operating segment revenue and revenue, as well
as the reconciliation between our segment performance measure and net loss before tax (benefits) expense, is presented in our
unaudited condensed consolidated financial statements in Note 18 to those statements. Our chief operating decision maker is our
Executive Chairman and he evaluates segment performance based on segment earnings before interest, tax, depreciation and
amortization (“EBITDA”), adjusted for items mentioned in the next sentence (“Segment Adjusted EBITDA”) for each operating
segment. We do not allocate once -off items (as defined below), stock-based compensation charges, depreciation and amortization,
impairment of goodwill or other intangible assets, other items (including gains or losses on disposal of investments, fair value
adjustments to equity securities, fair value adjustments to currency options), interest income, interest expense, income tax expense or
loss from equity-accounted investments to our reportable segments. We have included an intercompany interest expense in our
Consumer Segment Adjusted EBITDA for the three and nine months ended March 31, 2025. Once-off items represent non-recurring
expense items, including costs related to acquisitions and transactions consummated or ultimately not pursued. The Stock-based
compensation adjustments reflect stock-based compensation expense and are both excluded from the calculation of Segment Adjusted
EBITDA and are therefore reported as reconciling items to reconcile the reportable segments’ Segment Adjusted EBITDA to our loss
before income tax expense. Effective from fiscal 2025, all lease charges are allocated to our operating segments, whereas in fiscal
2024 we presented certain lease charges on a separate line outside of our operating segments. Prior period information has been re-
presented to include the lease charges which were previously reported on a separate line in our Consumer and Merchant (and now
Merchant, Consumer and Enterprise) operating segments.
Group Adjusted EBITDA represents Segment Adjusted EBITDA after deducting group costs. Refer also “Results of
Operations—Use of Non-GAAP Measures” below.
Our fiscal 2025 financial results include Adumo from October 1, 2024 and Recharger from March 3, 2025. Adumo and Recharger
are not included in our financial results for fiscal 2024.
We analyze our business and operations in terms of three inter-related but independent operating segments: (1) Merchant (2)
Consumer and (3) Enterprise. In addition, corporate activities that are impracticable to allocate directly to the operating segments, as
well as any inter-segment eliminations, are included in Group costs. Inter-segment revenue eliminations are included in Eliminations.
Third quarter of fiscal 2025 compared to third quarter of fiscal 2024
The following factors had a significant impact on our results of operations during the third quarter of fiscal 2025 as compared
with the same period in the prior year:
●
Lower revenue in ZAR:
Our revenues decreased 4% in ZAR, primarily due to fewer low margin prepaid airtime sales and a
lower contribution from our legacy Enterprise businesses, which was partially offset by the inclusion of Adumo and
Recharger, an increase in ADP throughput in Merchant, as well as higher transaction, insurance and lending revenues in
Consumer;
●
Operating income increase, before transaction costs:
Operating income before transaction and related costs increased
primarily due to a strong performance by Consumer and the contribution from Adumo and Recharger from March 3, 2025,
which was partially offset by higher costs and the increase in amortization of acquisition-related intangible assets related to
the acquisition of Adumo;
●
Non-cash fair value adjustment related to equity securities:
We recorded a non -cash fair value loss of $20.4 million during
the third quarter of fiscal 2025 related to our investment in MobiKwik;
●
Higher net interest charge:
million) primarily due to higher overall borrowings, which was partially offset by a small increase in interest received as a
result of the inclusion of Adumo; and
●
Foreign exchange movements:
compared to the prior period, which positively impacted our U.S. dollar reported results.
61
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 3
In United States Dollars
Three months ended March 31,
2025
2024
%
$ ’000
$ ’000
change
Revenue
135,670
138,194
(2%)
Cost of goods sold, IT processing, servicing and support
91,233
107,854
(15%)
Selling, general and administration
34,217
23,124
48%
Depreciation and amortization
8,429
5,791
46%
Transaction costs related to Adumo and Recharger acquisitions and certain
compensation costs
1,222
631
94%
Operating income
569
794
(28%)
Change in fair value of equity securities
(20,421)
-
nm
Interest income
645
628
3%
Interest expense
5,777
4,581
26%
Loss before income tax (benefit) expense
(24,984)
(3,159)
691%
Income tax (benefit) expense
(2,934)
931
nm
Net loss before earnings from equity-accounted investments
(22,050)
(4,090)
439%
Earnings from equity-accounted investments
12
43
(72%)
Net loss
(22,038)
(4,047)
445%
Less net income attributable to non-controlling interest
20
-
nm
Net loss attributable to us
(22,058)
(4,047)
445%
Table 4
In South African Rand
Three months ended March 31,
2025
2024
%
ZAR ’000
ZAR ’000
change
Revenue
2,510,061
2,609,913
(4%)
Cost of goods sold, IT processing, servicing and support
1,688,015
2,036,881
(17%)
Selling, general and administration
632,841
436,746
45%
Depreciation and amortization
155,919
109,379
43%
Transaction costs related to Adumo and Recharger acquisitions and certain
compensation costs
22,361
11,915
88%
Operating income
10,925
14,992
(27%)
Change in fair value of equity securities
(373,784)
-
nm
Interest income
11,944
11,861
1%
Interest expense
106,923
86,504
24%
Loss before income tax (benefit) expense
(457,838)
(59,651)
668%
Income tax (benefit) expense
(53,650)
17,575
nm
Net loss before earnings from equity-accounted investments
(404,188)
(77,226)
423%
Earnings from equity-accounted investments
220
811
(73%)
Net loss
(403,968)
(76,415)
429%
Less net income attributable to non-controlling interest
369
-
nm
Net loss attributable to us
(404,337)
(76,415)
429%
Revenue decreased by $2.5 million (ZAR 99.9 million) or 1.8% (in ZAR 3.8%). The decrease was primarily due to fewer low
margin prepaid airtime sales, which was partially offset by the inclusion of Adumo, an increase in the volume of ADP provided
(prepaid airtime), the impact of an increase in certain issuing fee base prices year-over-year, and transaction activity in our issuing
business, and an increase in insurance premiums collected and lending revenues following higher loan originations. Refer to discussion
above at “—Recent Developments” for a description of key trends impacting our revenue this quarter.
Cost of goods sold, IT processing, servicing and support decreased by $16.6 million (ZAR 348.9 million) or 15.4% (in ZAR
17.1%), primarily due to the decrease in low margin prepaid airtime sales, which was partially offset by the inclusion of Adumo,
higher commissions paid related to ADP revenue generated, and higher insurance-related claims and third-party transaction fees.
62
Selling, general and administration expenses increased by $11.1 million (ZAR 196.1 million), or 48.0% (in ZAR 44.9%). The
increase was primarily due to the inclusion of Adumo; higher employee-related expenses (including the impact of annual salary
increases); reorganization and retrenchment costs, an increase in the allowance for credit losses as a result of higher lending activities
by both Consumer and Merchant, higher stock-based compensation charges; and the year-over-year impact of inflationary increases
on certain expenses, which was partially offset by lower bonus provision expense.
Depreciation and amortization expense increased by $2.6 million (ZAR 46.5 million), or 45.6% (42.5%). The increase was due
to the inclusion of acquisition-related intangible asset amortization related to intangible assets identified pursuant to the Adumo and
Recharger acquisitions and an increase in depreciation expense related to additional POS devices deployed .
Transaction costs related to Adumo and Recharger acquisitions and certain compensation costs increased primarily due to the
inclusion of post-combination compensation charges recognized related to the Recharger acquisition. Refer to Note 2 to our unaudited
condensed consolidation financial statements for additional information.
Our operating income margin for the third quarter of fiscal 2025 and 2024 was 0.4% and 0.6%, respectively. We discuss the
components of operating loss margin under “—Results of operations by operating segment.”
The change in fair value of equity securities of $20.4 million during the third quarter of fiscal 2025 represents a non-cash fair
value adjustment loss related to MobiKwik. We did not record any changes in the fair value of equity interests in MobiKwik during
the third quarter of fiscal 2024, or any fair value adjustments for Cell C during the third quarter of fiscal 2025 or 2024, respectively.
We continue to carry our investment in Cell C at $0 (zero). Refer to Note 5 to our unaudited condensed consolidation financial
statements for the methodology and inputs used in the fair value calculation for MobiKwik and Cell C.
Interest on surplus cash was flat at $0.6 million (ZAR 11.9 million) from $0.6 million (ZAR 11.9 million) .
Interest expense increased to $5.8 million (ZAR 106.9 million) from $4.6 million (ZAR 86.5 million). In ZAR, the increase was
primarily by higher overall borrowings during the third quarter of fiscal 2025 compared with the comparable period in the prior quarter.
Fiscal 2025 income tax benefit was $(2.9) million (ZAR (53.7) million) compared to an income tax expense of $0.9 million
(ZAR 17.6 million) in fiscal 2024. Our effective tax rate for fiscal 2025 was impacted by deferred tax impact related to the fair value
adjustment to our equity securities, the tax expense recorded by our profitable South African operations, a deferred tax benefit related
to acquisition-related intangible asset amortization, non-deductible expenses (in transaction-related expenses), the on-going losses
incurred by certain of our South African businesses, a valuation allowance created related to the fair value adjustment to MobiKwik,
and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred
by these entities.
Our effective tax rate for fiscal 2024 was impacted by the tax expense recorded by our profitable South African operations, a
deferred tax benefit related to acquisition-related intangible asset amortization, non-deductible expenses, the on-going losses incurred
by certain of our South African businesses, and the associated valuation allowances created related to the deferred tax assets recognized
regarding net operating losses incurred by these entities.
The table below presents the relative earnings (loss) from our equity-accounted investments:
Table 5
Three months ended March 31,
2025
2024
$ %
$ ’000
$ ’000
change
Other
12
43
(72%)
Total income (loss) from equity-accounted investments
12
43
(72%)
63
Results of operations by operating segment
The composition of revenue and the contributions of our business activities to operating loss are illustrated below:
Table 6
In United States Dollars
Three months ended March 31,
2025
% of
2024
% of
% change
Operating Segment
$ ’000
total
$ ’000
total
Consolidated revenue:
Merchant
103,001
76%
111,801
81%
(8%)
Consumer
24,096
18%
17,904
13%
35%
Enterprise
9,444
7%
11,322
8%
(17%)
Subtotal: Operating segments
136,541
101%
141,027
102%
(3%)
Eliminations
(871)
(1%)
(2,833)
(2%)
(69%)
Total consolidated revenue
135,670
100%
138,194
100%
(2%)
Group Adjusted EBITDA:
Merchant
(1)(2)
8,103
63%
7,420
76%
9%
Consumer
(1)(2)
6,333
49%
3,757
39%
69%
Enterprise
(2)
133
1%
725
7%
(82%)
Group costs
(1,772)
(13%)
(2,199)
(22%)
(19%)
Group Adjusted EBITDA (non-GAAP)
(3)
12,797
100%
9,703
100%
32%
(1) Segment Adjusted EBITDA for the three months ended March 31, 2025, includes reorganization and retrenchment costs of
$0.7 million for Merchant and Enterprise of $0.3 million. Segment Adjusted EBITDA Consumer includes retrenchment costs of $0.01
million for the third quarter of fiscal 2024.
(2) Lease expenses which were previously presented on a separate line in fiscal 2024 are now included in Merchant, Enterprise
and Consumer Segment Adjusted EBITDA. The prior period has been re-presented to conform with current period presentation. See
also “—Results of Operations — Presentation of Merchant, Consumer and Enterprise by segment for fiscal 2025 to date and fiscal
2024”.
(3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
Table 7
In South African Rand
Three months ended March 31,
2025
% of
2024
% of
% change
Operating Segment
ZAR ’000
total
ZAR ’000
total
Consolidated revenue:
Merchant
1,905,817
76%
2,111,386
81%
(10%)
Consumer
445,845
18%
338,170
13%
32%
Enterprise
174,565
7%
213,856
8%
(18%)
Subtotal: Operating segments
2,526,227
101%
2,663,412
102%
(5%)
Eliminations
(16,166)
(1%)
(53,499)
(2%)
(70%)
Total consolidated revenue
2,510,061
100%
2,609,913
100%
(4%)
Group Adjusted EBITDA:
Merchant
(1)(2)
149,858
63%
140,091
76%
7%
Consumer
(1)(2)
117,144
49%
70,988
39%
65%
Enterprise
(2)
2,384
1%
13,716
7%
(83%)
Group costs
(32,623)
(13%)
(41,529)
(22%)
(21%)
Group Adjusted EBITDA (non-GAAP)
(3)
236,763
100%
183,266
100%
29%
(1) Segment Adjusted EBITDA Merchant and Segment Adjusted EBITDA Merchant include reorganization and retrenchment
costs of ZAR 12.9 million and Enterprise of ZAR 5.4 million, respectively, for the third quarter of fiscal 2025. Segment Adjusted
EBITDA for Consumer includes retrenchment costs of ZAR 0.1 million for the third quarter of fiscal 2024.
(2) Lease expenses which were previously presented on a separate line in fiscal 2024 are now included in Merchant, Enterprise
and Consumer Segment Adjusted EBITDA. The prior period has been re-presented to conform with current period presentation.
(3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
64
Merchant
Segment revenue primarily decreased due to fewer low margin prepaid airtime sales (“Pinned airtime”), which was partially
offset by the inclusion of Adumo, a higher volume of ADP. In ZAR, the increase in Segment Adjusted EBITDA is primarily due to
the inclusion of Adumo, which was partially offset by higher operating expenses incurred, including employment-related expenditures,
to expand our offering, an increase in the allowance for credit losses following higher loan originations and reorganization and
retrenchment costs incurred during the third quarter of fiscal 2025. We recorded a significant proportion of our airtime sales in revenue
(see further below) and cost of sales, while only earning a relatively small margin. This significantly depresses the Segment Adjusted
EBITDA margins shown by the business. From the first quarter of fiscal 2025, we have experienced a shift in the mix between the
sale of Pinned Airtime and distribution of pinless prepaid airtime (“Pinless Airtime”), and this trend has continued through to the third
quarter of fiscal 2025, with the volume of Pinned Airtime sales decreasing, which results in a lower revenue and related cost of sales,
and an overall improved margin.
Our Segment Adjusted EBITDA margin for the third quarter of fiscal 2025 and 2024 was 7.9% and 6.6%, respectively.
Consumer
Segment revenue increased primarily due to higher transaction fees generated from the higher EPE account holders base, the
impact of an increase in certain issuing fee base prices year-over-year, and transaction activity in our issuing business, insurance
premiums collected, lending revenues following an increase in loan originations and the inclusion of Adumo. This increase in revenue
has translated into improved profitability, which was partially offset by a higher allowance for credit losses following an increase in
loan originations during the quarter, higher insurance-related claims, interest expense (of approximately ZAR 16.5 million) incurred
to fund our lending book and the year-over-year impact of inflationary increases on certain expenses. As noted during the first quarter
of fiscal 2025, we intend to obtain a separate lending facility to fund a portion of our lending during fiscal 2025. Therefore, we have
included an intercompany interest expense in our Consumer Segment Adjusted EBITDA for the third quarter of fiscal 2025 compared
with the third quarter of fiscal 2024.
Our Segment Adjusted EBITDA margin for the third quarter of fiscal 2025 and 2024 was 26.3% and 21.0%, respectively.
Enterprise
Segment revenue decreased primarily due to fewer ad hoc hardware sales as well as lower revenue generated from the sale of
prepaid airtime vouchers, which was partially offset by the inclusion of Recharger. In ZAR, the significant decrease in Segment
Adjusted EBITDA is primarily due to the impact of fewer sales, which was partially offset by the inclusion of Recharger.
Our Segment Adjusted (loss) EBITDA margin for the third quarter of fiscal 2025 and 2024 was 1.41% and 6.4%, respectively.
Group costs
Our group costs primarily include employee related costs in relation to employees specifically hired for group roles and costs
related directly to managing the US-listed entity; expenditures related to compliance with the Sarbanes-Oxley Act of 2002; non-
employee directors’ fees; legal fees; group and US-listed related audit fees; and directors’ and officers’ insurance premiums.
Our group costs for fiscal 2025 decreased compared with the prior period due to lower bonus provision expense, which was
partially offset by higher employee costs resulting from an increase in the number of individuals allocated to group costs and base
salary adjustments, audit and consulting fees.
Year to date fiscal 2025 compared to year to date fiscal 2024
The following factors had a significant impact on our results of operations during the year to date fiscal 2025 as compared with
the same period in the prior year:
●
Revenue flat in $, lower revenue in ZAR:
Our revenues were flat in U.S. dollar and decreased 1.1% in ZAR, primarily due
to the inclusion of Adumo and Recharger, an increase in value-added services activity in Merchant, as well as higher
transaction, insurance and lending revenues in Consumer, which was partially offset by fewer Pinned Airtime sales and a
lower contribution from Enterprise;
●
Operating income increase, before transaction costs:
Operating income, before transaction and related costs, increased
significantly primarily due to contribution from Adumo from October 1, 2024 and Recharger from March 3, 2025, which was
partially offset by increased costs and the increase in amortization of acquisition-related intangible assets related to the
acquisition of Adumo and Recharger;
●
Non-cash fair value adjustment related to equity securities:
We recorded a non -cash fair value loss of $54.2 million during
the year to date fiscal 2025 related to our investment in MobiKwik;
●
Higher net interest charge:
239.0 million) primarily due to higher overall borrowings, which was partially offset by an increase in interest received as a
result of the inclusion of Adumo; and
●
Foreign exchange movements:
to the prior period, which adversely impacted our U.S. dollar reported results.
65
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 8
In United States Dollars
Nine months ended March 31,
2025
2024
%
$ ’000
$ ’000
change
Revenue
428,034
418,176
2%
Cost of goods sold, IT processing, servicing and support
303,418
329,610
(8%)
Selling, general and administration
97,213
67,146
45%
Depreciation and amortization
22,928
17,460
31%
Transaction costs related to Adumo and Recharger acquisitions and certain
compensation costs
3,174
665
377%
Operating income
1,301
3,295
(61%)
Change in fair value of equity securities
(54,152)
-
nm
Loss on disposal of equity-accounted investments
161
-
nm
Reversal of allowance for EMI doubtful debt receivable
-
250
nm
Interest income
1,952
1,562
25%
Interest expense
16,983
14,312
19%
Loss before income tax (benefit) expense
(68,043)
(9,205)
639%
Income tax (benefit) expense
(9,268)
1,881
nm
Net loss before income (loss) from equity-accounted investments
(58,775)
(11,086)
430%
Income (Loss) from equity-accounted investments
89
(1,319)
nm
Net loss
(58,686)
(12,405)
373%
Less net income attributable to non-controlling interest
48
-
nm
Net loss attributable to us
(58,734)
(12,405)
373%
Table 9
In South African Rand
Nine months ended March 31,
2025
2024
%
ZAR ’000
ZAR ’000
change
Revenue
7,754,951
7,842,078
(1%)
Cost of goods sold, IT processing, servicing and support
5,495,767
6,181,076
(11%)
Selling, general and administration
1,761,823
1,259,415
40%
Depreciation and amortization
415,665
327,408
27%
Transaction costs related to Adumo and Recharger acquisitions and certain
compensation costs
56,809
12,550
353%
Operating income
24,887
61,629
(60%)
Change in fair value of equity securities
(988,494)
-
nm
Loss on disposal of equity-accounted investments
2,886
-
nm
Reversal of allowance for EMI doubtful debt receivable
-
4,741
nm
Interest income
35,347
29,309
21%
Interest expense
307,831
268,262
15%
Loss before income tax (benefit) expense
(1,238,977)
(172,583)
618%
Income tax (benefit) expense
(169,202)
35,245
nm
Net loss before income (loss) from equity-accounted investments
(1,069,775)
(207,828)
415%
Income (Loss) from equity-accounted investments
1,586
(25,041)
nm
Net loss
(1,068,189)
(232,869)
359%
Less net income attributable to non-controlling interest
865
-
nm
Net loss attributable to us
(1,069,054)
(232,869)
359%
66
Revenue increased by $9.9 million (ZAR 87.1 million), or 2.4% (in ZAR, 1.1%), primarily due to the inclusion of Adumo, an
increase in the volume of value-added services provided (Pinless Airtime and gaming), an increase in certain issuing fee base prices
and transaction activity in our issuing business, and an increase in insurance premiums collected and lending revenues following higher
loan originations, which was partially offset by fewer Pinned Airtime sales.
Cost of goods sold, IT processing, servicing and support decreased by $26.2 million (or 7.9%) and, in ZAR, decreased by ZAR
685.3 million (or 11.1%), primarily due to the decrease in Pinned Airtime sales, which was partially offset by the inclusion of Adumo,
higher commissions paid related to ADP revenue generated, and higher insurance-related claims and third-party transaction fees.
Selling, general and administration expenses increased by $30.1 million (ZAR 502.4 million), or 44.8% (in ZAR 39.9%). The
increase was primarily due to the inclusion of Adumo; higher employee-related expenses (including annual bonuses and annual salary
increases); higher stock-based compensation charges, consulting fees, audit fees, and travel expenses; and the year-over-year impact
of inflationary increases on certain expenses.
Depreciation and amortization expense increased by $5.5 million (ZAR 88.3 million), or 31.3% (27.0%). The increase was due
to the inclusion of acquisition-related intangible asset amortization related to intangible assets identified pursuant to the Adumo and
Recharger acquisitions and an increase in depreciation expense related to additional POS devices deployed.
Transaction costs related to Adumo and Recharger acquisitions and certain compensation costs includes fees paid to external
service providers associated with legal and advisory services procured to close the Adumo transaction on October 1, 2024, and the
Recharger transaction in March 2025, and increased primarily due to the inclusion of post-combination compensation charges
recognized related to the Recharger acquisition. Refer to Note 2 to our unaudited condensed consolidation financial statements for
additional information.
Our operating income margin for the year to date fiscal 2025 and 2025 was 0.3% and 0.8%, respectively. We discuss the
components of operating loss margin under “—Results of operations by operating segment.”
The change in fair value of equity securities of $54.2 million during the year to date fiscal 2025 represents a non-cash fair value
adjustment loss related to MobiKwik. We did not record any changes in the fair value of equity interests in MobiKwik during the year
to date fiscal 2024, or any fair value adjustments for Cell C during the year to date fiscal 2025 or 2024, respectively. We continue to
carry our investment in Cell C at $0 (zero).
We recorded a loss of $0.2 million related to the change in our investment in an equity security recorded under the equity method
to consolidation during fiscal 2025. Refer to Note 2 to our consolidated financial statements for additional information regarding this
loss.
Interest on surplus cash increased to $2.0 million (ZAR 35.3 million) from $1.6 million (ZAR 29.3 million), primarily due to the
inclusion of Adumo and higher overall average cash balances on deposit during the year to date fiscal 2025 compared with 2024.
Interest expense increased to $17.0 million (ZAR 307.8 million) from $14.3 million (ZAR 268.3 million). In ZAR, the increase
was primarily as a result of higher overall borrowings during the year to date fiscal 2025 compared with the comparable period in the
prior quarter.
Fiscal 2025 income tax benefit was $(9.3) million (ZAR (169.2) million) compared an income tax expense of $1.9 million (ZAR
35.2 million) in fiscal 2024. Our effective tax rate for fiscal 2025 was impacted by deferred tax impact related to the fair value
adjustment to our equity securities, the tax expense recorded by our profitable South African operations, a deferred tax benefit related
to acquisition-related intangible asset amortization, non-deductible expenses (in transaction-related expenses),
a valuation allowance
created related to the fair value adjustment to MobiKwik, the on-going losses incurred by certain of our South African businesses and
the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by
these entities.
Our effective tax rate for fiscal 2024 was impacted by the tax expense recorded by our profitable South African operations, a
deferred tax benefit related to acquisition-related intangible asset amortization, non-deductible expenses, the on-going losses incurred
by certain of our South African businesses and the associated valuation allowances created related to the deferred tax assets recognized
regarding net operating losses incurred by these entities.
67
Finbond is listed on the Johannesburg Stock Exchange and reports its six-month results during our first half and its annual results
during our fourth quarter. We sold our entire remaining interest in Finbond during the year to date fiscal 2024. The table below presents
the relative (loss) earnings from our equity-accounted investments:
Table 10
Nine months ended March 31,
2025
2024
$ %
$ ’000
$ ’000
change
Finbond
-
(1,445)
nm
Share of net loss
-
(278)
nm
Impairment
-
(1,167)
nm
Other
89
126
(29%)
89
(1,319)
nm
Results of operations by operating segment
The composition of revenue and the contributions of our business activities to operating loss are illustrated below:
Table 11
In United States Dollars
Nine months ended March 31,
2025
% of
2024
% of
% change
Operating Segment
$ ’000
total
$ ’000
total
Consolidated revenue:
Merchant
334,442
79%
341,044
82%
(2%)
Consumer
68,097
16%
50,191
12%
36%
Enterprise
30,259
7%
32,710
8%
(7%)
Subtotal: Operating segments
432,798
102%
423,945
102%
2%
Eliminations
(4,764)
(2%)
(5,769)
(2%)
(17%)
Total consolidated revenue
428,034
100%
418,176
100%
2%
Group Adjusted EBITDA:
Merchant
(1)(2)
25,976
76%
21,827
82%
19%
Consumer
(1)(2)
15,071
44%
8,452
32%
78%
Enterprise
(1)(2)
464
1%
2,431
9%
(81%)
Group costs
(7,541)
(21%)
(6,032)
(23%)
25%
Group Adjusted EBITDA (non-GAAP)
(3)
33,970
100%
26,678
100%
27%
(1) Segment Adjusted EBITDA for the nine months ended March 31, 2025, includes reorganization and retrenchment costs for
Merchant of $0.7 million, Enterprise of $0.3 million, and Consumer of $0.1 million. Segment Adjusted EBITDA for Merchant includes
retrenchment costs of $0.2 million and Consumer includes retrenchment costs of $0.2 million for year to date fiscal 2024.
(2) Lease expenses which were previously presented on a separate line in fiscal 2024 are now included in Merchant, Consumer
and Enterprise Segment Adjusted EBITDA. The prior period has been re-presented to conform with current period presentation.
(3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
Table 12
In South African Rand
Nine months ended March 31,
2025
% of
2024
% of
% change
Operating Segment
ZAR ’000
total
ZAR ’000
total
Consolidated revenue:
Merchant
6,058,673
79%
6,395,041
82%
(5%)
Consumer
1,234,595
16%
941,566
12%
31%
Enterprise
548,390
7%
613,770
8%
(11%)
Subtotal: Operating segments
7,841,658
102%
7,950,377
102%
(1%)
Eliminations
(86,707)
(2%)
(108,299)
(2%)
(20%)
Total consolidated revenue
7,754,951
100%
7,842,078
100%
(1%)
Group Adjusted EBITDA:
Merchant
(1)(2)
470,476
76%
409,236
82%
15%
Consumer
(1)(2)
273,313
44%
158,833
32%
72%
Enterprise
(1)(2)
8,415
1%
45,689
9%
(82%)
Group costs
(135,542)
(21%)
(113,172)
(23%)
20%
Group Adjusted EBITDA (non-GAAP)
(3)
616,662
100%
500,586
100%
23%
68
(1) Segment Adjusted EBITDA for the nine months ended March 31, 2025, includes reorganization and retrenchment costs for
Merchant of ZAR 12.9 million, Enterprise of ZAR 5.6 million, and Consumer of ZAR 1.5 million. Segment Adjusted EBITDA for
Merchant includes retrenchment costs of ZAR 4.7 million and Consumer includes retrenchment costs of ZAR 2.9 million for year to
date fiscal 2024.
(2) Lease expenses which were previously presented on a separate line in fiscal 2024 are now included in Merchant and Consumer
Segment Adjusted EBITDA. The prior period has been re-presented to conform with current period presentation.
(3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
Merchant
Segment revenue primarily increased due to the inclusion of Adumo, a higher volume of ADP provided (Pinless Airtime and
gaming), which was partially offset by fewer Pinned Airtime sales. In ZAR, the increase in Segment Adjusted EBITDA is primarily
due to the inclusion of Adumo, which was partially offset by higher operating expenses incurred, including employment-related
expenditures, to expand our offering, an increase in the allowance for credit losses following higher loan originations and
reorganization and retrenchment costs incurred during the third quarter of fiscal 2025. From the first quarter of fiscal 2025, we have
experienced a shift in the mix between the sale of Pinned Airtime and distribution of Pinless Airtime, and this trend has continued
through to the third quarter of fiscal 2025, with the volume of Pinned Airtime sales decreasing, which results in a lower revenue and
related cost of sales, and an overall improved margin.
Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for the year to date
fiscal 2025 and 2024 was 7.8% and 6.4%, respectively.
Consumer
Segment revenue increased primarily due to higher transaction fees generated from the higher EPE account holders base, an
increase in certain issuing fee base prices and transaction activity in our issuing business, insurance premiums collected, lending
revenues following an increase in loan originations and the inclusion of Adumo. This increase in revenue has translated into improved
profitability, which was partially offset by a higher allowance for credit losses following an increase in loan originations in December
2024 and the third quarter of fiscal 2025, higher insurance-related claims, interest expense (of approximately ZAR 45.0 million)
incurred to fund our lending book, higher computer software license costs, and the year-over-year impact of inflationary increases on
certain expenses. As discussed in our commentary for the second quarter of fiscal 2025, we have included an intercompany interest
expense in our Consumer Segment Adjusted EBITDA for year to date fiscal 2025 compared with the year to date fiscal 2024.
Our Segment Adjusted EBITDA margin for the year to date fiscal 2025 and 2024 was 22.1% and 16.8%, respectively.
Enterprise
Segment revenue decreased primarily due to fewer ad hoc hardware sales as well as lower revenue generated from the sale of
prepaid airtime vouchers, which was partially offset by the inclusion of Recharger. In ZAR, the significant decrease in Segment
Adjusted EBITDA is primarily due to the impact of few sales, which was partially offset by the inclusion of Recharger .
Our Segment Adjusted EBITDA margin for the year to date fiscal 2025 and 2024 was 1.5% and 7.4%, respectively.
Group costs
Our group costs for fiscal 2025 increased compared with the prior period due to higher employee costs resulting 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.
69
Presentation of Merchant, Consumer and Enterprise by segment for fiscal 2025 to date and fiscal 2024
The tables below present Merchant, Consumer and Enterprise revenue and EBITDA for fiscal 2025 to date and fiscal 2024,
including lease charges, as well as the U.S. dollar/ ZAR exchange rates applicable per fiscal quarter and year:
Table 13
Fiscal 2025
In United States dollars
Quarter 1
Quarter 2
Quarter 3
F2025
$ ’000
$ ’000
$ ’000
$ ’000
Revenue
Merchant
115,630
115,811
103,001
334,442
Consumer
21,072
22,929
24,096
68,097
Enterprise
11,882
8,933
9,444
30,259
Subtotal: Operating segments
148,584
147,673
136,541
432,798
Eliminations
(3,038)
(855)
(871)
(4,764)
Total consolidated revenue
145,546
146,818
135,670
428,034
Group Adjusted EBITDA:
Merchant
7,554
10,319
8,103
25,976
Consumer
4,396
4,342
6,333
15,071
Enterprise
362
(31)
133
464
Group costs
(2,949)
(2,820)
(1,772)
(7,541)
Group Adjusted EBITDA (non-GAAP)
9,363
11,810
12,797
33,970
Income and expense items: $1 = ZAR
17.72
17.85
18.40
18.04
Table 14
Fiscal 2024
In United States dollars
Quarter 1
Quarter 2
Quarter 3
Quarter 4
F2024
$ ’000
$ ’000
$ ’000
$ ’000
$ ’000
Revenue
Merchant
112,061
117,182
111,801
118,746
459,790
Consumer
15,580
16,707
17,904
19,020
69,211
Enterprise
9,467
11,921
11,322
14,187
46,897
Subtotal: Operating segments
137,108
145,810
141,027
151,953
575,898
Eliminations
(1,019)
(1,917)
(2,833)
(5,907)
(11,676)
Total consolidated revenue
136,089
143,893
138,194
146,046
564,222
Group Adjusted EBITDA:
Merchant
6,910
7,497
7,420
7,343
29,170
Consumer
2,120
2,575
3,757
4,227
12,679
Enterprise
815
891
725
500
2,931
Group costs
(1,822)
(2,011)
(2,199)
(1,812)
(7,844)
Group Adjusted EBITDA (non-GAAP)
8,023
8,952
9,703
10,258
36,936
Income and expense items: $1 = ZAR
18.71
18.71
18.88
18.47
18.68
Use of Non-GAAP Measures
U.S. securities laws require that when we publish any non-GAAP measures, we disclose the reason for using these non-GAAP
measures and provide reconciliations to the most directly comparable GAAP measures. The presentation of Group Adjusted EBITDA
is a non-GAAP measure. We provide this non-GAAP measure to enhance our evaluation and understanding of our financial
performance and trends. We believe that this measure is helpful to users of our financial information understand key operating
performance and trends in our business because it excludes certain non-cash expenses (including depreciation and amortization and
stock-based compensation charges) and income and expenses that we consider once-off in nature.
70
Non-GAAP Measures
Group Adjusted EBITDA is earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted for non-
operational transactions (including loss on disposal of equity-accounted investments, change in fair value of equity securities),
(earnings) loss from equity-accounted investments, stock-based compensation charges and once-off items. We are working on
obtaining a separate lending facility to fund a portion of our Consumer lending during the twelve months ended June 30, 2025.
We
expected to have this facility in place on July 1, 2024, however, we have been unable to finalize terms as the separate lending facility
will form part of a broader refinancing of our facilities. Therefore, we have included an intercompany interest expense in our Consumer
Segment Adjusted EBITDA for the three and nine months ended March 31, 2025. Once-off items represents non-recurring income
and expense items, including costs related to acquisitions and transactions consummated or ultimately not pursued.
The table below presents the reconciliation between GAAP net loss attributable to Lesaka to Group Adjusted EBITDA:
Table 15
Three months ended
March 31,
Nine months ended
March 31,
2025
2024
2025
2024
$ ’000
$ ’000
$ ’000
$ ’000
Loss attributable to Lesaka - GAAP
(22,058)
(4,047)
(58,734)
(12,405)
Less net income attributable to non-controlling interest
(20)
-
(48)
-
Net loss
(22,038)
(4,047)
(58,686)
(12,405)
(Earnings) loss from equity accounted investments
(12)
(43)
(89)
1,319
Net loss before (earnings) loss from equity-accounted investments
(22,050)
(4,090)
(58,775)
(11,086)
Income tax (benefit) expense
(2,934)
931
(9,268)
1,881
Loss before income tax expense
(24,984)
(3,159)
(68,043)
(9,205)
Interest expense
5,777
4,581
16,983
14,312
Interest income
(645)
(628)
(1,952)
(1,562)
Reversal of allowance for doubtful EMI loan receivable
-
-
-
(250)
Net loss on disposal of equity-accounted investment
-
-
161
-
Change in fair value of equity securities
20,421
-
54,152
-
Operating income
569
794
1,301
3,295
PPA amortization (amortization of acquired intangible assets)
4,974
3,562
13,588
10,762
Depreciation and amortization
3,455
2,229
9,340
6,698
Stock-based compensation charges
2,497
2,090
7,518
5,653
Interest adjustment
(890)
-
(2,478)
-
Once-off items
(1)
2,306
907
4,599
169
Unrealized loss (gain) FV for currency adjustments
(114)
121
102
101
Group Adjusted EBITDA - Non-GAAP
12,797
9,703
33,970
26,678
(1) The table below presents the components of once-off items for the periods presented:
Table 16
Three months ended
March 31,
Nine months ended
March 31,
2025
2024
2025
2024
$ ’000
$ ’000
$ ’000
$ ’000
Transaction costs
1,084
276
1,621
456
Transaction costs related to Adumo and Recharger acquisitions and
certain compensation costs
1,222
631
3,174
665
Indirect taxes provision release
-
-
(196)
-
Income recognized related to closure of legacy businesses
-
-
-
(952)
Total once-off items
2,306
907
4,599
169
Once-off items are non-recurring in nature, however, certain items may be reported in multiple quarters. For instance, transaction
costs include costs incurred related to acquisitions and transactions consummated or ultimately not pursued. The transactions can span
multiple quarters, for instance in fiscal 2025 we incurred significant transaction costs related to the acquisition of Adumo and
Recharger over a number of quarters, and the transactions are generally non-recurring.
Indirect tax provision release relates to the reversal of a non-recurring indirect tax provision created in fiscal 2023 which was
resolved in fiscal 2025 following settlement of the matter with the tax authority. Income recognized related to closure of legacy
businesses represents (i) gains recognized related to the release of the foreign currency translation reserve on deconsolidation of a
subsidiaries and (ii) costs incurred related to subsidiaries which we are in the process of deregistering/ liquidation and therefore we
consider these costs non-operational and ad hoc in nature.
71
Liquidity and Capital Resources
As of March 31, 2025, our cash and cash equivalents were $71.0 million and comprised of U.S. dollar-denominated balances of
$3.2 million, ZAR-denominated balances of ZAR 1.2 billion ($65.9 million), and other currency deposits, primarily Botswana pula,
of $1.9 million, all amounts translated at exchange rates applicable as of March 31, 2025. The increase in our unrestricted cash balances
from June 30, 2024, was primarily due to the positive contribution from our Merchant and Consumer operations and utilizing of our
borrowing facilities, which was partially offset by the utilization of cash reserves to fund certain scheduled and other repayments of
our borrowings, settle the cash portion of the purchase consideration related to our various acquisitions, purchase ATMs and vaults,
pay annual bonuses, pay for expenses included in our group costs, and to make an investment in working capital.
We generally invest any surplus cash held by our South African operations in overnight call accounts that we maintain at South
African banking institutions, and any surplus cash held by our non-South African companies in U.S. dollar-denominated money market
accounts.
Historically, we have financed most of our operations, research and development, working capital, and capital expenditures, as
well as acquisitions and strategic investments, through internally generated cash and our financing facilities. When considering
whether to borrow under our financing facilities, we consider the cost of capital, cost of financing, opportunity cost of utilizing surplus
cash and availability of tax efficient structures to moderate financing costs. Refer to Note 12 to our consolidated financial statements
for the year ended June 30, 2024, as well as Note 9 to these condensed consolidated financial statements for additional information
related to our borrowings.
Available short-term borrowings
Summarized below are our short-term facilities available and utilized as of March 31, 2025:
Table 17
RMB GBF
RMB Other
Nedbank
$ ’000
ZAR ’000
$ ’000
ZAR ’000
$ ’000
ZAR ’000
Total short-term facilities available, comprising:
Total overdraft
38,195
700,901
-
-
-
-
Indirect and derivative facilities
(1)
-
-
5,487
100,700
8,531
156,556
Total short-term facilities available
38,195
700,901
5,487
100,700
8,531
156,556
Utilized short-term facilities:
Overdraft
23,550
432,156
-
-
-
-
Indirect and derivative facilities
(1)
-
-
1,804
33,097
115
2,107
Total short-term facilities utilized
23,550
432,156
1,804
33,097
115
2,107
Interest rate, based on South African prime rate
10.50%
N/A
N/A
(1) Other facilities include indirect and derivative facilities may only be used for guarantees, letters of credit and forward
exchange contracts to support guarantees issued by RMB and Nedbank to various third parties on our behalf.
In terms of a commitment provided to the lender under the CTA entered into on February 27, 2025, we have undertaken not to
utilize more than ZAR 5.0 million ($0.3 million) of the Nedbank Facility.
Long-term borrowings
We have aggregate long-term borrowing outstanding of ZAR 3.6 billion ($194.7 million translated at exchange rates as of March
31, 2025) as described in Note 9. These borrowings include outstanding long-term borrowings obtained by Lesaka SA of ZAR 3.1
billion, which was used to refinance our previous long-term borrowings. We have utilized all of these long-term borrowings . We also
have a revolving credit facility, of ZAR 300.0 million which is utilized to fund a portion of our merchant finance loans receivable
book and an asset backed facility of ZAR 227.0 million which is utilized to partially fund the acquisition of POS devices and vaults.
Restricted cash
We have also entered into cession and pledge agreements with Nedbank related to our Nedbank indirect credit facilities and we
have ceded and pledged certain bank accounts to Nedbank. The funds included in these bank accounts are restricted as they may not
be withdrawn without the express permission of Nedbank. Our cash, cash equivalents and restricted cash presented in our consolidated
statement of cash flows as of March 31, 2025, includes restricted cash of $0.1 million that has been ceded and pledged.
72
Arrangement with African Bank to fund our ATMs
In September 2024, we entered into an arrangement with African Bank Limited (“African Bank”) and certain cash-in-transit
service providers to fund our ATMs. Under this arrangement, African Bank will use its cash resources to fund our ATMs and it is
specifically recorded that the cash in our ATMs are African Bank’s property. Therefore, as we have not utilized a facility to obtain the
cash, and do not own or control the cash for an extended period of time, we do not record cash or cash equivalents and borrowings in
our consolidated statement of financial position. Cash withdrawn from our ATMs by our EPE customers and other consumers are
settled through the interbank settlement system from the ATM users bank account to African Bank’s bank accounts. We pay African
Bank a monthly fee for the service provided which is calculated based on the cumulative daily outstanding balance of cash utilized
multiplied by the South African prime interest rate less 1%. We are exposed to the risk of cash lost while it is in our ATMs (i.e. from
theft) and are required to repay African Bank for any shortages.
Cash flows from operating activities
Third quarter
Net cash provided by operating activities during the third quarter of fiscal 2025 was $10.7 million (ZAR 196.2 million) compared
to net cash utilized of $19.2 million (ZAR 362.1 million) during the third quarter of fiscal 2024. Excluding the impact of income taxes,
our cash provided by operating activities during the third quarter of fiscal 2025 was positively impacted by movements within our
Merchant and Enterprise businesses related to quarter-end transaction processing activities, lower inventory holdings as of March 31,
2025, and the contribution from our Merchant and Consumer businesses, which was partially offset by the impact of cash utilized for
the significant net growth in our Consumer and Merchant finance loans receivable books.
During the third quarter of fiscal 2025, we paid first provisional South African tax payments of $0.6 million (ZAR 10.9 million)
related primarily to certain of Adumo’s subsidiaries 2025 tax year. We also paid taxes totaling $0.1 million in other tax jurisdictions,
primarily in Namibia and Botswana during the third quarter of fiscal 2025. During the third quarter of fiscal 2024, we paid taxes
totaling $0.1 million in other tax jurisdictions, primarily in Botswana.
Taxes paid (refunded) during the third quarter of fiscal 2025 and 2024 were as follows:
Table 18
Three months ended March 31,
2025
2024
2025
2024
$
$
ZAR
ZAR
‘000
‘000
‘000
‘000
First provisional payments
594
1
10,885
18
Second provisional payments
-
36
-
691
Tax refund received
(151)
(7)
(2,016)
(128)
Total South African taxes paid
443
30
8,869
581
Foreign taxes paid
62
58
1,148
1,072
Total tax paid
505
88
10,017
1,653
Year to date
Net cash used in operating activities during the year to date of fiscal 2025 was $2.6 million (ZAR 47.6 million) compared to net
cash provided by operating activities of $23.1 million (ZAR 434.0 million) during the year to date of fiscal 2024. Excluding the impact
of income taxes, our cash used in operating activities during the year to date of fiscal 2025 includes cash utilized for the settlement of
working capital movements within our Merchant 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 on a Sunday), and the net growth in our the
significant net growth in our Consumer and Merchant finance loans receivable books, which was partially offset by was positively
impacted by the contribution from Merchant and Consumer businesses.
During the year to date of fiscal 2025, we paid first provisional South African tax payments of $3.7 million (ZAR 67.1 million)
related to our 2025. We also paid taxes totaling $0.2 million in other tax jurisdictions, primarily in Namibia and Botswana during the
year to date of fiscal 2025. During the year to date of fiscal 2024, we paid first provisional South African tax payments of $2.7 million
(ZAR 49.5 million) related to our 2024 tax year and South African tax payments related to prior years of $0.6 million (ZAR 12.2
million). We also paid taxes totaling $0.2 million in other tax jurisdictions, primarily in Botswana.
73
Taxes (refunded) paid during the year to date of fiscal 2025 and 2024 were as follows:
Table 19
Nine months ended March 31,
2025
2024
2025
2024
$
$
ZAR
ZAR
‘000
‘000
‘000
‘000
First provisional payments
3,682
2,663
67,149
49,534
Second provisional payments
-
36
-
691
Taxation paid related to prior years
93
641
1,660
12,187
Tax refund received
(264)
(38)
(4,069)
(768)
Total South African taxes paid
3,511
3,302
64,740
61,644
Foreign taxes paid
202
196
3,693
3,677
Total tax paid
3,713
3,498
68,433
65,321
Cash flows from investing activities
Third quarter
Cash used in investing activities for the third quarter of fiscal 2025 included capital expenditures of $2.8 million (ZAR 51.8
million), primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $1.7 million (ZAR 30.8 million),
primarily related to the capitalization of development costs, during the third quarter of fiscal 2025. During the third quarter of fiscal
2025, we paid $6.7 million related to acquisition of certain businesses, including Recharger.
Cash used in investing activities for the third quarter of fiscal 2024 included capital expenditures of $2.9 million (ZAR 55.6
million), primarily due to the acquisition of vaults and POS devices .
Year to date
Cash used in investing activities for the year to date of fiscal 2025 included capital expenditures of $13.1 million (ZAR 236.3
million), primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $2.3 million (ZAR 41.0 million),
primarily related to the capitalization of development costs, during the third quarter of fiscal 2025. During the year to date of fiscal
2025, we paid $10.6 million related to acquisition of certain businesses, including Adumo and Recharger.
Cash used in investing activities for the year to date of fiscal 2024 included capital expenditures of $8.0 million (ZAR 149.1
million), primarily due to the acquisition of vaults. During the year to date of fiscal 2024, we received proceeds of $3.5 million related
to the sale of remaining interest in Finbond and $0.25 million related to the second (and final) tranche from the disposal of our entire
equity interest in Carbon.
Cash flows from financing activities
Third quarter
During the third quarter of fiscal 2025, we utilized $21.4 million from our South African overdraft facilities to partially fund the
acquisition of Recharger and for the February 2025 refinance of certain of our facilities, and repaid $50.5 million towards our
refinanced facilities. We utilized $175.8 million of our long-term borrowings for the February 2025 refinance of certain of our
facilities. We repaid $134.5 million of long-term borrowings towards our refinanced facilities and in accordance with our repayment
schedule and paid $7.2 million to settle Adumo’s borrowings. We also paid fees of $0.5 million related the February 2025 refinance
and paid dividends to the non-controlling interest of $0.1 million.
During the third quarter of fiscal 2024 , we utilized $24.9 million from our South African overdraft facilities to fund our ATMs
and our cash management business through Connect, and repaid $43.4 million of those facilities. We utilized $3.4 million of our long-
term borrowings to fund the acquisition of certain capital expenditures and for working capital requirements. We repaid $7.2 million
of long-term borrowings in accordance with our repayment schedule as well as to settle a portion of our revolving credit facility
utilized.
74
Year to date
During the year to date of fiscal 2025, we utilized $94.2 million from our South African overdraft facilities to fund our ATMs
and our cash management business through Connect as well as to partially fund the acquisition of Recharger and for the February
2025 refinance of certain of our facilities. We repaid $84.9 million of those facilities, including towards our refinanced facilities. We
utilized $189.5 million of our borrowings to settle a portion of the Adumo purchase consideration, pay certain transaction expenses,
repay Adumo’s borrowings, repurchase shares of our common stock, fund the acquisition of certain capital expenditures, for working
capital requirements and for the February 2025 refinance of certain of our facilities. We repaid $130.0 million of long-term borrowings
towards our refinanced facilities and in accordance with our repayment schedule, paid $7.2 million to settle Adumo’s borrowings, and
settled a portion of our revolving credit facility utilized. We also paid an origination fee of $1.0 million to secure additional borrowings
as well as paid dividends to the non-controlling interest of $0.4 million.
During the year to date of fiscal 2024, we utilized $153.5 million from our South African overdraft facilities to fund our ATMs
and our cash management business through Connect, and repaid $172.2 million of those facilities. We utilized $14.4 million of our
long-term borrowings to fund the acquisition of certain capital expenditures and for working capital requirements. We repaid $13.1
million of long-term borrowings in accordance with our repayment schedule as well as to settle a portion of our revolving credit facility
utilized. We also paid $0.2 million to repurchase shares from employees in order for the employees to settle taxes due related to the
vesting of shares of restricted stock.
Off-Balance Sheet Arrangements
We have no off -balance sheet arrangements.
Capital Expenditures
We expect capital spending for the fourth quarter of fiscal 2025 to primarily include spending for acquisition of POS devices,
vaults, computer software, computer and office equipment, as well as for our ATM infrastructure and branch network in South Africa.
Our capital expenditures for the third quarter of fiscal 2025 and 2025 are discussed under “—Liquidity and Capital Resources—Cash
flows from investing activities.” Our capital expenditures for the past three fiscal years were funded through internally generated
funds, or our asset-backed borrowing arrangements. We had outstanding capital commitments as of March 31, 2025, of $0.1 million.
We expect to fund these expenditures through internally generated funds and available facilities.
75
Item 3. Quantitative and Qualitative Disclosures About Market Risk
In addition to the tables below, see Note 5 to the unaudited condensed consolidated financial statements for a discussion of
market risk.
We have short and long-term borrowings in South Africa which attract interest at rates that fluctuate based on changes in the
South African prime and 3-month JIBAR interest rates. The following table illustrates the effect on our annual expected interest charge,
translated at exchange rates applicable as of March 31, 2025, as a result of changes in the South African prime and 3-month JIBAR
interest rates, using our outstanding short and long-term borrowings as of March 31, 2025. The effect of a hypothetical 1% (i.e. 100
basis points) increase and a 1% decrease in the interest rates applicable to the borrowings as of March 31, 2025, are shown. The
selected 1% hypothetical change does not reflect what could be considered the best- or worst-case scenarios.
Table 20
As of March 31, 2025
Annual expected
interest charge
($ ’000)
Hypothetical
change in
interest rates
Estimated annual
expected interest
charge after
hypothetical change
in interest rates
($ ’000)
Interest on South African borrowings
23,853
1%
26,048
(1%)
21,658
The following table summarizes our exchange-traded equity security with equity and liquidity price risk as of March 31, 2025.
The effects of a hypothetical 10% increase and a 10% decrease in market prices as of March 31, 2025, is also shown. The selected
10% hypothetical change does not reflect what could be considered the best or worst case scenarios. Indeed, results could be far worse
due both to the nature of equity markets and the liquidity risk associated with the equity security.
Table 21
As of March 31, 2025
Fair value
Hypothetical
price change
Estimated fair value
after hypothetical
change in price
($ ’000)
Percentage Increase
(Decrease) in
Shareholders’ Equity
Exchange-traded equity securities
22,113
10%
24,324
1%
10%
19,902
(1%)
76
Item 4. Controls and Procedures
Under the supervision and with the participation of our management, including our executive chairman and our group chief
financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934, as amended, as of March 31, 2025.
We previously identified and disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the year ended June 30, 2024,
material weaknesses in our internal control over financial reporting related to: (1) information technology general controls (“ITGCs”),
specifically insufficient risk assessment, design and implementation, monitoring activities and training of individuals to operate
controls in the areas of user access and program-change management for certain information technology systems that support our
financial reporting processes and (2) insufficient design and implementation of controls and associated policies and procedures in our
annual goodwill impairment assessment. A material weakness is a deficiency, or combination of deficiencies, in internal control over
financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial
statements will not be prevented or detected on a timely basis.
As a result of insufficient time to design, implement and fully test controls to ensure we have remediated the material weaknesses
discussed in our Annual Report on Form 10-K for our fiscal year ended June 30, 2024 (as described above), the executive chairman
and the group chief financial officer concluded that our disclosure controls and procedures were not effective as of March 31, 2025.
Notwithstanding the previously identified material weaknesses, management believes the condensed consolidated financial
statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of
operations and cash flows as of and for the periods presented in accordance with GAAP.
Remediation Plan
Management has made good progress and continues to actively work on remediating the identified material weakness and remains
committed to remediating the material weakness in a timely manner. Our remediation process is ongoing and includes, but is not
limited to, the following steps:
-
the review of ITGCs and implementation of changes to certain controls to address the issues related to the material
weaknesses identified above; and
-
the review and implementation of changes to the design of the controls related to the goodwill impairment assessment.
The remediation plan may be adjusted as is appropriate, as we continue to evaluate and enhance our internal control over financial
reporting. Other than the design and implementation of the remediation plan, there have not been any changes in our internal control
over financial reporting during the fiscal quarter ended March 31, 2025, that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
77
Part II. Other Information
Item 1A. Risk Factors
See “Item 1A RISK FACTORS” in Part I of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, for a
discussion of risk factors relating to (i) our business, (ii) operating in South Africa and other foreign markets, (iii) government
regulation, and (iv) our common stock. Except as set forth below, there have been no material changes from the risk factors previously
disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
We may not be able to successfully integrate Adumo and Recharger’s operations with our business.
On October 1, 2024, we announced the closing of our ZAR 1.67 billion ($96.2 million) investment to acquire a 100% interest in
Adumo and on March 5, 2024, we announced the closing of our ZAR 503.4 million ($27.0 million) investment to acquire a 100%
interest in Recharger. Integrating these businesses into our company may require significant attention from our senior management
which may divert their attention from our day-to-day business. The difficulties of integration may be increased by cultural differences
between our two organizations and the necessity of retaining and integrating personnel, including Adumo and Recharger’s key
employees and management team. The services of some of these individuals will be important to the continued growth and success of
Adumo and Recharger’s business and to our ability to integrate those businesses with ours. If we were to lose the services of these key
employees or fail to sufficiently integrate them, our ability to operate these businesses successfully would likely be materially and
adversely impacted.
As such, if we are unable to successfully integrate Adumo and Recharger’s operations into our business we could be required to
record material impairments, and as a result, our financial condition, results of operations, cash flows and stock price could suffer.
We depend upon third-party suppliers, making us vulnerable to supply shortages and price fluctuations, which could harm
our business.
We obtain our smart cards, ATMs, electronic payment and POS devices, components for our safe assets, components to repair
the ISV (independent software vendor) division’s POS hardware, and the other hardware we use in our business from a limited number
of suppliers, and do not manufacture this equipment ourselves. We generally do not have long-term agreements with our manufacturers
or component suppliers. If our suppliers become unwilling or unable to provide us with adequate supplies of parts or products when
we need them, or if they increase their prices, we may not be able to find alternative sources in a timely manner and could be faced
with a critical shortage. This could harm our ability to meet customer demand and cause our revenues to decline. Even if we are able
to secure alternative sources in a timely manner, our costs could increase as a result of supply or geopolitical shocks, which may lead
to an increase in the prices of goods and services from third parties. A supply interruption, such as the recent global shortage of
semiconductors, or an increase in demand beyond current suppliers’ capabilities could harm our ability to distribute our equipment
and thus to acquire new customers who use our technology. Any interruption in the supply of the hardware necessary to operate our
technology, or our inability to obtain substitute equipment at acceptable prices in a timely manner, could impair our ability to meet the
demand of our customers, which would have an adverse effect on our business.
We do not have a South African banking license and, therefore, we provide our EPE solution through an arrangement with
a third-party bank, which limits our control over this business and the economic benefit we derive from it. If this arrangement were
to terminate, we would not be able to operate our EPE business without alternate means of access to a banking license. We are
also required to comply with the requirements of payment schemes, including VISA and Mastercard. Furthermore, we provide
certain of our services under partnerships with South African banks. We will be unable to provide our payments and card-acquiring
businesses if we fail to comply with payment scheme rules, and/or fails to maintain certain regulatory licenses and registrations,
and/ or if we were unable to continue to partner with South African banks to provide our payments and card acquiring services.
The South African retail banking market is highly regulated. Under current law and regulations, our EasyPay Everywhere
(“EPE”) business activities require us to be registered as a bank in South Africa or to have access to an existing banking license. We
are not currently so registered, but we have an agreement with Grindrod Bank, a subsidiary of African Bank Limited, that enables us
to implement our EPE program in compliance with the relevant laws and regulations. If this agreement were to be terminated, we
would not be able to operate these services unless we were able to obtain access to a banking license through alternate means.
Furthermore, we have to comply with the South African Financial Intelligence Centre Act, 2001 and money laundering and terrorist
financing control regulations, when we open new bank accounts for our customers and when they transact. Failure to effectively
implement and monitor responses to the legislation and regulations may result in significant fines or prosecution of Grindrod Bank
and ourselves.
We are required to comply with the requirements of payment schemes, including VISA and Mastercard. We have deployed a
significant number of devices, and any mandatory compliance upgrades to our deployed POS devices would require significant capital
expenditures and/or be disruptive to our customer base. Failure to comply with the payment schemes’ rules may result in significant
fines and/or a loss of license to participate in the scheme(s).
78
We provide card acquiring services to our customers by partnering with Nedbank Limited and ABSA Bank Limited, and payment
processing services in partnership with the largest banks in South Africa. If these agreements were to be terminated, Adumo would
not be able to operate its payment services unless it were able to obtain alternative card acquiring or payment processing agreements
with other partners or obtain a direct designation license with the scheme's and regulatory bodies. In addition, if we were to lose our
PASA registrations or fail to have them renewed, it would be unable to operate its payment services.
Compliance with the requirements under these various regulatory regimes may cause us to incur significant additional costs and
failure to comply with such requirements could result in the shutdown of the non-complying facility, the imposition of liens, fines
and/or civil or criminal liability.
In addition, the South African Financial Advisory and Intermediary Services Act, 2002, requires persons who act as
intermediaries between financial product suppliers and consumers in South Africa to register as financial service providers. EasyPay
Insurance was granted a Financial Service Provider, or FSP, license on June 9, 2015, and EasyPay Financial Services (Pty) Ltd was
granted a FSP license on July 11, 2017. If our FSP licenses are withdrawn or suspended, we may be stopped from continuing our
financial services businesses in South Africa unless we are able to enter into a representative arrangement with a third party FSP.
Furthermore, the proposed Conduct of Financial Institutions Bill will make significant changes to the current licensing regime
however, the current proposal is that existing licences will be converted. The second draft of the Conduct of Financial Institutions Bill
was published for public comment on September 29, 2020.
Proposed regulatory changes to the national payments system are expected to have a substantial impact on the South African
payments industry. It may change the manner in which we conduct business and likely lead to increased operating costs for our
business as we work to ensure compliance with the new legislative and regulatory framework, which may have a material adverse
effect on our business.
On March 3, 2025, the South African Reserve Bank (“SARB”) published certain draft regulatory documents for commentary
that are expected to have a substantial impact on how we conduct our business namely: (i) a draft directive entitled “Directive in
respect of specific payment activities within the national payment system” (the “Directive”); (ii) a draft exemption notice entitled
“Designation by the Prudential Authority of specific activities conducted in the national payment system which shall be deemed not
to constitute ‘the business of a bank’ under paragraph (cc) in section 1(1) of the Banks Act, 1990” (the “Exemption Notice”); and
(iii) the National Payment System Bill (“NPS Bill”), which seeks to replace the existing National Payment System Act, 1998. The
proposed regulations were made available for comment, and we submitted detailed comments to our industry body, Association of
South African Payment Providers, on the proposed regulations.
The key objectives of the proposed regulations are to clarify the mandate and objectives of the SARB with respect to the national
payment system (“NPS”); and establish a robust regulatory, oversight, and supervisory framework for the NPS. The proposed
regulations also aim to promote financial inclusion, competition, the prevention of financial crime, and the fair treatment and protection
of customers, while introducing an activity-based licensing and authorization regime. In this regard, the Directive defines thirteen
“payment activities” and provides that a person, which can be a bank or a non-bank, providing a “payment activity" must obtain
authorisation from the SARB to undertake such activity. Under the Exemption Notice, certain payment activities are exempted from
the definition of ‘the business of a bank’. Prior to the Exemption Notice, these activities could only be undertaken by a bank. Pursuant
to the Exemption Notice, these activities can be undertaken by non-banks, subject to certain conditions. Certain of our businesses,
including EasyPay Everywhere, Adumo and Kazang Pay, currently undertake activities which would qualify as “payment activities”
under the Directive and the NPS Bill. Under the current regulatory framework, these activities are undertaken in partnership with a
sponsoring bank and the sponsoring bank is subject to regulation by the SARB. In other words, the business undertaking the “payment
activity” is not subject to direct regulation with respect to such payment activities.
It is uncertain if and when the proposed regulations will enter into effect and whether a non-bank such as the relevant Lesaka
subsidiary may elect whether to conduct an exempted payment activity by partnering with a bank to do so, or on its own, if it is
authorised by the SARB - i.e. whether both options will be available to a non-bank. Should our businesses be subject to direct regulation
under this new regime (i.e., if our current sponsorship model is no longer available), we expect that we will incur significant operating
costs to comply with the new requirements, and to obtain authorization with respect thereto. Furthermore, while some requirements
may already exist under other current regulatory frameworks for certain of our businesses, we will likely need to invest in additional
resources, systems and processes to satisfy the regulatory requirements contemplated in the proposed regulations, which may also lead
to increased operational costs, which may have a material adverse effect on our business.
79
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On February 5, 2020, our board of directors approved the replenishment of our existing share repurchase authorization to
repurchase up to an aggregate of $100 million of common stock. The authorization has no expiration date.
The table below presents information relating to purchases of shares of our common stock during the third quarter of fiscal 2025:
Table 22
(a)
(b)
(c)
(d)
Period
Total number
of shares
purchased
Average price
paid per share
(US dollars)
Total number of shares
purchased as part of publicly
announced plans or
programs
Maximum dollar value of
shares that may yet be
purchased under the plans
or programs
Jan 1, 2025 - Jan 31, 2025
-
-
-
100,000,000
Feb 1, 2025 - Feb 28, 2025
(1)
5,662
4.86
-
100,000,000
Mar 1, 2025 - Mar 31, 2025
-
-
-
100,000,000
Total
5,662
-
(1) Relates to the delivery of 5,662 shares of our common stock in February 2025 to us by certain of our employees to settle their
income tax liabilities. These shares do not reduce the repurchase authority under the share repurchase program.
Other than as reported in a Current Report on Form 8-K, we did not sell any securities that were not registered under the Securities
Act during the third quarter of fiscal 2025.
Item 5. Other Information
Our Section 16 officers and directors, as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934 (the “Exchange Act”),
may from time to time enter into plans for the purchase or sale of our common stock that are intended to satisfy the affirmative defense
conditions of Rule 10b5-1(c) of the Exchange Act. During the quarter ended March 31, 2025, no officers or directors, as defined in
Rule 16a-1(f),
, modified, or
defined in Item 408 of Regulation S-K.
80
Item 6. Exhibits
The following exhibits are filed as part of this Form 10-Q:
Incorporated by Reference Herein
Exhibit
No.
Description of Exhibit
Included
Herewith
Form
Exhibit
Filing Date
X
X
X
X
X
X
X
X
X
X
X
81
X
X
X
101.INS
XBRL Instance Document
X
101.SCH
XBRL Taxonomy Extension Schema
X
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
X
101.DEF
XBRL Taxonomy Extension Definition Linkbase
X
101.LAB
XBRL Taxonomy Extension Label Linkbase
X
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
X
104
Cover page formatted as Inline XBRL and contained in
Exhibit 101
* Indicates a management contract or compensatory plan or arrangement.
82
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on May 7, 2025.
LESAKA TECHNOLOGIES, INC.
By: /s/ Ali Mazanderani
Ali Mazanderani
Executive Chairman
By: /s/ Dan Smith
Dan Smith
Group Chief Financial Officer, Treasurer and Secretary