Lesaka (LSAK)

Dara Dierks Managing Director, ICR
Alex Smith Chief Financial Officer & Interim Chief Executive Officer
Raj Sharma B. Riley
Call transcript
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Good day, ladies and gentlemen and welcome to the Net1 Q3 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this call is being recorded. I'd now like to turn the conference over to Dara Dierks. Please go ahead ma'am.

Dara Dierks

operator. you, Thank third our earnings call. Welcome quarter to XXXX Interim me Smith. is and today CFO CEO, Alex With

release supplementary press Relations Our and website our available at Investor on ir.netX.com. investor presentation are

making to look with the in during which we this XX-K our discuss As our our our release contained forward-looking at and underlying and regarding a results you will results statements. the is cautionary rand, reminder, non-GAAP will African risks our the be ask I measure. forward-looking in we call, Form language to statements associated Also of business. rand South operations press in understanding assist analyze We in uncertainties investors of trends

dollar know be rand. results can African the the significantly you currency company's the the and South by As US affected fluctuations between

Q&A prepared will remarks. session We the following have

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

Alex Smith

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the been and as for quarter. has key very third quarter the be theme scaling as business, we’re team on to current and from highlights as the strategic pursuing the our progress, Now The this continues financial busy to well board executive operational initiatives.

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cost significant base we and have remained the stable, available capacity. However,

year third Africa, about share Corporate from ago. our previous progress, loss and the $X.XX of fall does inflated accounts, was XXXX million, in The last we XX,XXX gross bank South were to share or the during rate increased but further amount quarter Everywhere $X.X quarter. $X.XX quarter. EPE of more per net costs accounts to run fundamental expectations quarter. the an a consumer In the reflects a fundamental per normal by accounts compared XX,XXX set out returning EasyPay the This short loss

executives. monthly we to the departure clearly receive changes number much external which process some they of acquisition to which the pushes achieved. several accounts serving it been make expecting not some caused easier long a have by are a From designate had X.X March, We and grant. we to with from And million expectations has SASSA we've EPE The high perspective, number by not had and an recipients meaningful a management for of proposed This into account been regulatory acceleration through. the Internally, seen delay reaching in internal believe customer this caliber bank changes several we external. months. have backed are several a their drafted the have to team changes, open factors, expected and our push see additions been of we grant

to As printing office then recipient involves regulation form deliver has a discussed and in which has passing into be gazetted, them filling law. pretty the deliver out would the yet to processing. which changes These we've previously, and - assess existing to draft are for is hand onerous process result the to

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and where significant Our cost we Africa a support stable in base business can activity. level remains in growth South

to result, at a clear coming revenue level. any profitability to should large of the corporate relatively Africa profit and then drop quarters in to achieving As providing a breakeven line, in the growth reaching us South path percentage the

initiatives. encouraging Our plan by restrictions that becoming active we little we may regulatory COVID achieved next accounts so future date continue impacted this is reach in with without process have that revenue The in the proposed emphasizes the year, half and initiatives, proactive because be affect our while South - to growth monthly earlier and seems generating. important to fiscal the basis, is a I breakeven accounts on in over our lockdown primarily acquisition to these adversely continues may been believe respect total regulatory active number million, be in referred plan. caveat a to to bank related ongoing the This or to increases be why see of that X we of and first change Africa of of customer delays marketing net

utilization Our values, the has total affects slightly to and which volumes lower withdrawal in reduced ATM network this direction, were right though fees trend continued quarter. transaction

same expansion low volume new of important electricity due this an book is prior by transactions about Transaction by prior seasonality March the more in to There's base. versus any in was XXXX. XX around the EasyPay penetration X% higher last ZARXXX customer though Compared in XX the growth growth quarters, see the growth loans Future likely stronger, For they recharges, the on We the million up The of in infrastructure finished loan to loan reductions on customers. margin but bill therefore any period at lag volumes at the the to loan through that same quarter X% and down last three growth the in up XX% year, quarter. from is And our quarter, XXXX the see customer book been using higher unique base. there and December March customer and fiscal the encouraging into last into little loan X% year. come of the lending we same in but airtime our around room million compared number penetration payment trend existing to the space. apply will XXXX to months this quarter continue in for transactions quarter XXXX. ZARXXX to requirements were base. million in did than currently over EPE of affected the were The growth customers indicating the normal quarter two we ZARXXX our limited XX% switch customer books expected XX%

short the some months, We volume into the coming in also new few next high result in in the term. have should relationships growth good ecosystem which

million for IPG, as significant any loss provided with quarter, costs with $X.X loss the million for million the quarter quarter, expected of terms we balance recorded all we is respective $X.X last loss we in of for the the this operations Bank million impact indicated for quarter the of last to In a of This be the IPG, with loss process formed as $X.X balance profit was the the of unit. various the largely quarter closure for IPG complete, cost having that of Frick. is entities the of settlement business The we quarter. of reached liquidation account that the are closure the in $X.X business the now around settlement been Included loss of for quarter the for the already and for in accounted the operational entering part and settlement the this creditors. represents the

a review just to few various minutes investments. Now

Frick. Bank the First

the Foundation are remaining for As sold Family Frick we quarter. to interest the in our aware, you $XX million back Kuno

a all this $X.X and settle purchase due Only $XX.X of over the the IPG outstanding XXXX to price million We was the was was was initial completion, reminder, process. two in as the installment major price liabilities the Frick. of cost As the received purchase closure completion, October million and believe payments million balance between and final on XXXX. used due group further $XX of with any on received July in that Bank

same carry in continue Finbond the $X.XX which share. XXXX, recorded We around December at per to value to equates

an recovery the of And equity around accounted write our up last saw over value are it in to investment, share trading we we [ph] has Finbond able price. to price. been As not the stake ZARX.XX some the month market quarter, the the During

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capital be will best our likely we return include a allocation use Company likely the will our generally look and shareholders. most capital is as shareholders. governed the remaining the return status where by for at soon time review Investment of capital clarified, Act the As will possible the generate is of circumstances the effective our which may capital, - What at for to

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estimated $X.X a is the estimated or financial consumer services dollars at reminder, services, total billion billion TAM or at billion and - is a ZARXXX As ZARXX or And approximately annually. million merchants banking market $X.X addressable billion TAM annually. financial approximately

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you quick first from go Please B. Raj The ahead, Instructions] Riley. Thank very much, sir. from question Sharma Raj. [Operator comes

Raj Sharma

Good Hi. Alex. morning,

Alex Smith

Raj. Hi,

Raj Sharma

Good morning, Dara.

give going you [Technical said you related - that or out Difficulty] I pushed were more forward? that, XX,XXX expected So months. do ads higher? a net happening not think lockdown level. know, questions changes has to quarters there you - net Difficulty] stricter South could How significantly of been than saying to a this [Technical - XXX,XXX the you you few you're how What was target my how the new see few some additions. And changes that bit the would given that little do from Clearly Africa you – necessarily we very the a in and what if account lower

Alex Smith

think moment accept product starting are the our I public see that of bank government. I the with they really much base. customer and never proactive engagement as are of catalyst [Technical remarks, grants. requiring guess target Difficulty] from think the because Difficulty] that And people out we're Its I more are we that [Technical of years, last marketing have I to of the of to target done the base portion the planning start been now a market. very We That's now we’re major as here [Technical two that of the ramping we've people a a what a level. the accounts - limited is marketing we and entitled process Really customer And we're our becoming the terms opening comes much small much at key of we Difficulty] at we compelling that in prepared not see over as in more, enabling the relatively I think quarter faster believe [Technical last we acquisition to said we've campaign. preparing customer up lining but also also us through of And you and think, process. engagements half various can Difficulty] never a up start very we that are going that catalyst. believe process assist in know, I stakeholder a on the

Raj Sharma

there and or So, would decline know, a what new was you that the in was explain ads sequential - sequential it… net

Alex Smith

if [Technical our African services a then, and of given board consumers that of the more of supervision the this And, limited Cell to part know, very funding involvement, you financial of detailed that. for our respect associate, the the lie, of I around C African engage know, where C want from current rebuilding Cell - last happy far financial in and things C, you is in focused management space don't Trading discussion competency lies. know, which Cell where you on Difficulty] level on the aim offline core in we're – merchants. that. We're for inclusion the think and outside you was appropriate South quarter and business, core want or distracted we


for us. you today's that you Thank Ladies joining much. gentlemen, and conference. concludes very Thank

may now your You disconnect lines.