Lesaka Technologies (NASDAQ:LSAK) reported second-quarter fiscal 2026 results that management described as continued progress in executing its strategy to build “the leading independent fintech in Southern Africa,” alongside two notable strategic developments: Competition Tribunal approval for its proposed combination with Bank Zero and the launch of a “One Lesaka” brand consolidation across the group’s operating businesses.
Strategic developments: Bank Zero approval process and “One Lesaka” consolidation
CEO Ali (no last name provided in the transcript) said the company received Competition Tribunal approval for the combination with Bank Zero, calling it “a significant step forward.” He added Lesaka continues to engage with South Africa’s Prudential Authority regarding its approval process.
Financial results: revenue growth, higher adjusted EBITDA, and leverage target
CFO Dan (no last name provided) said the company delivered within its guidance range for the 14th consecutive quarter. He reported net revenue of ZAR 1.6 billion for Q2, up 16% year over year, and group-adjusted EBITDA of ZAR 304 million, up 47% year over year and “just above the midpoint” of guidance.
Dan said adjusted earnings, which he called the best indicator of underlying performance, rose more than sixfold to ZAR 111 million. Adjusted earnings per share increased from ZAR 0.21 to ZAR 1.34, with management noting that adjusted EPS excludes one-off profit contributions referenced earlier in the call.
The company’s leverage ratio was 2.5x, flat versus the prior quarter and down from 2.9x at year-end. Dan reiterated a medium-term target of 2x or lower. He also said the Bank Zero transaction is expected to deliver “meaningful funding and balance sheet benefits” and, once integrated, allow Lesaka to fund lending growth with customer deposits rather than debt, which management expects will support deleveraging and improve cash conversion.
Cash flows from operations were ZAR 419 million for the quarter. Dan said ZAR 385 million of that was reinvested into lending operations and ZAR 101 million funded interest costs. Capital expenditure was ZAR 84 million, including ZAR 48 million described as growth investment, including SmartSafe expansion, software development capitalization, and additional acquiring devices.
Segment performance: consumer strength offsets merchant transformation
Management discussed performance across its three divisions—merchant, consumer, and enterprise—and emphasized a simplified KPI framework focused on engaged customers and ARPU.
- Merchant: Net revenue declined 2% year over year, which Dan attributed to a refocusing of the distribution force toward clients with higher cross-sell potential and ongoing pricing pressure. Segment adjusted EBITDA was ZAR 170 million, down 6%. Management described the segment as being in a “transformative” year, integrating multiple businesses, unifying the merchant brand, investing in new product offerings, and rationalizing infrastructure. Dan said merchant growth is expected to be “flat for the rest of the fiscal year,” with a return to growth in FY27.
- Consumer: Net revenue increased 38% to ZAR 567 million, which management called a record for the division. Segment adjusted EBITDA more than doubled to ZAR 159 million. Dan said, following strong lending performance, the company expects “strong earnings growth in Q3 and Q4.”
- Enterprise: Net revenue rose 67% year over year to ZAR 217 million, reflecting a restructured base and including benefits from the Recharger acquisition. Segment adjusted EBITDA was ZAR 24 million. Dan said the company is investing in the platform and expects stronger earnings later in the year and into FY27 as new product platforms come online and as the company internalizes merchant acquiring volumes. He cited a short-term quarterly run-rate expectation of roughly ZAR 40 million to ZAR 50 million.
Operational highlights: merchants, consumer lending, and in-house switching
Lincoln (no last name provided) provided operational KPIs and drivers.
In merchant, he said active merchants increased 8% year over year to just over 130,000, with “active” defined as at least one customer-initiated transaction in the past 90 days. Merchant ARPU fell 10% to ZAR 1,835, driven mainly by lower airtime volumes and margin compression in alternative digital products (ADP), as well as margin pressure in acquiring tied to a push into the tavern market and terminal upgrades for community merchants. The company reported 46% of merchants using more than one product at quarter-end.
Card acquiring TPV grew 7% to ZAR 12.1 billion, and active acquiring merchants rose 8% to 73,500. Lincoln said that following the launch of a proprietary payment switch, over 40% of the quarter’s card TPV was processed in-house, which management expects to improve profitability and reduce reliance on third parties over time. ADP TPV in the merchant division grew 27% year over year, and supplier payments within ADP grew 48%, with more than 1,900 suppliers on the platform. Corporate lending originations in merchant reached ZAR 205 million, up 35%, with the loan book up 28% to ZAR 389 million.
In consumer, Lincoln said active customers exceeded 2 million, up 21% year over year, and stated the company recorded its “highest net new additions” in the grant beneficiary market for the first time, surpassing Capitec and other competitors. Consumer ARPU increased 15% to ZAR 91 per month, driven by lending and insurance cross-sell. Lending originations totaled about ZAR 1.2 billion, up 88%, and the outstanding book grew 106% to about ZAR 1.5 billion. Lincoln noted the newer medium-term loan (higher maximum loan size and longer tenure) represented 40% of originations. He also said 8% of new loans originated through the USSD digital channel, and that 78% of originations were to repeat borrowers, with 80% to clients of more than two years. He reminded listeners the company provides for default at 6.5%.
In insurance, gross premium revenue increased 38% to ZAR 134 million, and enforced policies rose 29% to 641,000. The collections ratio remained 96%. Lincoln said the company plans to pilot selling insurance policies in the open market beyond the existing consumer base starting in Q3.
Guidance and Q&A: fee reviews, rebrand costs, and deposits
For Q3, management guided net revenue of ZAR 1.65 billion to ZAR 1.8 billion and group-adjusted EBITDA of ZAR 300 million to ZAR 340 million. For the full year, Lesaka reaffirmed net revenue guidance of ZAR 6.4 billion to ZAR 6.9 billion and group-adjusted EBITDA of ZAR 1.25 billion to ZAR 1.45 billion, excluding any impact from Bank Zero should the acquisition complete during the year.
During Q&A, management said it reviews consumer transaction fees annually and attributed customer growth partly to taking share from competitors, naming Postbank. On merchant ARPU, management said the principal driver of the decline was ADP, particularly airtime, and that it expects ARPU to stabilize and then increase over the next 12 months, driven by multi-product cross-sell rather than individual product pricing. On consumer lending, Lincoln pointed to the increased loan size and tenure and growth in USSD origination, and said he expects “the same level of growth” as the medium-term product remains in an early stage.
Dan estimated rebrand-related costs over the next two quarters at ZAR 50 million to ZAR 75 million, which management said would be excluded from adjusted EBITDA. Asked about deposits expected to transfer to Bank Zero, Ali referenced the company’s expectation that the acquisition would reduce gross debt by “north of ZAR 1 billion,” but declined to provide a specific deposit number.
About Lesaka Technologies (NASDAQ:LSAK)
Lesaka Technologies, Inc operates as a Fintech company that utilizes its proprietary banking and payment technologies to deliver financial services solutions to merchants (B2B) and consumers (B2C) in Southern Africa. It offers cash management solutions, growth capital, card acquiring, bill payment technologies, and value-added services to formal and informal retail merchants, as well as banking, lending, and insurance solutions to consumers across Southern Africa. The company also engages in the sale of POS devices, SIM cards, and other consumables; and license of rights to use certain technology developed by the company, as well as offers related technology services.
