On this page of StockholderLetter.com we present the 9/29/2023 shareholder letter from LESAKA TECHNOLOGIES INC — ticker symbol LSAK. Reading current and past LSAK letters to shareholders can bring important insights into the investment thesis.

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LSAK 9/29/2023 Shareholder/Stockholder Letter Transcript:

Lesaka Technologies, Inc. Chairman   s Letter for 2023 Annual Report
It has been just over a year since we rebranded as Lesaka and welcomed the Connect Group into our business, and yet so much has
been achieved by this team that the business is barely recognizable. After many years of significant losses, the strategy put in place in
2020 by our new Board is being realized with tangible results starting to come through.
Our revenues increased from $222.6 million (ZAR 3.4 billion) to $528.0 million (ZAR 9.5 billion) attributable to inclusion of the
Connect Group and the excellent growth in the Merchant Division, as well as the successful turnaround of the Consumer Division,
with the Group   s net loss narrowing from $40.2 million (ZAR 610.9 million) to $15.3 million (R275.3 million), an improvement of
$24.8 million (ZAR 335.6 million). Most impressively, through outstanding performances from both divisions, our Group Adjusted
EBITDA, a non-GAAP1 measure, improved from a loss of $17.6 million (ZAR 267.7 million) in 2022 to a profit of $27.7 million
(ZAR 497.6 million), an improvement of $45.4 million (ZAR 765.3 million). I am exceptionally proud of our leadership team and
employees for delivering this performance.
Several milestones were achieved during the year. The Consumer Division reached its goal of achieving profitability in the second
quarter of FY23 and ended the year with an adjusted EBITDA of $3.3 million (ZAR 59.5 million), an improvement of $25.0 million
(ZAR 388.9 million) compared to 2022. We have completed our restructuring phase and are now firmly focused on the growth of our
account base through a number of interventions and initiatives that our Consumer team is executing. The challenges with the Post
Office are impacting South Africa   s most vulnerable individuals and we are working with SASSA wherever possible to bring financial
inclusion, choice and dignity to grant recipients.
The Connect Group acquisition has been transformational for Lesaka. From a sub-scale merchant division focused primarily at the
enterprise level, Lesaka is now a champion of MSME merchants in South Africa, helping them to compete and grow with our holistic
offering. At an operational level the Merchant Division has achieved excellent growth rates this year. Devices deployed increased
from approximately 51,000 to approximately 75,000, with card acquiring enabled devices growing 98% to 44,900. Our secure vaults
took in over ZAR 110 billion cash this year, making this immediately available to our merchants. Our supplier payments platform
enabled small merchants to make almost R4 billion in payments to suppliers, a 300% increase. These are real value adding services
for our merchants which allow us to differentiate our offering and entrench ourselves in our merchants    businesses. Importantly this
growth is all being achieved in a profitable manner, with the Connect business growing EBITDA 44% this year and driving the
Merchant Division to over $33.4 million (ZAR 600.0 million) in adjusted EBITDA.
In South Africa   s rural, informal and township economies Lesaka is playing an increasingly important role in bringing real financial
inclusion to previously underserved individuals. Through our EasyPay consumer offering and Kazang merchant offering we are now
touching the lives of 1.3 million consumers and their families and over 75,000 merchants. As we grow and gain a better understanding
of our customers, we will be able to further improve our value propositions and entrench Lesaka as a sector leader.
From a balance sheet perspective, we have made significant progress this year and, with our improved trading and cash flows, have
restructured our debt facilities to provide greater flexibility in managing our cash resources and to fund additional acquisition
opportunities. We have also managed to secure greatly improved interest rates on our credit facilities. While our improved cash flows
allow us to more aggressively invest in our organic growth, acquisitions will remain an important part of our overall strategy as we
look to add scale to our existing businesses and broaden our service offering to merchants. We continue to investigate opportunities
to exit our non-core investments. We signed a share repurchase agreement with Finbond which should close in late calendar 2023 and
realize ZAR 64 million in cash which will be used to pay down debt.
During the year we have also made great strides in further enhancing our governance, internal controls and management information
and reporting capabilities across both the Consumer and Merchant segments of the business; particularly with the Connect Group
integration.
A further highlight has been the Lesaka Values Journey, which involved every member of staff and management, thus ensuring the
company aspires to the highest levels of customer service excellence, product innovation and ethical business practices and leadership.
In July 2023 Venessa Naidoo joined the Board and the Audit Committee, and I look forward to working with her as she brings her
deep and relevant experience to our business.
I would like to express my gratitude to our Executive Team and dedicated employees, whose hard work and commitment have been
crucial to Lesaka   s achievements this year. Their perseverance, creativity and passion have transformed Lesaka, and I am confident in
their ability to continue to deliver on our commitments to our customers, funders and shareholders and overcome the challenges we
face in South Africa.
1
Refer to Item 7 Management   s Discussion and Analysis of Financial Condition and Results of Operations   Use of non-GAAP
measures for a discussion regarding our non-GAAP measures and a reconciliation to the comparable GAAP measure.

Lastly, I extend my sincere appreciation to our shareholders for their unwavering support and confidence in us to deliver on the
strategic objectives set out a few years back. Lesaka has a noble purpose to improve people   s lives by bringing financial inclusion to
South Africa   s underserved consumers and merchants. I am extremely proud of the progress over the last 12 months, and we will build
on this momentum as we lead the way in transforming South Africa   s informal markets for the better.
Sincerely,

Kuben Pillay
Chairman

Financial results at a glance
Consolidated results
(in United States dollar thousands, except percentages, per share data and number of employees)
Revenue ........................................................................
Group Adjusted EBITDA .............................................
Operating (loss) income ................................................
Operating (loss) income margin ...................................
Net (loss) income Lesaka..............................................
(Loss) Earnings per share:
Basic ($) ..................................................................
Diluted ($) ...............................................................
Fundamental net (loss) income2 ....................................
Fundamental (loss) earnings per share:
Basic ($)2.................................................................
Number of employees ...................................................
Cash flows (used in) provided by operating activities ..
Cash and cash equivalents ............................................
Total assets ...................................................................
Total equity ...................................................................
2023
527,971
27,736
(15,347)
(3%)
(35,074)
Year Ended June 30
2022
2021
2020
222,609
130,786
144,299
(38,415)
(29,601)
(26,381)
(40,195)
(53,872)
(44,248)
(18%)
(41%)
(31%)
(43,876)
(38,057)
(97,214)
2019
166,227
(58,639)
(134,932)
(81%)
(311,761)
(0.56)
(0.56)
(9,429)
(0.75)
(0.75)
(28,657)
(0.67)
(0.67)
(49,516)
(1.70)
(1.70)
(58,027)
(5.49)
(5.49)
(96,883)
(0.15)
2,296
410
69,324
552,926
179,478
(0.49)
2,650
(37,198)
104,800
656,565
234,920
(0.87)
3,075
(58,371)
232,485
453,678
290,213
(1.02)
2,875
(46,045)
232,485
453,678
290,213
(1.71)
2,889
(4,460)
95,460
670,247
317,342
Operating segments information
(in United States dollar thousands)
Refer to Note 21 in our audited consolidated financial statements for additional information and Item 7 of our Annual Report on
Form 10-K included in this Annual Report for a detailed discussion of our results per operating segment.
Operating Segment
Consolidated revenue:
Consumer
Merchant
Subtotal: Operating segments
Not allocated to operating segments
Eliminations
Total consolidated revenue
Group Adjusted EBITDA2:
Consumer
Merchant
Group costs
Group Adjusted EBITDA2
2023
$    000
% of
total
Year ended June 30,
2022
% of
$    000
total

change
62,801
463,701
527,971
1,469
527,971
12%
88%
100%
100%
65,932
156,689
222,621
(12)
222,609
30%
70%
100%
100%
(5%)
196%
137%
nm
nm
137%
3,314
33,531
(9,109)
27,736
12%
121%
(33%)
100%
(21,674)
12,646
(8,587)
(17,615)
123%
(72%)
49%
100%
nm
165%
6%
nm
Forward looking statements and use of non-GAAP measures
Forward looking statements
This Annual Report contains forward-looking statements that involve risks and uncertainties that could cause our actual results to
differ materially from those projected, anticipated or implied in the forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as    may,       will,       should,       could,       would,       expects,       plans,       intends,   
   anticipates,       believes,       estimates,       predicts,       potential    or    continue    or the negative of such terms and other comparable
terminology. For more information about the factors that could cause our actual results to differ materially from current expectations,
you should refer to the section entitled    Risk Factors    in our 2023 Annual Report on Form 10-K and in our Quarterly Reports on Form
10-Q that we file from time to time with the United States Securities and Exchange Commission.
2
Fundamental net income, earnings per share and Group Adjusted EBITDA are non-GAAP measures. Refer to       Forward looking
statements and use of non-GAAP measures   Use of non-GAAP measures in this Annual Report    for further information regarding
these non-GAAP measures.



 9/29/2023 Letter Continued (Full PDF)