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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
☒
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
December 31, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from
To
Commission file number:
000-31203
LESAKA TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Florida
98-0171860
(State or other jurisdiction
(IRS Employer
of incorporation or organization)
Identification No.)
President Place, 4
th
Floor
,
Cnr. Jan Smuts Avenue and Bolton Road
,
Rosebank, Johannesburg
,
2196
,
South Africa
(Address of principal executive offices, including zip code)
Registrant’s telephone number,
including area code:
27
-
11
-
343-2000
Not Applicable
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Common stock, par value $0.001 per share
LSAK
NASDAQ
Global Select Market
Indicate by check mark whether
the registrant (1) has filed
all reports required to be
filed by Section 13 or
15(d)
of
the
Securities
Exchange
Act
of
1934
during
the
preceding
12
months
(or
for
such
shorter
period
that
the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.
YES
☒
NO
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File
required
to
be
submitted
pursuant
to
Rule
405
of
Regulation
S-T
(§232.405
of
this
chapter)
during
the
preceding
12
months (or for such shorter period that the registrant was required to submit such files).
YES
☒
NO
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, smaller
reporting company
or an
emerging growth
company. See the
definitions of
“large accelerated
filer,”
“accelerated
filer,”
“smaller
reporting
company,”
and
“emerging
growth
company”
in
Rule 12b-2
of
the
Exchange Act (check one):
☐
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
If an
emerging
growth company,
indicate by
check mark
if the
registrant has
elected not
to use
the extended
transition period
for complying
with any
new or
revised financial
accounting standards
provided pursuant
to
Section 13(a) of the Exchange Act.
☐
Indicate by
check mark
whether the
registrant is
a shell
company (as
defined in
Rule 12b-2
of the
Exchange
Act). YES
☐
NO
☒
As of
February 2,
2026 (the
latest practicable
date),
83,920,675
shares of
the registrant’s
common stock,
par
value $0.001 per share, net of treasury shares, were outstanding.
1
Form 10-Q
LESAKA TECHNOLOGIES, INC.
Table
of Contents
Page No.
PART
I. FINANCIAL INFORMATION
Item 1
.
Financial Statements
Unaudited Condensed Consolidated Balance Sheets as of December 31, 2025 and June
30, 2025
2
Unaudited Condensed Consolidated Statements of Operations for the three and six
months ended December 31, 2025 and 2024
3
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the
three and six months ended December 31, 2025 and 2024
4
Unaudited Condensed Consolidated Statement of Changes in Equity for the three and six
months ended December 31, 2025 and 2024
5
Unaudited Condensed Consolidated Statements of Cash Flows for the three and six
months ended December 31, 2025 and 2024
9
Notes to Unaudited Condensed Consolidated Financial Statements
10
Item 2
.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
48
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
68
Item 4
.
Controls and Procedures
69
Part II. OTHER INFORMATION
Item 1.
Legal Proceedings
71
Item 1A.
Risk Factors
71
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
72
Item 3
Defaults upon Senior Securities
72
Item 4
Mine Safety Disclosures
72
Item 5.
Other Information
72
Item 6.
Exhibits
73
Signatures
74
2
Part I. Financial information
Item 1. Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Balance Sheets
December 31,
June 30,
2025
2025
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
69,474
$
76,520
Restricted cash related to ATM funding
and credit facilities (Note 9)
127
119
Accounts receivable, net and other receivables (Note 3)
58,244
42,525
Finance loans receivable, net (Note 3)
103,593
74,110
Inventory (Note 4)
25,098
23,551
Total current assets before settlement assets
256,536
216,825
Settlement assets
28,314
27,098
Total current assets
284,850
243,923
PROPERTY,
PLANT AND EQUIPMENT, net of accumulated depreciation of - December: $
61,787
June:
$
55,086
(Note 1)
46,708
44,924
OPERATING LEASE RIGHT-OF-USE (Note 17)
12,378
9,691
EQUITY-ACCOUNTED INVESTMENTS
(Note 6)
289
199
GOODWILL (Note 7)
211,886
199,395
INTANGIBLE ASSETS, NET (Note 7), including integrated platform of: December: $
78,696
June: $
79,343
131,663
139,215
DEFERRED INCOME TAXES
12,489
12,554
OTHER LONG-TERM ASSETS (Note 6 and 8)
4,381
3,809
TOTAL ASSETS
704,644
653,710
LIABILITIES
CURRENT LIABILITIES
Short-term credit facilities (Note 9)
21,333
24,469
Accounts payable
20,150
19,867
Other payables (Note 10)
(A)
92,501
76,035
Operating lease liability - current (Note 17)
5,015
4,007
Current portion of long-term borrowings (Note 9)
13,025
11,956
Income taxes payable
1,628
1,400
Total current liabilities before settlement obligations
153,652
137,734
Settlement obligations
28,175
26,695
Total current liabilities
181,827
164,429
DEFERRED INCOME TAXES
31,553
33,921
OPERATING LEASE LIABILITY - LONG TERM (Note 17)
7,805
6,129
LONG-TERM BORROWINGS (Note 9)
203,802
188,813
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 8)
3,002
2,991
TOTAL LIABILITIES
427,989
396,283
REDEEMABLE COMMON STOCK
88,957
88,957
EQUITY
COMMON STOCK (Note 11)
Authorized:
200,000,000
with $
0.001
par value;
Issued and outstanding shares, net of treasury - December:
81,524,175
; June:
81,249,097
103
103
PREFERRED STOCK
Authorized shares:
50,000,000
with $
0.001
par value;
Issued and outstanding shares, net of treasury:
December:
-
; June:
-
-
-
ADDITIONAL PAID-IN-CAPITAL
430,686
426,950
TREASURY SHARES, AT
COST: December:
30,234,228
; June:
29,934,044
(299,632)
(298,523)
ACCUMULATED OTHER
COMPREHENSIVE LOSS (Note 12)
(A)
(168,308)
(185,626)
RETAINED EARNINGS
(A)
217,712
218,725
TOTAL LESAKA EQUITY
180,561
161,629
NON-CONTROLLING INTEREST
7,137
6,841
TOTAL EQUITY
187,698
168,470
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY
$
704,644
$
653,710
(A) Amounts for June 30, 2025 revised to correct the errors discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Operations
3
Three months ended
Six months ended
December 31,
December 31,
2025
2024
2025
2024
(In thousands, except per share
data)
(In thousands, except per share
data)
REVENUE (Note 16)
$
178,734
$
176,216
$
350,182
$
329,784
EXPENSE
Cost of goods sold, IT processing, servicing and support
(A)
122,691
130,866
241,314
249,941
Selling, general and administration
(A)
36,075
33,837
73,169
59,094
Allowance for credit losses (Note 3)
4,203
2,521
6,809
4,020
Depreciation and amortization
13,568
8,223
26,462
14,499
Transaction costs related to Adumo, Recharger and Bank Zero
acquisitions (Note 2)
47
222
141
1,952
OPERATING INCOME
2,150
547
2,287
278
CHANGE IN FAIR VALUE
OF EQUITY SECURITIES (Note 5 and 6)
2,971
(33,731)
2,971
(33,731)
OTHER INCOME (Note 10)
3,883
-
3,883
-
LOSS ON DISPOSAL OF EQUITY SECURITIES (Note 2)
730
-
730
-
NET LOSS ON IMPAIRMENT OF EQUITY-ACCOUNTED
INVESTMENT/ LOSS ON DISPOSAL OF EQUITY-ACCOUNTED
INVESTMENT (Note 6)
-
161
584
161
INTEREST INCOME
508
721
1,047
1,307
INTEREST EXPENSE
(A)
4,591
6,266
9,604
11,382
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
4,191
(38,890)
(730)
(43,689)
INCOME TAX EXPENSE (BENEFIT) (Note 19)
670
(6,412)
524
(6,334)
NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY-
ACCOUNTED INVESTMENTS
3,521
(32,478)
(1,254)
(37,355)
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS
(Note 6)
110
50
110
77
NET INCOME (LOSS)
3,631
(32,428)
(1,144)
(37,278)
(ADD) LESS NET (LOSS) INCOME ATTRIBUTABLE
TO NON-
CONTROLLING INTEREST
(14)
28
(131)
28
NET INCOME (LOSS) ATTRIBUTABLE
TO LESAKA
$
3,645
$
(32,456)
$
(1,013)
$
(37,306)
Net earnings (loss) per share, in United States dollars
(Note 14):
Basic earnings (loss) attributable to Lesaka shareholders
$
0.04
$
(0.40)
$
(0.01)
$
(0.52)
Diluted earnings (loss) attributable to Lesaka shareholders
$
0.04
$
(0.40)
$
(0.01)
$
(0.52)
(A) Revised to correct the errors discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income
4
Three months ended
Six months ended
December 31,
December 31,
2025
2024
2025
2024
(In thousands)
(In thousands)
Net income (loss)
(A)
$
3,631
$
(32,428)
$
(1,144)
$
(37,278)
Other comprehensive income (loss), net of taxes
Movement in foreign currency translation reserve
(A)
10,541
(22,444)
17,264
(12,085)
Release of foreign currency translation reserve related to
disposal/ liquidation of subsidiaries (Note 12)
(26)
6
(26)
6
Release of foreign currency translation reserve related to
disposal of equity securities (Note 12)
-
-
550
-
Total other comprehensive
income (loss), net of
taxes
10,515
(22,438)
17,788
(12,079)
Comprehensive income (loss)
14,146
(54,866)
16,644
(49,357)
(Less) Add comprehensive (loss) income
attributable to non-controlling interest
(270)
558
(343)
558
Comprehensive income (loss) attributable to
Lesaka
$
13,876
$
(54,308)
$
16,301
$
(48,799)
(A) Revised to correct the errors discussed in Note 1.
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 December 31, 2024 (dollar amounts
in thousands)
Balance – October 1, 2024
(A)
89,865,751
$
83
(25,563,808)
$
(289,733)
64,301,943
$
346,016
$
302,616
$
(177,868)
$
181,114
$
-
$
181,114
$
79,429
Shares issued (Note 2 and Note 11)
17,279,803
17
-
-
17,279,803
73,239
73,256
73,256
9,528
Shares repurchased (Note 13)
(2,733,557)
(12,586)
(2,733,557)
-
(12,586)
(12,586)
Restricted stock granted (Note 13)
1,331,310
1,331,310
-
-
Exercise of stock options (Note 13)
17,014
1
17,014
51
52
52
Stock-based compensation charge
(Note 13)
-
2,655
2,655
2,655
Reversal of stock-based compensation
charge (Note 13)
(37,221)
(37,221)
(11)
(11)
(11)
Adumo non-controlling interest
acquired (Note 2)
-
-
-
7,586
7,586
Net loss
(A)
-
(32,456)
(32,456)
28
(32,428)
Dividends paid to non-controlling
interest
(301)
(301)
Other comprehensive loss (Note 12)
(A)
(21,852)
(21,852)
(586)
(22,438)
Balance – December 31, 2024
108,456,657
$
101
(28,297,365)
$
(302,319)
80,159,292
$
421,950
$
270,160
$
(199,720)
$
190,172
$
6,727
$
196,899
$
88,957
(A) Revised to correct the errors discussed in Note 1.
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 six months ended December 31, 2024 (dollar
amounts in thousands)
Balance – July
1, 2024
(A)
89,836,051
$
83
(25,563,808)
$
(289,733)
64,272,243
$
343,639
$
307,466
$
(188,227)
$
173,228
$
-
$
173,228
$
79,429
Shares issued (Note 2 and Note 11)
17,279,803
17
-
-
17,279,803
73,239
73,256
73,256
9,528
Shares repurchased (Note 13)
-
-
(2,733,557)
(12,586)
(2,733,557)
(12,586)
(12,586)
Restricted stock granted (Note 13)
1,364,110
-
1,364,110
-
-
-
Exercise of stock options (Note 13)
17,014
1
17,014
51
52
52
Stock-based compensation charge
(Note 13)
-
5,032
5,032
5,032
Reversal of stock-based compensation
charge (Note 13)
(40,321)
-
(40,321)
(11)
(11)
(11)
Net loss
(A)
-
(37,306)
(37,306)
28
(37,278)
Dividends paid to non-controlling
interest
-
-
(301)
(301)
Other comprehensive loss (Note 12)
(A)
(11,493)
(11,493)
(586)
(12,079)
Balance – December 31, 2024
108,456,657
$
101
(28,297,365)
$
(302,319)
80,159,292
$
421,950
$
270,160
$
(199,720)
$
190,172
$
6,727
$
196,899
$
88,957
(A) Revised to correct the errors discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial
Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
7
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 December 31, 2025 (dollar amounts
in thousands)
Balance – October 1, 2025
(A)
111,397,943
$
103
(29,934,044)
$
(298,523)
81,463,899
$
428,811
$
214,067
$
(178,543)
$
165,915
$
6,914
$
172,829
$
88,957
Shares repurchased (Note 13)
-
(70,133)
(271)
(70,133)
(271)
(271)
Loss recognized related to issue of
shares included in treasury shares
(Note 2)
76,716
373
76,716
(70)
303
303
-
Restricted stock granted (Note 13)
631,000
631,000
-
-
Stock-based compensation charge
(Note 13)
-
-
1,996
1,996
1,996
Reversal of stock-based compensation
charge (Note 13)
(270,540)
(270,540)
(51)
(51)
(51)
Deconsolidation of Humble (Note 2)
(306,767)
(1,211)
(306,767)
-
(1,211)
(43)
(1,254)
Net Income (loss)
3,645
3,645
(14)
3,631
Other comprehensive income (Note
12)
10,235
10,235
280
10,515
Balance – December 31, 2025
111,758,403
$
103
(30,234,228)
$
(299,632)
81,524,175
$
430,686
$
217,712
$
(168,308)
$
180,561
$
7,137
$
187,698
$
88,957
(A) Revised to correct the errors discussed in Note 1.
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
8
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net
of treasury
Addition
al Paid-
In
Capital
Retained
Earnings
Accumulated
other
comprehensiv
e loss
Total
Lesaka
Equity
Non-
controllin
g Interest
Total
Redeemabl
e common
stock
For the six months ended December 31, 2025 (dollar
amounts in thousands)
Balance – July 1,
2025
(A)
111,183,141
$
103
(29,934,044)
$
(298,523)
81,249,097
$
426,950
$
218,725
$
(185,626)
$
161,629
$
6,841
$
168,470
$
88,957
Shares repurchased (Note 13)
(70,133)
(271)
(70,133)
(271)
(271)
Loss recognized related to issue of
shares included in treasury shares
(Note 2)
76,716
373
76,716
(70)
303
303
Restricted stock granted
856,595
856,595
-
-
-
Stock-based compensation charge
(Note 13)
-
-
3,869
3,869
3,869
Reversal of stock-based compensation
charge (Note 13)
(281,333)
(281,333)
(63)
(63)
(63)
Deconsolidation of Humble (Note 2)
(306,767)
(1,211)
(306,767)
-
(1,211)
(43)
(1,254)
Net loss
(A)
(1,013)
(1,013)
(131)
(1,144)
Other comprehensive income (Note
12)
(A)
17,318
17,318
470
17,788
Balance – December 31, 2025
111,758,403
$
103
(30,234,228)
$
(299,632)
81,524,175
$
430,686
$
217,712
$
(168,308)
$
180,561
$
7,137
$
187,698
$
88,957
(A) Revised to correct the errors discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial
Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
9
Three months ended
Six months ended
December 31,
December 31,
2025
2024
2025
2024
(In thousands)
(In thousands)
Cash flows from operating activities
Net income (loss)
(A)
$
3,631
$
(32,428)
$
(1,144)
$
(37,278)
Depreciation and amortization
13,568
8,223
26,462
14,499
Movement in allowance for doubtful accounts receivable
4,203
2,521
6,809
4,020
Fair value adjustment related to financial liabilities
36
(454)
35
(264)
Loss on disposal of equity securities (Note 6)
730
-
730
-
Loss on disposal of equity-accounted investments (Note 6)
-
161
584
161
Earnings from equity-accounted investments
(110)
(50)
(110)
(77)
Change in fair value of equity securities (Note 5 and 6)
(2,971)
33,731
(2,971)
33,731
Other income
(3,883)
-
(3,883)
-
Profit on disposal of property, plant and equipment
(27)
(14)
(57)
(41)
Movement in interest payable
(61)
1,864
(168)
3,557
Facility fee amortized
88
68
166
137
Stock-based compensation charge (Note 13)
1,945
2,644
3,806
5,021
Dividends received from equity-accounted investments
-
65
-
65
Increase in accounts receivable
(11,452)
(11,988)
(12,682)
(4,295)
Increase in finance loans receivable
(22,678)
(8,325)
(29,581)
(9,915)
(Increase) Decrease in inventory
(3,949)
(4,560)
1,199
(5,449)
Increase (Decrease) in accounts payable and other payables
(A)
12,855
8,457
12,622
(8,412)
(Decrease) Increase in taxes payable
(422)
(153)
90
612
Decrease in deferred taxes
(2,419)
(8,928)
(3,900)
(9,374)
Net cash used in operating activities
(10,916)
(9,166)
(1,993)
(13,302)
Cash flows from investing activities
Capital expenditures
(3,922)
(6,318)
(7,902)
(10,283)
Proceeds from disposal of property, plant and equipment
459
475
911
1,325
Acquisition of intangible assets
(1,008)
(428)
(2,147)
(601)
Acquisitions, net of cash acquired
(345)
(3,957)
(345)
(3,957)
Cash disposed on disposal of subsidiary
(165)
-
(165)
-
Investment in equity securities
(250)
-
(250)
-
Proceeds from disposal of equity securities (Note 6)
2,971
-
2,971
-
Net change in settlement assets
(3,452)
(1,266)
754
2,304
Net cash used in investing activities
(5,712)
(11,494)
(6,173)
(11,212)
Cash flows from financing activities
Proceeds from bank overdraft (Note 9)
20,535
48,855
48,509
72,748
Repayment of bank overdraft (Note 9)
(12,440)
(4,512)
(53,101)
(35,540)
Long-term borrowings utilized (Note 9)
1,266
12,903
4,029
13,677
Repayment of long-term borrowings (Note 9)
(1,237)
(8,322)
(2,385)
(13,794)
Acquisition of treasury stock (Note 13)
(271)
(12,586)
(271)
(12,586)
Proceeds from exercise of stock options
-
51
-
51
Guarantee fee
-
(431)
(33)
(431)
Dividends paid to non-controlling interest
-
(301)
-
(301)
Net change in settlement obligations
3,156
1,209
(477)
(2,439)
Net cash provided by (used in) financing activities
11,009
36,866
(3,729)
21,385
Effect of exchange rate changes on cash and cash equivalents
2,936
(5,278)
4,857
(2,052)
Net (decrease) increase in cash, cash equivalents and restricted cash
(2,683)
10,928
(7,038)
(5,181)
Cash, cash equivalents and restricted cash – beginning of period
72,284
49,809
76,639
65,918
Cash, cash equivalents and restricted cash – end of period (Note 15)
$
69,601
$
60,737
$
69,601
$
60,737
(A) Revised to correct the errors discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial Statements
10
LESAKA TECHNOLOGIES, INC
Notes to the Unaudited Condensed Consolidated Financial Statements
for the three and six months ended December 31, 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 (“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
and six
months ended December 31, 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
Understatement of cost and accumulated depreciation
for computer equipment
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
$
6.5
million
in
the
notes
to
the
audited
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 error. The Company has
recast its
accumulated depreciation presented
on the condensed consolidated balance sheet as of June 30, 2025, to increase
the amount from $
48,636
to $
55,086
.
The Company assessed the materiality of this error and change in presentation on prior period consolidated
financial statements
in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99“Materiality” and SAB No.
108, “Considering the Effects of Prior
Year
Misstatements
when
Quantifying
Misstatements
in
the
Current
Year
Financial
Statements.”
Based
on
this
assessment,
the
Company has concluded
that previously issued
financial statements were
not materially misstated
based upon overall
considerations
of both quantitative and qualitative factors.
Understatement of cost of goods sold, IT processing,
servicing and support due to incorrect claim of indirect
taxes
Subsequent to the issuance
of the Company’s
Quarterly Report on Form
10-Q for the three
months ended September
30, 2025,
it
determined
that
its
certain
indirect
taxes
had
not
been
accounted
for
correctly
in
its
consolidated
balance
sheet,
consolidated
statements of
operations,
consolidated
statement of
comprehensive
loss, consolidated
statement of
changes in
equity,
consolidated
statement of cash flows and
related notes to the
consolidated financial statements included in
previously filed Annual Reports on
Form
10-K and Quarterly Reports on Form 10-Q since June 30, 2022, and these filings were incorrect. In these previous filings, the amount
of
certain
indirect
taxes
were
incorrectly
claimed
in
monthly
indirect
tax
submission
to
the
taxing
authority
and
were
incorrectly
excluded
from
the Company’s
reported
cost of
goods
sold, IT
processing,
servicing
and support
in the
consolidated
statements of
operations
and
other
payables
and
retained
earnings
in
the
consolidated
balance
sheet.
The
corrected
presentation
in
the
revised
consolidated
financial
statements
includes
certain
indirect
taxes
in
cost
of
goods
sold,
IT processing,
servicing
and
support
in
the
consolidated statements of operations and other payables and retained
earnings in the consolidated balance sheet
The Company has
also determined that
it may also
be liable for
penalties and interest
related to the
indirect taxes not
paid in a
timely manner and has recorded the penalties in the selling,
general and administration expense and the interest in interest expense
in
the revised consolidated statements of operations.
The cumulative sum of the penalties and interest are included in other payables and
retained earnings in the revised consolidated balance sheet.
The Company has determined
that at this time
it is more likely
than not that it
will be unable to
claim an income tax
deduction
related to the error, however,
it is performing further analysis of
its tax position with its external tax advisors.
Therefore, there are no
income tax adjustments reflected in these condensed consolidated
financial statements related to the correction of this error.
11
1.
Basis of Presentation and Summary of Significant Accounting
Policies (continued)
Revision of Previously Issued Financial Statements (continued)
Understatement of cost
of goods sold,
IT processing, servicing and
support due to
incorrect claim of indirect taxes
(continued)
The Company assessed the materiality of this error and change in presentation on prior period consolidated
financial statements
in
accordance
with
SAB
No.
99“Materiality”
and
SAB
No.
108,
“Considering
the
Effects
of
Prior
Year
Misstatements
when
Quantifying
Misstatements in
the Current
Year
Financial Statements.”
Based on
this assessment,
the Company
has concluded
that
previously
issued
financial
statements
were
not
materially
misstated
based
upon
overall
considerations
of
both
quantitative
and
qualitative factors.
The Company
has revised the
previous presentations
on the condensed
consolidated statements
of operations
for the three
and
six months ended December
31, 2024, and corrected them
in this filing. The Company
has also included the impact
of the correction
for
the three
months ended
September
30, 2025,
in the
condensed
consolidated
statements of
operations
for the
six months
ended
December 31,
2025, included in
this filing. The
impact of
these revisions has
increased cost
of goods
sold, IT processing,
servicing
and support,
selling, general
and administration
expense and
interest expense,
and all
subtotals from
operating income
(loss) to
net
income (loss) attributable to Lesaka for the affected periods.
Specifically,
for the
six months ended
December 31, 2025,
Cost of goods
sold, IT processing,
servicing and
support increased
by
$
0.18
million,
Selling,
general
and
administration
expense
increased
by
$
0.06
million,
Operating
income
decreased
by
$
0.25
million, Interest
expense increased
by $
0.12
million, and
Net income
(loss) attributable
to Lesaka
decreased by
$
0.36
million, as
a
result of the correction
to amounts reported
for the three months
ended September 30,
2025. Basic and Diluted
loss per share for
the
six months ended December 31, 2025, were not impacted
by the correction to amounts reported for
the three months ended September
30, 2025.
The Company
has revised
the condensed
consolidated balance
sheet as
of June
30, 2025,
and corrected
it in
this filing
where
these amounts
are presented as
comparative prior
period amounts in
other payables and
retained earnings and
affected subtotals
and
totals.
The tables below present the impact of
the revisions to specific captions to
the Company’s condensed consolidated balance sheet
and condensed consolidated statement of operations for the periods
identified.
Condensed consolidated balance sheet
June 30, 2025
As reported
Correction
As revised
Other payables
$
72,079
$
3,956
$
76,035
Accumulated other comprehensive loss
(185,664)
38
(185,626)
Retained earnings
222,719
(3,994)
218,725
Condensed consolidated statement of operations
Three months ended December 31, 2024
As reported
Correction
As revised
(in thousands, except per share data)
Cost of goods sold, IT processing, servicing and support
$
130,696
$
170
$
130,866
Selling, general and administration
33,777
60
33,837
Interest expense
6,174
92
6,266
Basic income (loss) per share attributable to Lesaka shareholders
$
(0.40)
$
-
$
(0.40)
Diluted income (loss) per share attributable to Lesaka shareholders
$
(0.40)
$
-
$
(0.40)
Condensed consolidated statement of operations
Six months ended December 31, 2024
As reported
Correction
As revised
(in thousands, except per share data)
Cost of goods sold, IT processing, servicing and support
$
249,605
$
336
$
249,941
Selling, general and administration
58,976
118
59,094
Interest expense
11,206
176
11,382
Basic income (loss) per share attributable to Lesaka shareholders
$
(0.51)
$
(0.01)
$
(0.52)
Diluted income (loss) per share attributable to Lesaka shareholders
$
(0.51)
$
(0.01)
$
(0.52)
12
1.
Basis of Presentation and Summary of Significant Accounting
Policies (continued)
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 December 31, 2025
In
November
2024,
the
FASB
issued
guidance
regarding
Income
Statement—Reporting
Comprehensive
Income—Expense
Disaggregation
Disclosures
(Subtopic
220-40)
which
requires
disaggregated
disclosure
of
income
statement
expenses
for
public
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
which amends current guidance to provide a practical
expedient (for all entities)
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.
On
September
18,
2025,
the
FASB
issued
guidance
regarding
Intangibles—Goodwill
and
Other—
Internal-Use
Software
(Subtopic 350-40)
which amends certain
aspects of the
accounting for and
disclosure of software
costs under ASC
350-40. The new
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)
and relocate
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.
On December
8, 2025,
the FASB
issued guidance
regarding
Interim Reporting
(Topic
270)
which is
intended to
improve the
navigability
of the
guidance
in ASC
270
and clarify
when it
applies.
Under the
amendments, an
entity is
subject to
ASC 270
if
it
provides “interim financial
statements and notes
in accordance with
GAAP.” The updated guidance also
addresses the
form and content
of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other Codification topics, and establishes
a principle
under which an
entity must “disclose
events since the
end of the
last annual reporting
period that have
a material impact
on the entity.”
As the FASB
stated in the
proposed guidance and
reiterates in the ASU,
the amendments are
not intended to “change
the fundamental nature
of interim reporting
or expand or
reduce current interim
disclosure requirements.” This
guidance is effective
for the
Company beginning
July 1,
2028, and
interim reporting
periods during
that fiscal
year.
Early adoption
is permitted.
Entities
m
ay apply the guidance prospectively,
retrospectively, or via a modified
prospective transition method.
13
2.
Acquisitions
and Dispositions
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 cash paid,
net of cash
received related
to the Company’s
acquisitions during
the six months
ended December
31, 2025,
is
summarized in the table below:
Total
Total cash paid
$
350
Less: cash acquired
5
Total cash paid, net
of cash received
$
345
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 $
0.04
million and $
0.1
million during the three and six months ended
December 31, 2025, respectively,
related to the proposed acquisition of
Bank Zero. The Company’s
accruals presented in Note 10 of
as December 31,
2025, includes an
accrual of transaction related
expenditures of $
0.3
million and the
Company expects to
incur further
transaction costs of $
0.2
million during the 2026 fiscal year.
2026 Acquisitions
On November
10, 2025,
the Company,
through its
wholly
owned
subsidiary,
Prism Holdings
Proprietary
Limited
(“Prism”),
entered
into
a
Sale
of
Shares
Agreement
(the
“Atom
Purchase
Agreement”)
with
Gravaton
Investments
Proprietary
Limited
(“Gravaton”) and Atom Operations Proprietary Limited (“Atom”). Pursuant to the Atom Purchase Agreement and subject to its terms
and conditions, Prism agreed to
acquire, and Gravaton agreed
to sell, all of
the outstanding equity interests
in Atom for a
total purchase
consideration of
$
0.7
million which comprised
of $
0.4
million (ZAR
6.0
million, translated at
December 1, 2025
exchange rates)
in
cash and
76,716
shares of the Company’s
shares of common stock (which
had an aggregate value
of $
0.3
million (
76,716
multiplied
by
$
3.95
)
on closing).
The transaction
closed
on December
1, 2025.
The Company
did not
incur
any
significant
transaction
costs
related to this acquisition.
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.
14
2.
Acquisitions and Dispositions (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 Recharger
preliminary purchase
price allocation
as of
June 30,
2025. The
final
purchase
price
allocation
related
to
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
$
1,720
Accounts receivable
17
Inventory
194
Property, plant and equipment
39
Operating lease right of use asset
401
Goodwill
3,614
Intangible assets
16,171
Deferred income taxes assets
81
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
$
15,825
Transaction costs and certain compensation
costs
The Company
did not
incur any
transaction costs
related to
the Bank
Zero acquisition
during the
three and
six months
ended
December 31, 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 and six months
ended December 31, 2025 and 2024:
Three months ended
December 31,
Six months ended
December 31,
2025
2024
2025
2024
Bank Zero transaction costs
$
44
$
-
$
126
$
-
Adumo transaction costs
3
-
3
1,702
Recharger transaction costs
(1)
-
222
12
250
Total
$
47
$
222
$
141
$
1,952
(1)
Recharger
transactions
costs for
the three
and
six months
ended
December 31,
2024, of
$
0.22
million and
$
0.25
million,
respectively, have been allocated from Selling, general and administration to
Transaction costs related to Adumo, Recharger and Bank
Zero
acquisitions
in the
unaudited condensed
consolidated
statement operations
for
the three
and
six months
ended December
31,
2025.
Pro forma results related
to acquisitions
Pro forma results of operations have not been presented for the
acquisition of Atom because the effect of this acquisition was not
material to the Company.
Since the closing of these
acquisitions, Atom has contributed
revenue and net income of
$
0.05
million and
$
(0.01)
million, respectively, for the six
months ended December 31, 2025.
15
2.
Acquisitions and Dispositions (continued)
Dispositions
2026
Dispositions
December 2025 disposal of Humble
On
December
1,
2025,
Adumo
(RF)
Proprietary
Limited,
a wholly
-owned
subsidiary
of the
Company,
disposed
of its
entire
investment in
Humble Software
Proprietary Limited
(“Humble”) and
received
306,767
shares of
the Company’s
common stock
as
consideration. The fair value of these
306,767
shares of the Company’s common stock on December 1, 2025, was $
1.2
million. These
shares have
been included in
the Company’s
treasury shares.
The table below
presents the impact
of the deconsolidation
of Humble
and the calculation of the net loss recognized on deconsolidation:
Deconsolidation of Humble
Humble
Fair value of consideration received
$
1,211
Add carrying value of noncontrolling interest on deconsolidation
47
Less: carrying value of Humble, comprising
1,988
Cash and cash equivalents
162
Accounts receivable, net
26
Inventory
10
Property, plant and equipment,
net
1
Goodwill
1,515
Intangible assets, net
63
Deferred income taxes assets
300
Accounts payable
(4)
Other payables
(58)
Income taxes payable
(1)
Released from accumulated other comprehensive income – foreign
currency translation reserve
(26)
Loss recognized on disposal, before transaction costs
(730)
Loss recognized on disposal, before tax
(730)
Taxes related to gain
recognized on disposal
-
Tax benefit related
to loss recognized on disposal
(1)
-
Release of valuation allowance
(1)
-
Loss recognized on disposal, after tax
$
(730)
(1)The Company incurred a capital loss of $
0.04
million. The Company recorded a valuation allowance of $
0.04
million related
to the capital loss generated.
16
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 December 31, 2025, and June 30, 2025, are presented in
the table below:
December 31,
June 30,
2025
2025
Accounts receivable, trade, net
$
23,247
$
16,433
Accounts receivable, trade, gross
25,503
18,186
Less: Allowance for doubtful accounts receivable, end of period
2,256
1,753
Beginning of period
1,753
1,241
Reversed to statement of operations
(189)
(521)
Charged to statement of operations
869
1,856
Write-offs
(310)
(847)
Deconsolidation
(4)
-
Foreign currency adjustment
137
24
Current portion of amount outstanding related to sale of interest in Carbon,
net of
allowance: December 2025: $
750
; June 2025: $
750
-
-
Other receivables
34,997
26,092
Total accounts receivable,
net and other receivables
$
58,244
$
42,525
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
balances
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
is 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.
17
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 December 31, 2025, and June 30, 2025, is presented
in the table below:
December 31,
June 30,
2025
2025
Microlending finance loans receivable, net
$
82,250
$
52,492
Microlending finance loans receivable, gross
88,010
56,140
Less: Allowance for doubtful finance loans receivable, end of period
5,760
3,648
Beginning of period
3,648
1,947
Reversed to statement of operations
-
(161)
Charged to statement of operations
4,881
4,301
Write-offs
(3,113)
(2,499)
Foreign currency adjustment
344
60
Merchant finance loans receivable, net
21,343
21,618
Merchant finance loans receivable, gross
24,121
23,214
Less: Allowance for doubtful finance loans receivable, end of period
2,778
1,596
Beginning of period
1,596
2,697
Reversed to statement of operations
(117)
(22)
Charged to statement of operations
1,365
2,576
Write-offs
(229)
(3,709)
Foreign currency adjustment
163
54
Total finance
loans receivable, net
$
103,593
$
74,110
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 $
20.5
million as of December 31, 2025 have been pledged as
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
five years
and uses historical default experience over the lifetime of
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 December 31, 2025,
was
6.50
%. The performing component (that
is, outstanding loan payments
not in
arrears) of
the book
exceeds more
than
98
%, of
the outstanding
lending book
as of each
of June
30, 2025
and December
31,
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.
18
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
December
31,
2025,
was
approximately
1.14
%.
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
88
%,
11
% and
1
%, respectively,
of the
outstanding lending book as of December 31, 2025.
4.
Inventory
The Company’s inventory
comprised the following categories as of December 31, 2025, and June 30, 2025:
December 31,
June 30,
2025
2025
Raw materials
$
2,627
$
2,963
Work-in-progress
288
293
Finished goods
22,183
20,295
$
25,098
$
23,551
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.
19
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
from time
to time.
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.
20
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
held
75,000,000
class “A” shares
in Cell
C Limited
(“Cell C”), a
significant mobile
telecoms provider
in South
Africa.
In November 2025,
Cell C completed a
restructuring process in anticipation
of its listing on
the securities exchange
operated
by the JSE Limited. Under this process, a new holding company,
Cell C Holdings Limited (“Cell C Listco”), was established for Cell
C, with a transaction
step including 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”). The
Company exchanged its
75,000,000
class “A” shares
in Cell C for
76,590
shares in Cell C Listco. Cell C Listco listed on November 23, 2025.
On October 31, 2025, in considering the proposed restructure
and listing of Cell C Listco, 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:
●
the listing
occurred by
November 30,
2025, and
the value
of Lesaka
SA’s
shares in
Cell C
was less
than ZAR
50
million,
then Lesaka SA could choose to either hold the shares, or sell the Relevant Shares to TPC for a purchase price equal to ZAR
50
million; or
●
the listing did
not occur by
November 30, 2025
(or, earlier
than this date,
it is determined
that the listing
will not proceed),
then Lesaka SA
could sell the Relevant
Shares to TPC for
ZAR
35
million. If, after
this sale and before
April 30, 2026, the
Listing occurs and the
list price per share
(“A”) is more than the
price paid to Lesaka
SA per Relevant Share
(the aggregate
ZAR
35
million) (“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.
The value of Lesaka SA’s
shares in Cell C Listco was less than ZAR
50
million on listing and Lesaka SA elected to sell its Cell
C Listco shares to TPC for ZAR
50
million ($
3.0
million) and received the cash proceeds in December 2025.
The
Company’s
Level
3
asset
represented
an
investment
of
75,000,000
class
“A”
shares
in
Cell
C.
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 June
30, 2025,
and valued Cell C
at $
0.0
(zero) as of June
30, 2025. The Company
assumed that Cell C’s
deferred tax assets would
be utilized over
the forecast period. The Company has assumed a marketability discount of
15
% as of June 2025 and a minority discount of
17
%. The
Company utilized the latest business plan provided
by Cell C management for the period ended May 31, 2030,
for the June 30, 2025,
valuation.
The following key valuation inputs were used as of June 30, 2025:
Weighted Average
Cost of Capital ("WACC"):
24
%
Long term growth rate:
4.5
%
Marketability discount:
15
%
Minority discount:
17
%
Net adjusted external debt - June 30, 2025:
(1)
ZAR
8.3
billion ($
0.5
billion), no lease liabilities included
(1) translated from ZAR to U.S. dollars at exchange rates applicable as of
June 30, 2025.
21
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 December 31,
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
Related to insurance
business:
$
$
$
$
Cash, cash equivalents and
restricted cash (included
in other long-term assets)
136
-
-
136
Fixed maturity
investments (included in
cash and cash equivalents)
6,793
-
-
6,793
Total assets at fair value
$
6,929
$
-
$
-
$
6,929
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)
125
-
-
125
Fixed maturity investments
(included in cash and cash
equivalents)
4,739
-
-
4,739
Total assets at fair value
$
4,864
$
-
$
-
$
4,864
During the three and six
months ended December 31,
2025, respectively, the Company transferred its investment in
Cell C Listco
out
of
Level
3
following
the
disposal
of
these
equity
securities.
During
the
three
and
six
months
ended
December
31,
2025,
respectively,
the Company recorded an
increase in the carrying
value of its investment
in Cell C Listco
prior to the disposal
of these
equity securities.
There were
no
transfers in or out of Level 3 during the three and six months ended December 31, 2024. There was
no
movement
in the
carrying value
of assets
measured at
fair value
on a
recurring basis,
and categorized
within Level
3, during
the three
and six
months ended December 31, 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 six months ended December 31, 2025:
Carrying value
Assets
Balance as of June 30, 2025
$
-
Gain on fair value re-measurement
2,971
Disposal of investment in Cell C
(2,971)
Foreign currency adjustment
(1)
-
Balance as of December 31, 2025
$
-
(1) The foreign currency adjustment represents the effects of the fluctuations of the
South African rand against the U.S. dollar on
t
he carrying value.
22
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 six months ended December 31, 2024:
Carrying value
Assets
Balance as of June 30, 2024
$
-
Foreign currency adjustment
(1)
-
Balance as of December 31, 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
no
liabilities
that
are
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 December 31,
2025, and June 30, 2025, was as
follows:
December 31,
June 30,
2025
2025
Sandulela Technology
(Proprietary) Limited (“Sandulela”)
49.0
%
49.0
%
SmartSwitch Namibia (Proprietary) Limited (“SmartSwitch Namibia”)
50.0
%
50.0
%
SmartSwitch Namibia
The
Company
recorded
a
loss
on
impairment
of
equity-accounted
investment
of
$
0.6
million
during
the
six
months
ended
December 31, 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 December
31, 2025, and June 30, 2025:
December 31,
June 30,
2025
2025
Total equity investments
$
250
$
-
Investment in Cell C (June 30, 2025:
5
%) at fair value (Note 5)
(1)
-
-
Investment in
10
% of Cowdi at fair value
(2)
250
-
Investment in
87.5
% of CPS (June 30, 2025:
87.5
%) at fair value
(2)(3)
-
-
Policy holder assets under investment contracts (Note 8)
136
125
Reinsurance assets under insurance contracts (Note 8)
2,020
1,837
Other long-term assets
1,975
1,847
Total other long-term
assets
$
4,381
$
3,809
(1) The Company disposed of its entire shareholding in Cell C in December
2025, refer to Note 5 for additional information.
(2) The Company determined
that Cowdi and CPS do
not have a readily
determinable fair value and
therefore elected to record
its investments
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.
(
3) On October 16,
2020, the High Court of
South Africa, Gauteng Division, Pretoria
ordered that CPS be
placed into liquidation.
23
6.
Equity-accounted investments and other long-term assets (continued)
Other long-term assets (continued)
During
the three
and six
months ended
December
31, 2025,
the Company
invested
$
0.3
million
to acquire
a
10
% interest
in
Cowdi Limited (“Cowdi”), an entity incorporated in England and Wales,
with operations through a Kenyan wholly-owned subsidiary
offering digital
loans to customers
in that country.
The Company also
extended a $
0.75
million credit facility
to Cowdi. The
facility
was undrawn as of December 31, 2025.
The Company previously owned
6,215,620
equity shares of One MobiKwik
Systems Limited (“MobiKwik”). MobiKwik
listed
on
the
National
Stock
Exchange
of
India
(“NSE”)
on
December
18,
2024.
Up
until
its
listing
MobiKwik
did
not
have
a
readily
determinable fair
value and
the Company
elected to
measure its
investment in
MobiKwik 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 (“cost plus or minus changes
in observable prices equity securities”).
From the date of MobiKwik’s
listing, the Company used
MobiKwik’s
closing
price
reported
on
the
NSE
on
the
last
trading
day
related
to
last
day
of
the
Company’s
reporting
period
to
determine the fair value
of the equity securities
owned by the Company.
The Company determined
a fair value per
MobiKwik share
of $
6.85
(INR
586.15
per share
at the
USD: INR
exchange rates applicable
as of
December 31, 2024).
The Company used
this valuation
as the
basis for
its adjustment
to decrease
the carrying
value of
its investment
in MobiKwik
by $
33.7
million from
$
76.3
million to
$
42.6
million as of December 31,
2024. The change in the
fair value of MobiKwik for
the three and six months ended
December 31,
2024, of $
33.7
million, is included in the
caption “Change in fair
value of equity securities”
in the consolidated statement of
operations
for the three and six months ended December 31, 2024. The Company disposed of its entire shareholding in MobiKwik in June 2025.
Summarized below
are the components
of the Company’s
equity securities without
readily determinable
fair value and
held to
maturity investments as of December 31, 2025:
Cost basis
Unrealized
holding
Unrealized
holding
Carrying
gains
losses
value
Equity securities:
Investment in Cowdi
$
250
$
-
$
-
$
250
Investment in CPS
-
-
-
-
Total
$
250
$
-
$
-
$
250
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
-
-
-
-
24
7.
Goodwill and intangible assets, net
Goodwill
Summarized below is the movement in the carrying value of goodwill
for the six months ended December 31, 2025:
Gross value
Accumulated
impairment
Carrying
value
Balance as of June 30, 2025
$
236,109
$
(36,714)
$
199,395
Deconsolidation of Humble (Note 2)
(1,515)
-
(1,515)
Foreign currency adjustment
(1)
16,194
(2,188)
14,006
Balance as of December 31, 2025
$
250,788
$
(38,902)
$
211,886
(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
$
179,634
$
6,027
$
13,734
$
199,395
Deconsolidation of Humble (Note 2)
(1,515)
-
-
(1,515)
Foreign currency adjustment
(1)
12,609
426
971
14,006
Balance as of December 31, 2025
$
190,728
$
6,453
$
14,705
$
211,886
(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.
Intangible assets, net
Carrying value and amortization of intangible assets
Summarized below is
the carrying value
and accumulated amortization
of intangible assets as
of December 31,
2025, and June
30, 2025:
As of December 31, 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
$
149,178
$
(52,905)
$
96,273
$
137,099
$
(41,925)
$
95,174
Customer relationships
57,248
(22,842)
34,406
53,369
(18,568)
34,801
Brands and trademarks
(1)
19,523
(18,539)
984
18,233
(8,993)
9,240
FTS patent
2,311
(2,311)
-
2,158
(2,158)
-
Total finite-lived
intangible
assets
$
228,260
$
(96,597)
$
131,663
$
210,859
$
(71,644)
$
139,215
(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 aligned in 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
$
3.2
million and $
6.3
million during the three
and six months ended
December 31, 2025 compared
with the
three and six months ended December 31, 2024. The
change in the useful lives resulted in a $
2.3
million and $
4.6
million increase in
the Company’s
net loss from continuing operations
for the three and six
months ended December 31, 2025,
respectively, and
did not
h
ave a significant impact on earnings (loss) per share. The change did not impact prior periods.
25
7.
Goodwill and intangible assets, net (continued)
Intangible assets, net (continued)
Aggregate amortization
expense on the
finite-lived intangible
assets for the
three months
ended December
31, 2025 and
2024,
was $
9.8
million and $
4.9
million, respectively. Aggregate amortization expense on the
finite-lived intangible assets for
the six months
ended December 31, 2025 and 2024,
was $
18.9
million and $
8.8
million, respectively.
Future estimated annual amortization expense
for the next
five fiscal years
and thereafter,
assuming exchange
rates that prevailed
on December
31, 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 six months ended December 31, 2025)
$
12,527
Fiscal 2027
22,780
Fiscal 2028
22,316
Fiscal 2029
21,164
Fiscal 2030
19,697
Thereafter
33,179
Total future
estimated annual amortization expense
$
131,663
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
six
months ended December 31, 2025:
Reinsurance
Assets
(1)
Insurance
contracts
(2)
Balance as of June 30, 2025
$
1,837
$
(2,644)
Increase in policyholder benefits under insurance contracts
177
(6,055)
Claims and decrease in policyholders’ benefits under insurance contracts
(126)
5,939
Foreign currency adjustment
(3)
132
(193)
Balance as of December 31, 2025
$
2,020
$
(2,953)
(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 six months ended
December 31, 2025:
Assets
(1)
Investment
contracts
(2)
Balance as of June 30, 2025
$
133
$
(125)
Increase in policy holder benefits under investment contracts
3
(3)
Foreign currency adjustment
(3)
-
(8)
Balance as of December 31, 2025
$
136
$
(136)
(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.
26
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
December 31,
2025, was
6.75
%. The
prime rate, the benchmark rate at which private sector banks lend to the public
in South Africa, on December 31, 2025, was
10.25
%.
Movement in short-term credit facilities
Summarized below are the Company’s short-term facilities as
of December 31, 2025, and
the movement in the Company’s short-
term facilities from as of June 30, 2025 to as of December 31, 2025:
RMB
RMB
Nedbank
GBF
Other
Facilities
Total
Short-term facilities available as of December 31, 2025
$
42,267
$
6,073
$
9,441
$
57,781
Overdraft
42,267
-
-
42,267
Indirect and derivative facilities
-
6,073
9,441
15,514
Movement in utilized overdraft facilities:
No restrictions as to use
24,469
-
-
24,469
Balance as of June 30, 2025
24,469
-
-
24,469
Utilized
48,509
-
-
48,509
Repaid
(53,101)
-
-
(53,101)
Foreign currency adjustment
(1)
1,456
-
-
1,456
Balance as of December 31, 2025
21,333
-
-
21,333
No restrictions as to use
$
21,333
$
-
$
-
$
21,333
Interest rate as of December 31, 2025 (%)
(2)
9.75
N/A
N/A
Interest rate as of June 30, 2025 (%)
(2)
10.25
N/A
N/A
Movement in utilized indirect and derivative facilities:
Balance as of June 30, 2025
$
-
$
1,864
$
119
$
1,983
Guarantees cancelled
-
(1,611)
-
(1,611)
Utilized
-
1,536
-
1,536
Foreign currency adjustment
(1)
-
128
8
136
Balance as of December 31, 2025
$
-
$
1,917
$
127
$
2,044
(1) Represents the effects of the fluctuations between the
ZAR and the U.S. dollar.
(2) RMB GBF interest is set at prime less
0.50
%.
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 December 31, 2025 and 2024, was $
0.8
million
and $
0.6
million, respectively.
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
six months ended
December 31, 2025
and 2024, was $
1.3
million and $
2.4
million, respectively.
The
Company
cancelled
Adumo’s
overdraft
arrangements
on
October
1,
2024,
and
settled
Adumo’s
outstanding
overdraft
balance of ZAR
20.0
million ($
1.1
million) on the
same day.
The repayment is
included in the
caption repayment
of bank overdraft
included on the Company’s unaudited condensed consolidated statements of cash flows for the three and six months ended December
3
1, 2024.
27
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 December
31,
2025:
Facilities
Lesaka A
Lesaka B
Asset
backed
CCC
Total
Included in current
$
-
$
8,448
$
3,508
$
-
$
11,956
Included in long-term
120,375
47,873
3,671
16,894
188,813
Opening balance as of June 30, 2025
120,375
56,321
7,179
16,894
200,769
Facilities utilized
-
-
3,057
972
4,029
Facilities repaid
-
-
(2,385)
-
(2,385)
Non-refundable fees paid
-
-
-
(33)
(33)
Non-refundable fees amortized
152
-
5
12
169
Foreign currency adjustment
(1)
8,520
3,983
533
1,242
14,278
Closing balance as of December 31, 2025
129,047
60,304
8,389
19,087
216,827
Included in current
-
9,046
3,979
-
13,025
Included in long-term
129,047
51,258
4,410
19,087
203,802
Unamortized fees
(951)
-
-
(23)
(974)
Due within 2 years
-
12,061
2,518
-
14,579
Due within 3 years
-
18,091
1,530
19,110
38,731
Due within 4 years
129,998
21,106
362
-
151,466
Due within 5 years
$
-
$
-
$
-
$
-
$
-
Interest rates as of December 31, 2025 (%):
10.00
9.90
11.00
10.15
Base rate (%)
6.75
6.75
10.25
10.25
Margin (%)
3.25
3.15
0.75
(0.10)
(2)
(3)
(4)
(5)
Interest rates as of June 30, 2025 (%):
10.54
10.44
11.50
11.70
Base rate (%)
7.29
7.29
10.75
10.75
Margin (%)
3.25
3.15
0.75
0.95
Footnote number
(2)
(3)
(4)
(6)
(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
3.25
% 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)
3.25
%, if the Net
Debt to EBITDA Ratio
is greater than or
equal to 2.5 times;
or (ii)
2.5
%, 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
3.15
% 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)
3.15
%, if the Net
Debt to EBITDA Ratio is greater than
or equal to 2.5 times;
or (ii)
2.4
%, if the Net Debt
to EBITDA
Ratio is less than 2.5 times.
(4) Interest is charged at prime plus
0.75
% per annum on the utilized balance.
(5) Interest is charged at prime less 0.10% per annum on
the utilized balance.
(6) Interest is charged at prime plus
0.95
% 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 December 31, 2025 and 2024, was $
3.7
million
and $
4.2
million, respectively.
Prepaid facility fees
amortized included
in interest expense
during the three
months ended December
31, 2025 and 2024, respectively,
were $
0.1
million and $
0.1
million, respectively.
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
six months ended
December 31, 2025
and 2024, was
$
7.5
million
and $
4.2
million, respectively. Prepaid facility fees amortized included in interest expense during the six months ended December
31,
2025 and 2024, respectively,
were $
0.2
million and $
0.1
million, respectively.
28
9.
Borrowings (continued)
Movement in long-term borrowings (continued)
Interest expense incurred under the Company’s
South African long-term borrowings to fund its Consumer lending book (for the
three months ended
December 31, 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 $
1.8
million and $
0.4
million, respectively, and is
included in the caption cost of
goods sold, IT processing, servicing and support
on the condensed consolidated statement of operations
for the three months ended December 31, 2025 and 2024.
Interest expense incurred under the Company’s
South African long-term borrowings to fund its Consumer lending book (for the
six months
ended December
31, 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 $
3.3
million and $
0.4
million, respectively, and is
included in the caption cost of
goods sold, IT processing, servicing and support
on the condensed consolidated statement of operations
for the six months ended December 31, 2025 and 2024.
The Company
cancelled Adumo’s
long-term
borrowings
arrangements on
October 1,
2024, and
settled Adumo’s
outstanding
balances
of ZAR
126.7
million
($
7.2
million) on
the same
day.
The repayment
is included
in the
caption
repayment of
long-term
borrowings included on the Company’s unaudited condensed consolidated statements
of cash flows for
the three and six
months ended
December 31, 2024.
10.
Other payables
Summarized below is the breakdown of other payables as of December
31, 2025, and June 30, 2025:
December 31,
June 30,
2025
2025
Vendor
wallet balances
$
25,949
$
19,529
Accruals
14,280
8,469
Provisions
7,309
8,497
Clearing accounts
12,404
6,766
Value
-added tax payable
(A)
8,428
6,347
Deferred consideration due to seller of Recharger
14,815
13,837
Payroll-related payables
2,233
1,931
Other
7,083
10,659
$
92,501
$
76,035
(A) Value-added
tax payable
and the
total of
Other payables
have each
increased by
$
4.0
million as
a result
of the
correction
discussed in Note 1.
Other includes deferred income, client deposits and other payables.
In December 2025,
the Company determined
that the liquidation
of CPS is at
an advanced stage
and released an
accrual raised
at the time of
deconsolidation. The release has
been included in the
caption “Other income” in
the consolidated statement of
operations
for the three and six months ended December 31, 2025.
11.
Capital structure
Impact of non-vested equity shares on number of shares,
net of treasury
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 during the six months ended
December 31, 2025 and 2024, respectively,
and the number
of shares, net of treasury,
excluding non-vested equity shares that have not vested as of December
31, 2025 and 2024, respectively:
December 31,
December 31,
2025
2024
Number of shares, net of treasury:
Statement of changes in equity
81,524,175
80,203,148
Less: Non-vested equity shares that have not vested as of end of period
2,500,483
2,902,303
Number of shares, net of treasury,
excluding non-vested equity shares that have not
vested
79,023,692
77,300,845
29
12.
Accumulated other comprehensive loss
The table
below presents
the change
in accumulated
other comprehensive
loss per
component
during the
three months
ended
December 31, 2025:
Three months ended
December 31, 2025
Accumulated
foreign
currency
translation
reserve
Total
Balance as of October 1, 2025
$
(178,543)
$
(178,543)
Movement in foreign currency translation reserve related to disposal of
subsidiary
(22)
(22)
Movement in foreign currency translation reserve
10,257
10,257
Balance as of December 31, 2025
$
(168,308)
$
(168,308)
The table
below presents
the change
in accumulated
other comprehensive
loss per
component during
the three
months ended
December 31, 2024:
Three months ended
December 31, 2024
Accumulated
foreign
currency
translation
reserve
Total
Balance as of October 1, 2024
(A)
$
(177,868)
$
(177,868)
Movement in foreign currency translation reserve related to liquidation
of subsidiaries
6
6
Movement in foreign currency translation reserve
(A)
(21,858)
(21,858)
Balance as of December 31, 2024
(A)
$
(199,720)
$
(199,720)
(A) Accumulated other comprehensive loss and Total
as of October 1, 2024, have each
increased by $
0.04
million as a result of
the correction discussed in Note 1. Accumulated
other comprehensive loss and Total
for the three months ended December 31, 2024,
have each decreased by $
-0.3
million as a result of the correction discussed in
Note 1 to the amount included in the caption Movement
in
foreign
currency
translation
reserve.
Accumulated
other
comprehensive
loss
and
Total
as
of
December
31,
2024,
have
each
decreased by $
-0.3
million as a result of the correction discussed in Note 1.
The
table
below
presents
the
change
in
accumulated
other
comprehensive
loss
per
component
during
the
six
months
ended
December 31, 2025:
Six months ended
December 31, 2025
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2025
(A)
$
(185,626)
$
(185,626)
Release of foreign currency translation reserve related to liquidation of equity
-accounted
investment
550
550
Release of foreign currency translation reserve related to liquidation of subsidiaries
(22)
(22)
Movement in foreign currency translation reserve
(A)
16,790
16,790
Balance as of December 31, 2025
(A)
$
(168,308)
$
(168,308)
(A) Accumulated other comprehensive loss and Total
as of July 1, 2025, have each decreased by $
0.04
million as a result of the
correction discussed in Note 1.
Accumulated other comprehensive loss
and Total
for the six months ended
December 31, 2025, have
each increased by
$
0.1
million as a result
of the correction,
as discussed in Note
1, to the amount
included in the caption
Movement
in foreign
currency translation
reserve for
the three
months ended
September 30,
2025. Accumulated
other comprehensive
loss and
T
otal as of December 31, 2025, have each increased by $
0.1
million as a result of the correction discussed in Note 1.
30
12.
Accumulated other comprehensive loss (continued)
The
table
below
presents
the
change
in
accumulated
other
comprehensive
loss
per
component
during
the
six
months
ended
December 31, 2024:
a
Six months ended
December 31, 2024
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2024
(A)
$
(188,227)
$
(188,227)
Movement in foreign currency translation reserve related to liquidation
of subsidiaries
6
6
Movement in foreign currency translation reserve related to equity-accounted
investment
(A)
(11,499)
(11,499)
Balance as of December 31, 2024
(A)
$
(199,720)
$
(199,720)
(A) Accumulated other
comprehensive loss and Total
as of July 1,
2024, have each decreased
by $
0.1
million as a result of
the
correction discussed in Note 1.
Accumulated other comprehensive loss
and Total
for the six months ended
December 31, 2024, have
each decreased by
$
-0.1
million as a result
of the correction
discussed in Note
1 to the
amount included in
the caption Movement
in
foreign currency translation reserve. Accumulated other comprehensive loss and Total as of December
31, 2024, have each decreased
by $
0.01
million as a result of the correction discussed in Note 1.
The movement in the
foreign currency translation reserve represents
the impact of translation of
consolidated entities which have
a functional currency (which is primarily ZAR) to the Company’s
reporting currency, which is USD.
During
the
six
months
ended
December
31,
2025,
the
Company
reclassified
losses
of
$
0.6
million
from
accumulated
other
comprehensive
loss
(accumulated
foreign
currency
translation
reserve)
to
net
loss
related
to
the
impairment
on
liquidation
of
an
equity-accounted investment. During
each of the three and six
months ended December 31,
2025, the Company reclassified
a loss of
$
0.02
million, respectively, from accumulated other comprehensive loss (accumulated foreign currency translation reserve) to net loss
related to the disposal of a subsidiary. During each of the three and six months ended December 31, 2024, the Company reclassified a
loss of $
0.006
million, respectively,
from accumulated
other comprehensive
loss (accumulated
foreign currency
translation reserve)
t
o net loss related to the liquidation of subsidiaries.
31
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. On
September 2,
2025, the
Company’s
Board resolved
to request
the approval
of the
Company’s
shareholders to increase the
number of shares
available for issuance under
the 2022 Plan by
3,000,000
. On December
8,
2025, the Company’s shareholders approved
the amendment.
Stock option and restricted stock activity
Options
The following table summarizes stock option activity for the six months
ended December 31, 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
5,866,904
8.71
3.55
703
1.20
Outstanding - December 31, 2025
5,866,904
8.71
3.03
883
1.20
Outstanding - June 30, 2024
4,918,248
8.70
4.51
889
1.77
Granted – December 2023
350,000
6.00
-
433
1.24
Granted – November 2020
250,000
8.00
-
177
0.71
Exercised
(17,014)
3.02
-
38
-
Forfeited
(13,333)
11.23
-
-
8.83
Outstanding - December 31, 2024
5,487,901
8.48
4.04
1,418
1.76
No
stock options were awarded
during the three and
six months ended
December 31, 2025. The
Company awarded
600,000
stock
options to
an executive officer
during the
three and six
months ended December
31, 2024, with
strike prices ranging
from $
6
to $
8
.
The
600,000
stock options
will vest on
December 31,
2026, and
vesting is
subject to
the executive
officer’s
continued employment
with the Company through to the vesting date. The
600,000
stock options expire on January 31, 2029.
No
stock options were exercised or forfeited during the three
and six months ended December 31, 2025. During each
of the three
and six months
ended December 31,
2024, the Company
received $
0.05
million from the
exercise of
17,014
stock options, respectively.
Employees forfeited an aggregate of
13,333
stock options during each of the three and six months ended December 31, 2024.
The
fair
value
of
each
option
is
estimated
on
the
date
of
grant
using the
Cox
Ross
Rubinstein
binomial
model
that
uses the
assumptions noted in the
following table. The estimated
expected volatility is calculated
based on the Company’s
730
-day volatility.
The estimated
expected life
of the
option was
determined based
on the
historical behavior
of employees
who were
granted options
with similar terms.
32
13.
Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Options (continued)
The table below
presents the range
of assumptions used
to value stock
options granted during
the six months
ended December
31, 2024:
Six months
ended
December 31,
2024
Expected volatility
42
%
Expected dividends
0
%
Expected life (in years)
2
Risk-free rate
4.3
%
The following table presents stock options vested and expected to vest as of
December 31, 2025:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Vested
and expecting to vest - December 31, 2025
5,866,904
8.71
3.03
883
These options have an exercise price range of $
3.01
to $
14.00
.
The following table presents stock options that are exercisable as of December
31, 2025:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Exercisable - December 31, 2025
869,570
3.98
3.47
888
No
stock options became exercisable during each
of the three and six
months ended December 31, 2025 and
2024. The Company
issues new shares to satisfy stock option exercises.
33
13.
Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Restricted stock
The following table summarizes restricted stock activity for the six
months ended December 31, 2025 and 2024:
Number of
shares of
restricted stock
Weighted
average grant
date fair value
($’000)
Non-vested – June 30, 2025
2,169,900
7,833
Total granted
829,095
3,175
Granted – July 2025
3,772
17
Granted – August 2025
5,323
25
Granted – September 2025
200,000
922
Granted – October 2025
215,000
905
Granted – November 2025
160,000
708
Granted – November 2025, with performance conditions
245,000
598
Total vested
(217,179)
850
Vested
– August 2025
(10,933)
50
Vested
– October 2025
(33,333)
139
Vested
– November 2025
(120,434)
465
Vested
– December 2025
(52,479)
196
Forfeitures
(281,333)
1,060
Forfeitures
(23,465)
98
Forfeitures December 2022 award with market conditions
(257,868)
962
Non-vested – December 31, 2025
2,500,483
10,035
Non-vested – June 30, 2024
2,084,946
8,736
Total Granted
1,331,110
4,850
Granted – August 2024
32,800
154
Granted – October 2024
100,000
490
Granted – November 2024, with performance conditions
1,198,310
4,206
Total vested
(473,432)
2,469
Vested
– July 2024
(78,801)
394
Vested
– November 2024
(213,687)
1,134
Vested
– November 2024, with performance conditions
(103,638)
524
Vested
– December 2024
(77,306)
417
Forfeitures
(40,321)
216
Non-vested – December 31, 2024
2,902,303
11,348
34
13.
Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Restricted stock (continued)
Grants
In July,
August, September,
October and
November 2025,
respectively,
the Company
granted
3,772
;
5,323
;
200,000
;
215,000
and
160,000
shares of restricted stock
to 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 November
2025, the
Company awarded
245,000
shares of
restricted stock
to a
group comprising
employees and
which are
subject to a time-based vesting condition and a market condition and vest in full only on the date, if any, that the following conditions
are satisfied: (1) a compounded annual
15
% appreciation in the Company’s stock price off a base
price of $
4.31
over the measurement
period commencing on November 1, 2025
through October 31, 2028, and (2) the recipient
is employed by the Company on a full-time
basis through to October 31, 2028. If either of these conditions is not satisfied, then none of the shares of restricted stock
will vest and
they will be forfeited. The Company’s
closing price on October 31, 2025, was $
4.30
.
The appreciation levels (times and price) and
annual target percentages to earn the
awards as of each period
ended are as follows:
●
Prior to the first anniversary of the grant date:
0
%;
●
Fiscal
2027,
the
Company’s
30-day
volume
weighted-average
stock
price
(“VWAP”)
before
October
31,
2026
is
approximately
1.15
times higher (i.e. $
4.96
or higher) than $
4.31
:
33
%;
●
Fiscal 2028, the Company’s
VWAP before
October 31, 2027 is
1.32
times higher (i.e. $
5.70
or higher) than $
4.31
:
67
%;
●
Fiscal 2029, the Company’s
VWAP before
October 31, 2028 is
1.52
times higher (i.e. $
6.55
) than $
4.31
:
100
%.
The fair value
of these shares
of restricted
stock was calculated
using a Monte
Carlo simulation. In
scenarios where
the shares
do not vest, the final vested value at maturity is zero. In scenarios where vesting occurs, the final vested value on maturity is the share
price on
vesting date.
In its calculation
of the
fair value
of the
restricted stock,
the Company
used an
equally weighted
volatility of
41.2
% for
the closing
price (of
$
4.35
), a
discounting based
on U.S.
dollar overnight
indexed swap
rates for
the grant
date, and
no
future dividends. The equally weighted volatility was extracted from the time series for closing prices as the standard deviation of log
prices for the three years preceding the grant date.
In August 2024 and
October 2024, respectively, the Company granted
32,800
and
100,000
shares of restricted
stock to 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 November 2024, the
Company awarded
1,198,310
shares of restricted stock to
a group comprising employees
and which are
subject to a time-based vesting condition and a market condition
and vest in full only on the date, if any,
that the specified conditions
are satisfied.
The Company
has agreed to
grant an advisor
5,500
shares per month
in lieu of
cash for ad
hoc consulting services
provided to
the Company. The 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 and six months ended
December 31, 2025, the Company recorded a stock-based
compensation charge of $
0.1
million
and
$
0.1
million,
respectively,
and
included
the
issuance
of
11,000
and
27,500
shares
of
common
stock
in
its issued
and
outstanding share count.
Vesting
In August,
October,
November and
December 2025,
an aggregate
of
217,179
shares of
restricted stock
granted
to employees
vested. Certain employees elected for
70,133
shares to be withheld
to satisfy the withholding
tax liability on the
vesting of their shares.
These
70,133
shares have been included in the Company’s
treasury shares.
In July 2024,
78,801
shares of restricted stock granted
to our former Group CEO,
vested. In November and
December 2024, an
aggregate
of
290,993
shares
of
restricted
stock
granted
to
employees
vested.
Certain
employees
elected
for
132,147
shares
to
be
withheld
to
satisfy
the
withholding
tax
liability
on
the
vesting
of
their
shares.
These
132,147
shares
have
been
included
in
the
Company’s
treasury shares. In
November 2024,
103,638 shares of
restricted stock with
performance conditions
(share price targets)
vested following the achievement of the agreed performance condition.
35
13.
Stock-based compensation (continued)
Restricted stock (continued)
Forfeitures
During
the
three
and
six
months
ended
December
31,
2025,
respectively,
employees
forfeited
12,672
and
23,465
shares
of
restricted
stock
following
their
termination
of
employment
with
the
Company.
During
each
of
the
three
and
six
months
ended
December 31,
2025,
257,868
shares of
restricted stock
were forfeited
by executive
officers (including
a former
Group CEO)
as the
market condition (related to share price performance) were not achieved.
During
the
three
and
six
months
ended
December
31,
2024,
respectively,
employees
forfeited
37,221
and
40,321
shares
of
restricted stock following their
termination of employment with
the Company or the
failure to achieved agreed
performance conditions
(
29,121
shares were forfeited following the failure to achieved agreed share performance
targets).
Stock-based compensation charge and unrecognized compensation
cost
The Company
recorded a
stock-based compensation
charge, net,
during the
three months ended
December 31, 2025
and 2024,
of $
1.9
million and $
2.6
million, 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 December 31, 2025
Stock-based compensation charge
$
1,829
$
-
$
1,829
Stock compensation charge related to ESOP
167
-
167
Reversal of stock compensation charge related to restricted
stock forfeited
(51)
-
(51)
Total - three months
ended December 31, 2025
$
1,945
$
-
$
1,945
Three months ended December 31, 2024
Stock-based compensation charge
$
2,655
$
-
$
2,655
Reversal of stock compensation charge related to restricted
stock forfeited
(11)
-
(11)
Total - three months
ended December 31, 2024
$
2,644
$
-
$
2,644
The Company recorded
a stock-based compensation
charge, net, during
the six months ended
December 31, 2025 and
2024, of
$
3.8
million and $
5.0
million respectively, which
comprised:
a
Total
charge
Allocated to cost
of goods sold, IT
processing,
servicing and
support
Allocated to
selling, general
and
administration
Six months ended December 31, 2025
Stock-based compensation charge
$
3,541
$
-
$
3,541
Stock compensation charge related to ESOP
328
-
328
Reversal of stock compensation charge related to
restricted
stock forfeited
(63)
-
(63)
Total - six months ended
December 31, 2025
$
3,806
$
-
$
3,806
Six months ended December 31, 2024
Stock-based compensation charge
$
5,032
$
-
$
5,032
Reversal of stock compensation charge related to
restricted
stock forfeited
(11)
-
(11)
Total - six months ended
December 31, 2024
$
5,021
$
-
$
5,021
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.
36
13.
Stock-based compensation (continued)
As
of
December
31,
2025,
the
total
unrecognized
compensation
cost
related
to
stock
options
was
$
4.2
million,
which
the
Company expects to
recognize over
two years
. As of
December 31, 2025,
the total unrecognized
compensation cost related
to restricted
stock awards was $
4.9
million, which the Company expects to recognize over
two years
.
During the three months
ended December 31,
2025 and 2024, the
Company recorded a deferred
tax benefit of $
0.2
million and
$
0.5
million, respectively,
related to the stock-based compensation charge
recognized related to employees of Lesaka.
During the six
months
ended
December
31,
2025
and
2024,
the
Company
recorded
a
deferred
tax
benefit
of
$
0.4
million
and
$
0.8
million,
respectively,
related
to the
stock-based
compensation
charge
recognized
related
to employees
of Lesaka.
During
these 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.
Earnings (Loss) 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
no
redemptions of common stock, or
adjustments to the
carrying value of the redeemable
common stock during the three
months ended December 31,
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.
Basic earnings (loss) 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 earnings (loss)
per share
has been calculated using the two-class method and basic earnings (loss) per share
for the three months ended December 31, 2025 and
2024,
reflects only undistributed earnings. The computation below of basic earnings (loss) 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 earnings
(loss) 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 earnings (loss) 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
257,445
shares of
common stock
from the
calculation of
diluted loss
per share
during the
three months
ended December
31, 2024
because the effect would be antidilutive. The Company has excluded employee stock options to purchase
138,158
and
338,725
shares
of common stock from the calculation of diluted loss per share during the six months ended December 31, 2025 and 2024 because the
effect would be antidilutive.
The
calculation
of diluted
earnings
(loss)
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
earnings
(loss) 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.
37
14.
Earnings (Loss) per share (continued)
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
Six months ended
December 31,
December 31,
2025
2024
2025
2024
(in thousands except
(in thousands except
percent and
percent and
per share data)
per share data)
Numerator:
Net income (loss) attributable to Lesaka
(A)
$
3,645
$
(32,456)
$
(1,013)
$
(37,306)
Undistributed earnings (loss)
(A)
3,645
(32,456)
(1,013)
(37,306)
Percent allocated to common shareholders
(Calculation 1)
97%
97%
97%
97%
Numerator for earnings (loss) per share: basic
and diluted
$
3,524
$
(31,345)
$
(983)
$
(36,038)
Denominator
Denominator for basic earnings (loss) per share:
Weighted-average
common shares outstanding
79,002
77,024
79,048
69,589
Effect of dilutive securities:
Related to acquisitions
999
-
-
-
Stock options
118
-
-
-
Denominator for diluted earnings (loss)
per share: adjusted weighted average
common shares outstanding and assuming
conversion
80,119
77,024
79,048
69,589
Earnings (Loss) per share:
Basic
(A)
$
0.04
$
(0.40)
$
(0.01)
$
(0.52)
Diluted
(A)
$
0.04
$
(0.40)
$
(0.01)
$
(0.52)
(Calculation 1)
Basic weighted-average common shares
outstanding (A)
79,002
77,024
79,048
69,589
Basic weighted-average common shares
outstanding and unvested restricted shares
expected to vest (B)
81,719
79,753
81,435
72,037
Percent allocated to common shareholders
(A) / (B)
97%
97%
97%
97%
(A) Net income (loss) attributable to Lesaka and Undistributed earnings (loss)
for the three and six months ended December 31,
2024, have
decreased by
$
0.3
million and
$
0.6
million, respectively,
as a
result of
the correction
discussed in
Note 1.
Net income
(loss) attributable
to Lesaka
and Undistributed
earnings (loss)
for the
six months
ended December
31, 2025,
has decreased
by $
0.4
million, as a
result of the
correction, as discussed
in Note 1,
to the amount
included in the
captions
Net income (loss)
attributable to
Lesaka and Undistributed
earnings (loss) for
the three months ended
September 30, 2025.
The correction of
the error did not
impact
Basic and Diluted
loss per share for
the three months ended
December 31, 2024,
or the six months
ended December 31, 2025.
Basic
and Diluted loss per share for the six months ended December 31, 2024, each decreased
by $
0.01
(one U.S. cent).
Options to
purchase
6,493,683
shares of
the Company’s
common stock
at prices
ranging from
$
4.87
to $
14.00
per share
were
outstanding during the three
and six months ended December
31, 2025, but were not
included in the computation of
diluted earnings
(loss) per share
because the options’
exercise price was
greater than the
average market price
of the Company’s common
stock. Options
to purchase
4,743,500
shares of
the Company’s
common stock
at prices
ranging from
$
6.00
to $
14.00
per share
were outstanding
during the three and
six months ended
December 31, 2024, but
were not included in
the computation of diluted
(loss) 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 December
31, 2025.
38
15.
Supplemental cash flow information
The following
table presents
supplemental
cash flow
disclosures
for the
three and
six months
ended December
31, 2025
and
2024:
Three months ended
Six months ended
December 31,
December 31,
2025
2024
2025
2024
Cash received from interest
$
502
$
716
$
1,036
$
1,297
Cash paid for interest
$
5,928
$
4,242
$
11,929
$
7,513
Cash paid (refund) for income taxes
$
4,428
$
3,253
$
5,138
$
3,208
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 December 31, 2025 and 2024, and June 30,
2025:
December 31,
2025
December 31,
2024
June 30, 2025
Cash and cash equivalents
$
69,474
$
60,625
$
76,520
Restricted cash
127
112
119
Cash, cash equivalents and restricted cash
$
69,601
$
60,737
$
76,639
Leases
The following
table presents supplemental
cash flow disclosure
related to leases
for the
three and
six months ended
December
31, 2025 and 2024:
Three months ended
Six months ended
December 31,
December 31,
2025
2024
2025
2024
Cash paid for amounts included in the measurement of
lease liabilities
Operating cash flows from operating leases
$
1,464
$
1,212
$
2,826
$
2,216
Right-of-use assets obtained in exchange for lease
obligations
Operating leases
$
3,187
$
708
$
4,223
$
1,218
39
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 December 31, 2025:
Merchant
Consumer
Enterprise
Total
Processing fees
$
37,551
$
10,007
$
11,854
$
59,412
South Africa
35,252
10,007
11,854
57,113
Rest of Africa
2,299
-
-
2,299
Technology
products
8,639
81
847
9,567
South Africa
8,553
81
847
9,481
Rest of Africa
86
-
-
86
Prepaid airtime sold
82,023
46
1,648
83,717
South Africa
73,694
46
1,648
75,388
Rest of Africa
8,329
-
-
8,329
Lending revenue
-
7,169
-
7,169
Interest from customers
2,104
5,323
-
7,427
Insurance revenue
-
7,943
-
7,943
Account holder fees
-
2,270
-
2,270
Other
825
279
125
1,229
South Africa
647
279
125
1,051
Rest of Africa
178
-
-
178
Total revenue, derived
from the following geographic
locations
131,142
33,118
14,474
178,734
South Africa
120,250
33,118
14,474
167,842
Rest of Africa
$
10,892
$
-
$
-
$
10,892
The
following
table
presents
the
Company’s
revenue
disaggregated
by
major
revenue
streams,
including
a
reconciliation
to
reportable segments for the three months ended December 31, 2024:
Merchant
Consumer
Enterprise
Total
Processing fees
$
35,794
$
7,862
$
5,825
$
49,481
South Africa
33,931
7,862
5,825
47,618
Rest of Africa
1,863
-
-
1,863
Technology
products
8,121
65
1,187
9,373
South Africa
8,057
65
1,187
9,309
Rest of Africa
64
-
-
64
Prepaid airtime sold
98,188
23
1,660
99,871
South Africa
91,409
23
1,660
93,092
Rest of Africa
6,779
-
-
6,779
Lending revenue
-
7,376
-
7,376
Interest from customers
1,610
120
-
1,730
Insurance revenue
-
4,868
-
4,868
Account holder fees
-
1,765
-
1,765
Other
902
850
-
1,752
South Africa
845
850
-
1,695
Rest of Africa
57
-
-
57
Total revenue, derived
from the following geographic
locations
144,615
22,929
8,672
176,216
South Africa
135,852
22,929
8,672
167,453
Rest of Africa
$
8,763
$
-
$
-
$
8,763
40
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 six months ended December 31, 2025:
Merchant
Consumer
Enterprise
Total
Processing fees
$
72,014
$
19,423
$
23,601
$
115,038
South Africa
67,866
19,423
23,601
110,890
Rest of Africa
4,148
-
-
4,148
Technology
products
15,160
165
1,817
17,142
South Africa
15,013
165
1,817
16,995
Rest of Africa
147
-
-
147
Prepaid airtime sold
164,076
83
3,327
167,486
South Africa
148,031
83
3,327
151,441
Rest of Africa
16,045
-
-
16,045
Lending revenue
-
14,023
-
14,023
Interest from customers
4,391
10,237
-
14,628
Insurance revenue
-
14,815
-
14,815
Account holder fees
-
4,418
-
4,418
Other
1,814
530
288
2,632
South Africa
1,491
530
288
2,309
Rest of Africa
323
-
-
323
Total revenue, derived
from the following geographic
locations
257,455
63,694
29,033
350,182
South Africa
236,792
63,694
29,033
329,519
Rest of Africa
$
20,663
$
-
$
-
$
20,663
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 six months ended December 31, 2024:
Merchant
Consumer
Enterprise
Total
Processing fees
$
60,164
$
15,392
$
12,338
$
87,894
South Africa
56,499
15,392
12,338
84,229
Rest of Africa
3,665
-
-
3,665
Technology
products
9,966
67
2,478
12,511
South Africa
9,829
67
2,478
12,374
Rest of Africa
137
-
-
137
Prepaid airtime sold
192,063
40
3,238
195,341
South Africa
179,404
40
3,238
182,682
Rest of Africa
12,659
-
-
12,659
Lending revenue
-
14,332
-
14,332
Interest from customers
3,286
120
-
3,406
Insurance revenue
-
9,208
-
9,208
Account holder fees
-
3,464
-
3,464
Other
2,199
1,378
51
3,628
South Africa
2,085
1,378
51
3,514
Rest of Africa
114
-
-
114
Total revenue, derived
from the following geographic
locations
267,678
44,001
18,105
329,784
South Africa
251,103
44,001
18,105
313,209
Rest of Africa
$
16,575
$
-
$
-
$
16,575
41
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
and
five years
. The Company also
operates parts
of its
consumer business
from locations
which it
leases for
a period
of less
than
one year
. The
Company’s
operating
lease
expense
during
the
three
months
ended
December
31,
2025
and
2024
was
$
1.5
million
and
$
1.2
million,
respectively.
The
Company’s
operating lease
expense during
the six
months ended
December 31,
2025 and
2024 was
$
2.8
million and
$
2.2
million,
respectively.
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
December 31,
2025 and 2024,
was $
0.4
million and
$
1.2
million, respectively.
The Company’s
short-term lease
expense during
the
six months ended December 31, 2025 and 2024, was $
0.9
million and $
2.3
million, respectively.
In December
2025, the
Company,
through Lesaka
SA, entered
into a
leasing arrangement
for
a new
corporate head
office
in
Rosebank, Gauteng,
South Africa
with Oxford
Parks Proprietary
Limited, a
limited liability
private company
incorporated in
South
Africa. The lease
commences on July 1,
2026 and is
for a period
of
10 years
with
two
renewal options of
five years
each. The Company
has secured
beneficial occupation
from April
1, 2026,
and is required
to deliver
a bank
guarantee or
cash of
$
0.4
million (ZAR
7.0
million, translated at exchange rates applicable as of December 31, 2025). The Company expects
to pay an annual basic lease expense
of $
1.5
million (ZAR
25.1
million, translated at
exchange rates applicable
as of December
31, 2025), which
increases by
6.25
% per
annum.
The following table presents supplemental balance
sheet disclosure related to the
Company’s right-of-use assets and its operating
lease liabilities as of December 31, 2025 and June 30, 2025:
December 31,
June 30,
2025
2025
Right of use assets obtained in exchange for lease obligations:
Weighted average
remaining lease term (years)
3.0
2.8
Weighted average
discount rate (percent)
8.5
9.8
The maturities of the Company’s
operating lease liabilities as of December 31, 2025, are presented below:
Maturities of operating lease liabilities
Year
ended June 30,
2026 (excluding six months to December 31, 2025)
$
3,214
2027
5,011
2028
3,262
2029
1,899
2030
1,207
Thereafter
188
Total undiscounted
operating lease liabilities
14,781
Less imputed interest
1,961
Total operating lease liabilities,
included in
12,820
Operating lease liability - current
5,015
Operating lease liability - long-term
$
7,805
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.
42
18.
Operating segments (continued)
Operating segments (continued)
The Company’s
chief operating decision maker
(“CODM”) is the Company’s
Executive Chairman. The
Company currently has
three
reportable segments: Merchant, Consumer and Enterprise. The CODM analyzes
the Company’s operating performance primarily
based on these three operational lines, namely,
(i) Merchant, which focuses on
both formal and informal sector
merchants. Formal sector merchants are generally in
urban areas,
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
solution.
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.
The Company
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.
43
18.
Operating segments (continued)
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
and six
months ended
December 31,
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
and six months ended December 31, 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.
44
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 December 31, 2025 and 2024, respectively,
is as follows:
Three months ended December 31, 2025
Merchant
Consumer
Enterprise
Total
Revenue from external customers
$
131,142
$
33,118
$
14,474
$
178,734
Intersegment revenues
777
-
322
1,099
Segment revenue
(z)
131,919
33,118
14,796
179,833
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
(y)
101,613
10,533
10,792
122,938
Selling, general and
administration
(1)(2)
11,422
4,782
1,312
17,516
Segment adjusted EBITDA
$
18,884
$
17,803
$
2,692
$
39,379
(z) includes interest revenue of:
$
2,104
$
5,323
$
-
$
7,427
(y) includes interest expense of:
$
481
$
1,295
$
-
$
1,776
Operating segments
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
3,688
$
311
$
88
$
9,481
$
13,568
Expenditures for long-lived assets
$
4,148
$
87
$
695
$
-
$
4,930
Three months ended December 31, 2024
Merchant
Consumer
Enterprise
Total
Revenue from external customers
$
144,615
$
22,929
$
8,672
$
176,216
Intersegment revenues
594
-
261
855
Segment revenue
(z)
145,209
22,929
8,933
177,071
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
(y)(A)
104,703
8,373
9,702
122,778
Selling, general and
administration
(A)(1)(3)
30,417
10,214
(738)
39,893
Segment adjusted EBITDA
(A)
$
10,089
$
4,342
$
(31)
$
14,400
(z) includes interest revenue of:
$
1,610
$
120
$
-
$
1,730
(y) includes interest expense of:
$
374
$
757
$
-
$
1,131
Operating segments
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
3,027
$
235
$
94
$
4,867
$
8,223
Expenditures for long-lived assets
$
5,899
$
575
$
272
$
-
$
6,746
(A) Cost of goods
sold, IT processing, servicing
and support and Selling,
general and administration for
Merchant and Total
for
the three
months ended
December 31,
2024 have
each increased
by $
0.17
million and
$
0.06
million, respectively,
as a result
of the
correction discussed
in Note 1.
Segment Adjusted
EBITDA for
Merchant and
Total
for the three
months ended
December 31,
2024
have each decreased by $
0.23
million as a result of the correction discussed in Note 1.
(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
December 31,
2025, includes
retrenchment costs
for Merchant
of $
0.2
million (ZAR
3.7
million).
(3) Segment
Adjusted EBITDA
for the
three months
ended December
31, 2024,
includes retrenchments
costs for
Consumer of
$
0.01
million (ZAR
0.1
million).
45
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 six months
ended December 31, 2025 and 2024, respectively,
is as follows:
Six months ended December 31, 2025
Merchant
Consumer
Enterprise
Total
Revenue from external customers
$
257,455
$
63,694
$
29,033
$
350,182
Intersegment revenues
1,414
-
616
2,030
Segment revenue
(z)
258,869
63,694
29,649
352,212
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
(y)(A)
200,026
20,970
21,313
242,309
Selling, general and
administration
(A)(1)(2)
39,959
24,921
5,644
70,524
Segment adjusted EBITDA
(A)
$
18,884
$
17,803
$
2,692
$
39,379
(z) includes interest revenue of:
$
4,391
$
10,237
$
-
$
14,628
(y) includes interest expense of:
$
972
$
2,367
$
-
$
3,339
Operating segments
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
7,053
$
620
$
174
$
18,615
$
26,462
Expenditures for long-lived assets
$
8,473
$
368
$
1,208
$
-
$
10,049
Six months ended December 31, 2024
Merchant
Consumer
Enterprise
Total
Revenue from external customers
$
267,678
$
44,001
$
18,105
$
329,784
Intersegment revenues
1,182
-
2,711
3,893
Segment revenue
(z)
268,860
44,001
20,816
333,677
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
(y)(A)
221,137
17,040
16,908
255,085
Selling, general and
administration
(A)(1)(3)
30,304
18,223
3,577
52,104
Segment adjusted EBITDA
(A)
$
17,419
$
8,738
$
331
$
26,488
(z) includes interest revenue of:
$
3,286
$
120
$
-
$
3,406
(y) includes interest expense of:
$
766
$
1,588
$
-
$
2,354
Operating segments
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
5,254
$
437
$
194
$
8,614
$
14,499
Expenditures for long-lived assets
$
9,785
$
706
$
393
$
-
$
10,884
46
18.
Operating segments (continued)
(A) Cost of goods sold, IT processing, servicing and support and
Selling, general and administration for Merchant and Total
for
the six
months
ended
December 31,
2024 have
each increased
by $
0.34
million
and
$
0.12
million,
respectively,
as a
result of
the
correction discussed in Note 1. Segment Adjusted EBITDA
for Merchant and Total for the six months ended December 31,
2024 have
each decreased by $
0.45
million as a result of the correction discussed in Note 1.
Cost of goods sold, IT
processing, servicing and support and
Selling, general and administration
for Merchant and Total
for the
six months ended
December 31, 2025
have each increased
by $
0.18
million and $
0.06
million, respectively, as a
result of the
correction,
as discussed in
Note 1, to
the amount included
in the captions
Cost of goods
sold, IT processing,
servicing and
support and Selling,
general and
administration for the
three months ended
September 30, 2025.
Segment Adjusted EBITDA
for Merchant
and Total
for
the six months
ended December 31,
2025 have each
decreased by $
0.25
million as a result
of the correction,
as discussed in Note
1,
to the amount included in the caption Segment Adjusted EBITDA for
the three months ended September 30, 2025.
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 six months
ended December 31, 2025,
includes retrenchment costs for
Merchant of $
0.4
million (ZAR
7.4
million) and Consumer of $
0.1
million (ZAR
2.6
million).
(3) Segment Adjusted EBITDA for the six months ended December 31,
2024, includes retrenchments costs for Consumer of $
0.1
million (ZAR
1.2
million) and Enterprise of $
0.0
million (ZAR
0.2
million).
The reconciliation of the reportable segments’ measures of profit or loss to income (loss) before income tax expense for the three
and six months ended December 31, 2025 and 2024, is as follows:
Three months ended
Six months ended
December 31,
December 31,
2025
2024
2025
2024
Reportable segments' measure of profit or loss
(A)
$
20,673
$
14,400
$
39,379
$
26,488
Operating loss: Group costs
(2,896)
(2,820)
(6,507)
(5,769)
Once-off costs
(247)
(488)
(514)
(2,293)
Interest adjustment
-
757
-
1,588
Unrealized Gain (Loss) FV for currency adjustments
133
(435)
197
(216)
Stock-based compensation charge adjustments
(1,945)
(2,644)
(3,806)
(5,021)
Depreciation and amortization
(13,568)
(8,223)
(26,462)
(14,499)
Loss on disposal of equity-accounted investments
-
(161)
(584)
(161)
Change in fair value of equity securities
2,971
(33,731)
2,971
(33,731)
Other income
3,883
-
3,883
-
Loss on disposal of equity securities
(730)
-
(730)
-
Interest income
508
721
1,047
1,307
Interest expense
(A)
(4,591)
(6,266)
(9,604)
(11,382)
Income (Loss) before income tax expense
(A)
$
4,191
$
(38,890)
$
(730)
$
(43,689)
(A) Reportable
segments’ measure of
profit or loss
for the three
and six months
ended December 31,
2024, have decreased
by
$
0.23
million and $
0.45
million, respectively,
as a result of
the correction discussed
in Note 1.
Interest expense for
the three and
six
months
ended
December
31,
2024,
have
increased
by
$
0.09
million
and
$
0.18
million,
respectively,
as
a
result
of
the
correction
discussed in Note 1. Net
income (loss) before taxes for
the three and six months ended
December 31, 2024, have decreased
by $
0.63
million and $
0.63
million, respectively,
as a result of the correction discussed in Note 1.
Reportable segments’ measure of profit or loss and Net income (loss) before taxes for the six months ended December 31, 2025,
have decreased by $
0.25
million and $
0.36
million, as a result of the correction, as discussed in Note 1, to the amount
included in the
captions
Reportable segments’ measure of profit or loss and Net income (loss) before taxes for the three months ended September 30,
2025. Interest expense
for the six months
ended December 31,
2025, has increased
by $
0.12
million, as a result
of the correction,
as
discussed in Note 1, to the amount included in the caption Interest expense
for the three months ended September 30, 2025.
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.
47
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
and
six
months
ended
December
31,
2025,
the Company’s
effective
tax
rate
was impacted
by
the
tax
expense
recorded by
the Company’s
profitable South
African operations,
non-taxable income
(including the
fair value
adjustment on
equity
securities and
other income)
and non-deductible
and 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 and
six months ended
December 31, 2025.
For
the
three
and
six
months
ended
December
31,
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
December 31,
2025 and
June 30,
2025, the
Company had
no
unrecognized tax
benefits. The
Company files
income tax
returns mainly
in South
Africa, Botswana,
Namibia and
in the
U.S. federal
jurisdiction. As
of December
31, 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
individually
material to its financial position, statement of cash flows, or results of operations.
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
31.8
million
($
1.9
million,
translated
at
exchange
rates
applicable as of December 31, 2025) thereby utilizing part of the Company’s
short-term facilities.
Nedbank has
issued guarantees
to these
third parties
amounting to
ZAR
2.1
million ($
0.1
million, translated
at exchange
rates
applicable as of December 31, 2025) thereby utilizing part of the Company’s
short-term facilities. The Company pays commission of
between
0.47
% per annum to
1.84
% 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 December 31,
2025. The maximum
potential amount that
the Company could
pay under these
guarantees is ZAR
35.1
million ($
2.0
million, translated
at exchange
rates applicable
as of
December 31,
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
2.1
million ($
0.1
million, translated
at exchange
rates
applicable as of December 31, 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
m
aterial adverse impact on the Company’s
financial position, results of operations or cash flows.
48
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 second quarter of fiscal 2026 compared
to the second quarter of fiscal 2025.
Group
Lesaka launched its new brand in November 2025 and will take the remainder of the 2026 calendar year to roll out the refreshed
brand throughout the
organization. This was
more than a
brand refresh, it
is a necessary step
in a set of
strategic initiatives designed
to create a “One Lesaka” identity for our customers and our employees. The brand is underpinned by a set of values that encapsulates
what Lesaka stands for and the behaviors expected of all Lesaka employees.
The
lease
for
our
new
Johannesburg
head
office
was
finalized.
This
will
consolidate
the
three
different
offices
across
Johannesburg into
a single hub,
fostering faster integration,
simplification and
result in positive
long-term financial
impact. We
aim
to complete the move by the end of this fiscal year.
A similar exercise is underway for our Durban and Cape Town
regional hubs.
We have made
continued progress in simplifying the business:
●
Each
of
Lesaka’s
three
divisions
are
now
measured
on
clear
KPIs
that
have
a
direct
impact
on
financial
outcomes.
Merchant
and
Consumer
are
measured
on
number
of
customers
and
ARPU
(Average
Revenue
Per
User),
whilst
Enterprise
is
measured
on
throughput
volumes
and
take
rates.
We
disclose
these
KPIs
in
the
following
tables
per
division.
●
We disposed of
non-core assets such as Cell-C for ZAR 50 million.
●
Finalized the Cash Paymaster Services liquidation, releasing provisions
of ZAR 65 million.
Regarding the Bank Zero
transaction, Lesaka has received Competition
Commission approval. Completion of
the transaction is
conditional upon obtaining regulatory approvals
from the Prudential Authority
and the Financial
Surveillance Department of the South
African Reserve Bank, as well as the satisfaction of other outstanding conditions
precedent set forth in the agreement.
49
Merchant Division
In the second
quarter of fiscal
2026, we introduced
a refined reporting
framework for the
Merchant division to
better represent
the primary
drivers of
our revenue
and performance.
Developed through
a comprehensive
review of
our operational
analytics, this
framework aligns our Merchant metrics,
specifically active merchant count and
blended ARPU with our
Consumer division to provide
a
holistic
view
of our
ecosystem.
We
are
treating
this updated
approach
as a
baseline
for
future
comparisons
to
ensure consistent
reporting across our channels; as such, this transition may result in non-material
inconsistencies with certain legacy metrics.
Our definition
of an active
merchant is any
merchant that has
made a voluntary
transaction (debit and/or
credit) within the
last
90
days.
Previously,
we
reported
on
a
points
of
presence
basis,
which
was
more
focused
on
our
device
estate.
This
updated
methodology of an active
merchant reflects the
revenue generating engagement of
our entire Merchant
base and more accurately
tracks
our current and future monetization strategy for the division. Average Revenue Per User excludes once-off and non-recurring revenue
such as hardware and installation costs as well
as revenue from international subsidiaries, which are generally non-recurring in nature.
We manage our Merchant operations through two distinct
channels: Community, which focuses on local, high-growth businesses
acquired
through direct,
face-to-face
sales and
rapid
conversion cycles;
and
Corporate,
which
serves large
-scale organizations
and
franchises requiring customized, multi-product solutions through
a strategic, long-term sales process.
The
underlying
drivers
of
ARPU performance
are
based
on
cross-sell
product
penetration
and
the
individual
product
related
KPI’s are shown below.
Q2 2026
Q2 2025
Q2 2026 vs
Q2 2025
Merchant Division
Active Merchants
132,443
122,846
8%
Merchant ARPU
(1)
(ZAR per month)
1,835
2,030
(10%)
Product Penetration Rate: 1+ Products
46%
47%
(1%)
Product Penetration Rate: 2+ Products
8%
10%
(16%)
Merchant Division: Merchant Acquiring
Active Merchants
73,521
67,830
8%
Total Payment Volume
("TPV") (ZAR billions)
12.1
11.3
7%
Merchant Division: Software
Active Merchants
10,133
9,689
5%
Merchant Division: Cash Management
Active Merchants
4,891
4,910
(0%)
Total Payment Volume
("TPV") (ZAR billions)
31.9
30.4
5%
Merchant Division: Lending
Lending Origination (ZAR millions)
205
153
35%
Net Lending Portfolio Outstanding (ZAR millions)
389
305
28%
Merchant Division: Alternative Digital Products
Active Merchants
102,346
94,516
8%
Total Payment Volume
("TPV") (ZAR billions)
14.0
11.0
27%
Total Payment Volume
("TPV") - Prepaid Solutions (ZAR billions)
5.0
4.9
3%
Total Payment Volume
("TPV") - Supplier Enabled Payments (ZAR billions)
9.0
6.1
46%
Notes:
(1) ARPU
is calculated on
a revenue per
active merchant basis
based on a
3-month rolling average
for the
quarter ended December
31, 2025.
Notable developments within Merchant Division:
Within
Merchant
Acquiring:
TPV attributable
to Community
segment
increased to
ZAR 4.2
billion
for the
second quarter
of
fiscal 2026 and 13% year-on-year growth.
Within
Cash:
Our
business
is
experiencing
differing
secular
trends
in
its
two
distinct
markets.
At
the
Corporate
level,
cash
continues
to
experience
a
downward
trend
of
growth
as
digital
payment
adoption
progressively
increases
in
this
sector.
At
the
Community level, cash
vault placements drove
a 77% year-on-year
increase in total
cash TPV this quarter,
now accounting for
19%
of all
processed cash
TPV processed.
This signals
rapid growth
among merchants
within this
segment aiming
to digitize
their cash
holdings.
50
Within ADP: Core to our device placement strategy is the decision
to focus on quality business and optimizing our existing
fleet.
This
can
be
seen
through
the
TPV
growth
which
is
primarily
driven
by
our
Supplier
Enabled
Payment
product.
This
enables
Community
Merchants
to
digitize
their
required
payments
to
suppliers
at
competitive
pricing
and
introduces
them
to
the
Lesaka
Merchant ecosystem.
Consumer Division
Our consumer base includes South African grant beneficiaries and other EasyPay
Payouts cardholders.
Our grant
beneficiary base
includes both
permanent and
non-permanent grant
beneficiaries. As
the division
has evolved,
both
sub-categories of consumers are
revenue generating and hence
the combined consumer base
metrics shown below are
most appropriate
to
measure
the
performance
of
the
division
financially
and
operationally.
Although
historically
we
have
shown
these
metrics
separately, it is maintained
that approximately 90% of the active consumer base are permanent grant beneficiaries.
Our definition of an active consumer is any EPE consumer that has made a voluntary transaction (debit and/or
credit) within the
last 90
days. Consumers
who may
be charged
a monthly
banking fee
but have
not made
a voluntary
transaction in
the last
90 days
would not be considered an active consumer.
The definition of
an active consumer
reflects the revenue
generating engagement of
our entire consumer
base and more
accurately
tracks our current
and future monetization
strategy for the division.
We
will continue to
show the EasyPay
Payouts separately
given
this follows a different monetization model.
The
underlying
drivers
of
ARPU performance
are
based
on
cross-sell
product
penetration
and
the
individual
product
related
KPI’s are shown below.
Q2 2026
Q2 2025
Q2 2026 vs
Q2 2025
Consumer Division
Active Consumers (Millions)
2.0
1.6
21%
ARPU
(1)
(ZAR per month)
91
79
15%
Product Penetration Rate: 1+ Products
49%
46%
8%
Product Penetration Rate: 2+ Products
19%
16%
16%
Consumer Division: Transactional Accounts
Active Consumers (Millions)
2.0
1.6
21%
Net Activations (Thousands)
72
91
(21%)
Consumer Division: Lending
Number of Loans Originated (Thousands)
449
336
34%
Lending Origination (ZAR millions)
1,156
617
88%
Lending Portfolio Outstanding (ZAR millions)
(2)
1,459
709
106%
Consumer Division: Insurance
Number of Insurance Policies Written (Thousands)
70
50
41%
Active Insurance Policies (Thousands)
641
496
29%
Gross Written Premium (ZAR millions)
134
97
38%
Consumer Division: EasyPay Payouts
Approximate number of active cardholders (Thousands)
247
217
14%
Approximate load value for the period (ZAR millions)
226
179
27%
Notes:
(1) ARPU is calculated
on a revenue per
active consumer basis whereby
an active consumer
can be both a
permanent and non-
permanent grant. ARPU is a monthly figure based on a 3-month rolling
average for the quarter ended December 31, 2025.
(2) Gross loan book, before provisions.
Notable developments within Consumer Division:
Within
Transactional
Accounts:
Largest
net
active
account
growth
in
the
quarter
as
compared
against
all
other
competitors,
validated from public
data. Growth in active
consumers driven primarily by
continued product and
technology innovation, including
but
not
withstanding
to
Bonngwe
(our
proprietary
CRM
engine)
and
CreditEase
(our
USSD
distribution
platform).
These
improvements
to
sales
consultant
and
consumer
experiences
have
driven
higher
cross-sell
penetration
for
both
existing
and
new
c
onsumer onboards.
51
Within Lending:
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. Our credit loss ratios
have remained relatively flat
over the time period despite
the increase in
both lending
originations and
loan portfolio
and are
well below
our provisioning.
As we
continue
to scale
the lending
product,
we
carefully monitor both our provisioning levels and risk exposures. Currently
we maintain our provision policy at 6.5%.
Enterprise Division
Our Enterprise
Division primarily
consists of
our ADP
offering
(which includes
prepaid solutions
and bill
payments) through
channels such as retailer distribution networks and digital
banking apps. Following the acquisition of Recharger on March 3,
2025, we
now report on the performance under the Utilities product.
The underlying drivers of performance are primarily based
on TPV processed. Individual product related KPI’s are shown below
Q2 2026
Q2 2025
Q2 2026 vs
Q2 2025
Enterprise Division: ADP
Total Payment Volume
("TPV") (ZAR billions)
11.9
10.1
18%
Enterprise Division: Utilities
Active Meters (Thousands)
357.3
335.7
6%
Total Payment Volume
("TPV") (ZAR millions)
465.0
402.8
15%
Notable developments within Enterprise Division:
Within
ADP: We
continue
to deepen
our integration
with South
Africa’s
leading financial
and retail
institutions, successfully
activating three key strategic partnerships
during the period. Our
footprint expanded by over 3,350
physical points of presence through
the
deployment
of
bill
payment
facilitation
at
850
Spar
locations
and
airtime
distribution
at
more
than
2,500
Shoprite
sites.
Furthermore,
we
onboarded
Investec
enabling
their
clients
to
now
purchase
airtime
directly
through
the
Investec
app,
with
all
transactions processed through our ADP platform.
Critical Accounting Policies
Our unaudited condensed consolidated
financial statements have been
prepared in accordance with U.S.
GAAP,
which requires
management
to
make
estimates
and
assumptions
about
future
events
that
affect
the
reported
amount
of
assets
and
liabilities
and
disclosure
of
contingent
assets and
liabilities.
As future
events
and
their
effects
cannot be
determined
with
absolute
certainty,
the
determination
of
estimates
requires
management’s
judgment
based
on
a
variety
of
assumptions
and
other
determinants
such
as
historical experience, current and expected market conditions and certain scientific evaluation techniques. Critical accounting policies
are those
that reflect
significant judgments
or uncertainties
and may
potentially result
in materially
different
results under
different
assumptions
and
conditions.
We
have
identified
the
following
critical
accounting
policies that
are
described
in
more
detail
in
our
Annual Report on Form 10-K for the year ended June 30, 2025:
●
Recoverability of Goodwill;
●
Intangible Assets Acquired Through Acquisitions;
●
Revenue recognition – principal versus agent considerations; and
●
Finance Loans Receivable and Allowance for Credit Losses.
Recent accounting pronouncements adopted
Refer to Note
1 to
our unaudited condensed
consolidated financial statements
for a full
description of accounting
pronouncements
adopted, including the dates of adoption and the effects on
our unaudited condensed consolidated financial statements.
Recent accounting pronouncements not yet adopted
as of December 31, 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
December
31,
2025,
including
the
expected
dates
of
adoption
and
effects
on
our
financial
condition, results of operations and cash flows.
52
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
Six months ended
Year
ended
December 31,
December 31,
June 30,
2025
2024
2025
2024
2025
ZAR : $ average exchange rate
17.1189
17.9054
17.3784
17.9327
18.1644
Highest ZAR : $ rate during period
17.5082
18.8296
18.1650
18.8296
19.6350
Lowest ZAR : $ rate during period
16.5828
17.3354
16.5828
17.1144
17.1144
Rate at end of period
16.5828
18.8296
16.5828
18.8296
17.7554
Translation exchange
rates for financial reporting purposes
We are required
to translate our results of operations from ZAR to U.S. dollars on a monthly
basis. Thus, the average rates used
to translate this
data for
the three and
six months ended
December 31, 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
Six months ended
Year
ended
Table 2
December 31,
December 31,
June 30,
2025
2024
2025
2024
2025
Income and expense items: $1 = ZAR
16.9556
17.8495
17.3855
17.7967
17.9031
Balance sheet items: $1 = ZAR
16.5828
18.8296
16.5828
18.8296
17.7554
We
have translated
the results
of operations
and operating
segment information
for the
three and
six months
ended December
31, 2025
and 2024,
provided in
the tables
below using
the actual
average exchange
rates per
month (i.e.
for each
of October
2025,
November
2025,
and
December
2025
for
the
second
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.
53
Results of Operations
The discussion
of our
consolidated overall
results of
operations is
based on
amounts as
reflected
in our
unaudited condensed
consolidated financial
statements which
are prepared
in accordance
with U.S.
GAAP.
We
analyze our
results of
operations both
in
U.S. dollars, as presented in the unaudited condensed consolidated
financial statements, and supplementally in ZAR, because ZAR is
the functional
currency of
the entities
which contribute
the majority
of our
results and
is the
currency in
which the
majority
of our
transactions
are
initially
incurred
and
measured.
Presentation
of our
reported
results
in ZAR
is a
non-GAAP
measure.
Due
to
the
significant impact of currency
fluctuations between the U.S.
dollar and ZAR on
our reported results and because
we use the U.S.
dollar
as our reporting
currency,
we believe that
the supplemental presentation
of our results
of operations in
ZAR is useful
to investors to
understand the changes in the underlying trends of our business.
Our
operating
segment
revenue
presented
in
“—Results
of
operations
by
operating
segment”
represents
total
revenue
per
operating segment before intercompany
eliminations. A reconciliation between
total operating segment revenue and
revenue, as well
as the reconciliation between our segment performance measure and net loss before tax (benefits) expense, is presented in our audited
consolidated financial statements
in Note 18 to
those statements. Our
chief operating decision maker
is our Executive Chairman
and
he
evaluates
segment
performance
based
on
segment
earnings
before
interest,
tax,
depreciation
and
amortization
(“EBITDA”),
adjusted for
items mentioned
in the
next sentence
(“Segment Adjusted
EBITDA”) for
each operating
segment. We
do not
allocate
once-off items (as defined below), stock-based compensation charges, depreciation and amortization, impairment of goodwill or other
intangible assets,
other items
(including gains
or losses
on disposal
of investments,
fair value
adjustments to
equity securi
ties, fair
value
adjustments
to
currency
options),
interest
income,
interest
expense,
income
tax
expense
or
loss
from
equity-accounted
investments
to our
reportable segments.
For fiscal
2025, we
included
an intercompany
interest expense
in our
Consumer Segment
Adjusted
EBITDA.
Once-off
items
represent
non-recurring
expense
items,
including
costs related
to
acquisitions
and
transactions
consummated or
ultimately not
pursued. The
Stock-based compensation
adjustments reflect
stock-based compensation
expense and
are both excluded from the calculation of Segment Adjusted EBITDA and
are therefore reported as reconciling items to reconcile the
reportable segments’ Segment Adjusted EBITDA to our loss before income
tax expense.
Group
Adjusted
EBITDA
represents
Segment
Adjusted
EBITDA
after
deducting
group
costs.
Refer
also
“Results
of
Operations—Use of Non-GAAP Measures” below.
In fiscal 2025 we closed
the acquisitions of Adumo and Recharger and
have integrated their businesses into
ours. Our fiscal 2025
financial results for the three and six months ended December 31, 2024,
includes Adumo from October 1, 2024, and does not include
Recharger because we acquired 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 Group costs. Inter-segment revenue eliminations are included
in Eliminations.
Second quarter of fiscal 2026
compared to second quarter of fiscal 2025
The following factors had
a significant impact on
our results of operations
during the second quarter
of fiscal 2026
as compared
with the same period in the prior year:
●
Lower revenue in ZAR:
Our revenues increased 1% in U.S. dollars but decreased by
3% in ZAR, primarily due to a
decrease
in prepaid airtime revenue which was
partially offset by the inclusion of Recharger, higher transaction, insurance and
lending
revenues in Consumer;
●
Operating
income
increase:
Operating
income
increased
primarily
due
to
strong
performance
by
Consumer
and
the
contribution from
Recharger
in Enterprise,
which was
partially offset
by an
increase in
amortization of
acquisition-related
intangible assets related to change of useful lives of certain brand intangibles assets and a lower contribution from
Merchant;
●
Lower net interest charge:
Net interest charge decreased to $4.08 million (ZAR 69.9 million) from $5.55 million (ZAR 99.4
million) primarily due to
a lower interest expense
following lower interest rates
and the exclusion of
interest expense incurred
under our borrowing arrangements related to our Consumer lending book in the second quarter of fiscal 2026 compared with
2025. On a comparable basis the
equivalent interest expense related to
the Consumer lending book for the
second quarter of
fiscal 2025 was included in interest expense ; and
●
Foreign exchange
movements:
The U.S.
dollar was
5% weaker
against the
ZAR during
the second
quarter of
fiscal 2026
compared to the prior period, which positively impacted our U.S. dollar
reported results.
54
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 December 31,
2025
2024
%
$ ’000
$ ’000
change
Revenue
178,734
176,216
1%
Cost of goods sold, IT processing, servicing and support
(A)
122,691
130,866
(6%)
Selling, general and administration
(A)(1)
40,278
36,358
11%
Depreciation and amortization
13,568
8,223
65%
Transaction costs related to Adumo, Recharger
and Bank Zero acquisitions
47
222
(79%)
Operating income
2,150
547
293%
Change in fair value of equity securities
2,971
(33,731)
nm
Other income
3,883
-
nm
Loss on disposal of equity-accounted investment
-
161
nm
Loss on disposal of equity securities
730
-
nm
Interest income
508
721
(30%)
Interest expense
(A)
4,591
6,266
(27%)
Income (Loss) before income tax expense (benefit)
4,191
(38,890)
nm
Income tax expense (benefit)
670
(6,412)
nm
Net income (loss) before earnings from equity-accounted investments
3,521
(32,478)
nm
Earnings from equity-accounted investments
110
50
120%
Net income (loss)
3,631
(32,428)
nm
(Less) Add net income (loss) attributable to non-controlling interest
(14)
28
nm
Net income (loss) attributable to us
3,645
(32,456)
nm
(A) In order to
correct the error discussed in
Note 1 to the unaudited
condensed consolidated statement of
operations, Cost of goods sold,
IT
processing, servicing and
support increased
by $0.17 million,
Selling, general
and administration
expense increased by
$0.06 million, Operating
income decreased by $0.23 million, Interest expense increased by $0.09 million, and
the subtotal captions from Income (Loss) before income
tax expense (benefit) to Net income (loss) attributable to Lesaka decreased by $0.32 million for the three months ended December 31, 2024.
(1) Selling, general and administration includes allowance for credit losses.
55
Table 4
In South African Rand
Three months ended December 31,
2025
2024
%
ZAR ’000
ZAR ’000
change
Revenue
3,058,191
3,155,758
(3%)
Cost of goods sold, IT processing, servicing and support
(A)
2,099,058
2,343,713
(10%)
Selling, general and administration
(A)(1)
689,116
650,864
6%
Depreciation and amortization
232,173
147,086
58%
Transaction costs related to Adumo, Recharger
and Bank Zero acquisitions
805
3,957
(80%)
Operating income
37,039
10,138
265%
Change in fair value of equity securities
50,000
(614,710)
nm
Other income
65,353
-
nm
Loss on disposal of equity-accounted investment
-
2,886
nm
Loss on disposal of equity securities
12,286
-
nm
Interest income
8,696
12,886
(33%)
Interest expense
(A)
78,564
112,244
(30%)
Income (Loss) before income tax expense (benefit)
70,238
(706,816)
nm
Income tax expense (benefit)
11,506
(116,954)
nm
Net income (loss) before earnings from equity-accounted investments
58,732
(589,862)
nm
Earnings from equity-accounted investments
1,851
891
108%
Net income (loss)
60,583
(588,971)
nm
(Less) Add net income (loss) attributable to non-controlling interest
(242)
496
nm
Net income (loss) attributable to us
60,825
(589,467)
nm
(A) In order to
correct the error discussed in
Note 1 to the unaudited
condensed consolidated statement of
operations, Cost of goods sold,
IT
processing, servicing and
support increased by
ZAR 3.0 million,
Selling, general and
administration expense increased
by ZAR 1.1
million,
Operating income decreased by ZAR
4.1 million, Interest expense
increased by ZAR 1.7
million, and the subtotal
captions from Income (Loss)
before income
tax expense
(benefit) to
Net income
(loss) attributable
to Lesaka
decreased by
ZAR 5.8
million for
the three
months ended
December 31, 2024.
(1) Selling, general and administration includes allowance for credit losses.
Revenue increased by $2.5 million, or 1.4% in
U.S. dollars, and decreased by ZAR 97.6 million, or 3.1%
in ZAR. The decrease
in
ZAR
was
primarily
due
to
the
decrease
in
the
volume
of
prepaid
airtime
sold,
which
was
partially
offset
by
the
inclusion
of
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.
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 $8.2
million (ZAR 244.7
million) or 6.2%
(in ZAR 10.4%),
primarily due
to the
decrease in
the prepaid
airtime costs,
which was
partially offset
by an
increase in
lending related
expenditures
(including interest expense) and higher insurance-related
claims and third-party transaction fees.
Selling,
general
and
administration
expenses
increased
by
$3.9
million
(ZAR
38.3
million),
or
10.8%
(in
ZAR
5.9%).
The
increase was
primarily due
to the
inclusion of
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 Merchant,
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
$5.3 million (ZAR 85.1
million),
or 65.0% (57.8%). The
increase was due
to
the
change
to
a
shorter
useful
life
for
certain
of
our
brand
and
trademark
intangible
assets
(refer
to
Note
7),
the
inclusion
of
acquisition-related
intangible asset
amortization
related to
intangible assets
identified pursuant
to the
Recharger
acquisition and
an
increase in depreciation expense related to additional POS devices deployed
.
Transaction
costs related
to Adumo,
Recharger
and Bank
Zero acquisitions
during the
second quarter
of fiscal
2025 included
costs incurred
related to the
Recharger and
Bank Zero acquisitions.
We
did not
incur significant
transaction costs
during the second
quarter of fiscal 2026. Refer to Note 2 to our unaudited condensed consolidation
financial statements for additional information.
Our operating income
margin for the
second quarter of
fiscal 2026
and 2025 was
1.2% and 0.3%,
respectively.
We
discuss the
components of operating income margin under “—Results of
operations by operating segment.”
56
We
recorded an
increase in
the fair
value of
Cell C of
$3.0 million
(ZAR 50
million) during
the second
quarter of
fiscal 2026
(refer to Note 5 for additional information). We
disposed of our entire investment in Cell C in December 2025 for $3.0 million
(ZAR
50 million)
in cash. There
were no changes
in the fair
value of Cell
C during
the second quarter
of fiscal 2025.
We
recorded a
non-
cash change in fair value
of equity securities of $33.7
million during the second
quarter of fiscal 2025 related
to a fair value
adjustment
loss related to MobiKwik.
In December 2025, we
determined that the liquidation
of CPS is at an advanced
stage and released an accrual
raised at the time
of deconsolidation of $3.9 million (ZAR 65.4 million) to Other income
.
Interest on surplus
cash was $0.5
million (ZAR 8.7
million) compared with
$0.7 million (ZAR 12.9
million) during the second
quarter of fiscal 2025, and decrease due to lower interest rates.
Interest expense decreased to $4.6 million (ZAR 78.6 million) from $6.3
million (ZAR 112.2 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
second
quarter
of
fiscal
2026
compared
with
2025.
On
a
comparable
basis
the
equivalent
interest
expense related to the Consumer lending book for the second quarter of
fiscal 2025 was included in interest expense.
Second quarter of fiscal 2026
income tax expense was $0.7 million
(ZAR 11.5 million) compared to income tax benefit of
$(6.4)
million (ZAR (117.0)
million) in fiscal 2025.
Our effective tax
rate for fiscal 2026
was impacted by the
tax expense recorded by
our
profitable
South
African
operations,
non-taxable
income
(primarily
related
to
the
disposal
of
Cell
C
and
other
income)
and
non-
deductible expenses (including transaction-related expenditures).
The income tax expense was also impacted by a higher deferred tax
benefit as a result of
the reduction in the useful
lives of certain of our
brand and trademark intangible
assets which has resulted
in an
increase in amortization expense during the three months ended December
31, 2025.
Our
effective
tax rate
for
fiscal
2025
was impacted
by deferred
tax impact
related
to
the fair
value
adjustment
to our
equity
securities, the
tax expense
recorded
by our
profitable South
African operations,
a deferred
tax benefit
related to
acquisition-related
intangible asset amortization, non-deductible expenses (in
transaction-related expenses), the on-going losses incurred by
certain of our
South African businesses
and the associated
valuation allowances created
related to the
deferred tax assets
recognized regarding
net
operating losses incurred by these entities.
Results of operations by operating segment
The composition of revenue and the contributions of our business activities to operating
loss are illustrated below:
Table 5
In United States Dollars
Three months ended December 31,
2025
2024
$ ’000
% of total
$ ’000
% of total
% change
Operating Segment
Consolidated revenue:
Merchant
131,919
74%
145,209
82%
(9%)
Consumer
33,118
19%
22,929
13%
44%
Enterprise
14,796
8%
8,933
5%
66%
Subtotal: Operating segments
179,833
101%
177,071
100%
2%
Eliminations
(1,099)
(1%)
(855)
-
29%
Total
consolidated revenue
178,734
100%
176,216
100%
1%
Group Adjusted EBITDA:
Merchant
(A)(1)
9,940
56%
10,089
87%
(1%)
Consumer
(1)
9,310
52%
4,342
37%
114%
Enterprise
(1)
1,423
8%
(31)
-
nm
Group costs
(2,896)
(16%)
(2,820)
(24%)
3%
Group Adjusted EBITDA (non-GAAP)
(A)(2)
17,777
100%
11,580
100%
54%
(A) In order to correct the
error discussed in Note 1 to the
unaudited condensed consolidated statement
of operations, Merchant
Segment Adjusted EBITDA and Group
Adjusted EBITDA decreased by
$0.32 million for the
three months ended December 31,
2024.
(1) Segment Adjusted EBITDA for
the three months ended December 31,
2025, includes retrenchment costs of
$0.2 million for
Merchant for the second quarter of fiscal 2026. Segment Adjusted EBITDA
for the three months ended December 31, 2024, includes
retrenchments costs for Consumer of $0.01 million.
(2) Group Adjusted EBITDA
is a non-GAAP measure, refer
to reconciliation below at
“—Results of Operations—Use of
Non-
G
AAP Measures”.
57
Table 6
In South African Rand
Three months ended December 31,
2025
2024
Operating Segment
ZAR ’000
% of total
ZAR ’000
% of total
% change
Consolidated revenue:
Merchant
2,257,003
74%
2,600,561
82%
(13%)
Consumer
566,735
19%
410,687
13%
38%
Enterprise
253,227
8%
159,846
5%
58%
Subtotal: Operating segments
3,076,965
101%
3,171,094
100%
(3%)
Eliminations
(18,774)
(1%)
(15,336)
-
22%
Total
consolidated revenue
3,058,191
100%
3,155,758
100%
(3%)
Group Adjusted EBITDA:
Merchant
(A)(1)
170,340
56%
180,999
87%
(6%)
Consumer
(1)
159,442
52%
77,488
37%
106%
Enterprise
(1)
24,316
8%
(537)
-
nm
Group costs
(49,647)
(16%)
(50,265)
(24%)
(1%)
Group Adjusted EBITDA (non-GAAP)
(A)(2)
304,451
100%
207,685
100%
47%
(A) In order to correct the
error discussed in Note 1 to the
unaudited condensed consolidated statement
of operations, Merchant
Segment Adjusted
EBITDA and Group
Adjusted EBITDA decreased
by ZAR 5.8
million for the
three months ended
December 31,
2024.
(1) Segment Adjusted EBITDA for the three months ended December 31, 2025, includes retrenchment costs of ZAR 3.7 million
for Merchant for the second quarter of fiscal 2026. Segment Adjusted EBITDA Merchant and Segment Adjusted EBITDA Consumer
include retrenchment costs of ZAR 0.1 million, respectively,
for the second quarter of fiscal 2025.
(2) Group Adjusted EBITDA
is a non-GAAP measure, refer
to reconciliation below at
“—Results of Operations—Use of
Non-
GAAP Measures”.
Merchant
Segment
revenue
decreased
primarily
due
to
reduced
ADP
revenue,
driven
by
lower
prepaid
airtime
volumes
and
margin
compression from
lower per-transaction
fees, despite
overall growth
in processed
volumes. 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.
We
record a
significant proportion
of our airtime
sales in revenue
and cost
of
sales,
while
only
earning
a
relatively
small
margin.
The
decrease
in
Segment
Adjusted
EBITDA
primarily
related
to
a
higher
allowance for
credit losses
following an
increase in
default experience
on our
Merchant lending
book and
an increase
in inventory
written off, which was partially offset by lower
IT processing, servicing and support and employment-related expenditures.
Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided
by revenue) for the second quarter
of fiscal 2026
and 2025 was 7.5% and 6.9%, respectively.
Consumer
Segment revenue
increased primarily
due to
higher transaction
fees generated
from the
higher EPE
account holders
base, the
impact
of
an
increase
in
certain
issuing
fee
base
prices
year-over-year,
and
transaction
activity
in
our
issuing
business,
insurance
premiums collected,
lending revenues following an increase
in loan originations.
This increase in revenue
has translated into improved
profitability,
which was
partially offset
by a higher
allowance for
credit losses following
an increase
in loan originations
during the
quarter,
higher insurance-related claims, interest expense (of approximately ZAR 22.1 million; Q2 2025: ZAR 13.1 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
second quarter of fiscal 2026
and 2025 was 28.1%
and 18.9%, respectively.
Enterprise
Segment revenue and Segment Adjusted EBITDA increased primarily
due to the inclusion of Recharger.
Our Segment Adjusted (loss) EBITDA margin for
the second quarter of fiscal 2026
and 2025 was 9.6% and
(0.3)%, 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 second quarter of fiscal 2026
were moderately lower compared with the prior period due to
lower travel
expenses and legal fees, which was partially offset by higher consulting
fees.
58
First half of fiscal 2026 compared to first half of fiscal 2025
The following factors had
a significant impact on
our results of operations
during the first half
of fiscal 2026 as
compared with
the same period in the prior year:
●
Higher
revenue:
Our
revenues
increased
by
6.2%
in
U.S.
dollars
and
increased
by
2.9%
in
ZAR,
primarily
due
to
the
inclusion of
Adumo and Recharger,
an increase in
value-added services
activity in Merchant,
as well as
higher transaction,
insurance and lending revenues in Consumer,
which was partially offset by lower prepaid airtime revenue;
●
Operating
income
increase:
Operating
income
increased
primarily
due
to
a
strong
performance
by
Consumer,
the
contribution
from
Adumo
for
the
entire
period
in
fiscal
2026
compared
with
three
months
in
fiscal
2025
and
from
the
contribution from Recharger, which was partially offset by an
increase in amortization of acquisition-related intangible
assets
related to change of useful lives of certain brand intangibles assets.
●
Non-cash fair value adjustment related
to equity securities in fiscal 2025:
We recorded
a non-cash fair value loss of $33.7
million during the first half of fiscal 2025
related to MobiKwik;
●
Lower net interest
charge:
Net interest charge decreased
to $8.6 million
(ZAR 148.8 million) from
$10.1 million (ZAR
180.7
million) primarily due to
a lower interest expense
following lower interest rates
and the exclusion of
interest expense incurred
under our borrowing arrangements related to our Consumer lending book in the first half of fiscal 2026 compared with 2025.
On a comparable
basis the equivalent
interest expense related
to the Consumer lending
book for the first
half of fiscal 2025
was included in interest expense; and
●
Foreign exchange movements:
The U.S. dollar was
2% weaker against the
ZAR during the first
half of fiscal 2026
compared
to the prior period, which positively impacted our U.S. dollar reported
results.
Consolidated overall results of operations
This discussion is based on the amounts prepared in accordance with U.S. GAAP.
The following tables show the changes in the items comprising our statements of operations,
both in U.S. dollars and in ZAR:
Table 7
In United States Dollars
Six months ended December 31,
2025
2024
%
$ ’000
$ ’000
change
Revenue
350,182
329,784
6%
Cost of goods sold, IT processing, servicing and support
(A)
241,314
249,941
(3%)
Selling, general and administration
(A)(1)
79,978
63,114
27%
Depreciation and amortization
26,462
14,499
83%
Transaction costs related to Adumo, Recharger
and Bank Zero acquisitions
141
1,952
(93%)
Operating income
2,287
278
723%
Change in fair value of equity securities
2,971
(33,731)
nm
Other income
3,883
-
nm
Loss on impairment or disposal of equity-accounted investment
584
161
263%
Loss on disposal of equity securities
730
-
nm
Interest income
1,047
1,307
(20%)
Interest expense
(A)
9,604
11,382
(16%)
Loss before income tax expense (benefit)
(730)
(43,689)
(98%)
Income tax expense (benefit)
524
(6,334)
nm
Net loss before earnings from equity-accounted investments
(1,254)
(37,355)
(97%)
Earnings from equity-accounted investments
110
77
43%
Net loss
(1,144)
(37,278)
(97%)
(Less) Add net income (loss) attributable to non-controlling interest
(131)
28
nm
Net loss attributable to us
(1,013)
(37,306)
(97%)
(A) In order
to correct the error
discussed in Note 1
to the unaudited condensed
consolidated statement of operations,
Cost of goods sold,
IT
processing, servicing
and support
increased by
$0.34 million,
Selling, general
and administration
expense increased
by $0.12
million, Operating
income decreased by
$0.45 million,
Interest expense increased
by $0.18
million, and
the subtotal
captions from
Income (Loss)
before income tax
expense (benefit) to Net income (loss) attributable to Lesaka decreased by $0.63 million for the six months ended December 31, 2024.
Cost of goods sold, IT processing, servicing and support increased by $0.18 million, Selling, general
and administration expense increased by
$0.06 million,
Operating income
decreased by
$0.25 million,
Interest expense
increased by
$0.12 million,
and the
subtotal captions
from Income
(Loss) before income tax
expense (benefit) to
Net income (loss)
attributable to Lesaka
decreased by $0.36 million
for the six
months ended December
31, 2025,
to correct
the error
discussed in
Note 1
to the
unaudited condensed
consolidated statement
of operations
as a
result of
the correction
to
amounts reported for the three months ended September 30, 2025.
(
1) Selling, general and administration includes allowance for credit losses.
59
Table 8
In South African Rand
Six months ended December 31,
2025
2024
%
ZAR ’000
ZAR ’000
change
Revenue
6,081,737
5,912,635
3%
Cost of goods sold, IT processing, servicing and support
(A)
4,191,300
4,481,512
(6%)
Selling, general and administration
(A)(1)
1,388,919
1,131,087
23%
Depreciation and amortization
459,539
259,746
77%
Transaction costs related to Adumo, Recharger
and Bank Zero acquisitions
2,567
34,448
(93%)
Operating income
39,412
5,842
575%
Change in fair value of equity securities
50,000
(614,710)
nm
Other income
65,353
-
nm
Loss on impairment or disposal of equity-accounted investment
10,342
2,886
258%
Loss on disposal of equity securities
12,286
-
nm
Interest income
18,192
23,403
(22%)
Interest expense
(A)
166,986
204,081
(18%)
Loss before income tax expense (benefit)
(16,657)
(792,432)
(98%)
Income tax expense (benefit)
8,934
(115,552)
nm
Net loss before earnings from equity-accounted investments
(25,591)
(676,880)
(96%)
Earnings from equity-accounted investments
1,851
1,366
36%
Net loss
(23,740)
(675,514)
(96%)
(Less) Add net income (loss) attributable to non-controlling interest
(2,300)
496
nm
Net loss attributable to us
(21,440)
(676,010)
(97%)
(A) In order
to correct the error
discussed in Note 1
to the unaudited condensed
consolidated statement of operations,
Cost of goods sold,
IT
processing, servicing and
support increased
by ZAR 6.0
million, Selling, general
and administration expense
increased by ZAR
2.1 million, Operating
income decreased by ZAR 8.1 million, Interest expense increased by ZAR 3.2 million,
and the subtotal captions from Income (Loss) before income
tax expense (benefit) to Net income (loss) attributable to Lesaka decreased by ZAR 11.3 million for the three months ended December 31, 2024.
(A)
Cost
of
goods
sold,
IT
processing,
servicing
and
support
increased
by
ZAR
3.2
million,
Selling,
general
and
administration
expense
increased by
ZAR 1.1
million, Operating
income decreased
by ZAR
4.4 million,
Interest expense increased
by ZAR
2.0 million,
and the
subtotal
captions from Income (Loss) before
income tax expense (benefit) to
Net income (loss) attributable to Lesaka
decreased by ZAR 6.4 million
for the
six months ended December 31, 2025, to correct the error
discussed in Note 1 to the unaudited condensed consolidated
statement of operations as a
result of the correction to amounts reported for the three months ended September 30, 2025.
(1) Selling, general and administration includes allowance for credit losses.
Revenue increased by $20.4 million (ZAR 169.1 million), or 6.2% (in ZAR, 2.9%), primarily due to the inclusion of Adumo, an
increase in the volume of value-added services provided (primarily Pinless Airtime), an increase in certain issuing fee base prices and
transaction activity
in our issuing
business, and
an increase in
insurance premiums
collected and
lending revenues
following higher
loan originations, which was partially offset by fewer Pinned
Airtime sales.
Cost of goods
sold, IT processing,
servicing and
support decreased
by $8.6 million
(or 3.5%) and,
in ZAR, decreased
by ZAR
290.2 million (or 6.5%), primarily due to the decrease in Pinned Airtime
sales, which was partially offset by the inclusion of Adumo,
higher commissions paid related to ADP revenue generated, and higher
insurance-related claims and third-party transaction fees.
Selling, general
and administration
expenses increased
by $16.9
million (ZAR
257.8 million),
or 26.7%
(in ZAR 22.8%).
The
increase was primarily due to the inclusion of Adumo; higher employee-related expenses (including annual bonuses and
annual salary
increases);, consulting fees,
audit fees,
and travel expenses;
and the year-over-year impact
of inflationary increases
on certain expenses,
which was partially offset by lower stock-based compensation
charges.
Depreciation and
amortization expense
increased by
$12.0 million
(ZAR 199.8
million), or
82.5% (76.9%).
The increase
was
due to
the change
to a
shorter useful
life for
certain of
our brand
and trademark
intangible assets
(refer to
Note 7),
the inclusion
of
acquisition-related
intangible
asset
amortization
related
to
intangible
assets
identified
pursuant
to
the
Adumo
and
Recharger
acquisitions and an increase in depreciation expense related to additional POS devices
deployed.
60
Transaction
costs
related
to
Adumo,
Recharger
and
Bank
Zero
acquisitions
includes
fees
paid
to
external
service
providers
associated with legal and advisory services procured to close the Adumo transaction on October 1, 2024, the Recharger transaction
in
March 2025, and
ongoing transaction fees
related to our
proposed acquisition of
Bank Zero.
Refer to
Note 2
to our
unaudited condensed
consolidation financial statements for additional information.
Our
operating
income
margin
for
the
first
half
of
fiscal
2026
and
2025
was
0.7%
and
0.1%,
respectively.
We
discuss
the
components of operating loss margin under “—Results of operations
by operating segment.”
We recorded
an increase in the fair value of Cell C of $3.0 million (ZAR 50
million) during the first half of fiscal 2026 (refer
to
Note 5 for additional information). There were no changes in the
fair value of Cell C during the first half of fiscal 2025. We
recorded
a non-cash change in
fair value of equity
securities of $33.7 million
during the first half
of fiscal 2025 related
to a fair value
adjustment
loss related to MobiKwik.
In December 2025, we
determined that the liquidation
of CPS is at an advanced
stage and released an accrual
raised at the time
of deconsolidation of $3.9 million (ZAR 65.4 million) to Other income.
Interest on surplus cash
decreased to $1.0 million
(ZAR 18.2 million) from
$1.3 million (ZAR 23.4
million), due to lower
interest
rates, which was partially offset by the inclusion of Adumo.
Interest
expense
decreased
to
$9.6
million
(ZAR
167.0
million)
from
$11.4
million
(ZAR
204.1
million).
The
decrease
was
primarily due
to lower interest
rates and the
exclusion of interest
expense incurred
under our borrowing
arrangements related to
our
Consumer lending
book in
the first
half of
fiscal 2026
compared with
2025. On
a comparable
basis the
equivalent interest
expense
related to the Consumer lending book for the first half of fiscal 2025 was included
in interest expense.
Fiscal 2026
income tax expense was $0.5
million (ZAR 8.9 million) compared
to an income tax benefit
of $(6.3) million (ZAR
(115.6) million) in fiscal 2024. Our effective tax rate for
fiscal 2026 was impacted by the tax
expense recorded by our profitable South
African operations,
non-taxable income
(primarily related
to the
disposal of
Cell C and
other income)
and non-deductible
expenses
(including transaction-related expenditures). The income tax expense was also impacted by a higher deferred tax benefit as a result of
the reduction in
the useful lives
of certain of
our brand and
trademark intangible assets
which has resulted
in an increase
in amortization
expense during the fiscal 2026.
Our
effective
tax rate
for
fiscal 2025
was impacted
by deferred
tax
impact
related
to the
fair
value
adjustment
to our
equity
securities, the
tax expense
recorded
by our
profitable South
African operations,
a deferred
tax benefit
related to
acquisition-related
intangible asset amortization, non-deductible expenses (in
transaction-related expenses), 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.
61
Results of operations by operating segment
The composition of revenue and the contributions of our business activities to operating
loss are illustrated below:
Table 9
In United States Dollars
Six months ended December 31,
2025
2024
Operating Segment
$ ’000
% of total
$ ’000
% of total
% change
Consolidated revenue:
Merchant
258,869
74%
268,860
82%
(4%)
Consumer
63,694
18%
44,001
13%
45%
Enterprise
29,649
8%
20,816
6%
42%
Subtotal: Operating segments
352,212
100%
333,677
101%
6%
Eliminations
(2,030)
-
(3,893)
(1%)
(48%)
Total
consolidated revenue
350,182
100%
329,784
100%
6%
Group Adjusted EBITDA:
Merchant
(A)(1)
18,884
57%
17,419
84%
8%
Consumer
(1)
17,803
54%
8,738
42%
104%
Enterprise
(1)
2,692
8%
331
2%
713%
Group costs
(6,507)
(19%)
(5,769)
(28%)
13%
Group Adjusted EBITDA (non-
GAAP)
(A)(2)
32,872
100%
20,719
100%
59%
(A) In order to correct the
error discussed in Note 1 to the
unaudited condensed consolidated statement
of operations, Merchant
Segment Adjusted EBITDA and
Group Adjusted EBITDA decreased by
$0.63 million for the six months
ended December 31, 2024.
Merchant Segment Adjusted EBITDA
and Group Adjusted EBITDA
decreased by $0.36 million
for the three months
ended December
31, 2025,
to correct
the error discussed
in Note 1
to the unaudited
condensed consolidated
statement of operations
as a result
of the
correction to amounts reported for the three months ended September
30, 2025.
(1) Segment Adjusted EBITDA for the six months ended December 31,
2025, includes retrenchment costs for Merchant of $0.4
million, and Consumer
of $0.1 million. Segment
Adjusted EBITDA for
the first half of
fiscal 2025, includes retrenchments
costs for
Consumer of $0.1 million and for Enterprise of $0.01 million.
(2) Group Adjusted EBITDA
is a non-GAAP measure, refer
to reconciliation below at
“—Results of Operations—Use of
Non-
GAAP Measures”.
Table 10
In South African Rand
Six months ended December 31,
2025
2024
Operating Segment
ZAR ’000
% of total
ZAR ’000
% of total
% change
Consolidated revenue:
Merchant
4,496,038
74%
4,820,583
82%
(7%)
Consumer
1,105,741
18%
788,750
13%
40%
Enterprise
515,131
8%
373,843
6%
38%
Subtotal: Operating segments
6,116,910
100%
5,983,176
101%
2%
Eliminations
(35,173)
-
(70,541)
(1%)
(50%)
Total
consolidated revenue
6,081,737
100%
5,912,635
100%
3%
Group Adjusted EBITDA:
Merchant
(A)(1)
328,053
57%
312,498
84%
5%
Consumer
(1)
309,152
54%
156,169
42%
98%
Enterprise
(1)
46,723
8%
6,031
2%
675%
Group costs
(113,266)
(19%)
(102,919)
(28%)
10%
Group Adjusted EBITDA (non-
GAAP)
(A)(2)
570,662
100%
371,779
100%
53%
(A) In order to correct the
error discussed in Note 1 to the unaudited
condensed consolidated statement of operations,
Merchant
Segment Adjusted
EBITDA and
Group Adjusted
EBITDA decreased
by ZAR
11.3 million
for the
six months
ended December
31,
2024.
(A)
Merchant Segment
Adjusted
EBITDA
and
Group
Adjusted
EBITDA
decreased
by ZAR
6.4
million
for
the six
months
ended December 31, 2024, to correct the error discussed in Note 1 to the
unaudited condensed consolidated statement of operations as
a
result of the correction to amounts reported for the three months ended September
30, 2025.
62
(1) Segment Adjusted EBITDA for the six months ended December 31, 2025, includes retrenchment costs for Merchant of ZAR
7.4 million,
and Consumer
of ZAR 2.6
million. Segment
Adjusted EBITDA
for the first
half of fiscal
2025, includes
retrenchments
costs for Consumer of ZAR 0.1 million and for Enterprise of ZAR 0.01 million.
(2) Group Adjusted EBITDA
is a non-GAAP measure, refer
to reconciliation below at
“—Results of Operations—Use of
Non-
GAAP Measures”.
Merchant
Segment revenue primarily
decreased due to
fewer prepaid airtime sales
which was partially
offset by the
inclusion of Adumo,
and a higher
volume of ADP
provided (primarily
Pinless Airtime). In
ZAR, the increase
in Segment Adjusted
EBITDA is primarily
due to
the inclusion
of Adumo
for the
entire period
compared with
the prior
period, which
was partially
offset by
higher operating
expenses incurred.
Our Segment Adjusted EBITDA margin (calculated as
Segment Adjusted EBITDA divided by revenue) for
the first half of
fiscal
2026 and 2024 was 7.3% and 6.5%, respectively.
Consumer
Segment
revenue
increased
primarily
due
to higher
transaction
fees generated
from the
higher
EPE
account holders
base,
an
increase in certain issuing
fee base prices and transaction
activity in our issuing business,
insurance premiums collected, and
lending
revenues following
an increase
in loan
originations.
This increase
in revenue
has translated
into improved
profitability,
which was
partially offset by a higher allowance for credit losses following an increase in loan originations in December 2025, higher insurance-
related claims, interest
expense (of approximately
ZAR 41.0 million;
F2025: ZAR 28.5
million ) incurred
to fund our
lending book,
and the year-over-year impact of
inflationary increases on certain expenses.
Our Segment Adjusted EBITDA margin for the
first half of fiscal 2026 and 2024 was 28.0% and 19.9%, respectively.
Enterprise
Segment revenue
increased primarily
due to
the inclusion
of Recharger.
In ZAR,
the significant
increase in
Segment Adjusted
EBITDA is primarily due to the inclusion of Recharger
.
Our Segment Adjusted EBITDA margin for the
first half of fiscal 2026 and 2024 was 9.1% and 1.6%, respectively.
Group costs
Our group costs for fiscal 2026
increased compared with the prior period due to higher consulting fees.
Use of Non-GAAP Measures
U.S. securities laws
require that when
we publish any
non-GAAP measures, we
disclose the reason
for using these
non-GAAP
measures
and
provide
reconciliations
to
the
most
directly
comparable
U.S.
GAAP measures.
The
presentation
of
Group Adjusted
EBITDA is a non-GAAP measure. We provide this non-GAAP measure to enhance our evaluation and understanding of our financial
performance
and
trends.
We
believe
that
this
measure
is
helpful
to
users
of
our
financial
information
understand
key
operating
performance and
trends in our
business because
it excludes certain
non-cash expenses
(including depreciation
and amortization
and
stock-based compensation charges) and income
and expenses that we consider once-off in nature.
Non-GAAP Measures
Group
Adjusted
EBITDA
is
earnings
before
interest,
tax,
depreciation
and
amortization
(“EBITDA”),
adjusted
for
non-
operational
transactions
(including
loss
on
impairment/
disposal
of
equity-accounted
investments,
change
in
fair
value
of
equity
securities), (earnings) loss from equity-accounted investments, stock-based compensation charges and once-off items. We included an
intercompany
interest
expense
in
our
Consumer
Segment
Adjusted
EBITDA
for
three
and
six
months
ended
December
31,
2024.
Once-off
items
represents
non-recurring
income
and
expense
items,
including
costs
related
to
acquisitions
and
transactions
consummated or ultimately not pursued.
63
The
table
below
presents
the reconciliation
between
U.S. GAAP
net
income
(loss)
attributable
to
Lesaka to
Group Adjusted
EBITDA:
Table 11
Three months ended
December 31,
Six months ended
December 31,
2025
2024
2025
2024
$ ’000
$ ’000
$ ’000
$ ’000
Income (Loss) attributable to Lesaka - GAAP
3,645
(32,456)
(1,013)
(37,306)
(Less) Add net income (loss) attributable to non-controlling interest
14
(28)
131
(28)
Net income (loss)
3,631
(32,428)
(1,144)
(37,278)
Earnings from equity accounted investments
(110)
(50)
(110)
(77)
Net income (loss) before earnings from equity-accounted investments
3,521
(32,478)
(1,254)
(37,355)
Income tax expense (benefit)
670
(6,412)
524
(6,334)
Income (Loss) before income tax expense
4,191
(38,890)
(730)
(43,689)
Interest expense
(A)
4,591
6,266
9,604
11,382
Interest income
(508)
(721)
(1,047)
(1,307)
Loss on disposal of equity securities
730
-
730
-
Other income
(3,883)
-
(3,883)
-
Net loss on impairment/ disposal of equity-accounted investment
-
161
584
161
Change in fair value of equity securities
(2,971)
33,731
(2,971)
33,731
Operating income
2,150
547
2,287
278
PPA amortization
(amortization of acquired intangible assets)
9,481
4,867
18,615
8,614
Depreciation and amortization
4,087
3,356
7,847
5,885
Stock-based compensation charges
1,945
2,644
3,806
5,021
Interest adjustment
-
(757)
-
(1,588)
Once-off items
(1)
247
488
514
2,293
Unrealized gain (loss) FV for currency adjustments
(133)
435
(197)
216
Group Adjusted EBITDA - Non-GAAP
(A)
17,777
11,580
32,872
20,719
(A) Income (Loss) attributable to
Lesaka – GAAP and all subtotal
captions to Income (Loss) before
income tax expense for the
three and six
months ended December
31, 2024 have
been decreased by
$0.32 million and
$0.63 million, respectively,
as a result
of
the correction
discussed in
Note 1.
Interest expense
for the
three and
six months
ended December
31, 2024
has been
increased
by
$0.09 million and $0.18 million, respectively, as a result of the correction discussed in Note 1. Operating income and Group Adjusted
EBITDA - Non-GAAP
for the three
and six months
ended December 31,
2024 have been
decreased by $0.23
million and $0.45
million,
respectively, as a result of
the correction discussed in Note 1.
Income (Loss) attributable
to Lesaka – GAAP
and all subtotal captions
to Income (Loss) before
income tax expense for
the six
months ended December
31, 2025 have been
decreased by $0.36
million and, as
a result of the
correction, as discussed in
Note 1, to
the amount included
in the caption
Interest expense for the
three months ended
September 30, 2025.
Interest expense for
the six months
ended December
31, 2025
has been
increased by
$0.12 million
as a
result of
the correction,
as discussed
in Note
1, to
the amount
included
in
the
caption
Interest
expense
for
the
three
months
ended
September
30,
2025.
Operating
income
and
Group
Adjusted
EBITDA - Non-GAAP
for the six
months ended December
31, 2025 have
been decreased by
$0.25 million, as
a result
of the correction,
as discussed in Note 1, to the amount included in the caption Interest expense
for the three months ended September 30, 2025.
(1) The table below presents the components of once-off
items for the periods presented:
Table 12
Three months ended
December 31,
Six months ended
December 31,
2025
2024
2025
2024
$ ’000
$ ’000
$ ’000
$ ’000
Transaction costs
200
462
373
537
Transaction costs related to Adumo, Recharger
and Bank Zero acquisitions
47
222
141
1,952
Indirect taxes provision release
-
(196)
-
(196)
Total once-off
items
247
488
514
2,293
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.
Indirect tax
provision release
relates to
the reversal
of a
non-recurring indirect
tax provision
created in
fiscal 2023
which was
resolved in fiscal 2025 following settlement of the matter with the tax authority.
64
Liquidity and Capital Resources
As of December 31, 2025, our cash and cash
equivalents were $69.5 million and comprised of U.S. dollar-denominated balances
of $2.1 million, ZAR-denominated balances of
ZAR 1.1 billion ($65.6 million),
and other currency deposits, primarily Botswana
pula,
of $1.8
million, all
amounts translated
at exchange
rates applicable
as of
December 31,
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
reduce
our
general banking facilities utilized, the utilization
of cash reserves to
fund certain scheduled repayments of
our borrowings, the increase
in our Consumer lending book, which was partially offset by the positive contribution from our operating
segments, utilization of our
general banking facilities to partially fund the growth in our Consumer lending book and the proceeds received on disposal of Cell C.
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
($10.6 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 ($9.0
million)
in February 2026.
We
expect to pay
ZAR 100 million
($6.0 million)
payment on
closing of the
Bank Zero
transaction. All amounts
translated at exchange rates as of December 31, 2025.
Available short-term
borrowings
Summarized below are our short-term facilities available and utilized as of
December 31, 2025:
Table 13
RMB GBF
RMB Other
Nedbank
$ ’000
ZAR ’000
$ ’000
ZAR ’000
$ ’000
ZAR ’000
Total
short-term facilities available, comprising:
Total overdraft
42,267
700,901
-
-
-
-
Indirect and derivative facilities
(1)
-
-
6,073
100,718
9,441
156,554
Total
short-term facilities available
42,267
700,901
6,073
100,718
9,441
156,554
Utilized short-term facilities:
Overdraft
21,333
353,761
-
-
-
-
Indirect and derivative facilities
(1)
-
-
1,917
31,782
127
2,103
Total
short-term facilities utilized
21,333
353,761
1,917
31,782
127
2,103
Interest rate, based on South African prime rate
9.75%
N/A
N/A
(1)
Other
facilities
include
indirect
and
derivative
facilities
may
only
be
used
for
guarantees,
letters
of
credit
and
forward
exchange contracts to support guarantees issued by RMB and Nedbank
to various third parties on our behalf.
In terms of
a commitment provided
to the lender
under the CTA
entered into on
February 27, 2025,
we have undertaken
not to
utilize more than ZAR 5.0 million ($0.3 million) of the Nedbank Facility.
Long-term borrowings
We
have
aggregate
long-term
borrowings
outstanding
of
ZAR
3.6
billion
($217.1
million
translated
at
exchange
rates
as
of
December 31, 2025) as described in Note 12. These borrowings include
outstanding long-term borrowings obtained by Lesaka SA of
ZAR 3.1 billion, which were
used to refinance our
previous long-term borrowings. We have utilized all of
these long-term borrowings.
As of
December 31,
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.
65
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 December 31, 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
Second quarter
Net cash utilized
in operating activities
during the second quarter
of fiscal 2026
was $10.9 million
(ZAR 185.1 million) compared
to net
cash utilized
of $9.2
million (ZAR
163.6 million)
during the
second quarter
of fiscal
2025. Excluding
the impact
of income
taxes, our cash utilized in operating activities during the second quarter of fiscal 2026
was adversely impacted by cash utilized for the
significant net growth in our Consumer finance
loans receivable book, which was partially
offset by the positive contribution from our
operating segments.
During the
second quarter
of fiscal
2026, we
paid second
provisional South
African tax
payments of
$4.2 million
(ZAR 71.2
million).
We also
paid taxes related to prior
tax years in South Africa
of $0.2 million (ZAR 2.7
million). We
paid taxes totaling $0.1
million in other tax
jurisdictions, primarily in Botswana
during the second
quarter of fiscal 2026.
During the second quarter
of fiscal
2025, we
paid first
provisional South
African tax
payments of
$3.1 million
(ZAR 56.3
million) related
to our
fiscal 2025
tax year.
During the second quarter of fiscal 2025, we paid taxes totaling $0.1 million
in other tax jurisdictions, primarily in Botswana.
Taxes paid (refunded)
during the second quarter of fiscal 2026
and 2025 were as follows:
Table 14
Three months ended December 31,
2025
2024
2025
2024
$
$
ZAR
ZAR
’000
’000
’000
’000
First provisional payments
4,232
3,088
71,219
56,264
Taxation paid related
to prior years
154
93
2,663
1,660
Tax refund received
(32)
-
(560)
-
Total South African
taxes paid
4,354
3,181
73,322
57,924
Foreign taxes paid
74
72
1,264
1,332
Total
tax paid
4,428
3,253
74,586
59,256
First half
Net cash
used in
operating activities
during the
first half
of fiscal
2026
was $2.0
million (ZAR
34.6 million)
compared to
net
cash used in
operating activities
of $13.3
million (ZAR 236.7
million) during
the fiscal half
of fiscal 2024.
Excluding the impact
of
income taxes, our cash used
in operating activities during the
first half of fiscal 2026 was
adversely impacted by cash utilized
for the
significant net growth in our Consumer finance
loans receivable book, which was partially
offset by the positive contribution from our
operating segments.
During the
first half
of fiscal
2026, we
paid first
provisional South
African tax
payments of
$4.3 million
(ZAR 72.0
million)
related to our 2026 tax year. We also 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
$0.5 million
(ZAR 8.4
million). We
paid taxes
totaling $0.1
million in
other tax
jurisdictions, primarily in Namibia and Botswana during the first
half of fiscal 2026. During the first half of fiscal 2025, we paid
first
provisional South African
tax payments of $3.1
million (ZAR 56.3 million)
related to our 2025
tax year.
We
also paid taxes totaling
$0.1 million in other tax jurisdictions, primarily in Botswana during
the first half of fiscal 2025.
66
Taxes paid (refunded)
during the first half of fiscal 2026
and 2025 were as follows:
Table 15
Six months ended December 31,
2025
2024
2025
2024
$
$
ZAR
ZAR
‘000
‘000
‘000
‘000
First provisional payments
4,278
3,088
72,040
56,264
Second provisional payments
284
-
4,936
-
Taxation paid related
to prior years
484
93
8,426
1,660
Tax refund received
(52)
(113)
(909)
(2,053)
Total South African
taxes paid
4,994
3,068
84,493
55,871
Foreign taxes paid
144
140
2,507
2,545
Total
tax paid
5,138
3,208
87,000
58,416
Cash flows from investing activities
Second quarter
Cash used in
investing activities
for the
second quarter
of fiscal 2026
included
capital expenditures
of $3.9
million (ZAR 66.5
million), primarily due to
the acquisition of
vaults and POS
devices. We also incurred expenditures of
$1.0 million (ZAR
17.1 million),
primarily related
to the capitalization
of development
costs, during
the second quarter
of fiscal 2026.
We
also received
$3.0 million
from the disposal of Cell C.
Cash used in investing activities
for the second quarter
of fiscal 2025 included
capital expenditures of $6.3
million (ZAR 112.8
million), primarily due to the acquisition of vaults and
POS devices. We also incurred expenditures of $0.4 million (ZAR 7.6 million),
primarily related
to the
capitalization of
development costs,
during the
second quarter
of fiscal
2025. During
the second
quarter of
fiscal 2025, we paid $4.0 million related to acquisition of certain businesses, including
Adumo.
First half
Cash used in
investing activities for
the first half
of fiscal 2026
included capital expenditures
of $7.9 million
(ZAR 137.4 million),
primarily due to
the acquisition
of vaults
and POS
devices. We also incurred
expenditures of $2.1
million (ZAR
37.3 million), primarily
related to the capitalization of development costs, during the first half of fiscal 2026.
We also received $3.0 million
from the disposal
of Cell C.
Cash
used
in
investing
activities
for
the
first
half
of
fiscal
2025
included
capital
expenditures
of
$10.3
million
(ZAR 183.0
million), primarily due to
the acquisition of
vaults. We also incurred expenditures of
$0.6 million (ZAR
10.7 million), primarily related
to the capitalization of development costs, during the first half of fiscal 2025. During the first half of fiscal 2025, we paid
$4.0 million
related to acquisition of certain businesses, including Adumo.
Cash flows from financing activities
Second quarter
During the second quarter of fiscal 2026, we utilized $20.5 million from our South African general banking facilities to partially
fund the
growth of
our Consumer
lending book,
and repaid
$12.4 million.
We
utilized $1.3
million of
our long-term
borrowings to
finance
the
acquisition
of
POS
devices
and
vehicles
to
fund
our
Merchant
lending
book.
We
repaid
$1.2
million
of
long-term
borrowings and in
accordance with our
repayment schedule under our
asset-based facilities. We
also paid $0.3 million
to repurchase
shares from employees in order for the employees to settle taxes due related
to the vesting of shares of restricted stock.
During the second quarter of fiscal 2025, we utilized $48.9 million from our
South African overdraft facilities to fund our ATMs
and our cash management business through Connect, and repaid
$4.5 million of those facilities. We utilized $12.9 million of our long-
term borrowings to
settle a
portion of the
Adumo purchase consideration,
pay certain transaction
expenses, repay Adumo’s borrowings,
repurchase shares of our common stock, fund the acquisition of certain capital expenditures and for working capital requirements. We
repaid
$8.3
million
of
long-term
borrowings
in
accordance
with
our
repayment
schedule
and
paid
$7.2
million
to
settle Adumo’s
borrowings.
We
also paid
an origination
fee of
$0.4 million
to secure
additional borrowings
as well
as paid
dividends to
the non-
controlling interest of $0.3 million.
67
First half
During the first half of fiscal
2026, we utilized $48.5 million from
our South African general banking
facilities to partially fund
the growth of our Consumer lending book, and repaid $53.1 million. We
utilized $4.0 million of our long-term borrowings to finance
the acquisition of POS devices and vehicles to fund our Merchant lending book. We
repaid $2.4 million of long-term borrowings and
in accordance
with our
repayment schedule
under our
asset-based facilities.
We
paid fees
of $0.03
million related
to the
September
2025
refinance
of our
facility to
fund
the growth
of Merchant
lending
book.
We
also paid
$0.3
million
to repurchase
shares from
employees in order for the employees to settle taxes due related to the vesting of
shares of restricted stock.
During the first
half of fiscal
2025, we utilized
$72.7 million from
our South African
overdraft facilities to
fund our ATMs
and
our
cash
management
business
through
Connect,
and
repaid
$34.4
million
of
those
facilities.
We
utilized
$12.9
million
of
our
borrowings to
settle a
portion of
the Adumo
purchase consideration,
pay certain
transaction expenses,
repay Adumo’s
borrowings,
repurchase shares of our common stock, fund the acquisition of certain capital expenditures and for working capital requirements. We
repaid
$6.6
million
of
long-term
borrowings
in
accordance
with
our
repayment
schedule,
paid
$7.2
million
to
settle
Adumo’s
borrowings,
and settled
a portion
of our
revolving credit
facility utilized.
We
also paid
an origination
fee of
$0.4 million
to secure
additional
borrowings as well as paid dividends to the non-controlling interest of $0.3 million.
Off-Balance Sheet Arrangements
We have no off
-balance sheet arrangements.
Capital Expenditures
We
expect
capital spending
for the
third 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 second
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
December
31,
2025,
of
$0.1
m
illion. We expect
to fund these expenditures through internally generated funds and available facilities.
68
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
In addition to the tables below, see
Note 5 to the unaudited condensed consolidated financial statements for
a discussion of
market risk.
We
have
short and
long-term borrowings
in South
Africa which
attract interest
at rates
that fluctuate
based on
changes in
the
South African prime
and 3-month JIBAR
interest rates. The
following table illustrates
the effect on
our annual expected
interest charge,
translated at exchange rates applicable
as of December 31, 2025,
as a result of
changes in the South
African prime and 3-month JIBAR
interest rates,
using our
outstanding short
and long-term
borrowings as
of December
31, 2025. The
effect of
a hypothetical
1% (i.e.
100 basis points)
increase and a
1% decrease in
the interest rates
applicable to the
borrowings as of
December 31, 2025,
are shown.
The selected 1% hypothetical change does not reflect what could be considered
the best- or worst-case scenarios.
Table 16
As of December 31, 2025
Annual expected
interest charge
($ ’000)
Hypothetical
change in
interest rates
Estimated annual
expected interest
charge after
hypothetical change
in interest rates
($ ’000)
Interest on South African borrowings
23,913
1%
26,304
(1%)
21,522
69
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
December 31, 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
that could
impact our
system of internal
control, insufficient
controls over internal
information and
information from service
organizations, insufficient
design and implementation
of information technology general
controls
(“ITGCs”), and controls over service
organizations, resulting in ineffective
process level and automated controls,
including
a lack of validation of the completeness and accuracy of information used
within the process;
(2)
Our payroll process,
specifically insufficient risk
assessment and monitoring activities
relating to changes over
the transfer
of ownership to the centralized
payroll processes that could impact the
system of internal control, insufficient
controls over
information
from
service
organizations,
insufficient
design
and
implementation
of
ITGCs,
controls
over
service
organizations resulting in ineffective process level and automated controls
including a lack of validation
of the completeness
and accuracy of information used within this process;
(3)
Our
annual
goodwill
impairment
process,
specifically
related
to
insufficient
risk
assessments
and
ineffective
design
and
implementation of controls resulting in ineffective process level
controls;
(4)
Our business
combination process,
specifically insufficient
risk assessments
and ineffective
design and
implementation of
controls
over
the purchase
price
allocation
of
the Adumo and
Recharger
acquisitions
including
insufficient
controls over
information resulting in ineffective process level controls including a lack of validation of the completeness and accuracy of
information used;
(5)
Our
revenue
recognition
process
relating
to
prepaid
airtime
sold
and
processing
fees
relating
to
certain
agreements,
specifically insufficient risk assessment and ineffective design and implementation of controls
related to our judgement over
revenue recognized either
as principal versus as
agent resulting in ineffective
controls and
a material misstatement
as well
as the requirement to restate revenue, cost of goods sold, IT processing, servicing and support and related disclosures for all
quarters as described below;
(6)
Our journal
entry process, specifically
relating to
insufficient risk
assessments, and
ineffective design
and implementation
of controls including insufficient controls over information resulting in ineffective process level controls including
a lack of
validation of the completeness
of the journal entry
population and a lack
of validation of the
completeness and accuracy of
information used within the process; and
(7)
An insufficient number of experienced and trained resources and an insufficient understanding of the application
of internal
controls over financial reporting
across the Southern African
businesses resulting in ineffective
design and implementation
of internal controls.
As a result of insufficient time in implementing all procedures to remediate
the material weaknesses discussed in our Annual
Report on Form10-K for our
fiscal year ended June 30,
2025 (as described above), the Executive
Chairman and the group chief
financial officer concluded that our disclosure controls and procedures
were not effective as of December 31, 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
GAAP.
Remediation Plan
Management has made significant
progress and continues to actively
work on remediating the identified
material weakness and
remains committed to remediating the material weakness in a timely manner.
Our remediation process is ongoing and includes, but is
not limited to, the following steps:
(1)
implementing
our
comprehensive remediation
plan that
encompasses specific
actions aimed
at embedding
accountability
with control owners as well
as training related to the operation
and importance of internal controls over financial
reporting,
including
the
principles
and
requirements
of each
control,
with
a
focus
on
the impacted
processes,
controls
over
service
organizations, ITGCs, other process level controls and
embedding accountability on a process and controls level;
(2)
mandating improved risk assessment procedures with governance requirements upon implementing new systems within our
company together with the design, implementation and monitoring
of control activities;
(3)
the recruitment of additional appropriately
skilled resources
across the Finance
and Risk
and Compliance disciplines coupled
with the further upskilling and training of existing resources responsible
for the execution of key controls as well as a focus
on a greater degree of automation of controls throughout the organization;
(4)
embedding of controls compliance in the key performance indicators of
senior executives across the business; and
(5)
collaborating closely with internal and external assurance partners to ensure
the robustness of our remediation plan.
70
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
December 31,
2025, that
have materially
affected, or
are reasonably likely to
materially affect,
our internal
c
ontrol over financial reporting.
71
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
and six months ended December 31, 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. Except
as set forth below, there have been no material
changes from the risk factors previously
disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30,
2025.
We
may
identify
additional
errors
related
to
our
Value
Added
Tax
(VAT)
processes,
indirect
tax
positions,
or
similar
transaction-level tax matters, which could require future adjustments to
our financial statements.
During the current quarter we identified errors in the
historical VAT
treatment of certain gaming voucher transactions within our
Merchant business. Although we have completed an
initial review of the matter and
determined to correct the identified errors through
revisions to our previously issued
financial statement, our review
is ongoing.
Refer to Note 1
to our unaudited condensed
consolidated
financial statements for
additional information.
The error arose from
the incorrect application
of indirect tax
rules, the configuration
of underlying systems, and operational practices involving downstream vendors.
While we
are implementing
remedial actions,
enhancing controls,
and conducting
further analyses
with our
external advisors,
there is a risk that we have
not yet identified all errors associated with
this matter. Additional issues may be discovered as we continue
to evaluate historical periods, refine our technical tax conclusions, or integrate updated processes into our systems. Moreover,
similar
errors
could exist
in accounting
and reporting
for other
indirect tax
transactions
particularly
where
our business
involves
complex
multi-party arrangements, voucher products, commissions, or activities involving
non-registered VAT
vendors.
Identification
of
additional
errors
may
require
us
to
record
further
adjustments,
amend
or
restate
previously
issued
financial
statements, update
our tax
filings, or make
additional payments of
tax, penalties,
or interest. Any
such developments
could result
in
increased
compliance
costs,
additional
administrative
burdens,
diversion
of
management
attention,
or
investor
perceptions
of
weaknesses
in
our
financial
reporting
or
tax
compliance
processes.
If
material,
additional
errors
could
also
adversely
affect
our
financial condition, results of operations, liquidity,
or internal control over financial reporting.
Our failure to prepare
and timely file
our periodic reports
with the SEC limits
our access to
the public markets
to raise debt
or equity capital.
Form S-3 permits eligible
issuers to conduct registered
offerings using a short
form registration statement that
allows the issuer
to incorporate
by reference its
past and future
filings and reports
made under the
Securities Exchange
Act of 1934,
as amended
(the
“Exchange Act”).
In addition,
Form S-3
enables eligible
issuers to
conduct primary
offerings “off
the shelf”
under Rule
415 of
the
Securities
Act
of
1933,
as
amended
(the
“Securities
Act”).
The
shelf
registration
process,
combined
with
the
ability
to
forward
incorporate information, allows issuers to avoid delays and
interruptions in the offering process and to access the capital markets
in a
more expeditious
and efficient
manner than
raising capital
in a
standard registered
offering pursuant
to a
Registration Statement
on
Form S-1. The ability to register securities for resale may also be limited as a result
of the loss of Form S-3 eligibility.
We
did
not
file
our
2025
Form
10-K
within
the
timeframe
required
by
the
SEC;
thus,
we
have
not
remained
current
in
our
reporting requirements
with the
SEC. Although
we regained
status as
a current
filer by
filing our
Form 10-K/A
to amend
our 2025
Form 10-K, we are currently ineligible to file new short form registration statements on Form S-3 and, absent a waiver of the Form S-
3 eligibility requirements, we are no longer permitted to use our existing registration statements on Form S-3. If we wish to pursue an
offering
now,
we
would
be
required
to conduct
the offering
on
an exempt
basis,
such
as in
accordance
with
Rule
144A,
or file
a
registration statement on Form
S-1. Using a Form
S-1 registration statement for
a public offering would
likely take significantly longer
than using a registration statement on Form S-3 and increase our transaction costs, and could, to the extent we are not able to conduct
offerings
using
alternative
methods,
adversely
impact
our
ability to
raise
capital
or
complete acquisitions
of
other
companies
in
a
timely manner.
72
Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds
On September 2, 2025, our board of directors approved a share repurchase authorization to repurchase up to an aggregate
of $15
million of our common stock. The authorization has no expiration date.
The table
below presents
information relating
to purchases
of shares
of our
common stock
during the
second quarter
of fiscal
2026:
Table 17
(a)
(b)
(c)
(d)
Period
Total
number
of shares
purchased
Average price
paid per share
(US dollars)
Total
number of shares
purchased as part of publicly
announced plans or
programs
Maximum dollar value of
shares that may yet be
purchased under the plans
or programs
Oct 1, 2025 - Oct 31, 2025
-
-
-
15,000,000
Nov 1, 2025 - Nov 30, 2025
(1)
49,614
3.83
-
15,000,000
Dec 1, 2025 - Dec 31, 2025
(2)
20,519
3.95
-
15,000,000
Total
70,133
-
(1) Relates to the delivery
of 49,614 shares of our
common stock in November 2025
to us by certain of our
employees to settle
their income tax liabilities. These shares do not reduce the repurchase authority
under the share repurchase program.
(2) Relates to the
delivery of 20,519 shares
of our common stock
in December 2025
to us by certain of
our employees to settle
their
income
tax
liabilities.
Excludes
306,767
shares
of
common
stock
obtained
as
purchase
consideration
from
the
disposal
of
a
subsidiary during December 2025. These shares do not reduce the repurchase
authority under the share repurchase program.
We
completed an acquisition
on December 1,
2025, in which a
portion of the
consideration for the
acquisition consisted of
the
unregistered issuance of shares of our
common stock. The aggregate consideration
paid at closing in this acquisition
included 76,716
shares of our common stock, valued at $0.3 million as of the acquisition date.
The shares of
common stock issued
in this transaction
were issued in
reliance upon
the exemptions
from registration
provided
by Section
4(a)(2) of
the Securities
Act of
1933, as
amended (the
Securities Act)
and Regulation
S under
the Securities
Act, as
the
shares were
issued to
the owners
of the
business acquired
in privately
negotiated transactions
not involving
any public
offering
or
solicitation.
For additional
information about
this acquisition,
see Note
2 of
the Notes
to Condensed
Consolidated Financial
Statements in
Item 1. Financial Statements of Part I of this Quarterly Report.
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 December 31, 2025,
no officers or
directors, as defined
in Rule 16a-1(f),
adopted
, modified, or
terminated
a “Rule 10b5-1 trading arrangement” or a “
non-Rule
10b5-1
trading arrangement,”
as defined in Item 408 of Regulation S-K.
73
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
31.1
Certification of Principal Executive Officer pursuant to
Rule 13a-14(a) under the Exchange Act
X
31.2
Certification of Principal Financial Officer pursuant to Rule
13a-14(a) under the Exchange Act
X
32
Certification pursuant to 18 USC Section 1350
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
* Indicates a management contract or compensatory plan or arrangement.
74
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 February
4, 2026.
LESAKA TECHNOLOGIES, INC.
By: /s/ Ali Mazanderani
Ali Mazanderani
Executive Chairman
By: /s/ Dan Smith
Dan Smith
Group Chief Financial Officer,
Treasurer and Secretary