Lesaka Technologies recently released its financial results for the third quarter ended March 31, 2024 (Q3 2024). The company’s performance highlights significant improvements in key financial metrics, showcasing its resilience and strategic growth initiatives despite market challenges.
Revenue Growth and Operating Profit
In Q3 2024, Lesaka reported a revenue of $138.2 million (ZAR 2.6 billion), marking a notable 9% increase in South African Rand compared to the same quarter in the previous year (Q3 2023). This growth in revenue reflects the company’s successful market strategies and increased customer adoption of its financial services and solutions.
Moreover, Lesaka achieved a significant turnaround in its operating income, recording $0.8 million (ZAR 15.0 million) in operating profit for the quarter. This positive shift from an operating loss in Q3 2023 demonstrates the effectiveness of Lesaka’s operational efficiency measures and revenue-generating activities.
Net Loss Reduction and Adjusted EBITDA Growth
One of the key highlights of Lesaka’s Q3 2024 performance is the reduction in net loss to $4.0 million (ZAR 76.4 million), showcasing a notable 27% improvement compared to the previous year. This improvement in net loss reflects the company’s focus on cost management and revenue optimization strategies.
Additionally, Lesaka’s Group Adjusted EBITDA witnessed substantial growth, reaching $9.7 million (ZAR 183.3 million) for the quarter, representing a significant 47% increase in ZAR compared to Q3 2023. This strong performance in Adjusted EBITDA underscores Lesaka’s ability to generate sustainable profitability and create value for its stakeholders.
Segment Performance Analysis
Lesaka operates through distinct business segments, each contributing to its overall financial performance:
- Merchant Division:
- Revenue increased by 8% in ZAR, driven by higher sales activity in prepaid airtime vouchers and value-added services.
- Segment Adjusted EBITDA also showed growth, reflecting improved operational efficiency and revenue generation within the division.
- Consumer Division:
- Recorded a substantial 19% revenue growth year-on-year in ZAR, attributed to higher transaction fees and increased lending revenues.
- Segment Adjusted EBITDA surged by 178% in ZAR, highlighting the division’s strong performance and profitability.
Debt Management and Outlook
Lesaka’s effective debt management strategies are evident in the improvement of its net debt to Group Adjusted EBITDA ratio, which reduced to 2.6 times compared to previous periods. This demonstrates the company’s commitment to maintaining a healthy financial position and optimizing its capital structure.
Looking ahead, Lesaka reaffirmed its revenue outlook for FY 2024 and raised its Group Adjusted EBITDA guidance, indicating confidence in its growth prospects and ability to capitalize on market opportunities. The company’s strategic acquisitions and focus on organic growth are expected to further strengthen its position as a leading player in the Southern African Fintech sector.
Cash Flow and Financial Resilience
As of March 31, 2024, Lesaka maintained a robust cash position, with cash and cash equivalents totaling $55.2 million. This liquidity strength reflects the company’s financial resilience and ability to support its ongoing operations, investments, and strategic initiatives.
Conclusion
Lesaka Technologies’ Q3 2024 financial performance showcases a strong trajectory of growth and profitability, underpinned by strategic initiatives, operational efficiency, and prudent financial management. The company’s ability to navigate market challenges, reduce losses, and drive revenue and EBITDA growth positions it as a formidable player in the dynamic Fintech landscape. With a clear outlook and solid financial fundamentals, Lesaka is poised for continued success and value creation for its shareholders and stakeholders.
