Lesaka uses $6.8M operating cash in Q1 FY2027
During the quarter, Lesaka revised Consumer interest-bearing loan pricing from 12% to 15% per annum, calculated on a simple interest basis.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Rhea-AI Filing Summary
Lesaka Technologies, Inc. reported revenue of $184.6 million for the three months ended September 30, 2026, compared with $171.4 million a year earlier. Net loss was $4.2 million versus $4.8 million; operating results were a $1.1 million loss compared with $0.1 million of income. Operating cash flow was $6.8 million used, versus $8.9 million provided a year earlier.
Segment Adjusted EBITDA was $4.7 million for Merchant and $12.7 million for Consumer, compared with $8.9 million and $8.5 million, respectively. Consumer reported 2.15 million active consumers, a ZAR 1,578 million lending portfolio outstanding and 799,000 active insurance policies. The company revised prior-period financial statements after determining indirect taxes had not been accounted for correctly, and concluded the previously issued statements were not materially misstated.
The proposed Bank Zero acquisition remains conditional. Consideration includes Lesaka common stock and up to ZAR 91.0 million ($5.1 million) in cash. The agreement will lapse if all conditions precedent are not met or waived by January 31, 2027, unless the parties agree to a later date. Following implementation and subject to an adjustment, the Bank Zero Sellers, Zero Research Sellers and Naught Holdings Ltd will own approximately 11.6% of Lesaka’s fully diluted shares.
2 points · 0 major0 major · 2 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointRevenue was $184.6 million, compared with $171.4 million a year earlier.
- Minor pointNet loss decreased to $4.2 million from $4.8 million in the prior-year quarter.
Negative
- Moderate pointOperating cash flow was $6.8 million used, versus $8.9 million provided a year earlier.
- Minor pointOperating results shifted to a $1.1 million loss from $0.1 million of income.
Filing Explained
Any added shares from the one-million-option award depend on exercise in the April 2029 to April 2030 window.
Lesaka reports that ALAC sold 860,649 shares, after which the put-option rights tied to those shares expired; Lesaka reclassified
The options vest on
Key Figures
Revenue: $184.6 million
Net loss: $4.2 million
Operating cash flow: $6.8 million used
+5 more
8 metrics
Revenue
$184.6 million
Three months ended September 30, 2026
Net loss
$4.2 million
Three months ended September 30, 2026
Operating cash flow
$6.8 million used
Three months ended September 30, 2026
Cash and cash equivalents
$85.8 million
As of September 30, 2026
Merchant Segment Adjusted EBITDA
$4.7 million
Three months ended September 30, 2026
Consumer Segment Adjusted EBITDA
$12.7 million
Three months ended September 30, 2026
Active consumers
2.15 million
Q1 FY2027
Consumer lending portfolio outstanding
ZAR 1,578 million
Q1 FY2027
Key Terms
Segment Adjusted EBITDA, expected loss rate, performing component, two-class method, +1 more
5 terms
Segment Adjusted EBITDA financial
"the reportable segments’ measure of profit or loss"
Segment adjusted EBITDA is a measure of how much profit a specific part of a company generates from its everyday operations, before counting interest, taxes, depreciation, amortization and one‑off items. Investors use it like checking the fuel efficiency of one car in a fleet: it helps compare which business lines truly earn money, evaluate trend performance, and decide where to invest or cut costs without distortions from financing or accounting choices.
expected loss rate financial
"The expected loss rate applied to the performing lending book"
performing component financial
"outstanding loan payments not in arrears"
two-class method financial
"Basic loss per share has been calculated using the two-class method"
Net Debt to EBITDA Ratio financial
"the margin is determined with reference to the Net Debt to EBITDA Ratio"
A measure of a company’s leverage that shows how many years it would take to repay net debt using its annual EBITDA (earnings before interest, taxes, depreciation and amortization); net debt is total debt minus cash and short-term investments. It matters to investors because it indicates how comfortably a company can cover its borrowings from its operating cash-like earnings — like comparing a household’s mortgage size to its yearly take-home pay — so a lower ratio generally signals lower financial risk.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What revenue and net loss did LSAK report for Q1 FY2027?
Lesaka reported revenue of $184.6 million and a net loss of $4.2 million for the three months ended September 30, 2026. Revenue was $171.4 million and net loss was $4.8 million for the three months ended September 30, 2025.
What are the terms and deadline for LSAK’s proposed Bank Zero acquisition?
Lesaka SA’s proposed consideration combines Lesaka common stock with up to ZAR 91.0 million ($5.1 million) in cash. Following implementation, the Bank Zero Sellers, Zero Research Sellers and Naught Holdings Ltd are expected to own approximately 11.6% of Lesaka’s fully diluted shares, subject to an adjustment. The agreement will lapse if conditions are not met or waived by January 31, 2027, unless the parties agree to a later date.
What interest rate applies to LSAK’s Consumer interest-bearing loans?
During the quarter, Lesaka revised pricing from 12% to 15% per annum, calculated on a simple interest basis.
Why did Lesaka revise its prior-period financial statements?
Lesaka said certain indirect taxes had not been accounted for correctly in statements and related notes in reports filed since June 30, 2022. The revisions increased specified expenses and affected subtotals. After assessing materiality, the company concluded the previously issued financial statements were not materially misstated.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
☒
OF 1934
For the quarterly period ended
OR
☐
ACT OF 1934
For the transition period from ________________ To ________________
Commission file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
(IRS Employer
of incorporation or organization)
Identification No.)
,
,
,
,
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: +
-
-
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES
☒
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File
required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YES
☒
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-
accelerated filer, smaller reporting company or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act (check one):
☐
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). YES ☐ NO
☒
As of November 2, 2026 (the latest practicable date),
stock, par value $0.001 per share, net of treasury shares, were outstanding.
1
Form 10-Q
LESAKA TECHNOLOGIES, INC.
Table of Contents
Page No.
PART I. FINANCIAL INFORMATION
Item 1
.
Financial Statements
Unaudited Condensed Consolidated Balance Sheets as of September 30, 2026 and
June 30, 2026
2
Unaudited Condensed Consolidated Statements of Operations for the three
months ended September 30, 2026 and 2025
3
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income
for the three months ended September 30, 2026 and 2025
4
Unaudited Condensed Consolidated Statement of Changes in Equity for the three
months ended September 30, 2026 and 2025
5
Unaudited Condensed Consolidated Statements of Cash Flows for the three
months ended September 30, 2026 and 2025
7
Notes to Unaudited Condensed Consolidated Financial Statements
8
Item 2
.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
41
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
57
Item 4
.
Controls and Procedures
58
Part II. OTHER INFORMATION
Item 1.
Legal Proceedings
60
Item 1A.
Risk Factors
60
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
60
Item 3
Defaults upon Senior Securities
60
Item 4
Mine Safety Disclosures
60
Item 5.
Other Information
60
Item 6.
Exhibits
61
Signatures
62
2
Part I. Financial information
Item 1. Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Balance Sheets
September 30,
June 30,
2026
2026
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
$
Restricted cash related to credit facilities (Note 9)
Accounts receivable, net and other receivables (Note 3)
Finance loans receivable, net (Note 3)
Inventory (Note 4)
Total current assets before settlement assets
Settlement assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of -September: $
June:
$
OPERATING LEASE RIGHT-OF-USE (Note 17)
EQUITY-ACCOUNTED INVESTMENTS (Note 6)
GOODWILL (Note 7)
INTANGIBLE ASSETS, NET (Note 7), including integrated platform of -September: $
June:
$
DEFERRED INCOME TAXES
OTHER LONG-TERM ASSETS (Note 6 and 8)
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Short-term credit facilities (Note 9)
Accounts payable
Other payables (Note 10)
Operating lease liability - current (Note 17)
Current portion of long-term borrowings (Note 9)
Income taxes payable
Total current liabilities before settlement obligations
Settlement obligations
Total current liabilities
DEFERRED INCOME TAXES
OPERATING LEASE LIABILITY - LONG TERM (Note 17)
LONG-TERM BORROWINGS (Note 9)
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 8)
TOTAL LIABILITIES
REDEEMABLE COMMON STOCK (Note 11)
EQUITY
COMMON STOCK (Note 11)
Authorized:
with $
par value;
Issued and outstanding shares, net of treasury -September:
; June:
PREFERRED STOCK
Authorized shares:
with $
par value;
Issued and outstanding shares, net of treasury: September:
-
-
ADDITIONAL PAID-IN-CAPITAL
TREASURY SHARES, AT COST - September:
; June:
(234 )
(234 )
ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 12)
(166,234 )
(166,319 )
RETAINED EARNINGS
TOTAL LESAKA EQUITY
NON-CONTROLLING INTEREST
TOTAL EQUITY
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY
$
$
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Operations
3
Three months ended
September 30,
2026
2025
(In thousands, except per
share data)
REVENUE (Note 16)
$
$
EXPENSE
Cost of goods sold, IT processing, servicing and support, exclusive of depreciation and amortization
shown separately below
(A)
Selling, general and administration, exclusive of depreciation and amortization shown separately
below
(A)
Movement in allowance for credit losses (Note 3)
(B)
Depreciation and amortization
Transaction costs related to Utilities and Bank Zero acquisitions (Note 2)
OPERATING (LOSS) INCOME
(1,066 )
NET LOSS ON IMPAIRMENT OF EQUITY-ACCOUNTED INVESTMENT (Note 6)
INTEREST INCOME
INTEREST EXPENSE
(A)
LOSS BEFORE INCOME TAX BENEFIT
(4,779 )
(4,921 )
INCOME TAX BENEFIT (Note 19)
NET LOSS BEFORE EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS
(4,252 )
(4,775 )
EARNINGS FROM EQUITY -ACCOUNTED INVESTMENTS (Note 6)
NET LOSS
$
(4,183 )
$
(4,775 )
ADD NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST
NET LOSS ATTRIBUTABLE TO LESAKA
(4,183 )
(4,658 )
Net loss per share, in United States dollars
(Note 14):
Basic loss attributable to Lesaka shareholders
$
(0.05 )
$
(0.05 )
Diluted loss attributable to Lesaka shareholders
$
(0.05 )
$
(0.05 )
(A) Revised to correct the errors discussed in Note 1.
(B) Movement in allowance for credit losses for the three months ended September 30, 2025, were previously included in Selling, general
and administration.
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income
4
Three months ended
September 30,
2026
2025
(In thousands)
Net loss
(A)
$
(4,183 )
$
(4,775 )
Other comprehensive income, net of taxes
Movement in foreign currency translation reserve
(A)
Release of foreign currency translation reserve related to disposal of equity securities
Total other comprehensive income, net of taxes
Comprehensive (loss) income
(4,098 )
Less comprehensive income attributable to non -controlling interest
(73 )
Comprehensive (loss) income attributable to Lesaka
$
(4,098 )
$
(A) Revised to correct the errors disclosed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
5
For the three months ended September 30, 2025 (dollar amounts in thousands)
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
Balance – July 1, 2025
$
(3,999,049 )
$
(7,059 )
$
$
$
(185,626 )
$
$
$
$
Restricted stock granted (Note 13)
Stock-based compensation
charge (Note 13)
Reversal of stock-based
compensation charge (Note 13)
(10,793 )
(10,793 )
(12 )
(12 )
(12 )
Net loss
(A)
-
(4,658 )
(4,658 )
(117 )
(4,775 )
Other comprehensive income
(Note 12)
(A)
Balance – September 30, 2025
(A)
$
(3,999,049 )
$
(7,059 )
$
$
$
(178,543 )
$
$
$
$
(A) Revised to correct the errors discussed in Note 1.
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
6
For the three months ended September 30, 2026 (dollar amounts in thousands)
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
Balance – July 1, 2026
$
(2,548,472 )
$
(234 )
$
$
$
(166,319 )
$
$
$
$
Shares repurchased (Note 13)
(40,688 )
(40,688 )
(186 )
(186 )
(186 )
Restricted stock granted (Note
13)
Stock-based compensation
charge (Note 13)
-
-
Reversal of stock-based
compensation charge (Note 13)
(39,632 )
(39,632 )
(39 )
(39 )
(39 )
Transfer from redeemable
common stock to additional paid-
in-capital (Note 11)
-
(9,286 )
Net loss
(4,183 )
(4,183 )
(4,183 )
Other comprehensive income
(Note 12)
Balance – September 30, 2026
$
(2,548,472 )
$
(234 )
$
$
$
(166,234 )
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
7
Three months ended
September 30,
2026
2025
(In thousands)
Cash flows from operating activities
Net loss
(A)
$
(4,183 )
$
(4,775 )
Depreciation and amortization
Movement in allowance for doubtful accounts receivable and finance loans receivable
Earnings from equity -accounted investments (Note 6)
(69 )
Fair value adjustment related to financial liabilities
(265 )
(1 )
Interest payable
(107 )
Facility fee amortized
Net loss on disposal of equity-accounted investments (Note 6)
Profit on disposal of property, plant and equipment
(6 )
(30 )
Stock-based compensation charge (Note 13)
Changes in net working capital
Increase in accounts receivable and other receivables
(7,787 )
(1,230 )
Increase in finance loans receivable
(15,574 )
(6,903 )
(Increase) decrease in inventory
(3,900 )
Increase (decrease) in accounts payable and other payables
(A)
(233 )
Increase in taxes payable
Decrease in deferred taxes
(2,140 )
(1,481 )
Net cash (used in) provided by operating activities
(6,801 )
Cash flows from investing activities
Capital expenditures
(8,243 )
(3,980 )
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(829 )
(1,139 )
Acquisition of insurance entity investments
(65 )
Acquisition of equity-accounted investment
(750 )
Repayment of loans by equity-accounted investments
Net change in settlement assets
(323 )
Net cash used in investing activities
(9,545 )
(461 )
Cash flows from financing activities
Proceeds from bank overdraft (Note 9)
Repayment of bank overdraft (Note 9)
(41,780 )
(40,661 )
Long-term borrowings utilized (Note 9)
Repayment of long -term borrowings (Note 9)
(1,189 )
(1,148 )
Repurchase of shares of common stock (Note 13)
(186 )
Non-refundable deal origination fees (Note 9)
(33 )
Net change in settlement obligations
(3,633 )
Net cash provided by (used in) financing activities
(14,738 )
Effect of exchange rate changes on cash
Net increase (decrease) in cash, cash equivalents and restricted cash
(4,355 )
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
8
LESAKA TECHNOLOGIES, INC
Notes to the Unaudited Condensed Consolidated Financial Statements
for the three months ended September 30, 2026 and 2025
(All amounts in tables stated in thousands or thousands of U.S. dollars, unless otherwise stated)
1. Basis of Presentation and Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The accompanying unaudited condensed consolidated financial statements include all majority-owned subsidiaries
over which the Company exercises control and have been prepared in accordance with U.S. generally accepted accounting
principles (“U.S. GAAP”) and
the rules and regulations of the United States Securities and Exchange Commission for Quarterly
Reports on Form 10-Q and include all of the information and disclosures required for interim financial reporting. The results
of operations for the three months ended September 30, 2026 and 2025, 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, 2026. 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 fai
r
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 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 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. Refer to Note 1 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2026 for additional
information.
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 included the impact of the correction for the three months ended September 30, 2025, in the
condensed consolidated statements of operations for the three months ended September 30, 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 to net income (loss) attributable to
Lesaka for the affected periods.
9
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 has revised the condensed consolidated statement of changes in equity as of June 30, 2025. The
comparative condensed consolidated balance sheet as of June 30, 2026, reflects the correct accounting treatment.
The tables below present the impact of the revisions to specific captions to the Company’s consolidated statement of
operations and cash flow statements for the periods identified.
Condensed consolidated statement of operations
Three months ended September 30,
2025
As
reported
Correction
As revised
(in thousands, except per share data)
Cost of goods sold, IT processing, servicing and support
$
$
$
Selling, general and administration, exclusive of depreciation and amortization
Interest expense
Basic loss per share attributable to Lesaka shareholders
$
(0.05 )
$
$
(0.05 )
Diluted loss per share attributable to Lesaka shareholders
$
(0.05 )
$
$
(0.05 )
Condensed consolidated statement of comprehensive (loss) income
Three months ended September 30,
2025
As
reported
Correction
As revised
(in thousands)
Net loss
$
(4,414 )
$
(361 )
$
(4,775 )
Movement in foreign currency translation reserve
(119 )
Total other comprehensive income, net of taxes
(119 )
Comprehensive income (loss)
(480 )
Comprehensive income (loss) attributed to Lesaka
$
$
(480 )
$
Condensed consolidated statement of cash flows
Three months ended September 30, 2025
As reported
Correction
As revised
(in thousands)
Net loss
$
(4,414 )
$
(361 )
$
(4,775 )
Increase (decrease) in accounts payable and other payables
$
(594 )
$
$
(233 )
10
1. Basis of Presentation and Summary of Significant Accounting Policies (continued)
Recent accounting pronouncements adopted
In July 2025, the FASB issued guidance regarding
Financial Instruments-Credit Losses (Topic 326) Measurement of Credit
Losses for Accounts Receivable and Contract Assets
entities) and an accounting policy election (for all entities, other than public business entities, that elect the practical
expedient) related to the estimation of expected credit losses for current accounts receivable and current contract assets
that arise from transactions accounted for under
Revenue From Contracts With Customers (Topic 606).
This guidance is
effective for the Company beginning July 1, 2026, and interim reporting periods during that fiscal year. The Company adopted
the guidance from the effective date and elected the practical expedient.
Recent accounting pronouncements not yet adopted as of September 30, 2026
In November 2024, the FASB issued guidance regarding
Income Statement—Reporting Comprehensive Income—
Expense Disaggregation Disclosures
(Subtopic 220-40)
expenses for public business entities. The guidance does not change the expense captions an entity presents on the face of
the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures
within the footnotes to the financial statements. This guidance is effective for the Company beginning July 1, 2027. Early
adoption is permitted. The Company is currently assessing the impact of this guidance on its financial statements and related
disclosures.
On September 18, 2025, the FASB issued guidance regarding
Intangibles—Goodwill and Other — Internal-Use Software
(Subtopic 350-40)
40. The new guidance makes targeted improvements to existing guidance but does not fully align the framework for
accounting for internally developed software costs that are subject to ASC 350-40 with the framework applied to software to
be sold or marketed externally that is subject to guidance regarding
Costs of Software to Be Sold, Leased, or Marketed
(Subtopic ASC 985-20)
. The new guidance also does not amend the guidance on costs of software licenses that are within the
scope of ASC 985-20. The amendments supersede the guidance on website development costs in guidance regarding
Website
Development Costs (Subtopic ASC 350-50)
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)
the navigability of the guidance in ASC 270 and clarify when it applies. Under the amendments, an entity is subject to ASC 27
0
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 th
e
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 may apply the guidance prospectively or retrospectively.
The Company is currently assessing the impact of this guidance on its financial statements and related disclosures.
11
2. Acquisition s 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, 2026, for additional information regarding the acquisitions during fiscal 2026 and the proposed
acquisition of Bank Zero Mutual Bank (“Bank Zero”) which transaction remains conditional.
2027 Proposed acquisitions of Bank Zero
On June 26, 2025, Lesaka SA entered into a Transaction Implementation Agreement (the “Transaction Implementation
Agreement”) with Zero Research Proprietary Limited (“Zero Research”), Bank Zero Mutual Bank (“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. All amounts below translated at the closing rate of $1: ZAR
The purchase consideration payable by Lesaka SA in exchange for the relevant shares in Bank Zero and the subscription
consideration payable by Lesaka SA in exchange the subscription shares will be settled through a combination of delivery of
Lesaka shares of common stock and up to ZAR
shares received by it to settle the repurchase consideration due to the Zero Research Sellers. Following implementation of
each of these steps, and subject to the below adjustment, the Bank Zero Sellers, Zero Research Sellers and Naught Holdings
Ltd will own approximately
% of Lesaka's fully diluted shares at the time of completion of the proposed transaction. The
Transaction Implementation Agreement allows a mechanism (in certain circumstances) pursuant to which the Bank Zero
Sellers and the Zero Research Sellers may acquire fewer shares in Lesaka and a larger cash consideration.
The Transaction Implementation Agreement includes customary interim period undertakings which required each of
Zero Research and Bank Zero, among other things (i) to conduct their business in the ordinary course during the period
between the execution of the Transaction Implementation Agreement and the closing of the transaction contemplated
thereby, and (ii) not to engage in certain kinds of transactions during such period. The Transaction Implementation Agreement
is subject to the fulfilment of certain conditions precedent. The Transaction Implementation Agreement will lapse if all of the
conditions precedent are not met or not waived by January 31, 2027 (or such later date as may be agreed).
Bank Zero and Lesaka SA have agreed to implement a long-term incentive arrangement following implementation of the
transaction, under which such a number of Lesaka's shares of common stock as is equal to (i) ZAR
divided by an agreed value (as defined in the Transaction Implementation Agreement) (the “Retention LTIP Shares”) and (ii)
ZAR
employees of Bank Zero. The Retention LTIP Shares will be subject to time vesting conditions and the Performance LTIP Shares
will be subject to time and certain performance-based vesting conditions. The terms of the long-term incentive plan are
required to be considered, and if necessary approved, by Lesaka's remuneration committee.
The Company incurred transaction-related expenditures of $
September 30, 2026 and 2025, respectively, related to the proposed acquisition of Bank Zero. The Company’s accruals
presented in Note 10 of as September 30, 2026, includes an accrual of transaction related expenditures of $
the Company expects to incur further transaction costs of $
Transaction costs
The table below presents transaction costs incurred related to the acquisition of Utilities, and the proposed acquisition
of Bank Zero expensed during the three months ended September 30, 2026 and 2025:
Three months ended
September 30,
2026
2025
Bank Zero transaction costs
$
$
Utilities transaction costs
Total
$
$
12
3.
Accounts receivable, net and other receivables and finance loans receivable, net
Accounts receivable, net and other receivables
The Company’s accounts receivable, net, and other receivables as of September 30, 2026, and June 30, 2026, are
presented in the table below:
September 30,
June 30,
2026
2026
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
(185 )
(388 )
Charged to statement of operations
Write-offs
(159 )
(526 )
Deconsolidation
(4 )
Foreign currency adjustment
(5 )
Amount due from VantagePay
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.
Other receivables include prepayments, deposits, income taxes receivable and other receivables.
13
3.
Accounts receivable, net and other receivables and finance loans receivable, net (continued)
Finance loans receivable, net
The Company’s finance loans receivable, net, as of September 30, 2026, and June 30, 2026, is presented in the table
below:
September 30,
June 30,
2026
2026
Consumer finance loans receivable, net
$
$
Consumer finance loans receivable, gross
Less: Allowance for doubtful finance loans receivable, end of period
Beginning of period
Charged to statement of operations
Write-offs
(2,177 )
(6,600 )
Foreign currency adjustment
(4 )
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
(105 )
(117 )
Charged to statement of operations
Write-offs
(734 )
(459 )
Foreign currency adjustment
(1 )
Total finance loans receivable, net
$
$
Total finance loans receivable, net, comprises Consumer finance loans receivable related to the Company’s Consumer
operations in South Africa as well as its merchant finance loans receivable related to the Company’s Merchant’s lending
activities in South Africa. Certain merchant finance loans receivable with an aggregate balance of $
September 30, 2026 have been pledged as security for the Company’s revolving credit facility (refer to Note 9).
Allowance for credit losses
Consumer finance loans receivable
Consumer finance loans receivable is related to the Company’s Consumer operations in South Africa whereby it provides
unsecured short-term loans to qualifying customers. Loans to customers have a tenor of up to
, with the majority
of loans originated having a tenor of
. 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
lifetime of loans in order to develop an expected loss rate for the lending book. The allowance for credit losses related to these
Consumer finance loans receivables is calculated by multiplying the expected loss rate with the month end outstanding
lending book. Default is defined as loans in 90 days in arrears or greater and is primarily driven by missed or disrupted
customer payments, as a result of non-receipt of social grant income and broader affordability pressures. Loss outcomes are
further influenced by limited post-default recoveries. The Company continues to undertake recovery activity for up to six
months post write-off, however, recoveries during this period are minimal. After six months, collection activity ceases and
recoveries are considered negligible.
The expected loss rate as of each of June 30, 2026 and September 30, 2026, 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 June
30, 2026 and September 30, 2026.
14
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
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
, with
the majority of loans originated having a tenor of approximately
. 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, except for loans in the Lesaka Fuel Proprietary Limited finance
portfolio, which is in run-off and assessed individually. Refer to Note 5 related to the Company risk management process
related to these receivables.
The Company uses historical default experience over the lifetime of loans generated thus far in order to develop an
expected loss rate for the lending book. A loan is classified as being in default where a client has missed seven or more
instalments, at which point a specific allowance for outstanding capital and accrued interest is raised based on the loan’s
collection status, as described below. Upon default, the Company commences recovery procedures including the use of
external debt collectors, asset attachment through the Sheriff of the High Court, and judgements against clients in both thei
r
personal and entity capacities. An account is written off when management concludes that there is no reasonable expectation
of recovery, which may be before legal recovery procedures are concluded. Any subsequent recoveries are recognized when
received.
The allowance for credit losses related to these merchant finance loans receivable is calculated as the sum of (i) the
expected loss rate applied to the performing lending book, (ii) specific allowances on loans in payment relief, under a payme
nt
arrangement or in legal recovery, at loss rates that increase with the severity of the status, and (iii) management adjustments
where the model does not fully reflect current conditions. The expected loss rate as of each of June 30, 2026 and September
30, 2026, was approximately
%, and the loss rates applied to loans in payment relief, under a payment arrangement and
in legal recovery were approximately
%,
% and
%, respectively.
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 lending book as of September 30, 2026 and June 30, 2026, was as follows:
September 30,
June 30,
2026
2026
Performing component
%
%
Under-performing component
%
%
Non-performing component
%
%
%
%
4. Inventory
The Company’s inventory comprised the following categories as of September 30, 2026, and June 30, 2026:
September 30,
June 30,
2026
2026
Raw materials
$
$
Work-in-progress
Finished goods
$
$
15
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 i
ts
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.
Interest rate risk
As a result of its normal borrowing activities, the Company’s operating results are exposed to fluctuations in interest
rates. The South African Reserve Bank increased the repurchase rate to
% in September 2026, citing upside risks to the
inflation outlook. Higher fuel prices and uncertainty around global oil prices are expected to keep inflationary pressures
elevated in the near term. Accordingly, changes in South African interest rates may affect the Company’s finance costs.
Excluding the impact of changes to the margins on its borrowings (refer to Note 9) and the value of borrowings
outstanding, an increase in interest rates would moderately increase the Company’s cost of borrowing. The Company
periodically evaluates the cost and effectiveness of interest rate hedging strategies to manage this risk.
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 inclu
de
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.
16
5. Fair value of financial instruments (continued)
Risk management (continued)
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.
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.
17
5. Fair value of financial instruments (continued)
The following table presents the Company’s assets measured at fair value on a recurring basis as of September 30, 2026,
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:
$
$
$
$
Mutual fund (included in
cash, cash equivalents
and restricted cash)
Cash, cash equivalents
and restricted cash
(included in other long-
term assets)
Mutual fund (included in
other long-term assets)
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, 2026
,
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
$
$
$
$
Mutual fund (included in
cash, cash equivalents
and restricted cash)
Cash, cash equivalents
and restricted cash
(included in other long-
term assets)
Mutual fund (included in
other long-term assets)
Total assets at fair value
$
$
$
$
There have been
,
respectively.
There was
Level 3, during the three months ended September 30, 2026 and 2025.
18
5. Fair value of financial instruments (continued)
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
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, 2026, for additional information regarding its equity-accounted investments and other long-term
assets.
Equity-accounted investments
The Company’s ownership percentage in its equity-accounted investments as of September 30, 2026, and June 30, 2026
,
was as follows:
September
30,
June 30,
2026
2026
Sandulela Technology Proprietary Limited (“Sandulela”)
%
%
SmartSwitch Namibia (Proprietary) Limited (“SmartSwitch Namibia”)
%
%
Cowdi Limited (“Cowdi”)
%
%
Cowdi
During the year ended June 30, 2026, the Company invested $
% interest in Cowdi, an entity
incorporated in England and Wales, with operations through a Kenyan wholly-owned subsidiary offering digital loans to
customers in that country. During the three months ended September 30, 2026, the Company invested an additional $
million to increase its interest in Cowdi to
%, the investment has therefore been moved from other long-term assets to
equity-accounted investments. The Company initially accounted for its investment in Cowdi as an equity securities without
readily determinable fair value and therefore applied the 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 model. Following
the increase in its investment from
% to
%, the Company has determined that it has obtained significant influence and
has accounted for its investment in Cowdi from July 2026, using the equity method.
19
6. Equity-accounted investments and other long-term assets
Equity-accounted investments (continued)
The Company also extended a $
June 30, 2026. Cowdi had utilized $
SmartSwitch Namibia
The Company recorded a loss on impairment of equity-accounted investment of $
ended September 30, 2025, which primarily includes the release of accumulated other comprehensive loss (refer to Note 12).
Other long-term assets
Summarized below is the breakdown of other long-term assets as of September 30, 2026, and June 30, 2026:
September 30,
June 30,
2026
2026
Total equity investments
$
$
Investment in Cowdi (June 30, 2026:
%) at fair value
(1)
Policy holder assets under investment contracts (Note 8)
Reinsurance assets under insurance contracts (Note 8)
Insurance investments
Other long-term assets
Total other long-term assets
$
$
(1) The Company determined that Cowdi does not have a readily determinable fair value and therefore elected to record
its investment at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly
transactions for the identical or a similar investment of the same issuer.
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, 2026:
Cost basis
Unrealized
holding
Unrealized
holding
Carrying
gains
losses
value
Equity securities:
Investment in Cowdi
$
$
$
$
Total
$
$
$
$
As of September 30, 2026 the Company had no significant equity securities without readily determinable fair value
and held to maturity investments.
20
7. Goodwill and intangible assets, net
Goodwill
Summarized below is the movement in the carrying value of goodwill for the three months ended September 30, 2026:
Gross value
Accumulate
d
impairment
Carrying
value
Balance as of June 30, 2026
$
$
(39,652 )
$
Foreign currency adjustment
(1)
(20 )
Balance as of September 30, 2026
$
$
(39,672 )
$
(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, 2026
$
$
$
$
Foreign currency adjustment
(1)
Balance as of September 30, 2026
$
$
$
$
(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 September 30, 2026
,
and June 30, 2026:
As of September 30, 2026
As of June 30, 2026
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
$
$
(66,624 )
$
$
$
(62,220 )
$
Customer relationships
(27,598 )
(26,084 )
Brands and trademarks
(19,744 )
(19,732 )
FTS patent
(2,337 )
(2,335 )
Total finite-lived intangible
assets
$
$
(116,303 )
$
$
$
(110,371 )
$
Aggregate amortization expense on the finite-lived intangible assets for the three months ended September 30, 2026 and
2025, was $
years and thereafter, assuming exchange rates that prevailed on September 30, 2026, 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.
21
7. Goodwill and intangible assets, net (continued)
Intangible assets, net (continued)
Fiscal 2027 (excluding three months ended September 30, 2026)
$
Fiscal 2028
Fiscal 2029
Fiscal 2030
Fiscal 2031
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 three months ended September 30, 2026:
Reinsurance
Assets
(1)
Insurance
contracts
(2)
Balance as of June 30, 2026
$
$
(3,688 )
Increase in policyholder benefits under insurance contracts
(5,299 )
Claims and decrease in policyholders’ benefits under insurance
contracts
(458 )
Foreign currency adjustment
(3)
Balance as of September 30, 2026
$
$
(3,874 )
(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 large insurance contracts,
however, if the reinsurer is unable to meet its obligations, the Company retains the liability. The value of insurance contra
ct
liabilities is based on the best estimate assumptions of future experience plus a risk adjustment for non-financial risk, as
required in the markets in which these products are offered, namely South Africa. The process of deriving the best estimates
assumptions plus risk adjustments include assumptions related to claim reporting delays (based on average industry
experience) and their associated costs as well as assumptions related to the present value of disability claims in payment.
Assets and policyholder liabilities under investment contracts
Summarized below is the movement in assets and policyholder liabilities under investment contracts during the three
months ended September 30, 2026:
Assets
(1)
Investment
contracts
(2)
Balance as of June 30, 2026
$
$
(141 )
Increase in policy holder benefits under investment contracts
(2 )
Foreign currency adjustment
(3)
Balance as of September 30, 2026
$
$
(143 )
(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.
22
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, 2026, for additional information regarding its borrowings.
South Africa
On September 30, 2026, the South African Overnight Index Average (“ZARONIA”) rate was
% and the credit
adjustment spread (“CAS”) applicable to certain of the Company’s borrowing
%. On September 30, 2026, the prime
rate, the benchmark rate at which private sector banks lend to the public in South Africa, was
%.
Movement in short-term credit facilities
Summarized below are the Company’s short-term facilities as of September 30, 2026, and the movement in the
Company’s short-term facilities from as of June 30, 2026 to as of September 30, 2026:
RMB
RMB
Nedbank
GBF
Other
Facilities
Total
Short-term facilities available as of September 30, 2026
$
$
$
$
Overdraft
Indirect and derivative facilities
Movement in utilized overdraft facilities:
No restrictions as to use
Balance as of June 30, 2026
Utilized
Repaid
(41,780 )
(41,780 )
Guarantee fee amortized
Foreign currency adjustment
(1)
Balance as of September 30, 2026
No restrictions as to use
$
$
$
$
Interest rate as of September 30, 2026 (%)
(2)
N/A
N/A
Interest rate as of June 30, 2026 (%)
(2)
N/A
N/A
Movement in utilized indirect and derivative facilities:
Balance as of June 30, 2026
$
$
$
$
Utilized
Foreign currency adjustment
(1)
(18 )
(18 )
Balance as of September 30, 2026
$
$
$
$
(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.
(2) RMB GBF interest is set at prime less
%.
Interest expense incurred under the Company’s South African short-term borrowings and included in the caption interest
expense on the condensed consolidated statement of operations during the three months ended September 30, 2026 and
2025, was $
23
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, 2026 to as of September
30, 2026:
Facilities
Lesaka A
Lesaka B
Asset
backed
CCC
Total
Included in current
$
$
$
$
$
Included in long-term
Opening balance as of June 30, 2026
Facilities utilized
Facilities repaid
(1,189 )
(1,189 )
Non-refundable fees paid
Non-refundable fees amortized
Foreign currency adjustment
(1)
(27 )
Closing balance as of September 30, 2026
Included in current
Included in long-term
Unamortized fees
(719 )
(719 )
Due within 2 years
Due within 3 years
Due within 4 years
Due within 5 years
$
$
$
$
$
Interest rates as of September 30, 2026 (%):
Base rate (%)
CAS (%)
Margin (%)
(2)
(3)
(4)
(5)
Interest rates as of June 30, 2026 (%):
Base rate (%)
CAS (%)
Margin (%)
(0.10 )
Footnote number
(2)
(3)
(4)
(6)
(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.
(2)
From April 1, 2026, interest on Facility A is based on ZARONIA in effect from time to time plus a margin. 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) From April 1, 2026, interest on Facility B is calculated based on ZARONIA from time to time plus a margin. The margin
on Facility B is determined with reference to the Net Debt to EBITDA Ratio, and the margin will be either (i)
%, if the
Net Debt to EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
%, if the Net Debt to EBITDA Ratio is less than
2.5 times.
(4) Interest is charged at prime plus
% per annum on the utilized balance.
(5) Interest is charged at prime plus
% per annum on the utilized balance.
(6) Interest is charged at prime less
% per annum on the utilized balance.
Interest expense incurred under the Company’s South African long-term borrowings and included in the caption interest
expense on the condensed consolidated statement of operations during the three months ended September 30, 2026 and
2025, was $
three months ended September 30, 2026 and 2025, respectively, were $
24
9. Borrowings (continued)
Interest expense incurred under the Company’s South African long-term borrowings to fund its Consumer lending book
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 $
cost of goods sold, IT processing, servicing and support on the condensed consolidated statement of operations for the three
months ended September 30, 2026 and 2025.
10. Other payables
Summarized below is the breakdown of other payables as of September 30, 2026, and June 30, 2026:
September 30,
June 30,
2026
2026
Vendor wallet balances
$
$
Accruals
Clearing accounts
Provisions
Value-added tax payable
Payroll-related payables
Other
$
$
Other includes deferred income, client deposits and other payables.
11. Capital structure
Redeemable common stock issued pursuant to transaction with the IFC Investors
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, 2026, for additional information regarding its redeemable common stock issued pursuant to
transactions with the IFC Investors.
On September 29, 2026, the IFC Investors filed Amendment No. 6 to Schedule 13D with the United States Securities
and Exchange Commission reporting that IFC African, Latin American and Caribbean Fund, LP (“ALAC”) had sold an aggregate
of
rights related to these
from redeemable common stock to additional paid-in-capital during the three months ended September 30, 2026.
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 as of September 30, 2026 and 2025, respectively:
September 30,
September 30,
2026
2025
Number of shares, net of treasury:
Statement of changes in equity
Non-vested equity shares that have not vested as of end of period
Number of shares, net of treasury, excluding non-vested equity shares that
have not vested
25
12. Accumulated other comprehensive loss
The table below presents the change in accumulated other comprehensive loss per component during the three months
ended September 30, 2026:
Three months ended
September 30, 2026
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2026
$
(166,319 )
$
(166,319 )
Movement in foreign currency translation reserve
Balance as of September 30, 2026
$
(166,234 )
$
(166,234 )
The table below presents the change in accumulated other comprehensive loss per component during the three months
ended September 30, 2025:
Three months ended
September 30, 2025
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2025
$
(185,626 )
$
(185,626 )
Release of foreign currency translation reserve related to liquidation of equity-
accounted investment
Movement in foreign currency translation reserve
(A)
Balance as of September 30, 2025
(A)
$
(178,543 )
$
(178,543 )
(A) Accumulated other comprehensive loss and Total for the three months ended September 30, 2025, have each
increased by $
in foreign currency translation reserve.
26
13. Stock-based compensation
The Company’s Amended and Restated 2022 Stock Incentive Plan (“2022 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, 2026.
Stock option and restricted stock activity
Options
The following table summarizes stock option activity for the three months ended September 30, 2026 and 2025:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($'000)
Weighted
average
grant
date fair
value
($)
Outstanding - June 30, 2026
Granted - August 2026
Outstanding - September 30, 2026
Outstanding - June 30, 2025
Outstanding - September 30, 2025
The
Mazanderani, the Company’s Executive Chairman and were granted pursuant to shareholder approval which was obtained
on August 3, 2026. The
to this date. The
2030.
The fair value of each option is estimated on the date of grant using the Cox Ross Rubinstein binomial model that uses
the assumptions noted in the following table. The estimated expected volatility is calculated based on the Company’s
-
day volatility. The estimated expected life of the option was determined based on the historical behavior of employees who
were granted options with similar terms.
27
13. Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Options (continued)
The table below presents the range of assumptions used to value stock options granted during the three months ended
September 30, 2026:
Three months
ended
September 30,
2026
Expected volatility
%
Expected dividends
%
Expected life (in years)
Risk-free rate
%
The following table presents stock options vested and expected to vest as of September 30, 2026:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractua
l term
(in years)
Aggregate
intrinsic
value
($’000)
Vested and expecting to vest - September 30,
2026
These options have an exercise price range of $
.
The following table presents stock options that are exercisable as of September 30, 2026:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractua
l term
(in years)
Aggregate
intrinsic
value
($’000)
Exercisable - September 30, 2026
Company issues new shares to satisfy stock option exercises.
28
13. Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Restricted stock
The following table summarizes restricted stock activity for the three months ended September 30, 2026 and 2025:
Number of
shares of
restricted
stock
Weighted
average grant
date fair value
($’000)
Non-vested – June 30, 2026
Total granted
Granted – July 2026
Granted – August 2026
Granted – September 2026
Total vested
(93,963 )
Vested – July 2026
(1,257 )
Vested – August 2026
(26,040 )
Vested – September 2026
(66,666 )
Forfeitures
(39,632 )
Non-vested – September 30, 2026
Non-vested – June 30, 2025
Total Granted
Granted – July 2025
Granted – August 2025
Granted – September 2025
Total vested
(10,933 )
Vested – August 2025
(10,933 )
Forfeitures
(10,793 )
Non-vested – September 30, 2025
29
13. Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Restricted stock (continued)
Grants
In July, August and September 2026, respectively, the Company granted
,
, and
stock to employees which have time-based vesting conditions and which are subject to the employees’ continued
employment with the Company through the applicable vesting dates.
In July, August and September 2025, respectively, the Company granted
,
, and
stock to employees which have time-based vesting conditions and which are subject to the employees’ continued
employment with the Company through the applicable vesting dates.
During fiscal 2025, the Company agreed to grant an advisor
to the Company. The Company and the advisor agreed that the Company would issue the shares to the advisor, in arrears, on
a quarterly basis. During the three months ended September 30, 2025, the Company recorded a stock-based compensation
charge of $
The contract with the advisor ends in the second quarter of fiscal 2027.
Vesting
In July, August and September 2026, an aggregate of
Certain employees elected for
These
In August 2025, an aggregate of
Forfeitures
During the three months ended September 30, 2026 and 2025, respectively, employees forfeited
shares of restricted stock following termination of their employment with the Company.
Stock-based compensation charge and unrecognized compensation cost
The Company recorded a stock-based compensation charge, net, during the three months ended September 30, 2026
and 2025, of $
Total charge
Allocated to
cost of goods
sold, IT
processing,
servicing and
support
Allocated to
selling, general
and
administration
Three months ended September 30, 2026
Stock-based compensation charge
$
$
-
$
Stock compensation charge related to ESOP
-
Reversal of stock compensation charge related to
restricted stock forfeited
(39 )
-
(39 )
Total - three months ended September 30, 2026
$
$
-
$
Three months ended September 30, 2025
Stock-based compensation charge
$
$
-
$
Stock compensation charge related to ESOP
-
Reversal of stock compensation charge related to
restricted stock forfeited
(12 )
-
(12 )
Total - three months ended September 30, 2025
$
$
-
$
30
13. Stock-based compensation (continued)
Stock-based compensation charge and unrecognized compensation cost (continued)
The stock-based compensation charges have been allocated to selling, general and administration based on the
allocation of the cash compensation paid to the relevant employees.
As of September 30, 2026, the total unrecognized compensation cost related to stock options was $
the Company expects to recognize over
. As of September 30, 2026, the total unrecognized compensation cost
related to restricted stock awards was $
.
During the three months ended September 30, 2026 and 2025, the Company recorded a deferred tax benefit of $
million and $
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. 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
common stock, or adjustments to the carrying value of the redeemable common stock during the three months ended
September 30, 2026 and 2025, except as described in Note 11. 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, 2026.
Basic 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 loss per share
has been calculated using the two-class method and basic loss per share for the three months ended September 30, 2026
and 2025, reflects only undistributed earnings. The computation below of basic 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 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 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
ended September 30, 2026 and 2025 because the effect would be antidilutive.
The calculation of diluted 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
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, 2026.
31
14. 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
September 30,
2026
2025
(in thousands except
percent and
per share data)
Numerator:
Net loss attributable to Lesaka
(A)
$
(4,183 )
$
(4,658 )
Undistributed loss
(A)
$
(4,183 )
$
(4,658 )
Percent allocated to common shareholders (Calculation 1)
Numerator for loss per share: basic and diluted
(4,059 )
(4,514 )
Continuing
(4,059 )
(4,514 )
Denominator
Denominator for basic loss per share:
Weighted-average common shares outstanding
Denominator for diluted loss per share: adjusted weighted average common
shares outstanding and assuming conversion
Loss per share:
Basic
(A)
$
(0.05 )
$
(0.05 )
Diluted
(A)
$
(0.05 )
$
(0.05 )
(Calculation 1)
Basic weighted-average common shares outstanding (A)
Basic weighted-average common shares outstanding and unvested restricted
shares expected to vest (B)
Percent allocated to common shareholders (A) / (B)
(A) Net loss attributable to Lesaka and Undistributed loss for the three months ended September 30, 2025, has
decreased by $
loss attributable to Lesaka and Undistributed 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 September 30, 2026.
Options to purchase
were outstanding during the three months ended September 30, 2026, 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. Options to purchase
share were outstanding during the three months ended September 30, 2025, 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 various dates through February 3, 2032, were still outstanding as of September
30, 2026.
32
15. Supplemental cash flow information
The following table presents supplemental cash flow disclosures for the three months ended September 30, 2026 and
2025:
Three months ended
September 30,
2026
2025
Cash received from interest
$
$
Cash paid for interest
$
$
Cash paid 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 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 restrict
ed
cash. The following table presents the disaggregation of cash, cash equivalents and restricted cash as of September 30, 2026
and 2025, and June 30, 2026:
September 30,
2026
September 30,
2025
June 30, 2026
Cash and cash equivalents
$
$
$
Restricted cash
Cash, cash equivalents and restricted cash
$
$
$
Leases
The following table presents supplemental cash flow disclosure related to leases for the three months ended September
30, 2026 and 2025:
Three months ended
September 30,
2026
2025
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
$
$
33
16. Revenue recognition
The Company is a provider of digitized cash management solutions and merchant acquiring services, including an
integrated platform for the distribution of ADP (including value-added services such as prepaid airtime, prepaid electricity and
bill payment); software solutions, transaction processing services; financial inclusion products and services, and secure
payment technology. The Company operates as a payment processor in South Africa. The Company offers debit, credit and
prepaid processing and issuing services for all major payment networks. In South Africa, the Company provides innovative
low-cost financial inclusion products, including banking, lending and insurance.
The Company analyzes its business under a “product” view, for example, its acquiring activities in Merchant are
allocated to an acquiring product view for Merchant. The Company has updated its disaggregation of revenue disclosures to
align with this product view. Comparative periods have been recast.
Disaggregation of revenue
The following table presents the Company’s revenue disaggregated by major revenue streams, including a reconciliation
to reportable segments for the three months ended September 30, 2026:
Merchant
Consumer
Enterprise
Total
ADP
$
$
$
$
South Africa
Rest of world
Transactional fees
Acquiring
South Africa
Rest of world
Cash
Software
Utilities
Other
South Africa
Rest of world
Total revenue under ASC 606, derived from the
following geographic location
South Africa
Rest of world
Lending
South Africa
Rest of world
Insurance
Total non-ASC 606 revenue, derived from the
following geographic location
South Africa
Rest of world
Total revenue, derived from the following
geographic locations
South Africa
Rest of world
$
$
$
$
34
16. Revenue recognition (continued)
Disaggregation of revenue (continued)
The following table presents the Company’s revenue disaggregated by major revenue streams, including a reconciliation
to reportable segments for the three months ended September 30, 2025:
Merchant
Consumer
Enterprise
Total
ADP
$
$
$
$
South Africa
Rest of world
Transactional fees
Cash
Acquiring
South Africa
Rest of world
Software
Utilities
Other
South Africa
Rest of world
Total revenue under ASC 606, derived from the
following geographic location
South Africa
Rest of world
Lending
South Africa
Rest of world
Insurance
Total non-ASC 606 revenue, derived from the
following geographic location
South Africa
Rest of world
Total revenue, derived from the following
geographic locations
South Africa
Rest of world
$
$
$
$
35
17. Leases
The Company has entered into leasing arrangements classified as operating leases under accounting guidance. These
leasing arrangements relate primarily to the lease of its corporate head office, administration offices, a manufacturing facility,
and branch locations through which the Company operates its financial services business in South Africa. The Company’s
operating leases have a remaining lease term of between
. The Company also operates parts of its
financial services business from locations which it leases for a period of less than
.
The Company’s operating lease expense during the three months ended September 30, 2026 and 2025 was $
and $
The Company has also entered into short-term leasing arrangements, primarily for the lease of branch locations and
other locations, to operate its consumer business in South Africa. The Company’s short-term lease expense during the three
months ended September 30, 2026 and 2025, was $
In April 2026, the Company, through Lesaka SA, entered into a binding offer to lease for a new regional office in Cape
Town, Western Cape, South Africa with Growthpoint Securitisation Warehouse Trust, a trust incorporated in South Africa. The
lease commences on October 1, 2026 and is for a period of
. The Company secured beneficial occupation from August
1, 2026, and recorded a ROU asset and an operating lease liability related to this lease in August 2026 upon taking beneficia
l
occupation. The Company expects to pay an annual basic lease expense of $
exchange rates applicable as of September 30, 2026), which increases by
% per annum.
In August 2026, the Company, through Lesaka SA, entered into a binding offer to lease for a new regional office in
Umhlanga, Durban, KwaZulu-Natal, South Africa with SA Sugar Distributors Proprietary Limited, a subsidiary of ABFS, a private
company incorporated in South Africa. The lease commences on November 23, 2026 and is for a period of
, with an
option to renew for a further
. The Company secured beneficial occupation from September 23, 2026, and has
recorded a ROU asset and an operating lease liability related from the date of taking beneficial occupation. The Company was
required to provide a guarantee for two month’s rent to the lessor. 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 September 30, 2026 and June 30, 2026:
September 30,
June 30,
2026
2026
Right of use assets obtained in exchange for lease obligations:
Weighted average remaining lease term (years)
Weighted average discount rate (percent)
The maturities of the Company’s operating lease liabilities as of September 30, 2026, are presented below:
Maturities of operating lease liabilities
Year ended June 30,
2027 (excluding three months to September 30, 2026)
$
2028
2029
2030
2031
Thereafter
Total undiscounted operating lease liabilities
Less imputed interest
Total operating lease liabilities, included in
Operating lease liability - current
Operating lease liability - long-term
$
36
18. Operating segments
Operating segments
The Company discloses segment information as reflected in the management information systems reports that its chief
operating decision maker (“CODM”) 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, 2026.
The Company currently has
the Company’s Executive Chairman. The CODM analyzes the Company’s operating performance primarily based on these
three operational lines, namely,
urban areas, have higher revenues and have access to multiple service providers. Informal sector merchants, which are often
sole proprietors and usually have lower revenues compared with formal section merchants, operate in rural areas or in
informal urban areas and do not always have access to a full-suite of traditional banking products;
(ii) Consumer, which primarily focuses on individuals who have historically been excluded from traditional financial
services and to whom we offer transactional accounts (banking), insurance, lending (short-term loans), payments solutions
(digital wallet) and various value-added services; and
(iii) Enterprise, which comprises large-scale corporate and government organizations, including but not limited to banks,
mobile network operators (“MNOs”) and municipalities, and, through Utilities, landlords utilizing Utilities’ prepaid electricity
metering solution.
The Merchant segment includes revenue generated from the sale of 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 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 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. 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 Utilities
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.
37
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 does not allocate once-off items, stock-based compensation charges, impairment of 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. 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 and segment adjusted EBITDA
The table below presents the reconciliation of revenue from external customers to the reportable segment’s revenue,
significant expenditures, the Company’s reportable segment’s measure of profit or loss, and certain other segment
information for the three months ended September 30, 2026 and 2025, respectively, is as follows:
38
18. Operating segments (continued)
Three months ended September 30, 2026
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 September 30, 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)(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
$
$
$
$
$
(A) Cost of goods sold, IT processing, servicing and support and Selling, general and administration for Merchant and
Total for the three months ended September 30, 2025 have each increased by $
a result of the correction discussed in Note 1. Segment Adjusted EBITDA for Merchant and Total for the three months ended
September 30, 2025 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 September 30, 2026, includes retrenchment costs for Merchant
of $
(3) Segment Adjusted EBITDA for the three months ended September 30, 2025, includes retrenchments costs for
Merchant of $
39
18. Operating segments (continued)
The reconciliation of the reportable segments’ measures of profit or loss to loss before income tax expense for the three
months ended September 30, 2026 and 2025, is as follows:
Three months ended
September 30,
2026
2025
Reportable segments measure of profit or loss
(A)
$
$
Operating loss: Group costs
(5,615 )
(3,611 )
Once-off costs
(3,033 )
(267 )
Unrealized (Loss) Gain FV for currency adjustments
(204 )
Stock-based compensation charge adjustments
(1,370 )
(1,861 )
Depreciation and amortization
(9,973 )
(12,894 )
Loss on impairment of equity-accounted investment
(584 )
Interest income
Interest expense
(A)
(4,258 )
(5,013 )
Loss before income tax expense
(A)
$
(4,779 )
$
(4,921 )
(A) Reportable segments’ measure of profit or loss for the three months ended September 30, 2025, has decreased by
$
2025, has increased by $
months ended September 30, 2025, has increased by $
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.
40
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 September 30, 2026, the Company’s effective tax rate was impacted by deferred tax assets related to net
operating losses incurred by certain of our South African subsidiaries and the deferred tax impact related to the amortizatio
n
of acquired intangible assets, the tax expense recorded by our profitable South African operations and non-deductible
expenses.
For the September 30, 2025, the Company’s effective tax rate was impacted by the tax expense recorded by the
Company’s profitable South African operations and non-deductible expenses (including transaction-related expenditures).
The Company’s income tax benefit was impacted by a higher deferred tax benefit as a result of the reduction in the useful lives
of certain of the Company’s brand and trademark intangible assets which has resulted in an increase in amortization expense
during the three months ended September 30, 2025.
Uncertain tax positions
As of September 30, 2026 and June 30, 2026, the Company had
tax returns mainly in South Africa, Botswana, Namibia and in the U.S. federal jurisdiction. As of September 30, 2026, 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
rates applicable as of September 30, 2026) thereby utilizing part of the Company’s short-term facilities.
Nedbank has issued guarantees to these third parties amounting to ZAR
rates applicable as of September 30, 2026) 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 condensed consolidated balance
sheet as of September 30, 2026. The maximum potential amount that the Company could pay under these guarantees is ZAR
pledged certain bank accounts to Nedbank as security for the guarantees issued by them with an aggregate value of ZAR
million ($
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 no
t
have a material adverse impact on the Company’s financial position, results of operations or cash flows.
41
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,
2026, 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, 2026. 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 diffe
r
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
The following discussion addresses our results for the first quarter of fiscal 2027 compared with the first quarter of fiscal
2026.
Merchant
We manage our Merchant operations through two distinct channels: Community, which serves local, high-growth
businesses acquired through direct, in-person sales with short conversion cycles; and Corporate, which serves large
organizations and franchises that require customized, multi-product solutions delivered through a longer-term, strategic
sales process.
We define an active merchant as any merchant that has made a voluntary transaction (debit and/or credit) within the last
90 days. We previously reported merchants on a point-of-presence basis, which focused primarily on our device estate. The
active merchant methodology reflects the revenue-generating engagement of our entire Merchant base and is more closely
aligned with our current and future monetization strategy. Average Revenue Per User (“ARPU”) excludes once-off and non-
recurring revenue, such as revenue from hardware and installations, as well as revenue from non-South African subsidiaries.
In the second quarter of fiscal 2026, we introduced a refined reporting framework for Merchant that better reflects the
primary drivers of revenue and performance. The framework, which was developed following a comprehensive review of our
operational data, aligns our Merchant metrics, specifically active merchant count and blended
ARPU, to provide a consolidated view of our ecosystem. We use this framework as the baseline for future comparisons in
order to maintain consistent reporting across our channels. Accordingly, the transition may result in immaterial
inconsistencies with certain legacy metrics. In the first quarter of fiscal 2027, we further refined our calculation of Merchant
ARPU to exclude network fees, such as interchange, earned in our Corporate acquiring business, so that ARPU is measured
on a consistent basis across our Corporate and Community channels. Merchant ARPU for the prior period shown below has
been recast on the same basis to ensure comparability.
42
ARPU performance is driven by cross-sell product penetration. Product-level key performance indicators (“KPIs”) are
presented below.
Q1 2027
Q1 2026
Q1 2027 vs
Q1 2026
Merchant
Active Merchants
132,892
133,410
(0%)
Community Merchants
109,069
106,708
2%
Corporate Merchants
23,823
26,702
(11%)
Merchant ARPU
(1)
1,563
1,646
(5%)
Community Merchant ARPU
(1)
744
766
(3%)
Corporate Merchant ARPU
(1)
5,245
5,080
3%
Product Penetration Rate: 2 or more products
46%
46%
0%
Product Penetration Rate: 3 or more products
6%
9%
(28%)
Merchant: Acquiring
Active Merchants
74,449
73,375
1%
Total Payment Volume (“TPV”) (ZAR billions)
11.3
10.4
9%
TPV - Community (ZAR billions)
4.5
3.6
24%
TPV - Corporate (ZAR billions)
6.8
6.8
0%
Merchant: Cash Management
Active Merchants
4,535
4,815
(6%)
TPV (ZAR billions)
30.0
29.5
2%
TPV - Community (ZAR billions)
7.7
4.9
58%
TPV - Corporate (ZAR billions)
22.2
24.6
(10%)
Merchant: Alternative Digital Products
Active Merchants
103,449
103,560
(0%)
TPV (ZAR billions)
15.9
11.9
34%
TPV - Prepaid Solutions (ZAR billions)
5.9
5.6
5%
TPV - Supplier Enabled Payments (ZAR billions)
10.0
6.3
59%
Merchant: Lending
(2)
Lending Origination (ZAR millions)
272
163
67%
Net Lending Portfolio Outstanding (ZAR millions)
483
375
29%
Merchant: Software
Software Sites
9,716
9,927
(2%)
Notes:
(1) ARPU is calculated on a revenue per active merchant basis based on a 3-month rolling average for the quarter ended
September 30, 2026. ARPU excludes network fees earned in our Corporate acquiring business, and the prior period has
been recast on the same basis.
(2) Our lending solutions are offered to merchants through in-house lending products and through a joint venture with
Retail Capital, in which we have a 50:50 profit share. Lending origination and net lending portfolio outstanding include 15% of
the lending originated and portfolio outstanding of the joint venture with Retail Capital.
Notable developments within Merchant:
Merchant ARPU decreased 5% year-over-year to ZAR 1,563 per month. Corporate ARPU increased 3% to ZAR 5,245, while
Community ARPU decreased 3% to ZAR 744, reflecting the more competitive pricing introduced across our Prepaid Solutions
products within ADP. The larger decline in blended ARPU reflects a change in our merchant mix.
43
Within Merchant Acquiring: Acquiring TPV increased 9% year-over-year to ZAR 11.3 billion, led by our Community
channel, where TPV increased 24% to ZAR 4.5 billion. Corporate TPV was unchanged at ZAR 6.8 billion. Community represents
approximately 40% of our acquiring TPV. In Community, our focus remains on developing the merchant ecosystem. Many
Community merchants first engage with us through our Cash Management or Supplier Enabled Payments solutions and
subsequently adopt our acquiring solutions as they become more fully integrated into our offering.
Within Cash: Cash Management TPV increased 2% year-over -year to ZAR 30.0 billion, reflecting divergent trends across
our two channels. In Corporate, cash TPV decreased 10% to ZAR 22.2 billion as the adoption of digital payments in this sector
continued to increase. In Community, cash TPV increased 58% to ZAR 7.7 billion and represented 26% of total cash TPV
processed, compared with 17% in the prior period. Community merchants continue to adopt our solutions to digitize their
cash holdings.
Within ADP: ADP TPV increased 33% year-over-year to ZAR 15.9 billion, driven primarily by our Supplier Enabled
Payments product, for which TPV increased 59% to ZAR 10.0 billion. Supplier Enabled Payments enable Community
merchants to pay their suppliers digitally and introduce those merchants to the broader Lesaka Merchant ecosystem. During
the quarter, we implemented more competitive pricing across our Prepaid Solutions products within ADP, with the objective
of increasing merchant engagement and our share of merchant spend. Prepaid Solutions TPV increased 5% year-over-year to
ZAR 5.9 billion.
Within Lending: Lending originations increased 67% year-over-year to ZAR 272 million, and the net lending portfolio
outstanding increased 29% to ZAR 483 million. The growth was driven by our recently established merchant lending sales
team, which is dedicated to originating loans and managing existing merchant relationships. A significant portion of
originations continues to be derived from relending to existing customers.
Within Software: Software sites decreased 2% year-over-year. We continue to focus on deploying Unity, our cloud-based
point-of-sale (“POS”) software solution, to new and existing merchants. Unity carries a lower monthly cost than our on-
premises solutions, and migrating merchants to Unity facilitates the integration of our Software and Acquiring offerings into a
single bundled solution. As of September 30, 2026, approximately 19% of our Software base used Unity, compared with 12%
a year ago.
Consumer
Consumer serves South African grant beneficiaries, both permanent and non-permanent, as well as other Lesaka
Payouts cardholders. As Consumer has evolved, both groups of grant beneficiaries have become revenue-generating.
Accordingly, we believe the combined metrics presented below are the most appropriate measures of Consumer’s financial
and operational performance. Although we have historically presented these metrics separately, permanent grant
beneficiaries continue to represent approximately 90% of active consumers.
We define an active consumer as any 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 within the last
90 days are not considered active consumers.
This definition reflects the revenue-generating engagement of our entire consumer base and is more closely aligned with
our current and future monetization strategy. We will continue to present Lesaka Payouts separately because it follows a
different monetization model.
44
ARPU performance is driven by cross-sell product penetration. Product-level KPIs are presented below.
Q1 2027
Q1 2026
Q1 2027 vs
Q1 2026
Consumer
Active Consumers (millions)
2.15
1.93
11%
ARPU
(1)
101.7
88.6
15%
Product Penetration Rate: 2 or more products
51%
47%
10%
Product Penetration Rate: 3 products
20%
17%
19%
Consumer: Transactional Accounts
Active Consumers (millions)
2.15
1.93
11%
Net Activations (thousands)
61
49
26%
Consumer: Lending
Number of Loans Originated (thousands)
411
354
16%
Lending Origination (ZAR millions)
1,137
820
39%
Lending Portfolio Outstanding (ZAR millions)
(2)
1,578
1,116
41%
Consumer: Insurance
Number of Insurance Policies Written (thousands)
89
57
57%
Active Insurance Policies (thousands)
799
589
36%
Gross Written Premium (ZAR millions)
167
114
46%
Consumer: Lesaka Payouts
Approximate number of active cardholders (thousands)
188
211
(11%)
Approximate load value for the period (ZAR millions)
155
165
(6%)
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
September 30, 2026.
(2) Gross loan book, before allowance for credit losses.
Notable developments within Consumer:
Consumer ARPU increased 15% year-over-year to ZAR 101.7 per month. We continued to grow our active consumer base
while cross-selling lending and insurance products to existing consumers, with particularly strong performance in insurance.
The proportion of active consumers holding two or more products increased to 51% from 47% in the prior period, and the
proportion holding all three products increased to 20% from 17%.
Within Transactional Accounts: Active consumers increased 11% year-over-year to 2.15 million, and our share of the
SASSA grant beneficiary market increased to 15.6% from 14.9% in the prior period. Growth continues to be driven by our
branch network in the communities in which our consumers live, supported by Bonngwe, our proprietary customer
relationship management (“CRM”) engine. Pusha Manje, our direct-to-consumer ADP offering, has shown early uptake,
although its roll-out across our consumer base remains at an early stage.
Within Lending: Lending originations increased 39% year-over-year to ZAR 1.14 billion, and the lending portfolio
outstanding increased 41% to ZAR 1.58 billion. Our nine-month loan product represented 67% of the portfolio, compared with
54% in the prior period. This product enables us to offer larger loans, including the ZAR 5,000 product introduced in the fourth
quarter of fiscal 2026, while maintaining affordable monthly repayments. During the quarter, we revised the pricing of our
interest-bearing loans from 12% to 15% per annum, calculated on a simple interest basis. Credit performance at the vintage
level remains in line with our expectations, and we have maintained our provisioning policy at 5.5% of the outstanding lendin
g
portfolio.
Within Insurance: Gross written premium increased 46% year-over-year to ZAR 167 million, and active policies increased
36% to 799,000. The growth reflects an increased focus on insurance across our sales teams, with consultants introducing
funeral cover to consumers at an earlier stage in their relationship with us.
45
Enterprise
Enterprise consists primarily of our ADP offering (which includes prepaid solutions and bill payments), distributed
through channels such as retail distribution networks and digital banking applications. Enterprise also includes our Utilitie
s
product, which provides prepaid electricity sub-metering and vending solutions.
Performance is driven primarily by TPV processed. Product-level KPIs are presented below.
Q1 2027
Q1 2026
Q1 2027 vs
Q1 2026
Enterprise: ADP
TPV (ZAR billions)
13.8
12.0
15%
Enterprise: Utilities
Active Meters (thousands)
380
358
6%
TPV (ZAR millions)
537
488
10%
Notable developments within Enterprise:
Within ADP: TPV increased 15% year-over-year to ZAR 13.8 billion. During the quarter, we consolidated our airtime
procurement from third parties for all operating segments into Enterprise, and our direct integration with mobile network
operators has reduced our supplier concentration risk. We also launched “4Connect”, our proprietary generic airtime
voucher, which has experienced positive uptake in our Community channel. In addition, we added several new content
providers to our “4All” multi-store-of-value voucher product, which contributed to growth in Prepaid Solutions TPV.
Within Utilities: TPV increased 10% year-over-year to ZAR 537 million, driven by a 6% increase in active meters to 380,000,
partially offset by a lower average vend per meter. Active meter growth remains positive, supported by strong retail meter
sales.
46
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, 2026:
●
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 September 30, 2026
Refer to Note 1 to our unaudited condensed consolidated financial statements for a full description of recent accounting
pronouncements not yet adopted as of September 30, 2026, including the expected dates of adoption and effects on our
financial condition, results of operations and cash flows
Currency Exchange Rate Information
Actual exchange rates
The actual exchange rates for and at the end of the periods presented were as follows:
Table 1
Three months ended
Year ended
September 30,
June 30,
2026
2025
2026
ZAR : $ average exchange rate
16.2849
17.6379
16.9074
Highest ZAR : $ rate during period
16.8364
18.1650
18.1650
Lowest ZAR : $ rate during period
15.9453
17.2702
15.7392
Rate at end of period
16.3979
17.2702
16.4072
47
Translation exchange rates for financial reporting purposes
We have translated the results of operations and operating segment information for the three months ended September
30, 2026 and 2025, provided in the tables below using the actual average exchange rates per month between the USD and
ZAR. Thus, the average rates used to translate this data for the three months ended September 30, 2026 and 2025, vary slightl
y
from the averages shown in the table above.
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 an
d
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 unaudited 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,
impairment of goodwill or other intangible assets, other items (including gains or losses on disposal of investments, fair value
adjustments to equity securities, unrealized (gain) loss FV for currency adjustment), interest income, interest expense,
income tax expense or earnings from equity-accounted investments to our reportable segments. 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.
48
In fiscal 2026 we closed the acquisitions of Atom and MobileMart and have integrated these businesses from December
2025 and February 2026, respectively.
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 th
e
operating segments, as well as any inter-segment eliminations, are included in Group costs. Inter-segment revenue
eliminations are included in Eliminations.
First quarter of fiscal 2027 compared to first quarter of fiscal 2026
The following factors had a significant impact on our results of operations during the first quarter of fiscal 2027 as
compared with the same period in the prior year:
●
Lower ZAR revenue:
Our revenues increased 7.7% in U.S. dollars and decreased by 0.6% in ZAR, primarily due to the
decrease in ADP revenue in Merchant and lower fees from Cash following the exit of our ATM business, which was
partially offset by an increase in insurance premiums collected and lending revenues (including interest) following
higher loan originations, and an increase in ADP activity in Enterprise;
●
Operating income decrease:
Operating income decreased primarily due to a lower contribution from Merchant and
rebrand costs, which was partially offset by a strong performance by Consumer and Enterprise, and lower
amortization of acquisition-related intangible assets;
●
Lower net interest charge:
78.9 million) primarily due to a lower interest expense following lower effective interest rates; and
●
Foreign exchange movements:
compared to the prior period, which positively impacted our U.S. dollar reported results.
Consolidated overall results of operations
This discussion is based on the amounts prepared in accordance with U.S. GAAP.
The following tables show the changes in the items comprising our statements of operations, both in U.S. dollars and in
ZAR:
Table 2
In United States Dollars
Three months ended September 30,
2026
2025
%
$ ’000
$ ’000
change
Revenue
184,572
171,448
8%
Cost of goods sold, IT processing, servicing and support
(A)
124,052
118,623
5%
Selling, general and administration
(A)(1)
51,555
39,700
30%
Depreciation and amortization
9,973
12,894
(23%)
Transaction costs related to Utilities and Bank Zero acquisitions
58
94
(38%)
Operating (loss) income
(1,066)
137
nm
Loss on disposal of equity-accounted investment
-
584
nm
Interest income
545
539
1%
Interest expense
(A)
4,258
5,013
(15%)
Loss before income tax benefit
(4,779)
(4,921)
(3%)
Income tax benefit
527
146
261%
Net loss before earnings from equity-accounted investments
(4,252)
(4,775)
(11%)
Earnings from equity-accounted investments
69
-
nm
Net loss
(4,183)
(4,775)
(12%)
Add net loss attributable to non-controlling interest
-
(117)
nm
Net loss attributable to us
(4,183)
(4,658)
(10%)
(A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations for the three
months ended September 30, 2025, Cost of goods sold, IT processing, servicing and support increased by $0.2 million, Selling, general and
administration expense increased by $0.06 million, Operating loss increased by $0.2 million, Interest expense increased by $0.1 million,
and the subtotal captions from Loss before income tax expense to Net loss attributable to Lesaka decreased by $0.4 million.
(1) Selling, general and administration includes allowance for credit losses.
49
Table 3
In South African Rand
Three months ended September 30,
2026
2025
%
ZAR ’000
ZAR ’000
change
Revenue
3,005,676
3,023,546
(1%)
Cost of goods sold, IT processing, servicing and support
(A)
2,020,378
2,092,242
(3%)
Selling, general and administration
(A)(1)
839,158
699,803
20%
Depreciation and amortization
162,383
227,366
(29%)
Transaction costs related to Utilities and Bank Zero acquisitions
945
1,762
(46%)
Operating (loss) income
(17,188)
2,373
nm
Loss on disposal of equity-accounted investment
-
10,342
nm
Interest income
8,875
9,496
(7%)
Interest expense
(A)
69,345
88,422
(22%)
Loss before income tax benefit
(77,658)
(86,895)
(11%)
Income tax benefit
8,494
2,572
230%
Net loss before earnings from equity-accounted investments
(69,164)
(84,323)
(18%)
Earnings from equity-accounted investments
1,118
-
nm
Net loss
(68,046)
(84,323)
(19%)
Add net loss attributable to non-controlling interest
-
(2,058)
nm
Net loss attributable to us
(68,046)
(82,265)
(17%)
(A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations for the three
months ended September 30, 2025, 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 loss increased by ZAR 4.4 million, Interest expense increased by ZAR
2.0 million, and the subtotal captions from Loss before income tax expense to Net loss attributable to Lesaka decreased by ZAR 6.4 million.
(1) Selling, general and administration includes allowance for credit losses.
Revenue increased by $13.1 million or 7.7% in U.S. dollars, and decreased by ZAR 17.9 million or ZAR 0.6% in ZAR . The
decrease in ZAR was primarily due to the decrease in ADP revenues in Merchant and lower fees from Cash following the exit
of our ATM business, which was partially offset by an increase in insurance premiums collected and lending revenues
(including interest) following higher loan originations, and an increase in ADP activity in Enterprise. 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 increased by $5.4 million or 4.6% in U.S. dollars and decreased
by ZAR71.9 million or 3.4% in ZAR. The decrease in ZAR is primarily due to the decrease in ADP costs, which was partially
offset by an increase in lending related expenditures (including interest expense), higher insurance-related claims and third-
party transaction fees.
Selling, general and administration expenses increased by $11.9 million (ZAR 139.4 million), or 29.9% (in ZAR 19.9%).
The increase was primarily due to higher employment-related expenditures, higher marketing costs related to the Lesaka
rebrand, an increase in the allowance for credit losses as a result of higher lending activities by Consumer and Merchant
,
higher consulting fees, higher lease expense from our new corporate head office and other new regional offices, 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 decreased by $2.9 million (ZAR 65.0 million), or 22.7% (28.6%). Fiscal 2026
included the impact of the change to a shorter useful life for certain of our brand and trademark intangible assets, which were
fully amortized by June 30, 2026. Therefore, the decrease compared with fiscal 2026 was primarily due to lower amortization
of acquired intangible assets.
50
Transaction costs related to Utilities and Bank Zero acquisitions during the first quarter of fiscal 2027 and 2026 included
costs incurred primarily related to the proposed acquisition of Bank Zero. Refer to Note 2 to our unaudited condensed
consolidation financial statements for additional information.
Our operating (loss) income margin for the first quarter of fiscal 2027 and 2026 was (0.6) % and 0.1%, respectively. We
discuss the components of operating income margin under “—Results of operations by operating segment.”
We did not record any changes in the fair value of equity interests in Cell C during the first quarter of fiscal 2026. We
disposed of our entire investment in Cell C in December 2025.
Interest on surplus cash was $0.5 million (ZAR 8.9 million) compared with $0.5 million (ZAR 9.5 million) during the first
quarter of fiscal 2026, primarily due to lower interest rates.
Interest expense decreased to $4.3 million (ZAR 69.3 million) from $5.0 million (ZAR 88.4 million). In ZAR, the decrease
was primarily due to lower interest rates following a reduction in the margin on our borrowings compared with the first quarter
of fiscal 2026 .
First quarter of fiscal 2027 income tax benefit was $0.5 million ZAR 8.5 million compared to income tax benefit of $0.1
million (ZAR 2.6 million) in fiscal 2026. Our effective tax rate for fiscal 2027 was impacted by deferred tax assets related to net
operating losses incurred by certain of our South African subsidiaries and the deferred tax impact related to the amortization
of acquired intangible assets, the tax expense recorded by our profitable South African operations and non-deductible
expenses.
Our effective tax rate for fiscal 2026 was impacted by the tax expense recorded by our profitable South African operations
and non-deductible expenses (including transaction-related expenditures). The income tax benefit was impacted by a higher
deferred tax benefit as a result of the reduction in the useful lives of certain of our brand and trademark intangible assets
which has resulted in an increase in amortization expense during the three months ended September 30, 2025.
Results of operations by operating segment
The composition of revenue and the contributions of our business activities to operating loss are illustrated below:
Table 4
In United States Dollars
Three months ended September 30,
2026
2025
$ ’000
% of total
$ ’000
% of total
% change
Operating Segment
Consolidated revenue:
Merchant
119,146
65%
126,950
74%
(6%)
Consumer
41,049
22%
30,576
18%
34%
Enterprise
25,766
14%
14,853
9%
73%
Subtotal: Operating segments
185,961
101%
172,379
101%
8%
Eliminations
(1,389)
(1%)
(931)
(1%)
49%
Total consolidated revenue
184,572
100%
171,448
100%
8%
Group Adjusted EBITDA:
Merchant
(A)(1)
4,716
35%
8,944
59%
(47%)
Consumer
(1)
12,658
94%
8,493
56%
49%
Enterprise
(1)
1,755
13%
1,269
8%
38%
Group costs
(5,615)
(42%)
(3,611)
(23%)
55%
Group Adjusted EBITDA (non-GAAP)
(A)(2)
13,514
100%
15,095
100%
(10%)
(A) Merchant Segment Adjusted EBITDA and Group Adjusted EBITDA decreased by $0.2 million for the three months ended September
30, 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 three months ended September 30, 2026, includes retrenchment costs of $0.4 million for
Merchant. Segment Adjusted EBITDA for the three months ended September 30, 2025, includes retrenchment costs of $0.2 million for
Merchant and $0.1 million for Consumer.
(2) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations —Use of Non-GAAP
Measures”.
51
Table 5
In South African Rand
Three months ended September 30,
2026
2025
Operating Segment
ZAR ’000
% of total
ZAR ’000
% of total
% change
Consolidated revenue:
Merchant
1,940,454
65%
2,239,035
74%
(13%)
Consumer
668,310
22%
539,006
18%
24%
Enterprise
419,452
14%
261,904
9%
60%
Subtotal: Operating segments
3,028,216
101%
3,039,945
101%
(0%)
Eliminations
(22,540)
(1%)
(16,399)
(1%)
37%
Total consolidated revenue
3,005,676
100%
3,023,546
100%
(1%)
Group Adjusted EBITDA:
Merchant
(A)(1)
76,870
35%
157,713
59%
(51%)
Consumer
(1)
206,111
94%
149,710
56%
38%
Enterprise
(1)
28,572
13%
22,407
8%
28%
Group costs
(91,413)
(42%)
(63,619)
(23%)
44%
Group Adjusted EBITDA (non-GAAP)
(A)(2)
220,140
100%
266,211
100%
(17%)
(A) Merchant Segment Adjusted EBITDA and Group Adjusted EBITDA decreased by ZAR 4.4 million for the three months ended
September 30, 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 three months ended September 30, 2026, includes retrenchment costs of ZAR 6.4 million for
Merchant. Segment Adjusted EBITDA for the three months ended September 30, 2025, includes retrenchment costs of ZAR 3.8 million for
Merchant and ZAR 2.6 million for Consumer .
(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 lower ADP revenue earned, including from lower prepaid airtime volumes
sold, which was partially offset by higher Acquiring and Lending revenue. The decrease in Segment Adjusted EBITDA primarily
related to lower revenue, higher employment-related expenditures, and higher allowance for credit losses.
Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for the first quarter
of fiscal 2027 and 2026 was 4.0% and 7.0%, respectively.
Consumer
Segment revenue increased primarily due to an increase in insurance premiums collected and lending revenues
following an increase in loan originations. Segment Adjusted EBITDA has been positively impacted by these increases in
revenue, but this increase was partially impacted by higher allowance for credit losses following an increase in loan
originations during the quarter, higher insurance-related claims, interest expense (of approximately ZAR 26.7 million; Q1
2026: ZAR 19.9 million ) incurred to fund our lending book, higher employment-related expenditures and the year -over-year
impact of inflationary increases on certain expenses.
Our Segment Adjusted EBITDA margin for the first quarter of fiscal 2027 and 2026 was 30.8% and 27.8 %, respectively.
Enterprise
Segment revenue increase due to higher ADP activity following the acquisition of Mobilemart and continue growth in the
contribution from Utilities. Segment Adjusted EBITDA increased primarily due to the increase in revenue which was partially
offset by higher employment-related expenditures.
Our Segment Adjusted EBITDA margin for the first quarter of fiscal 2027 and 2026 was 6.8% and 8.5%, respectively.
52
Group costs
Our group costs primarily include employee related costs in relation to employees specifically hired for group roles and
costs related directly to managing the US-listed entity; expenditures related to compliance with the Sarbanes-Oxley Act of
2002; non-employee directors’ fees; legal fees; group and US-listed related audit fees; and directors’ and officers’ insurance
premiums.
Our group costs for the first quarter of fiscal 2027 increased compared with the prior period due to higher employee
related costs, consulting fees, audit fees and compliance related expenditure.
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), , unrealized (gain) loss FV for currency adjustment, earnings from equity-accounted investments, stock-
based compensation charges and once-off items. Once-off items represents non-recurring income and expense items,
including costs related to acquisitions and transactions consummated or ultimately not pursued.
The table below presents the reconciliation between U.S. GAAP net loss attributable to Lesaka to Group Adjusted
EBITDA:
Table 6
Three months ended
September 30,
2026
2025
$ ’000
$ ’000
Loss attributable to Lesaka - GAAP
(A)
(4,183)
(4,658)
Add net loss attributable to non-controlling interest
-
117
Net loss
(4,183)
(4,775)
Earnings from equity accounted investments
(69)
-
Net loss before earnings from equity-accounted investments
(4,252)
(4,775)
Income tax benefit
(527)
(146)
Loss before income tax expense
(4,779)
(4,921)
Interest expense
(A)
4,258
5,013
Interest income
(545)
(539)
Net loss on impairment/ disposal of equity-accounted investment
-
584
Operating (loss) income
(1,066)
137
PPA amortization (amortization of acquired intangible assets)
5,524
9,134
Depreciation and amortization
4,449
3,760
Stock-based compensation charges
1,370
1,861
Once-off items
3,033
267
Unrealized gain (loss) FV for currency adjustments
204
(64)
Group Adjusted EBITDA - Non-GAAP
(A)
13,514
15,095
(A) Loss attributable to Lesaka – GAAP and all subtotal captions to Loss before income tax expense for the three months
ended September 30, 2025, have been decreased by $0.4 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
three months ended September 30, 2025, has been increased by $0.1 million as a result of the correction 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 three months ended September 30, 2025, have been decreased by $0.2 million, as a
result of the correction to the amount included in the caption Interest expense for the three months ended September 30,
2025.
53
(1) The table below presents the components of once-off items for the periods presented:
Table 7
Three months ended
September 30,
2026
2025
$ ’000
$ ’000
Lesaka brand refresh
2,750
-
Transaction costs
225
173
Transaction costs related to Utilities and Bank Zero acquisitions
58
94
Total once-off items
3,033
267
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 2026 we incurred transaction costs related to the proposed
acquisition of Bank Zero over a number of quarters, and the transactions are generally non-recurring.
Rebrand relates to costs incurred related to Lesaka’s new brand launched in November 2025, we expect that it will take
the remainder of the 2026 calendar year to roll out the refreshed brand throughout the organization. These are non-recurring
costs incurred as a necessary step in a set of strategic initiatives designed to create a “One Lesaka” identity for our customers
and our employees.
Liquidity and Capital Resources
As of September 30, 2026, our cash and cash equivalents were $85.8 million and comprised U.S. dollar-denominated
balances of $2.5 million, ZAR -denominated balances of ZAR 1.3 billion ($81.3 million), and other currency deposits, primarily
Botswana pula, of $2.0 million, all amounts translated at exchange rates applicable as of September 30, 2026. The increase
in our unrestricted cash balances from June 30, 2026, was primarily due to positive contribution from our operating segments,
and the utilization of our general banking facilities to partially fund the growth in our Consumer and Merchant lending books
,
which was partially offset by the utilization of cash reserves to fund certain scheduled repayments of our borrowings,
acquisition of property, plant and equipment and intangible assets, to fund the increase in our Consumer lending book and
other working capital (including acquiring inventory and funding suppliers to procure ADP).
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
9 to our consolidated financial statements for the year ended June 30, 2026, 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 are required to make a scheduled debt repayment of ZAR 200 million ($12.2 million) in March 2027. We expect to pay
up to ZAR 93.0 million ($5.7 million) on closing of the Bank Zero transaction. All amounts translated at exchange rates as of
September 30, 2026.
54
Available short-term borrowings
Summarized below are our short-term facilities available and utilized as of September 30, 2026:
Table 8
RMB GBF
RMB Other
Nedbank
$ ’000
ZAR ’000
$ ’000
ZAR ’000
$ ’000
ZAR ’000
Total short-term facilities available,
comprising:
Total overdraft
67,741
1,110,808
-
-
-
-
Indirect and derivative facilities
(1)
-
-
6,333
103,846
9,547
156,556
Total short-term facilities available
67,741
1,110,808
6,333
103,846
9,547
156,556
Utilized short -term facilities:
Overdraft
38,633
633,506
-
-
-
-
Indirect and derivative facilities
(1)
-
-
6,300
103,299
129
2,112
Total short-term facilities utilized
38,633
633,506
6,300
103,299
129
2,112
Interest rate, based on South African prime rate
10.25%
N/A
N/A
(1) Other facilities include indirect and derivative facilities may only be used for guarantees, letters of credit and forwar
d
exchange contracts to support guarantees issued by RMB and Nedbank to various third parties on our behalf.
The facilities under the Restated GBF Agreement were available for utilization from March 30, 2026, and are subject to
annual review by RMB.
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 3.5 billion ($213.8 million translated at exchange rates as
of September 30, 2026) as described in Note 9. These borrowings include outstanding long-term borrowings obtained by
Lesaka SA of ZAR 3.0 billion, which were used to refinance our previous long-term borrowings. We have utilized all of these
long-term borrowings. As of September 30, 2026, 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.
Restricted cash
We have also entered into cession and pledge agreements with Nedbank related to our Nedbank indirect credit facilities
and we have ceded and pledged certain bank accounts to Nedbank. The funds included in these bank accounts are restricted
as they may not be withdrawn without the express permission of Nedbank. Our cash, cash equivalents and restricted cash
presented in our consolidated statement of cash flows as of September 30, 2026, includes restricted cash of $0.1 million that
has been ceded and pledged.
55
Cash flows from operating activities
First quarter
Net cash used in operating activities during the first quarter of fiscal 2027 was $6.8 million (ZAR 110.4 million) compared
to net cash provided by operating activities of $8.9 million (ZAR 157.6 million) during the first quarter of fiscal 2026. Excluding
the impact of income taxes, our cash used in operating activities during the first quarter of fiscal 2027 was primarily due to
cash utilized for the significant net growth in our Consumer finance loans receivable and to fund other working capital required
(including acquiring inventory and funding suppliers to procure ADP), which was partially offset by the positive contribution
from our operating segments.
During the first quarter of fiscal 2027, paid taxes related to prior tax years in South Africa of $0.2 million (ZAR 3.7 million)
.
We paid taxes totaling $0.2 million in other tax jurisdictions, primarily in Namibia and Botswana during the first quarter of fiscal
2027. During the first quarter of fiscal 2026, we paid second provisional South African tax payments of $0.05 million (ZAR 0.8
million) primarily related to certain of our recently acquired subsidiaries that have not yet aligned their tax year to our June 30
tax year end. We also paid taxes related to prior tax years in South Africa of $0.3 million (ZAR 5.8 million). We paid taxes totaling
$0.1 in other tax jurisdictions, primarily in Botswana during the first quarter of fiscal 2026.
Taxes paid (refunded) during the first quarter of fiscal 2027 and 2026 were as follows:
Table 9
Three months ended September 30,
2026
2025
2026
2025
$
$
ZAR
ZAR
’000
’000
’000
’000
First provisional payments
-
46
-
821
Second provisional payments
-
284
-
4,936
Taxation paid related to prior years
234
330
3,683
5,763
Tax refund received
-
(20)
-
(349)
Total South African taxes paid
234
640
3,683
11,171
Foreign taxes paid
172
70
2,899
1,243
Total tax paid
406
710
6,582
12,414
Cash flows from investing activities
First quarter
Cash used in investing activities for the first quarter of fiscal 2027 included capital expenditures of $8.2 million (ZAR
133.8 million), primarily due to leasehold improvements to our new corporate head office and other leases, the acquisition of
vaults and POS devices. We also incurred expenditures of $0.8 million (ZAR 13.5 million), primarily related to the capitalization
of development costs, during the first quarter of fiscal 2027.
Cash used in investing activities for the first quarter of fiscal 2026 included capital expenditures of $4.0 million (ZAR 70.3
million), primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $1.1 million (ZAR 20.1
million), primarily related to the capitalization of development costs, during the first quarter of fiscal 2026.
Cash flows from financing activities
First quarter
During the first quarter of fiscal 2027, we utilized $59.5 million from our South African general banking facilities to partially
fund the growth of our Consumer lending book, and repaid $41.8 million. We utilized $4.1 million of our long-term borrowings
to finance the growth in our Merchant lending book as well as the acquisition of POS devices and vehicles. We repaid $1.2
million of long-term borrowings and in accordance with our repayment schedule under our asset-based facilities.
56
During the first quarter of fiscal 2026, we utilized $28.0 million from our South African general banking facilities to partially
fund the growth of our Consumer lending book, and repaid $40.7 million utilizing the funds received from the disposal of
MobiKwik. We utilized $2.8 million of our long-term borrowings to finance the acquisition of POS devices and vehicles to fund
our Merchant lending book. We repaid $1.1 million of long-term borrowings and in accordance with our repayment schedule
under our asset-based facilities. We also paid fees of $0.03 million related the September 2025 refinance of our facility to
fund the growth of Merchant lending book.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Capital Expenditures
We expect capital spending for the second quarter of fiscal 2027 to primarily include spending for acquisition of
POS
devices, vaults, computer software, computer and office equipment, as well as for our branch network in South Africa. Our
capital expenditures for the first quarter of fiscal 2027 and 2026 are discussed under “—Liquidity and Capital Resources—
Cash flows from investing activities.” Our capital expenditures for the past three fiscal years were funded through internally
generated funds, or our asset-backed borrowing arrangements. We had outstanding capital commitments as of September
30, 2026, of $0.6 million. We expect to fund these expenditures through internally generated funds and available facilities.
57
Item 3. Quantitative and Qualitative Disclosures About Market Risk
In addition to the tables below, see Note 5 to the unaudited condensed consolidated financial statements for a discussion
of market risk.
We have short and long-term borrowings in South Africa as described in Note 12 to our consolidated financial statements
which attract interest at rates that fluctuate based on changes in the South African prime and South African Overnight Index
Average (“ZARONIA”) interest rates. The following table illustrates the effect on our annual expected interest charge,
translated at exchange rates applicable as of September 30, 2026, as a result of changes in the South African prime and South
African Overnight Index Average (“ZARONIA”) interest rates, using our outstanding short and long-term borrowings as of
September 30, 2026. The effect of a hypothetical 1% (i.e. 100 basis points) increase and a 1% decrease in the interest rates
applicable to the borrowings as of September 30, 2026, are shown. The selected 1% hypothetical change does not reflect
what could be considered the best- or worst-case scenarios.
Table 10
As of September 30, 2026
Annual
expected
interest charge
($ ’000)
Hypothetical
change in
interest rates
Estimated annual
expected interest
charge after
hypothetical change
in interest rates
($ ’000)
Interest on South African borrowings
25,268
1%
27,801
(1%)
22,738
58
Item 4. Controls and Procedures
Under the supervision and with the participation of our management, including our executive chairman and our group
chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under
Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of September 30, 2026.
We previously identified and disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the year ended June 30,
2026, material weaknesses in our internal control over financial reporting related to:
(1)
Our Consumer lending, Consumer insurance and Group payroll processes, specifically insufficient risk assessment
and monitoring activities relating to changes in or migration of systems and processes, insufficient controls over
internal information and information from service organizations, and insufficient design and implementation of
ITGCs, controls over service organizations and process level controls, resulting in ineffective process level controls,
including a lack of validation of the completeness and accuracy of information used within the processes;
(2)
Our journal entry process, specifically relating to insufficient risk assessment, 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 inadequate validation
of the completeness and accuracy of information used within the process;
(3)
The failure of our Utilities, Lesaka Hospitality, Lesaka Merchant Technologies and Lesaka Payments businesses to
comply with our Sarbanes program, specifically insufficient risk assessment and monitoring activities relating to
systems and processes, insufficient controls over internal information and information from service organizations,
and insufficient design and implementation of ITGCs, controls over service organizations and process level controls,
resulting in ineffective process level controls, including a lack of validation of the completeness and accuracy of
information used within the process;
(4)
An insufficient number of experienced and trained resources to execute on their internal control responsibilities
resulting in inadequate risk assessment, ineffective design, implementation and operating effectiveness of process
level controls for processes in the scope of our internal control over financial reporting evaluation.
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, 2026 (as described above), the executive chairman and the
group chief financial officer concluded that our disclosure controls and procedures were not effective as of September 30
,
2026.
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 continues to work to remediate the identified material weaknesses and remains committed to remediating
them. Our remediation process is ongoing and includes, but is not limited to, the following steps:
(1)
Commencement of an Internal Control Upliftment project, supported by external advisors, to strengthen and
standardize internal control documentation, elevate the design and implementation of process-level controls,
enhance control owner/management understanding and accountability in relation to the importance and operation
of internal controls over financial reporting. The focus is specifically on areas comprising associated material
weaknesses or significant deficiencies. In parallel, the Group SOX team continues to work with control owners to
enhance the broader control environment, with a focus on, among other things, controls over service organizations
and ITGCs. In the medium term, we intend to increase the degree of automation of controls throughout the
organization;
(2)
The recruitment of additional appropriately skilled resources across the Finance and Risk and Compliance
disciplines, including the appointment of a Group Head: Risk and Compliance reporting to our executive chairman
to enhance internal control capacity and capabilities;
(3)
Planned rollout of an enhanced internal controls training program across the business, including targeted training
for resources responsible for key controls;
(4)
Further embedment of a culture of internal controls compliance through the embedding of controls compliance in
the key performance indicators of senior executives as well as process and control owners across the business;
(5)
Mandated enhanced risk assessment procedures with governance requirements upon implementing new or
migrating existing systems within the Group together with the design, implementation and monitoring of control
activities; and
(6)
Closer collaboration with internal and external assurance partners to ensure the robustness of our remediation
activities.
59
The remediation plan with respect to the material weaknesses identified for the year ended June 30, 2026, may be
adjusted as is appropriate, as we continue to evaluate and enhance our internal control over financial reporting. Other than
the design and implementation of the remediation plan, there have not been any changes in our internal control over financial
reporting during the fiscal quarter ended September 30, 2026, that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
60
Part II. Other Information
Item 1. Legal Proceedings
General
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. 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 resul
ts
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, 2026, for a
discussion of risk factors relating to (i) our business, (ii) operating in South Africa and other foreign markets, (iii) government
regulation, and (iv) our common stock. There have been no material changes from the risk factors previously disclosed in our
Annual Report on Form 10-K for the fiscal year ended June 30, 2026.
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 first quarter of
fiscal 2027:
Table 16
(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
Jul 1, 2026 - Jul 31, 2026
-
-
-
15,000,000
Aug 1, 2026 - Aug 31, 2026
-
-
-
15,000,000
Sep 1, 2026 - Sep 30, 2026
(1)
40,688
4.56
-
15,000,000
Total
40,688
-
(1) Relates to the delivery of 40,688 shares of our common stock in September 2026 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.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Our Section 16 officers and directors, as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934 (the “Exchange
Act”), may from time to time enter into plans for the purchase or sale of our common stock that are intended to satisfy the
affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act. During the quarter ended September 30, 2026, no
officers or directors, as defined in Rule 16a-1(f),
, modified, or
“
61
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
10.47*
Amended and Restated Employment Agreement, dated
as of July 30, 2026, between Lesaka Technologies, Inc.
and Ali Mazanderani
8-K
10.1
July 30, 2026
10.48*
Employment Agreement, dated as of July 30, 2026,
between Lesaka Technologies (Pty) Ltd and Ali
Mazanderani
8-K
10.2
July 30, 2026
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.
62
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on November 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