Lesaka leaps by more than 12% on the JSE after raising revenue and narrow loss
SHARES in rapidly expanding South African fintech company, Lesaka Technologies, jumped 12.4% in afternoon trade on the JSE yesterday after the company reported narrow losses on the back of a 9% surge in revenues for the quarter to the end of March. Lesaka has made numerous acquisitions in the past year as it seeks to consolidate its foothold in the fintech and payments business across Southern Africa.
This week, Lesaka reached an agreement for the R1.6 billion acquisition of regional payments processor, Adumo.
With the company reporting a narrowing in losses for the March quarter, shares in Lesaka leapt by 12.44% to close at R89 on the JSE yesterday.
The company’s net loss for the period under review declined to R76.4 million compared to R104.4m in the same period a year ago, boosted by a 9% revenue surge in rand terms to R2.6bn.
Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) grew 47% to R183.3m, exceeding the upper end of its guidance for the period.
“We are excited about the anticipated completion of the Adumo acquisition. We believe it will facilitate an acceleration of our organic growth story and cement Lesaka’s position as southern Africa’s leading fintech,” said Lesaka group chairperson Ali Mazanderani.
He added that the company’s operating profit for the period under review had improved, swinging from a loss of R33m in the same quarter last year to a profit R15m this year. Lesaka also lowered its net debt to adjusted Ebitda from 4.2 times to 2.6 times.
Cash and cash equivalents closed the period at $55.2m (R1.03bn), comprised of US dollar-denominated balances of $3.4m, about R942.2m in rand balances, as well as other currency deposits, primarily Botswana pula worth $2m.
The company attributed the increase in its cash balances to positive contributions from its merchant and consumer operations, as well as utilisation
of borrowings facilities to fund operations. This had been partially offset by the utilisation of cash reserves to fund scheduled and other repayments of borrowings, the purchase of ATMs and vaults in addition to investments in working capital.
The merchants segment raised revenues by 8% to $121m, attributable to an “increase in prepaid airtime vouchers sold and other value-added services provided” amid “lower hardware sales” for its Point-of-Sale distribution business.
The consumer division had revenues of $17.9m for the March quarter, a significant 19% upswing on the prior year contrasting period.
The increased profitability was partially
offset by higher insurance-related claims and higher employee-related expenses, as well as the year-over-year impact of inflationary increases on expenses.
Employee-related costs in relation to employees specifically hired for group roles and costs related directly to managing the US-listed entity drove up expenses for the period.
There were also 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.
“Group costs for fiscal 2024 decreased modestly compared with
the prior period due to lower external audit, legal fees and lower provision for executive bonuses, which was partially offset by higher employee (base salary) costs, consulting fees and travel expenses,” explained the company.
After consummation of the Adumo acquisition, Lesaka expects to have an ecosystem serving some 1.7 million active consumers and about 119 000 merchants.
This means that the South African fintech will be processing more than R250bn in throughput comprised of R40bn in card payments, R100bn in value-added services payments that include prepaid airtime, data, electricity, money transfers and DStv payments.