Lesaka (LSAK)

Dhruv Chopra Head, IR
Herman Kotzé CEO & Director
Alexander Smith CFO, Treasurer, Secretary & Director
Allen Klee Maxim Group
Scott Buck B. Riley FBR, Inc.
Thomas Zeifang Lucrum Capital
Call transcript
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Good day, ladies and gentlemen, and welcome to the Net 1 Second Quarter 2019 Earnings Conference. [Operator Instructions]. Please note that this call is being recorded. I would now like to turn the conference over to Dhruv Chopra. Please go ahead, sir.

Dhruv Chopra

Chris. you, Thank Second our Earnings Call. Welcome Quarter to XXXX is me Smith. Kotzé; Herman the today on call our and CEO, With our CFO, Alex

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

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

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

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

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

We will remarks. have a prepared question-and-answer our following session

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

Herman Kotzé

and Thank good Dhruv, you, everybody day else. to

a for our our was anticipated, given loss aware, migration of our holders. been than go but will all our challenging for results are African transition and more SASSA contract difficult of our very this the you out the company, has As account in our shortly, was detail quarter the Alex financial quarter rural to predominantly more attributable over South EPE operating auto businesses.

group's of line over and the on expectations and have was comfortable our based the cash $XX source to results $XX XX operate provide with these EBITDA position annualized the group. remain months. The Furthermore, Our approximately in next remaining EBITDA to million we XXXX with businesses transaction-related substantial of contribution net liquidity QX continue million. businesses a of

being is businesses the result. EBITDA monthly focus a both return level turn and fourth the to immediate by a quarter, flow cash as EPE-related in to positive Our end of breakeven our

discuss robust profitable a management businesses seeing with we our to Board and stock own the complexity Europe much Africa, stock in Net pillars reiterate I rural strategic A, plus I of ex balance $XXX I team $XX opinion, other the million, approximately the and and four The business. expect in of the valuation, million and reduce to on four all to know that in I pillars and top the or that do address our before valued recognized. on of my Africa; time it, with the Asia; prices unit D, focused, investment long-term would analyzing our cut know our more But company market the the at my where like sufficient will than to some these X C, have committed the mind. conservatively company our these as each we shortly. we thoughts manageable. currently value are we new these B, how opportunity. quickly annualized than know I briefly changes We will mentioned, costs. suggests. are advantages that this and of with focused be contained discussing impact current We to like of that more, and Europe as issues are is would are sound Korea. sheet business growth Africa our of greatly initiatives When need our South our add properly liquidity, facing far adding portfolio, we want you viability Directors characteristics forward, Africa, financially not at I certainly, intact. confident pillars, spend business processing transaction will generates be, We and remains higher I Going price individual believe geographic and will will South EBITDA of to

four our of first its the Starting address services related value-added South pillars, businesses. EPE now Africa. financial namely me and and with Let

portion services, accounts, ATM reversed million Post last unexpectedly EPE week, were and November on from This the High consumer and business auto Africa the migrated infrastructure and this accounts South South Moneyline with its of South network, that South Life that to headwinds, required or X.X disclosed our rural out nature roots services we segment have to deliver of bearing This recently the Court microlending of to years the African insurance in added last As XX consistency. significant interim consumer services, Office, includes SAPO, its African bank to over over coupled African have our our accounts. rural ruling mobile quarter. EPE the SASSA interrelated segment Smart other stem the reinstate we built would setback second financial micro

proposition recently, with were could ago. embarked we X.X of accounts those we EPE importantly, As and from consistently fiscal years XXXX, confident rural been individuals the had the were of meaningfully taking value quarter and this many approaching fourth segment that quite at validating we as also buying upon And business profitable insurance loans, X million levels. out the those we grow strategy

rights over came as SASSA and for situation, believe aggressive our required that tactics a resulted to particularly confirmed experience Our of the in contractual that Court's focusing by a we November. commercial and We practices have we business customers, rather the the company, grant mention playing wrong allowed not the Unfortunately, providing recipients, services compete High carry was the and without to the infrastructure, have affordable by most EPE rely underbanked, in level with could significant not as financial six opportunities. low interim losses Africa agreements us in second on for on benefits operating this income, through the or regard order reason none, SAPO months, to newer write-offs and it and demographic our on than the for got to surprise we the bandwidth to technology of deal last with believed management is field. would The South sole employed transition. we rural been and our

regards EPE believe time At fulfilled of evaluating are our junction, still disposal are regulatory but options operations We QX ensure this we South this accounts. our focus get we the them with to XXXX. and the we customers legal in pursuing to their rightsize business, opening options our immensely at as all level to that immediate African all is our requirements a at breakeven

will an effective. to extensive exercise, already become given X our labor take We months cost-reduction local before X laws, they have fully can commenced with but

have are risk expenditure. are ATM deterioration the at communities, that, base people the again would are to There running focus we and high-volume be given It any that EPE and with close presented of migrated, without in that every account devastating customers areas time rightsized, willing merge of the only onwards EPE base us We processed can rural opening no but also we their back holder benefits that to would that on mobile from always entire plus is million been actively remaining amount is currently of ensure line look other the Annexure having SASSA our capacity believe distribution enjoy C and surface on footprint engaging auto the we X levels forms by which at single stable We if significant in is for time. this fleet sad Once these account our continue based increase operation. have dramatically and scaled include employees South for this February. customers, actions, consistent Having a capital order, to were see business at a could to Africa said have in the High the living we at can December, those business, January January, for we election. to to and these Court's or an be sell, also further do XXXX this option. voluntary with we and

all this, to changes need future. we necessary to in of focus on to addition the and adapt immediate our business efforts if will the In

provide updates related any businesses. We to the developments these operational legal, changes will in to or proactively strategic regulatory,

and The repayments a in their all who have both being Life, approximately attractiveness key until form XXXX. towards Smart on not million December with products to of our access funded EPE the these of allowance doubtful credit a XXXX. accounts our $XX lower relates loans book We an offering, all current continues Regarding the and remaining cheapest part is even EPE insurance. finance February to customers Moneyline namely to receivable at are who profitable the Life Smart of customers took those be base.

issuing Our transaction and during now position growth QX to double-digit platform, we to is cards The for payment post week. processing and certification complete, a top commence EasyPay, Finbond XXXX. line next UEPS/EMV in continue are bulk

and this of business. Finbond recipients, grant of with other challenges has all measures the the from address experienced social this to creditors segment in taken loans part this recovery to exposed remedial also As has market

They in As we consumer has evaluating its customers now strategy, work the their process to of to environment in arrangement Cell continues have we these assets, its ahead also to to were address of grow a have of on with peer of the the and much to Finbond micro performance performance are market best It working DNI despite MTN spending our with complementary tower-sharing the for offerings. unable budgets, and implementation each create the end particularly footprint of insurance operating business way synergies. has begun Life geographic users. closely continues country Africa. is a with line its that South be to go-to-market previously new maximize the challenging in Smart number service. with to products C's and expand concluded larger in

position of An have the we XXXX. their have provided on place competitive Blue will the manage liquidity, they been end February to concerns be their performance in when market Cell mechanisms there and C liquidity. Label short-term at about the While reports operating believe, update and

let second Now is me our Africa. pillar, which address

thus XX% deployment financial increase group, we want our strong a Depending local us. and address focus of and adult the to opportunity partners meaningfully to the populations together to Botswana. XX% substantial for technology services, using inclusion presents country, financial access and solutions, in on have on we our on cloud-based opportunities Namibia card the the the are Today, of continent. with a to operational mobile-based As

nine in offering through footholds in partnership our have We MTN. with countries VTU other

already consumer growing in and as which OneFi rapidly discussions short operators Ghana, West banks initiatives finance ZAP Group a in is payment brand-new Africa. live months operation in the of We have UEPS one in a QR-based the our of with through advance mobile and with a VX Nigeria payment beta Ghana largest in in in one and largest system few Africa, with national

There Africa. to and management network the in Its earnings in call. its card-based Africa to in across unbanked we management an creating has payment XXXX. over spanning a VX technology the of a single an structures, to to are model process be revenue in and ended revenue of our our currently development banks clearer year technologies more having team in of on synergies road next over its the range and hope calendar business again channel expect deployment in map clear for provide extensive able than to as business and mobile appropriate XXXX are and the XXX% in a countries black. has play prioritization and the markets, grown double past We expects OneFi promote Nigeria across integral role team telcos of the

with Paylater, became and have card-based a OneFi the into soon expect continues OneFi's credit lenders a called, also X Africa rating. app the and of million lender to conversion BB expanded digital in obtain over digital one recently downloads rate. products. also customer first traction They As in neobanks to and payments first launch gain Africa, remarkable to core

the specialist and other we continues and blockchain-based which third during filed is IPG asset Asia, for departments develop a Frick close pillar or work exchangers storage Group. IPG, in patents with but investors QX. accessible primarily The bespoke to collaboration and easily crypto to International asset solutions, through including Bank for two Payments Europe crypto have driven secure, highly our solution

prototype live a are QX. track on We have in to

months, to to the needs accounts, the service customers. have These Europe. world-class on merchants we and underserviced cards onboarding, solution services seamless of bank the a in gateway require to end-to-end payment last issue often been and During ability their XX creating focused SME specific fast merchants

its challenger Malta development creating IT been by our and now believe together in than continues through finally a transition organizations, and we the solutions, In in established operational offices day that successful has able IPG is bank certified in wallet-only with digital being SME more financial for in application provider. which been India, teams our XX an core to a currently While various required is the industry-leading mobile issue jurisdictions. services an Bank have X,XXX high-cost position be microloans the provider in Frick app, the which They a Europe. center market MobiKwik approve We required a to from our a disburse seconds. to exited full have

In launched approximately and as investment invest addition, also its micro during $X.XX. or has funds allowing products, to for in XXX INR mutual as micro MobiKwik QX, insurance Indians little

fourth Korea, Our Operationally, KSNET and solid to pillar in improvements that specifically. is KSNET we another put or continue unit. up quarter, see

local to agent revenue a declined direct as sales, XXXX. and from XX% shift lower currency, margins margin XXXX, result, QX sales to in primarily towards During in XX% due modest margin a X% EBITDA QX increased a from higher

top an as of line to our business. evaluate appointed to we As strategic with alternatives acceleration as external well and adviser we last the for profitability this growth assist improving discussed quarter,

made are and progress past office. of couple advisers with both actively over our good months have head KSNET engaged the and We management

finance VAN to overall are While years, better and regulatory VAN, working gateway KSNET's card was banking couple accretive capital growing and offerings payment primarily its significantly margins. past impacted at over business are of the rates by effects the

return company continue business KSNET expertly a XXXX. business management EBITDA in international we to over believe that a several regulatory to is fiscal are is We It who some that fabulous last rate processing Korea. run navigating one is the worth a million operates with there track difficult have $XX on in by very their proven team, to other a headwinds very payment only also unique as great years.

portfolio, business, a nicely in great has strategic To potential stated shareholders. comment to I I generator fit meaningful is several core to the cash believe, hand our on times which I it and and our want not to Korea in transaction free have we over investment processing conclude, our portfolio. attention While that past does rest been before by flow warrants Alex, as our the of current

contribution Taken total EBITDA share no to to our investments our results. exceed together, well these despite fundamental cap, earnings overall minimal contribution per market our and

working down profitable shares growing company. existing continue several restricted $XX surplus highly that share focused Directors our cash South position new remain our high-growth African our Once reserve we and by our opportunistically and return in flows SASSA using latest exciting through value we purposes. repaid our setback a is have assure cash full, in million our liquidity losses we want our program. see foreign limiting great have loans complex remaining approximately any other a current a future loans transitioning we X approximately of million in to outstanding period shareholders $XX and our ruling, June, and or ones. We are great are and our from to are and foundation We repurchase to expect our in cash on some consider own on despite find share of for reserves capital Board program. elsewhere, while We to we history its pay most businesses, until resuming of have Net repurchase we our committed to the to being to management to and believe launching to the be

Africa. of in We EasyPay transaction are other and pleased the our KSNET, financial South and switch processing performance businesses DNI with

over is now to level with business, resize South it QX Q&A. ensure performance more breakeven before for metrics regard options will near-term all detail the get financial up we go African considering operations are and to by and XXXX. We to our and opening a focus the Alex these that in them

Alexander Smith

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

Turning to our results.

dollar. ZAR XX% XXXX in to in dollars and For Revenue rate QX down in to Rand year impacted ZAR strengthened by our X%. XX.XX year-over-year adversely of compared our was which a trading slightly exchange around currently XXXX, dollar-based U.S. XX% XX.XX is XX.XX quarter-end the has $XX average dollar results million currency. ago, Rand constant ZAR approximately of since was and down The QX

African share the includes cards. by inclusion SASSA the recipients a for fundamental XXXX QX Cedar migration African per as $X.XX segment, The a contract Our and lesser decrease per predominantly South reported business from our due a of $X.XX earnings result termination primarily $X.XX XX% value to adjustment By forced revenue EPE of receivable, migration SASSA cards fair with a constant-currency South extent compared of financial loss EPE impacted loss. $X.XX processing impairment from C $XX by basis. incurred of grant share XXXX, to was on Fundamental to in SASSA Cell and loss note losses including of declined the as allowance the loans doubtful to million adjustments, QX a to mentioned transaction a down $X.XX noncash EPS above. a of Cellular the

as income operating accounts Grindrod with and of of volumes adversely XXXX EPE These lower bank was in our were to higher in as cards significant QX grant reduction the the in the usage as as as ATMs as numbers. partially EasyPay. SASSA higher of impacted transaction revenue of branded well revenue well by in end operating offset ended number linked Our decreases the and SASSA result increased recipients a contract by revenue also income the Grindrod

was operating XXXX for Our and XX%, negative margin respectively. QX XX.X% and XXXX

been additional period of to respect far SASSA in so fees extension any contract. the recover have the We unable CPS of

this agreement ongoing. to directly engaged on and SASSA reach with try and We have the is pricing

rate. was International down of in to million no the this XXXX, time despite of transaction with around compared which recommendations which QX Treasury, processing pricing XX% lines QX contract crypto processing the of includes National KSNET in China visibility impairment $XX.X and revenue matter, We specifically generated the have meaningfully original resolving Xx IPG $X modestly a QX operating noncash goodwill processed, in lower an to due segment generated and million. of of contraction $X which transactions million exchange The revenue. primarily XXXX, a XXXX, lower were loss

this in due margin items, stronger operating the KSNET. QX Excluding operating XXXX X% receivables capital for finance XXXX allowance was of this Normalizing QX improved of and $X.X sequentially QX income was in million. margin largely working doubtful margin QX the contribution contributed than has the impairment, than from than X.X% stronger QX. included higher these X.X% in XXXX in to KSNET improvement. was recorded during both XXXX QX to an XXXX for

KSNET's February taking but are adjustments, quarter access transaction previous goodwill $XX IPG be during approximately relates a XXXX. volume in had sales to continued For the X% further lower January restructuring expected remain while business impairment and XX% $XX IPG. compared XXXX, to under actions last QX in in processes sales modest margin We second primarily quarter in fiscal The QX as quarter on loss to million to margin the agent and compared QX expected the October XXXX. decreased cuts and XXXX. good, improvements show to regulatory recognized due we a their margin revenue XXXX. Korea within change not increased million, as they impact direct from conclude Korea last and and effects. interchange Further came an of revenue in the have to in push through to operating Won XXXX, are as very adjustments XXXX. we low the $XX.X mix higher The pricing significant is from margin conversion to of income and the another EBITDA million experienced KSNET's rate challenging cash the XX% to from in mitigate these remains pressures to previous intervention to

over Given associated confidence meaningfully business and terminated the year, the of or so the in past IPG. written-off of lines we've several the our goodwill despite prospects and consolidation reduced, IPG restructuring were long-term

previously. restructuring as products the process growing largely launch focus the complete, new of volumes the the shifted With various as discussed has to well

a steadily remainder the we over slower a than communicated. fiscal at pace see to expect result, improve year, performance albeit of As previously the

XX.X% XX% revenue revenue reported inclusion on X, QX segment financial technology $XX.X decreased to XXXX constant-currency primarily and due from applied in fewer by a Segment service due QX value-added DNI to million July of revenue, revenue basis. and airtime in Our a -- XXXX, includes partially insurance was down the Operating and XXXX. and lower a prepaid sales, and minus margin inclusion in compared to DNI. offset in intersegment XX.X% decrease lending

run adversely million, $XX.X gross migration an prevents against compensate SASSA's effectively of QX been impacted bank SAPO ZAR accounts, for of created of In XXXX, we allowance as to nonrecoverability book debits million, approximately lending has direct by loan the debtors. us no be repayments EPE which from Our accounts. collecting XXX the can

December We loans all have against and been effectively repayments have provided received remaining maintained conservative a book. consistently allowance no for since when the

December, reduction we the the there quarter-end, collections, With the in continue base expect to customer is and the both stabilized, quarter-end, stability we've in seen this no account EPE post would have since further provided the base.

collect We SASSA have seen unable transition. debit a from Smart on SAPO against are similar Life the Smart to Where of to account. account, impact direct Life the customers that impact we a the moved

initiated mechanisms we limited We with deal these and date. to to have increasing issues, new experienced collection success very various

premiums, drop only the based this drop migration, As quarter uncollected numbers of but after XXX,XXX the is around its on months. seen to policy a we end next in as four the to around from policies expected the to peak result December, at at lapse XXX,XXX have SASSA XXX,XXX

reduced With with remain of million October, an their incoming million these in much into and cycles. the remain February accounts just pay these XXXX in the we stable with to reduction numbers payment the January X.X under Life with X.X received claims and compared cycle, customers in levels, our deposit reduction EPE expected levels the profitable provisioning and In policy a the in to expect numbers. Smart December

have to up was the XX% SASSA, up accounts accounts new them to opening EPE period only despite of thus date. accounts, new during ability to sign this of due Our limited a received about grant

reporting at value Cell its carry to fair fluctuations our in reporting primarily higher increased intangible asset have in to Our period C are value from expected. amortization. carrying corporate investment We due period expenses and acquired

noncash which our we recorded XXXX, adjustment impacted of value QX $XX During a fair results. adversely million,

methodology to the and telecoms mobile, Our of unchanged decline the operators. African group peer remained and a of multiples market fair has is solely the value valuation eight attributable decline market emerging in in

with the had reduction carrying value of also the We in Cellular this line value. to fair Cedar impair in notes

XXXX $X.X Our was quarter. net interest to the interest comparative million million of compared QX expense $X.X net income in

However, impact this a million Cedar of Cellular the $X.X which impairment income. affected included of the interest notes,

being net million. investments QX recognized Excluding expense lending This to was The change ATMs. African due to year. We of comparative to consolidated the last increased fiscal this of effective did the effect, in particularly is in was July investments as losses compared the in to due accounted to $X.X the obtained, interest that of from fact XXXX, the X, equity XXXX the not cash equity $X.X interest reduction of million facilities business utilized strategic respect the expense QX for the DNI and our is funding in we period from same $X.X million earnings income due during primarily XXXX. XXXX period contribute South

debt and dividend repayments, on accounted interest The was the our the of network various decrease partially capital unrestricted primarily reported to the XXXX debt facilities construction lending C of significantly investments. from noncontrolling in mobile, to and our DNI payments which to We book. Africa included lending activities, fund contribution $XX cash cash was offset the arrangements, telephone scheduled June flow utilization capital our from $X by our inclusion end infrastructure, June. utilizing ATMs our to continue as weaker by to the million by South December group's reserves. finance to approximately decrease fund cash at balances results XX, our the from be expenditures, million our the contribution fund we positive operations Cell release. in due trading XX, and compared of expect to is which it a timing of At to a annual basis, investments Apart million $XX impacted our to our cash was equity Free XXXX, lending an amounted our from million, utilization $X.X in working the

$XXX in restricted Africa on of processing X.XX system fund the and have have ZAR sheet. ATMs short-term cash South We cash to credit presented facilities specifically the and in million, balance place billion these gone facilities as under in or our

As of short-term We facilities territories December utilization facilities restricted December XX, XXXX, million of in of various utilized. $XX to million. at banking of XX, cash us had $XX of available and XXXX, we which $XX been million associated none short-term had had

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

We XXXX. principal equal XXXX, be remainder the our fiscal million make XXXX during in June further repayments XXX expect of totaling the ZAR fiscal remainder full to two three in will of of XX repayments and ZAR settled million during debt

Our of compared tax was $X.X QX XXXX benefit million to QX XXXX. an expense $XX.X million in

losses not businesses recorded the for have certain significantly by and African as incurred effectively net operating by deferred asset tax impacted benefit been QX a these South impairments rate to XXXX Our effective losses. has tax related we

of heavily position. Our our a to distorted losses return continue certain until effective operations at breakeven we the affected by will be rate tax incurred least by to businesses

fourth weighted the of XXXX a cost-reduction and of cost The EPE-related losses quarter XXXX. to Once each for position monthly cash need count will actual fourth the the now infrastructure take the operations labor December of fiscal XX, in in a security local components we the operations, headcount, of of be full the return In costs. group the basis benefits breakeven EBITDA should to of we fiscal exercise, monthly up of see XXXX. operations, flow light open the end key it quarter breakeven we a reduced these can that law, cost XXXX achieve Respecting related XX.X Q&A. position. was Our on and which shares. our base to for will and and QX have South share African a African initiated only the average million cutting We South positive on the call by the


[Operator Instructions].

Group. is from question Klee first Allen from Maxim Our

Allen Klee

financial your what the, help mentioned a operating but that or if analysis So have African inclusion of earnings and next what could my positive South think about, And margin the the challenged would much you have could you are of excluded margin is, losses what -- businesses? we of about? been from kind business year, first you type that you us how business, if you question of simplify the maybe talking the starting losses in say,

Alexander Smith

think, loss those $XX segment roundabout inclusion out African businesses impact or operating are units quarter. rural in million came in I South the business the of and the of terms of Allen, that of on out the financial results of

see current go of the in would, through a can very region bases substantial exclude Smart from of be businesses. the our EPE which that the various cost million account and is related particularly a quarter -- various third of the in that the on mobile the think quarter, -- will based occur group And any $X you about obviously, cost-cutting current exercises. the rate customer EBITDA sort the Moneyline business, once-off in really as coming and infrastructure it. really base, run overall space. third a and our items, on to number the portion We loss of normal business the -- our we the So that's for And Life ATM should those loss

Allen Klee

bigger of kind another then And question. Okay. picture

have to get market's unlock take significant credit. to not and investments seems management it value likely a order giving that to the in will for them, value But view. this KSNET you actions in credit and You in need your my

management question think my how the this? about does is, So

Herman Kotzé

have longer portfolio these there at We -- at others, path sizes portfolio individual The evaluate each of and individually. understand look obviously we some than and various way them assets so these are different Allen, within they in potentially an and geographies. of to look the and liquidity a is on ongoing basis. that assets different we of

I management of necessarily busy And with so think to portfolio, investment an clearly, to the as a the overall opportunities shareholders portfolio, of into and and KSNET earnings, contributor we processing and out ongoing our for what and/or in to it's think, the KSNET our said, but outsider there the as that at help largest where are expertise exercise from terms are a structure, of businesses. an relevant it group by help but I understand appropriate, group nicely fits in the I've bit us far do the part advisers transaction lot banks the potential the important bring of we is look very stress not

ongoing So we as are process. it's we they an very It's happen. shareholders of, something updated developments keep will to and when that our as any and aware obviously,


The Buck next B. Riley question from from FBR. Scott is

Scott Buck

to microlending continuing new you book? are within curious, I'm issue loans the

Herman Kotzé

we Scott, are. yes,

far February last ago that there different adopted we So is a year. actually as as in methodology

the extent months, on EPE to period The them. we we, So indication of the of to that of book we got of rate disbursement basis, you XX%. all collection on three least accounts. have ratio very I idea active a loans that February obviously, excess reject people quality comprehensive Those at was assessment provide of remains minimum do strike booking and the in to -- a an the just of the receive. that selected of think, for that of obviously for -- the the be that such more accounts affordability is need than XX% have actual application month on versus give in first And is we applications the

answer, yes. short So

Scott Buck

I the the are That's marketing thought know And numbers organically? this to Okay. going what some be on try efforts going forward had growing of organically process accounts helpful. to to you grow quarter. some to account continue those then trouble EPE What's

Herman Kotzé


big and we that static relationship three unlocked to Finbond. in the channel on the growth our months have fairly next some to now focus rate. have uptake through over for So X been the months, with is distribution The we X the registered account last nominal plan numbers have the

the able quarter, over we So been have obtain an our of issuer for cards. certifications also to to last the UEPS/EMV required become Finbond

lot that market to EPE with of have low-cost but specifically behind in obviously, forward. XXX-odd so the to XXX-odd sort we And going which we to access, approximately and branches products Finbond's also will telephony be effort, our and really across we offering. a only, in hope But customer collaboration is for an own base from offering important We with field in believe, customer this add ourselves, locations branches, this XXX, of to base. data to XXX-odd South access not now to of our the there have addition additional focus Finbond Africa us, consideration grow still of


Edell The [ph]. from Raisen next Management Joshua from question is Street Asset

Unidentified Analyst

back area? changes will to what EPE the Given the fall base bring the current new you clear be outside a customers geographical idea to breakeven, have operating do how EPE of many

Herman Kotzé


customer of are is EPE sure of that all areas, a will those we down a servicing within teams core we each rightsizing able factor rightsizing the It is nature all specific the still of that doing those but The is base. of team cardholders. service EPE making at of not capable geographies. to are that such individual a current retain So we closing we that

over distribution really Our expensive XX which where our those mobile in It we that area. base of is another the of grow to We that cardholders so volume the again, ATM only ATM are channels most quite scaling in those. place, there or of the by will all fixed remains warrants so. of base, over by deployment obviously X,XXX service we that next far But months continue back. is significantly to the is the hope XXX actual ATMs, on the


next The [Operator follow-up is Instructions]. a Allen. from question

Allen Klee

XX%, kind to at about number looks finance segment have around segment inclusion operating The Is think running this percent financial so. or XX.X% The you XX.X% around the if excluded the of been forward? had doubtful like, allowances, loan you'd account going margin. right XX-ish

Alexander Smith

products sensitive customer to where and goods The is be, highly I Allen. at expect think we the other bottom inclusion financial addition would and of end XX.X% the segment the into base. services the to of is certainly

exercises so, financial the And we gathers region. sort over towards recovering expect been of business last that XX% of would going we the amount three inclusion product so or back margin as the on momentum, months in the start focused given containment the But the base. to expanding on that's really haven't

Allen Klee

that follow-up. a been then around quarterly And for Explain Okay. and a you've little million running more an EBITDA KSNET's revenue $X KSNET. declined

but to -- EBITDA. What makes run -- third I to So next what million -- get do confident going you understand, can actions you that's working, is to million what the that that $XX you what's have rate annualized increase a to know what fiscal get you $XX year think you to like a party I'd you're going that? to

Herman Kotzé

that In business. few areas importance, across work a all no of order the them. the are moment, the product of of really focuses at we're doing key There the

or that at the focus one, proper we obviously to is for first of card is KSNET's segment contributor The in twofold. us specific look is if processing that So VAN the biggest card financial which and sort far the by business, the key results.

the be our First, to and sort on include although we medium diversifying but in longer, not slightly the overall larger to cycle profitable South the completely some that portfolio on a of within focused EBITDA specifically slightly market merchants, Korea, merchant Those are focusing sales portfolio. to more size is contribution SME specific the merchants more of have result.

a distribution difference extensively model. around on focusing agent-based in involves between second that really are model sales-based we Korea the follow The direct and quite the we element South that

the introduction And is all an agents, with sorts so party, complications. introduces cost the there intermediary of and different of obviously, that use of

carefully agents, those less regions or we we are that who to that reduce focus of all ones, the business. of the analyzing And sure so profitable we are process relationships and make profitable the exposure the in for the to on individual our

we or area second our VAN on focusing banking product the product. that are The is

by is and that most are this far the the this think Korean South profitable service. in we offers actually our only offering VAN as a market, I company

those careful are finally, so focusing all will but small be a we working loans years to specifically, grow merchants. about to And merchants, process now and have are the revenue absolutely and as we aggressively in larger capital activities. we which was that of ago. we to and entry an terms security of very businesses And in visibility VAN in SME pretty product sort do of And throughput, into the are business, think offer we initial size, we, have very of are testing I their barriers the advances. and a actually own on high, relatively can obviously, marketing these the obviously, product very critical where additional Korean with position prototyping, and full our what finance X.X have businesses are those conservative for these conceived this Again, finally space. as good against

things few sort in the $XX a back not to of are get combination to XXXX. the rate important, other as we so And that those with three obviously EBITDA million hope of


Thomas from Lucrum. is question Next Zeifang of

Thomas Zeifang

understand business your as recurring operating by unit you recurring help are me and revenue Could what the profits base? 'XX QX using

Herman Kotzé

unit. Business

Alexander Smith

revenues recurring we terms segments in that The individual report... Yes. the of

Thomas Zeifang


you recurring those that's back So if Can go knowing you main away. had your and the what to EBITDA, relative -- could in that from the if the can what And on you that levy out worth? guys businesses me portfolio, sense a also, the share you revenues that quarter -- current so you do to that we generates going investment of what a percentages? recurring of what get second those you're give consider

Alexander Smith

by units. as it business opposed cover can segments I the

revenue five units. we're sort about here recurring run sort businesses, of total talking the business rate of Our and really of

the identified sense? troubled that sitting processing of African annual within about that and DNI, South sort the of is Then the of there businesses. $XXX Does and businesses, EBITDA million So make KSNET about revenue excluding $XX of space the some of million. we've sort recurring

Thomas Zeifang

That's recurring?

Herman Kotzé


Alexander Smith

troubled to Yes. that in We fix for the the obviously have to order be rightsize areas evident and results. in

Herman Kotzé


Thomas Zeifang

$XX part is -- is of annualized, And the that, million correct? KSNET of

Alexander Smith

portion very a substantial that, yes. of Yes,

Thomas Zeifang

million $XX the million? it's $XX of So

Alexander Smith

approximately. Yes,

Thomas Zeifang

rate will make for forward, going you what be? do the when so June you adjustments think these exit And

Alexander Smith

during QX, will the there obviously say cost-cutting to and we to difficult breakeven QX been June, be end like losses quarter, obviously of is in costs a process. and basis big recurring -- that will -- the -- fourth once-off there'll be a with be there's one, we have on associated of lot and the by QX exercise but a For given are monthly there both cost-reduction be expect to

Thomas Zeifang

How a on monthly right losing much we're basis there?

Herman Kotzé

I businesses. African mentioned earlier that... South those On

Thomas Zeifang


Herman Kotzé

quarter... the For

Herman Kotzé


Alexander Smith

see now the some QX, perspective, significant -- about obviously of third million businesses. That to EBITDA includes African further $X But of no a in and South about QX, expect of we'd of includes really, events, the what we there's For $XX losses on for those assuming losses group obviously basis write-offs. the saw $XX.X quarter. see we from million million

Thomas Zeifang

each but For for month? the quarter, not

Alexander Smith


basis. on quarter. a group-wide the For That's


a have from follow-up We question Allen.

Allen Klee

into of African get can For you And what if is rightsize South a going the type you if margin a that margin think business, you on next business this do visualize it, you do would how transaction so, fiscal that year, be? it?

Herman Kotzé


include the handling performance, channels I EasyPay, this think, -- -- the going specific the for going the transaction and let's cash African bulk and at transaction down. payment forward, this By this costs. of the the we look security is volumes what end some for running banking those good of will definitely, into South when margins perennially mobile and quite so payment African the business our have as contribute CPA, fiscal base South of will Allen, switch. traditional, The include of sector biggest processing part margins businesses is that XXXX. the the year, It staff, been obviously processing would be it, the rural call other depressing that with has specific high volumes that including time associated the some the would eliminated business, -- came those remember, we gone cost all in

that that so I over next been, And we year think, year see margin levels like the XXXX be the of profitable sort recover XXXX. the to those as year, has new to would in business again, or last will it and cost And so. course we if business the overall of the out of had the entering stripped you over specific


disconnect may this gentlemen, conclude now does you the Ladies call. lines. And and your conference