Lesaka (NASDAQ: LSAK) swings to profit in quarter ended December 31, 2025
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
Lesaka Technologies, Inc. reported a return to profitability for the quarter ended December 31, 2025. Revenue was $178.7 million, slightly above the prior year’s $176.2 million, while operating income improved to $2.2 million from $0.5 million.
Helped by a $3.0 million gain on equity securities and other income, net income attributable to Lesaka was $3.6 million, or $0.04 per share, compared with a loss of $32.5 million, or $0.40 per share, a year earlier. For the six-month period, revenue rose to $350.2 million and the net loss narrowed sharply to $1.0 million.
Total assets increased to $704.6 million, driven partly by growth in finance loans receivable to $103.6 million. Total equity rose to $187.7 million. Cash, cash equivalents and restricted cash ended the period at $69.6 million, after modest net cash outflows from operating, investing and financing activities.
The company revised prior-period figures to correct certain indirect tax and depreciation presentation errors, concluding earlier financial statements were not materially misstated. During the period it completed the small Atom acquisition, disposed of its Humble subsidiary for Lesaka shares, and sold its Cell C investment for cash.
Positive
- None.
Negative
- None.
Insights
Lesaka swings from heavy prior-year loss to a modest quarterly profit, with cleaner balance sheet and equity gains.
Lesaka delivered a notable turnaround for the quarter ended
For the six months, revenue reached
Operating cash flow for the six months was slightly negative at
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As of February 2, 2026 (the latest practicable date),
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
$
$
Restricted cash related to ATM funding and credit facilities (Note 9)
Accounts receivable, net and other receivables (Note 3)
Finance loans receivable, net (Note 3)
Inventory (Note 4)
Total current assets before settlement assets
Settlement assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - December: $
$
OPERATING LEASE RIGHT-OF-USE (Note 17)
EQUITY-ACCOUNTED INVESTMENTS (Note 6)
GOODWILL (Note 7)
INTANGIBLE ASSETS, NET (Note 7), including integrated platform of: December: $
DEFERRED INCOME TAXES
OTHER LONG-TERM ASSETS (Note 6 and 8)
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Short-term credit facilities (Note 9)
Accounts payable
Other payables (Note 10)
(A)
Operating lease liability - current (Note 17)
Current portion of long-term borrowings (Note 9)
Income taxes payable
Total current liabilities before settlement obligations
Settlement obligations
Total current liabilities
DEFERRED INCOME TAXES
OPERATING LEASE LIABILITY - LONG TERM (Note 17)
LONG-TERM BORROWINGS (Note 9)
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 8)
TOTAL LIABILITIES
REDEEMABLE COMMON STOCK
EQUITY
COMMON STOCK (Note 11)
Authorized:
Issued and outstanding shares, net of treasury - December:
; June:
PREFERRED STOCK
Authorized shares:
Issued and outstanding shares, net of treasury: December:
-
-
ADDITIONAL PAID-IN-CAPITAL
TREASURY SHARES, AT COST: December:
; June:
(299,632 )
(298,523 )
ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 12)
(A)
(168,308 )
(185,626 )
RETAINED EARNINGS
(A)
TOTAL LESAKA EQUITY
NON-CONTROLLING INTEREST
TOTAL EQUITY
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY
$
$
(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)
$
$
$
$
EXPENSE
Cost of goods sold, IT processing, servicing and support
(A)
Selling, general and administration
(A)
Allowance for credit losses (Note 3)
Depreciation and amortization
Transaction costs related to Adumo, Recharger and Bank Zero
acquisitions (Note 2)
OPERATING INCOME
CHANGE IN FAIR VALUE OF EQUITY SECURITIES (Note 5 and 6)
(33,731 )
(33,731 )
OTHER INCOME (Note 10)
LOSS ON DISPOSAL OF EQUITY SECURITIES (Note 2)
NET LOSS ON IMPAIRMENT OF EQUITY-ACCOUNTED
INVESTMENT/ LOSS ON DISPOSAL OF EQUITY-ACCOUNTED
INVESTMENT (Note 6)
INTEREST INCOME
INTEREST EXPENSE
(A)
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
(38,890 )
(730 )
(43,689 )
INCOME TAX EXPENSE (BENEFIT) (Note 19)
(6,412 )
(6,334 )
NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY-
ACCOUNTED INVESTMENTS
(32,478 )
(1,254 )
(37,355 )
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS (Note 6)
NET INCOME (LOSS)
(32,428 )
(1,144 )
(37,278 )
(ADD) LESS NET (LOSS) INCOME ATTRIBUTABLE TO NON-
CONTROLLING INTEREST
(14 )
(131 )
NET INCOME (LOSS) ATTRIBUTABLE TO LESAKA
$
$
(32,456 )
$
(1,013 )
$
(37,306 )
Net earnings (loss) per share, in United States dollars
(Note 14):
Basic earnings (loss) attributable to Lesaka shareholders
$
$
(0.40 )
$
(0.01 )
$
(0.52 )
Diluted earnings (loss) attributable to Lesaka shareholders
$
$
(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)
$
$
(32,428 )
$
(1,144 )
$
(37,278 )
Other comprehensive income (loss), net of taxes
Movement in foreign currency translation reserve
(A)
(22,444 )
(12,085 )
Release of foreign currency translation reserve related to
disposal/ liquidation of subsidiaries (Note 12)
(26 )
(26 )
Release of foreign currency translation reserve related to
disposal of equity securities (Note 12)
Total other comprehensive income (loss), net of
taxes
(22,438 )
(12,079 )
Comprehensive income (loss)
(54,866 )
(49,357 )
(Less) Add comprehensive (loss) income
attributable to non-controlling interest
(270 )
(343 )
Comprehensive income (loss) attributable to
Lesaka
$
$
(54,308 )
$
$
(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)
$
(25,563,808 )
$
(289,733 )
$
$
$
(177,868 )
$
$
$
$
Shares issued (Note 2 and Note 11)
Shares repurchased (Note 13)
(2,733,557 )
(12,586 )
(2,733,557 )
(12,586 )
(12,586 )
Restricted stock granted (Note 13)
Exercise of stock options (Note 13)
Stock-based compensation charge
(Note 13)
Reversal of stock-based compensation
charge (Note 13)
(37,221 )
(37,221 )
(11 )
(11 )
(11 )
Adumo non-controlling interest
acquired (Note 2)
-
-
-
Net loss
(A)
-
(32,456 )
(32,456 )
(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
$
(28,297,365 )
$
(302,319 )
$
$
$
(199,720 )
$
$
$
$
(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)
$
(25,563,808 )
$
(289,733 )
$
$
$
(188,227 )
$
$
$
$
Shares issued (Note 2 and Note 11)
Shares repurchased (Note 13)
(2,733,557 )
(12,586 )
(2,733,557 )
(12,586 )
(12,586 )
Restricted stock granted (Note 13)
Exercise of stock options (Note 13)
Stock-based compensation charge
(Note 13)
-
Reversal of stock-based compensation
charge (Note 13)
(40,321 )
(40,321 )
(11 )
(11 )
(11 )
Net loss
(A)
(37,306 )
(37,306 )
(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
$
(28,297,365 )
$
(302,319 )
$
$
$
(199,720 )
$
$
$
$
(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)
$
(29,934,044 )
$
(298,523 )
$
$
$
(178,543 )
$
$
$
$
Shares repurchased (Note 13)
(70,133 )
(271 )
(70,133 )
(271 )
(271 )
Loss recognized related to issue of
shares included in treasury shares
(Note 2)
(70 )
Restricted stock granted (Note 13)
Stock-based compensation charge
(Note 13)
-
-
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)
(14 )
Other comprehensive income (Note
12)
Balance – December 31, 2025
$
(30,234,228 )
$
(299,632 )
$
$
$
(168,308 )
$
$
$
$
(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)
$
(29,934,044 )
$
(298,523 )
$
$
$
(185,626 )
$
$
$
$
Shares repurchased (Note 13)
(70,133 )
(271 )
(70,133 )
(271 )
(271 )
Loss recognized related to issue of
shares included in treasury shares
(Note 2)
(70 )
Restricted stock granted
Stock-based compensation charge
(Note 13)
-
-
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)
Balance – December 31, 2025
$
(30,234,228 )
$
(299,632 )
$
$
$
(168,308 )
$
$
$
$
(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)
$
$
(32,428 )
$
(1,144 )
$
(37,278 )
Depreciation and amortization
Movement in allowance for doubtful accounts receivable
Fair value adjustment related to financial liabilities
(454 )
(264 )
Loss on disposal of equity securities (Note 6)
Loss on disposal of equity-accounted investments (Note 6)
Earnings from equity-accounted investments
(110 )
(50 )
(110 )
(77 )
Change in fair value of equity securities (Note 5 and 6)
(2,971 )
(2,971 )
Other income
(3,883 )
(3,883 )
Profit on disposal of property, plant and equipment
(27 )
(14 )
(57 )
(41 )
Movement in interest payable
(61 )
(168 )
Facility fee amortized
Stock-based compensation charge (Note 13)
Dividends received from equity-accounted investments
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 )
(5,449 )
Increase (Decrease) in accounts payable and other payables
(A)
(8,412 )
(Decrease) Increase in taxes payable
(422 )
(153 )
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
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)
Net change in settlement assets
(3,452 )
(1,266 )
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)
Repayment of bank overdraft (Note 9)
(12,440 )
(4,512 )
(53,101 )
(35,540 )
Long-term borrowings utilized (Note 9)
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
Guarantee fee
(431 )
(33 )
(431 )
Dividends paid to non-controlling interest
(301 )
(301 )
Net change in settlement obligations
(477 )
(2,439 )
Net cash provided by (used in) financing activities
(3,729 )
Effect of exchange rate changes on cash and cash equivalents
(5,278 )
(2,052 )
Net (decrease) increase in cash, cash equivalents and restricted cash
(2,683 )
(7,038 )
(5,181 )
Cash, cash equivalents and restricted cash – beginning of period
Cash, cash equivalents and restricted cash – end of period (Note 15)
$
$
$
$
(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 $
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 $
.
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 $
million, Interest expense increased by $
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
$
$
$
Accumulated other comprehensive loss
(185,664 )
(185,626 )
Retained earnings
(3,994 )
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
$
$
$
Selling, general and administration
Interest expense
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
$
$
$
Selling, general and administration
Interest expense
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)
business entities. The guidance does not change the expense captions an entity presents on the face of the income statement; rather, it
requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial
statements. This guidance is effective for the Company beginning July 1, 2027. Early adoption is permitted. The Company is currently
assessing the impact of this guidance on its financial statements and related disclosures.
In July 2025, the FASB issued guidance regarding
Financial Instruments-Credit Losses (Topic 326) Measurement of Credit
Losses for Accounts Receivable and Contract Assets
and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the
estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted
for under
Revenue From Contracts With Customers (Topic 606).
This guidance is effective for the Company beginning July 1, 2026,
and interim reporting periods during that fiscal year. Early adoption is permitted. The Company is currently assessing the impact of
this guidance on its financial statements and related disclosures.
On September 18, 2025, the FASB issued guidance regarding
Intangibles—Goodwill and Other— Internal-Use Software
(Subtopic 350-40)
guidance makes targeted improvements to existing guidance but does not fully align the framework for accounting for internally
developed software costs that are subject to ASC 350-40 with the framework applied to software to be sold or marketed externally
that is subject to guidance regarding
Costs of Software to Be Sold, Leased, or Marketed
(Subtopic ASC 985-20)
. The new guidance
also does not amend the guidance on costs of software licenses that are within the scope of ASC 985 -20. The amendments supersede
the guidance on website development costs in guidance regarding
Website Development Costs (Subtopic ASC 350-50)
that guidance, along with the recognition requirements for development costs specific to websites, to ASC 350 -40. This guidance is
effective for the Company beginning July 1, 2028, and interim reporting periods during that fiscal year. Early adoption is permitted.
Entities may apply the guidance prospectively, retrospectively, or via a modified prospective transition method. The modified
prospective transition approach would allow entities to account for an in-process project that, before the transition date, met the
capitalization requirements but would no longer meet the requirements for capitalization under the new guidance by derecognizing the
capitalized costs for that in-process project through a cumulative-effect adjustment to the opening balance of retained earnings. The
Company is currently assessing the impact of this guidance on its financial statements and related disclosures.
On December 8, 2025, the FASB issued guidance regarding
Interim Reporting (Topic 270)
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
$
Less: cash acquired
Total cash paid, net of cash received
$
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 $
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 $
transaction costs of $
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 $
cash and
by $
) 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
$
Accounts receivable
Inventory
Property, plant and equipment
Operating lease right of use asset
Goodwill
Intangible assets
Deferred income taxes assets
Accounts payable
(149 )
Other payables
(1,439 )
Operating lease liability - current
(185 )
Income taxes payable
(4 )
Deferred income taxes liabilities
(4,366 )
Operating lease liability - long-term
(269 )
Fair value of assets and liabilities on acquisition
$
Transaction costs and certain compensation costs
The Company did 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
$
$
$
$
Adumo transaction costs
Recharger transaction costs
(1)
Total
$
$
$
$
(1) Recharger transactions costs for the three and six months ended December 31, 2024, of $
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 $
$
(0.01 )
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
consideration. The fair value of 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
$
Add carrying value of noncontrolling interest on deconsolidation
Less: carrying value of Humble, comprising
Cash and cash equivalents
Accounts receivable, net
Inventory
Property, plant and equipment, net
Goodwill
Intangible assets, net
Deferred income taxes assets
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 $
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
$
$
Accounts receivable, trade, gross
Less: Allowance for doubtful accounts receivable, end of period
Beginning of period
Reversed to statement of operations
(189 )
(521 )
Charged to statement of operations
Write-offs
(310 )
(847 )
Deconsolidation
(4 )
Foreign currency adjustment
Current portion of amount outstanding related to sale of interest in Carbon, net of
allowance: December 2025: $
; June 2025: $
Other receivables
Total accounts receivable, net and other receivables
$
$
Trade receivables include amounts due from customers which generally have a very short-term life from date of invoice or service
provided to settlement. The duration is less than a year in all cases and generally less than 30 days in many instances. The short-term
nature of these exposures often results in balances at month-end that are disproportionately small compared to the total invoiced
amounts. The month-end outstanding 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
$
$
Microlending finance loans receivable, gross
Less: Allowance for doubtful finance loans receivable, end of period
Beginning of period
Reversed to statement of operations
(161 )
Charged to statement of operations
Write-offs
(3,113 )
(2,499 )
Foreign currency adjustment
Merchant finance loans receivable, net
Merchant finance loans receivable, gross
Less: Allowance for doubtful finance loans receivable, end of period
Beginning of period
Reversed to statement of operations
(117 )
(22 )
Charged to statement of operations
Write-offs
(229 )
(3,709 )
Foreign currency adjustment
Total finance loans receivable, net
$
$
Total finance loans receivable, net, comprises microlending finance loans receivable related to the Company’s microlending
operations in South Africa as well as its merchant finance loans receivable related to Connect’s lending activities in South Africa.
Certain merchant finance loans receivable with an aggregate balance of $
security for the Company’s revolving credit facility (refer to Note 9).
Allowance for credit losses
Microlending finance loans receivable
Microlending finance loans receivable is related to the Company’s microlending operations in South Africa whereby it provides
unsecured short-term loans to qualifying customers. Loans to customers have a tenor of up to nine months, with the majority of loans
originated having a tenor of six months. The Company analyses this lending book as a single portfolio because the loans within the
portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk of the lending book.
Refer to Note 5 related to the Company risk management process related to these receivables.
The Company has operated this lending book for more than
loans in order to calculate a lifetime loss rate for the lending book. The allowance for credit losses related to these microlending finance
loans receivables is calculated by multiplying the lifetime loss rate with the month end outstanding lending book. The lifetime loss
rate as of each of June 30, 2025 and December 31, 2025, was
%. The performing component (that is, outstanding loan payments
not in arrears) of the book exceeds more than
%, of the outstanding lending book as of each of June 30, 2025 and 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
%. 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
%,
% and
%, respectively, of the outstanding lending book as of June 30, 2025. The performing component, under-
performing component and non-performing component of the book represents approximately
%,
% and
%, respectively, of the
outstanding lending book as of 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
$
$
Work-in-progress
Finished goods
$
$
5. Fair value of financial instruments
Initial recognition and measurement
Financial instruments are recognized when the Company becomes a party to the transaction. Initial measurements are at cost,
which includes transaction costs.
Risk management
The Company manages its exposure to currency exchange, translation, interest rate, credit, microlending credit and equity price
and liquidity risks as discussed below.
Currency exchange risk
The Company is subject to currency exchange risk because it purchases components for its vaults, that the Company assembles,
and inventories that it is required to settle in other currencies, primarily the euro, renminbi, and U.S. dollar. The Company has used
forward contracts in order to limit its exposure in these transactions to fluctuations in exchange rates between the South African rand
(“ZAR”), on the one hand, and the U.S. dollar and the euro, on the other hand.
Translation risk
Translation risk relates to the risk that the Company’s results of operations will vary significantly as the U.S. dollar is its reporting
currency, but it earns a significant amount of its revenues and incurs a significant amount of its expenses in ZAR. The U.S. dollar to
the ZAR exchange rate has fluctuated significantly over the past three years. As exchange rates are outside the Company’s control,
there can be no assurance that future fluctuations will not adversely affect the Company’s results of operations and financial condition.
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
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
in Cell C for
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
then Lesaka SA could choose to either hold the shares, or sell the Relevant Shares to TPC for a purchase price equal to ZAR
●
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
Listing occurs and the list price per share (“A”) is more than the price paid to Lesaka SA per Relevant Share (the aggregate
ZAR
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
C Listco shares to TPC for ZAR
The Company’s Level 3 asset represented an investment of
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 $
the forecast period. The Company has assumed a marketability discount of
% as of June 2025 and a minority discount of
%. 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"):
%
Long term growth rate:
%
Marketability discount:
%
Minority discount:
%
Net adjusted external debt - June 30, 2025:
(1)
ZAR
(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)
Fixed maturity
investments (included in
cash and cash equivalents)
Total assets at fair value
$
$
$
$
The following table presents the Company’s assets measured at fair value on a recurring basis as of June 30, 2025, according to
the fair value hierarchy:
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
$
$
$
Related to insurance business
Cash and cash equivalents
(included in other long-term
assets)
Fixed maturity investments
(included in cash and cash
equivalents)
Total assets at fair value
$
$
$
$
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
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
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
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”)
%
%
SmartSwitch Namibia (Proprietary) Limited (“SmartSwitch Namibia”)
%
%
SmartSwitch Namibia
The Company recorded a loss on impairment of equity-accounted investment of $
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
$
$
Investment in Cell C (June 30, 2025:
%) at fair value (Note 5)
(1)
Investment in
% of Cowdi at fair value
(2)
Investment in
% of CPS (June 30, 2025:
%) at fair value
(2)(3)
Policy holder assets under investment contracts (Note 8)
Reinsurance assets under insurance contracts (Note 8)
Other long-term assets
Total other long-term assets
$
$
(1) The Company 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 $
% 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 $
was undrawn as of December 31, 2025.
The Company previously owned
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 $
as the basis for its adjustment to decrease the carrying value of its investment in MobiKwik by $
$
2024, of $
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
$
$
$
$
Investment in CPS
Total
$
$
$
$
Summarized below are the components of the Company’s equity securities without readily determinable fair value and held to
maturity investments as of June 30, 2025:
Cost basis
Unrealized
holding
Unrealized
holding
Carrying
gains
losses
value
Equity securities:
Investment in CPS
$
$
$
$
Held to maturity:
Investment in Cedar Cellular notes
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
$
$
(36,714 )
$
Deconsolidation of Humble (Note 2)
(1,515 )
(1,515 )
Foreign currency adjustment
(1)
(2,188 )
Balance as of December 31, 2025
$
$
(38,902 )
$
(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
$
$
$
$
Deconsolidation of Humble (Note 2)
(1,515 )
(1,515 )
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 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
$
$
(52,905 )
$
$
$
(41,925 )
$
Customer relationships
(22,842 )
(18,568 )
Brands and trademarks
(1)
(18,539 )
(8,993 )
FTS patent
(2,311 )
(2,158 )
Total finite-lived intangible
assets
$
$
(96,597 )
$
$
$
(71,644 )
$
(1) During early calendar 2025, the Company’s executive considered the unification of the Company’s merchant segments
operations and the realignment of the Company’s brands under the master brand “Lesaka”. The Company’s Board of Directors
approved the realignment of certain of the Company’s brands to the master brand in May 2025. The Company has identified the steps
and timing to realign the affected brands under the master brand and expects to have complete alignment by February 2027, with
certain brands 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 $
three and six months ended December 31, 2024. The change in the useful lives resulted in a $
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 $
ended December 31, 2025 and 2024, was $
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)
$
Fiscal 2027
Fiscal 2028
Fiscal 2029
Fiscal 2030
Thereafter
Total future estimated annual amortization expense
$
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
$
$
(2,644 )
Increase in policyholder benefits under insurance contracts
(6,055 )
Claims and decrease in policyholders’ benefits under insurance contracts
(126 )
Foreign currency adjustment
(3)
(193 )
Balance as of December 31, 2025
$
$
(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
$
$
(125 )
Increase in policy holder benefits under investment contracts
(3 )
Foreign currency adjustment
(3)
(8 )
Balance as of December 31, 2025
$
$
(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
%. The
prime rate, the benchmark rate at which private sector banks lend to the public in South Africa, on December 31, 2025, was
%.
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
$
$
$
$
Overdraft
Indirect and derivative facilities
Movement in utilized overdraft facilities:
No restrictions as to use
Balance as of June 30, 2025
Utilized
Repaid
(53,101 )
(53,101 )
Foreign currency adjustment
(1)
Balance as of December 31, 2025
No restrictions as to use
$
$
$
$
Interest rate as of December 31, 2025 (%)
(2)
N/A
N/A
Interest rate as of June 30, 2025 (%)
(2)
N/A
N/A
Movement in utilized indirect and derivative facilities:
Balance as of June 30, 2025
$
$
$
$
Guarantees cancelled
(1,611 )
(1,611 )
Utilized
Foreign currency adjustment
(1)
Balance as of December 31, 2025
$
$
$
$
(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.
(2) RMB GBF interest is set at prime less
%.
Interest expense incurred under the Company’s South African short-term borrowings and included in the caption interest expense
on the condensed consolidated statement of operations during the three months ended December 31, 2025 and 2024, was $
and $
the caption interest expense on the condensed consolidated statement of operations during the six months ended December 31, 2025
and 2024, was $
The Company cancelled Adumo’s overdraft arrangements on October 1, 2024, and settled Adumo’s outstanding overdraft
balance of ZAR
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
$
$
$
$
$
Included in long-term
Opening balance as of June 30, 2025
Facilities utilized
Facilities repaid
(2,385 )
(2,385 )
Non-refundable fees paid
(33 )
(33 )
Non-refundable fees amortized
Foreign currency adjustment
(1)
Closing balance as of December 31, 2025
Included in current
Included in long-term
Unamortized fees
(951 )
(23 )
(974 )
Due within 2 years
Due within 3 years
Due within 4 years
Due within 5 years
$
$
$
$
$
Interest rates as of December 31, 2025 (%):
Base rate (%)
Margin (%)
(0.10 )
(2)
(3)
(4)
(5)
Interest rates as of June 30, 2025 (%):
Base rate (%)
Margin (%)
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
% per
annum until June 30, 2025. From July 1, 2025, the margin on Facility A is determined with reference to the Net Debt to EBITDA
Ratio, and the margin will be either (i)
%, if the Net Debt to EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
%, if
the Net Debt to EBITDA Ratio is less than 2.5 times.
(3) Interest on Facility B is calculated based on JIBAR from time to time plus an initial margin of
% per annum until June
30, 2025. From July 1, 2025, the margin on Facility B is determined with reference to the Net Debt to EBITDA Ratio, and the margin
will be either (i)
%, if the Net Debt to EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
%, if the Net Debt to EBITDA
Ratio is less than 2.5 times.
(4) Interest is charged at prime plus
% per annum on the utilized balance.
(5) Interest is charged at prime less 0.10% per annum on the utilized balance.
(6) Interest is charged at prime plus
% per annum on the utilized balance.
Interest expense incurred under the Company’s South African long-term borrowings and included in the caption interest expense
on the condensed consolidated statement of operations during the three months ended December 31, 2025 and 2024, was $
and $
31, 2025 and 2024, respectively, were $
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 $
and $
2025 and 2024, respectively, were $
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 $
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 $
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
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
$
$
Accruals
Provisions
Clearing accounts
Value -added tax payable
(A)
Deferred consideration due to seller of Recharger
Payroll-related payables
Other
$
$
(A) Value-added tax payable and the total of Other payables have each increased by $
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
Less: Non-vested equity shares that have not vested as of end of period
Number of shares, net of treasury, excluding non-vested equity shares that have not
vested
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
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
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 $
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
in foreign currency translation reserve. Accumulated other comprehensive loss and Total as of December 31, 2024, have each
decreased by $
-0.3
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
Release of foreign currency translation reserve related to liquidation of subsidiaries
(22 )
(22 )
Movement in foreign currency translation reserve
(A)
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 $
correction discussed in Note 1. Accumulated other comprehensive loss and Total for the six months ended December 31, 2025, have
each increased by $
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 $
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
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 $
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
foreign currency translation reserve. Accumulated other comprehensive loss and Total as of December 31, 2024, have each decreased
by $
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 $
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
$
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 $
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
. 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
Outstanding - December 31, 2025
Outstanding - June 30, 2024
Granted – December 2023
-
Granted – November 2020
-
Exercised
(17,014 )
-
-
Forfeited
(13,333 )
-
-
Outstanding - December 31, 2024
options to an executive officer during the three and six months ended December 31, 2024, with strike prices ranging from $
.
The
with the Company through to the vesting date. The
and six months ended December 31, 2024, the Company received $
Employees forfeited an aggregate of
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
-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
%
Expected dividends
%
Expected life (in years)
Risk-free rate
%
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
These options have an exercise price range of $
.
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
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
Total granted
Granted – July 2025
Granted – August 2025
Granted – September 2025
Granted – October 2025
Granted – November 2025
Granted – November 2025, with performance conditions
Total vested
(217,179 )
Vested – August 2025
(10,933 )
Vested – October 2025
(33,333 )
Vested – November 2025
(120,434 )
Vested – December 2025
(52,479 )
Forfeitures
(281,333 )
Forfeitures
(23,465 )
Forfeitures December 2022 award with market conditions
(257,868 )
Non-vested – December 31, 2025
Non-vested – June 30, 2024
Total Granted
Granted – August 2024
Granted – October 2024
Granted – November 2024, with performance conditions
Total vested
(473,432 )
Vested – July 2024
(78,801 )
Vested – November 2024
(213,687 )
Vested – November 2024, with performance conditions
(103,638 )
Vested – December 2024
(77,306 )
Forfeitures
(40,321 )
Non-vested – December 31, 2024
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
;
;
;
and
continued employment with the Company through the applicable vesting dates.
In November 2025, the Company awarded
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
% appreciation in the Company’s stock price off a base price of $
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 $
.
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:
%;
●
Fiscal 2027, the Company’s 30-day volume weighted-average stock price (“VWAP”) before October 31, 2026 is
approximately
:
%;
●
Fiscal 2028, the Company’s VWAP before October 31, 2027 is
:
%;
●
Fiscal 2029, the Company’s VWAP before October 31, 2028 is
) than $
:
%.
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
% for the closing price (of $
), 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
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
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
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 $
million and $
outstanding share count.
Vesting
In August, October, November and December 2025, an aggregate of
vested. Certain employees elected for
These
In July 2024,
aggregate of 290,993 shares of restricted stock granted to employees vested. Certain employees elected for
withheld to satisfy the withholding tax liability on the vesting of their shares. These
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
restricted stock following their termination of employment with the Company. During each of the three and six months ended
December 31, 2025,
market condition (related to share price performance) were not achieved.
During the three and six months ended December 31, 2024, respectively, employees forfeited
restricted stock following their termination of employment with the Company or the failure to achieved agreed performance conditions
(
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 $
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
$
$
-
$
Stock compensation charge related to ESOP
-
Reversal of stock compensation charge related to restricted
stock forfeited
(51 )
-
(51 )
Total - three months ended December 31, 2025
$
$
-
$
Three months ended December 31, 2024
Stock-based compensation charge
$
$
-
$
Reversal of stock compensation charge related to restricted
stock forfeited
(11 )
-
(11 )
Total - three months ended December 31, 2024
$
$
-
$
The Company recorded a stock-based compensation charge, net, during the six months ended December 31, 2025 and 2024, of
$
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
$
$
-
$
Stock compensation charge related to ESOP
-
Reversal of stock compensation charge related to restricted
stock forfeited
(63 )
-
(63 )
Total - six months ended December 31, 2025
$
$
-
$
Six months ended December 31, 2024
Stock-based compensation charge
$
$
-
$
Reversal of stock compensation charge related to restricted
stock forfeited
(11 )
-
(11 )
Total - six months ended December 31, 2024
$
$
-
$
The stock-based compensation charges have been allocated to selling, general and administration based on the allocation of the
cash compensation paid to the relevant employees.
36
13. Stock-based compensation (continued)
As of December 31, 2025, the total unrecognized compensation cost related to stock options was $
Company expects to recognize over
. As of December 31, 2025, the total unrecognized compensation cost related to restricted
stock awards was $
.
During the three months ended December 31, 2025 and 2024, the Company recorded a deferred tax benefit of $
$
months ended December 31, 2025 and 2024, the Company recorded a deferred tax benefit of $
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
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
because the effect would be antidilutive. The Company has excluded employee stock options to purchase
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)
$
$
(32,456 )
$
(1,013 )
$
(37,306 )
Undistributed earnings (loss)
(A)
(32,456 )
(1,013 )
(37,306 )
Percent allocated to common shareholders
(Calculation 1)
Numerator for earnings (loss) per share: basic
and diluted
$
$
(31,345 )
$
(983 )
$
(36,038 )
Denominator
Denominator for basic earnings (loss) per share:
Weighted-average common shares outstanding
Effect of dilutive securities:
Related to acquisitions
Stock options
Denominator for diluted earnings (loss)
per share: adjusted weighted average
common shares outstanding and assuming
conversion
Earnings (Loss) per share:
Basic
(A)
$
$
(0.40 )
$
(0.01 )
$
(0.52 )
Diluted
(A)
$
$
(0.40 )
$
(0.01 )
$
(0.52 )
(Calculation 1)
Basic weighted-average common shares
outstanding (A)
Basic weighted-average common shares
outstanding and unvested restricted shares
expected to vest (B)
Percent allocated to common shareholders
(A) Net income (loss) attributable to Lesaka and Undistributed earnings (loss) for the three and six months ended December 31,
2024, have decreased by $
(loss) attributable to Lesaka and Undistributed earnings (loss) for the six months ended December 31, 2025, has decreased by $
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 $
Options to purchase
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
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
$
$
$
$
Cash paid for interest
$
$
$
$
Cash paid (refund) for income taxes
$
$
$
$
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
$
$
$
Restricted cash
Cash, cash equivalents and restricted cash
$
$
$
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
$
$
$
$
Right-of-use assets obtained in exchange for lease
obligations
Operating leases
$
$
$
$
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
$
$
$
$
South Africa
Rest of Africa
Technology products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of Africa
Total revenue, derived from the following geographic
locations
South Africa
Rest of Africa
$
$
$
$
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
$
$
$
$
South Africa
Rest of Africa
Technology products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of Africa
Total revenue, derived from the following geographic
locations
South Africa
Rest of Africa
$
$
$
$
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
$
$
$
$
South Africa
Rest of Africa
Technology products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of Africa
Total revenue, derived from the following geographic
locations
South Africa
Rest of Africa
$
$
$
$
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
$
$
$
$
South Africa
Rest of Africa
Technology products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Account holder fees
Other
South Africa
Rest of Africa
Total revenue, derived from the following geographic
locations
South Africa
Rest of Africa
$
$
$
$
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
. The Company also
operates parts of its consumer business from locations which it leases for a period of less than
. The Company’s operating
lease expense during the three months ended December 31, 2025 and 2024 was $
Company’s operating lease expense during the six months ended December 31, 2025 and 2024 was $
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 $
six months ended December 31, 2025 and 2024, was $
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
has secured beneficial occupation from April 1, 2026, and is required to deliver a bank guarantee or cash of $
million, translated at exchange rates applicable as of December 31, 2025). The Company expects to pay an annual basic lease expense
of $
% 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)
Weighted average discount rate (percent)
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)
$
2027
2028
2029
2030
Thereafter
Total undiscounted operating lease liabilities
Less imputed interest
Total operating lease liabilities, included in
Operating lease liability - current
Operating lease liability - long-term
$
18. Operating segments
Operating segments
The Company discloses segment information as reflected in the management information systems reports that its chief operating
decision maker uses in making decisions and to report certain entity-wide disclosures about products and services, and the countries in
which the entity holds material assets or reports material revenues. A description of the Company’s operating segments is contained in
Note 21 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended
June 30, 2025.
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
based on these three operational lines, namely,
have higher revenues and have access to multiple service providers. Informal sector merchants, which are often sole proprietors and
usually have lower revenues compared with formal section merchants, operate in rural areas or in informal urban areas and do not
always have access to a full-suite of traditional banking products;
(ii) Consumer, which primarily focuses on individuals who have historically been excluded from traditional financial services
and to whom we offer transactional accounts (banking), insurance, lending (short-term loans), payments solutions (digital wallet) and
various value-added services; and
(iii) Enterprise, which comprises large-scale corporate and government organizations, including but not limited to banks, mobile
network operators (“MNOs”) and municipalities, and, through Recharger, landlords utilizing Recharger’s prepaid electricity metering
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
$
$
$
$
Intersegment revenues
Segment revenue
(z)
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
(y)
Selling, general and
administration
(1)(2)
Segment adjusted EBITDA
$
$
$
$
(z) includes interest revenue of:
$
$
$
$
(y) includes interest expense of:
$
$
$
$
Operating segments
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
Expenditures for long-lived assets
$
$
$
$
$
Three months ended December 31, 2024
Merchant
Consumer
Enterprise
Total
Revenue from external customers
$
$
$
$
Intersegment revenues
Segment revenue
(z)
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
(y)(A)
Selling, general and
administration
(A)(1)(3)
(738 )
Segment adjusted EBITDA
(A)
$
$
$
(31 )
$
(z) includes interest revenue of:
$
$
$
$
(y) includes interest expense of:
$
$
$
$
Operating segments
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
Expenditures for long-lived assets
$
$
$
$
$
(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 $
correction discussed in Note 1. Segment Adjusted EBITDA for Merchant and Total for the three months ended December 31, 2024
have each decreased by $
(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 $
(3) Segment Adjusted EBITDA for the three months ended December 31, 2024, includes retrenchments costs for Consumer of
$
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
$
$
$
$
Intersegment revenues
Segment revenue
(z)
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
(y)(A)
Selling, general and
administration
(A)(1)(2)
Segment adjusted EBITDA
(A)
$
$
$
$
(z) includes interest revenue of:
$
$
$
$
(y) includes interest expense of:
$
$
$
$
Operating segments
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
Expenditures for long-lived assets
$
$
$
$
$
Six months ended December 31, 2024
Merchant
Consumer
Enterprise
Total
Revenue from external customers
$
$
$
$
Intersegment revenues
Segment revenue
(z)
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
(y)(A)
Selling, general and
administration
(A)(1)(3)
Segment adjusted EBITDA
(A)
$
$
$
$
(z) includes interest revenue of:
$
$
$
$
(y) includes interest expense of:
$
$
$
$
Operating segments
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
Expenditures for long-lived assets
$
$
$
$
$
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 $
correction discussed in Note 1. Segment Adjusted EBITDA for Merchant and Total for the six months ended December 31, 2024 have
each decreased by $
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 $
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 $
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 $
million (ZAR
(3) Segment Adjusted EBITDA for the six months ended December 31, 2024, includes retrenchments costs for Consumer of $
million (ZAR
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)
$
$
$
$
Operating loss: Group costs
(2,896 )
(2,820 )
(6,507 )
(5,769 )
Once-off costs
(247 )
(488 )
(514 )
(2,293 )
Interest adjustment
Unrealized Gain (Loss) FV for currency adjustments
(435 )
(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
(33,731 )
(33,731 )
Other income
Loss on disposal of equity securities
(730 )
(730 )
Interest income
Interest expense
(A)
(4,591 )
(6,266 )
(9,604 )
(11,382 )
Income (Loss) before income tax expense
(A)
$
$
(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
$
months ended December 31, 2024, have increased by $
discussed in Note 1. Net income (loss) before taxes for the three and six months ended December 31, 2024, have decreased by $
million and $
Reportable segments’ measure of profit or loss and Net income (loss) before taxes for the six months ended December 31, 2025,
have decreased by $
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 $
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
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
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
applicable as of December 31, 2025) thereby utilizing part of the Company’s short-term facilities. The Company pays commission of
between
% per annum to
% per annum of the face value of these guarantees and does not recover any of the commission from
third parties.
The Company has not recognized any obligation related to these guarantees in its consolidated balance sheet as of December 31,
2025. The maximum potential amount that the Company could pay under these guarantees is ZAR
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
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)
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)
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:
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:
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:
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:
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
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),
, modified, or
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
FAQ
How did Lesaka Technologies (LSAK) perform in the quarter ended December 31, 2025?
Lesaka reported net income of $3.6 million for the quarter ended December 31, 2025, compared with a $32.5 million loss a year earlier. Revenue was $178.7 million, slightly above $176.2 million in the prior-year quarter, and operating income improved to $2.2 million.
What were Lesaka Technologies’ revenues and profitability for the six months ended December 31, 2025?
For the six months ended December 31, 2025, Lesaka generated revenue of $350.2 million and a net loss attributable to Lesaka of $1.0 million. This compares with $329.8 million of revenue and a $37.3 million net loss in the prior-year period, showing substantially reduced losses.
What is Lesaka Technologies’ cash and debt position as of December 31, 2025?
As of December 31, 2025, Lesaka held $69.6 million in cash, cash equivalents and restricted cash. Short-term credit facilities utilized totaled $21.3 million, while long-term borrowings were $203.8 million. Total liabilities stood at $428.0 million against total equity of $187.7 million.
What corrections did Lesaka Technologies make to previously issued financial statements?
Lesaka revised prior figures for indirect tax treatment and accumulated depreciation presentation. The corrections increased cost of goods sold, selling, general and administration expense, interest expense and other payables, and reduced retained earnings. Management concluded earlier financial statements were not materially misstated after assessing quantitative and qualitative factors.
What major investment and disposal actions did Lesaka Technologies take in this period?
During the six months, Lesaka acquired Atom Operations for about $0.7 million in cash and shares, disposed of its Humble Software subsidiary for 306,767 Lesaka shares, and sold its Cell C investment to The Prepaid Company for ZAR 50 million (about $3.0 million) in cash.
How is Lesaka Technologies’ lending portfolio evolving?
Lesaka’s finance loans receivable, net grew to $103.6 million as of December 31, 2025, from $74.1 million at June 30, 2025. This includes microlending and merchant finance loans in South Africa. Allowances for doubtful finance loans receivable increased with portfolio growth and are calculated using lifetime loss rates.
How many Lesaka Technologies shares were outstanding as of early 2026?
As of February 2, 2026, Lesaka had 83,920,675 shares of common stock outstanding, net of treasury shares. This share count reflects treasury stock movements, acquisitions settled in shares, and other equity changes disclosed in the statements of changes in equity.
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