Lesaka Technologies Inc: Form 10-Q for the period ended Mar 31, 2026
Filed with the SEC on May 6, 2026 and accepted by EDGAR at May 6, 2026, 20:21 ET.
Management's discussion and analysis
As filed, 85,034 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
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 third quarter of fiscal 2026 compared to the third quarter of fiscal 2025.
Group
On February 6, 2026, Lesaka acquired 100% of the shares in MobileMart, a South African distributor of ADP, specifically
prepaid solutions. Leveraging MobileMart’s existing direct integrations into multiple mobile network operators and suppliers, aims to
enhance the unit economics of Merchant and Enterprise’s ADP product offering.
On March 27, 2026, Lesaka amended its Working Capital Facility agreement, increasing the size of its general banking facility
by ZAR 400 million to approximately ZAR 1.1 billion. The amended agreement also includes additional operating subsidiaries as
borrowers, enabling those entities to access the facility directly and better aligning the financing structure with the Group’s current
operating structure. The increased facility provides additional liquidity and financial flexibility to support the Group’s operations and
growth initiatives.
During the quarter, the Merchant division exited its ancillary ATM business to better align resources with the core cash
management offering and merchant lending ecosystem. The ATM segment was determined to be non-core due to its limited financial
contribution and lack of operational synergy with the Merchant division’s primary product suite. This strategic wind-down allows for
the reallocation of capital toward high-growth, data-driven merchant services.
Merchant Division
We manage our Merchant operations through two distinct channels: Community, which focuses on local, high-growth businesses
acquired through direct, face-to-face sales and rapid conversion cycles; and Corporate, which serves large -scale organizations and
franchises requiring customized, multi-product solutions through a strategic, long-term sales process.
In the second quarter of fiscal 2026, we introduced a refined reporting framework for the Merchant division to better represent the
primary drivers of our revenue and performance. Developed through a comprehensive review of our operational analytics, this
framework aligns our Merchant metrics, specifically active merchant count and blended ARPU with our Consumer division
to provide a holistic view of our ecosystem. We are treating this updated approach as a baseline for future comparisons to ensure
consistent reporting across our channels; as such, this transition may result in non-material inconsistencies with certain legacy metrics.
Our definition of an active merchant is any merchant that has made a voluntary transaction (debit and/or credit) within the last
90 days. Previously, we reported on a point of presence basis, which was more focused on our device estate. This updated methodology
of an active merchant reflects the revenue generating engagement of our entire Merchant base and more accurately tracks our current
and future monetization strategy for the division. Average Revenue Per User excludes once-off and non-recurring revenue such as
hardware and installation costs as well as revenue from international subsidiaries.
The underlying drivers of ARPU performance are based on cross-sell product penetration and the individual product related
KPI’s are shown below.
Q3 2026
Q3 2025
Q3 2026 vs
Q3 2025
Merchant Division
Active Merchants
132,003
124,522
6%
Merchant ARPU
(1)
(ZAR per month)
1,760
1,901
(7%)
Product Penetration Rate: 2 or more products
46%
46%
1%
Product Penetration Rate: 3 or more products
7%
10%
(25%)
Merchant Division: Merchant Acquiring
Active Merchants
73,863
67,652
9%
Total Payment Volume (“TPV”) (ZAR billions)
10.6
9.9
7%
Merchant Division: Software
Active Merchants
10,044
9,738
3%
Merchant Division: Cash Management
Active Merchants
4,881
4,844
1%
Total Payment Volume (“TPV”) (ZAR billions)
27.9
27.5
2%
Merchant Division: Lending
Lending Origination (ZAR millions)
227
291
(22%)
Net Lending Portfolio Outstanding (ZAR millions)
427
412
4%
Merchant Division: Alternative Digital Products
Active Merchants
102,019
96,213
6%
Total Payment Volume (“TPV”) (ZAR billions)
13.7
10.6
30%
Total Payment Volume (“TPV”) - Prepaid Solutions (ZAR billions)
5.8
5.3
10%
Total Payment Volume (“TPV”) - Supplier Enabled Payments (ZAR billions)
7.9
5.3
49%
Notes:
(1) ARPU is calculated on a revenue per active merchant basis based on a 3-month rolling average for the quarter ended March
31, 2026.
Notable developments within Merchant Division:
Within
Merchant Acquiring:
TPV attributable to Community segment increased to ZAR 3.8 billion for the third quarter of fiscal
2026 and 18% year-on-year growth.
Within Cash: Our business is experiencing differing secular trends in its two distinct markets. At the Corporate level, cash
continues to experience a downward trend of growth as digital payment adoption progressively increases in this sector. At the
Community segment, we continue to see growth for our cash management solutions, with cash TPV growth totalling to 52% year-on-
year. The Community segment now accounts for 20% of all processed cash TPV processed. This signals rapid growth among
m
erchants within this segment aiming to digitize their cash holdings.
Within ADP: Core to our device placement strategy is the decision to focus on quality business and optimizing our existing fleet.
This can be seen through the TPV growth which is primarily driven by our Supplier Enabled Payment product, delivering 49% year-
on-year growth. This enables Community Merchants to digitize their required payments to suppliers at competitive pricing and
introduces them to the Lesaka Merchant ecosystem. Within the Prepaid Solutions product TPV processed delivered -1% year-on-year
growth. We continue to see sustained margin pressures from wholesale providers of airtime, resulting in a contraction of Prepaid
Solutions TPV processed. Overall, our ADP TPV continues to grow above 20% on a year-on-year basis.
Within Software: Continued focus on deploying Unity, our cloud-based point-of-sale (POS) software offering to existing and
new merchants. Unity has a lower monthly cost than on-premises solutions, the increase in client numbers was offset by a decrease in
average revenue per user, resulting in core revenue remaining flat. Migration to Unity enables easier integration of our Software and
Acquiring propositions into one holistic bundle. Approximately 17% of our Software base currently use the Unity offering.
Within Lending: Lending originations decreased 22% year-over-year, primarily reflecting exceptionally high activity in the prior
year period which were driven by concentrated short-term sales initiatives that did not recur in the current period.
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.
The underlying drivers of ARPU performance are based on cross-sell product penetration and the individual product related
KPI’s are shown below.
Q3 2026
Q3 2025
Q3 2026 vs
Q3 2025
Consumer Division
Active Consumers (millions)
2.04
1.72
19%
ARPU
(1)
(ZAR per month)
99
83
19%
Product Penetration Rate: 2 or more products
50%
47%
8%
Product Penetration Rate: 3 products
20%
17%
18%
Consumer Division: Transactional Accounts
Active Consumers (millions)
2.04
1.72
19%
Net Activations (thousands)
39
68
(42%)
Consumer Division: Lending
Number of Loans Originated (thousands)
349
316
10%
Lending Origination (ZAR millions)
856
641
33%
Lending Portfolio Outstanding (ZAR millions)
(2)
1,399
808
73%
Consumer Division: Insurance
Number of Insurance Policies Written (thousands)
75
55
37%
Active Insurance Policies (thousands)
704
527
34%
Gross Written Premium (ZAR millions)
146
105
38%
Consumer Division: EasyPay Payouts
Approximate number of active cardholders (thousands)
251
232
8%
Approximate load value for the period (ZAR millions)
183
19%
Notes:
(1) 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 March 31, 2026.
(2) Gross loan book, before provisions.
Notable developments within Consumer Division:
Within Transactional Accounts: Growth in active consumers driven primarily by continued product and technology innovation,
including but not withstanding to Bonngwe (our proprietary CRM engine). These improvements to sales consultant and consumer
experiences have driven higher cross-sell penetration for both existing and new consumer onboards. We also continue to reassess our
distribution footprint and have progressed well in expanding both our branches and community service centers to further
enhance growth of our active consumer base.
Within Lending: We have continued to see strong growth for our lending products with our credit loss ratios
performance tracking below risk expectations. As we continue to scale the product, we have maintained our provisioning
policy at 6.5% of the outstanding lending portfolio and catered for the changes that have been implemented in the lending product
offering. This provisioning level is currently under review and we expect to implement a change in provisioning levels towards the end
of this fiscal year.
Within Insurance: Our insurance product delivered the highest gross written premium in a single quarter, since launching the
business at ZAR 146 million. Growth has been driven by continued adoption of our Bonngwe engine, enabling sales consultants to
cross-sell an insurance policy in an efficient manner. We have recently launched a new funeral insurance product offering to grant
beneficiary recipients outside of the Lesaka consumer base. We continue to perform research and development on our insurance
offerings to further develop our open-market insurance strategy.
Enterprise Division
Our Enterprise Division primarily consists of our ADP offering (which includes prepaid solutions and bill payments) through
channels such as retailer distribution networks and digital banking apps. Following the acquisition of Recharger on March 3, 2025, we
now report on the performance under the Utilities product.
The underlying drivers of performance are primarily based on TPV processed. Individual product related KPI’s are shown below.
Q3 2026
Q3 2025
Q3 2026 vs
Q3 2025
Enterprise Division: ADP
Total Payment Volume (“TPV”) (ZAR billions)
11.8
9.8
19%
Enterprise Division: Utilities
Active Meters (thousands)
368
332
11%
Total Payment Volume (“TPV”) (ZAR millions)
(1)
477
404
18%
Notes:
(1)
Utilities TPV combines historical performance of the Recharger business pre-acquisition. Recharger was acquired on March
3, 2025.
Notable developments within Enterprise Division:
Within ADP: We continue to see increased TPV for bill payments driven from increased usage from our existing bank channel
partners, which grew primarily from targeted marketing campaigns. Through the MobileMart transaction, we are able to secure direct
integrations into four primary mobile network operators (“MNO”) in South Africa providing access to preferential rates and supplier
availability. Additionally, we continue to see product expansion into our “4All” product, a multi-store of value voucher which can be
redeemed at 40+ partners. Although in early development, we are seeing growth in both volumes and average transaction values for
this product within ADP.
Within Utilities: Through the consolidation of product procurement to ADP, the bulk of Merchant electricity volumes are now
being processed via the Enterprise division reducing reliance on third-party providers. We expect to migrate all other subproducts of
ADP volume offered in Merchant via the Enterprise division by the end of this fiscal year.
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; and
Finance Loans Receivable and Allowance for Credit Losses.
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, 2026
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, 2026, 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,
2026
2025
2026
2025
2025
ZAR : $ average exchange rate
16.3674
18.5066
17.0463
18.1212
18.1644
Highest ZAR : $ rate during period
17.1588
19.1171
18.1650
19.1171
19.6350
Lowest ZAR : $ rate during period
15.7392
18.0985
15.7392
17.1144
17.1144
Rate at end of period
17.0568
18.3508
17.0568
18.3508
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 and nine months ended March 31, 2026 and 2025, 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,
2026
2025
2026
2025
2025
Income and expense items: $1 = ZAR
16.7685
18.4021
17.1282
18.0393
17.9031
Balance sheet items: $1 = ZAR
17.0568
18.3508
17.0568
18.3508
17.7554
We have translated the results of operations and operating segment information for the three and nine months ended March 31,
2026 and 2025, provided in the tables below using the actual average exchange rates per month (i.e. for each of January 2026, February
2026, and March 2026 for the third 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
understand 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 2026 we closed the acquisitions of Mobilemart and Atom and have integrated their businesses into ours. In fiscal 2025
we closed the acquisitions of Adumo and Recharger and have integrated their businesses into ours. Our fiscal 2025 financial results
for the three and nine months ended March 31, 2025, includes Adumo from October 1, 2024, and Recharger from 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 Group costs. Inter-segment revenue eliminations are included in Eliminations.
Third quarter of fiscal 2026 compared to third quarter of fiscal 2025
The following factors had a significant impact on our results of operations during the third quarter of fiscal 2026 as compared
with the same period in the prior year:
Higher revenue:
Our revenues increased 13.4% in U.S. dollars and increased by 0.2% in ZAR, primarily due to the inclusion
of Recharger and Mobilemart, as well as higher transaction, insurance and lending revenues in Consumer, which was partially
offset by lower prepaid airtime revenue;
Operating income increase:
Operating income increased primarily due to strong performance by Consumer and the
contribution from Recharger in Enterprise, which was partially offset by an increase in amortization of acquisition-related
intangible assets;
Lower net interest charge:
Net interest charge decreased to $3.3 million (ZAR 54.2 million) from $5.2 million (ZAR 96.7
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 third quarter of fiscal 2026 compared with
2025. On a comparable basis the equivalent interest expense related to the Consumer lending book for the third quarter of
fiscal 2025 was included in interest expense; and
Foreign exchange movements:
The U.S. dollar was 9% weaker against the ZAR during the third quarter of fiscal 2026
compared to the prior period, which positively impacted our U.S. dollar reported results.
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,
2026
2025
$ ’000
$ ’000
change
Revenue
183,051
161,450
13%
Cost of goods sold, IT processing, servicing and support
(A)
123,924
117,163
6%
Selling, general and administration
(A)(1)
41,751
34,270
22%
Depreciation and amortization
10,543
8,429
25%
Impairment loss
2,604
nm
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions
and certain compensation costs
144
1,222
(88%)
Operating income
4,085
366
1,016%
Change in fair value of equity securities
(378)
(20,421)
(98%)
Reversal of allowance for doubtful loan receivable
1,500
nm
Interest income
1,154
645
79%
Interest expense
(A)
4,477
5,869
(24%)
Income (Loss) before income tax expense (benefit)
1,884
(25,279)
nm
Income tax expense (benefit)
1,503
(2,934)
nm
Net Income (loss) before earnings from equity-accounted investments
381
(22,345)
nm
Earnings from equity-accounted investments
56
12
367%
Net Income (loss)
437
(22,333)
nm
(Add) Less net (loss) income attributable to non-controlling interest
(115)
20
nm
Net Income (loss) attributable to us
552
(22,353)
nm
(A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Cost of goods sold, IT
processing, servicing and support increased by $0.2 million, Selling, general and administration expense increased by $0.05 million, Operating
income decreased by $0.2 million, Interest expense increased by $0.09 million, and the subtotal captions from Income (Loss) before income
tax expense (benefit) to Net income (loss) attributable to Lesaka decreased by $0.3 million for the three months ended March 31, 2025.
(1) Selling, general and administration includes allowance for credit losses.
Table 4
In South African Rand
Three months ended March 31,
2026
2025
ZAR ’000
ZAR ’000
change
Revenue
2,994,536
2,987,226
0%
Cost of goods sold, IT processing, servicing and support
(A)
2,027,838
2,167,948
(6%)
Selling, general and administration
(A)(1)
683,095
633,810
8%
Depreciation and amortization
172,553
155,919
11%
Impairment loss
43,636
nm
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions
and certain compensation costs
2,401
22,361
(89%)
Operating income
65,013
7,188
804%
Change in fair value of equity securities
(6,043)
(373,784)
(98%)
Reversal of allowance for doubtful loan receivable
25,132
nm
Interest income
19,086
11,944
60%
Interest expense
(A)
73,288
108,639
(33%)
Income (Loss) before income tax expense (benefit)
29,900
(463,291)
nm
Income tax expense (benefit)
24,310
(53,650)
nm
Net Income (loss) before earnings from equity-accounted investments
5,590
(409,641)
nm
Earnings from equity-accounted investments
938
220
326%
Net Income (loss)
6,528
(409,421)
nm
(Add) Less net (loss) income attributable to non-controlling interest
(1,855)
369
nm
Net Income (loss) attributable to us
8,383
(409,790)
nm
(A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Cost of goods sold, IT
processing, servicing and support increased by ZAR 2.8 million, Selling, general and administration expense increased by ZAR 1.0 million,
Operating income decreased by ZAR 3.7 million, Interest expense increased by ZAR 1.7 million, and the subtotal captions from Income (Loss)
before income tax expense (benefit) to Net income (loss) attributable to Lesaka decreased by ZAR 5.5 million for the three months ended
March 31, 2025.
(1) Selling, general and administration includes allowance for credit losses.
Revenue increased by $21.6 million (ZAR 7.3 million), or 13.4% (0.2%). The increase was primarily due to the inclusion of
Recharger and Mobilemart , 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 the 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 increased by $6.8 million or 5.8% in U.S. dollars and decreased by
ZAR140.1 million or 6.5% in ZAR. The decrease in ZAR is primarily due to the decrease in the prepaid airtime costs, which was
partially offset by an increase in lending related expenditures (including interest expense), higher insurance-related claims and third-
party transaction fees and the inclusion of Recharger and Mobilemart.
Selling, general and administration expenses increased by $7.5 million (ZAR 49.3 million), or 21.8% (in ZAR 7.8%). The
increase was primarily due to the inclusion of Recharger; higher marketing costs related to the Lesaka rebrand, an increase in the
allowance for credit losses as a result of higher lending activities by Consumer and Merchant, higher consulting fees, 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 $2.1 million (ZAR 16.6 million), or 25.1% (10.7%). The increase was due
to the inclusion of acquisition-related intangible asset amortization related to intangible assets identified pursuant to the Recharger
acquisition.
Impairment loss for the third quarter of fiscal 2026 includes an impairment loss of $1.5 million (ZAR 25.6 million) related to
right-of-use assets recorded in property, plant and equipment for our existing operating lease arrangements as certain of our leased
facilities will no longer be utilized as originally intended as a result of the planned transition to our new corporate head office, an
impairment loss of $0.7 million (ZAR 11.5 million) related to ATMs recorded in property, plant and equipment as a result of the exit
of the ATM business, and an impairment loss of $0.4 million (ZAR 6.5 million) related to goodwill allocated to our Switchpay
reporting unit within the Merchant segment. Refer to Notes 7 and 17 to our unaudited condensed consolidation financial statements
for additional information.
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions and certain compensation costs includes costs
incurred related to the Recharger and Bank Zero acquisitions, and post-combination compensation charges recognized related to the
Recharger acquisition. We did not incur significant transaction costs during the third quarter of fiscal 2026. Refer to Note 2 to our
unaudited condensed consolidation financial statements for additional information.
Our operating income margin for the third quarter of fiscal 2026 and 2025 was 2.2% and 0.2%, respectively. We discuss the
components of operating income margin under “—Results of operations by operating segment.”
We recorded a non-cash change in fair value of equity securities of $0.4 million during the third quarter of fiscal 2026, compared
to $20.4 million during the third quarter of fiscal 2025 related to a fair value adjustment loss related to MobiKwik. Refer to Note 6 to
our unaudited condensed consolidation financial statements for additional information.
Interest on surplus cash was $1.2 million (ZAR 19.1 million) compared with $0.6 million (ZAR 11.9 million) during the third
quarter of fiscal 2025, due to increased cash balances.
Interest expense decreased to $4.5 million (ZAR 73.3 million) from $5.9 million (ZAR 108.6 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 third quarter of fiscal 2026 compared with 2025. On a comparable basis the equivalent interest expense
related to the Consumer lending book for the third quarter of fiscal 2025 was included in interest expense.
Third quarter of fiscal 2026 income tax expense was $1.5 million (ZAR 24.3 million) compared to income tax benefit of $(2.9)
million (ZAR (53.7) million) in fiscal 2026. Our effective tax rate for fiscal 2026 was impacted by the tax expense recorded by our
profitable South African operations and non-deductible expenses (including transaction-related expenditures and the impairment of
goodwill).
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.
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 March 31,
2026
2025
$ ’000
% of total
$ ’000
% of total
% change
Operating Segment
Consolidated revenue:
Merchant
127,078
69%
128,781
80%
(1%)
Consumer
38,323
21%
24,096
15%
59%
Enterprise
18,978
10%
9,444
6%
101%
Subtotal: Operating segments
184,379
100%
162,321
101%
14%
Eliminations
(1,328)
(871)
(1%)
52%
Total consolidated revenue
183,051
100%
161,450
100%
13%
Group Adjusted EBITDA:
Merchant
(A)(1)
9,228
45%
7,900
63%
17%
Consumer
(1)
13,015
63%
6,333
50%
106%
Enterprise
(1)
2,125
10%
133
1%
1,498%
Group costs
(3,756)
(18%)
(1,772)
(14%)
112%
Group Adjusted EBITDA (non-GAAP)
(A)(2)
20,612
100%
12,594
100%
64%
(A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Merchant Segment
Adjusted EBITDA and Group Adjusted EBITDA decreased by $0.2 million for the three months ended March 31, 2025.
(1) Segment Adjusted EBITDA for the three months ended March 31, 2026, includes retrenchment costs of $0.3 million for Merchant, $0.02
million for Consumer, and $0.1 million for Enterprise for the third quarter of fiscal 2026. 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.
(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 March 31,
2026
2025
Operating Segment
ZAR ’000
% of total
ZAR ’000
% of total
% change
Consolidated revenue:
Merchant
2,079,232
69%
2,382,982
80%
(13%)
Consumer
626,514
21%
445,845
15%
41%
Enterprise
310,481
10%
174,565
6%
78%
Subtotal: Operating segments
3,016,227
100%
3,003,392
101%
0%
Eliminations
(21,691)
(16,166)
(1%)
34%
Total consolidated revenue
2,994,536
100%
2,987,226
100%
0%
Group Adjusted EBITDA:
Merchant
(A)(1)
151,116
45%
146,121
63%
3%
Consumer
(1)
212,537
63%
117,144
50%
81%
Enterprise
(1)
35,047
10%
2,384
1%
1,370%
Group costs
(61,629)
(18%)
(32,623)
(14%)
89%
Group Adjusted EBITDA (non-GAAP)
(A)(2)
337,071
100%
233,026
100%
45%
(A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Merchant Segment
Adjusted EBITDA and Group Adjusted EBITDA decreased by ZAR 3.7 million for the three months ended March 31, 2025.
(1) Segment Adjusted EBITDA for the three months ended March 31, 2026, includes retrenchment costs of ZAR 5.0 million for Merchant,
ZAR 0.3 million for Consumer, and ZAR 1.1 million for Enterprise for the third quarter of fiscal 2026. 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.
(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 decreased primarily due to 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 primarily related to a lower employment -related expenditures, lower IT processing, servicing and support costs,
and lower allowance for credit losses.
Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for the third quarter of
fiscal 2026 and 2025 was 7.3% 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. 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 24.1 million; Q3 2025: ZAR 16.5 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 third quarter of fiscal 2026 and 2025 was 34.0% and 26.3%, respectively.
Enterprise
Segment revenue and Segment Adjusted EBITDA increased primarily due to the inclusion of Recharger.
Our Segment Adjusted (loss) EBITDA margin for the third quarter of fiscal 2026 and 2025 was 11.2% and 1.4%, 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 the third quarter of fiscal 2026 increased compared with the prior period due to higher employee related
costs, consulting fees and compliance related expenditure.
Year to date fiscal 2026 compared to year to date fiscal 2025
The following factors had a significant impact on our results of operations during year to date fiscal 2026 as compared with the
same period in the prior year:
Higher revenue:
Our revenues increased by 8.5% in U.S. dollars and increased by 2.0% in ZAR, primarily due to the
inclusion of Adumo, Recharger and Mobilemart, 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 lower prepaid airtime revenue;
Operating income increase:
Operating income increased primarily due to a strong performance by Consumer, the
contribution from Adumo for the entire period in fiscal 2026 compared with six months in fiscal 2025 and from the
contribution from Recharger, which was partially offset by an increase in amortization of acquisition-related intangible assets
related to change of useful lives of certain brand intangibles assets.
Non-cash fair value adjustment related to equity securities in fiscal 2025:
We recorded a non-cash fair value loss of $54.2
million during the year to date fiscal 2025 related to MobiKwik;
Lower net interest charge:
Net interest charge decreased to $11.9 million (ZAR 203.0 million) from $15.3 million (ZAR
277.4 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 year to date fiscal 2026 compared with
2025. On a comparable basis the equivalent interest expense related to the Consumer lending book for the year to date fiscal
2025 was included in interest expense; and
Foreign exchange movements:
The U.S. dollar was 5% weaker against the ZAR during year to date fiscal 2026 compared
to the prior period, which positively impacted our U.S. dollar reported results.
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 7
In United States Dollars
Nine months ended March 31,
2026
2025
$ ’000
$ ’000
change
Revenue
533,233
491,234
9%
Cost of goods sold, IT processing, servicing and support
(A)
365,238
367,104
(1%)
Selling, general and administration
(A)(1)
121,729
97,384
25%
Depreciation and amortization
37,005
22,928
61%
Impairment loss
2,604
nm
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions
and certain compensation costs
285
3,174
(91%)
Operating income
6,372
644
889%
Change in fair value of equity securities
2,593
(54,152)
nm
Other income
3,883
nm
Loss on impairment or disposal of equity-accounted investment
584
161
263%
Reversal of allowance for doubtful loan receivable
1,500
nm
Loss on disposal of equity securities
730
nm
Interest income
2,201
1,952
13%
Interest expense
(A)
14,081
17,251
(18%)
Income (Loss) before income tax expense (benefit)
1,154
(68,968)
nm
Income tax expense (benefit)
2,027
(9,268)
nm
Net loss before earnings from equity-accounted investments
(873)
(59,700)
(99%)
Earnings from equity-accounted investments
166
89
87%
Net loss
(707)
(59,611)
(99%)
(Add) Less net (loss) income attributable to non-controlling interest
(246)
48
nm
Net loss attributable to us
(461)
(59,659)
(99%)
(A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Cost of goods sold, IT
processing, servicing and support increased by $0.5 million, Selling, general and administration expense increased by $0.2 million, Operating income
decreased by $0.7 million, Interest expense increased by $0.3 million, and the subtotal captions from Income (Loss) before income tax expense
(benefit) to Net loss attributable to Lesaka decreased by $0.9 million for the nine months ended March 31, 2025.
Cost of goods sold, IT processing, servicing and support increased by $0.2 million, Selling, general and administration expense increased by
$0.06 million, Operating income decreased by $0.2 million, Interest expense increased by $0.1 million, and the subtotal captions from Income (Loss)
before income tax expense (benefit) to Net loss attributable to Lesaka decreased by $0.4 million for the nine months ended March 31, 2026, to correct
the error discussed in Note 1 to the unaudited condensed consolidated statement of operations as a result of the correction to amounts reported for
the three months ended September 30, 2025.
(1) Selling, general and administration includes allowance for credit losses.
Table 8
In South African Rand
Nine months ended March 31,
2026
2025
ZAR ’000
ZAR ’000
change
Revenue
9,076,273
8,899,861
2%
Cost of goods sold, IT processing, servicing and support
(A)
6,219,138
6,649,460
(6%)
Selling, general and administration
(A)(1)
2,072,014
1,764,897
17%
Depreciation and amortization
632,092
415,665
52%
Impairment loss
43,636
nm
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions
and certain compensation costs
4,968
56,809
(91%)
Operating income
104,425
13,030
701%
Change in fair value of equity securities
43,957
(988,494)
nm
Other income
65,353
nm
Loss on impairment or disposal of equity-accounted investment
10,342
2,886
258%
Reversal of allowance for doubtful loan receivable
25,132
nm
Loss on disposal of equity securities
12,286
nm
Interest income
37,278
35,347
5%
Interest expense
(A)
240,274
312,720
(23%)
Income (Loss) before income tax expense (benefit)
13,243
(1,255,723)
nm
Income tax expense (benefit)
33,244
(169,202)
nm
Net loss before earnings from equity-accounted investments
(20,001)
(1,086,521)
(98%)
Earnings from equity-accounted investments
2,789
1,586
76%
Net loss
(17,212)
(1,084,935)
(98%)
(Add) Less net (loss) income attributable to non-controlling interest
(4,155)
865
nm
Net loss attributable to us
(13,057)
(1,085,800)
(99%)
(A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Cost of goods sold, IT
processing, servicing and support increased by ZAR 8.8 million, Selling, general and administration expense increased by ZAR 3.1 million, Operating
income decreased by ZAR 11.9 million, Interest expense increased by ZAR 4.9 million, and the subtotal captions from Income (Loss) before income
tax expense (benefit) to Net loss attributable to Lesaka decreased by ZAR 16.7 million for the three months ended March 31, 2025.
(A) Cost of goods sold, IT processing, servicing and support increased by ZAR 3.2 million, Selling, general and administration expense
increased by ZAR 1.1 million, Operating income decreased by ZAR 4.4 million, Interest expense increased by ZAR 2.0 million, and the subtotal
captions from Income (Loss) before income tax expense (benefit) to Net loss attributable to Lesaka decreased by ZAR 6.4 million for the nine months
ended March 31, 2026, to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations as a result of the
correction to amounts reported for the three months ended September 30, 2025.
(1) Selling, general and administration includes allowance for credit losses.
Revenue increased by $42.0 million (ZAR 176.4 million), or 8.5% (in ZAR, 2.0%), primarily due to the inclusion of Adumo,
Recharger, and Mobilemart, 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 $1.9 million (ZAR 430.3 million) or 0.5% (in ZAR 6.5%),
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 $24.3 million (ZAR 307.1 million), or 25.0% (in ZAR 17.4%). The
increase was primarily due to the inclusion of Adumo and Recharger, higher marketing costs related to the Lesaka rebrand, higher
employee-related expenses (including annual bonuses and annual salary increases), consulting fees, audit fees, and travel expenses,
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 $14.1 million (ZAR 216.4 million), or 61.4% (52.1%). The increase was
due to the change to a shorter useful life for certain of our brand and trademark intangible assets (refer to Note 7), 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.
Impairment loss for year to date fiscal 2026 includes an impairment loss of $1.5 million (ZAR 25.6 million) related to right-of-
use assets recorded in property, plant and equipment for our existing operating lease arrangements as certain of our leased facilities
will no longer be utilized as originally intended as a result of the planned transition to our new corporate head office, an impairment
loss of $0.7 million (ZAR 11.5 million) related to ATMs recorded in property, plant and equipment as a result of the exit of the ATM
business, and an impairment loss of $0.4 million (ZAR 6.5 million) related to goodwill allocated to our Switchpay reporting unit within
the Merchant segment. Refer to Notes 7 and 17 to our unaudited condensed consolidation financial statements for additional
information.
Transaction costs related to Adumo, Recharger and Bank Zero 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,
the Recharger transaction in March 2025, and ongoing transaction fees related to our proposed acquisition of Bank Zero. Refer to Note
2 to our unaudited condensed consolidation financial statements for additional information.
Our operating income margin for year to date fiscal 2026 and 2025 was 1.2% and 0.1%, respectively. We discuss the components
of operating loss margin under “—Results of operations by operating segment.”
We recorded an increase in the fair value of Cell C of $3.0 million (ZAR 50 million) during year to date fiscal 2026 (refer to
Note 5 for additional information), partially offset by a non-cash change in fair value of equity securities of $0.4 million. We recorded
a non-cash change in fair value of equity securities of $54.2 million during year to date fiscal 2025 related to a fair value adjustment
loss related to MobiKwik. There were no changes in the fair value of Cell C during the year to date fiscal 2025.
In December 2025, we determined that the liquidation of CPS is at an advanced stage and released an accrual raised at the time
of deconsolidation of $3.9 million (ZAR 65.4 million) to Other income.
Interest on surplus cash increased to $2.2 million (ZAR 37.3 million) from $2.0 million (ZAR 35.3 million), due to the inclusion
of Adumo and increased cash balances, which was partially offset by lower interest rates.
Interest expense decreased to $14.1 million (ZAR 240.3 million) from $17.3 million (ZAR 312.7 million). 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 year to date fiscal 2026 compared with 2025. On a comparable basis the equivalent interest expense related
to the Consumer lending book for the year to date fiscal 2025 was included in interest expense.
Fiscal 2026 income tax expense was $2.0 million (ZAR 33.2 million) compared to an income tax benefit of $(9.3) million (ZAR
(169.2) million) in fiscal 2025. Our effective tax rate for fiscal 2026 was impacted by the tax expense recorded by our profitable South
African operations, non-taxable income (primarily related to the disposal of Cell C and other income) and non-deductible expenses
(including transaction-related expenditures and the goodwill impairment). The income tax expense was also 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 fiscal 2026.
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.
Results of operations by operating segment
The composition of revenue and the contributions of our business activities to operating loss are illustrated below:
Table 9
In United States Dollars
Nine months ended March 31,
2026
2025
Operating Segment
$ ’000
% of total
$ ’000
% of total
% change
Consolidated revenue:
Merchant
385,947
73%
397,642
81%
(3%)
Consumer
102,017
19%
68,097
14%
50%
Enterprise
48,627
9%
30,259
6%
61%
Subtotal: Operating segments
536,591
101%
495,998
101%
8%
Eliminations
(3,358)
(1%)
(4,764)
(1%)
(30%)
Total consolidated revenue
533,233
100%
491,234
100%
9%
Group Adjusted EBITDA:
Merchant
(A)(1)
28,112
53%
25,319
76%
11%
Consumer
(1)
30,818
58%
15,071
45%
104%
Enterprise
(1)
4,817
9%
464
1%
938%
Group costs
(10,263)
(20%)
(7,541)
(22%)
36%
Group Adjusted EBITDA (non-
GAAP)
(A)(2)
53,484
100%
33,313
100%
61%
(A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Merchant Segment
Adjusted EBITDA and Group Adjusted EBITDA decreased by $0.7 million for the nine months ended March 31, 2025. Merchant Segment Adjusted
EBITDA and Group Adjusted EBITDA decreased by $0.2 million for the nine months ended March 31, 2026, to correct the error discussed in Note
1 to the unaudited condensed consolidated statement of operations as a result of the correction to amounts reported for the three months ended
September 30, 2025.
(1) Segment Adjusted EBITDA for the nine months ended March 31, 2026, includes retrenchment costs for Merchant of $0.7 million, for
Consumer of $0.2 million, and for Enterprise of $0.03 million. 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.
(2) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-GAAP
Measures”.
Table 10
In South African Rand
Nine months ended March 31,
2026
2025
Operating Segment
ZAR ’000
% of total
ZAR ’000
% of total
% change
Consolidated revenue:
Merchant
6,575,270
73%
7,203,565
81%
(9%)
Consumer
1,732,255
19%
1,234,595
14%
40%
Enterprise
825,612
9%
548,408
6%
51%
Subtotal: Operating segments
9,133,137
101%
8,986,568
101%
2%
Eliminations
(56,864)
(1%)
(86,707)
(1%)
(34%)
Total consolidated revenue
9,076,273
100%
8,899,861
100%
2%
Group Adjusted EBITDA:
Merchant
(A)(1)
479,169
53%
458,619
76%
4%
Consumer
(1)
521,689
57%
273,313
45%
91%
Enterprise
(1)
81,770
9%
8,415
1%
872%
Group costs
(174,895)
(19%)
(135,542)
(22%)
29%
Group Adjusted EBITDA (non-
GAAP)
(A)(2)
907,733
100%
604,805
100%
50%
(A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Merchant Segment
Adjusted EBITDA and Group Adjusted EBITDA decreased by ZAR 11.9 million for the nine months ended March 31, 2025. Merchant Segment
Adjusted EBITDA and Group Adjusted EBITDA decreased by ZAR 4.4 million for the nine months ended March 31, 2026, to correct the error
discussed in Note 1 to the unaudited condensed consolidated statement of operations as a result of the correction to amounts reported for the three
months ended September 30, 2025.
(1) Segment Adjusted EBITDA for the nine months ended March 31, 2026, includes retrenchment costs for Merchant of ZAR 12.4 million, for
Consumer of ZAR 2.9 million, and for Enterprise of ZAR 0.3 million. Segment Adjusted EBITDA for the nine months ended March 31, 2025,
ncludes reorganization and retrenchment costs for Merchant of ZAR 12.9 million, Enterprise of ZAR 5.6 million, and Consumer of ZAR 1.5 million.
(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 decreased due to fewer prepaid airtime sales which was partially offset by the inclusion of Adumo,
a higher volume of ADP provided (Pinless Airtime and gaming). In ZAR, the increase in Segment Adjusted EBITDA is primarily due
to the inclusion of Adumo for the entire period compared with the prior period, which was partially offset by higher operating expenses
incurred.
Our Segment Adjusted EBITDA margin for year to date fiscal 2026 and 2025 was 7.3% 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, and lending
revenues following an increase in loan originations. 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 March 2025, higher insurance-
related claims, interest expense (of approximately ZAR 65.1 million; F2025: ZAR 45.0 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 year to date fiscal 2026 and 2025 was 30.2% and 22.1%, respectively.
Enterprise
Segment revenue increased primarily due to the inclusion of Recharger and Mobilemart. In ZAR, the significant increase in
Segment Adjusted EBITDA is primarily due to the inclusion of Recharger .
Our Segment Adjusted EBITDA margin for year to date fiscal 2026 and 2025 was 9.9% and 1.5%, respectively.
Group costs
Our group costs for fiscal 2026 increased compared with the prior period due to higher consulting fees, higher employee related
costs, and higher compliance related expenditure.
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 and nine months ended March 31, 202 5. 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 income (loss) attributable to Lesaka to Group Adjusted
EBITDA:
Table 11
Three months ended
March 31,
Nine months ended
March 31,
2026
2025
2026
2025
$ ’000
$ ’000
$ ’000
$ ’000
Income (Loss) attributable to Lesaka - GAAP
552
(22,353)
(461)
(59,659)
(Add) Less net (loss) income attributable to non-controlling interest
115
(20)
246
(48)
Net Income (loss)
437
(22,333)
(707)
(59,611)
Earnings from equity accounted investments
(56)
(12)
(166)
(89)
Net Income (loss) before earnings from equity-accounted investments
381
(22,345)
(873)
(59,700)
Income tax expense (benefit)
1,503
(2,934)
2,027
(9,268)
Income (Loss) before income tax expense
1,884
(25,279)
1,154
(68,968)
Interest expense
(A)
4,477
5,869
14,081
17,251
Interest income
(1,154)
(645)
(2,201)
(1,952)
Reversal of allowance for doubtful loan receivable
(1,500)
(1,500)
Loss on disposal of equity securities
730
Other income
(3,883)
Net loss on impairment/ disposal of equity-accounted investment
584
161
Change in fair value of equity securities
378
20,421
(2,593)
54,152
Operating income
4,085
366
6,372
644
PPA amortization (amortization of acquired intangible assets)
6,044
4,974
24,659
13,588
Depreciation and amortization
4,499
3,455
12,346
9,340
Impairments
(1)
1,916
1,916
Stock-based compensation charges
1,334
2,497
5,140
7,518
Interest adjustment
(890)
(2,478)
Once-off items
2,553
2,306
3,067
4,599
Unrealized gain (loss) FV for currency adjustments
181
(114)
(16)
102
Group Adjusted EBITDA - Non-GAAP
(A)
20,612
12,594
53,484
33,313
(A) Loss attributable to Lesaka – GAAP and all subtotal captions to Loss before income tax expense for the three and nine months
ended March 31, 2025 have been decreased by $0.3 million and $0.9 million, respectively, as a result of the correction discussed in
Note 1. Interest expense for the three and nine months ended March 31, 2025 has been increased by $0.09 million and $0.3 million,
respectively, as a result of the correction discussed in Note 1. Operating income and Group Adjusted EBITDA - Non-GAAP for the
three and nine months ended March 31, 2025 have been decreased by $0.2 million and $0.7 million, respectively, as a result of the
correction discussed in Note 1.
Loss attributable to Lesaka – GAAP and all subtotal captions to Loss before income tax expense for the nine months ended
March 31, 2026 have been decreased by $0.4 million and, as a result of the correction, as discussed in Note 1, to the amount included
in the caption Interest expense for the three months ended September 30, 2025. Interest expense for the nine months ended March 31,
2026 has been increased by $0.1 million as a result of the correction, as discussed in Note 1, to the amount included in the caption
Interest expense for the three months ended September 30, 2025. Operating income and Group Adjusted EBITDA - Non-GAAP for
the nine months ended March 31, 2026 have been decreased by $0.2 million, as a result of the correction, as discussed in Note 1, to
the amount included in the caption Interest expense for the three months ended September 30, 2025.
(1) Impairments excludes an amount of $0.7 million which is included in the caption exit of ATM business in the table below.
(2) The table below presents the components of once-off items for the periods presented:
Table 12
Three months ended
March 31,
Nine months ended
March 31,
2026
2025
2026
2025
$ ’000
$ ’000
$ ’000
$ ’000
Exit of ATM business
1,599
1,599
Lesaka brand refresh
984
984
Transaction costs
466
1,084
839
1,621
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions
144
1,222
285
3,174
Indirect taxes provision release
(61)
(61)
(196)
Income recognized related to closure of legacy businesses
(579)
(579)
Total once-off items
2,553
2,306
3,067
4,599
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.
Exit of ATM business includes expenses incurred to exit our ATM business and the impairment of ATMs recorded in property,
plant and equipment (refer to Note 7 to our unaudited condensed consolidated financial statements for additional information).
Rebrand relates to costs incurred related to Lesaka’s new brand launched in November 2025, we expect that it will take the
remainder of the 2026 calendar year to roll out the refreshed brand throughout the organization. These are non-recurring costs incurred
as a necessary step in a set of strategic initiatives designed to create a “One Lesaka” identity for our customers and our employees.
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 subsidiary 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.
Liquidity and Capital Resources
As of March 31, 2026, our cash and cash equivalents were $90.6 million and comprised of U.S. dollar-denominated balances of
$3.3 million, ZAR-denominated balances of ZAR 1.5 billion ($85.4 million), and other currency deposits, primarily Botswana pula,
of $1.8 million, all amounts translated at exchange rates applicable as of March 31, 2026. The increase in our unrestricted cash balances
from June 30, 2025, was primarily due to positive contribution from our operating segments, and the utilization of our general banking
facilities to partially fund the growth in our Consumer lending book, which was partially offset by the application of the proceeds
received from the disposal of MobiKwik to reduce our general banking facilities utilized, the utilization of cash reserves to fund certain
scheduled repayments of our borrowings, acquisition of property, plant and equipment and intangible assets, to fund the increase in
our Consumer lending book and to settle amounts due to the sellers of Recharger and other entities acquired during the year to date.
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 are required to make a scheduled debt repayment of ZAR 200 million ($11.7 million) in March 2027. We expect to pay ZAR
100.0 million ($6.0 million) payment on closing of the Bank Zero transaction. All amounts translated at exchange rates as of March
31, 2026.
Available short-term borrowings
Summarized below are our short-term facilities available and utilized as of March 31, 2026:
Table 13
RMB GBF
RMB Other
Nedbank
$ ’000
ZAR ’000
$ ’000
ZAR ’000
$ ’000
ZAR ’000
Total short-term facilities available, comprising:
Total overdraft
67,064
1,143,901
Indirect and derivative facilities
(1)
3,383
57,700
9,179
156,556
Total short-term facilities available
67,064
1,143,901
3,383
57,700
9,179
156,556
Utilized short-term facilities:
Overdraft
35,825
611,055
Indirect and derivative facilities
(1)
1,864
31,786
124
2,112
Total short-term facilities utilized
35,825
611,055
1,864
31,786
124
2,112
Interest rate, based on South African prime rate
9.75%
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.
The facilities under the Restated GBF Agreement were available for utilization from March 30, 2026, and are subject to annual
review by RMB.
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 borrowings outstanding of ZAR 3.4 billion ($201.6 million translated at exchange rates as of March
31, 2026) as described in Note 9. These borrowings include outstanding long-term borrowings obtained by Lesaka SA of ZAR 2.8
billion, which were used to refinance our previous long-term borrowings. We have utilized all of these long-term borrowings. As of
March 31, 2026, 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 March 31, 2026, 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. We intend to cancel this arrangement as part of the process of winding
down our ATM business.
Cash flows from operating activities
Third quarter
Net cash provided by operating activities during the third quarter of fiscal 2026 was $37.6 million (ZAR 630.0 million) compared
to $10.7 million (ZAR 196.2 million) during the third quarter of fiscal 2025. Excluding the impact of income taxes, our cash provided
by operating activities during the third quarter of fiscal 2026 was positively impacted by the positive contribution from our operating
segments and positive working capital changes including a decrease in accounts receivables and inventory, and an increase in trade
and other payables.
During the third quarter of fiscal 2026, we paid first provisional South African tax payments of $0.2 million (ZAR 3.2 million)
related primarily to certain of Adumo’s subsidiaries 2026 tax year. We paid taxes totaling $0.1 million in other tax jurisdictions,
primarily in Botswana during the third quarter of fiscal 2026. 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. During
the third quarter of fiscal 2025, we paid taxes totaling $0.1 million in other tax jurisdictions, primarily in Namibia and Botswana.
Taxes paid (refunded) during the third quarter of fiscal 2026 and 2025 were as follows:
Table 14
Three months ended March 31,
2026
2025
2026
2025
ZAR
ZAR
’000
’000
’000
’000
First provisional payments
192
594
3,180
10,885
Second provisional payments
147
2,464
Taxation paid related to prior years
17
296
Tax refund received
(6)
(151)
(101)
(2,016)
Dividend withholding tax
91
1,526
Total South African taxes paid
441
443
7,365
8,869
Foreign taxes paid
81
62
1,349
1,148
Total tax paid
522
505
8,714
10,017
Year to date
Net cash provided by operating activities during year to date fiscal 2026 was $35.6 million (ZAR 609.4 million) compared to net
cash used in operating activities of $2.6 million (ZAR 47.6 million) during the year to date fiscal 2025. Excluding the impact of income
taxes, our cash provided by operating activities during year to date fiscal 2026 was positively impacted by the positive contribution
from our operating segments and positive working capital movements , which was partially offset by cash utilized for the significant
net growth in our Consumer finance loans receivable.
During year to date fiscal 2026, we paid first provisional South African tax payments of $4.5 million (ZAR 75.2 million) related
to our 2026 tax year. We also paid second provisional South African tax payments of $0.4 million (ZAR 7.4 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 $0.5 million (ZAR 8.7 million). We paid taxes totaling $0.2 million in other tax
jurisdictions, primarily in Namibia and Botswana during year to date fiscal 2026. During the year to date fiscal 2025, we paid first
provisional South African tax payments of $3.7 million (ZAR 67.1 million) related to our 2025 tax year. We also paid taxes totaling
$0.2 million in other tax jurisdictions, primarily in Namibia and Botswana during the year to date fiscal 2025.
Taxes paid (refunded) during year to date fiscal 2026 and 2025 were as follows:
Table 15
Nine months ended March 31,
2026
2025
2026
2025
ZAR
ZAR
‘000
‘000
‘000
‘000
First provisional payments
4,470
3,682
75,220
67,149
Second provisional payments
431
7,400
Taxation paid related to prior years
501
93
8,722
1,660
Tax refund received
(58)
(264)
(1,010)
(4,069)
Dividend withholding tax
91
1,526
Total South African taxes paid
5,435
3,511
91,858
64,740
Foreign taxes paid
225
202
3,856
3,693
Total tax paid
5,660
3,713
95,714
68,433
Cash flows from investing activities
Third quarter
Cash used in investing activities for the third quarter of fiscal 2026 included capital expenditures of $3.4 million (ZAR 57.0
million), primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $1.2 million (ZAR 20.2 million),
primarily related to the capitalization of development costs, during the third quarter of fiscal 2026. During the third quarter of fiscal
2026, we paid we paid $10.8 million related to acquisition of certain businesses, including $10.4 million for the final tranche of the
Recharger acquisition, and $0.3 million for Mobilemart. Refer to Note 2 to our unaudited condensed consolidation financial statements
for additional information.
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.
Year to date
Cash used in investing activities for year to date fiscal 2026 included capital expenditures of $11.3 million (ZAR 193.5 million),
primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $3.4 million (ZAR 57.4 million), primarily
related to the capitalization of development costs, during year to date fiscal 2026. We also received $3.0 million from the disposal of
Cell C. During year to date fiscal 2026, we paid $11.1 million related to acquisition of certain businesses, including $10.4 million for
the final tranche of the Recharger acquisition, $0.3 million for Mobilemart and $0.3 million for Atom. Refer to Note 2 to our unaudited
condensed consolidation financial statements for additional information.
Cash used in investing activities for the year to date fiscal 2025 included capital expenditures of $13.1 million (ZAR 236.3
million), primarily due to the acquisition of vaults. We also incurred expenditures of $2.3 million (ZAR 41.0 million), primarily related
to the capitalization of development costs, during the year to date fiscal 2025. During the year to date fiscal 2025, we paid $10.6
m
illion related to acquisition of certain businesses, including Adumo and Recharger.
Cash flows from financing activities
Third quarter
During the third quarter of fiscal 2026, we utilized $44.9 million from our South African general banking facilities to partially
fund the growth of our Consumer lending book, and repaid $29.4 million. We utilized $0.7 million of our long-term borrowings to
finance the acquisition of POS devices and vehicles to fund our Merchant lending book. We repaid $10.2 million of long-term
borrowings and in accordance with our repayment schedule under Facility B and our asset-based facilities. We also paid $3.5 million
to purchase Lesaka Hospitality non-controlling interests.
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.
Year to date
During year to date fiscal 2026, we utilized $93.4 million from our South African general banking facilities to partially fund the
growth of our Consumer lending book, and repaid $82.5 million. We utilized $4.7 million of our long-term borrowings to finance the
acquisition of POS devices and vehicles to fund our Merchant lending book. We repaid $12.6 million of long-term borrowings and in
accordance with our repayment schedule under our asset-based facilities. We paid fees of $0.03 million related to the September 2025
refinance of our facility to fund the growth of Merchant lending book. We paid $3.5 million to purchase Lesaka Hospitality non-
controlling interests. We also paid $0.3 million to repurchase shares from employees in order for the employees to settle taxes due
related to the vesting of shares of restricted stock.
During the year to date 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 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.
Off-Balance Sheet Arrangements
We have no off -balance sheet arrangements.
Capital Expenditures
We expect capital spending for the fourth 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 branch network in South Africa. Our capital expenditures
for the third quarter of fiscal 2026 and 2026 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, 2026, of $0.5 million. We expect to fund these
e
xpenditures through internally generated funds and available facilities.
Market risk
As filed, 1,226 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
In addition to the tables below, see Note 5 to the unaudited condensed consolidated financial statements for a discussion of
market risk.
We have short and long-term borrowings in South Africa which attract interest at rates that fluctuate based on changes in the
South African prime and 3-month JIBAR interest rates. The following table illustrates the effect on our annual expected interest charge,
translated at exchange rates applicable as of March 31, 2026, as a result of changes in the South African prime and 3-month JIBAR
interest rates, using our outstanding short and long-term borrowings as of March 31, 2026. The effect of a hypothetical 1% (i.e. 100
basis points) increase and a 1% decrease in the interest rates applicable to the borrowings as of March 31, 2026, are shown. The
selected 1% hypothetical change does not reflect what could be considered the best- or worst-case scenarios.
Table 16
As of March 31, 2026
Annual expected
interest charge
($ ’000)
Hypothetical
change in
interest rates
Estimated annual
expected interest
charge after
hypothetical change
in interest rates
($ ’000)
Interest on South African borrowings
23,791
1%
26,173
(1%)
21,408
Controls and procedures
As filed, 6,411 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
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, 2026.
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 that could impact our system of internal control, insufficient controls over internal information and
information from service organizations, insufficient design and implementation of information technology general controls
(“ITGCs”), and controls over service organizations, resulting in ineffective process level and automated controls, 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 that could impact the system of internal control, insufficient controls over
information from service organizations, insufficient design and implementation of ITGCs, controls over service
organizations resulting in ineffective process level and automated controls 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 and implementation
of internal controls.
As a result of insufficient time in implementing all procedures to remediate the material weaknesses discussed in our Annual
Report on Form10-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 March 31, 2026.
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 significant progress and is continuing to finalize remediating the identified material weakness and
remains committed to rectifying the remaining material weaknesses in a timely manner. Our remediation process is ongoing and
includes, but is not limited to, the following steps:
(1)
implementing our comprehensive remediation plan that encompasses specific actions aimed at embedding accountability
with control owners as well as training 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 and embedding accountability on a process and controls level;
(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 March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control
o
ver financial reporting.
Risk factors
As filed, 8,630 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
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. 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, 2025.
We may identify additional errors related to our Value Added Tax (VAT) processes, indirect tax positions, or similar
transaction-level tax matters, which could require future adjustments to our financial statements.
During the second quarter of fiscal 2026, we identified errors in the historical VAT treatment of certain gaming voucher
transactions within our Merchant business. Although we have completed an initial review of the matter and determined to correct the
identified errors through revisions to our previously issued financial statement, our review is ongoing. Refer to Note 1 to our unaudited
condensed consolidated financial statements for additional information. The error arose from the incorrect application of indirect tax
rules, the configuration of underlying systems, and operational practices involving downstream vendors.
While we have implemented remedial actions, including enhancing our system of internal control and conducting further analyses
with our external advisors, there is a risk that we have not identified all errors associated with this matter. Additional issues may be
discovered as we continue to evaluate historical periods, refine our technical tax conclusions, or from inadequate updates to our
systems. Moreover, similar errors could exist in accounting and reporting for other indirect tax transactions particularly where our
business involves complex multi-party arrangements, voucher products, commissions, or activities involving non-registered VAT
vendors.
Identification of additional errors may require us to record further adjustments, amend or restate previously issued financial
statements, update our tax filings, make additional payments of tax, penalties, or interest, or make further enhancements to our internal
control processes. Any such developments could result in increased compliance costs, additional administrative burdens, diversion of
management attention, or investor perceptions of weaknesses in our financial reporting or tax compliance processes. If material,
additional errors could also adversely affect our financial condition, results of operations, liquidity, or internal control over financial
reporting.
Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt
or equity capital.
Form S-3 permits eligible issuers to conduct registered offerings using a short form registration statement that allows the issuer
to incorporate by reference its past and future filings and reports made under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). In addition, Form S-3 enables eligible issuers to conduct primary offerings “off the shelf” under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”). The shelf registration process, combined with the ability to forward
incorporate information, allows issuers to avoid delays and interruptions in the offering process and to access the capital markets in a
more expeditious and efficient manner than raising capital in a standard registered offering pursuant to a Registration Statement on
Form S-1. The ability to register securities for resale may also be limited as a result of the loss of Form S-3 eligibility.
We did not file our 2025 Form 10-K within the timeframe required by the SEC; thus, we have not remained current in our
reporting requirements with the SEC. Although we regained status as a current filer by filing our Form 10-K/A to amend our 2025
Form 10-K, we are currently ineligible to file new short form registration statements on Form S-3 and, absent a waiver of the Form S-
3 eligibility requirements, we are no longer permitted to use our existing registration statements on Form S-3. If we wish to pursue an
offering now, we would be required to conduct the offering on an exempt basis, such as in accordance with Rule 144A, or file a
registration statement on Form S-1. Using a Form S-1 registration statement for a public offering would likely take significantly longer
than using a registration statement on Form S-3 and increase our transaction costs, and could, to the extent we are not able to conduct
offerings using alternative methods, adversely impact our ability to raise capital or complete acquisitions of other companies in a
timely manner.
Geopolitical conflicts, including the conflict between Russia and Ukraine and in the Middle East, may adversely affect our
business and results of operations.
Global economic and geopolitical conditions continue to influence the environment in which we operate. Since our year ended
June 30, 2025, heightened geopolitical tensions, including the conflict between Russia and Ukraine and ongoing conflicts in the Middle
East, have contributed to volatility in global financial markets and increased macroeconomic uncertainty.
We have no direct operations, assets or revenue exposure in the affected regions. However, the indirect effects of these
developments may adversely impact the South African operating environment, our primary market, including through foreign
exchange volatility, inflationary pressures, tighter external funding conditions, and reduced consumer affordability.
Management has concluded that developments in the geopolitical environment have not resulted in material changes to our
financial position, financial performance or cash flows since the year ended June 30, 2025. Therefore, no material changes have
occurred that require adjustment to, or separate disclosure in, the condensed interim financial information, and that our existing risk
management framework and mitigating actions, as disclosed in the annual financial statements, remain appropriate.
Geopolitical conditions remain fluid, and we continue to monitor developments. Any material changes to our risk profile or
financial position will be disclosed in accordance with applicable regulatory requirements.
Our use of artificial intelligence (“AI”) may present risks that could adversely affect our business, results of operations and
reputation.
While our use of AI is not currently material, we may increasingly incorporate AI technologies into our systems, operations and
product offerings. The development, deployment and use of AI present a number of risks and uncertainties. AI systems may produce
inaccurate, unreliable or otherwise flawed outputs, including as a result of limitations in model design, training data quality, bias or
other technical constraints. Any such issues could impair the effectiveness of our products and services or expose us to liability.
The use of AI may also increase cybersecurity, privacy, intellectual property and operational risks. For example, the use of AI
may involve the processing of sensitive data, reliance on third-party tools, or the generation of outputs that are misused or
misinterpreted. In addition, AI technologies may introduce new or evolving vulnerabilities that could be exploited, and our risk
management processes may not be effective in identifying or mitigating all such risks.
The legal and regulatory landscape relating to AI is rapidly evolving and uncertain. We may be subject to existing and emerging
laws, regulations and regulatory expectations in the United States and other jurisdictions (including South Africa) relating to, among
other things, data protection, consumer protection, intellectual property and the use of automated decision-making. Compliance with
such requirements may increase our costs, limit the use or effectiveness of AI in our business, or require changes to our products or
operations. Failure to comply with applicable requirements, or the perception that our use of AI is inappropriate or controversial, could
result in regulatory scrutiny, litigation, reputational harm or competitive disadvantage.
As AI technologies continue to develop, we may not be able to anticipate or effectively manage all associated risks. If any of
these risks were to materialize, they could have a material adverse effect on our business, results of operations and financial condition.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2026-03-31. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Revenue | 3 months2026-01-01 to 2026-03-31 | $183.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months2025-07-01 to 2026-03-31 | $533.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months2026-01-01 to 2026-03-31 | $123.9m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months2025-07-01 to 2026-03-31 | $365.2m | us-gaap:CostOfRevenue |
| Selling, general and administrative | 3 months2026-01-01 to 2026-03-31 | $39.2m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months2025-07-01 to 2026-03-31 | $112.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months2026-01-01 to 2026-03-31 | $4.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months2025-07-01 to 2026-03-31 | $6.4m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months2026-01-01 to 2026-03-31 | $1.5m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months2025-07-01 to 2026-03-31 | $2.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2026-01-01 to 2026-03-31 | $552.0k | us-gaap:NetIncomeLoss |
| Net income | 9 months2025-07-01 to 2026-03-31 | −$461.0k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months2026-01-01 to 2026-03-31 | $0.01 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months2025-07-01 to 2026-03-31 | −$0.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months2026-01-01 to 2026-03-31 | $0.01 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months2025-07-01 to 2026-03-31 | −$0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months2026-01-01 to 2026-03-31 | 79,479,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months2025-07-01 to 2026-03-31 | 78,895,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months2026-01-01 to 2026-03-31 | $37.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Operating cash flow | 9 months2025-07-01 to 2026-03-31 | $35.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months2026-01-01 to 2026-03-31 | $3.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Capital expenditure | 9 months2025-07-01 to 2026-03-31 | $11.3m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 3 months2026-01-01 to 2026-03-31 | $40.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Share repurchases | 9 months2025-07-01 to 2026-03-31 | $311.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | At period end2026-03-31 | $90.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | At period end2026-03-31 | $274.5m | us-gaap:AssetsCurrent |
| Total assets | At period end2026-03-31 | $675.0m | us-gaap:Assets |
| Current liabilities | At period end2026-03-31 | $178.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | At period end2026-03-31 | $403.6m | us-gaap:Liabilities |
| Long-term debt | At period end2026-03-31 | $186.2m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | At period end2026-03-31 | $15.3m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | At period end2026-03-31 | $186.6m | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0001562762-26-000058. Last ingested by Listed: Oct 24, 2026, 15:04 ET. Listed shows no prices and gives no investment advice.