Lesaka Technologies, Inc. ((LSAK)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Lesaka Technologies, Inc. recently held its earnings call, revealing a robust financial performance characterized by significant revenue and EBITDA growth. The company attributed its success to strategic acquisitions and effective integration. However, challenges in the Enterprise division and increased debt levels, coupled with substantial noncash charges, were noted as areas of concern.
Strong Financial Performance
Lesaka concluded FY 2025 with impressive financial results, achieving net revenue of ZAR 5.3 billion and EBITDA of ZAR 922 million, aligning with their guidance. Adjusted earnings for the year saw a remarkable increase from ZAR 51 million to ZAR 186 million, while earnings per share grew from ZAR 0.80 to ZAR 2.29.
Consumer Division Growth
The Consumer division had an outstanding year, with net revenue surging by 35% to ZAR 1.7 billion and EBITDA climbing by 83% to ZAR 435 million. This growth highlights the division’s strong market position and successful strategies.
Merchant Division Expansion
The Merchant division also experienced significant growth, with net revenue increasing by 46% to ZAR 3 billion and EBITDA rising by 20% to ZAR 657 million. This expansion was partly driven by strategic acquisitions, showcasing Lesaka’s effective growth strategies.
Significant M&A Activity
Lesaka engaged in several strategic acquisitions, including Adumo, Recharger, and Bank Zero, while divesting from MobiKwik for ZAR 290 million. These moves are part of Lesaka’s strategy to strengthen its market position and enhance its product offerings.
Positive Q4 Performance
The fourth quarter was particularly strong for Lesaka, with net revenue increasing by 47% to ZAR 1.5 billion and group adjusted EBITDA rising by 61% to ZAR 306 million compared to the previous year.
Enterprise Division Decline
The Enterprise division faced challenges, with net revenue declining by 9% to ZAR 651 million and EBITDA dropping from ZAR 55 million to ZAR 24 million. This decline was attributed to the closure of noncore business units.
Increase in Gross Debt
Lesaka’s gross debt increased as the company raised funds for acquisitions, resulting in a net debt to group adjusted EBITDA ratio of 2.9x. This reflects the company’s strategic investments but also highlights the need for careful debt management.
Significant Noncash Charges
The company reported substantial noncash charges, including ZAR 239 million in transaction costs, ZAR 335 million in noncash goodwill impairments, and a ZAR 101 million loss on the sale of MobiKwik, impacting its financial results.
Forward-Looking Guidance
Lesaka provided comprehensive guidance for the future, emphasizing its strong financial performance and strategic growth initiatives. The company expects continued growth, with a focus on enhancing product offerings and reducing funding costs through the transformative acquisition of Bank Zero. For FY 2026, Lesaka anticipates adjusted earnings per share to exceed ZAR 4.60, indicating optimism for sustained financial success.
In conclusion, Lesaka Technologies, Inc. demonstrated a strong financial performance in its latest earnings call, driven by strategic acquisitions and effective integration. While challenges in the Enterprise division and increased debt levels pose concerns, the company’s forward-looking guidance suggests continued growth and success in the coming fiscal year.