Lesaka Technologies NASDAQ: LSAK reported third-quarter fiscal 2026 results that management described as strong on a largely like-for-like basis, with year-over-year gains in net revenue, profitability, and cash generation. While group net revenue came in below the company’s prior outlook due to softer-than-expected performance in Merchant, Lesaka said adjusted EBITDA landed at the top end of guidance and operating leverage continued to improve.
Quarterly results: revenue up 16%, adjusted EBITDA up 45%
On the call, Ali (operator/presenter) said net revenue increased 16% year over year to ZAR 1.58 billion, below the company’s guidance of ZAR 1.65 billion due to the Merchant division “focus[ing] on the integration of the business units and closures of non-core business lines.” Even so, Ali said the company remains confident in the Merchant division’s “profile and trajectory.”
Group adjusted EBITDA was ZAR 337 million, which Ali said was at the top end of guidance and up 45% year over year. Adjusted earnings rose to ZAR 148 million from ZAR 43 million, and adjusted EPS increased to ZAR 1.80 from ZAR 0.52. Net debt to group adjusted EBITDA improved to 2.1x, which management said is close to its 2x target.
Non-recurring items and “One Lesaka” actions
Group CFO Daniel Smith said the quarter included several non-recurring items tied to portfolio cleanup and the company’s push to build “One Lesaka.” In Merchant, Lesaka decided to exit its ATM business, which Smith called “structurally loss-making and immaterial in scale.” The wind-down drove an impairment charge of about ZAR 27 million split between impairments and once-off items.
Smith also said SwitchPay, a legacy buy-now-pay-later product, was sunset during the quarter, resulting in a ZAR 6.5 million impairment charge. At the group level, Lesaka reversed a ZAR 25 million receivables allowance tied to collection of monies owed from a legacy investment, and deregistered a legacy offshore entity (Masterpayment), producing a ZAR 14 million gain.
Rebrand-related costs totaled ZAR 16 million in the quarter, with Smith reiterating the company’s expected rebrand costs of ZAR 50 million to ZAR 75 million. Lesaka also recorded a ZAR 26 million impairment charge on lease premises due to lower utilization as it consolidates offices. Smith added that purchase price amortization of intangible assets was ZAR 98 million, which he said reflects a more normalized run rate as accelerated write-downs relating to legacy brands have tapered off.
Division performance: Consumer and Enterprise drive growth as Merchant integrates
Smith said the Consumer division delivered “another record performance,” with net revenue up 41% to ZAR 627 million, an all-time quarterly high. Enterprise net revenue grew 51% to ZAR 220 million, which included three months of contribution from Recharger versus one month in the prior period, and also reflected what Smith called “meaningful organic growth” as the unit’s strategy refresh gains traction.
Merchant net revenue declined 4% to ZAR 751 million. Smith said Lesaka expects Merchant net revenue to be flat next quarter, even as profitability improves.
On adjusted EBITDA, Merchant segment adjusted EBITDA increased 3% to ZAR 151 million, and Smith said the margin rose above 20% as efficiencies implemented over the past six months started to come through. Management reiterated medium-term expectations that Merchant margin can rise above 30%.
Consumer segment adjusted EBITDA increased 81% to a record ZAR 213 million. Smith said last quarter’s origination volumes in lending began to flow through to results, driving operating leverage. Enterprise delivered ZAR 35 million of segment adjusted EBITDA as it scales.
Group costs were ZAR 62 million, which Smith said was slightly elevated due to investment in finance, risk and compliance frameworks and strategic head office hires; he characterized this as a more accurate run-rate going forward.
Cash flow, leverage, and CapEx trends
Smith said cash generated from business operations was ZAR 365 million, “closely tracking” adjusted EBITDA. Lesaka required only ZAR 10 million of additional funding for its lending books, which Smith attributed to the short duration of the credit cycle and seasonality effects. The company paid ZAR 98 million in cash interest and also benefited from a ZAR 320 million release of seasonal working capital versus the prior quarter, resulting in ZAR 608 million of operating cash flow.
CapEx was ZAR 76 million, split relatively evenly between cash vaults, POS devices, and software and platform development. Smith reiterated guidance that annual CapEx should remain below ZAR 400 million. In Q&A, he noted some quarterly variability tied to timing of POS device deliveries and capitalized software development, but said the annual level is the appropriate way to view investment needs.
Ali added that mix also plays a role, as faster-growing product lines generally have lower CapEx requirements, and said management expects the CapEx-to-revenue percentage to decline over time, although not necessarily in a straight line each quarter.
Operating metrics and product initiatives across Merchant, Consumer, and Enterprise
CEO Southern Africa Lincoln Mali said Lesaka is integrating five historical merchant components into a unified backbone, centralizing data, and using AI to improve risk capabilities, reduce fraud, and reduce customer friction. He also highlighted plans for AI-enabled WhatsApp support and targeted cross-sell engines to improve customer experience and lift ARPU over time.
In Merchant, Mali said active merchants increased 6% year over year, with community merchants up 8% and corporate merchants down 4% due primarily to increased competition in more aligned products such as acquiring. Merchant ARPU was 7% lower year over year, which he attributed mainly to mix shift toward community merchants, who generate lower ARPU than corporate merchants.
Mali also discussed performance across key volume indicators:
- Card total processed volume (TPV) increased 7% to ZAR 10.6 billion, with active acquiring merchants up 9% to 74,000.
- Cash volume grew 2%, with vaults slightly higher at 4,900.
- Alternative digital products (ADP) TPV increased 30%, which Mali said was supported by growth of the cash offering in community merchants.
Merchant lending originations were 22% lower year over year at ZAR 227 million, which Mali said was due to an unusually high comparative period driven by a prior fuel-related lending push. He said March was “very strong,” driven by demand in the fuel sector ahead of anticipated price increases. The merchant lending portfolio ended up 4% at ZAR 427 million, and Mali said the company was deliberately conservative while refining its merchant lending offering.
In Consumer, Mali said active consumers increased 19% year over year to over 2 million, including 1.7 million permanent grant recipients representing 14.6% market share. He said Lesaka’s medium- to long-term expectation is it could reach 25% share “based on our current growth trajectory and distribution plans.” Mali said net additions in Q3 were almost 26,000, and he pointed to continued distribution expansion, including expectations to add 30 community sites and 15 new branches by June.
Consumer ARPU increased 19% to ZAR 99 per month, which Mali tied to engagement and cross-sell success. He said 50% of the active consumer base has two or more products and 20% is using the full product suite, up from 17% last year.
Mali said Consumer lending originations were approximately ZAR 856 million, up 33% year over year, and the outstanding book grew 73% to around ZAR 1.4 billion. He said the nine-month loan product now represents nearly 50% of new originations, and the company is evaluating modest increases to maximum loan values and repayment terms while maintaining disciplined risk controls. Mali also said the loan portfolio is performing within normal parameters and that provision levels of 6.5% remain above observed risk experience, with any refinements to be communicated at year-end.
In insurance, Mali said gross premiums written grew 38% to ZAR 146 million and in-force policies rose 34% to 704,000. He said Lesaka has begun rolling out policy sales to non-Lesaka consumers in the SASSA ecosystem, which he framed as a significant strategic opportunity, though “not yet financially material.” Mali said the company expects insurance collection rates to moderate toward about 90% over time as attachment rates and standalone sales increase, but still expects net positive growth in gross written premiums.
In Enterprise, Mali said ADP TPV increased 19% year over year, bill payments rose 12.5% to ZAR 9 billion, and prepaid solutions grew more than 50% to ZAR 2.8 billion. He said ADP take rate improved 22% to 1.3%. In utilities, TPV rose 18% to ZAR 477 million on a like-for-like basis and active meters increased to 368,000. Mali said Lesaka plans to launch an electricity advance product in Q4 that will allow utilities customers to load electricity when short of funds via an interest-free facility, with Lesaka charging a flat fee and recovering the advance from future purchases.
Ali also outlined three strategic themes: exploring blockchain-based payment rails (including use cases around a ZAR-denominated stablecoin through ZARU), expanding short-term credit advances against utility products, and embedding AI tools across engineering, product launches, fraud management and operational efficiencies. He said additional details will be shared at the end-of-year investor presentation.
Updated FY2026 guidance and outlook
Lesaka tightened its fiscal 2026 net revenue guidance to ZAR 6.2 billion to ZAR 6.5 billion, with the midpoint implying 20% year-over-year growth. Ali said the company remains on track to deliver adjusted EBITDA guidance for the year, while tightening the range to ZAR 1.25 billion to ZAR 1.35 billion and expecting results at the bottom end of the previous range; the midpoint implies 43% year-over-year growth.
Lesaka raised adjusted EPS guidance from “at least ZAR 4.60” to a range of ZAR 5.50 to ZAR 6.00, with the midpoint implying growth of greater than 150% year over year. Ali said the company expects to be profitable on a net income basis (without exclusions) for FY2026, which he said would be the first profitable year “since the creation of Lesaka four years ago in May 2022.”
Management said it expects to provide FY2027 and medium-term guidance at its September end-of-year presentation, and anticipates that guidance will include Bank Zero given expectations the acquisition will be completed “in the coming months.” In response to a question about Bank Zero’s relevance to Merchant cross-sell, Ali said the deal should enable Lesaka to offer a banking product through its existing merchant salesforce and relationships, potentially increasing ARPU, including benefits from float and other sources.
About Lesaka Technologies NASDAQ: LSAK
Lesaka Technologies, Inc operates as a Fintech company that utilizes its proprietary banking and payment technologies to deliver financial services solutions to merchants (B2B) and consumers (B2C) in Southern Africa. It offers cash management solutions, growth capital, card acquiring, bill payment technologies, and value-added services to formal and informal retail merchants, as well as banking, lending, and insurance solutions to consumers across Southern Africa. The company also engages in the sale of POS devices, SIM cards, and other consumables; and license of rights to use certain technology developed by the company, as well as offers related technology services.
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