Lesaka Technologies Reports Robust Q1 Growth and Strategic Success

Lesaka Technologies, Inc. ((LSAK)) has held its Q1 earnings call. Read on for the main highlights of the call.

Lesaka Technologies’ recent earnings call painted a picture of robust growth and strategic success, despite some challenges. The company reported significant revenue and EBITDA growth across its divisions, with standout performances in the Consumer and Enterprise segments. While there were concerns about merchant churn and elevated group costs, Lesaka’s strategic acquisitions and restructuring efforts have laid a strong foundation for future expansion and profitability.

Record Revenue Growth

Lesaka Technologies achieved a record net revenue of ZAR 1.53 billion for Q1 fiscal 2026, marking a remarkable 45% increase year-on-year. This substantial growth underscores the company’s successful strategies in expanding its market presence and optimizing its revenue streams.

Strong Group Adjusted EBITDA Increase

The company reported a 61% year-on-year increase in group adjusted EBITDA, reaching ZAR 271 million. This improvement in financial performance highlights Lesaka’s effective cost management and operational efficiency.

Consumer Division Performance

The Consumer division was a significant contributor to Lesaka’s success, with a 43% year-on-year increase in net revenue. The division’s adjusted EBITDA surged by 90% to ZAR 150 million, reflecting strong consumer demand and effective market strategies.

Enterprise Division Restructuring Success

Following significant restructuring efforts, the Enterprise division delivered ZAR 22 million in segment adjusted EBITDA, a 241% increase year-on-year. This success demonstrates the positive impact of strategic restructuring on the division’s profitability.

Merchant Division Expansion

The Merchant division experienced a 43% increase in net revenue, driven primarily by the acquisition of Adumo. Segment adjusted EBITDA rose by 20%, showcasing the division’s successful expansion and integration efforts.

Reduction in Net Debt to EBITDA Ratio

Lesaka’s net debt to adjusted EBITDA ratio improved from 2.9x last quarter to 2.5x, indicating better financial management and a stronger balance sheet.

Successful Consumer Market Expansion

The active consumer base grew by 24% to over 1.9 million, with average revenue per user (ARPU) increasing 13% year-on-year to ZAR 89. This growth reflects the company’s effective strategies in expanding its consumer market.

Moderate Merchant Churn

The company observed higher churn among small to medium single-product merchants, attributed to price sensitivity. This remains a challenge for Lesaka as it seeks to stabilize its merchant base.

Cash Usage Decline in Small to Medium Sector

Cash total payment volume (TPV) experienced a modest decrease of 4% in the small to medium merchant sector, indicating a shift in payment preferences or economic conditions.

Elevated Group Costs

Group costs were elevated this quarter at ZAR 64 million, primarily due to nonrecurring finance and administrative charges. This increase in costs is a temporary challenge that the company is addressing.

Forward-Looking Guidance

Lesaka Technologies provided a forward-looking guidance that anticipates continued improvement in financial metrics. The company expects strategic initiatives and the anticipated completion of the Bank Zero acquisition to enhance cash conversion rates and support growth across divisions. This optimistic outlook is based on the company’s solid performance and strategic plans.

In conclusion, Lesaka Technologies’ earnings call highlighted a period of significant growth and strategic success, despite some challenges. The company’s strong revenue and EBITDA growth, coupled with effective restructuring and strategic acquisitions, have positioned it well for future expansion and profitability. Investors and market watchers will be keen to see how Lesaka continues to build on this momentum in the coming quarters.