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Net 1 UEPS (UEPS)

Participants
Dhruv Chopra Head of IR
Herman Kotzé CEO
Alex Smith CFO
Allen Klee Maxim Group
Tom Zeifang Lucrum
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Net 1 Quarter Four Earnings Conference Call. All participants will be listen-only mode. [Operator Instructions] Please note that this call is being recorded. I'll now hand the conference over to Mr. Dhruv Chopra. sir. ahead, go Please

Dhruv Chopra

Welcome on fourth our the our Kotzé; Irene. call. CEO, XXXX With and Smith. Alex me call CFO, to you, quarter our earnings Herman Thank today is

Investor financial release press available on and supplementary Relations Our presentation ir.netX.com. website, a for are - our

or to Form weeks expect a couple XX-K We in file of our sooner.

risks As statements, cautionary you the ask at the uncertainties and language release during in and to call, press will we forward-looking this reminder, with I a be forward-looking our contained statements. making associated look regarding

In certain directly addition, these we a be during this most call, of GAAP comparable we have non-GAAP will using non-GAAP reconciliation the and financial to measures. measures measures, provided

results discuss African of press in South our our assist a release Rand, in will Rand non-GAAP in business. results trends operations analyze underlying of understanding the to in is We our investors our which measure. We

South fluctuations by U.S. you dollar be significantly As affected the Rand. results can the between the know, African currency company's and

We will following remarks. have prepared session a Q&A our

So over to turn Herman. the call with me that, let

Herman Kotzé

Thank and to shareholders. our of good you, morning, all afternoon Good Dhruv.

We SASSA, days be days expiration to are exact. XX to our contract counting eagerly down of the with the

to XX%. that sustainable, Despite inclusion Africa expand processing conservative our South offerings and and South and of beneficiaries positioning businesses underserved paid has our CPS allegations, African been very strategy past political internationally. financial during transaction as are fintech further shareholders. differentiated social we the to millions competitors the remain and its fueling XXXX and company obligations of We revenue have revenues, to by of SASSA by challenges exit While and proud years, on our the to mention to QX to Concord South reduction hostile our sometimes upliftment competitive, the are over on media demonstrated Africans achievements X.X the approximately our declined in and unfounded they NGOs track this the and recognition policies not number distractive

the proudly the and on African successful annual privileged biometric treasury grant incredibly South of while social past world's largest and the ZAR for run billion one without save over per paying X years, to year as their X.X are We reports. our most using disruption programs, South technology by are African time and SASSA to recognized have distribution in

by return with in mind, to We inclusion company our bandwidth a initiatives this with and growth will on hopefully political to part abroad important for have or SASSA more South contract than to update profitable a burdened being and and focus other minutes Africa on will you strategy. contracts finally financial of activities group's motivations. or freedom of the it the our consistently and in fixed-term I that we aspects on With our one, I being other without call, spend to future an the our few the activities before last earnings expect turn need providing

tumultuous potentially Post recipients the South get and discovered where we thus for given would the transition listeners investors website, disruptions warned our the refer officials of events like is hours government I or and to welfare release, grant the in and has been pay catastrophic cycle. the of or may worse recent better. gets to to which it from last before and payments of it country's on expected, far Office, African we've we South the As still service potential XX our SAPO, our so, in media complex SASSA CPS and available have September African some grant

card, receive turn forcing SAPO September where the their a underhanded no will a that receive SASSA these knowledge used to and receive they grants taking presumably consent with valid to notice accounts grant SASSA grant Approximately choose on be XXX,XXX card, option, cash our other to constitutional not the where illegal potentially grants away put also and resolve office issue will out are current wish and through to they to to into their to soon or the at find who the in be have travel in issued paid. for how without a We card. SAPO they unsuspecting new points conduct, SASSA or recipients pay SAPO right and recipients the and have with new but grants new a SASSA/SAPO

in for last efficiently Given of could clients themselves. to challenges consequences the have the surge volumes disastrous panels expert report, beneficiaries SAPO's board new in as highlighted

legitimately XXX,XXX the not accounts receive receive suffer similar these will SASSA the EPE. instances In to EPE though the clients EasyPay their grant elected completing SASSA/SAPO documentation paid be not our is into accounts the because processed for new has to documentation addition, receive in through approximately have into will grants supporting a card even certain and required through September existing to forcing and recipients, Everywhere the grants they grants fate who by elected

from intend we that accordance SASSA categorically Concord's in long insufficient X we recipients. recipients We contract contract. and pay end phaseout all door week as paymaster our prolong points our our down these of instructed grant blame access for money their care with point attempt grant CPS to to service to pay about devices matters closing amongst amount turned ATMs with on X state will only XX that African attempts been concerns have an SASSA the no grant want the yet further This about large make I that at and to fully the social SASSA doubt any worse, making pay to are to as attempt this To points to that I and with process away, September has services as this of no will thousands at a our and will confusion as point-of-sale South dysfunctional be and and order. a create SAPO the arrive in our provinces. success due of criticism is funds. of by concerned will aggressively possible portraying grants again lay have to not through

In addition, unprofitable interest it profits is contract time, continue, the simply the commercial to that not and all the so about unsustainable. some been it is for our in argument has is

in It especially in new Net a forward, have grant profitable SAPO quarters. with they to conditions, to number X, times of in provided South payment Net the African global them often going history. are two uncertain service account XXXX, now an being As is recipients in about that post to will offices is us without expect welcome sense -- pin X's September. recipients a chapter makes the during payments role unnecessary while and two playing will what to transformation consequences proudly that And any the product the education next grant biometric continue terms business We But to with actively to price will appropriate that corporate these on that the for new clear in turn with distribution of the direct company. the prevail of comprising unsecured required this The to used not and exciting grant forced to effectively sustainable and recipients verification fintech continue citizen, I being in will offer the the The also operate fair when areas. network competition the at they of our built use proximity starting and and other ensures accounts closing conclusion in to and banking and instead old of to these in an utilize our We, hardship a market required to the inadequate July and we fiscal constituents are service actions no only numbers and this ATMs are to as system best and bring businesses therefore, into large live. and provided illiterate. constituents. grant national place last the of payments deeply cycles, best stress properly close affair solutions into SAPO's strategy. payment wholly concerned segment we these rural is SASSA caused out where infrastructure sordid have forcing

in X its expand will, Net payment processing synergies services consolidated solutions. we to international fiscal acquiring in processing solutions blockchain financial our and go-to-market virtual will our One, infrastructure aggressively coming primarily unparalleled unveil and with transaction and MobiKwik the Finbond, issuing, IPG expand including other our card underserved and X and processing fiscal collaboration Starting UEPS/EMV, being the Frick, or Frick, and intend new last DNI, to within and our international Finance. Cell by Bank unbanked and with further having investment the we cryptocurrency with forward the Starting our Africa, Finbond. with and and Our areas. solutions XXXX. IPG, on of South our strategy Bank key IPG product continue in mile will under end-to-end where inclusion And in partners small activities, also around One to going and businesses in collaboration Two, leveraging XXXX, Payments Africa. strategic brand focus, payment following South Group, new technologies and third, expansion storage C during weeks. assets International to underbanked

transactional consumer-focused of which strategy First, issuing account. let provision in the EasyPay Everywhere, South me begin is card independent through our low-cost with Africa a bank

devices that began actually accounts fiscal Everywhere, the post-SASSA form million May our preparations years, ATMs for of in in network card the with EasyPay previously, of and acquiring few EPE account Since growth past the discussed South interoperable locations. Africa XXXX launch, the in almost or strategic reaccelerating contract over we we've As and launch in deployment X added XXXX. of our with at strategy point-of-sale

or access negligible it mobile of period, and provides. banking other proof accounts product of number to this Importantly, churned, of had over we've the closed this further the services value a that

they considerable the SASSA recent I've of by grant undertaken debit cards campaign SAPO Thus, new confusion new and issued the SASSA if account same described, the SAPO-issued minister have as a experience can they growth. the wealthy while recipients specifically caused continue However, card. group we this newly just reregister account the level has that to by to holders, told been among to receive grants and of only rapid SASSA SAPO

meaningful time, For our experiencing are base. in also the attrition we first

or additional choose, this our completes a we around this conversion subsides. on will and SAPO Recipients now choice. are million is noise marketing also receive that next the own of can accessibility, account grant grant modestly the between in their line grow to recipients net customer bank remediate once recipient to quickly We to active and to to we to the fiscal and and win account registration constitutional to loyalty with choose in again benefits, functionality option and any insistence situation in the contract adoption the the base becomes process XXXX SASSA months apparent of regulations million efforts. they and entire this SASSA/SAPO number their QX of the the X.X of new as EPE rights card X elect continued as EPE services from available expiration our base few confident anticipate an ultimately not then expect SASSA's remainder that We during through increase itself and base XXXX. of be accounts the Importantly,

fuel consumer it a users. C push of We will more income termination with will December is flat to South the supplemented given which by reaching during of hit to also EPE be synergies further addition customers, XXXX. the Cell than for process, actions three for prudent to our ARPU the African that our remains X months believe our and million remain though, driver out and to fully base backend we this fiscal is expect of EPE begin contract DNI, EPE SASSA key the for believe of up to higher line account expect by time the XXXX. by We targets X% we to recent target strategy

as EPE financial and as products access EPE our from well products. and We we in C financial redirect have Finbond to distribution the contract to away to both as our access growing platform. The cheapest product ATM and our will point-of-sale this additional significant connectivity DNI, inclusion our provides Cell towards we resources channels create the utilizing and our articulate synergies made investments infrastructure, continue consumer mile to by offerings, new progress our created SASSA every obligations quarter. inclusion last

to March in identified meaningfully, mobile proprietary We believe we activities number accept our believe also increased mobile expand from our from accessing infrastructure customers other further we of ATM number banks, in our Since X opportunity this fixed the increase of non-Net utilizing interoperable. and all has South We infrastructure acquiring an ATM XXX,XXX will will individuals at business have commence our to which point-of-sale initiative, we once to infrastructure June. our XXX,XXX transaction supplement processing Africa. end of make ATM the the cards

has next XX fiscal branch our over to to XXX XXX And branches, ATMs the network this the X,XXX will interoperability months. branches accessible our this expected XXX-plus customers ATMs and year. we another to grow of Our fixed with from over of further X,XXX are mobile to any grow from to together grown expect ATMs, bank. become to XXX Similarly,

part are to initiative strategy. our completed issuer become card an final waiting With for acquiring and have card UEPS/EMV the the African Our is, Finbond, of from certification networks. South important them other therefore, cards, the we of development we

Finbond have issuance in second with branches retail we Finbond, and in Africa. XXX large with commence us would over quarter a have Together XXXX. themselves X,XXX giving Africa. network rival South of of combined that cards over any will We banks expect ATMs, the XXX of the in branches to South

book offerings insurance financial into Our premiums of expand. services continue and our offering loan part and and an our differentiator integral are EPE and to tie

into investments, and discuss consolidated wish XXX its XX%. the the million after-tax targets million how its XXXX. We interest effective in will June and developments of financial Cell tie and performance XXX ZAR full end minority June in fiscal strategy. ZAR far and million, the namely I operating our C, of for posted XXXX, DNI XXXX profit South year be telecom-related DNI, African Second, XX, XXX ZAR consolidated they after-tax approximately with to to of ended of our DNI exceeded projected

customers. unemployed accelerate able projects our Now to to application that only joint DNI provides our generating comprehensive not Africa the distribution networks, exciting micro-jobbing deliver but contracts and lifeline South be in well. income disruptive its technologies, to citizens will to some South a such for has that products leverage is and a itself group products lifestyle many to subsidiary, become we as and Africans opportunities all can as internationally our DNI complementary and

tower-sharing the recently with DNI one seamlessly by Cell become means Net be C, XX% barriers for lifestyle results This removes African the operator is will week our and dependable price up interim from XXXX our Finally, our X tower-sharing as C's Cell June on see year. to to last their products, was country. low-cost transformational with of right biggest as and the investments South a November expected XG consumers and well they C recapitalization XX, the which discuss in C, Cell trend for limited finally following ending due have and Cell performance regions to will of able the poor and to as and to X agreement ability financials, operating Cell coverage. demonstrating in make let customers X will reported overlap I signal all as attractive public direction, to been initiative announced products XX% their Alex note they it for coverage I to together And that will fully months to the the last C operational XXXX. metrics create while will organizations. and that continues the take benefit wanted This returns our customers interest

the international strategy component second on being focus will I IPG, in and particular. Next, of our

the one of international Frick consolidated called the our entity Masterpayment Services TXX, finance International has nonpayment Bank such and the Malta to over course down as various soon undergone operate Group. investments have and solutions a activities. nonstrategic closed reminder, in in a various restructuring businesses capital Financial Payments new our currently will This As including working brand customers XXXX, Masterpayment, assets, various consolidated operations, we under which entity, under

to appointed of help several new the this business have We development executives sales and expansion drive business.

and Development XXXX. the MasterCard and issuing Visa -- past certification we fiscal newer its new complete, in is initiatives. and building a quarter new progress expect has quarter, called channels for processing its multicurrency products on IPG platform new made of and and and during system, management blockchain Over [Kaleidoscope] Atlas new XXXX second partners, card identifying the bank cryptocurrency

In which to integration. biometric division of most leverages small for underway, single-point solution on module merchants, modern offerings technology X's consolidate asset in is security X merchants deliver addition, proposition include in trading services made licenses past investors X scale recently world has blockchain a range has in our number It is cryptocurrency future. we value date, U.K. become meaningfully custodian have card this today. progressive enhance significant a exist cryptocurrencies\ of the and institutional the and we processing new the and regulations virtual offer MobiKwik To part strategic to in to The in technology blockchain working In with the MobiKwik. onboarding addressing countries of April product and the X the as new of further our merger activities. Europe. accelerate its the has Net India, its week, development is also instant is that this and controlled this position blockchain its for and Net payment could cryptographic persistent first most due unresolved X, to investment resulting by challenges with defining banks with and asset launched of that the IPG the collaboration in for a cross-border some one added Net core earlier is offering project and IPG expanded a compliance blockchain of the to leverage a with solution And in its year. to over it Liechtenstein bank with issues particularly Bank will along India storage of one XX% users Net publish arguably late users by firmly deliver to solutions the industry. exploring and Research Bank crypto alone. offers EU of regulatory objective accelerating to draft in in The start Frick, best-in-class regulatory for its customer the new daily we our product received framework to products, issuing and week generation investments months. leading one hardware underpinned is crypto a already Europe what verification a in onboarding, custodial significant has knowhow, with established area Frick crypto this registered to the to approval in to of crypto industry the security partner. holistic increase all

very We seen registered the positive trends the among stands users. user usage in currently XX,XXX base, which at take-up and have

For spend the million, locations the is sequential processing acceptance to XXX%. and wallet which have value a of adding sequential XXX%, approximately the ending approximately Approximately is accepted, not a of INR virtual card increase of XXXX, MobiKwik we billion was on $X their processed increase three thereby August is at period XX% month value transaction XX,XXX transactions, X.X or where network. meaningful

financial to range of payment including rollout via loans Their more by products, being expanding will Net platform largest its interaction. have its remittances. In West to the line they X and services expand And XXX% for platform, preclude services year. pure company XXXX algorithms proprietary Similar offering loans, business in with to offerings, Nigeria, provider, to months insurance strategy. insurance, also the player OneFi other next machine in company of MobiKwik The the provide financial expand business savings wealth of will the be it the of in sub-Saharan not rapidly is excited customers digital ago, to X using that model. personal expanded a its our its lending the to cross-border alone, a all multiple the number product first by services and far has which cards, keeping closely other Africa become issued mobile payment operates including in over its app sectors the IPG. NXX seen aligns adoption. already revolutionize company Paylater. digital processed so has management Africa include finance major rapid about credit in and markets its to mission X to services the countries any is million calendar daily, this such of We management to country. in to and neobank X loans currently need human the of billion and be launched ability fixed the and MobiKwik X evaluating has OneFi Nubank, to financial from lenders which are the as end continue digital Net other continues In Revolut, neobank impact itself transformed OneFi's by with underestimated. initiative wallet and should investment one the learning support

Let discuss for international aspect the our of deployment me of strategy third now technologies. the payment

base the international for analyzed continuously go-to-market UEPS/EMV are strategy We opportunities.

As season you London are executives. by aware, decided driven a to last joint and year in based venture payment create we industry

project, specific we Given effect, and the countries, mobile by on those is we including UEPS/EMV. already build have across and payment customers are these identified who markets, of to better significantly the that their believe market. the have remain served multiple to pipeline emerging time in and extends partners approach be effort that based and African first-world offerings being To a in to solutions, to solutions to people we provider in keen we proactive, realizable believe working time countries. utilizing opportunities, of who with expand environment ground will the now Therefore, active potential the card-based

We able with on more finalize we to details will as this as our effort matters are provide proposed partner. soon

periods in are our Turning our to -- results, at questions to borrowing investors the in transaction beginning our regulatory bottoms subsidiary as the recover worst QX. Revenues, by resulting as behind have year. is driven past QX further seen I'm we from margins regulatory to to out mostly KSNET. us any also XX% they feel that the volumes, nicely over around XX% becoming EBITDA rebounded and and in the being of get in QX quarters declines. in local October took therefore, comparisons changes year in to flat and should of our previously pricing currency easier the $XX goal towards this plus place returning QX, It's of XXXX. move year steady in XXXX current fiscal a relatively margin Korea little EBITDA improvement stated run several by prior starting pleased our on our that after on The say back versus QX. many million revenue changes, South will South per yielded Korean and headwinds us loss effect and The rate

intend expert transaction also landscape in valuable navigate to help asset. will challenges our explore and us those We invest by opportunities some assist help the advice as to alternatives better strategic to as with presented this processing us new and well

hand Cell fundamental and minimal is attention Before total per are I warrants EBITDA share clearly MobiKwik in by overall meaningful the our potential our results. all well by portfolio, to which in I XX% believe to OneFi to Bank Finbond, investment and it contribution our very investor market metrics want over our seen community our some now undervalued value comment despite earnings on I release. It C, almost shareholders. press represents current and doing as Alex, of Frick, as

us to of these corporate expand brings Africa may small globally. potential In our exciting allocation. each activities they diversifying strategic turn structures, in companies South our few of which a these and their in capital our expect investment activities as A, finance with long-term strategy nicely their fiscal investments. in of optimize seek engage and XXXX, B, investments, we into fiscal in on the topic own full most In million capital spend XXXX, new fitting We of we $XXX reaching to strategic

share We great tangible engage loans we program. $XX To see some we we resuming we on current find sustain with from meaningful, currently are new down until opportunistically but we in to program, levels, steps Net full. current to or at our earnings and our in in are repaid we outstanding repurchase you African existing next consider if million that shareholders, cash but be surplus expect remaining starting position to own fiscal we said, which using South taken the will and and approximately I our bottom share flows generation. deliver However, U.S. $XX likely forward our the be also one strategy shares. year value have elsewhere, actually our million meeting the our have our repurchase in approximately loans actions in The will our are we of our liquidity of our reiterate drive cash a Once pay XXXX, commitment to benefits and have to X to look of of transition month. is is our as restricted

in We have the SASSA company increases financial to challenges positioned inclusion the to of our South with contract our short-term exiting business drive our African navigate through businesses. positioned and

to the X in rebuild Net before recent IPG financial in our execution, companies. leading of echelon With hope and international and credibility session to go Alex internationally, our return the we over While more and the detail performance will up and the Q&A. its growth the for metrics growth now restructuring confidence sustain will to and repositioning of we is expected to strategy trajectory. business continue open

Alex Smith

Thank operating the trends of quarter discuss results and I for compared XXXX key to segments will year a within our you, fourth Herman. ago. the

average dollar was XX.XX down Revenue down currency. but XX%. For ago ZAR QX of rate of QX XXXX X% XX.XX U.S. XXXX, our ZAR in approximately our constant year and compared positively by dollars a in million $XXX dollar results XX% impacted year-over-year rand in exchange was to

XXXX to by on C constant-currency share in and basis per include QX Cell a USD our X.XX earnings XX% fundamental relative Our a the decrease tax-affected decreased investment. fair of value

share earnings fundamental $X.XX was the in adjustment, value fair the fourth of per Excluding XXXX. quarter

improvement we will be amount this of to returns in last any last offset included group, included in we've believe due And it significant in caused quarter the GAAP deduction operating to fiscal C market accounting appropriate for the lower company's investment is this of for assessment announcement results performance. earnings as the be performance guidance. multiples of in Cell new earnings quarter, it the reflected in their from The reflected partially indicated our underlying by and As adjustment in week. included in fundamental because in in peer the decline this XXXX, generated the by value is

with and in pleased are XX, for the showed months in evident Cell XXXX, We which announced progress continued profitability. subscriber and June improvements the C's X ended recently revenue growth results

be their in While the billion for need some Cell good in since week, has July in and additional around discussions C has progress ZAR with last is funding there for which for always a been approved to is speculation made leverage business X.X very facility funding It in Cell C was a results for to remain similar current expected its round Cell the of that its recapitalization manageable. year, last requirement. sufficient that invest ratios size, and a following C intention

in management's plan around to ability potential in is a planning confident business underway. on IPO XXXX and deliver are We the

in segment, carrying impacted resulting fair required from the Our holding purchase than the to earned, the to revenue was this lower value the a in million quarterly by compared of in basis. grants, order number date a noncash contract Court of loss billed of processing have adversely equity dollars recommendation. being income holding U.S. of a constant-currency due as lower fourth X% price The XXXX, transaction have record and is social rate in reported $XX was measurement value XXXX the loss. as we on In a on results XXXX. old as primarily of the our treasury's revenue short, African million, By Constitutional on and of acquisition a at of segment South also the welfare quarter XX% the performed the issued XX% were fourth $X result currently were an not DNI allocation yet which of national June the remeasurement decrease to quarter we acquisition decline significant of as down XX, of the preliminary price

of treasury office contractor requirements given pay the with quoted significantly rural higher allowed panel our ZAR points, per For in by XX cash national to a and disbursement has distribution be excess cash month. structure expert at renegotiate Court Constitutional the African cost of for the to to estimated grants South monthly price, post the by areas engage in us

not Constitutional propose activities. the to Constitutional at part treasury on a the be losses the XX.XX, the that in application the August rectifying While XXst quarter. filed in first XX.XX on further. the severely for recognized during aggressive our inaction a of excluding to price have migration fiscal did XXXX this an CPS increase therefore, prejudices The CPS. earlier. and of by ex income we was VAT recommendation resulting result as revenues, incurred to transaction quarter offset only EPE-related any higher primarily resulting increase increased or decline the old Court with partially the decreased, segment the CPS processing revenue intersegment you given and we Court, African discussed has monthly their of post beneficiaries contract to of accepted CPS to Operating transition and revenue We've the by of the revenue a an fixed ZAR urgent Without efficiently considerable ZAR instituting price, court the price loss South increase expect office,

margin Our operating XX.X%, X.X% of income and the fourth segment and XXXX quarter respectively. XXXX was for

order the fiscal expect margins Given depressed last which contract. by CPS margins of SASSA for of the will currently the await rationalize the quarter we to of transaction compared $XX.X million with Group. the quarter XXXX end X% quarter of that Court, the $X.X of concluded to contract, be International the International infrastructure segment quarter was the of higher fourth fourth as currently down transaction results for allowance Once loan we as fourth the during the our income we to the Constitutional generated processing dollar-based full a XXXX, from first from due we've no we given XXXX levels structure, SASSA than as XXXX, revenue the required cost the Payments in maintain because our longer receivable. required we contract. a expect XXXX, South these to Operating coinciding remain limited year's lower visibility, quarter African finance contribution doubtful recover to can million our was fourth included see processing

of lower them XXXX contribution is that by XXXX fourth XXXX This it sequentially compared lower year, X.X%, the as Korea the XX% than the the other last fees the respectively. and though the of Korean businesses, a quarter XX% under of in margin Group. fourth and international units and of comparative in quarter equivalent fourth broadly and charged improve regulations XX% adversely XXXX, from the consolidate may on have transactions the governing last to million in Operating compared period International due lower KSNET we to generated allowance, the Korean restructured was in be was flat quarter Won third over $XX.X card as been discussed as various the X.X% revenues in to a quarters for reduction XXXX. changes EBITDA from prior quarter margin year-over-year this to was operating while Excluding declined X the result the amounted in South quarter to impacted income year to the the and Payments regulations, earlier. income did

sequential an for to effect impact XXXX. have We But have around. on turning remainder expect trends businesses continue of a shown quarterly adverse the this results to basis, on results the calendar reported

the had is we fiscal flow with Looking seeing in fourth Payments are XXXX. International to in as companies quarter we business. the cash although first lower the improve half performance transaction for quarter of a the CapEx calendar XXXX the forward, of the South landscape in free strong out And the fourth from in of the Group dropping seen a off VAN returned to expect XXXX, remains challenging level challenging The a as the XXXX. quarter revenue, this its capital incurring the the which IPG impacted value been particular, in as in second quarter dissipated up of of the quarter. fiscal levels had in of on we most seen these restructuring currencies we costs pick in seized which regard, given margins third In some the the XXXX. experienced of focused quarter working of third the elimination also cryptocurrency for in various higher operations, finance well processing result, operating volumes Korea. decline regulatory generation the has

and segment business primarily lower revenue services, and XX% other of in down applied to on the growth fewer intersegment X% operating technology criteria decreased Our applied of Financial fees down constant-currency fewer basis. dollar in by value-added with financial compared fourth revenues, offset $XX.X million our a due XXXX account revenue fourth prepaid as technology income charged in terms customers. we and was U.S. and partially monthly to and lending and quarter our insurance the tightened airtime quarter in lending volumes inclusion inclusion XXXX, products and

deferred XXXX. capital approximately fourth the of book, compared million billion quarter was lending at at XXX of fiscal in and service of comprising the fourth fees quarter ZAR gross the of Our end X.X out ZAR XXXX to the end

criteria have tightened We as sequentially lending transition lending XXXX the the not during current book quarter we by manage risks given in refined new our risk, credit of payment the the our space. fourth grant further grown to introduced

accounts, we our approximately continue are expansion growth We offerings complete. of currently ATM X believe and is although million payment once along July contract the with will EPE to financial XX, segment's sustain X.X particularly receiving grant after service transition branch had the our million this infrastructures, grants. the only At

associated operating of as than us fewer in sold the revenues in may product income. of sales Life segment. prepaid Moneyline XXXX. continue In will but September. in from was largest business, to insurance monthly of X, various to this the market the services DNI's inflationary in The segment this and of momentum, the pressures, quarter for due more margin the financial compared the this the policies be at XXXX. this fourth cost dissipate the And of by margin after expect of short with and adversely provider and July, performance the by the have relative affected to Operating fee transition sustain and segment of financial its to reduced low-margin inclusion to segment products. Our adoption operating XX.X% the the be Smart include and grant a and businesses quarter making last higher the insurance end term, account we rates XXXX And affected with continues decrease life Smart intersegment by margin partially disruption XXX,XXX applied in the beneficiary various contributions Life, we XX.X% income methods, payment July our we'll technologies offset end

expect accretive going We margins to segment DNI's forward. inclusion to be

lower Our have due the last during XXXX. corporate amortization to decreased, of asset expenses costs quarter transaction intangible fewer primarily and

a the separation remeasurement us, from Executive Officer quarter on payment with the associated million an the charge. addition, quarter stock-based loss DNI on costs compensation our $X.X includes of In a that former Chief consolidation, $X.X million the while included $X noncash million XXXX of last and comprising separation of

our amortizing XX.X acquisition-related quarter we our of income expect as a commence rate XXXX DNI result, We exchange ZAR $X using or to expense include million the in will an of first and million intangibles fiscal XXXX operating each fiscal approximately quarter.

XXXX year. the due to and reported for same last contributed net XXXX quarter partially Bank in C DNI quarter quarter, to $X.X fourth in from recorded the with also million America. of DNI of million that million positive North the expand we interest The our We a Finbond compared Frick as effect a in and a to by the facility balances. last for somewhat investments we operations increase period African recorded $X.X and continues a $X.X and under as full Frick Bank listed obtained GAAP. operational income by to contribution booked $X.X the earnings from an was the adjustment contribution they GAAP offset its local during primarily recognized capital of South to fund income of higher reverse quarter it interest million offset This income higher lower equity-accounted was Our investment note. overall interest cash interest decreased a expenses, to Cell result driven from

Frick forward. to earnings equity Bank expect to provide a going positive We contribution

vehicle quarter As via XXXX Capital method. contribution equity the to and through it's XXXX we last for instead of of and Korea, $X.X in consolidation by a in the in and an now of to recognize DNI, million our processing fiscal South Africa. $X.X control fewer XXXX million, due acquisition the partially earnings, ATM terminals were acquisitions decrease we expenditures respectively increase offset and payment and

South Scheduled our capital long-term due arrangements, cash activities. of to infrastructure from our Cell expand capital equivalents higher Africa. XX, note investments offset and in partially we the of businesses ATM Frick, decrease payment and African XXXX fiscal repayments expenditures our to cash XXXX, in our and balances At Bank cash C new our and South from in in other lending June our repayment continue the group's some $XXX.X be our our repayments and million, by Apart cash listed June we XX, investments XXXX, from cash expenditures primarily $X of in XXXX, utilizing million facilities, Korean our generated expect were in DNI, reserves totaling South generated full, a our $XX.X book business long-term African cash as debt million. than and facilities. were our was African fund our capital lending core growth debt, unscheduled our and operations short-term South by to We

and facilities possible, to We majority fund interest extent cash to fiscal expect under XXXX South of our to share principal our generated growth and in repay lending African our to investments reinitiate the buyback the used be to our program. internal

As under we or million of South of outstanding had African June XXX long-term our million ZAR facilities. $XX debt XXXX, XX,

during repayments equal fiscal remainder principal in XXXX XXX our be debt ZAR XXXX. and the settled million X full of will early fiscal make to in of expect We

Our fourth XXXX quarter $XX.X expense million to tax $XX.X was XXXX. million compared in

was nondeductible a XXXX interest CPS, long-term the result for XX% statutory a remeasurement small expenditure loss, DNI South loss, of incurred and and African in the at as much rate tax than impairment transaction-related fiscal South expenses, our nondeductible losses African rate was higher effective Our including facility.

million XXXX doubtful $X effective the including impacted by finance million a adversely XX% to to highlight rate loss, and loan approximately been noncash our $XX loss tax remeasurement be that expect the impairment XX%. We of allowance XXXX million has DNI I'd for $X our a for events, number of receivable. rate like effective

Excluding be XX%. our effective these would items, rate approximately

million of X.X of of the the fourth was actual middle of million count quarter March the our versus lower due share in our XX QX quarter XX.X Our shares. to with XXXX weighted weighted shares was fourth repurchase count XXXX, the share share XXXX. Compared for XX.X million of count

Turning to our guidance.

contributors. during guidance process is prudent volatility the transition quarter issue it of our SASSA first of the more believe on focusing the Given predictable to profit XXXX, we

expect XXXX. therefore, assumptions per comments. fiscal on For into net earnings following per $X.XX the Low which contribution CPS in share we income and XXXX, based of fundamental is from share,

million EPE active X.X number to accounts expect average year with of for be on to around ARPU the those the accounts We be flat year. and on the last

for X now million and previously months, goal EPE by next with confusion XX accounts feel warrants SAPO in We of conservatism SASSA long-term have we the indicated caused the current updates but quarterly.

synergies we South potential expect shares in expect the rate second fiscal XX.XX With DNI, XX.X Korea of full to a in $X, XX%. fiscal we see significant results growth of our year of And we constant half currency although XXXX results, should improvements see prepared to basis with consistent approximately we with year. businesses. a respect ZAR reflecting tax base although the on other guidance of XXXX, and million our for be the has XX% the been fiscal

through SASSA actions September, under on review have more we which could provided reflects to Additionally, current would to transpire, include, operating and to competitive current with to service number at that expect quarter one, would like be are we would is for through a undertaken reduce are the for September of our to but the currently were XXXX, a uncertainty to expect of could of Two, guidance. contract various environment EPE loss. normalized results. pricing there by end unilateral performed limited which XX, the we that us following XXXX account transition regarding exist. accounts players through would the but our -- events positively a highlight their not guidance cause impact dialogue key first CPS net SASSA paid process the XXXX our the Constructive positive the EPE These

guidance, our expect see EPS $X.XX and to $X.XX between For benefit. million over every we incremental EPE X.X accounts, retain we

Cell offering. our in and factors XXXX transition lastly, all given not long-term the outlined Also addition expect income and drive is year likely we C of We is biggest to fiscal actions initiatives, for fiscal also customers accounts And we months. Our Q&A. up to XXXX, it target be EPE to our growth new call in we've this DNI target data has our in pushing the the space. fiscal to our can of expect the to various in open to now out by with changed company's earlier initiatives history, investments our bottom million-plus be year this XX X the result months means due of X EPE higher noting worth and

Operator

first from Klee Our Allen is Instructions] of Maxim question Group. [Operator

Allen Klee

Good morning.

might so you're in customers when could Can And getting churn processing about what mentioned reallocate potential EPE. from XXX,XXX most the much. getting quarter? rates hear people the for a given And you risk, on that CPS proactively the that and when and you like that, SASSA sounded underpaid earnings talk for mitigate then ends they that higher - can EPE do customers of XXX,XXX customers? the about on you Thank you to that? sounded contract can on that? to then you’re timing you expensive And positive try the were also create ability maybe at that quantify questions Some those the now, of then the a it like the loss - to infrastructure

Herman Kotzé

Thanks, Alan.

them. if but remind on of up questions, list have skipped I think your I of a I've got please me, some

at numbers. provided end those of are the contract they, we review, out In to period. the terms the to a subject final They and of the obviously, split CPS to don't need loss, be court

we the the were. So what publish as losses exactly is done, that of results as soon will

not continue. provide the to will court On timing question, it your exactly response. when expect know We do with we us

the the some guidance in filed to with We matter. to addressed to application Chief urgent to correspondents Justice us have this an also We've ask them please provide court.

being we understand, these But National recommendation time agreeing court of a no from terms do Treasury, made. the simply kind was considering set heard. the As in recommendation of court that of land, as have far and the there the highest approving it's that as we matter in applications are is the how

that as I that system. this of we part assets become said contract, the about with spoke the -- interoperable we the what of the deployed these or Second, we've part we reapplication when form fully are enabled about already vehicles just of talking these banking return to

those that so these - initiative of is our card the specifically, EasyPay South now the can, to cash to they reutilize the African technology we've any we will certainly with the vehicles be are part biometric the deployed acquiring access in lot will considering dispensers bank But readers, strategy, deployed form Everywhere vehicles network. And that to as X.X and and will these part it form of a intention redeployed years that important basically our of allow the an old. the which any on extent of

Net So on to banks. that customers. population of being last any not is of mission of in system customers our users mile access the can provide terms dependent from to the be the the X They one

hope use infrastructure. to that of And so we the maximize

grants have that these that will receive the old the cards, SASSA customers view, necessary EasyPay banking legal people these But From different regulations big those crisis by big, the customers taking and actions our there into messages believe we to the to on receive that who there them to contrary got will they XXX,XXX state. apparently what potential with September that regulations and for spoke the basis. be activate issued and Everywhere card. acts to we be first with rules Turning not trying problem are be at the risk, which a to are accounts. advise in are an that then urgent the -- point account, XXX,XXX-odd sending or face, them will we order And SMSs. would action we've to we SAPO as to also of may the relevant alleviate will contravened and about the a result, that ensure a are in new money of separate And some proactively cardholders

of our the went call we be the on terms centers, helpers published payment the in statement and also yesterday, of Saturday. the out when starts We media will terms press cycle and on fully advisers our ground, manned that in or statement

Allen Klee

And on from about, think of a Okay. and based what if in talk you with the Cell providing can DNI, XX% 'XX? you commissions you on this plans, how C, generate SIM 'XX? C comfortable can terms little you Cell that Cell And the EPS then that cards will you C XX% cellular do can if fiscal to be about DNI think in plus feel around fiscal still accretive in -

Herman Kotzé

with those XXXX We will between and of ability of a Cell it meaningful network year. in that fiscal technologies confident are very combined be distribution and our the C the contributor DNI

For big three it us signal dollar-sharing for changer, together the cover, the experience country. a national urban has more the I which coverage the XX% improves the guess, entire in previously was to across mainly game its than up which a been opens of us Cell the or from It virtually C can has geographical signed, that the way XX% initiative basis. I customer on really put centers that reach if

also is part and huge South of now of lot be adequately of will EPE our a so a clients our covered. where Africa And side reside. That rural lot customers of obviously a reside the

products, foresee a terms the our the reliable to now well low-cost in side particular this growth of revenues, of cellular accounts, service with as insurance with so And significant them very data as provide our low-cost the we're and uptick prospects of and credits and in We users. about business strategy. bullish ability the bank low-cost

We what slightly before. also to of now have customer a the different segment we had target than ability

of an in point that provide and we we exclusive the C DNI C, as result have we the done other quarters, basis. stake are of Cell so If the two from requirements, the synergies identified So we've in that investment minority of bullish. with majority Cell ability the acquisition a certainly over SIM almost extremely talk card our been view, about have to and on the last

content believe of financial we for or form And good when able phones and through talk competitive and we and us, being services. and service. expect with just an of that very product terms our more underserved services, very continue in through believe in either to been about about there we provide airtime, market. an We customers we being is we in talk or us and tablets. that's them as delivered or that way and banked to distribute products in today about of potential So telephony having normal by talk one data ours cell are a terms Those and some enormous other we communication-based

together, upside is these bringing by the of all so enormous. And

Allen Klee

can then turns KSNET, environment? business little Okay. you the about a growth? what Thank for eventually you. back talk And competitive this And to

Herman Kotzé

Sure. highly Korea environment. is a competitive

influenced that the ones. And has the provision, government services rates of there introduction a by But top of players. are financial Korea value-added competitive probably industry other competitors been the and industry X highly say, would in by hand. the environment, is one. a the serviced of between XX country capped South of XX of being an value transaction these in think, two is network I networks which primarily in are by the dominated the one and major I number processing added smaller transaction a players totality. they is KSNET side In it and these is on by hugely and of industry the business processing really our variety

So fact we now there the is cap - we put we basis, charged one on that on before just been can what are be the could hamstrung hand. on pricing compete a by a slightly that's

prevents there that hand, activities. been other from engaging the certain On the in introduced then have companies regulations are also that promotional

of were to in customers. provide of now stopped those the able initiatives charge the our devices by have also example, free past, point-of-sale kind That -- an government. been As to we the

reduction, that ourselves. now the differentiate of The losses in the how the The really an to that's fees. way could have for acquiring for your absorb fix we volumes by the order immediate removed to us is, issuing you your by increase lost. to have regain is So down and that also key -- you us element rather to if in go what or XX%, fees XX% right

volume. there a focus big So is on

that VAN to extent agents. various they other each utilize element is companies the the unique other which in differentiate The space from the Korean does

during receive agents element smaller are we and them more to along be that -- VAN are normally fees which issuers the are They between there merchants to pretty so can is And the companies. passed to from service the utilized the in pretty such agents. I And easy companies time by card KSNET of any Agents frame would to in -- call switch as for an SME the areas. rural what them cut the free agents. various -- it's extent

individual any fee quite and the you medium-enterprise uniquely a businesses. more on a or so to case, impact sector KSNET on the are lot the focused In the extent retailers. our competitors is market. other the provider the And of push the which as of also small- Whereas, profitability can have largest to significant our down Korean cut larger positioned

believe so edge our that's we to improve volumes. that's lies competitive And where and where the we need

been a obviously the material companies Obviously, experience, the the on just it's cut fees had on of the catastrophic. painful will say I for smaller it's VAN has more ones. been But much frankly. players, impact Finally, some for had us, smaller bigger than it's in very the a that

lot effectively a players obviously are a as Korean are those so volumes and to available result, the seeing market. we're And in closing surviving shop of those that the

Operator

question is Instructions] Zeifang Tom next Lucrum. [Operator of from Our

Tom Zeifang

you in granularity in forward a us losses Can the QX? guys. more give going Hello, QX and CPS on little

Herman Kotzé

court point this Tom, of X-month we're the at submissions the we the we financial make time, over in process in overall CPS of performance to the to period. terms are finalizing the in that - of have extension

I that's mathematics Safe in absence -- until finalized, that the to simple we our much mathematics too charge of fee, elaborate ability say to fair are pretty a to So broad want think quantify. it. the to on don't

number to XX.X and QX We QX And to of rate number only let used cash only to paid per process this and the say points. rate, first, opposed would we recipients, on probably XX.XX as are that which X.X for quarter now as grant charge I old of the at to the obviously steadily million last are an allowed phaseout ZAR on the roughly under moment declined XX.X still actual people say charge charging has differentiator That pay the QX, happens. the whereas, is paid payment. is the between X.X we we average The me beneficiaries million. at the million rate

you but XX.XX, our revenue. broad of probably a quarter. cost reduction million reduction multiply if XX of ZAR million at a a I So ZAR over a overall, loss the reduce month obviously X you it by that accordingly, measure, run an around in gives as indication to tried the We've our about would say we've last base the

Tom Zeifang

larger over a Q... And XX in last the million month gets quarter? ZAR it

Herman Kotzé

Yes.

Tom Zeifang

And in larger Yes. it gets QX.

Herman Kotzé

the It gets the be we base months correct. beneficiary last offset for partially extent may QX that the of once totality, in X period. that But or the larger reduces, to the pricing get contract in obviously finalized that's

Tom Zeifang

exactly my ZAR is which Okay. expenses, ZAR Can I ZAR is for million that ask math mentioned You question by a too? housekeeping X.XX, what X X.XX, quarter a for?

Herman Kotzé

about I the head -- are think talking office expenses? you that

Dhruv Chopra

think, get Tom, it's amortization X $X -- I I think Herman, ZAR DNI for the million I can that. acquisition. million in

Tom Zeifang

our it for But employee? wasn't compensation legacy

Dhruv Chopra

No.

Herman Kotzé

No.

Tom Zeifang

back you. Okay. in queue, I’ll Thank get

Operator

follow-up Allen Group. Klee Maxim of a from have We

Allen Klee

Yes.

talk earnings potential longer you mobile rollout then about, be MobiKwik, could what with as and international to the from the there you're For could you. areas, wallets a their potentially term you what And Thank similarly as can potential be? consolidating perspective? other the revenue base it,

Herman Kotzé

you want it to do part Dhruv, the MobiKwik just handle of first?

Dhruv Chopra

Sure.

in obviously, products. months So We're previous X get revenues to particularly need you're MobiKwik, to India, here when the the dollars Allen, in And as you rolling significant on in. in we've of to only is key we on innings are volume. reporting out calls our generating mentioned first

a and if you initial good we've $X quarter million. growth, though last still even at new great got products I in were in mean, the So processed value and we've look seen pipeline the of there,

But volume impact products we financial of start have best more can ways the our here. go the introducing before giving the by: and quantifying So B, up. a ones that ourselves up have; keep shot A, we ramping we to driving to still in

Herman Kotzé

to from that and flagship the our through platforms we've Thanks, over as those IPG month gone or all certification terms, await In are certified, We and the our we And strategic flagship, instant on planning side, and a last two as completed. development just effectively being just, as multicurrency rollout MasterCard the three direction. strategic of it's mainly and got broad session Visa that. Allen, acquiring finalizing well commence significant marketing with I the while onboarding so group our think platform, the issuing important soon Dhruv. as

top and us. contribution all set gentlemen, growing Thank and today. much that's for we line line bottom years. ourselves you the X of in that IPG, next business factor of have very We over in Ladies of joining for a terms by XXx at least target have its time a

You may now lines. your disconnect