Lesaka Technologies Q4 Earnings Call Highlights

Key Points

• Lesaka delivered a strong fiscal 2026: Revenue increased 20% to ZAR 6.33 billion, adjusted EBITDA rose 41% to ZAR 1.27 billion, and the company reported its first GAAP net income since 2022. Net leverage improved to 1.9 times, meeting its medium-term target.
• Consumer and Enterprise drove growth, while Merchant lagged. Consumer revenue rose 38% for the year and Enterprise core revenue increased 45%, but Merchant faced lower take rates and a 33% quarterly EBITDA decline as the company integrated businesses and exited non-core operations.
• Management expects further growth in fiscal 2027 with revenue guidance of ZAR 7.0 billion to ZAR 7.7 billion and adjusted EBITDA of ZAR 1.45 billion to ZAR 1.6 billion. The Bank Zero acquisition is expected to close before the end of calendar 2026, with most financial synergies anticipated in fiscal 2028.

Lesaka Technologies NASDAQ: LSAK said fiscal 2026 revenue, profitability and cash generation improved, while the company met its guidance targets and reported positive GAAP net income for the first time since 2022.

For the year ended June 2026, net revenue increased 20% to ZAR 6.33 billion, group adjusted EBITDA rose 41% to ZAR 1.27 billion, and adjusted earnings per share increased 210% to ZAR 6.51. The company recorded approximately ZAR 40 million of GAAP net income, Executive Chairman Ali Mazanderani said.

Lesaka also reduced its net-debt-to-adjusted-EBITDA ratio to 1.9 times from 2.9 times a year earlier, meeting its medium-term target of two times or less. Group CFO Dan Smith said gross debt declined by about ZAR 200 million to approximately ZAR 3.8 billion.

Operating cash flow totaled ZAR 864 million for the year. After ZAR 421 million in capital expenditures, the company generated ZAR 443 million of cash, Smith said. Capital spending exceeded the company’s previous ZAR 400 million guidance, partly due to office-consolidation costs and the timing of operating investments.

Fourth-Quarter Results Show Margin Expansion

In the fourth quarter, Lesaka’s net revenue rose 8% to ZAR 1.62 billion, while adjusted EBITDA increased 22% to a quarterly record of ZAR 367 million. Adjusted earnings were ZAR 199 million, or ZAR 2.40 per share, compared with ZAR 0.90 per share a year earlier.

The group adjusted EBITDA margin reached 22.6% in the quarter, up from 20.1% in the prior-year period. Smith attributed the improvement to operating leverage across the group, though performance varied by division.

• Consumer net revenue increased 31% in the quarter to ZAR 669 million, and segment adjusted EBITDA climbed 56% to ZAR 253 million.
• Enterprise net revenue rose 34% to ZAR 255 million, while segment adjusted EBITDA increased 255% to ZAR 54 million.
• Merchant net revenue declined 10% to ZAR 729 million, and segment adjusted EBITDA fell 33% to ZAR 122 million.

Smith said Lesaka expects its annual group-cost run rate to reset to about ZAR 350 million in fiscal 2027 from ZAR 238 million in fiscal 2026. The increase will support data and information systems, personnel, risk and compliance functions as the company prepares to integrate Bank Zero and scale operations.

Consumer and Enterprise Drive Growth

Consumer was Lesaka’s strongest segment during fiscal 2026. Annual net revenue grew 38% to ZAR 2.4 billion, driven by customer acquisition and cross-selling of lending and insurance products into the company’s transactional-account base.

Active consumers increased 11% to 2.1 million, while consumer average revenue per user rose 15% to ZAR 98 per month. Lincoln C. Mali, Lesaka’s CEO of Southern Africa, said 51% of active consumers held two or more products, while 20% held all three of the company’s principal consumer products.

Fourth-quarter consumer lending originations rose 20% year over year to ZAR 937 million, and the outstanding lending portfolio grew 40% to ZAR 1.4 billion. Insurance gross written premiums increased 36% to ZAR 155 million, while in-force policies rose 34% to 753,000.

Enterprise annual net revenue reached ZAR 913 million, with core net revenue increasing 45%. During the fourth quarter, enterprise alternative digital payments total payment volume grew 18% to ZAR 12.2 billion, while utilities payment volume increased 16% to ZAR 502 million.

Mazanderani said Enterprise is expected to be Lesaka’s fastest-growing division in fiscal 2027, albeit from a smaller base, and said there is potential for margin expansion as the platform scales.

Merchant Business Remains a Focus

Merchant annual net revenue rose 3% to ZAR 3.1 billion, while core net revenue increased 6% to ZAR 2.8 billion. The segment faced declining take rates in several products, including alternative digital payments, cash and acquiring, despite higher transaction volumes.

The average active merchant base grew 12% to 132,000 for the year, while weighted average revenue per merchant declined 5%. Mali said the company’s community merchant base grew faster than its corporate merchant base, contributing to a lower blended average revenue figure because community merchants generally produce lower revenue per user.

Lesaka exited its non-core ATM business during the second half of fiscal 2026 and has been winding down a legacy acquiring product. Management said those actions affected merchant results but are not expected to create recurring costs.

In response to an analyst question, Mazanderani said merchant performance was weaker than expected during fiscal 2026 as the company integrated businesses and addressed margin pressure. He said the company expects merchant customer-growth acceleration to become more visible during the second quarter of fiscal 2027, while restructuring costs are expected primarily in the first quarter and potentially the beginning of the second quarter.

Bank Zero Closing Expected Before Year-End

Lesaka said its acquisition of Bank Zero remains subject to approval from the Prudential Authority and Exchange Control, after receiving unconditional Competition Tribunal approval in November 2025. Head of Corporate Development Steven J. Heilbron said the company anticipates closing the transaction before the end of calendar 2026.

Bank Zero had deposits of just under ZAR 400 million when the transaction was announced in June 2025. Heilbron said deposits had surpassed ZAR 700 million by April 2026 and are expected to exceed ZAR 1 billion by December 2026. Bank Zero is budgeted to reach standalone breakeven by December, before any Lesaka contribution, he said.

Management expects to migrate Lesaka’s consumer lending book to Bank Zero first, followed by its merchant lending book, with both transfers targeted by the end of fiscal 2027. If completed as planned, Lesaka estimates gross debt would fall to approximately ZAR 2.3 billion and its leverage ratio would be below one time by June 2027.

For fiscal 2027, Lesaka guided for net revenue of ZAR 7 billion to ZAR 7.7 billion, adjusted EBITDA of ZAR 1.45 billion to ZAR 1.6 billion, and adjusted EPS of ZAR 7.50 to ZAR 8.50. Management said the outlook includes Bank Zero but assumes limited financial contribution from the acquisition during fiscal 2027, with most synergies expected in fiscal 2028.

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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