Page No.
PART
I. FINANCIAL INFORMATION
Unaudited Condensed Consolidated Balance Sheets as of March 31, 2026 and June 30,
Unaudited Condensed Consolidated Statements of Operations for the three and nine
months ended March 31, 2026 and 2025
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the
three and nine months ended March 31, 2026 and 2025
Unaudited Condensed Consolidated Statement of Changes in Equity for the three and
nine months ended March 31, 2026 and 2025
Unaudited Condensed Consolidated Statements of Cash Flows for the three and nine
months ended March 31, 2026 and 2025
Notes to Unaudited Condensed Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults upon Senior Securities
EXHIBIT 10.51
EXHIBIT 10.52
EXHIBIT 10.53
2
Part I. Financial information
Item 1. Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Balance Sheets
March 31,
June 30,
2026
2025
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
$
Restricted cash related to ATM funding
and credit facilities (Note 9)
Accounts receivable, net and other receivables (Note 3)
Finance loans receivable, net (Note 3)
Inventory (Note 4)
Total current assets before settlement assets
Settlement assets
Total current assets
PROPERTY,
PLANT AND EQUIPMENT, net of accumulated depreciation of - March: $
June:
$
(Note 1)
OPERATING LEASE RIGHT-OF-USE (Note 17)
EQUITY-ACCOUNTED INVESTMENTS
(Note 6)
GOODWILL (Note 7)
INTANGIBLE ASSETS, NET (Note 7), including integrated platform of - March: $
June: $
DEFERRED INCOME TAXES
OTHER LONG-TERM ASSETS (Note 6 and 8)
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Short-term credit facilities (Note 9)
Accounts payable
Other payables (Note 10)
(A)
Operating lease liability - current (Note 17)
Current portion of long-term borrowings (Note 9)
Income taxes payable
Total current liabilities before settlement obligations
Settlement obligations
Total current liabilities
DEFERRED INCOME TAXES
OPERATING LEASE LIABILITY - LONG TERM (Note 17)
LONG-TERM BORROWINGS (Note 9)
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 8)
TOTAL LIABILITIES
REDEEMABLE COMMON STOCK (Note 11)
EQUITY
COMMON STOCK (Note 11)
Authorized:
with $
par value;
Issued and outstanding shares, net of treasury - March:
; June:
PREFERRED STOCK
Authorized shares:
with $
par value;
Issued and outstanding shares, net of treasury:
March:
; June:
ADDITIONAL PAID-IN-CAPITAL
TREASURY SHARES, AT
COST - March:
; June:
()
()
ACCUMULATED OTHER
COMPREHENSIVE LOSS (Note 12)
(A)
()
()
RETAINED EARNINGS
(A)
TOTAL LESAKA EQUITY
NON-CONTROLLING INTEREST
TOTAL EQUITY
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY
$
$
(A) Amounts for June 30, 2025 revised to correct the errors discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Operations
3
Three months ended
Nine months ended
March 31,
March 31,
2026
2025
2026
2025
(In thousands, except per share
data)
(In thousands, except per share
data)
REVENUE (Note 16)
$
$
$
$
EXPENSE
Cost of goods sold, IT processing, servicing and support
(A)
Selling, general and administration
(A)
Allowance for credit losses (Note 3)
Depreciation and amortization
Impairment loss (Note 7)
Transaction costs related to Adumo, Recharger and Bank Zero
acquisitions and certain compensation costs (Note 2)
OPERATING INCOME
CHANGE IN FAIR VALUE
OF EQUITY SECURITIES (Note 5 and 6)
()
()
()
OTHER INCOME (Note 10)
LOSS ON DISPOSAL OF EQUITY SECURITIES (Note 2)
NET LOSS ON IMPAIRMENT OF EQUITY-ACCOUNTED
INVESTMENT/ LOSS ON DISPOSAL OF EQUITY-ACCOUNTED
INVESTMENT (Note 6)
REVERSAL OF ALLOWANCE FOR
DOUBTFUL LOAN
RECEIVABLE
(Note 3)
INTEREST INCOME
INTEREST EXPENSE
(A)
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
()
()
INCOME TAX EXPENSE (BENEFIT) (Note 19)
()
()
NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY-
ACCOUNTED INVESTMENTS
()
()
()
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS
(Note 6)
NET INCOME (LOSS)
()
()
()
(ADD) LESS NET (LOSS) INCOME ATTRIBUTABLE
TO NON-
CONTROLLING INTEREST
()
()
NET INCOME (LOSS) ATTRIBUTABLE
TO LESAKA
$
$
()
$
()
$
()
Net earnings (loss) per share, in United States dollars
(Note 14):
Basic earnings (loss) attributable to Lesaka shareholders
$
$
()
$
()
$
()
Diluted earnings (loss) attributable to Lesaka shareholders
$
$
()
$
()
$
()
(A) Revised to correct the errors discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income
4
Three months ended
Nine months ended
March 31,
March 31,
2026
2025
2026
2025
(In thousands)
(In thousands)
Net income (loss)
(A)
$
$
()
$
()
$
()
Other comprehensive (loss) income, net of taxes
Movement in foreign currency translation reserve
(A)
()
()
Release of foreign currency translation reserve related to
disposal/ liquidation of subsidiaries (Note 12)
(494)
(520)
6
Release of foreign currency translation reserve related to
impairment of equity-accounted investment (Note 12)
550
Total other comprehensive
(loss) income, net of
taxes
()
()
Comprehensive (loss) income
()
()
()
(Less) Add comprehensive (loss) income
attributable to non-controlling interest
()
()
()
Comprehensive (loss) income attributable to
Lesaka
$
()
$
()
$
$
()
(A) Revised to correct the errors discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
5
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
For the three months ended March 31, 2025 (dollar amounts in thousands)
Balance – January 1, 2025
(A)
108,456,657
$
101
(28,297,365)
$
(302,319)
80,159,292
$
421,950
$
270,160
$
(199,720)
$
190,172
$
6,727
$
$
Shares issued (Note 2 and Note 11)
2,490,000
2
2,490,000
(2)
Shares repurchased (Note 13)
(2,495,662)
(27)
(2,495,662)
(27)
()
Gain recognized related to issue of
shares included in treasury shares
(Note 2)
1,092,361
4,870
1,092,361
408
5,278
Restricted stock granted (Note 13)
81,500
81,500
Exercise of stock options (Note 13)
19,331
19,331
59
59
Stock-based compensation charge
(Note 13)
2,531
2,531
Reversal of stock-based compensation
charge (Note 13)
(67,922)
(67,922)
(34)
(34)
()
Net (loss) income
(A)
(22,353)
(22,353)
20
()
Dividends paid to non-controlling
interest
(131)
()
Other comprehensive income (Note
(A)
6,086
6,086
176
Balance – March 31, 2025
(A)
110,979,566
$
103
(29,700,666)
$
(297,476)
81,278,900
$
424,912
$
247,807
$
(193,634)
$
181,712
$
6,792
$
$
(A) Revised to correct the errors discussed in Note 1.
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
6
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
For the nine months ended March 31, 2025 (dollar amounts in
thousands)
Balance – July
1, 2024
(A)
89,836,051
$
83
(25,563,808)
$
(289,733)
64,272,243
$
343,639
$
307,466
$
(188,227)
$
173,228
$
$
$
Shares issued (Note 2 and Note 11)
19,769,803
19
19,769,803
73,237
73,256
9,528
Shares repurchased (Note 13)
(5,229,219)
(12,613)
(5,229,219)
(12,613)
()
Gain recognized related to issue of
shares included in treasury shares
(Note 2)
1,092,361
4,870
1,092,361
408
5,278
Restricted stock granted (Note 13)
1,445,610
1,445,610
Exercise of stock options (Note 13)
36,345
1
36,345
110
111
Stock-based compensation charge
(Note 13)
7,563
7,563
Reversal of stock-based compensation
charge (Note 13)
(108,243)
(108,243)
(45)
(45)
()
Adumo non-controlling interest
acquired (Note 2)
7,586
7,586
Net (loss) income
(A)
(59,659)
(59,659)
48
()
Dividends paid to non-controlling
interest
(432)
()
Other comprehensive loss (Note 12)
(A)
(5,407)
(5,407)
(410)
()
Balance – March 31, 2025
(A)
110,979,566
$
103
(29,700,666)
$
(297,476)
81,278,900
$
424,912
$
247,807
$
(193,634)
$
181,712
$
6,792
$
$
(A) Revised to correct the errors discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial
Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
7
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
For the three months ended March 31, 2026 (dollar amounts in thousands)
Balance – January 1, 2026
111,758,403
$
103
(30,234,228)
$
(299,632)
81,524,175
$
430,686
$
217,712
$
(168,308)
$
180,561
$
7,137
$
$
Shares repurchased (Note 13)
(9,000)
(40)
(9,000)
(40)
()
Loss recognized related to issue of
shares included in treasury shares
(Note 2)
1,680,628
7,663
1,680,628
19
7,682
Restricted stock granted (Note 13)
180,000
180,000
Stock-based compensation charge
(Note 13)
1,573
1,573
Reversal of stock-based compensation
charge (Note 13)
(129,580)
(129,580)
(239)
(239)
()
Deconsolidation of Humble (Note 2)
Lesaka Hospitality non-controlling
interest acquired (Note 11)
422
422
Transfer from redeemable common
stock to additional paid-in-capital
(Note 11)
4,277
4,277
(4,277)
Net Income (loss)
552
552
(115)
Acquisition of non-controlling interest
(Note 11)
(7,312)
()
Other comprehensive (loss) income
(Note 12)
(8,163)
(8,163)
290
()
Balance – March 31, 2026
111,808,823
$
103
(28,562,600)
$
(292,009)
83,246,223
$
436,738
$
218,264
$
(176,471)
$
186,625
$
$
$
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Changes in Equity
8
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net
of treasury
Addition
al Paid-
In
Capital
Retained
Earnings
Accumulated
other
comprehensiv
e loss
Total
Lesaka
Equity
Non-
controllin
g Interest
Total
Redeemabl
e common
stock
For the nine months ended March 31, 2026 (dollar amounts in
thousands)
Balance – July 1,
2025
(A)
111,183,141
$
103
(29,934,044)
$
(298,523)
81,249,097
$
426,950
$
218,725
$
(185,626)
$
161,629
$
6,841
$
$
Shares repurchased (Note 13)
(79,133)
(311)
(79,133)
(311)
()
Loss recognized related to issue of
shares included in treasury shares
(Note 2)
1,757,344
8,036
1,757,344
(51)
7,985
Restricted stock granted
1,036,595
1,036,595
Stock-based compensation charge
(Note 13)
5,442
5,442
Reversal of stock-based compensation
charge (Note 13)
(410,913)
(410,913)
(302)
(302)
()
Deconsolidation of Humble (Note 2)
(306,767)
(1,211)
(306,767)
(1,211)
(43)
()
Lesaka Hospitality non-controlling
interest acquired (Note 11)
422
422
422
Transfer from redeemable common
stock to additional paid-in-capital
(Note 11)
4,277
4,277
(4,277)
Net loss
(A)
(461)
(461)
(246)
()
Acquisition of non-controlling interest
(Note 11)
(7,312)
()
Other comprehensive income (Note
(A)
9,155
9,155
760
Balance – March 31, 2026
111,808,823
$
103
(28,562,600)
$
(292,009)
83,246,223
$
436,738
$
218,264
$
(176,471)
$
186,625
$
$
$
(A) Revised to correct the errors discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial
Statements
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
9
Three months ended
Nine months ended
March 31,
March 31,
2026
2025
2026
2025
(In thousands)
(In thousands)
Cash flows from operating activities
Net income (loss)
(A)
$
$
()
$
()
$
()
Depreciation and amortization
Impairment loss
Movement in allowance for doubtful accounts receivable
Fair value adjustment related to financial liabilities
()
()
()
Loss on disposal of equity securities (Note 6)
Loss on disposal of equity-accounted investments (Note 6)
Earnings from equity-accounted investments
()
()
()
()
Reversal of allowance for doubtful loans receivable
()
()
Gain on deconsolidation of subsidiary
()
()
Change in fair value of equity securities (Note 5 and 6)
()
Other income
()
Profit on disposal of property, plant and equipment
()
()
()
()
Movement in interest payable
()
Facility fee amortized
Stock-based compensation charge (Note 13)
Dividends received from equity-accounted investments
Decrease (Increase) in accounts receivable
()
Increase in finance loans receivable
()
()
()
()
Decrease in inventory
Increase (Decrease) in accounts payable and other payables
(A)
()
()
Deferred consideration due to seller of Recharger included in accounts payable
and other payables (Note 2 and Note 10)
Increase in taxes payable
Decrease in deferred taxes
()
()
()
()
Net cash provided by (used in) operating activities
()
Cash flows from investing activities
Capital expenditures
()
()
()
()
Proceeds from disposal of property, plant and equipment
()
Acquisition of intangible assets
()
()
()
()
Acquisitions, net of cash acquired
()
()
()
()
Cash disposed on disposal of subsidiary
()
Investment in equity securities
()
Proceeds from disposal of equity securities (Note 6)
Net change in settlement assets
Net cash used in investing activities
()
()
()
()
Cash flows from financing activities
Proceeds from bank overdraft (Note 9)
Repayment of bank overdraft (Note 9)
()
()
()
()
Long-term borrowings utilized (Note 9)
Repayment of long-term borrowings (Note 9)
()
()
()
()
Acquisition of non-controlling interest
()
()
Acquisition of treasury stock (Note 13)
()
()
()
()
Proceeds from exercise of stock options
Guarantee fee
()
()
()
Dividends paid to non-controlling interest
()
()
Net change in settlement obligations
()
()
()
()
Net cash (used in) provided by financing activities
()
()
Effect of exchange rate changes on cash and cash equivalents
()
()
Net increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash – beginning of period
Cash, cash equivalents and restricted cash – end of period (Note 15)
$
$
$
$
(A) Revised to correct the errors discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial Statements
10
LESAKA TECHNOLOGIES, INC
Notes to the Unaudited Condensed Consolidated Financial Statements
for the three and nine months ended March 31, 2026 and 2025
(All amounts in tables stated in thousands or thousands of U.S. dollars, unless otherwise stated)
Basis of Presentation and Summary of Significant Accounting
Policies
Unaudited Interim Financial Information
The accompanying
unaudited condensed
consolidated financial
statements include
all majority-owned
subsidiaries over
which
the Company exercises
control and have been
prepared in accordance with
U.S. generally accepted accounting
principles (“GAAP”)
and
the rules
and
regulations
of
the United
States Securities
and
Exchange
Commission
for
Quarterly Reports
on Form
10-Q
and
include all of the information and
disclosures required for interim financial reporting.
The results of operations for the
three and nine
months ended March 31, 2026 and
2025, are not necessarily indicative of
the results for the full year.
The Company believes that the
disclosures are adequate to make the information presented not misleading.
These
unaudited
condensed
consolidated
financial
statements
should
be
read
in
conjunction
with
the
financial
statements,
accounting policies and financial notes thereto included in the
Company’s Annual Report on Form 10-K for the fiscal year ended June
30,
In
the
opinion
of
management,
the
accompanying
unaudited
condensed
consolidated
financial
statements
reflect
all
adjustments (consisting only of normal recurring adjustments), which are necessary for a fair
representation of financial results for the
interim periods presented.
References to “Lesaka” are references
solely to Lesaka Technologies,
Inc. References to the “Company” refer
to Lesaka and its
consolidated subsidiaries, collectively,
unless the context otherwise requires.
Revision of Previously Issued Financial Statements
Understatement of cost and accumulated depreciation
for computer equipment
In October 2025, the Company
identified that it had understated
its June 30, 2025, amounts
of cost and accumulated depreciation
for
computer
equipment
as
well
as
the
totals
for
cost
and
accumulated
depreciation
by
$
6.5
million
in
the
notes
to
the
audited
consolidated
financial
statements
for
the
years
ended
June
30,
2025,
2024
and
The
carrying
value
of
property,
plant
and
equipment reported as
of June
30, 2025, was
not impacted by
the error. The Company has
recast its
accumulated depreciation presented
on the condensed consolidated balance sheet as of June 30, 2025, to increase
the amount from $
48,636
to $
.
The Company assessed the materiality of this error and change in presentation on prior period consolidated
financial statements
in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99 “Materiality” and SAB No. 108, “Considering the Effects of Prior
Year
Misstatements
when
Quantifying
Misstatements
in
the
Current
Year
Financial
Statements.”
Based
on
this
assessment,
the
Company has concluded
that previously issued
financial statements were
not materially misstated
based upon overall
considerations
of both quantitative and qualitative factors.
Understatement of cost of goods sold, IT processing,
servicing and support due to incorrect claim of indirect
taxes
Subsequent to the issuance
of the Company’s
Quarterly Report on Form
10-Q for the three
months ended September
30, 2025,
it
determined
that
its
certain
indirect
taxes
had
not
been
accounted
for
correctly
in
its
consolidated
balance
sheet,
consolidated
statements of
operations,
consolidated
statement of
comprehensive
loss, consolidated
statement of
changes in
equity,
consolidated
statement of cash flows and
related notes to the
consolidated financial statements included in
previously filed Annual Reports on
Form
10-K and Quarterly Reports on Form 10-Q since June 30, 2022, and these filings were incorrect. In these previous filings, the amount
of
certain
indirect
taxes
were
incorrectly
claimed
in
monthly
indirect
tax
submission
to
the
taxing
authority
and
were
incorrectly
excluded
from
the Company’s
reported
cost of
goods
sold, IT
processing,
servicing
and support
in the
consolidated
statements of
operations
and
other
payables
and
retained
earnings
in
the
consolidated
balance
sheet.
The
corrected
presentation
in
the
revised
consolidated
financial
statements
includes
certain
indirect
taxes
in
cost
of
goods
sold,
IT processing,
servicing
and
support
in
the
consolidated statements of operations and other payables and retained
earnings in the consolidated balance sheet.
The Company has
also determined that
it may also
be liable for
penalties and interest
related to the
indirect taxes not
paid in a
timely manner and has recorded the penalties in the selling,
general and administration expense and the interest in interest expense
in
the revised consolidated statements of operations.
The cumulative sum of the penalties and interest are included in other payables and
retained earnings in the revised consolidated balance sheet.
The Company has determined
that at this time
it is more likely
than not that it
will be unable to
claim an income tax
deduction
related to the error, however,
it is performing further analysis of
its tax position with its external tax advisors.
Therefore, there are no
income tax adjustments reflected in these condensed consolidated
financial statements related to the correction of this error.
11
Basis of Presentation and Summary of Significant Accounting
Policies (continued)
Revision of Previously Issued Financial Statements (continued)
Understatement of cost
of goods sold,
IT processing, servicing and
support due to
incorrect claim of indirect taxes
(continued)
The Company assessed the materiality of this error and change in presentation on prior period consolidated
financial statements
in
accordance
with
SAB
No.
99“Materiality”
and
SAB
No.
108,
“Considering
the
Effects
of
Prior
Year
Misstatements
when
Quantifying
Misstatements in
the Current
Year
Financial Statements.”
Based on
this assessment,
the Company
has concluded
that
previously
issued
financial
statements
were
not
materially
misstated
based
upon
overall
considerations
of
both
quantitative
and
qualitative factors.
The Company
has revised the
previous presentations
on the condensed
consolidated statements
of operations
for the three
and
nine months ended March 31, 2025, and corrected them in this filing. The Company has also included the impact of the correction for
the three months ended September 30, 2025, in the condensed consolidated statements of operations for the nine months ended March
31, 2026, included in this filing. The impact of these revisions has increased cost
of goods sold, IT processing, servicing and support,
selling,
general
and
administration
expense
and
interest
expense,
and
all
subtotals
from
operating
income
to
net
income
(loss)
attributable to Lesaka for the affected periods.
Specifically,
for the nine months
ended March 31, 2026,
Cost of goods sold,
IT processing, servicing
and support increased by
$
0.2
million, Selling,
general and
administration expense
increased by
$
0.06
million, Operating
income decreased
by $
0.2
million,
Interest expense increased
by $
0.1
million, and Net
income (loss) attributable
to Lesaka decreased
by $
0.4
million, as a result
of the
correction to amounts reported
for the three months
ended September 30, 2025.
Basic and Diluted loss per
share for the nine months
ended March 31, 2026, were not impacted by the correction to amounts reported
for the three months ended September 30, 2025.
The Company
has revised
the condensed
consolidated balance
sheet as
of June
30, 2025,
and corrected
it in
this filing
where
these amounts
are presented as
comparative prior
period amounts in
other payables and
retained earnings and
affected subtotals
and
totals.
The tables below present the impact of
the revisions to specific captions to
the Company’s condensed consolidated balance sheet
and condensed consolidated statement of operations for the periods
identified.
Condensed consolidated balance sheet
June 30, 2025
As reported
Correction
As revised
Other payables
$
72,079
$
3,956
$
Accumulated other comprehensive loss
(185,664)
38
()
Retained earnings
222,719
(3,994)
Condensed consolidated statement of operations
Three months ended March 31, 2025
As reported
Correction
As revised
(in thousands, except per share data)
Cost of goods sold, IT processing, servicing and support
$
117,013
$
150
$
Selling, general and administration
34,217
53
Interest expense
5,777
92
Basic earnings (loss) per share attributable to Lesaka shareholders
$
(0.27)
$
(0.01)
$
()
Diluted earnings (loss) per share attributable to Lesaka shareholders
$
(0.27)
$
(0.01)
$
()
Condensed consolidated statement of operations
Nine months ended March 31, 2025
As reported
Correction
As revised
(in thousands, except per share data)
Cost of goods sold, IT processing, servicing and support
$
366,618
$
486
$
Selling, general and administration
97,213
171
Interest expense
16,983
268
Basic earnings (loss) per share attributable to Lesaka shareholders
$
(0.81)
$
(0.01)
$
()
Diluted earnings (loss) per share attributable to Lesaka shareholders
$
(0.81)
$
(0.01)
$
()
12
Basis of Presentation and Summary of Significant Accounting
Policies (continued)
Recent accounting pronouncements adopted
In December 2023,
the Financial Accounting
Standards Board (“FASB”)
issued guidance regarding
Income Taxes
(Topic
to improve income tax
disclosure requirements. The guidance
requires entities, on an
annual basis, to (1) disclose
specific categories
in the income tax rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if
the effect of those reconciling items is equal to or greater than five percent of
the amount computed by multiplying pre-tax income or
loss by
the applicable
statutory income
tax rate).
This guidance
was effective
for the
Company beginning
July 1,
2025 for
its year
ended June 30, 2026.
Recent accounting pronouncements not yet adopted
as of March 31, 2026
In
November
2024,
the
FASB
issued
guidance
regarding
Income
Statement—Reporting
Comprehensive
Income—Expense
Disaggregation
Disclosures
(Subtopic
220-40)
which
requires
disaggregated
disclosure
of
income
statement
expenses
for
public
business entities. The guidance does not change the expense captions an
entity presents on the face of the income statement; rather,
it
requires
disaggregation
of
certain
expense
captions
into
specified
categories
in
disclosures
within
the
footnotes
to
the
financial
statements. This guidance is effective for the
Company beginning July 1, 2027. Early
adoption is permitted. The Company is
currently
assessing the impact of this guidance on its financial statements and related disclosures.
In
July
2025,
the
FASB
issued
guidance
regarding
Financial
Instruments-Credit
Losses
(Topic
Measurement
of
Credit
Losses for Accounts Receivable and Contract Assets
which amends current guidance to provide a practical
expedient (for all entities)
and an accounting
policy election (for
all entities, other than
public business entities,
that elect the practical
expedient) related to
the
estimation of expected credit
losses for current accounts receivable
and current contract assets that
arise from transactions accounted
for under
Revenue From Contracts With
Customers (Topic
606).
This guidance is effective for
the Company beginning July 1, 2026,
and interim
reporting periods during
that fiscal year.
Early adoption
is permitted. The
Company is currently
assessing the impact
of
this guidance on its financial statements and related disclosures.
On
September
18,
2025,
the
FASB
issued
guidance
regarding
Intangibles—Goodwill
and
Other—
Internal-Use
Software
(Subtopic 350-40)
which amends certain
aspects of the
accounting for and
disclosure of software
costs under ASC
350-40. The new
guidance
makes
targeted
improvements
to
existing
guidance
but
does
not
fully
align
the
framework
for
accounting
for
internally
developed software
costs that
are subject
to ASC
350-40 with
the framework
applied to
software to
be sold
or marketed
externally
that is
subject to
guidance regarding
Costs of
Software to
Be Sold,
Leased, or
Marketed
(Subtopic ASC
985-20)
. The
new guidance
also does not amend the guidance
on costs of software licenses that
are within the scope of ASC 985
-20. The amendments supersede
the guidance
on website
development costs
in guidance
regarding
Website
Development Costs
(Subtopic ASC
350-50)
and relocate
that guidance,
along with the
recognition requirements
for development costs
specific to websites,
to ASC 350
-40. This guidance
is
effective for
the Company beginning
July 1, 2028,
and interim reporting
periods during that fiscal
year. Early
adoption is permitted.
Entities
may
apply
the
guidance
prospectively,
retrospectively,
or
via
a
modified
prospective
transition
method.
The
modified
prospective
transition
approach
would
allow
entities
to
account
for
an
in-process
project
that,
before
the
transition
date,
met
the
capitalization requirements but would no longer meet
the requirements for capitalization under the
new guidance by derecognizing the
capitalized costs for
that in-process project
through a
cumulative-effect adjustment
to the opening
balance of retained
earnings. The
Company is currently assessing the impact of this guidance on its financial
statements and related disclosures.
On December
8, 2025,
the FASB
issued guidance
regarding
Interim Reporting
(Topic
which is
intended to
improve the
navigability
of the
guidance
in ASC
270
and clarify
when it
applies.
Under the
amendments, an
entity is
subject to
ASC 270
if
it
provides “interim financial
statements and notes
in accordance with
GAAP.” The updated guidance also
addresses the
form and content
of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other Codification topics, and establishes
a principle
under which an
entity must “disclose
events since the
end of the
last annual reporting
period that have
a material impact
on the entity.”
As the FASB
stated in the
proposed guidance and
reiterates in the ASU,
the amendments are
not intended to
“change
the fundamental nature
of interim reporting
or expand or
reduce current interim
disclosure requirements.” This
guidance is effective
for the
Company beginning
July 1,
2028, and
interim reporting
periods during
that fiscal
year.
Early adoption
is permitted.
Entities
m
ay apply the guidance prospectively,
retrospectively, or via a modified
prospective transition method.
13
Acquisitions
and Dispositions
Refer to Note 3 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the
year ended
June 30,
2025, for
additional information
regarding the
acquisition of
Recharger Proprietary
Limited (“Recharger”)
and
the proposed acquisition of Bank Zero Mutual Bank (“Bank Zero”) (which transaction
remains conditional).
The cash
paid, net
of cash
received related
to the
Company’s
acquisitions during
the three
and nine
months ended
March 31,
2026, is summarized in the table below:
Three months ended March 31,
Nine months ended March 31,
2026
2025
2026
2025
Total cash paid
$
$
$
$
Less: cash acquired
Total cash paid, net
of cash received
$
$
$
$
2026 Proposed acquisitions of Bank Zero
On
June
26,
2025,
Lesaka
Technologies
Proprietary
Limited
(“Lesaka
SA”)
entered
into
a
Transaction
Implementation
Agreement (the
“Transaction
Implementation Agreement”)
with Zero
Research Proprietary
Limited (“Zero
Research”), Bank
Zero,
and other parties identified in Annexure
A to the Transaction Implementation
Agreement (being all of the shareholders of Bank
Zero
save
for
Zero
Research
and
Naught
Holdings
Ltd,
the
“Bank
Zero
Sellers”),
the
parties
listed
in
Annexure
B
to
the
Transaction
Implementation Agreement (being all
of the shareholders
of Zero Research
save for Naught
Holdings Ltd, the
“Zero Research Sellers”)
and Naught Holdings Ltd.
The Company incurred transaction-related expenditures of $
0.1
million and $
0.3
million during the three and nine months
ended
March 31, 2026,
respectively, related
to the proposed
acquisition of Bank
Zero. The Company’s
accruals presented in
Note 10 of
as
March
31, 2026,
includes
an accrual
of transaction
related expenditures
of $
0.3
million and
the Company
expects
to incur
further
transaction costs of $
0.2
million during the 2026 fiscal year.
2026 Acquisitions
Atom Operations Proprietary Limited
On November
10, 2025,
the Company,
through its
wholly
owned
subsidiary,
Prism Holdings
Proprietary
Limited
(“Prism”),
entered
into
a
Sale
of
Shares
Agreement
(the
“Atom
Purchase
Agreement”)
with
Gravaton
Investments
Proprietary
Limited
(“Gravaton”) and Atom Operations Proprietary Limited (“Atom”). Pursuant to the Atom Purchase Agreement and subject to its terms
and conditions, Prism agreed to
acquire, and Gravaton agreed
to sell, all of
the outstanding equity interests
in Atom for a
total purchase
consideration of $
0.7
million which comprised
of $
0.4
million (ZAR
6.0
million, translated at
December 1, 2025
exchange rates)
in
cash and
76,716
shares of the Company’s
shares of common stock (which
had an aggregate value
of $
0.3
million (
76,716
multiplied
by
$
3.95
)
on closing).
The transaction
closed
on December
1, 2025.
The Company
did not
incur
any
significant
transaction
costs
related to this acquisition.
Mobilemart Proprietary Limited
On
January
30,
2026,
the
Company,
through
Prism,
entered
into
a
Sale
of
Shares
Agreement
(the
“Mobilemart
Purchase
Agreement”) with BASA
Ventures
Proprietary Limited (“BASA”) and
Mobilemart Proprietary Limited
(“Mobilemart”). Pursuant to
the Mobilemart Purchase Agreement and subject to its terms and conditions, Prism
agreed to acquire, and BASA agreed to sell, all of
the
outstanding
equity
interests
in
Mobilemart
for
a
total
purchase
consideration
of
$
2.5
million
(ZAR
40.0
million,
translated
at
February 6,
2026 exchange
rates) in
cash. The
transaction closed
on February
6, 2026.
The Company
did not
incur any
significant
transaction costs related to this acquisition.
These acquisitions were allocated to our Enterprise operating segment.
2025 Acquisitions
On November 19,
2024, the Company,
through Lesaka SA,
entered into a
Sale of Shares Agreement
(the “Recharger Purchase
Agreement”) with
Imtiaz Dhooma
(Recharger’s
former chief
executive officer)
and Ninety
Nine Proprietary
Limited (“the
Seller”).
Pursuant to
the Recharger
Purchase Agreement
and subject to
its terms and
conditions, Lesaka
SA agreed to
acquire, and
the Seller
agreed to sell, all of the outstanding equity interests in Recharger.
The transaction closed on March 3, 2025.
14
Acquisitions and Dispositions (continued)
The transaction consideration per
the Recharger Purchase Agreement
was settled in two tranches.
The second and final tranche
was settled
on March
3, 2026,
and comprised
a contractual
cash payment
of ZAR
175.0
million ($
10.4
million) and
the delivery
of
shares of Lesaka’s common
stock with a contractual value of ZAR
75.0
million ($
4.6
million).
The Company
previously recorded
the stock-based
compensation charge
related to
the cash-settled
awards in
other payables.
The Company
recorded a
fair value
loss of $
0.4
million during
the three and
nine months ended
March 31,
2026, under
the caption
change
in
fair value
of equity
securities
in
the unaudited
condensed
consolidated
statement
of operations.
The fair
value
loss was
calculated
as
the
difference
between
the
fair
value
of
the
shares
of
common
stock
transferred
on
March
3,
2026,
and
the
amount
recorded
in
other
payables
as
of
June
30,
The
1,017,914
shares
of
common
stock
to
be
provided
was
calculated
using
the
contractual
value
of
ZAR
75.0
million
divided
by
the
volume-weighted
average
price
of
the
Company’s
common
shares
on
the
Johannesburg Stock Exchange for the three-month period prior to February 24, 2026. The fair value of the shares of common stock in
U.S. dollars was
calculated using
the shares issued
multiplied by the
Company’s closing
price on the
Johannesburg Stock
Exchange
on March 3, 2026, of ZAR
75.37
, and translated to U.S. dollars at the exchange rate of $1: ZAR
16.35
.
Lesaka SA delivered the
1,017,914
shares of the Company’s common stock from a pool of shares it purchased in October 2024,
and the Company recognized
a loss in
additional paid-in-capital of $
0.1
million related to
the difference between in the
value on March
3, 2026, and the price paid per share in October 2024.
The
Company
completed
the
purchase
price
allocation
related
to
the
Recharger
acquisition
during
the
three
months
ended
September 30,
- There
were no
changes to
the Recharger
preliminary purchase
price allocation
as of
June 30,
- The
final
purchase
price
allocation
related
to
the
Recharger
acquisition,
translated
at
the
foreign
exchange
rates
applicable
on
the
date
of
acquisition, is provided in the table below:
Final purchase price allocation
Recharger
Cash and cash equivalents
$
1,720
Accounts receivable
17
Inventory
194
Property, plant and equipment
39
Operating lease right of use asset
401
Goodwill
3,614
Intangible assets
16,171
Deferred income taxes assets
81
Accounts payable
(149)
Other payables
(1,439)
Operating lease liability - current
(185)
Income taxes payable
(4)
Deferred income taxes liabilities
(4,366)
Operating lease liability - long-term
(269)
Fair value of assets and liabilities on acquisition
$
15,825
Transaction costs and certain compensation
costs
The Company
did not incur
any transaction
costs related to
the Bank Zero
acquisition during
the three
and nine
months ended
March
31,
The
table
below
presents
transaction
costs
incurred
related
to
the
acquisition
of
Adumo
and
Recharger,
and
the
proposed acquisition of Bank Zero,
as well as
certain post-combination compensation costs expensed during
the three and nine
months
ended March 31, 2026 and 2025:
Three months ended
March 31,
Nine months ended
March 31,
2026
2025
2026
2025
Bank Zero transaction costs
$
144
$
$
270
$
Adumo transaction costs
3
1,702
Recharger transaction costs
92
12
342
Recharger post-combination services expensed
1,130
1,130
Total
$
$
$
$
15
Acquisitions and Dispositions (continued)
2025 Acquisitions (continued)
Pro forma results related
to acquisitions
Pro forma results of operations have not been presented for the acquisitions of Atom and Mobilemart because the effect of these
acquisitions,
individually
and
in
aggregate,
are
not
material
to
the
Company.
Since
the
closing
of
these
acquisitions,
they
have
contributed revenue and net income of $
4.30
million and $
(0.13)
million, respectively, for
the nine months ended March 31, 2026.
Dispositions
2026
Dispositions
December 2025 disposal of Humble
On
December
1,
2025,
Adumo
(RF)
Proprietary
Limited,
a wholly
-owned
subsidiary
of the
Company,
disposed
of its
entire
investment in
Humble Software
Proprietary Limited
(“Humble”) and
received
306,767
shares of
the Company’s
common stock
as
consideration. The fair value of these
306,767
shares of the Company’s common stock on December 1, 2025, was $
1.2
million. These
shares have
been included in
the Company’s
treasury shares.
The table below
presents the impact
of the deconsolidation
of Humble
and the calculation of the net loss recognized on deconsolidation:
Deconsolidation of Humble
Humble
Fair value of consideration received
$
1,211
Add carrying value of noncontrolling interest on deconsolidation
47
Less: carrying value of Humble, comprising
1,988
Cash and cash equivalents
162
Accounts receivable, net
26
Inventory
10
Property, plant and equipment,
net
1
Goodwill
1,515
Intangible assets, net
63
Deferred income taxes assets
300
Accounts payable
(4)
Other payables
(58)
Income taxes payable
(1)
Released from accumulated other comprehensive income – foreign
currency translation reserve
(26)
Loss recognized on disposal, before transaction costs
(730)
Loss recognized on disposal, before tax
(730)
Taxes related to gain
recognized on disposal
Tax benefit related
to loss recognized on disposal
(1)
Release of valuation allowance
(1)
Loss recognized on disposal, after tax
$
(730)
(1) The Company incurred a capital loss of $
0.04
million. The Company recorded a valuation allowance of $
0.04
million related
to the capital loss generated.
16
Accounts receivable, net and other receivables and
finance loans receivable, net
Accounts receivable, net and other receivables
The Company’s accounts receivable,
net, and other receivables as of March 31, 2026, and June 30, 2025, are presented in the
table below:
March 31,
June 30,
2026
2025
Accounts receivable, trade, net
$
$
Accounts receivable, trade, gross
Less: Allowance for doubtful accounts receivable, end of period
Beginning of period
Reversed to statement of operations
(258)
(521)
Charged to statement of operations
1,395
1,856
Write-offs
(473)
(847)
Deconsolidation
(4)
Foreign currency adjustment
76
24
Current portion of amount outstanding related to sale of interest in Carbon,
net of
allowance: March 2026: $
750
; June 2025: $
750
Amount due from VantagePay,
net of allowance: March 2026: $
0
; June 2025: $
1,500
2,027
Other receivables
23,782
26,092
Total accounts receivable,
net and other receivables
$
$
Trade receivables include amounts
due from customers
which generally have
a very short-term
life from
date of invoice
or service
provided to settlement. The duration
is less than a year in all cases and
generally less than 30 days in many
instances. The short-term
nature
of
these
exposures
often
results
in
balances
at
month-end
that
are
disproportionately
small
compared
to
the
total
invoiced
amounts.
The
month-end
outstanding
balances
are
more
volatile
than
the
monthly
invoice
amounts
because
they
are
affected
by
operational timing issues and
the fact that a balance
is outstanding at month-end
is not necessarily an indication
of increased risk but
rather a matter of operational timing.
Credit risk in respect of trade receivables
is generally not significant and the
Company has not developed a sophisticated
model
for these basic
credit exposures. The
Company determined to
use a lifetime
loss rate by
expressing write-off experience as
a percentage
of corresponding
invoice amounts
(as opposed
to outstanding
balances). The
allowance for credit
losses related to
these receivables
has
been
calculated
by
multiplying
the
lifetime
loss
rate
with
recent
invoice/origination
amounts.
Management
actively
monitors
performance of these receivables over
short periods of time. Different
balances have different rules to
identify an account in distress.
Once balances
in distress are
identified, specific
allowances are immediately
created. Subsequent
recovery from distressed
accounts
is not significant.
The Company previously provided
Vantage
Africa Limited (“VantagePay”)
with a working capital facility
of $
1.5
million. The
Company created an allowance for
credit losses related to
loans receivable of $
1.5
million during the year
ended June 30, 2021, related
to the
full amount
outstanding as
of June
30, 2021.
This amount
was still
outstanding
as of
June 30,
- The
Company recently
entered into discussions
with VantagePay
regarding steps to recover
the amount outstanding,
and the Company believes
that there is
sufficient
evidence
to
support
the
recoverability
of
the
amount
due
from
VantagePay
.
The
Company
recorded
a
reversal
of
the
allowance
for
credit
losses
of
$
1.5
million
previously
recognized
during
the
three
and
nine
months
ended
March
31,
The
Company also recognized outstanding interest of $
0.5
million during the three and nine months ended March 31, 2026.
O
ther receivables include prepayments, deposits, income taxes receivable and
other receivables.
17
Accounts receivable, net and other receivables and
finance loans receivable, net (continued)
Finance loans receivable, net
The Company’s finance
loans receivable, net, as of March 31, 2026, and June 30, 2025, is presented in the table below:
March 31,
June 30,
2026
2025
Microlending finance loans receivable, net
$
76,694
$
52,492
Microlending finance loans receivable, gross
82,025
56,140
Less: Allowance for doubtful finance loans receivable, end of period
5,331
3,648
Beginning of period
3,648
1,947
Reversed to statement of operations
(161)
Charged to statement of operations
6,461
4,301
Write-offs
(4,934)
(2,499)
Foreign currency adjustment
156
60
Merchant finance loans receivable, net
22,717
21,618
Merchant finance loans receivable, gross
25,713
23,214
Less: Allowance for doubtful finance loans receivable, end of period
2,996
1,596
Beginning of period
1,596
2,697
Reversed to statement of operations
(119)
(22)
Charged to statement of operations
1,832
2,576
Write-offs
(384)
(3,709)
Foreign currency adjustment
71
54
Total finance
loans receivable, net
$
$
Total
finance
loans
receivable,
net,
comprises
microlending
finance
loans
receivable
related
to
the
Company’s
microlending
operations
in South
Africa as
well as
its merchant
finance loans
receivable related
to Connect’s
lending activities
in South
Africa.
Certain merchant
finance loans
receivable
with an
aggregate balance
of $
21.9
million as
of March
31, 2026
have been
pledged
as
security for the Company’s
revolving credit facility (refer to Note 9).
Allowance for credit losses
Microlending finance loans receivable
Microlending finance loans receivable is related to the Company’s
microlending operations in South Africa whereby it provides
unsecured short-term loans to qualifying customers. Loans to customers
have a tenor of up to nine months, with the majority of loans
originated having
a tenor of
six months.
The Company
analyses this lending
book as a
single portfolio
because the
loans within the
portfolio have similar characteristics and management uses similar processes to monitor and assess
the credit risk of the lending book.
Refer to Note 5 related to the Company risk management process related to
these receivables.
The Company has operated this lending book for more than
five years
and uses historical default experience over the lifetime of
loans in order
to calculate a
lifetime loss rate
for the lending
book. The allowance for
credit losses related
to these microlending finance
loans receivables
is calculated
by multiplying
the lifetime
loss rate
with the
month end
outstanding lending
book. The
lifetime loss
rate as of each of June 30, 2025 and March 31, 2026, was
6.5
%. The performing component (that is, outstanding loan payments not in
arrears)
of the
book exceeds
more
than
98
% and
99
%, of
the outstanding
lending book
as of
June 30,
2025, and
March 31,
2026,
respectively.
Merchant finance loans receivable
Merchant finance loans
receivable is related
to the Company’s
Merchant lending activities
in South Africa
whereby it provides
unsecured
short-term loans
to qualifying
customers. Loans
to customers
have a
tenor of
up to
twelve months,
with the
majority of
loans originated having a tenor of approximately eight months. The Company analyses this lending book as a single portfolio because
the loans within the portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk
o
f the lending book. Refer to Note 5 related to the Company risk management
process related to these receivables.
18
Accounts receivable, net and other receivables and
finance loans receivable, net (continued)
Finance loans receivable, net (continued)
Allowance for credit losses (continued)
Merchant finance loans receivable (continued)
The Company uses historical default
experience over the lifetime of loans generated
thus far in order to calculate a lifetime
loss
rate for the lending
book. The allowance
for credit losses related
to these merchant
finance loans receivables
is calculated by adding
together actual receivables in default plus
multiplying the lifetime loss rate
with the month-end outstanding lending book.
The lifetime
loss rate as of each of June 30, 2025 and March 31, 2026, was approximately
1.14
%. The performing component (that is, outstanding
loan payments not in
arrears), under-performing component (that
is, outstanding loan payments
that are in
arrears) and non-performing
component (that
is, outstanding
loans for
which payments
appeared to
have ceased)
of the book
represents approximately
95
%,
4
%
and
1
%, respectively, of the outstanding lending book as of June 30, 2025.
The performing component, under-performing component
and non-performing component of the book represents approximately
91
%,
8
% and
1
%, respectively, of the outstanding lending book
as of March 31, 2026.
Inventory
The Company’s inventory
comprised the following categories as of March 31, 2026, and June 30, 2025:
March 31,
June 30,
2026
2025
Raw materials
$
$
Work-in-progress
Finished goods
$
$
Fair value of financial instruments
Initial recognition and measurement
Financial instruments
are recognized
when the
Company becomes
a party
to the
transaction. Initial
measurements are
at cost,
which includes transaction costs.
Risk management
The Company manages its exposure
to currency exchange, translation, interest rate,
credit, microlending credit and equity price
and liquidity risks as discussed below.
Currency exchange risk
The Company is subject to currency exchange risk because it purchases components
for its vaults, that the Company assembles,
and inventories
that it is
required to
settle in other
currencies, primarily
the euro, renminbi,
and U.S. dollar.
The Company
has used
forward contracts in order to limit its
exposure in these transactions to fluctuations
in exchange rates between the South African
rand
(“ZAR”), on the one hand, and the U.S. dollar and the euro, on the other hand.
Translation risk
Translation risk relates to
the risk that
the Company’s results of operations
will vary significantly
as the U.S.
dollar is its
reporting
currency,
but it earns a
significant amount of its
revenues and incurs a
significant amount of its
expenses in ZAR. The
U.S. dollar to
the ZAR
exchange rate
has fluctuated
significantly over
the past
three years.
As exchange
rates are
outside the
Company’s
control,
there can be no
assurance that future fluctuations will
not adversely affect the Company’s results of operations and
financial condition.
19
Fair value of financial instruments (continued)
Risk management (continued)
Interest rate risk
As a result of its
normal borrowing activities, the Company’s operating results are exposed to fluctuations in
interest rates, which
it manages
primarily
through regular
financing
activities. Interest
rates in
South
Africa have
generally
declined in
recent quarters.
However,
the escalation of
conflict in the
Middle East has
increased oil and
commodity prices and
contributed to heightened
global
market volatility.
This is expected to exert upward pressure on inflation in the near term, which may
result in interest rates increasing
toward the end of the year or early next year. Therefore, ignoring the impact of changes to the margin on its borrowings (refer to Note
- and
value of
borrowings outstanding,
the Company
expects its
cost of
borrowing to
increase moderately
if interest
rates were
to
increase in the future.
The
Company
periodically
evaluates
the
cost
and
effectiveness
of
interest
rate
hedging
strategies
to
manage
this
risk.
The
Company
generally
maintains
surplus
cash
in
cash
equivalents
and
held
to
maturity
investments
and
has
occasionally
invested
in
marketable securities.
Credit risk
Credit
risk
relates
to
the
risk
of
loss
that
the
Company
would
incur
as
a
result
of
non-performance
by
counterparties.
The
Company
maintains
credit
risk
policies
in
respect
of
its
counterparties
to
minimize
overall
credit
risk.
These
policies
include
an
evaluation
of
a
potential
counterparty’s
financial
condition,
credit
rating,
and
other
credit
criteria
and
risk
mitigation
tools
as
the
Company’s
management deems
appropriate.
With
respect to
credit risk
on certain
financial instruments,
the Company
maintains
a
policy of entering
into such transactions only
with South African
and European financial
institutions that have
a credit rating
of “B”
(or its equivalent) or better, as determined by
credit rating agencies such as Standard & Poor’s, Moody’s
and Fitch Ratings.
Consumer microlending credit
risk
The Company
is exposed
to credit
risk in
its Consumer
microlending activities,
which provides
unsecured short-term
loans to
qualifying customers.
Credit bureau
checks as
well as
an affordability
test are
conducted as
part of
the origination
process, both
of
which are in line with local regulations. The Company considers this
policy to be appropriate because the affordability test it
performs
takes into account
a variety of
factors such
as other debts
and total expenditures
on normal household
and lifestyle expenses.
Additional
allowances
may
be required
should the
ability of
its customers
to make
payments when
due
deteriorate
in the
future. Judgment
is
required to assess
the ultimate recoverability
of these finance
loan receivables, including
ongoing evaluation
of the creditworthiness
of each customer.
Merchant lending
The Company maintains an allowance for
doubtful finance loans receivable related to
its Merchant services segment with
respect
to short-term loans to qualifying merchant customers. The
Company’s risk management procedures include adhering to its proprietary
lending criteria which uses
an online-system loan application
process, obtaining necessary customer transaction-history
data and credit
bureau checks.
The Company considers
these procedures
to be appropriate
because it takes
into account
a variety of
factors such
as
the customer’s credit capacity and customer-specific
risk factors when originating a loan.
Equity price and liquidity risk
Equity price risk relates to the risk of loss that the Company would incur as a result of the volatility in the exchange-traded price
of equity
securities that
it holds
from time
to time.
The market
price of
these securities
may fluctuate
for a
variety of
reasons and,
consequently,
the
amount
that
the
Company
may
obtain
in
a
subsequent
sale of
these
securities
may
significantly
differ
from
the
reported market value.
Equity liquidity risk
relates to the risk
of loss that the
Company would incur as
a result of the lack
of liquidity on the
exchange
on
which
those
securities
are
listed.
The
Company
may
not be
able
to
sell some
or
all
of
these
securities
at
one
time,
or
over
an
extended period of time without influencing the exchange-traded price,
or at all.
20
Fair value of financial instruments (continued)
Financial instruments
The following
section describes
the valuation
methodologies the
Company uses
to measure
its significant
financial assets
and
liabilities at fair value.
In general, and where applicable, the Company uses quoted prices in
active markets for identical assets or liabilities
to determine
fair value.
This pricing
methodology would
apply to
Level 1
investments. If quoted
prices in
active markets
for identical
assets or
liabilities are
not available
to determine
fair value,
then the
Company uses
quoted
prices for
similar assets
and
liabilities or
inputs
other
than
the
quoted
prices
that
are
observable
either
directly
or
indirectly. These
investments
would
be included
in
Level
2
investments. In
circumstances
in
which
inputs
are
generally
unobservable,
values
typically
reflect
management’s
estimates
of
assumptions that market participants would use in pricing the asset or liability.
The fair values are therefore determined using model-
based techniques that include
option pricing models, discounted
cash flow models, and
similar techniques. Investments
valued using
such techniques are included in Level 3 investments.
Asset measured at fair value using significant unobservable inputs – investment
in Cell C
The Company
held
75,000,000
class “A” shares
in Cell
C Limited
(“Cell C”), a
significant mobile
telecoms provider
in South
Africa.
In November 2025,
Cell C completed a
restructuring process in anticipation
of its listing on
the securities exchange
operated
by the JSE Limited. Under this process, a new holding company,
Cell C Holdings Limited (“Cell C Listco”), was established for Cell
C, with a transaction
step including the transfer
of shares in Cell
C by its existing
shareholders to Cell C
Listco in exchange
for Cell
C Listco issuing shares to
the existing Cell C shareholders
(the “Flip-up”). The
Company exchanged its
75,000,000
class “A” shares
in Cell C for
76,590
shares in Cell C Listco. Cell C Listco listed on November 23, 2025.
On October 31, 2025, in considering the proposed restructure
and listing of Cell C Listco, Lesaka SA entered into an agreement
with The
Prepaid Company
Proprietary Limited
(“TPC”) to
dispose of
its shares
in Cell
C (or,
after the
Flip-up is
implemented, its
shares in Cell C Listco) (“Relevant Shares”), if certain conditions were met. Under
the terms of the agreement, if:
- the listing
occurred by
November 30,
2025, and
the value
of Lesaka
SA’s
shares in
Cell C
was less
than ZAR
50
million,
then Lesaka SA could choose to either hold the shares, or sell the Relevant Shares to TPC for a purchase price equal to ZAR
50
million; or
- the listing did
not occur by
November 30, 2025
(or, earlier
than this date,
it is determined
that the listing
will not proceed),
then Lesaka SA
could sell the Relevant
Shares to TPC for
ZAR
35
million. If, after
this sale and before
April 30, 2026, the
Listing occurs and the
list price per share
(“A”) is more than the
price paid to Lesaka
SA per Relevant Share
(the aggregate
ZAR
35
million) (“B”), then TPC shall pay an amount equal to the difference between A and B, multiplied by the number of
Relevant Shares to Lesaka SA as a top-up to the purchase consideration.
The value of Lesaka SA’s
shares in Cell C Listco was less than ZAR
50
million on listing and Lesaka SA elected to sell its Cell
C Listco shares to TPC for ZAR
50
million ($
3.0
million) and received the cash proceeds in December 2025.
The
Company’s
Level
3
asset
represented
an
investment
of
75,000,000
class
“A”
shares
in
Cell
C.
The
Company
used
a
discounted cash
flow model
developed by
the Company
to determine
the fair value
of its
investment in
Cell C as
of June
30, 2025,
and valued Cell C
at $
0.0
(zero) as of June
30, 2025. The Company
assumed that Cell C’s
deferred tax assets would
be utilized over
the forecast period. The Company has assumed a marketability discount of
15
% as of June 2025 and a minority discount of
17
%. The
Company utilized the latest business plan provided
by Cell C management for the period ended May 31, 2030,
for the June 30, 2025,
valuation.
The following key valuation inputs were used as of June 30, 2025:
Weighted Average
Cost of Capital ("WACC"):
24
%
Long term growth rate:
4.5
%
Marketability discount:
15
%
Minority discount:
17
%
Net adjusted external debt - June 30, 2025:
(1)
ZAR
8.3
billion ($
0.5
billion), no lease liabilities included
(1) translated from ZAR to U.S. dollars at exchange rates applicable as of
June 30, 2025.
21
Fair value of financial instruments (continued)
The following table presents
the Company’s
assets measured at fair value
on a recurring basis as
of March 31, 2026,
according
to the fair value hierarchy:
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Related to insurance
business:
$
$
$
$
Cash, cash equivalents and
restricted cash (included
in other long-term assets)
134
134
Fixed maturity
investments (included in
cash and cash equivalents)
4,233
4,233
Total assets at fair value
$
4,367
$
$
$
4,367
The following table presents the
Company’s assets measured
at fair value on a recurring basis as of
June 30, 2025, according to
the fair value hierarchy:
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
$
$
$
Related to insurance business
Cash and cash equivalents
(included in other long-term
assets)
125
125
Fixed maturity investments
(included in cash and cash
equivalents)
4,739
4,739
Total assets at fair value
$
4,864
$
$
$
4,864
During the nine months ended March 31, 2026, the Company
transferred its investment in Cell C Listco out
of Level 3 following
the
disposal
of
these
equity
securities.
During
the
nine
months
ended
March
31,
2026,
the
Company
recorded
an
increase
in
the
carrying value of its investment in Cell C Listco prior to the disposal of these
equity securities.
There were
transfers in or out of Level 3 during
the three months ended March 31, 2026
or during the three and nine months
ended March
31, 2025,
respectively.
There was
movement in
the carrying
value of
assets measured
at fair
value on
a recurring
basis, and categorized within
Level 3, during the
three months ended March
31, 2026 or
during the three and
nine months ended March
31, 2025, respectively.
Summarized below is the movement in the carrying value of
assets and liabilities measured at fair value on a recurring
basis, and
categorized within Level 3, during the nine months ended March 31, 2026:
Carrying value
Assets
Balance as of June 30, 2025
$
Gain on fair value re-measurement
2,971
Disposal of investment in Cell C
(2,971)
Foreign currency adjustment
(1)
Balance as of March 31, 2026
$
(1) The foreign currency adjustment represents the effects of the fluctuations of the
South African rand against the U.S. dollar on
t
he carrying value.
22
Fair value of financial instruments (continued)
Summarized below is the movement in the carrying value
of assets and liabilities measured at fair value on
a recurring basis, and
categorized within Level 3, during the nine months ended March 31, 2025:
Carrying value
Assets
Balance as of June 30, 2024
$
Foreign currency adjustment
(1)
Balance as of March 31, 2025
$
(1) The
foreign currency
adjustment represents the
effects of
the fluctuations
of the South
African rand
against the U.S.
dollar
on the carrying value.
Assets measured at fair value on a nonrecurring basis
The Company
measures equity
investments without
readily determinable
fair values
at fair value
on a
nonrecurring basis.
The
fair values of
these investments
are determined
based on
valuation techniques
using the best
information available
and may include
quoted market prices, market comparables, and discounted cash flow
projections. An impairment charge is recorded when the cost
of
the
asset
exceeds
its
fair
value
and
the
excess
is
determined
to
be
other-than-temporary.
The
Company
has
no
liabilities
that
are
measured at fair value on a nonrecurring basis.
Equity-accounted investments and other long-term assets
Refer to Note 9 to the Company’s audited consolidated
financial statements included in its Annual Report on Form 10-K for the
year ended June 30, 2025, for additional information regarding its equity
-accounted investments and other long-term assets.
Equity-accounted investments
The
Company’s
ownership
percentage
in its
equity-accounted
investments
as of
March 31,
2026,
and
June 30,
2025, was
as
follows:
March 31,
June 30,
2026
2025
Sandulela Technology
(Proprietary) Limited (“Sandulela”)
49.0
%
49.0
%
SmartSwitch Namibia (Proprietary) Limited (“SmartSwitch Namibia”)
50.0
%
50.0
%
SmartSwitch Namibia
The
Company
recorded
a
loss on
impairment
of
equity-accounted
investment
of
$
million
during
the
nine
months
ended
March 31, 2026, which primarily includes the release of accumulated other comprehensive
loss (refer to Note 12).
Other long-term assets
Summarized below is the breakdown of other long-term assets as of March
31, 2026, and June 30, 2025:
March 31,
June 30,
2026
2025
Total equity investments
$
$
Investment in Cell C (June 30, 2025:
5
%) at fair value (Note 5)
(1)
Investment in
10
% of Cowdi at fair value
(2)
250
Investment in
87.5
% of CPS (June 30, 2025:
87.5
%) at fair value
(2)(3)
Policy holder assets under investment contracts (Note 8)
Reinsurance assets under insurance contracts (Note 8)
Other long-term assets
Total other long-term
assets
$
$
(1) The Company disposed of its entire shareholding in Cell C in December
2025, refer to Note 5 for additional information.
(2) The Company determined
that Cowdi and CPS do
not have a readily
determinable fair value and
therefore elected to record
its investments
at cost minus impairment, if
any, plus or minus changes resulting
from observable price changes in
orderly transactions
for the identical or a similar investment of the same issuer.
(3) On October 16, 2020,
the High Court of
South Africa, Gauteng Division, Pretoria
ordered that CPS be
placed into liquidation.
23
Equity-accounted investments and other long-term assets (continued)
Other long-term assets (continued)
During the nine months
ended March 31, 2026,
the Company invested $
0.3
million to acquire a
10
% interest in Cowdi Limited
(“Cowdi”), an entity incorporated in England and Wales,
with operations through a Kenyan wholly-owned subsidiary offering digital
loans to customers in that country.
The Company also extended a $
0.75
million credit facility to Cowdi.
The facility was undrawn as
of March 31, 2026.
The Company previously owned
6,215,620
equity shares of One MobiKwik
Systems Limited (“MobiKwik”). MobiKwik
listed
on
the
National
Stock
Exchange
of
India
(“NSE”)
on
December
18,
Up
until
its
listing
MobiKwik
did
not
have
a
readily
determinable fair
value and
the Company
elected to
measure its
investment in
MobiKwik at
cost minus
impairment, if
any,
plus or
minus changes
resulting from
observable price
changes in
orderly transactions
for the
identical or
a similar
investment of
the same
issuer (“cost plus or minus changes
in observable prices equity securities”).
From the date of MobiKwik’s
listing, the Company used
MobiKwik’s
closing
price
reported
on
the
NSE
on
the
last
trading
day
related
to
last
day
of
the
Company’s
reporting
period
to
determine the fair value
of the equity securities
owned by the Company.
The Company determined
a fair value per
MobiKwik share
of $
3.56
(INR
304.05
per share at the USD: INR
exchange rates applicable as of
March 31, 2025). The Company
used this valuation
as the basis for its adjustment to decrease the carrying value of its investment in MobiKwik by $
54.2
million from $
76.3
million as of
June 30, 2024, to $
22.1
million as of March 31, 2025. The change in the fair value of MobiKwik for the three and nine months
ended
March 31, 2025, of $
20.4
million and $
54.2
million, respectively, is included in the caption “Change in fair value of equity securities”
in the consolidated statement of
operations for the three and nine months
ended March 31, 2025. The Company
disposed of its entire
shareholding in MobiKwik in June 2025.
Summarized below
are the components
of the Company’s
equity securities without
readily determinable
fair value and
held to
maturity investments as of March 31, 2026:
Cost basis
Unrealized
holding
Unrealized
holding
Carrying
gains
losses
value
Equity securities:
Investment in Cowdi
$
250
$
$
$
250
Investment in CPS
Total
$
$
$
$
Summarized below are the components of the Company’s
equity securities without readily determinable fair value and held to
maturity investments as of June 30, 2025:
Cost basis
Unrealized
holding
Unrealized
holding
Carrying
gains
losses
value
Equity securities:
Investment in CPS
$
$
$
$
Held to maturity:
Investment in Cedar Cellular notes
24
Goodwill and intangible assets, net
Goodwill
Summarized below is the movement in the carrying value of goodwill
for the nine months ended March 31, 2026:
Gross value
Accumulated
impairment
Carrying
value
Balance as of June 30, 2025
$
$
()
$
Impairment loss
()
()
Acquisition (Note 2)
Deconsolidation of Humble (Note 2)
()
()
Foreign currency adjustment
(1)
()
Balance as of March 31, 2026
$
$
()
$
(1) – The foreign currency adjustment represents the effects of the fluctuations
of the South African rand against the U.S. dollar
on the carrying value.
Impairment loss
The Company assesses the carrying
value of goodwill for impairment
annually, or more
frequently, whenever
events occur and
circumstances change indicating potential impairment. The Company
performs its annual impairment test as at June 30 of each year.
In order to determine
the amount of goodwill
impairments, the estimated
fair value of the
Company’s
reporting units’ business
assets and liabilities were compared to the carrying value of their assets and liabilities. The Company typically uses a discounted cash
flow model in order to determine the fair value of its businesses (this is a Level-3 fair value
measurement), however the reporting unit
impairment during
the three
and nine
months ended
March 31,
2026, did
not have
any future
cash flows
to discount
following the
termination of its sole revenue generating contract with a customer. Based on this analysis, the Company determined that the carrying
value of the reporting units’ business assets and liabilities exceeded their fair
value at the reporting date.
In determining the
fair value
of the
reporting unit, the
Company considered key
judgements related to
the reporting unit’s ongoing
revenue growth rates and the reporting unit’s
ability to continue to operate as a going concern.
Nine months ended March 31, 2026, impairment
loss
The Company recognized
an impairment loss
of $
million as a result
of the impairment
analysis performed
as of March
31,
2026, related to goodwill allocated to its
Switchpay reporting unit within its Merchant segment. The
impairment is included within the
caption impairment loss in the
unaudited condensed consolidated statement
of operations for the three and nine
months ended March
30, 2026.
At June 30, 2025, the fair value of the Switchpay reporting unit exceeded
its carrying value by
50
%. The impairment loss in the
Switchpay reporting unit resulted
from the termination of its
sole customer contract
during fiscal 2026 which adversely
impacted its
future cash flows,
growth prospects and its ability to continue as a going concern.
The table presents the components of impairment loss for the three and nine
months ended March 31, 2026:
Three months ended
March 31, 2026
Nine months ended
March 31, 2026
Goodwill impairment loss
$
$
Impairment of right-of-use assets (Note 17)
Impairment of property,
plant and equipment
(1)
Balance as of March 31, 2026
$
$
(1)
During
the
three
and
nine months
ended
March
31,
2026,
the
Company
commenced
the
process
to
wind
down
its ATM
business and recognized an impairment related to ATMs
recorded in property, plant and equipment
to reduce the carrying amounts of
these assets to
their estimated recoverable
values. The recoverable
values were determined
based on estimated
proceeds expected
to
be
realized
primarily
through the
piecemeal
disposal
of
the
assets.
The
Company’s
management
estimated
the
recoverable
values
based on
observable market
pricing for
similar assets,
adjusted for
the condition,
age and
expected timing
of sale.
These estimates
represent management’s best estimate of fair value
less costs to sell.
The fair value measurements associated
with the impairment were
classified
within
Level
3
of
the
fair
value
hierarchy,
as
the
valuation
incorporates
significant
unobservable
inputs,
including
assumptions regarding expected
selling prices and
market demand for
used ATM
equipment. Actual proceeds
may differ from
these
estimates arising from changes in market conditions or the timing and manner of disposal.
25
Goodwill and intangible assets, net (continued)
Goodwill (continued)
Goodwill has been allocated to the Company’s
reportable segments as follows:
Merchant
Consumer
Enterprise
Carrying
value
Balance as of June 30, 2025
$
$
$
$
Impairment loss
()
()
Acquisitions (Note 2)
Deconsolidation of Humble (Note 2)
()
()
Foreign currency adjustment
(1)
Balance as of March 31, 2026
$
$
$
$
(1) The foreign
currency adjustment represents
the effects
of the fluctuations
of the South
African rand
against the U.S.
dollar
on the carrying value.
Intangible assets, net
Carrying value and amortization of intangible assets
Summarized below is
the carrying value
and accumulated amortization
of intangible assets as
of March 31,
2026, and June
30,
2025:
As of March 31, 2026
As of June 30, 2025
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Finite-lived intangible assets:
Software, integrated
platform and unpatented
technology
$
147,087
$
(55,426)
$
91,661
$
137,099
$
(41,925)
$
95,174
Customer relationships
55,656
(23,648)
32,008
53,369
(18,568)
34,801
Brands and trademarks
(1)
18,980
(18,619)
361
18,233
(8,993)
9,240
FTS patent
2,246
(2,246)
2,158
(2,158)
Total finite-lived
intangible
assets
$
$
()
$
$
$
()
$
(1)
During
early
calendar
2025,
the
Company’s
executive
considered
the
unification
of
the
Company’s
merchant
segments
operations
and
the
realignment
of
the
Company’s
brands
under
the
master
brand
“Lesaka”.
The
Company’s
Board
of
Directors
approved the realignment of certain of the Company’s brands to the master brand in May 2025. The Company has identified the steps
and
timing
to realign
the affected
brands
under the
master brand
and expects
to have
complete alignment
by February
2027,
with
certain brands aligned in December
- The change in
brands has resulted in
a change in
the useful lives of
certain of the Company’s
brand
and
trademark
intangible
assets
which
has
resulted
in
an
increase
(excluding
the
impact
on
Adumo
and
GAAP
brands)
in
amortization expense of $
6.3
million during the nine months ended March 31, 2026 compared with the nine months ended March
31,
- The change in
the useful lives resulted in
a $
4.6
million increase in the
Company’s net
loss from continuing operations
for the
nine months ended
March 31, 2026,
respectively,
and did not
have a significant
impact on earnings
(loss) per share.
The change did
n
ot impact prior periods.
26
Goodwill and intangible assets, net (continued)
Intangible assets, net (continued)
Aggregate amortization
expense on the finite-lived
intangible assets for the
three months ended March
31, 2026 and 2025,
was
$
million and $
million, respectively.
Aggregate amortization
expense on the
finite-lived intangible
assets for the
nine months
ended March 31, 2026 and 2025, was $
million and $
million, respectively. Future estimated annual amortization expense for
the next five
fiscal years and
thereafter,
assuming exchange
rates that prevailed
on March
31, 2026,
is presented in
the table below.
Actual
amortization
expense
in
future
periods
could
differ
from
this
estimate
as
a
result
of
acquisitions,
changes
in
useful
lives,
exchange rate fluctuations and other relevant factors.
Fiscal 2026 (excluding nine months ended March 31, 2026)
$
Fiscal 2027
Fiscal 2028
Fiscal 2029
Fiscal 2030
Thereafter
Total future
estimated annual amortization expense
$
Assets and policyholder liabilities under insurance and investment
contracts
Reinsurance assets and policyholder liabilities under insurance contracts
Summarized below is
the movement in reinsurance
assets and policyholder
liabilities under insurance
contracts during the
nine
months ended March 31, 2026:
Reinsurance
Assets
(1)
Insurance
contracts
(2)
Balance as of June 30, 2025
$
$
()
Increase in policyholder benefits under insurance contracts
()
Claims and decrease in policyholders’ benefits under insurance contracts
()
Foreign currency adjustment
(3)
()
Balance as of March 31, 2026
$
$
()
(1) Included in other long-term assets (refer to Note 6);
(2) Included in other long-term liabilities;
(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.
The Company has agreements with reinsurance companies in order to limit its losses from various insurance contracts, however,
if the reinsurer is unable
to meet its obligations, the
Company retains the liability.
The value of insurance
contract liabilities is based
on the best estimate assumptions of future experience plus prescribed
margins, as required in the markets in which these
products are
offered,
namely South
Africa. The
process of
deriving the
best estimate
assumptions plus
prescribed margins
includes assumptions
related to claim reporting delays (based on average industry experience).
Assets and policyholder liabilities under investment contracts
Summarized
below
is the
movement
in assets
and
policyholder
liabilities
under investment
contracts
during
the
nine months
ended March 31, 2026:
Assets
(1)
Investment
contracts
(2)
Balance as of June 30, 2025
$
$
()
Increase in policy holder benefits under investment contracts
()
Foreign currency adjustment
(3)
()
()
Balance as of March 31, 2026
$
$
()
(1) Included in other long-term assets (refer to Note 6);
(2) Included in other long-term liabilities;
(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.
The Company does not offer any investment products with
guarantees related to capital or returns.
27
Borrowings
Refer to
Note 12
to the
Company’s
audited consolidated
financial statements
included in
its Annual
Report on
Form 10-K
for
the year ended June 30, 2025, for additional information regarding
its borrowings.
Reference rate reform
After the
transition
away from
certain
interbank
offered
rates in
foreign
jurisdictions
(“IBOR reform”),
the reforms
to South
Africa’s
reference interest
rate are now
accelerating rapidly.
The Johannesburg
Interbank Average
Rate (“JIBAR”)
will be replaced
by the new South African Overnight Index Average
(“ZARONIA”) following the cessation of JIBAR after its final publication on
31
December
ZARONIA
reflects
the
interest
rate
at
which
rand-denominated
overnight
wholesale
funds
are
obtained
by
commercial
banks.
The “No
New
JIBAR”
initiative
will commence
on 1
May 2026,
marking
the cut-off
date
from which
market
participants should no
longer enter
into new
financial contracts
referencing JIBAR, except
in clearly
defined and limited
circumstances.
Certain of the
Company’s borrowings referenced JIBAR as
a base interest
rate. In February
2026, the Company amended
its borrowing
agreement to change
the reference rate
from JIBAR to
ZARONIA from April
1, 2026 in
anticipation of the
“No New JIBAR”
initiative.
The reference rate applicable to
Facilities A and B will be
ZARONIA plus a credit adjustment
spread (“CAS”), intended to place
the
parties in
substantially the
same economic
position as
if JIBAR
had not
ceased. As
of April
1, 2026,
ZARONIA and
JIBAR were
6.606
% and
6.760
%, respectively, implying an indicative CAS of
0.154
%, or
15.4
basis points, to align ZARONIA
with the prevailing
JIBAR rate on
that date. The
final CAS will
be determined in
accordance with the
CTA,
either by agreement
between the Company
and
the
facility
agent
or,
failing
agreement,
by
the
facility
agent
using
the
applicable
SARB-recommended
or
market-adopted
methodology.
South Africa
The JIBAR, an average of
3 month negotiable certificates of deposit
(“NCD”) rates, on March 31, 2026,
was
6.75
%. The prime
rate,
the
benchmark
rate
at
which
private
sector
banks
lend
to
the
public
in
South
Africa,
on
March
31,
2026,
was
10.25
%.
The
ZARONIA rate on March 31, 2026, was
7.00
%.
Facilities obtained in February 2025
Long-term borrowings – Facility A and Facility B Agreements
On February 27, 2025, the Company, Lesaka SA and a
number of other subsidiaries of Lesaka
SA entered into a Common Terms
Agreement (the “Original CTA”) with FirstRand
Bank Limited (acting through
its Rand Merchant Bank
division) (“RMB”), FirstRand
Bank
Limited
(acting
through its
WesBank
division)
(“WesBank”),
FirstRand
Bank
Limited
being
a
South
African
corporate
and
investment
bank,
Investec
Bank
Limited
(acting
through
its
Investment
Banking
division:
Corporate
Solutions)
(“Investec”
and
together with RMB and WesBank,
the “Lenders”), a South African
corporate and investment bank,
and Bowwood and Main No
408
(RF) Proprietary Limited (“Debt Guarantor”), a South African company incorporated for the sole purpose of holding collateral for the
benefit of the Lenders and acting as debt guarantor,
and certain other parties.
On February
27, 2026,
the Company,
Lesaka SA
and a
number of
other subsidiaries
of Lesaka
SA, the
Lenders and
the Debt
Guarantor
entered into
a Amended
and Restated
Common Terms
Agreement
(“Restated CTA”)
which replaced
the Original
CTA,
and:
- amended the reference rate from JIBAR TO ZARONIA;
- aligned the
annual repayment
dates for
Facility B
from February
to March,
with the
final maturity
date unchanged
as
February 27, 2029; and
- updated
certain provisions to expressly permit the implementation of interest rate hedging.
The Restated CTA was further
amended by a letter dated March 27, 2026.
On March 31, 2026, the Company made its first scheduled repayment of
ZAR
150.0
million ($
9.0
million) related to Facility B.
Short-term facility - General Banking Facility
Concurrent with
the execution
of the
Original CTA,
Lesaka SA
and RMB
entered into
a General
Banking Facility
Agreement
(the “Original GBF Agreement”), which was amended by an addendum
dated on or about July 16, 2025. On March 27, 2026, Lesaka
SA and
RMB entered
into an
Amended and
Restated General
Banking Facility
(“Restated GBF
Agreement”) to
amend and
replace
the Original GBF Agreement. Pursuant
to the Restated GBF
Agreement, Lesaka SA and certain
of its subsidiaries have access
to direct
facilities
of
ZAR
1.1
billion
($
67.1
million),
which
include
a
general
banking
facility
(a
demand
facility);
short-term
direct
and
contingent facilities which cover
forward exchange contracts and credit
cards; an indirect facility of ZAR
57.7
million ($
3.4
million)
for bank
guarantees; and
settlement lines
of ZAR
326.0
million ($
19.1
million). The
direct facilities
may be
reallocated as
indirect
facilities, and indirect facilities may be reallocated as direct facilities.
The facilities under the
Restated GBF Agreement were
available for utilization
from March 30, 2026,
and are subject to annual
review by RMB. Lesaka SA
paid an upfront fee of
ZAR
3.45
million ($
0.2
million, translated at rates
applicable as of March 31,
to the RMB related to this transaction.
28
Borrowings (continued)
Movement in short-term credit facilities
Summarized below
are the
Company’s
short-term facilities
as of
March 31,
2026, and
the movement
in the
Company’s
short-
term facilities from as of June 30, 2025 to as of March 31, 2026:
RMB
RMB
Nedbank
GBF
Other
Facilities
Total
Short-term facilities available as of March 31, 2026
$
67,064
$
3,383
$
9,179
$
Overdraft
67,064
67,064
Indirect and derivative facilities
3,383
9,179
12,562
Movement in utilized overdraft facilities:
No restrictions as to use
24,469
24,469
Balance as of June 30, 2025
24,469
24,469
Utilized
93,417
93,417
Repaid
(82,477)
(82,477)
Guarantee fee paid
(257)
(257)
Foreign currency adjustment
(1)
673
673
Balance as of March 31, 2026
35,825
35,825
No restrictions as to use
$
35,825
$
$
$
35,825
Interest rate as of March 31, 2026 (%)
(2)
9.75
N/A
N/A
Interest rate as of June 30, 2025 (%)
(2)
10.25
N/A
N/A
Movement in utilized indirect and derivative facilities:
Balance as of June 30, 2025
$
$
1,864
$
119
$
1,983
Guarantees cancelled
(1,635)
(1,635)
Utilized
1,559
1,559
Foreign currency adjustment
(1)
76
5
81
Balance as of March 31, 2026
$
$
1,864
$
124
$
1,988
(1) Represents the effects of the fluctuations between the
ZAR and the U.S. dollar.
(2) RMB GBF interest is set at prime less
0.50
%.
Interest expense incurred under
the Company’s South African short-term borrowings
and included in
the caption interest
expense
on the condensed consolidated statement of operations during the three months ended March 31,
2026 and 2025, was $
0.8
million and
$
0.6
million, respectively.
Interest expense incurred
under the Company’s
South African
short-term borrowings
and included
in the
caption interest
expense on
the condensed
consolidated statement
of operations
during the
nine months
ended March
31, 2026
and
2025, was $
1.9
million and $
2.4
million, respectively.
The
Company
cancelled
Adumo’s
overdraft
arrangements
on
October
1,
2024,
and
settled
Adumo’s
outstanding
overdraft
balance of ZAR
20.0
million ($
1.1
million) on the
same day.
The repayment is
included in the
caption repayment
of bank overdraft
i
ncluded on the Company’s
unaudited condensed consolidated statements of cash flows for the nine months
ended March 31, 2025.
29
Borrowings (continued)
Movement in long-term borrowings
Summarized below is the movement in the Company’s
long-term borrowing from as of June 30, 2025 to as of March 31, 2026:
Facilities
Lesaka A
Lesaka B
Asset
backed
CCC
Total
Included in current
$
$
8,448
$
3,508
$
$
Included in long-term
120,375
47,873
3,671
16,894
Opening balance as of June 30, 2025
120,375
56,321
7,179
16,894
Facilities utilized
3,763
972
Facilities repaid
(8,953)
(3,635)
()
Non-refundable fees paid
(33)
()
Non-refundable fees amortized
233
5
20
Foreign currency adjustment
(1)
4,931
2,466
320
711
Closing balance as of March 31, 2026
125,539
49,834
7,632
18,564
Included in current
11,726
3,601
Included in long-term
125,539
38,108
4,031
18,564
Unamortized fees
(847)
(14)
()
Due within 2 years
17,588
2,416
Due within 3 years
126,386
20,520
1,403
18,578
Due within 4 years
212
Due within 5 years
$
$
$
$
$
Interest rates as of March 31, 2026 (%):
10.00
9.90
11.00
10.15
Base rate (%)
6.75
6.75
10.25
10.25
Margin (%)
3.25
3.15
0.75
(0.10)
(2)
(3)
(4)
(5)
Interest rates as of June 30, 2025 (%):
10.54
10.44
11.50
11.70
Base rate (%)
7.29
7.29
10.75
10.75
Margin (%)
3.25
3.15
0.75
0.95
Footnote number
(2)
(3)
(4)
(6)
(1) Represents the effects of the fluctuations between the ZAR and the
U.S. dollar.
(2) Interest on Facility A and Facility
B is based on the JIBAR (ZARONIA from April 1,
- in effect from time to time plus
an initial margin
of
3.25
% per annum until
June 30, 2025. From
July 1, 2025, the
margin on Facility
A is determined
with reference
to the Net Debt
to EBITDA Ratio, and
the margin will be
either (i)
3.25
%, if the Net Debt
to EBITDA Ratio is
greater than or
equal
to 2.5 times; or (ii)
2.5
%, if the Net Debt to EBITDA Ratio is less than 2.5 times.
(3) Interest on Facility B is calculated based on JIBAR (ZARONIA from April 1, 2026)
from time to time plus an initial margin
of
3.15
% per annum until June 30, 2025. From July 1, 2025, the margin
on Facility B is determined with reference to the Net Debt to
EBITDA Ratio, and the margin will be either
(i)
3.15
%, if the Net Debt to EBITDA Ratio is greater than
or equal to 2.5 times; or (ii)
2.4
%, if the Net Debt to EBITDA Ratio is less than 2.5 times.
(4) Interest is charged at prime plus
0.75
% per annum on the utilized balance.
(5) Interest is charged at prime less
0.10
% per annum on the utilized balance.
(6) Interest is charged at prime plus
0.95
% per annum on the utilized balance.
Interest expense incurred under the Company’s South African long-term borrowings and included in the
caption interest expense
on the condensed consolidated statement of operations during the three months ended March 31,
2026 and 2025, was $
2.3
million and
$
4.2
million, respectively. Prepaid facility fees amortized
included in interest expense during the three months ended March 31, 2026
and 2025, respectively,
were $
0.1
million and $
0.1
million, respectively.
Interest expense incurred under the Company’s South African long-term borrowings and included in the
caption interest expense
on the condensed consolidated statement of operations during the nine months ended March 31, 2026 and 2025, was $
9.8
million and
$
4.2
million, respectively.
Prepaid facility fees amortized included
in interest expense during the nine
months ended March 31, 2026
and 2025, respectively,
were $
0.2
million and $
0.1
million, respectively.
30
Borrowings (continued)
Movement in long-term borrowings (continued)
Interest expense incurred under the Company’s
South African long-term borrowings to fund its Consumer lending book (for the
three
months
ended
March
31,
and
interest
incurred
under
the
Company’s
CCC and
K2020
facilities
relates
to
borrowings
utilized to fund a portion of the Company’s merchant finance loans receivable were $
1.5
million and $
0.4
million, respectively, and is
included in the caption cost of
goods sold, IT processing, servicing and support
on the condensed consolidated statement of operations
for the three months ended March 31, 2026 and 2025.
Interest expense incurred under the Company’s
South African long-term borrowings to fund its Consumer lending book (for the
nine months ended
March 31,
and interest incurred
under the
Company’s CCC and K2020
facilities relates
to borrowings utilized
to fund a portion
of the Company’s merchant finance loans
receivable were $
4.8
million and $
0.4
million, respectively, and is included
in the caption cost of
goods sold, IT processing,
servicing and support on the
condensed consolidated statement of
operations for the
nine months ended March 31, 2026 and 2025.
The Company
cancelled Adumo’s
long-term
borrowings
arrangements on
October 1,
2024, and
settled Adumo’s
outstanding
balances
of ZAR
126.7
million
($
7.2
million) on
the same
day.
The repayment
is included
in the
caption
repayment of
long-term
borrowings included on the Company’s unaudited
condensed consolidated statements of cash flows for the nine months ended March
31, 2025.
Other payables
Summarized below is the breakdown of other payables as of March
31, 2026, and June 30, 2025:
March 31,
June 30,
2026
2025
Vendor
wallet balances
$
$
Accruals
Clearing accounts
Provisions
Value
-added tax payable
(A)
Deferred consideration due to seller of Recharger
Payroll-related payables
Other
$
$
(A) Value-added
tax payable and the total of Other payables as of June 30, 2025, have each increased by $
4.0
million as a result
of the correction discussed in Note 1.
Other includes deferred income, client deposits and other payables.
In December 2025,
the Company determined
that the liquidation
of CPS is at
an advanced stage
and released an
accrual raised
at the time of
deconsolidation. The release has
been included in the
caption “Other income” in
the consolidated statement of
operations
for the nine months ended March 31, 2026.
Capital structure
Redeemable common stock issued pursuant to transaction with the IFC Investors
Refer to
Note 12
to the
Company’s
audited consolidated
financial statements
included in
its Annual
Report on
Form 10-K
for
the year ended June 30, 2025, for additional information regarding its redeemable
common stock issued pursuant to transactions with
the IFC Investors.
During
the
three
and
nine
months
ended
March
31,
2026,
the
IFC
Investors,
specifically
IFC
African,
Latin
American
and
Caribbean Fund, LP
(“ALAC”), made numerous
filings on Form
4 Statement of
Beneficial Ownership with
the United States
Securities
and
Exchange
Commission
reporting
that
ALAC
had
sold
an
aggregate
of
396,397
shares
of
the
Company’s
common
stock
and
therefore
the
additional
contractual
rights,
including
the
put
option
rights
related
to
these
396,397
shares,
expired.
The
Company
reclassified $
4.3
million related to these
396,397
shares sold from redeemable
common stock to additional
paid-in-capital during the
three and nine months ended March 31, 2026.
31
Capital structure (continued)
Impact of non-vested equity shares on number of shares,
net of treasury
The following table presents a
reconciliation between the number of
shares, net of treasury, presented in the
unaudited condensed
consolidated statement of changes in equity during the nine months
ended March 31, 2026 and 2025, respectively,
and the number of
shares, net of treasury,
excluding non-vested equity shares that have not vested as of March 31, 2026 and 2025,
respectively:
March 31,
March 31,
2026
2025
Number of shares, net of treasury:
Statement of changes in equity
Less: Non-vested equity shares that have not vested as of end of period
Number of shares, net of treasury,
excluding non-vested equity shares that have not
vested
Acquisition of Lesaka Hospitality non-controlling
interests
During
the
three
and
nine
months
ended
March
31,
2026,
the
Company
acquired
all
of
the
issued
share
capital
of
Lesaka
Hospitality (formerly
known as
GAAP Point
of Sale
Proprietary Limited)
(“Lesaka Hospitality”)
that it
did not
previously own
for
approximately $
7.0
million, which was settled
utilizing cash of
$
4.0
million and the
transfer of
662,714
shares of Lesaka’s
common
stock with a fair
value of $
3.0
million on closing on
March 6, 2026.
The
662,714
shares of the
Company’s common stock were sourced
from a pool of shares the Company purchased in October 2024 and December 2025, respectively, and the Company recognized a gain
in additional paid-in-capital of $
0.1
million related to the difference between the value on March 6, 2026, and the price paid per share
in October
2024 and
December 2025,
respectively.
The acquisition
of the
non-controlling
interests was
accounted
for as
an equity
transaction with
a non-controlling
interest and
accordingly
no
gain or
loss was
recognized
in the
Company’s
unaudited condensed
consolidated
statement
of
operations.
The
carrying
amount
of
the
non-controlling
interest
was
adjusted
to
reflect
the
change
in
ownership interest in Lesaka Hospitality. The difference between the fair value of the consideration paid and the amount by which the
non-controlling interest was adjusted, of $
0.4
million, was recognized in, and increased, total Lesaka equity.
Accumulated other comprehensive loss
The table
below presents
the change
in accumulated
other comprehensive
loss per
component
during the
three months
ended
March 31, 2026:
Three months ended
March 31, 2026
Accumulated
foreign
currency
translation
reserve
Total
Balance as of January 1, 2026
$
(168,308)
$
(168,308)
Movement in foreign currency translation reserve related to disposal of
subsidiary
(494)
(494)
Movement in foreign currency translation reserve
(7,669)
()
Balance as of March 31, 2026
$
(176,471)
$
(176,471)
The table
below presents
the change
in accumulated
other comprehensive
loss per
component during
the three
months ended
March 31, 2025:
Three months ended
March 31, 2025
Accumulated
foreign
currency
translation
reserve
Total
Balance as of January 1, 2025
(A)
$
(199,720)
$
(199,720)
Movement in foreign currency translation reserve
(A)
6,086
Balance as of March 31, 2025
(A)
$
(193,634)
$
(193,634)
32
Accumulated other comprehensive loss (continued)
(A) Accumulated other
comprehensive loss and
Total
as of January
1, 2025, have
each decreased by
$
0.2
million as a result
of
the correction discussed in Note 1. Accumulated
other comprehensive loss and Total for the three months ended March
31, 2025, have
each increased by
$
0.08
million as a result
of the correction
discussed in Note
1 to the
amount included in
the caption Movement
in
foreign currency translation reserve.
Accumulated other comprehensive loss
and Total
as of March 31, 2025, have
each increased by
$
0.3
million as a result of the correction discussed in Note 1.
The
table below
presents
the change
in
accumulated
other comprehensive
loss per
component
during
the
nine
months
ended
March 31, 2026:
Nine months ended
March 31, 2026
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2025
(A)
$
(185,626)
$
(185,626)
Release of foreign currency translation reserve related to impairment of equity
-accounted
investment
550
550
Release of foreign currency translation reserve related to liquidation of subsidiaries
(516)
(516)
Movement in foreign currency translation reserve
(A)
9,121
Balance as of March 31, 2026
(A)
$
(176,471)
$
(176,471)
(A) Accumulated other comprehensive loss and Total
as of July 1, 2025, have each decreased by $
0.04
million as a result of the
correction discussed
in Note
- Accumulated
other comprehensive
loss and
Total
for the
nine months
ended March
31, 2026,
have
each increased by
$
0.1
million as a result
of the correction,
as discussed in Note
1, to the amount
included in the caption
Movement
in foreign
currency translation
reserve for
the three
months ended
September 30,
- Accumulated
other comprehensive
loss and
Total as of March
31, 2026, have each increased by $
0.1
million as a result of the correction discussed in Note 1.
The table
below
presents the
change
in accumulated
other comprehensive
loss per
component
during
the
nine
months ended
March 31, 2025:
a
Nine months ended
March 31, 2025
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2024
(A)
$
(188,227)
$
(188,227)
Movement in foreign currency translation reserve related to liquidation
of subsidiaries
6
6
Movement in foreign currency translation reserve
(A)
(5,413)
()
Balance as of March 31, 2025
(A)
$
(193,634)
$
(193,634)
(A) Accumulated other
comprehensive loss and
Total
as of July
1, 2024, have
each increased by
$
0.1
million as a result
of the
correction discussed
in Note
- Accumulated
other comprehensive
loss and
Total
for the
nine months
ended March
31, 2025,
have
each decreased by
$
0.04
million as a result
of the correction discussed
in Note 1 to
the amount included in
the caption Movement
in
foreign currency translation reserve.
Accumulated other comprehensive loss
and Total
as of March 31, 2025,
have each increased by
$
0.09
million as a result of the correction discussed in Note 1.
The movement in the
foreign currency translation reserve represents
the impact of translation of
consolidated entities which have
a functional currency (which is primarily ZAR) to the Company’s
reporting currency, which is USD.
33
Accumulated other comprehensive loss (continued)
During
the
three
months
ended
March
31,
2026,
the
Company
reclassified
a
gain
of
$
0.5
million
from
accumulated
other
comprehensive loss (accumulated foreign currency translation reserve) to
net loss related to the
liquidation of a subsidiary.
There were
reclassifications from accumulated other comprehensive loss to net loss during
the three months ended March 31, 2025.
During
the
nine
months
ended
March
31,
2026,
the
Company
reclassified
losses
of
$
million
from
accumulated
other
comprehensive loss (accumulated foreign
currency translation reserve) to
net loss related
to the impairment
on liquidation of an
equity-
accounted investment.
During the
nine months
ended March
31, 2026,
the Company
reclassified an
aggregate gain
of $
0.5
million
from accumulated other comprehensive loss (accumulated
foreign currency translation reserve) to net loss related to the
disposal of a
subsidiary
and
the liquidation
of a
subsidiary.
During the
nine
months
ended
March 31,
2025,
the Company
reclassified
a
loss of
$
0.006
million from
accumulated other
comprehensive loss
(accumulated foreign
currency translation
reserve) to
net loss related
to
the liquidation of subsidiaries.
Stock-based compensation
The Company’s
Amended and Restated
2022 Stock
Incentive Plan (“20
22 Plan”)
and the vesting
terms of certain
stock-based
awards granted are described in Note 17 to the Company’s audited consolidated financial statements included in its Annual Report on
Form 10-K
for the
year ended
June 30,
- On
September 2,
2025, the
Company’s
Board resolved
to request
the approval
of the
Company’s
shareholders to increase the
number of shares
available for issuance under
the 2022 Plan by
3,000,000
. On December
8,
2025, the Company’s shareholders approved
the amendment.
Stock option and restricted stock activity
Options
The following table summarizes stock option activity for the nine months
ended March 31, 2026 and 2025:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($'000)
Weighted
average
grant date
fair value
($)
Outstanding - June 30, 2025
3.55
Outstanding - March 31, 2026
2.55
Outstanding - June 30, 2024
4.51
Granted – December 2024
350,000
6.00
433
1.24
Granted – December 2024
250,000
8.00
177
0.71
Granted – January 2025
100,000
8.00
2.00
71
0.71
Granted – January 2025
150,000
11.00
2.00
107
0.71
Granted – January 2025
150,000
14.00
2.00
123
0.82
Exercised
()
Forfeited
()
Outstanding - March 31, 2025
3.79
stock options were awarded during the
three and nine months ended March
31, 2026. The Company awarded
400,000
stock
options
to
an
executive
officer
during
the
three
months
ended
March
31,
2025
with
strike
prices
ranging
from
$
8
to
$
14
,
and
an
aggregate of
1,000,000
stock options during the nine months
ended March 31, 2025 with strike
prices ranging from $
6
to $
14
. These
stock options, together with the
600,000
that were awarded in December 2024, will vest on December 31, 2026, and
vesting is subject
to the executive officers continued employment with the Company through to the vesting date. The
1,000,000
stock options expire on
January 31, 2029.
stock options were exercised or forfeited during the three and nine months ended March 31, 2026. During
the three and nine
months ended
March 31, 2025,
the Company
received $
million and
$
million from the
exercise of
and
stock
options, respectively. Employees forfeited an aggregate of
stock options during each
of the three and
nine months ended March
31, 2025.
The
fair
value
of
each
option
is
estimated
on
the
date
of
grant
using the
Cox
Ross
Rubinstein
binomial
model
that
uses the
assumptions noted in the
following table. The estimated
expected volatility is calculated
based on the Company’s
730
-day volatility.
The estimated
expected life
of the
option was
determined based
on the
historical behavior
of employees
who were
granted options
with similar terms.
34
Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Options (continued)
The table below presents the range
of assumptions used to value stock options
granted during the nine months
ended March 31,
2025:
Nine months
ended
March 31,
2025
Expected volatility
42
%
Expected dividends
0
%
Expected life (in years)
2
Risk-free rate
4.3
%
The following table presents stock options vested and expected to vest as of
March 31, 2026:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Vested
and expecting to vest - March 31, 2026
2.55
These options have an exercise price range of $
3.01
to $
14.00
.
The following table presents stock options that are exercisable as of March
31, 2026:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Exercisable - March 31, 2026
2.95
stock options became exercisable during each of the three and nine
months ended March 31, 2026 and 2025. During each of
the three and nine months ended March
31, 2025,
stock options became exercisable. The Company issues
new shares to satisfy
stock option exercises.
35
Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Restricted stock
The following table summarizes restricted stock activity for the nine
months ended March 31, 2026 and 2025:
Number of
shares of
restricted stock
Weighted
average grant
date fair value
($’000)
Non-vested – June 30, 2025
2,169,900
7,833
Total granted
1,009,095
4,012
Granted – July 2025
3,772
17
Granted – August 2025
5,323
25
Granted – September 2025
200,000
922
Granted – October 2025
215,000
905
Granted – November 2025
160,000
708
Granted – November 2025, with performance conditions
245,000
598
Granted – February 2026
150,000
698
Granted – March 2026
30,000
139
Total vested
(238,845)
949
Vested
– August 2025
(10,933)
50
Vested
– October 2025
(33,333)
139
Vested
– November 2025
(120,434)
465
Vested
– December 2025
(52,479)
196
Vested
– February 2025
(21,666)
99
Forfeitures
(361,413)
1,437
Forfeitures
(103,545)
475
Forfeitures December 2022 award with market conditions
(257,868)
962
Non-vested – March 31, 2026
2,578,737
9,825
Non-vested – June 30, 2024
2,084,946
8,736
Total Granted
1,396,110
5,204
Granted – August 2024
32,800
154
Granted – October 2024
100,000
490
Granted – November 2024, with performance conditions
1,198,310
4,206
Granted – January 2025
65,000
354
Total vested
(556,641)
2,865
Vested
– July 2024
(78,801)
394
Vested
– November 2024
(213,687)
1,134
Vested
– November 2024, with performance conditions
(103,638)
524
Vested
– December 2024
(77,306)
417
Vested
– February 2025
(13,922)
68
Vested
– March 2025
(69,287)
328
Forfeitures
(108,243)
537
Non-vested – March 31, 2025
2,816,172
10,955
36
Stock-based compensation (continued)
Stock option and restricted stock activity (continued)
Restricted stock (continued)
Grants
In July,
August, September,
October and
November 2025,
and February
and March
2026, respectively,
the Company
granted
3,772
;
5,323
;
200,000
;
215,000
;
160,000
;
150,000
; and
30,000
shares of restricted stock to employees which have time-based vesting
conditions and which are subject to the employees’ continued employment
with the Company through the applicable vesting dates.
In November
2025, the
Company awarded
245,000
shares of
restricted stock
to a
group comprising
employees and
which are
subject to a time-based vesting condition and a market condition and vest in full only on the date, if any, that the following conditions
are satisfied: (1) a compounded annual
15
% appreciation in the Company’s stock price off a base
price of $
4.31
over the measurement
period commencing on November 1, 2025
through October 31, 2028, and (2) the recipient
is employed by the Company on a full-time
basis through to October 31, 2028. If either of these conditions is not satisfied, then none of the shares of restricted stock
will vest and
they will be forfeited. The Company’s
closing price on October 31, 2025, was $
4.30
.
The appreciation levels (times and price) and
annual target percentages to earn the
awards as of each period
ended are as follows:
- Prior to the first anniversary of the grant date:
0
%;
- Fiscal
2027,
the
Company’s
30-day
volume
weighted-average
stock
price
(“VWAP”)
before
October
31,
2026
is
approximately
1.15
times higher (i.e. $
4.96
or higher) than $
4.31
:
33
%;
- Fiscal 2028, the Company’s
VWAP before
October 31, 2027 is
1.32
times higher (i.e. $
5.70
or higher) than $
4.31
:
67
%;
- Fiscal 2029, the Company’s
VWAP before
October 31, 2028 is
1.52
times higher (i.e. $
6.55
) than $
4.31
:
100
%.
The fair value
of these shares
of restricted
stock was calculated
using a Monte
Carlo simulation. In
scenarios where
the shares
do not vest, the final vested value at maturity is zero. In scenarios where vesting occurs, the final vested value on maturity is the share
price on
vesting date.
In its calculation
of the
fair value
of the
restricted stock,
the Company
used an
equally weighted
volatility of
41.2
% for
the closing
price (of
$
4.35
), a
discounting based
on U.S.
dollar overnight
indexed swap
rates for
the grant
date, and
no
future dividends. The equally weighted volatility was extracted from the time series for closing prices as the standard deviation of log
prices for the three years preceding the grant date.
In
August
2024,
October
2024
and
January
2025,
respectively,
the
Company
granted
32,800
,
100,000
and
65,000
shares
of
restricted
stock
to
employees
which
have
time
-based
vesting
conditions
and
which
are
subject
to
the
employees’
continued
employment with the Company through the applicable vesting dates.
In November 2024, the
Company awarded
1,198,310
shares of restricted stock to
a group comprising employees
and which are
subject to a time-based vesting condition and a market condition
and vest in full only on the date, if any,
that the specified conditions
are satisfied.
The Company
had previously
agreed to
grant an
advisor
5,500
shares per
month in
lieu of cash
for ad
hoc consulting
services
provided to the Company. The Company and the advisor have agreed that the Company will issue the shares to the advisor, in arrears,
on a
quarterly basis.
During the
nine months
ended March
31, 2026,
the Company
recorded a
stock-based compensation
charge of
$
0.1
million and included
the issuance of
27,500
shares of common
stock in its
issued and outstanding
share count.
No
shares were
issued during the three months ended March 31, 2026. During the third quarter of fiscal 2026, the Company and the consultant agreed
that
49,500
shares of the Company’s common stock that were
previously issued would be forfeited and
a cash payment of $
0.2
million
was made in lieu of the forfeited shares.
Vesting
In August,
October,
November and
December 2025,
and in
January 2026,
an aggregate
of
238,845
shares of
restricted
stock
granted to employees vested. Certain employees elected for
79,133
shares to be withheld to satisfy the withholding tax liability on the
vesting of their shares. These
79,133
shares have been included in the Company’s
treasury shares.
In July 2024,
78,801
shares of restricted
stock granted to Mr. Meyer, our
former Group CEO, vested.
In November 2024,
103,638
shares of restricted
stock with
performance conditions (share
price targets) vested
following the
achievement of the
agreed performance
condition. In November,
December 2024, February 2025 and March 2025,
an aggregate of
374,202
shares of restricted stock granted
to employees vested. Certain employees elected
for
137,809
shares to be withheld to
satisfy the withholding tax liability on
the vesting
of their shares. These
137,809
shares have been included in the Company’s
treasury shares.
37
Stock-based compensation (continued)
Restricted stock (continued)
Forfeitures
During
the
three
and
nine
months
ended
March
31,
2026,
respectively,
employees
forfeited
80,080
and
103,545
shares
of
restricted stock following their
termination of employment with
the Company. During the nine months
ended March 31,
2026,
257,868
shares of
restricted
stock were
forfeited by
executive officers
(including
a former
Group CEO)
as the
market condition
(related to
share price performance) were not achieved.
During
the
three
and
nine
months
ended
March
31,
2025,
respectively,
employees
forfeited
67,922
and
108,243
shares
of
restricted stock following their
termination of employment with
the Company or the
failure to achieved agreed
performance conditions
(
29,121
shares were forfeited following the failure to achieved agreed share performance
targets).
Stock-based compensation charge and unrecognized compensation
cost
The Company
recorded a
stock-based compensation
charge, net,
during the
three months
ended March
31, 2026
and 2025,
of
$
million and $
million, respectively,
which comprised:
Total
charge
Allocated to cost
of goods sold, IT
processing,
servicing and
support
Allocated to
selling, general
and
administration
Three months ended March 31, 2026
Stock-based compensation charge
$
$
$
1,406
Stock compensation charge related to ESOP
167
Reversal of stock compensation charge related to restricted
stock forfeited
()
(239)
Total - three months
ended March 31, 2026
$
$
$
1,334
Three months ended March 31, 2025
Stock-based compensation charge
$
$
$
2,531
Reversal of stock compensation charge related to restricted
stock forfeited
()
(34)
Total - three months
ended March 31, 2025
$
$
$
2,497
The Company recorded a stock-based
compensation charge, net, during the nine
months ended March 31, 2026
and 2025, of $
million and $
million respectively, which
comprised:
a
Total
charge
Allocated to cost
of goods sold, IT
processing,
servicing and
support
Allocated to
selling, general
and
administration
Nine months ended March 31, 2026
Stock-based compensation charge
$
$
$
4,947
Stock compensation charge related to ESOP
495
Reversal of stock compensation charge related to
restricted
stock forfeited
()
(302)
Total - nine months
ended March 31, 2026
$
$
$
5,140
Nine months ended March 31, 2025
Stock-based compensation charge
$
$
$
7,563
Reversal of stock compensation charge related to
restricted
stock forfeited
()
(45)
Total - nine months
ended March 31, 2025
$
$
$
7,518
The stock-based compensation charges
have been allocated to selling,
general and administration based
on the allocation of the
cash compensation paid to
the relevant employees. Stock-based compensation
charge of $
million related to the post-combination
compensation charges
related to the Recharger
acquisition are included
in the caption transaction
costs related to
Adumo, Recharger
and Bank Zero acquisitions and certain compensation costs included on the
unaudited condensed consolidated statement of operations
for the three
and nine months
ended March 31,
- These stock-based charges
are classified as
cash settled awards
and were included
i
n other payables as of March 31, 2025.
38
Stock-based compensation (continued)
As of March 31, 2026,
the total unrecognized compensation
cost related to stock options
was $
2.9
million, which the Company
expects to recognize over
two years
. As of March
31, 2026, the total
unrecognized compensation cost related to
restricted stock awards
was $
6.6
million, which the Company expects to recognize over
two years
.
During the three months ended March 31, 2026 and 2025, the Company recorded a deferred tax benefit of $
million and $
million,
respectively,
related
to the
stock-based
compensation
charge
recognized
related to
employees
of Lesaka.
During
the
nine
months ended March 31, 2026 and
2025, the Company recorded a deferred
tax benefit of $
million and $
million, respectively,
related
to
the
stock-based
compensation
charge
recognized
related
to
employees
of
Lesaka.
During
these
periods
the
Company
recorded
a
valuation
allowance
related
to
the
full deferred
tax
benefit
recognized
because
it does
not
believe
that
the stock-based
compensation
deduction
would
be
utilized
as it
does not
anticipate
generating
sufficient
taxable
income
in
the
United States.
The
Company deducts the difference
between the market value on the
date of exercise by the option
recipient and the exercise price from
income subject to taxation in the United States.
Earnings (Loss)
per share
The Company
has issued redeemable
common stock
which is redeemable
at an amount
other than
fair value.
Redemption of
a
class of
common stock
at other
than fair
value increases
or decreases
the carrying
amount of
the redeemable
common stock
and is
reflected in basic earnings
per share using the two-class
method. There were
redemptions of common stock, or
adjustments to the
carrying value of the redeemable common stock during the three
months ended March 31, 2026 and 2025, except as described in
Note
- Accordingly,
the two-class method
presented below does not
include the impact
of any redemption.
The Company’s
redeemable
common stock is
described in Note
14 to the
Company’s
audited consolidated financial
statements included in
its Annual Report
on
Form 10-K for the year ended June 30, 2025.
Basic earnings (loss) per share
includes shares of restricted stock that
meet the definition of a
participating security because these
shares are eligible
to receive non
-forfeitable dividend
equivalents at the
same rate as
common stock.
Basic earnings (loss)
per share
has been
calculated using
the two-class
method and
basic earnings
(loss) per
share for
the three months
ended March
31, 2026
and
2025,
reflects only undistributed earnings. The computation below of basic earnings (loss) per
share excludes the net loss attributable
to shares of unvested
restricted stock (participating
non-vested restricted stock)
from the numerator
and excludes the dilutive
impact
of these unvested shares of restricted stock from the denominator.
Diluted earnings
(loss) per
share has
been
calculated
to give
effect
to the
number
of shares
of additional
common
stock that
would have
been outstanding
if the
potential dilutive
instruments had
been issued
in each
period. Stock
options are
included in
the
calculation of diluted earnings (loss) per share utilizing the treasury stock
method and are not considered to be participating securities,
as the
stock options
do not
contain non-forfeitable
dividend rights.
The Company
has excluded
employee stock
options to
purchase
shares of common stock from the calculation of diluted
loss per share during the three months ended March 31,
2025 because
the
effect
would
be
antidilutive.
The
Company
has
excluded
employee
stock
options
to
purchase
and
shares
of
common stock from the calculation
of diluted loss per
share during the nine
months ended March 31, 2026
and 2025 because the
effect
would be antidilutive.
The
calculation
of diluted
earnings
(loss)
per share
includes the
dilutive
effect
of
a portion
of the
restricted
stock granted
to
employees as
these shares
of restricted
stock are
considered contingently
returnable shares
for the
purposes of
the diluted
earnings
(loss) per share calculation and the vesting conditions in respect of a portion
of the restricted stock had been satisfied.
The vesting conditions for all awards made are discussed in Note 17 to the Company’s audited consolidated financial statements
included in its Annual Report on Form 10-K for the year ended June
30, 2025.
39
Earnings (Loss)
per share (continued)
The following table
presents net earnings
(loss) attributable to
Lesaka and the
share data used in
the basic and
diluted earnings
(loss) per share computations using the two-class method:
Three months ended
Nine months ended
March 31,
March 31,
2026
2025
2026
2025
(in thousands except
(in thousands except
percent and
percent and
per share data)
per share data)
Numerator:
Net earnings (loss) attributable to Lesaka
(A)
$
$
()
$
()
$
()
Undistributed Earnings (Loss)
(A)
()
()
()
Percent allocated to common shareholders
(Calculation 1)
%
%
%
%
Numerator for earnings (loss) per share: basic
and diluted
$
$
()
$
()
$
()
Denominator
Denominator for basic earnings (loss) per share:
Weighted-average
common shares outstanding
Effect of dilutive securities:
Stock options
Denominator for diluted earnings (loss)
per share: adjusted weighted average
common shares outstanding and assuming
conversion
Earnings (Loss) per share:
Basic
(A)
$
$
()
$
()
$
()
Diluted
(A)
$
$
()
$
()
$
()
(Calculation 1)
Basic weighted-average common shares
outstanding (A)
Basic weighted-average common shares
outstanding and unvested restricted shares
expected to vest (B)
Percent allocated to common shareholders
(A) / (B)
%
%
%
%
(A) Net loss attributable to
Lesaka and Undistributed
loss for the three and nine
months ended March 31, 2025,
have decreased
by $
0.3
million and
$
0.9
million, respectively,
as a
result of
the correction
discussed in
Note 1.
Net loss
attributable to
Lesaka and
Undistributed loss for the nine months ended March 31,
2026, has decreased by $
0.4
million, as a result of the correction,
as discussed
in Note
1, to
the amount
included in
the captions
Net loss
attributable to
Lesaka and
Undistributed loss
for the
three months
ended
September 30, 2025. The correction of the error did not impact Basic and Diluted loss per share for the three months ended March 31,
2025,
or the
nine months
ended March
31, 2026.
Basic and Diluted
loss per
share for
the nine months
ended March
31, 2025,
each
decreased by $
0.01
(one U.S. cent).
Options to
purchase
6,493,683
shares of
the Company’s
common stock
at prices
ranging from
$
4.87
to $
14.00
per share
were
outstanding during
the three
and nine
months ended
March 31,
2026, but
were not
included in
the computation
of diluted
earnings
(loss) per share
because the options’
exercise price was
greater than the
average market price
of the Company’s common
stock. Options
to purchase
shares of
the Company’s
common
stock at
prices ranging
from $
to $
per share
were outstanding
during the three
and nine months
ended March 31,
2025, but were
not included in
the computation of
diluted loss per
share because
the options’ exercise
price was greater
than the average market
price of the Company’s
common stock. The options,
which expire at
v
arious dates through February 3, 2032, were still outstanding as of March 31, 2026.
40
Supplemental cash flow information
The following table presents supplemental cash flow disclosures for the three and nine months ended March 31, 2026 and 2025:
Three months ended
Nine months ended
March 31,
March 31,
2026
2025
2026
2025
Cash received from interest
$
$
$
$
Cash paid for interest
$
$
$
$
Cash paid for income taxes
$
$
$
$
Disaggregation of cash, cash equivalents and restricted
cash
Cash, cash equivalents and restricted
cash included on the Company’s unaudited condensed consolidated statement of
cash flows
includes restricted
cash related
to cash
withdrawn from
the Company’s
debt facilities
to fund
ATMs.
This facility
was cancelled
in
November 2024.
The Company
was only permitted
to use this
cash to
fund ATMs
and this cash
was considered
restricted as
to use
and therefore was classified
as restricted cash.
Cash, cash equivalents
and restricted cash also
includes cash in certain
bank accounts
that has been
ceded to Nedbank.
As this cash has
been pledged and
ceded it may
not be drawn
and is considered
restricted as to
use
and
therefore is
classified as
restricted
cash as
well. The
following
table presents
the disaggregation
of cash,
cash equivalents
and
restricted cash as of March 31, 2026 and 2025, and June 30, 2025:
March 31,
2026
March 31,
2025
June 30, 2025
Cash and cash equivalents
$
$
$
Restricted cash
Cash, cash equivalents and restricted cash
$
$
$
Leases
The following table presents supplemental
cash flow disclosure related to leases
for the three and nine months
ended March 31,
2026 and 2025:
Three months ended
Nine months ended
March 31,
March 31,
2026
2025
2026
2025
Cash paid for amounts included in the measurement of
lease liabilities
Operating cash flows from operating leases
$
$
$
$
Right-of-use assets obtained in exchange for lease
obligations
Operating leases
$
$
$
$
41
Revenue recognition
Disaggregation of revenue
The
following
table
presents
the
Company’s
revenue
disaggregated
by
major
revenue
streams,
including
a
reconciliation
to
reportable segments for the three months ended March 31, 2026:
Merchant
Consumer
Enterprise
Total
Processing fees
$
$
$
$
South Africa
Rest of Africa
Technology
products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Account holder fees
Other
South Africa
Rest of Africa
Total revenue under
ASC 606, derived from the
following geographic locations
South Africa
113,319
13,441
18,456
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Total non-ASC 606
revenue
Revenue
$
126,272
$
$
18,456
$
The
following
table
presents
the
Company’s
revenue
disaggregated
by
major
revenue
streams,
including
a
reconciliation
to
reportable segments for the three months ended March 31, 2025:
Merchant
Consumer
Enterprise
Total
Processing fees
$
$
$
$
South Africa
Rest of Africa
Technology
products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Account holder fees
Other
South Africa
Rest of Africa
Total revenue under
ASC 606, derived from the
following geographic locations
South Africa
117,869
10,279
9,137
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Total non-ASC 606
revenue
Revenue
$
128,217
$
$
9,137
$
42
Revenue recognition (continued)
Disaggregation of revenue (continued)
The
following
table
presents
the
Company’s
revenue
disaggregated
by
major
revenue
streams,
including
a
reconciliation
to
reportable segments for the nine months ended March 31, 2026:
Merchant
Consumer
Enterprise
Total
Processing fees
$
$
$
$
South Africa
Rest of Africa
Technology
products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Account holder fees
Other
South Africa
Rest of Africa
Total revenue under
ASC 606, derived from the
following geographic locations
South Africa
345,720
38,060
47,489
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Total non-ASC 606
revenue
Revenue
$
383,727
$
$
47,489
$
The
following
table
presents
the
Company’s
revenue
disaggregated
by
major
revenue
streams,
including
a
reconciliation
to
reportable segments for the nine months ended March 31, 2025:
Merchant
Consumer
Enterprise
Total
Processing fees
$
$
$
$
South Africa
Rest of Africa
Technology
products
South Africa
Rest of Africa
Prepaid airtime sold
South Africa
Rest of Africa
Account holder fees
Other
South Africa
Rest of Africa
Total revenue under
ASC 606, derived from the
following geographic locations
South Africa
365,687
30,620
27,241
Rest of Africa
Lending revenue
Interest from customers
Insurance revenue
Total non-ASC 606
revenue
Revenue
$
395,896
$
$
27,241
$
43
Leases
The
Company
has
entered
into leasing
arrangements
classified
as operating
leases under
accounting
guidance.
These leasing
arrangements
relate
to
the
lease
of
its
corporate
head
office
and
sales
and
administration
offices
of
its
Merchant,
Consumer
and
Enterprise businesses. The Company’s operating leases have remaining lease terms of between
one
and
five years
. The Company also
operates parts
of its
consumer business
from locations
which it
leases for
a period
of less
than
one year
. The
Company’s
operating
lease expense during
the three
months ended March
31, 2026 and
2025 was $
million and
$
million, respectively. The Company’s
operating lease expense during the nine months ended March 31, 2026 and 2025
was $
million and $
million, respectively.
The
Company
has
also
entered
into
short-term
leasing
arrangements,
primarily
for
the
lease
of
branch
locations
and
other
locations,
to operate its consumer
business in South Africa.
The Company’s
short-term lease expense during
the three months ended
March 31, 2026 and 2025,
was $
0.6
million and $
1.1
million, respectively.
The Company’s
short-term lease expense during
the nine
months ended March 31, 2026 and 2025, was $
1.4
million and $
3.4
million, respectively.
In December
2025, the
Company,
through Lesaka
SA, entered
into a
leasing arrangement
for
a new
corporate head
office
in
Rosebank, Gauteng,
South Africa
with Oxford
Parks Proprietary
Limited, a
limited liability
private company
incorporated in
South
Africa. The lease
commences on July 1,
2026 and is
for a period
of
10 years
with
two
renewal options of
five years
each. The Company
has secured
beneficial occupation
from April
1, 2026,
and is required
to deliver
a bank
guarantee or
cash of
$
0.4
million (ZAR
7.5
million, translated at exchange rates applicable as of March 31,
2026). The Company expects to pay an annual basic lease expense of
$
1.5
million (ZAR
25.1
million, translated at exchange rates applicable as of March 31, 2026), which increases
by
6.25
% per annum.
The Company has
not recorded an
operating lease right
-of-use (“ROU”) asset
or a operating
lease liability related
to this lease
in its
unaudited condensed
consolidated balance
sheet as
of March
31, 2026,
because the
Company determined
it did
not have
beneficial
occupation as of March 31, 2026.
The Company
determined that its
existing operating
lease arrangements
for its corporate
head office
and certain
related leased
facilities will
no longer
be utilized
as originally
intended as
a result
of the
new lease
arrangement
and the
planned transition
of its
corporate head office and
other operating activities
to the new
premises. Accordingly, the Company identified
indicators of impairment
for the related ROU assets and certain items of property,
plant and equipment.
The Company evaluated the impacted ROU assets for impairment. The asset
groups consisted of operating lease ROU assets and
related
leasehold
improvements
associated
with
the
affected
locations
as
well
as
certain
items
of
property,
plant
and
equipment,
including furniture
and office
equipment. The
recoverability test
indicated that
the carrying
amounts of
these asset
groups were
not
recoverable, as the undiscounted future cash flows were insufficient
to recover their carrying values.
The Company measured
these operating lease
ROU assets and
related leasehold improvements
at fair value
on a non-recurring
basis during the three and nine months ended March 31, 2026, as a result of impairment. These fair value measurements are classified
within Level
3 of
the fair
value hierarchy.
Fair value
was estimated
using a
discounted cash
flow methodology,
which incorporates
significant unobservable inputs, including
assumptions related to remaining
lease terms, expected sublease income
and market rental
rates.
As a
result, the
Company recorded
an impairment
charge of
$
million during
the three
and nine
months ended
March 31,
2026,
representing
the
excess
of
the
carrying
amount
of
the
affected
ROU
assets
and
related
leasehold
improvements
over
their
estimated fair value. The impairment charge is included in the
caption impairment loss (refer to Note 7) in the
condensed consolidated
statement of
operations for
the three
and nine
months ended
March 31,
- The
impairment did
not impact
the related
operating
lease liabilities.
The following table presents supplemental balance
sheet disclosure related to the
Company’s right-of-use assets and its operating
lease liabilities as of March 31, 2026 and June 30, 2025:
March 31,
June 30,
2026
2025
Right of use assets obtained in exchange for lease obligations:
Weighted average
remaining lease term (years)
2.49
2.84
Weighted average
discount rate (percent)
44
Leases (continued)
The maturities of the Company’s
operating lease liabilities as of March 31, 2026, are presented below:
Maturities of operating lease liabilities
Year
ended June 30,
2026 (excluding nine months to March 31, 2026)
$
2027
2028
2029
2030
Thereafter
Total undiscounted
operating lease liabilities
Less imputed interest
Total operating lease liabilities,
included in
Operating lease liability - current
Operating lease liability - long-term
$
Operating segments
Operating segments
The Company discloses segment information as reflected in the management
information systems reports that its chief operating
decision maker uses in making decisions and to report certain entity-wide disclosures about products and services, and the countries in
which the entity holds material assets or reports material revenues. A description of the Company’s operating segments is contained in
Note 21 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended
June 30, 2025.
The Company’s
chief operating decision maker
(“CODM”) is the Company’s
Executive Chairman. The
Company currently has
reportable segments: Merchant, Consumer and Enterprise. The CODM analyzes
the Company’s operating performance primarily
based on these three operational lines, namely,
(i) Merchant, which focuses on
both formal and informal sector
merchants. Formal sector merchants are generally in
urban areas,
have higher
revenues and
have access
to multiple
service providers.
Informal sector
merchants, which
are often
sole proprietors
and
usually
have lower
revenues compared
with formal
section merchants,
operate in
rural areas
or in
informal urban
areas and
do not
always have access to a full-suite of traditional banking products;
(ii) Consumer,
which primarily
focuses on
individuals who
have historically
been excluded
from traditional
financial services
and to whom we offer
transactional accounts (banking), insurance,
lending (short-term loans), payments solutions
(digital wallet) and
various value-added services; and
(iii) Enterprise, which comprises large-scale corporate
and government organizations, including but not
limited to banks, mobile
network operators (“MNOs”) and municipalities, and,
through Recharger,
landlords utilizing Recharger’s
prepaid electricity metering
solution.
Types of products
and services from which each segment derives its revenues
The
Merchant
segment
includes
revenue
generated
from
the
sale
of
Alternative
Digital
Products
(“ADP”)
(select
prepaid
solutions, supplier-enabled payments, international
money transfer and
other) and card-acquiring services
to informal sector
merchants.
It also includes activities related to the provision of goods and
services provided to corporate and other juristic entities. The
Company
earns fees
from
processing activities
performed
(including card
acquiring
and
the provision
of a
payment
gateway
services) for
its
customers, and rental and
license fees from the provision
of point of sales (“POS”)
hardware and software
to the hospitality industry.
The Company also provides cash management and payment services to merchant customers through a digital vault
which is located at
the customer’s
premises and through
which the Company
is able to
provide the services
which generate
processing fee revenue.
The
Merchant segment includes interest earned from the provision of loans to
its customers, refer to Note 16.
The Consumer segment
includes activities related
to the provision
of financial services
to customers,
including a bank
account,
loans and
insurance products.
The Company
charges monthly
administration fees
for all
bank accounts.
Customers that
have a
bank
account managed by the Company are issued cards that can be utilized to withdraw funds at an ATM or to transact at a merchant POS.
The Company
earns processing
fees from
transactions processed
for these
customers. The
Company also
earns fees
on transactions
performed
by
other
banks’
customers
utilizing
its
ATM
(until
June
30,
or
POS. The
Company
provides
short-term
loans
to
customers in South Africa for which it earns initiation and monthly service fees, and interest revenue from the second quarter of fiscal
2025,
refer to
Note 16.
The Company
writes life
insurance contracts,
primarily
funeral-benefit
policies, and
policy holders
pay the
Company a monthly
insurance premium. The
Company also earns
fees from the
provision of physical
and digital prepaid
and secure
p
ayout solutions for South African businesses.
45
Operating segments
Operating segments
The Enterprise segment provides its business and government-related customers with transaction
processing services that involve
the collection,
transmittal and
retrieval of
transaction data.
The Company
offers
landlords access
to Recharger
’s
prepaid electricity
metering
solution through
which Enterprise
earns commission
revenue
from prepaid
electricity voucher
sales to
tenants recharging
prepaid meters.
This segment also
includes sales of
hardware and
licenses to customers.
Hardware includes
the sale of
POS devices,
SIM cards and other consumables
which can occur on an ad hoc
basis. Licenses include the right to
use certain technology developed
by the Company.
Segment measure of profit or loss
The
Company
evaluates
segment
performance
based
on
segment
earnings
before
interest,
tax,
depreciation
and
amortization
(“EBITDA”),
adjusted
for
items
mentioned
in
the
sentences
below
(“Segment
Adjusted
EBITDA”),
the
Company’s
reportable
segments’ measure of profit or loss.
The Company obtained
a general
lending facility in
February 2025, which
has been
partially used to
fund a
portion of
its Consumer
lending
during
the
three
and
nine
months
ended
March
31,
2026,
and
interest
related
to
these
borrowings
have
been
allocated
to
Consumer.
The Company
also included
an intercompany
interest expense
in its
Consumer Segment
Adjusted EBITDA
for the
three
and nine months ended March 31, 2025.
The Company does not allocate once-off items, stock-based compensation charges, depreciation and amortization, impairment of
goodwill or other intangible
assets, other items (including
gains or losses on
disposal of investments, fair
value adjustments
to equity
securities), interest
income, certain
interest expense,
income tax
expense or
loss from
equity-accounted investments
to its reportable
segments. Group costs generally include: employee related costs in relation to employees specifically hired for group roles and related
directly
to managing
the US-listed
entity; expenditures
related
to compliance
with the
Sarbanes-Oxley
Act of
2002; non-employee
directors’
fees;
legal
fees;
group
and
US-listed
related
audit
fees;
and
directors
and
officer’s
insurance
premiums.
Once-off
items
represent non-recurring expense items, including costs related to acquisitions and
transactions consummated or ultimately not pursued.
Unrealized
(loss)
gain
for
currency
adjustments
represents
foreign
currency
mark-to-market
adjustments
on
certain
intercompany
accounts.
Interest
adjustment
represents
the
intercompany
interest
expense
included
in
the
Consumer
Segment
Adjusted
EBITDA
during fiscal 2025.
The Stock-based compensation
adjustments reflect stock-based
compensation expense
and are excluded
from the
calculation
of
Segment
Adjusted
EBITDA
and
are
therefore
reported
as
reconciling
items
to
reconcile
the
reportable
segments’
Segment Adjusted EBITDA to the Company’s
loss before income tax expense.
Our CODM does
not review the
components of segment selling,
general and administration
expenses and is
presented with reports
which include revenue, net revenue (a non-GAAP measure) and Segment Adjusted
EBITDA.
46
Operating segments (continued)
The table below
presents the reconciliation
of revenue from
external customers
to the reportable
segment’s revenue,
significant
expenditures, the Company’s reportable segment’s measure of
profit or loss,
and certain other
segment information for
the three months
ended March 31, 2026 and 2025, respectively,
is as follows:
Three months ended March 31, 2026
Merchant
Consumer
Enterprise
Total
Revenue from external customers
$
126,272
$
$
18,456
$
Intersegment revenues
806
522
1,328
Segment revenue
(z)
38,323
184,379
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
(y)
125,252
Selling, general and
administration
(1)(2)
34,759
Segment adjusted EBITDA
$
$
$
$
24,368
Operating segments
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
10,543
Expenditures for long-lived assets
$
$
$
$
$
4,603
Three months ended March 31, 2025
Merchant
Consumer
Enterprise
Total
Revenue from external customers
$
128,217
$
$
9,137
$
Intersegment revenues
564
307
871
Segment revenue
(z)
24,096
162,321
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
(y)(A)
122,944
Selling, general and
administration
(A)(1)(3)
()
25,011
Segment adjusted EBITDA
(A)
$
7,900
$
$
133
$
14,366
(z) includes interest revenue of:
$
$
$
$
3,193
(y) includes interest expense of:
$
$
$
$
1,309
Operating segments
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
8,429
Expenditures for long-lived assets
$
$
$
$
$
4,490
(A) Cost of goods
sold, IT processing, servicing
and support and Selling,
general and administration for
Merchant and Total
for
the three months
ended March 31,
2025 have each
increased by
$
0.2
million and $
0.05
million, respectively, as a
result of the
correction
discussed
in
Note
Segment
Adjusted
EBITDA
for
Merchant
and
Total
for
the
three
months
ended
March
31,
2025
have
each
decreased by $
0.2
million as a result of the correction discussed in Note 1.
(1)
Selling,
general
and
administration
includes
human
capital-related
expenses
(including
base
salary
and
bonus),
IT-related
expenses
(including
software licenses,
hardware
maintenance,
hosting,
and communication
expenses), professional
fees (including
audit, legal,
consulting and
other fees),
lease and
utilities expenses,
the allowance
for credit
losses and
other operating
and support
expenses.
(2) Segment
Adjusted EBITDA
for the three
months ended
March 31,
2026, includes retrenchment
costs for Merchant
of $
0.3
million (ZAR
5.0
million), Consumer of $
0.02
million (ZAR
0.3
million) and Enterprise of $
0.1
million (ZAR
1.1
million).
(3) Segment Adjusted
EBITDA for the
three months ended
March 31, 2025,
includes retrenchment and
reorganization costs for
M
erchant of $
million (ZAR
million) and Enterprise of $
million (ZAR
million).
47
Operating segments (continued)
The table below
presents the reconciliation
of revenue from
external customers
to the reportable
segment’s
revenue, significant
expenditures, the Company’s reportable segment’s measure of
profit or loss,
and certain other
segment information for
the nine months
ended March 31, 2026 and 2025, respectively,
is as follows:
Nine months ended March 31, 2026
Merchant
Consumer
Enterprise
Total
Revenue from external customers
$
383,727
$
$
47,489
$
Intersegment revenues
2,220
1,138
3,358
Segment revenue
(z)
102,017
536,591
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
(y)(A)
368,596
Selling, general and
administration
(A)(1)(2)
104,248
Segment adjusted EBITDA
(A)
$
$
$
$
63,747
(z) includes interest revenue of:
$
$
$
$
16,989
(y) includes interest expense of:
$
$
$
$
3,339
Operating segments
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
37,005
Expenditures for long-lived assets
$
$
$
$
$
14,652
Nine months ended March 31, 2025
Merchant
Consumer
Enterprise
Total
Revenue from external customers
$
395,896
$
$
27,241
$
Intersegment revenues
1,746
3,018
4,764
Segment revenue
(z)
68,097
495,998
Less segment-related expenses:
Cost of goods sold, IT processing,
servicing and support
(y)(A)
374,069
Selling, general and
administration
(A)(1)(3)
81,075
Segment adjusted EBITDA
(A)
$
$
$
464
$
40,854
(z) includes interest revenue of:
$
$
$
$
6,599
(y) includes interest expense of:
$
$
$
$
3,663
Operating segments
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
22,928
Expenditures for long-lived assets
$
$
$
$
$
15,374
48
Operating segments (continued)
(A) Cost of goods sold, IT processing, servicing and support and
Selling, general and administration for Merchant and Total
for
the nine months ended March 31, 2025 have each increased
by $
0.5
million and $
0.2
million, respectively, as a result of the correction
discussed
in
Note
Segment
Adjusted
EBITDA
for
Merchant
and
Total
for
the
nine
months
ended
March
31,
2025
have
each
decreased by $
0.7
million as a result of the correction discussed in Note 1.
Cost of goods sold, IT
processing, servicing and support and
Selling, general and administration
for Merchant and Total
for the
nine months ended March 31, 2026
have each increased by $
0.2
million and $
0.06
million, respectively,
as a result of the correction,
as discussed in
Note 1, to
the amount included
in the captions
Cost of goods
sold, IT processing,
servicing and
support and Selling,
general and
administration for the
three months ended
September 30, 2025.
Segment Adjusted EBITDA
for Merchant
and Total
for
the nine months ended March 31, 2026 have each decreased by $
0.2
million as a result of the correction, as discussed in Note 1, to the
amount included in the caption Segment Adjusted EBITDA for
the three months ended September 30, 2025.
Selling,
general
and
administration
includes
human
capital-related
expenses
(including
base
salary
and
bonus),
IT-related
expenses
(including
software
licenses,
hardware
maintenance,
hosting,
and
communication
expenses),
professional
fees
(including
audit, legal,
consulting and
other fees),
lease and
utilities expenses,
the allowance
for credit
losses and
other operating
and support
expenses.
(2) Segment
Adjusted EBITDA
for the
nine months
ended March
31, 2026,
includes retrenchment
costs for
Merchant of
$
0.7
million (ZAR
12.4
million), Consumer of $
0.2
million (ZAR
2.9
million), and Enterprise of $
0.03
million (ZAR
0.3
million).
(3) Segment
Adjusted EBITDA
for the nine
months ended March
31, 2025,
includes retrenchment
and reorganization
costs for
Merchant of
$
0.7
million (ZAR
12.9
million), Consumer of
$
0.1
million (ZAR
1.5
million) and Enterprise
of $
million (ZAR
million).
The reconciliation of the reportable segments’ measures of profit or loss to income (loss) before income tax expense for the three
and nine months ended March 31, 2026 and 2025, is as follows:
Three months ended
Nine months ended
March 31,
March 31,
2026
2025
2026
2025
Reportable segments' measure of profit or loss
(A)
$
24,368
$
14,366
$
63,747
$
40,854
Operating loss: Group costs
(3,756)
(1,772)
(10,263)
(7,541)
Once-off costs
(2,553)
(2,306)
(3,067)
(4,599)
Interest adjustment
Unrealized (Loss) Gain FV for currency adjustments
()
()
Stock-based compensation charge adjustments
()
()
()
()
Depreciation and amortization
()
()
()
()
Loss on disposal of equity-accounted investments
()
()
Impairment loss
(1)
()
()
Change in fair value of equity securities
()
()
()
Other income
Loss on disposal of equity securities
()
Reversal of allowance for doubtful loan receivable
Interest income
Interest expense
(A)
()
()
()
()
Income (Loss) before income tax expense
(A)
$
$
()
$
$
()
(A) Reportable segments’ measure of profit or loss for the three and nine months ended
March 31, 2025, have decreased by $
0.2
million and $
0.7
million, respectively, as a result of the correction discussed in Note 1. Interest expense
for the three and nine months
ended March 31, 2025, have
increased by $
0.09
million and $
0.3
million, respectively,
as a result of the correction discussed
in Note
Net
loss
before
taxes
for
the
three
and
nine
months
ended
March
31,
2025,
have
decreased
by
$
0.9
million
and
$
0.9
million,
respectively, as a result of
the correction discussed in Note 1.
Reportable
segments’
measure
of
profit
or
loss
and
net
loss
before
taxes
for
the
nine
months
ended
March
31,
2026,
have
decreased by $
0.2
million and $
0.4
million, as a result of the correction, as discussed in Note 1, to the
amount included in the captions
Reportable
segments’
measure of
profit
or loss
and
net loss
before
taxes for
the three
months ended
September 30,
Interest
expense for the
nine months ended
March 31, 2026, has
increased by $
0.1
million, as a result
of the correction,
as discussed in Note
1, to the amount included in the caption Interest expense for the three
months ended September 30, 2025.
(1) Impairment loss excludes an amount of $
million which is included in the caption Once-off costs related to the exit of the
ATM
business.
49
Operating segments (continued)
The segment
information as
reviewed by
the chief operating
decision maker
does not include
a measure of
segment assets per
segment as all of
the significant assets are
used in the operations
of all, rather than
any one, of the
segments. The Company does
not
have dedicated assets
assigned to a
particular operating segment.
Accordingly,
it is not meaningful
to attempt an arbitrary
allocation
and segment asset allocation is therefore not presented.
Income tax
Income tax in interim periods
For the purposes of interim
financial reporting, the Company
determines the appropriate income
tax provision by first applying
the effective
tax rate
expected to
be applicable
for the
full fiscal
year to
ordinary income.
This amount
is then
adjusted for
the tax
effect
of
significant
unusual
items,
for
instance,
changes
in
tax
law,
valuation
allowances
and
non-deductible
transaction-related
expenses that
are reported
separately,
and have an
impact on the
tax charge.
The cumulative effect
of any change
in the enacted
tax
rate, if and when applicable, on the opening balance of deferred tax assets
and liabilities is also included in the tax charge as a discrete
event in the interim period in which the enactment date occurs.
For the three and
nine months ended March 31,
2026, the Company’s effective tax rate was
impacted by the tax
expense recorded
by the Company’s
profitable South African
operations,
non-taxable income
(including the fair
value adjustment on
equity securities
and other
income) and non
-deductible and
expenses (including
certain impairment
losses and
transaction-related expenditures).
The
Company’s income tax expense was impacted by a higher deferred tax benefit as a result of the reduction in the useful lives of certain
of the
Company’s
brand and
trademark intangible
assets which
has resulted
in an
increase in
amortization expense
during the
nine
months ended March 31, 2026.
For the three and
nine months ended March 31,
2025, the Company’s effective tax rate was
impacted by the tax
expense recorded
by the Company’s
profitable South African operations, non-deductible
expenses (including transaction-related expenditures),
the on-
going losses
incurred by
certain of
the Company’s
South African
businesses, a
valuation allowance
created related
to the fair
value
adjustment to MobiKwik,
and the associated valuation
allowances created related
to the deferred tax
assets recognized regarding
net
operating losses incurred by these entities.
Uncertain tax positions
As of March 31, 2026 and June 30, 2025, the
Company had
unrecognized tax benefits. The Company files income tax returns
mainly in South Africa, Botswana, Namibia and in the U.S. federal jurisdiction. As of March 31, 2026, the Company’s South African
subsidiaries are no longer subject to income tax examination by the South African Revenue Service
for periods before June 30, 2020.
The
Company
is
subject
to
income
tax
in
other
jurisdictions
outside
South
Africa,
none
of
which
are
individually
material
to
its
financial position, statement of cash flows, or results of operations.
Commitments and contingencies
Guarantees
The South African
Revenue Service and
certain of the
Company’s customers,
suppliers and other
business partners have
asked
the Company
to provide
them with
guarantees, including
standby letters
of credit,
issued by
South African
banks. The
Company is
required to procure these guarantees for these third parties to operate
its business.
RMB has
issued
guarantees
to
these
third
parties
amounting
to
ZAR
31.8
million
($
1.9
million,
translated
at
exchange
rates
applicable as of March 31, 2026) thereby utilizing part of the Company’s
short-term facilities.
Nedbank has
issued guarantees
to these
third parties
amounting to
ZAR
2.1
million ($
0.1
million, translated
at exchange
rates
applicable
as of
March 31,
- thereby
utilizing part
of the
Company’s
short-term
facilities. The
Company
pays commission
of
between
0.47
% per annum to
1.84
% per annum of the face
value of these guarantees and does
not recover any of the commission
from
third parties.
The Company
has not
recognized any
obligation related
to these
guarantees in
its consolidated
balance sheet
as of
March 31,
- The maximum
potential amount that
the Company could
pay under these
guarantees is ZAR
35.1
million ($
2.0
million, translated
at exchange rates applicable as
of March 31, 2026).
The Company has ceded
and pledged certain bank
accounts to Nedbank as
security
for the guarantees issued by them with an aggregate value of ZAR
2.1
million ($
0.1
million, translated at exchange rates applicable as
of March 31, 2026).
Contingencies
The
Company
is
subject
to
a
variety
of
insignificant
claims
and
suits
that
arise
from
time
to
time
in
the
ordinary
course
of
business. Management
currently believes
that the
resolution of
these other
matters, individually
or in
the aggregate,
will not
have a
m
aterial adverse impact on the Company’s
financial position, results of operations or cash flows.
50
Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year
ended June 30, 2025,
and the unaudited condensed consolidated financial statements and
the accompanying notes included in this Form 10-Q.
U.S. securities laws
require that when
we publish any
non-GAAP measures, we
disclose the reason
for using these
non-GAAP
measures
and
provide
reconciliations
to
the
most
directly
comparable
GAAP
measures.
We
discuss
why
we
consider
it
useful
to
present these non
-GAAP measures and
the material risks
and limitations of
these measures, as
well as a
reconciliation of these
non-
GAAP measures
to the
most directly
comparable GAAP
financial measure
below at
“—Results of
Operations—Use of
Non-GAAP
Measures” below.
ADP,
specifically
prepaid solutions. Leveraging MobileMart’s
existing direct integrations into multiple mobile network operators and suppliers, aims to
enhance the unit economics of Merchant and Enterprise’s
ADP product offering.
On March 27, 2026,
Lesaka amended its Working
Capital Facility agreement,
increasing the size of
its general banking facility
by ZAR
400 million
to approximately
ZAR 1.1
billion. The
amended
agreement
also includes
additional operating
subsidiaries as
borrowers, enabling
those entities
to access
the facility
directly and
better aligning
the financing
structure with
the Group’s
current
operating structure. The increased facility provides additional liquidity
and financial flexibility to support the Group’s
operations and
growth initiatives.
During
the
quarter,
the
Merchant
division
exited
its
ancillary
ATM
business
to
better
align
resources
with
the
core
cash
management offering and merchant lending ecosystem. The ATM
segment was determined to be non-core due to its limited financial
contribution and lack of operational synergy with the Merchant division’s
primary product suite. This strategic wind-down allows for
the reallocation of capital toward high-growth, data-driven merchant
services.
51
Merchant Division
We manage our Merchant operations through two distinct
channels: Community, which focuses on local, high-growth businesses
acquired
through direct,
face-to-face
sales and
rapid
conversion cycles;
and
Corporate, which
serves large
-scale organizations
and
franchises requiring customized, multi-product solutions through
a strategic, long-term sales process.
In the second
quarter of fiscal
2026, we introduced
a refined
reporting framework for
the Merchant division
to better represent the
primary
drivers
of
our
revenue
and
performance.
Developed
through
a
comprehensive
review
of
our
operational
analytics,
this
framework
aligns
our
Merchant
metrics, specifically
active
merchant
count
and
blended
ARPU with
our
Consumer
division
to provide a holistic view
of
our
ecosystem.
We
are
treating
this
updated
approach
as
a
baseline
for
future
comparisons
to
ensure
consistent reporting across our
channels; as such,
this transition may
result in non-material inconsistencies
with certain legacy metrics.
Our definition
of an active
merchant is any
merchant that has
made a voluntary
transaction (debit and/or
credit) within the
last
90 days. Previously, we reported
on a point
of presence basis,
which was more
focused on our
device estate. This
updated methodology
of an active merchant reflects the revenue generating
engagement of our entire Merchant base and more accurately
tracks our current
and future
monetization strategy
for the
division. Average
Revenue Per
User excludes
once-off
and non-recurring
revenue such
as
hardware and installation costs as well as revenue from international subsidiaries.
The
underlying
drivers
of
ARPU performance
are
based
on
cross-sell
product
penetration
and
the
individual
product
related
KPI’s are shown below.
Q3 2026
Q3 2025
Q3 2026 vs
Q3 2025
Merchant Division
Active Merchants
132,003
124,522
6%
Merchant ARPU
(1)
(ZAR per month)
1,760
1,901
(7%)
Product Penetration Rate: 2 or more products
46%
46%
1%
Product Penetration Rate: 3 or more products
7%
10%
(25%)
Merchant Division: Merchant Acquiring
Active Merchants
73,863
67,652
9%
Total Payment Volume
(“TPV”) (ZAR billions)
10.6
9.9
7%
Merchant Division: Software
Active Merchants
10,044
9,738
3%
Merchant Division: Cash Management
Active Merchants
4,881
4,844
1%
Total Payment Volume
(“TPV”) (ZAR billions)
27.9
27.5
2%
Merchant Division: Lending
Lending Origination (ZAR millions)
227
291
(22%)
Net Lending Portfolio Outstanding (ZAR millions)
427
412
4%
Merchant Division: Alternative Digital Products
Active Merchants
102,019
96,213
6%
Total Payment Volume
(“TPV”) (ZAR billions)
13.7
10.6
30%
Total Payment Volume
(“TPV”) - Prepaid Solutions (ZAR billions)
5.8
5.3
10%
Total Payment Volume
(“TPV”) - Supplier Enabled Payments (ZAR billions)
7.9
5.3
49%
Notes:
(1) ARPU is calculated on
a revenue per active merchant
basis based on a 3-month
rolling average for the quarter
ended March
31, 2026.
Notable developments within Merchant Division:
Within
Merchant Acquiring:
TPV attributable to Community segment increased to ZAR 3.8 billion for the third quarter of fiscal
2026 and 18% year-on-year growth.
Within
Cash:
Our
business
is
experiencing
differing
secular
trends
in
its
two
distinct
markets.
At
the
Corporate
level,
cash
continues
to
experience
a
downward
trend
of
growth
as
digital
payment
adoption
progressively
increases
in
this
sector.
At
the
Community segment, we continue to see growth for our cash management solutions, with cash TPV growth totalling to 52% year-on-
year.
The
Community
segment
now
accounts
for
20%
of
all
processed
cash
TPV
processed.
This
signals
rapid
growth
among
m
erchants within this segment aiming to digitize their cash holdings.
52
Within ADP: Core to our device placement strategy is the decision
to focus on quality business and optimizing our existing
fleet.
This can be seen through
the TPV growth which is primarily
driven by our Supplier Enabled
Payment product, delivering 49%
year-
on-year
growth.
This
enables
Community
Merchants
to
digitize
their
required
payments
to
suppliers
at
competitive
pricing
and
introduces them to the Lesaka Merchant ecosystem. Within the Prepaid Solutions product TPV processed delivered -1% year-on-year
growth.
We
continue
to
see sustained
margin
pressures
from
wholesale
providers
of
airtime,
resulting
in
a
contraction
of
Prepaid
Solutions TPV processed. Overall, our ADP TPV continues to grow above 20%
on a year-on-year basis.
Within Software: Continued focus on deploying Unity, our cloud-based point-of-sale (POS) software offering to existing and
new merchants. Unity has a lower monthly cost than on-premises solutions, the increase in client numbers was offset by a decrease in
average revenue per user,
resulting in core revenue
remaining flat. Migration to
Unity enables easier integration
of our Software and
Acquiring propositions into one holistic bundle. Approximately 17%
of our Software base currently use the Unity offering.
Within Lending: Lending originations decreased 22% year-over-year, primarily reflecting exceptionally high activity in the prior
year period which were driven by concentrated short-term sales initiatives that did
not recur in the current period.
Consumer Division
Our consumer base includes South African grant beneficiaries and other EasyPay
Payouts cardholders.
Our grant
beneficiary base
includes both
permanent and
non-permanent grant
beneficiaries. As
the division
has evolved,
both
sub-categories of consumers are
revenue generating and hence
the combined consumer base
metrics shown below are
most appropriate
to
measure
the
performance
of
the
division
financially
and
operationally.
Although
historically
we
have
shown
these
metrics
separately, it is maintained
that approximately 90% of the active consumer base are permanent grant beneficiaries.
Our definition of an active consumer is any EPE consumer that has made a voluntary transaction (debit and/or
credit) within the
last 90
days. Consumers
who may
be charged
a monthly
banking fee
but have
not made
a voluntary
transaction in
the last
90 days
would not be considered an active consumer.
The definition of
an active consumer
reflects the revenue
generating engagement of
our entire consumer
base and more
accurately
tracks our current
and future monetization
strategy for the division.
We
will continue to
show the EasyPay
Payouts separately
given
this follows a different monetization model.
The
underlying
drivers
of
ARPU performance
are
based
on
cross-sell
product
penetration
and
the
individual
product
related
KPI’s are shown below.
Q3 2026
Q3 2025
Q3 2026 vs
Q3 2025
Consumer Division
Active Consumers (millions)
2.04
1.72
19%
ARPU
(1)
(ZAR per month)
99
83
19%
Product Penetration Rate: 2 or more products
50%
47%
8%
Product Penetration Rate: 3 products
20%
17%
18%
Consumer Division: Transactional Accounts
Active Consumers (millions)
2.04
1.72
19%
Net Activations (thousands)
39
68
(42%)
Consumer Division: Lending
Number of Loans Originated (thousands)
349
316
10%
Lending Origination (ZAR millions)
856
641
33%
Lending Portfolio Outstanding (ZAR millions)
(2)
1,399
808
73%
Consumer Division: Insurance
Number of Insurance Policies Written (thousands)
75
55
37%
Active Insurance Policies (thousands)
704
527
34%
Gross Written Premium (ZAR millions)
146
105
38%
Consumer Division: EasyPay Payouts
Approximate number of active cardholders (thousands)
251
232
8%
Approximate load value for the period (ZAR millions)
183
154
19%
53
Notes:
(1) ARPU is calculated
on a revenue per
active consumer basis whereby
an active consumer
can be both a
permanent and non-
permanent grant. ARPU is a monthly figure based on a 3-month rolling
average for the quarter ended March 31, 2026.
(2) Gross loan book, before provisions.
Notable developments within Consumer Division:
Within Transactional
Accounts: Growth in active consumers
driven primarily by continued
product and technology innovation,
including
but
not withstanding
to Bonngwe (our
proprietary
CRM
engine).
These
improvements
to
sales consultant and
consumer
experiences have driven higher cross-sell penetration for both existing and new consumer
onboards. We
also continue to reassess our
distribution
footprint
and
have
progressed
well in
expanding
both
our
branches
and
community
service centers to
further
enhance growth
of our active consumer base.
Within
Lending:
We
have continued
to
see strong
growth for
our
lending
products with
our credit
loss
ratios
performance tracking below risk
expectations.
As
we
continue
to scale the
product,
we
have maintained our
provisioning
policy at 6.5%
of the outstanding
lending portfolio
and catered for
the changes
that have
been
implemented
in the
lending product
offering. This provisioning level is currently
under review and we expect
to implement a
change in provisioning
levels towards the end
of this fiscal year.
Within
Insurance: Our insurance product
delivered
the highest
gross written
premium
in a
single quarter,
since launching
the
business at
ZAR 146
million. Growth
has been
driven by
continued adoption
of our Bonngwe engine,
enabling sales
consultants to
cross-sell an
insurance policy
in an
efficient manner.
We
have recently
launched a
new funeral
insurance product
offering
to grant
beneficiary
recipients
outside
of
the
Lesaka
consumer
base. We
continue to
perform research
and
development
on
our
insurance
offerings to further develop our open-market
insurance strategy.
Enterprise Division
Our Enterprise
Division primarily
consists of
our ADP
offering
(which includes
prepaid solutions
and bill
payments) through
channels such as retailer distribution networks and digital
banking apps. Following the acquisition of Recharger on March 3,
2025, we
now report on the performance under the Utilities product.
The underlying drivers of
performance are primarily based
on TPV processed. Individual
product related KPI’s are shown below.
Q3 2026
Q3 2025
Q3 2026 vs
Q3 2025
Enterprise Division: ADP
Total Payment Volume
(“TPV”) (ZAR billions)
11.8
9.8
19%
Enterprise Division: Utilities
Active Meters (thousands)
368
332
11%
Total Payment Volume
(“TPV”) (ZAR millions)
(1)
477
404
18%
Notes:
(1)
Utilities TPV combines historical performance of the Recharger business
pre-acquisition. Recharger was acquired on March
3, 2025.
Notable developments within Enterprise Division:
Within ADP: We
continue to see
increased TPV for
bill payments driven
from increased usage from
our existing bank
channel
partners, which grew primarily from targeted marketing campaigns. Through the MobileMart transaction, we are able to secure direct
integrations into four primary mobile
network operators (“MNO”) in South
Africa providing access to preferential
rates and supplier
availability. Additionally,
we continue to see product expansion into our “4All” product, a multi-store
of value voucher which can be
redeemed at 40+
partners. Although in
early development, we
are seeing growth
in both volumes
and average transaction
values for
this product within ADP.
Within Utilities:
Through the consolidation
of product procurement
to ADP,
the bulk of
Merchant electricity
volumes are now
being processed via
the Enterprise division reducing
reliance on third-party
providers. We
expect to migrate all
other subproducts of
ADP volume offered in Merchant via the Enterprise division by
the end of this fiscal year.
54
Critical Accounting Policies
Our unaudited condensed consolidated
financial statements have been
prepared in accordance with U.S.
GAAP,
which requires
management
to
make
estimates
and
assumptions
about
future
events
that
affect
the
reported
amount
of
assets
and
liabilities
and
disclosure
of
contingent
assets and
liabilities.
As future
events
and
their
effects
cannot be
determined
with
absolute
certainty,
the
determination
of
estimates
requires
management’s
judgment
based
on
a
variety
of
assumptions
and
other
determinants
such
as
historical experience, current and expected market conditions and certain scientific evaluation techniques. Critical accounting policies
are those
that reflect
significant judgments
or uncertainties
and may
potentially result
in materially
different
results under
different
assumptions
and
conditions.
We
have
identified
the
following
critical
accounting
policies that
are
described
in
more
detail
in
our
Annual Report on Form 10-K for the year ended June 30, 2025:
- Recoverability of Goodwill;
- Intangible Assets Acquired Through Acquisitions;
- Revenue recognition – principal versus agent considerations; and
- Finance Loans Receivable and Allowance for Credit Losses.
Recent accounting pronouncements adopted
Refer to Note
1 to
our unaudited condensed
consolidated financial statements
for a full
description of accounting
pronouncements
adopted, including the dates of adoption and the effects on
our unaudited condensed consolidated financial statements.
Recent accounting pronouncements not yet adopted
as of March 31, 2026
Refer
to
Note
1
to
our
unaudited
condensed
consolidated
financial
statements
for
a
full
description
of
recent
accounting
pronouncements not yet adopted as
of March 31, 2026, including
the expected dates of adoption
and effects on our financial
condition,
results of operations and cash flows.
55
Currency Exchange Rate Information
Actual exchange rates
The actual exchange rates for and at the end of the periods presented were
as follows:
Table 1
Three months ended
Nine months ended
Year
ended
March 31,
March 31,
June 30,
2026
2025
2026
2025
2025
ZAR : $ average exchange rate
16.3674
18.5066
17.0463
18.1212
18.1644
Highest ZAR : $ rate during period
17.1588
19.1171
18.1650
19.1171
19.6350
Lowest ZAR : $ rate during period
15.7392
18.0985
15.7392
17.1144
17.1144
Rate at end of period
17.0568
18.3508
17.0568
18.3508
17.7554
Translation exchange
rates for financial reporting purposes
We are required
to translate our results of operations from ZAR to U.S. dollars on a monthly
basis. Thus, the average rates used
to translate this data for the three and nine months ended March 31,
2026
and 2025, vary slightly from the averages shown in the table
above.
Except
as
described
below,
the
translation
rates
we
use
in
presenting
our
results
of
operations
are
the
rates
shown
in
the
following table:
Three months ended
Nine months ended
Year
ended
Table 2
March 31,
March 31,
June 30,
2026
2025
2026
2025
2025
Income and expense items: $1 = ZAR
16.7685
18.4021
17.1282
18.0393
17.9031
Balance sheet items: $1 = ZAR
17.0568
18.3508
17.0568
18.3508
17.7554
We
have translated the
results of operations and
operating segment information
for the three and
nine months ended March
31,
2026
and 2025, provided
in the tables
below using the
actual average exchange rates
per month (i.e.
for each of
January 2026, February
2026,
and
March
2026
for
the
third
quarter
of
fiscal
between
the
USD
and
ZAR
in
order
to
reduce
the
reconciliation
of
information presented to our chief operating
decision maker. The impact of
using this method compared with the average rate for
the
quarter and year to date is not significant, however, it does result in minor differences.
We believe that presentation using the average
exchange
rates
per
month
compared
with
the
average
exchange
rate
per
quarter
and
year
to
date
improves
the
accuracy
of
the
information presented in our
external financial reporting and
leads to fewer
differences between our external reporting
measures which
are supplementally presented in ZAR, and our internal management
information, which is also presented in ZAR.
56
Results of Operations
The discussion
of our
consolidated overall
results of
operations is
based on
amounts as
reflected
in our
unaudited condensed
consolidated financial
statements which
are prepared
in accordance
with U.S.
GAAP.
We
analyze our
results of
operations both
in
U.S. dollars, as presented in the unaudited condensed consolidated
financial statements, and supplementally in ZAR, because ZAR is
the functional
currency of
the entities
which contribute
the majority
of our
results and
is the
currency in
which the
majority
of our
transactions
are
initially
incurred
and
measured.
Presentation
of our
reported
results
in ZAR
is a
non-GAAP
measure.
Due
to
the
significant impact of currency
fluctuations between the U.S.
dollar and ZAR on
our reported results and because
we use the U.S.
dollar
as our reporting
currency,
we believe that
the supplemental presentation
of our results
of operations in
ZAR is useful
to investors to
understand the changes in the underlying trends of our business.
Our
operating
segment
revenue
presented
in
“—Results
of
operations
by
operating
segment”
represents
total
revenue
per
operating segment before intercompany
eliminations. A reconciliation between
total operating segment revenue and
revenue, as well
as the reconciliation between our segment performance measure and net loss before tax (benefits) expense, is presented in our audited
consolidated financial statements
in Note 18 to
those statements. Our
chief operating decision maker
is our Executive Chairman
and
he
evaluates
segment
performance
based
on
segment
earnings
before
interest,
tax,
depreciation
and
amortization
(“EBITDA”),
adjusted for
items mentioned
in the
next sentence
(“Segment Adjusted
EBITDA”) for
each operating
segment. We
do not
allocate
once-off items (as defined below), stock-based compensation charges, depreciation and amortization, impairment of goodwill or other
intangible assets,
other items
(including gains
or losses
on disposal
of investments,
fair value
adjustments to
equity securi
ties, fair
value
adjustments
to
currency
options),
interest
income,
interest
expense,
income
tax
expense
or
loss
from
equity-accounted
investments
to our
reportable segments.
For fiscal
2025, we
included
an intercompany
interest expense
in our
Consumer Segment
Adjusted
EBITDA.
Once-off
items
represent
non-recurring
expense
items,
including
costs related
to
acquisitions
and
transactions
consummated or
ultimately not
pursued. The
Stock-based compensation
adjustments reflect
stock-based compensation
expense and
are both excluded from the calculation of Segment Adjusted EBITDA and
are therefore reported as reconciling items to reconcile the
reportable segments’ Segment Adjusted EBITDA to our loss before income
tax expense.
Group
Adjusted
EBITDA
represents
Segment
Adjusted
EBITDA
after
deducting
group
costs.
Refer
also
“Results
of
Operations—Use of Non-GAAP Measures” below.
In fiscal 2026 we closed
the acquisitions of Mobilemart and
Atom and have integrated
their businesses into ours. In fiscal
2025
we closed the
acquisitions of Adumo
and Recharger
and have integrated
their businesses into
ours. Our fiscal
2025 financial results
for the three and nine months ended March 31, 2025, includes Adumo
from October 1, 2024, and Recharger from March 3, 2025.
We
analyze our
business and
operations
in terms
of three
inter-related
but independent
operating segments:
(1) Merchant
(2)
Consumer and (3) Enterprise.
In addition, corporate activities
that are impracticable to
allocate directly to the
operating segments, as
well as any inter-segment eliminations, are included in Group costs. Inter-segment revenue eliminations are included
in Eliminations.
Third quarter of fiscal 2026 compared to third quarter
of fiscal 2025
The following
factors had
a significant
impact on
our results
of operations
during the
third quarter
of fiscal
2026 as
compared
with the same period in the prior year:
- Higher revenue:
Our revenues increased 13.4% in U.S. dollars
and increased by 0.2% in ZAR,
primarily due to the inclusion
of Recharger and Mobilemart,
as well as
higher transaction, insurance and
lending revenues in
Consumer,
which was partially
offset by lower prepaid airtime revenue;
- Operating
income
increase:
Operating
income
increased
primarily
due
to
strong
performance
by
Consumer
and
the
contribution from
Recharger
in Enterprise,
which was
partially offset
by an
increase in
amortization of
acquisition-related
intangible assets;
- Lower net interest
charge:
Net interest
charge decreased
to $3.3 million
(ZAR 54.2 million)
from $5.2 million
(ZAR 96.7
million) primarily due to
a lower interest expense
following lower interest rates
and the exclusion of
interest expense incurred
under our borrowing
arrangements related to
our Consumer lending
book in the
third quarter of
fiscal 2026
compared with
- On
a comparable
basis the
equivalent interest
expense related
to the
Consumer lending
book for
the third
quarter of
fiscal 2025 was included in interest expense;
and
- Foreign
exchange
movements:
The
U.S.
dollar
was
9%
weaker
against
the
ZAR
during
the
third
quarter
of
fiscal
2026
compared to the prior period, which positively impacted our U.S. dollar
reported results.
57
Consolidated overall results of operations
This discussion is based on the amounts prepared in accordance with U.S. GAAP.
The following tables show the changes in the items comprising our statements of operations,
both in U.S. dollars and in ZAR:
Table 3
In United States Dollars
Three months ended March 31,
2026
2025
%
$ ’000
$ ’000
change
Revenue
183,051
161,450
13%
Cost of goods sold, IT processing, servicing and support
(A)
123,924
117,163
6%
Selling, general and administration
(A)(1)
41,751
34,270
22%
Depreciation and amortization
10,543
8,429
25%
Impairment loss
2,604
nm
Transaction costs related to Adumo, Recharger
and Bank Zero acquisitions
and certain compensation costs
144
1,222
(88%)
Operating income
4,085
366
1,016%
Change in fair value of equity securities
(378)
(20,421)
(98%)
Reversal of allowance for doubtful loan receivable
1,500
nm
Interest income
1,154
645
79%
Interest expense
(A)
4,477
5,869
(24%)
Income (Loss) before income tax expense (benefit)
1,884
(25,279)
nm
Income tax expense (benefit)
1,503
(2,934)
nm
Net Income (loss) before earnings from equity-accounted investments
381
(22,345)
nm
Earnings from equity-accounted investments
56
12
367%
Net Income (loss)
437
(22,333)
nm
(Add) Less net (loss) income attributable to non-controlling interest
(115)
20
nm
Net Income (loss) attributable to us
552
(22,353)
nm
(A) In order to
correct the error discussed in
Note 1 to the unaudited
condensed consolidated statement of
operations, Cost of goods sold,
IT
processing, servicing and support increased
by $0.2 million, Selling, general
and administration expense increased
by $0.05 million, Operating
income decreased by
$0.2 million, Interest
expense increased by $0.09
million, and the subtotal
captions from Income
(Loss) before income
tax expense (benefit) to Net income (loss) attributable to Lesaka decreased by $0.3 million for the three months ended March 31, 2025.
(1) Selling, general and administration includes allowance for credit losses.
58
Table 4
In South African Rand
Three months ended March 31,
2026
2025
%
ZAR ’000
ZAR ’000
change
Revenue
2,994,536
2,987,226
0%
Cost of goods sold, IT processing, servicing and support
(A)
2,027,838
2,167,948
(6%)
Selling, general and administration
(A)(1)
683,095
633,810
8%
Depreciation and amortization
172,553
155,919
11%
Impairment loss
43,636
nm
Transaction costs related to Adumo, Recharger
and Bank Zero acquisitions
and certain compensation costs
2,401
22,361
(89%)
Operating income
65,013
7,188
804%
Change in fair value of equity securities
(6,043)
(373,784)
(98%)
Reversal of allowance for doubtful loan receivable
25,132
nm
Interest income
19,086
11,944
60%
Interest expense
(A)
73,288
108,639
(33%)
Income (Loss) before income tax expense (benefit)
29,900
(463,291)
nm
Income tax expense (benefit)
24,310
(53,650)
nm
Net Income (loss) before earnings from equity-accounted investments
5,590
(409,641)
nm
Earnings from equity-accounted investments
938
220
326%
Net Income (loss)
6,528
(409,421)
nm
(Add) Less net (loss) income attributable to non-controlling interest
(1,855)
369
nm
Net Income (loss) attributable to us
8,383
(409,790)
nm
(A) In order to
correct the error discussed in
Note 1 to the unaudited
condensed consolidated statement of
operations, Cost of goods sold,
IT
processing, servicing and
support increased by
ZAR 2.8 million,
Selling, general and
administration expense increased
by ZAR 1.0
million,
Operating income decreased by ZAR
3.7 million, Interest expense
increased by ZAR 1.7
million, and the subtotal
captions from Income (Loss)
before income
tax expense
(benefit) to
Net income
(loss) attributable
to Lesaka
decreased by
ZAR 5.5
million for
the three
months ended
March 31, 2025.
(1) Selling, general and administration includes allowance for credit losses.
Revenue increased
by $21.6
million (ZAR
7.3 million),
or 13.4%
(0.2%). The
increase was
primarily due
to the
inclusion of
Recharger and Mobilemart
,
the impact of an increase in
certain issuing fee base prices
year-over-year, and
transaction activity in our
issuing business,
and
an increase
in insurance
premiums
collected and
lending revenues
(including
interest) following
higher
loan
originations,
which was partially offset by the decrease in the volume of prepaid airtime sold.
Refer to discussion above at “—Recent
Developments”
for a description of key trends impacting our revenue this quarter.
Cost of
goods sold,
IT processing,
servicing and
support
increased by
$6.8 million
or 5.8%
in U.S.
dollars
and decreased
by
ZAR140.1
million or
6.5% in
ZAR. The
decrease in
ZAR is
primarily
due to
the decrease
in the
prepaid airtime
costs, which
was
partially offset by
an increase in lending
related expenditures (including
interest expense),
higher insurance-related claims
and third-
party transaction fees and the inclusion of Recharger
and Mobilemart.
Selling,
general
and
administration
expenses
increased
by
$7.5
million
(ZAR
49.3
million),
or
21.8%
(in
ZAR
7.8%).
The
increase
was primarily
due
to the
inclusion
of
Recharger;
higher
marketing
costs related
to the
Lesaka
rebrand,
an increase
in the
allowance for
credit losses
as a
result of
higher lending
activities by
Consumer and
Merchant,
higher consulting
fees, and
the year-
over-year impact of inflationary increases on certain expenses,
which was partially offset by lower stock-based compensation
charges.
Depreciation and amortization
expense increased by
$2.1 million (ZAR 16.6
million),
or 25.1% (10.7%). The
increase was due
to the
inclusion of
acquisition-related intangible
asset amortization
related to
intangible assets
identified pursuant
to the
Recharger
acquisition.
Impairment loss
for the
third quarter
of fiscal
2026 includes
an impairment
loss of
$1.5 million
(ZAR 25.6
million) related
to
right-of-use assets
recorded in
property,
plant and
equipment for
our existing
operating lease
arrangements
as certain
of our
leased
facilities will
no longer
be utilized
as originally
intended
as a
result of
the planned
transition to
our new
corporate head
office,
an
impairment loss of $0.7 million (ZAR 11.5
million) related to ATMs
recorded in property,
plant and equipment as a result of the exit
of
the
ATM
business,
and
an
impairment
loss
of
$0.4
million
(ZAR
6.5
million)
related
to
goodwill
allocated
to
our
Switchpay
reporting unit
within the Merchant
segment.
Refer to Notes
7 and 17
to our unaudited
condensed consolidation
financial statements
for additional information.
59
Transaction
costs
related
to
Adumo,
Recharger
and
Bank
Zero
acquisitions
and
certain
compensation
costs
includes
costs
incurred related
to the Recharger
and Bank Zero
acquisitions, and post-combination
compensation charges
recognized related to
the
Recharger
acquisition. We
did not
incur significant
transaction costs
during the
third quarter
of fiscal
- Refer
to Note
2 to
our
unaudited condensed consolidation financial statements for additional information.
Our operating
income margin
for the
third quarter
of fiscal
2026
and 2025
was 2.2%
and 0.2%,
respectively.
We
discuss the
components of operating income margin under “—Results of
operations by operating segment.”
We recorded a non-cash change in fair value of equity securities of $0.4
million during the third quarter of fiscal
2026, compared
to $20.4 million during the third quarter of fiscal 2025 related to
a fair value adjustment loss related to MobiKwik. Refer to Note
6 to
our unaudited condensed consolidation financial statements for additional
information.
Interest on
surplus cash
was $1.2 million
(ZAR 19.1
million) compared
with $0.6
million (ZAR
11.9 million)
during the
third
quarter of fiscal 2025, due to increased cash balances.
Interest expense decreased to $4.5 million (ZAR 73.3 million) from $5.9
million (ZAR 108.6 million). In ZAR, the decrease was
primarily due
to lower interest
rates and the
exclusion of interest
expense incurred
under our borrowing
arrangements related to
our
Consumer lending book in the third quarter of fiscal 2026 compared with 2025.
On a comparable basis the equivalent interest expense
related to the Consumer lending book for the third quarter of fiscal 2025
was included in interest expense.
Third quarter of fiscal 2026
income tax expense was $1.5 million
(ZAR 24.3 million) compared
to income tax benefit of $(2.9)
million (ZAR (53.7)
million) in fiscal
Our effective
tax rate for
fiscal 2026
was impacted by
the tax expense
recorded by our
profitable South
African operations
and non-deductible
expenses (including
transaction-related expenditures
and the
impairment of
goodwill).
Our
effective
tax rate
for
fiscal
2025
was impacted
by
deferred
tax
impact
related
to
the fair
value
adjustment
to
our equity
securities, the
tax expense
recorded
by our
profitable South
African operations,
a deferred
tax benefit
related to
acquisition-related
intangible asset amortization, non-deductible expenses (in
transaction-related expenses), the on-going losses incurred by
certain of our
South African businesses, a
valuation allowance created related
to the fair
value adjustment to MobiKwik,
and the associated valuation
allowances created related to the deferred tax assets recognized regarding
net operating losses incurred by these entities.
Results of operations by operating segment
The composition of revenue and the contributions of our business activities to operating
loss are illustrated below:
Table 5
In United States Dollars
Three months ended March 31,
2026
2025
$ ’000
% of total
$ ’000
% of total
% change
Operating Segment
Consolidated revenue:
Merchant
127,078
69%
128,781
80%
(1%)
Consumer
38,323
21%
24,096
15%
59%
Enterprise
18,978
10%
9,444
6%
101%
Subtotal: Operating segments
184,379
100%
162,321
101%
14%
Eliminations
(1,328)
(871)
(1%)
52%
Total
consolidated revenue
183,051
100%
161,450
100%
13%
Group Adjusted EBITDA:
Merchant
(A)(1)
9,228
45%
7,900
63%
17%
Consumer
(1)
13,015
63%
6,333
50%
106%
Enterprise
(1)
2,125
10%
133
1%
1,498%
Group costs
(3,756)
(18%)
(1,772)
(14%)
112%
Group Adjusted EBITDA (non-GAAP)
(A)(2)
20,612
100%
12,594
100%
64%
(A) In
order
to correct
the error
discussed
in Note
1
to the
unaudited condensed
consolidated statement
of
operations, Merchant
Segment
Adjusted EBITDA and Group Adjusted EBITDA decreased by $0.2 million for the three months ended March 31, 2025.
(1) Segment Adjusted EBITDA
for the three months ended
March 31, 2026, includes retrenchment
costs of $0.3 million
for Merchant, $0.02
million for
Consumer, and
$0.1 million for
Enterprise for the
third quarter of
fiscal 2026. Segment
Adjusted EBITDA for
the three months
ended
March 31, 2025, includes reorganization and retrenchment costs of $0.7 million for Merchant and Enterprise of $0.3 million.
(2)
Group
Adjusted
EBITDA
is
a
non-GAAP
measure,
refer
to
reconciliation
below
at
“—Results
of
Operations—Use
of
Non-GAAP
Measures”.
60
Table 6
In South African Rand
Three months ended March 31,
2026
2025
Operating Segment
ZAR ’000
% of total
ZAR ’000
% of total
% change
Consolidated revenue:
Merchant
2,079,232
69%
2,382,982
80%
(13%)
Consumer
626,514
21%
445,845
15%
41%
Enterprise
310,481
10%
174,565
6%
78%
Subtotal: Operating segments
3,016,227
100%
3,003,392
101%
0%
Eliminations
(21,691)
(16,166)
(1%)
34%
Total
consolidated revenue
2,994,536
100%
2,987,226
100%
0%
Group Adjusted EBITDA:
Merchant
(A)(1)
151,116
45%
146,121
63%
3%
Consumer
(1)
212,537
63%
117,144
50%
81%
Enterprise
(1)
35,047
10%
2,384
1%
1,370%
Group costs
(61,629)
(18%)
(32,623)
(14%)
89%
Group Adjusted EBITDA (non-GAAP)
(A)(2)
337,071
100%
233,026
100%
45%
(A) In
order
to correct
the error
discussed
in Note
1
to the
unaudited condensed
consolidated statement
of
operations, Merchant
Segment
Adjusted EBITDA and Group Adjusted EBITDA decreased by ZAR 3.7 million for the three months ended March 31, 2025.
(1) Segment
Adjusted EBITDA for
the three months
ended March 31,
2026, includes
retrenchment costs of
ZAR 5.0
million for
Merchant,
ZAR 0.3 million
for Consumer,
and ZAR 1.1 million
for Enterprise for the
third quarter of
fiscal 2026. Segment Adjusted
EBITDA Merchant and
Segment
Adjusted
EBITDA
Merchant
include
reorganization
and
retrenchment
costs
of
ZAR
12.9
million
and
Enterprise
of
ZAR
5.4
million,
respectively, for the third quarter of fiscal 2025.
(2)
Group
Adjusted
EBITDA
is
a
non-GAAP
measure,
refer
to
reconciliation
below
at
“—Results
of
Operations—Use
of
Non-GAAP
Measures”.
Merchant
Segment revenue
decreased primarily
due to lower
ADP revenue earned,
including from lower
prepaid airtime volumes
sold.
While
overall
ADP volumes
increased,
prepaid
airtime revenue
contributes
a
significant
portion
of our
overall
ADP revenue,
and
therefore
a
drop
in
the
volume
of
the
prepaid
airtime
revenue
impacts
our
reported
revenue
generated.
The
increase
in
Segment
Adjusted EBITDA
primarily related
to a
lower employment
-related expenditures,
lower IT
processing, servicing
and support
costs,
and lower allowance for credit losses.
Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for the third quarter of
fiscal 2026
and 2025 was 7.3% and 6.1%, respectively.
Consumer
Segment revenue
increased primarily
due to
higher transaction
fees generated
from the
higher EPE
account holders
base, the
impact
of
an
increase
in
certain
issuing
fee
base
prices
year-over-year,
and
transaction
activity
in
our
issuing
business,
insurance
premiums collected,
lending revenues following an increase
in loan originations.
This increase in revenue
has translated into improved
profitability,
which was
partially offset
by a higher
allowance for
credit losses following
an increase
in loan originations
during the
quarter,
higher insurance-related claims, interest expense (of approximately ZAR 24.1 million; Q3 2025: ZAR 16.5 million ) incurred
to fund our lending book and the year-over-year impact of inflationary increases on
certain expenses.
Our Segment Adjusted EBITDA margin for the
third quarter of fiscal 2026 and 2025 was 34.0%
and 26.3%, respectively.
Enterprise
Segment revenue and Segment Adjusted EBITDA increased primarily
due to the inclusion of Recharger.
Our Segment Adjusted (loss) EBITDA margin for the
third quarter of fiscal 2026 and 2025 was 11.2% and 1.4%, respectively.
Group costs
Our group
costs primarily
include employee
related costs
in relation
to employees
specifically hired
for group
roles and
costs
related
directly
to
managing
the
US-listed
entity;
expenditures
related
to
compliance
with
the
Sarbanes-Oxley
Act
of
2002;
non-
employee directors’ fees; legal fees; group and US-listed related audit
fees; and directors’ and officers’ insurance premiums.
Our group
costs for
the third
quarter
of fiscal
2026
increased compared
with the
prior period
due to
higher employee
related
costs, consulting fees and compliance related expenditure.
61
Year
to date fiscal 2026 compared to year to date fiscal 2025
The following factors had
a significant impact on our results
of operations during year to
date fiscal 2026 as compared
with the
same period in the prior year:
- Higher
revenue:
Our
revenues
increased
by
8.5%
in
U.S.
dollars
and
increased
by
2.0%
in
ZAR,
primarily
due
to
the
inclusion of Adumo, Recharger
and Mobilemart,
an increase in value-added services
activity in Merchant, as
well as higher
transaction, insurance and lending revenues in Consumer,
which was partially offset by lower prepaid airtime revenue;
- Operating
income
increase:
Operating
income
increased
primarily
due
to
a
strong
performance
by
Consumer,
the
contribution
from
Adumo
for
the
entire
period
in
fiscal
2026
compared
with
six
months
in
fiscal
2025
and
from
the
contribution from Recharger, which was partially offset by an
increase in amortization of acquisition-related intangible
assets
related to change of useful lives of certain brand intangibles assets.
- Non-cash fair value adjustment related
to equity securities in fiscal 2025:
We recorded
a non-cash fair value loss of $54.2
million during the year to date fiscal 2025
related to MobiKwik;
- Lower net
interest charge:
Net interest
charge
decreased to
$11.9
million (ZAR
203.0 million)
from $15.3
million (ZAR
277.4 million) primarily
due to a lower
interest expense following
lower interest rates and
the exclusion of interest
expense
incurred under our borrowing arrangements related to our Consumer lending book in year to date fiscal 2026 compared with
- On a comparable basis the equivalent interest expense related to the
Consumer lending book for the year to date fiscal
2025 was included in interest expense;
and
- Foreign exchange
movements:
The U.S. dollar
was 5% weaker
against the ZAR
during year to
date fiscal 2026
compared
to the prior period, which positively impacted our U.S. dollar reported
results.
Consolidated overall results of operations
This discussion is based on the amounts prepared in accordance with U.S. GAAP.
The following tables show the changes in the items comprising our statements of operations,
both in U.S. dollars and in ZAR:
Table 7
In United States Dollars
Nine months ended March 31,
2026
2025
%
$ ’000
$ ’000
change
Revenue
533,233
491,234
9%
Cost of goods sold, IT processing, servicing and support
(A)
365,238
367,104
(1%)
Selling, general and administration
(A)(1)
121,729
97,384
25%
Depreciation and amortization
37,005
22,928
61%
Impairment loss
2,604
nm
Transaction costs related to Adumo, Recharger
and Bank Zero acquisitions
and certain compensation costs
285
3,174
(91%)
Operating income
6,372
644
889%
Change in fair value of equity securities
2,593
(54,152)
nm
Other income
3,883
nm
Loss on impairment or disposal of equity-accounted investment
584
161
263%
Reversal of allowance for doubtful loan receivable
1,500
nm
Loss on disposal of equity securities
730
nm
Interest income
2,201
1,952
13%
Interest expense
(A)
14,081
17,251
(18%)
Income (Loss) before income tax expense (benefit)
1,154
(68,968)
nm
Income tax expense (benefit)
2,027
(9,268)
nm
Net loss before earnings from equity-accounted investments
(873)
(59,700)
(99%)
Earnings from equity-accounted investments
166
89
87%
Net loss
(707)
(59,611)
(99%)
(Add) Less net (loss) income attributable to non-controlling interest
(246)
48
nm
Net loss attributable to us
(461)
(59,659)
(99%)
(A) In order
to correct the error
discussed in Note 1
to the unaudited condensed
consolidated statement of operations,
Cost of goods sold,
IT
processing, servicing and support
increased by $0.5 million,
Selling, general and
administration expense increased
by $0.2 million, Operating
income
decreased by
$0.7 million,
Interest expense
increased by
$0.3 million,
and the
subtotal captions
from Income
(Loss) before
income tax
expense
(benefit) to Net loss attributable to Lesaka decreased by $0.9 million for the nine months ended March 31, 2025.
62
Cost of goods
sold, IT processing, servicing
and support increased by
$0.2 million, Selling, general
and administration expense
increased by
$0.06 million, Operating income decreased
by $0.2 million, Interest expense increased
by $0.1 million, and the subtotal
captions from Income (Loss)
before income tax expense
(benefit) to Net loss
attributable to Lesaka decreased
by $0.4 million for
the nine months ended
March 31, 2026, to
correct
the error discussed
in Note 1
to the unaudited
condensed consolidated statement
of operations as
a result of
the correction to
amounts reported for
the three months ended September 30, 2025.
(1) Selling, general and administration includes allowance for credit losses.
Table 8
In South African Rand
Nine months ended March 31,
2026
2025
%
ZAR ’000
ZAR ’000
change
Revenue
9,076,273
8,899,861
2%
Cost of goods sold, IT processing, servicing and support
(A)
6,219,138
6,649,460
(6%)
Selling, general and administration
(A)(1)
2,072,014
1,764,897
17%
Depreciation and amortization
632,092
415,665
52%
Impairment loss
43,636
nm
Transaction costs related to Adumo, Recharger
and Bank Zero acquisitions
and certain compensation costs
4,968
56,809
(91%)
Operating income
104,425
13,030
701%
Change in fair value of equity securities
43,957
(988,494)
nm
Other income
65,353
nm
Loss on impairment or disposal of equity-accounted investment
10,342
2,886
258%
Reversal of allowance for doubtful loan receivable
25,132
nm
Loss on disposal of equity securities
12,286
nm
Interest income
37,278
35,347
5%
Interest expense
(A)
240,274
312,720
(23%)
Income (Loss) before income tax expense (benefit)
13,243
(1,255,723)
nm
Income tax expense (benefit)
33,244
(169,202)
nm
Net loss before earnings from equity-accounted investments
(20,001)
(1,086,521)
(98%)
Earnings from equity-accounted investments
2,789
1,586
76%
Net loss
(17,212)
(1,084,935)
(98%)
(Add) Less net (loss) income attributable to non-controlling interest
(4,155)
865
nm
Net loss attributable to us
(13,057)
(1,085,800)
(99%)
(A) In order
to correct the error
discussed in Note 1
to the unaudited condensed
consolidated statement of operations,
Cost of goods sold,
IT
processing, servicing and
support increased
by ZAR 8.8
million, Selling, general
and administration expense
increased by ZAR
3.1 million, Operating
income decreased by ZAR 11.9 million, Interest expense increased by
ZAR 4.9 million, and the subtotal captions from
Income (Loss) before income
tax expense (benefit) to Net loss attributable to Lesaka decreased by ZAR 16.7 million for the three months ended March 31, 2025.
(A)
Cost
of
goods
sold,
IT
processing,
servicing
and
support
increased
by
ZAR
3.2
million,
Selling,
general
and
administration
expense
increased by
ZAR 1.1
million, Operating
income decreased
by ZAR
4.4 million,
Interest expense increased
by ZAR
2.0 million,
and the
subtotal
captions from Income (Loss)
before income tax expense
(benefit) to Net
loss attributable to Lesaka
decreased by ZAR
6.4 million for the
nine months
ended March
31, 2026,
to correct the
error discussed
in Note
1 to the
unaudited condensed
consolidated statement of
operations as a
result of
the
correction to amounts reported for the three months ended September 30, 2025.
(1) Selling, general and administration includes allowance for credit losses.
Revenue increased
by $42.0
million (ZAR
176.4 million),
or 8.5%
(in ZAR,
2.0%), primarily
due to
the inclusion
of Adumo,
Recharger,
and Mobilemart, an increase in the volume of value-added services provided
(Pinless Airtime and gaming), an increase in
certain issuing
fee base
prices and
transaction activity
in our issuing
business, and
an increase in
insurance premiums
collected and
lending revenues following higher loan originations, which was partially
offset by fewer Pinned Airtime sales.
Cost of goods sold, IT processing, servicing
and support decreased by $1.9 million (ZAR 430.3
million) or 0.5% (in ZAR 6.5%),
primarily due to the decrease in Pinned Airtime sales, which was partially offset by the inclusion of Adumo, higher commissions paid
related to ADP revenue generated, and higher insurance-related claims and
third-party transaction fees.
Selling, general
and administration
expenses increased
by $24.3
million (ZAR
307.1 million),
or 25.0%
(in ZAR 17.4%).
The
increase was
primarily due
to the
inclusion of
Adumo and
Recharger,
higher marketing
costs related
to the
Lesaka rebrand,
higher
employee-related expenses
(including annual
bonuses and
annual salary
increases), consulting
fees, audit
fees, and
travel expenses,
and
the
year-over-year
impact
of
inflationary
increases
on
certain
expenses,
which
was
partially
offset
by
lower
stock-based
compensation charges.
63
Depreciation and
amortization expense
increased by
$14.1 million
(ZAR 216.4
million), or
61.4% (52.1%).
The increase
was
due to
the change
to a
shorter useful
life for
certain of
our brand
and trademark
intangible assets
(refer to
Note 7),
the inclusion
of
acquisition-related
intangible
asset
amortization
related
to
intangible
assets
identified
pursuant
to
the
Adumo
and
Recharger
acquisitions and an increase in depreciation expense related to additional POS devices
deployed.
Impairment loss for year
to date fiscal 2026 includes
an impairment loss of
$1.5 million (ZAR 25.6
million) related to right-of-
use assets
recorded in
property,
plant and
equipment for
our existing
operating lease
arrangements as
certain of our
leased facilities
will no longer
be utilized as originally
intended as a result
of the planned
transition to our new
corporate head office,
an impairment
loss of $0.7 million (ZAR 11.5 million) related to ATMs
recorded in property, plant and equipment
as a result of the exit of the ATM
business,
and an impairment loss
of $0.4 million (ZAR
6.5 million) related to
goodwill allocated to our
Switchpay reporting unit within
the
Merchant
segment.
Refer
to
Notes
7
and
17
to
our
unaudited
condensed
consolidation
financial
statements
for
additional
information.
Transaction costs related to Adumo, Recharger
and Bank Zero acquisitions and certain compensation costs includes fees paid to
external service
providers associated
with legal
and advisory
services procured
to close
the Adumo
transaction on
October 1,
2024,
the Recharger transaction in March 2025, and
ongoing transaction fees related to
our proposed acquisition of Bank
Zero. Refer to Note
2 to our unaudited condensed consolidation financial statements for additional
information.
Our operating income margin for year
to date fiscal 2026
and 2025 was 1.2%
and 0.1%, respectively. We discuss the components
of operating loss margin under “—Results of operations by
operating segment.”
We
recorded an
increase in
the fair
value of
Cell C
of $3.0
million (ZAR
50 million)
during year
to date
fiscal 2026
(refer to
Note 5 for additional information), partially offset by a non-cash change in fair value of equity securities of $0.4 million. We recorded
a non-cash change
in fair value of
equity securities of $54.2
million during year
to date fiscal 2025
related to a fair
value adjustment
loss related to MobiKwik. There were no changes in the fair value
of Cell C during the year to date fiscal 2025.
In December 2025, we
determined that the liquidation
of CPS is at an advanced
stage and released an accrual
raised at the time
of deconsolidation of $3.9 million (ZAR 65.4 million) to Other income.
Interest on surplus cash increased to $2.2 million (ZAR 37.3 million) from $2.0 million (ZAR 35.3 million), due to the inclusion
of Adumo and increased cash balances,
which was partially offset by lower interest rates.
Interest expense
decreased to
$14.1
million (ZAR
240.3
million) from
$17.3 million
(ZAR 312.7
million).
The decrease
was
primarily due
to lower interest
rates and the
exclusion of interest
expense incurred
under our borrowing
arrangements related to
our
Consumer lending book in year to date
fiscal 2026 compared with 2025. On a comparable
basis the equivalent interest expense related
to the Consumer lending book for the year to date fiscal 2025 was included
in interest expense.
Fiscal 2026
income tax expense was $2.0 million (ZAR 33.2 million) compared to an income tax benefit of $(9.3) million (ZAR
(169.2) million) in fiscal 2025. Our effective tax
rate for fiscal 2026 was impacted by
the tax expense recorded by our
profitable South
African operations,
non-taxable income
(primarily related
to the
disposal of
Cell C and
other income)
and non-deductible
expenses
(including
transaction-related
expenditures
and
the goodwill
impairment).
The income
tax expense
was also
impacted by
a higher
deferred tax
benefit as a
result of
the reduction
in the useful
lives of certain
of our
brand and
trademark intangible
assets which has
resulted in an increase in amortization expense during fiscal 2026.
Our
effective
tax rate
for
fiscal 2025
was impacted
by deferred
tax
impact
related
to the
fair
value
adjustment
to our
equity
securities, the
tax expense
recorded
by our
profitable South
African operations,
a deferred
tax benefit
related to
acquisition-related
intangible asset amortization,
non-deductible expenses (in
transaction-related expenses), a
valuation allowance
created related to the
fair
value
adjustment
to
MobiKwik,
the
on-going
losses
incurred
by
certain
of
our
South
African
businesses
and
the
associated
valuation allowances created related to the deferred tax assets recognized regarding
net operating losses incurred by these entities.
64
Results of operations by operating segment
The composition of revenue and the contributions of our business activities to operating
loss are illustrated below:
Table 9
In United States Dollars
Nine months ended March 31,
2026
2025
Operating Segment
$ ’000
% of total
$ ’000
% of total
% change
Consolidated revenue:
Merchant
385,947
73%
397,642
81%
(3%)
Consumer
102,017
19%
68,097
14%
50%
Enterprise
48,627
9%
30,259
6%
61%
Subtotal: Operating segments
536,591
101%
495,998
101%
8%
Eliminations
(3,358)
(1%)
(4,764)
(1%)
(30%)
Total
consolidated revenue
533,233
100%
491,234
100%
9%
Group Adjusted EBITDA:
Merchant
(A)(1)
28,112
53%
25,319
76%
11%
Consumer
(1)
30,818
58%
15,071
45%
104%
Enterprise
(1)
4,817
9%
464
1%
938%
Group costs
(10,263)
(20%)
(7,541)
(22%)
36%
Group Adjusted EBITDA (non-
GAAP)
(A)(2)
53,484
100%
33,313
100%
61%
(A) In
order
to correct
the error
discussed
in Note
1
to the
unaudited condensed
consolidated statement
of
operations, Merchant
Segment
Adjusted EBITDA and Group Adjusted EBITDA
decreased by $0.7 million for the
nine months ended March 31, 2025.
Merchant Segment Adjusted
EBITDA and Group Adjusted EBITDA decreased by $0.2 million for the nine months ended March 31, 2026, to correct the error discussed in Note
1
to the
unaudited
condensed consolidated
statement of
operations as
a result
of
the correction
to amounts
reported for
the three
months
ended
September 30, 2025.
(1) Segment
Adjusted EBITDA
for the
nine months
ended March
31, 2026,
includes retrenchment
costs for
Merchant of
$0.7 million,
for
Consumer of
$0.2 million,
and for
Enterprise of
$0.03 million.
Segment Adjusted
EBITDA for
the nine
months ended
March 31,
2025, includes
reorganization and retrenchment costs for Merchant of $0.7 million, Enterprise of $0.3 million, and Consumer of $0.1 million.
(2)
Group
Adjusted
EBITDA
is
a
non-GAAP
measure,
refer
to
reconciliation
below
at
“—Results
of
Operations—Use
of
Non-GAAP
Measures”.
Table 10
In South African Rand
Nine months ended March 31,
2026
2025
Operating Segment
ZAR ’000
% of total
ZAR ’000
% of total
% change
Consolidated revenue:
Merchant
6,575,270
73%
7,203,565
81%
(9%)
Consumer
1,732,255
19%
1,234,595
14%
40%
Enterprise
825,612
9%
548,408
6%
51%
Subtotal: Operating segments
9,133,137
101%
8,986,568
101%
2%
Eliminations
(56,864)
(1%)
(86,707)
(1%)
(34%)
Total
consolidated revenue
9,076,273
100%
8,899,861
100%
2%
Group Adjusted EBITDA:
Merchant
(A)(1)
479,169
53%
458,619
76%
4%
Consumer
(1)
521,689
57%
273,313
45%
91%
Enterprise
(1)
81,770
9%
8,415
1%
872%
Group costs
(174,895)
(19%)
(135,542)
(22%)
29%
Group Adjusted EBITDA (non-
GAAP)
(A)(2)
907,733
100%
604,805
100%
50%
(A) In
order to
correct the
error discussed
in Note
1 to
the unaudited
condensed consolidated
statement of
operations, Merchant
Segment
Adjusted EBITDA
and Group
Adjusted EBITDA
decreased by
ZAR 11.9
million for
the nine
months ended
March 31,
- Merchant
Segment
Adjusted EBITDA
and Group
Adjusted EBITDA
decreased by
ZAR 4.4
million for
the nine
months ended
March 31,
2026, to
correct the
error
discussed in Note
1 to the unaudited
condensed consolidated statement of
operations as a
result of the correction
to amounts reported
for the three
months ended September 30, 2025.
(1) Segment Adjusted EBITDA for the nine
months ended March 31, 2026, includes
retrenchment costs for Merchant of ZAR
12.4 million, for
Consumer of
ZAR 2.9
million, and
for Enterprise
of ZAR
0.3
million. Segment
Adjusted EBITDA
for the
nine months
ended March
31, 2025,
i
ncludes reorganization and retrenchment costs
for Merchant of ZAR
12.9 million, Enterprise of
ZAR 5.6 million, and
Consumer of ZAR 1.5
million.
65
(2)
Group
Adjusted
EBITDA
is
a
non-GAAP
measure,
refer
to
reconciliation
below
at
“—Results
of
Operations—Use
of
Non-GAAP
Measures”.
Merchant
Segment revenue primarily
decreased due to
fewer prepaid airtime sales
which was partially
offset by the
inclusion of Adumo,
a higher volume of ADP provided (Pinless Airtime and gaming). In ZAR,
the increase in Segment Adjusted EBITDA is primarily due
to the inclusion
of Adumo for the
entire period compared with
the prior period, which
was partially offset
by higher operating expenses
incurred.
Our Segment Adjusted EBITDA margin for year to
date fiscal 2026 and 2025 was 7.3% and 6.4%, respectively.
Consumer
Segment
revenue
increased
primarily
due
to higher
transaction
fees generated
from the
higher
EPE
account holders
base,
an
increase in certain issuing
fee base prices and transaction
activity in our issuing business,
insurance premiums collected, and
lending
revenues following
an increase
in loan
originations.
This increase
in revenue
has translated
into improved
profitability,
which was
partially offset
by a
higher allowance
for credit
losses following
an increase
in loan
originations in
March 2025,
higher insurance-
related claims,
interest expense
(of approximately
ZAR 65.1
million; F2025:
ZAR 45.0
million) incurred
to fund
our lending
book,
and the year-over-year impact of
inflationary increases on certain expenses.
Our Segment Adjusted EBITDA margin for year to
date fiscal 2026 and 2025 was 30.2% and 22.1%, respectively.
Enterprise
Segment
revenue
increased
primarily
due
to
the
inclusion of
Recharger
and
Mobilemart.
In
ZAR,
the
significant
increase
in
Segment Adjusted EBITDA is primarily due to the inclusion of Recharger
.
Our Segment Adjusted EBITDA margin for year to
date fiscal 2026 and 2025 was 9.9% and 1.5%, respectively.
Group costs
Our group costs for fiscal 2026 increased compared with the prior period due to higher
consulting fees, higher employee related
costs, and higher compliance related expenditure.
Use of Non-GAAP Measures
U.S. securities laws
require that when
we publish any
non-GAAP measures, we
disclose the reason
for using these
non-GAAP
measures
and
provide
reconciliations
to
the
most
directly
comparable
U.S.
GAAP measures.
The
presentation
of
Group Adjusted
EBITDA is a non-GAAP measure. We provide this non-GAAP measure to enhance our evaluation and understanding of our financial
performance
and
trends.
We
believe
that
this
measure
is
helpful
to
users
of
our
financial
information
understand
key
operating
performance and
trends in our
business because
it excludes certain
non-cash expenses
(including depreciation
and amortization
and
stock-based compensation charges) and income
and expenses that we consider once-off in nature.
Non-GAAP Measures
Group
Adjusted
EBITDA
is
earnings
before
interest,
tax,
depreciation
and
amortization
(“EBITDA”),
adjusted
for
non-
operational
transactions
(including
loss
on
impairment/
disposal
of
equity-accounted
investments,
change
in
fair
value
of
equity
securities), (earnings) loss from equity-accounted investments, stock-based compensation charges and once-off items. We included an
intercompany interest expense in our Consumer Segment Adjusted EBITDA for three and nine months ended March 31, 202
- Once-
off items represents non-recurring income and expense items, including costs related to acquisitions and transactions consummated or
ultimately not pursued.
66
The
table
below
presents
the reconciliation
between
U.S. GAAP
net
income
(loss)
attributable
to
Lesaka to
Group Adjusted
EBITDA:
Table 11
Three months ended
March 31,
Nine months ended
March 31,
2026
2025
2026
2025
$ ’000
$ ’000
$ ’000
$ ’000
Income (Loss) attributable to Lesaka - GAAP
552
(22,353)
(461)
(59,659)
(Add) Less net (loss) income attributable to non-controlling interest
115
(20)
246
(48)
Net Income (loss)
437
(22,333)
(707)
(59,611)
Earnings from equity accounted investments
(56)
(12)
(166)
(89)
Net Income (loss) before earnings from equity-accounted investments
381
(22,345)
(873)
(59,700)
Income tax expense (benefit)
1,503
(2,934)
2,027
(9,268)
Income (Loss) before income tax expense
1,884
(25,279)
1,154
(68,968)
Interest expense
(A)
4,477
5,869
14,081
17,251
Interest income
(1,154)
(645)
(2,201)
(1,952)
Reversal of allowance for doubtful loan receivable
(1,500)
(1,500)
Loss on disposal of equity securities
730
Other income
(3,883)
Net loss on impairment/ disposal of equity-accounted investment
584
161
Change in fair value of equity securities
378
20,421
(2,593)
54,152
Operating income
4,085
366
6,372
644
PPA amortization
(amortization of acquired intangible assets)
6,044
4,974
24,659
13,588
Depreciation and amortization
4,499
3,455
12,346
9,340
Impairments
(1)
1,916
1,916
Stock-based compensation charges
1,334
2,497
5,140
7,518
Interest adjustment
(890)
(2,478)
Once-off items
2,553
2,306
3,067
4,599
Unrealized gain (loss) FV for currency adjustments
181
(114)
(16)
102
Group Adjusted EBITDA - Non-GAAP
(A)
20,612
12,594
53,484
33,313
(A) Loss attributable to
Lesaka – GAAP
and all subtotal
captions to Loss
before income tax
expense for the
three and nine
months
ended March
31, 2025 have
been decreased
by $0.3 million
and $0.9
million, respectively,
as a result
of the correction
discussed in
Note 1. Interest expense for the three and nine months ended March 31, 2025 has been increased by $0.09 million and $0.3 million,
respectively,
as a result of
the correction
discussed in Note
- Operating income
and Group Adjusted
EBITDA - Non-GAAP
for the
three and
nine months
ended March
31, 2025
have been
decreased by
$0.2 million
and $0.7
million, respectively,
as a
result of
the
correction discussed in Note 1.
Loss
attributable
to Lesaka
– GAAP
and
all subtotal
captions to
Loss
before
income
tax expense
for
the nine
months ended
March 31, 2026 have been decreased by $0.4 million and, as a result of the correction, as discussed in Note 1, to the amount included
in the caption Interest expense for the three months ended September 30, 2025. Interest expense for the nine months ended March 31,
2026 has
been increased
by $0.1
million as
a result
of the
correction, as
discussed in
Note 1,
to the
amount included
in the
caption
Interest expense for
the three months
ended September 30,
- Operating
income and Group
Adjusted EBITDA
- Non-GAAP for
the nine months
ended March 31,
2026 have been
decreased by $0.2
million, as a
result of the
correction, as discussed
in Note 1,
to
the amount included in the caption Interest expense for the three months ended
September 30, 2025.
(1) Impairments excludes an amount of $0.7 million which is included
in the caption exit of ATM
business in the table below.
(2) The table below presents the components of once-off
items for the periods presented:
Table 12
Three months ended
March 31,
Nine months ended
March 31,
2026
2025
2026
2025
$ ’000
$ ’000
$ ’000
$ ’000
Exit of ATM
business
1,599
1,599
Lesaka brand refresh
984
984
Transaction costs
466
1,084
839
1,621
Transaction costs related to Adumo, Recharger
and Bank Zero acquisitions
144
1,222
285
3,174
Indirect taxes provision release
(61)
(61)
(196)
Income recognized related to closure of legacy businesses
(579)
(579)
Total once-off
items
2,553
2,306
3,067
4,599
67
Once-off items are non-recurring in nature, however, certain
items may be reported in
multiple quarters. For instance, transaction
costs include costs incurred related to acquisitions and
transactions consummated or ultimately not pursued. The transactions can span
multiple quarters,
for instance
in fiscal
2025
we incurred
transaction costs
related to
the acquisition
of Recharger
over a number
of
quarters, and the transactions are generally non-recurring.
Exit of ATM
business includes expenses incurred to
exit our ATM
business and the impairment of ATMs
recorded in property,
plant and equipment (refer to Note 7 to our unaudited condensed consolidated
financial statements for additional information).
Rebrand
relates
to
costs incurred
related
to Lesaka’s
new brand
launched
in
November
2025,
we expect
that it
will take
the
remainder of the 2026 calendar
year to roll out
the refreshed brand throughout the
organization. These are non-recurring costs incurred
as a necessary step in a set of strategic initiatives designed to create a “One
Lesaka” identity for our customers and our employees.
Indirect tax
provision release
relates to
the reversal
of a
non-recurring indirect
tax provision
created in
fiscal 2023
which was
resolved in fiscal 2025 following settlement of the matter with the tax authority.
Income recognized
related to
closure of
legacy businesses
represents (i)
gains recognized
related to
the release
of the
foreign
currency translation reserve
on deconsolidation of
a subsidiary
and (ii) costs
incurred related to
subsidiaries which we
are in the
process
of deregistering/ liquidation and therefore we consider these costs non-operational
and ad hoc in nature.
68
Liquidity and Capital Resources
As of March 31, 2026, our cash and cash equivalents were
$90.6 million and comprised of U.S. dollar-denominated
balances of
$3.3 million,
ZAR-denominated balances
of ZAR 1.5
billion ($85.4 million),
and other currency
deposits, primarily
Botswana pula,
of $1.8 million,
all amounts translated
at exchange rates
applicable as of
March 31, 2026.
The increase in
our unrestricted cash
balances
from June 30, 2025, was
primarily due to positive contribution from our
operating segments, and the utilization of
our general banking
facilities to
partially fund
the growth
in our
Consumer lending
book, which
was partially
offset
by the
application of
the proceeds
received from the disposal
of MobiKwik to
reduce
our general banking
facilities utilized, the
utilization of cash
reserves to fund certain
scheduled repayments
of our borrowings,
acquisition of
property,
plant and
equipment and
intangible assets,
to fund
the increase
in
our Consumer lending book and to settle amounts due to the sellers of Recharger
and other entities acquired during the year to date.
We generally
invest any surplus cash held by
our South African operations in overnight
call accounts that we maintain at
South
African banking institutions,
and any surplus
cash held by
our non-South African
companies in
U.S. dollar-denominated money market
accounts.
Historically,
we have financed
most of our
operations, research and
development, working capital,
and capital expenditures,
as
well
as
acquisitions
and
strategic
investments,
through
internally
generated
cash
and
our
financing
facilities.
When
considering
whether to borrow under our financing
facilities, we consider the cost
of capital, cost of financing, opportunity cost
of utilizing surplus
cash and availability of tax
efficient structures to moderate
financing costs. Refer to Note 12
to our consolidated financial statements
for the
year ended
June 30,
2025, as
well as
Note 9
to these condensed
consolidated financial
statements for
additional information
related to our borrowings.
Our ability to make payments on our indebtedness and to
fund our operations may be dependent upon the operating
income and
the distribution
of funds
from our
subsidiaries. However,
as local laws
and regulations
and/or the
terms of our
indebtedness restrict
certain
of
our
subsidiaries
from
paying
dividends
and
transferring
assets
to
us,
there
is no
assurance
that
our
subsidiaries
will
be
permitted to provide us with sufficient dividends, distributions
or loans when necessary.
We are required to make a scheduled debt repayment of ZAR 200 million ($11.7 million) in March 2027. We expect to pay ZAR
100.0 million ($6.0
million) payment on
closing of the
Bank Zero transaction.
All amounts translated
at exchange rates
as of March
31, 2026.
Available short-term
borrowings
Summarized below are our short-term facilities available and utilized as of
March 31, 2026:
Table 13
RMB GBF
RMB Other
Nedbank
$ ’000
ZAR ’000
$ ’000
ZAR ’000
$ ’000
ZAR ’000
Total
short-term facilities available, comprising:
Total overdraft
67,064
1,143,901
Indirect and derivative facilities
(1)
3,383
57,700
9,179
156,556
Total
short-term facilities available
67,064
1,143,901
3,383
57,700
9,179
156,556
Utilized short-term facilities:
Overdraft
35,825
611,055
Indirect and derivative facilities
(1)
1,864
31,786
124
2,112
Total
short-term facilities utilized
35,825
611,055
1,864
31,786
124
2,112
Interest rate, based on South African prime rate
9.75%
N/A
N/A
(1)
Other
facilities
include
indirect
and
derivative
facilities
may
only
be
used
for
guarantees,
letters
of
credit
and
forward
exchange contracts to support guarantees issued by RMB and Nedbank
to various third parties on our behalf.
The facilities under the
Restated GBF Agreement were
available for utilization
from March 30, 2026,
and are subject to annual
review by RMB.
In terms of
a commitment provided
to the lender
under the CTA
entered into on
February 27, 2025,
we have undertaken
not to
utilize more than ZAR 5.0 million ($0.3 million) of the Nedbank Facility.
69
Long-term borrowings
We have aggregate long-term borrowings
outstanding of ZAR
3.4 billion ($201.6 million
translated at exchange
rates as of
March
31, 2026)
as described
in Note
- These
borrowings include
outstanding long-term
borrowings obtained
by Lesaka
SA of
ZAR 2.8
billion, which were
used to refinance
our previous long-term
borrowings. We
have utilized all
of these long-term
borrowings. As of
March 31,
2026, we
also have
a revolving
credit facility,
of ZAR
400.0 million
which is
utilized to
fund a
portion of
our merchant
finance loans receivable
book and an asset
backed facility of ZAR
227.0 million which
is utilized to partially
fund the acquisition of
POS devices and vaults.
Restricted cash
We have
also entered into cession and pledge
agreements with Nedbank related to
our Nedbank indirect credit facilities
and we
have ceded and pledged
certain bank accounts to
Nedbank. The funds included
in these bank accounts
are restricted as they
may not
be withdrawn without the express
permission of Nedbank. Our cash,
cash equivalents and restricted
cash presented in our consolidated
statement of cash flows as of March 31, 2026, includes restricted cash of $0.1 million
that has been ceded and pledged.
Arrangement with African Bank to fund our ATMs
In
September
2024,
we
entered into
an
arrangement
with African
Bank Limited
(“African
Bank”)
and
certain
cash-in-transit
service providers
to fund
our ATMs.
Under this
arrangement, African
Bank will
use its
cash resources
to fund
our ATMs
and it
is
specifically recorded that the cash in our ATMs are African Bank’s property.
Therefore,
as we have not utilized a facility to obtain the
cash, and do not own or control the cash for an extended period
of time, we do not record cash or cash equivalents and borrowings
in
our
consolidated statement
of financial
position.
Cash withdrawn
from our
ATMs
by our
EPE customers
and other
consumers are
settled through the interbank settlement
system from the ATM
users bank account to African
Bank’s bank
accounts. We
pay African
Bank a
monthly fee
for the
service provided
which is calculated
based on
the cumulative
daily outstanding
balance of
cash utilized
multiplied by the South African prime interest rate
less 1%. We are
exposed to the risk of cash lost while it is in our
ATMs
(i.e. from
theft) and are required to repay
African Bank for any shortages. We intend to cancel this arrangement as
part of the process of winding
down our ATM
business.
Cash flows from operating activities
Third quarter
Net cash provided by
operating activities during the
third quarter of fiscal
2026 was $37.6 million
(ZAR 630.0 million) compared
to $10.7 million (ZAR 196.2 million) during the third quarter of fiscal 2025. Excluding the impact of income taxes, our cash provided
by operating activities during the third quarter
of fiscal 2026
was positively impacted by the positive contribution
from our operating
segments and
positive working
capital changes
including a
decrease in
accounts receivables
and inventory,
and an
increase in trade
and other payables.
During the third quarter
of fiscal 2026, we
paid first provisional South
African tax payments of
$0.2 million (ZAR 3.2
million)
related
primarily
to
certain
of
Adumo’s
subsidiaries
2026
tax
year.
We
paid
taxes
totaling
$0.1
million
in
other
tax
jurisdictions,
primarily in Botswana
during the third quarter
of fiscal 2026. During
the third quarter of
fiscal 2025, we
paid first provisional South
African tax payments
of $0.6 million (ZAR
10.9 million) related
primarily to certain
of Adumo’s
subsidiaries 2025 tax year.
During
the third quarter of fiscal 2025, we paid taxes totaling $0.1 million in other
tax jurisdictions, primarily in Namibia and Botswana.
Taxes paid (refunded)
during the third quarter of fiscal 2026 and 2025 were as follows:
Table 14
Three months ended March 31,
2026
2025
2026
2025
$
$
ZAR
ZAR
’000
’000
’000
’000
First provisional payments
192
594
3,180
10,885
Second provisional payments
147
2,464
Taxation paid related
to prior years
17
296
Tax refund received
(6)
(151)
(101)
(2,016)
Dividend withholding tax
91
1,526
Total South African
taxes paid
441
443
7,365
8,869
Foreign taxes paid
81
62
1,349
1,148
Total
tax paid
522
505
8,714
10,017
Year
to date
70
Net cash provided by operating activities during year to date fiscal
2026 was $35.6 million (ZAR 609.4 million) compared to net
cash used in
operating activities of
$2.6 million (ZAR
47.6 million) during the
year to date
fiscal 2025. Excluding the
impact of income
taxes, our
cash provided
by operating activities
during year
to date fiscal
2026 was
positively impacted
by the positive
contribution
from our operating
segments and positive
working capital movements
,
which was partially
offset by cash
utilized for the
significant
net growth in our Consumer finance loans receivable.
During year to date fiscal 2026, we paid first provisional South African tax payments of $4.5 million (ZAR 75.2 million) related
to our 2026 tax year. We also paid second provisional South African tax payments of $0.4 million (ZAR 7.4 million) primarily related
to certain of our recently acquired subsidiaries that have not yet aligned
their tax year to our June 30 tax year end. We
also paid taxes
related
to
prior
tax
years
in
South
Africa
of
$0.5
million
(ZAR
8.7
million).
We
paid
taxes
totaling
$0.2
million
in
other
tax
jurisdictions, primarily
in Namibia
and Botswana
during year
to date
fiscal 2026.
During the
year to
date fiscal
2025, we
paid first
provisional South African
tax payments of $3.7
million (ZAR 67.1 million)
related to our 2025
tax year.
We
also paid taxes totaling
$0.2 million in other tax jurisdictions, primarily in Namibia and Botswana
during the year to date fiscal 2025.
Taxes paid (refunded)
during year to date fiscal 2026 and 2025 were as follows:
Table 15
Nine months ended March 31,
2026
2025
2026
2025
$
$
ZAR
ZAR
‘000
‘000
‘000
‘000
First provisional payments
4,470
3,682
75,220
67,149
Second provisional payments
431
7,400
Taxation paid related
to prior years
501
93
8,722
1,660
Tax refund received
(58)
(264)
(1,010)
(4,069)
Dividend withholding tax
91
1,526
Total South African
taxes paid
5,435
3,511
91,858
64,740
Foreign taxes paid
225
202
3,856
3,693
Total
tax paid
5,660
3,713
95,714
68,433
Cash flows from investing activities
Third quarter
Cash used
in investing
activities for
the third
quarter of
fiscal 2026
included
capital expenditures
of $3.4
million
(ZAR 57.0
million), primarily due to
the acquisition of
vaults and POS
devices. We also incurred expenditures of
$1.2 million (ZAR
20.2 million),
primarily related
to the capitalization
of development costs,
during the third
quarter of fiscal
- During the
third quarter of
fiscal
2026, we
paid we paid
$10.8 million related
to acquisition
of certain
businesses,
including $10.4
million for
the final tranche
of the
Recharger acquisition,
and $0.3 million
for Mobilemart. Refer to
Note 2 to
our unaudited condensed consolidation
financial statements
for additional information.
Cash used
in
investing
activities for
the third
quarter
of fiscal
2025
included
capital
expenditures
of $2.8
million
(ZAR 51.8
million), primarily due to
the acquisition of
vaults and POS
devices. We also incurred expenditures of
$1.7 million (ZAR
30.8 million),
primarily related
to the capitalization
of development costs,
during the third
quarter of fiscal
- During the
third quarter of
fiscal
2025, we paid $6.7 million related to acquisition of certain businesses, including
Recharger.
Year
to date
Cash used in investing activities for year to date fiscal 2026 included capital expenditures of $11.3 million (ZAR 193.5 million),
primarily due to
the acquisition
of vaults
and POS
devices. We also incurred
expenditures of $3.4
million (ZAR
57.4 million), primarily
related to the capitalization of development
costs, during year to date fiscal
- We
also received $3.0 million from
the disposal of
Cell C. During year to date fiscal 2026,
we paid $11.1 million related to acquisition of
certain businesses,
including $10.4 million for
the final tranche of
the Recharger acquisition,
$0.3 million for Mobilemart and
$0.3 million for Atom.
Refer to Note 2
to our unaudited
condensed consolidation financial statements for additional information.
Cash
used
in
investing
activities
for
the
year
to
date
fiscal
2025
included
capital
expenditures
of
$13.1
million
(ZAR 236.3
million), primarily due to
the acquisition of
vaults. We also incurred expenditures of
$2.3 million (ZAR
41.0 million), primarily related
to the
capitalization
of development
costs, during
the year
to date
fiscal 2025.
During
the year
to date
fiscal 2025,
we paid
$10.6
m
illion related to acquisition of certain businesses, including Adumo and Recharger.
71
Cash flows from financing activities
Third quarter
During the
third quarter of
fiscal 2026, we
utilized $44.9
million from our
South African general
banking facilities to
partially
fund the
growth of
our Consumer
lending book,
and repaid
$29.4 million.
We
utilized $0.7
million of
our long-term
borrowings to
finance
the
acquisition
of
POS
devices
and
vehicles
to
fund
our
Merchant
lending
book.
We
repaid
$10.2
million
of
long-term
borrowings and in accordance with our repayment schedule
under Facility B and our asset-based facilities. We
also paid $3.5 million
to purchase Lesaka Hospitality non-controlling interests.
During the third quarter of fiscal 2025, we utilized $21.4 million from our South African overdraft facilities to partially fund the
acquisition
of
Recharger
and
for
the
February
2025
refinance
of
certain
of
our
facilities,
and
repaid
$50.5
million
towards
our
refinanced
facilities.
We
utilized
$175.8
million
of
our
long-term
borrowings
for
the
February
2025
refinance
of
certain
of
our
facilities. We
repaid $134.5 million of
long-term borrowings towards our
refinanced facilities and in
accordance with our repayment
schedule and paid
$7.2 million to settle
Adumo’s
borrowings. We
also paid fees
of $0.5 million
related the February
2025 refinance
and paid dividends to the non-controlling interest of $0.1 million.
Year
to date
During year to date fiscal 2026, we utilized $93.4 million from our
South African general banking facilities to partially fund the
growth of our Consumer lending book, and repaid $82.5 million. We
utilized $4.7 million of our long-term borrowings to finance the
acquisition of POS devices and vehicles to fund our Merchant lending book. We
repaid $12.6 million of long-term borrowings and in
accordance with our repayment schedule under our asset-based facilities. We paid fees of $0.03 million related to the September 2025
refinance
of our
facility
to fund
the growth
of Merchant
lending book.
We
paid
$3.5 million
to purchase
Lesaka Hospitality
non-
controlling interests.
We
also paid
$0.3 million
to repurchase
shares from
employees in
order for
the employees
to settle
taxes due
related to the vesting of shares of restricted stock.
During the year
to date fiscal 2025,
we utilized $94.2
million from our
South African overdraft
facilities to fund our
ATMs
and
our cash
management business
through Connect
as well
as to
partially fund
the acquisition
of Recharger
and for
the February
2025
refinance of certain of
our facilities. We repaid $84.9 million
of those facilities,
including towards our refinanced facilities.
We utilized
$189.5 million
of our
borrowings to
settle a
portion
of the
Adumo purchase
consideration, pay
certain transaction
expenses, repay
Adumo’s borrowings, repurchase shares of our common stock, fund the
acquisition of certain capital
expenditures, for working capital
requirements and
for the
February 2025
refinance of
certain of
our facilities.
We
repaid $130.0
million of
long-term borrowings
in
accordance with our repayment schedule
,
paid $7.2 million to settle Adumo’s borrowings, and settled a portion of
our revolving credit
facility utilized. We
also paid an origination fee
of $1.0 million to secure additional
borrowings as well as paid
dividends to the non-
controlling interest of $0.4 million.
Off-Balance Sheet Arrangements
We have no off
-balance sheet arrangements.
Capital Expenditures
We
expect capital
spending for
the fourth
quarter of
fiscal 2026
to primarily
include spending
for acquisition
of POS
devices,
vaults, computer software, computer and
office equipment, as well as
for our branch network in
South Africa.
Our capital expenditures
for
the third
quarter of
fiscal 2026
and 2026
are discussed
under “—Liquidity
and Capital
Resources—Cash
flows from
investing
activities.” Our capital expenditures for the past three fiscal
years were funded through internally generated funds, or our asset-backed
borrowing arrangements.
We
had outstanding
capital commitments
as of
March 31,
2026, of
$0.5 million.
We
expect to
fund these
e
xpenditures through internally generated funds and available facilities.
72
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
In addition to the tables below, see
Note 5 to the unaudited condensed consolidated financial statements for
a discussion of
market risk.
We
have
short and
long-term borrowings
in South
Africa which
attract interest
at rates
that fluctuate
based on
changes in
the
South African prime
and 3-month JIBAR
interest rates. The
following table illustrates
the effect on
our annual expected
interest charge,
translated at exchange
rates applicable as
of March 31,
2026, as a
result of changes
in the South
African prime and
3-month JIBAR
interest rates, using
our outstanding short
and long-term borrowings
as of March
31, 2026. The
effect of a
hypothetical 1% (i.e.
100
basis points)
increase
and
a
1% decrease
in
the
interest
rates
applicable
to
the
borrowings
as of
March
31,
2026,
are shown.
The
selected 1% hypothetical change does not reflect what could be considered the
best- or worst-case scenarios.
Table 16
As of March 31, 2026
Annual expected
interest charge
($ ’000)
Hypothetical
change in
interest rates
Estimated annual
expected interest
charge after
hypothetical change
in interest rates
($ ’000)
Interest on South African borrowings
23,791
1%
26,173
(1%)
21,408
73
Item 4. Controls and Procedures
Under
the
supervision
and
with
the
participation
of
our
management,
including
our
executive
chairman
and
our
group
chief
financial officer, we conducted
an evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934, as amended, as of
March 31, 2026.
We previously identified
and disclosed in Part II, Item 9A of our Annual Report
on Form 10-K for the year ended
June 30, 2025,
material weaknesses in our internal control over financial reporting related
to:
(1)
Our
Consumer
lending
process,
specifically
insufficient
risk
assessment
and
monitoring
activities
relating
to
changes
in
systems and processes
that could
impact our
system of internal
control, insufficient
controls over internal
information and
information from service
organizations, insufficient
design and implementation
of information technology general
controls
(“ITGCs”), and controls over service
organizations, resulting in ineffective
process level and automated controls,
including
a lack of validation of the completeness and accuracy of information used
within the process;
(2)
Our payroll process,
specifically insufficient risk
assessment and monitoring activities
relating to changes over
the transfer
of ownership to the centralized
payroll processes that could impact the
system of internal control, insufficient
controls over
information
from
service
organizations,
insufficient
design
and
implementation
of
ITGCs,
controls
over
service
organizations resulting in ineffective process level and automated controls
including a lack of validation
of the completeness
and accuracy of information used within this process;
(3)
Our
annual
goodwill
impairment
process,
specifically
related
to
insufficient
risk
assessments
and
ineffective
design
and
implementation of controls resulting in ineffective process level
controls;
(4)
Our business
combination process,
specifically insufficient
risk assessments
and ineffective
design and
implementation of
controls
over
the purchase
price
allocation
of
the Adumo and
Recharger
acquisitions
including
insufficient
controls over
information resulting in ineffective process level controls including a lack of validation of the completeness and accuracy of
information used;
(5)
Our
revenue
recognition
process
relating
to
prepaid
airtime
sold
and
processing
fees
relating
to
certain
agreements,
specifically insufficient risk assessment and ineffective design and implementation of controls
related to our judgement over
revenue recognized either
as principal versus as
agent resulting in ineffective
controls and
a material misstatement
as well
as the requirement to restate revenue, cost of goods sold, IT processing, servicing and support and related disclosures for all
quarters as described below;
(6)
Our journal
entry process, specifically
relating to
insufficient risk
assessments, and
ineffective design
and implementation
of controls including insufficient controls over information resulting in ineffective process level controls including
a lack of
validation of the completeness
of the journal entry
population and a lack
of validation of the
completeness and accuracy of
information used within the process; and
(7)
An insufficient number of experienced and trained resources and an insufficient understanding of the application
of internal
controls over financial reporting
across the Southern African
businesses resulting in ineffective
design and implementation
of internal controls.
As a
result of
insufficient
time in
implementing all
procedures to
remediate the
material weaknesses
discussed in
our Annual
Report
on
Form10-K
for
our
fiscal
year
ended
June
30,
2025
(as
described
above),
the
Executive
Chairman
and
the
group
chief
financial officer concluded that our disclosure controls and procedures
were not effective as of March 31, 2026.
Notwithstanding
the
previously
identified
material
weaknesses,
management
believes
the
condensed
consolidated
financial
statements included
in this Quarterly
Report on
Form 10-Q fairly
present, in
all material respects,
our financial
condition, results
of
operations and cash flows as of and for the periods presented in accordance with
GAAP.
Remediation Plan
Management
has
made
significant
progress
and
is
continuing
to
finalize
remediating
the
identified
material
weakness
and
remains
committed
to
rectifying
the
remaining
material
weaknesses
in
a
timely
manner. Our
remediation
process
is
ongoing
and
includes, but is not limited to, the following steps:
(1)
implementing
our
comprehensive remediation
plan that
encompasses specific
actions aimed
at embedding
accountability
with control owners as well
as training related to the operation
and importance of internal controls over financial
reporting,
including
the
principles
and
requirements
of each
control,
with
a
focus
on
the impacted
processes,
controls
over
service
organizations, ITGCs, other process level controls and
embedding accountability on a process and controls level;
(2)
mandating improved risk assessment procedures with governance requirements upon implementing new systems within our
company together with the design, implementation and monitoring
of control activities;
(3)
the recruitment of additional appropriately
skilled resources
across the Finance
and Risk
and Compliance disciplines coupled
with the further upskilling and training of existing resources responsible
for the execution of key controls as well as a focus
on a greater degree of automation of controls throughout the organization;
(4)
embedding of controls compliance in the key performance indicators of
senior executives across the business; and
(5)
collaborating closely with internal and external assurance partners to ensure
the robustness of our remediation plan.
The
remediation
plan
with
respect to
the material weaknesses identified for
the year
ended
June 30,
2025 may
be
adjusted
as
is appropriate,
as
we
continue
to
evaluate
and
enhance
our
internal
control
over
financial
reporting.
Other
than
the
design
and implementation of
the remediation
plan, there
have not been
any changes
in our internal
control over
financial reporting
during
the fiscal quarter ended March
31, 2026, that have materially
affected, or are reasonably likely to materially affect, our internal control
o
ver financial reporting.
74
Part II. Other Information
Item 1. Legal Proceedings
Litigation related to CPS
Lesaka
SA
was
a
party
to
proceedings
in
the
Constitutional
Court
of
South
Africa
involving
its
subsidiary,
Cash
Paymaster
Services Proprietary Limited (“CPS”), which is in liquidation.
The objective of these proceedings was to procure an
order for CPS to
pay
to
the
South
African
Social Security
Agency
(“SASSA”)
the
profit
generated
by
CPS from
an
agreement
concluded
between
SASSA and
CPS, following
the award
of a tender
to CPS. This
arose from
prior court
proceedings which
concluded that the
tender
should not
have been
awarded to
CPS (for
technical reasons
not related
to any
conduct by
CPS). Lesaka
SA was
included
in these
proceedings to provide
information relevant to
determining the profit
so made by CPS.
The Constitutional Court
delivered its ruling
on April 8, 2026.
The Court ordered CPS
to refund certain
adjusted certified profits to
SASSA. The Court did
not make any adverse
order against Lesaka SA.
General
We are, from
time to time, subject to claims and suits, or threats of claims or suits, relating
to our business, including claims for
damages for personal injuries,
breach of contract and
employment related claims. In
certain of these actions,
plaintiffs request payment
for damages, including punitive damages, which may not be covered by insurance or may otherwise have a material adverse effect on
our business or results of
operations. In the opinion
of management, we are
not currently a party to
any proceedings that would
have
a material adverse effect on our business, financial condition,
or results of operations.
Item 1A. Risk Factors
See “Item
1A RISK
FACTORS”
in Part
I of
our Annual
Report on
Form 10-K
for the
fiscal year
ended June
30, 2025,
for a
discussion
of
risk
factors
relating
to
(i)
our
business,
(ii)
operating
in
South
Africa
and
other
foreign
markets,
(iii)
government
regulation, and (iv) our common stock. Except
as set forth below, there have been no material
changes from the risk factors previously
disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30,
We
may
identify
additional
errors
related
to
our
Value
Added
Tax
(VAT)
processes,
indirect
tax
positions,
or
similar
transaction-level tax matters, which could require future adjustments to
our financial statements.
During
the
second
quarter
of
fiscal
2026,
we
identified
errors
in
the
historical
VAT
treatment
of
certain
gaming
voucher
transactions within our Merchant business. Although we
have completed an initial review of the matter and
determined to correct the
identified errors through revisions to
our previously issued financial
statement, our review is
ongoing. Refer to Note
1 to our unaudited
condensed consolidated financial
statements for additional
information. The error arose
from the incorrect application
of indirect tax
rules, the configuration of underlying systems, and operational practices involving
downstream vendors.
While we have
implemented remedial actions,
including enhancing our
system of internal
control and conducting
further analyses
with our external
advisors, there is
a risk that
we have not
identified all errors
associated with this
matter.
Additional issues
may be
discovered
as
we
continue
to
evaluate
historical
periods,
refine
our
technical
tax
conclusions,
or
from
inadequate
updates
to
our
systems. Moreover,
similar errors
could exist
in accounting
and reporting
for other
indirect tax
transactions particularly
where our
business
involves
complex
multi-party
arrangements,
voucher
products,
commissions,
or
activities
involving
non-registered
VAT
vendors.
Identification
of
additional
errors
may
require
us
to
record
further
adjustments,
amend
or
restate
previously
issued
financial
statements, update our tax filings,
make additional payments of tax,
penalties, or interest, or
make further enhancements to our
internal
control processes. Any such developments could result in increased compliance
costs, additional administrative burdens, diversion of
management
attention,
or
investor
perceptions
of
weaknesses
in
our
financial
reporting
or
tax
compliance
processes.
If
material,
additional errors could
also adversely affect
our financial condition,
results of operations,
liquidity,
or internal control
over financial
reporting.
Our failure to prepare
and timely file
our periodic reports
with the SEC limits
our access to
the public markets
to raise debt
or equity capital.
Form S-3 permits eligible
issuers to conduct registered
offerings using a short
form registration statement that
allows the issuer
to incorporate
by reference its
past and future
filings and reports
made under the
Securities Exchange
Act of 1934,
as amended
(the
“Exchange Act”).
In addition,
Form S-3
enables eligible
issuers to
conduct primary
offerings “off
the shelf”
under Rule
415 of
the
Securities
Act
of
1933,
as
amended
(the
“Securities
Act”).
The
shelf
registration
process,
combined
with
the
ability
to
forward
incorporate information, allows issuers to avoid delays and
interruptions in the offering process and to access the capital markets
in a
more expeditious
and efficient
manner than
raising capital
in a
standard registered
offering pursuant
to a
Registration Statement
on
Form S-1. The ability to register securities for resale may also be limited as a result
of the loss of Form S-3 eligibility.
75
We
did
not
file
our
2025
Form
10-K
within
the
timeframe
required
by
the
SEC;
thus,
we
have
not
remained
current
in
our
reporting requirements
with the
SEC. Although
we regained
status as
a current
filer by
filing our
Form 10-K/A
to amend
our 2025
Form 10-K, we are currently ineligible to file new short form registration statements on Form S-3 and, absent a waiver of the Form S-
3 eligibility requirements, we are no longer permitted to use our existing registration statements on Form S-3. If we wish to pursue an
offering
now,
we
would
be
required
to conduct
the offering
on
an exempt
basis,
such
as in
accordance
with
Rule
144A,
or file
a
registration statement on Form
S-1. Using a Form
S-1 registration statement for
a public offering would
likely take significantly longer
than using a registration statement on Form S-3 and increase our transaction costs, and could, to the extent we are not able to conduct
offerings
using
alternative
methods,
adversely
impact
our
ability to
raise
capital
or
complete acquisitions
of
other
companies
in
a
timely manner.
Geopolitical conflicts,
including the
conflict between
Russia and
Ukraine and
in the Middle
East, may
adversely affect
our
business and results of operations.
Global economic and
geopolitical conditions continue
to influence the
environment in which
we operate. Since
our year ended
June 30, 2025,
heightened geopolitical tensions, including
the conflict between
Russia and
Ukraine and ongoing
conflicts in the
Middle
East, have contributed to volatility in global financial markets and increased
macroeconomic uncertainty.
We
have
no
direct
operations,
assets
or
revenue
exposure
in
the
affected
regions.
However,
the
indirect
effects
of
these
developments
may
adversely
impact
the
South
African
operating
environment,
our
primary
market,
including
through
foreign
exchange volatility,
inflationary pressures, tighter external funding conditions,
and reduced consumer affordability.
Management
has
concluded
that
developments
in
the
geopolitical
environment
have
not
resulted
in
material
changes
to
our
financial
position,
financial
performance
or
cash
flows
since
the
year
ended
June
30,
Therefore,
no
material
changes
have
occurred that
require adjustment to,
or separate disclosure
in, the condensed
interim financial information,
and that our
existing risk
management framework and mitigating actions, as disclosed in the
annual financial statements, remain appropriate.
Geopolitical
conditions
remain
fluid,
and
we
continue
to monitor
developments.
Any material
changes
to
our
risk
profile
or
financial position will be disclosed in accordance with applicable regulatory
requirements.
Our use of artificial
intelligence (“AI”) may
present risks that could
adversely affect our
business, results of operations
and
reputation.
While our use of AI is not currently material, we may increasingly incorporate AI technologies into
our systems, operations and
product offerings. The development,
deployment and use of AI present
a number of risks and uncertainties.
AI systems may produce
inaccurate, unreliable
or otherwise flawed
outputs, including
as a result
of limitations
in model
design, training
data quality,
bias or
other technical constraints. Any such issues could impair the effectiveness
of our products and services or expose us to liability.
The use of
AI may also
increase cybersecurity,
privacy,
intellectual property
and operational risks.
For example,
the use of
AI
may
involve
the
processing
of
sensitive
data,
reliance
on
third-party
tools,
or
the
generation
of
outputs
that
are
misused
or
misinterpreted.
In
addition,
AI
technologies
may
introduce
new
or
evolving
vulnerabilities
that
could
be
exploited,
and
our
risk
management processes may not be effective in identifying
or mitigating all such risks.
The legal and regulatory landscape relating to AI is rapidly evolving and uncertain. We
may be subject to existing and emerging
laws, regulations and regulatory
expectations in the United States
and other jurisdictions (including
South Africa) relating to,
among
other things, data protection,
consumer protection, intellectual
property and the use
of automated decision-making.
Compliance with
such requirements
may increase our
costs, limit the
use or effectiveness
of AI in
our business, or
require changes to
our products or
operations. Failure to comply with
applicable requirements, or the perception
that our use of
AI is inappropriate or
controversial, could
result in regulatory scrutiny,
litigation, reputational harm or competitive disadvantage.
As AI
technologies continue
to develop,
we may
not be
able to
anticipate or
effectively manage
all associated
risks. If
any of
these risks were to materialize, they could have
a material adverse effect on our business,
results of operations and financial condition.
76
Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds
On September 2, 2025, our board of directors approved a share repurchase authorization to repurchase up to an aggregate
of $15
million of our common stock. The authorization has no expiration date.
The table below presents information relating
to purchases of shares
of our common stock during the third
quarter of fiscal 2026:
Table 17
(a)
(b)
(c)
(d)
Period
Total
number
of shares
purchased
Average price
paid per share
(US dollars)
Total
number of shares
purchased as part of publicly
announced plans or
programs
Maximum dollar value of
shares that may yet be
purchased under the plans
or programs
Jan 1, 2026 - Jan 31, 2026
15,000,000
Feb 1, 2026 - Feb 28, 2026
(1)
9,000
4.43
15,000,000
Mar 1, 2026 - Mar 31, 2026
15,000,000
Total
9,000
(1) Relates to
the delivery of
9,000 shares
of our common
stock in November
2025 to us
by certain of
our employees to
settle
their income tax liabilities. These shares do not reduce the repurchase authority
under the share repurchase program.
On March
3, 2026,
we delivered
1,017,914
unregistered
shares of
our common
stock, valued
at $4.7
million, to
the seller
of
Recharger to settle the second and final tranche due
under the Recharger purchase agreement.
The shares of
common stock issued
in this transaction
were issued in
reliance upon
the exemptions
from registration
provided
by Section
4(a)(2) of
the Securities
Act of
1933, as
amended (the
Securities Act)
and Regulation
S under
the Securities
Act, as
the
shares were
issued to
the owners
of the
business acquired
in privately
negotiated transactions
not involving
any public
offering
or
solicitation.
For additional
information about
this acquisition,
see Note
2 of
the Notes
to Condensed
Consolidated Financial
Statements in
Item 1. Financial Statements of Part I of this Quarterly Report.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Our Section 16 officers and directors, as defined in Rule 16a-1(f) of the Securities
Exchange Act of 1934 (the “Exchange Act”),
may from time to time
enter into plans for the
purchase or sale of our
common stock that are
intended to satisfy the affirmative defense
conditions of
Rule 10b5-1(c)
of the
Exchange Act.
During the
quarter ended
March 31, 2026,
no officers
or directors, as
defined in
Rule 16a-1(f),
adopted
, modified, or
terminated
a “Rule 10b5-1 trading arrangement” or a “
non-Rule
10b5-1
trading arrangement,” as
d
efined in Item 408 of Regulation S-K.
77
Item 6. Exhibits
The following exhibits are filed as part of this Form 10-Q:
Incorporated by Reference Herein
Exhibit
No.
Description of Exhibit
Included
Herewith
Form
Exhibit
Filing Date
Amendment and Restatement Agreement dated February
27, 2026, between amongst others, Lesaka Technologies
Proprietary Limited, as Term/RCF Borrower, FirstRand
Bank Limited (acting through its Rand Merchant Bank
Division), as facility agent, and Bowwood and Main No 408
(RF) Proprietary Limited, as Debt Guarantor
X
Letter of Amendment, dated March 27, 2026, among
Lesaka Technologies Proprietary Limited and FirstRand
Bank Limited (acting through its Rand Merchant Bank
division), as facility agent, related to the amendment to the
Amended and Restated Common Terms Agreement
X
Letter of Amendment, dated March 27, 2026, among
Lesaka Technologies Proprietary Limited and FirstRand
Bank Limited (acting through its Rand Merchant Bank
division), as facility agent, related to the amendment to the
Original General Banking Facility Agreement and Facility
X
Certification of Principal Executive Officer pursuant to
Rule 13a-14(a) under the Exchange Act
X
Certification of Principal Financial Officer pursuant to Rule
13a-14(a) under the Exchange Act
X
Certification pursuant to 18 USC Section 1350
X
101.INS
XBRL Instance Document
X
101.SCH
XBRL Taxonomy
Extension Schema
X
101.CAL
XBRL Taxonomy
Extension Calculation Linkbase
X
101.DEF
XBRL Taxonomy
Extension Definition Linkbase
X
101.LAB
XBRL Taxonomy
Extension Label Linkbase
X
101.PRE
XBRL Taxonomy
Extension Presentation Linkbase
X
104
Cover
page
formatted
as
Inline
XBRL
and
contained
in
Exhibit 101
Indicates a management contract or compensatory plan or arrangement.
78