Lesaka Technologies Inc: Form 10-Q for the period ended Sep 30, 2025

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended June 30, 2025,

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, 2025. 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

This item generally discusses our results for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.

Merchant Division

Performance in Merchant has been driven by:

Merchant acquiring

Merchant acquiring includes 87,847 devices deployed under the Adumo, Card Connect and Kazang brands.

Q1 2026

Q1 2025

Q1 2024

Q1 2026 vs

Q1 2025

Number of devices in deployment at period end

87,847

53,450

46,600

64%

Total throughput for the period (ZAR billions)

9.2

4.2

3.6

117%

2026 is inclusive of approximately 29,000 devices deployed by Adumo 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 9.2 billion for the quarter, driven mainly by the inclusion of Adumo in the first quarter of

fiscal 2026 and 10% year-on-year growth attributable to Kazang Pay.

Software

Our software solutions are offered through GAAP.

Q1 2026

Q1 2025

Q1 2024

Q1 2026 vs

Q1 2025

Number of GAAP sites at period end

9,772

n.a.

n.a.

nm

Approximate ARPU per site (ZAR)

(1)

3,184

n.a.

n.a.

nm

(1) ARPU is calculated on a revenue per site basis, as monthly figure based on a three-month rolling average for the quarter

ending September 30, 2025.

GAAP was acquired on October 1, 2024.

Monthly ARPU per site combines hardware on a rental basis and software subscription revenue, but excludes the

merchant acquiring revenue when our software customers utilize our merchant acquiring payment solutions.

Cash

Q1 2026

Q1 2025

Q1 2024

Q1 2026 vs

Q1 2025

Number of devices in deployment at period end

4,656

4,484

4,411

4%

Cash settlements (throughput) for the period (ZAR billions)

27.5

28.7

27.6

(4%)

Our cash business is experiencing differing secular trends in its two distinct markets:

Small-to-Medium merchant sector: Ongoing decline in cash usage with flat net growth in vault activity in a more mature

digital economy where cash is increasingly displaced by digital alternatives.

Micro-merchant market: High cash prevalence and increasing digital adoption is supporting strong growth in the numbers of

devices and cash settlements. Throughput in our vaults placed in the micro-merchant sector increased more than 70% to ZAR

4.9 billion in the first quarter of fiscal 2026, representing 18% of total vault throughput for the year compared to 10% a year

ago. This is fast becoming a meaningful contributor to our cash offering.

Lending

Our lending solutions are offered to merchants through Capital Connect and Adumo Capital. Adumo Capital is a joint venture

with Retail Capital, a division of Tyme Bank, with a 50:50 profit share.

Q1 2026

Q1 2025

Q1 2024

Q1 2026 vs

Q1 2025

Total lending origination volume for the period (ZAR millions)

(1)

201

166

173

21%

Total net loan book outstanding at period end (ZAR millions)

(1)

470

273

280

72%

(1) Amounts reflected above includes 100% of Adumo Capital’s credit disbursed and net loan book.

The first quarter of fiscal 2026 is inclusive of lending origination volume (for three months) and the net loan book 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.

Capital Connect comprises more than 70% of our merchant lending activity.

ADP

ADP in our Merchant Division includes prepaid solutions (airtime, data, electricity and gaming), bill payments, IMT and supplier

enabled payments. IMT and bill payments are included in the supplier enabled throughput shown below, with supplier payments

representing the most significant contributor to ADP throughput in the Merchant Division.

Q1 2026

Q1 2025

Q1 2024

Q1 2026 vs

Q1 2025

Number of devices in deployment at period end

97,519

89,044

77,111

10%

Total throughput for the period (ZAR billions)

11.9

9.9

7.2

21%

Prepaid solutions throughput for the period (ZAR billions)

4.9

4.7

4.3

4%

Supplier enabled payments throughput for the period (ZAR

billions)

7.1

5.2

2.9

37%

We had 97,519 devices deployed as of September 30, 2025, representing a 10% year-on-year growth. 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 21% to ZAR 11.9 billion year-on-year, driven by a 37% increase in supplier enabled

payments.

Unification of Merchant under Lesaka brands

Over the past three years, we have brought together Kazang and Connect and subsequently added Adumo and GAAP to our

Merchant Division. In 2025, we accelerated the integration of our micro-merchant and merchant businesses as we build an integrated,

multi-product platform serving merchants of all sizes. The unification of our Merchant Division’s operations and the realignment of

these brands under a single Lesaka identity is expected to optimize our Merchant Division.

Consumer Division

Our consumer base includes South African grant beneficiaries and other EasyPay Payouts cardholders.

Our grant beneficiary base includes both permanent and non-permanent grant beneficiaries. As the division has evolved,

both sub-categories of consumers are revenue generating and hence the combined consumer base metrics shown below

are most appropriate to measure the performance of the division financially and operationally. Although historically we

have shown these metrics separately, it is maintained that approximately 90% of the active consumer base are permanent

grant beneficiaries.

Our definition of an active consumer is any EPE consumer that has made a voluntary transaction (debit and/or credit)

within the last 90 days. Consumers who may be charged a monthly banking fee but have not made a voluntary transaction

in the last 90 days would not be considered an active consumer.

The definition of an active consumer reflects the revenue generating engagement of our entire consumer base and more

accurately tracks our current and future monetization strategy for the division.

We will continue to show the EasyPay Payouts separately given this follows a different monetization model.

Q1 2026

Q1 2025

Q1 2024

Q1 2026 vs

Q1 2025

Transactional accounts (banking) - EPE

Number of active consumers at period end (millions)

1.9

1.6

1.3

24%

Approximate net activations for the period (thousands)

49

24

27

103%

Lending - EasyPay Loans

Approximate number of loans originated during the period

(thousands)

354

286

222

24%

Lending originations for the period (ZAR millions)

820

462

353

77%

Loan portfolio outstanding at period end (ZAR millions)

(1)

1,116

564

423

98%

Insurance - EasyPay Insurance

Approximate number of insurance policies written during the

period (thousands)

57

49

38

16%

Total active insurance policies on book at period end

(thousands)

589

466

359

27%

Gross written premium for the period (ZAR millions)

120

87

64

38%

Average revenue per consumer per month, in the quarter,

(active customers) (ZAR)

(2)

89

78

73

13%

EasyPay Payouts

Approximate number of active cardholders (thousands)

211

n.a.

n.a.

nm

Approximate load value for the period (ZAR millions)

(3)

125

n.a.

n.a.

nm

(1) Gross loan book, before provisions.

(2) ARPU is calculated on a revenue per active consumer basis whereby an active consumer can be both a permanent and non-

permanent grant. ARPU is a monthly figure based on a 3-month rolling average for the quarter ended September 30, 2025.

(3) Represents a 3-month period for quarter one fiscal 2026. With the Adumo transaction closing on October 1, 2024, the impact

is not included in the prior period comparatives.

Driving customer acquisition, supported by increased focus on customer service using enhanced digital capabilities.

o

Net active account growth of approximately 49,000 for the period, compared to approximately 24,000 a

y

ear ago for the equivalent period.

o

Growth in active consumers driven by strong performance from sales and distribution teams, with further

product enhancements made to the lending product driving growth.

o

Development of a proprietary onboarding engine which allows for digital onboarding for banking, lending

and insurance products at the point of engagement. Utilizing the new onboarding engine has improved

operational efficiencies and driven higher cross-sell penetration for both existing consumers and new

consumer onboards.

EasyPay Loans

o

We originated approximately 354,000 loans during the period, with our loan portfolio outstanding, increasing 98%

to ZAR 1.1 billion as of September 30, 2025, compared to ZAR 564 million as of September 30, 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 active consumer base and improved cross-selling initiatives

driven by the launch of our new onboarding engine.

o

The credit loss ratio, calculated as the loans written off over the last 12 months as a percentage of the average gross

loan book over the last 12 months is approximately 6.5% on an annualized basis, compared to the same period a

year ago (Q1 2025). As the lending product mix scales to the larger and longer tenor loan product, we expect a

modest but non-material increase in the credit loss ratio.

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 consumer base as of

September 30, 2025, compared to 34% as of September 30, 2024.

o

Approximately 57,000 new policies were written in the period, increasing 16% compared to the same period a year

ago (Q1 2025).

ARPU

o

ARPU for our active consumer base has increased to approximately ZAR 89 per month from approximately ZAR

78 compared to the same period a year ago (Q1 2025). ARPU reflects the definition of an active consumer and

includes permanent and non-permanent grant beneficiaries.

EasyPay Payouts

o

The number of active card holders was approximately 211,000 at the period end, with a load value of approximately

ZAR 125 million.

o

Adumo Payouts was acquired on October 1, 2024 and subsequently rebranded to EasyPay Payouts.

Enterprise Division

ADP includes prepaid solutions and bill payments through channels such as retailer distribution networks and online banking

apps.

Q1 2026

Q1 2025

Q1 2024

Q1 2026 vs

Q1 2025

ADP

Total throughput for the period (ZAR billions)

12

11

9

13%

Utilities

(1)

Total throughput for the period (ZAR millions)

396.3

n.a.

n.a.

nm

Approximate number of active meters (thousands)

270

n.a.

n.a.

nm

(1) The Recharger transaction closed on March 3, 2025.

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, 2025:

Recoverability of Goodwill;

Intangible Assets Acquired Through Acquisitions;

Revenue recognition – principal versus agent considerations;

Finance Loans Receivable and Allowance for Credit Losses; and

Valuation of investment in Cell C.

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 September 30, 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 September 30, 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

Year ended

September 30,

June 30,

2025

2024

2025

ZAR : $ average exchange rate

17.6379

17.9601

18.1644

Highest ZAR : $ rate during period

18.1650

18.5100

19.6350

Lowest ZAR : $ rate during period

17.2702

17.1144

17.1144

Rate at end of period

17.2702

17.1808

17.7554

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 months ended September 30, 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

Year ended

Table 2

September 30,

June 30,

2025

2024

2025

Income and expense items: $1 = ZAR

17.6654

17.7176

17.9031

Balance sheet items: $1 = ZAR

17.2702

17.1808

17.7554

We have translated the results of operations and operating segment information for the three months ended September 30, 2025

and 2024, provided in the tables below using the actual average exchange rates per month (i.e. for each of July 2025, August 2025,

and September 2025 for the first quarter of fiscal 2026) 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

u

nderstand the changes in the underlying trends of our business.

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 audited

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 securi ties, fair

value adjustments to currency options), interest income, interest expense, income tax expense or loss from equity-accounted

investments to our reportable segments. For fiscal 2025, we included an intercompany interest expense in our Consumer Segment

Adjusted EBITDA. 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.

Group Adjusted EBITDA represents Segment Adjusted EBITDA after deducting group costs. Refer also “Results of

Operations—Use of Non-GAAP Measures” below.

In fiscal 2025 we closed the acquisitions of Adumo and Recharger and have integrated their businesses into our ours. Our fiscal

2025 financial results for the three months ended September 30, 2024, do not include these businesses because we acquired Adumo

on October 1, 2024 and Recharger on March 3, 2025.

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 Grfiscaoup costs. Inter-segment revenue eliminations are included in

Eliminations.

First quarter of fiscal 2026 compared to first quarter of fiscal 2025

The following factors had a significant impact on our results of operations during the first quarter of fiscal 2025 as compared with

the same period in the prior year:

Higher revenue:

Our revenues increased 12% in U.S. dollars and 10% in ZAR, primarily due to the inclusion of Adumo and

Recharger, higher transaction, insurance and lending revenues in Consumer, which was partially offset by a decrease in

prepaid airtime revenue in Merchant;

Operating income increase:

Operating income increased primarily due to strong performance by Consumer and the

contribution from Adumo and Recharger , which was partially offset by an increase in amortization of acquisition-related

intangible assets related to the acquisition of Adumo and Recharger and higher operating costs;

Lower net interest charge:

Net interest charge decreased to $4.36 million (ZAR 76.9 million) from $4.45 million (ZAR 79.8

million) primarily due to a lower interest expense following lower interest rates and the exclusion of interest expense incurred

under our borrowing arrangements related to our Consumer lending book in the first quarter of fiscal 2026 compared with

2025. On a comparable basis the equivalent interest expense related to the Consumer lending book for the first quarter of

fiscal 2025 was included in interest expense ; and

Foreign exchange movements:

The U.S. dollar was flat against the ZAR during the first quarter of fiscal 2026 compared to

the prior period.

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 September 30,

2025

2024

$ ’000

$ ’000

change

Revenue

171,448

153,568

12%

Cost of goods sold, IT processing, servicing and support

118,440

118,909

(0%)

Selling, general and administration

39,637

26,698

48%

Depreciation and amortization

12,894

6,276

105%

Transaction costs related to Adumo, Recharger and Bank Zero acquisitions

94

1,730

(95%)

Operating income (loss)

383

(45)

nm

Loss on impairment of equity-accounted investment

584

nm

Interest income

539

586

(8%)

Interest expense

4,898

5,032

(3%)

Loss before income tax (benefit) expense

(4,560)

(4,491)

2%

Income tax (benefit) expense

(146)

78

nm

Net loss before earnings from equity-accounted investments

(4,414)

(4,569)

(3%)

Earnings from equity-accounted investments

27

nm

Net loss

(4,414)

(4,542)

(3%)

Add net loss attributable to non-controlling interest

117

nm

Net loss attributable to us

(4,297)

(4,542)

(5%)

Table 4

In South African Rand

Three months ended September 30,

2025

2024

ZAR ’000

ZAR ’000

change

Revenue

3,023,546

2,756,877

10%

Cost of goods sold, IT processing, servicing and support

2,089,010

2,134,828

(2%)

Selling, general and administration

698,672

479,183

46%

Depreciation and amortization

227,366

112,660

102%

Transaction costs related to Adumo, Recharger and Bank Zero acquisitions

1,762

30,491

(94%)

Operating income (loss)

6,736

(285)

nm

Loss on impairment of equity-accounted investment

10,342

nm

Interest income

9,496

10,517

(10%)

Interest expense

86,410

90,328

(4%)

Loss before income tax (benefit) expense

(80,520)

(80,096)

1%

Income tax (benefit) expense

(2,572)

1,402

nm

Net loss before earnings from equity-accounted investments

(77,948)

(81,498)

(4%)

Earnings from equity-accounted investments

475

nm

Net loss

(77,948)

(81,023)

(4%)

Add net loss attributable to non-controlling interest

2,058

nm

Net loss attributable to us

(75,890)

(81,023)

(6%)

Revenue increased by $17.9 million (ZAR 266.7 million) or 11.6% (in ZAR 9.7%). The increase was primarily due to the

inclusion of Adumo and Recharger, 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 (including interest) following higher

loan originations , which was partially offset by a decrease in the volume of prepaid airtime sold. 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 $0.5 million (ZAR 45.8 million) or 0.4% (in ZAR 2.1%),

primarily due to the decrease in the prepaid airtime costs, which was partially offset by the inclusion of Adumo, an increase in lending

r

elated expenditures (including interest expense) and higher insurance-related claims and third-party transaction fees.

Selling, general and administration expenses increased by $12.9 million (ZAR 219.5 million), or 48.5% (in ZAR 45.8%). The

increase was primarily due to the inclusion of Adumo and Recharger; higher employee-related expenses (including the impact of

annual salary increases), an increase in the allowance for credit losses as a result of higher lending activities by Consumer, and the

year-over-year impact of inflationary increases on certain expenses, which was partially offset by lower stock-based compensation

charges.

Depreciation and amortization expense increased by $6.6 million (ZAR 114.7 million), or 105.4% (101.8%). 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, Recharger and Bank Zero acquisitions during the first quarter of fiscal 2025 included costs

incurred related to the Adumo acquisition which closed in October 2024. We did not incur significant transaction costs during the first

quarter of fiscal 2026. Refer to Note 2 to our unaudited condensed consolidation financial statements for additional information.

Our operating income (loss) margin for the first quarter of fiscal 2026 and 2025 was 0.2% and (0.0)%, respectively. We discuss

the components of operating loss margin under “—Results of operations by operating segment.”

We did not record any changes in the fair value of equity interests in Cell C during the first quarter of fiscal 2026 or 202 5,

respectively, or any fair value adjustments for MobiKwik during the first quarter of fiscal 2025. 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 Cell C.

Interest on surplus cash of was $0.5 million (ZAR 9.5 million) compared with $0.6 million (ZAR 10.5 million) during the first

quarter of fiscal 2025, and decrease due to lower interest rates.

Interest expense decreased to $4.9 million (ZAR 86.4 million) from $5.0 million (ZAR 90.3 million). In ZAR, the decrease was

primarily due to lower interest rates and the exclusion of interest expense incurred under our borrowing arrangements related to our

Consumer lending book in the first quarter of fiscal 2026 compared with 2025. On a comparable basis the equivalent interest expense

related to the Consumer lending book for the first quarter of fiscal 2025 was included in interest expense.

First quarter of fiscal 2026 income tax benefits was $0.1 million (ZAR 2.6 million) compared to income tax expense of $0.1

million (ZAR 1.4 million) in fiscal 2025. Our effective tax rate for fiscal 2025 was impacted by the tax expense recorded by our

profitable South African operations and non-deductible expenses (including transaction-related expenditures). The income tax benefit

was impacted by a higher deferred tax benefit as a result of the reduction in the useful lives of certain of our brand and trademark

intangible assets which has resulted in an increase in amortization expense during the three months ended September 30, 2025.

Our effective tax rate for fiscal 2025 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 (in transaction-related

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.

Results of operations by operating segment

The composition of revenue and the contributions of our business activities to operating loss are illustrated below:

Table 5

In United States Dollars

Three months ended September 30,

2025

% of

2024

% of

% change

Operating Segment

$ ’000

total

$ ’000

total

Consolidated revenue:

Merchant

126,950

74%

123,651

81%

3%

Consumer

30,576

18%

21,072

14%

45%

Enterprise

14,853

9%

11,883

8%

25%

Subtotal: Operating segments

172,379

101%

156,606

103%

10%

Eliminations

(931)

(1%)

(3,038)

(3%)

(69%)

Total consolidated revenue

171,448

100%

153,568

100%

12%

Group Adjusted EBITDA:

Merchant

(1)

9,190

60%

7,554

81%

22%

Consumer

(1)

8,493

55%

4,396

47%

93%

Enterprise

(1)

1,269

8%

362

4%

251%

Group costs

(3,611)

(23%)

(2,949)

(32%)

22%

Group Adjusted EBITDA (non-GAAP)

(2)

15,341

100%

9,363

100%

64%

(1) Segment Adjusted EBITDA for the three months ended September 30, 2025, includes retrenchment costs of $0.2 million for

Merchant and Consumer of $0.1 million. Segment Adjusted EBITDA Merchant and Segment Adjusted EBITDA Consumer include

retrenchment costs of $0.01 million and $0.06 million, respectively, for the first quarter of fiscal 2025.

(2) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-

GAAP Measures”.

Table 6

In South African Rand

Three months ended September 30,

2025

% of

2024

% of

% change

Operating Segment

ZAR ’000

total

ZAR ’000

total

Consolidated revenue:

Merchant

2,239,035

74%

2,220,022

81%

1%

Consumer

539,006

18%

378,063

14%

43%

Enterprise

261,904

9%

213,997

8%

22%

Subtotal: Operating segments

3,039,945

101%

2,812,082

103%

8%

Eliminations

(16,399)

(1%)

(55,205)

(3%)

(70%)

Total consolidated revenue

3,023,546

100%

2,756,877

100%

10%

Group Adjusted EBITDA:

Merchant

(1)

162,076

60%

135,510

81%

20%

Consumer

(1)

149,710

55%

78,681

47%

90%

Enterprise

(1)

22,407

8%

6,568

4%

241%

Group costs

(63,619)

(23%)

(52,654)

(32%)

21%

Group Adjusted EBITDA (non-GAAP)

(2)

270,574

100%

168,105

100%

61%

(1) Segment Adjusted EBITDA for the three months ended September 30, 2025, includes retrenchment costs of ZAR 0.2 million

for Merchant and Consumer of ZAR 3.8 and ZAR 2.6 million for the first quarter of fiscal 2026. Segment Adjusted EBITDA Merchant

and Segment Adjusted EBITDA Consumer include retrenchment costs of ZAR 0.2 million and ZAR 1.1 million, respectively, for the

first quarter of fiscal 2025.

(2) 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, which was partially offset by lower ADP revenue earned,

including from lower prepaid airtime volumes sold. While overall ADP volumes increased, prepaid airtime revenue contributes a

significant portion of our overall ADP revenue, and therefore a drop in the volume of the prepaid airtime revenue impacts our reported

revenue generated. The increase in Segment Adjusted EBITDA is primarily due the inclusion of the contribution from Adumo, lower

cost of goods sold, IT processing, servicing and support and lower employment-related expenditures, which was partially offset by

higher operating expenses incurred. We record 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.

Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for the first quarter of

fiscal 2026 and 2025 was 7.2% and 6.1%, 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 19.9 million; Sep 2024:

ZAR 14.9 million ) incurred to fund our lending book and the year-over-year impact of inflationary increases on certain expenses.

Our Segment Adjusted EBITDA margin for the first quarter of fiscal 2026 and 2025 was 27.8% and 20.9%, respectively.

Enterprise

Segment revenue and Segment Adjusted EBITDA increased primarily due to the inclusion of Recharger.

Our Segment Adjusted (loss) EBITDA margin for the first quarter of fiscal 2026 and 2025 was 8.54% and 3.0%, 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 the first quarter of fiscal 2026 increased compared with the prior period due to offset by higher employee

costs resulting from an increase in the number of individuals allocated to group costs and base salary adjustments and higher consulting

and legal fees, which was partially offset by lower bonus expense.

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 U.S. 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.

Non-GAAP Measures

Group Adjusted EBITDA is earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted for non-

operational transactions (including loss on impairment/ 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 included an

intercompany interest expense in our Consumer Segment Adjusted EBITDA for three months ended September 30, 2024. 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 U.S. GAAP net loss attributable to Lesaka to Group Adjusted EBITDA:

Table 7

Three months ended

September 30,

2025

2024

$ ’000

$ ’000

Loss attributable to Lesaka - GAAP

(4,297)

(4,542)

Add net loss attributable to non-controlling interest

117

Net loss

(4,414)

(4,542)

Earnings from equity accounted investments

(27)

Net loss before earnings from equity-accounted investments

(4,414)

(4,569)

Income tax (benefit) expense

(146)

78

Loss before income tax expense

(4,560)

(4,491)

Interest expense

4,898

5,032

Interest income

(539)

(586)

Net loss on impairment of equity-accounted investment

584

Operating income (loss)

383

(45)

PPA amortization (amortization of acquired intangible assets)

9,134

3,747

Depreciation and amortization

3,760

2,529

Stock-based compensation charges

1,861

2,377

Interest adjustment

(831)

Once-off items

(1)

267

1,805

Unrealized gain FV for currency adjustments

(64)

(219)

Group Adjusted EBITDA - Non-GAAP

15,341

9,363

(1) The table below presents the components of once-off items for the periods presented:

Table 8

Three months ended

September 30,

2025

2024

$ ’000

$ ’000

Transaction costs

173

75

Transaction costs related to Adumo and Recharger acquisitions and certain compensation costs

94

1,730

Total once-off items

267

1,805

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 transaction costs related to the acquisition of Recharger over a number of

quarters, and the transactions are generally non-recurring.

Liquidity and Capital Resources

As of September 30, 2025, our cash and cash equivalents were $72.2 million and comprised of U.S. dollar-denominated balances

of $1.3 million, ZAR-denominated balances of ZAR 1.2 billion ($69.2 million), and other currency deposits, primarily Botswana pula,

of $1.7 million, all amounts translated at exchange rates applicable as of September 30, 2025. The decrease in our unrestricted cash

balances from June 30, 2025, was primarily due to application of the proceeds received from the disposal of MobiKwik to reduction

our general banking facilities, the utilization of cash reserves to fund certain scheduled repayments of our borrowings, which was

partially offset by the positive contribution from our operating segments.

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, 2025, as well as Note 9 to these condensed consolidated financial statements for additional information

related to our borrowings.

Our ability to make payments on our indebtedness and to fund our operations may be dependent upon the operating income and

the distribution of funds from our subsidiaries. However, as local laws and regulations and/or the terms of our indebtedness restrict

certain of our subsidiaries from paying dividends and transferring assets to us, there is no assurance that our subsidiaries will be

permitted to provide us with sufficient dividends, distributions or loans when necessary.

We will make a cash payment of ZAR 175.0 million ($10.1 million) in March 2026 related to the cash portion of the deferred

consideration due to the seller of Recharger. We are required to make a scheduled debt repayment of ZAR 150 million ($8.7 million)

in February 2026. We expect to pay ZAR 100 million ($5.8 million) payment on closing of the Bank Zero transaction. All amounts

translated at exchange rates as of September 30, 2025.

Available short-term borrowings

Summarized below are our short-term facilities available and utilized as of September 30, 2025:

Table 9

RMB GBF

RMB Other

Nedbank

$ ’000

ZAR ’000

$ ’000

ZAR ’000

$ ’000

ZAR ’000

Total short-term facilities available, comprising:

Total overdraft

40,584

700,901

Indirect and derivative facilities

(1)

5,831

100,700

9,065

156,556

Total short-term facilities available

40,584

700,901

5,831

100,700

9,065

156,556

Utilized short-term facilities:

Overdraft

12,488

215,671

Indirect and derivative facilities

(1)

1,917

33,099

122

2,104

Total short-term facilities utilized

12,488

215,671

1,917

33,099

122

2,104

Interest rate, based on South African prime rate

10.00%

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 ($208.1 million translated at exchange rates as of

September 30, 2025) as described in Note 12. 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.

As of September 30, 2025, we also have a revolving credit facility, of ZAR 400.0 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 September 30, 2025, includes restricted cash of $0.1 million that has been ceded and pledged.

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

First quarter

Net cash provided by operating activities during the first quarter of fiscal 2026 was $8.9 million (ZAR 157.6 million) compared

to net cash utilized of $4.1 million (ZAR 73.3 million) during the first quarter of fiscal 2025. Excluding the impact of income taxes,

our cash provided by operating activities during the first quarter of fiscal 2026 was positively impacted by improved contribution from

our all of our operating segments, fewer quarterly movements within our Merchant and Enterprise businesses related to quarter-end

transaction processing activities compared to the prior quarter end, which was partially offset by the impact of cash utilized for the

significant net growth in our Consumer finance loans receivable books .

During the first quarter of fiscal 2026, we paid second provisional South African tax payments of $0.3 million (ZAR 4.9 million)

primarily related to certain of our recently acquired subsidiaries that have not yet aligned their tax year to our June 30 tax year end.

We also paid taxes related to prior tax years in South Africa of $0.3 million (ZAR 5.8 million). We paid taxes totaling $0.1 million in

other tax jurisdictions, primarily in Botswana during the first quarter of fiscal 2026. During the first quarter of fiscal 2025, we paid

taxes totaling $0.1 million in other tax jurisdictions, primarily in Botswana.

Taxes paid (refunded) during the first quarter of fiscal 2026 and 2025 were as follows:

Table 10

Three months ended September 30,

2025

2024

2025

2024

ZAR

ZAR

’000

’000

’000

’000

First provisional payments

46

821

Second provisional payments

284

4,936

Taxation paid related to prior years

330

5,763

Tax refund received

(20)

(113)

(349)

(2,053)

Total South African taxes paid

640

(113)

11,171

(2,053)

Foreign taxes paid

70

68

1,243

1,213

Total tax paid (refunded)

710

(45)

12,414

(840)

Cash flows from investing activities

First quarter

Cash used in investing activities for the first quarter of fiscal 2026 included capital expenditures of $4.0 million (ZAR 70.3

million), primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $1.1 million (ZAR 20.1 million),

primarily related to the capitalization of development costs, during the first quarter of fiscal 2026.

Cash used in investing activities for the first quarter of fiscal 2025 included capital expenditures of $4.0 million (ZAR 70.3

million), primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $0.2 million (ZAR 3.1 million),

primarily related to the capitalization of development costs, during the first quarter of fiscal 2025.

Cash flows from financing activities

First quarter

During the first quarter of fiscal 2026, we utilized $28.0 million from our South African general banking facilities to partially

fund the growth of our Consumer lending book, and repaid $40.7 million utilizing the funds received from the disposal of MobiKwik.

We utilized $2.8 million of our long-term borrowings to finance the acquisition of POS devices and vehicles to fund our Merchant

lending book. We repaid $1.1 million of long-term borrowings and in accordance with our repayment schedule under our asset-based

facilities. We also paid fees of $0.03 million related the September 2025 refinance of our facility to fund the growth of Merchant

lending book.

During the first quarter of fiscal 2025, we utilized $23.9 million from our South African overdraft facilities to fund our ATMs

and our cash management business through Connect, and repaid $31.0 million of those facilities. We utilized $0.8 million of our long-

term borrowings to fund the acquisition of certain capital expenditures and for working capital requirements. We repaid $5.5 million

of long-term borrowings in accordance with our repayment schedule as well as to settle a portion of our revolving credit facility

utilized.

Off-Balance Sheet Arrangements

We have no off -balance sheet arrangements.

Capital Expenditures

We expect capital spending for the second quarter of fiscal 2026 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 first quarter of fiscal 2026 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 September 30, 2025, of $0.1

m

illion. We expect to fund these expenditures through internally generated funds and available facilities.

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 September 30, 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 September 30, 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 September 30, 2025, are shown.

The selected 1% hypothetical change does not reflect what could be considered the best- or worst-case scenarios.

Table 11

As of September 30, 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

22,926

1%

25,142

(1%)

20,709

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 September 30, 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, 2025,

material weaknesses in our internal control over financial reporting related to:

(1)

Our Consumer lending process, specifically insufficient risk assessment and monitoring activities relating to changes in

systems and processes, insufficient controls over internal information and information from service organizations,

insufficient design and implementation of information technology general controls (“ITGCs”), controls over service

organizations, resulting in ineffective process level, including a lack of validation of the completeness and accuracy of

information used within the process;

(2)

Our payroll process, specifically insufficient risk assessment and monitoring activities relating to changes over the transfer

of ownership to the centralized payroll processes, insufficient controls over information from service organizations,

insufficient design and implementation of ITGCs, controls over service organizations resulting in ineffective process level

including a lack of validation of the completeness and accuracy of information used within this process;

(3)

Our annual goodwill impairment process, specifically related to insufficient risk assessments, and ineffective design and

implementation of controls resulting in ineffective process level controls;

(4)

Our business combination process, specifically insufficient risk assessments, and ineffective design and implementation of

controls over the purchase price allocation of the Adumo and Recharger acquisitions including insufficient controls over

information resulting in ineffective process level controls including a lack of validation of the completeness and accuracy of

information used;

(5)

Our revenue recognition process relating to prepaid airtime sold and processing fees relating to certain agreements,

specifically insufficient risk assessment and ineffective design and implementation of controls related to our judgement over

revenue recognized either as principal versus as agent resulting in ineffective controls and a material misstatement as well

as the requirement to restate revenue, cost of goods sold, IT processing, servicing and support and related disclosures for all

quarters as described below;

(6)

Our journal entry process, specifically relating to insufficient risk assessments, and ineffective design and implementation

of controls including insufficient controls over information resulting in ineffective process level controls including a lack of

validation of the completeness of the journal entry population and a lack of validation of the completeness and accuracy of

information used within the process; and

(7)

An insufficient number of experienced and trained resources and an insufficient understanding of the application of internal

controls over financial reporting across the Southern African businesses resulting in ineffective design, implementation of

internal controls.

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, 2025 (as described above), the executive chairman

and the group chief financial officer concluded that our disclosure controls and procedures were not effective as of September 30,

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 U.S. GAAP.

Remediation Plan

Management has made progress and continues to actively work on remediating the identified material weaknesses and remains

committed to remediating the material weaknesses in a timely manner. Our remediation process is ongoing and includes, but is not

limited to, the following steps:

(1)

developing and implementing a comprehensive remediation plan that includes specific actions aimed at embedding

accountability with control owners related to the operation and importance of internal controls over financial reporting,

including the principles and requirements of each control, with a focus on the impacted processes, controls over service

organizations, ITGCs, other process level controls;

(2)

mandating improved risk assessment procedures with governance requirements upon implementing new systems within our

company together with the design, implementation and monitoring of control activities;

(3)

the recruitment of additional appropriately skilled resources across the Finance and Risk and Compliance disciplines coupled

with the further upskilling and training of existing resources responsible for the execution of key controls as well as a focus

on a greater degree of automation of controls throughout the organization;

(4)

embedding of controls compliance in the key performance indicators of senior executives across the business; and

(5)

collaborating closely with internal and external assurance partners to ensure the robustness of our remediation plan.

The remediation plan with respect to the material weaknesses identified for the year ended June 30, 2025 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 September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control

o

ver financial reporting.

See “Item 1A RISK FACTORS” in Part I of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, 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. 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, 2025.