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1
Form 10-Q
LESAKA TECHNOLOGIES, INC.
Table of Contents
Page No.
PART I. FINANCIAL INFORMATION
2
Part I. Financial information
Item 1. Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Balance Sheets
September 30,
June 30,
2025
2025
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
$
Restricted cash related to ATM funding and credit facilities (Note 9)
Accounts receivable, net and other receivables (Note 3)
Finance loans receivable, net (Note 3)
Inventory (Note 4)
Total current assets before settlement assets
Settlement assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - September: $
$
OPERATING LEASE RIGHT-OF-USE (Note 17)
EQUITY-ACCOUNTED INVESTMENTS (Note 6)
GOODWILL (Note 7)
INTANGIBLE ASSETS, NET (Note 7)
DEFERRED INCOME TAXES
OTHER LONG-TERM ASSETS (Note 6 and 8)
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Short-term credit facilities (Note 9)
Accounts payable
Other payables (Note 10)
Operating lease liability - current (Note 17)
Current portion of long-term borrowings (Note 9)
Income taxes payable
Total current liabilities before settlement obligations
Settlement obligations
Total current liabilities
DEFERRED INCOME TAXES
OPERATING LEASE LIABILITY - LONG TERM (Note 17)
LONG-TERM BORROWINGS (Note 9)
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 8)
TOTAL LIABILITIES
REDEEMABLE COMMON STOCK
EQUITY
COMMON STOCK (Note 11)
Authorized:
Issued and outstanding shares, net of treasury - September:
; June:
PREFERRED STOCK
Authorized shares:
Issued and outstanding shares, net of treasury: September:
-
-
ADDITIONAL PAID-IN-CAPITAL
TREASURY SHARES, AT COST: September:
; June:
(298,523 )
(298,523 )
ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 12)
(178,462 )
(185,664 )
RETAINED EARNINGS
TOTAL LESAKA EQUITY
NON-CONTROLLING INTEREST
TOTAL EQUITY
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY
$
$
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Operations
3
Three months ended
September 30,
2025
2024
(In thousands, except per
share data)
REVENUE (Note 16)
$
$
EXPENSE
Cost of goods sold, IT processing, servicing and support, exclusive of depreciation and amortization shown
separately below
Selling, general and administration, exclusive of depreciation and amortization shown separately below
Depreciation and amortization
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions (Note 2)
OPERATING INCOME (LOSS)
(45 )
NET LOSS ON IMPAIRMENT OF EQUITY-ACCOUNTED INVESTMENT (Note 6)
INTEREST INCOME
INTEREST EXPENSE
LOSS BEFORE INCOME TAX (BENEFIT) EXPENSE
(4,560 )
(4,491 )
INCOME TAX (BENEFIT) EXPENSE (Note 19)
(146 )
NET LOSS BEFORE EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS
(4,414 )
(4,569 )
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS (Note 6)
NET LOSS
$
(4,414 )
$
(4,542 )
ADD NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST
NET LOSS ATTRIBUTABLE TO LESAKA
(4,297 )
(4,542 )
Net loss per share, in United States dollars
(Note 14):
Basic loss attributable to Lesaka shareholders
$
(0.05 )
$
(0.07 )
Diluted loss attributable to Lesaka shareholders
$
(0.05 )
$
(0.07 )
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income
4
Three months ended
September 30,
2025
2024
(In thousands)
Net loss
$
(4,414 )
$
(4,542 )
Other comprehensive income, net of taxes
Movement in foreign currency translation reserve
Release of foreign currency translation reserve related to disposal of equity securities
Total other comprehensive income, net of taxes
Comprehensive income
Less comprehensive income attributable to non-controlling interest
(73 )
Comprehensive income attributable to Lesaka
$
$
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
5
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
For the three months ended September 30, 2024 (dollar amounts in thousands)
Balance – July 1, 2024
$
(25,563,808 )
$
(289,733 )
$
$
$
(188,355 )
$
$
$
$
Restricted stock granted (Note 13)
Stock-based compensation charge
(Note 13)
Reversal of stock-based compensation
charge (Note 13)
(3,100 )
(3,100 )
Net loss
(4,542 )
(4,542 )
(4,542 )
Other comprehensive income (Note
12)
Balance – September 30, 2024
$
(25,563,808 )
$
(289,733 )
$
$
$
(177,830 )
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
6
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
For the three months ended September 30, 2025 (dollar amounts in thousands)
Balance – July 1, 2025
$
(29,934,044 )
$
(298,523 )
$
$
$
(185,664 )
$
$
$
$
Restricted stock granted (Note 13)
Stock-based compensation charge
(Note 13)
-
-
Reversal of stock-based compensation
charge (Note 13)
(10,793 )
(10,793 )
(12 )
(12 )
(12 )
Net loss
(4,297 )
(4,297 )
(117 )
(4,414 )
Other comprehensive income (Note
12)
Balance – September 30, 2025
$
(29,934,044 )
$
(298,523 )
$
$
$
(178,462 )
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
7
Three months ended
September 30,
2025
2024
(In thousands)
Cash flows from operating activities
Net loss
$
(4,414 )
$
(4,542 )
Depreciation and amortization
Movement in allowance for doubtful accounts receivable and finance loans receivable
Earnings from equity-accounted investments (Note 6)
(27 )
Fair value adjustment related to financial liabilities
(1 )
Interest payable
(107 )
Facility fee amortized
Net loss on disposal of equity-accounted investments (Note 6)
Profit on disposal of property, plant and equipment
(30 )
(27 )
Stock-based compensation charge (Note 13)
Changes in net working capital
(Increase) Decrease in accounts receivable and other receivables
(1,230 )
Increase in finance loans receivable
(6,903 )
(1,590 )
(Decrease) Increase in inventory
(889 )
Decrease in accounts payable and other payables
(594 )
(17,177 )
Increase in taxes payable
Decrease in deferred taxes
(1,481 )
(446 )
Net cash provided by (used in) operating activities
(4,137 )
Cash flows from investing activities
Capital expenditures
(3,980 )
(3,965 )
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(1,139 )
(173 )
Net change in settlement assets
Net cash (used in) provided by investing activities
(461 )
Cash flows from financing activities
Proceeds from bank overdraft (Note 9)
Repayment of bank overdraft (Note 9)
(40,661 )
(31,028 )
Long-term borrowings utilized (Note 9)
Repayment of long-term borrowings (Note 9)
(1,148 )
(5,472 )
Non-refundable deal origination fees (Note 9)
(33 )
Net change in settlement obligations
(3,633 )
(3,648 )
Net cash used in financing activities
(14,738 )
(15,481 )
Effect of exchange rate changes on cash
Net decrease in cash, cash equivalents and restricted cash
(4,355 )
(16,110 )
Cash, cash equivalents and restricted cash – beginning of period
Cash, cash equivalents and restricted cash – end of period (Note 15)
$
$
See Notes to Unaudited Condensed Consolidated Financial Statements
8
LESAKA TECHNOLOGIES, INC
Notes to the Unaudited Condensed Consolidated Financial Statements
for the three months ended September 30, 2025 and 2024
(All amounts in tables stated in thousands or thousands of U.S. dollars, unless otherwise stated)
1. Basis of Presentation and Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The accompanying unaudited condensed consolidated financial statements include all majority-owned subsidiaries over which
the Company exercises control and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S.
GAAP”) and
the rules and regulations of the United States Securities and Exchange Commission for Quarterly Reports on Form 10-
Q and include all of the information and disclosures required for interim financial reporting. The results of operations for the three
months ended September 30, 2025 and 2024, are not necessarily indicative of the results for the full year. The Company believes that
the disclosures are adequate to make the information presented not misleading.
These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements,
accounting policies and financial notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June
30, 2025. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all
adjustments (consisting only of normal recurring adjustments), which are necessary for a fair representation of financial results for the
interim periods presented.
References to “Lesaka” are references solely to Lesaka Technologies, Inc. References to the “Company” refer to Lesaka and its
consolidated subsidiaries, collectively, unless the context otherwise requires.
Revision of Previously Issued Financial Statements
In October 2025, the Company identified that it had understated its June 30, 2025, amounts of cost and accumulated depreciation
for computer equipment as well as the totals for cost and accumulated depreciation by $
consolidated financial statements for the years ended June 30, 2025, 2024 and 2023. The carrying value of property, plant and
equipment reported as of June 30, 2025, was not impacted by the misstatement. The Company has recast its accumulated depreciation
presented on the condensed consolidated balance sheet as of June 30, 2025, to increase the amount from $
.
Recent accounting pronouncements adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued guidance regarding
Income Taxes (Topic 740)
to improve income tax disclosure requirements. The guidance requires entities, on an annual basis, to (1) disclose specific categories
in the income tax rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if
the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pre-tax income or
loss by the applicable statutory income tax rate). This guidance was effective for the Company beginning July 1, 2025 for its year
ended June 30, 2026.
Recent accounting pronouncements not yet adopted as of September 30, 2025
In November 2024, the FASB issued guidance regarding
Income Statement—Reporting Comprehensive Income—Expense
Disaggregation Disclosures
(Subtopic 220-40)
business entities. The guidance does not change the expense captions an entity presents on the face of the income statement; rather, it
requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial
statements. This guidance is effective for the Company beginning July 1, 2027. Early adoption is permitted. The Company is currently
assessing the impact of this guidance on its financial statements and related disclosures.
In July 2025, the FASB issued guidance regarding
Financial Instruments-Credit Losses (Topic 326) Measurement of Credit
Losses for Accounts Receivable and Contract Assets
and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the
estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted
for under
Revenue From Contracts With Customers (Topic 606).
This guidance is effective for the Company beginning July 1, 2026,
and interim reporting periods during that fiscal year. Early adoption is permitted. The Company is currently assessing the impact of
this guidance on its financial statements and related disclosures.
9
1. Basis of Presentation and Summary of Significant Accounting Policies (continued)
Recent accounting pronouncements not yet adopted as of September 30, 2025 (continued)
On September 18, 2025, the FASB issued guidance regarding
Intangibles—Goodwill and Other— Internal-Use Software
(Subtopic 350-40)
guidance makes targeted improvements to existing guidance but does not fully align the framework for accounting for internally
developed software costs that are subject to ASC 350-40 with the framework applied to software to be sold or marketed externally
that is subject to guidance regarding
Costs of Software to Be Sold, Leased, or Marketed
(Subtopic ASC 985-20)
. The new guidance
also does not amend the guidance on costs of software licenses that are within the scope of ASC 985 -20. The amendments supersede
the guidance on website development costs in guidance regarding
Website Development Costs (Subtopic ASC 350-50)
that guidance, along with the recognition requirements for development costs specific to websites, to ASC 350 -40. This guidance is
effective for the Company beginning July 1, 2028, and interim reporting periods during that fiscal year. Early adoption is permitted.
Entities may apply the guidance prospectively, retrospectively, or via a modified prospective transition method. The modified
prospective transition approach would allow entities to account for an in-process project that, before the transition date, met the
capitalization requirements but would no longer meet the requirements for capitalization under the new guidance by derecognizing the
capitalized costs for that in-process project through a cumulative-effect adjustment to the opening balance of retained earnings. The
Company is currently assessing the impact of this guidance on its financial statements and related disclosures.
2. Acquisitions
Refer to Note 3 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the
year ended June 30, 2025, for additional information regarding the acquisition of Recharger Proprietary Limited (“Recharger”) and
the proposed acquisition of Bank Zero Mutual Bank (“Bank Zero”) (which transaction remains conditional). The Company did not
close any acquisitions during the three months ended September 30, 2025.
2026 Proposed acquisitions of Bank Zero
On June 26, 2025, Lesaka Technologies Proprietary Limited (“Lesaka SA”) entered into a Transaction Implementation
Agreement (the “Transaction Implementation Agreement”) with Zero Research Proprietary Limited (“Zero Research”), Bank Zero,
and other parties identified in Annexure A to the Transaction Implementation Agreement (being all of the shareholders of Bank Zero
save for Zero Research and Naught Holdings Ltd, the “Bank Zero Sellers”), the parties listed in Annexure B to the Transaction
Implementation Agreement (being all of the shareholders of Zero Research save for Naught Holdings Ltd, the “Zero Research Sellers”)
and Naught Holdings Ltd.
The Company incurred transaction-related expenditures of $
related to the proposed acquisition of Bank Zero. The Company’s accruals presented in Note 10 of as September 30, 2025, includes
an accrual of transaction related expenditures of $
during the 2026 fiscal year.
2025 Acquisitions
On November 19, 2024, the Company, through Lesaka SA, entered into a Sale of Shares Agreement (the “Recharger Purchase
Agreement”) with Imtiaz Dhooma (Recharger’s former chief executive officer) and Ninety Nine Proprietary Limited (“the Seller”).
Pursuant to the Recharger Purchase Agreement and subject to its terms and conditions, Lesaka SA agreed to acquire, and the Seller
agreed to sell, all of the outstanding equity interests in Recharger. The transaction closed on March 3, 2025.
10
2. Acquisitions (continued)
2025 Acquisitions (continued)
The Company completed the purchase price allocation related to the Recharger acquisition during the three months ended
September 30, 2025. There were no changes to the preliminary purchase price allocation as of June 30, 2025. The final purchase price
allocation of the Recharger acquisition, translated at the foreign exchange rates applicable on the date of acquisition, is provided in
the table below:
Final purchase price allocation
Recharger
Cash and cash equivalents
$
Accounts receivable
Inventory
Property, plant and equipment
Operating lease right of use asset
Goodwill
Intangible assets
Deferred income taxes assets
Accounts payable
(149 )
Other payables
(1,439 )
Operating lease liability - current
(185 )
Income taxes payable
(4 )
Deferred income taxes liabilities
(4,366 )
Operating lease liability - long-term
(269 )
Fair value of assets and liabilities on acquisition
$
Transaction costs and certain compensation costs
The Company did
t incur any transaction costs related to the Bank Zero acquisition during the three months ended September
30, 2024. The table below presents transaction costs incurred related to the acquisitions of Adumo and Recharger, and the proposed
acquisition of Bank Zero during the three months ended September 30, 2025 and 2024:
Three months ended
September 30,
2025
2024
Bank Zero transaction costs
$
$
Adumo transaction costs
Recharger transaction costs
(1)
Total
$
$
(1) Recharger transactions costs for the three months ended September 30, 2024, of $
Selling, general and administration to Transaction costs related to Adumo, Recharger and Bank Zero acquisitions in the unaudited
c
ondensed consolidated statement of operations for the three months ended September 30, 2024.
11
3.
Accounts receivable, net and other receivables and finance loans receivable, net
Accounts receivable, net and other receivables
The Company’s accounts receivable, net, and other receivables as of September 30, 2025, and June 30, 2025, are presented in
the table below:
September 30,
June 30,
2025
2025
Accounts receivable, trade, net
$
$
Accounts receivable, trade, gross
Less: Allowance for doubtful accounts receivable, end of period
Beginning of period
Reversed to statement of operations
(150 )
(521 )
Charged to statement of operations
Write-offs
(67 )
(847 )
Foreign currency adjustment
Current portion of amount outstanding related to sale of interest in Carbon, net of
allowance: September 2025: $
; June 2025: $
Current portion of total held to maturity investments
Other receivables
Total accounts receivable, net and other receivables
$
$
Trade receivables include amounts due from customers which generally have a very short-term life from date of invoice or service
provided to settlement. The duration is less than a year in all cases and generally less than 30 days in many instances. The short-term
nature of these exposures often results in balances at month-end that are disproportionately small compared to the total invoiced
amounts. The month-end outstanding balance are more volatile than the monthly invoice amounts because they are affected by
operational timing issues and the fact that a balance is outstanding at month-end is not necessarily an indication of increased risk but
rather a matter of operational timing.
Credit risk in respect of trade receivables are generally not significant and the Company has not developed a sophisticated model
for these basic credit exposures. The Company determined to use a lifetime loss rate by expressing write-off experience as a percentage
of corresponding invoice amounts (as opposed to outstanding balances). The allowance for credit losses related to these receivables
has been calculated by multiplying the lifetime loss rate with recent invoice/origination amounts. Management actively monitors
performance of these receivables over short periods of time. Different balances have different rules to identify an account in distress.
Once balances in distress are identified, specific allowances are immediately created. Subsequent recovery from distressed accounts
is not significant.
O
ther receivables include prepayments, deposits, income taxes receivable and other receivables.
12
3.
Accounts receivable, net and other receivables and finance loans receivable, net (continued)
Finance loans receivable, net
The Company’s finance loans receivable, net, as of September 30, 2025, and June 30, 2025, is presented in the table below:
September 30,
June 30,
2025
2025
Microlending finance loans receivable, net
$
$
Microlending finance loans receivable, gross
Less: Allowance for doubtful finance loans receivable, end of period
Beginning of period
Reversed to statement of operations
(161 )
Charged to statement of operations
Write-offs
(1,714 )
(2,499 )
Foreign currency adjustment
Merchant finance loans receivable, net
Merchant finance loans receivable, gross
Less: Allowance for doubtful finance loans receivable, end of period
Beginning of period
Reversed to statement of operations
(19 )
(22 )
Charged to statement of operations
Write-offs
(107 )
(3,709 )
Foreign currency adjustment
Total finance loans receivable, net
$
$
Total finance loans receivable, net, comprises microlending finance loans receivable related to the Company’s microlending
operations in South Africa as well as its merchant finance loans receivable related to Connect’s lending activities in South Africa.
Certain merchant finance loans receivable with an aggregate balance of $
security for the Company’s revolving credit facility (refer to Note 9).
Allowance for credit losses
Microlending finance loans receivable
Microlending finance loans receivable is related to the Company’s microlending operations in South Africa whereby it provides
unsecured short-term loans to qualifying customers. Loans to customers have a tenor of up to nine months, with the majority of loans
originated having a tenor of six months. The Company analyses this lending book as a single portfolio because the loans within the
portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk of the lending book.
Refer to Note 5 related to the Company risk management process related to these receivables.
The Company has operated this lending book for more than
loans in order to calculate a lifetime loss rate for the lending book. The allowance for credit losses related to these microlending finance
loans receivables is calculated by multiplying the lifetime loss rate with the month end outstanding lending book. The lifetime loss
rate as of each of June 30, 2025 and September 30, 2025, was
%. The performing component (that is, outstanding loan payments
not in arrears) of the book exceeds more than
%, of the outstanding lending book as of each of June 30, 2025 and September 30,
2025.
Merchant finance loans receivable
Merchant finance loans receivable is related to the Company’s Merchant lending activities in South Africa whereby it provides
unsecured short-term loans to qualifying customers. Loans to customers have a tenor of up to twelve months, with the majority of
loans originated having a tenor of approximately eight months. The Company analyses this lending book as a single portfolio because
the loans within the portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk
o
f the lending book. Refer to Note 5 related to the Company risk management process related to these receivables.
13
3.
Accounts receivable, net and other receivables and finance loans receivable, net (continued)
Finance loans receivable, net (continued)
Allowance for credit losses (continued)
Merchant finance loans receivable (continued)
The Company uses historical default experience over the lifetime of loans generated thus far in order to calculate a lifetime loss
rate for the lending book. The allowance for credit losses related to these merchant finance loans receivables is calculated by adding
together actual receivables in default plus multiplying the lifetime loss rate with the month-end outstanding lending book. The lifetime
loss rate as of each of June 30, 2025 and September 30, 2025, was approximately
%. The performing component (that is,
outstanding loan payments not in arrears), under-performing component (that is, outstanding loan payments that are in arrears) and
non-performing component (that is, outstanding loans for which payments appeared to have ceased) of the book represents
approximately 95%, 4% and 1%, respectively, of the outstanding lending book as of June 30, 2025. The performing component, under-
performing component and non-performing component of the book represents approximately
%,
% and
%, respectively, of the
outstanding lending book as of September 30, 2025.
4. Inventory
The Company’s inventory comprised the following categories as of September 30, 2025, and June 30, 2025:
September 30,
June 30,
2025
2025
Raw materials
$
$
Work-in-progress
Finished goods
$
$
5. Fair value of financial instruments
Initial recognition and measurement
Financial instruments are recognized when the Company becomes a party to the transaction. Initial measurements are at cost,
which includes transaction costs.
Risk management
The Company manages its exposure to currency exchange, translation, interest rate, credit, microlending credit and equity price
and liquidity risks as discussed below.
Currency exchange risk
The Company is subject to currency exchange risk because it purchases components for its vaults, that the Company assembles,
and inventories that it is required to settle in other currencies, primarily the euro, renminbi, and U.S. dollar. The Company has used
forward contracts in order to limit its exposure in these transactions to fluctuations in exchange rates between the South African rand
(“ZAR”), on the one hand, and the U.S. dollar and the euro, on the other hand.
Translation risk
Translation risk relates to the risk that the Company’s results of operations will vary significantly as the U.S. dollar is its reporting
currency, but it earns a significant amount of its revenues and incurs a significant amount of its expenses in ZAR. The U.S. dollar to
the ZAR exchange rate has fluctuated significantly over the past three years. As exchange rates are outside the Company’s control,
there can be no assurance that future fluctuations will not adversely affect the Company’s results of operations and financial condition.
14
5. Fair value of financial instruments (continued)
Risk management (continued)
Interest rate risk
As a result of its normal borrowing activities, the Company’s operating results are exposed to fluctuations in interest rates, which
it manages primarily through regular financing activities. Interest rates in South Africa have been trending downwards in recent
quarters and as of the date of this Quarterly Report, are expected to decline by a further 25 basis points in the first quarter of calendar
2026 and stabilize at that level for the remainder of that year. Therefore, ignoring the impact of changes to the margin on its borrowings
(refer to Note 9) and value of borrowings outstanding, the Company expects its cost of borrowing to decline moderately in the
foreseeable future, however, the Company would expect a higher cost of borrowing if interest rates were to increase in the future. The
Company periodically evaluates the cost and effectiveness of interest rate hedging strategies to manage this risk. The Company
generally maintains surplus cash in cash equivalents and held to maturity investments and has occasionally invested in marketable
securities.
Credit risk
Credit risk relates to the risk of loss that the Company would incur as a result of non-performance by counterparties. The
Company maintains credit risk policies in respect of its counterparties to minimize overall credit risk. These policies include an
evaluation of a potential counterparty’s financial condition, credit rating, and other credit criteria and risk mitigation tools as the
Company’s management deems appropriate. With respect to credit risk on certain financial instruments, the Company maintains a
policy of entering into such transactions only with South African and European financial institutions that have a credit rating of “B”
(or its equivalent) or better, as determined by credit rating agencies such as Standard & Poor’s, Moody’s and Fitch Ratings.
Consumer microlending credit risk
The Company is exposed to credit risk in its Consumer microlending activities, which provides unsecured short-term loans to
qualifying customers. Credit bureau checks as well as an affordability test are conducted as part of the origination process, both of
which are in line with local regulations. The Company considers this policy to be appropriate because the affordability test it performs
takes into account a variety of factors such as other debts and total expenditures on normal household and lifestyle expenses. Additional
allowances may be required should the ability of its customers to make payments when due deteriorate in the future. Judgment is
required to assess the ultimate recoverability of these finance loan receivables, including ongoing evaluation of the creditworthiness
of each customer.
Merchant lending
The Company maintains an allowance for doubtful finance loans receivable related to its Merchant services segment with respect
to short-term loans to qualifying merchant customers. The Company’s risk management procedures include adhering to its proprietary
lending criteria which uses an online-system loan application process, obtaining necessary customer transaction-history data and credit
bureau checks. The Company considers these procedures to be appropriate because it takes into account a variety of factors such as
the customer’s credit capacity and customer-specific risk factors when originating a loan.
Equity price and liquidity risk
Equity price risk relates to the risk of loss that the Company would incur as a result of the volatility in the exchange-traded price
of equity securities that it holds. The market price of these securities may fluctuate for a variety of reasons and, consequently, the
amount that the Company may obtain in a subsequent sale of these securities may significantly differ from the reported market value.
Equity liquidity risk relates to the risk of loss that the Company would incur as a result of the lack of liquidity on the exchange
on which those securities are listed. The Company may not be able to sell some or all of these securities at one time, or over an
extended period of time without influencing the exchange-traded price, or at all.
15
5. Fair value of financial instruments (continued)
Financial instruments
The following section describes the valuation methodologies the Company uses to measure its significant financial assets and
liabilities at fair value.
In general, and where applicable, the Company uses quoted prices in active markets for identical assets or liabilities to determine
fair value. This pricing methodology would apply to Level 1 investments. If quoted prices in active markets for identical assets or
liabilities are not available to determine fair value, then the Company uses quoted prices for similar assets and liabilities or inputs
other than the quoted prices that are observable either directly or indirectly. These investments would be included in Level 2
investments. In circumstances in which inputs are generally unobservable, values typically reflect management’s estimates of
assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-
based techniques that include option pricing models, discounted cash flow models, and similar techniques. Investments valued using
such techniques are included in Level 3 investments.
Asset measured at fair value using significant unobservable inputs – investment in Cell C
The Company’s Level 3 asset represents an investment of
mobile telecoms provider in South Africa. The Company used a discounted cash flow model developed by the Company to determine
the fair value of its investment in Cell C as of September 30, 2025 and June 30, 2025, respectively, and valued Cell C at $
and $
would be utilized over the forecast period. The Company has assumed a marketability discount of
% (June 2025: 15%) and a
minority discount of
% (June 2025: 17%). The Company utilized the latest business plan provided by Cell C management for the
period ended May 31, 2030, for the September 30, 2025, and June 30, 2025, valuations.
The following key valuation inputs were used as of September 30, 2025, and June 30, 2025:
Weighted Average Cost of Capital ("WACC"):
% (
% as of June 30, 2025)
Long term growth rate:
% (
% as of June 30, 2025)
Marketability discount:
% (
% as of June 30, 2025)
Minority discount:
% (
% as of June 30, 2025)
Net adjusted external debt - September 30, 2025:
(1)
ZAR
Net adjusted external debt - June 30, 2025:
(2)
ZAR
(1) translated from ZAR to U.S. dollars at exchange rates applicable as of September 30, 2025.
(2) translated from ZAR to U.S. dollars at exchange rates applicable as of June 30, 2025.
The fair value of Cell C as of September 30, 2025, utilizing the discounted cash flow valuation model developed by the Company
is sensitive to the following inputs: (i) the ability of Cell C to achieve the forecasts in their business case; (ii) the WAC C rate used;
and (iii) the minority and marketability discount used. Utilization of different inputs, or changes to these inputs, may result in a
significantly higher or lower fair value measurement.
The following table presents the impact on the carrying value of the Company’s Cell C investment of a
% decrease and
%
increase in the WACC rate and the EBITDA margins respectively used in the Cell C valuation on September 30, 2025, all amounts
translated at exchange rates applicable as of September 30, 2025:
Sensitivity for fair value of Cell C investment
2.5% increase
2.5% decrease
WACC rate
$
$
EBITDA margin
$
$
The aggregate fair value of the Cell C’s shares as of September 30, 2025, represented
% of the Company’s total assets,
including these shares. The Company expects that there will be short-term equity price volatility with respect to these shares given
t
hat Cell C remains in a turnaround process.
16
5. Fair value of financial instruments (continued)
The following table presents the Company’s assets measured at fair value on a recurring basis as of September 30, 2025,
according to the fair value hierarchy:
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
$
$
$
Related to insurance
business:
Cash, cash equivalents and
restricted cash (included
in other long-term assets)
Fixed maturity
investments (included in
cash and cash equivalents)
Total assets at fair value
$
$
$
$
The following table presents the Company’s assets measured at fair value on a recurring basis as of June 30, 2025, according to
the fair value hierarchy:
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
$
$
$
Related to insurance business
Cash and cash equivalents
(included in other long-term
assets)
Fixed maturity investments
(included in cash and cash
equivalents)
Total assets at fair value
$
$
$
$
There have been
There was
3, during the three months ended September 30, 2025 and 2024.
Summarized below is the movement in the carrying value of assets and liabilities measured at fair value on a recurring basis, and
categorized within Level 3, during the three months ended September 30, 2025:
Carrying value
Assets
Balance as of June 30, 2025
$
Foreign currency adjustment
(1)
Balance as of September 30, 2025
$
(1) The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S. dollar on
the carrying value.
17
5. Fair value of financial instruments (continued)
Summarized below is the movement in the carrying value of assets and liabilities measured at fair value on a recurring basis, and
categorized within Level 3, during the three months ended September 30, 2024:
Carrying value
Assets
Balance as of June 30, 2024
$
Foreign currency adjustment
(1)
Balance as of September 30, 2024
$
(1) The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S. dollar
on the carrying value.
Assets measured at fair value on a nonrecurring basis
The Company measures equity investments without readily determinable fair values at fair value on a nonrecurring basis. The
fair values of these investments are determined based on valuation techniques using the best information available and may include
quoted market prices, market comparables, and discounted cash flow projections. An impairment charge is recorded when the cost of
the asset exceeds its fair value and the excess is determined to be other-than-temporary. The Company has
measured at fair value on a nonrecurring basis.
6. Equity-accounted investments and other long-term assets
Refer to Note 9 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the
year ended June 30, 2025, for additional information regarding its equity -accounted investments and other long-term assets.
Equity-accounted investments
The Company’s ownership percentage in its equity-accounted investments as of September 30, 2025, and June 30, 2025, was as
follows:
September 30,
June 30,
2025
2025
Sandulela Technology (Pty) Ltd (“Sandulela”)
%
%
SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”)
%
%
SmartSwitch Namibia
The Company recorded a loss on impairment of equity-accounted investment of $
September 30, 2025, which primarily includes the release of accumulated other comprehensive loss (refer to Note 12).
Other long-term assets
Summarized below is the breakdown of other long-term assets as of September 30, 2025, and June 30, 2025:
September 30,
June 30,
2025
2025
Investment in
% of Cell C (June 30, 2025:
%) at fair value (Note 5)
Investment in
% of CPS (June 30, 2025:
%) at fair value
(1)(2)
Policy holder assets under investment contracts (Note 8)
Reinsurance assets under insurance contracts (Note 8)
Other long-term assets
Total other long-term assets
$
$
(1) The Company determined that CPS does not have a readily determinable fair value and therefore elected to record its
investment at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions
for the identical or a similar investment of the same issuer.
(2) On October 16, 2020, the High Court of South Africa, Gauteng Division, Pretoria ordered that CPS be placed into liquidation.
18
6. Equity-accounted investments and other long-term assets (continued)
Other long-term assets (continued)
Summarized below are the components of the Company’s equity securities without readily determinable fair value and held to
maturity investments as of September 30, 2025:
Cost basis
Unrealized
holding
Unrealized
holding
Carrying
gains
losses
value
Equity securities:
Investment in CPS
$
$
$
$
Total
$
$
$
$
Summarized below are the components of the Company’s equity securities without readily determinable fair value and held to
maturity investments as of June 30, 2025:
Cost basis
Unrealized
holding
Unrealized
holding
Carrying
gains
losses
value
Equity securities:
Investment in CPS
$
$
$
$
Held to maturity:
Investment in Cedar Cellular notes
7. Goodwill and intangible assets, net
Goodwill
Summarized below is the movement in the carrying value of goodwill for the three months ended September 30, 2025:
Gross value
Accumulated
impairment
Carrying
value
Balance as of June 30, 2025
$
$
(36,714 )
$
Foreign currency adjustment
(1)
(869 )
Balance as of September 30, 2025
$
$
(37,583 )
$
(1) – The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S. dollar
on the carrying value.
Goodwill has been allocated to the Company’s reportable segments as follows:
Merchant
Consumer
Enterprise
Carrying
value
Balance as of June 30, 2025
$
$
$
$
Foreign currency adjustment
(1)
Balance as of September 30, 2025
$
$
$
$
(1) The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S. dollar
o
n the carrying value.
19
7. Goodwill and intangible assets, net (continued)
Intangible assets, net
Carrying value and amortization of intangible assets
Summarized below is the carrying value and accumulated amortization of intangible assets as of September 30, 2025, and June
30, 2025:
As of September 30, 2025
As of June 30, 2025
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Finite-lived intangible assets:
Software, integrated
platform and unpatented
technology
$
$
(47,034 )
$
$
$
(41,925 )
$
Customer relationships
(20,509 )
(18,568 )
Brands and trademarks
(1)
(13,524 )
(8,993 )
FTS patent
(2,219 )
(2,158 )
Total finite-lived intangible
assets
$
$
(83,286 )
$
$
$
(71,644 )
$
(1) During early calendar 2025, the Company’s executive considered the unification of the Company’s merchant segments
operations and the realignment of the Company’s brands under the master brand “Lesaka”. The Company’s Board of Directors
approved the realignment of certain of the Company’s brands to the master brand in May 2025. The Company has identified the steps
and timing to realign the affected brands under the master brand and expects to have complete alignment by February 2027, with
certain brands expected to be aligned by December 2025. The change in brands has resulted in a change in the useful lives of certain
of the Company’s brand and trademark intangible assets which has resulted in an increase (excluding the impact on Adumo and GAAP
brands) in amortization expense of $
ended September 30, 2024. The change in the useful lives resulted in a $
operations for the three months ended September 30, 2025, and did not have a significant impact on loss per share. The change did
not impact prior periods.
Aggregate amortization expense on the finite-lived intangible assets for the three months ended September 30, 2025 and 2024,
was $
thereafter, assuming exchange rates that prevailed on September 30, 2025, is presented in the table below. Actual amortization expense
in future periods could differ from this estimate as a result of acquisitions, changes in useful lives, exchange rate fluctuations and other
relevant factors.
Fiscal 2026 (excluding three months ended September 30, 2025)
$
Fiscal 2027
Fiscal 2028
Fiscal 2029
Fiscal 2030
Thereafter
Total future estimated annual amortization expense
$
20
8. Assets and policyholder liabilities under insurance and investment contracts
Reinsurance assets and policyholder liabilities under insurance contracts
Summarized below is the movement in reinsurance assets and policyholder liabilities under insurance contracts during the three
months ended September 30, 2025:
Reinsurance
Assets
(1)
Insurance
contracts
(2)
Balance as of June 30, 2025
$
$
(2,644 )
Increase in policyholder benefits under insurance contracts
(3,062 )
Claims and decrease in policyholders’ benefits under insurance contracts
Foreign currency adjustment
(3)
(78 )
Balance as of September 30, 2025
$
$
(2,902 )
(1) Included in other long-term assets (refer to Note 6);
(2) Included in other long-term liabilities;
(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.
The Company has agreements with reinsurance companies in order to limit its losses from various insurance contracts, however,
if the reinsurer is unable to meet its obligations, the Company retains the liability. The value of insurance contract liabilities is based
on the best estimate assumptions of future experience plus prescribed margins, as required in the markets in which these products are
offered, namely South Africa. The process of deriving the best estimate assumptions plus prescribed margins includes assumptions
related to claim reporting delays (based on average industry experience).
Assets and policyholder liabilities under investment contracts
Summarized below is the movement in assets and policyholder liabilities under investment contracts during the three months
ended September 30, 2025:
Assets
(1)
Investment
contracts
(2)
Balance as of June 30, 2025
$
$
(125 )
Increase in policy holder benefits under investment contracts
(1 )
Foreign currency adjustment
(3)
(4 )
(4 )
Balance as of September 30, 2025
$
$
(130 )
(1) Included in other long-term assets (refer to Note 6);
(2) Included in other long-term liabilities;
(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.
The Company does not offer any investment products with guarantees related to capital or returns.
21
9. Borrowings
Refer to Note 12 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for
the year ended June 30, 2025, for additional information regarding its borrowings.
Reference rate reform
After the transition away from certain interbank offered rates in foreign jurisdictions (“IBOR reform”), the reforms to South
Africa’s reference interest rate are now accelerating rapidly. The Johannesburg Interbank Average Rate (“JIBAR”) will be replaced
by the new South African Overnight Index Average (“ZARONIA”). Certain of the Company’s borrowings reference JIBAR as a base
interest rate. ZARONIA reflects the interest rate at which rand-denominated overnight wholesale funds are obtained by commercial
banks. There is uncertainty surrounding the timing and manner in which the transition would occur and how this would affect our
borrowings. The Company is in regular contact with its lenders and will update existing borrowing agreements to the new base rate
when ZARONIA is adopted by the financial industry and lenders as the new reference rate.
South Africa
The JIBAR, an average of 3 month negotiable certificates of deposit (“NCD”) rates, on September 30, 2025, was
%. The
prime rate, the benchmark rate at which private sector banks lend to the public in South Africa, on September 30, 2025, was
%.
Movement in short-term credit facilities
Summarized below are the Company’s short-term facilities as of September 30, 2025, and the movement in the Company’s short-
term facilities from as of June 30, 2025 to as of September 30, 2025:
RMB
RMB
Nedbank
GBF
Other
Facilities
Total
Short-term facilities available as of September 30, 2025
$
$
$
$
Overdraft
Indirect and derivative facilities
Movement in utilized overdraft facilities:
No restrictions as to use
Balance as of June 30, 2025
Utilized
Repaid
(40,661 )
(40,661 )
Foreign currency adjustment
(1)
Balance as of September 30, 2025
No restrictions as to use
$
$
$
$
Interest rate as of September 30, 2025 (%)
(2)
N/A
N/A
Interest rate as of June 30, 2025 (%)
(2)
N/A
N/A
Movement in utilized indirect and derivative facilities:
Balance as of June 30, 2025
$
$
$
$
Foreign currency adjustment
(1)
Balance as of September 30, 2025
$
$
$
$
(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.
(2) RMB GBF interest is set at prime less
%.
Interest expense incurred under the Company’s South African short-term borrowings and included in the caption interest expense
on the condensed consolidated statement of operations during the three months ended September 30, 2025 and 2024, was $
and $
22
9. Borrowings (continued)
Movement in long-term borrowings
Summarized below is the movement in the Company’s long-term borrowing from as of June 30, 2025 to as of September 30,
2025:
Facilities
Lesaka A
Lesaka B
Asset
backed
CCC
Total
Included in current
$
$
$
$
$
Included in long-term
Opening balance as of June 30, 2025
Facilities utilized
Facilities repaid
(1,148 )
(1,148 )
Non-refundable fees paid
(33 )
(33 )
Non-refundable fees amortized
Foreign currency adjustment
(1)
Closing balance as of September 30, 2025
Included in current
Included in long-term
Unamortized fees
(990 )
(31 )
(1,021 )
Due within 2 years
Due within 3 years
Due within 4 years
Due within 5 years
$
$
$
$
$
Interest rates as of September 30, 2025 (%):
Base rate (%)
Margin (%)
(2)
(3)
(4)
(5)
Interest rates as of June 30, 2025 (%):
Base rate (%)
Margin (%)
Footnote number
(2)
(3)
(4)
(5)
(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.
(2) Interest on Facility A and Facility B is based on the JIBAR in effect from time to time plus an initial margin of
% per
annum until June 30, 2025. From July 1, 2025, the margin on Facility A is determined with reference to the Net Debt to EBITDA
Ratio, and the margin will be either (i)
%, if the Net Debt to EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
%, if
the Net Debt to EBITDA Ratio is less than 2.5 times.
(3) Interest on Facility B is calculated based on JIBAR from time to time plus an initial margin of
% per annum until June
30, 2025. From July 1, 2025, the margin on Facility B is determined with reference to the Net Debt to EBITDA Ratio, and the margin
will be either (i)
%, if the Net Debt to EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
%, if the Net Debt to EBITDA
Ratio is less than 2.5 times.
(4) Interest is charged at prime plus
% per annum on the utilized balance.
(5) Interest is charged at prime plus
% per annum on the utilized balance.
Interest expense incurred under the Company’s South African long-term borrowings and included in the caption interest expense
on the condensed consolidated statement of operations during the three months ended September 30, 2025 and 2024, was $
and $
30, 2025 and 2024, respectively, were $
Interest expense incurred under the Company’s South African long-term borrowings to fund its Consumer lending book (for the
three months ended September 30, 2025) and interest incurred under the Company’s CCC and K2020 facilities relates to borrowings
utilized to fund a portion of the Company’s merchant finance loans receivable were $
included in the caption cost of goods sold, IT processing, servicing and support on the condensed consolidated statement of operations
f
or the three months ended September 30, 2025 and 2024.
23
10. Other payables
Summarized below is the breakdown of other payables as of September 30, 2025, and June 30, 2025:
September 30,
June 30,
2025
2025
Vendor wallet balances
$
$
Accruals
Provisions
Clearing accounts
Value -added tax payable
Deferred consideration due to seller of Recharger
Payroll-related payables
Other
$
$
Other includes deferred income, client deposits and other payables.
11. Capital structure
The following table presents a reconciliation between the number of shares, net of treasury, presented in the unaudited condensed
consolidated statement of changes in equity as of September 30, 2025 and 2024, respectively:
September 30,
September 30,
2025
2024
Number of shares, net of treasury:
Statement of changes in equity
Non-vested equity shares that have not vested as of end of period
Number of shares, net of treasury, excluding non-vested equity shares that have not
vested
12. Accumulated other comprehensive loss
The table below presents the change in accumulated other comprehensive loss per component during the three months ended
September 30, 2025:
Three months ended
September 30, 2025
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2025
$
(185,664 )
$
(185,664 )
Release of foreign currency translation reserve related to liquidation of equity -accounted
investment
Movement in foreign currency translation reserve
Balance as of September 30, 2025
$
(178,462 )
$
(178,462 )
24
12. Accumulated other comprehensive loss (continued)
The table below presents the change in accumulated other comprehensive loss per component during the three months ended
September 30, 2024:
Three months ended
September 30, 2024
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2024
$
(188,355 )
$
(188,355 )
Movement in foreign currency translation reserve
Balance as of September 30, 2024
$
(177,830 )
$
(177,830 )
During the three months ended September 30, 2025, the Company reclassified losses of $
comprehensive loss (accumulated foreign currency translation reserve) to net loss related to the impairment on liquidation of an
equity-accounted investment. There were
the three months ended September 30, 2024.
13. Stock-based compensation
The Company’s Amended and Restated 2022 Stock Incentive Plan (“20 22 Plan”) and the vesting terms of certain stock-based
awards granted are described in Note 17 to the Company’s audited consolidated financial statements included in its Annual Report on
Form 10-K for the year ended June 30, 2025.
Stock option and restricted stock activity
Options
The following table summarizes stock option activity for the three months ended September 30, 2025 and 2024:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($'000)
Weighted
average
grant date
fair value
($)
Outstanding - June 30, 2025
Outstanding - September 30, 2025
Outstanding - June 30, 2024
Forfeited
(13,333 )
-
-
Outstanding - September 30, 2024
during the three months ended September 30, 2025 and 2024.
Employees forfeited an aggregate of
three months ended September 30, 2024.
The following table presents stock options vested and expected to vest as of September 30, 2025:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Vested and expecting to vest - September 30, 2025
These options have an exercise price range of $
.
25
13. Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Options (continued)
The following table presents stock options that are exercisable as of September 30, 2025:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Exercisable - September 30, 2025
The Company issues new shares to satisfy stock option exercises.
Restricted stock
The following table summarizes restricted stock activity for the three months ended September 30, 2025 and 2024:
Number of
shares of
restricted stock
Weighted
average grant
date fair value
($’000)
Non-vested – June 30, 2025
Total granted
Granted – July 2025
Granted – August 2025
Granted – September 2025
Total vested
(10,933 )
Vested – August 2025
(10,933 )
Forfeitures
(10,793 )
Non-vested – September 30, 2025
Non-vested – June 30, 2024
Total Granted
Granted – August 2024
Total vested
(78,801 )
Vested – July 2024
(78,801 )
Forfeitures
(3,100 )
Non-vested – September 30, 2024
Grants
In July, August and September 2025, respectively, the Company granted
,
employees which have time-based vesting conditions and which are subject to the employees’ continued employment with the
Company through the applicable vesting dates.
In August 2024, the Company granted
The Company has agreed to grant an advisor
Company and the advisor have agreed that the Company will issue the shares to the advisor, in arrears, on a quarterly basis. During
the three months ended September 30, 2025, the Company recorded a stock-based compensation charge of $
the issuance of
26
13. Stock-based compensation (continued)
Restricted stock (continued)
Vesting
In August and September 2025, an aggregate of
Forfeitures
During the three months ended September 30, 2025 and 2024, respectively, employees forfeited
restricted stock following termination of their employment with the Company.
Stock-based compensation charge and unrecognized compensation cost
The Company recorded a stock-based compensation charge, net, excluding charges related to the post-combination compensation
charges discussed in Note 2, during the three months ended September 30, 2025 and 2024, of $
respectively, which comprised:
Total charge
Allocated to cost
of goods sold, IT
processing,
servicing and
support
Allocated to
selling, general
and
administration
Three months ended September 30, 2025
Stock-based compensation charge
$
$
-
$
Reversal of stock compensation charge related to ESOP
-
Reversal of stock compensation charge related to restricted
stock forfeited
(12 )
-
(12 )
Total - three months ended September 30, 2025
$
$
-
$
Three months ended September 30, 2024
Stock-based compensation charge
$
$
-
$
Total - three months ended September 30, 2024
$
$
-
$
The stock-based compensation charges have been allocated to selling, general and administration based on the allocation of the
cash compensation paid to the relevant employees.
As of September 30, 2025, the total unrecognized compensation cost related to stock options was $
Company expects to recognize over
. As of September 30, 2025, the total unrecognized compensation cost related to
restricted stock awards was $
.
During the three months ended September 30, 2025 and 2024, the Company recorded a deferred tax benefit of $
$
periods the Company recorded a valuation allowance related to the full deferred tax benefit recognized because it does not believe that
the stock-based compensation deduction would be utilized as it does not anticipate generating sufficient taxable income in the United
States. The Company deducts the difference between the market value on the date of exercise by the option recipient and the exercise
price from income subject to taxation in the United States.
14. (Loss) Earnings per share
The Company has issued redeemable common stock which is redeemable at an amount other than fair value. Redemption of a
class of common stock at other than fair value increases or decreases the carrying amount of the redeemable common stock and is
reflected in basic earnings per share using the two-class method. There were
carrying value of the redeemable common stock during the three months ended September 30, 2025 and 2024. Accordingly, the two-
class method presented below does not include the impact of any redemption. The Company’s redeemable common stock is described
in Note 14 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended
June 30, 2025.
27
14. (Loss) Earnings per share (continued)
Basic (loss) earnings per share includes shares of restricted stock that meet the definition of a participating security because these
shares are eligible to receive non -forfeitable dividend equivalents at the same rate as common stock. Basic (loss) earnings per share
has been calculated using the two-class method and basic (loss) earnings per share for the three months ended September 30, 2025 and
2024, reflects only undistributed earnings. The computation below of basic (loss) earnings per share excludes the net loss attributable
to shares of unvested restricted stock (participating non-vested restricted stock) from the numerator and excludes the dilutive impact
of these unvested shares of restricted stock from the denominator.
Diluted (loss) earnings per share has been calculated to give effect to the number of shares of additional common stock that
would have been outstanding if the potential dilutive instruments had been issued in each period. Stock options are included in the
calculation of diluted (loss) earnings per share utilizing the treasury stock method and are not considered to be participating securities,
as the stock options do not contain non-forfeitable dividend rights. The Company has excluded employee stock options to purchase
30, 2025 and 2024 because the effect would be antidilutive.
The calculation of diluted (loss) earnings per share includes the dilutive effect of a portion of the restricted stock granted to
employees as these shares of restricted stock are considered contingently returnable shares for the purposes of the diluted (loss)
earnings per share calculation and the vesting conditions in respect of a portion of the restricted stock had been satisfied.
The vesting conditions for all awards made are discussed in Note 17 to the Company’s audited consolidated financial statements
included in its Annual Report on Form 10-K for the year ended June 30, 2025.
The following table presents net loss attributable to Lesaka and the share data used in the basic and diluted loss per share
computations using the two-class method:
Three months ended
September 30,
2025
2024
(in thousands except
percent and
per share data)
Numerator:
Net loss attributable to Lesaka
$
(4,297 )
$
(4,542 )
Undistributed (loss) earnings
$
(4,297 )
$
(4,542 )
Percent allocated to common shareholders (Calculation 1)
Numerator for (loss) earnings per share: basic and diluted
(4,179 )
(4,399 )
Continuing
(4,179 )
(4,399 )
Denominator
Denominator for basic (loss) earnings per share:
Weighted-average common shares outstanding
Denominator for diluted (loss) earnings per share: adjusted weighted average
common shares outstanding and assuming conversion
(Loss) Earnings per share:
Basic
$
(0.05 )
$
(0.07 )
Diluted
$
(0.05 )
$
(0.07 )
(Calculation 1)
Basic weighted-average common shares outstanding (A)
Basic weighted-average common shares outstanding and unvested restricted shares
expected to vest (B)
Percent allocated to common shareholders (A) / (B)
Options to purchase
outstanding during the three months ended September 30, 2025, but were not included in the computation of diluted (loss) earnings
per share because the options’ exercise price was greater than the average market price of the Company’s common stock. Options to
purchase
the three months ended September 30, 2024, but were not included in the computation of diluted (loss) earnings per share because the
options’ exercise price was greater than the average market price of the Company’s common stock. The options, which expire at
v
arious dates through February 3, 2032, were still outstanding as of September 30, 2025.
28
15. Supplemental cash flow information
The following table presents supplemental cash flow disclosures for the three months ended September 30, 2025 and 2024:
Three months ended
September 30,
2025
2024
Cash received from interest
$
$
Cash paid for interest
$
$
Cash paid (refund) for income taxes
$
$
(45 )
Disaggregation of cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash included on the Company’s unaudited condensed consolidated statement of cash flows
includes restricted cash related to cash withdrawn from the Company’s debt facilities to fund ATMs. This facility was cancelled in
November 2024. The Company was only permitted to use this cash to fund ATMs and this cash was considered restricted as to use
and therefore was classified as restricted cash. Cash, cash equivalents and restricted cash also includes cash in certain bank accounts
that has been ceded to Nedbank. As this cash has been pledged and ceded it may not be drawn and is considered restricted as to use
and therefore is classified as restricted cash as well. The following table presents the disaggregation of cash, cash equivalents and
restricted cash as of September 30, 2025 and 2024, and June 30, 2025:
September 30,
2025
September 30,
2024
June 30, 2025
Cash and cash equivalents
$
$
$
Restricted cash
Cash, cash equivalents and restricted cash
$
$
$
Leases
The following table presents supplemental cash flow disclosure related to leases for the three months ended September 30, 2025
and 2024:
Three months ended
September 30,
2025
2024
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
$
$
Right-of-use assets obtained in exchange for lease obligations
Operating leases
$
$
29
16. Revenue recognition
Disaggregation of revenue
The following table presents the Company’s revenue disaggregated by major revenue streams, including a reconciliation to
reportable segments for the three months ended September 30, 2025:
Merchant
Consumer
Enterprise
Total
Processing fees
$
$
$
$
South Africa
Rest of Africa
Technology products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of Africa
Total revenue, derived from the following geographic
locations
South Africa
Rest of Africa
$
$
$
$
30
16. Revenue recognition (continued)
Disaggregation of revenue (continued)
The following table presents the Company’s revenue disaggregated by major revenue streams, including a reconciliation to
reportable segments for the three months ended September 30, 2024 (previously reported information for the three months ended
September 30, 2024, has been recast for the change to the Company’s internal reporting structure in the second quarter of fiscal 2025
as described in Note 21 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for
the year ended June 30, 2025):
Merchant
Consumer
Enterprise
Total
Processing fees
$
$
$
$
South Africa
Rest of Africa
Technology products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of Africa
Total revenue, derived from the following geographic
locations
South Africa
Rest of Africa
$
$
$
$
31
17. Leases
The Company has entered into leasing arrangements classified as operating leases under accounting guidance. These leasing
arrangements relate to the lease of its corporate head office and sales and administration offices of its Merchant, Consumer and
Enterprise businesses. The Company’s operating leases have remaining lease terms of between
one
. The Company also
operates parts of its consumer business from locations which it leases for a period of less than
. The Company’s operating
lease expense during the three months ended September 30, 2025 and 2024 was $
The Company has also entered into short-term leasing arrangements, primarily for the lease of branch locations and other
locations, to operate its consumer business in South Africa. The Company’s short-term lease expense during the three months ended
September 30, 2025 and 2024, was $
The following table presents supplemental balance sheet disclosure related to the Company’s right-of-use assets and its operating
lease liabilities as of September 30, 2025 and June 30, 2025:
September 30,
June 30,
2025
2025
Right of use assets obtained in exchange for lease obligations:
Weighted average remaining lease term (years)
Weighted average discount rate (percent)
The maturities of the Company’s operating lease liabilities as of September 30, 2025, are presented below:
Maturities of operating lease liabilities
Year ended June 30,
2026 (excluding three months to September 30, 2025)
$
2027
2028
2029
2030
Thereafter
Total undiscounted operating lease liabilities
Less imputed interest
Total operating lease liabilities, included in
Operating lease liability - current
Operating lease liability - long-term
$
18. Operating segments
Operating segments
The Company discloses segment information as reflected in the management information systems reports that its chief operating
decision maker uses in making decisions and to report certain entity-wide disclosures about products and services, and the countries in
which the entity holds material assets or reports material revenues. A description of the Company’s operating segments is contained in
Note 21 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended
June 30, 2025. Previously reported information for the three months ended September 30, 2024, has been recast for the change to the
Company’s internal reporting structure in the second quarter of fiscal 2025 as described in Note 21 to the Company’s audited
consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2025.
The Company’s chief operating decision maker is the Company’s Executive Chairman. During the second quarter of fiscal 2025,
he changed the Company’s operating and internal reporting structures to present a new segment, Enterprise, separately.
The Company currently has
decision maker (“CODM”) is the Company’s Executive Chairman. The CODM analyzes the Company’s operating performance
primarily based on these three operational lines, namely,
have higher revenues and have access to multiple service providers. Informal sector merchants, which are often sole proprietors and
usually have lower revenues compared with formal section merchants, operate in rural areas or in informal urban areas and do not
always have access to a full-suite of traditional banking products;
(ii) Consumer, which primarily focuses on individuals who have historically been excluded from traditional financial services
and to whom we offer transactional accounts (banking), insurance, lending (short-term loans), payments solutions (digital wallet) and
various value-added services; and
(iii) Enterprise, which comprises large-scale corporate and government organizations, including but not limited to banks, mobile
network operators (“MNOs”) and municipalities, and, through Recharger, landlords utilizing Recharger’s prepaid electricity metering
s
olution.
32
18. Operating segments (continued)
Types of products and services from which each segment derives its revenues
The Merchant segment includes revenue generated from the sale of Alternative Digital Products (“ADP”) (select prepaid
solutions, supplier-enabled payments, international money transfer and other) and card-acquiring services to informal sector
merchants. It also includes activities related to the provision of goods and services provided to corporate and other juristic entities.
The Company earns fees from processing activities performed (including card acquiring and the provision of a payment gateway
services) for its customers, and rental and license fees from the provision of point of sales (“POS”) hardware and software to the
hospitality industry. The Company also provides cash management and payment services to merchant customers through a digital
vault which is located at the customer’s premises and through which the Company is able to provide the services which generate
processing fee revenue. The Merchant segment includes interest earned from the provision of loans to its customers, refer to Note 16.
The Consumer segment includes activities related to the provision of financial services to customers, including a bank account,
loans and insurance products. The Company charges monthly administration fees for all bank accounts. Customers that have a bank
account managed by the Company are issued cards that can be utilized to withdraw funds at an ATM or to transact at a merchant POS.
The Company earns processing fees from transactions processed for these customers. The Company also earns fees on transactions
performed by other banks’ customers utilizing its ATM (until June 30, 2023) or POS. The Company provides short -term loans to
customers in South Africa for which it earns initiation and monthly service fees, and interest revenue from the second quarter of fiscal
2025, refer to Note 16. The Company writes life insurance contracts, primarily funeral-benefit policies, and policy holders pay the
Company a monthly insurance premium. The Company also earns fees from the provision of physical and digital prepaid and secure
payout solutions for South African businesses.
The Enterprise segment provides its business and government-related customers with transaction processing services that involve
the collection, transmittal and retrieval of transaction data. Through Recharger, Enterprise offers landlords access to Recharger’s
prepaid electricity metering solution through which Enterprise earns commission revenue from prepaid electricity voucher sales to
tenants recharging prepaid meters. This segment also includes sales of hardware and licenses to customers. Hardware includes the sale
of POS devices, SIM cards and other consumables which can occur on an ad hoc basis. Licenses include the right to use certain
technology developed by the Company.
Segment measure of profit or loss
The Company evaluates segment performance based on segment earnings before interest, tax, depreciation and amortization
(“EBITDA”), adjusted for items mentioned in the sentences below (“Segment Adjusted EBITDA”), the Company’s reportable
segments’ measure of profit or loss.
The Company obtained a general lending facility in February 2025, which has been partially used to fund a portion of its
Consumer lending during the three months ended September 30, 2025, and interest related to these borrowings have been allocated to
Consumer. The Company also included an intercompany interest expense in its Consumer Segment Adjusted EBITDA for the three
months ended September 30, 2024.
The Company does not allocate once-off items, 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 securities), interest income, certain interest expense, income tax expense or loss from equity-accounted investments to its
reportable segments. Group costs generally include: employee related costs in relation to employees specifically hired for group roles
and 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 officer’s insurance premiums. Once-off
items represent non-recurring expense items, including costs related to acquisitions and transactions consummated or ultimately not
pursued. Unrealized (loss) gain for currency adjustments represents foreign currency mark-to-market adjustments on certain
intercompany accounts. Interest adjustment represents the intercompany interest expense included in the Consumer Segment Adjusted
EBITDA during fiscal 2025. The Stock-based compensation adjustments reflect stock-based compensation expense and are excluded
from the calculation of Segment Adjusted EBITDA and are therefore reported as reconciling items to reconcile the reportable
segments’ Segment Adjusted EBITDA to the Company’s loss before income tax expense.
Our CODM does not review the components of segment selling, general and administration expenses and is presented with
reports which include revenue, net revenue (a non-GAAP measure) and Segment Adjusted EBITDA.
33
18. Operating segments (continued)
The table below presents the reconciliation of revenue from external customers to the reportable segment’s revenue, significant
expenditures, the Company’s reportable segment’s measure of profit or loss, and certain other segment information for the three
months ended September 30, 2025 and 2024, respectively, is as follows:
Three months ended September 30, 2025
Merchant
Consumer
Enterprise
No allocated
Total
Revenue from external customers
$
$
$
$
$
Intersegment revenues
Segment revenue
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
Selling, general and
administration
(1)(2)
Segment adjusted EBITDA
$
$
$
$
$
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
Expenditures for long-lived assets
$
$
$
$
$
Three months ended September 30, 2024
Merchant
Consumer
Enterprise
No allocated
Total
Revenue from external customers
$
$
$
$
$
Intersegment revenues
Segment revenue
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
Selling, general and
administration
(1)(3)
Segment adjusted EBITDA
$
$
$
$
$
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
Expenditures for long-lived assets
$
$
$
$
$
34
18. Operating segments (continued)
(1) Selling, general and administration includes human capital-related expenses (including base salary and bonus), IT-related
expenses (including software licenses, hardware maintenance, hosting, and communication expenses), professional fees (including
audit, legal, consulting and other fees), lease and utilities expenses, the allowance for credit losses and other operating and support
expenses.
(2) Segment Adjusted EBITDA for the three months ended September 30, 2025, includes retrenchment costs for Merchant of $
(3) Segment Adjusted EBITDA for the three months ended September 30, 2024, includes retrenchments costs for Consumer of
$
The reconciliation of the reportable segments’ measures of profit or loss to loss before income tax expense for the three months
ended September 30, 2025 and 2024, is as follows:
Three months ended
September 30,
2025
2024
Reportable segments measure of profit or loss
$
$
Operating loss: Group costs
(3,611 )
(2,949 )
Once-off costs
(267 )
(1,805 )
Interest adjustment
Unrealized Gain FV for currency adjustments
Stock-based compensation charge adjustments
(1,861 )
(2,377 )
Depreciation and amortization
(12,894 )
(6,276 )
Loss on impairment of equity-accounted investment
(584 )
Interest income
Interest expense
(4,898 )
(5,032 )
Loss before income tax expense
$
(4,560 )
$
(4,491 )
The segment information as reviewed by the chief operating decision maker does not include a measure of segment assets per
segment as all of the significant assets are used in the operations of all, rather than any one, of the segments. The Company does not
have dedicated assets assigned to a particular operating segment. Accordingly, it is not meaningful to attempt an arbitrary allocation
and segment asset allocation is therefore not presented.
19. Income tax
Income tax in interim periods
For the purposes of interim financial reporting, the Company determines the appropriate income tax provision by first applying
the effective tax rate expected to be applicable for the full fiscal year to ordinary income. This amount is then adjusted for the tax
effect of significant unusual items, for instance, changes in tax law, valuation allowances and non-deductible transaction-related
expenses that are reported separately, and have an impact on the tax charge. The cumulative effect of any change in the enacted tax
rate, if and when applicable, on the opening balance of deferred tax assets and liabilities is also included in the tax charge as a discrete
event in the interim period in which the enactment date occurs.
For the three months ended September 30, 2025, the Company’s effective tax rate was impacted by the tax expense recorded by
the Company’s profitable South African operations and non-deductible expenses (including transaction-related expenditures). The
Company’s income tax benefit was impacted by a higher deferred tax benefit as a result of the reduction in the useful lives of certain
of the Company’s brand and trademark intangible assets which has resulted in an increase in amortization expense during the three
months ended September 30, 2025.
For the three months ended September 30, 2024, the Company’s effective tax rate was impacted by the tax expense recorded by
the Company’s profitable South African operations, non-deductible expenses (including transaction-related expenditures), the on-
going losses incurred by certain of the Company’s South African businesses and the associated valuation allowances created related
to the deferred tax assets recognized regarding net operating losses incurred by these entities.
Uncertain tax positions
As of three months ended September 30, 2025 and June 30, 2025, the Company had
files income tax returns mainly in South Africa, Botswana, Namibia and in the U.S. federal jurisdiction. As of September 30, 2025,
the Company’s South African subsidiaries are no longer subject to income tax examination by the South African Revenue Service for
periods before June 30, 2020. The Company is subject to income tax in other jurisdictions outside South Africa, none of which are
i
ndividually material to its financial position, statement of cash flows, or results of operations.
35
20. Commitments and contingencies
Guarantees
The South African Revenue Service and certain of the Company’s customers, suppliers and other business partners have asked
the Company to provide them with guarantees, including standby letters of credit, issued by South African banks. The Company is
required to procure these guarantees for these third parties to operate its business.
RMB has issued guarantees to these third parties amounting to ZAR
applicable as of September 30, 2025) thereby utilizing part of the Company’s short-term facilities.
Nedbank has issued guarantees to these third parties amounting to ZAR
applicable as of September 30, 2025) thereby utilizing part of the Company’s short-term facilities. The Company pays commission of
between
% per annum to
% per annum of the face value of these guarantees and does not recover any of the commission from
third parties.
The Company has not recognized any obligation related to these guarantees in its consolidated balance sheet as of September 30,
2025. The maximum potential amount that the Company could pay under these guarantees is ZAR
at exchange rates applicable as of September 30, 2025). The Company has ceded and pledged certain bank accounts to Nedbank as
security for the guarantees issued by them with an aggregate value of ZAR
applicable as of September 30, 2025).
Contingencies
The Company is subject to a variety of insignificant claims and suits that arise from time to time in the ordinary course of
business. Management currently believes that the resolution of these other matters, individually or in the aggregate, will not have a
material adverse impact on the Company’s financial position, results of operations or cash flows.
21. Subsequent events
Agreement to sell shares in Cell C
As discussed in Note 5, the Company holds, through Lesaka SA, shares in Cell C. It is intended that a restructure of Cell C will
be undertaken, which will include the establishment of a new holding company for Cell C, Cell C Holdings Limited (“Cell C Listco”),
and the transfer of shares in Cell C by its existing shareholders to Cell C Listco in exchange for Cell C Listco issuing shares to the
existing Cell C shareholders (the “Flip-up”). It is further intended that the shares of Cell C Listco will be listed on the securities
exchange operated by the JSE Limited (the “Listing”). On October 31, 2025, in considering the proposed restructure and Listing,
Lesaka SA entered into an agreement with The Prepaid Company Proprietary Limited (“TPC”) to dispose of its shares in Cell C (or,
after the Flip-up is implemented, its shares in Cell C Listco) (“Relevant Shares”), if certain conditions are met. Under the terms of the
agreement, if:
(1)
the Listing occurs by November 30, 2025, and the value of Lesaka SA’s shares in Cell C is less than ZAR
Lesaka SA can choose to either hold the shares, or sell the Relevant Shares to TPC for a purchase price equal to ZAR
million; or
(2)
the Listing does not occur by November 30, 2025 (or, earlier than this date, it is determined that the Listing will not proceed),
then Lesaka SA will sell the Relevant Shares to TPC for ZAR
Listing occurs and the list price per share (“A”) is more than the price paid per Lesaka share (the aggregate ZAR
(“B”), then TPC shall pay an amount equal to the difference between A and B, multiplied by the number of Relevant Shares
to Lesaka SA as a top-up to the purchase consideration.
Issue of guarantee to RMB in October 2025
In October 2025, the Company provided a ZAR
facility extended by RMB to Sandulela under the terms of February 2025 Common Terms Agreement.
36
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended June 30, 2025,
and the unaudited condensed consolidated financial statements and the accompanying notes included in this Form 10-Q.
U.S. securities laws require that when we publish any non-GAAP measures, we disclose the reason for using these non-GAAP
measures and provide reconciliations to the most directly comparable GAAP measures. We discuss why we consider it useful to
present these non -GAAP measures and the material risks and limitations of these measures, as well as a reconciliation of these non-
GAAP measures to the most directly comparable GAAP financial measure below at “—Results of Operations—Use of Non-GAAP
Measures” below.
Forward-looking statements
Some of the statements in this Form 10-Q constitute forward-looking statements. These statements relate to future events or our
future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s
actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed, implied or inferred by these forward-looking statements. Such factors include, among other
things, those listed under Item 1A.—“Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2025. In some
cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should ”, “could”, “would”, “expects”,
“plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other
comparable terminology.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we do not know whether
we can achieve positive future results, levels of activity, performance, or goals. Actual events or results may differ materially. We
undertake no obligation to update any of the forward-looking statements after the date of this Form 10-Q to conform those statements
to reflect the occurrence of unanticipated events, except as required by applicable law.
You should read this Form 10-Q and the documents that we reference herein and the documents we have filed as exhibits hereto
and thereto and which we have filed with the United States Securities and Exchange Commission (“SEC”) completely and with the
understanding that our actual future results, levels of activity, performance and achievements may be materially different from what
we expect. We qualify all of our forward-looking statements by these cautionary statements.
Recent Developments
This item generally discusses our results for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.
Merchant Division
Performance in Merchant has been driven by:
Merchant acquiring
Merchant acquiring includes 87,847 devices deployed under the Adumo, Card Connect and Kazang brands.
Q1 2026
Q1 2025
Q1 2024
Q1 2026 vs
Q1 2025
Number of devices in deployment at period end
87,847
53,450
46,600
64%
Total throughput for the period (ZAR billions)
9.2
4.2
3.6
117%
●
2026 is inclusive of approximately 29,000 devices deployed by Adumo with the Adumo transaction closing on October
1, 2024, the impact of which is not included in the prior period comparatives.
●
Throughput increased to ZAR 9.2 billion for the quarter, driven mainly by the inclusion of Adumo in the first quarter of
fiscal 2026 and 10% year-on-year growth attributable to Kazang Pay.
37
Software
Our software solutions are offered through GAAP.
Q1 2026
Q1 2025
Q1 2024
Q1 2026 vs
Q1 2025
Number of GAAP sites at period end
9,772
n.a.
n.a.
nm
Approximate ARPU per site (ZAR)
(1)
3,184
n.a.
n.a.
nm
(1) ARPU is calculated on a revenue per site basis, as monthly figure based on a three-month rolling average for the quarter
ending September 30, 2025.
●
GAAP was acquired on October 1, 2024.
●
Monthly ARPU per site combines hardware on a rental basis and software subscription revenue, but excludes the
merchant acquiring revenue when our software customers utilize our merchant acquiring payment solutions.
Cash
Q1 2026
Q1 2025
Q1 2024
Q1 2026 vs
Q1 2025
Number of devices in deployment at period end
4,656
4,484
4,411
4%
Cash settlements (throughput) for the period (ZAR billions)
27.5
28.7
27.6
(4%)
Our cash business is experiencing differing secular trends in its two distinct markets:
●
Small-to-Medium merchant sector: Ongoing decline in cash usage with flat net growth in vault activity in a more mature
digital economy where cash is increasingly displaced by digital alternatives.
●
Micro-merchant market: High cash prevalence and increasing digital adoption is supporting strong growth in the numbers of
devices and cash settlements. Throughput in our vaults placed in the micro-merchant sector increased more than 70% to ZAR
4.9 billion in the first quarter of fiscal 2026, representing 18% of total vault throughput for the year compared to 10% a year
ago. This is fast becoming a meaningful contributor to our cash offering.
Lending
Our lending solutions are offered to merchants through Capital Connect and Adumo Capital. Adumo Capital is a joint venture
with Retail Capital, a division of Tyme Bank, with a 50:50 profit share.
Q1 2026
Q1 2025
Q1 2024
Q1 2026 vs
Q1 2025
Total lending origination volume for the period (ZAR millions)
(1)
201
166
173
21%
Total net loan book outstanding at period end (ZAR millions)
(1)
470
273
280
72%
●
The first quarter of fiscal 2026 is inclusive of lending origination volume (for three months) and the net loan book under
the Adumo brand, with the Adumo transaction closing on October 1, 2024, the impact of which is not included in the
prior period comparatives.
●
Capital Connect comprises more than 70% of our merchant lending activity.
ADP
ADP in our Merchant Division includes prepaid solutions (airtime, data, electricity and gaming), bill payments, IMT and supplier
enabled payments. IMT and bill payments are included in the supplier enabled throughput shown below, with supplier payments
representing the most significant contributor to ADP throughput in the Merchant Division.
Q1 2026
Q1 2025
Q1 2024
Q1 2026 vs
Q1 2025
Number of devices in deployment at period end
97,519
89,044
77,111
10%
Total throughput for the period (ZAR billions)
11.9
9.9
7.2
21%
Prepaid solutions throughput for the period (ZAR billions)
4.9
4.7
4.3
4%
Supplier enabled payments throughput for the period (ZAR
billions)
7.1
5.2
2.9
37%
38
●
We had 97,519 devices deployed as of September 30, 2025, representing a 10% year-on-year growth. Core to our device
placement strategy is the decision to focus on quality business and optimizing our existing fleet, which is reflected in
healthy throughput growth.
●
Total throughput increased 21% to ZAR 11.9 billion year-on-year, driven by a 37% increase in supplier enabled
payments.
Unification of Merchant under Lesaka brands
Over the past three years, we have brought together Kazang and Connect and subsequently added Adumo and GAAP to our
Merchant Division. In 2025, we accelerated the integration of our micro-merchant and merchant businesses as we build an integrated,
multi-product platform serving merchants of all sizes. The unification of our Merchant Division’s operations and the realignment of
these brands under a single Lesaka identity is expected to optimize our Merchant Division.
Consumer Division
Our consumer base includes South African grant beneficiaries and other EasyPay Payouts cardholders.
●
Our grant beneficiary base includes both permanent and non-permanent grant beneficiaries. As the division has evolved,
both sub-categories of consumers are revenue generating and hence the combined consumer base metrics shown below
are most appropriate to measure the performance of the division financially and operationally. Although historically we
have shown these metrics separately, it is maintained that approximately 90% of the active consumer base are permanent
grant beneficiaries.
●
Our definition of an active consumer is any EPE consumer that has made a voluntary transaction (debit and/or credit)
within the last 90 days. Consumers who may be charged a monthly banking fee but have not made a voluntary transaction
in the last 90 days would not be considered an active consumer.
●
The definition of an active consumer reflects the revenue generating engagement of our entire consumer base and more
accurately tracks our current and future monetization strategy for the division.
●
We will continue to show the EasyPay Payouts separately given this follows a different monetization model.
Q1 2026
Q1 2025
Q1 2024
Q1 2026 vs
Q1 2025
Transactional accounts (banking) - EPE
Number of active consumers at period end (millions)
1.9
1.6
1.3
24%
Approximate net activations for the period (thousands)
49
24
27
103%
Lending - EasyPay Loans
Approximate number of loans originated during the period
(thousands)
354
286
222
24%
Lending originations for the period (ZAR millions)
820
462
353
77%
Loan portfolio outstanding at period end (ZAR millions)
(1)
1,116
564
423
98%
Insurance - EasyPay Insurance
Approximate number of insurance policies written during the
period (thousands)
57
49
38
16%
Total active insurance policies on book at period end
(thousands)
589
466
359
27%
Gross written premium for the period (ZAR millions)
120
87
64
38%
Average revenue per consumer per month, in the quarter,
(active customers) (ZAR)
(2)
89
78
73
13%
EasyPay Payouts
Approximate number of active cardholders (thousands)
211
n.a.
n.a.
nm
Approximate load value for the period (ZAR millions)
(3)
125
n.a.
n.a.
nm
(1) Gross loan book, before provisions.
(2) ARPU is calculated on a revenue per active consumer basis whereby an active consumer can be both a permanent and non-
permanent grant. ARPU is a monthly figure based on a 3-month rolling average for the quarter ended September 30, 2025.
(3) Represents a 3-month period for quarter one fiscal 2026. With the Adumo transaction closing on October 1, 2024, the impact
is not included in the prior period comparatives.
●
Driving customer acquisition, supported by increased focus on customer service using enhanced digital capabilities.
o
Net active account growth of approximately 49,000 for the period, compared to approximately 24,000 a
y
ear ago for the equivalent period.
39
o
Growth in active consumers driven by strong performance from sales and distribution teams, with further
product enhancements made to the lending product driving growth.
o
Development of a proprietary onboarding engine which allows for digital onboarding for banking, lending
and insurance products at the point of engagement. Utilizing the new onboarding engine has improved
operational efficiencies and driven higher cross-sell penetration for both existing consumers and new
consumer onboards.
EasyPay Loans
o
We originated approximately 354,000 loans during the period, with our loan portfolio outstanding, increasing 98%
to ZAR 1.1 billion as of September 30, 2025, compared to ZAR 564 million as of September 30, 2024.
o
We have not amended our credit scoring or other lending criteria, and the growth is reflective of the demand for
our tailored loan product for this market, growth in active consumer base and improved cross-selling initiatives
driven by the launch of our new onboarding engine.
o
The credit loss ratio, calculated as the loans written off over the last 12 months as a percentage of the average gross
loan book over the last 12 months is approximately 6.5% on an annualized basis, compared to the same period a
year ago (Q1 2025). As the lending product mix scales to the larger and longer tenor loan product, we expect a
modest but non-material increase in the credit loss ratio.
EasyPay Insurance
o
Our insurance product sales continue to grow and is a material contributor to the improvement in our overall ARPU.
We have been able to improve customer penetration to approximately 35% of our active consumer base as of
September 30, 2025, compared to 34% as of September 30, 2024.
o
Approximately 57,000 new policies were written in the period, increasing 16% compared to the same period a year
ago (Q1 2025).
ARPU
o
ARPU for our active consumer base has increased to approximately ZAR 89 per month from approximately ZAR
78 compared to the same period a year ago (Q1 2025). ARPU reflects the definition of an active consumer and
includes permanent and non-permanent grant beneficiaries.
EasyPay Payouts
o
The number of active card holders was approximately 211,000 at the period end, with a load value of approximately
ZAR 125 million.
o
Adumo Payouts was acquired on October 1, 2024 and subsequently rebranded to EasyPay Payouts.
Enterprise Division
ADP includes prepaid solutions and bill payments through channels such as retailer distribution networks and online banking
apps.
Q1 2026
Q1 2025
Q1 2024
Q1 2026 vs
Q1 2025
ADP
Total throughput for the period (ZAR billions)
12
11
9
13%
Utilities
(1)
Total throughput for the period (ZAR millions)
396.3
n.a.
n.a.
nm
Approximate number of active meters (thousands)
270
n.a.
n.a.
nm
40
Critical Accounting Policies
Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires
management to make estimates and assumptions about future events that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities. As future events and their effects cannot be determined with absolute certainty, the
determination of estimates requires management’s judgment based on a variety of assumptions and other determinants such as
historical experience, current and expected market conditions and certain scientific evaluation techniques. Critical accounting policies
are those that reflect significant judgments or uncertainties and may potentially result in materially different results under different
assumptions and conditions. We have identified the following critical accounting policies that are described in more detail in our
Annual Report on Form 10-K for the year ended June 30, 2025:
●
Recoverability of Goodwill;
●
Intangible Assets Acquired Through Acquisitions;
●
Revenue recognition – principal versus agent considerations;
●
Finance Loans Receivable and Allowance for Credit Losses; and
●
Valuation of investment in Cell C.
Recent accounting pronouncements adopted
Refer to Note 1 to our unaudited condensed consolidated financial statements for a full description of accounting pronouncements
adopted, including the dates of adoption and the effects on our unaudited condensed consolidated financial statements.
Recent accounting pronouncements not yet adopted as of September 30, 2025
Refer to Note 1 to our unaudited condensed consolidated financial statements for a full description of recent accounting
pronouncements not yet adopted as of September 30, 2025, including the expected dates of adoption and effects on our financial
condition, results of operations and cash flows.
Currency Exchange Rate Information
Actual exchange rates
The actual exchange rates for and at the end of the periods presented were as follows:
Table 1
Three months ended
Year ended
September 30,
June 30,
2025
2024
2025
ZAR : $ average exchange rate
17.6379
17.9601
18.1644
Highest ZAR : $ rate during period
18.1650
18.5100
19.6350
Lowest ZAR : $ rate during period
17.2702
17.1144
17.1144
Rate at end of period
17.2702
17.1808
17.7554
41
Translation exchange rates for financial reporting purposes
We are required to translate our results of operations from ZAR to U.S. dollars on a monthly basis. Thus, the average rates used
to translate this data for the three months ended September 30, 2025 and 2024, vary slightly from the averages shown in the table
above. Except as described below, the translation rates we use in presenting our results of operations are the rates shown in the
following table:
Three months ended
Year ended
Table 2
September 30,
June 30,
2025
2024
2025
Income and expense items: $1 = ZAR
17.6654
17.7176
17.9031
Balance sheet items: $1 = ZAR
17.2702
17.1808
17.7554
We have translated the results of operations and operating segment information for the three months ended September 30, 2025
and 2024, provided in the tables below using the actual average exchange rates per month (i.e. for each of July 2025, August 2025,
and September 2025 for the first quarter of fiscal 2026) between the USD and ZAR in order to reduce the reconciliation of information
presented to our chief operating decision maker. The impact of using this method compared with the average rate for the quarter and
year to date is not significant, however, it does result in minor differences. We believe that presentation using the average exchange
rates per month compared with the average exchange rate per quarter and year to date improves the accuracy of the information
presented in our external financial reporting and leads to fewer differences between our external reporting measures which are
supplementally presented in ZAR, and our internal management information, which is also presented in ZAR.
Results of Operations
The discussion of our consolidated overall results of operations is based on amounts as reflected in our unaudited condensed
consolidated financial statements which are prepared in accordance with U.S. GAAP. We analyze our results of operations both in
U.S. dollars, as presented in the unaudited condensed consolidated financial statements, and supplementally in ZAR, because ZAR is
the functional currency of the entities which contribute the majority of our results and is the currency in which the majority of our
transactions are initially incurred and measured. Presentation of our reported results in ZAR is a non-GAAP measure. Due to the
significant impact of currency fluctuations between the U.S. dollar and ZAR on our reported results and because we use the U.S. dollar
as our reporting currency, we believe that the supplemental presentation of our results of operations in ZAR is useful to investors to
u
nderstand the changes in the underlying trends of our business.
42
Our operating segment revenue presented in “—Results of operations by operating segment” represents total revenue per
operating segment before intercompany eliminations. A reconciliation between total operating segment revenue and revenue, as well
as the reconciliation between our segment performance measure and net loss before tax (benefits) expense, is presented in our audited
consolidated financial statements in Note 18 to those statements. Our chief operating decision maker is our Executive Chairman and
he evaluates segment performance based on segment earnings before interest, tax, depreciation and amortization (“EBITDA”),
adjusted for items mentioned in the next sentence (“Segment Adjusted EBITDA”) for each operating segment. We do not allocate
once-off items (as defined below), stock-based compensation charges, depreciation and amortization, impairment of goodwill or other
intangible assets, other items (including gains or losses on disposal of investments, fair value adjustments to equity securi ties, fair
value adjustments to currency options), interest income, interest expense, income tax expense or loss from equity-accounted
investments to our reportable segments. For fiscal 2025, we included an intercompany interest expense in our Consumer Segment
Adjusted EBITDA. Once-off items represent non-recurring expense items, including costs related to acquisitions and transactions
consummated or ultimately not pursued. The Stock-based compensation adjustments reflect stock-based compensation expense and
are both excluded from the calculation of Segment Adjusted EBITDA and are therefore reported as reconciling items to reconcile the
reportable segments’ Segment Adjusted EBITDA to our loss before income tax expense.
Group Adjusted EBITDA represents Segment Adjusted EBITDA after deducting group costs. Refer also “Results of
Operations—Use of Non-GAAP Measures” below.
In fiscal 2025 we closed the acquisitions of Adumo and Recharger and have integrated their businesses into our ours. Our fiscal
2025 financial results for the three months ended September 30, 2024, do not include these businesses because we acquired Adumo
on October 1, 2024 and Recharger on March 3, 2025.
We analyze our business and operations in terms of three inter-related but independent operating segments: (1) Merchant (2)
Consumer and (3) Enterprise. In addition, corporate activities that are impracticable to allocate directly to the operating segments, as
well as any inter-segment eliminations, are included in Grfiscaoup costs. Inter-segment revenue eliminations are included in
Eliminations.
First quarter of fiscal 2026 compared to first quarter of fiscal 2025
The following factors had a significant impact on our results of operations during the first quarter of fiscal 2025 as compared with
the same period in the prior year:
●
Higher revenue:
Our revenues increased 12% in U.S. dollars and 10% in ZAR, primarily due to the inclusion of Adumo and
Recharger, higher transaction, insurance and lending revenues in Consumer, which was partially offset by a decrease in
prepaid airtime revenue in Merchant;
●
Operating income increase:
Operating income increased primarily due to strong performance by Consumer and the
contribution from Adumo and Recharger , which was partially offset by an increase in amortization of acquisition-related
intangible assets related to the acquisition of Adumo and Recharger and higher operating costs;
●
Lower net interest charge:
million) primarily due to a lower interest expense following lower interest rates and the exclusion of interest expense incurred
under our borrowing arrangements related to our Consumer lending book in the first quarter of fiscal 2026 compared with
2025. On a comparable basis the equivalent interest expense related to the Consumer lending book for the first quarter of
fiscal 2025 was included in interest expense ; and
●
Foreign exchange movements:
the prior period.
43
Consolidated overall results of operations
This discussion is based on the amounts prepared in accordance with U.S. GAAP.
The following tables show the changes in the items comprising our statements of operations, both in U.S. dollars and in ZAR:
Table 3
In United States Dollars
Three months ended September 30,
2025
2024
%
$ ’000
$ ’000
change
Revenue
171,448
153,568
12%
Cost of goods sold, IT processing, servicing and support
118,440
118,909
(0%)
Selling, general and administration
39,637
26,698
48%
Depreciation and amortization
12,894
6,276
105%
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions
94
1,730
(95%)
Operating income (loss)
383
(45)
nm
Loss on impairment of equity-accounted investment
584
-
nm
Interest income
539
586
(8%)
Interest expense
4,898
5,032
(3%)
Loss before income tax (benefit) expense
(4,560)
(4,491)
2%
Income tax (benefit) expense
(146)
78
nm
Net loss before earnings from equity-accounted investments
(4,414)
(4,569)
(3%)
Earnings from equity-accounted investments
-
27
nm
Net loss
(4,414)
(4,542)
(3%)
Add net loss attributable to non-controlling interest
117
-
nm
Net loss attributable to us
(4,297)
(4,542)
(5%)
Table 4
In South African Rand
Three months ended September 30,
2025
2024
%
ZAR ’000
ZAR ’000
change
Revenue
3,023,546
2,756,877
10%
Cost of goods sold, IT processing, servicing and support
2,089,010
2,134,828
(2%)
Selling, general and administration
698,672
479,183
46%
Depreciation and amortization
227,366
112,660
102%
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions
1,762
30,491
(94%)
Operating income (loss)
6,736
(285)
nm
Loss on impairment of equity-accounted investment
10,342
-
nm
Interest income
9,496
10,517
(10%)
Interest expense
86,410
90,328
(4%)
Loss before income tax (benefit) expense
(80,520)
(80,096)
1%
Income tax (benefit) expense
(2,572)
1,402
nm
Net loss before earnings from equity-accounted investments
(77,948)
(81,498)
(4%)
Earnings from equity-accounted investments
-
475
nm
Net loss
(77,948)
(81,023)
(4%)
Add net loss attributable to non-controlling interest
2,058
-
nm
Net loss attributable to us
(75,890)
(81,023)
(6%)
Revenue increased by $17.9 million (ZAR 266.7 million) or 11.6% (in ZAR 9.7%). The increase was primarily due to the
inclusion of Adumo and Recharger, the impact of an increase in certain issuing fee base prices year-over-year, and transaction activity
in our issuing business, and an increase in insurance premiums collected and lending revenues (including interest) following higher
loan originations , which was partially offset by a decrease in the volume of prepaid airtime sold. Refer to discussion above at “—
Recent Developments” for a description of key trends impacting our revenue this quarter.
Cost of goods sold, IT processing, servicing and support decreased by $0.5 million (ZAR 45.8 million) or 0.4% (in ZAR 2.1%),
primarily due to the decrease in the prepaid airtime costs, which was partially offset by the inclusion of Adumo, an increase in lending
r
elated expenditures (including interest expense) and higher insurance-related claims and third-party transaction fees.
44
Selling, general and administration expenses increased by $12.9 million (ZAR 219.5 million), or 48.5% (in ZAR 45.8%). The
increase was primarily due to the inclusion of Adumo and Recharger; higher employee-related expenses (including the impact of
annual salary increases), an increase in the allowance for credit losses as a result of higher lending activities by Consumer, and the
year-over-year impact of inflationary increases on certain expenses, which was partially offset by lower stock-based compensation
charges.
Depreciation and amortization expense increased by $6.6 million (ZAR 114.7 million), or 105.4% (101.8%). The increase was
due to the inclusion of acquisition-related intangible asset amortization related to intangible assets identified pursuant to the Adumo
and Recharger acquisitions and an increase in depreciation expense related to additional POS devices deployed .
Transaction costs related to Adumo, Recharger and Bank Zero acquisitions during the first quarter of fiscal 2025 included costs
incurred related to the Adumo acquisition which closed in October 2024. We did not incur significant transaction costs during the first
quarter of fiscal 2026. Refer to Note 2 to our unaudited condensed consolidation financial statements for additional information.
Our operating income (loss) margin for the first quarter of fiscal 2026 and 2025 was 0.2% and (0.0)%, respectively. We discuss
the components of operating loss margin under “—Results of operations by operating segment.”
We did not record any changes in the fair value of equity interests in Cell C during the first quarter of fiscal 2026 or 202 5,
respectively, or any fair value adjustments for MobiKwik during the first quarter of fiscal 2025. We continue to carry our investment
in Cell C at $0 (zero). Refer to Note 5 to our unaudited condensed consolidation financial statements for the methodology and inputs
used in the fair value calculation for Cell C.
Interest on surplus cash of was $0.5 million (ZAR 9.5 million) compared with $0.6 million (ZAR 10.5 million) during the first
quarter of fiscal 2025, and decrease due to lower interest rates.
Interest expense decreased to $4.9 million (ZAR 86.4 million) from $5.0 million (ZAR 90.3 million). In ZAR, the decrease was
primarily due to lower interest rates and the exclusion of interest expense incurred under our borrowing arrangements related to our
Consumer lending book in the first quarter of fiscal 2026 compared with 2025. On a comparable basis the equivalent interest expense
related to the Consumer lending book for the first quarter of fiscal 2025 was included in interest expense.
First quarter of fiscal 2026 income tax benefits was $0.1 million (ZAR 2.6 million) compared to income tax expense of $0.1
million (ZAR 1.4 million) in fiscal 2025. Our effective tax rate for fiscal 2025 was impacted by the tax expense recorded by our
profitable South African operations and non-deductible expenses (including transaction-related expenditures). The income tax benefit
was impacted by a higher deferred tax benefit as a result of the reduction in the useful lives of certain of our brand and trademark
intangible assets which has resulted in an increase in amortization expense during the three months ended September 30, 2025.
Our effective tax rate for fiscal 2025 was impacted by the tax expense recorded by our profitable South African operations, a
deferred tax benefit related to acquisition-related intangible asset amortization, non-deductible expenses (in transaction-related
expenses), the on-going losses incurred by certain of our South African businesses and the associated valuation allowances created
related to the deferred tax assets recognized regarding net operating losses incurred by these entities.
45
Results of operations by operating segment
The composition of revenue and the contributions of our business activities to operating loss are illustrated below:
Table 5
In United States Dollars
Three months ended September 30,
2025
% of
2024
% of
% change
Operating Segment
$ ’000
total
$ ’000
total
Consolidated revenue:
Merchant
126,950
74%
123,651
81%
3%
Consumer
30,576
18%
21,072
14%
45%
Enterprise
14,853
9%
11,883
8%
25%
Subtotal: Operating segments
172,379
101%
156,606
103%
10%
Eliminations
(931)
(1%)
(3,038)
(3%)
(69%)
Total consolidated revenue
171,448
100%
153,568
100%
12%
Group Adjusted EBITDA:
Merchant
(1)
9,190
60%
7,554
81%
22%
Consumer
(1)
8,493
55%
4,396
47%
93%
Enterprise
(1)
1,269
8%
362
4%
251%
Group costs
(3,611)
(23%)
(2,949)
(32%)
22%
Group Adjusted EBITDA (non-GAAP)
(2)
15,341
100%
9,363
100%
64%
(1) Segment Adjusted EBITDA for the three months ended September 30, 2025, includes retrenchment costs of $0.2 million for
Merchant and Consumer of $0.1 million. Segment Adjusted EBITDA Merchant and Segment Adjusted EBITDA Consumer include
retrenchment costs of $0.01 million and $0.06 million, respectively, for the first quarter of fiscal 2025.
(2) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
Table 6
In South African Rand
Three months ended September 30,
2025
% of
2024
% of
% change
Operating Segment
ZAR ’000
total
ZAR ’000
total
Consolidated revenue:
Merchant
2,239,035
74%
2,220,022
81%
1%
Consumer
539,006
18%
378,063
14%
43%
Enterprise
261,904
9%
213,997
8%
22%
Subtotal: Operating segments
3,039,945
101%
2,812,082
103%
8%
Eliminations
(16,399)
(1%)
(55,205)
(3%)
(70%)
Total consolidated revenue
3,023,546
100%
2,756,877
100%
10%
Group Adjusted EBITDA:
Merchant
(1)
162,076
60%
135,510
81%
20%
Consumer
(1)
149,710
55%
78,681
47%
90%
Enterprise
(1)
22,407
8%
6,568
4%
241%
Group costs
(63,619)
(23%)
(52,654)
(32%)
21%
Group Adjusted EBITDA (non-GAAP)
(2)
270,574
100%
168,105
100%
61%
(1) Segment Adjusted EBITDA for the three months ended September 30, 2025, includes retrenchment costs of ZAR 0.2 million
for Merchant and Consumer of ZAR 3.8 and ZAR 2.6 million for the first quarter of fiscal 2026. Segment Adjusted EBITDA Merchant
and Segment Adjusted EBITDA Consumer include retrenchment costs of ZAR 0.2 million and ZAR 1.1 million, respectively, for the
first quarter of fiscal 2025.
(2) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
46
Merchant
Segment revenue primarily increased due to the inclusion of Adumo, which was partially offset by lower ADP revenue earned,
including from lower prepaid airtime volumes sold. While overall ADP volumes increased, prepaid airtime revenue contributes a
significant portion of our overall ADP revenue, and therefore a drop in the volume of the prepaid airtime revenue impacts our reported
revenue generated. The increase in Segment Adjusted EBITDA is primarily due the inclusion of the contribution from Adumo, lower
cost of goods sold, IT processing, servicing and support and lower employment-related expenditures, which was partially offset by
higher operating expenses incurred. We record a significant proportion of our airtime sales in revenue (see further below) and cost of
sales, while only earning a relatively small margin. This significantly depresses the Segment Adjusted EBITDA margins shown by
the business.
Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for the first quarter of
fiscal 2026 and 2025 was 7.2% and 6.1%, respectively.
Consumer
Segment revenue increased primarily due to higher transaction fees generated from the higher EPE account holders base, the
impact of an increase in certain issuing fee base prices year-over-year, and transaction activity in our issuing business, insurance
premiums collected, lending revenues following an increase in loan originations and the inclusion of Adumo. This increase in revenue
has translated into improved profitability, which was partially offset by a higher allowance for credit losses following an increase in
loan originations during the quarter, higher insurance-related claims, interest expense (of approximately ZAR 19.9 million; Sep 2024:
ZAR 14.9 million ) incurred to fund our lending book and the year-over-year impact of inflationary increases on certain expenses.
Our Segment Adjusted EBITDA margin for the first quarter of fiscal 2026 and 2025 was 27.8% and 20.9%, respectively.
Enterprise
Segment revenue and Segment Adjusted EBITDA increased primarily due to the inclusion of Recharger.
Our Segment Adjusted (loss) EBITDA margin for the first quarter of fiscal 2026 and 2025 was 8.54% and 3.0%, respectively.
Group costs
Our group costs primarily include employee related costs in relation to employees specifically hired for group roles and costs
related directly to managing the US-listed entity; expenditures related to compliance with the Sarbanes-Oxley Act of 2002; non-
employee directors’ fees; legal fees; group and US-listed related audit fees; and directors’ and officers’ insurance premiums.
Our group costs for the first quarter of fiscal 2026 increased compared with the prior period due to offset by higher employee
costs resulting from an increase in the number of individuals allocated to group costs and base salary adjustments and higher consulting
and legal fees, which was partially offset by lower bonus expense.
Use of Non-GAAP Measures
U.S. securities laws require that when we publish any non-GAAP measures, we disclose the reason for using these non-GAAP
measures and provide reconciliations to the most directly comparable U.S. GAAP measures. The presentation of Group Adjusted
EBITDA is a non-GAAP measure. We provide this non-GAAP measure to enhance our evaluation and understanding of our financial
performance and trends. We believe that this measure is helpful to users of our financial information understand key operating
performance and trends in our business because it excludes certain non-cash expenses (including depreciation and amortization and
stock-based compensation charges) and income and expenses that we consider once-off in nature.
Non-GAAP Measures
Group Adjusted EBITDA is earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted for non-
operational transactions (including loss on impairment/ disposal of equity-accounted investments, change in fair value of equity
securities), (earnings) loss from equity-accounted investments, stock-based compensation charges and once-off items. We included an
intercompany interest expense in our Consumer Segment Adjusted EBITDA for three months ended September 30, 2024. Once-off
items represents non-recurring income and expense items, including costs related to acquisitions and transactions consummated or
ultimately not pursued.
47
The table below presents the reconciliation between U.S. GAAP net loss attributable to Lesaka to Group Adjusted EBITDA:
Table 7
Three months ended
September 30,
2025
2024
$ ’000
$ ’000
Loss attributable to Lesaka - GAAP
(4,297)
(4,542)
Add net loss attributable to non-controlling interest
117
-
Net loss
(4,414)
(4,542)
Earnings from equity accounted investments
-
(27)
Net loss before earnings from equity-accounted investments
(4,414)
(4,569)
Income tax (benefit) expense
(146)
78
Loss before income tax expense
(4,560)
(4,491)
Interest expense
4,898
5,032
Interest income
(539)
(586)
Net loss on impairment of equity-accounted investment
584
-
Operating income (loss)
383
(45)
PPA amortization (amortization of acquired intangible assets)
9,134
3,747
Depreciation and amortization
3,760
2,529
Stock-based compensation charges
1,861
2,377
Interest adjustment
-
(831)
Once-off items
(1)
267
1,805
Unrealized gain FV for currency adjustments
(64)
(219)
Group Adjusted EBITDA - Non-GAAP
15,341
9,363
(1) The table below presents the components of once-off items for the periods presented:
Table 8
Three months ended
September 30,
2025
2024
$ ’000
$ ’000
Transaction costs
173
75
Transaction costs related to Adumo and Recharger acquisitions and certain compensation costs
94
1,730
Total once-off items
267
1,805
Once-off items are non-recurring in nature, however, certain items may be reported in multiple quarters. For instance, transaction
costs include costs incurred related to acquisitions and transactions consummated or ultimately not pursued. The transactions can span
multiple quarters, for instance in fiscal 2025 we incurred transaction costs related to the acquisition of Recharger over a number of
quarters, and the transactions are generally non-recurring.
.
48
Liquidity and Capital Resources
As of September 30, 2025, our cash and cash equivalents were $72.2 million and comprised of U.S. dollar-denominated balances
of $1.3 million, ZAR-denominated balances of ZAR 1.2 billion ($69.2 million), and other currency deposits, primarily Botswana pula,
of $1.7 million, all amounts translated at exchange rates applicable as of September 30, 2025. The decrease in our unrestricted cash
balances from June 30, 2025, was primarily due to application of the proceeds received from the disposal of MobiKwik to reduction
our general banking facilities, the utilization of cash reserves to fund certain scheduled repayments of our borrowings, which was
partially offset by the positive contribution from our operating segments.
We generally invest any surplus cash held by our South African operations in overnight call accounts that we maintain at South
African banking institutions, and any surplus cash held by our non-South African companies in U.S. dollar-denominated money market
accounts.
Historically, we have financed most of our operations, research and development, working capital, and capital expenditures, as
well as acquisitions and strategic investments, through internally generated cash and our financing facilities. When considering
whether to borrow under our financing facilities, we consider the cost of capital, cost of financing, opportunity cost of utilizing surplus
cash and availability of tax efficient structures to moderate financing costs. Refer to Note 12 to our consolidated financial statements
for the year ended June 30, 2025, as well as Note 9 to these condensed consolidated financial statements for additional information
related to our borrowings.
Our ability to make payments on our indebtedness and to fund our operations may be dependent upon the operating income and
the distribution of funds from our subsidiaries. However, as local laws and regulations and/or the terms of our indebtedness restrict
certain of our subsidiaries from paying dividends and transferring assets to us, there is no assurance that our subsidiaries will be
permitted to provide us with sufficient dividends, distributions or loans when necessary.
We will make a cash payment of ZAR 175.0 million ($10.1 million) in March 2026 related to the cash portion of the deferred
consideration due to the seller of Recharger. We are required to make a scheduled debt repayment of ZAR 150 million ($8.7 million)
in February 2026. We expect to pay ZAR 100 million ($5.8 million) payment on closing of the Bank Zero transaction. All amounts
translated at exchange rates as of September 30, 2025.
Available short-term borrowings
Summarized below are our short-term facilities available and utilized as of September 30, 2025:
Table 9
RMB GBF
RMB Other
Nedbank
$ ’000
ZAR ’000
$ ’000
ZAR ’000
$ ’000
ZAR ’000
Total short-term facilities available, comprising:
Total overdraft
40,584
700,901
-
-
-
-
Indirect and derivative facilities
(1)
-
-
5,831
100,700
9,065
156,556
Total short-term facilities available
40,584
700,901
5,831
100,700
9,065
156,556
Utilized short-term facilities:
Overdraft
12,488
215,671
-
-
-
-
Indirect and derivative facilities
(1)
-
-
1,917
33,099
122
2,104
Total short-term facilities utilized
12,488
215,671
1,917
33,099
122
2,104
Interest rate, based on South African prime rate
10.00%
N/A
N/A
(1) Other facilities include indirect and derivative facilities may only be used for guarantees, letters of credit and forward
exchange contracts to support guarantees issued by RMB and Nedbank to various third parties on our behalf.
In terms of a commitment provided to the lender under the CTA entered into on February 27, 2025, we have undertaken not to
utilize more than ZAR 5.0 million ($0.3 million) of the Nedbank Facility.
Long-term borrowings
We have aggregate long-term borrowing outstanding of ZAR 3.6 billion ($208.1 million translated at exchange rates as of
September 30, 2025) as described in Note 12. These borrowings include outstanding long-term borrowings obtained by Lesaka SA of
ZAR 3.1 billion, which was used to refinance our previous long-term borrowings. We have utilized all of these long-term borrowings.
As of September 30, 2025, we also have a revolving credit facility, of ZAR 400.0 million which is utilized to fund a portion of our
merchant finance loans receivable book and an asset backed facility of ZAR 227.0 million which is utilized to partially fund the
acquisition of POS devices and vaults.
49
Restricted cash
We have also entered into cession and pledge agreements with Nedbank related to our Nedbank indirect credit facilities and we
have ceded and pledged certain bank accounts to Nedbank. The funds included in these bank accounts are restricted as they may not
be withdrawn without the express permission of Nedbank. Our cash, cash equivalents and restricted cash presented in our consolidated
statement of cash flows as of September 30, 2025, includes restricted cash of $0.1 million that has been ceded and pledged.
Arrangement with African Bank to fund our ATMs
In September 2024, we entered into an arrangement with African Bank Limited (“African Bank”) and certain cash-in-transit
service providers to fund our ATMs. Under this arrangement, African Bank will use its cash resources to fund our ATMs and it is
specifically recorded that the cash in our ATMs are African Bank’s property. Therefore, as we have not utilized a facility to obtain the
cash, and do not own or control the cash for an extended period of time, we do not record cash or cash equivalents and borrowings in
our consolidated statement of financial position. Cash withdrawn from our ATMs by our EPE customers and other consumers are
settled through the interbank settlement system from the ATM users bank account to African Bank’s bank accounts. We pay African
Bank a monthly fee for the service provided which is calculated based on the cumulative daily outstanding balance of cash utilized
multiplied by the South African prime interest rate less 1%. We are exposed to the risk of cash lost while it is in our ATMs (i.e. from
theft) and are required to repay African Bank for any shortages.
Cash flows from operating activities
First quarter
Net cash provided by operating activities during the first quarter of fiscal 2026 was $8.9 million (ZAR 157.6 million) compared
to net cash utilized of $4.1 million (ZAR 73.3 million) during the first quarter of fiscal 2025. Excluding the impact of income taxes,
our cash provided by operating activities during the first quarter of fiscal 2026 was positively impacted by improved contribution from
our all of our operating segments, fewer quarterly movements within our Merchant and Enterprise businesses related to quarter-end
transaction processing activities compared to the prior quarter end, which was partially offset by the impact of cash utilized for the
significant net growth in our Consumer finance loans receivable books .
During the first quarter of fiscal 2026, we paid second provisional South African tax payments of $0.3 million (ZAR 4.9 million)
primarily related to certain of our recently acquired subsidiaries that have not yet aligned their tax year to our June 30 tax year end.
We also paid taxes related to prior tax years in South Africa of $0.3 million (ZAR 5.8 million). We paid taxes totaling $0.1 million in
other tax jurisdictions, primarily in Botswana during the first quarter of fiscal 2026. During the first quarter of fiscal 2025, we paid
taxes totaling $0.1 million in other tax jurisdictions, primarily in Botswana.
Taxes paid (refunded) during the first quarter of fiscal 2026 and 2025 were as follows:
Table 10
Three months ended September 30,
2025
2024
2025
2024
$
$
ZAR
ZAR
’000
’000
’000
’000
First provisional payments
46
-
821
-
Second provisional payments
284
-
4,936
-
Taxation paid related to prior years
330
-
5,763
-
Tax refund received
(20)
(113)
(349)
(2,053)
Total South African taxes paid
640
(113)
11,171
(2,053)
Foreign taxes paid
70
68
1,243
1,213
Total tax paid (refunded)
710
(45)
12,414
(840)
Cash flows from investing activities
First quarter
Cash used in investing activities for the first quarter of fiscal 2026 included capital expenditures of $4.0 million (ZAR 70.3
million), primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $1.1 million (ZAR 20.1 million),
primarily related to the capitalization of development costs, during the first quarter of fiscal 2026.
Cash used in investing activities for the first quarter of fiscal 2025 included capital expenditures of $4.0 million (ZAR 70.3
million), primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $0.2 million (ZAR 3.1 million),
primarily related to the capitalization of development costs, during the first quarter of fiscal 2025.
50
Cash flows from financing activities
First quarter
During the first quarter of fiscal 2026, we utilized $28.0 million from our South African general banking facilities to partially
fund the growth of our Consumer lending book, and repaid $40.7 million utilizing the funds received from the disposal of MobiKwik.
We utilized $2.8 million of our long-term borrowings to finance the acquisition of POS devices and vehicles to fund our Merchant
lending book. We repaid $1.1 million of long-term borrowings and in accordance with our repayment schedule under our asset-based
facilities. We also paid fees of $0.03 million related the September 2025 refinance of our facility to fund the growth of Merchant
lending book.
During the first quarter of fiscal 2025, we utilized $23.9 million from our South African overdraft facilities to fund our ATMs
and our cash management business through Connect, and repaid $31.0 million of those facilities. We utilized $0.8 million of our long-
term borrowings to fund the acquisition of certain capital expenditures and for working capital requirements. We repaid $5.5 million
of long-term borrowings in accordance with our repayment schedule as well as to settle a portion of our revolving credit facility
utilized.
Off-Balance Sheet Arrangements
We have no off -balance sheet arrangements.
Capital Expenditures
We expect capital spending for the second quarter of fiscal 2026 to primarily include spending for acquisition of POS devices,
vaults, computer software, computer and office equipment, as well as for our ATM infrastructure and branch network in South Africa.
Our capital expenditures for the first quarter of fiscal 2026 and 2025 are discussed under “—Liquidity and Capital Resources —Cash
flows from investing activities.” Our capital expenditures for the past three fiscal years were funded through internally generated
funds, or our asset-backed borrowing arrangements. We had outstanding capital commitments as of September 30, 2025, of $0.1
m
illion. We expect to fund these expenditures through internally generated funds and available facilities.
51
Item 3. Quantitative and Qualitative Disclosures About Market Risk
In addition to the tables below, see Note 5 to the unaudited condensed consolidated financial statements for a discussion of
market risk.
We have short and long-term borrowings in South Africa which attract interest at rates that fluctuate based on changes in the
South African prime and 3-month JIBAR interest rates. The following table illustrates the effect on our annual expected interest charge,
translated at exchange rates applicable as of September 30, 2025, as a result of changes in the South African prime and 3-month JIBAR
interest rates, using our outstanding short and long-term borrowings as of September 30, 2025. The effect of a hypothetical 1% (i.e.
100 basis points) increase and a 1% decrease in the interest rates applicable to the borrowings as of September 30, 2025, are shown.
The selected 1% hypothetical change does not reflect what could be considered the best- or worst-case scenarios.
Table 11
As of September 30, 2025
Annual expected
interest charge
($ ’000)
Hypothetical
change in
interest rates
Estimated annual
expected interest
charge after
hypothetical change
in interest rates
($ ’000)
Interest on South African borrowings
22,926
1%
25,142
(1%)
20,709
52
Item 4. Controls and Procedures
Under the supervision and with the participation of our management, including our executive chairman and our group chief
financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934, as amended, as of September 30, 2025.
We previously identified and disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the year ended June 30, 2025,
material weaknesses in our internal control over financial reporting related to:
(1)
Our Consumer lending process, specifically insufficient risk assessment and monitoring activities relating to changes in
systems and processes, insufficient controls over internal information and information from service organizations,
insufficient design and implementation of information technology general controls (“ITGCs”), controls over service
organizations, resulting in ineffective process level, including a lack of validation of the completeness and accuracy of
information used within the process;
(2)
Our payroll process, specifically insufficient risk assessment and monitoring activities relating to changes over the transfer
of ownership to the centralized payroll processes, insufficient controls over information from service organizations,
insufficient design and implementation of ITGCs, controls over service organizations resulting in ineffective process level
including a lack of validation of the completeness and accuracy of information used within this process;
(3)
Our annual goodwill impairment process, specifically related to insufficient risk assessments, and ineffective design and
implementation of controls resulting in ineffective process level controls;
(4)
Our business combination process, specifically insufficient risk assessments, and ineffective design and implementation of
controls over the purchase price allocation of the Adumo and Recharger acquisitions including insufficient controls over
information resulting in ineffective process level controls including a lack of validation of the completeness and accuracy of
information used;
(5)
Our revenue recognition process relating to prepaid airtime sold and processing fees relating to certain agreements,
specifically insufficient risk assessment and ineffective design and implementation of controls related to our judgement over
revenue recognized either as principal versus as agent resulting in ineffective controls and a material misstatement as well
as the requirement to restate revenue, cost of goods sold, IT processing, servicing and support and related disclosures for all
quarters as described below;
(6)
Our journal entry process, specifically relating to insufficient risk assessments, and ineffective design and implementation
of controls including insufficient controls over information resulting in ineffective process level controls including a lack of
validation of the completeness of the journal entry population and a lack of validation of the completeness and accuracy of
information used within the process; and
(7)
An insufficient number of experienced and trained resources and an insufficient understanding of the application of internal
controls over financial reporting across the Southern African businesses resulting in ineffective design, implementation of
internal controls.
As a result of insufficient time to design, implement and fully test controls to ensure we have remediated the material weaknesses
discussed in our Annual Report on Form 10-K for our fiscal year ended June 30, 2025 (as described above), the executive chairman
and the group chief financial officer concluded that our disclosure controls and procedures were not effective as of September 30,
2025.
Notwithstanding the previously identified material weaknesses, management believes the condensed consolidated financial
statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of
operations and cash flows as of and for the periods presented in accordance with U.S. GAAP.
Remediation Plan
Management has made progress and continues to actively work on remediating the identified material weaknesses and remains
committed to remediating the material weaknesses in a timely manner. Our remediation process is ongoing and includes, but is not
limited to, the following steps:
(1)
accountability with control owners related to the operation and importance of internal controls over financial reporting,
including the principles and requirements of each control, with a focus on the impacted processes, controls over service
organizations, ITGCs, other process level controls;
(2)
mandating improved risk assessment procedures with governance requirements upon implementing new systems within our
company together with the design, implementation and monitoring of control activities;
(3)
the recruitment of additional appropriately skilled resources across the Finance and Risk and Compliance disciplines coupled
with the further upskilling and training of existing resources responsible for the execution of key controls as well as a focus
on a greater degree of automation of controls throughout the organization;
(4)
embedding of controls compliance in the key performance indicators of senior executives across the business; and
(5)
collaborating closely with internal and external assurance partners to ensure the robustness of our remediation plan.
The remediation plan with respect to the material weaknesses identified for the year ended June 30, 2025 may be adjusted as is
appropriate, as we continue to evaluate and enhance our internal control over financial reporting. Other than the design and
implementation of the remediation plan, there have not been any changes in our internal control over financial reporting during the
fiscal quarter ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control
o
ver financial reporting.
53
Part II. Other Information
Item 1. Legal Proceedings
We are, from time to time, subject to claims and suits, or threats of claims or suits, relating to our business, including claims for
damages for personal injuries, breach of contract and employment related claims. In certain of these actions, plaintiffs request payment
for damages, including punitive damages, which may not be covered by insurance or may otherwise have a material adverse effect on
our business or results of operations. For a description of certain of these matters, refer to Item 3, “Legal Proceedings,” in our Annual
Report on Form 10-K for the year ended June 30, 2025. There have been no material developments in these matters during the three
months ended September 30, 2025. In the opinion of management, we are not currently a party to any proceedings that would have a
material adverse effect on our business, financial condition, or results of operations.
Item 1A. Risk Factors
See “Item 1A RISK FACTORS” in Part I of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, for a
discussion of risk factors relating to (i) our business, (ii) operating in South Africa and other foreign markets, (iii) government
regulation, and (iv) our common stock. There have been no material changes from the risk factors previously disclosed in our Annual
Report on Form 10-K for the fiscal year ended June 30, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Our Section 16 officers and directors, as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934 (the “Exchange Act”),
may from time to time enter into plans for the purchase or sale of our common stock that are intended to satisfy the affirmative defense
conditions of Rule 10b5-1(c) of the Exchange Act. During the quarter ended September 30, 2025, no officers or directors, as defined
in Rule 16a-1(f),
, modified, or
a
s defined in Item 408 of Regulation S-K.
54
Item 6. Exhibits
The following exhibits are filed as part of this Form 10-Q:
Incorporated by Reference Herein
Exhibit
No.
Description of Exhibit
Included
Herewith
Form
Exhibit
Filing Date
8-K
2.1
July 2, 2025
X
X
X
101.INS
XBRL Instance Document
X
101.SCH
XBRL Taxonomy Extension Schema
X
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
X
101.DEF
XBRL Taxonomy Extension Definition Linkbase
X
101.LAB
XBRL Taxonomy Extension Label Linkbase
X
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
X
104
Cover page formatted as Inline XBRL and contained in
Exhibit 101
*
55
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on November 5, 2025.
LESAKA TECHNOLOGIES, INC.
By: /s/ Ali Mazanderani
Ali Mazanderani
Executive Chairman
By: /s/ Dan Smith
Dan Smith
Group Chief Financial Officer, Treasurer and Secretary